Exhibit 10(b)(8)
AMENDMENT NO. 2
to
LEASE AGREEMENT
This AMENDMENT NO. 2, dated as of December 1, 1999, to Lease
Agreement, dated as of December 1, 1985, between TUCSON ELECTRIC
POWER COMPANY, an Arizona corporation ("TEP"), and SAN CARLOS
RESOURCES INC., an Arizona corporation ("San Carlos"), jointly
and severally as Lessee (such term and all other capitalized
terms used herein without definition having the meanings provided
in Section 1 hereof), and WILMINGTON TRUST COMPANY, a Delaware
corporation, and WILLIAM J. WADE (not in their respective
individual capacities but solely as Owner Trustee and Cotrustee,
respectively, under the Trust Agreement between such parties and
Philip Morris Capital Corporation, as Owner Participant), as
Lessor (this "Lease Amendment"),
W I T N E S S E T H
WHEREAS, the Lessee and the Lessor have heretofore entered
into a Lease Agreement, dated as of December 1, 1985, as duly
recorded in the office of the County Recorder of Apache County,
Arizona on January 8, 1986, in Docket 499 at Pages 50-184, as
supplemented by a Lease Supplement dated December 31, 1985, as
duly recorded in the aforesaid office in Docket 499 at Pages 453-
470, as amended by Amendment No. 1 to Lease Agreement, dated as
of December 15, 1992, duly recorded in the aforesaid office in
Docket 700 at Pages 318-344, providing for the lease by the
Lessor to the Lessee of the Leased Assets (such Lease Agreement,
as so supplemented and amended and as further amended, modified
or supplemented from time to time in accordance with the
provisions thereof, being hereinafter referred to as the
"Lease"),
WHEREAS, the Lessee and the Lessor have agreed pursuant to a
Refunding Agreement, dated as of December 1, 1999 (as amended,
modified or supplemented from time to time in accordance with the
provisions thereof, the "Refunding Agreement"), with the Owner
Participant, the Loan Participants named therein, the Indenture
Trustee and certain other parties to participate in refinancing
the outstanding Secured Notes on the Refunding Date (as defined
in the Refunding Agreement),
WHEREAS, the Lessee and Lessor have agreed to amend the
Lease as contemplated herein so as to effectuate such
refinancing,
WHEREAS, Section 31(b) of the Lease provides, among other
things, that until the Lessee has received notice from the
Indenture Trustee that the Lien of the Indenture on the Trust
Indenture Estate has been released, no term of the Lease shall be
amended without the consent of the Indenture Trustee, and
WHEREAS, pursuant to Section 15.1 of the Indenture, the
Indenture Trustee has, at the direction and with the consent of
each holder of a Secured Note, consented, by executing and
delivering the Refunding Agreement, to the amendments to the
Lease set forth in this Lease Amendment,
NOW THEREFORE, in consideration of the premises and of such
other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1. Definitions.
(a) General Definitions. Except as otherwise expressly
provided herein or unless the context otherwise requires,
capitalized terms used herein shall have the meanings set forth
in Section 1 of the Lease.
(b) Amended Definitions.
(i) The following definitions in Section 1 of the Lease
are hereby amended in their entirety to read as follows:
"Fair Market Rental Value" shall mean
the fair market rental value which would
be obtained in an arm's-length
transaction between an informed and
willing lessee and an informed and
willing lessor, in each case under no
compulsion to lease, for the Leased
Assets in place on the Site, on the
terms set forth, or referred to, in
Section 18 for a Renewal Period,
assuming, in the determination of such
fair market rental value, that (i) such
lessee has all rights of Lessee and such
lessor has all rights of Lessor under
the Operative Documents to use the
premises on which the Leased Assets are
situated for the then remaining term of
the Easement Assignment Agreements, and
(ii) the Leased Assets are in the
condition and repair required to be
maintained by the terms of this Lease
(unless such fair market rental value is
being determined for the purposes of
Section 16(d), in which case the
assumption described in this clause (ii)
shall not be made).
"Fair Market Sales Value" shall mean the
fair market sales value which would be
obtained in an arms's-length transaction
between an informed and willing buyer
and an informed and willing seller, in
each case under no compulsion,
respectively, to buy or sell, calculated
on the basis of the value for the use of
the Leased Assets in place on the Site,
assuming, in the determination of such
fair market sales value, that (i) such
buyer has all rights and obligations of
Lessor under the Operative Documents to
which it is a party, including the right
to use the premises on which the Leased
Assets are situated for the then
remaining term of the Easement
Assignment Agreements, (ii) upon the
expiration of the Easement Assignment
Agreements, the owner will be paid only
Net Scrap Value for the Leased Assets,
and (iii) the Leased Assets are in the
condition and repair required to be
maintained by the terms of this Lease
and the Facilities Agreement (unless
such fair market sales value is being
determined for the purposes of Section
16(d) in which case the assumption
described in this clause (iii) shall not
be made).
"Loan Participant" shall mean
collectively, the holders of the Secured
Notes and individually, any holder of a
Secured Note.
(ii) Clause (xix) of the definition of "Permitted
Encumbrance" in Annex 2 of the Lease is hereby amended in its
entirety to read as follows:
(xix) with respect to the Site (and, in
the case of clause (C), the Easements
and the Ancillary Rights), the Liens
created by (A) the Indenture, dated as
of April 1, 1941, of the Tucson Gas,
Electric Light and Power Company
(predecessor of TEP) to The Chase
Manhattan Bank of the City of New York
(predecessor of The Chase Manhattan Bank
(National Association)), trustee, (B)
the Indenture of Mortgage and Deed of
Trust, dated as of December 1, 1992, of
TEP to Bank of Montreal Trust Company,
trustee, so long as, in the case of this
clause (B), such indenture provides that
such Lien on TEP's leasehold interests
shall not result in the trustee having
any greater rights with respect to such
leasehold interests than TEP and (C) the
Deed of Trust, Assignment of Rents and
Leases and Security Agreement, dated as
of December 1, 1992, from San Carlos to
Transamerica Title Insurance Company,
trustee, for the use and benefits of
Barclays Bank PLC, New York Branch, as
collateral agent and beneficiary, so
long as, in the case of this clause (C),
such Deed of Trust at all times contains
the following language without
qualification "Notwithstanding any
provision of this Deed of Trust, the
Lien of this Deed of Trust shall not
result in the Trustee having any greater
rights than the Trustor in and to the
Trust Property".
(c) Additional Definition. Section 1 of the Lease is hereby
amended by adding the following definitions thereto:
"Administrative Agent" shall mean Union Bank of
California, N.A, in its capacity as Administrative Agent for the
Loan Participants.
"Alternate Base Rate" shall have the meaning specified
in the Indenture.
"Series 3 Notes" shall have the meaning specified in
the Indenture.
(d) Deleted Definitions. The definition of Series 1 Notes,
Series 2 Notes and Subparticipation Amount in Section 1 of the
Lease are hereby deleted in their entirety.
(e) Special Event of Loss. Clause (iii) of the definition of
"Special Event of Loss" in Section 1 of the Lease is hereby
amended in its entirety to read as follows:
(iii) (a) any of the Series 3 Notes are
outstanding after July 1, 2003 unless
subclause (b) of this clause (iii) shall
apply, or (b) upon any date occurring
prior to July 1, 2003 which shall have
been agreed to by the Lessee and the
Owner Participant; or
(f) Stipulated Interest Rate. Clause (b) of the definition
of "Stipulated Interest Rate" in Section 1 of the Lease is hereby
amended in its entirety to read as follows:
(b) in the case of any payment or the
portion of any payment to paid to the
Indenture Trustee or Loan Participant,
two percent over the Alternate Base
Rate.
Section 2. Insurance. Section 8(c) of the Lease is hereby
amended to delete each reference therein to the Loan Participant
and to substitute the words "Administrative Agent" in lieu
thereof.
Section 3. Sublease. Clause (ii)(B)(1) of the proviso to
Section 13(a) of the Lease is hereby amended to delete the words
"Series 1 Notes or Series 2 Notes" and to substitute the words
"Series 3 Notes" in lieu thereof.
Section 4. Counterpart Execution. This Lease Amendment may
be executed by the parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed an
original, but all such counterparts shall together constitute but
one and the same instrument. The single executed original of
this Lease Amendment which provides that it is the "original
counterpart" and which contains the receipt therefor executed by
the Indenture Trustee on or immediately following the signature
page thereof shall evidence the monetary obligations of the
Lessee hereunder and thereunder. To the extent, if any, that
this Lease Amendment constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction), no security interest in this Lease
Amendment may be created by the transfer or possession of any
counterpart thereof other than the original counterpart and
containing the receipt therefor executed by the Indenture Trustee
on or immediately following the signature page thereof.
Section 5. Ratification of the Lease. This Lease Amendment
is an amendment to the Lease. As amended by this Lease
Amendment, the Lease is in all respects ratified, approved and
confirmed, and the Lease and this Lease Amendment shall together
constitute one and the same instrument.
Section 6. Governing Law. This Lease Amendment has been
delivered in, and shall in all respects be governed by and
construed in accordance with, the laws of the State of Arizona
applicable to agreements made and to be performed entirely within
such state, including matters of construction, validity and
performance.
Section 7. Liabilities of Owner Participant. Sections 23
and 31 of the Lease are hereby incorporated by reference mutatis
mutandis in this Lease Amendment.
IN WITNESS WHEREOF, the undersigned Lessee and Lessor have
each caused this Lease Amendment to be duly executed and
delivered and their corporate seals to be hereunto affixed and
attested by their respective officers thereunto duly authorized
as of the day and year first above written.
TUCSON ELECTRIC POWER COMPANY,
as Lessee
By: /s/ Kevin Larson
------------------------------
Name:
Title:
[seal]
Attest:
/s/ Linda Kennedy
- ------------------------
Assistant Secretary
SAN CARLOS RESOURCES INC.
as Lessee
By: /s/ Karen G. Kissinger
------------------------------
Name:
Title:
[seal]
Attest:
/s/ Vincent Nitido
- ------------------------
Assistant Secretary
WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
under the Trust Agreement, as
Lessor
By: /s/ C. Paglia
------------------------------
Name: Charlotte Paglia
Title: Financial Services Officer
[seal]
Attest:
/s/ D. Geran
- ------------------------
Assistant Secretary
/s/ William J. Wade
---------------------------------
WILLIAM J. WADE,
not in his individual capacity
but solely as Cotrustee under
the Trust Agreement, as Lessor
Witness:
Wendy R. Marthrope
- ------------------------
Receipt of this original counterpart of the foregoing
Amendment No. 2 to Lease Agreement is hereby acknowledged on this
____ day of December, 1999.
UNITED STATES TRUST COMPANY OF NEW YORK,
as Indenture Trustee
By:
-----------------------------------
Name:
Title:
ACKNOWLEDGEMENTS TO LEASE AMENDMENT
STATE OF ARIZONA )
) ss.:
COUNTY OF PIMA )
The foregoing instrument was acknowledged before me this
10th day of December, 1999, by Kevin Larson, Vice President
and Treasurer of TUCSON ELECTRIC POWER COMPANY, an Arizona
corporation, on behalf of said corporation.
/s/ Janice Spencer
--------------------------
Notary Public
My Commission Expires:
August 8, 2003
- ------------------------
STATE OF ARIZONA )
) ss.:
COUNTY OF PIMA )
The foregoing instrument was acknowledged before me this
10th day of December, 1999, by Karen G. Kissinger, Vice
President and Controller of SAN CARLOS RESOURCES INC., an
Arizona corporation, on behalf of said corporation.
/s/ Janice Spencer
-----------------------------
Notary Public
My Commission Expires:
August 8, 2003
- ------------------------
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
The foregoing instrument was acknowledged before me this
10th day of December, 1999, by Charlotte Paglia, Financial
Services Officer of WILMINGTON TRUST COMPANY, a Delaware
banking corporation, on behalf of said corporation.
/s/ Lisa M. Harrison
-----------------------------
Notary Public
My Commission Expires:
September 1, 2000
- ------------------------
STATE OF DELAWARE )
) ss.:
COUNTY OF NEW CASTLE )
The foregoing instrument was acknowledged before me this
10th day of December, 1999, by WILLIAM J. WADE, an individual.
/s/ Lisa M. Harrison
-----------------------------
Notary Public
My Commission Expires:
September 1, 2000
- ------------------------