SECOND AMENDED AND RESTATED PROJECT FACILITIES
AGREEMENT, dated as of December 1, 1993 between LUZERNE COUNTY
INDUSTRIAL DEVELOPMENT AUTHORITY (the "Authority") and
PENNSYLVANIA GAS AND WATER COMPANY (the "Company").
RECITALS
Pursuant to a Project Facilities Agreement dated as of
March 1, 1982 (the "1982 Agreement"), the Authority issued an
aggregate of $19,000,000 of its Exempt Facilities Revenue Bonds,
1982 Series A (Pennsylvania Gas and Water Company Project) (the
"1982 Bonds") under a Trust Indenture dated as of March 1, 1982
between the Authority and Northeastern Bank of Pennsylvania (now
PNC Bank, National Association), as trustee (the "1982
Indenture"). In order to provide for a portion of the costs of
refunding the 1982 Bonds and pursuant to an Amended and Restated
Project Facilities Agreement dated as of January 1, 1989 (the
"1989 Agreement"), the Authority issued an aggregate of
$19,000,000 of its Exempt Facilities Revenue Bonds, 1989 Series A
(Pennsylvania Gas and Water Company Project) (the "1989 Bonds")
under a Trust Indenture dated as of January 1, 1989 between the
Authority and Northeastern Bank of Pennsylvania (now PNC Bank,
National Association), as trustee (the "1989 Indenture"). In
order to provide for a portion of the costs of refunding the 1989
Bonds, the Company has requested the Authority to issue its
Exempt Facilities Revenue Refunding Bonds, 1993 Series A
(Pennsylvania Gas and Water Company Project) (the "1993 Series A
Bonds") in the aggregate principal amount of $19,000,000 under
the terms of a Trust Indenture (the "1993 Indenture") dated as of
the date hereof between the Authority and PNC Bank, National
Association, as trustee (the "Trustee"). The Authority will use
the proceeds received from the sale of the 1993 Series A Bonds,
together with other moneys available for such purpose, to provide
for the refunding of the 1989 Bonds and the redemption thereof on
January 1, 1994. In connection with the issuance of the 1993
Series A Bonds, the Authority and the Company desire to amend and
restate the 1989 Agreement as hereinafter provided.
NOW, THEREFORE, in consideration of the foregoing and
the undertakings herein set forth and intending to be legally
bound, the Authority and the Company hereby agree that, effective
upon the defeasance of the 1989 Indenture, as provided for in the
Refunding Agreement (the "Refunding Agreement") dated as of
December 1, 1993 between the Authority and PNC Bank, National
Association, as escrow agent, the 1989 Agreement is amended and
restated in full as follows (the 1989 Agreement, as hereby
amended and restated, is referred to as the "Agreement"):
I. BACKGROUND, REPRESENTATIONS AND FINDINGS
1.1 Background. The Authority is a public
instrumentality of the Commonwealth of Pennsylvania and a public
body corporate and politic organized under the Pennsylvania
Industrial and Commercial Development Authority Law (the "Act").
Under the Act, the Authority is authorized to enter into
agreements providing for the financing of the acquisition,
construction and equipment of development projects (including
facilities for the furnishing by a public utility of water which
is or will be made available on reasonable demand to members of
the general public) and the sale thereof to occupants (including
public utilities) for the public purposes of alleviating
unemployment, maintaining employment at a high level, and
creating and developing business opportunities by the
construction, improvement, rehabilitation, revitalization and
financing of industrial, specialized and commercial enterprises,
including facilities for the furnishing by a public utility of
water available on reasonable demand to members of the general
public.
The Company is a Pennsylvania corporation engaged in,
among other things, furnishing water in the Pennsylvania Counties
of Lackawanna, Luzerne, Wayne and Susquehanna; and the Company is
engaged primarily in activities regulated by the Pennsylvania
Public Utility Commission. The Company previously requested the
Authority, and the Authority agreed, to issue the 1989 Bonds to
finance a project (the "Project") consisting of the payment of a
portion of the costs of the acquisition, construction, equipment
and sale to the Company of a specialized enterprise project (as
defined in the Act) consisting of facilities, located in the
Pennsylvania Counties of Luzerne, Lackawanna, Wayne and
Susquehanna for the furnishing of water which is available on
reasonable demand to members of the general public in portions of
the Pennsylvania Counties of Luzerne, Lackawanna, Wayne and
Susquehanna which facilities and their costs are generally
described in Schedule A to this Agreement (the "Project
Facilities"). The Pennsylvania Secretary of Commerce, as
required by the Act, approved the financing for the Project on
June 29, 1981, which approval was amended by letter dated
March 5, 1982. The acquisition, construction and equipment of
the Project Facilities has been completed prior to the date
hereof and title to the Project Facilities has vested in the
Company pursuant to the 1989 Agreement. The Company has
requested the Authority to enter into this Agreement to provide
for the refunding of the 1989 Bonds.
The proceeds of the 1989 Bonds issued by the Authority
pursuant to the 1989 Agreement were applied to making certain
deposits in the funds and accounts created pursuant to the 1989
Indenture. The rates for the water furnished by the Project
Facilities have been established or approved by the Pennsylvania
Public Utilities Commission, for purposes of Section 142(a)(4) of
the Internal Revenue Code of 1986, as amended (the "Code"), so
that the interest on the 1989 Bonds was not, and the interest on
the 1993 Series A Bonds will not be, includible in gross income
of the holders thereof for purposes of Federal income tax law.
1.2 Company Representations. The Company represents
that:
(a) It is a corporation duly organized and
existing in good standing under Pennsylvania law with full power
and legal right to enter into this Agreement and perform its
obligations hereunder, and is a corporation engaged primarily in
activities regulated by the Pennsylvania Public Utility
Commission. The making and performance of this Agreement on the
Company's part have been duly authorized by all necessary
corporate action in accordance with the provisions of the
Restated Articles of Incorporation and By-Laws of the Company,
and will not, as of the date of the delivery of the 1993 Series A
Bonds, violate or conflict with any governmental rule or
regulation applicable to the Company, or violate any instrument
by which the Company is bound, other than such violations or
conflicts as would not have a material adverse effect on the
Company's business or financial position.
(b) The Project Facilities constitute a
specialized enterprise project consisting of facilities for the
furnishing by a utility activity (as defined in the Act) of water
available on reasonable demand to members of the general public.
(c) The acquisition and construction of the
Project Facilities did not commence prior to the approval of the
Project by the Pennsylvania Secretary of Commerce.
(d) The Project Facilities consist of land or
property of a character subject to allowance for depreciation
under Section 167 of the Code.
(e) The proceeds of the 1982 Bonds did not exceed
the Costs of the Project in respect of the Project Facilities as
permitted under the Act.
(f) The Company has acquired all permits and
licenses and has satisfied all other requirements necessary for
the acquisition, construction, equipment and operation by the
Company of the Project Facilities.
1.3 Authority Representations and Findings. The
Authority hereby confirms the following representations and
findings:
(a) It is a public instrumentality of the
Commonwealth of Pennsylvania and a public body corporate and
politic duly organized under the Act with full power and legal
right to enter into this Agreement and perform its obligations
hereunder.
(b) The making and performance of this Agreement
on the Authority's part have been duly authorized by all
necessary action, have been and will be done in full compliance
with the provisions of the Act and will not violate any
instrument to which the Authority is a party.
(c) The Company is financially responsible to
assume all obligations prescribed by the Authority in this
Agreement and by the Act and is qualified to be an occupant for
purposes of the Act and is engaged in activities in Pennsylvania
requiring substantial capital, and its operations contribute to
economic growth and the creation of employment opportunities.
(d) The Project promotes the health, safety and
general welfare of the people of Pennsylvania and the purposes of
the Act by maintaining employment in Pennsylvania and by
providing a specialized enterprise project consisting of
facilities for the furnishing by a utility activity (as defined
in the Act) of water available on reasonable demand to members of
the general public.
(e) The issuance of the 1989 Bonds was approved
by publicly elected local officials as required by the Code,
after public hearings held upon at least two weeks public notice.
(f) The issuance of the 1993 Series A Bonds and
the execution of this Agreement and the 1993 Indenture have been
approved by the Authority at a duly constituted meeting.
II. COMPLETION OF AND TITLE TO PROJECT FACILITIES
2.1 Completion of and Title to Project Facilities.
Prior to the date hereof, (i) those portions of the acquisition,
construction and equipment of the Project Facilities financed
with the proceeds of the 1982 Bonds have been completed, (ii)
substantially all of the proceeds of the 1989 Bonds were used to
redeem the 1982 Bonds and the proceeds of the 1982 Bonds were
spent for costs of the Project, and (iii) all of the Authority's
right, title and interest in the Project Facilities, together
with all of the Authority's rights to support, rights to occupy
the ground and air space under and around the Project Facilities
and rights of ingress and egress to the Project Facilities have
vested in the Company.
III. FINANCING THE PROJECT
3.1 Issuance of 1993 Series A Bonds. In order to
refund the 1989 Bonds, the Authority, at the request of the
Company, will issue and sell the 1993 Series A Bonds under the
1993 Indenture.
3.2 Deposit of 1993 Series A Bond Proceeds. The
proceeds of the 1993 Series A Bonds shall be deposited in the
Clearing Fund established under the 1993 Indenture; except that
accrued interest on the 1993 Series A Bonds received by the
Authority upon the sale of the 1993 Series A Bonds shall be
deposited into the Bond Fund established under the 1993
Indenture, and shall be applied to the first interest payments
due on the 1993 Series A Bonds. The proceeds of the 1993 Series
A Bonds deposited in the Clearing Fund established under the 1993
Indenture shall be applied to the refunding of the 1989 Bonds as
provided in and in accordance with the terms of the Refunding
Agreement.
3.3 1993 Series A Bonds Not to Become Arbitrage Bonds.
The Authority and the Company hereby covenant to each other and
to the holders of the 1993 Series A Bonds that, notwithstanding
any other provision of this Agreement or any other instrument,
they will neither make nor instruct the Trustee to make any
investment or other use of money in the Bond Fund or the Clearing
Fund or other proceeds of the 1993 Series A Bonds which would
cause the 1993 Series A Bonds to become arbitrage bonds under
Section 148 of the Code and the regulations thereunder, and that
they will comply with the requirements of such Section and
regulations throughout the term of the 1993 Series A Bonds. The
Company covenants that it will not knowingly take or authorize or
permit, to the extent such action is within the control of the
Company, any action to be taken with respect to the Project
Facilities, or the proceeds of the 1993 Series A Bonds (including
investment earnings on the 1993 Series A Bonds), or insurance,
condemnation, or any other proceeds derived directly or
indirectly in connection with the Project Facilities, which will
result in the loss of the exclusion from gross income of interest
on the 1993 Series A Bonds for purposes of Federal income
taxation (except for any 1993 Series A Bond held by a person
referred to in Section 147(a) of the Code); and the Company also
covenants that it will not knowingly omit to take any action in
its power which, if omitted, would cause such a result.
3.4 Restriction on Use of Bond Fund and Clearing Fund.
The Company shall not use or direct the use of moneys from the
Bond Fund or the Clearing Fund in any way so as to cause the
interest on any 1993 Series A Bonds to be included in gross
income for purposes of Federal income tax and shall use the
proceeds (including the proceeds of the investment thereof) of
the 1993 Series A Bonds deposited in the Clearing Fund to refund
the 1989 Bonds as provided in the Refunding Agreement.
3.5 No "Same Issue" Bonds. Neither the Company nor
any other principal user of the Project Facilities, nor any
related person, within the meaning of Section 144(a)(3) of the
Code, has participated, or will participate, in the offering for
sale or sale of any issue of private activity bonds within the
meaning of Section 141 of the Code, which are or will be required
to be aggregated with the 1993 Series A Bonds as part of the
"same issue" within the meaning of Revenue Ruling 81-216, 1981-2
C.B. 21.
IV. FIRST MORTGAGE BONDS
4.1 First Mortgage Bonds. As evidence of its
obligations to pay the purchase price of the Project Facilities
(such purchase price being an amount equal to the principal of
and premium (if any) and interest payable on the 1993 Series A
Bonds), the Company will, concurrently with the issuance and sale
of the 1993 Series A Bonds, execute and deliver to the Trustee,
as assignee of the Authority, $19,000,000 principal amount of the
Company's First Mortgage Bonds 6.05% Series due 2019 (the "First
Mortgage Bonds"), issued under the Company's Indenture of
Mortgage and Deed of Trust dated March 15, 1946, as heretofore or
hereafter amended or supplemented (the "Mortgage"), to Morgan
Guaranty Trust Company of New York, as trustee (such trustee and
its successors in trust being hereinafter referred to as the
"Mortgage Trustee").
4.2 Acceleration of Payment to Redeem Bonds. The
Authority will (subject to any applicable rights under the 1993
Indenture to purchase 1993 Series A Bonds in lieu of redemption)
redeem any or all 1993 Series A Bonds or portions thereof upon
the occurrence of an event which gives rise to any mandatory
redemption specified in the 1993 Series A Bonds or in the 1993
Indenture. Whenever any of the 1993 Series A Bonds are subject
to optional or extraordinary optional redemption, the Authority
will, but only upon request of the Company, redeem the same in
accordance with such request and the 1993 Indenture. In either
event, the Company will pay an amount equal to the then
applicable redemption price of such 1993 Series A Bonds as a
prepayment on the First Mortgage Bonds, plus interest accrued to
the redemption date, less any credits to which the Company may be
entitled hereunder, under the 1993 Indenture or under the First
Mortgage Bonds.
4.3 No Defense or Set-Off. Except as set forth in any
applicable provisions of the 1993 Indenture or the First Mortgage
Bonds which are not inconsistent with the provisions of this
Agreement, the obligation of the Company to make the payments
required under the First Mortgage Bonds shall be absolute and
unconditional without defense or set-off by reason of any default
by the Authority under this Agreement or under any other
agreement between the Company and the Authority or for any other
reason, including, without limitation, any acts or circumstances
that may constitute failure of consideration, destruction of or
damage to the Project Facilities, commercial frustration of
purpose, or failure of the Authority to perform and observe any
agreement, whether express or implied, or any duty, liability or
obligation arising out of or connected with this Agreement, it
being the intention of the parties that the payments required
under this Agreement and the First Mortgage Bonds will be paid in
full when due without any delay or diminution whatsoever.
Nothing contained in this Section shall be construed to release
the Authority from its obligation to perform any of the
agreements on its part herein contained; and in the event the
Authority should fail to perform any such agreement on its part,
the Company may institute such action against the Authority as
the Company may deem necessary to compel performance.
4.4 Assignment of Authority's Rights. As the source
of payment for the 1993 Series A Bonds, the Authority will assign
to the Trustee all the Authority's rights under this Agreement
with respect to the 1993 Series A Bonds, including its rights to
receive all amounts due under the First Mortgage Bonds (except
rights to receive payments under Section 5.2 or 5.4 hereof). The
Company consents to such assignments and agrees to make payments
required by the First Mortgage Bonds directly to the Trustee,
without defense or set-off by reason of any dispute between the
Company and any such Trustee.
V. COVENANTS OF THE COMPANY
5.1 Maintenance and Operation of Project Facilities.
The Company agrees that it will cause the Project Facilities to
be maintained and operated during their useful lives but this
covenant shall not require the Company to operate any portion of
the Project Facilities after the Company, in its sole discretion,
determines that it is no longer practical, economic, or desirable
to do so and shall not prevent the Company from selling all or
any portion of its interest in any property or from merging or
consolidating with another corporation, provided that (a)(i) in
the case of any such merger or consolidation other than one in
which the Company is the continuing corporation or (ii) in the
case of the sale of all or substantially all of the property of
the Company, the corporation formed by such consolidation, or
into which the Company shall have been merged, or to which such
property has been sold, shall be a solvent domestic corporation
organized under the laws of the United States or a state thereof,
shall be qualified to do business in the Commonwealth of
Pennsylvania, and shall expressly assume, in a form reasonably
satisfactory to the Trustee, all obligations of the Company
hereunder and under the First Mortgage Bonds then outstanding;
(b) after such merger, consolidation or sale, the Company or the
surviving entity is not in default hereunder; and (c) such merger
or consolidation is permitted under the provisions of the
Mortgage.
5.2 Payment of Authority's Expenses. At the time of
the issuance of the 1993 Series A Bonds, the Company shall pay
the Authority's financing fee related to such Bonds, as
established at the time of initial application to the Authority,
and from time to time shall reimburse the Authority for the
Authority's reasonable expenses in respect of the 1993 Series A
Bonds, including reasonable fees and expenses of counsel.
5.3 Payment of Trustee's Compensation and Expenses.
The Company will pay the reasonable compensation and reasonable
expenses of the Trustee and any Paying Agent under the 1993
Indenture, including all costs of redeeming 1993 Series A Bonds
thereunder.
5.4 Indemnity Against Claims. The Company will
indemnify the Authority and the Trustee against claims arising
out of the construction or operation of the Project Facilities;
provided, however, that the Company will not indemnify the
Authority or the Trustee against such claims which result from
the gross negligence or willful misconduct of the Authority, the
Trustee, or their respective officers, employees or agents. If
any such claim for which indemnification is sought is asserted,
the Authority or the Trustee, as the case may be, will give
prompt notice to the Company and the Company will assume the
defense thereof, with full power to litigate, compromise or
settle the same in its sole discretion.
5.5 Limitation of Liability of the Authority;
Authority Disclaimer. In the event of any default by the
Authority hereunder, the liability of the Authority to the
Company shall be enforceable only out of its interest under this
Agreement and there shall be no other recourse by the Company
against the Authority or any of the property now or hereafter
owned by it. The Authority makes no warranty either express or
implied as to the actual or designed capacity of the Project
Facilities, as to the suitability of the Project Facilities for
the purposes specified in this Agreement, as to the condition of
the Project Facilities, or that the Project Facilities will be
suitable for the Company's purposes or needs.
5.6 Default, etc. In addition to all other rights of
the Authority granted herein or otherwise by law, the Authority
shall have the right to specifically enforce the performance and
observation by the Company of any of its obligations, agreements
or covenants under this Agreement and may take any actions at law
or in equity to collect any payments due or to obtain other
remedies. If the Company shall default under any provisions of
this Agreement and the Authority shall employ attorneys or incur
other expenses for the collection of payments due or for the
enforcement of the performance or observance of any obligation or
agreement on the part of the Company contained herein, the
Company will on demand therefor reimburse the reasonable fees of
such attorneys and such reasonable expenses so incurred.
5.7 Deficiencies in Revenues. If for any reason,
including the Company being required to withhold or pay any tax
imposed by reason of its obligations evidenced by the First
Mortgage Bonds, amounts paid to the Trustee on the First Mortgage
Bonds, together with other moneys held by the Trustee and then
available, would not be sufficient to make the corresponding
payments of principal or redemption price of, and interest on,
the 1993 Series A Bonds when such payments become due, the
Company will pay the amounts required from time to time to make
up any such deficiency.
5.8 Arbitrage Rebate. The Company expects that all
of the proceeds of the 1993 Series A Bonds, other than amounts
held in the Bond Fund established pursuant to the 1993
Indenture, will be expended within six months of the date of
issuance of the 1993 Series A Bonds. The Company, therefore,
does not expect to have any earnings subject to rebate with
respect to the 1993 Series A Bonds. Notwithstanding the
foregoing, the Company covenants to comply with the arbitrage
rebate requirements of the Code, including without limitation
Section 148(f) thereof.
5.9 Notice and Certification with Respect to
Bankruptcy Proceedings. The Company shall promptly notify the
Trustee of the occurrence of any of the following events and
shall keep the Trustee informed of the status of any petition in
bankruptcy filed (or bankruptcy or similar proceeding otherwise
commenced) against the Company: (i) application by the Company
for or consent by the Company to the appointment of a receiver,
trustee, liquidator or custodian or the like of itself or of its
property, or (ii) admission by the Company in writing of its
inability to pay its debts generally as they become due, or
(iii) general assignment by the Company for the benefit of
creditors, or (iv) adjudication of the Company as a bankrupt or
insolvent, or (v) commencement by the Company of a voluntary case
under the United States Bankruptcy Code or filing by the Company
of a voluntary petition or answer seeking reorganization of the
Company, an arrangement with creditors of the Company or an order
for relief or seeking to take advantage of any insolvency law or
filing by the Company of an answer admitting the material
allegations of an insolvency proceeding against it, or action by
the Company for the purpose of effecting any of the foregoing, or
(vi) if without the application, approval or consent of the
Company, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking in
respect of the Company an order for relief or an adjudication in
bankruptcy, reorganization, dissolution, winding up, liquidation,
a composition or arrangement with creditors, a readjustment of
debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of the Company or of all or any substantial
part of its assets, or other relief in respect thereof under any
bankruptcy or insolvency law.
VI. COVENANTS OF THE AUTHORITY
6.1 Maintenance of Its Existence. The Authority
agrees that it will maintain its corporate existence and use its
best efforts to maintain and renew all its material rights,
powers, privileges and franchises.
6.2 Compliance with Laws. The Authority shall comply
in all material respects with all valid and applicable laws,
acts, rules, regulations, permits, orders, requirements and
directions of any legislative, executive, administrative or
judicial body.
6.3 Compliance with the Indenture. The Authority
shall comply in all material respects with its covenants in
Article VIII of the 1993 Indenture.
VII. MISCELLANEOUS
7.1 Notices. Notice hereunder shall be given to:
The Authority - Luzerne County Industrial
Development Authority
54 West Union Street
Wilkes-Barre, Pennsylvania 18711
Attention: Chairman
The Company - Pennsylvania Gas and Water Company
39 Public Square
Wilkes-Barre, Pennsylvania 18711
Attention: Secretary
7.2 Assignments. This Agreement may not be assigned
by either party without the consent of the other, except that the
Authority may assign its rights to the Trustee pursuant to
Section 4.4 hereof.
7.3 Illegal, etc. Provisions Disregarded. In case any
provision of this Agreement shall for any reason be held invalid,
illegal or unenforceable in any respect, this Agreement shall be
construed as if such provision had never been contained herein.
7.4 Amendments. This Agreement may not be amended
except by an instrument in writing signed by the parties and, if
such amendment occurs after the issuance of the 1993 Series A
Bonds and adversely affects the interests of holders of any 1993
Series A Bonds, consented to by the Trustee; provided that no
such consent of the Trustee shall be necessary if and to the
extent that such amendment pertains to the issuance of additional
bonds by the Authority for the benefit of the Company.
7.5 Controlling Law. This Agreement shall be deemed
to be a contract made in the Commonwealth of Pennsylvania and
governed by Pennsylvania law.
7.6 Term of Agreement. This Agreement shall become
effective upon its delivery and shall continue in effect until
all 1993 Series A Bonds have been paid or provision for such
payment has been made as provided in the 1993 Indenture.
7.7 Counterparts. This Agreement may be executed in
any number of counterparts, each of which when so executed and
delivered shall be an original; but such counterparts shall
together constitute but one and the same instrument.
WITNESS the due execution of this Second Amended and
Restated Project Facilities Agreement as of the day and year
first mentioned above.
[SEAL] LUZERNE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
Attest:
___________________________ By:___________________________
Secretary Vice Chairman
[SEAL] PENNSYLVANIA GAS AND WATER
COMPANY
Attest:
______________________________ By:___________________________
Secretary Vice President, Finance
Schedule A
Project Facilities
BD31719.A(PF) Closing Item No. A-1
SECOND AMENDED AND RESTATED
PROJECT FACILITIES AGREEMENT
Between
LUZERNE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
And
PENNSYLVANIA GAS AND WATER COMPANY
Dated as of December 1, 1993
TABLE OF CONTENTS
Page
I. BACKGROUND, REPRESENTATIONS AND FINDINGS. . . . . . . . . . 2
1.1 Background . . . . . . . . . . . . . . . . . . . . . 2
1.2 Company Representations. . . . . . . . . . . . . . . 3
1.3 Authority Representations and Findings . . . . . . . 4
II. COMPLETION OF AND TITLE TO PROJECT FACILITIES . . . . . . 4
2.1 Completion of and Title to Project Facilities. . . . 4
III. FINANCING THE PROJECT. . . . . . . . . . . . . . . . . . 5
3.1 Issuance of 1993 Series A Bonds. . . . . . . . . . . 5
3.2 Deposit of 1993 Series A Bond Proceeds . . . . . . . 5
3.3 1993 Series A Bonds Not to Become Arbitrage Bonds. . 5
3.4 Restriction on Use of Bond Fund and Clearing Fund. . 6
3.5 No "Same Issue" Bonds. . . . . . . . . . . . . . . . 6
IV. FIRST MORTGAGE BONDS. . . . . . . . . . . . . . . . . . . 6
4.1 First Mortgage Bonds . . . . . . . . . . . . . . . . 6
4.2 Acceleration of Payment to Redeem Bonds. . . . . . . 6
4.3 No Defense or Set-Off. . . . . . . . . . . . . . . . 7
4.4 Assignment of Authority's Rights . . . . . . . . . . 7
V. COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . . . 7
5.1 Maintenance and Operation of Project Facilities. . . 7
5.2 Payment of Authority's Expenses. . . . . . . . . . . 8
5.3 Payment of Trustee's Compensation and Expenses . . . 8
5.4 Indemnity Against Claims . . . . . . . . . . . . . . 8
5.5 Limitation of Liability of the Authority;
Authority Disclaimer . . . . . . . . . . . . . . . . 8
5.6 Default, etc . . . . . . . . . . . . . . . . . . . . 9
5.7 Deficiencies in Revenues . . . . . . . . . . . . . . 9
5.8 Arbitrage Rebate . . . . . . . . . . . . . . . . . . 9
5.9 Notice and Certification with Respect to
Bankruptcy Proceedings . . . . . . . . . . . . . . . 9
VI. COVENANTS OF THE AUTHORITY. . . . . . . . . . . . . . . . 10
6.1 Maintenance of Its Existence . . . . . . . . . . . . 10
6.2 Compliance with Laws . . . . . . . . . . . . . . . . 10
6.3 Compliance with the Indenture. . . . . . . . . . . . 10
VII. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . 10
7.1 Notices. . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Assignments. . . . . . . . . . . . . . . . . . . . . 11
7.3 Illegal, etc. Provisions Disregarded . . . . . . . . 11
7.4 Amendments . . . . . . . . . . . . . . . . . . . . . 11
7.5 Controlling Law. . . . . . . . . . . . . . . . . . . 11
7.6 Term of Agreement. . . . . . . . . . . . . . . . . . 11
7.7 Counterparts . . . . . . . . . . . . . . . . . . . . 11