EXHIBIT 4.3.6
EXECUTION COPY
SERIES B LOAN AND TRUST AGREEMENT
among
BUSINESS FINANCE AUTHORITY OF
THE STATE OF NEW HAMPSHIRE
and
PUBLIC SERVICE COMPANY OF NEW HAMPSHIRE
and
STATE STREET BANK AND TRUST COMPANY, as Trustee
Dated as of October 1, 2001
Providing for the Issue of:
$89,250,000 Business Finance Authority
of the State of New Hampshire
Pollution Control Revenue Bonds
(Public Service Company of New Hampshire Project--2001 Tax-Exempt Series B)
Auction Rate Securities Dated the Date of Delivery
TABLE OF CONTENTS
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ARTICLE I. INTRODUCTION AND DEFINITIONS 1
Section 101. Description of the Agreement and the Parties 1
Section 102. Definitions 2
(a) Words 2
(b) Number and Gender 6
(c) Use of Examples 6
ARTICLE II. LOAN OF BOND PROCEEDS; THE ASSIGNMENT AND PLEDGE 7
Section 201. Loan of Bond Proceeds; Issue of First Mortgage Bonds 7
Section 202. Assignment and Pledge of the Authority 7
Section 203. Further Assurance 8
Section 204. Defeasance 8
ARTICLE III. THE BORROWING 10
Section 301. The Bonds 10
(a) Details of the Bonds 10
(b) Form of Bonds 10
(c) Replacement of Bonds 20
(d) Registration of Bonds in the Book-Entry Only System 20
(e) Interest on Overdue Principal 23
(f) Cancellation and Destruction of Bonds 23
Section 302. Application of Bond Proceeds 23
Section 303. Bond Fund 23
Section 304. Application of Moneys 24
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Section 305. Payments by the Company 25
(a) Debt Service 25
(b) Additional Payments 25
(c) Unclaimed Moneys 25
(d) Rebate 25
(e) Purchase Price 25
Section 306. Unconditional Obligation 26
Section 307. Redemption of the Bonds 26
(a) Optional Redemption 26
(b) Reserved 27
(c) Mandatory Taxability Redemption 27
(d) Notice to the Trustee 27
(e) Payment of Redemption Price and Accrued Interest 28
(f) Notice of Redemption 28
Section 308. Investments 28
Section 309. Tax Status of Bonds 30
Section 310. Paying Agent 31
Section 311. Payment Procedure Pursuant to Bond Insurance Policy 33
Section 312. The Bond Insurer 35
ARTICLE IV. SPECIAL PROVISIONS RELATING TO AUCTION RATE SECURITIES 35
Section 401. Definitions 35
Section 402. Orders by Existing Owners and Potential Owners 42
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Section 403. Submission of Orders by Broker-Dealers to Auction Agent 44
Section 404. Determination of Auction Rate 46
Section 405. Allocation of Bonds 47
Section 406. Notice of Auction Rate 49
Section 407. Auction Index 50
Section 408. Miscellaneous Provisions Regarding Auctions 51
Section 409. Changes in Auction Period or Auction Date 52
Section 410. Auction Agent 53
Section 411. Qualifications of Auction Agent; Resignation; Removal 53
Section 412. Conversion 54
Section 413. Credit Ratings 56
Section 414. Mandatory Tender 56
(a) Agreement to Tender 56
(b) Purchase of Tendered Bonds 56
ARTICLE V. SPECIAL PROVISIONS RELATING TO VARIABLE RATE AND FIXED RATE MODES 56
Section 501. Definitions 56
Section 502. Medium, Method and Place of Payment and Dating of Bonds 64
Section 503. Payment of Principal and Interest of Bonds; Acceptance of Terms and Conditions 65
Section 504. Calculation and Payment of Interest; Change in Mode; Maximum Rate 65
Section 505. Determination of Flexible Rates and Interest Periods During Flexible Mode 66
Section 506. Determination of Interest Rates During the Daily Mode and the Weekly Mode 66
Section 507. Determination of Term Rates and Fixed Rates 67
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(a) Term Rates 67
(b) Fixed Rates 67
Section 508. Alternate Rates 67
Section 509. Changes in Mode 68
(a) Changes to Modes Other Than Fixed Rate Mode 68
(b) Change to Fixed Rate Mode 70
(c) Failure to Satisfy Conditions Precedent to a Mode Change 72
(d) Recission of Election 72
Section 510. Optional Redemption of Flexible Rate Bonds 72
Section 511. Optional Redemption of Bonds in the Daily Mode or the Weekly Mode 73
Section 512. Optional Redemption of Bonds in the Term Rate or the Fixed Rate Mode 73
Section 513. Optional Tenders of Bonds in the Daily Mode or the Weekly Mode 74
Section 514. Mandatory Purchase on Mandatory Purchase Date 74
Section 515. Remarketing of Bonds; Notices 75
(a) Remarketing of Bonds 75
(b) Notice of Remarketing; Registration Instructions; New Bonds 75
(c) Draw on Liquidity Facility 75
Section 516. Source of Funds for Purchase of Bonds 76
Section 517. Delivery of Bonds 76
Section 518. Book-Entry Tenders 77
Section 519. No Book-Entry System 78
Section 520. No Purchases or Sales After Credit Provider or Liquidity Provider Failure 78
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Section 521. Credit Enhancement and Liquidity Facility 79
Section 522. Purchase Fund 80
(a) Remarketing Proceeds Account 80
(b) Liquidity Facility Purchase Account 80
(c) Company Purchase Account 80
(d) Investment 80
Section 523. Inadequate Funds for Tenders 80
Section 524. Appointment of Remarketing Agent 81
ARTICLE VI. THE PROJECT 82
Section 601. Company not to Impair Tax Status; Use of Project Facilities 82
Section 602. Qualification of Project Facilities 82
Section 603. Reserved 82
Section 604. Reserved 82
Section 605. Disposition and Use of Project Facilities 82
ARTICLE VII. ADDITIONAL COVENANTS OF THE COMPANY 83
Section 701. Existence and Good Standing; Merger; Consolidation 83
Section 702. Indemnification by the Company 83
Section 703. Continuing Disclosure 83
ARTICLE VIII. DEFAULT AND REMEDIES 84
Section 801. Default 84
Section 802. Remedies for Events of Default 85
(a) Acceleration 85
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(b) Rights as a Secured Party 86
Section 803. Court Proceedings 86
Section 804. Revenues after Default 86
Section 805. Rights of Bondowners 86
Section 806. Performance of Company's Obligations 87
Section 807. Remedies Cumulative; No Waiver 87
Section 808. Rights of Bond Insurer 87
ARTICLE IX. THE TRUSTEE 88
Section 901. Corporate Organization, Authorization and Capacity 88
Section 902. Rights and Duties of the Trustee 88
(a) Moneys to be Held in Trust 88
(b) Accounts 88
(c) Performance of the Authority's Obligations 88
(d) Responsibility 88
(e) Limitations on Actions 89
(f) Financial Obligations 89
(g) Registration Books 89
(h) Ownership of Bonds 90
(i) No Surety Bond 90
(j) Requests by the Company 90
(k) Trustee as Holder of Series J First Mortgage Bonds 90
Section 903. Fees and Expenses of the Trustee 90
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Section 904. Resignation or Removal of Trustee 90
Section 905. Successor Trustee 91
ARTICLE X. THE AUTHORITY 92
Section 1001. Limited Obligation 92
Section 1002. Rights and Duties of the Authority 92
(a) Remedies of the Authority 92
(b) Limitations on Actions 92
(c) Responsibility 93
Section 1003. Expenses of the Authority 93
Section 1004. Matters to be Considered by Authority 93
Section 1005. Actions by Authority 94
ARTICLE XI. THE BONDOWNERS 94
Section 1101. Action by Bondowners 94
ARTICLE XII. AMENDMENTS AND MISCELLANEOUS 95
Section 1201. Amendments 95
(a) Without Bondowners Consent 95
(b) With Bondowners Consent 96
Section 1202. Notices 97
Section 1203. Agreement Not for the Benefit of Other Parties 97
Section 1204. Severability 98
Section 1205. Counterparts 98
Section 1206. Captions 98
Section 1207. Governing Law 98
Section 1208. Payment Date Not a Business Day 98
EXHIBIT A THE PROJECT FACILITIES A-1
EXHIBIT B SERIES B SEABROOK POLLUTION CONTROL FACILITIES AGREEMENT B-1
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ARTICLE I. INTRODUCTION AND DEFINITIONS
Section 101. Description of the Agreement and the Parties. This SERIES B
LOAN AND TRUST AGREEMENT (the "Agreement") is entered into as of October 1, 2001
by the Business Finance Authority of the State of New Hampshire (with its
successors, the "Authority" and formerly The Industrial Development Authority of
the State of New Hampshire), a body corporate and politic created under New
Hampshire RSA 162-A:3; Public Service Company of New Hampshire (with its
successors, the "Company"), a New Hampshire corporation; and State Street Bank
and Trust Company, a Massachusetts trust company, as Trustee (with its
successors, the "Trustee"). This Agreement is a financing document combined with
a security document as one instrument in accordance with New Hampshire RSA
Chapter 162-I (the "Act") and relates to industrial facilities as defined in
Paragraphs 2, VII(d) and (e) of the Act and located in the Town of Seabrook,
Rockingham County, New Hampshire.
This Agreement provides for the following transactions:
(a) the Authority's issue of the Bonds;
(b) the Authority's loan of the proceeds of the Bonds to the Company to
refund a portion of the outstanding balance of the Authority's $112,500,000
7.65% Pollution Control Revenue Bonds (Public Service Company of New Hampshire
Project--1991 Tax-Exempt Series C) (the "1991 Series C Bonds") which 1991 Series
C Bonds were originally issued for the purpose of financing the acquisition,
construction and installation of the Project Facilities;
(c) the Company's repayment of the loan of Bond proceeds from the
Authority through payment to the Trustee of all amounts necessary to pay the
Bonds issued by the Authority;
(d) the Company's agreement to evidence and secure its repayment
obligations hereunder by the issuance of the Series J First Mortgage Bonds; and
(e) the Authority's assignment to the Trustee in trust for the benefit and
security of the Bondowners and the Bond Insurer of the Authority's rights in
respect of the loan to the Company hereunder, including repayment of the loan to
be received from the Company.
In consideration of the mutual promises contained in this Agreement, the
rights conferred and the obligations assumed hereby, and other good and valuable
consideration, the receipt of which is hereby acknowledged, each of the Company,
the Authority and the Trustee agree, assign, covenant, grant, pledge, promise,
represent and warrant as set forth herein for their own benefit and for the
benefit of the Bondowners and the Bond Insurer.
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Section 102. Definitions.
(a) Words. In addition to terms defined elsewhere herein, the following
terms have the following meanings in this Agreement, unless the context
otherwise requires:
(i) "Act" has the meaning set forth in Section 101.
(ii) "Auction Rate Mode" means the mode during which the Bonds bear
interest at an Auction Rate.
(iii) "Authority's Service Charge" means payment to the Authority
for its own use of .375% of the principal amount of the Bonds payable on
the date of the issue of the Bonds and an additional .375% of the then
Outstanding principal balance of the Bonds payable on the date which is
three years from the date of the issue of the Bonds.
(iv) "Bond Counsel" means Palmer & Dodge LLP or such other
nationally recognized bond counsel selected by the Company and reasonably
satisfactory to the Trustee and the Bond Insurer.
(v) "Bond Fund" means the fund established under Section 303.
(vi) "Bond Insurance Agreement" means the Reimbursement and
Indemnity Agreement dated as of December 19, 2001, between the Company and
the Bond Insurer.
(vii) "Bond Insurance Policy" means the financial guaranty insurance
policy issued by the Bond Insurer insuring the payment when due of the
principal of and interest on the Bonds as provided therein.
(viii) "Bond Insurer" means MBIA Insurance Corporation, a New York
stock insurance company.
(ix) "Bond Insurer Default" has the meaning defined in Section
808(b).
(x) "Bond Insurer Event of Insolvency" means the institution of a
proceeding in a court having jurisdiction in the premises seeking an order
for relief, rehabilitation, reorganization, conservation, liquidation or
dissolution in respect of the Bond Insurer and the continuance of such
proceeding for a period of sixty (60) consecutive days or such court
enters an order granting the relief sought in such proceeding and such
order is not reversed or action thereunder stayed within sixty (60) days
of such entry.
(xi) "Bondowners", "owners" or words of similar import means the
registered owners of the Bonds from time to time as shown in the books
kept by the Trustee as bond registrar, except that wherever appropriate
the term "owners" shall mean the owners of the Bonds for federal income
tax purposes.
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(xii) "Bonds" means the $89,250,000 principal amount of the Business
Finance Authority of the State of New Hampshire Pollution Control Revenue
Bonds (Public Service Company of New Hampshire Project - 2001 Tax-Exempt
Series B) dated the date of delivery and substantially in the form set
forth in Subsection 301(a) and any bond or bonds duly issued in exchange
or replacement therefor.
(xiii) "Book-Entry Only System" means the system of registration of
the Bonds described in Subsection 301(d).
(xiv) "Business Day" means a day other than a Saturday or Sunday and
on which banks in each of the cities in which the principal offices of the
Trustee, the First Mortgage Bond Trustee, the Remarketing Agent, if any,
and the Paying Agent and the office of the Liquidity Provider at which
draws on a Liquidity Facility, if any, are made are located are not
required or authorized to remain closed and on which the New York Stock
Exchange or the payment system of the Federal Reserve System is not
closed.
(xv) "Company Bonds" shall have the meaning set forth in Section
305(e).
(xvi) "Company Representative" means the person or persons at the
time designated to act on behalf of the Company in a written certificate
(or any alternate or alternates at the time so designated) furnished to
the Trustee, containing the specimen signature of such person or persons
and signed on behalf of the Company by its Chairman, Vice Chairman,
President, Chief Financial Officer, Treasurer, any Assistant Treasurer, or
any Vice President.
(xvii) "Continuing Disclosure Agreement" means the Continuing
Disclosure Agreement between the Company and the Trustee dated the date of
issuance and delivery of the Bonds as originally executed and as it may be
amended from time to time in accordance with its terms.
(xviii) "Debt Service" means all money payable to the Bondowners in
accordance with the terms hereof and of the Bonds including (i) principal,
(ii) interest and (iii) any premium.
(xix) "Default" has the meaning given such term in Section 801.
(xx) "Event of Default" has the meaning given such term in Section
801.
(xxi) "Facilities Agreement" has the meaning given to it in Section
605.
(xxii) "Federal Tax Statement" means the Statement as to Tax Exempt
Status of Bonds executed by the Company in connection with the original
issuance of the Bonds and delivered to the Trustee.
(xxiii) "First Mortgage Bond Indenture" means the First Mortgage
Indenture
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dated as of August 15, 1978, as amended, and the Twelfth Supplemental
Indenture thereto dated as of December 1, 2001 between the Company and
First Union National Bank, successor to First Fidelity Bank, National
Association, New Jersey, as Trustee, as amended and supplemented from time
to time.
(xxiv) "First Mortgage Bond Trustee" means the trustee under the
First Mortgage Bond Indenture.
(xxv) "IRC" means the Internal Revenue Code of 1986, as it may be
amended from time to time.
(xxvi) "Loan" has the meaning given such term in Section 201.
(xxvii) "Maximum Rate" means the lesser of fourteen percent (14%)
per annum (or such separate rates for Bonds and Liquidity Provider Bonds
as may be provided for by amendment to this Agreement) and the maximum
rate of interest permitted by applicable law.
(xxviii) "MBIA" means MBIA Insurance Corporation, the principal
operating subsidiary of MBIA Inc., a New York Stock Exchange listed
company, as Bond Insurer.
(xxix) "Moody's" means Moody's Investors Service, a corporation duly
organized and existing under and by virtue of the laws of the State of
Delaware, and its successors and assigns, except that if such corporation
shall be dissolved or liquidated or shall no longer perform the functions
of a securities rating agency, then the term "Moody's" shall be deemed to
refer to any other nationally recognized securities rating agency selected
by the Company after consultation with the Remarketing Agent.
(xxx) "NAEC" means North Atlantic Energy Corporation, a New
Hampshire corporation and an affiliate of the Company.
(xxxi) "1954 Code" means the Internal Revenue Code of 1954, as
amended, as applicable to the Bonds and the Project Facilities.
(xxxii) "Outstanding", when used to modify Bonds, refers to Bonds
issued, authenticated, and delivered under this Agreement, excluding: (i)
Bonds which have been exchanged or replaced; (ii) Bonds which have been
paid; (iii) Bonds which have become due and for the payment of which
moneys have been duly provided; and (iv) Bonds with respect to which this
Agreement has been defeased pursuant to Section 204.
(xxxiii) "Paying Agent" means State Street Bank and Trust Company,
as Paying Agent under this Agreement and its successors in such capacity.
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(xxxiv) "Permitted Investments" has the meaning given such term in
Section 308.
(xxxv) The word "person" means any individual or entity so
recognized by law.
(xxxvi) "Project Costs" means the Company's cost of acquisition or
construction and installation of the Project Facilities which are "project
costs" within the meaning of Paragraph 2, IX of the Act, including, but
not limited to, the cost of issuing the Bonds, obtaining professional and
advisory services, and certain interest on the Bonds, which may be paid
from Bond proceeds pursuant to the Act.
(xxxvii) "Project Facilities" means the Company's former ownership
share of the sewage or solid waste disposal and air or water pollution
control facilities at the Station as of the date of issuance of the Bonds
described generally in the attached Exhibit A.
(xxxviii) "Refunding Trust Agreement" means the Refunding Trust
Agreement, among the Authority, the Company and State Street Bank and
Trust Company, as trustee for the 1991 Series C Bonds, dated as of October
1, 2001.
(xxxix) "S&P" means Standard & Poor's Ratings Services, a division
of McGraw-Hill, duly organized and existing under and by virtue of the
laws of the State of New York, and its successors and assigns, except that
if such corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, then the term "S&P"
shall be deemed to refer to any other nationally recognized securities
rating agency selected by the Company after consultation with the
Remarketing Agent.
(xl) "Seabrook Transfer" means each of the transfer by the Company
of its interest in the Station (including the Project Facilities) to NAEC,
as of June 5, 1992, the proposed transfer by NAEC of such interest to an
unaffilated party pursuant to an order of the New Hampshire Public
Utilities Commission and any subsequent transfer of such interest.
(xli) "Seabrook Transferee" means each of NAEC, any subsequent owner
or owners of the Project Facilities pursuant to a Seabrook Transfer, and
its or their successors.
(xlii) "Securities Depository" means The Depository Trust Company
and its successors and assigns or any other securities depository selected
by the Company which agrees to follow the procedures required to be
followed by such securities depository in connection with the Bonds.
(xliii) "Series J First Mortgage Bonds" means the $89,250,000 in
aggregate principal amount First Mortgage Bonds, Series J issued by the
Company and delivered to the Trustee pursuant to Section 201 of this
Agreement and the First Mortgage Bond
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Indenture to evidence and secure the Company's obligation to repay the
Loan.
(xliv) "Station" means Unit No. 1 of the nuclear electric generating
plant located in Seabrook, New Hampshire, of which the Company is a joint
owner.
(xlv) "Trustee" means the State Street Bank and Trust Company, as
trustee under this Agreement and its successors in such capacity.
(xlvi) "UCC" means the New Hampshire Uniform Commercial Code (New
Hampshire Revised Statutes Annotated Chapter 382-A).
(xlvii) "Variable Rate Mode" means the Daily Mode, Weekly Mode,
Flexible Mode or Term Rate Mode (all as defined in Section 501).
Except in the Bonds, "here" in such words as "hereby", "herein", "hereof"
or "hereunder" means this Agreement as a whole rather than the particular
section, subsection, paragraph, subparagraph, clause or subclause in which the
word appears; and in the Bonds it refers thereto.
(b) Number and Gender. Wherever appropriate (1) the singular and plural
forms of words and (2) words of different gender shall, within those respective
classifications, be deemed interchangeable.
(c) Use of Examples. When a condition, class, category, circumstance or
other concept is described in general terms herein and a list of possible
examples or components of what has been described generally is associated with
that description, and regardless of whether the words "include" or "including"
or the like are also used, the listing shall be deemed illustrative only and
shall not be construed as excluding other possible examples or components or as
otherwise limiting the generality of the description in any way.
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ARTICLE II. LOAN OF BOND PROCEEDS; THE ASSIGNMENT AND PLEDGE
Section 201. Loan of Bond Proceeds; Issue of First Mortgage Bonds. The
Authority shall issue the Bonds pursuant to the Act in the amount, in the form,
and with the terms provided herein, and shall loan to the Company such amount
(the Loan) to refinance Project Costs as hereinafter provided. The Company
agrees to repay the Loan of the aggregate principal amount of the Bonds in the
amounts and at the times necessary to pay principal of, premium, if any, and
interest on the Bonds by making the payments required under Section 305, and to
evidence and secure the Company's obligation to do so, the Company shall issue
and deliver to the Trustee a like aggregate principal amount of its Series J
First Mortgage Bonds in the form set forth in the First Mortgage Bond Indenture.
Upon payment of the principal of and premium, if any, on any of the Bonds and
payment of all accrued interest in connection therewith, whether at maturity or
prior to maturity by redemption or otherwise, or upon provision for the payment
thereof having been made in accordance with Section 204, Series J First Mortgage
Bonds in an aggregate principal amount equal to the aggregate principal amount
of the Bonds so paid, or for the payment of which such provision has been made,
shall be deemed fully paid and the obligations of the Company thereunder
terminated as provided in the First Mortgage Indenture and shall be surrendered
by the Trustee to the First Mortgage Bond Trustee for cancellation. The Trustee
shall promptly notify the First Mortgage Bond Trustee by telephone, confirmed in
writing, of any default in the payment of principal of, and premium, if any, and
interest on the Bonds, and shall promptly notify the First Mortgage Bond Trustee
by telephone, confirmed in writing of any payment of principal of and premium,
if any, and interest (other than payment of regularly scheduled interest) on the
Bonds, or if the Bonds have been paid or deemed paid, defeased, redeemed,
retired, surrendered or canceled. In accordance with the terms thereof, the
Series J First Mortgage Bonds shall be issued to and registered in the name of
the Trustee and shall not be sold, assigned, pledged or transferred, except to
effect transfer to any successor Trustee hereunder. The Series J First Mortgage
Bonds shall have a principal amount, an interest rate, a maturity date and
redemption provisions corresponding to the Bonds. Payments of principal of and
premium, if any, and interest on the Series J First Mortgage Bonds shall upon
receipt by the Trustee be deemed to constitute payments of corresponding amounts
by the Company in respect of the Bonds pursuant to Subsection 305(a).
Section 202. Assignment and Pledge of the Authority. The Authority, for
consideration paid as hereinabove acknowledged, hereby irrevocably assigns and
pledges to the Trustee in trust for the security of the Bondowners upon the
terms hereof all of the Authority's right, title and interest in (i) respect of
the Loan and all payments thereon, (ii) all moneys and securities held by the
Trustee for deposit in, or deposited in, the Bond Fund and investment earnings
thereon, (iii) the Series J First Mortgage Bonds, all bonds issued in
replacement thereof or in exchange or substitution therefor and all payments on,
and proceeds of, the foregoing, and (iv) any collateral security for, and all
proceeds of, any of the foregoing. The Trustee shall hold (a) all the rights,
title and interest received under this section and (b) all payments (exclusive
of funds to which the Trustee is entitled in its own right as fees,
reimbursement, indemnity or otherwise) received from the Company or derived from
the exercise of the Authority's powers hereunder (which shall include all
payments under Subsection 305(a)) and in respect of the Series J First Mortgage
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Bonds in trust for the security of the Bondowners in accordance with the
provisions hereof.
Section 203. Further Assurance. The Company and the Authority shall from
time to time execute, deliver and record and file such instruments as may be
necessary to perfect or to maintain or continue the perfection of, or as the
Trustee may reasonably require to confirm, perfect or maintain the security
created hereby and the assignment and pledge of rights hereunder.
Section 204. Defeasance. When there are in the Bond Fund sufficient funds,
or non-callable and non-prepayable obligations issued by, or the full and timely
payment of which are guaranteed by, the United States of America, in such
principal amount, bearing interest at such rates and with such maturities as
will provide, without reinvestment, sufficient amounts to pay principal or
Purchase Price of, premium, if any, and interest on the Bonds as and when such
amounts become due and, prior to the Fixed Rate Conversion Date or change to the
Fixed Rate, as applicable, to pay the Purchase Price thereof whenever the same
may be payable, as determined through a verification report or computation,
which may be prepared by the Company, and when all the rights hereunder of the
Authority and the Trustee have been provided for (1) the Bondowners will cease
to be entitled to any right, benefit or security under this Agreement except the
right to receive payment of the funds deposited and held for payment and other
rights set forth below or which by their nature cannot be satisfied prior to or
simultaneously with termination of the lien hereof, (2) the security interests
created by this Agreement (except in such funds and investments) shall
terminate, and (3) the Authority and the Trustee shall execute and deliver such
instruments as may be necessary to discharge the lien and security interests
created hereunder; provided, however, that, if within ninety (90) days of such
deposit, the Bonds are not to be redeemed in full prior to maturity or paid in
full at maturity, the Trustee and the Bond Insurer shall have received on the
date of the deposit an opinion of Bond Counsel to the effect that such deposit
and the investment thereof will not affect the exclusion of interest on the
Bonds from gross income of the owners thereof for federal income tax purposes;
and provided further that if any Bonds are to be redeemed prior to the maturity
thereof, such Bonds shall have been duly called for redemption or irrevocable
instructions for such a call shall have been given to the Trustee. Upon such
defeasance, the funds and investments required to pay or redeem the Bonds in
full shall be irrevocably set aside for such purpose. The Trustee shall cause to
be mailed to all Bondowners within fifteen (15) days of the conditions of this
section being met in the manner herein specified for redemption of Bonds a
notice stating that such conditions have been met and that the lien of this
Agreement has been discharged, and, if the Bonds are to be redeemed prior to
maturity, specifying the date of redemption and the redemption price. Any funds
or property held by the Trustee for payment of the Bonds under this section and
not required for such payment shall (unless there is an Event of Default
hereunder, in which case they shall be applied as provided in Section 604),
after satisfaction of all the rights of the Authority and the Trustee, and
payment of the rebate, if any, due to the United States of America under IRC
ss.148(f), and upon such indemnification, if any, as the Authority or the
Trustee may reasonably require, be distributed to the Company. If Bonds are not
presented for final payment when due and moneys are available in the hands of
the Trustee therefor, the Trustee shall, without liability for interest thereon,
continue to hold the moneys held for that purpose subject to
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Subsection 305(c), and interest shall cease to accrue on the principal amount
represented thereby.
When there are in the Bond Fund funds or securities as described in the
preceding paragraph as are sufficient to pay principal or Purchase Price of,
premium, if any, and interest on, some but not all of the Bonds in full as and
when such amounts become due and all of the other conditions in the preceding
paragraph have been met with respect to such Bonds, the particular Bonds (or
portions thereof) for which such provision for payment shall have been
considered made shall be selected by lot by the Trustee (or, if the Bonds are
then registered to CEDE & CO. and the Book-Entry Only System is then in effect,
by The Depository Trust Company) and thereupon the Trustee and the Authority
shall take similar action to release the security interests created by this
Agreement in respect of such Bonds (except in such funds or securities and
investments thereon), subject however to compliance with the applicable
conditions set forth in the provisos above.
Notwithstanding the foregoing, those provisions relating to the maturity
of Bonds, interest payments and dates thereof and the Trustee's remedies with
respect thereto, and provisions relating to exchange, transfer and registration
of Bonds, replacement and cancellation of Bonds, the holding of moneys in trust
and the duties of the Trustee in connection with all of the foregoing and the
fees, expenses and indemnities of the Trustee and the Authority, shall remain in
full force and effect and shall be binding upon the Trustee, the Authority, the
Company and the Bondowners notwithstanding the release and discharge of this
Agreement and the lien on the Series J First Mortgage Bonds until the Bonds have
been actually paid in full.
Notwithstanding anything herein to the contrary, if moneys or governmental
obligations have been deposited or set aside with the Trustee pursuant to the
provisions of this Section 204 and the principal of, premium, if any, and
interest on the Bonds shall not, in fact, have been actually paid in full, no
amendment to the provisions of this Section 204 will be made without the consent
of the owner of each of the Bonds affected thereby.
Subject to Section 808(b), any defeasance of the Bonds shall require the
prior written consent, which consent shall not be unreasonably withheld, of the
Bond Insurer.
Notwithstanding anything herein to the contrary, in the event that the
principal and/or interest due on the Bonds shall be paid by the Bond Insurer
pursuant to the Bond Insurance Policy, the Bonds shall remain Outstanding for
all purposes, not be defeased or otherwise satisfied and not be considered paid
by the Company, and the assignment and pledge hereunder and all covenants,
agreements and other obligations of the Company to the registered owners of the
Bonds shall continue to exist and shall run to the benefit of the Bond Insurer,
and the Bond Insurer shall be subrogated to the rights of such Bondowners.
9
ARTICLE III. THE BORROWING
Section 301. The Bonds.
(a) Details of the Bonds. The Bonds shall be issued in fully registered
form and shall be numbered from 1 upwards in the order of their issuance or in
any other manner deemed appropriate by the Paying Agent and the Authority. The
Bonds shall be initially in the denomination of $25,000 or any integral multiple
thereof prior to the Conversion Date and thereafter in Authorized Denominations
as defined in Section 501. The Bonds shall be dated the date of original
delivery thereof, and interest shall accrue from that date. The interest on
Bonds until they come due shall be payable on the interest payment dates
applicable to the Mode the Bonds are in from time to time; provided, however,
that Liquidity Provider Bonds shall bear interest as described in Section 503.
The Bonds shall be initially in the Auction Rate Mode. Bonds shall be signed on
behalf of the Authority by the manual or facsimile signature of any two of the
Chairman, Vice Chairman, Treasurer, and Executive Director and the corporate
seal of the Authority or a facsimile thereof shall be engraved or otherwise
reproduced thereon. The Certificate of Authentication of the Trustee shall be
manually signed on behalf of the Trustee. No bonds shall be issued under this
Agreement other than the Bonds. In case any officer of the Authority whose
manual or facsimile signature shall appear on any Bonds shall cease to be such
officer before the delivery thereof, such manual or facsimile signature shall
nevertheless be valid and sufficient for all purposes as if he or she had
remained in office until after such delivery.
The Bonds shall mature on May 1, 2021 and shall bear interest as provided
in this Agreement for the Mode they are in from time to time. The Bonds are
subject to redemption and optional and mandatory tender for purchase all as
described in Articles IV and V of this Agreement and the form of Bonds.
(b) Form of Bonds. (i) The Bonds initially shall be issued in
substantially the following form:
Unless this bond is presented by an authorized representative of The
Depository Trust Company, a New York Company ("DTC"), to the Authority (as
defined below) or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
10
Registered No. R $___________
UNITED STATES OF AMERICA
STATE OF NEW HAMPSHIRE
BUSINESS FINANCE AUTHORITY OF THE
STATE OF NEW HAMPSHIRE
Pollution Control Revenue Bond
(Public Service Company of New Hampshire Project--
2001 Tax-Exempt Series B)
CUSIP: 64468C AU 8
INITIAL INTEREST RATE: 1.55%
INITIAL PERIOD: December 19, 2001 through and including January 22, 2002
MATURITY DATE: May 1, 2021
DATE OF THIS BOND: December 19, 2001
(Date as of which Bonds of this
series were initially issued)
MODE: Auction Rate
(as of Date of Registration)
REGISTERED OWNER: CEDE & CO.
DATE OF REGISTRATION:
PRINCIPAL AMOUNT: DOLLARS
THIS BOND DOES NOT CONSTITUTE AN INDEBTEDNESS OF THE STATE OF NEW
HAMPSHIRE OR OF THE AUTHORITY EXCEPT TO THE EXTENT PERMITTED BY NEW HAM-PSHIRE
RSA CHAPTER 162-I. ALL AMOUNTS OWED HEREUNDER ARE PAYABLE ONLY FROM THE SOURCES
PROVIDED IN THE LOAN AND TRUST AGREEMENT DESCRIBED BELOW, AND NO PUBLIC FUNDS
MAY BE USED FOR THAT PURPOSE.
The Business Finance Authority of the State of New Hampshire (the
"Authority"), for value received, promises to pay to the REGISTERED OWNER, or
registered assigns, but solely from the moneys to be provided under the
Agreement mentioned below, upon presentation and surrender hereof, in lawful
money of the United States of America, the PRINCIPAL AMOUNT on the MATURITY
DATE, unless paid earlier as provided below, with interest from the most recent
Interest Payment Date (as defined in the Agreement) to which interest has been
paid or duly provided for or, if no interest has been paid, from the DATE OF
THIS BOND, as the rates determined as set forth below, payable on each Interest
Payment Date.
This bond is one of a series of Pollution Control Revenue Bonds (Public
Service Company of New Hampshire Project-2001 Tax-Exempt Series B) (the "Bonds")
in the
11
aggregate principal amount of $89,250,000 issued under New Hampshire Chapter RSA
162-I (the "Act"). The proceeds of the Bonds are being loaned to Public Service
Company of New Hampshire (the "Company"), a New Hampshire corporation, pursuant
to a Series B Loan and Trust Agreement (the "Agreement") dated as of October 1,
2001 among the Company, the Authority and the Trustee to refinance certain costs
associated with the Company's prior ownership interest in air or water pollution
control and sewage or solid waste disposal facilities installed for use by Unit
No. 1 at the nuclear electric generating station (the "Station") in Seabrook,
New Hampshire (the "Project Facilities"). Pursuant to the Agreement, the Company
has unconditionally agreed to repay such loan in the amounts and at the times
necessary to pay the principal of, premium, if any, and interest on the Bonds
when due. To evidence and secure such loan the Company has issued and delivered
to the Trustee its First Mortgage Bonds, Series J (the "Series J First Mortgage
Bonds") issued under the First Mortgage Indenture dated as of August 15, 1978,
as amended, and the Twelfth Supplemental Indenture thereto dated as of December
1, 2001 between the Company and First Union National Bank, successor to First
Fidelity Bank, National Association, New Jersey, as Trustee (as amended and
supplemented from time to time, the "First Mortgage Bond Indenture") in an
aggregate principal amount and with an interest rate, maturity date and
redemption provisions corresponding to those of the Bonds. As provided in the
Agreement, payments of principal of, and premium, if any, and interest on the
Series J First Mortgage Bonds shall, upon receipt by the Trustee, be deemed to
constitute payments in corresponding amounts by the Company in respect of the
Bonds. Reference is hereby made to the Agreement for the provisions thereof with
respect to the rights, limitations of rights, duties, obligations and immunities
of the Company, the Authority, the Trustee and the Bondowners, including the
order of payments in the event of insufficient funds, the disposition of
unclaimed moneys held by the Trustee and restrictions on the rights of owners of
the Bonds to bring suit. The Agreement may be amended to the extent and in the
manner provided therein. Copies of the Agreement are available for inspection at
the corporate trust office of the Trustee. Unless otherwise defined herein,
capitalized terms shall have the meanings given them in the Agreement.
If an Event of Default (as defined in the Agreement) occurs and is
continuing, the Trustee may, and upon the written request of Bondowners of at
least 25% in principal amount of the Bonds outstanding shall, declare the
principal of all Bonds then outstanding and the interest accrued thereon
immediately due and payable in accordance with the Agreement. The Bondowners
shall have no right to institute any proceeding or pursue any other remedy to
enforce the Bonds or the covenants of the Company under the Agreement except as
provided therein.
The Bonds shall be issued initially in the Auction Rate Mode. This bond is
initially issued in a thirty-five day Auction Period. At the option of the
Company and upon certain terms and conditions provided for in the Agreement,
this bond may at any time be converted to a daily, seven-day, 28-day, 35-day,
three-month or six-month Auction Period or a Special Auction Period or converted
to a Variable Rate Mode or to Fixed Rate Indebtedness, all as provided in the
Agreement. Until conversion to the Daily Mode, Weekly Mode, Flexible Mode, Term
Rate Mode or Fixed Rate Mode as provided below, this bond shall bear interest at
an Auction Rate. The Auction Rate shall be the rate of interest determined by
the auction agent designated as provided in the Agreement (herein, with its
successors, the "Auction Agent") for each Auction
12
Period or Special Auction Period, as defined below, pursuant to the Auction
Procedures. In no event may the Auction Rate exceed the Maximum Auction Rate (as
defined in the Agreement, initially the lesser of fourteen percent (14%) per
annum or the maximum rate permitted by applicable law). The Bonds shall bear
interest during the INITIAL PERIOD at the INITIAL INTEREST RATE. Thereafter, the
Auction Agent shall redetermine the Auction Rate for each Auction Period as
provided in the Agreement. The amount of interest due on any Interest Payment
Date shall be the amount of unpaid interest accrued on this bond through the day
preceding such Interest Payment Date or, if such Interest Payment Date is not a
Business Day, through the day preceding the first Business Day succeeding such
Interest Payment Date. The Auction Rate and the applicable auction procedures
shall be as set forth in the Agreement, to which specific reference is made and
which provisions are specifically incorporated herein by reference.
Upon conversion or reconversion to a Variable Rate Mode or the Fixed Rate
Mode, this bond is subject to mandatory tender for purchase as described below.
Each conversion of the Bonds from the Auction Mode to another Mode shall be
subject to the conditions set forth herein and in the Agreement. In the event
that the conditions for a proposed conversion from the Auction Rate Mode to a
new Mode are not met (i) such new Mode shall not take effect on the proposed
conversion date, notwithstanding any prior notice to the Bondowners of such
conversion and (ii) the next Auction Period shall be a seven-day Auction Period
and the Auction Rate shall be the Maximum Auction Rate. In no event shall the
failure of this bond to be converted to another Mode be deemed to be a default
or an Event of Default (as defined in the Agreement).
Each determination and redetermination of the Auction Rate shall be
conclusive and binding on the Authority, the Trustee, the Paying Agent, the Bond
Insurer, the Company and the Bondowners.
While this bond is in the Auction Rate Mode in a daily, seven-day, 28-day,
35-day or three-month Auction Period or Special Auction Period of 180 days or
less, interest shall be computed on the basis of a 360-day year for the actual
number of days elapsed. While this bond is in the Auction Rate Mode in a
six-month Auction Period or Special Auction Period of more than 180 days,
interest shall be computed on the basis of a 360-day year consisting of twelve
30-day months. From and after the date on which this bond becomes due, any
unpaid principal will bear interest at the then effective interest rate until
paid or duly provided for.
Principal and interest on this bond is payable while this bond is in the
Auction Rate Mode, by check mailed to the REGISTERED OWNER hereof, or by wire or
bank transfer within the continental United States of America of immediately
available funds to any REGISTERED OWNER of $1,000,000 or more in principal
amount of the Series Bonds upon written request of such REGISTERED OWNER
received by the Trustee not less than five days prior to the record date,
determined as of the close of business on the applicable record date, at its
address as shown on the registration books maintained by the Paying Agent. The
Purchase Price of Bonds tendered for purchase shall be paid as provided below.
13
The record date for payment of interest while this bond is in an Auction
Rate Period other than a daily Auction Period is the second Business Day
preceding the date on which interest is to be paid, and during a daily Auction
Period, the last Business Day of the month preceding the date on which interest
is to be paid.
AFTER THE FIXED RATE CONVERSION DATE, THE REGISTERED OWNER SHALL HAVE NO
RIGHT TO TENDER THIS BOND FOR PURCHASE.
This bond is subject to mandatory tender for purchase at a price of par
plus accrued interest, if any, to the Purchase Date, on the Conversion Date from
the Auction Rate Mode to another Mode. Notice of mandatory tender shall be given
or caused to be given by the Trustee in writing to the REGISTERED OWNER at least
fifteen (15) days (or, if this bond is then in a six-month Auction Period or a
Special Auction Period of more than 180 days, 30 days) prior to the mandatory
Purchase Date. The owner of this bond, by acceptance hereof, agrees to sell and
surrender this bond at such price to any purchaser determined in accordance with
the provisions of the Agreement in the event of such mandatory tender and, on
such Purchase Date, to surrender this bond to the Paying Agent for payment of
the Purchase Price. From and after the Purchase Date, no further interest on
this bond shall be payable to the REGISTERED OWNER, provided that there are
sufficient funds available on the Conversion Date to pay the purchase price. All
notices of tender of Bonds and deliveries of Bonds subject to mandatory tender
shall be made to the Paying Agent at 2 Avenue de Lafayette, Boston, MA 02111,
Attention: Corporate Trust Department.
The Purchase Price of Bonds in the Auction Rate Mode tendered for purchase
is payable by wire or bank transfer within the continental United States of
America in immediately available funds from the Paying Agent to the REGISTERED
OWNER at its address shown on the registration books maintained by the Paying
Agent. If on any date this bond is subject to mandatory tender for purchase,
payment of the Purchase Price of this bond to such owner shall be made on the
Purchase Date if presentation and surrender of this bond is made prior to 1:00
P.M., New York City time, or on the next Business Day without any additional
accrued interest if presentation and surrender of this bond made after 1:00
P.M., New York City time.
This bond is also subject to optional redemption at 100% of the principal
amount so redeemed plus accrued interest to the redemption date prior to the
Fixed Rate Conversion Date at the direction of the Company in whole or in part
on any Interest Payment Date immediately following the last day of an Auction
Period during an Auction Rate Period; provided that in the event of any partial
redemption of the Bonds prior to the Fixed Rate Conversion Date, the aggregate
principal amount so redeemed shall be an integral multiple of $25,000 and the
aggregate principal amount of the Bonds of this series bearing interest at an
Auction Rate that will remain Outstanding shall be at least $10,000,000 unless
otherwise consented to by the Broker-Dealer.
The Bonds are subject to mandatory redemption at any time at a redemption
price of 100% of the principal amount of the Bonds so redeemed plus accrued
interest to the redemption date in the event (i) the Company delivers to the
Trustee an opinion of nationally recognized
14
bond counsel selected by the Company and reasonably satisfactory to the Trustee
("Bond Counsel") stating that interest on the Bonds is or will become includable
in gross income of the owners thereof for federal income tax purposes, or (ii)
it is finally determined by the Internal Revenue Service or a court of competent
jurisdiction, as a result of (A) a proceeding in which the Company has
participated or been given notice and an opportunity to participate, and (B)
either a failure by the Company or the Seabrook Transferee (as defined in the
Agreement) to observe any covenant or agreement undertaken in or pursuant to the
Agreement or a Seabrook Transfer (as defined in the Agreement), or the
inaccuracy of any representation made by the Company or the Seabrook Transferee
in or pursuant to the Agreement or a Seabrook Transfer, that interest payable on
the Bonds is includable for federal income tax purposes in the gross income of
any owner thereof (other than an owner which is a substantial user or a related
person within the meaning of Section 147(a) of the Internal Revenue Code of
1986). Any determination under clause (ii) above will not be considered final
for this purpose until the earliest of the conclusion of any appellate review,
the denial of appellate review or the expiration of the period for seeking
appellate review. Redemption under this paragraph shall be in whole unless not
later than forty-five (45) days prior to the redemption date the Company
delivers to the Trustee an opinion of Bond Counsel reasonably satisfactory to
the Trustee to the effect that a redemption of less than all of the Bonds will
preserve the tax-exempt status of interest on the remaining Bonds outstanding
subsequent to such redemption. Any such redemption shall be made on the 60th day
after the date on which the opinion described in clause (i) is delivered or the
determination described in clause (ii) becomes final or on such earlier date as
the Company may designate by notice given to the Trustee at least forty-five
(45) days prior to such designated date. If such redemption shall occur in
accordance with the terms of the Agreement, then such failure by the Company or
the Seabrook Transferee to observe such covenant or agreement, or the inaccuracy
of any such representation will not, in and of itself, constitute a default
thereunder.
If the Trustee receives written notice from any Bondowner stating that (i)
such Bondowner has been notified in writing by the Internal Revenue Service that
it proposes to include the interest on the Bonds in the gross income of such
owner for federal income tax purposes, or any other proceeding has been
instituted against such owner which may lead to a like determination, and (ii)
such owner will afford the Company the opportunity to participate at its own
expense in the proceeding, either directly or in the name of such owner, until
the conclusion of any appellate review, and the Trustee has examined such
written notice and it appears to be accurate on its face, then the Trustee shall
promptly give notice thereof to the Company, the Authority, and each Bondowner
whose Bonds may be affected. The Trustee shall thereafter keep itself reasonably
informed of the progress of any administrative proceedings or litigation
relating to such notice. Under the Agreement the Company is required to give the
Trustee written notice of such a final determination within forty-five (45) days
of such final determination.
If less than all of the outstanding Bonds are to be called for redemption,
the Bonds or portions thereof to be redeemed will be selected by the Trustee by
lot or in any customary manner as determined by the Trustee in units of $25,000,
provided that for so long as CEDE & CO., as nominee of the Depository Trust
Company ("DTC"), is the REGISTERED OWNER and the Book-Entry Only System (as
defined in the Agreement) is in effect, the particular Bonds or
15
portions thereof to be redeemed shall be selected by DTC, in such manner as DTC
may determine.
In the event this bond (or any portion thereof) is selected for redemption
prior to the Fixed Rate Conversion Date, notice will be mailed by the Trustee no
fewer than 15 days (and no fewer than 30 days when this bond is in a six-month
Auction Period or a Special Auction Period of 180 days or more) prior to the
redemption date to the REGISTERED OWNER. Failure to mail notice to the owner of
any other Bond or any defect in the notice to such other owner shall not affect
the redemption of this bond.
The Trustee shall give or cause to be given notice of any redemption of
this bond as provided above to the REGISTERED OWNER at its address shown on the
registration books maintained by the Paying Agent. A certificate of the Trustee
shall conclusively establish the mailing of any such notice for all purposes.
Notice of redemption having been duly mailed, this bond, or the portion called
for redemption, will become due and payable on the redemption date at the
applicable redemption price and, moneys for the redemption having been deposited
with the Paying Agent, from and after the date fixed for redemption, interest on
this bond (or such portion) will no longer accrue.
IN CERTAIN CIRCUMSTANCES SET OUT HEREIN, THIS BOND (OR PORTION THEREOF) IS
SUBJECT TO PURCHASE OR REDEMPTION, IN EACH CASE UPON NOTICE TO OR FROM THE OWNER
HEREOF AS OF A DATE PRIOR TO SUCH PURCHASE OR REDEMPTION. IN EACH SUCH EVENT AND
UPON DEPOSIT OF THE PURCHASE OR REDEMPTION PRICE WITH THE PAYING AGENT ON THE
PURCHASE OR REDEMPTION DATE, AS THE CASE MAY BE, THIS BOND (OR PORTION THEREOF)
SHALL CEASE TO BE DEEMED TO BE OUTSTANDING UNDER THE AGREEMENT, INTEREST HEREON
SHALL CEASE TO ACCRUE AS OF THE PURCHASE OR REDEMPTION DATE, AND THE REGISTERED
OWNER HEREOF SHALL BE ENTITLED ONLY TO RECEIVE THE PURCHASE OR REDEMPTION PRICE
SO DEPOSITED WITH THE PAYING AGENT BUT ONLY UPON SURRENDER OF THIS BOND TO THE
PAYING AGENT.
This bond is transferable by the REGISTERED OWNER, in person or by its
attorney duly authorized in writing, at the principal corporate trust office of
the Paying Agent, upon surrender of this bond to the Paying Agent for
cancellation. Upon the transfer, a new Bond or Bonds in authorized denominations
of the same aggregate principal amount will be issued to the transferee at the
same office. This bond may also be exchanged at the principal corporate trust
office of the Paying Agent for a new Bond or Bonds in authorized denominations
of the same aggregate principal amount without transfer to a new registered
owner. Exchanges and transfers will be without expense to the owner except for
applicable taxes or other governmental charges, if any. The Paying Agent will
not be required to make an exchange or transfer of this bond (except in
connection with any mandatory tender of this bond) (i) if this bond (or any
portion thereof) has been selected for redemption or (ii) during the fifteen
(15) days preceding any date fixed for selection for redemption if this bond (or
any portion thereof) is eligible to be selected for redemption.
The Bonds are issuable only in fully registered form in the denominations
of $25,000 or
16
any multiple thereof with respect to Bonds in the Auction Rate Mode.
The Authority, the Trustee and the Company may treat the REGISTERED OWNER
as the absolute owner of this bond for all purposes, notwithstanding any notice
to the contrary.
No director, officer, employee or agent of the Authority nor any person
executing this bond (by facsimile signature or otherwise) shall be personally
liable, either jointly or severally, hereon or be subject to any personal
liability or accountability by reason of the issuance hereof.
This bond shall not be valid until the Certificate of Authentication has
been signed by the Trustee.
BUSINESS FINANCE AUTHORITY OF
THE STATE OF NEW HAMPSHIRE
By:
Chairman
(Seal)
By:
Executive Director
Certificate Of Authentication
This bond is one of the Bonds described in the Agreement.
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By: ______________________________
Authorized Signer
17
STATEMENT OF INSURANCE
MBIA Insurance Corporation (the "Insurer") has issued a policy containing
the following provisions, such policy being on file at the principal corporate
trust office of the Trustee (which on the date of this Bond is State Street Bank
and Trust Company, Boston, Massachusetts).
The Insurer, in consideration of the payment of the premium and subject to
the terms of this policy, hereby unconditionally and irrevocably guarantees to
any owner, as hereinafter defined, of the following described obligations, the
full and complete payment required to be made by or on behalf of the Issuer to
State Street Bank and Trust Company, or its successor, as Paying Agent for the
Bonds (the "Paying Agent") of an amount equal to (i) the principal of (either at
the stated maturity or by any advancement of maturity pursuant to a mandatory
sinking fund payment) and interest on, the Obligations (as that term is defined
below) as such payments shall become due but shall not be so paid (except that
in the event of any acceleration of the due date of such principal by reason of
mandatory or optional redemption or acceleration resulting from default or
otherwise, other than any advancement of maturity pursuant to a mandatory
sinking fund payment, the payments guaranteed hereby shall be made in such
amounts and at such times as such payments of principal would have been due had
there not been any such acceleration); and (ii) the reimbursement of any such
payment which is subsequently recovered from any owner pursuant to a final
judgment by a court of competent jurisdiction that such payment constitutes an
avoidable preference to such owner within the meaning of any applicable
bankruptcy law. The amounts referred to in clauses (i) and (ii) of the preceding
sentence shall be referred to herein collectively as the "Insured Amounts".
"Obligations" shall mean:
$89,250,000
Business Finance Authority of the State of New Hampshire
Pollution Control Revenue Bonds
(Public Service Company of New Hampshire Project--2001 Tax-Exempt Series B)
Auction Rate Securities
Upon receipt of telephonic notice, such notice subsequently confirmed in
writing by registered or certified mail, or upon receipt of written notice by
registered or certified mail, by the Insurer from the Paying Agent or any owner
of an Obligation the payment of an Insured Amount for which is then due, that
such required payment has not been made, the Insurer on the due date of such
payment or within one business day after receipt of notice of such nonpayment,
whichever is later, will make a deposit of funds, in an account with State
Street Bank and Trust Company, N.A., in New York, New York, or its successor,
sufficient for the payment of any such Insured Amounts which are then due. Upon
presentment and surrender of such Obligations or presentment of such other proof
of ownership of the Obligations, together with any appropriate instruments of
assignment to evidence the assignment of the Insured Amounts due on the
Obligations as are paid by the Insurer, and appropriate instruments to effect
the appointment of the Insurer as agent for such owners of the Obligations in
any legal proceeding related to payment of Insured Amounts on the Obligations,
such instruments being in a form satisfactory to State Street Bank and Trust
Company, N.A., State Street Bank and Trust Company, N.A. shall disburse to such
owners or the Paying Agent payment of the Insured Amounts due on such
18
Obligations, less any amount held by the Paying Agent for the payment of such
Insured Amounts and legally available therefor. This policy does not insure
against loss of any prepayment premium which may at any time be payable with
respect to any Obligation.
As used herein, the term "owner" shall mean the registered owner of any
Obligation as indicated in the books maintained by the Paying Agent, the Issuer,
or any designee of the Issuer for such purpose. The term owner shall not include
the Authority or any party whose agreement with the Issuer constitutes the
underlying security for the Obligations.
Any service of process on the Insurer may be made to the Insurer at its
offices located at 113 King Street, Armonk, New York 10504 and such service of
process shall be valid and binding.
This policy is non-cancelable for any reason. The premium on this policy
is not refundable for any reason including the payment prior to maturity of the
Obligations.
The policy has been endorsed as follows:
It is further understood that this policy shall guarantee to the
owner or holder, as defined in the policy, the full and complete payments
required to be made by or on behalf of the Issuer if there occurs pursuant to
the terms of the Obligations an event which results in the loss of the tax
exempt status of the interest on the Obligations, including any principal,
interest or premium payments payable thereon, if any, as and when thereby
required.
This endorsement forms a part of the policy to which it is attached,
effective on the inception date of the policy.
MBIA INSURANCE CORPORATION
ASSIGNMENT
For value received the undersigned sells, assigns and transfers this bond
to
(NAME AND ADDRESS OF ASSIGNEE)
Social Security or Other Identifying Number of Assignee
and irrevocably appoints
19
attorney-in-fact to transfer it on the books kept for registration of the bond,
with full power of substitution.
NOTE: The signature to this assignment
must correspond with the name as written
on the face of the bond without
alteration or enlargement or other
change and must be guaranteed by a
Participant in a Recognized Signature
Guaranty Medallion Program.
Dated:
Signature Guaranteed:
Participant in a Recognized Signature
Guaranty Medallion Program
By:
Authorized Signature
(ii) In the event of a conversion of any series of the Bonds from
the Auction Rate Mode to any other Mode, the Company shall cause to be
prepared and Trustee shall deliver, new Bonds to the owners thereof in
substantially the form set forth in Subsection 301(b)(i) with such
insertions and deletions as are necessary or desirable, as determined by
the Company, to reflect the terms of the Bonds in the Daily Mode, Weekly
Mode, Flexible Mode, Term Rate Mode or Fixed Rate Mode, as applicable.
(c) Replacement of Bonds. Replacement Bonds shall be issued pursuant to
applicable law as a result of the destruction, loss or mutilation of the Bonds.
The costs of a replacement shall be paid or reimbursed by the applicant, who
shall indemnify the Authority, the Trustee, the Paying Agent and the Company
against all liability and expense in connection therewith.
(d) Registration of Bonds in the Book-Entry Only System.
(i) The provisions of this Subsection 301(d) shall apply with
respect to any Bond registered to CEDE & CO. or any other nominee of The
Depository Trust Company (DTC) while the Book-Entry Only System (meaning
the system of registration described in paragraph (ii) of this Subsection
301(d)) is in effect.
(ii) The Bonds shall be issued in the form of a separate single
authenticated fully registered Bond for each Mode of Bonds in
substantially the form set forth in
20
Subsection 301(b). Any legend required to be on the Bonds by DTC may be
added by the Trustee or Paying Agent. On the date of original delivery
thereof, the Bonds shall be registered in the registry books of the Paying
Agent in the name of CEDE & CO., as nominee of The Depository Trust
Company as agent for the Authority in maintaining the Book-Entry Only
System. With respect to Bonds registered in the registry books kept by the
Paying Agent in the name of CEDE & CO., as nominee of DTC, the Authority,
the Paying Agent, the Remarketing Agent, if any, the Company and the
Trustee shall have no responsibility or obligation to any Participant
(which means securities brokers and dealers, banks, trust companies,
clearing Companys and various other entities, some of whom or their
representatives own DTC) or to any Beneficial Owner (which means, when
used with reference to the Book-Entry Only System, the person who is
considered the beneficial owner of the Bonds pursuant to the arrangements
for book entry determination of ownership applicable to DTC) with respect
to the following: (A) the accuracy of the records of DTC, CEDE & CO. or
any Participant with respect to any ownership interest in the Bonds, (B)
the delivery to or from any Participant, any Beneficial Owner or any other
person, other than DTC, of any notice with respect to the Bonds, including
any notice of redemption or tender (whether mandatory or optional), or (C)
the payment to any Participant, any Beneficial Owner or any other person,
other than DTC, of any amount with respect to the principal of or premium,
if any, or interest on the Bonds. The Paying Agent shall pay all principal
of and premium, if any, and interest on the Bonds only to or upon the
order of DTC, and all such payments shall be valid and effective fully to
satisfy and discharge the Authority's obligations with respect to the
principal of and premium, if any, and interest on such Bonds to the extent
of the sum or sums so paid. No person other than DTC shall be entitled to
receive an authenticated Bond evidencing the obligation of the Authority
to make payments of principal of and premium, if any, and interest
pursuant to this Agreement. Upon delivery by DTC to the Trustee or the
Paying Agent of written notice to the effect that DTC has determined to
substitute a new nominee in place of CEDE & CO., the words "CEDE & CO." in
this Agreement shall refer to such new nominee of DTC.
(iii) Upon receipt by the Authority and the Trustee, the Paying
Agent or the Remarketing Agent, if any, of written notice from DTC to the
effect that DTC is unable or unwilling to discharge its responsibilities,
the Paying Agent shall issue, transfer and exchange Bonds as requested by
DTC in appropriate amounts, and whenever DTC requests the Authority, the
Paying Agent, the Trustee and the Remarketing Agent, if any, to do so, the
Trustee, the Paying Agent, the Remarketing Agent, if any, and the
Authority will cooperate with DTC in taking appropriate action after
reasonable notice (A) to arrange for a substitute bond depository willing
and able upon reasonable and customary terms to maintain custody of the
Bonds or (B) to make available Bonds registered in whatever name or names
the Bondowners transferring or exchanging such Bonds shall designate.
(iv) In the event the Company determines that it is in the best
interests of the Beneficial Owners that they be able to obtain Bond
certificates, the Authority may so notify DTC, the Paying Agent, the
Remarketing Agent, if any, and the Trustee,
21
whereupon DTC will notify the Participants of the availability through DTC
of Bond certificates. In such event, the Paying Agent shall issue,
transfer and exchange Bond certificates of the initial series as requested
by DTC in appropriate amounts and in authorized denominations. Whenever
DTC requests the Authority and the Paying Agent to do so, the Paying Agent
and the Authority will cooperate with DTC in taking appropriate action
after reasonable notice to make available Bonds registered in whatever
name or names the Beneficial Owners transferring or exchanging Bonds shall
designate.
(v) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Bond is registered in the name of CEDE & CO., as
nominee of DTC, all payments with respect to the Purchase Price and
principal of and premium, if any, and interest on such Bond and all
notices with respect to such Bond shall be made and given, respectively,
to DTC as provided in the Authority's Letter of Representation (the
"Representation Letter") for the Bonds dated December 4, 2001. The form of
such Representation Letter may be modified in a manner consistent with the
provisions of this Agreement upon conversion or reconversion of the Bonds
to another Mode or Rate Period in which the Book-Entry Only System is in
effect.
(vi) Notwithstanding any provision in Section 307 to the contrary,
so long as all of the Bonds Outstanding are held in the Book-Entry Only
System, (A) if less than all of such Bonds are to be redeemed upon any
redemption of Bonds hereunder, the particular Bonds or portions of Bonds
of such series to be redeemed shall be selected by DTC in such manner as
DTC may determine, and (B) if less than all of such Bonds are to be
converted to a different Mode, upon any conversion to such Mode hereunder,
the beneficial interests in particular Bonds or portions of Bonds to be
converted shall be selected by DTC in such manner as DTC may determine.
(vii) So long as the Book-Entry Only System is in effect, a
Beneficial Owner who elects to have its Bonds purchased or tendered
pursuant to the Agreement shall effect delivery by causing a Participant
to transfer the Beneficial Owner's interest in the Bonds pursuant to the
Book-Entry Only System. The requirement for physical delivery of Bonds in
connection with a demand for purchase or a mandatory tender for purchase
will be deemed satisfied when the ownership rights in the Bonds are
transferred in accordance with the Book-Entry Only System.
(viii) While the Bonds bear interest in a Variable Rate Mode, so
long as the Book-Entry Only System is in effect, the Remarketing Agent, if
any, shall communicate to DTC information concerning the purchasers of
Tendered Bonds as may be necessary or appropriate, and, notwithstanding
any provision in the Representations Letter to the contrary, the
Remarketing Agent shall continue to remit to the Paying Agent interest
rate determination information pursuant to the terms of this Agreement.
(ix) While the Bonds bear interest in a Variable Rate Mode,
notwithstanding any provision of this Agreement to the contrary, if the
Book-Entry Only System is in effect while a Liquidity Facility is in
effect, Company Bonds or Liquidity Provider Bonds,
22
if any, shall be registered in the name of the Company or the Liquidity
Provider, as the case may be, and a separate Bond certificate shall be
issued to and held by the Paying Agent for the Company or the Liquidity
Provider, as the case may be, and the registration books maintained by the
Paying Agent shall indicate (i) the Company or the Liquidity Provider, as
the case may be, as the owner of any Company Bonds or Liquidity Provider
Bonds and (ii) that CEDE & CO. is no longer the owner of such Company
Bonds or Liquidity Provider Bonds, as the case may be. Upon any Bond
ceasing to be a Company Bond or Liquidity Provider Bond, as the case may
be, such Bond shall be re-registered in the name of CEDE & CO.
(e) Interest on Overdue Principal. Any overdue principal of any Bond shall
bear interest after its maturity or acceleration at the then-effective interest
rate of the Bonds.
(f) Cancellation and Destruction of Bonds. All Bonds paid or redeemed in
full, either at or before maturity, shall be delivered to the Trustee when such
payment or redemption is made, and such Bonds, and all Bonds surrendered in any
exchanges or transfers, shall thereupon be promptly canceled. All Bonds acquired
and owned by the Company and delivered to the Trustee for cancellation shall be
deemed paid and shall be promptly canceled. Bonds so canceled may at any time be
cremated or otherwise destroyed by the Trustee, which shall execute a
certificate of cremation or destruction in duplicate by the signature of one of
its authorized officers describing the Bonds so cremated or otherwise destroyed,
and one executed certificate shall be filed with the Authority and the other
executed certificate shall be retained by the Trustee.
Section 302. Application of Bond Proceeds. The Authority shall loan the
proceeds of the Bonds to the Company by promptly causing (A) the accrued
interest, if any, to be deposited in the Bond Fund and (B) $89,250,000 to be
deposited with State Street Bank and Trust Company, as trustee under the
Refunding Trust Agreement, to refund a portion of the 1991 Series C Bonds on a
current basis. The Company represents and warrants that (i) substantially all of
the proceeds (within the meaning of the 1954 Code) of the Authority's
$112,500,000 Adjustable Rate Solid Waste Disposal and Pollution Control Revenue
Bonds (Public Service Company of New Hampshire Project-1989 Series) (the "1989
Bonds"), which were refunded by the 1991 Series C Bonds, were spent to pay
directly or to reimburse the Company for Project Costs; (ii) such Project Costs
were incurred by and were chargeable to the capital account of the Company;
(iii) such Project Costs are costs of "sewage or solid waste disposal
facilities" or "air or water pollution control facilities" within the meaning of
Section 103(b)(4)(E) or (F) of the 1954 Code incurred and paid after January 14,
1976; and (iv) such Project Costs were for an "industrial facility" within the
meaning of Paragraphs 2, VII (d) and (e) of the Act. The Company shall pay
expenses and costs of issuance of the Bonds from its own funds.
Section 303. Bond Fund. A Bond Fund is hereby established with the Trustee
for the account of the Company, and moneys shall be deposited therein as
provided in this Agreement. The Company hereby grants to the Trustee for the
benefit of the Bondowners a lien on and security interest in all deposits in the
Bond Fund. The moneys in the Bond Fund and any investments held as part of such
Fund shall be held in trust and, except as otherwise provided in
23
Sections 304, 804 and 903, shall be applied by the Trustee solely to the payment
of principal of, premium, if any, and interest on the Bonds. If at any time the
amount in the Bond Fund exceeds the amount necessary to pay or redeem the Bonds
in full, and all amounts owing or to be owing under this Agreement to the
Authority and the Trustee have been paid or provided for to the reasonable
satisfaction of the Trustee and the Authority, then the excess shall be paid to
the Company except as otherwise may be required by applicable law. When moneys
in the Bond Fund are to be applied to the payment of the Bonds, such moneys
shall be transferred by the Trustee to itself for the account of the Authority
and shall then be so applied. The Trustee shall pay out of the Bond Fund on each
payment date the amount required for the payment of principal of, premium, if
any, and interest on the Bonds payable on such date (whether at maturity, upon
redemption, by acceleration or otherwise).
Section 304. Application of Moneys. If available moneys in the Bond Fund
are not sufficient on any day to pay all principal of, premium, if any, and
interest on the Outstanding Bonds then due or overdue, such moneys shall, after
payment of all amounts owing to the Trustee and the Authority under this
Agreement, be applied first to the payment of interest, including interest on
overdue principal, in the order in which the same became due (pro rata with
respect to interest which became due at the same time) and second to the pro
rata payment of principal and premium, if any, without regard to the order in
which the same became due, in each case pro rata among Bondowners. For this
purpose interest on overdue principal shall be treated as coming due on the
first day of each month. Whenever moneys are applied pursuant to this section,
such moneys shall be applied by the Trustee at such times, and from time to
time, as the Trustee in its discretion shall determine, having due regard to the
amount of such moneys available and the likelihood of additional moneys becoming
available for such application in the future. Whenever the Trustee shall
exercise such discretion it shall fix the date (which shall be the first day of
a month unless the Trustee shall deem another date more suitable) upon which
such application is to be made, and upon such date interest on the amounts of
principal paid on such date shall cease to accrue. The Trustee shall give such
notice as it may deem appropriate of the fixing of any such date. When interest
or a portion of the principal is to be paid on an overdue Bond, the Trustee may
require presentation of the Bond for endorsement of the payment.
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Section 305. Payments by the Company.
(a) Debt Service. Not later than the opening of business on the second
Business Day preceding an Interest Payment Date or the date on which a payment
of principal or redemption premium or Purchase Price is due, at maturity, upon
redemption, by acceleration or otherwise, the Company shall pay or cause to be
paid to the Trustee for deposit in the Bond Fund an amount in immediately
available funds on such date equal to the payment then coming due less the
amount, if any, then in the Bond Fund and available to pay Debt Service. At any
time when any principal of the Bonds is overdue, the Company shall also have a
continuing obligation to pay to the Trustee for deposit in the Bond Fund an
amount equal to interest on the overdue principal, but the payments required
under this section shall not otherwise bear interest. The Company may make
payments to the Bond Fund earlier than required by this section, but such
payments shall not affect the accrual of interest. If any moneys are invested in
accordance with this Agreement and a loss results therefrom so that there are
insufficient funds to pay principal of, premium, if any, and interest on the
Bonds when due, the Company shall supply the deficiency.
(b) Additional Payments.
(i) The Company shall pay when due the Authority's Service
Charge and other expenses as provided in Section 1003.
(ii) Within thirty (30) days after notice from the Trustee,
the Company shall pay to the Trustee the reasonable fees and
expenses of the Trustee as set forth in Section 903 and other
indemnified or reimbursable amounts.
(c) Unclaimed Moneys. Except as may otherwise be required by applicable
law, in case any moneys deposited with the Trustee for the payment of the
principal of, premium, if any, or interest on any Bond remain unclaimed for
three years after such principal, premium, if any, or interest has become due
and payable, the Trustee may, and upon receipt of a written request of the
Company Representative shall, pay over to the Company the amount so deposited
and thereupon the Trustee and the Authority shall be released from any further
liability with respect to the payment of such principal, premium or interest,
and the owner of such Bond shall be entitled (subject to any applicable statute
of limitations) to look only to the Company as an unsecured creditor for the
payment thereof.
(d) Rebate. The Company shall pay to the United States of America when due
any rebate with respect to the Bonds pursuant to IRC ss.148(f).
(e) Purchase Price. If the amount available from a Liquidity Facility,
together with all other amounts received by the Paying Agent for the purchase of
Bonds tendered pursuant to Sections 414, 513 or 514, is not sufficient to pay
the Purchase Price of such Bonds on the Purchase Date, the Paying Agent shall
before 12:00 P.M., New York City time, on such Purchase Date, notify the Company
and the Trustee of such deficiency by telephone or telegraph promptly confirmed
in writing. The Company shall pay to the Paying Agent in immediately available
funds by 12:30 P.M. New York City time, on the Purchase Date for Bonds tendered
pursuant to
25
Sections 414, 513 or 514, an amount equal to the Purchase Price of such Bonds
less the amount, if any, available to pay the Purchase Price in accordance with
Sections 414, 513 or 514 as the case may be, from the proceeds of the
remarketing of such Bonds or from drawings on the Liquidity Facility, as
reported by the Paying Agent. Bonds so purchased with moneys furnished by the
Company ("Company Bonds") shall be registered to the Company, but shall be
delivered to and held by the Paying Agent for the account of the Company until
transferred pursuant to the following sentence or cancelled. Company Bonds held
by the Paying Agent shall, upon written instructions of the Company, be
cancelled or transferred to the Remarketing Agent for delivery to or at the
direction of any purchaser of such Bonds from the Company which the Company
certifies is a person other than the Company or a "related person" as such term
is used in Section 144(a)(3) of the IRC, whereupon such Bonds shall no longer be
Company Bonds. Any Company Bond shall not be subject to purchase under Sections
513 and 514 and, if so registered for a period of ninety (90) days without being
resold, shall be canceled, and the Company shall deliver the Bonds to the Paying
Agent.
Section 306. Unconditional Obligation. The obligation of the Company to
make payments under this Agreement shall be absolute and unconditional, shall be
binding and enforceable in all circumstances whatsoever as provided in the Act
and shall not be subject to set-off, recoupment or counterclaim, and shall be a
general obligation of the Company to which the full faith and credit of the
Company are pledged. The Company shall be obligated to make such payments
whether or not the Project Facilities have ceased to exist or be functional to
any extent from any cause whatsoever. The Company shall be obligated to make
such payments regardless of whether it is in possession or entitled to be in
possession of the Project Facilities.
Section 307. Redemption of the Bonds. The Bonds shall be subject to
redemption prior to maturity under the circumstances, in the manner and subject
to the conditions provided in this section, in Article IV and V and in the form
of Bonds. Whenever Bonds are called for redemption, the accrued interest thereon
shall become due on the redemption date. Transfers and payments for the purpose
of redeeming Bonds under this Agreement shall be made on behalf of the
Authority, and the Authority hereby consents to any redemption of Bonds in
accordance herewith. Except as otherwise provided in Subsection 301(d), if less
than all of the Bonds are to be redeemed, the Bonds to be redeemed shall be
selected by the Trustee by lot or in any customary manner as determined by the
Trustee provided that the Trustee shall redeem prior to any other Bonds (i)
Bonds that are Liquidity Provider Bonds at the time of selection for redemption
and (ii) after the redemption of such Liquidity Provider Bonds, Bonds that are
Company Bonds at the time of selection for redemption.
(a) Optional Redemption. The Bonds may be redeemed at the times and prices
as provided in the form of Bonds and in Article V at the option of the Company
upon written notice given by the Company to the Authority, the Remarketing
Agent, if any, the Trustee and the Paying Agent at the time specified in the
form of Bonds or Article V, as applicable, or, after the Fixed Rate Conversion
Date or change to the Fixed Rate, at least sixty (60) days, before the
redemption date.
26
(b) Reserved.
(c) Mandatory Taxability Redemption. The Outstanding Bonds are subject to
mandatory redemption at any time at a redemption price of 100% of the principal
amount of the Bonds so redeemed plus accrued interest to the redemption date in
the event (i) the Company delivers to the Trustee and the Bond Insurer an
opinion of Bond Counsel stating that interest on the Bonds is or will become
includable in gross income of the owners thereof for federal income tax
purposes, or (ii) it is finally determined by the Internal Revenue Service or a
court of competent jurisdiction, as a result of (A) a proceeding in which the
Company has participated or been given notice and an opportunity to participate,
and (B) either a failure by the Company or the Seabrook Transferee to observe
any covenant or agreement undertaken in or pursuant to this Agreement or a
Seabrook Transfer, or the inaccuracy of any representation made by the Company
or the Seabrook Transferee in or pursuant to this Agreement or a Seabrook
Transfer, that interest payable on the Bonds is includable for federal income
tax purposes in the gross income of any owner thereof (other than an owner which
is a "substantial user" or a "related person" within the meaning of IRC Section
147(a)). Any determination under clause (ii) above will not be considered final
for this purpose until the earliest of the conclusion of any appellate review,
the denial of appellate review or the expiration of the period for seeking
appellate review. Redemption under this Subsection 307(c) shall be in whole
unless, not later than forty-five (45) days prior to the redemption date, the
Company delivers to the Trustee an opinion of Bond Counsel to the effect that a
redemption of less than all of the Bonds will preserve the tax-exempt status of
interest on the remaining Bonds outstanding subsequent to such redemption. Any
redemption under this Subsection 307(c) shall be made on the 60th day after the
date on which the opinion described in clause (i) is delivered or the
determination described in clause (ii) becomes final or on such earlier date as
the Company may designate by notice given to the Trustee at least forty-five
(45) days prior to such designated date. If such redemption shall occur in
accordance with the terms of this Agreement, then such failure by the Company or
the Seabrook Transferee to observe such covenant or agreement, or the inaccuracy
of any such representations will not, in and of itself, constitute a Default
hereunder.
If the Trustee receives written notice from any Bondowner stating that (I)
such Bondowner has been notified in writing by the Internal Revenue Service that
it proposes to include the interest on the Bonds in the gross income of such
owner for federal income tax purposes, or any other proceeding has been
instituted against such owner which may lead to a like determination, and (II)
such owner will afford the Company the opportunity to participate at its own
expense in the proceeding, either directly or in the name of such owner, until
the conclusion of any appellate review, and the Trustee has examined such
written notice and it appears to be accurate on its face, then the Trustee shall
promptly give notice thereof to the Company, the Authority, and each Bondowner
whose Bonds may be affected. The Trustee shall thereafter keep itself reasonably
informed of the progress of any administrative proceedings or litigation
relating to such notice.
(d) Notice to the Trustee. The Company shall exercise its option to have
Bonds redeemed under Subsection 307(a) by giving written notice to the Trustee
at least forty-five (45) days before the redemption date. The Company shall keep
the Trustee informed of the progress
27
of any proceeding referred to in Subclause 307(c)(ii)(A) and shall give written
notice to the Trustee within forty-five (45) days after it has actual knowledge
of a final determination as described in Clause 307(c)(ii).
(e) Payment of Redemption Price and Accrued Interest. Whenever Bonds are
called for redemption, the accrued interest thereon shall become due on the
redemption date and shall be paid from the Bond Fund to the extent available
therein. To the extent not otherwise provided, the Company shall deposit with
the Trustee prior to the redemption date a sufficient sum to pay the redemption
price and accrued interest.
(f) Notice of Redemption. When Bonds are to be redeemed, the Trustee shall
give notice to Bondowners in the name of the Authority as provided in the form
of Bond and this Subsection 307(f), which notice shall identify the Bonds or
portions thereof to be redeemed and state the date fixed for redemption and the
place or places of payment of the redemption price. The notice shall further
state that on such date there shall become due and payable upon each Bond or
portion thereof to be redeemed the redemption price thereof, together with
interest accrued to the redemption date, that money available therefor having
been deposited with the Trustee, from and after such date, interest thereon
shall cease to accrue and that the Bonds or portions thereof called for
redemption shall cease to be entitled to any benefit under this Agreement except
the right to receive payment of the redemption price. Failure to mail notice to
a particular Bondowner, or any defect in the notice to such Bondowner, shall not
affect the redemption of any other Bond.
Section 308. Investments.
(a) Pending their use under this Agreement, moneys in the Bond Fund may be
invested or reinvested by the Trustee at the written direction of the Company
Representative (upon which the Trustee may conclusively rely) in Permitted
Investments, as defined below, with maturities at or before the time when such
moneys are required to be available and shall be so invested upon and pursuant
to written direction of the Company if no Default known to the Trustee then
exists under this Agreement; provided that the Company shall not request,
authorize or permit any investment which would cause any of the Bonds to be
classified as "arbitrage bonds" as defined in IRC ss.148(a). Any investments
and proceeds thereof shall be held by the Trustee as part of the Bond Fund and
shall be sold or redeemed at the direction of the Company to the extent
necessary to make payments or transfers or anticipated payments or transfers
from such Fund.
(b) Any interest or dividends realized from an investment and any profit
realized upon the sale or disposition thereof shall be credited to the Bond Fund
and any loss shall be charged thereto.
(c) (1) The term "Permitted Investments" means (A) Direct obligations of
the United States of America (including obligations issued or held in book-entry
form on the books of the Department of the Treasury, and CATS and TIGRS) or
obligations the principal of and interest on which are unconditionally
guaranteed by the United States of America; (B) Bonds,
28
debentures, notes or other evidence of indebtedness issued or guaranteed by any
of the following federal agencies and provided such obligations are backed by
the full faith and credit of the United States of America (stripped securities
are only permitted if they have been stripped by the agency itself):
(i) U.S. Export-Import Bank (Eximbank) - Direct obligations or
fully guaranteed certificates of beneficial ownership;
(ii) Farmers Home Administration (FmHA) - Certificates of
beneficial ownership;
(iii) Federal Financing Bank
(iv) Federal Housing Administration Debentures (FHA)
(v) General Services Administration - Participation
certificates
(vi) Government National Mortgage Association (GNMA or "Ginnie
Mae") - GNMA - guaranteed mortgage-backed bonds and GNMA -
guaranteed pass-through obligations
(vii) U.S. Maritime Administration - Guaranteed Title XI
financing
(viii) U.S. Department of Housing and Urban Development (HUD)
- Project Notes, Local Authority Bonds, New Communities Debentures -
U.S. government guaranteed debentures, U.S. Public Housing Notes and
Bonds - U.S. government guaranteed public housing notes and bonds;
(C) Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following non-full faith and credit U.S. government
agencies (stripped securities are only permitted if they have been stripped by
the agency itself):
(i) Federal Home Loan Bank System - Senior debt obligations
(ix) Federal Home Loan Mortgage Corporation (FHLMC or "Freddie
Mac") - Participation Certificates and Senior debt obligations
(x) Federal National Mortgage Association (FNMA or "Fannie
Mae") - Mortgage-backed securities and senior debt obligations
(xi) Student Loan Marketing Association (SLMA or "Sallie Mae")
- Senior debt obligations
(xii) Resolution Funding Corp. (REFCORP) obligations, and
29
(xiii) Farm Credit System - Consolidated systemwide bonds and
notes;
(D) Money market funds registered under the Federal Investment Company Act
of 1940, whose shares are registered under the Federal Securities Act of 1933,
and having a rating by S&P of AAAm-G; AAAm; or Aam; (E) Certificates of deposit
secured at all times by collateral described in (A) and/or (B) above. Such
certificates must be issued by commercial banks, savings and loan associations
or mutual savings banks. The collateral must be held by a third party and the
bondholders must have a perfected first security interest in the collateral; (F)
Certificates of deposit, savings accounts, deposit accounts or money market
deposits which are fully insured by FDIC, including BIF and SAIF; (G) Investment
Agreements, including GIC's, acceptable to the Bond Insurer; (H) Commercial
paper rated, at the time of purchase, "Prime - 1" by Moody's and "A-1" or better
by S&P; (I) Bonds or notes issued by any state or municipality which are rated
by Moody's and S&P in one of the two highest rating categories assigned by such
agencies; (J) Federal funds or bankers acceptances with a maximum term of one
year of any bank which has an unsecured, uninsured and unguaranteed obligation
rating of "Prime - 1" or "A3" or better by Moody's and "A-1" or "A" or better by
S&P; and (K) Repurchase agreements acceptable to the Bond Insurer.
(2) Notwithstanding the immediately preceding paragraph Permitted
Investments shall not include the following:
(i) obligations the principal of and interest on which are
unconditionally guaranteed by the United States of America,
certificates of deposit and bankers' acceptances, in each case with
yields lower than the yield available on comparable obligations of
the United States Treasury; or
(xiv) any demand deposit or similar account with a bank, trust
company or broker, unless the account is used for holding funds for
a short period of time until such funds are reinvested or spent.
Any of the requirements of this paragraph (2) shall not apply to moneys as
to which the Trustee and the Authority shall have received an opinion of
nationally recognized bond counsel to the effect that such requirements are not
necessary to preserve the exclusion of interest on Bonds from the gross income
of the owner thereof for federal income tax purposes. Any such Permitted
Investments obtained from or through, or issued by, the Trustee in its
commercial banking or other capacity, or any of its affiliates, shall be
permitted (provided that such investment otherwise qualifies in accordance with
the definition of "Permitted Investments").
Section 309. Tax Status of Bonds. The Company will perform its obligations
and agreements contained in the Federal Tax Statement as if they were set forth
herein. All representations of the Company in the Federal Tax Statement shall be
treated as if they were set forth herein. Any covenants, agreements or
representations made by the Company or any transferee of the Project Facilities
(or any successor to such a transferee) in connection with such a transfer shall
be performed and treated as if set forth herein. The Authority will cooperate
with the Bondowners and the Company to the extent deemed necessary or permitted
by law in the
30
opinion of bond counsel to the Authority in order to preserve the exclusion of
interest on the Bonds from the gross income of the owners thereof for federal
income tax purposes.
Section 310. Paying Agent. The Paying Agent shall act as such and as Bond
registrar and transfer agent. The Paying Agent, which may act by means of
agents, shall signify its acceptance of the duties and obligations imposed upon
it hereunder by its written instrument of acceptance addressed and delivered to
the parties hereto under which the Paying Agent will agree to:
(i) hold all sums delivered to it by the Trustee for the payment of
principal (including sinking fund installments) of, premium, if any, and
interest on the Bonds or paid to it by the Company or under a Liquidity
Facility in trust for the benefit of the Bondowners until such sums shall
be paid to the Bondowners or otherwise disposed of as herein provided;
(ii) hold all Bonds tendered to it hereunder in trust for the
benefit of the respective Bondowners until moneys representing the
Purchase Price of such Bonds shall have been delivered to or for the
account of or to the order of such Bondowners;
(iii) hold all Liquidity Provider Bonds for the benefit of the
Liquidity Provider until such Liquidity Provider Bonds shall have been
remarketed by the Remarketing Agent or redeemed in the manner set forth in
Section 307 and Article V and in the form of Bonds and any Liquidity
Facility;
(iv) hold all moneys delivered to it hereunder for the purchase of
Bonds in trust for the benefit of the person or entity which shall have so
delivered such moneys until the Bonds purchased with such moneys shall
have been delivered to or for the account of such person or entity;
(v) keep such books and records as shall be consistent with prudent
industry practice and make such books and records, including the books of
registration for the Bonds, available for inspection by the parties
hereto, the Liquidity Provider, if any, and the Remarketing Agent, if any,
at all reasonable times;
(vi) promptly report to the Trustee all authentications of Bonds
transferred, exchanged or remarketed and any information received by it
concerning the names and addresses of Bondowners; and
(vii) give all notices of the Paying Agent at the times and in the
manner required by this Agreement and send to the Remarketing Agent, if
any, copies of all such notices.
The Paying Agent shall be entitled to the advice of counsel (who may be
counsel for any party) and shall not be liable for any action taken in good
faith in reliance on such advice. The Paying Agent may rely conclusively on any
telephone or written notice, certificate or other
31
document furnished to it under this Agreement and reasonably believed by it to
be genuine. The Paying Agent shall not be liable for any action taken or omitted
to be taken by it in good faith and reasonably believed by it to be within the
discretion or power conferred upon it, or taken by it pursuant to any direction
or instruction by which it is governed under this Agreement or omitted to be
taken by it by reason of the lack of direction or instruction required for such
action, or be responsible for the consequences of any error of judgment
reasonably made by it. When any payment or other action by the Paying Agent is
called for by this Agreement, it may defer such action pending receipt of such
evidence, if any, as it may reasonably require in support thereof. A permissive
right or power to act shall not be construed as a requirement to act. The Paying
Agent shall not in any event be liable for the application or misapplication of
funds, or for other acts or defaults, by any person, firm or Company except by
their respective directors, officers, agents and employees. No recourse shall be
had by the Company, the Authority, the Trustee, the Liquidity Provider, if any,
or any Bondowner for any claim based on this Agreement or the Bonds against any
director, officer, agent or employee of the Paying Agent unless such claim is
based upon the bad faith, fraud or deceit of such person. For the purposes of
this Agreement matters shall not be considered to be known to the Paying Agent
unless they are known to an officer in its corporate trust division.
The Company shall pay to the Paying Agent reasonable compensation for its
services and pay or reimburse the Paying Agent for its reasonable expenses and
disbursements, including reasonable attorney's fees, hereunder. The Company
shall indemnify and save the Paying Agent harmless against any liabilities and
reasonable expenses which it may incur in the exercise of its duties hereunder
and which are not due to its negligence or bad faith. Any fees, expenses,
reimbursements or other charges which the Paying Agent may be entitled to
receive from the Company hereunder, if not paid when due, shall bear interest at
the "base rate" of the Paying Agent (or, if none, the nearest equivalent).
The Company may discharge the Paying Agent from time to time (upon not
less than thirty days advance written notice, unless such discharge is for
cause) and appoint a successor, but such removal shall not take effect until a
successor approved in writing by the Bond Insurer has been appointed and has
accepted the appointment. The Company shall also designate a successor if the
Paying Agent resigns or becomes ineligible. The Paying Agent may resign by
giving at least sixty (60) days' written notice to the parties hereto, but such
resignation shall not take effect until a successor approved in writing by the
Bond Insurer has been appointed and has accepted the appointment. Each successor
Paying Agent shall be a commercial bank or trust company having a capital and
surplus of not less than $50,000,000, shall be registered as a transfer agent
with the Securities and Exchange Commission, and shall be capable of performing
the duties prescribed for it herein in Boston, Massachusetts or New York, New
York. The Paying Agent may but need not be the same person as the Trustee. The
Company shall give notice of the appointment of a successor Paying Agent in
writing to each Bondowner and the Bond Insurer. The Company will promptly
certify to the Trustee that it has mailed such notice to all Bondowners, and
such certificate will be conclusive evidence that such notice was given in the
manner required hereby.
In the event of the resignation or removal of the Paying Agent, the Paying
Agent shall pay
32
over, transfer, assign and deliver any moneys and Bonds, including Liquidity
Provider Bonds and unauthenticated Bonds, held by it, any Liquidity Facility
(which transfer shall be made in accordance with the terms thereof), and the
books of registry maintained by it in such capacity to its successor or, if
there be no successor, to the Trustee, who shall act in the capacity of Paying
Agent until a successor is appointed.
Any Company, association, partnership or firm which succeeds to the
business of the Paying Agent as a whole or substantially as a whole, whether by
sale, merger, consolidation or otherwise, shall thereby become vested with all
the property, rights and powers of the Paying Agent under this Agreement and
shall be subject to all the duties and obligations of the Paying Agent under
this Agreement.
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 Authority or the
Company, as the case may be, shall not have appointed its successor, the Trustee
shall appoint a successor and, if no appointment is made within thirty (30)
days, shall apply to a court of competent jurisdiction for such appointment.
The Paying Agent shall send or cause to be sent notice to Bondowners of a
change of address for the delivery of Bonds or notices or the payment of
principal or purchase price of Bonds.
Section 311. Payment Procedure Pursuant to Bond Insurance Policy. In the
event that, on the second Business Day, and again on the Business Day, prior to
the payment date on the Bonds, the Trustee has not received sufficient moneys to
pay all principal of and interest on the Bonds due on the second following or
following, as the case may be, Business Day, the Trustee shall immediately
notify the Bond Insurer or its designee on the same Business Day by telephone,
facsimile or telegraph, confirmed in writing by registered or certified mail, of
the amount of the deficiency.
(a) If the deficiency is made up in whole or in part prior to or on the
payment date, the Trustee shall so notify the Bond Insurer or its designee.
(b) In addition, if the Trustee has actual notice that any Bondowner has
been required to disgorge payments of principal or interest on the Bond to a
trustee in bankruptcy or creditors or others pursuant to a final judgment by a
court of competent jurisdiction that such payment constitutes an avoidable
preference to such Bondowner within the meaning of any applicable bankruptcy
laws, then the Trustee shall notify the Bond Insurer or its designee of such
fact by telephone, facsimile or telegraphic notice, confirmed in writing by
registered or certified mail.
(c) The Trustee is hereby irrevocably designated, appointed, directed and
authorized to act as attorney-in-fact for Bondowners as follows:
33
(i) If and to the extent there is a deficiency in amounts required
to pay interest on the Bonds, the Trustee shall (a) execute and deliver to
State Street Bank and Trust Company, N.A., or its successors under the
Bond Insurance Policy (the "Insurance Paying Agent"), in form reasonably
satisfactory to the Insurance Paying Agent, an instrument appointing the
Bond Insurer as agent for such Bondowners in any legal proceeding related
to the payment of such interest and an assignment to the Bond Insurer of
the claims for interest to which such deficiency relates and which are
paid by the Bond Insurer, (b) receive as designee of the respective
Bondowners (and not as Trustee) in accordance with the tenor of the Bond
Insurance Policy payment from the Insurance Paying Agent with respect to
the claims for interest so assigned, and (c) disburse the same to such
respective Bondowners; and
(ii) If and to the extent of a deficiency in amounts required to pay
principal of the Bonds, the Trustee shall (a) execute and deliver to the
Insurance Paying Agent in form reasonably satisfactory to the Insurance
Paying Agent an instrument appointing the Bond Insurer as agent for such
Bondowners in any legal proceeding relating to the payment of such
principal and an assignment to the Bond Insurer of any of the Bonds
surrendered to the Insurance Paying Agent of so much of the principal
amount thereof as has not previously been paid or for which moneys are not
held by the Trustee and available for such payment (but such assignment
shall be delivered only if payment from the Insurance Paying Agent is
received), (b) receive as designee of the respective Bondowners (and not
as Trustee) in accordance with the tenor of the Bond Insurance Policy
payment therefor from the Insurance Paying Agent, and (c) disburse the
same to such Bondowners.
(d) Payments with respect to claims for interest on and principal of Bonds
disbursed by the Trustee from proceeds of the Bond Insurance Policy shall not be
considered to discharge the obligation of the Authority with respect to such
Bonds, and the Bond Insurer shall become the owner of such unpaid Bonds and
claims for the interest in accordance with the tenor of the assignment made to
it under the provisions of this section or otherwise.
(e) Irrespective of whether any such assignment is executed and delivered,
the Authority and the Trustee hereby agree for the benefit of the Bond Insurer
that:
(i) They recognize that to the extent the Bond Insurer makes
payments, directly or indirectly (as by paying through the Trustee), on
account of principal of or interest on the Bonds, the Bond Insurer will be
subrogated to the rights of such Owners to receive the amount of such
principal and interest from the Authority, with interest thereon as
provided and solely from the sources stated in this Agreement and the
Bonds; and
(ii) They will accordingly pay to the Bond Insurer the amount of
such principal and interest (including principal and interest recovered
under subparagraph (ii) of the first paragraph of the Bond Insurance
Policy, which principal and interest shall be deemed past due and not to
have been paid), with interest thereon as provided in this Agreement and
34
the Bonds, but only from the sources and in the manner provided herein for
the payment of principal of and interest on the Bonds to Bondowners, and
will otherwise treat the Bond Insurer as the owner of such rights to the
amount of such principal and interest.
(f) Copies of any amendments made to the documents executed in connection
with the issuance of the Bonds which are consented to by the Bond Insurer shall
be sent to S&P.
(g) The Bond Insurer shall receive notice of the resignation or removal of
the Trustee and the appointment of a successor thereto.
(h) The Bond Insurer shall receive copies of all notices required to be
delivered to Bondowners and, on an annual basis, the Company shall provide to
the Bond Insurer copies of the Company's audited financial statements and annual
budget.
(i) Any notice that is required to be given to an owner of the Bonds or to
the Trustee or by any party pursuant to this Agreement shall also be provided to
the Bond Insurer. All notices required to be given to the Bond Insurer under
this Agreement shall be in writing and shall be sent by registered or certified
mail addressed to MBIA Insurance Corporation, 113 King Street, Armonk, NY 10504,
Attention: Surveillance.
Section 312. The Bond Insurer. Except as provided in Subsection 808(b),
anything in this Agreement to the contrary notwithstanding, the Bond Insurer
shall be deemed to be the owner of the Bonds for purposes of giving consents
(including consent to amendments to this Agreement other than those requiring
unanimous consent of the affected Bondowners), notices, directions and waivers
to the Company, the Authority and the Trustee under this Agreement.
(j) Except as provided in Subsection 808(b), the Bond Insurer, acting
alone, shall have the right to direct all remedies pursuant to Section 802(b) in
an Event of Default, subject to the terms of this Agreement.
ARTICLE IV.
SPECIAL PROVISIONS RELATING TO AUCTION RATE SECURITIES
Section 401. Definitions. In addition to the words and terms elsewhere
defined in this Agreement, the following words and terms as used in this Article
IV and elsewhere in this Agreement have the following meanings with respect to
Bonds in an Auction Rate Period unless the context or use indicates another or
different meaning or intent:
"Agent Member" means a member of, or participant in, the Securities
Depository who
35
shall act on behalf of a Bidder.
"Auction" means each periodic implementation of the Auction Procedures.
"Auction Agent" means the auctioneer appointed in accordance with Section
410 or 411 of this Agreement and shall initially be The Bank of New York.
"Auction Agreement" means the Series B Auction Agreement dated as of
October 1, 2001 between the Auction Agent and the Trustee pursuant to which the
Auction Agent agrees to follow the procedures specified in this Article IV, with
respect to the Bonds while bearing interest at an Auction Rate, as such
agreement may from time to time be amended or supplemented.
"Auction Date" means during any period in which the Auction Procedures are
not suspended in accordance with the provisions hereof, (i) if the Bonds are in
a daily Auction Period, each Business Day, (ii) if the Bonds are in a Special
Auction Period, the last Business Day of the Special Auction Period, and (iii)
if the Bonds are in any other Auction Period, the Business Day next preceding
each Interest Payment Date for such Bonds (whether or not an Auction shall be
conducted on such date); provided, however, that the last Auction Date with
respect to Bonds in an Auction Period other than a daily Auction Period or
Special Auction Period shall be the earlier of (a) the Business Day next
preceding the Interest Payment Date next preceding the Conversion Date for such
Bonds and (b) the Business Day next preceding the Interest Payment Date next
preceding the final maturity date for such Bonds; and provided, further, that if
the Bonds are in a daily Auction Period, the last Auction Date shall be the
earlier of (x) the Business Day next preceding the Conversion Date for such
Bonds and (y) the Business Day next preceding the final maturity date for such
Bonds. The last Business Day of a Special Auction Period shall be the Auction
Date for the Auction Period which begins on the next succeeding Business Day, if
any. On the Business Day preceding the conversion from a daily Auction Period to
another Auction Period, there shall be two Auctions, one for the last daily
Auction Period and one for the first Auction Period following the conversion.
The first Auction Date for the Bonds is January 22, 2002.
"Auction Index" shall have the meaning specified in Section 407 of this
Agreement.
"Auction Multiple" means, as of any Auction Date, the Percentage of
Auction Index (in effect on such Auction Date) determined as set forth below,
based on the Prevailing Rating of the Bonds in effect at the close of business
on the Business Day immediately preceding such Auction Date:
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Percentage
Prevailing Rating of Auction Index
----------------- ----------------
AAA/Aaa 125%
AA/Aa 150
A/A 175
BBB/Baa 200
Below BBB/Baa 225
"Auction Period" means (i) a Special Auction Period,
(ii) with respect to Bonds in a daily mode, a period beginning on
each Business Day and extending to but not including the next succeeding
Business Day,
(iii) with respect to Bonds in a seven-day mode, a period of
generally seven days beginning on the day of the week designated by the
Broker-Dealer (or the day following the last day of the prior Auction
Period if the prior Auction Period does not end on the day prior to such
designated day of the week) and ending on such day of the week thereafter
designated by the Broker-Dealer (unless such day of the week is not
followed by a Business Day, in which case on the next succeeding day which
is followed by a Business Day),
(iv) with respect to Bonds in a 28-day mode, a period of generally
28 days beginning on the day of the week designated by the Broker-Dealer
(or the day following the last day of the prior Auction Period if the
prior Auction Period does not end on the day prior to such designated day
of the week) and ending on such day of the fourth week thereafter
designated by the Broker-Dealer (unless such day of the week is not
followed by a Business Day, in which case on the next succeeding day which
is followed by a Business Day),
(v) with respect to Bonds in a 35-day mode, a period of generally 35
days beginning on the day of the week designated by the Broker-Dealer (or
the day following the last day of the prior Auction Period if the prior
Auction Period does not end on the day prior to such designated day of the
week) and ending on such day of the fifth week thereafter designated by
the Broker-Dealer (unless such day of the week is not followed by a
Business Day, in which case on the next succeeding day followed by a
Business Day),
(vi) with respect to Bonds in a three-month mode, a period of
generally three months (or shorter period upon a conversion from another
Auction Period) beginning on the day following the last day of the prior
Auction Period and ending on the first day of the month that is the third
calendar month following the beginning date of such Auction Period, and
(vii) with respect to Bonds in a semiannual mode, a period of
generally six months (or shorter period upon a conversion from another
Auction Period) beginning on
37
the day following the last day of the prior Auction Period and ending on
the next succeeding May 1 or November 1;
provided, however, that if there is a conversion of Bonds (i) from a
daily Auction Period to a seven-day Auction Period, the next Auction
Period shall begin on the date of the conversion (i.e. the Interest
Payment Date for the prior Auction Period) and shall end on such day of
the week of the next succeeding week designated by the Broker-Dealer
(unless such day of the week is not followed by a Business Day, in which
case on the next succeeding day which is followed by a Business Day), (ii)
from a daily Auction Period to a 28-day Auction Period, the next Auction
Period shall begin on the date of the conversion (i.e. the Interest
Payment Date for the prior Auction Period) and shall end on such day of
the week designated by the Broker-Dealer (unless such day of the week is
not followed by a Business Day, in which case on the next succeeding day
which is followed by a Business Day) which is more than 21 days but not
more than 28 days from such date of conversion, and (iii) from a daily
Auction Period to a 35-day Auction Period, the next Auction Period shall
begin on the date of the conversion (i.e. the Interest Payment Date for
the prior Auction Period) and shall end on such day of the week designated
by the Broker-Dealer (unless such day of the week is not followed by a
Business Day, in which case on the next succeeding day which is followed
by a Business Day) which is more than 28 days but no more than 35 days
from such date of conversion.
"Auction Procedures" means the procedures for conducting Auctions for
Bonds during an Auction Rate Period set forth in this Article IV.
"Auction Rate" means for each Auction Period, (i) if Sufficient Clearing
Bids exist, the Winning Bid Rate, provided, however, if all of such Bonds are
the subject of Submitted Hold Orders, the Minimum Auction Rate with respect to
the Bonds and (ii) if Sufficient Clearing Bids do not exist, the Maximum Auction
Rate with respect to the Bonds.
"Auction Rate Conversion Date" means the date on which the Bonds convert
from an interest rate period other than an Auction Rate Period and begin to bear
interest at an Auction Rate.
"Auction Rate Period" means after the Initial Period any period of time
commencing on the day following the Initial Period and ending on a Conversion
Date to a Variable Rate or the Fixed Rate Conversion Date.
"Auction Rate Securities" means any Bonds while they bear interest at the
Auction Rate.
"Available Bonds" means for Bonds on each Auction Date, the aggregate
principal amount of such Bonds that are not the subject of Submitted Hold
Orders.
"Bid" has the meaning specified in subsection (a) of Section 402 of this
Agreement.
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"Bidder" means each Existing Owner and Potential Owner who places an
Order.
"Broker-Dealer" means any entity that is permitted by law to perform the
function required of a Broker-Dealer described in this Agreement that is a
member of, or a direct participant in, the Securities Depository, that has been
selected by the Company, with the consent of the Authority and Morgan Stanley &
Co. Incorporated, so long as Morgan Stanley & Co. Incorporated is a
Broker-Dealer, and that is a party to a Broker-Dealer Agreement with the Auction
Agent.
"Broker-Dealer Agreement" means an agreement among the Auction Agent, the
Company and one or more Broker-Dealers pursuant to which such Broker-Dealers
agree to follow the procedures described in this Article IV, as such agreement
may from to time be amended or supplemented.
"Conversion Date" means the respective date on which the Bonds begin to
bear interest at a Fixed Rate or in a Variable Rate Mode.
"Date of Original Delivery" means December 19, 2001, or such other date or
dates on which the respective Bonds are first issued and delivered.
"Default Rate" means, in respect of any Auction Period other than a daily
Auction Period, a per annum rate equal to two hundred fifty percent (250%) of
the Auction Index determined on the Auction Date next preceding the first day of
such Auction Period or in the case of Bonds in a daily Auction Period, two
hundred fifty percent (250%) of the Auction Index determined on the Auction Date
which was the first day of such Auction Period, provided, however, the Default
Rate shall not exceed the lesser of (x) 14% per annum or (y) the maximum rate
permitted by applicable law, anything herein to the contrary notwithstanding.
"Existing Owner" means a Person who is listed as the beneficial owner of
Bonds in the records of the Auction Agent.
"Fixed Rate" means the fixed rate or rates of interest to be borne by the
Bonds converted to Fixed Rate Indebtedness on or after a Fixed Rate Conversion
Date.
"Fixed Rate Conversion Date" means a date on which all of the Bonds are
converted to Fixed Rate Indebtedness as provided in Section 412 hereof. The
Fixed Rate Conversion Date shall be (i) the second regularly scheduled Interest
Payment Date following the final Auction Date with respect to Bonds bearing
interest at an Auction Rate in an Auction Rate Period other than a daily Auction
Period, provided that with respect to Bonds in a Special Auction Period, the
Fixed Rate Conversion Date shall be the Interest Payment Date immediately
following the last day of the final Auction Period, or (ii) the next regularly
scheduled Interest Payment Date with respect to Bonds bearing interest at an
Auction Rate in a daily Auction Period.
"Fixed Rate Indebtedness" means, as of any date of determination, any
Bonds bearing
39
interest at a fixed rate for the remainder of their term.
"Fixed Rate Mode" means the Mode in which the Bonds bear interest at a
Fixed Rate.
"Fixed Rate Period" means a period, commencing on a Fixed Rate Conversion
Date for the Bonds and ending on the final maturity date therefor, during which
such Bonds shall be Fixed Rate Indebtedness.
"Hold Order" has the meaning specified in subsection (a) of Section 402 of
this Agreement.
"Initial Period" means the period from the date of initial delivery of the
Bonds through and including January 22, 2002.
"Interest Payment Date" with respect to Bonds bearing interest at Auction
Rates, means January 23, 2002, and thereafter (a) when used with respect to any
Auction Period other than a daily Auction Period or a Special Auction Period,
the Business Day immediately following such Auction Period, (b) when used with
respect to a daily Auction Period, the first Business Day of the month
immediately succeeding such Auction Period, (c) when used with respect to a
Special Auction Period of (i) seven or more but fewer than 92 days, the Business
Day immediately following such Special Auction Period, or (ii) 92 or more days,
the day of the week of each thirteenth week designated by the Broker-Dealer,
after the first day of such Special Auction Period, or the next Business Day if
such day of the week designated by the Broker-Dealer is not a Business Day and
on the Business Day immediately following such Special Auction Period, (d) after
the Fixed Rate Conversion Date, each May 1 and November 1, (e) each mandatory
tender date, and (f) the maturity date.
"Maximum Auction Rate" means as of any Auction Date, a per annum rate of
interest equal to the product of the Auction Index multiplied by the Auction
Multiple; provided, however, that in no event shall the Maximum Auction Rate
exceed the lesser of (x) 14% per annum or (y) the maximum rate permitted by
applicable law, anything herein to the contrary notwithstanding.
"Minimum Auction Rate" means, as of any Auction Date, a per annum rate of
interest equal to 45% of the Auction Index in effect on such Auction Date.
"Mode" means the Daily Mode, Weekly Mode, Flexible Mode, Term Rate Mode
(all as defined in Section 501), Fixed Rate Mode or Auction Rate Mode.
"Order" means a Hold Order, Bid or Sell Order.
"Potential Owner" means any Person, including any Existing Owner, who may
be interested in acquiring a beneficial interest in the Bonds in addition to the
Bonds currently owned by such Person, if any.
"Prevailing Rating" means (a) AAA/Aaa, if the Bonds shall have a rating of
AAA or
40
better by S&P and a rating of Aaa or better by Moody's, (b) if not AAA/Aaa,
AA/Aa if the Bonds shall have a rating of AA- or better by S&P and a rating of
Aa3 or better by Moody's, (c) if not AAA/Aaa or AA/Aa, A/A if the Bonds shall
have a rating of A- or better by S&P and a rating of A3 or better by Moody's,
(d) if not AAA/Aaa, AA/Aa or A/A, BBB/Baa if the Bonds shall have a rating of
BBB- or better by S&P and a rating of Baa3 or better by Moody's and (e) if not
AAA/Aaa, AA/Aa, A/A or BBB/Baa, then below BBB/Baa, whether or not the Bonds are
rated by any securities rating agency. For purposes of this definition, S&P's
rating categories of "AAA", "AA-", "A-" and "BBB-" and Moody's rating categories
of "Aaa", "Aa3", "A3" and "Baa3" shall be deemed to refer to and include the
respective rating categories correlative thereto in the event that any such
Rating Agencies shall have changed or modified their generic rating categories
or if any successor thereto appointed in accordance with the definitions thereof
shall use different rating categories. If the Bonds are not rated by a Rating
Agency, the requirement of a rating by such Rating Agency shall be disregarded.
If the ratings for the Bonds are split between two of the foregoing categories,
the lower rating shall determine the Prevailing Rating. If there is no rating,
then the Auction Rate shall be the Maximum Auction Rate.
"Principal Office" means, with respect to the Auction Agent, the office
thereof designated in writing to the Company, the Authority, the Trustee and the
Broker-Dealer.
"Purchase Date" means the Conversion Date.
"Record Date" means during an Auction Rate Period other than a daily
Auction Period, the second Business Day preceding an Interest Payment Date
therefor, and during a daily Auction Period, the last Business Day of the month
preceding an Interest Payment Date.
"Remarketing Agent" has the meaning specified in Section 501.
"Sell Order" has the meaning specified in subsection (a) of Section 402 of
this Agreement.
"Special Auction Period" means any period of not less than seven nor more
than 1,092 days which begins on an Interest Payment Date and ends on the day of
the week designated by the Broker-Dealer, unless such day of the week designated
by the Broker-Dealer is not followed by a Business Day, in which case on the
next succeeding day which is followed by a Business Day.
"Submission Deadline" means 1:00 p.m., New York City time, on each Auction
Date not in a daily Auction Period and 11:00 a.m., New York City time, on each
Auction Date for a series of Bonds in a daily Auction Period, or such other time
on such date as shall be specified from time to time by the Auction Agent
pursuant to the Auction Agreement as the time by which Broker-Dealers are
required to submit Orders to the Auction Agent.
"Submitted Bid" has the meaning specified in subsection (b) of Section 404
of this Agreement.
41
"Submitted Hold Order" has the meaning specified in subsection (b) of
Section 404 of this Agreement.
"Submitted Order" has the meaning specified in subsection (b) of Section
404 of this Agreement.
"Submitted Sell Order" has the meaning specified in subsection (b) of
Section 404 of this Agreement.
"Sufficient Clearing Bids" means an Auction for which the aggregate
principal amount of Bonds that are the subject of Submitted Bids by Potential
Owners specifying one or more rates not higher than the Maximum Auction Rate is
not less than the aggregate principal amount of Bonds that are the subject of
Submitted Sell Orders and of Submitted Bids by Existing Owners specifying rates
higher than the Maximum Auction Rate.
"Winning Bid Rate" means the lowest rate specified in any Submitted Bid
which if selected by the Auction Agent as the Auction Rate would cause the
aggregate principal amount of Bonds that are the subject of Submitted Bids
specifying a rate not greater than such rate to be not less than the aggregate
principal amount of Available Bonds.
Section 402. Orders by Existing Owners and Potential Owners.
(a) Prior to the Submission Deadline on each Auction Date:
(i) each Existing Owner may submit to a Broker-Dealer, in writing or
by such other method as shall be reasonably acceptable to such
Broker-Dealer, information as to:
(A) the principal amount of Bonds, if any, held by such Existing
Owner which such Existing Owner irrevocably commits to continue to hold
for the next succeeding Auction Period without regard to the rate
determined by the Auction Procedures for such Auction Period,
(B) the principal amount of Bonds, if any, held by such Existing
Owner which such Existing Owner irrevocably commits to continue to hold
for the next succeeding Auction Period if the rate determined by the
Auction Procedures for such Auction Period shall not be less than the rate
per annum then specified by such Existing Owner (and which such Existing
Owner irrevocably offers to sell on the next succeeding Interest Payment
Date (or the same day in the case of a daily Auction Period) if the rate
determined by the Auction Procedures for the next succeeding Auction
Period shall be less than the rate per annum then specified by such
Existing Owner), and/or
(C) the principal amount of Bonds, if any, held by such Existing
Owner which such Existing Owner irrevocably offers to sell on the next
succeeding Interest Payment
42
Date (or on the same day in the case of a daily Auction Period) without
regard to the rate determined by the Auction Procedures for the next
succeeding Auction Period; and
(ii) for the purpose of implementing the Auctions and thereby to
achieve the lowest possible interest rate on the Bonds, the Broker-Dealers
shall contact Potential Owners, including Persons that are Existing
Owners, to determine the principal amount of Bonds, if any, which each
such Potential Owner irrevocably offers to purchase if the rate determined
by the Auction Procedures for the next succeeding Auction Period is not
less than the rate per annum then specified by such Potential Owner.
For the purposes hereof, an Order containing the information referred to
in clause (i)(A) above is herein referred to as a "Hold Order", an Order
containing the information referred to in clause (i)(B) or (ii) above is herein
referred to as a "Bid", and an Order containing the information referred to in
clause (i)(C) above is herein referred to as a "Sell Order."
(b)(i) A Bid by an Existing Owner shall constitute an irrevocable offer to
sell:
(A) the principal amount of Bonds specified in such Bid if the rate
determined by the Auction Procedures on such Auction Date shall be less than the
rate specified therein; or
(B) such principal amount or a lesser principal amount of Bonds to be
determined as described in subsection (a)(v) of Section 405 hereof if the rate
determined by the Auction Procedures on such Auction Date shall be equal to such
specified rate; or
(C) a lesser principal amount of Bonds to be determined as described in
subsection (b)(iv) of Section 405 hereof if such specified rate shall be higher
than the Maximum Auction Rate and Sufficient Clearing Bids do not exist.
(ii) A Sell Order by an Existing Owner shall constitute an irrevocable
offer to sell:
(A) the principal amount of Bonds specified in such Sell Order; or
(B) such principal amount or a lesser principal amount of Bonds as
described in subsection (b)(iv) of Section 405 hereof if Sufficient Clearing
Bids do not exist.
(iii) A Bid by a Potential Owner shall constitute an irrevocable offer to
purchase:
(A) the principal amount of Bonds specified in such Bid if the rate
determined by the Auction Procedures on such Auction Date shall be higher than
the rate specified therein; or
(B) such principal amount or a lesser principal amount of Bonds as
described in subsection (a)(vi) of Section 405 hereof if the rate determined by
the Auction Procedures on such Auction Date shall be equal to such specified
rate.
43
(c) Anything herein to the contrary notwithstanding:
(i) for purposes of any Auction, any Order which specifies Bonds to be
held, purchased or sold in a principal amount which is not $25,000 or an
integral multiple thereof shall be rounded down to the nearest $25,000, and the
Auction Agent shall conduct the Auction Procedures as if such Order had been
submitted in such lower amount;
(ii) for purposes of any Auction other than during a daily Auction Period,
any portion of an Order of an Existing Owner which relates to a Bond which has
been called for redemption on or prior to the Interest Payment Date next
succeeding such Auction shall be invalid with respect to such portion and the
Auction Agent shall conduct the Auction Procedures as if such portion of such
Order had not been submitted;
(iii) for purposes of any Auction other than during a daily Auction
Period, no portion of a Bond which has been called for redemption on or prior to
the Interest Payment Date next succeeding such Auction shall be included in the
calculation of Available Bonds for such Auction; and
(iv) the Auction Procedures shall be suspended during the period
commencing on the date of the Auction Agent's receipt of notice from the Trustee
or the Authority of the occurrence of an Event of Default resulting from a
failure to pay principal, premium or interest on any Bond when due (provided
however that for purposes of this provision only payment by the Bond Insurer
shall be deemed to cure such Event of Default and no such suspension of the
Auction Procedures shall occur) but shall resume two Business Days after the
date on which the Auction Agent receives notice from the Trustee that such Event
of Default has been waived or cured, with the next Auction to occur on the next
regularly scheduled Auction Date occurring thereafter.
Section 403. Submission of Orders by Broker-Dealers to Auction Agent.
(a) The Broker-Dealer shall submit to the Auction Agent in writing or by
such other method as shall be reasonably acceptable to the Auction Agent,
including such electronic communication acceptable to the parties, prior to the
Submission Deadline on each Auction Date, all Orders obtained by such
Broker-Dealer and, if requested, specifying with respect to each Order:
(i) the name of the Bidder placing such Order;
(ii) the aggregate principal amount of Bonds, if any, that are the subject
of such Order;
(iii) to the extent that such Bidder is an Existing Owner:
(A) the principal amount of Bonds, if any, subject to any Hold Order
placed by such Existing Owner;
44
(B) the principal amount of Bonds, if any, subject to any Bid placed by
such Existing Owner and the rate specified in such Bid; and
(C) the principal amount of Bonds, if any, subject to any Sell Order
placed by such Existing Owner;
(iv) to the extent such Bidder is a Potential Owner, the rate specified in
such Bid.
(b) If any rate specified in any Bid contains more than three figures to
the right of the decimal point, the Auction Agent shall round such rate up to
the next highest one thousandth of one percent (0.001%).
(c) If an Order or Orders covering all of the Bonds held by an Existing
Owner is not submitted to the Auction Agent prior to the Submission Deadline,
the Auction Agent shall deem a Hold Order to have been submitted on behalf of
such Existing Owner covering the principal amount of Bonds of such series held
by such Existing Owner and not subject to Orders submitted to the Auction Agent;
provided, however, that if there is a conversion from one Auction Period to
another Auction Period and Orders have not been submitted to the Auction Agent
prior to the Submission Deadline covering the aggregate principal amount of
Bonds to be converted held by such Existing Owner, the Auction Agent shall deem
a Sell Order to have been submitted on behalf of such Existing Owner covering
the principal amount of Bonds to be converted held by such Existing Owner not
subject to Orders submitted to the Auction Agent.
(d) If one or more Orders covering in the aggregate more than the
principal amount of Outstanding Bonds held by any Existing Owner are submitted
to the Auction Agent, such Orders shall be considered valid as follows:
(i) all Hold Orders shall be considered Hold Orders, but only up to and
including in the aggregate the principal amount of Bonds held by such Existing
Owner;
(ii) (A) any Bid of an Existing Owner shall be considered valid as a Bid
of an Existing Owner up to and including the excess of the principal amount of
Bonds held by such Existing Owner over the principal amount of the Bonds subject
to Hold Orders referred to in paragraph (i) above;
(B) subject to clause (A) above, all Bids of an Existing Owner with the
same rate shall be aggregated and considered a single Bid of an Existing Owner
up to and including the excess of the principal amount of Bonds held by such
Existing Owner over the principal amount of Bonds held by such Existing Owner
subject to Hold Orders referred to in paragraph (i) above;
(C) subject to clause (A) above, if more than one Bid with different rates
is submitted on behalf of such Existing Owner, such Bids shall be considered
Bids of an Existing Owner in the ascending order of their respective rates up to
the amount of the excess of the principal amount of Bonds held by such Existing
Owner over the principal amount of Bonds held by such
45
Existing Owner subject to Hold Orders referred to in paragraph (i) above; and
(D) the principal amount, if any, of such Bonds subject to Bids not
considered to be Bids of an Existing Owner under this paragraph (ii) shall be
treated as the subject of a Bid by a Potential Owner;
(iii) all Sell Orders shall be considered Sell Orders, but only up to and
including a principal amount of Bonds equal to the excess of the principal
amount of Bonds held by such Existing Owner over the sum of the principal amount
of the Bonds considered to be subject to Hold Orders pursuant to paragraph (i)
above and the principal amount of Bonds considered to be subject to Bids of such
Existing Owner pursuant to paragraph (ii) above.
(e) If more than one Bid is submitted on behalf of any Potential Owner,
each Bid submitted with the same rate shall be aggregated and considered a
single Bid and each Bid submitted with a different rate shall be considered a
separate Bid with the rate and the principal amount of Bonds specified therein.
(f) Any Bid submitted for Bonds by an Existing Owner or a Potential Owner
specifying a rate lower than the Minimum Auction Rate shall be treated as a Bid
specifying the Minimum Auction Rate.
(g) Neither the Authority, the Company, the Trustee nor the Auction Agent
shall be responsible for the failure of any Broker-Dealer to submit an Order to
the Auction Agent on behalf of any Existing Owner or Potential Owner.
Section 404. Determination of Auction Rate
(a) Not later than 9:30 a.m., New York City time, on each Auction Date,
the Auction Agent shall advise the Broker-Dealers and the Trustee by telephone
or other electronic communication acceptable to the parties of the Minimum
Auction Rate, the Maximum Auction Rate and the Auction Index for such Bonds.
(b) Promptly after the Submission Deadline on each Auction Date, the
Auction Agent shall assemble all Orders submitted or deemed submitted to it by
the Broker-Dealers (each such Order as submitted or deemed submitted by a
Broker-Dealer being hereinafter referred to as a "Submitted Hold Order," a
"Submitted Bid" or a "Submitted Sell Order," as the case may be, and
collectively as a "Submitted Order") and shall determine (i) the Available
Bonds, (ii) whether there are Sufficient Clearing Bids, and (iii) the Auction
Rate.
(c) Promptly after the Auction Agent has made the determinations pursuant
to subsection (b) above, the Auction Agent shall advise the Trustee by telephone
(promptly confirmed in writing), telex or facsimile transmission or other
electronic communication acceptable to the parties of the Auction Rate for the
next succeeding Auction Period and the Trustee shall promptly notify DTC of such
Auction Rate.
46
(d) In the event the Auction Agent fails to calculate, or for any reason
fails to timely provide, the Auction Rate for any Auction Period, the Auction
Rate for such Auction Period, with respect to the applicable series of Bonds,
shall be the Maximum Auction Rate; provided, however, that if the Auction
Procedures are suspended due to the failure of principal of, premium or interest
on any Bond to be paid, the Auction Rate for the next succeeding Auction Period
shall be the Default Rate.
(e) In the event of a failed conversion of any series of Bonds to a
Variable Rate Period or a Fixed Rate Period or in the event of a failure to
change the length of the current Auction Period due to the lack of Sufficient
Clearing Bids at the Auction on the Auction Date for the first new Auction
Period, the Auction Rate for the next Auction Period shall be the Maximum
Auction Rate and the Auction Period shall be a seven-day Auction Period.
(f) If the Bonds are not rated by either Moodys or S&P, then the Auction
Rate shall be the Maximum Auction Rate.
Section 405. Allocation of Bonds.
(a) In the event of Sufficient Clearing Bids, subject to the further
provisions of subsections (c) and (d) below, Submitted Orders shall be accepted
or rejected as follows in the following order of priority:
(i) the Submitted Hold Order of each Existing Owner shall be accepted,
thus requiring each such Existing Owner to continue to hold the Bonds that are
the subject of such Submitted Hold Order;
(ii) the Submitted Sell Order of each Existing Owner shall be accepted and
the Submitted Bid of each Existing Owner specifying any rate that is higher than
the Winning Bid Rate shall be rejected, thus requiring each such Existing Owner
to sell the Bonds that are the subject of such Submitted Sell Order or Submitted
Bid;
(iii) the Submitted Bid of each Existing Owner specifying any rate that is
lower than the Winning Bid Rate shall be accepted, thus requiring each such
Existing Owner to continue to hold the Bonds that are the subject of such
Submitted Bid;
(iv) the Submitted Bid of each Potential Owner specifying any rate that is
lower than the Winning Bid Rate shall be accepted, thus requiring each such
Potential Owner to purchase the Bonds that are the subject of such Submitted
Bid;
(v) the Submitted Bid of each Existing Owner specifying a rate that is
equal to the Winning Bid Rate shall be accepted, thus requiring each such
Existing Owner to continue to hold the Bonds that are the subject of such
Submitted Bid, but only up to and including the principal amount of Bonds
obtained by multiplying (A) the aggregate principal amount of Outstanding Bonds
which are not the subject of Submitted Hold Orders described in paragraph (i)
above or of Submitted Bids described in paragraphs (iii) or (iv) above by (B) a
fraction the numerator of
47
which shall be the principal amount of Outstanding Bonds held by such Existing
Owner subject to such Submitted Bid and the denominator of which shall be the
aggregate principal amount of Outstanding Bonds subject to such Submitted Bids
made by all such Existing Owners that specified a rate equal to the Winning Bid
Rate, and the remainder, if any, of such Submitted Bid shall be rejected, thus
requiring each such Existing Owner to sell any excess amount of Bonds;
(vi) the Submitted Bid of each Potential Owner specifying a rate that is
equal to the Winning Bid Rate shall be accepted, thus requiring each such
Potential Owner to purchase the Bonds that are the subject of such Submitted
Bid, but only in an amount equal to the principal amount of Bonds obtained by
multiplying (A) the aggregate principal amount of Outstanding Bonds which are
not the subject of Submitted Hold Orders described in paragraph (i) above or of
Submitted Bids described in paragraphs (iii), (iv) or (v) above by (B) a
fraction the numerator of which shall be the principal amount of Outstanding
Bonds subject to such Submitted Bid and the denominator of which shall be the
sum of the aggregate principal amount of Outstanding Bonds subject to such
Submitted Bids made by all such Potential Owners that specified a rate equal to
the Winning Bid Rate, and the remainder of such Submitted Bid shall be rejected;
and
(vii) the Submitted Bid of each Potential Owner specifying any rate that
is higher than the Winning Bid Rate shall be rejected.
(b) In the event there are not Sufficient Clearing Bids, subject to the
further provisions of subsections (c) and (d) below, Submitted Orders shall be
accepted or rejected as follows in the following order of priority:
(i) the Submitted Hold Order of each Existing Owner shall be accepted,
thus requiring each such Existing Owner to continue to hold the Bonds that are
the subject of such Submitted Hold Order;
(ii) the Submitted Bid of each Existing Owner specifying any rate that is
not higher than the Maximum Auction Rate with respect to the Bonds, shall be
accepted, thus requiring each such Existing Owner to continue to hold the Bonds
that are the subject of such Submitted Bid;
(iii) the Submitted Bid of each Potential Owner specifying any rate that
is not higher than the Maximum Auction Rate with respect to the Bonds, shall be
accepted, thus requiring each such Potential Owner to purchase the Bonds that
are the subject of such Submitted Bid;
(iv) the Submitted Sell Orders of each Existing Owner shall be accepted as
Submitted Sell Orders and the Submitted Bids of each Existing Owner specifying
any rate that is higher than the Maximum Auction Rate with respect to the Bonds,
shall be deemed to be and shall be accepted as Submitted Sell Orders, in both
cases only up to and including the principal amount of Bonds obtained by
multiplying (A) the aggregate principal amount of Bonds subject to Submitted
Bids described in paragraph (iii) of this subsection (b) by (B) a fraction the
numerator of which shall be the principal amount of Outstanding Bonds held by
such Existing Owner subject to such Submitted Sell Order or such Submitted Bid
deemed to be a Submitted Sell Order and the
48
denominator of which shall be the principal amount of Outstanding Bonds subject
to all such Submitted Sell Orders and such Submitted Bids deemed to be Submitted
Sell Orders, and the remainder of each such Submitted Sell Order or Submitted
Bid shall be deemed to be and shall be accepted as a Hold Order and each such
Existing Owner shall be required to continue to hold such excess amount of
Bonds; and
(v) the Submitted Bid of each Potential Owner specifying any rate that is
higher than the Maximum Auction Rate with respect to the Bonds shall be
rejected.
(c) If, as a result of the procedures described in subsection (a) or (b)
above, any Existing Owner or Potential Owner would be required to purchase or
sell an aggregate principal amount of Bonds which is not an integral multiple of
$25,000 on any Auction Date, the Auction Agent shall by lot, in such manner as
it shall determine in its sole discretion, round up or down the principal amount
of Bonds to be purchased or sold by any Existing Owner or Potential Owner on
such Auction Date so that the aggregate principal amount of Bonds purchased or
sold by each Existing Owner or Potential Owner on such Auction Date shall be an
integral multiple of $25,000, even if such allocation results in one or more of
such Existing Owners or Potential Owners not purchasing or selling any Bonds on
such Auction Date.
(d) If, as a result of the procedures described in subsection (a) above,
any Potential Owner would be required to purchase less than $25,000 in principal
amount of Bonds on any Auction Date, the Auction Agent shall by lot, in such
manner as it shall determine in its sole discretion, allocate Bonds for purchase
among Potential Owners so that the principal amount of Auction Rate Securities
purchased on such Auction Date by any Potential Owner shall be an integral
multiple of $25,000, even if such allocation results in one or more of such
Potential Owners not purchasing Bonds on such Auction Date.
Section 406. Notice of Auction Rate.
(a) On each Auction Date, the Auction Agent shall notify by
telephone or other telecommunication device or other electronic communication
acceptable to the parties or in writing the Broker-Dealer that participated in
the Auction held on such Auction Date of the following with respect to Bonds for
which an Auction was held on such Auction Date:
(i) the Auction Rate determined on such Auction Date for the succeeding
Auction Period;
(ii) whether Sufficient Clearing Bids existed for the determination of the
Winning Bid Rate;
(iii) if such Broker-Dealer submitted a Bid or a Sell Order on behalf of
an Existing Owner, whether such Bid or Sell Order was accepted or rejected and
the principal amount of
49
Bonds, if any, to be sold by such Existing Owner;
(iv) if such Broker-Dealer submitted a Bid on behalf of a Potential Owner,
whether such Bid was accepted or rejected and the principal amount of Bonds, if
any, to be purchased by such Potential Owner;
(v) if the aggregate principal amount of the Bonds to be sold by all
Existing Owners on whose behalf such Broker-Dealer submitted Bids or Sell Orders
is different from the aggregate principal amount of Bonds to be purchased by all
Potential Owners on whose behalf such Broker-Dealer submitted a Bid, the name or
names of one or more Broker-Dealers (and the Agent Member, if any, of each such
other Broker Dealer) and the principal amount of Bonds to be (A) purchased from
one or more Existing Owners on whose behalf such other Broker-Dealers submitted
Bids or Sell Orders or (B) sold to one or more Potential Owners on whose behalf
such Broker-Dealer submitted Bids; and
(vi) the immediately succeeding Auction Date.
(b) On each Auction Date, with respect to each series of Bonds for which
an Auction was held on such Auction Date, the Broker-Dealer that submitted an
Order on behalf of any Existing Owner or Potential Owner shall: (i) advise each
Existing Owner and Potential Owner on whose behalf such Broker-Dealer submitted
an Order as to (A) the Auction Rate determined on such Auction Date, (B) whether
any Bid or Sell Order submitted on behalf of each such Owner was accepted or
rejected and (C) the immediately succeeding Auction Date; (ii) instruct each
Potential Owner on whose behalf such Broker-Dealer submitted a Bid that was
accepted, in whole or in part, to instruct such Existing Owner's Agent Member to
pay to such Broker-Dealer (or its Agent Member) through the Securities
Depository the amount necessary to purchase the principal amount of Bonds to be
purchased pursuant to such Bid (including, with respect to the Bonds in a daily
Auction Period, accrued interest if the purchase date is not an Interest Payment
Date for such Bond) against receipt of such Bonds; and (iii) instruct each
Existing Owner on whose behalf such Broker-Dealer submitted a Sell Order that
was accepted or a Bid that was rejected, in whole or in part, to instruct such
Existing Owner's Agent Member to deliver to such Broker-Dealer (or its Agent
Member) through the Securities Depository the principal amount of Bonds to be
sold pursuant to such Bid or Sell Order against payment therefor.
Section 407. Auction Index.
(a) The Auction Index on any Auction Date with respect to Bonds in
any Auction Period of 35 days or less shall be the Seven-Day "AA" Non Financial
Composite Commercial Paper Rate on such date. The Auction Index with respect to
Bonds in any Auction Period greater than 35 days shall be the rate on United
States Treasury Securities having a maturity which most closely approximates the
length of the Auction Period, as last published in The Bond Buyer. If either
rate is unavailable, the Auction Index shall be an index or rate agreed
50
to by all Broker-Dealers and consented to by the Company.
"Seven-Day 'AA' Non Financial Composite Commercial Paper Rate" on any date
of determination, means (A) the interest equivalent of the seven-day rate on
commercial paper placed on behalf of issuers whose corporate bonds are rated AA
by S&P, or the equivalent of such rating by S&P, as made available on a discount
basis or otherwise by the Federal Reserve Bank of New York for the Business Day
immediately preceding such date of determination, or (B) if the Federal Reserve
Bank of New York does not make available any such rate, then the arithmetic
average of such rates, as quoted on a discount basis or otherwise, by Morgan
Stanley & Co. Incorporated, Lehman Commercial Paper Inc. and Merrill Lynch,
Pierce, Fenner & Smith Incorporated or, in lieu of any thereof, their respective
affiliates or successors which are commercial paper dealers (the "Commercial
Paper Dealers"), to the Auction Agent before the close of business on the
Business Day immediately preceding such date of determination.
For purposes of the definition of Seven-Day "AA" Non Financial Composite
Commercial Paper Rate, the interest equivalent means the equivalent yield on a
360-day basis of a discount-basis security to an interest-bearing security. If
any Commercial Paper Dealer does not quote a commercial paper rate required to
determine the Seven-Day "AA" Non Financial Composite Commercial Paper Rate, the
Seven-Day "AA" Non Financial Composite Commercial Paper Rate shall be determined
on the basis of the quotation or quotations furnished by the remaining
Commercial Paper Dealer or Commercial Paper Dealers and any substitute
commercial paper dealer not included within the definition of Commercial Paper
Dealer above, which may be CS First Boston Corporation or Goldman Sachs & Co. or
their respective affiliates or successors which are commercial paper dealers (a
"Substitute Commercial Paper Dealer") selected by the Trustee (who shall be
under no liability for such selection) to provide such commercial paper rate or
rates not being supplied by any Commercial Paper Dealer or Commercial Paper
Dealers, as the case may be, or if the Trustee does not select any such
Substitute Commercial Paper Dealer or Substitute Commercial Paper Dealers, by
the remaining Commercial Paper Dealer or Commercial Paper Dealers.
(b) If for any reason on any Auction Date the Auction Index shall not be
determined as hereinabove provided in this Section, the Auction Index shall be
the Auction Index for the Auction Period ending on such Auction Date.
(c) The determination of the Auction Index as provided herein shall be
conclusive and binding upon the Company, the Authority, the Trustee, the
Broker-Dealers, the Auction Agent and the Owners of the Bonds.
Section 408. Miscellaneous Provisions Regarding Auctions.
(a) In this Article IV, each reference to the purchase, sale or holding of
"Bonds" shall refer to beneficial interests in Bonds, unless the context clearly
requires otherwise.
(b) During an Auction Rate Period with respect to any Bonds, the
provisions of this Agreement and the definitions contained herein and described
in this Article IV, including
51
without limitation the definitions of Maximum Auction Rate, Minimum Auction
Rate, Auction Index, Default Rate, Auction Multiple and the Auction Rate, may be
amended pursuant to this Agreement, by obtaining the consent of the owners of
all Outstanding Bonds bearing interest at an Auction Rate as follows. If on the
first Auction Date occurring at least 20 days after the date on which the
Trustee mailed notice of such proposed amendment to the registered owners of the
Outstanding Bonds as required by this Agreement, (i) the Auction Rate which is
determined on such date is the Winning Bid Rate and (ii) there is delivered to
the Authority and the Trustee an opinion of Bond Counsel to the effect that such
amendment shall not adversely affect the validity of the Bonds or any exemption
from federal income tax to which the interest on the Bonds would otherwise be
entitled, the proposed amendment shall be deemed to have been consented to by
the owners of all affected Outstanding Bonds bearing interest at an Auction
Rate.
(c) During an Auction Rate Period, so long as the ownership of the Bonds
is maintained in book-entry form by the Securities Depository, an Existing Owner
or a beneficial owner may sell, transfer or otherwise dispose of a Bond only
pursuant to a Bid or Sell Order in accordance with the Auction Procedures or to
or through a Broker-Dealer, provided that (i) in the case of all transfers other
than pursuant to Auctions such Existing Owner or its Broker-Dealer or its Agent
Member advises the Auction Agent of such transfer and (ii) a sale, transfer or
other disposition of Bonds from a customer of a Broker-Dealer who is listed on
the records of that Broker-Dealer as the holder of such Bonds to that
Broker-Dealer or another customer of that Broker-Dealer shall not be deemed to
be a sale, transfer or other disposition for purposes of this paragraph if such
Broker-Dealer remains the Existing Owner of the Bonds so sold, transferred or
disposed of immediately after such sale, transfer or disposition.
Section 409. Changes in Auction Period or Auction Date.
(a) Changes in Auction Period. (i) During any Auction Rate Period, the
Company may with the written consent of the Bond Insurer, from time to time on
any Interest Payment Date, change the length of the Auction Period with respect
to all of the Bonds among daily, seven-days, 28-days, 35-days, three months, six
months and a Special Auction Period in order to accommodate economic and
financial factors that may affect or be relevant to the length of the Auction
Period and the interest rate borne by such Bonds; provided, however, in the case
of a change from a Special Auction Period the date of such change shall be the
Interest Payment Date immediately following the last day of the final Auction
Period. The Company shall initiate the change in the length of the Auction
Period by giving written notice to the Trustee, the Bond Insurer, the Auction
Agent, the Broker-Dealers and the Securities Depository that the Auction Period
shall change if the conditions described herein are satisfied and the proposed
effective date of the change, at least 10 Business Days prior to the Auction
Date for such Auction Period. In the event that the Company is in default under
any of its obligations relating to the Bonds (including without limitation any
default under this Agreement or the Bond Insurance Agreement), the Bond Insurer
will succeed to any rights of the Company to direct a conversion of the interest
rate on the Bonds. The Trustee shall not be charged with knowledge or notice of
any such default, other than a default under Section 801(a)(i) unless and except
to the extent it has actual knowledge thereof or has received written notice
thereof from the Insurer.
52
(ii) Any such changed Auction Period shall be for a period of one day,
seven-days, 28-days, 35-days, three months, six months or a Special Auction
Period and shall be for all of the Bonds in an Auction Rate Period.
(iii) The change in the length of the Auction Period shall not be allowed
unless Sufficient Clearing Bids existed at both the Auction before the date on
which the notice of the proposed change was given as provided in this subsection
(a) and the Auction immediately preceding the proposed change.
(iv) The change in length of the Auction Period shall take effect only if
Sufficient Clearing Bids exist at the Auction on the Auction Date for such first
Auction Period. For purposes of the Auction for such first Auction Period only,
each Existing Owner shall be deemed to have submitted Sell Orders with respect
to all of its Bonds except to the extent such Existing Owner submits an Order
with respect to such Bonds. If the condition referred to above is not met, the
Auction Rate for the next Auction Period shall be the Maximum Auction Rate and
the Auction Period shall be a seven-day Auction Period.
(b) Changes in Auction Date. During any Auction Rate Period, the Auction
Agent, with the written consent of the Company, may specify an earlier Auction
Date for the Bonds (but in no event more than five Business Days earlier) than
the Auction Date that would otherwise be determined in accordance with the
definition of Auction Date in order to conform with then current market practice
with respect to similar securities or to accommodate economic and financial
factors that may affect or be relevant to the day of the week constituting an
Auction Date and the interest rate borne on the Bonds. The Auction Agent shall
provide notice of its determination to specify an earlier Auction Date for an
Auction Period by means of a written notice delivered at least 45 days prior to
the proposed changed Auction Date to the Trustee, the Company, the
Broker-Dealers and the Securities Depository.
Section 410. Auction Agent.
(a) The Auction Agent shall be appointed by the Trustee upon, and as
designated in, the written direction of the Company to perform the functions
specified herein. The Auction Agent shall designate its Principal Office and
signify its acceptance of the duties and obligations imposed upon it hereunder
by a written instrument, delivered to the Company, the Authority, the Trustee
and the Broker-Dealer which shall set forth such procedural and other matters
relating to the implementation of the Auction Procedures as shall be
satisfactory to the Company and the Trustee.
(b) Subject to any applicable governmental restrictions, the Auction Agent
may be or become the owner of or trade in Bonds with the same rights as if such
entity were not the Auction Agent.
Section 411. Qualifications of Auction Agent; Resignation; Removal. The
Auction
53
Agent shall be (a) a bank or trust company 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 $30,000,000, or (b) a
member of NASD having a capitalization of at least $30,000,000 and, in either
case, authorized by law to perform all the duties imposed upon it by this
Agreement and a member of or a participant in, the Securities Depository. The
Auction Agent may at any time resign and be discharged of the duties and
obligations created by this Agreement by giving at least ninety (90) days notice
to the Company, the Authority, the Bond Insurer and the Trustee. The Auction
Agent may be removed at any time by the Company by written notice, delivered to
the Auction Agent, the Authority, the Bond Insurer and the Trustee. Upon any
such resignation or removal, the Trustee shall appoint a successor Auction
Agent, with the approval of the Bond Insurer, upon, and as designated in, the
written direction of the Company meeting the requirements of this Section. In
the event of the resignation or removal of the Auction Agent, the Auction Agent
shall pay over, assign and deliver any moneys and Bonds held by it in such
capacity to its successor. The Auction Agent shall continue to perform its
duties hereunder until its successor has been appointed by the Trustee. The
Company shall be solely responsible for payment of compensation to the Auction
Agent for its services. In the event that the Auction Agent has not been
compensated for its services, the Auction Agent may resign by giving thirty (30)
days notice to the Company, the Authority and the Trustee even if a successor
Auction Agent has not been appointed.
Section 412. Conversion.
(a) Notice. At the option of the Company, with the prior written consent
of the Bond Insurer, all (but not less than all) of the Bonds outstanding may be
converted to the Daily Mode, Weekly Mode, Flexible Mode, Term Rate Mode or Fixed
Rate Mode on a Conversion Date selected by the Company; provided that the
Company's right to convert Bonds to another Mode shall terminate on the date of
defeasance of such Bonds pursuant to Section 204; and provided further that no
conversion shall be effective if the Bonds to be converted are not fully
remarketed on the applicable mandatory tender date. Upon timely written notice
from the Company, the Trustee shall give notice of any proposed conversion not
fewer than 15 days (or, if the Bonds are then in a six-month Auction Period or a
Special Auction Period of more than 180 days, 30 days) before the proposed
Conversion Date to the registered owner, the Paying Agent, the Auction Agent and
the Broker-Dealer. Such notice will state:
(1) the title, outstanding principal amount and CUSIP number(s) of
the Bonds to be converted to the Daily Mode, Weekly Mode, Flexible Mode,
Term Rate Mode or Fixed Rate Mode;
(2) the proposed Conversion Date;
(3) that all of the Bonds to be converted will be subject to
mandatory tender for purchase on the Conversion Date, at a price equal to
par plus accrued interest to the Conversion Date;
(4) the consequences of a failed conversion (which shall be as
provided in
54
subsection (c) below);
(5) the time and address at which the Bonds are to be tendered for
purchase;
(6) that the conversion of the Bonds to the Daily Mode, Weekly Mode,
Flexible Mode, Term Rate Mode or Fixed Rate Mode will not become effective
unless the Trustee and the Authority shall have received, no later than
one day before the proposed Conversion Date, an opinion of Bond Counsel to
the effect that the conversion to the applicable Mode will not adversely
affect the exclusion of interest on the Bonds from the gross income of the
registered owner or the beneficial owners of the Bonds for federal income
tax purposes and, on the proposed Conversion Date, a confirmation of such
opinion; and
(7) that after the Conversion Date, the registered owner and any
beneficial owners shall have no further rights with respect to the Bonds
so converted except to receive the purchase price therefor on the
Conversion Date, with no interest accruing thereon.
Such notice to the owners shall be made by first class mail or, at the Company's
option, certified mail, return receipt requested. Any notice mailed as provided
in this Section 412 to the registered owner at its address listed in the
registration books of the Paying Agent shall be conclusively presumed to have
been duly given, whether or not the registered owner received the notice, and
the failure of the registered owner to receive any such notice shall not affect
the validity of the action described in such notice. For so long as the Bonds
are registered in the name of Cede & Co., as nominee for DTC, notices of
mandatory tender for purchase of Bonds shall be given to DTC only, and none of
the Authority, the Company, the Trustee, or the Paying Agent or any other Person
shall have any responsibility for the delivery of any of such notices by DTC to
any participants of DTC or by any direct or indirect participants of DTC to
beneficial owners of the Bonds.
(b) Terms of Bonds in Daily, Weekly, Flexible, Term Rate and Fixed Rate
Modes. The Remarketing Agent shall determine the Daily, Weekly, Flexible, Term
or Fixed Rate on a Business Day at least one Business Day prior to the proposed
Conversion Date to the Daily, Weekly, Flexible, Term Rate or Fixed Rate Mode, as
applicable. The Daily, Weekly, Flexible, Term Rate or Fixed Rate shall be
determined by the Remarketing Agent as described in Article V. The Bonds so
converted shall be subject to optional and mandatory redemption at the times and
in the amounts described in Article V.
(c) Failure to Convert. If any of the conditions to conversion of the
Bonds from the Auction Mode to another Mode are not met, such conversion shall
not take effect and the next Auction Period shall be a seven-day Auction Period
and the Auction Rate of such Auction Period shall be the Maximum Auction Rate.
In no event shall the failure of any Bond to be converted to another Mode be
deemed to be a default or an Event of Default hereunder.
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Section 413. Credit Ratings. The Company shall take all reasonable action
necessary to enable at least two nationally recognized statistical rating
organizations (as that term is used in the rules and regulations of the
Securities and Exchange Commission under the Securities Exchange Act) to provide
credit ratings for the Bonds.
Section 414. Mandatory Tender.
(a) Agreement to Tender. Each registered owner, by its acceptance of the
Bonds, agrees to tender its Bonds to the Paying Agent for purchase on a
Conversion Date properly endorsed for transfer in blank, at the time and address
specified in such notice.
(b) Purchase of Tendered Bonds. Delivery to the Paying Agent of Bonds to
be tendered for purchase, together with wire payment instructions satisfactory
to the Paying Agent, is required to be made on the Purchase Date in accordance
with the procedures described in Sections 518 and 519. If the Bonds are
delivered after the time described in Sections 518 or 519, as applicable,
payment will be made on the next Business Day without any additional accrued
interest. Bonds which are required to be tendered for purchase shall cease
bearing interest from and after the date tender is required regardless of
whether such Bonds are presented for payment and Owners shall have no further
rights with respect to such Bonds other than the right to receive payment of the
purchase price upon surrender of the Bonds.
For so long as the Bonds are registered in the name of Cede & Co., as
nominee for DTC, delivery of Bonds required to be tendered for purchase shall be
effected by the transfer by a direct participant of DTC on the Purchase Date of
a book entry credit to the account of the Paying Agent of a beneficial interest
in such Bonds. For so long as the Bonds are registered in the name of Cede &
Co., as nominee for DTC, payment of the purchase price shall be paid directly to
DTC in accordance with the Representation Letter.
In receiving Bonds hereunder, the Paying Agent shall be acting as a
conduit and shall not be purchasing such Bonds for its own account. The
performance of the Paying Agent's duties is subject to certain terms and
standards set forth in this Agreement.
ARTICLE V.
SPECIAL PROVISIONS RELATING TO
VARIABLE RATE AND FIXED RATE MODES
Section 501. Definitions. In addition to the words and terms elsewhere
defined in this Agreement, the following words and terms as used in this Article
V and elsewhere in this Agreement have the following meanings with respect to
Bonds in a Variable Rate Mode or Fixed Rate Mode unless the context or use
indicates another or different meaning or intent:
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"Alternate Credit Enhancement" or "Alternate Liquidity Facility" shall
mean a letter of credit, insurance policy, line of credit, surety bond, standby
purchase agreement or other security or liquidity instrument, as the case may
be, issued in accordance with the terms hereof as a replacement or substitute
for any Credit Enhancement or Liquidity Facility, as applicable, then in effect.
"Alternate Rate" shall mean, on any Rate Determination Date, for any Mode,
a rate per annum equal to (a) the BMA Municipal Swap Index of Municipal Market
Data, formerly the PSA Municipal Swap Index (as such term is defined in the 1992
ISDA U.S. Municipal Counterparty Definitions) (the BMA Rate) most recently
available as of the date of determination, or (b) if such index is no longer
available, or if the BMA Rate is no longer published, the Kenny Index (as such
term is defined in the 1992 ISDA U.S. Municipal Counterparty Definitions), or if
neither the BMA Rate nor the Kenny Index is published, the index determined to
equal the prevailing rate determined by the Remarketing Agent for tax-exempt
state and local government bonds meeting criteria determined in good faith by
the Remarketing Agent to be comparable under the circumstances to the criteria
used by the Bond Market Association to determine the BMA Rate just prior to when
the Bond Market Association stopped publishing the BMA Rate. The Tender Agent
shall make the determinations required by this determination, upon notification
from the Authority, if there is no Remarketing Agent, if the Remarketing Agent
fails to make any such determination or if the Remarketing Agent has suspended
its remarketing efforts in accordance with the Remarketing Agreement.
"Authorized Denominations" shall mean (i) with respect to Bonds in a Daily
Mode or Weekly Mode, $100,000 and any integral multiple of $5,000 in excess
thereof, (ii) with respect to Bonds in a Flexible Mode, $100,000 and any
integral multiple of $1,000 in excess thereof and (iii) with respect to Bonds in
a Long-Term Mode, $5,000 and any integral multiple thereof.
"Automatic Termination Event" shall mean an event of default set forth in
the Reimbursement Agreement between the Company and the Liquidity Provider which
would result in the immediate termination of the Liquidity Facility prior to its
stated expiration date without at least thirty days prior notice from the
Liquidity Provider to the Tender Agent, other than a termination upon the
substitution of an Alternate Liquidity Facility.
"Available Amount" shall mean the amount available under the Credit
Enhancement or Liquidity Facility, as applicable, to pay the principal of and
interest on the Bonds or the Purchase Price of the Bonds, as applicable.
"Available Moneys" shall mean (i) moneys held by the Trustee (other than
in the Purchase Fund) and continuously subject to a first priority lien under
this Agreement for a period of at least 123 days and not commingled with any
moneys so held for less than said period and during which period no petition in
bankruptcy was filed by or against, and no receivership, insolvency, assignment
for the benefit of creditors or other similar proceeding has been commenced by
or against, the Company, unless such petition or proceeding was dismissed and
all applicable appeal periods have expired without an appeal having been filed,
(ii) investment income derived from the investment of moneys described in clause
(i) or (iii) any moneys with
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respect to which an opinion of nationally recognized bankruptcy counsel has been
received by the Trustee to the effect that payments by the Trustee in respect of
the Bonds, as provided in this Agreement, derived from such moneys would not
constitute transfers avoidable under 11 U.S.C. ss. 547(b) and recoverable from
the Owners under 11 U.S.C. ss. 550(a) should the Company be the debtor in a case
under Title 11 of the United States Code, as amended.
"Beneficial Owner" shall mean, so long as the Bonds are negotiated in the
Book-Entry System, any Person who acquires a beneficial ownership interest in a
Bond held by the Securities Depository. If at any time the Bonds are not held in
the Book-Entry System, Beneficial Owner shall mean Owner for purposes of this
Agreement.
"Book-Entry System" shall mean the system maintained by the Securities
Depository described in Section 301(d) hereof.
"Credit Enhancement" shall mean a direct-pay letter of credit, insurance
policy, surety bond, line of credit or other instrument then in effect which
secures or guarantees the payment of principal of and interest on the Bonds.
"Credit Enhancement Failure" or "Liquidity Facility Failure" shall mean a
failure of the Credit Provider or Liquidity Provider, as applicable, to pay a
properly presented and conforming draw or request for advance under the Credit
Enhancement or Liquidity Facility, as applicable, or the filing or commencement
of any bankruptcy or insolvency proceedings by or against the Credit Provider or
Liquidity Provider, as applicable, or the Credit Provider or Liquidity Provider,
as applicable, shall declare a moratorium on the payment of its unsecured debt
obligations or shall repudiate the Credit Enhancement or Liquidity Facility, as
applicable.
"Credit Provider" shall mean any bank, insurance company, pension fund or
other financial institution which provides a Credit Enhancement or Alternate
Credit Enhancement for the Bonds, including the Bond Insurer.
"Current Mode" shall have the meaning specified in Section 509(a)(i)
hereof.
"Daily Mode" shall mean the Mode during which the Bonds bear interest at
the Daily Rate.
"Daily Rate" shall mean the per annum interest rate on any Bond in the
Daily Mode determined pursuant to Section 506(a) hereof.
"Daily Rate Period" shall mean the period during which a Bond in the Daily
Mode shall bear a Daily Rate, which shall be from the Business Day upon which a
Daily Rate is set to but not including the next succeeding Business Day.
"Electronic Means" shall mean telecopy, facsimile transmission, e-mail
transmission or other similar electronic means of communication providing
evidence of transmission, including a
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telephonic communication confirmed by any other method set forth in this
definition.
"Expiration Date" shall mean the stated expiration date of the Credit
Enhancement or the Liquidity Facility, as it may be extended from time to time
as provided in the Credit Enhancement or the Liquidity Facility, or any earlier
date on which the Credit Enhancement or the Liquidity Facility shall terminate,
expire or be cancelled.
"Favorable Opinion of Bond Counsel" shall mean, with respect to any action
the occurrence of which requires such an opinion, an unqualified Opinion of
Counsel, which shall be a Bond Counsel, to the effect that such action is
permitted under the Act and this Agreement and will not impair the exclusion of
interest on the Bonds from gross income for purposes of Federal income taxation
or the exemption of interest on the Bonds from personal income taxation under
the laws of New Hampshire (subject to the inclusion of any exceptions contained
in the opinion delivered upon original issuance of the Bonds).
"Fitch" shall mean Fitch, Inc., and its successors and assigns, except
that if such Company shall be dissolved or liquidated or shall no longer perform
the functions of a securities rating agency, then the term "Fitch" shall be
deemed to refer to any other nationally recognized securities rating agency
selected by the Company after consultation with the Remarketing Agent.
"Fixed Rate" shall mean the per annum interest rate on any Bond in the
Fixed Rate Mode determined pursuant to Sections 507(b) hereof.
"Fixed Rate Bond" shall mean a Bond in the Fixed Rate Mode.
"Fixed Rate Mode" shall mean the Mode during which the Bonds bear interest
at the Fixed Rate.
"Fixed Rate Period" shall mean for the Bonds in the Fixed Rate Mode, the
period from the Mode Change Date upon which the Bonds were converted to the
Fixed Rate Mode to but not including the Maturity Date for the Bonds.
"Flexible Rate Bond" shall mean a Bond in the Flexible Mode.
"Flexible Mode" shall mean the Mode during which the Bonds bear interest
at the Flexible Rate.
"Flexible Rate" shall mean the per annum interest rate on a Bond in the
Flexible Mode determined for such Bond pursuant to Section 505 hereof. The Bonds
in the Flexible Mode may bear interest at different Flexible Rates.
"Flexible Rate Period" shall mean the period of from one to 270 calendar
days (which period must end on a Business Day) during which a Flexible Rate Bond
shall bear interest at a Flexible Rate, as established by the Remarketing Agent
pursuant to Section 505 hereof. The
59
Bonds in the Flexible Mode may be in different Flexible Rate Periods.
"Interest Accrual Period" shall mean the period during which a Bond
accrues interest payable on the next Interest Payment Date applicable thereto.
With respect to any Mode, each Interest Accrual Period shall commence on (and
include) the last Interest Payment Date to which interest has been paid (or, if
no interest has been paid in such Mode, from the date of original authentication
and delivery of the Bonds, or the Mode Change Date, as the case may be) to, but
not including, the Interest Payment Date on which interest is to be paid. If, at
the time of authentication of any Bond, interest is in default or overdue on the
Bonds, such Bond shall bear interest from the date to which interest has
previously been paid in full or made available for payment in full on
Outstanding Bonds.
"Interest Amount" shall mean the aggregate amount available under the
Credit Enhancement or Liquidity Facility, as applicable, to pay interest
accruing on the Bonds or that portion of the Purchase Price constituting
interest.
"Interest Payment Date" shall mean each date on which interest is to be
paid and is: (i) with respect to the Bonds in the Flexible Mode, each Mandatory
Purchase Date applicable thereto; (ii) with respect to the Bonds in the Daily
Mode or Weekly Mode, the first Business Day of each month; (iii) with respect to
the Bonds in a Long-Term Mode, the first day of the sixth calendar month
following the month in which such Long-Term Mode takes effect, and the first day
of each sixth calendar month thereafter or, upon the receipt by the Trustee of a
Favorable Opinion of Bond Counsel, any other six-month interval chosen by the
Company (beginning with the first such day which is at least three months after
the Mode Change Date) and, with respect to a Term Rate Period, or the final day
of the current Interest Period if other than a regular six-month interval; (iv)
(without duplication as to any Interest Payment Date listed above) any Mode
Change Date, other than a change between a Daily Mode and a Weekly Mode, and
each Maturity Date; and (v) with respect to any Liquidity Provider Bonds, the
day set forth in the Reimbursement Agreement.
"Interest Period" shall mean, for the Bonds in a particular Mode, the
period of time that the Bonds bear interest at the rate (per annum) which
becomes effective at the beginning of such period, and shall include a Flexible
Rate Period, a Daily Rate Period, a Weekly Rate Period, a Term Rate Period and a
Fixed Rate Period.
"Liquidity Facility" shall mean any letter of credit, line of credit,
standby purchase agreement or other instrument then in effect which provides for
the purchase of Bonds upon the tender thereof in the event remarketing proceeds
are insufficient therefor.
"Liquidity Provider" shall mean any bank, insurance company, pension fund
or other financial institution which provides a Liquidity Facility or Alternate
Liquidity Facility for the Bonds.
"Liquidity Provider Bonds" shall mean any Bonds purchased by the Liquidity
Provider
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with funds drawn on or advanced under the Liquidity Facility.
"Long-Term Mode" shall mean a Term Rate Mode or a Fixed Rate Mode.
"Mandatory Purchase Date" shall mean: (i) with respect to a Flexible Rate
Bond the first Business Day following the last day of each Flexible Rate Period
with respect to such Bond, (ii) for Bonds in the Term Rate Mode, on the first
Business Day following the last day of each Term Rate Period, (iii) any Mode
Change Date (except a change in Mode between the Daily Mode and the Weekly
Mode), (iv) any Substitution Date, (v) the fifth Business Day prior to the
Expiration Date (other than as a result of an Automatic Termination Event), and
(vi) the date specified by the Credit Provider or Liquidity Provider in a
written notice to the Trustee following the occurrence of an event of default
(other than an Automatic Termination Event) under the Reimbursement Agreement,
which date shall be a Business Day not less than the number of days specified in
the Liquidity Facility after the Trustee's receipt of such notice.
"Mode" shall mean, as the context may require, the Flexible Mode, the
Daily Mode, the Weekly Mode, the Term Rate Mode, the Auction Rate Mode or the
Fixed Rate Mode.
"Mode Change Date" shall mean with respect to the Bonds in a particular
Mode, the day on which another Mode for the Bonds begins.
"Mode Change Notice" shall mean the notice from the Company to the other
Notice Parties of the Company's intention to change the Mode with respect to the
Bonds.
"New Mode" shall have the meaning specified in Section 509(a)(i) hereof.
"Notice Parties" shall mean the Authority, the Trustee, the Tender Agent,
the Remarketing Agent, the Paying Agent, the Credit Provider, the Liquidity
Provider and the Company.
"Opinion of Counsel" shall mean a written legal opinion from a firm of
attorneys experienced in the matters to be covered in the opinion.
"Owner" shall mean the registered owner of a Bond, including the
Securities Depository, if any, or its nominee.
"Principal Payment Date" shall mean any date upon which the principal
amount of Bonds is due hereunder, including the maturity date, any Redemption
Date, or the date the maturity of any Bond is accelerated pursuant to the terms
hereof or otherwise.
"Purchase Date" shall mean (i) for a Bond in the Daily Mode or the Weekly
Mode, any Business Day selected by the Beneficial Owner of said Bond pursuant to
the provisions of Section 513 hereof, and (ii) any Mandatory Purchase Date.
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"Purchase Fund" shall mean the fund by that name created in Section 522
hereof.
"Purchase Price" shall mean an amount equal to the principal amount of any
Bonds purchased on any Purchase Date, plus, in the case of any purchase of Bonds
in the Daily Mode or the Weekly Mode and Bonds purchased on a Mandatory Purchase
Date that is not an Interest Payment Date, accrued interest, if any.
"Rate Determination Date" shall mean any date on which the interest rate
on Bonds shall be determined, which, (i) in the case of the Flexible Mode, shall
be the first day of an Interest Period; (ii) in the case of the Daily Mode,
shall be each Business Day commencing with the first day (which must be a
Business Day) the Bonds become subject to the Daily Mode; (iii) in the case of
the initial conversion to the Weekly Mode, shall be no later than the Business
Day prior to the Mode Change Date, and thereafter, shall be each Wednesday or,
if Wednesday is not a Business Day, then the Business Day next preceding such
Wednesday; (iv) in the case of the Term Rate Mode, shall be a Business Day no
earlier than fifteen (15) Business Days and no later than the Business Day next
preceding the first day of an Interest Period, as determined by the Remarketing
Agent; and (v) in the case of the Fixed Rate Mode, shall be a date determined by
the Remarketing Agent which shall be at least one Business Day prior to the Mode
Change Date.
"Rating Agencies" shall mean any of Moodys, S&P or Fitch, which is then
providing a rating on the Bonds.
"Rating Confirmation Notice" shall mean a notice from Moodys, S&P or
Fitch, as appropriate, confirming that the rating on the Bonds will not be
lowered or withdrawn (other than a withdrawal of a short-term rating upon a
change to a Long-Term Mode) as a result of the action proposed to be taken.
"Record Date" shall mean (i) with respect to Bonds in a Short-Term Mode,
the last Business Day before an Interest Payment Date and (ii) with respect to
Bonds in a Long-Term Mode, the fifteenth (15th) day (whether or not a Business
Day) of the month next preceding each Interest Payment Date.
"Redemption Date" shall mean the date fixed for redemption of Bonds
subject to redemption in any notice of redemption given in accordance with the
terms hereof.
"Redemption Price" shall mean an amount equal to the principal of and
premium, if any, and accrued interest, if any, on the Bonds to be paid on the
Redemption Date.
"Reimbursement Agreement" shall mean any reimbursement agreement, credit
agreement, line of credit agreement, standby purchase agreement or other
agreement, by and between the Credit Provider or Liquidity Provider, as
applicable, and the Company.
"Remarketing Agent" shall mean Morgan Stanley & Co. Incorporated, or any
other investment banking firm which may be substituted in its place as provided
in Section 524 hereof.
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"Remarketing Agreement" shall mean that certain Remarketing Agreement
relating to the Bonds, by and between the Company and the Remarketing Agent or
any similar agreement between the Company and the Remarketing Agent, as it may
be amended or supplemented from time to time in accordance with its terms.
"Remarketing Proceeds Account" shall mean the account by that name created
in Section 522(a) hereof.
"Short-Term Mode" shall mean the Daily Mode, the Weekly Mode or the
Flexible Mode.
"Short Term Interest Period" shall mean a Daily Rate Period, a Weekly Rate
Period or a Flexible Rate Period.
"Substitution Date" shall mean the date upon which an Alternate Credit
Enhancement or Alternate Liquidity Facility is substituted for the Credit
Enhancement or Liquidity Facility then in effect.
"Tender Agent" shall mean the commercial bank, trust company or other
entity which may from time to time be appointed to serve as Tender Agent
hereunder. Until such time as an alternate Tender Agent is appointed, the Tender
Agent shall be the Trustee.
"Tender Notice Deadline" shall mean (i) during the Daily Mode, 11:00 A.M.
on any Business Day and (ii) during the Weekly Mode, 5:00 P.M. on the Business
Day seven days prior to the applicable Purchase Date.
"Tender Notice" shall mean a notice delivered by Electronic Means or in
writing that states (i) the principal amount of such Bond to be purchased
pursuant to Section 513 hereof, (ii) the Purchase Date on which such Bond is to
be purchased, (iii) applicable payment instructions with respect to the Bonds
being tendered for purchase and (iv) an irrevocable demand for such purchase.
"Term Rate" shall mean the per annum interest rate for the Bonds in the
Term Rate Mode determined pursuant to Section 507(a) hereof.
"Term Rate Mode" shall mean the Mode during which the Bonds bear interest
at the Term Rate.
"Term Rate Period" shall mean the period from (and including) the Mode
Change Date to (but excluding) the last day of the first period that the Bonds
shall be in the Term Rate Mode as established by the Company for the Bonds
pursuant to Sections 509(a)(i) hereof and, thereafter, the period from (and
including) the beginning date of each successive Interest Rate Period selected
for the Bonds by the Company pursuant to Section 507(a) while it is in the Term
Rate Mode to (but excluding) the commencement date of the next succeeding
Interest Period, including another Term Rate Period. Except as otherwise
provided in this Agreement, an Interest
63
Period for the Bonds in the Term Rate Mode must be at least 180 days in length.
"Weekly Mode" shall mean the Mode during which the Bonds bear interest at
the Weekly Rate.
"Weekly Rate" shall mean the per annum interest rate on the Bonds in the
Weekly Mode determined pursuant to Section 506(b) hereof.
"Weekly Rate Period" shall mean the period during which a Bond in the
Weekly Mode shall bear a Weekly Rate, which shall be the period commencing on
Thursday of each week to and including Wednesday of the following week, except
the first Weekly Rate Period which shall be from the Mode Change Date or date of
initial issuance of the Bonds, as applicable, to and including the Wednesday of
the following week and the last Weekly Rate Period which shall be from and
including the Thursday of the week prior to the Mode Change Date to the day next
preceding the Mode Change Date.
Unless otherwise provided herein, all references to a particular time are
to New York City time.
Section 502. Medium, Method and Place of Payment and Dating of Bonds.
So long as the Bonds are in the Book-Entry System, interest on the Bonds
shall be paid by the Paying Agent on the Interest Payment Date by wire transfer
of immediately available funds to an account and by the time specified by the
Securities Depository. Unless otherwise provided in any writing with or from the
Securities Depository, the interest on the Bonds in a Variable Rate Mode or the
Fixed Rate Mode shall be paid by the Paying Agent on the Interest Payment Dates
by wire transfer of immediately available funds to an account specified by the
Owner in a writing delivered to the Paying Agent. Any such specified account
shall remain in effect until revised by such Owner by an instrument in writing
delivered to the Paying Agent. The principal of and premium, if any, on each
Bond shall be payable on the Principal Payment Date, upon surrender thereof at
the office of the Paying Agent.
Except as may be specifically set forth herein, the Paying Agent, the
Trustee, the Bond Insurer, the Remarketing Agent, the Company and the Authority
may treat the Owner of a Bond as the absolute owner thereof for all purposes,
whether or not such Bond shall be overdue, and the Paying Agent, the Trustee,
the Remarketing Agent, the Company and the Authority shall not be affected by
any knowledge or notice to the contrary; and payment of the principal of and
premium, if any, and interest on such Bond shall be made only to such Owner,
which payments shall be valid and effectual to satisfy and discharge the
liability of such Bond to the extent of the sum or sums so paid. All Bonds at
maturity or on earlier redemption paid pursuant to the provisions of this
Section shall be cancelled by the Paying Agent.
The Bonds shall be dated as described in Section 301 and, while in a
Variable Rate Mode or the Fixed Rate Mode, shall bear interest at the applicable
rate or rates during each applicable Interest Accrual Period until the entire
principal amount of the respective series of Bonds has
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been paid.
Section 503. Payment of Principal and Interest of Bonds; Acceptance of
Terms and Conditions.
(a) The interest on the Bonds shall become due and payable on the Interest
Payment Dates in each year to and including the respective maturity date, and on
each Redemption Date and on the date of any acceleration prior thereto. The
principal of the Bonds shall become due and payable on the Principal Payment
Dates.
(b) By the acceptance of its Bond, the Owner and each Beneficial Owner
thereof shall be deemed to have agreed to all the terms and provisions of such
Bond as specified in such Bond and this Agreement including, without limitation,
the applicable Interest Periods, interest rates (including any applicable
Alternate Rate), Purchase Dates, Mandatory Purchase Dates, Purchase Prices,
mandatory and optional purchase and redemption provisions applicable to such
Bond, method and timing of purchase, redemption, payment, etc. Such Owner and
each Beneficial Owner further agree that if, on any date upon which one of its
Bonds is to be purchased, redeemed or paid at maturity or earlier due date,
funds are on deposit with the Paying Agent or the Trustee to pay the full amount
due on such Bond, then such Owner or Beneficial Owner shall have no rights under
this Agreement other than to receive such full amount due with respect to such
Bond and that interest on such Bond shall cease to accrue as of such date.
(c) While any Bonds are Liquidity Provider Bonds, such Bonds shall bear
interest and be payable at the times and in the amounts required under the
Liquidity Facility (as to which the Trustee, the Bond Insurer and the Paying
Agent shall be entitled to receive and rely upon a certificate from the
Liquidity Provider).
Section 504. Calculation and Payment of Interest; Change in Mode; Maximum
Rate.
When a Short-Term Mode is in effect, interest shall be
calculated on the basis of a 365/366 day year for the actual number of days
elapsed. When a Long-Term Mode is in effect, interest shall be calculated on the
basis of a 360 day year comprised of twelve 30-day months. Payment of interest
on each Bond shall be made on each Interest Payment Date for such Bond for
unpaid interest accrued during the Interest Accrual Period to the Owner of
record of such Bond on the applicable Record Date.
(a) Bonds in any Mode, other than a Fixed Rate Mode, may be changed to any
other Mode at the times and in the manner hereinafter provided. Subsequent to
such change in Mode (other than a change to a Fixed Rate Mode), the Bonds may
again be changed to a different Mode at the times and in the manner hereinafter
provided. A Fixed Rate Mode shall be in effect until the respective maturity
date, or acceleration thereof prior to such maturity date, and may not be
changed to any other Mode.
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(b) No Bonds shall bear interest at an interest rate higher than the
Maximum Rate.
(c) In the absence of manifest error, the determination of interest rates
(including any determination of rates in connection with a New Mode) and
interest periods by the Remarketing Agent and the record of interest rates
maintained by the Paying Agent shall be conclusive and binding upon the
Remarketing Agent, the Paying Agent, the Trustee, the Authority, the Company,
the Owners and the Beneficial Owners.
Section 505. Determination of Flexible Rates and Interest Periods During
Flexible Mode. An Interest Period for the Bonds in the Flexible Mode shall be of
such duration of from one to 270 calendar days, ending on a Business Day or the
maturity date, as the Remarketing Agent shall determine in accordance with the
provisions of this Section. A Flexible Rate Bond can have an Interest Period,
and bear interest at a Flexible Rate, different than another Flexible Rate Bond.
In making the determinations with respect to Interest Periods, subject to
limitations imposed by the second preceding sentence and in Section 504 hereof,
on each Rate Determination Date for a Flexible Rate Bond, the Remarketing Agent
shall select for such Bond the Interest Period which would result in the
Remarketing Agent being able to remarket such Bond at par in the secondary
market at the lowest average interest cost; provided, however, that if the
Remarketing Agent has received notice from the Company that the Bonds are to be
changed from the Flexible Mode to any other Mode, the Remarketing Agent shall
select Interest Periods which do not extend beyond the resulting applicable
Mandatory Purchase Date of the Bonds.
Except while the Bonds are registered in a Book-Entry System, in order to
receive payment of the Purchase Price the Owner of any Bond in the Flexible Mode
must present such Bond to the Paying Agent, by 12:00 noon on the Rate
Determination Date, in which case, the Paying Agent shall pay the Purchase Price
to such Owner by 2:30 P.M. on the same day.
By 1:00 P.M. on each Rate Determination Date, the Remarketing Agent, with
respect to each Bond in the Flexible Mode which is subject to adjustment on such
date, shall determine the Flexible Rate(s) for the Interest Periods then
selected for such Bond and shall give notice by Electronic Means to the Paying
Agent and the Company, of the Interest Period, the Purchase Date(s) and the
Flexible Rate(s). The Remarketing Agent shall make the Flexible Rate and
Interest Period available after 2:00 p.m. on each Rate Determination Date by
telephone or Electronic Means to any Beneficial Owner or Notice Party requesting
such information.
Section 506. Determination of Interest Rates During the Daily Mode and the
Weekly Mode. The interest rate for the Bonds in the Daily Mode or Weekly Mode
shall be the rate of interest per annum determined by the Remarketing Agent on
and as of the applicable Rate Determination Date as the minimum rate of interest
which, in the opinion of the Remarketing Agent under then-existing market
conditions, would result in the sale of the Bonds in the Daily Rate Period or
Weekly Rate Period, as applicable, at a price equal to the principal amount
thereof, plus interest, if any, accrued through the Rate Determination Date
during the then current Interest Accrual Period.
(a) During the Daily Mode, the Remarketing Agent shall establish the Daily
Rate by
66
10:00 A.M. on each Rate Determination Date. The Daily Rate for any day during
the Daily Mode which is not a Business Day shall be the Daily Rate established
on the immediately preceding Rate Determination Date. The Remarketing Agent
shall make the Daily Rate available after 10:30 A.M. on each Rate Determination
Date by telephone or Electronic Means to any Beneficial Owner or Notice Party
requesting such rate.
(b) During the Weekly Mode, the Remarketing Agent shall establish the
Weekly Rate by 4:00 P.M. on each Rate Determination Date. The Weekly Rate shall
be in effect during the applicable Weekly Rate Period. The Remarketing Agent
shall make the Weekly Rate available after 5:00 P.M. on the Rate Determination
Date by telephone or Electronic Means to any Beneficial Owner or Notice Party
requesting such rate.
Section 507. Determination of Term Rates and Fixed Rates.
(a) Term Rates. Except as provided in the immediately succeeding
paragraph, once the Bonds are changed to the Term Rate Mode, the Bonds shall
continue in the Term Rate Mode until changed to another Mode in accordance with
Section 509 hereof. The Term Rate shall be determined by the Remarketing Agent
not later than 4:00 P.M. on the Rate Determination Date, and the Remarketing
Agent shall make the Term Rate available by telephone or by Electronic Means to
any Notice Party requesting such rate after 5:00 p.m. on the Rate Determination
Date. The Term Rate shall be the minimum rate which, in the sole judgment of the
Remarketing Agent, would result in a sale of the Bonds at a price equal to the
principal amount thereof on the Rate Determination Date for the Interest Period
selected by the Company in writing delivered to the Remarketing Agent before
such Rate Determination Date. If a new Interest Period is not selected by the
Company prior to a Rate Determination Date (for a reason other than a court
prohibiting such selection), the new Interest Period shall be the same length as
the current Interest Period (or such lesser period as shall be necessary to
comply with the last sentence of this paragraph). No Interest Period in the Term
Rate Mode may extend beyond the applicable Maturity Date.
(b) Fixed Rates. The Remarketing Agent shall determine the Fixed Rate for
the Bonds being converted to the Fixed Rate Mode in the manner and at the times
as follows: not later than 4:00 P.M. on the applicable Rate Determination Date,
the Remarketing Agent shall determine the Fixed Rate. The Fixed Rate shall be
the minimum interest rate which, in the sole judgment of the Remarketing Agent,
will result in a sale of the Bonds at a price equal to the principal amount
thereof on the Rate Determination Date. The Remarketing Agent shall make the
Fixed Rate available by telephone or by Electronic Means after 5:00 p.m. on the
Rate Determination Date to any Notice Party requesting such Fixed Rate. The
Fixed Rate so established shall remain in effect until the Maturity Date of such
Bonds.
Section 508. Alternate Rates. The following provisions shall apply in the
event (i) the Remarketing Agent fails or is unable to determine the interest
rate or Interest Period for the Bonds, (ii) the method by which the Remarketing
Agent determines the interest rate or Interest Period with respect to the Bonds
(or the selection by the Company of the Interest Periods for Bonds in the Term
Rate Mode) shall be held to be unenforceable by a court of law of competent
jurisdiction or (iii) if the Remarketing Agent suspends its remarketing effort
in accordance with
67
the Remarketing Agreement. These provisions shall continue to apply until such
time as the Remarketing Agent (or the Company if applicable) again makes such
determinations. In the case of clause (ii) above, the Remarketing Agent (or the
Company, if applicable) shall again make such determination at such time as
there is delivered to the Remarketing Agent and the Authority an opinion of Bond
Counsel to the effect that there are no longer any legal prohibitions against
such determinations. The following shall be the methods by which the interest
rates and, in the case of the Flexible and Term Rate Modes, the Interest
Periods, shall be determined for the Bonds as to which either of the events
described in clauses (i), (ii) or (iii) shall be applicable. Such methods shall
be applicable from and after the date either of the events described in clauses
(i), (ii) or (iii) first become applicable to the Bonds until such time as the
events described in clauses (i), (ii) or (iii) are no longer applicable to the
Bonds. These provisions shall not apply if the Company fails to select an
Interest Period for the Bonds in the Term Rate Mode for a reason other than as
described in clause (ii) above.
(a) For Flexible Rate Bonds, the next Interest Period shall be from, and
including, the first day following the last day of the current Interest Period
for the Bonds to, but excluding, the next succeeding Business Day and thereafter
shall commence on each Business Day and extend to, but exclude, the next
succeeding Business Day. For each such Interest Period, the interest rate for
the Bonds shall be the applicable Alternate Rate in effect on the Business Day
that begins an Interest Period.
(b) If the Bonds are in the Daily Mode or the Weekly Mode, then the Bonds
shall bear interest during each subsequent Interest Period at the Alternate Rate
in effect on the first day of such Interest Period.
(c) If the Bonds are then in the Term Rate Mode, then the Bonds shall
automatically convert to Flexible Rate Bonds, with an Interest Period commencing
on the first day following the last day of the current Interest Period for the
Bonds to, but excluding, the next succeeding Business Day and thereafter shall
commence on each Business Day and extend to, but exclude, the next succeeding
Business Day. For each such Interest Period, the interest rate for the Bonds
shall be the applicable Alternate Rate in effect at the beginning of each such
Interest Period.
Section 509. Changes in Mode. Subject to the provisions of this Section,
the Company may effect a change in Mode of the Bonds by following the procedures
set forth in this Section; provided that the Company's right to effect a change
in Mode of any series of Bonds shall terminate on the date of defeasance
pursuant to Section 204. If a change in Mode will make the Bonds subject to Rule
15c2-12 promulgated under the Securities Act of 1934, as amended, the Company
will execute a continuing disclosure undertaking satisfying the requirements of
such Rule and shall cooperate with the Remarketing Agent and any Underwriter (as
defined in such Rule) in satisfying the requirements of such Rule.
(a) Changes to Modes Other Than Fixed Rate Mode. With the prior written
consent of the Bond Insurer, the Bonds (other than Bonds in the Fixed Rate Mode)
may be changed from a Variable Rate Mode to another Mode (other than the Fixed
Rate Mode) as follows:
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(i) Mode Change Notice; Notice to Owners. No later than a Business
Day which is at least 30 days (or such shorter time as may be agreed to by
the Authority, the Company, the Trustee, the Tender Agent and the
Remarketing Agent) preceding the proposed Mode Change Date, the Company
shall give written notice to the Notice Parties of its intention to effect
a change in the Mode from the Mode then prevailing (for purposes of this
Section, the "Current Mode") to another Mode (for purposes of this
Section, the "New Mode") specified in such written notice, and, if the
change is to a Term Rate Mode, the length of the initial Interest Period
as set by the Company, and, if the change is to the Auction Rate Mode, the
length of the Auction Period. In the case of a change to a Term Rate Mode
or from one Term Rate Mode to another Term Rate Mode, such notice to the
Notice Parties shall also include a statement as to whether there will be
a Liquidity Facility and/or Credit Enhancement in effect with respect to
the Bonds following such change and the identity of any provider of such
Liquidity Facility and/or Credit Enhancement. Notice of the proposed
change in Mode shall be given by the Tender Agent to the Owners of the
Bonds not less than the 15th day next preceding the Mode Change Date. Such
notice shall state: (1) the Mode to which the conversion will be made and
the Mode Change Date; (2) except in the case of a change from the Daily
Mode to the Weekly Mode or from the Weekly Mode to the Daily Mode, that
the Bonds will be subject to mandatory tender for purchase on the Mode
Change Date and the Purchase Price of the Bonds; and (3) if the Book-Entry
System is no longer in effect, information with respect to required
delivery of Bond certificates and payment of Purchase Price.
(ii) Determination of Interest Rates. The New Mode shall commence on
the Mode Change Date and the interest rate(s) (together, in the case of a
change to the Flexible Mode, with the Interest Period(s)) shall be
determined by the Remarketing Agent (or the Company in the case of the
Interest Period for the Bonds converted to the Term Rate Mode) in the
manner provided in Sections 505, 506 and 507 and in Article IV hereof, as
applicable.
(iii) Conditions Precedent:
(A) The Mode Change Date shall be:
(1) in the case of a change from the Flexible Mode, the
next Mandatory Purchase Date for the Flexible Rate Bonds;
(2) in the case of a change from the Daily or Weekly
Mode, any Business Day; and
(3) in the case of a change from the Term Rate Mode to
another Mode, or from a Term Rate Period to a Term Rate Period of a different
duration, the Mode Change Date shall be limited to any Interest Payment Date on
which the Bonds are subject to optional redemption or to the last Interest
Payment Date of the current Term Rate Period, as the case may be. Such Bonds
shall be purchased on such Mode Change Date at a Purchase Price equal to 100% of
the principal amount thereof, provided that if such Bonds are to be purchased
69
on an Interest Payment Date other than the last Interest Payment Date and would
otherwise be subject to optional redemption on such Mode Change Date at a
Redemption Price of more than 100% of the principal amount thereof, such Bonds
shall be purchased at a Purchase Price equal to such Redemption Price.
(B) If the Bonds to be converted are in the Flexible Mode, no
Interest Period set after delivery by the Company to the Remarketing Agent of
the notice of the intention to effect a change in Mode shall extend beyond the
proposed Mode Change Date.
(C) The following items shall have been delivered to the
Trustee, the Paying Agent and the Remarketing Agent on or prior to the Mode
Change Date:
(1) in the case of a change from a Short-Term Mode to a
Long-Term Mode or from a Long-Term Mode to a Short-Term Mode or the Auction Rate
Mode, a Favorable Opinion of Bond Counsel dated the Mode Change Date and
addressed to the Notice Parties;
(2) if there is to be an Alternate Liquidity Facility or
Alternate Credit Enhancement delivered in connection with such change, the items
required by Section 521(d) hereof;
(3) a Rating Confirmation Notice, or if the Mode Change
Date is a Mandatory Purchase Date, a notice from the Rating Agencies of the
rating(s) to be assigned the Bonds on such Mode Change Date; and
(4) written consent from the Bond Insurer.
(b) Change to Fixed Rate Mode. At the option of the Company and with the
prior written consent of the Bond Insurer, the Bonds may be changed to the Fixed
Rate Mode as provided in this Section 509(b). On any Business Day which is at
least 30 days (or such shorter time as may be agreed to by the Authority, the
Company, the Trustee and the Remarketing Agent, but in any event not less than
the 15th day next preceding the Mode Change Date) before the proposed Mode
Change Date, the Company shall give written notice to the Notice Parties stating
that the Mode will be changed to the Fixed Rate Mode and setting forth the
proposed Mode Change Date. Such notice shall also state whether or not there
shall be Credit Enhancement with respect to the Bonds following such change and,
if so, the identity of the Credit Provider. Any such change in Mode shall be
made as follows:
(i) Mode Change Date. The Mode Change Date shall be:
(A) in the case of a change from the Flexible Mode, the next
Mandatory Purchase Date for the Flexible Rate Bonds;
(B) in the case of a change from the Daily or Weekly Mode, any
70
Business Day; and
(C) in the case of a change from the Term Rate Mode, the Mode
Change Date shall be limited to any Interest Payment Date on which the Bonds are
subject to optional redemption or to the next Mandatory Purchase Date for the
Term Rate Bonds, as the case may be. Such Bonds shall be purchased on such Mode
Change Date at a Purchase Price equal to 100% of the principal amount thereof,
provided that if such Bonds would otherwise be subject to optional redemption on
such Mode Change Date at a Redemption Price of more than 100% of the principal
amount thereof, such Bonds shall be purchased at a Purchase Price equal to such
Redemption Price.
(ii) Notice to Owners. Not less than the 15th day next preceding the
Mode Change Date, the Paying Agent shall mail, in the name of the Company,
a notice of such proposed change to the Owners of the Bonds stating that
the Mode will be changed to the Fixed Rate Mode, the proposed Mode Change
Date and that such Owner is required to tender such Owners Bonds for
purchase on such proposed Mode Change Date.
(iii) General Provisions Applying to Change to Fixed Rate Mode. The
change to the Fixed Rate Mode shall not occur unless the following items
shall have been delivered to the Authority, the Company, the Trustee and
the Remarketing Agent on or prior to the Mode Change Date:
(A) a Favorable Opinion of Bond Counsel dated the Mode Change
Date and addressed to the Authority, the Company, the Trustee, the Bond Insurer
and the Remarketing Agent;
(B) if there is to be Credit Enhancement delivered in
connection with such change, the items required by Section 521(d) hereof in
connection with the delivery of an Alternate Credit Enhancement, and
(C) notice from the Rating Agencies of the rating(s) to be
assigned the Bonds on such Mode Change Date.
(iv) Determination of Interest Rate. The Fixed Rate for the Bonds to
be converted to the Fixed Rate Mode shall be established by the
Remarketing Agent on the Rate Determination Date applicable thereto
pursuant to the provisions of Section 507(b). Such Rate shall remain in
effect until the maturity date of the Bonds.
(v) Redemption Terms. Upon conversion of the Bonds to the Fixed Rate
Mode, the Bonds shall be remarketed at par, shall mature on the same
maturity date and be subject to the same mandatory and optional redemption
provisions as set forth in this Agreement for any prior Mode; provided,
however, that if the Company shall deliver to the Trustee a Favorable
Opinion of Bond Counsel, the Company may elect to (1) change the optional
redemption dates and/or premiums set forth in Section 512(b) hereof,
and/or
71
(2) sell some or all of the Bonds at a premium or a discount to par.
(c) Failure to Satisfy Conditions Precedent to a Mode Change. In the event
the conditions described above in subsections (a) or (b), as applicable, of this
Section have not been satisfied by the applicable Mode Change Date, then the New
Mode shall not take effect (although any mandatory tender shall be made on such
date if notice has been sent to the Owners stating that such Bonds would be
subject to mandatory purchase on such date). If the failed change in Mode was
from the Flexible Mode, the Bonds shall remain in the Flexible Mode with
interest rates and Interest Periods to be established by the Remarketing Agent
on the failed Mode Change Date in accordance with Section 505 hereof. If the
failed change in Mode was from the Daily Mode, the Bonds shall remain in the
Daily Mode, and if the failed change in Mode was from the Weekly Mode, the Bonds
shall remain in the Weekly Mode, in each case with interest rates established in
accordance with the applicable provisions of Section 506 hereof on and as of the
failed Mode Change Date. If the failed change in Mode was from the Term Rate
Mode, then the Bonds shall stay in the Term Rate Mode for an Interest Period
ending on the following Interest Payment Date for the Bonds in the Term Rate
Mode and the interest rate shall be established by the Remarketing Agent on the
failed Mode Change Date in accordance with Section 507(a) hereof.
(d) Recission of Election. Notwithstanding anything herein to the
contrary, the Company may rescind any election by it to change a Mode as
described above prior to the Mode Change Date by giving written notice thereof
to the Notice Parties prior to such Mode Change Date. If the Tender Agent
receives notice of such rescission prior to the time the Tender Agent has given
notice to the holders of the Bonds, then such notice of change in Mode shall be
of no force and effect. If the Tender Agent receives notice from the Company of
rescission of a Mode change after the Tender Agent has given notice thereof to
the holders of the Bonds, then if the proposed Mode Change Date would have been
a Mandatory Purchase Date, such date shall continue to be a Mandatory Purchase
Date. If the proposed change in Mode was from the Flexible Mode, the Bonds shall
remain in the Flexible Mode with interest rates and Interest Periods to be
established by the Remarketing Agent on the proposed Mode Change Date in
accordance with Section 505 hereof. If the proposed change in Mode was from the
Daily Mode, the Bonds shall remain in the Daily Mode, and if the proposed change
in Mode was from the Weekly Mode, the Bonds shall remain in the Weekly Mode, in
each case with interest rates established in accordance with the applicable
provisions of Section 506 hereof on and as of the proposed Mode Change Date. If
the proposed change in Mode was from the Term Rate Mode, then the Bonds shall
stay in the Term Rate Mode for an Interest Period ending on the following
Interest Payment Date for the Bonds in the Term Rate Mode and the interest rate
shall be established by the Remarketing Agent on the proposed Mode Change Date
in accordance with Section 507(a) hereof. If the Remarketing Agent is unable to
determine the interest rate on the proposed Mode Change Date, the provisions of
Section 508 shall apply.
Section 510. Optional Redemption of Flexible Rate Bonds. Bonds in the
Flexible Mode are not subject to optional redemption prior to their respective
Purchase Dates. Bonds in the Flexible Mode shall be subject to redemption at the
option of the Company in whole or in part on
72
their respective Purchase Dates at a redemption price equal to the principal
amount thereof.
Section 511. Optional Redemption of Bonds in the Daily Mode or the Weekly
Mode. Bonds in the Daily Mode or the Weekly Mode are subject to optional
redemption by the Company, in whole or in part, in Authorized Denominations on
any date, at a redemption price equal to the principal amount thereof, plus,
accrued interest, if any, from the end of the preceding Interest Accrual Period
to the Redemption Date.
Section 512. Optional Redemption of Bonds in the Term Rate or the Fixed
Rate Mode.
Bonds in a Term Rate Mode shall be subject to redemption, in whole
or in part, on their individual Mandatory Purchase Dates, at the option of the
Company at a redemption price equal to the principal amount thereof.
(a) Bonds in the Term Rate Mode or Fixed Rate Mode are subject to
redemption in whole on any date or in part on any Interest Payment Date (and if
in part by lot or by such other method as the Paying Agent determines to be fair
and reasonable and in Authorized Denominations) at the redemption prices set
forth below, together with accrued interest, if any, to the redemption date:
- ---------------------------------------------------------------------------------------------------------------------
LENGTH OF LONG-TERM COMMENCEMENT OF REDEMPTION PRICE
INTEREST RATE PERIOD REDEMPTION PERIOD
- ---------------------------------------------------------------------------------------------------------------------
Greater than or equal to 15 Tenth anniversary of the 102%, declining by 1.0% on each
years commencement of Long-Term succeeding anniversary of the
Interest Rate Period first day of the redemption
period until reaching 100% and
thereafter at 100%
- ---------------------------------------------------------------------------------------------------------------------
Less than 15 years and greater Seventh anniversary of the 102%, declining by 1.0% on each
than or equal to 10 years commencement of Long-Term succeeding anniversary of the
Interest Rate Period first day of the redemption
period until reaching 100% and
thereafter at 100%
- ---------------------------------------------------------------------------------------------------------------------
Less than 10 years and Third anniversary of the 101%, declining by 1.0% on each
greater than or equal to commencement of Long-Term succeeding anniversary of the
5 years Interest Rate Period first day of the redemption
period until reaching 100% and
thereafter at 100%
- ---------------------------------------------------------------------------------------------------------------------
Less than 5 years Bonds not subject to optional
redemption
- ---------------------------------------------------------------------------------------------------------------------
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(b) The Company, in connection with a change to a Long-Term Mode, may
waive or otherwise alter its rights to direct the redemption of any such Bonds
so changed to a Long-Term Mode at any time without premium; provided that notice
describing the waiver or alteration shall be submitted to the Paying Agent, the
Trustee and the Remarketing Agent, together with a Favorable Opinion of Bond
Counsel, addressed to them.
(c) If a Credit Enhancement is then in effect and the Redemption Price
includes any premium, the right of the Company to direct an optional redemption
is subject to the condition that the Trustee has received, prior to the date on
which notice of redemption is required to be given to Owners, either Available
Moneys of the Company sufficient to cover the premium due on the Redemption Date
or written confirmation from the Credit Provider that it can draw under the
Credit Enhancement on the proposed redemption date in an aggregate amount
sufficient to cover the principal of and premium and interest due on the
Redemption Date.
Section 513. Optional Tenders of Bonds in the Daily Mode or the Weekly
Mode. Subject to Section 518 hereof, the Beneficial Owners of Bonds in a Daily
Mode or a Weekly Mode may elect to have their Bonds (or portions of those Bonds
in amounts equal to an Authorized Denominations) purchased on any Business Day
at a price equal to the Purchase Price, upon delivery of a Tender Notice by the
Tender Notice Deadline.
Section 514. Mandatory Purchase on Mandatory Purchase Date. The Bonds
shall be subject to mandatory purchase on each Mandatory Purchase Date. The
Tender Agent shall give notice of such mandatory purchase by mail to the Owners
of the Bonds subject to mandatory purchase (a) no less than thirty (30) days
prior to the Mandatory Purchase Date in the case of a mandatory purchase (i) at
the end of an Interest Period for Bonds in a Term-Rate Mode or (ii) on a
Substitution Date; (b) no less than 15 days prior to the Mandatory Purchase Date
in the case of a mandatory purchase on a Mode Change Date; and (c) no less than
the number of days specified in the Liquidity Facility prior to the Mandatory
Purchase Date (i) following notice from the Credit Provider or Liquidity
Provider of an event of default under the Reimbursement Agreement or (ii)
immediately preceding any Expiration Date. No notice shall be given of the
Mandatory Purchase Date at the end of each Interest Period for Flexible Rate
Bonds. Any notice shall state the Mandatory Purchase Date, the Purchase Price,
the numbers of the Bonds to be purchased if less than all of the Bonds owned by
such Owner are to be purchased, and that interest on Bonds subject to mandatory
purchase shall cease to accrue from and after the Mandatory Purchase Date. The
failure to mail such notice with respect to any Bond shall not affect the
validity of the mandatory purchase of any other Bond with respect to which
notice was so mailed. Any notice mailed will be conclusively presumed to have
been given, whether or not actually received by any Owner or Beneficial Owner.
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Section 515. Remarketing of Bonds; Notices.
(a) Remarketing of Bonds. The Remarketing Agent shall use its best efforts
to offer for sale:
(i) all Bonds or portions thereof as to which notice of tender pursuant to
Section 513 hereof has been given; and
(ii) all Bonds required to be purchased on a Mandatory Purchase Date
described in clauses (i), (ii) or (iii) of the definition thereof; and
(iii) any Liquidity Provider Bonds (A) purchased on a Purchase Date
described in clause (i) or (ii) above, (B) with respect to which the
Liquidity Provider has provided notice to the Trustee and the Remarketing
Agent that it is ready to reinstate the Available Amount, (C) with respect
to which an Alternate Liquidity Facility and Alternate Credit Enhancement
are in effect (if such funds were secured by a Credit Enhancement prior to
becoming Liquidity Provider Bonds which Credit Enhancement is no longer in
effect), or (D) which are being marketed as Fixed Rate Bonds.
(b) Notice of Remarketing; Registration Instructions; New Bonds. On each
date on which a Bond is to be purchased:
(i) the Remarketing Agent shall notify by Electronic Means the Tender
Agent by 12:00 noon if it has been unable to remarket any tendered Bonds,
and shall include in such notice the principal amount of Bonds it has been
unable to remarket;
(ii) unless the Remarketing Agent has delivered the notice described in
clause (i) above, the Remarketing Agent shall notify the Tender Agent by
Electronic Means not later than 1:00 P.M. of the names of the purchasers
of the remarketed Bonds and such information as may be necessary to
register the Bonds and the registration instructions (i.e., the names,
addresses and taxpayer identification numbers of the purchasers and the
desired Authorized Denominations) with respect thereto; and
(iii) if the Bonds are no longer in the Book-Entry System, the Tender
Agent shall authenticate new Bonds for the respective purchasers thereof
which shall be available for pick-up by the Remarketing Agent not later
than 2:30 P.M.
(c) Draw on Liquidity Facility. On each date on which a Bond is to be
purchased, if the Remarketing Agent shall have given notice to the Tender Agent
pursuant to clause (b)(i) above that it has been unable to remarket any of the
Bonds, the Tender Agent shall direct the Trustee (if the two are separate
entities) to draw on the Liquidity Facility (or if there is no Liquidity
Facility or the Liquidity Facility is unavailable to honor such draw, request
funds from the Company) by 12:30 P.M. in an amount equal to the Purchase Price
of all such Bonds which have not been successfully remarketed.
75
Section 516. Source of Funds for Purchase of Bonds. By the close of
business on the date on which a Bond is to be purchased, and except as set forth
in Section 518(b)(ii) hereof, the Tender Agent shall purchase tendered Bonds
from the tendering Owners at the applicable Purchase Price by wire transfer in
immediately available funds. Funds for the payment of such Purchase Price shall
be derived solely from the following sources in the order of priority indicated
and none of the Tender Agent, the Trustee nor the Remarketing Agent shall be
obligated to provide funds from any other source:
(a) immediately available funds on deposit in the Remarketing Proceeds
Account;
(b) immediately available funds on deposit in the Liquidity Facility
Purchase Account;
(c) Available Moneys of the Company; and
(d) Other moneys of the Company.
Section 517. Delivery of Bonds. On each date on which a Bond is to be
purchased, such Bond shall be delivered as follows:
(a) Bonds sold by the Remarketing Agent and described in Section 516(a)
hereof shall be delivered by the Remarketing Agent to the purchasers of such
Bonds by 3:00 P.M.; and
(b) Bonds purchased by the Tender Agent with moneys described in Section
516(b) hereof shall be registered immediately in the name of the Liquidity
Provider or its nominee (which may be the Securities Depository) on or before
3:00 P.M.
(c) Bonds purchased by the Company with moneys described in Section 516(c)
or (d) hereof shall be registered immediately in the name of the Company or its
nominee on or before 3:00 P.M. Bonds so owned by the Company shall continue to
be outstanding under the terms of this Agreement and be subject to all of the
terms and conditions of this Agreement and shall be subject to remarketing by
the Remarketing Agent.
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Section 518. Book-Entry Tenders.
(a) Notwithstanding any other provision of this Article V to the contrary,
all tenders for purchase during any period in which the Bonds are registered in
the name of Cede & Co. (or the nominee of any successor Securities Depository)
shall be subject to the terms and conditions set forth in the Representation
Letter and to any regulations promulgated by DTC (or any successor Securities
Depository). For so long as the Bonds are registered in the name of Cede & Co.,
as nominee for DTC, the tender option rights of Holders of Bonds may be
exercised only by a Direct Participant of DTC acting, directly or indirectly, on
behalf of a Beneficial Owner of Bonds by giving notice of its election to tender
Bonds or portions thereof at the times and in the manner described above.
Beneficial Owners will not have any rights to tender Bonds directly to the
Tender Agent. Procedures under which a Beneficial Owner may direct a Direct
Participant or DTC, or an Indirect Participant of DTC acting through a Direct
Participant of DTC, to exercise a tender option right in respect of Bonds or
portions thereof in an amount equal to all or a portion of such Beneficial
Owner's beneficial ownership interest therein shall be governed by standing
instructions and customary practices determined by such Direct Participant or
Indirect Participant. For so long as the Bonds are registered in the name of
Cede & Co., as nominee for DTC, delivery of Bonds required to be tendered for
purchase shall be effected by the transfer by a Direct Participant on the
applicable Purchase Date of a book-entry credit to the account of the Tender
Agent of a beneficial interest in such Bonds.
(b) Notwithstanding anything expressed or implied herein to the contrary,
so long as the Book-Entry System for the Bonds is maintained:
(i) there shall be no requirement of physical delivery to or by the Tender
Agent, the Remarketing Agent or the Trustee of:
(A) any Bonds subject to mandatory or optional purchase as a
condition to the payment of the Purchase Price therefor;
(B) any Bonds that have become Liquidity Provider Bonds; or
(C) any remarketing proceeds of such Bonds or Liquidity
Provider Bonds; and
(ii) except as provided in (iii) below, none of the Trustee, the Tender
Agent nor the Paying Agent shall have any responsibility for paying the
Purchase Price of any tendered Bond or for remitting remarketing proceeds
to any person; and
(iii) the Trustee's sole responsibilities in connection with the purchase
and remarketing of a tendered Bond shall be to:
(A) draw upon the Liquidity Facility in the event the
Remarketing Agent notifies the Tender Agent as provided herein that such Bond
has not been remarketed on or before the Purchase Date therefor, which draw
shall be in an amount equal to the difference
77
between such Purchase Price and any remarketing proceeds received by Remarketing
Agent in connection with a partial remarketing of such Bond, and to remit the
amount so drawn to or upon the order of the Securities Depository for the
benefit of the tendering Beneficial Owners; and
(B) remit any proceeds derived from the remarketing of a
Liquidity Provider Bond to the Liquidity Provider.
Section 519. No Book-Entry System. If at any time the Bonds shall no
longer be in the Book-Entry System, the following procedures shall be followed:
(a) Bonds shall be delivered (with all necessary endorsements) at or
before 12:00 noon on the Purchase Date at the office of the Paying Agent in New
York, New York; provided, however, that payment of the Purchase Price shall be
made pursuant to this Section only if the Bond so delivered to the Paying Agent
conforms in all respects to the description thereof in the notice described in
this Section. Payment of the Purchase Price with respect to purchases under this
Section shall be made to the Owners of tendered Bonds by wire transfer in
immediately available funds by the Paying Agent by 3:00 P.M. on the Purchase
Date.
(b) If a Bond to be purchased is not delivered by the Owner to the Paying
Agent by 12:00 noon on the date on which such Bond is to be purchased, the
Paying Agent shall hold any funds received for the purchase of those Bonds in
trust in a separate account and shall pay such funds to the former Owners of the
Bonds upon presentation of the Bonds. Such undelivered Bonds shall cease to
accrue interest as to the former Owners on such purchase date and moneys
representing the Purchase Price shall be available against delivery of those
Bonds at the Principal Office of the Paying Agent; provided, however, that any
funds which shall be so held by the Paying Agent and which remain unclaimed by
the former Owner of a Bond not presented for purchase for a period of three
years after delivery of such funds to the Paying Agent, shall, to the extent
permitted by law, upon request in writing by the Company and the furnishing of
security or indemnity to the Paying Agent's satisfaction, be paid to the Company
free of any trust or lien and thereafter the former Owner of such Bond shall
look only to the Company as an unsecured creditor and then only to the extent of
the amounts so received by the Company without any interest thereon and the
Paying Agent shall have no further responsibility with respect to such moneys or
payment of the purchase price of such Bonds. The Paying Agent shall authenticate
a replacement Bond for any undelivered Bond which may then be remarketed by the
Remarketing Agent.
(c) The Paying Agent shall hold all Bonds properly tendered to it for
purchase hereunder as agent and bailee of, and in escrow for the benefit of, the
respective Owners of the Bonds which shall have so tendered such Bonds until
moneys representing the Purchase Price of such Bonds shall have been delivered
to or for the account of or to the order of such Owners.
Section 520. No Purchases or Sales After Credit Provider or Liquidity
Provider Failure. Anything in this Agreement to the contrary notwithstanding, if
there shall have occurred and be continuing either a Credit Enhancement Failure
or a Liquidity Facility Failure, the Remarketing Agent shall not remarket any
Bonds. All other provisions of this Agreement, including without
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limitation, those relating to the setting of interest rates and Interest Periods
and mandatory and optional purchases, shall remain in full force and effect
during the continuance of such Credit Enhancement Failure or Liquidity Facility
Failure, as the case may be.
Section 521. Credit Enhancement and Liquidity Facility.
While any Credit Enhancement is in effect with
respect to any Bonds, the Trustee shall, on the Business Day preceding each
Interest Payment Date and Principal Payment Date, before 4:00 P.M. on such day,
draw on the Credit Enhancement in accordance with the terms thereof so as to
receive thereunder with respect to Bonds covered by the Credit Enhancement by
1:00 P.M. on said Interest Payment Date and Principal Payment Date, an amount,
in immediately available funds, equal to the amount of interest and principal
payable on such Bonds on such Interest Payment Date and Principal Payment Date.
The proceeds of such draws shall be deposited in an account dedicated to such
purpose.
(a) On each date on which a Bond is to be purchased, the Trustee, at the
direction of the Tender Agent as provided in Section 515(c) hereof, by demand
given by Electronic Means before 12:30 P.M., shall draw on the Liquidity
Facility in accordance with the terms thereof so as to receive thereunder by
2:30 P.M. on such date an amount, in immediately available funds, sufficient,
together with the proceeds of the remarketing of Bonds on such date, to enable
the Tender Agent to pay the Purchase Price in connection therewith. The proceeds
of such draw shall be paid to the Tender Agent, who shall deposit said proceeds
in the Liquidity Facility Purchase Account pursuant to Section 522(b) hereof.
(b) Notwithstanding the foregoing paragraphs of this Section, if the
Credit Provider and the Liquidity Provider are the same entity, the Trustee
shall not draw on the Credit Enhancement with respect to any payments due or
made in connection with Liquidity Provider Bonds. In no event shall the Trustee
draw on the Credit Enhancement with respect to any payments made or made in
connection with Bonds not covered by the Credit Enhancement or Bonds owned by
the Company.
(c) If at any time there shall have been delivered to the Trustee (i) an
Alternate Credit Enhancement or an Alternate Liquidity Facility in substitution
for the Credit Enhancement or Liquidity Facility then in effect, (ii) a
Favorable Opinion of Bond Counsel, (iii) a written Opinion of Counsel for the
provider of the Alternate Credit Enhancement or Alternate Liquidity Facility, as
applicable, to the effect that such Alternate Credit Enhancement or Alternate
Liquidity Facility is a valid, legal and binding obligation of the provider
thereof (subject to customary exceptions), and (iv) unless waived by such
entity, written evidence satisfactory to the Credit Provider and the Liquidity
Provider of the provision for purchase from the Liquidity Provider of all
Liquidity Provider Bonds, at a price equal to the principal amount thereof plus
accrued and unpaid interest, and payment of all amounts due to the Credit
Provider and the Liquidity Provider under the Reimbursement Agreement(s) on or
before the effective date of such Alternate Letter of Credit or Alternate
Liquidity Facility, then the Trustee shall accept such Alternate Letter of
Credit or
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Alternate Liquidity Facility on the Substitution Date and shall surrender the
Credit Enhancement or Liquidity Facility then in effect to the provider thereof
on the Substitution Date. The Company shall give the Notice Parties written
notice of the proposed substitution of an Alternate Credit Enhancement or
Alternate Liquidity Facility no less than thirty (30) days prior to the proposed
Substitution Date. The Trustee shall give notice of such proposed substitution
by mail to the Beneficial Owners of the Bonds as identified by the Remarketing
Agent and to the registered owners (subject to procedures of the Securities
Depository) no less than fifteen (15) days prior to the proposed Substitution
Date.
Section 522. Purchase Fund. There is hereby established and there shall be
maintained with the Tender Agent, as agent for the Trustee, a separate fund to
be known as the "Purchase Fund". The Tender Agent shall further establish
separate accounts within the Purchase Fund to be known as the "Liquidity
Facility Purchase Account" and the "Remarketing Proceeds Account" and the
"Company Purchase Account".
(a) Remarketing Proceeds Account. Upon receipt of the proceeds of a
remarketing of a Bond on the date such bond is to be purchased, the Tender Agent
shall deposit such proceeds in the Remarketing Proceeds Account for application
to the Purchase Price of the Bonds. Notwithstanding the foregoing, upon the
receipt of the proceeds of a remarketing of Liquidity Provider Bonds, the Tender
Agent shall immediately pay such proceeds to the Liquidity Provider to the
extent of any amount owing to the Liquidity Provider.
(b) Liquidity Facility Purchase Account. Upon receipt from the Trustee of
the immediately available funds transferred to the Tender Agent pursuant to
Section 521(b) hereof, the Tender Agent shall deposit such money in the
Liquidity Facility Purchase Account for application to the Purchase Price of the
Bonds to the extent that the moneys on deposit in the Remarketing Proceeds
Account shall not be sufficient. Any amounts deposited in the Liquidity Facility
Purchase Account and not needed with respect to the Purchase Price for any Bonds
shall be immediately returned to the Liquidity Provider.
(c) Company Purchase Account. Upon receipt of Funds from the Company
pursuant to Section 516(c) or (d) hereof, the Tender Agent shall deposit such
Funds in the Company Purchase Account for application to the Purchase Price of
the Bonds. Any amounts deposited in the Company Purchase Account and not needed
with respect to the Purchase Price for any Bonds shall be immediately refunded
to the Company.
(d) Investment. Amounts held in the Liquidity Facility Purchase Account
and the Remarketing Proceeds Account by the Paying Agent shall be held
uninvested and separate and apart from all other funds and accounts.
Section 523. Inadequate Funds for Tenders. If sufficient funds are not
available for the purchase of all tendered Bonds required to be purchased on any
Purchase Date, the Trustee shall take all actions reasonably available to it to
obtain remarketing proceeds from the Remarketing Agent and sufficient funds from
the Liquidity Provider or the Company to purchase all such Bonds on or before
12:00 noon, New York City time, on the Business Day next succeeding such
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Purchase Date. Thereafter, the Trustee shall continue to take all such action
reasonably available to it to obtain such remarketing proceeds from the
Remarketing Agent and such funds from the Liquidity Provider or the Company. Any
obligations of the Remarketing Agent, the Credit Provider or the Company to
cause the deposit of such funds from remarketing proceeds, proceeds of the
Credit Enhancement or other amounts, respectively, shall remain enforceable
pursuant to this Agreement, and such obligation shall only be discharged at such
time as funds are deposited with the Trustee in an amount sufficient to purchase
all such Bonds, together with any interest which has accrued on such Bonds to
the subsequent actual purchase date.
Section 524. Appointment of Remarketing Agent.
The Remarketing Agent is hereby appointed to remarket
Bonds pursuant to this Agreement, and 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 Notice Parties at all reasonable times. The
Remarketing Agent shall act as such under the Remarketing Agreement.
(a) The Remarketing Agent may at any time resign and be discharged of the
duties and obligations created by this Agreement by giving at least ten (10)
days' notice to the Notice Parties. The Remarketing Agent may suspend its
remarketing efforts as set forth in the Remarketing Agreement. The Remarketing
Agent may be removed at any time, at the direction of the Company, by an
instrument filed with the Remarketing Agent, the Trustee and the Paying Agent
and upon at least ten (10) days' notice to the Remarketing Agent. Any successor
Remarketing Agent shall be selected by the Company, and shall be a member of the
National Association of Securities Dealers, Inc., shall have a capitalization of
at least fifteen million dollars ($15,000,000), shall be authorized by law to
perform all the duties set forth in this Agreement and shall be reasonably
acceptable to the Credit Provider and Liquidity Provider. The Company's delivery
to the Trustee of a certificate setting forth the effective date of the
appointment of a successor Remarketing Agent and the name of such successor
shall be conclusive evidence that (i) if applicable, the predecessor Remarketing
Agent has been removed in accordance with the provisions of this Agreement and
(ii) such successor has been appointed and is qualified to act as Remarketing
Agent under the terms of this Agreement.
(b) If the Remarketing Agent consolidates with, merges or converts into,
or transfers all or substantially all of its assets (or, in the case of a bank,
national banking association or trust company, its corporate assets) to, another
Company, the resulting, surviving or transferee Company without any further act
shall be the successor Remarketing Agent.
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ARTICLE VI. THE PROJECT
Section 601. Company not to Impair Tax Status; Use of Project Facilities.
Notwithstanding any provision herein to the contrary, the Company did not use
any of the proceeds of the 1989 Bonds, the 1991 Series C Bonds or the Loan (or
the income earned through the investment thereof, if any) and did not take or
omit any action or permit any action to be taken or omitted with the result that
interest on the Bonds is included in the gross income of the owners thereof for
federal income tax purposes. The use of the Project Facilities (or facilities
replacing the same) is in furtherance of the purpose of air or water pollution
control or sewage or solid waste disposal and in compliance with the Act.
Section 602. Qualification of Project Facilities. Notwithstanding any
provision herein to the contrary, the Company did not permit the Project
Facilities to fail to qualify as (a) "industrial facilities" under the Act, and
(b) a facility described in Section 1312(a) of the Tax Reform Act of 1986, or
(c) "sewage or solid waste disposal facilities" or "air or water pollution
control facilities" within the meaning of Section 103(b)(4)(E) or (F) of the
1954 Code. The Company acknowledges that it is not relying on any representation
of any kind by the Authority or the Trustee concerning the nature or condition
of the Project Facilities. Neither the Authority nor the Trustee shall be liable
to the Company or any other person for any latent or patent defect in the
Project Facilities.
Section 603. Reserved.
Section 604. Reserved.
Section 605. Disposition and Use of Project Facilities. The Company has
transferred its interest in the Project Facilities to NAEC. NAEC is expected to
transfer the Project Facilities to an unaffiliated party pursuant to an order of
the New Hampshire Public Utilities Commission. No Bonds shall be issued under
this Agreement until the Authority, the Company, the Trustee and NAEC have
executed and delivered a Series B Seabrook Pollution Control Facilities
Agreement substantially in the form attached hereto as Exhibit C (such Agreement
and each subsequent agreement providing for a Seabrook Transfer, a "Facilities
Agreement"). No sale, lease, transfer or other disposition of the Project
Facilities or the Station shall relieve the Company of any of its obligations
under this Agreement.
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ARTICLE VII. ADDITIONAL COVENANTS OF THE COMPANY
Section 701. Existence and Good Standing; Merger; Consolidation. The
Company will maintain its corporate existence, qualification to do business and
good standing under the laws of the State of New Hampshire and will maintain
itself as a foreign corporation duly qualified to do business and in good
standing, where applicable, in each jurisdiction in which the failure to so
qualify would have a material adverse effect upon its business or properties.
The Company shall not merge or consolidate with or sell all or substantially all
of its assets to another entity, except that the Company may so merge or
consolidate with or sell all or substantially all of its assets to another
corporation if (i) the surviving or transferee corporation is qualified to do
business in New Hampshire, (ii) the surviving or transferee corporation (if not
the Company) has assumed in writing all of the Company's obligations hereunder
and under the Series J First Mortgage Bonds, and (iii) upon such assumption
there will not be a Default hereunder, or under the First Mortgage Bond
Indenture (disregarding any required passage of time or giving of notice
thereunder). The Company shall not change its name or reorganize or change its
legal structure or merge or consolidate with or sell all or substantially all
its assets to another entity without at least thirty (30) days notice to the
Trustee (unless the Trustee agrees to a shorter period).
Section 702. Indemnification by the Company. The Company, regardless of
any agreement to maintain insurance, shall and does hereby indemnify the
Authority and the Trustee against (a) any and all claims by any person related
to the participation of the Authority or the Trustee in the transactions
contemplated by this Agreement, including without limitation claims arising out
of any condition of the Project Facilities or Station or the construction, use,
occupancy or management thereof; any accident, injury or damage to any person
occurring in or about the Station; any breach by the Company of its obligations
under this Agreement; any act or omission of the Company or any of its agents,
contractors, servants, employees or licensees; or the offering, issuance, sale
or any resale of the Bonds to the extent permitted by law, and (b) all costs,
counsel fees, expenses or liabilities reasonably incurred in connection with any
such claim or any action or proceeding brought thereon. In case any action or
proceeding is brought against the Authority or the Trustee by reason of any such
claim, the Company will defend the same at its expense upon notice from the
Authority or the Trustee, and the Authority or the Trustee, as the case may be,
will cooperate with the Company, at the expense of the Company, in connection
therewith.
Section 703. Continuing Disclosure. The Company and the Trustee hereby
covenant and agree that each will comply with and carry out all of the
provisions of the Continuing Disclosure Agreement applicable to it and this
Section 703 of this Agreement. The Authority shall have no liability to the
owners of the Bonds or any other person with respect to such disclosure matters.
Notwithstanding any other provision of this Agreement, failure of the Company or
the Trustee to comply with the Continuing Disclosure Agreement shall not be
considered an Event of Default; however, the Trustee may (and, at the request of
the owners of at least 25% aggregate principal amount of Outstanding Bonds,
shall) or any owner (including a beneficial owner) of Bonds may seek specific
performance of the Company's or the Trustees obligations to comply with the
Continuing Disclosure Agreement or this Section 703 and not for
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money damages in any amount.
ARTICLE VIII. DEFAULT AND REMEDIES
Section 801. Default.
(a) Events of Default; Default. "Event of Default" in this Agreement means
any one of the events set forth below and "Default" means any Event of Default
without regard to any lapse of time or notice.
(i) Debt Service on Bonds. Any payment of interest, principal or
premium on the Bonds or any Purchase Price for Bonds shall not be
paid when the same becomes due and payable.
(ii) Other Obligations. The Company shall fail to observe or perform
any of its other covenants or agreements contained herein, or the
Seabrook Transferee shall fail to observe or perform any of its
covenants or agreements related to the Project Facilities contained
in the Facilities Agreement, and such failure shall continue for a
period of sixty (60) days after written notice given to the Company
by the Trustee, the Bond Insurer or the Bondowners of at least 25%
in principal amount of the Bonds Outstanding; provided, however,
that if such Default cannot be cured by the Company or the Seabrook
Transferee within such sixty-day period, it shall not constitute an
Event of Default if, with the written consent of the Bond Insurer
(which shall not be unreasonably withheld) curative action is
instituted by the Company or the Seabrook Transferee within such
sixty-day period and thereafter is diligently pursued until such
Default is cured.
(iii) First Mortgage Bond Default. The occurrence of any "event of
default" as defined in the First Mortgage Bond Indenture.
(iv) Bond Insurance Agreement Default. The Trustee shall have
received written notice from the Bond Insurer of the occurrence of
any "Event of Default" as defined in the Bond Insurance Agreement.
The Company agrees to notify the Authority, the Trustee and the Bond
Insurer promptly in writing of the occurrence of any Default or Event of Default
of which it has knowledge. Immediately after becoming aware of an Event of
Default under (i) above, or within five (5) days or the next Business Day if
such fifth day is not a Business Day after becoming aware of a Default or an
Event of Default under (ii), (iii), or (iv) above, the Trustee will give notice
to the Bondowners and, in the case of an Event of Default under (i), (ii) or
(iv) above, to the First Mortgage Bond Trustee.
Notwithstanding anything in this section to the contrary, no action or
failure to act by the Company or the Seabrook Transferee which results in
interest on the Bonds becoming includable in gross income of the owners thereof
for federal income tax purposes shall constitute a Default
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or Event of Default under this Agreement so long as (I) the Company shall have
delivered the opinion described in clause (i) of Subsection 307(c) or shall have
complied with the second sentence of Subsection 307(d) and (II) the redemption
provided by Subsection 307(c) occurs. In such event, no Bondowner shall be
entitled to any claim for monetary damages hereunder and the redemption of the
Bonds as provided under Subsection 307(c) shall be the exclusive recourse of
Bondowners.
(b) Waiver. At any time before an acceleration pursuant to Section 802,
the Trustee may waive a Default (other than a Default in the payment of
principal of, premium, if any, or interest on the Bonds) and its consequences,
with the written consent of the Bond Insurer, by written notice to the Company,
and in the absence of any inconsistent instructions from Bondowners pursuant to
Sections 805 or 1101 shall do so, with the written consent of the Bond Insurer,
upon written instruction of the owners of at least twenty-five per cent (25%) in
principal amount of the Outstanding Bonds. No waiver under this section shall
affect the right of the Trustee or the Authority to enforce the payment of any
amounts owing to it.
Any cure or waiver of any "event of default" under the First Mortgage Bond
Indenture and a rescission and annulment of its consequences shall constitute a
cure or waiver of the corresponding Event of Default under Paragraph 801(a)(iii)
and a rescission and annulment of the consequences thereof, and the Trustee,
upon obtaining knowledge thereof, shall give written notice of such cure or
waiver, rescission or annulment to the Authority and the Company, and shall give
notice thereof by mail to all Bondowners; but no such cure or waiver, rescission
and annulment shall extend to or affect any subsequent Event of Default or
impair any right or remedy consequent thereon.
Section 802. Remedies for Events of Default. If an Event of Default occurs
and is continuing:
(a) Acceleration. With the written consent of the Bond Insurer the Trustee
may, and upon the written request of the Bondowners of at least 25% in principal
amount of the Bonds Outstanding, shall, by written notice to the Authority, the
Company, the Bond Insurer, the Liquidity Provider, if any, and the Remarketing
Agent, if any, declare immediately due and payable the principal amount of the
Outstanding Bonds and accrued interest thereon, whereupon the same shall become
immediately due and payable without any further action or notice.
If at any time after such acceleration and before any judgment or decree
for the payment of moneys with respect thereto has been entered all amounts
payable hereunder except principal of and interest on the Bonds which are due
solely by reason of such acceleration shall have been paid or provided for by
deposit with the Trustee and all existing Defaults shall have been cured or
waived, then the Bondowners representing a majority in principal amount of the
Bonds Outstanding may annul such acceleration and its consequences by written
notice to the Authority, the Trustee and the Company. Such annulment shall be
binding upon the Authority, the Trustee and all of the Bondowners, but no such
annulment shall extend to or affect any subsequent Default or impair any right
or remedy consequent thereto.
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(b) Rights as a Secured Party. The Trustee may with the written consent of
the Bond Insurer and shall, at the written direction of the Bond Insurer
exercise all of the rights and remedies of a secured party under the UCC,
subject to the terms of this Agreement. Notice sent by registered or certified
mail, postage prepaid, or delivered during business hours, to the Company at
least seven (7) days before an event under UCC Section 9-611(b) or any successor
provision of law shall constitute reasonable notification of such event.
Section 803. Court Proceedings. The Trustee and the Bond Insurer may
enforce the provisions of this Agreement by appropriate legal proceedings for
the specific performance of any covenant, obligation or agreement contained
herein whether or not a Default or an Event of Default exists, or for the
enforcement of any other appropriate legal or equitable remedy, and may recover
damages caused by any breach by the Company of the provisions of this Agreement,
including (to the extent this Agreement may lawfully provide) court costs,
reasonable attorney's fees and other costs and expenses incurred in enforcing
the obligations of the Company hereunder. The Authority may likewise enforce
obligations owed to it hereunder which it has not assigned to the Trustee. All
rights under this Agreement and the Bonds may be enforced by the Trustee without
the possession of any Bonds or the production thereof at the trial or other
proceedings relative thereto, and any proceeding instituted by the Trustee shall
be brought in its name for the ratable benefit of the Bondowners.
Section 804. Revenues after Default. After the occurrence of an Event of
Default, any funds pledged as security hereunder and any other moneys received
by the Trustee (other than amounts irrevocably set aside to pay particular
Bonds), after payment or reimbursement of the reasonable expenses of the Trustee
and the Authority in connection therewith shall be applied, first, to any other
amounts owing to the Trustee; second, to any other amounts owing to the
Authority other than the Authority's Service Charge; third, to amounts due under
Section 305(a), which amounts shall be applied to the payment of principal of,
premium, if any, and interest on the Bonds in the order specified in Section
304; fourth, to the Authority's Service Charge; and fifth, to other obligations
of the Company hereunder in such order as determined by the Trustee. Any amounts
remaining after the satisfaction of all obligations of the Company hereunder
shall be paid to the Company.
Section 805. Rights of Bondowners. If an Event of Default occurs and is
continuing, and if the Bondowners representing not less than 25% in principal
amount of the Bonds Outstanding shall have requested the Trustee in writing to
exercise one or more of the rights and remedies provided hereunder and offered
it indemnity as provided in Subsection 902(e), the Trustee shall be required to
exercise such one or more of the rights and remedies hereunder as the Trustee
shall determine to be in the best interest of the Bondowners and not
inconsistent with any directions given in accordance with Section 1101. No
Bondowner shall have any right to institute an action in law or equity or to
pursue any other remedy hereunder with respect to any Bond unless (i) an Event
of Default of which the Trustee has been notified has occurred and Bondowners
representing not less than 25% in principal amount of the Bonds Outstanding
shall have requested the Trustee in writing to exercise its rights and remedies
with respect thereto and shall have offered the Trustee reasonable opportunity
to do so and indemnity as provided in Subsection 902(e), and (ii) the Trustee
shall within a reasonable time thereafter fail to exercise
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any of such rights or remedies. No Bondowner shall have any right to institute
any action or pursue any other remedy if and to the extent that the surrender,
impairment, waiver, or loss of the lien of this Agreement would, under
applicable law, result. Notwithstanding the foregoing, each Bondowner shall have
a right of action to enforce payment of the Bonds at and after the due date
thereof at the place, from the sources and in the manner expressed in the Bonds.
Section 806. Performance of Company's Obligations. If the Company shall
fail to observe or perform any of its agreements or obligations hereunder, the
Authority or the Trustee may perform the same in its own name or in the
Company's name and each is hereby irrevocably appointed the Company's
attorney-in-fact for such purpose. Unless an Event of Default exists, the
Authority or the Trustee, as the case may be, shall give at least five (5) days'
notice to the Company before taking action under this section, except that in
case of emergency as reasonably determined by the acting party, it may act on
lesser notice or give the notice promptly after rather than before taking the
action. The reasonable cost of any such action performed by the Trustee or the
Authority shall be paid or reimbursed by the Company within thirty (30) days
after the Trustee or the Authority notify the Company of such cost.
Section 807. Remedies Cumulative; No Waiver. The rights and remedies under
this Agreement shall be cumulative and shall not exclude any other rights and
remedies allowed by law, provided there is no duplication of recovery. Neither
the failure to insist upon a strict performance of any of the obligations of the
Company, nor the failure to exercise any remedy for any violation thereof, shall
be taken as a waiver for the future of the right to insist upon strict
performance of the obligation or to exercise any remedy for the violation.
Section 808. Rights of Bond Insurer.
(a) Anything in this Agreement to the contrary notwithstanding, except as
provided in subsection (b), upon the occurrence and continuance of an Event of
Default, the Bond Insurer shall be entitled to control and direct the
enforcement of all rights and remedies granted to the Bondowners or the Trustee
for the benefit of the Bondowners under this Agreement, including, without
limitation, acceleration of the principal of the Bonds as described in this
Agreement and the right to annul any declaration of acceleration, and the Bond
Insurer shall also be entitled to approve all waivers of Events of Default with
respect to the Bonds.
(b) Anything in this Agreement to the contrary notwithstanding, the
provisions contained in this Section 808 and all other rights and remedies
granted to the Bond Insurer under this Agreement shall be null and void upon the
happening and during the continuance of any of the following (a "Bond Insurer
Default"): (1) a Bond Insurer Event of Insolvency, except to the extent of
payments made by the Bond Insurer under the Bond Insurance Policy which are not
voidable preferences; or (2) failure of the Bond Insurer to pay in accordance
with the Bond Insurance Policy, except to the extent of prior payments made by
the Bond Insurer under the Bond Insurance Policy which are not voidable
preferences.
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ARTICLE IX. THE TRUSTEE
Section 901. Corporate Organization, Authorization and Capacity. The
Trustee represents and warrants that it is a trust company duly organized and
validly existing under the laws of The Commonwealth of Massachusetts and duly
licensed in Massachusetts, with the capacity to exercise the powers and duties
of the Trustee hereunder, and that by proper corporate action it has duly
authorized the execution and delivery of this Agreement.
Section 902. Rights and Duties of the Trustee.
(a) Moneys to be Held in Trust. All moneys deposited with the Trustee
under this Agreement (other than amounts received for its own use) shall be held
by the Trustee in trust and applied subject to the provisions of this Agreement,
but need not be segregated from other funds except as required herein or by law.
(b) Accounts. The Trustee shall keep proper accounts of its transactions
hereunder (separate from its other accounts), which shall be open to inspection
at reasonable times and upon reasonable advance written request by the
Authority, the Bond Insurer, the Company and the Bondowners and their
representatives duly authorized in writing.
(c) Performance of the Authority's Obligations. If the Authority shall
fail to observe or perform any agreement or obligation contained in this
Agreement, the Trustee may take whatever legal proceedings may be required to
compel full performance by the Authority of its obligations, and in addition,
the Trustee may, to whatever extent it deems appropriate for the protection of
the Bondowners, itself or the Company, perform any such obligation in the name
of the Authority and on its behalf.
(d) Responsibility. The Trustee shall be entitled to the advice of counsel
(who may be the Trustee's counsel, counsel for the Authority, the Company or any
Bondowner) and shall be wholly protected as to any action taken or omitted to be
taken in good faith in reliance on such advice. The Trustee may rely
conclusively on any notice, certificate or other document furnished to it
hereunder and reasonably believed by it to be genuine. The Trustee shall not be
liable for any action taken by it in good faith and reasonably believed by it to
be within the discretion or powers conferred upon it, in good faith omitted to
be taken by it and reasonably believed to be beyond the discretion or powers
conferred upon it, taken by it pursuant to any direction or instruction by which
it is governed hereunder, or omitted to be taken by it by reason of the lack of
direction or instruction required hereby for such action; nor shall it be
responsible for the consequences of any error of judgment reasonably made by it.
The duties of the Trustee are those expressly set forth in this Agreement, and
no additional duties shall be implied. When any payment, consent or other action
by it is called for hereby, it may defer such action pending receipt of such
evidence, if any, as it may require in support thereof. The Trustee shall in no
event be liable for the application or misapplication of funds, or for other
acts or defaults by any person, firm, or Company, except its own directors,
officers, and employees. No recourse shall be had by the Company, the Authority
or any Bondowner for any claim based on this Agreement or any Bond against any
director, officer, employee, or agent of the Trustee alleging personal
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liability on the part of such person, unless such claim is based upon the bad
faith, negligence, fraud or deceit of such person. The Trustee has no
responsibility for the validity or sufficiency of this Agreement or the Bonds or
any security therefor.
(e) Limitations on Actions. The Trustee shall not be required to monitor
the financial condition of the Company or the physical condition of the Project
Facilities and, unless otherwise expressly provided, shall not have any
responsibility with respect to notices, certificates or other documents filed
with it hereunder, except to make them available for inspection by the
Bondowners. The Trustee shall not be deemed to have knowledge of and shall not
be required to take notice of any Default or Event of Default, except for a
Default or Event of Default described in Paragraph 801(a)(i) relating to the
payment of principal of, premium, if any, and interest on or Purchase Price of
the Bonds, unless the Trustee shall be specifically notified in writing by the
Company, the Authority or Bondowners representing not less than 25% in principal
amount of the Bonds Outstanding , or in the case of a Default or Event of
Default described in Paragraph 801(a)(iii), the Trustee shall be notified in
writing by the First Mortgage Bond Trustee. The Trustee shall not be required to
take any remedial action (other than the giving of notice) unless indemnity
reasonably satisfactory to it is furnished for any expense or liability to be
incurred therein, other than liability for failure to meet the standards set
forth in this section. The Trustee shall be entitled to reimbursement from the
Company for its expenses reasonably incurred or advances reasonably made, which
reimbursement shall be due and payable thirty (30) days after notifying the
Company of such expenses or advances, in the exercise of its rights or the
performance of its obligations hereunder, whether or not it acts without
previously obtaining indemnity.
A permissive right or power to act shall not be construed as a requirement
to act. Upon receipt of written notice, direction, instruction, and indemnity as
provided above and, after making such investigation, if any, as it deems
appropriate to verify the occurrence of any Default of which it is notified by
the Bondowners, the Trustee shall pursue such remedies hereunder (not contrary
to such direction) as it deems appropriate for the protection of the Bondowners;
and in its actions under this provision, the Trustee shall be required to act
for the protection of the Bondowners with the same prudence as would be expected
of a prudent person in the conduct of such person's affairs.
(f) Financial Obligations. Nothing contained in this Agreement shall in
any way obligate the Trustee to pay any debt or meet any financial obligations
to any person in relation to the Project Facilities except from moneys received
under the provisions of this Agreement (including from the exercise of its
rights and remedies hereunder) other than moneys received for its own purposes.
(g) Registration Books. The Trustee will keep books for the registration
of the Bonds and transfers thereof as provided in this Agreement. The Trustee
shall furnish a list of the Bondowners to the Authority, the Bond Insurer or
Company at any time upon its request, and to Bondowners representing at least
15% in principal amount of the Outstanding Bonds, at any time upon their
request.
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(h) Ownership of Bonds. The Trustee or any affiliate of the Trustee may be
or become the owner of Bonds with the same rights as if it were not Trustee.
(i) No Surety Bond. The Trustee shall not be required to furnish any bond
or surety.
(j) Requests by the Company. Upon any request by the Company to the
Trustee to take any action under this Agreement (including but not limited to
any proposed amendment pursuant to Section 1201) the Trustee shall be entitled
to receive from the Company prior to taking such action, and to rely upon, a
certificate of a Company Representative and an opinion of counsel reasonably
satisfactory to the Trustee (who may be counsel to the Company), and, if
applicable in the reasonable judgment of the Trustee, a certificate of an
accountant satisfactory to the Company (who may be an employee of the Company),
each to the effect that in the signer's opinion all conditions precedent
applicable to such action under this Agreement, if any, have been satisfied
(and, in the case of the certificate of the Company Representative, including
but not limited to the absence of any Default or Event of Default) and such
action is permitted by this Agreement.
(k) Trustee as Holder of Series J First Mortgage Bonds. So long as no
Default has occurred and is continuing, the Trustee may, but shall have no
obligation to, take any action in its capacity as the registered holder of the
Series J First Mortgage Bonds (other than the duty to exercise reasonable care
in the safekeeping thereof and the giving of notices set forth below), unless
and except to the extent the Trustee is directed in writing by the Bondowners as
provided in Section 1101 of this Agreement. The Trustee shall promptly notify
the Bondowners of the receipt of and contents of any notice it receives under
the First Mortgage Bond Indenture (other than notices solely of payments being
made on the Series J First Mortgage Bonds.
Section 903. Fees and Expenses of the Trustee. The Company shall pay to
the Trustee reasonable compensation for its services and prepay or reimburse the
Trustee for its reasonable expenses and disbursements, including attorney's
fees, hereunder. The Company shall indemnify and save the Trustee harmless
against any and all (a) claims as set forth in Section 702 above, (b) costs,
counsel fees, expenses and liabilities reasonably incurred in connection with
such claims, and (c) costs, counsel fees, expenses and liabilities which it may
incur in or arising from the administration, performance or exercise of its
rights, powers, responsibilities or duties hereunder and which are not due to
the bad faith, negligence, fraud or deceit of any director, officer, employee or
agent of the Trustee. Any fees, expenses, reimbursements, or other charges which
the Trustee may be entitled to receive from the Company hereunder shall be due
and payable thirty (30) days after a request for payment has been made by the
Trustee, and if not otherwise paid, shall be a first lien upon any funds or
other property then or thereafter held hereunder by the Trustee. If any such
moneys are so applied, the Company shall be immediately obligated to restore the
moneys so applied.
Section 904. Resignation or Removal of Trustee. The Trustee may resign on
not less than sixty (60) days' notice given in writing to the Authority, the
Bondowners, the Bond Insurer and the Company, but such resignation shall not
take effect until a successor, approved by the Bond Insurer (which consent shall
not be unreasonably withheld), has been appointed and has
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assumed the duties hereunder. The Trustee will promptly certify to the other
parties that it has mailed such notice to all Bondowners and such certificate
shall be conclusive evidence that such notice was given in the manner required
hereby. The Trustee may be removed by written notice to the parties from the
Bondowners representing a majority in principal amount of the Bonds Outstanding,
upon not less than (30) days advance written notice (unless such removal is for
cause), but no such removal shall take effect until a successor has been
appointed and assumed the duties hereunder. A petition in a court of competent
jurisdiction for removal of the Trustee and the appointment of a successor may
be filed by the Bondowners representing not less than 25% in principal amount of
the Bonds Outstanding.
Section 905. Successor Trustee. Any Company or association which succeeds
to the corporate trust business of the Trustee as a whole, or substantially as a
whole, whether by sale, merger, consolidation or otherwise, shall become vested
with all the property, rights and powers of the Trustee hereunder, without any
further act or conveyance.
In case the Trustee resigns or is removed or becomes incapable of acting,
or becomes bankrupt or insolvent, or if a receiver, liquidator or conservator of
the Trustee or of its property is appointed, or if a public officer takes charge
or control of the Trustee, or of its property or affairs, a successor shall be
appointed by written notice from the Company to the Authority and the Bond
Insurer. The Company shall notify the Bondowners of the appointment in writing
within twenty (20) days from the appointment. The Company will promptly certify
to the successor Trustee that it has mailed such notice to all Bondowners and
such certificate will be conclusive evidence that such notice was given in the
manner required hereby. If no appointment of a successor is made within twenty
(20) days after the giving of written notice in accordance with Section 904 or
after the occurrence of any other event requiring or authorizing such
appointment, the outgoing Trustee or any Bondowner may apply to any court of
competent jurisdiction for the appointment of such a successor, and such court
may thereupon, after such notice, if any, as such court may deem proper, appoint
such successor. Any successor Trustee appointed under this section shall be a
trust company or a bank having the powers of a trust company that meets the
requirements of the Act and has a capital and surplus of not less than
$50,000,000. Any such successor Trustee shall notify the Authority and the
Company of its acceptance of the appointment and, upon giving such notice, shall
become Trustee, vested with all the property, rights and powers of the Trustee
hereunder, without any further act or conveyance. Such successor Trustee shall
execute, deliver, record and file such instruments as are required to confirm or
perfect its succession hereunder and any predecessor Trustee shall from time to
time execute, deliver, record and file such instruments as the incumbent Trustee
may reasonably require to confirm or perfect any succession hereunder.
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ARTICLE X. THE AUTHORITY
Section 1001. Limited Obligation. Under no circumstances shall the
Authority be obligated directly or indirectly to pay Project Costs, principal of
or premium, if any, and interest on the Bonds, or expenses of operation,
maintenance and upkeep of the Project Facilities except from Bond proceeds or
from funds received under this Agreement, exclusive of funds received hereunder
by the Authority for its own use. This Agreement does not create any debt of the
State of New Hampshire with respect to the Project Facilities other than a
special obligation of the Authority acting on behalf of the State of New
Hampshire pursuant to the Act. Nothing contained herein shall in any way
obligate the State of New Hampshire to raise any money by taxation or use other
public funds for any purpose in relation to the Project Facilities. Neither the
State of New Hampshire nor the Authority shall pay or promise to pay any debt or
meet any financial obligation to any person at any time in relation to the
Project Facilities except (i) from moneys received or to be received under the
provisions hereof or derived from the exercise of the Authority's right
hereunder, other than moneys received for its own purposes, or (ii) as may be
required by law other than the provisions of the Act. Nothing contained in this
Agreement shall be construed to require or authorize the Authority to operate
the Project Facilities itself or to conduct any business enterprise in
connection therewith.
Section 1002. Rights and Duties of the Authority.
(a) Remedies of the Authority. Notwithstanding any contrary provision in
this Agreement, the Authority shall have the right to take any action or make
any decision with respect to proceedings for indemnity against the liability of
the Authority and for collection or reimbursement from sources other than moneys
or property held under this Agreement or subject to the lien hereof. The
Authority may enforce its rights under this Agreement which have not been
assigned to the Trustee by legal proceedings for the specific performance of any
obligation contained herein or for the enforcement of any other appropriate
legal or equitable remedy, and may recover damages caused by any breach by the
Company of its obligations to the Authority under this Agreement, including
court costs, reasonable attorney's fees and other costs and expenses incurred in
enforcing such obligations.
(b) Limitations on Actions. The Authority shall not be required to monitor
the financial condition of the Company or the physical condition of the Project
Facilities and, unless otherwise expressly provided, shall not have any
responsibility with respect to notices, certificates or other documents filed
with it hereunder. The Authority shall not be required to take notice of any
breach or default except when given notice thereof by the Trustee. The Authority
shall not be responsible for the payment of any rebate to the United States of
America under IRC ss.148(f). The Authority shall not be required to take any
action unless indemnity reasonably satisfactory to it is furnished for expenses
or liability to be incurred therein (other than the giving of notice). The
Authority, upon written request of the Bondowners or the Trustee, and upon
receipt of reasonable indemnity for expenses or liability, shall cooperate to
the extent reasonably necessary to enable the Trustee to exercise any power
granted to the Trustee by this Agreement. The Authority shall be entitled to
reimbursement pursuant to Section 1003 to the
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extent that it acts without previously obtaining full indemnity.
(c) Responsibility. The Authority shall be entitled to the advice of
counsel (who may be counsel for any party or for any Bondowner) and shall be
wholly protected as to any action taken or omitted to be taken in good faith in
reliance on such advice. The Authority may rely conclusively on any notice,
certificate or other document furnished to it under this Agreement and
reasonably believed by it to be genuine. The Authority shall not be liable for
any action taken by it in good faith and reasonably believed by it to be within
the discretion or power conferred upon it, or in good faith omitted to be taken
by it and reasonably believed to be beyond such discretion or power, or taken by
it pursuant to any direction or instruction by which it is governed under this
Agreement or omitted to be taken by it by reason of the lack of direction or
instruction required for such action under this Agreement, or be responsible for
the consequences of any error of judgment reasonably made by it. When any
payment, consent or other action by the Authority is called for by this
Agreement, the Authority may defer such action pending such investigation or
inquiry or receipt of such evidence, if any, as it may require in support
thereof. A permissive right or power to act shall not be construed as a
requirement to act, and no delay in the exercise of a right or power shall
affect the subsequent exercise thereof. The Authority shall in no event be
liable for the application or misapplication of funds, or for other acts or
defaults by any person or entity except by its own directors, officers and
employees. No recourse shall be had by the Company, the Trustee or any Bondowner
for any claim based on this Agreement or the Bonds against any director,
officer, employee or agent of the Authority unless such claim is based upon the
bad faith, fraud or deceit of such person. No covenant, obligation or agreement
of the Authority contained in this Agreement shall be deemed to be a covenant,
obligation or agreement of any present or future director, officer, employee or
agent of the Authority in his individual capacity, and no person executing a
Bond shall be liable personally thereon or be subject to any personal liability
or accountability by reason of the issuance thereof.
Section 1003. Expenses of the Authority. The Company shall pay when due
the Authority's Service Charge and shall prepay or reimburse the Authority
within thirty (30) days after notice for all expenses (including reasonable
attorney's fees) incurred by the Authority in connection with the issuance and
carrying of the Bonds and all expenses reasonably incurred or advances
reasonably made in the exercise of the Authority's rights or the performance of
its obligations hereunder. Any fees, expenses, reimbursements or other charges
which the Authority may be entitled to receive from the Company hereunder, if
not paid within ten (10) days of when they are due, shall bear a late charge
equal to 5% of the amount overdue, and if not paid within sixty (60) days, shall
bear interest at 12% per annum.
Section 1004. Matters to be Considered by Authority. In approving,
concurring in or consenting to action or in exercising any discretion or in
making any determination under this Agreement, the Authority may consider the
interests of the public, which shall include the anticipated effect of any
transaction on tax revenues and employment, as well as the interests of the
other parties hereto and the Bondowners; provided, however, nothing herein shall
be construed as conferring on any person other than the other parties and the
Bondowners any right to notice, hearing or participation in the Authority's
consideration, and nothing in this section shall be construed as conferring on
any of them any right additional to those conferred elsewhere
93
herein. Subject to the foregoing, the Authority will not unreasonably withhold
any approval or consent to be given by it hereunder.
Section 1005. Actions by Authority. Any action which may be taken by the
Authority hereunder shall be deemed sufficiently taken if taken on its behalf by
its Chairman, its Vice Chairman or its Executive Director or by any other
director, officer or agent whom it may designate from time to time.
ARTICLE XI. THE BONDOWNERS
Section 1101. Action by Bondowners. Subject to Subsections 312, 801(b),
802(a), 808 and Section 1201 (as to the waivers and consents granted thereby),
Bondowners representing a majority in principal amount of the Bonds Outstanding
shall have the right at any time, by written notice to the Trustee and upon
offering it indemnity as provided in Subsection 902(e), to direct the Trustee
(i) in the granting of any consents, waivers or similar actions pertaining to
the Bonds, (ii) in the time, method and place of conducting all proceedings,
(iii) in the exercise of any rights or remedies available to the Trustee
hereunder, or (iv) in the exercise of any other right or power conferred upon
the Trustee for the protection of the Bondowners, provided that such direction
shall be in accordance with the provisions of law and this Agreement, and the
Trustee may take any other action determined proper by the Trustee which is not
inconsistent with such direction.
Except with respect to the matters provided below and subject to
Section 808, Bondowners representing a majority in principal amount of the Bonds
Outstanding shall have the right, at any time, by written notice to the Trustee
and the offering of indemnity as provided in Subsection 902(e), to direct the
Trustee, as holder of all of the Series J First Mortgage Bonds, to exercise the
rights available to it as holder of such bonds under the First Mortgage Bond
Indenture, including, without limitation, as to rendering notice to the First
Mortgage Bond Trustee of the occurrence of a default thereunder, the institution
of any suit, action or proceeding to enforce payments on the Series J First
Mortgage Bonds which were not paid when due or other proceeding in respect of
the First Mortgage Bond Indenture which the Trustee, as holder of the Series J
First Mortgage Bonds, is entitled to institute, and as to the time, place and
method of any such proceeding for any remedy available to the Trustee, as holder
of the Series J First Mortgage Bonds, subject however to compliance with the
applicable provisions of the First Mortgage Bond Indenture.
Where the First Mortgage Bond Trustee is required or permitted to take any
action under the First Mortgage Bond Indenture upon the direction,
authorization, consent, notice or request of the holders of a specified
percentage of principal amount of bonds outstanding thereunder or of outstanding
bonds thereunder which would be adversely affected by such action, including
with respect to acceleration of the maturity of such bonds under Section 10.1 of
the First Mortgage Bond Indenture, the time, method and place of proceedings and
waivers of events of default, as provided in Section 10.12 of the First Mortgage
Bond Indenture and amendments of the First Mortgage Bond Indenture under Article
15 thereof, each Bondowner shall be deemed the holder of its pro-rata portion of
the principal amount of Series J First Mortgage Bonds and shall have the right
to direct the Trustee whether or not to render such direction, authorization,
consent,
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notice or request under the First Mortgage Bond Indenture in respect of such
Bondowner's pro-rata portion, whereupon the Trustee shall notify the First
Mortgage Bond Trustee of the action to be taken in respect of the applicable
principal amount of Series J First Mortgage Bonds.
Any request, authorization, direction, notice, consent, waiver or other
action provided by this Agreement to be given or taken by Bondowners may be
contained in and evidenced by one or more writings of substantially the same
tenor signed by the Bondowners of the requisite percentage of principal amount
of Bonds Outstanding or their attorneys duly appointed in writing. Proof of the
execution of any such instrument, or of any instrument appointing any such
attorney, shall be sufficient for any purpose of this Agreement (except as
otherwise herein expressly provided) if made in the following manner, but the
Authority or the Trustee may nevertheless in its discretion require further or
other proof in cases where it deems the same desirable:
The fact and date of the execution by any Bondowner or his or her attorney
of such instrument may be proved by the certificate, which need not be
acknowledged or verified, of an officer of a bank or trust company satisfactory
to the Authority or to the Trustee or of any notary public or other officer
authorized to take acknowledgements of the deeds to be recorded in the state in
which he purports to act, that the person signing such request or other
instrument acknowledged to him or her the execution thereof, or by an affidavit
of a witness of such execution, duly sworn to before such notary public or other
officer. The authority of the person or persons executing any such instrument on
behalf of a corporate Bondowner may be established without further proof if such
instrument is signed by a person purporting to be the president or a vice
president of such corporation with a corporate seal affixed and attested by a
person purporting to be its clerk or secretary or an assistant clerk or
assistant secretary.
The ownership of Bonds and the amount, numbers and other identification,
and date of holding the same shall be proved by the registry books for the Bonds
maintained by the Trustee.
Any request, consent or vote of the owner of any Bond shall bind all
future owners of such Bond. Bonds owned or held by or for the account of the
Authority, the Company, or any related person to the Company within the meaning
of Section 147(a) of the IRC shall not be deemed Outstanding Bonds for the
purpose of any consent or other action by Bondowners.
ARTICLE XII. AMENDMENTS AND MISCELLANEOUS
Section 1201. Amendments.
(a) Without Bondowners' Consent. The parties may from time to time, but
with the consent of the Bond Insurer, without the consent of any Bondowner,
amend this Agreement in order to (i) cure any ambiguity, defect or omission in
the Agreement that does not materially adversely affect the interests of the
Bondowners, (ii) grant additional rights or security to the Trustee for the
benefit of the Bondowners, (iii) add additional Events of Default as shall not
be inconsistent with the provisions of this Agreement and which shall not
materially adversely
95
affect the interests of the Bondowners, (iv) qualify this Agreement under the
Trust Indenture Act of 1939, as amended, or corresponding provisions of federal
laws from time to time in effect, or (v) make such other provisions in regard to
matters or questions arising under this Agreement as shall not be inconsistent
with the provisions of this Agreement and which shall not materially adversely
affect the interests of the Bondowners. Provisions of this Agreement may also be
amended by the parties without Bondowner consent in any respect, including the
release of the First Mortgage Bonds, on the date of any mandatory tender of the
Bonds, provided that notice of any such amendment is included in the notice of
mandatory tender for purchase described in Sections 412 and 514. The Company
acting alone may amend the Maximum Rate to a higher interest rate without
Bondowner consent, provided that, if a Liquidity Facility is then in effect, it
entitles the Paying Agent to draw upon or demand and receive in immediately
available funds an amount equal to the principal amount of the Bonds then
outstanding plus a number of days of accrued interest at such amended Maximum
Rate at least equal to the number of days required to be covered under this
Agreement.
In addition, with the consent of the Broker-Dealer, the provisions of this
Agreement concerning the Auction Procedures, including without limitation the
mandatory tender provisions and amending the Auction Period, Auction Date and
Interest Payment Dates as provided in this Agreement, and the definitions
applicable thereto, including without limitation, the definition of Maximum
Auction Rate, may be amended (i) by obtaining the consent of the Bond Insurer
and the consent of the Trustee if the Trustee determines that such amendment
does not materially adversely affect the rights of any Bondowner (it being
agreed that in making such determination the Trustee may rely upon a certificate
to such effect of the Broker-Dealer) or (ii) by obtaining the consent of the
beneficial owners of the Bonds, or (iii) on any Auction Date on which Sufficient
Clearing Bids have been made or all of the Auction Rate Securities are subject
to Submitted Hold Orders. In the case of clause (iii) above, if on the first
Auction Date occurring at least 20 days after the date on which the Trustee
mailed notice to the registered owners of the Auction Rate Securities as
required by this Agreement, Sufficient Clearing Bids have been received or all
of the Auction Rate Securities are subject to Submitted Hold Orders, the
proposed amendment shall be deemed to have been consented to by the owners of
all Auction Rate Securities.
(b) With Bondowners' Consent. Except as set forth in Subsection 1201(a),
the parties may from time to time amend this Agreement with the consent of the
Bond Insurer and the owners of more than 50% in aggregate principal amount of
the Bonds Outstanding; provided, that no amendment shall be made which adversely
affects the rights of some but less than all the Bonds Outstanding without the
consent of the owners of more than 50% in aggregate principal amount of the
Bonds so affected; and provided further, that no amendment of this Agreement
shall be effective to (i) change the principal, premium or interest on any
Bonds, (ii) change the interest payment dates, maturity dates or redemption
provisions of any Bonds, (iii) reduce the percentage of Bondowners whose consent
is required for the amendment of this Agreement or (iv) modify the lien upon or
pledge of the payments and other revenues assigned and pledged hereunder,
without the consent, in each case, of the owner of each Bond which would be
affected by the action proposed to be taken. Any amendment of this Agreement
made under this or the preceding Subsection shall be accompanied by an opinion
of Bond Counsel reasonably
96
satisfactory to the Trustee to the effect that the amendment is permitted by
this Agreement and that it will not affect the exclusion of interest on the
Bonds from gross income of the owners thereof for federal income tax purposes.
When the Trustee determines that the requisite number of consents have been
obtained for an amendment which requires Bondowner consent, it shall, within
ninety (90) days, file a certificate to that effect in its records and give
notice thereof to the Bondowners. No action or proceeding to invalidate the
amendment shall be instituted or maintained unless it is commenced within sixty
(60) days after such notice. The validity of the amendment shall not be
adversely affected by any failure to give notice or any defect in the notice. A
consent to an amendment may be revoked by a notice given by the Bondowner and
received by the Trustee prior to the Trustee's certification that the requisite
consents have been obtained.
Section 1202. Notices. All notices to the Authority, the Trustee, the
Company, the Bond Insurer or the Bondowners unless otherwise specified shall be
in writing and shall be deemed sufficiently given if delivered by registered or
certified mail, postage prepaid, or delivered during business hours as follows:
(i) to the Authority at 14 Dixon Avenue, Suite 101, Concord, New Hampshire
03301, attention of the Executive Director, (ii) to the Trustee at 225 Asylum
Street, 23rd Floor, Hartford, Connecticut 06103, attention of Corporate Trust
Department, (iii) to the Company at 1000 Elm Street, Manchester, New Hampshire
03105, attention of Assistant Treasurer -- Finance, with a copy to Northeast
Utilities Service Company, P.O. Box 270, Hartford, Connecticut 06141-0270 (if by
U.S. Mail) and 107 Selden Street, Berlin, Connecticut 06037 (if by courier),
attention of Assistant Treasurer -- Finance, (iv) to the Bond Insurer at 113
King Street, Armonk, New York 10504, attention of IPM-PCF, or, as to all of the
foregoing, to such other address as the addressee shall have indicated by prior
written notice to the one giving notice. All notices to a Bondowner shall be in
writing and shall be deemed sufficiently given if sent by first class mail,
postage prepaid, to the Bondowner at the address shown on the registration books
for the Bonds maintained by the Trustee. A Bondowner may direct the Trustee to
change its address as shown on the registration books by written notice to the
Trustee. All notices to Bondowners shall identify the Bonds by name, CUSIP
number, date of original issuance, maturity date, and such other descriptive
information as may be needed to identify accurately the Bonds.
All notices sent to Bondowners by the Trustee shall simultaneously be sent
by registered or certified mail, postage prepaid, to all registered securities
depositories that are registered owners of the Bonds, provided that the failure
to give such notice shall not affect the validity of any notice given to
Bondowners.
Notice hereunder may be waived prospectively or retroactively by the
person entitled to the notice, but no waiver shall affect any notice requirement
as to other persons.
Section 1203. Agreement Not for the Benefit of Other Parties. This
Agreement is not intended for the benefit of and shall not be construed to
create rights in parties other than the Authority, the Company, the Trustee, the
Bondowners, the Bond Insurer and the respective directors, members, officers,
employees and agents of the Authority and the Trustee to the extent
97
specified in Sections 902 and 1002.
Section 1204. Severability. In the event that any provision of this
Agreement shall be held to be invalid in any circumstance, such invalidity shall
not affect any other provisions or circumstances.
Section 1205. Counterparts. This Agreement may be executed and delivered
in any number of counterparts, each of which shall be deemed to be an original;
but such counterparts together shall constitute one and the same instrument.
Section 1206. Captions. The captions and table of contents of this
Agreement are for convenience only and shall not affect the construction hereof.
Section 1207. Governing Law. This Agreement shall be governed by the laws
of the State of New Hampshire.
Section 1208. Payment Date Not a Business Day. If any payment, redemption
or maturity date for principal, premium or interest shall be (i) a Sunday or a
legal holiday, or (ii) a day on which banking institutions are authorized
pursuant to law to close and on which the corporate trust office of the Trustee
or the First Mortgage Bond Trustee is not open for business, then the payment
thereof may be made on the next succeeding day not a day specified in (i) or
(ii) with the same force and effect as if made on the specified payment date and
no interest shall accrue for the period after the specified payment date.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed under seal all as of the date first above written.
BUSINESS FINANCE AUTHORITY
OF THE STATE OF NEW HAMPSHIRE
(Seal)
By:________________________________
Jack Donovan
Executive Director
PUBLIC SERVICE COMPANY OF NEW
HAMPSHIRE
(Seal)
By:________________________________
Randy A. Shoop
Assistant Treasurer - Finance
STATE STREET BANK AND TRUST
COMPANY, as Trustee
(Seal)
By:________________________________
Name:
Title:
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EXHIBIT A
THE PROJECT FACILITIES
The Project Facilities to be financed by the Bonds consist of certain air
or water pollution control and sewage or solid waste disposal facilities at the
Seabrook Station Plant, Unit No. 1, in which Public Service Company of New
Hampshire had, at the time of the issue of the 1991 Series C Bonds, a 35.56942
percent ownership interest. The Project Facilities include the following:
Waste Water Run-Off System
The Waste Water Run-Off System collects and treats yard area drainage to
remove pollutants. The System includes catch basins, yard waste water drain
pipes, and a site settling pond.
Chemical and Oily Waste Treatment System
The Chemical and Oily Waste Treatment System collects, stores, processes,
treats and disposes of non-radioactive chemical and oily wastes. The wastes
result from construction, start-up and operation of the Seabrook Station Plant.
The wastes are collected and treated to remove pollutants. The System includes
tanks, an acid and caustic handling system, waste lagoons, system flush piping,
and oil separator, curbs and drains, pipes, valves, transfer pumps, controls and
instrumentation and related support equipment.
Sanitary Waste System
Sanitary waste is collected, treated and disposed of by the Sanitary Waste
System. The System includes sanitary drains, sumps and pumps, a holding tank, a
pump station, a sewage treatment plant, piping, transfer pumps and related
support equipment.
Radioactive Gaseous Waste System
The Radioactive Gaseous Waste System collects, processes, stores and
treats radioactive gaseous waste produced during normal operations. The System
includes the following components: a main gas collection header, a waste gas
condenser with associated primary cooling water components, gas chiller
compressor units, iodine guard beds, a regeneration subsystem for dryers, waste
gas dryers, a waste gas compressor package, ambient carbon delay beds,
particulate filters, an after cooler, a hydrogen surge tank, a waste gas
radiation monitor, an equipment vent system, a hydrogenated vent header, and
associated piping, valves, controls and instrumentation.
Exhaust Filtration System
The Exhaust Filtration System collects, filters and discharges exhaust
containing low level radioactive contamination resulting from normal operations.
The System includes exhaust filters, exhaust fans, exhaust ducts, plenums,
dampers, piping, flow control valves, and controls and instrumentation.
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Liquid Radwaste System
The Liquid Radwaste System collects, processes, treats, recycles and
disposes of low level radioactive liquid waste resulting from normal operations.
The System includes tanks, filters, strainers, pumps, a reboiler, an evaporator,
an evaporator distillate condenser, an evaporator distillate accumulator, an
evaporator distillate cooler, an evaporator bottoms cooler, a waste
demineralizer and filter, equipment drains, chemical drains, a radiation
monitor, and associated controls and instrumentation.
Boron Recycle System
The Boron Recycle System collects, stores, treats, recycles and disposes
of reactor coolant letdown during normal operations. This System is required to
maintain reactor coolant letdown in accordance with federal pollution control
standards as to radioactivity. The System includes the following components:
Drain tanks, a degasifier, a preheater, a degasifier regenerative heat
exchanger, trim coolers, a degasifier prefilter, cesium removal ion exchangers,
recovery filters, waste storage tanks, recovery evaporator packages, recovery
test tanks, recovery demineralizers, recovery demineralizer filters, a letdown
rehead heat exchanger, a letdown chiller heat exchanger, a letdown moderating
heat exchanger, a chiller surge tank, a chiller, thermal regenerative
demineralizers, radiation monitors, associated pumps, piping and valves, and
controls and instrumentation.
Steam Generator Blowdown Treatment System
The Steam Generator Blowdown Treatment System collects, processes, stores
and treats steam generator blowdown for discharge or recycle during normal
operation. This is necessary in compliance with pollution control requirements
which limit the discharge of untreated steam generator blowdown. The System
includes the following components: Blowdown evaporators, an evaporator
distillate condenser, an evaporator condensate accumulator, an evaporator
distillate pump, an evaporator condensate cooler, an evaporator bottoms pump, an
evaporator bottoms cooler, blowdown demineralizers, acid and caustic systems,
blowdown heat exchangers, and associated piping, controls and instrumentation.
Solid Radwaste System
The Solid Radwaste System collects, stores, packages and prepares solid
radioactive waste for disposal. Radioactive solid wastes processed by this
System include spent demineralizer resins, expended filter cartridges,
evaporator concentrates as well as dry active waste consisting of rags,
clothing, paper and other trash. The System includes the following components: A
spent resin storage tank, an evaporator bottoms storage tank, associated
collection piping, pumps and valves, a dry waste compactor, a filter transfer
vehicle, and associated controls and instrumentation.
Waste Processing Building
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The Waste Processing Building is a reinforced concrete structure which
houses equipment used for exempt facilities. The purpose of this building is to
house the air and water pollution control facilities and the solid waste
disposal facilities.
Auxiliary Building
The Auxiliary Building is a reinforced concrete structure which houses
both pollution control and production related equipment. Pollution control
facilities located in the Auxiliary Building include portions of the liquid
radwaste and gaseous radwaste systems. The cost of the Auxiliary Building and
general support equipment has been allocated to the exempt facilities according
to the ratio of space used for qualified equipment to the total space used in
the building for all equipment.
Spent Nuclear Fuel Facility
The Spent Nuclear Fuel Facility is located in a separate building with
enclosed fuel handling equipment for production functions and for spent fuel
storage. The fuel handling facility includes a Seismic Category 1 structure
containing a spent fuel pool with racks, spent fuel cooling and purification
systems, a new fuel storage area, a spent fuel cask loading pit, and a cask
washdown area. Also included are cranes and equipment supporting the fuel
handling operations as well as the transfer canal leading the reactor
containment. The cost of the Spent Nuclear Fuel Facility is determined through
an allocation of the cost of the overall fuel facility between spent fuel
facilities and production facilities.
Circulating Water System
The Circulating Water System will provide cooling water to the main
condensers of Seabrook Station. The Circulating Water System is a once-through
system using sea water from the Atlantic Ocean to remove the heat of
condensation from the steam cycle and to dispose of that heat in an
environmentally acceptable manner. The points of inlet and discharge of the
cooling water are offshore, east of Hampton Beach, New Hampshire.
The System includes the following structures: Two 19-foot inside diameter
tunnels, lined with reinforced concrete, which connect the plant with the
offshore inlet and outlet structures; a pumphouse, located at the plant site
which encloses traveling screens and pumps for the circulating water and service
water systems; and a piping system at the plant site, for the most part
underground, interconnecting the tunnels, the pumphouse, and the condensers.
The tunnels extend through the underlying rock in an east-west direction
at an elevation between 200 and 250 feet below sea level. They end at the plant
site with two 19-foot diameter vertical shafts, which reach above grade
transforming at the top into two transition boxes open to the atmosphere. At the
offshore end, the intake tunnel terminates with three 9-foot inside diameter
vertical shafts connecting to three submerged inlet heads. The discharge tunnel
terminates with eleven 5-foot inside diameter vertical shafts, each connecting
to a submerged bifurcated diffuser head.
A-3
Service Water Cooling Tower System
The Service Water Cooling Tower System disposes of waste heat from the
plant service water system. Waste heat from equipment throughout the plant is
collected by the service water cooling system piping. The service water
transfers waste heat to the service water cooling tower, which discharges heat
to the atmosphere, thereby controlling discharge of waste heat to the natural
water resources adjacent to the station. The Service Water Cooling Tower System
components include the service water cooling tower, service water piping, pumps
and associated electrical service, mechanical equipment, controls and
instrumentation.
Screen Wash System
The Screen Wash System collects, stores and disposes of debris removed
from the circulating and service water systems. This debris is solid waste with
no market or other value. After removal, the debris is transferred to a landfill
for final disposal. The components of the Screen Wash System include the screen
wash pumps, trash trough, trash container, piping and valves, associated
electrical service, mechanical equipment, controls and instrumentation.
A-4
EXHIBIT B
SERIES B SEABROOK POLLUTION CONTROL FACILITIES AGREEMENT
This Series B Seabrook Pollution Control Facilities Agreement (this
"Facilities Agreement") is entered into as of December 19, 2001 by the Business
Finance Authority of the State of New Hampshire (with its successors, the
"Authority"), a body corporate and politic created under New Hampshire Revised
Statutes Annotated 162-A:3; Public Service Company of New Hampshire (with its
successors, the "Company"), a New Hampshire corporation; North Atlantic Energy
Corporation (with its successors, "NAEC"), a New Hampshire corporation; and
State Street Bank and Trust Company, a Massachusetts trust company, as Trustee
(with its successors, the "Trustee"), under a Series B Loan and Trust Agreement
dated as of October 1, 2001 (the "LTA") among the Authority, the Company and the
Trustee, which secures the Authority's $89,250,000 in aggregate principal amount
Pollution Control Revenue Bonds (Public Service Company of New Hampshire Project
- - 2001 Tax-Exempt Series B) (the "Bonds"). Capitalized terms not otherwise
defined herein shall have the meaning given them in the LTA.
This Facilities Agreement is entered into pursuant to Section 605 of the
LTA in connection with the issuance of the Bonds by the Authority on behalf of
the Company and the proposed transfer by NAEC of its interest in the Station
(including the Project Facilities) to an unaffiliated party. The purpose of this
Facilities Agreement is to ensure the continued exclusion of interest on the
Bonds from gross income of the owners thereof for federal income tax purposes
and to satisfy certain requirements of the Authority with respect to facilities
financed under the Act. This Facilities Agreement shall remain in effect so long
as NAEC owns the Project Facilities and until no Bonds remain Outstanding.
In consideration of the mutual promises contained in this Facilities
Agreement, the rights conferred and the obligations assumed hereby, and other
good and valuable consideration, the receipt of which is hereby acknowledged,
each of the Company, NAEC, the Authority and the Trustee agree, assign,
covenant, grant, pledge, promise, represent and warrant as set forth herein for
their own benefit and for the benefit of the Bondowners.
Section 1. Representations and Covenants of the Company. The Company
represents, warrants, covenants and agrees as follows:
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Hampshire; is duly qualified to
do business and in good standing in each jurisdiction in which the failure so to
qualify would have a material adverse affect on its business or properties; and
has full corporate power to enter into this Facilities Agreement.
(b) This Facilities Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of the
Company enforceable against the Company as provided herein and in the LTA,
subject to bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights and to the exercise of judicial discretion in
appropriate cases.
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(c) No Default or Event of Default exists under the LTA.
(d) The Company has obtained all regulatory approvals necessary to enter
into this Facilities Agreement and all such approvals have become final.
(e) The Company's execution and delivery of this Facilities Agreement does
not violate or constitute a default under the Company's charter or by-laws, any
applicable law, any order or decree of any court or governmental authority
having jurisdiction over the Company, or any agreement or instrument binding on
the Company or its properties.
Section 2. Representations and Covenants of NAEC. NAEC represents,
warrants, covenants and agrees as follows:
(a) NAEC is a corporation duly organized, validly existing and in good
standing under the laws of the State of New Hampshire; is duly qualified to do
business and in good standing in the State of New Hampshire and in each
jurisdiction in which the failure so to qualify would have a material adverse
affect on its business or properties; and has full corporate power to enter into
this Facilities Agreement.
(b) This Facilities Agreement has been duly authorized, executed and
delivered by NAEC and constitutes a valid and binding obligation of NAEC
enforceable against NAEC as provided herein, subject to bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors' rights
and to the exercise of judicial discretion in appropriate cases.
(c) NAEC has obtained all regulatory approvals necessary to enter into
this Facilities Agreement and all such approvals have become final.
(d) NAEC's execution and delivery of this Facilities Agreement does not
violate or constitute a default under NAEC's charter or by-laws, any applicable
law, any order or decree of any court or governmental authority having
jurisdiction over NAEC, or any agreement or instrument binding on NAEC or its
properties.
(e) NAEC will maintain its corporate existence and its qualification to do
business and good standing under the laws of the State of New Hampshire and will
maintain itself as a foreign corporation duly qualified to do business and in
good standing, where applicable, in each jurisdiction in which the failure to so
qualify would have a material adverse effect upon its business or properties.
NAEC shall not merge or consolidate with or sell all or substantially all of its
assets to another entity, except that the NAEC may so merge or consolidate with
or sell all or substantially all of its assets to another corporation if (i) the
surviving or transferee corporation is qualified to do business in New
Hampshire, and (ii) the surviving or transferee corporation (if not NAEC) has
assumed in writing all of NAEC's obligations hereunder.
Section 3. Use of the Project. (a) Notwithstanding any provision herein or
in the LTA to the contrary, NAEC will not operate the Project Facilities in any
manner, and will not take or
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omit any action or permit any action to be taken or omitted with the result that
interest on the Bonds is included in the gross income of the owners thereof for
federal income tax purposes. NAEC's use of the Project Facilities (or facilities
replacing the same) shall be in furtherance of the purpose of air or water
pollution control or sewage or solid waste disposal and in compliance with the
Act.
(b) Notwithstanding any provision herein or in the LTA to the contrary,
NAEC shall not permit the Project Facilities to fail to qualify as (1)
"industrial facilities" under the Act, (2) a facility described in Section
1312(a) of the Tax Reform Act of 1986, or (3) "sewage or solid waste disposal
facilities" or "air or water pollution control facilities" within the meaning of
Section 103(b)(4)(E) or (F) of the 1954 Code. NAEC acknowledges that it is fully
familiar with the physical condition of the Project Facilities and that it is
not relying on any representation of any kind by the Authority or the Trustee
concerning the nature or condition thereof. Neither the Authority nor the
Trustee shall be liable to NAEC or any other person for any latent or patent
defect in the Project Facilities.
(c) In the maintenance, improvement and operation of the Project
Facilities, NAEC will comply in all material respects with all applicable
building, subdivision, zoning and land use, environmental protection, sanitary
and safety and other laws, rules and regulations, and will not permit any
nuisance thereat and will, to the extent of its ownership and control, permit no
nuisance to be committed thereat by others while NAEC is, or is entitled to be,
in possession thereof. It shall not be a breach of this section if NAEC fails to
comply with such laws, rules and regulations during any period in which NAEC
shall in good faith be diligently contesting the validity thereof.
(d) NAEC shall pay in a timely manner all costs of maintaining and
operating the Project Facilities, including without limitation all taxes,
excises and other governmental charges lawfully levied thereon or with respect
to its interests therein or use thereof to the extent of NAEC's interest
therein. It shall not be a breach of this section if NAEC fails to pay any such
costs, taxes or charges during any period in which NAEC shall in good faith be
contesting the validity or amount thereof and no foreclosure proceedings have
been commenced, unless the procedures applicable to such contest require payment
thereof and proceedings for their refund or abatement.
(e) NAEC shall not sell, lease, transfer or otherwise dispose of the
Project Facilities (other than the grant of a mortgage pursuant to a financing
transaction) unless (i) it obtains the consent of the Authority, which consent
shall not be unreasonably withheld, provided, however, that no such consent
shall be required if such transaction has been approved by or consented to by
the New Hampshire Public Utilities Commission; (ii) it obtains an opinion of
Bond Counsel addressed to and reasonably satisfactory to the Trustee and the
Authority that such sale, lease, transfer or other disposition will not affect
the exclusion of the interest on the Bonds from the gross income of the owners
thereof for federal income tax purposes; and (iii) the sale, lease, transfer or
other disposition is made pursuant to a written agreement executed and delivered
by NAEC and the transferee, under which agreement the transferee agrees to be
bound by covenants substantially similar in all material respects to the
covenants set forth in Attachment 1 hereto.
B-3
NAEC shall not make any material change in the purposes for which the
Project Facilities are used without the consent of the Authority, which consent
shall not be unreasonably withheld. NAEC at its own expense may alter, remodel
or improve the Project Facilities and construct other facilities at the site of
the Project Facilities, provided such action shall not result in any substantial
change in the Project Facilities or the character of the activities conducted by
NAEC at the Project Facilities site without the consent of the Authority, which
consent shall not be unreasonably withheld.
(f) The Authority and the Trustee and their respective duly authorized
agents shall have the right at all reasonable times and upon the furnishing of
reasonable notice under the circumstances to examine the books and records of
NAEC relating to the Project Facilities.
(g) The undertakings of NAEC contained in Subsections 3(b), (c), (d) and
(e) are limited to those consistent with NAEC's undivided percentage interest in
the facilities of which the Project Facilities are a part.
Section 4. Indemnification by NAEC. NAEC, regardless of any agreement to
maintain insurance, shall and hereby does indemnify the Authority and the
Trustee against (a) any and all claims by any person related to the
participation of the Authority or the Trustee in the financing of the Project
Facilities, including without limitation claims arising out of any condition of
the Project Facilities or Station or the construction, use, occupancy or
management thereof; any accident, injury or damage to any person occurring in or
about the Station; any breach by NAEC of its obligations under this Facilities
Agreement; any act or omission of NAEC or any of its agents, contractors,
servants, employees or licensees; and (b) all costs, counsel fees, expenses or
liabilities reasonably incurred in connection with any such claim or any action
or proceeding brought thereon. In case any action or proceeding is brought
against the Authority or the Trustee by reason of any such claim, NAEC will
defend the same at its expense upon notice from the Authority or the Trustee,
and the Authority or the Trustee, as the case may be, will cooperate with NAEC,
at the expense of NAEC, in connection therewith.
Section 5. Failure to Comply. NAEC shall immediately notify the Authority,
the Company and the Trustee of any failure to observe or perform any of its
covenants or agreements contained herein, and thereafter shall keep the
Authority, the Company and the Trustee informed with respect to any curative
action instituted by NAEC in order to cure such failure.
Section 6. Amendment. This Facilities Agreement may be amended by the
parties hereto, provided, however, that in connection with any amendment the
Company or NAEC shall furnish the Authority and the Trustee with an opinion of
Bond Counsel stating that the amendment will not impair the exclusion of
interest on the Bonds from gross income of the owners thereof for federal income
tax purposes.
Section 7. Agreement Not for the Benefit of Other Parties. This Facilities
Agreement is not intended for the benefit of and shall not be construed to
create rights in parties other than the Authority, the Company, NAEC, the
Trustee and the Bondowners.
B-4
Section 8. Severability. In the event that any provision of this
Facilities Agreement shall be held to be invalid in any circumstance, such
invalidity shall not affect any other provisions or circumstances.
Section 9. Counterparts. This Facilities Agreement may be executed and
delivered in any number of counterparts, each of which shall be deemed to be an
original; but such counterparts together shall constitute one and the same
instrument.
Section 10. Governing Law. This Facilities Agreement shall be governed by
the laws of the State of New Hampshire.
IN WITNESS WHEREOF, the parties have caused this Facilities Agreement to
be duly executed as of the date first above written.
BUSINESS FINANCE AUTHORITY OF
THE STATE OF NEW HAMPSHIRE
By:___________________________________
Jack Donovan
Executive Director
PUBLIC SERVICE COMPANY OF NEW
HAMPSHIRE
By:___________________________________
Randy A. Shoop
Assistant Treasurer-Finance
NORTH ATLANTIC ENERGY CORPORATION
By:___________________________________
STATE STREET BANK AND TRUST
COMPANY, as Trustee
By:___________________________________
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ATTACHMENT 1 TO
SERIES B SEABROOK POLLUTION CONTROL FACILITIES AGREEMENT
COVENANTS (SUBSTANTIALLY SIMILAR IN ALL MATERIAL RESPECTS) TO BE INCLUDED IN
PURCHASE AND SALE AGREEMENT
Section 1.1. [Caption]
(a) Pollution Control Revenue Bonds.
(i) The Buyer acknowledges that:
(A) The Pollution Control Facilities have been financed, and
refinanced, in whole or in part, with proceeds of the issuance and sale of
the Pollution Control Bonds;
(B) The Company is the economic obligor and conduit borrower in
respect of certain of the Pollution Control Bonds, as specified in
Schedule _____;
(C) The interest paid or accrued on the Pollution Control Bonds is
not included in the gross income of the holders of the Pollution Control
Bonds (the "PC Bondholders") for purposes of federal income taxation;
(D) Pursuant to the Internal Revenue Code of 1954, as amended, and
the Code, the basis for the federal income tax exclusion for interest
payable to the PC Bondholders is the use of the Pollution Control
Facilities for certain qualified purposes which include (I) the abatement
or control of air or atmospheric pollution or contamination, (II) the
abatement or control of water pollution or contamination, (III) sewage
disposal and/or (IV) the disposal of solid waste;
(E) The use of all or part of the Pollution Control Facilities for a
purpose other than the qualifying purpose or purposes described in
subclause (D) above for which the Pollution Control Bonds that financed or
refinanced them were issued may cause (I) the interest payable on all or
part of the Pollution Control Bonds to be includable in the federal gross
income of the PC Bondholders possibly with retroactive effect, unless
remedial action is promptly taken to redeem or defease the Pollution
Control Bonds or a portion thereof, and/or (II) the deductibility of the
interest payable by the Company on all or part of the Pollution Control
Bonds to be disallowed by Section 150(b) of the Code; and
(F) Any breach by the Buyer or any subsequent transferee of all or
any part of the Pollution Control Facilities of its obligations under this
Section 1.1(a) could result in the incurrence by the Company of additional
costs and expenses, including, but not limited to, an increase in the rate
of interest required to be paid to the PC Bondholders, liability to
i
some or all of the PC Bondholders for their failure to include interest
payable on the Pollution Control Bonds in their respective federal gross
income in the event of a final determination of taxability by the IRS,
loss of the interest deduction to the Company under Section 150(b) of the
Code and transaction costs relating to any refinancing, redemption and/or
defeasance of all or part of the Pollution Control Bonds.
(ii) In order to avoid any or all of the consequences described in clauses
(E) and (F) above, the Buyer agrees that it will not use, or permit the use of,
all or part of the Pollution Control Facilities for any purpose except (x) the
current use of such Pollution Control Facilities or (y) as "sewage or solid
waste disposal facilities" or "air or water pollution control facilities" within
the meaning of Section 103(b)(4)(E) or (F) of the Internal Revenue Code of 1954,
as amended, as contemplated by the tax compliance documents or non-arbitrage
certificates for the Pollution Control Bonds that financed or refinanced such
Pollution Control Facilities (copies of which with respect to all of the
Pollution Control Facilities have been provided to the Buyer by NAEC or the
Company), unless the Buyer shall have obtained at its own expense an opinion of
nationally recognized bond counsel reasonably acceptable to NAEC or the Company
("Bond Counsel") addressed to and reasonably satisfactory to NAEC and the
Company that such proposed change in use of the Pollution Control Facilities or
part thereof will not impair (x) the exclusion from gross income of the interest
on any Pollution Control Bonds for federal income tax purposes or (y) the
deductibility of the interest payable on any Pollution Control Bonds by the
Company under Section 150(b) of the Code.
(iii) The provisions of Section 1.1(a)(ii) shall not prohibit the Buyer
from ceasing to operate, maintain or repair any element or item of the Pollution
Control Facilities, suspending the operation of the Pollution Control Facilities
on a temporary basis, or terminating the operation of the Pollution Control
Facilities on a permanent basis and shutting down the Pollution Control
Facilities; provided, however, that the Pollution Control Facilities, in whole
or in part, shall not be maintained in such a manner as to prevent their being
reactivated and used for a purpose permitted by Section 1.1(a)(ii), nor be
retired and/or decommissioned, dismantled or sold as scrap, unless the Buyer has
obtained at its own expense an opinion of Bond Counsel addressed to and
reasonably satisfactory to NAEC and the Company that this action will not impair
either (x) the exclusion from gross income of the interest on any Pollution
Control Bonds for federal income tax purposes or (y) the deductibility of the
interest payable with respect to any Pollution Control Bonds by the Company
under Section 150(b) of the Code. The Buyer shall provide to NAEC and the
Company written notice at least thirty (30) days in advance of any permanent
shut-down, retirement, abandonment or decommissioning of Seabrook or the
Pollution Control Facilities in whole or in part and shall in good faith by
written notice to NAEC and the Company describe the affected property so that
NAEC and the Company can determine which issue or issues of Pollution Control
Bonds financed or refinanced such affected property.
(iv) It is expressly understood and agreed that this Section 1.1(a) shall
not prohibit the use by the Buyer of tax-exempt bonds to finance or refinance
any improvements to the Pollution Control Facilities made on or after the
Closing Date or any assets other than the Pollution Control Facilities, provided
that no breach by the Buyer of its covenants in this Section 1.1(a) shall result
from such improvements.
ii
(v) The Buyer shall indemnify NAEC and the Company for any costs and
expenses incurred by NAEC or the Company, respectively, solely as a result of
any breach by the Buyer of its covenants in this Section 1.1(a).
(vi) NAEC shall, or shall cause the Company to, notify the Buyer in
writing of the maturity or redemption of any issue of the Pollution Control
Bonds.
(vii) If NAEC or the Company shall have notified the Buyer that it has
refinanced any of the Pollution Control Bonds with new bonds, the provisions of
this Section 1.1(a), if applicable, shall apply with respect to such new bonds
as though they were the Pollution Control Bonds.
(viii) The Buyer and any transferee or subsequent transferee will not sell
or otherwise transfer all or part of the Pollution Control Facilities unless its
transferee covenants in writing for the benefit of NAEC and the Company to
comply with and to satisfy the covenants of this Section 1.1(a) (including
without limitation the covenants of this clause (viii)) with respect to its
ownership and use of such Pollution Control Facilities.
(ix) The covenants of this Section 1.1(a) shall survive Closing and shall
continue in effect and bind the Buyer and any transferee or subsequent
transferee of all or part of the Pollution Control Facilities so long as any of
the Pollution Control Bonds remain outstanding.
RELATED DEFINITIONS
"Agreement" means this [Purchase and Sale Agreement], together with
Schedules and Exhibits hereto, as the same may be amended from time to time.
"Bond Counsel" has the meaning set forth in Section 1.1(a)(ii).
"Buyer" [define as the buyer under the Purchase and Sale Agreement].
"Closing" means the closing of the transactions contemplated by this
Agreement.
"Closing Date" means the date on which the Closing takes place.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" [define to mean the Company, as defined in the Facilities
Agreement].
"Exhibit" means an exhibit to this Agreement.
"Facilities Agreement" means the Series B Seabrook Pollution Control
Facilities Agreement to which this Attachment 1 is attached.
"IRS" means the Internal Revenue Service or any successor agency.
iii
"LTA" means the LTA, as defined in the Facilities Agreement.
"NAEC" [define to mean NAEC, as defined in the Facilities Agreement].
"PC Bondholders" has the meaning set forth in Section 1.1(a)(i)(C).
"Pollution Control Bonds" [define to include the Bonds, as defined in the
LTA.].
"Pollution Control Facilities" [define to include the Project Facilities,
as defined in the LTA.].
"Schedule" means a schedule to this Agreement.
"Seabrook" [define to mean the Station, as defined in the LTA].
iv