Exhibit 10(b)(12)
AMENDMENT NO. 2
dated as of December 1, 1999
to
TAX INDEMNITY AGREEMENT
dated as of December 1, 1985
between
IBM Credit Financing Corporation
beneficiary under a Trust Agreement
dated as of December 1, 1985
with Wilmington Trust Company
and
William J. Wade,
as Owner Trustee and Cotrustee, respectively,
Lessor
and
TUCSON ELECTRIC POWER COMPANY,
and
SAN CARLOS RESOURCES INC.,
Lessee
---------------------------------------
Common Plant
Springerville Generating Station
AMENDMENT NO. 2
to
TAX INDEMNITY AGREEMENT
This AMENDMENT NO. 2 (this "Amendment"), dated as of
December 1, 1999 to TAX INDEMNITY AGREEMENT, dated as of
December 1, 1985, between TUCSON ELECTRIC POWER COMPANY, an
Arizona corporation, and SAN CARLOS RESOURCES INC., an Arizona
corporation, as Lessee (the "Lessee"), and IBM CREDIT FINANCING
CORPORATION, a Delaware corporation (the "Owner Participant"),
beneficiary under a Trust Agreement, dated as of December 1,
1985, with Wilmington Trust Company and William J. Wade, as
Owner Trustee and Cotrustee, respectively (the "Lessor").
W I T N E S S E T H
WHEREAS, the Owner Participant (or its predecessor in
interest) and the Lessee entered into a Tax Indemnity Agreement,
dated as of December 1, 1985, as amended by Amendment No. 1,
dated as of December 15, 1992, to Tax Indemnity Agreement dated
as of December 1, 1985 (such Tax Indemnity Agreement, as so
amended and as further amended, modified or supplemented from
time to time, being referred to herein as the "Tax Indemnity
Agreement");
WHEREAS, the Lessee, the Lessor, the Owner Participant and
certain other parties have agreed pursuant to a Refunding
Agreement, dated as of December 1, 1999 (as amended, modified or
supplemented from time to time, the "Refunding Agreement") to
participate in refinancing the outstanding Secured Notes on the
Refunding Date (as defined in the Refunding Agreement);
WHEREAS, the Owner Participant and the Lessee wish to amend
the Tax Indemnity Agreement as contemplated herein in order to
reflect agreements and amendments contemplated by the Refunding
Agreement;
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions. General. Capitalized terms used
herein and not otherwise defined herein shall have the respective
meanings specified in the Tax Indemnity Agreement.
Section 2. Indemnified Losses. (a) Section 3.1 is hereby
amended by adding at the end of subsection (b) (i.e. prior to the
phrase "(any of the events)") the following:
"or (c) if, as a result of the Lessee paying any
Transaction Expenses (as defined in the Refunding Agreement,
dated as of December 1, 1999, among Lessee, IBM Credit
Financing Corporation, Lessor and certain other parties
(such Refunding Agreement, as amended, modified or
supplemented from time to time, being referred to herein as
the "Refunding Agreement") the Owner Participant shall be
required to include any amount in its gross income; or
(d) if Section 467 of the Code or the regulations
thereunder shall apply to any Rent paid on or after the
Refunding Date (as defined in the Refunding Agreement) with
the result that the Owner Participant is required to include
any amount in gross income (including any related deemed
interest) earlier than the time such payments would be
includable in gross income in accordance with the method of
accounting regularly utilized by the Owner Participant
(i.e., the accrual method)".
(b) Section 3.1 is hereby amended by replacing the phrase
"(any of the events described in these subsections (a)(2) or (b)
hereof being referred to hereinafter as a "Loss")" with the
following:
"(any of the events described in these subsections
(a)(2), (b), (c) or (d) being referred to hereinafter as a
"Loss")".
Section 3. Excluded Events. (a) Section 6(1)(e) is hereby
amended by adding after the phrase "Effective Date;" the
following:
"provided, further, that with regard to Losses
described in Section 3.1(c) and (d) hereof only, for
purposes of this Section 6(1)(e) change in tax law
shall mean only changes in the Code enacted after the
Refunding Date (as defined in the Refunding
Agreement);".
(b) Section 6(2) is hereby amended by adding at the end of
the proviso thereto and before the period the following:
"or Section 3.1(c) or (d)".
Section 4. Counterpart Execution. This 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.
Section 5. Ratification of the Tax Indemnity Agreement. As
amended by this Amendment, the Tax Indemnity Agreement is in all
respects ratified, approved and confirmed, and the Tax Indemnity
Agreement and this Amendment shall together constitute one and
the same instrument.
Section 6. Governing Law. This Amendment has been
delivered in, and shall in all respects be governed by, construed
in accordance with, the laws of the State of New York applicable
to agreements made and to be performed entirely within such
State, including such laws applicable to matters of construction,
validity and performance.
Section 7. No Duplication of Payment. Section 21 is hereby
amended by adding, after the phrase "Section 7 hereof" the
following:
"or the payment made pursuant to Section 2.01(d) of the
Refunding Agreement (with respect to the income attributable
to the payment pursuant to Section 2.01(c) of the Refunding
Agreement). For the avoidance of doubt, the parties confirm
that Section 4 hereof shall have no application to any
payments made pursuant to the Refunding Agreement or any tax
benefits arising therefrom".
IN WITNESS WHEREOF, the Owner Participant and the Lessee
have caused this Amendment to be duly executed by their
respective officers hereunto duly authorized as of the date set
forth above.
TUCSON ELECTRIC POWER COMPANY
By /s/ Vincent Nitido
------------------------------
Name:
Title:
SAN CARLOS RESOURCES INC.
By /s/ Dennis Nelson
------------------------------
Name:
Title:
IBM CREDIT FINANCING CORPORATION
By /s/ John V. Palerno, Jr.
------------------------------
Name:
Title: