3206076.7 051096 932C 96256581
_________________________________________________________________
LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
dated as of May 1, 1996
among
TUCSON ELECTRIC POWER COMPANY,
VARIOUS BANKS
and
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY
individually and as Agent
Relating to $16,700,000
Coconino County, Arizona Pollution Control Corporation
Pollution Control Revenue Bonds, 1996 Series A
(Tucson Electric Power Company Project)
_________________________________________________________________
THIS LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as
of May 1, 1996, among TUCSON ELECTRIC POWER COMPANY, an Arizona
corporation (the "Company"), the undersigned banks and CANADIAN
IMPERIAL BANK OF COMMERCE, NEW YORK AGENCY, as Agent for the
Banks (in such capacity, the "Agent").
PRELIMINARY STATEMENTS. (1) At the Company's request,
the Coconino County, Arizona Pollution Control Corporation (the
"Issuer") is issuing, pursuant to an Indenture of Trust, dated as
of May 1, 1996 (the "Indenture"), between First Trust of New
York, National Association as trustee (such entity, or its
successor as trustee, being the "Trustee") and the Issuer,
$16,700,000 aggregate principal amount of its Pollution Control
Revenue Bonds, 1996 Series A (Tucson Electric Power Company
Project) (the "Bonds") to various purchasers.
(2) The Issuer and the Company are entering into a
Loan Agreement, dated as of May 1, 1996 (the "Loan Agreement"),
which the Issuer is assigning to secure the payment of the Bonds,
and pursuant to which, among other things, the Company is
requesting Canadian Imperial Bank of Commerce, New York Agency
(acting in its individual corporate capacity, "CIBC") to issue
its irrevocable transferable letter of credit, in substantially
the form of Exhibit A (such letter of credit, as it may from time
to time be extended or amended pursuant to the terms of this
Agreement, being the "Letter of Credit"), in the amount of
$18,347,124 (the "Commitment") of which (i) $16,700,000 shall
support the payment of principal of the Bonds, and (ii)
$1,647,124 shall support the payment of up to 300 days' interest
on the principal amount of the Bonds computed at a maximum rate
of 12% per annum.
(3) As more fully set forth hereinafter, each of the
Banks has agreed to purchase a participation in the Letter of
Credit.
NOW, THEREFORE, in consideration of the premises and in
order to induce CIBC to issue the Letter of Credit and the Banks
to participate therein, the parties hereto agree as follows:
I DEFINITIONS
I.1 Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings
to be equally applicable to both the singular and plural forms of
the terms defined):
"ACC" means the Arizona Corporation Commission or any
successor thereto.
"ACC Order" means the order of the ACC dated April 24,
1996.
"Advance" means any Tender Advance.
"Affiliate" means any trade or business (whether or not
incorporated) which is a member of a group of which the
Company is a member and which is under common control within
the meaning of the regulations under Sections 414(b) or (c)
of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"Agent" has the meaning assigned to it in the Preamble
to this Agreement, and includes any successor thereto.
"Agreement" means this Letter of Credit and
Reimbursement Agreement as it may be amended, supplemented
or otherwise modified in accordance with the terms hereof at
any time and from time to time.
"Available Amount" in effect at any time means the
maximum amount available to be drawn at such time under the
Letter of Credit, the determination of such maximum amount
to assume compliance with all conditions for drawing and no
reduction for any amount drawn by the Trustee in order to
make a regularly scheduled payment of interest on the Bonds
(unless such amount is not reinstated under the Letter of
Credit).
"Bank" means each of the banks whose signature appears
on the signature pages of this Agreement, including, without
limitation, CIBC in its capacity as issuer of the Letter of
Credit, and their respective successors and assigns; "Banks"
refers to all such banks.
"Base Advance" means any Advance bearing interest at
the Base Rate or the Default Rate.
"Base Rate" means, on any date, a fluctuating rate of
interest per annum equal to the higher of
(a) the rate of interest most recently
announced by CIBC in New York City as its prime
commercial lending rate (the "Prime Rate"); and
(b) the Federal Funds Rate plus .50%.
Neither the Prime Rate nor the Base Rate is necessarily
intended to be the lowest rate of interest determined by
CIBC in connection with extensions of credit. Changes in
the rate of interest will take effect simultaneously with
each change in the Base Rate.
"Bonds" has the meaning assigned to that term in the
Preliminary Statements hereto.
"Business Day" means a day of the year on which banks
located in The City of New York, New York are not required
or authorized to remain closed and on which The New York
Stock Exchange is not closed and, if the applicable Business
Day relates to any Eurodollar Advance or Interest Period
therefor, on which dealings are carried on in the London or
other relevant interbank market.
"Cancellation Date" has the meaning assigned to that
term in the Letter of Credit.
"CIBC" has the meaning assigned to that term in the
Preliminary Statements hereto.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time.
"Collateral" has the meaning assigned to that term in
Section 1.1 of the Custodian Agreement.
"Commitment" has the meaning assigned to that term in
the Preliminary Statements hereto.
"Company" has the meaning assigned to that term in the
Preliminary Statements hereto.
"Custodian Agreement" means the custodian and pledge
agreement in substantially the form of Exhibit B hereto.
"Debt" means, without duplication, (i) indebtedness for
borrowed money or for the deferred purchase price of
property or services, (ii) obligations as lessee under
Capital Leases, (iii) liabilities in respect of unfunded
vested benefits under plans covered by Title IV of ERISA,
(iv) withdrawal liability incurred under ERISA by the
Company or any Affiliate to any Multiemployer Plan, (v) all
obligations (contingent or otherwise) under reimbursement or
other similar agreements with respect to the issuance of
letters of credit (other than obligations in respect of
documentary letters of credit opened for the payment of
goods or services in the ordinary course of business), (vi)
obligations under direct or indirect guarantees in respect
of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against
loss in respect of, indebtedness, obligations and
liabilities of others of the kind referred to in clauses (i)
through (v) above, and (vii) to the extent due and payable
on any date of determination, all interest and premium on,
and other fees or charges payable in connection with,
indebtedness or obligations of the kinds referred to in
clauses (i) through (vi) above.
"Default Rate" means a fluctuating interest rate equal
at all times to the higher of (i) 2% per annum above the
Base Rate in effect from time to time and (ii) 2% per annum
above the IBO Rate determined for a period of one month.
"Drawing" has the meaning assigned to that term in the
Letter of Credit.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended from time to time.
"Eurodollar Advance" means any Advance bearing interest
at the Eurodollar Rate.
"Eurodollar Rate" for the Interest Period for any
Eurodollar Advance means an interest rate per annum equal at
all times during such Interest Period to 2.05% above the IBO
Rate for such Interest Period.
"Eurodollar Reserve Percentage" for the Interest Period
for any Eurodollar Advance means the reserve percentage
applicable during such Interest Period (or if more than one
such percentage shall be so applicable, the daily average of
such percentages for those days in such Interest Period
during which any such percentage shall be so applicable)
under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor)
for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or marginal
reserve requirement) for CIBC with respect to liabilities or
assets consisting of or including eurocurrency liabilities
having a term approximately equal to such Interest Period.
"Event of Default" has the meaning assigned to that
term in Section 6.01.
"Federal Funds Rate" means for any day, the weighted
average of the rate on overnight federal funds transactions
with member banks of the Federal Reserve System arranged by
Federal funds brokers as published by the Federal Reserve
Bank of New York for such day (or, if such day is not a
Business Day, for the next preceding Business Day), or, if
such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on
such transactions received by CIBC from three Federal funds
brokers of recognized standing selected by it.
"First Mortgage Bond" means the interest bearing First
Mortgage Bond(s), Pollution Control Series I in the
aggregate principal amount of $18,347,124 issued to CIBC
pursuant to the First Mortgage Bond Indenture Supplement in
accordance with Section 2.16.
"First Mortgage Bond Delivery Agreement" means the Bond
Delivery Agreement, dated as of May 1, 1996, between the
Company and CIBC, substantially in the form of Exhibit C.
"First Mortgage Bond Indenture" means the Indenture
dated as of April 1, 1941 of the Tucson Gas, Electric Light
and Power Company, a predecessor to the Company, to The
Chase National Bank of the City of New York, as trustee, a
predecessor to The Chase Manhattan Bank (National
Association), as amended, supplemented or otherwise modified
from time to time.
"First Mortgage Bond Indenture Supplement" means the
Thirty-First Supplemental Indenture dated as of May 1, 1996
to the First Mortgage Bond Indenture of the Company to The
Chase Manhattan Bank (National Association), as trustee,
pursuant to which the First Mortgage Bonds shall be issued.
"First Mortgage Documents" has the meaning assigned to
that term in Section 4.1(n).
"Funding Default" has the meaning assigned to that term
in Section 2.7(b).
"IBO Rate" for any Interest Period means the rate per
annum obtained by dividing (i) the rate of interest per
annum at which deposits in United States dollars are offered
by CIBC to prime banks in the London or other relevant
interbank market at 11:00 A.M. (local time of such interbank
market) two Business Days before the first day of such
Interest Period for a period equal to such Interest Period
by (ii) a percentage equal to 100% minus the Eurodollar
Reserve Percentage.
"Indenture" has the meaning assigned to that term in
the Preliminary Statements hereto.
"Interest Period" has the meaning assigned to that term
in Section 2.06(b)(ii).
"Issuer" has the meaning assigned to that term in the
Preliminary Statements hereto.
"Letter of Credit" has the meaning assigned to that
term in the Preliminary Statements hereto.
"Letter of Credit Fee Rate" at any time means whichever
of the following is applicable at such time:
Level I
0.525%
Level II 0.875%
Level III 1.175%
Level IV 1.475%
Level V 1.825%
The foregoing Levels are based on the ratings assigned to
the bonds issued under the First Mortgage Bond Indenture by
the Rating Agencies as follows:
Level I BBB- and Baa3
or higher
Level II BB+ and Ba1
Level III
BB and Ba2
Level IV BB- and Ba3
Level V B+ or B1 or lower
If the Rating Agencies assign ratings in different Levels,
then the Level with the highest two ratings shall apply. If
the highest two ratings are in different Levels, the Level
with the lower of the highest two ratings shall apply.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, deposit arrangement, encumbrance,
lien (statutory or otherwise), charge against or interest in
property to secure payment of a debt or performance of an
obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan Agreement" has the meaning assigned to that term
in the Preliminary Statements hereto.
"Majority Banks" means, at any time, those Banks whose
Percentages in the aggregate are greater than fifty percent
(50%).
"Master Restructuring Agreement" means the Master
Restructuring Agreement dated as of June 30, 1992, as
amended from time to time (but without giving effect to any
termination thereof), among the Company, certain of its
subsidiaries, various banks, and Barclays Bank PLC, New York
Branch, as Administrative Agent and Collateral Agent.
"Maximum Interest Period" has the meaning assigned to
that term in Section 2.6(a).
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA.
"Official Statement" means the Official Statement dated
April 30, 1996 of the Issuer relating to the Bonds, together
with the documents incorporated therein by reference.
"Owner" has the meaning assigned to that term in the
Indenture.
"PBGC" means the Pension Benefit Guaranty Corporation
or any successor thereto.
"Percentage" means, as to any Bank, the percentage set
forth opposite such Banks signature hereto, or as such
percentage may be adjusted from time to time pursuant to an
assignment under Section 7.8 or 7.12.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company,
joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any
political subdivision or agency thereof.
"Plan" means an employee benefit plan (other than a
Multiemployer Plan) maintained by the Company or any
Affiliate and which is subject to the provisions of Title IV
of ERISA.
"Preliminary Official Statement" means the Preliminary
Official Statement dated April 19, 1996, of the Issuer
relating to the Bonds, together with the documents
incorporated therein by reference.
"Rating Agencies" means Moody's Investors Service,
Inc., Fitch Investors Service, Inc., Duff & Phelps Credit
Rating Co. and Standard & Poor's or any successors thereto.
"Related Documents" has the meaning assigned to that
term in Section 2.15(i).
"Remarketing Agent" has the meaning assigned to that
term in the Indenture.
"Remarketing Agreement" has the meaning assigned to
that term in Section 1.1 of the Custodian Agreement.
"Stated Termination Date" means the expiration date
specified in clause (i) of the second paragraph of the
Letter of Credit (which date shall initially be May 1,
1999), as such date may be extended pursuant to Section 2.13
or modified pursuant to the Letter of Credit.
"Subsidiary" shall mean a corporation, joint venture or
other entity of which the Company and/or its other
Subsidiaries own, directly or indirectly, such number of
outstanding shares or interests as have at least 50% of the
ordinary voting power for the election of directors or the
governance of the business of such entity. Unless the
context otherwise requires, each reference to Subsidiaries
herein shall be a reference to Subsidiaries of the Company.
"Tender Advance" has the meaning assigned to that term
in Section 2.6(a).
"Tender Drawing" has the meaning assigned to that term
in the Letter of Credit.
"Termination Event" means (i) a Reportable Event
described in Section 4043 of ERISA and the regulations
issued thereunder (other than a Reportable Event not subject
to the provision for 30-day notice to the PBGC under such
regulations), or (ii) the filing of a notice of intent to
terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA (which such event
would result in a material liability being imposed on the
Company or an Affiliate or a material contribution being
made by the Company or an Affiliate), or (iii) the
institution of proceedings to terminate a Plan by the PBGC,
or (iv) any other event or condition which might constitute
grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Plan.
"Trustee" has the meaning assigned to that term in the
Preliminary Statements hereto.
I.2 Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later
specified date, the word "from" means "from and including" and
the words "to" and "until" each means "to but excluding".
I.3 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with generally
accepted United States accounting principles consistently
applied, except as otherwise stated herein.
I.4 Internal References. The words "herein", "hereof" and
"hereunder" and words of similar import, when used in this
Agreement, shall refer to this Agreement as a whole and not to
any provision of this Agreement, and "Article", "Section",
"subsection", "paragraph", and respective references are to
Articles, Sections, subsections, paragraphs and related
references respectively, in this Agreement unless otherwise
specified.
II AMOUNT AND TERMS OF THE LETTER OF CREDIT
II.1 The Letter of Credit. CIBC agrees, on the terms and
conditions hereinafter set forth, to issue the Letter of Credit
to the Trustee on the date hereof in the amount of the Commitment
and expiring on or before the Stated Termination Date.
II.2 Issuing the Letter of Credit. Upon the fulfillment of the
applicable conditions set forth in Article III, CIBC will issue
the Letter of Credit to the Trustee.
II.3 Participations in Letter of Credit. Concurrently with the
issuance of the Letter of Credit, CIBC shall be deemed to have
sold and transferred to each other Bank, and each other Bank
shall be deemed irrevocably and unconditionally to have purchased
and received from CIBC, without recourse or warranty (subject to
Section 7.6), an undivided interest and participation, to the
extent of such other Bank's Percentage, in (i) the Letter of
Credit and any payments and Advances made by CIBC with respect
thereto, (ii) the lien on and security interest in the Collateral
as provided in the Custodian Agreement, (iii) all liabilities
(other than liabilities arising from CIBC's gross negligence or
wilful misconduct) and obligations of CIBC arising in connection
with the Letter of Credit and any such payments or Advances, and
(iv) the Company's reimbursement obligations with respect to any
payments, Advances, or any other obligations to all of the Banks,
howsoever characterized, arising under or in connection with the
Letter of Credit, any Drawing certificates thereunder or this
Agreement. For the purpose of this Agreement, the unparticipated
portion of the Letter of Credit, any payments and Advances made
with respect thereto, all liabilities and obligations of CIBC
arising in connection with the Letter of Credit and any Advances,
and the Company's reimbursement obligations with respect to any
payments and Advances shall be deemed to be CIBC's
"participation" therein. CIBC hereby agrees to deliver to each
other Bank, upon request of such Bank, copies of the Letter of
Credit and related documentation as such other Bank may from time
to time reasonably request.
II.4 Commissions and Fees. Without requirement for notice or
demand by CIBC, the Agent or any other Person:
(a) The Company hereby agrees to pay to CIBC upon execution
of this Agreement the fee set forth in that certain letter
agreement, dated the date hereof, between CIBC and the Company.
(b) The Company hereby agrees to pay to CIBC a letter of
credit fee calculated on the Available Amount of the Letter of
Credit, from the date of issuance of the Letter of Credit until
the Cancellation Date, at the rate of 0.125% payable quarterly in
arrears on the last day of each March, June, September and
December commencing on the first such date to occur following the
date of issuance of the Letter of Credit, and on the Cancellation
Date.
(c) The Company hereby agrees to pay to the Agent for the
account of the Banks in accordance with each Bank's respective
Percentage a commitment fee calculated on the Available Amount,
from the date of issuance of the Letter of Credit until the
Cancellation Date, at the Letter of Credit Fee Rate payable
quarterly in arrears on the last day of each March, June,
September and December commencing on the first such date to occur
following the date of issuance of the Letter of Credit, and on
the Cancellation Date. Each Bank shall be entitled to receive
its Percentage of the fees described in this Section 2.04(c) in
immediately available funds promptly upon receipt by the Agent.
(d) The Company hereby agrees to pay to CIBC, on the date
of each drawing by the Trustee under the Letter of Credit, a
drawing fee in the amount of $50 per drawing.
(e) The Company hereby agrees to pay to CIBC, upon each
transfer of the Letter of Credit in accordance with its terms, a
transfer fee equal to $1,000.
II.5 Reimbursement On Demand. Subject to the provisions of
Section 2.6 hereof, the Company hereby agrees to pay to the Agent
on demand (i) on and after each date on which CIBC shall pay any
amount under the Letter of Credit pursuant to any certificate
thereunder, a sum equal to such amount so paid (which sum shall
constitute a demand loan from CIBC to the Company until so paid),
plus (ii) interest on any amount remaining unpaid by the Company
to the Agent under clause (i) above, at the Default Rate in
effect from time to time, from the date CIBC honors such
certificate, until payment of such amount in full. CIBC shall
notify the Company whenever any demand for payment is made under
the Letter of Credit (or any certificate thereunder) by the
Trustee; provided that the failure of CIBC to so notify the
Company shall not affect the rights of CIBC or the other Banks in
any manner whatsoever.
II.6 Advances. (a) If CIBC shall make any payment under the
Letter of Credit with respect to (i) the purchase price of Bonds
delivered pursuant to a put, in accordance with Sections 2.02(g)
and (h) of the Indenture (other than in accordance with Section
2.02(h)(iv) of the Indenture) or (ii) the redemption price of
Bonds delivered pursuant to a redemption in accordance with
Section 3.01(d) of the Indenture, such payment shall,
notwithstanding Section 2.5, constitute an advance made by CIBC
to the Company on the date and in the amount of such payment
(each such advance being a "Tender Advance"). Unless otherwise
selected in accordance with subsection (b) of this Section 2.6,
each Advance shall bear interest as provided in Section 2.6(b)(i)
and shall have an Interest Period commencing on the date such
Advance is made and ending on the earlier of (i) one month
thereafter or (ii) the Stated Termination Date. The Company may,
in accordance with Section 2.8, repay the unpaid principal amount
of each Advance on the last day of the Interest Period applicable
thereto and shall repay the unpaid principal amount of each
Advance on the Cancellation Date unless otherwise prepaid in
accordance with Section 2.8 hereof.
(a) The Company shall pay interest on the unpaid principal
amount of each Advance from the date of such Advance until such
principal amount is paid in full at the applicable rate or rates
as set forth below.
(i) Base Rate. Except to the extent that the Company
shall elect to pay interest on any Advance for any Interest Period
designated pursuant to paragraph (ii) of this Section 2.6(b) at a
rate designated pursuant to paragraph (iii) of this Section
2.6(b), the Company shall pay interest on such Advance at all
times from the date such Advance is made until the earlier to
occur of (A) the date of repayment in full of such Advance and
(B) the last day of the Maximum Interest Period for such Advance,
payable on such earlier date, at a fluctuating interest rate per
annum in effect from time to time equal to the Base Rate in
effect from time to time with respect to any Advance.
(ii) Interest Periods. The Company may from time to time
elect to have the interest on any Advance determined and payable
for a specified period (an "Interest Period" for such Advance;
subject to the terms hereof, an Advance may be comprised of one
or more such Interest Periods) in accordance with paragraph (i)
or (iii) of this Section 2.6(b); provided, however, that (x) the
Interest Period applicable to any election to pay interest in
accordance with Section 2.6(b)(iii) hereof shall be of one month
or two months duration, and (y) no such election with respect to
any Advance shall be effective if it would cause the aggregate
duration of all Interest Periods applicable to such Advance to
extend beyond the Stated Termination Date. The first day of the
first Interest Period for any Advance shall be the date such
Advance is made and the first day of each subsequent Interest
Period for such Advance shall be the date on which the applicable
election for such Interest Period is effective (which shall be a
Business Day) or if no such election is made, the day following
the last day of the immediately preceding Interest Period.
Unless the Company shall have given timely notice to the Agent
with respect to any Advance that it elects to either pay interest
thereon pursuant to Section 2.6(b)(iii) or prepay such Advance
pursuant to Section 2.8, the interest rate payable with respect
to such Advance shall automatically be the Base Rate as provided
in Section 2.6(b)(i) commencing on the day following the last day
of the immediately preceding Interest Period applicable to such
Advance. All Interest Periods shall end on or prior to the
Stated Termination Date and no Advances shall be made on or after
the Stated Termination Date.
(iii) Eurodollar Rate. Subject to Section
2.6(b)(ii) hereof, the Company may from time to time irrevocably
elect to pay interest on any Advance at the Eurodollar Rate for the
Interest Period for such Advance by notice, specifying the
Advance (which shall not be less than $1,000,000 unpaid principal
amount during such Interest Period) and the first day and
duration of such Interest Period, received by CIBC before 11:00
A.M. (New York time) three Business Days prior to the first day
of such Interest Period.
(iv) Illegality. If and so long as it shall be or
become unlawful for CIBC or any of the Banks to obtain funds in the
London or other relevant interbank market in order to fund or
maintain Eurodollar Advances or otherwise to perform its
obligations hereunder with respect to any Eurodollar Advances,
the rate of interest accruing on all such Advances shall be equal
to the Base Rate in effect from time to time until the maturity
of such Advance, and the right of the Company to select the
Eurodollar Rate for any Advance shall be suspended.
(v) Less Than $1,000,000. On and after the date on
which the unpaid principal amount of any Advance shall be reduced, by
payment or prepayment or otherwise, to less than $1,000,000, the
rate of interest on the unpaid principal amount of such Advance
shall be equal to the Base Rate, and the right of the Company to
select a different rate for such Advance shall terminate;
provided, however, that if and so long as the Company shall
select for such Advance the same rate for the same Interest
Period as another Advance or other Advances and the aggregate
unpaid principal amount of all such Advances shall equal or
exceed $1,000,000, the Company shall have the right to select
such rate for such Interest Period for such Advance.
(vi) Default Rate. Notwithstanding any provision to
the contrary herein (including, without limitation, any interest
elections under this subsection (b)) the Company shall pay
interest on all past-due Advances and (to the fullest extent
permitted by law) interest, costs, fees and expenses hereunder,
from the date when such amounts became due until paid in full,
payable on demand, at the Default Rate in effect from time to
time.
(b) If, on or before any date on which a Eurodollar Advance
would otherwise be made hereunder, pursuant to paragraph (iii) of
Section 2.6(b), either (i) the Agent determines or is notified by
any of the Banks that funding in the manner contemplated in
paragraph (iii), as the case may be, of Section 2.6(b) is not
reasonably available or (ii) the Agent determines or is notified
by any of the Banks that the rate of interest so elected for the
relevant Interest Period would not adequately reflect the cost to
the Banks of making, funding or maintaining such Advance for such
Interest Period, the Agent shall forthwith give telephonic notice
(confirmed promptly in writing) to the Company and telephonic
notice to each Bank of such determination or notification,
whereupon the Company shall not be entitled hereunder to elect to
pay interest at the rate provided in paragraph (iii) of Section
2.6(b) for such Interest Period; and such Advance shall bear
interest as provided in Section 2.6(b)(i) and shall have an
Interest Period as provided in Section 2.6(a).
II.7 Reimbursement Obligations Deemed to be Loans; Funding by
Banks to CIBC. (a) In the event that CIBC makes any payment or
disbursement under the Letter of Credit or any draft accepted
thereunder (including any Advance) and the Company shall not have
reimbursed CIBC in full for such payment or disbursement on the
same Business Day in accordance herewith, each Bank shall be
obligated to pay CIBC in full or partial payment of the purchase
price of its participation in the Letter of Credit, its pro rata
share, according to the amount of its Percentage, of such payment
or disbursement (but such obligation of the Banks shall not
diminish the obligation of the Company hereunder), and the Agent
shall promptly notify each other Bank thereof. Each other Bank
irrevocably and unconditionally agrees to pay to the Agent in
immediately available funds for CIBC's account the amount of such
other Bank's Percentage of such payment or disbursement, without
setoff, counterclaim, recoupment or any reduction for any reason.
If and to the extent any Bank shall not have made such amount
available to the Agent by 3:00 P.M., New York time, on the
Business Day on which such Bank receives notice from the Agent of
payment or disbursement (it being understood that such notice
received after 1:30 P.M., New York time, on any Business Day
shall be deemed to have been received on the next following
Business Day), such Bank agrees to pay interest on such amount to
the Agent for CIBC's account forthwith on demand for each day
from and including the date such amount was to have been
delivered to the Agent to but excluding the date such amount is
paid, at a rate per annum equal to the Federal Funds Rate. Any
Bank's failure to make available to the Agent its Percentage of
any such payment or disbursement shall not relieve any other Bank
of its obligation hereunder to make available to the Agent such
other Bank's Percentage of such payment, but no Bank shall be
responsible for the failure of any other Bank to make available
to the Agent such other Bank's Percentage of any such payment or
disbursement.
(a) Without limitation to the foregoing provisions of this
Section 2.7, if a Bank shall, at any time, fail to make any
payment to the Agent required under Section 2.7(a) (a "Funding
Default"), CIBC may, but shall not be required to, cause the
Agent to retain payments that would otherwise be made to such
Bank hereunder and apply such payments to such Bank's defaulted
obligations hereunder, at such time, and in such order, as CIBC
may elect in its sole discretion. Upon a Funding Default by a
Bank, CIBC shall have the right, but not the obligation, to
terminate and repurchase such Bank's participation in all or, in
its discretion, any portion of the Letter of Credit, for a
purchase price equal to such Bank's proportionate share of the
then unpaid principal balance of the outstanding Advances, if
any, being repurchased, together with interest, fees and other
amounts accrued and owing thereon (reduced by an amount equal to
such Bank's Percentage of any such Advance or portion thereof
with respect to which such Bank has not, as of the time of such
repurchase, reimbursed CIBC in full in accordance with Section
2.7(a) and by the amount of any costs or expenses incurred by
CIBC or the Agent in connection with such Bank's Funding Default
and such repurchase), and terminate such Bank's obligations
hereunder with respect to the repurchased Advances and any
Drawings then made under the Letter of Credit with respect to
which CIBC has not made payment as of the time of purchase. Upon
the occurrence and continuance of a Funding Default by a Bank,
the Agent and CIBC shall not be required to obtain the consent of
such Bank to any action as provided in this Section 2.7.
II.8 Prepayments; Reinstatement of Letter of Credit Amounts.
(a) The Company may, upon at least two Business Days' notice to
the Agent, prepay the outstanding amount of any Base Advance in
whole or in part (which prepayment shall be at least $1,000,000)
with accrued interest to the date of such prepayment on the
amount prepaid by making payment to the Agent for the pro rata
share of the Banks. Except for prepayments made pursuant to
subsection (b) of this Section 2.8, the Company shall not be
entitled to prepay any Eurodollar Advance; provided, however,
that the Company may repay any Eurodollar Advance on the last day
of the Interest Period applicable thereto upon at least two
Business Days' notice to the Agent. Any prepayment of a
Eurodollar Advance made pursuant to subsection (b) below, Section
6.2 or otherwise shall be accompanied by an additional payment,
in accordance with Section 2.9(b), of an amount sufficient to
compensate the Banks affected, as determined by each such Bank
and notified to the Agent, for any loss (including loss of
anticipated profits), cost or expense incurred by such Banks by
reason of such prepayment.
(a) Prior to or simultaneously with the receipt of proceeds
related to the resale of Bonds purchased pursuant to one or more
draws under the Letter of Credit by one or more Tender Drawings,
the Company shall directly or through the Remarketing Agent or
the Tender Agent on behalf of the Company, prepay the then
outstanding Advances (in the order in which they were made) by
paying to the Agent for the pro rata share of the Banks an amount
equal to the sum of (i) the aggregate principal amount of the
Bonds resold plus (ii) that aggregate amount of interest on such
Bonds which was paid by such Tender Drawing or Drawings.
II.9 Increased Costs. (a) If either (i) the introduction of or
any change (including, without limitation, any change by way of
imposition or increase of reserve requirements other than those
referred to in the definition of "Eurodollar Reserve Percentage")
in or in the interpretation of any law or regulation or (ii) the
compliance by CIBC or any of the other Banks with any guideline,
requirement or request from any central bank or other
governmental or quasi-governmental authority (whether or not
having the force of law), shall either (A) impose, modify or deem
applicable any reserve, assessment, special deposit or similar
requirement against letters of credit issued by, or assets held
by, or deposits in or for the account of, CIBC or any of the
other Banks or (B) impose on CIBC or any of the other Banks any
other condition regarding this Agreement, the Letter of Credit or
any Advance, and the result of any event referred to in clause
(A) or (B) above, shall be to increase the cost to any of the
Banks of issuing or maintaining the Letter of Credit or agreeing
to make or making, funding or maintaining any Advance by an
amount which such Bank reasonably deems material (which increase
in cost shall be determined by such Bank's reasonable allocation
of the aggregate of such cost increases resulting from such
event), then, upon demand by the Agent (which demand shall be
made at the direction of any of the Banks affected), the Company
shall pay to the Agent for the benefit of the Banks affected,
from time to time as specified by the Agent, additional amounts
which shall be sufficient to compensate such Banks for such
increased cost. A certificate setting forth such increased cost
incurred by the Banks as a result of any event referred to in
clause (i) or (ii) above, and giving a reasonable explanation
thereof, submitted by the Agent, on behalf of and at the
direction of the Banks affected, to the Company, shall constitute
such demand and shall, in the absence of manifest error, be
conclusive and binding for all purposes.
(a) If, due to any change of interest rate on any Advance
pursuant to Section 2.6(b)(iv), any prepayment pursuant to
Section 2.8, any acceleration of maturity of the Advances
pursuant to Section 6.2, or any other reason, any Bank is subject
to a change of interest rate, or receives payments of principal,
of any Eurodollar Advance other than on the last day of the
Interest Period relating to such Advance, the Company shall,
promptly after demand by the Agent (which demand shall be made at
the direction of such Bank), pay to the Agent for the benefit of
the Banks affected any amounts required to compensate such Banks
for any additional losses, costs or expenses which they may
reasonably incur as a result of such change or payment,
including, without limitation, any loss (including loss of
anticipated profits), cost or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired
by such Banks to fund or maintain such Eurodollar Advance. A
certificate setting forth the amount of such additional losses,
costs or expenses and giving a reasonable explanation thereof,
submitted by the Agent, on behalf of and at the direction of the
Banks affected, to the Company, shall constitute such demand and
shall, in the absence of manifest error, be conclusive and
binding for all purposes.
II.10 Increased Capital. If either (i) the introduction of
or any change in or in the interpretation of any law or
regulation or (ii) compliance by any of the Banks with any
guideline or request from any central bank or other governmental
authority (whether or not having the force of law) affects or
would affect the amount of capital required or expected to be
maintained by such Bank or any corporation controlling such Bank
and such Bank determines that the amount of such capital is
increased by or based upon the existence of letters of credit (or
similar contingent obligations) then, the Company shall
immediately pay to the Agent for the benefit of the Banks
affected, from time to time as specified by the Agent at the
direction of such Banks, additional amounts sufficient to
compensate such Banks in the light of such circumstances, to the
extent that such Banks reasonably determined such capital to be
allocable to the issuance or maintenance of the Letter of Credit
(or participation therein). A certificate as to such amounts
submitted to the Company by the Agent on behalf of and at the
direction of the Banks affected, giving a reasonable explanation
thereof, shall constitute such demand and shall, in the absence
of manifest error, be conclusive and binding for all purposes as
to the amount thereof.
II.11 Payments and Computations. The Company shall make
each payment hereunder not later than 12:00 Noon (New York time)
on the day when due in lawful money of the United States of
America to CIBC or the Agent, as appropriate, at its address
referred to in Section 7.2 in same-day funds. Any amounts due to
the Banks hereunder in respect of any such payment received from
the Company shall be paid by the Agent to the Banks in lawful
money of the United States of America at their respective
addresses, as provided in Section 7.2, in same-day funds by the
close of the Business Day on which such payment is received. If
and to the extent any such amount due to any Bank is not paid by
the Agent in a timely fashion as aforesaid, the Agent agrees to
pay interest on such unpaid amount for such Bank's account
forthwith on demand for each day from and including the date such
amount was to have been paid to such Bank to but excluding the
date such amount is paid, at a rate per annum equal to the
Federal Funds Rate. Computations of the Prime Rate and the
Default Rate shall be made by the Agent on the basis of a year of
365 or 366 days, as the case may be, for the actual number of
days (including the first day but excluding the last day)
elapsed. Computations of the Eurodollar Rate, the Federal Funds
Rate and the commissions and fees under Section 2.4 hereof shall
be made by the Agent on the basis of a year of 360 days for the
actual number of days (including the first day but excluding the
last day) elapsed.
II.12 Non-Business Days. Whenever any payment to be made
hereunder shall be stated to be due, or whenever the last day of
any Interest Period would otherwise occur, on a day which is not
a Business Day, such payment shall be made, and the last day of
such Interest Period shall occur, on the next succeeding Business
Day, and such extension of time shall in such case be included in
the computation of payment of interest, fee or commission, as the
case may be; provided, however, if such extension would cause
such payment of a Eurodollar Advance to be made and the last day
of an Interest Period for a Eurodollar Advance to occur in the
next following calendar month, such payment shall be made and the
last day of such Interest Period shall occur on the next
preceding Business Day.
II.13 Extension of the Stated Termination Date. Unless the
Letter of Credit shall have expired in accordance with its terms
on the Cancellation Date, at least 60 but not more than 120 days
before each May 1, commencing May 1, 1997, the Company may
request the Agent in writing (each such request being
irrevocable) to extend for one year the Stated Termination Date
(it being understood that the Company may make no more than two
such requests under this Section). If the Company shall make
such a request, the Agent shall, no later than 40 days following
the date on which the Agent shall have received such request,
notify the Company in writing whether or not the Banks consent to
such request (such consent requiring unanimous written approval
of the Banks in their individual sole discretion) and, if all of
the Banks do so consent, the conditions of such consent
(including conditions relating to legal documentation and the
consent of the Trustee). If the Agent shall not so notify the
Company, the Banks shall be deemed not to have consented to such
request.
II.14 Evidence of Debt. CIBC and, as appropriate, each
other Bank shall maintain, in accordance with its usual practice
evidence of the indebtedness of the Company resulting from each
drawing under the Letter of Credit and from each Advance made
from time to time hereunder and the amounts of principal and
interest payable and paid from time to time hereunder. In any
legal action or proceeding in respect of this Agreement, the
entries made shall, in the absence of manifest error, be
conclusive evidence of the existence and amounts of the
obligations of the Company therein recorded.
II.15 Obligations Absolute. The payment obligations of the
Company under this Agreement shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the
terms of this Agreement under all circumstances, including,
without limitation, the following circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit, the Bonds, the Indenture, the Loan Agreement, the
Custodian Agreement, the First Mortgage Bond, the First Mortgage
Bond Indenture, the First Mortgage Bond Indenture Supplement, the
First Mortgage Bond Delivery Agreement, the Remarketing
Agreement, (collectively, the "Related Documents"), this
Agreement, or any other agreement or instrument relating thereto;
(ii) any amendment or waiver of or any consent to departure
from all or any of the Related Documents;
(iii) the existence of any claim, set-off, defense or
other right which the Company may have at any time against the
Trustee or any other beneficiary, or any transferee, of the Letter of
Credit (or any persons or entities for whom the Trustee, any such
beneficiary or any such transferee may be acting), any Bank, or
any other person or entity, whether in connection with this
Agreement, the transactions contemplated herein or in the Related
Documents, or any unrelated transaction;
(iv) any statement or any other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;
(v) payment by CIBC under the Letter of Credit against
presentation of a draft or certificate which does not comply with
the terms of the Letter of Credit; or
(vi) any other circumstance or happening
whatsoever, whether or not similar to any of the
foregoing.
Nothing in this Section 2.15 is intended to limit any liability
of CIBC pursuant to Section 7.6 in respect of its wilful
misconduct or gross negligence.
II.16 First Mortgage Bond. The Company shall cause all
obligations of the Company to reimburse CIBC with respect to any
payment under the Letter of Credit to be and remain secured,
until paid, by the First Mortgage Bonds issued to CIBC in a
principal amount equal to $18,347,124, accruing interest at a
floating rate equal to the Eurodollar Rate (subject to a cap of
12% per annum) and containing other provisions and terms and
otherwise in accordance with the First Mortgage Bond Delivery
Agreement.
III CONDITIONS PRECEDENT
III.1 Condition Precedent to Issuance of the Letter of
Credit. The obligation of CIBC to issue the Letter of Credit is
subject to the condition precedent that the Agent and each of the
Banks shall have received on or before the date of the issuance
of the Letter of Credit the following, each dated such date, in
form and substance satisfactory to the Agent and the Banks:
(a) An executed copy (or a duplicate copy thereof certified
in a manner satisfactory to the Agent and the Banks to be a true,
correct and complete copy) of the Indenture.
(b) Executed copies (or duplicate copies thereof, in each
case certified in a manner satisfactory to the Agent and the
Banks to be a true, correct and complete copy) of the Loan
Agreement.
(c) The original First Mortgage Bond(s), an executed copy
of the First Mortgage Bond Delivery Agreement, and executed
copies (or duplicate copies or specimens, as appropriate, of such
copies, in each case certified in a manner satisfactory to the
Agent and the Banks to be a true, correct and complete copy) of
each of the First Mortgage Bond Indenture, the First Mortgage
Bond Indenture Supplement (together with evidence satisfactory to
the Agent of the due recording thereof), the Custodian Agreement
and the Remarketing Agreement.
(d) Certified copies of the Articles of Incorporation, By-
Laws and resolutions of the Board of Directors of the Company
authorizing this Agreement and all of the Related Documents to
which the Company is a party and the transactions contemplated
hereby and thereby, and of all other documents evidencing any
other necessary corporate action.
(e) Originals (or duplicate copies certified in a manner
satisfactory to the Agent and the Banks to be true, correct and
complete copies) of the application filed by the Company for the
ACC Order and of all governmental actions and regulatory
approvals (including, without limitation, approvals or orders of
the Issuer and the ACC) necessary for the Company with respect to
this Agreement and each of the Related Documents to which the
Company is a party and the transactions contemplated hereby and
thereby.
(f) A certificate of the Secretary or an Assistant
Secretary of the Company certifying the names and true signatures
of the officers of the Company authorized to sign this Agreement
and the other documents to be delivered by it hereunder.
(g) An opinion of Reid & Priest, LLP counsel to the
Company, in substantially the form of Exhibit D hereto and as to
such other matters as the Banks may reasonably request.
(h) An opinion of Dennis R. Nelson, Esq., General Counsel
to the Company, in substantially the form of Exhibit D-2 hereto
and as to such other matters as the Agent may reasonably request.
(i) An opinion of Rodey, Dickason, Sloan, Akin & Robb,
P.A., New Mexico counsel to the Company, in substantially the
form of Exhibit D-3 hereto and as to such other matters as the
Agent may reasonably request.
(j) An opinion of Dickerman & Marvin, P.C., special Arizona
counsel to the Company, in substantially the form of Exhibit D-4
hereto and as to such other matters as the Agent may reasonably
request.
(k) A letter from Orrick, Herrington & Sutcliffe, Bond
Counsel for the Company, addressed to the Banks and stating
therein that the Banks may rely on the opinion of such firm
delivered pursuant to Section 9(c) of the Bond Purchase
Agreement.
(l) A copy of the signature book or authorizing resolution
of the Trustee showing the names and signatures of the persons
authorized to execute Drawing certificates or other documents or
instruments under or in connection with Letter of Credit on
behalf of the Trustee.
III.2 Additional Conditions Precedent to Issuance of the
Letter of Credit. The obligation of CIBC to issue the Letter of
Credit shall be subject to the further conditions precedent that
on the date of the issuance of the Letter of Credit:
(a) the following statements shall be true and the Agent
shall have received a certificate signed by a duly authorized
officer of the Company, dated the date of such issuance, stating
that:
(i) The representations and warranties contained in Section
4.1 of this Agreement are true and correct on and as of the date
of issuance of the Letter of Credit as though made on and as of
such date; and
(ii) No event has occurred and is continuing, or would
result from the issuance of the Letter of Credit, which constitutes an
Event of Default or would constitute an Event of Default but for
the requirement that notice be given or time elapse or both; and
(b) the Agent shall have received such other approvals,
opinions or documents as the Agent may reasonably request.
IV REPRESENTATIONS AND WARRANTIES
IV.1 Representations and Warranties of the Company. In order
to induce CIBC to issue, and the other Banks to purchase a
participation in, the Letter of Credit, the Company hereby
represents and warrants to the Banks as of (i) the date hereof,
(ii) the date of the issuance of the Letter of Credit, and (iii)
the date of any Tender Advance, as follows:
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Arizona and is in compliance, in all material respects, with all
applicable laws, rules, regulations and orders, the non-
compliance with which could have a material adverse effect on the
financial condition or operations of the Company or its ability
to perform its obligations hereunder or in connection herewith.
(b) The execution, delivery and performance by the Company
of this Agreement and the Related Documents to which it is a
party are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not
contravene (i) the Company's charter or code of regulations or
(ii) law (including, without limitation, any order, rule or
regulation of the ACC) or any contractual restriction binding on
or affecting the Company, and do not result in or require the
creation of any lien, security interest or other charge or
encumbrance (except as may be created under the Related
Documents) upon or with respect to any of its properties.
(c) No authorization or approval or other action by, and no
notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery and
performance by the Company of this Agreement or any Related
Document to which the Company is a party except for the ACC
Order, which has been duly obtained, is final and in full force
and effect and is not the subject of appeal or reconsideration or
other review.
(d) This Agreement is, and the Related Documents to which
it is a party when delivered hereunder will be, legal, valid and
binding obligations of the Company enforceable against the
Company in accordance with their respective terms.
(e) The consolidated balance sheets (including the notes
thereto) of the Company and its Subsidiaries as at December 31,
1995, and the related statements of income and retained earnings
and statements of cash flows (including the notes thereto) of the
Company and its Subsidiaries for the fiscal year then ended,
certified by Deloitte and Touche LLP, independent public
accountants, copies of which have been furnished to the Agent,
fairly present the financial condition of the Company and its
Subsidiaries as at such date and the results of the operations of
the Company and its Subsidiaries for the fiscal year then ended,
all in accordance with generally accepted accounting principles
consistently applied, except, in the case of all such statements,
as noted in the report of the independent public accountants or
as noted elsewhere in the Company's Annual Report on Form 10-K
for the year ended December 31, 1995 (the "1995 10-K"); and,
except as disclosed in the 1995 10-K and the Current Reports on
Form 8-K, dated as of March 6 and April 4, 1996 (together with
the 1995 10-K, the "Disclosure Documents"), since December 31,
1995, there has been no material adverse change in the financial
condition, business, properties, operations or prospects of the
Company.
(f) Except as disclosed in the Disclosure Documents, as
filed with the Securities and Exchange Commission, there is no
pending or (to the best knowledge of the Company after due
inquiry) threatened action, investigation or proceeding before
any court, governmental agency or arbitrator against or affecting
the Company or any of its Subsidiaries which may materially
adversely affect the financial condition, business, properties,
operations or prospects of the Company or the ability of the
Company to perform its obligations hereunder or under any of the
Related Documents or which purports to affect the legality,
validity or enforceability of this Agreement or any Related
Document.
(g) No Termination Event has occurred nor is reasonably
expected to occur with respect to any Plan, and no contribution
failure has occurred with respect to any Plan sufficient to give
rise to a lien under Section 302(f) of ERISA.
IV(ff) Schedule B (Actuarial Information) to the
199_ annual report (Form 5500 Series) with respect to each
Plan, copies of which have been filed with the Internal
Revenue Service and furnished to the Agent, is complete and
accurate and fairly presents the funding status of such
Plan, and since the date of such Schedule B there has been
no material adverse change in such funding status.
(i) Neither the Company nor any of its Affiliates has
incurred nor reasonably expects to incur any withdrawal liability
under ERISA to any Multiemployer Plan. No condition exists or
event or transaction has occurred with respect to any Plan which
could result in the incurrence by the Company of any material
liability, fine or penalty (other than the liability in the
ordinary course of business to pay benefits or make
contributions). Except as disclosed in Schedule 4.1(i) hereto,
the Company has no contingent liability with respect to any post-
retirement benefit under a welfare plan as defined in Section
3(1) of ERISA, other than liability for continuation coverage
described in Part 6 of subtitle B of title I of ERISA.
(j) The Company has filed all material tax returns
(Federal, state and local), which to the knowledge of the
Company, are required to be filed and paid all taxes shown
thereon to be due, including interest and penalties, or provided
adequate reserves for payment thereof other than such taxes that
the Company is contesting in good faith by appropriate legal
proceedings.
(k) Except as otherwise disclosed to the Agent by the
Company in writing or as disclosed in any publicly available
report filed by the Company with the Securities and Exchange
Commission, in each case, prior to the date hereof, (i) all
facilities and property (including underlying groundwater) owned
or leased by the Company or any of its Subsidiaries have been,
and continue to be, owned or leased by it and its Subsidiaries in
compliance with all environmental laws, except for such failures
to comply which would not give rise to any potential material
liability of the Company or any of its Subsidiaries; and (ii)
there have been no past, and, to the Company's actual knowledge,
there are no pending or threatened (x) claims, complaints or
notices for information received by the Company or any of its
Subsidiaries with respect to any alleged violation of any
environmental law, or (y) complaints or notices to the Company or
any of its Subsidiaries regarding potential material liability
under any environmental law, except for such alleged violations
which would not give rise to any potential material liability of
the Company or any of its Subsidiaries.
(l) All information heretofore or contemporaneously
herewith furnished by the Company to the Agent and the Banks for
purposes of or in connection with this Agreement and the
transactions contemplated hereby is, and all information
hereafter furnished by or on behalf of the Company to the Agent
or the Banks will be, true and accurate in every material respect
on the date as of which such information is dated or certified,
and none of such information is or will be incomplete by omitting
to state any material fact necessary to make such information not
misleading in light of the circumstances in which such
information was provided.
(m) The Company is not engaged in the business of extending
credit for the purpose of purchasing or carrying margin stock,
and no proceeds of any Advances will be used for a purpose which
violates, or would be inconsistent with, Regulation G, U or X of
the Board of Governors of the Federal Reserve. Terms for which
meanings are provided in said Regulation G, U or X or any
regulations substituted therefor, as from time to time in effect,
are used in this Section 4.1(n) with such meanings.
(n) The provisions of the First Mortgage Bond Indenture
(including the First Mortgage Bond Indenture Supplement), the
First Mortgage Bonds and the First Mortgage Bond Delivery
Agreement (the "First Mortgage Documents") are effective to
create, in favor of the Agent for the benefit of the Banks, a
legal, valid and enforceable Lien on or in all of the "Mortgaged
Property" (as defined in the First Mortgage Bond Indenture), and
all necessary and appropriate recordings and filings have been
made in all necessary and appropriate public offices so that the
Liens created by the First Mortgage Documents constitute
perfected Liens on or in all rights, titles, estates and
interests of the Company in the "Mortgaged Property" (as defined
in the First Mortgage Bond Indenture), prior and superior to all
other Liens other than Liens permitted under subsection 12.4(d)
and (e) of the Master Restructuring Agreement, and all necessary
and appropriate consents to the creation and perfection of such
Liens have been obtained. No mortgage or financing statement or
other instrument or recordation covering all or any part of the
"Mortgaged Property" (as defined in the First Mortgage Bond
Indenture) is on file in any recording office which has not been
terminated or released, except as may have been filed in favor of
the Agent, for the benefit of the Banks or in respect of any Lien
permitted under subsection 12.4(d) and (e) of the Master
Restructuring Agreement.
V COVENANTS OF THE COMPANY
V.1 Affirmative Covenants. So long as a drawing is available
under the Letter of Credit (or the Banks shall have any other
obligation to the Company thereunder) or the Banks shall have any
Commitment hereunder or the Company shall have any obligation to
pay any amount to the Banks hereunder, the Company will, unless
the Agent (with the consent of the Majority Banks) shall
otherwise consent in writing:
(a) Preservation of Corporate Existence, Etc. Without
limiting the rights of the Company under Section 5.2(d), preserve
and maintain its corporate existence, rights (charter and
statutory), and franchises, and its qualification to do business
in Arizona; provided, however, that the Company shall not be
required to maintain any right or franchise if the Board of
Directors of the Company shall determine that the preservation
thereof is no longer desirable in the conduct of the business of
the Company and that the loss thereof is not disadvantageous in
any material respect to the Company.
(b) Compliance with Laws, Etc. Comply in all material
respects with all applicable laws, rules, regulations and orders
(including, without limitation, applicable environmental laws,
rules, regulations and orders), such compliance to include,
without limitation, paying before the same become delinquent all
material taxes, assessments and governmental charges imposed upon
it or upon its property, except to the extent that compliance
with or payment of any of the foregoing is then being contested
in good faith and by appropriate proceedings and against which
adequate reserves are being maintained; provided, however, that
any such non-compliance which will not have a material adverse
effect on the financial condition or operations of the Company or
its ability to perform its obligations shall not constitute a
breach of this subsection (b).
(c) Visitation Rights. Subject to contractual or statutory
limitations regarding confidential or proprietary information, at
any reasonable time and from time to time, permit the Agent or
any agents or representatives thereof, to examine and make copies
of and abstracts from the records and books of account of, and
visit the properties of, the Company and any of its Subsidiaries
which the Agent determines in good faith to be relevant to the
interests of the Banks hereunder, and to discuss the affairs,
finances and accounts of the Company and any of its Subsidiaries
with any of their respective officers or directors; provided,
however, that the Company reserves the right to restrict access
to any of its facilities in accordance with reasonably adopted
procedures relating to safety and security and provided, further,
that anything herein to the contrary notwithstanding, such costs
and expenses incurred by the Agent in connection with any such
examinations, copies, abstracts, visits or discussions occurring
or made prior to the occurrence and continuance of an Event of
Default shall be for the account of such Bank. Each Bank agrees
to use its best efforts to ensure that any information concerning
the Company or any of its Subsidiaries obtained by such Bank
pursuant to this Section 5.1(c) that is not contained in a report
or other document filed with the Securities and Exchange
Commission distributed by the Company or any of its Subsidiaries
to its shareholders or otherwise available to the public
generally, will to the extent permitted by law and except as may
be required by valid subpoena or in the normal course of business
operations of such Bank be treated confidentially by such Bank
and will not be distributed or otherwise made available by such
Bank to any person or entity other than bank examiners and the
employees, auditors, counsel, authorized agents or
representatives of such Bank or the Agent.
(d) Keeping of Books. Keep proper books of record and
account, in which appropriate entries shall be made of all
financial transactions and the assets and business of the Company
in accordance with generally accepted accounting principles.
(e) Reporting Requirements. Furnish to the Agent and each
of the Banks the following:
(i) as soon as possible and in any event within five
Business Days after the occurrence of each Event of Default and
each event which, with the giving of notice, lapse of time, or
both, would constitute any such Event of Default, the statement of
an authorized officer of the Company setting forth details of such
Event of Default or event and the action which the Company has
taken and proposes to take with respect thereto;
(ii) as soon as available and in any event within 60 days
after the close of each of the first three quarters in each fiscal
year of the Company, or 15 days after the date on which its
quarterly report for such fiscal quarterly period is required to be
filed with the Securities and Exchange Commission, whichever is
later, (A) an unaudited consolidated balance sheet of the Company and
its Subsidiaries as of the end of such quarter and consolidated
statements of income and of summary changes in financial position
of the Company and its Subsidiaries for the twelve-month period
then ended, fairly presenting the financial condition of the
Company and its Subsidiaries as at such date and the results of
operations and summary changes in the financial position of the
Company and its Subsidiaries for such period and setting forth in
each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, all in
reasonable detail and duly certified (subject to year-end audit
adjustments) by the chief financial officer, treasurer, assistant
treasurer, controller or corporate secretary (or the designee of
such corporate officers) of the Company as having been prepared
in accordance with generally accepted accounting principles
consistently applied, except as stated therein or in the
certificate referred to above, or noted elsewhere therein, (it
being understood and agreed that the delivery by the Company to
the Agent within the time period specified above of the Company's
Quarterly Report on Form 10-Q for such quarter, as filed with the
Securities and Exchange Commission, containing such balance sheet
and statements shall be deemed to satisfy the requirements of
this subparagraph (A)), (B) a certificate of such officer stating
whether he has any knowledge of the occurrence at any time prior
to the date of such certificate of any Event of Default not
theretofore reported pursuant to the provisions of paragraph (i)
of this subsection (e) or of the occurrence at any time prior to
such date of any such event, except events theretofore reported
pursuant to the provisions of paragraph (i) of this subsection
(e) and remedied, which with notice or lapse of time or both
would constitute an Event of Default and, if so, setting forth
the details of such Event of Default or event;
(iii) (A) as soon as available and in any event within
105 days after the end of each fiscal year of the Company or 15 days
after the date on which the annual report for such fiscal year is
required to be filed with the Securities and Exchange Commission,
whichever is later, a copy of the annual report for such year for
the Company and its Subsidiaries, containing financial statements
for such year and an audit report (without material qualification
as to the scope of or manner of performing such audit), in each
case, prepared in accordance with generally accepted auditing
standards by independent public accountants of recognized
national standing selected by the Company (it being understood
and agreed that the delivery by the Company to the Bank within
the time period specified above of the Company's Annual Report on
Form 10-K for such year, as filed with the Securities and
Exchange Commission, containing such financial statements shall
be deemed to satisfy the requirements of this subparagraph (A))
and (B) a certificate of the chief financial officer, treasurer,
assistant treasurer, comptroller or corporate secretary (or the
designee of such corporate officers) of the Company stating
whether he has any knowledge of the occurrence at any time prior
to the date of such certificate of any Event of Default not
theretofore reported pursuant to the provisions of paragraph (i)
of this subsection (e) or of the occurrence at any time prior to
such date of any such event, except events theretofore reported
pursuant to the provisions of paragraph (i) of this subsection
(e) and remedied, which with notice or lapse of time or both
would constitute an Event of Default and, if so, setting forth
the details of such Event of Default or event;
(iv) promptly after the sending or filing thereof, (A) copies
of all reports which the Company sends to its shareholders
generally and (B) copies of all reports which the Company or any
Subsidiary files with the Securities and Exchange Commission or
any national securities exchange;
(v) as soon as possible and in any event (i) within 30 days
after the Company or any Affiliate knows or has reason to know
that any Termination Event described in clause (i) of the
definition of Termination Event with respect to any Plan has
occurred and (ii) within 10 days after the Company or any
Affiliate knows or has reason to know that any other Termination
Event with respect to any Plan, a statement of the chief
financial officer of the Company describing such Termination
Event and the action, if any, which the Company or such Affiliate
proposes to take with respect thereto;
(vi) promptly and in any event within five Business Days after
receipt thereof by the Company or any Affiliate from the PBGC,
copies of each notice received by the Company or any such
Affiliate of the PBGC's intention to terminate any Plan or to
have a trustee appointed to administer any Plan;
(vii) promptly and in any event within 30 days after the
filing thereof with the Internal Revenue Service, copies of each
Schedule B (Actuarial Information) to the annual report (Form
5500 Series) with respect to each Plan which is a pension plan
(other than a Multiemployer Plan) maintained by the Company or
any Affiliate, which provides payments at, or defers receipt of
payment until, retirement and is subject to Title IV of ERISA;
(viii) if and for so long as the Company or any Affiliate
shall incur, or expect to incur, any liability under a
Multiemployer Plan, promptly and in any event within five
Business Days after receipt thereof by the Company or any
Affiliate from a Multiemployer Plan sponsor, a copy of each
notice received by the Company or any Affiliate concerning (A)
the imposition of withdrawal liability by a Multiemployer Plan
pursuant to Section 4202 of ERISA, (B) the determination that a
Multiemployer Plan is, or is expected to be, in reorganization
within the meaning of Title IV of ERISA, (C) the termination of a
Multiemployer Plan within the meaning of Title IV of ERISA, or
(D) the amount of liability incurred, or expected to be incurred,
by the Company or any Affiliate in connection with any event
described in clause (A), (B) or (C), above;
(ix) promptly after the Company knows or has reason to know of
(i) any pending or threatened action, investigation or proceeding
of the type described in Section 4.1(g) which may have a material
adverse effect of the type described therein, (ii) any claim,
complaint or notice of the type described in Section 4.1(l)
regarding potential material liability or respecting alleged
violations which might give rise to such potential material
liability, as described therein, (iii) any material adverse
change in the financial condition, business, properties,
operations or prospects of the Company, or (iv) any amendment,
supplement or other modification to the Indenture to which the
Agent is not a party, or any consent, waiver or release with
respect to the Indenture to which the Agent is not a party,
affecting the obligations or duties of the Tender Agent
thereunder with respect to the Collateral, the statement of an
authorized officer of the Company describing the foregoing and
the action, if any, which the Company proposes to take with
respect thereto; and
(x) such other information respecting the condition or
operations, financial or otherwise, of the Company or any of its
Subsidiaries as the Agent may from time to time reasonably
request.
(f) Redemption or Defeasance of Bonds. Use its best
efforts to cause the Trustee, upon redemption or defeasance of
less than all of the Bonds pursuant to the Indenture, to furnish
to the Agent a notice in the form of Exhibit 4 to the Letter of
Credit, and, upon a redemption or defeasance of all of the Bonds
pursuant to the Indenture, to surrender the Letter of Credit to
CIBC for cancellation.
(g) Maintenance of Insurance. Maintain insurance with
reputable insurers covering all such properties and against loss
or damage of the kinds and in such amounts, including self
insurance and retainage arrangements, as is usually carried by
companies engaged in similar businesses, similarly situated and
owning similar properties.
V.2 Negative Covenants. So long as a drawing is available
under the Letter of Credit (or the Banks shall have any other
obligations to the Company thereunder) or any of the Banks shall
have any Commitment hereunder or the Company shall have any
obligation to pay any amount to any of the Banks hereunder, the
Company will not, without the written consent of the Agent (with
the consent of the Majority Banks):
(a) Amendment of Any Related Document. Enter into or
consent to any amendment or modification of any Related Document,
except with prior written notice to the Agent and, in the case of
any amendment or modification adverse to the Agent or the Banks
or affecting any rights, powers, agreements or obligations of the
Agent or any Bank hereunder or thereunder, with the prior written
consent of the Agent and the Majority Banks (subject to the
second and third sentences of Section 7.15).
(b) Compliance with ERISA. (i) Enter into any prohibited
transaction (as defined in Section 4975 of the Code and in
Section 406 of ERISA and not otherwise exempt) involving any Plan
which may result in any fine or penalty being imposed on the
Company which (in the reasonable opinion of the Agent) is
material to the financial position or operations of the Company
or (ii) allow or suffer to exist any other event or condition
known to the Company which results in any liability of the
Company to the PBGC which (in the reasonable opinion of the
Agent) is material to the financial position or operations of the
Company. For purposes of this Section 5.2(b), "liability" shall
not include termination insurance premiums payable under Section
4007 of ERISA.
VI EVENTS OF DEFAULT
VI.1 Events of Default. The occurrence of any of the following
events shall be an "Event of Default" hereunder:
(a) The Company shall fail to pay any amount (other than
any amount due under Section 2.5(i) or the principal amount of
any Advance) payable hereunder within five (5) days after such
amount becomes due or shall fail to pay any amount due under
Section 2.5(i) or the principal amount of any Advance when due;
or
(b) Any representation or warranty made, or deemed made, by
the Company herein or by the Company (or any of its officers) in
connection with this Agreement or any of the Related Documents
shall prove to have been incorrect in any material respect when
made or deemed made; or
(c) The Company shall fail to perform or observe any term,
covenant or agreement contained in this Agreement or any material
term, covenant or agreement contained in any of the Related
Documents on its part to be performed or observed (other than a
term, covenant or agreement referred to in Section 6.1(a) or (b))
and, in any such case, such failure shall continue for 30 days
after written notice thereof from the Agent or any Bank (with
concurrent notice to the Agent) to the Company; the Company shall
seek to invalidate the Custodian Agreement or any lien or
security interest created thereby; or the Custodian Agreement
shall at any time fail to provide the Agent with a perfected
security interest in the Bonds as contemplated by the terms
thereof; or
(d) The Company shall fail to pay any Debt (excluding Debt
under this Agreement or under the Bonds) of the Company (as the
case may be), when due (whether by scheduled maturity, required
prepayment, acceleration, demand or otherwise) in an aggregate
amount exceeding $10,000,000 and such failure shall continue
after the applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or any other
default under any agreement or instrument relating to any such
Debt, or any other event, shall occur and shall continue after
the applicable grace period, if any, specified in such agreement
or instrument, if the effect of such default or event is to
accelerate, or to permit the acceleration of, the maturity of
such Debt; or any such Debt shall be declared to be due and
payable prior to the stated maturity thereof; or
(e) The Company shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the
benefit of creditors; or any proceeding shall be instituted by or
against the Company seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or
other similar official for it or for any substantial part of its
property; or the Company shall take any corporate action to
authorize any of the actions set forth above in this subsection
(e); or
(f) One or more final judgments or decrees shall be entered
against the Company involving in the aggregate a liability (not
paid or fully covered by insurance) of $10,000,000 plus with
respect to judgments or decrees for state income, sales, use and
property taxes, $20,000,000 or more and all such judgments or
decrees shall not have been vacated, discharged or stayed within
90 days from the entry thereof; or
(g) Any provision of this Agreement or any material
provision of any Related Document to which the Company is a party
shall at any time for any reason cease to be valid and binding on
the Company, or shall be declared to be null and void, or the
validity or enforceability thereof shall be denied or contested
by the Company, or a proceeding shall be commenced by any
governmental agency or authority having jurisdiction over the
Company seeking to establish the invalidity or unenforceability
thereof and the Company shall fail diligently or successfully to
defend such proceeding; or
(h) Any "Event of Default" under and as defined in the Loan
Agreement or the Indenture shall have occurred and be continuing;
or
(i) Any Termination Event with respect to a Plan shall have
occurred, and, 30 days after notice thereof shall have been given
to the Company by the Agent or any Bank (with concurrent notice
to the Agent), (i) such Termination Event (if correctable) shall
not have been corrected and (ii) the then present value of such
Plan's vested benefits exceeds the then current value of assets
accumulated in such Plan by more than the amount of $10,000,000;
or
(j) The Company or any of its Affiliates as employer under
a Multiemployer Plan shall have made a complete or partial
withdrawal from such Multiemployer Plan and the plan sponsor of
such Multiemployer Plan shall have notified such withdrawing
employer that such employer has incurred a withdrawal liability
in an annual amount exceeding $10,000,000; or
(k) Any order of the ACC or any approval or order of any
other governmental body, public board, or public body related to
the Related Documents shall be modified, rescinded, revoked or
set aside or otherwise cease to remain in full force and effect;
or
(l) Any "Event of Default" under and as defined in the
Master Restructuring Agreement shall have occurred and be
continuing; or
(m) Any of the First Mortgage Documents shall, at any time,
cease to be in full force and effect (unless released by the
Agent) or shall be declared to be null and void, or the validity
or enforceability thereof shall be contested by the Company, or
any Lien intended to be created by any of the First Mortgage
Documents shall cease to be or shall not be a valid and perfected
Lien having the priority contemplated thereby.
VI.2 Upon an Event of Default. If any Event of Default, other
than an Event of Default described in Section 6.1(e), shall have
occurred and be continuing, the Agent may or, at the direction of
the Majority Banks, shall (i) by notice to the Company, declare
the obligation of CIBC to issue the Letter of Credit and to make
Advances hereunder to be terminated, whereupon the same shall
forthwith terminate, (ii) (A) give notice to the Trustee and
pursuant to Section 2.02(h)(iv) of the Indenture stating that an
Event of Default under this Agreement has occurred and requiring
the Trustee to direct the Tender Agent to purchase the Bonds upon
mandatory tender for purchase pursuant to Section 2.02(h)(iv) of
the Indenture, or (B) give notice to the Trustee stating that an
Event of Default under this Agreement has occurred and directing
the Trustee to notify the Issuer of its resulting obligation to
redeem the Bonds pursuant to Section 3.01(f) of the Indenture,
(iii) declare the Advances, all interest thereon and all other
amounts payable thereunder or in respect thereof to be forthwith
due and payable, whereupon the Advances, all such interest and
all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest, or further notice of any
kind, all of which are hereby expressly waived by the Company,
and (iv) in addition to other rights and remedies provided for
herein or in the Custodian Agreement or otherwise available to
it, pursue any other rights and remedies permitted to the Agent
or any Bank at law or in equity. If any Event of Default
described in Section 6.1(e) shall occur, (i) the Commitment (if
not theretofore terminated) shall automatically terminate, (ii)
the obligation to issue the Letter of Credit (if not theretofore
issued) and make Advances hereunder shall automatically
terminate, and (iii) all Advances and other amounts outstanding,
all interest thereon and all other amounts payable thereunder or
in respect thereof shall automatically be and become immediately
due and payable, in each case, without presentment, demand,
protest or notice of any kind to the Company (or any other
Person), all of which are hereby expressly waived by the Company.
VII MISCELLANEOUS
VII.1 Amendments, Etc. Subject to the second and third
sentences of Section 7.15 hereof, no amendment or waiver of any
provision of this Agreement, nor consent to any departure by the
Company therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Agent (with the
consent of the Majority Banks) and then any such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given.
VII.2 Notices, Etc. All notices and other communications
provided for hereunder shall be in writing (including telegraphic
communication) and mailed, telecopied, telexed, telegraphed or
delivered, if to the Company, to it at 220 West Sixth Street,
Tucson, Arizona 85702, Attention: Treasurer, if to the Agent or
CIBC, at its address at 2727 Paces Ferry Road, Two Paces West,
Atlanta, Georgia 30339, Attention: Clare Coyne; and if to any
other Bank, at its address set forth on the signature page
hereto; or, as to each party, at such other address as shall be
designated by such party in a written notice to the other
parties. All such notices and communications shall, when mailed,
telecopied, telexed or telegraphed, be effective when deposited
in the mails or sent by telecopy or telex or delivered to the
telegraph company, respectively, addressed as aforesaid, except
that notices to CIBC or the Agent (as the case may be) pursuant
to the provisions of Article II shall not be effective until
received by CIBC or the Agent (as the case may be).
VII.3 No Waiver; Remedies. No failure on the part of any
Bank or the Agent to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
VII.4 Right of Set-off; Sharing of Payments. (a) Upon the
occurrence and during the continuance of any Event of Default,
each Bank is hereby authorized at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time
owing by such Bank to or for the credit or the account of the
Company against any and all of the obligations of the Company now
or hereafter existing under this Agreement, up to its pro rata
share thereof, according to the amount of its Percentage,
irrespective of whether or not such Bank shall have made any
demand hereunder and although such obligations may be contingent
or unmatured.
(a) Each Bank agrees promptly to notify the Company after
any such set-off and application referred to in subsection (a)
above; provided that the failure to give such notice shall not
affect the validity of such set-off and application. The rights
of the Banks under this Section are in addition to other rights
and remedies (including, without limitation, other rights of set-
off) which the Banks may have.
(b) If any Bank shall obtain any payment or other recovery
(whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Advance (other than pursuant to the
terms of Sections 2.09 and 2.10) in excess of its pro rata share
of payments then or therewith obtained by all Banks, such Bank
shall purchase from the other Banks such participations in
Advances made by them as shall be necessary to cause such
purchasing Bank to share the excess payment or other recovery
ratably with each of them; provided, however, that if all or any
portion of the excess payment or other recovery is thereafter
recovered from such purchasing Bank, the purchase shall be
rescinded and each Bank which has sold a participation to the
purchasing Bank shall repay to the purchasing Bank the purchase
price to the ratable extent of such recovery together with an
amount equal to such selling Bank's ratable share (according to
the proportion of
(i) the amount of such selling Bank's required repayment
to the purchasing Bank, to
(ii) the total amount so recovered from the purchasing
Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The
Company agrees that any Bank so purchasing a participation from
another Bank pursuant to this Section 7.4(c) may, to the fullest
extent permitted by law, exercise all its rights of payment
(including pursuant to Section 7.4(a) and (b) with respect to such
participation as fully as if such Bank were the direct creditor
of the Company in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Bank
receives a secured claim in lieu of a setoff to which this
Section applies, such Bank shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Banks entitled under this
Section to share in the benefits of any recovery on such secured
claim.
VII.5 Indemnification. The Company hereby indemnifies and
holds the Banks and the Agent harmless from and against any and
all claims, damages, losses, liabilities, penalties, costs and
expenses which any Bank or the Agent may incur or which may be
claimed against any Bank or the Agent by any Person:
(a) by reason of any inaccuracy or alleged inaccuracy in
any material respect, or any untrue statement or alleged untrue
statement of any material fact, contained in the Preliminary
Official Statement or the Official Statement or any amendment or
supplement thereto, or by reason of the omission or alleged
omission to state therein a material fact necessary to make such
statements, in the light of the circumstances under which they
were made, not misleading; or
(b) by reason of or in connection with the execution,
delivery or performance of the Bonds, the Indenture, or the Loan
Agreement, or any transaction contemplated by the Indenture or
the Loan Agreement, other than as specified in subsection (c)
below; or
(c) by reason of or in connection with the execution and
delivery or transfer of, or payment or failure to make payment
under, the Letter of Credit or any documents or instruments in
connection therewith; provided, however, that the Company shall
not be required to indemnify any Bank or the Agent pursuant to
this Section 7.5(c) for any claims, damages, losses, liabilities,
costs or expenses to the extent caused by (i) CIBC's wilful
misconduct or gross negligence, as determined by a court of
competent jurisdiction, in determining whether documents
presented under the Letter of Credit comply with the terms of the
Letter of Credit or (ii) CIBC's wilful or grossly negligent
failure, as determined by a court of competent jurisdiction, to
make lawful payment under the Letter of Credit after the
presentation to it by the Trustee of a draft and certificate
strictly complying with the terms and conditions of the Letter of
Credit.
Nothing in this Section 7.5 is intended to limit the Company's
obligations contained in Article II. Without prejudice to the
survival of any other obligation of the Company hereunder, the
indemnities and obligations of the Company contained in this
Section 7.5 shall survive the payment in full of amounts payable
pursuant to Article II and the termination of the Letter of
Credit.
VII.6 Liability of the Banks. The Company assumes all
risks of the acts or omissions of the Trustee and any other
beneficiary or transferee of the Letter of Credit with respect to
its use of the Letter of Credit. Neither the Banks, the Agent
nor any of their respective officers or directors shall be liable
or responsible for: (a) the use which may be made of the Letter
of Credit or any acts or omissions of the Trustee and any other
beneficiary or transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should prove to be in
any or all respects invalid, insufficient, fraudulent or forged;
(c) payment by CIBC against presentation of documents which do
not comply with the terms of the Letter of Credit, including
failure of any documents to bear any reference or adequate
reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under the Letter
of Credit, except that the Company shall have a claim against
CIBC, and CIBC shall be liable to the Company, to the extent of
any direct, as opposed to consequential, damages suffered by the
Company which the Company proves were caused by (i) CIBC's wilful
misconduct or gross negligence, as determined by a court of
competent jurisdiction, in determining whether documents
presented under the Letter of Credit comply with the terms of the
Letter of Credit or (ii) CIBC's wilful or grossly negligent
failure, as determined by a court of competent jurisdiction, to
make lawful payment under the Letter of Credit after the
presentation to it by the Trustee of a draft and certificate
strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing,
CIBC may accept (documents that appear on their face to be in
order (whether original documents or copies thereof, including
but not limited to, facsimile copies), without responsibility for
further investigation, regardless of any notice or information to
the contrary.
VII.7 Costs, Expenses and Taxes. The Company agrees to pay
on demand all reasonable costs and expenses in connection with
the preparation, execution, delivery, filing, recording, and
administration of this Agreement, the Custodian Agreement and any
other documents which may be delivered in connection with this
Agreement (including any amendments or waivers of, or consents to
depart from, any provision hereof executed in accordance herewith
at any time or from time to time), including, without limitation,
(A) the reasonable fees and out-of-pocket expenses of counsel for
the Agent and CIBC, and local counsel who may be retained by said
counsel, with respect thereto and with respect to advising the
Agent and CIBC as to their respective rights and responsibilities
under this Agreement and all costs and expenses (including
counsel fees and expenses) in connection with (i) the enforcement
(whether through negotiations, legal proceedings or otherwise) of
this Agreement and such other documents which may be delivered in
connection with this Agreement or (ii) any action or proceeding
relating to a court order, injunction, or other process or decree
restraining or seeking to restrain CIBC from paying any amount
under the Letter of Credit and (B) all costs and expenses of any
Bank (including fees and expenses of counsel to such Bank) in
connection with enforcement (whether through negotiations, legal
proceedings or otherwise) of this Agreement and such other
documents which may be delivered in connection with this
Agreement. In addition, the Company shall pay any and all stamp
and other taxes and fees payable or determined to be payable in
connection with the execution, delivery, filing and recording of
this Agreement or the Letter of Credit or any such other
documents, and agrees to save the Banks harmless from and against
any and all liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
Notwithstanding the foregoing, the Company's obligation in
respect of the fees of Agent's counsel in respect of the
preparation and initial closing under this Agreement shall be
limited to $15,000.
VII.8 Binding Effect. This Agreement shall become
effective when it shall have been executed and delivered by the
Company, the Agent and the Banks and thereafter shall be binding
upon and inure to the benefit of the Company, the Agent and the
Banks and their respective successors and assigns, except that
the Company shall not have the right to assign its rights
hereunder or any interest herein without the prior written
consent of the Agent. CIBC may assign to one or more banks or
other entities all or any part of, or may grant participations to
one or more banks or other entities in all or any part of, or any
interest (undivided or divided) in, CIBC's rights and benefits
under this Agreement, and to the extent of any such assignment or
participation (unless otherwise stated therein) the assignee or
purchaser of such assignment or participation shall, to the
fullest extent permitted by law, have the same rights and
benefits hereunder as it would have if such assignee were a Bank
hereunder.
VII.9 Severability. Any provision of this Agreement which
is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-
authorization without invalidating the remaining provisions
hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction.
VII.10 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State
of New York.
VII.11 Headings. Section headings in this Agreement are
included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose.
VII.12 Subparticipation. Subject to Section 7.8, no Bank's
participation may be subdivided or transferred without the
Agent's prior written consent (which consent shall not be
unreasonably withheld); except that each Bank may, with notice to
the Agent and each of the Banks, subdivide or transfer its
participation without consent of the Agent if such subdivision or
transfer is made exclusively with or to a branch of such Bank
located in any State of the United States and subject to
jurisdiction of the state and federal courts therein.
VII.13 Acknowledgements and Agreements by the Banks. Each
Bank expressly acknowledges and agrees that: (a) it has received
a copy of this Agreement, the Official Statement, the Indenture,
the Loan Agreement and such other documents in connection with
this Agreement and the Letter of Credit as it has deemed
appropriate to make its own credit analysis and decision to enter
into this Agreement; (b) such Bank, independently and without
reliance upon CIBC or the Agent, has made its own appraisal of
the creditworthiness of the Company and any and all other
obligors, has made a commercial banking decision to purchase its
participation and did take such care on its own behalf as would
have been the case if it were a direct party to the Letter of
Credit; (c) neither CIBC nor the Agent has made or does make any
representations or warranties or assumes any responsibility with
respect to the validity, genuineness, due authorization,
execution, delivery, legality, sufficiency, enforceability or
collectibility of any document related to the Letter of Credit or
any Advance (including, without limitation, this Agreement or any
other agreement, security agreement, guaranty, statement or
certificate delivered in connection therewith) or with respect to
the validity, genuineness, enforceability, collectibility,
existence or worth of any collateral securing the same or
guarantees thereof; (d) CIBC and the Agent assume no
responsibility for (i) any statement, warranty, representation,
or certification made in, or in connection with, any document
relative to the Letter of Credit or Advances, (ii) the filing,
recording, or taking of any action with respect to any document
relative to the Letter of Credit or Advances or any security
therefor, or (iii) the financial condition of the Company or any
other obligor with respect to the Letter of Credit or Advances or
the performance or observance by the Company or any other obligor
with respect to the Letter of Credit or Advances of their
obligations; and (e) the sale of the participation hereunder does
not constitute the sale of a "security" for purposes of the
Securities Act of 1933 and the Securities and Exchange Act of
1934.
VII.14 Authorization. Each Bank authorizes the Agent to act
on behalf of such Bank to the extent provided herein or in any
Related Document, the Letter of Credit or any other document or
instrument delivered hereunder or in connection herewith, and to
take such other action as may be reasonably incidental thereto.
VII.15 Action by the Agent. Each Bank expressly understands
and agrees that (a) the Agent may use its discretion with respect
to exercising or refraining from exercising any rights which it
may have or taking or refraining from taking any actions it may
be entitled to take in connection with the Letter of Credit,
Advances, this Agreement or any other document related to the
Letter of Credit or Advances or any collateral therefor or any
obligor or beneficiary thereunder; and (b) in exercising such
discretion, the Agent will use the same care to protect the
interest of the Banks as it would if the Agent were the holder of
the Banks' interests, and that, so long as the Agent exercises
such care, it shall not be under any liability to the Banks
except in the instance of the Agent's gross negligence or willful
misconduct (without limiting the foregoing, the Agent may consult
with legal counsel, independent public accountants, and experts
selected by it, and will not be liable for any action that it
takes or does not take, in good faith, in accordance with the
advice of such counsel, accountants or experts, and the Agent may
act in reliance on any notice, consent or other instrument or
writing which it believes to be genuine or to have been presented
by a proper Person). Each Bank further expressly understands and
agrees that the Agent may, with the consent of the Majority
Banks, agree to any amendment, modification, waiver, termination,
release or consent with respect to the Letter of Credit,
Advances, this Agreement or any document (including, without
limitation, any security agreement or guaranty) relative to the
Letter of Credit, Advances or this Agreement or any Related
Document, or take, or refrain from taking, any action with
respect thereto, except that the Agent will not, without the
consent of all of the Banks, agree to any extension of the Letter
of Credit (or this Agreement in connection therewith), reduction
of the effective fee rate or interest rate payable to the Banks
in connection with the Letter of Credit or Advances, forgiveness
or postponement of any reimbursement obligation in respect of the
Letter of Credit or any principal of or interest on the Advances
payable to the Banks, or any release of Collateral under the
Custodian Agreement. If the Agent requests the consent of the
Banks to an amendment, modification, waiver, release or consent
and any Bank does not respond within ten (10) days of CIBC's
written request, such Bank shall be deemed not to have given its
consent thereto. If a Bank fails to consent to any amendment,
modification, waiver, release or consent which requires its
consent, CIBC shall have the right, but not the obligation, to
terminate and repurchase such Bank's participation in the Letter
of Credit and all Advances or, in its discretion, in only the
Advances under the Letter of Credit affected by such change, at
such time, for a purchase price equal to the Bank's proportionate
share of the then unpaid principal balance of the outstanding
Advances, if any, being repurchased (reduced by an amount equal
to such Bank's Percentage of any such Advance or portion thereof
with respect to which such Bank has not, as of the time of such
repurchase, reimbursed CIBC in full in accordance with Section
2.7(a)), together with interest, fees and other amounts accrued
with respect thereto, and terminate the Bank's obligations
hereunder with respect to the Letter of Credit and/or the
repurchased Advances, as appropriate.
VII.16 Indemnification by the Banks. The Agent shall not
be required to do any act hereunder or under any Related
Document, the Letter of Credit, or any other document or
instrument delivered hereunder or in connection herewith or take
any action toward the execution or enforcement of the agency
hereby created, or to prosecute or defend any suit in respect of
this Agreement, the Related Documents, the Letter of Credit, or
any collateral security, or other documents in connection with
the foregoing, unless indemnified to its satisfaction by the
Banks, pro rata, in accordance with their respective Percentages,
against loss, cost, liability, and expense. If any indemnity
furnished to the Agent for any purpose shall, in the opinion of
the Agent, be insufficient or become impaired, the Agent may call
for additional indemnity and not commence or cease to do the acts
indemnified against until such additional indemnity is furnished.
VII.17 Exculpation of the Agent. Neither the Agent nor
any of its directors, officers, employees or agents shall (i) be
responsible for any recitals, representations or warranties
contained in, or for the execution, validity, genuineness,
effectiveness or enforceability of, this Agreement, any Related
Document, the Letter of Credit, or any other instrument or
document delivered hereunder or in connection herewith, (ii) be
responsible for the validity, genuineness, Related Document, the
Letter of Credit, or any other instrument or document delivered
hereunder or in connection herewith, (ii) be responsible for the
validity, genuineness, perfection, effectiveness, enforceability,
existence, value or enforcement of any Collateral or other
collateral security, (iii) be under any duty to inquire into or
pass upon any of the foregoing matters, or to make any inquiry
concerning the performance by the Company or any other obligor of
its obligations, (iv) be responsible to verify that any schedule,
certificate, statement, report, notice or other writing which is
required to be delivered by the Company to the Banks has in fact
been delivered to the Banks, (v) be responsible for the content
of any schedule, certificate, statement, report, notice or other
writing which is required to be delivered by the Company to the
Banks including, without limitation, any such writing which in
fact is not delivered to the Banks, or (vi) in any event, be
liable as such for any action taken or omitted by it or them,
except, in each case, for its or their own gross negligence or
willful misconduct. The agency hereby created shall in no way
impair or affect any of the rights and powers of, or impose any
duties or obligations upon, the Agent in its individual capacity.
VII.18 Knowledge. The Agent shall be entitled to assume
that no Event of Default or event or circumstance that with
notice or lapse of time or both would constitute an Event of
Default exists, absent actual knowledge thereof.
VII.19 Resignation. The Agent may resign as such at any
time upon at least 30 days' prior notice to the Company and the
Banks. In the event of any such resignation, the Banks shall as
promptly as practicable appoint a successor Agent with the
consent of those Banks whose Percentages in the aggregate are
greater than 50%. After any resignation pursuant to this Section
7.19, the provisions of this Agreement relating to
indemnification and limitation of the liability of the Agent,
including without limitation Sections 7.13, 7.15, 7.16 and 7.17,
shall inure to the benefit of the retiring Agent as to any
actions taken or omitted to be taken by it while it was Agent
hereunder.
VII.20 Submission To Jurisdiction; Waivers. The Company
hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement, the First Mortgage
Documents and the Custodian Agreement, or for recognition and
enforcement of any judgment in respect thereof, to the non-
exclusive general jurisdiction of the Courts of the State of New
York in the County of New York, the courts of the United States
of America for the Southern District of New York, and appellate
courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now
or hereafter have to the venue of any such action or proceeding
in any such court or that such action or proceeding was brought
in an inconvenient court and agrees not to plead or claim the
same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form
of mail), postage prepaid, to the Company at its address set
forth in Section 7.2 or at such other address of which the Agent
shall have been notified pursuant thereto; and
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction.
VII.21 WAIVERS OF JURY TRIAL. THE COMPANY, THE AGENT AND
THE BANKS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY FIRST MORTGAGE DOCUMENT OR THE CUSTODIAN AGREEMENT AND FOR
ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective
duly authorized officers as of the date first above written.
TUCSON ELECTRIC POWER COMPANY
By____________________________
Name:_______________________
Title:______________________
Amount of Percentage of
Commitment Commitment
$18,347,124.00 100.00% CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY
individually and as Agent
By____________________________
Name:_______________________
Title:______________________
EXHIBIT A
FORM OF LETTER OF CREDIT
May 1, 1996
First Trust of New York, National Association
100 Wall Street
Suite 1600
New York, New York 10005
Attention: Corporate Trust Administration
Dear Sir or Madam:
We hereby issue our Irrevocable Letter of Credit No.
U-96-0623, at the request and for the account of Tucson Electric
Power Company (the "Company"), in your favor, as Trustee under
the Indenture of Trust, dated as of May 1, 1996 (the
"Indenture"), between the Coconino County, Arizona Pollution
Control Corporation (the "Issuer") and you, as Trustee, pursuant
to which $16,700,000 in aggregate principal amount of the
Issuer's Pollution Control Revenue Bonds, 1996 Series A (Tucson
Electric Power Company Project) (the "Bonds"), are to be issued,
this Letter of Credit being in the total amount of $18,347,124
(subject to adjustment as provided below).
This Letter of Credit shall be effective immediately
and shall expire upon the earliest to occur of (i) April 30,
1999, (ii) the date on which we receive a written and completed
certificate signed by you in the form of Exhibit 1 or Exhibit 3
attached hereto, stating that the drawing thereunder is the final
drawing under this Letter of Credit and that, upon the honoring
of such drawing, this Letter of Credit will expire in accordance
with its terms, and (iii) the date upon which we receive a
written certificate signed by you and stating therein that either
(a) no Bonds are "Outstanding" (as defined in the Indenture) or
(b) this Letter of Credit is being "Terminated" (as defined in
the Indenture) without a mandatory purchase of the Bonds (such
earliest date being the "Cancellation Date").
The aggregate amount which may be drawn under this
Letter of Credit, subject to reductions in amount and
reinstatement as provided below, is $18,347,124, of which the
aggregate amounts set forth below may be drawn as indicated.
(i) An aggregate amount not exceeding
$16,700,000, as such amount may be reduced and restored
as provided below, may be drawn in respect of payment
of principal of the Bonds (or the portion of the
purchase price of Bonds corresponding to principal)
(the "Principal Component").
(ii) An aggregate amount not exceeding
$1,647,124, as such amount may be reduced and restored
as provided below, may be drawn in respect of the
payment of up to 300 days' interest on the principal
amount of the Bonds computed at a maximum rate of 12%
per annum (or the portion of the purchase price of
Bonds corresponding thereto) (the "Interest
Component").
The Principal Component and the Interest Component
shall be reduced effective upon our receipt of a certificate in
the form of Exhibit 4 attached hereto completed in strict
compliance with the terms hereof.
The Principal Component and the Interest Component
shall be reduced immediately following our honoring of any
certificate requesting a drawing hereunder, in each case by an
amount equal to the respective component of the amount specified
in such certificate. The presentation of a certificate
requesting a drawing hereunder, in strict compliance with the
terms hereof, shall be a "Drawing"; a Drawing in respect of a
regularly scheduled interest payment or payment of principal of
and interest on the Bonds upon scheduled or accelerated maturity
shall be a "Regular Drawing"; a Drawing to pay principal of and
interest on Bonds upon redemption of the Bonds in whole or in
part or to pay the purchase price of the Bonds in accordance with
Section 2.02(h)(iv) of the Indenture shall be a
"Redemption/Mandatory Tender Upon Default Drawing"; and a Drawing
to pay the purchase price of Bonds in accordance with Section
2.02(g) or (h) of the Indenture shall be a "Tender Drawing".
On the eighth day following any Drawing hereunder
against the Interest Component (other than the amount drawn
pursuant to a Redemption/Mandatory Tender Upon Default Drawing in
respect of the payment of interest accrued on the Bonds) the
amount so drawn shall be automatically restored to the Interest
Component (if not previously restored pursuant to the following
paragraph) unless you shall have received written notice from us
prior to such day that we will not reinstate the Letter of Credit
in the amount of such drawing because we have not been reimbursed
in respect of such Drawing or because an "Event of Default" under
the Letter of Credit and Reimbursement Agreement dated as of May
1, 1996 between the Company and us, as it may be amended from
time to time (the "Reimbursement Agreement") has occurred and is
continuing.
Upon our having been reimbursed by or for the account
of the Company in respect of any Regular Drawing for the payment
of interest on the Bonds or in respect to any Tender Drawing,
together with interest, if any, owing thereon pursuant to the
Reimbursement Agreement, the Principal Component and the Interest
Component, respectively, shall be restored in the same proportion
as the applicable Drawing. Upon your telephone request, we will
confirm reinstatement pursuant to this paragraph.
Funds under this Letter of Credit are available to you
against the appropriate certificate specified below, duly
executed by you and appropriately completed.
Exhibit Setting Forth
Type of Drawing Form of Certificate Required
Regular Drawing Exhibit 1
Tender Drawing Exhibit 2
Redemption/Mandatory Tender Exhibit 3
Upon Default Drawing
Drawing certificates and other certificates hereunder
shall be dated the date of presentation and shall be presented on
a business day (as hereinafter defined) by hand delivery at our
office located at 2727 Paces Ferry Road, Two Paces West,
Atlanta,Georgia 30339, Attention: Clare Coyne. The certificates
you are required to submit to us may be submitted to us by
facsimile transmission to the following number: (770) 319-4950
subsequently confirmed in writing, which you agree to send by
overnight courier for next day delivery. If we receive your
certificate at such office, all in strict conformity with the
terms and conditions of this Letter of Credit, with respect to
any Drawing at or before 11:30 A.M. (New York time), on a
business day on or before the Cancellation Date, we will honor
such Drawing at or before 3:00 P.M. (New York time), on the same
business day, in accordance with your payment instructions. If
we receive your certificate at such office, all in strict
conformity with the terms and conditions of this Letter of
Credit, after 11:30 A.M. (New York time), with respect to any
Drawing on any business day on or before the Cancellation Date,
we will honor such certificate at or before 3:00 P.M. (New York
time) on the next succeeding business day. Payment under this
Letter of Credit will be made by wire transfer of Federal Funds
to your account with any bank that is a member of the Federal
Reserve System. All payments made by us under this Letter of
Credit will be made with our own funds and not with any funds of
the Company, its affiliates or the Issuer. As used herein,
"business day" shall mean any day on which banks located in the
City of New York, New York are not required or authorized to
remain closed and on which The New York Stock Exchange is not
closed.
This Letter of Credit is transferable in its entirety,
but not in part, to any transferee who has succeeded you as
Trustee under the Indenture and may be successively so
transferred. Transfer of the available balance under this Letter
of Credit to such transferee shall be effected by the
presentation to us of this Letter of Credit accompanied by a
certificate in form set forth in Exhibit 5.
This Letter of Credit shall be governed by and
construed in accordance with the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of
Commerce Publication 500, and, to the extent matters are not
covered thereby, the laws of the State of New York, including the
Uniform Commercial Code as in effect in the State of New York.
To the extent of any inconsistency, the laws of the State of New
York will control. This Letter of Credit sets forth in full our
undertaking, and such undertaking shall not in any way be
modified, amended, amplified or limited by reference to any
document, instrument or agreement referred to herein (including,
without limitation, the Bonds and the Indenture), except only the
certificates referred to herein; and any such reference shall not
be deemed to incorporate herein by reference any document,
instrument or agreement except for such certificates. Whenever
and wherever the terms of this Letter of Credit shall refer to
the purpose of a Drawing hereunder, or the provisions of any
agreement or document pursuant to which such Drawing may be made
hereunder, such purpose or provisions shall be conclusively
determined by reference to the statements made in the certificate
accompanying such Drawing.
Very truly yours,
CANADIAN IMPERIAL BANK OF COMMERCE,
NEW YORK AGENCY
By_____________________________
Authorized Signatory
REGULAR DRAWING CERTIFICATE
The undersigned, a duly authorized officer of
____________ (the "Trustee"), hereby certifies as follows to
Canadian Imperial Bank of Commerce, New York Agency (the "Bank"),
with reference to Irrevocable Letter of Credit No. U-96-0623 (the
"Letter of Credit"), issued by the Bank in favor of the Trustee.
Terms defined in the Letter of Credit and used but not defined
herein shall have the meanings given them in the Letter of
Credit.
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The respective amounts of principal of and
interest on the Bonds, which do not exceed the Principal
Component and Interest Component, respectively, under the Letter
of Credit, which are due and payable (or which have been declared
to be due and payable) and with respect to the payment of which
the Trustee is presenting this Certificate, are as follows:
Principal: $_________________
Interest: $_________________
(3) The respective portions of the amount of this
Certificate in respect of payment of principal of and interest on
the Bonds have been computed in accordance with (and this
Certificate complies with) the terms and conditions of the Bonds
and the Indenture and do not include any amount with respect to
any Bonds held of record by the Company or the Issuer or by the
Tender Agent under the Indenture for the account of the Company
or the Issuer.
(4) Please send the payment requested hereunder by
wire transfer to __________________[insert wire transfer
instructions].
[(5) This Certificate is being presented upon the
[scheduled maturity of the Bonds] [accelerated maturity of the
Bonds pursuant to the Indenture]/1 and is the final amount to be
drawn under the Letter of Credit in respect of principal of and
interest on the Bonds. Upon the honoring of this Certificate,
the Letter of Credit will expire in accordance with its terms.
Following application of the proceeds of the Drawing under this
Certificate, no Bonds will be Outstanding (as defined in the
Indenture).]/2
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the ____ day of _________ 19__.
[TRUSTEE NAME],
as Trustee
By________________________
Title:
EXHIBIT 2
TENDER DRAWING CERTIFICATE
The undersigned, a duly authorized officer of
_____________ (the "Trustee"), hereby certifies as follows to
Canadian Imperial Bank of Commerce, New York Agency (the "Bank"),
with reference to Irrevocable Letter of Credit No. U-96-0623 (the
"Letter of Credit"), issued by the Bank in favor of the Trustee.
Terms defined in the Letter of Credit and used but not defined
herein shall have the meanings given them in the Letter of
Credit.
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The respective principal and interest portions of
the purchase price of the Bonds being tendered for which this
Tender Drawing is being made, which do not exceed the Principal
Component and Interest Component, respectively, under the Letter
of Credit, are as follows:
Principal: $__________________
Interest: $__________________
The Bonds are not being tendered for purchase pursuant
to Section 2.02(h)(iv) of the Indenture.
(3) The respective portions of the total amount of
this Certificate have been computed in accordance with (and this
Certificate complies with) the terms and conditions of the Bonds
and the Indenture and do not include any amount with respect to
any Bonds held of record by the Company or the Issuer or by the
Tender Agent under the Indenture for the account of the Company
or the Issuer.
(4) Please send the payment requested hereunder by
wire transfer to ___________________ [insert wire transfer
instructions].
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the _____ day of ___________
19___.
[TRUSTEE NAME],
as Trustee
By________________________
Title:
REDEMPTION/MANDATORY TENDER UPON DEFAULT DRAWING CERTIFICATE
The undersigned, a duly authorized officer of
_____________ (the "Trustee"), hereby certifies as follows to
Canadian Imperial Bank of Commerce, New York Agency (the "Bank"),
with reference to Irrevocable Letter of Credit No. U-96-0623 (the
"Letter of Credit"), issued by the Bank in favor of the Trustee.
Terms defined in the Letter of Credit and used but not defined
herein shall have the meanings given them in the Letter of
Credit.
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
[(2) The respective principal and interest portions of
the redemption price of the Bonds being redeemed for which this
Redemption/Mandatory Tender Upon Default Drawing is being made,
which do not exceed the Principal Component and Interest
Component, respectively, under the Letter of Credit, are as
follows:
Principal: $___________________
Interest: $___________________]/3
[(2) The respective principal and interest portions of
the purchase price of the Bonds being tendered pursuant to
Section 2.02(h)(iv) of the Indenture, which do not exceed the
Principal Component and Interest Component, respectively, under
the Letter of Credit, are as follows:
Principal: $___________________
Interest: $___________________]2/
(3) The respective portions of the total amount of
this Certificate have been computed in accordance with (and this
Certificate complies with) the terms and conditions of the Bonds
and the Indenture and do not include any amount with respect to
any Bonds held of record by the Company or the Issuer or by the
Tender Agent under the Indenture for the account of the Company
or the Issuer.
(4) Please send the payment requested hereunder by
wire transfer to ________________ [insert wire transfer
instructions].
[(5) This Certificate is the final Drawing under the
Letter of Credit and, upon the honoring of such Certificate, the
Letter of Credit will expire in accordance with its terms.]/43/
[Upon application of the proceeds of the Drawing under this
Certificate, no Bonds will be Outstanding (as defined in the
Indenture).]/5
IN WITNESS WHEREOF, the Trustee has executed and
delivered this Certificate as of the ____ day of _________ 19___.
[TRUSTEE
NAME],
as Trustee
By_______________________
Title:
REDUCTION CERTIFICATE
The undersigned, a duly authorized officer of
___________ (the "Trustee"), hereby certifies as follows to
Canadian Imperial Bank of Commerce, New York Agency (the "Bank"),
with reference to Irrevocable Letter of Credit No. U-96-0623 (the
"Letter of Credit"), issued by the Bank in favor of the Trustee.
Terms defined in the Letter of Credit and used but not defined
herein shall have the meanings given them in the Letter of
Credit.
(1) The Trustee is the Trustee under the Indenture for
the holders of the Bonds.
(2) The aggregate principal amount of the Bonds
outstanding (as defined in the Indenture) has been reduced to
$__________.
(3) The Principal Component is hereby correspondingly
reduced to $__________.
(4) The Interest Component is hereby reduced to
$__________/6 to reflect the amount of interest allocable to the
reduced amount of principal set forth in paragraph (2) hereof.
IN WITNESS WHEREOF, the Trustee has executed this
Certificate as of the ___ day of ________________, 19__.
[TRUSTEE NAME],
as Trustee
By________________________
Title:
INSTRUCTIONS TO TRANSFER
_____________, 19__
Re: Canadian Imperial Bank of Commerce, New York
Agency,
Irrevocable Letter of Credit No. U-96-0623
Gentlemen:
The undersigned, as Trustee under the Indenture of
Trust between [TRUSTEE NAME] and the Coconino County, Arizona
Pollution Control Corporation, dated as of May 1, 1996, is named
as beneficiary in the Letter of Credit referred to above (the
"Letter of Credit"). The Transferee named below has succeeded
the undersigned as Trustee under such Indenture.
_______________________________
(Name of Transferee)
______________________________
(Address)
Therefore, for value received, the undersigned hereby
irrevocably instructs you to transfer to such Transferee all
rights of the undersigned to draw under the Letter of Credit.
By this transfer, all rights of the undersigned in the
Letter of Credit are transferred to such Transferee and such
Transferee shall hereafter have the sole rights as beneficiary
under the Letter of Credit; provided, however, that no rights
shall be deemed to have been transferred to such Transferee until
such transfer complies with the requirements of the Letter of
Credit pertaining to transfers.
IN WITNESS WHEREOF, the undersigned has executed and
delivered this Certificate as of the ____ day of _____________
19__.
[TRUSTEE NAME],
as Trustee
By________________________
Title:
3206960.3 051096 1042C 96256581
CUSTODIAN AND PLEDGE AGREEMENT
THIS CUSTODIAN AND PLEDGE AGREEMENT (the "Agreement"), dated
as of May 1, 1996, is made by and among TUCSON ELECTRIC POWER
COMPANY (the "Company"), FIRST TRUST OF NEW YORK, NATIONAL
ASSOCIATION, as custodian (such entity, or its successor or
assign as custodian, being the "Custodian") and CANADIAN IMPERIAL
BANK OF COMMERCE, NEW YORK AGENCY, acting in its capacity as
Agent (in such capacity, "CIBC") for the benefit of certain
Banks, pro rata, in accordance with their respective Percentages
pursuant to a Letter of Credit and Reimbursement Agreement, dated
as of April 1, 1996 (the "Reimbursement Agreement"), among the
Company, such Banks and CIBC, individually and as Agent
thereunder.
WHEREAS, at the Company's request, the Coconino County,
Arizona Pollution Control Corporation (the "Issuer") is issuing
$16,700,000 in aggregate principal amount of the Issuer's
Pollution Control Revenue Bonds, 1996 Series A (Tucson Electric
Power Company Project) (the "Bonds"), pursuant to an Indenture of
Trust, dated as of May 1, 1996 (the "Indenture"), between the
Issuer and First Trust of New York, National Association, as
trustee (such trustee and any successor trustee under the
Indenture, in such capacity, being the "Trustee"), for the
purpose stated in the Indenture;
WHEREAS, to induce CIBC to issue a letter of credit to
support certain amounts payable on and in respect of the Bonds
(the "Letter of Credit") pursuant to the terms of the
Reimbursement Agreement, the Company proposes to pledge the
Collateral (as hereinafter defined) and to enter into this
Agreement;
NOW, THEREFORE, the Company, the Custodian and CIBC hereby
agree as follows:
I
DEFINITIONS; INTERPRETATION
I.1 Definitions. For the purposes of this Agreement, terms
defined in the Reimbursement Agreement and used but not otherwise
defined herein have the meanings given them in the Reimbursement
Agreement, and the following terms have the meanings indicated
(such meanings to be equally applicable to both singular and
plural forms of the terms defined):
"Collateral" means each Pledged Bond, all payments of
principal and interest payable on Pledged Bonds, all of the
Company's rights to receive Pledged Bonds and amounts payable
thereon and all of the Company's right, title and interest in and
to Pledged Bonds and such principal of and interest thereon, and
all proceeds thereof, as they may from time to time be delivered
to or held, pending payment by the Custodian, the Remarketing
Agents or the Trustee, in money, securities or collections from
or with respect to any or all of the foregoing.
"Obligations" means (a) all amounts of principal of and
interest on each Advance, (b) all other amounts due to the Agent
and the Banks by or on behalf of the Company under or in respect
of the Reimbursement Agreement and (c) all amounts paid or costs
or expenses (including, without limitation, reasonable attorneys'
fees) incurred by CIBC or any of the Banks in the collection of
any of the foregoing or for the maintenance, preservation,
protection or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or realization upon, the Collateral
or in connection with the enforcement or administration of this
Agreement or the Reimbursement Agreement, in each case
irrespective of whether the obligation to pay any such amount is
direct or indirect, absolute or contingent, joint or several, due
or not due, liquidated or unliquidated, arises by operation of
law or otherwise or is from time to time reduced and thereafter
reincurred. To the extent any payment made with respect to an
Obligation is rescinded or recovered or is otherwise avoided or
must be restored under or by reason of any bankruptcy or
insolvency proceedings of the Company or any other Person or
otherwise, the amount of such payment so rescinded, recovered,
restored or avoided shall again constitute an Obligation, as if
such payment had never been made.
"Pledged Bond" means any Bond held at any time by the Tender
Agent pursuant to Section 13.01 of the Indenture.
"Remarketing Agreement" means the Remarketing Agreement
between the Company and the Remarketing Agent, as the same may be
amended from time to time, and any remarketing agreement between
the Company and a successor Remarketing Agent.
I.2 Interpretation. The headings of the Articles and Sections
hereof are for convenience of reference only and shall not limit
or affect the meaning or construction of any provision hereof.
II
SECURITY INTEREST
II.1 Grant of Security Interest. As security for the due and
punctual payment in full of each of the Obligations, the Company
hereby grants to CIBC (on behalf of and for the benefit of the
Banks, pro rata, in accordance with their respective Percentages)
a continuing first lien on and security interest in the
Collateral.
II.2 Interest Continuing and Absolute. Until payment in full
of all the Obligations has been indefeasibly made after the
Cancellation Date, the security interest hereunder in the
Collateral shall continue in full force and effect, and it and
the Company's obligations hereunder shall be effective
irrespective of any illegality, invalidity or unenforceability of
the Bonds, the Letter of Credit, the Reimbursement Agreement,
this Agreement or any other Related Document.
II.3 Perfection. The Company shall perfect the security
interest hereunder in the Collateral (a) in the case of Pledged
Bonds, by delivering or causing to be delivered such Pledged
Bonds to the Custodian, (b) in the case of any other certificated
securities and cash proceeds forming part of the Collateral, by
delivering such Collateral to CIBC, (c) in the case of
uncertificated securities forming part of the Collateral, by
registering such securities in the name of CIBC, or (d) by any
other method permitted by the Uniform Commercial Code as in
effect in the State of New York on the date of such perfection.
All steps necessary for such perfection shall be taken by the
Company, in the case of each Pledged Bond forming part of the
Collateral, on the day such Bond becomes a Pledged Bond and, in
the case of proceeds, uncertified securities and any other
Collateral, immediately. The Company shall promptly notify CIBC
of any Collateral delivered to the Custodian and of any steps
taken to perfect the security interest hereunder in the
Collateral pursuant to Section 2.3(c) or (d) hereof.
III
REPRESENTATIONS AND WARRANTIES
III.1 Representations and Warranties. The Company
represents and warrants to CIBC and the Custodian and, so long as
any of the Obligations remain unpaid, shall be deemed
continuously to represent and warrant to CIBC and the Custodian,
as follows:
(a) At the time of delivery to CIBC or the Custodian of any
Collateral, the Company will have good and marketable title to,
and be the sole owner of, such Collateral, free and clear of all
liens and other encumbrances, other than the security interest
created hereby, the security interest hereunder in such
Collateral shall have been perfected and no financing statement
or other instrument with respect to any of the Collateral shall
have been and continue to be recorded, registered or filed, and
no security agreement with respect to any of the Collateral shall
have been executed by the Company, other than with respect to
such security interest in favor of CIBC (for the benefit of the
Banks) as provided in Section 2.1 hereof.
(b) CIBC (on behalf of the Banks as aforesaid) has a valid,
first and prior perfected security interest in the Collateral.
(c) The Collateral may be properly pledged hereunder.
(d) No consents or approvals of any Person are required for
the execution, delivery and performance by the Company of this
Agreement, the assignment and transfer by the Company of any of
the Collateral to CIBC hereunder, or the subsequent sale or
transfer of the Collateral by CIBC pursuant to the terms hereof.
(e) This Agreement has been authorized by all necessary
corporate action, duly executed and delivered by the Company, and
constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
IV
COVENANTS
IV.1 Protection of CIBC's Security Interest. The Company
hereby covenants and agrees that it shall defend its title to,
and the security interest hereunder in, the Collateral against
all claims of all other Persons, and shall keep the Collateral
free from all liens and encumbrances (other than the security
interest hereunder) and pay or cause to be paid promptly when due
all taxes, fees, assessments and other charges now or hereafter
imposed on or in respect of any of the Collateral.
IV.2 Sale of Collateral. The Company hereby covenants and
agrees that it shall not, without the prior written consent of
CIBC (given with the consent of the Majority Banks), sell,
transfer or otherwise dispose of, or permit any other Person to
sell, transfer or otherwise dispose of, any of the Collateral or
any of the Company's interests therein except in accordance with
the terms of this Agreement, the Indenture and the Remarketing
Agreement. The receipt by CIBC of all or any part of the
proceeds of any sale, transfer or other disposition of any of the
Collateral, except in accordance with the prior sentence, shall
not be deemed or construed to be a consent by CIBC to any such
sale, transfer or other disposition.
IV.3 Further Assurances. The Company hereby covenants and
agrees that it shall execute and deliver to CIBC or the Custodian
such assignments and other documents and instruments, and shall
take all other action relating to the Collateral and the
preservation, protection or perfection of CIBC's security
interest therein, as CIBC or the Custodian may request, and the
Company shall not file or permit to be filed any financing
statement (or amendment or continuation statement) or execute any
security agreement with respect to any of the Collateral unless
it names CIBC (on behalf of the Banks as aforesaid) as the only
secured party. To the extent permitted by law, the Company
hereby irrevocably appoints CIBC as its attorney-in-fact (without
requiring CIBC to act as such) to perform all acts that CIBC
deems appropriate to preserve, protect and perfect its continuing
security interest in the Collateral or to preserve or protect the
Collateral, and the Company and all other parties hereto
acknowledge and agree that such appointment is coupled with an
interest.
V
REMEDIES UPON THE OCCURRENCE OF AN EVENT OF
DEFAULT
V.1 Default Remedies. If an Event of Default under the
Reimbursement Agreement shall occur and be continuing, CIBC shall
be entitled to exercise and shall, at the direction of the
Majority Banks, exercise any one or more (at the discretion of
CIBC and/or such Majority Banks, as appropriate, at one or more
times) of the following remedies:
(a) CIBC shall have the right to receive the Collateral, if
any, then held by the Custodian, the Remarketing Agent or any
other Person, endorse, assign or deliver in its own name or the
name of the Company any and all checks, drafts and other
instruments for the payment of money, securities or other
property relating to or constituting part of the Collateral, and
cause the Collateral to be registered in the name of CIBC or its
designee, and the Company hereby waives presentment, protest and
notice of nonpayment of any instrument so endorsed. In
furtherance of the foregoing, the Company hereby irrevocably
appoints CIBC, or any of its officers or designees, the Company's
lawful attorney-in-fact (without requiring CIBC so to act), with
power of substitution, in the name of the Company or in the name
of CIBC (i) to endorse the name of the Company upon any of the
Collateral, including proceeds, and to cause any of the
Collateral to be registered in the name of CIBC (on behalf of the
Banks as aforesaid) or its designee; (ii) to demand, collect,
receive payment of, receipt for and give discharges and releases
of any of the Collateral; (iii) to commence and prosecute any and
all actions or proceedings at law or in equity in any court to
collect or otherwise realize on any of the Collateral to enforce
any rights in respect thereof; (iv) to initiate, settle,
compromise, compound, adjust or defend any actions, suits or
proceedings relating or pertaining to any of the Collateral; and
(v) to sell, transfer, assign, discount, negotiate or otherwise
deal in all or any portion of the Collateral or the proceeds
thereof and generally to perform all other acts necessary or
desirable to realize on, and obtain the benefits of, the
Collateral and otherwise to carry out the intention of this
Agreement, as fully and effectively as though CIBC were the
absolute owner thereof, and the Company hereby ratifies and
confirms all that CIBC shall do by virtue of this appointment.
CIBC shall not, under any circumstances, have any liability for
any error or omission made in the settlement, collection or
payment or other disposition of any or all of the Collateral or
of any instrument received in payment there for.
(b) CIBC may sell or cause to be sold, in one or more
sales, at such price as CIBC may deem adequate, in its sole
discretion, and for cash or on credit or for future delivery,
with or without assumption of any credit risk, all or any portion
of the Collateral, at public or private sale, without demand of
performance or notice of intention to sell or of time or place of
sale (except such notice as may be required by applicable statute
and cannot be waived), and CIBC and the Banks may be the
purchaser of all or any portion of the Collateral so sold;
provided, however, that CIBC shall first give notice to the
Trustee that an Event of Default has occurred and is continuing.
If any Pledged Bonds are sold pursuant to this subsection (b)
(unless sold on a basis that would exclude such Pledged Bond from
the benefit of the Letter of Credit), CIBC shall reinstate the
Letter of Credit to the full amount of principal and 300 days'
interest on the principal amount at 12% per annum for any such
Pledged Bonds sold; provided, however, that such reinstatement
shall not be deemed to constitute a waiver by CIBC of any of its
rights under Section 6.02 of the Reimbursement Agreement. The
purchaser(s) at any such sale shall thereafter hold the
Collateral so sold absolutely, free from any claim or right
whatsoever, including any equity of redemption, of the Company.
Any such demand, notice, claim, right or equity is hereby
expressly waived and released by the Company. Without limiting
the foregoing, if any such notice of the time or place of sale is
so required, the Company agrees that CIBC need not give more than
ten days' notice of the time and place of any public sale or of
the time after which a private sale or other intended disposition
is to take place and that such notice is reasonable notification
of such matters. Neither CIBC nor any Bank shall, under any
circumstances, incur any liability as a result of the sale of the
Collateral or any part thereof at any sale conducted in
accordance with the provisions of this Agreement. The Company
hereby waives any claims against CIBC or the Banks arising by
reason of the fact that the price at which the Collateral may
have been sold at any private sale was less than the price which
might have been obtained at a public sale or was less than the
aggregate principal amount of the Pledged Bonds or the then total
unpaid Obligations.
(c) The Company recognizes that CIBC may not deem it
desirable to effect a public sale of any or all of the Pledged
Bonds or otherwise but may deem it desirable to resort to one or
more private sales thereof to a restricted group of purchasers
who will be obliged to agree, among other things, to acquire such
securities for their own account for investment and not with a
view to the distribution or resale thereof. CIBC shall be under
no obligation to delay a sale of any of the Pledged Bonds for the
period of time necessary to permit the Issuer to register them
for public sale under the Securities Act of 1933, as amended (the
"Act"), or under applicable state securities laws, even should
the Issuer agree to do so.
(d) The Company shall do or cause to be done all such other
acts and things as may be deemed necessary or desirable by CIBC
to make such sale or sales of any portion or all of the Pledged
Bonds valid and binding and in compliance with all applicable
laws, regulations, orders, writs, injunctions, decrees or awards
of any and all courts, arbitrators or governmental
instrumentalities, domestic or foreign, having jurisdiction over
any such sale or sales, including registering such Bonds under
the Act, or any state securities laws (to the extent necessary,
in CIBC's judgment), all at the Company's expense.
(e) The Company acknowledges that a breach of any of the
covenants contained in this Article will cause irreparable injury
to CIBC (and the Banks) and that CIBC (on behalf of the Banks as
aforesaid) has no adequate remedy at law in respect of any such
breach and, as a consequence, agrees that each and every covenant
contained in this Article shall be specifically enforceable
against the Company, and the Company hereby waives and agrees not
to assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of Default
has occurred.
V.2 Remedies Not Exclusive. (a) The remedies provided for
herein are cumulative and are not exclusive of any other rights,
powers, privileges or remedies provided by law or under the
Reimbursement Agreement, including, without limitation, all
rights and remedies of a secured party under Article 9 of the
Uniform Commercial Code as in effect in the State of New York on
the date of the exercise of any such remedy. The exercise by
CIBC of any one or more remedies under Section 5.1 shall not
constitute a waiver of, or otherwise prohibit, the exercise by
CIBC of other remedies provided herein or by law at the same or
other times.
(b) CIBC shall not be required to exercise any
particular rights, powers, remedies or benefits hereunder or
under the Reimbursement Agreement or any Related Document.
Without limiting the generality of the foregoing, CIBC (i) shall
be entitled to seek to realize upon or enforce the Collateral in
such order as it may from time to time determine and without
regard to whether or not any other collateral or security for any
of the Obligations shall have been resorted to, and (ii) shall
not be required to exhaust or enforce any particular portion of
the Collateral before seeking to realize or enforce upon any
other portion thereof.
VI
COLLECTIONS BY THE COMPANY AND APPLICATIONS
OF PROCEEDS IN RESPECT OF COLLATERAL
VI.1 Collections on Pledged Bonds by the Company. (a) If,
while any of the Obligations are outstanding, the Company becomes
entitled to receive or receives any payment in respect of any
Pledged Bond, the Company shall accept such payment as CIBC's
(and the Banks') agent, hold it in trust on behalf of CIBC (and
the Banks) and deliver it, with any necessary endorsements,
forthwith to CIBC for application to satisfaction of the
Obligations then due and payable. All sums of money so paid in
respect of any payment of interest on, or any portion of purchase
price equal to the amount of accrued interest on, any Pledged
Bond which are received by the Company and paid to CIBC shall be
credited against the obligation of the Company to pay interest as
set forth in Sections 2.5 and 2.6 of the Reimbursement Agreement.
All sums of money so paid in respect of any payment of principal
of, or any portion of purchase price equal to the principal
amount of, any Pledged Bond which are received by the Company and
paid to CIBC shall be credited against the obligation of the
Company to pay principal to CIBC as set forth in Sections 2.5 and
2.6 of the Reimbursement Agreement.
VI.2 Application of Proceeds. All proceeds received from the
sale or other disposition of, or realization on or with respect
to, all or any part of the Collateral shall be applied by CIBC,
in such order as CIBC in its sole discretion (but subject to the
direction of the Majority Banks) may determine, to the payment of
the costs and expenses of such sale, disposition or realization,
including, without limitation, reasonable fees and expenses of
counsel for CIBC and the Banks and all expenses, liabilities and
advances of CIBC in connection therewith, and to the payment of
the remaining Obligations (pro rata, among the Banks).
VII
RELEASE OF COLLATERAL; COMPANY'S LIABILITY
FOR DEFICIENCY
VII.1 Release of Collateral. If (a) the Company makes or
causes to be made to CIBC a prepayment under Section 2.8(b) of
the Reimbursement Agreement in respect of its principal repayment
obligation under Section 2.6(b) of the Reimbursement Agreement in
respect of any Advance, (b) the Remarketing Agent causes Pledged
Bonds at the time held hereunder to be sold or (c) the
Obligations are otherwise indefeasibly satisfied, upon receipt of
such prepayment or of the proceeds of such sale or other
satisfaction of the Obligations, Pledged Bonds in an aggregate
principal amount equal to the prepayment so made, or the
principal amount of Pledged Bonds so sold, or the Obligations so
satisfied, shall be released from the lien of this Agreement and
the Company or its designee shall be entitled to have the
released Bonds delivered to the Company or the Remarketing Agent
in accordance with Sections 13.06 and 13.07 of the Indenture;
provided, however, that before delivering the released Bonds to
the Company or the Remarketing Agent, the Custodian shall have
received notice from CIBC of the reinstatement of the amounts so
prepaid, sold or satisfied as available under the Letter of
Credit.
VII.2 Company's Liability for Deficiency. The Company
shall in any event remain liable for any deficiency remaining
unpaid after the application of the proceeds of the Collateral to
the satisfaction of the Obligations.
VIII
GENERAL
VIII.1 Expenses. The Company shall pay to CIBC all expenses
(including reasonable fees and expenses of counsel) of, or
incident to, any actual or attempted sale or other disposition
of, or any exchange, enforcement (whether through negotiations,
legal proceedings or otherwise), collection, compromise or
settlement of or with respect to, all or any of the Collateral,
by litigation or otherwise. The Company shall reimburse CIBC on
demand for all reasonable costs and expenses incurred in
connection with the negotiation, preparation, execution and
administration of this Agreement and any Amendment hereto,
including, without limitation, any fees or expenses (including
reasonable fees and expenses of counsel to the Custodian) paid by
CIBC to the Custodian for its services in connection with this
Agreement.
VIII.2 Notices. All notices and other communications
provided for hereunder shall be in writing (including telegraphic
communication) and mailed, telecopied, telexed, telegraphed or
delivered to the parties to the telex or telecopier number or
address (as the case may be) specified for the intended recipient
on the signature page hereof, or to such other number or address
as such recipient may have last specified by notice to the other
parties. All such notices and communications shall, when mailed,
telecopied, telexed or telegraphed, be effective when deposited
in the mails or sent by telecopy or telex or delivered to the
telegraph company, respectively, addressed as aforesaid.
VIII.3 Remedies and Waivers. No failure or delay on the
part of CIBC in exercising any right hereunder shall operate as a
waiver of, or impair, any such right. No single or partial
exercise of any such right shall preclude any other or further
exercise thereof or the exercise of any other right. No waiver
of any such right shall be effective unless given in writing. No
waiver of any such right shall be deemed a waiver of any other
right hereunder. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.
VIII.4 Amendment. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall
be in writing and signed by the Custodian and CIBC (with the
consent of the Majority Banks), and then any such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given.
VIII.5 Assignment. (a) This Agreement shall be binding upon
and inure to the benefit of CIBC, the Custodian and the Company
and their respective successors and assigns; provided, however,
that the Company and the Custodian may not assign any of their
respective rights or obligations under this Agreement without the
prior written consent of CIBC.
(b) If CIBC or the Custodian assigns or otherwise
transfers any of its rights and obligations hereunder, each
reference in this Agreement to CIBC or the Custodian, as the case
may be, shall be deemed to be a reference to CIBC or the
Custodian, as the case may be, and the Person or Persons to which
such rights and obligations were assigned and transferred to the
extent of their respective interests.
VIII.6 Governing Law. This Agreement shall be governed by,
and construed and interpreted in accordance with, the laws of the
State of New York.
VIII.7 Custodian Appointed Agent. CIBC hereby appoints the
Custodian as its agent to receive and hold Pledged Bonds
constituting Collateral granted hereunder for CIBC's account.
The Company acknowledges such appointment and agrees with CIBC
and the Custodian, which by its execution of this Agreement
accepts such appointment, that, for so long as this Agreement
shall remain in full force and effect, all certificates or
instruments representing or evidencing the Pledged Bonds (and all
other portions of the Collateral which may be delivered to the
Custodian) shall be delivered to and held by the Custodian, as
agent for CIBC, separate and apart from all of the other property
of the Custodian and subject to CIBC's exclusive direction and
control. Upon receipt of any Collateral, the Custodian shall
promptly give notice to CIBC specifying the Collateral received.
Upon request from time to time by CIBC, the Custodian shall
promptly deliver all or such portions of the Collateral as CIBC
shall specify and to such Persons as CIBC shall specify by notice
to the Custodian. The Custodian shall give prompt notice to CIBC
(i) at least 30 days prior to resigning as Tender Agent under the
Indenture and (ii) upon receipt of notice or otherwise learning
of (x) its removal as such Tender Agent or (y) any amendment,
supplement or other modification of the Indenture, or any
consent, waiver or release with respect thereto, affecting the
obligations or duties of the Tender Agent under the Indenture
with respect to the Collateral.
VIII.8 Reasonable Care. Subject to Section 8.7 hereof, the
Custodian shall be deemed to have exercised reasonable care in
the custody and preservation of the Collateral in its possession
if the Collateral is accorded treatment substantially equal to
that which the Custodian accords its own property. In executing,
delivering and performing under this Agreement the Custodian
shall be entitled to all rights, privileges and immunities
afforded the Trustee under the Indenture which are hereby
incorporated by reference.
VIII.9 Integration of Terms; References in Indenture. This
Agreement contains the entire agreement between the parties
relating to the subject matter hereof and supersedes all oral
statements and prior writings with respect thereto. This
Agreement shall be deemed to be the "Custodian Agreement"
referenced in the Indenture.
VIII.10 Counterparts. This Agreement may be executed in
counterparts, and such counterparts taken together shall be
deemed to constitute one and the same agreement.
VIII.11 Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.
VIII.12
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
TUCSON ELECTRIC POWER COMPANY
220 West Sixth Street
Tucson, Arizona 85702
Telecopy:
Attention:
By: ___________________________
Name: _________________________
Title: ________________________
CANADIAN IMPERIAL BANK OF
COMMERCE, NEW YORK AGENCY, as
Bank
425 Lexington Avenue
New York, New York 10017
Telex:
Telecopy:
Attention:
By:
_____________________________
Name:
___________________________
Title:
__________________________
FIRST TRUST OF NEW YORK,
NATIONAL ASSOCIATION, as
Custodian
100 Wall Street
Suite 1600
New York, New York 10005
Attention: Corporate Trust
Administration
Telex:
Telecopy:
Attention:
By:
_____________________________
Name:
___________________________
Title:
__________________________
TABLE OF CONTENTS
Page
PRELIMINARY STATEMENTS 1
ARTICLE I
DEFINITIONS 1
SECTION 1.1 Certain Defined Terms 1
SECTION 1.2 Computation of Time Periods 8
SECTION 1.3 Accounting Terms 8
SECTION 1.4 Internal References 9
ARTICLE II
AMOUNT AND TERMS OF THE LETTER OF CREDIT 9
SECTION 2.1 The Letter of Credit 9
SECTION 2.2 Issuing the Letter of Credit 9
SECTION 2.3 Participations in Letter of Credit 9
SECTION 2.4 Commissions and Fees 10
SECTION 2.5 Reimbursement On Demand 10
SECTION 2.6 Advances 11
SECTION 2.7 Reimbursement Obligations Deemed to be Loans;
Funding by Banks to CIBC 13
SECTION 2.8 Prepayments; Reinstatement of Letter of Credit
Amounts 15
SECTION 2.9 Increased Costs 15
SECTION 2.10 Increased Capital 16
SECTION 2.11 Payments and Computations 17
SECTION 2.12 Non-Business Days 17
SECTION 2.13 Extension of the Stated Termination Date 18
SECTION 2.14 Evidence of Debt 18
SECTION 2.15 Obligations Absolute 18
SECTION 2.16 First Mortgage Bond 19
ARTICLE III
CONDITIONS PRECEDENT 19
SECTION 3.1 Condition Precedent to Issuance of the
Letter of Credit 19
SECTION 3.2 Additional Conditions Precedent to Issuance
of the Letter of Credit 21
ARTICLE IV
REPRESENTATIONS AND WARRANTIES 22
SECTION 4.1 Representations and Warranties of the
Company 22
ARTICLE V
COVENANTS OF THE COMPANY 26
SECTION 5.1 Affirmative Covenants 26
(a)
Preservation of Corporate Existence, Etc 26
(b) Compliance
with Laws, Etc. 26
(c) Visitation
Rights 26
(d) Keeping of
Books 27
(e) Reporting
Requirements 27
(f) Redemption
or Defeasance of Bonds 31
(g)
Maintenance of Insurance 31
SECTION 5.2 Negative Covenants 31
(a) Amendment
of Any Related Document 31
(b) Compliance
with ERISA 31
ARTICLE VI
EVENTS OF DEFAULT 32
SECTION 6.1 Events of Default 32
SECTION 6.2 Upon an Event of Default 34
ARTICLE VII
MISCELLANEOUS 35
SECTION 7.1 Amendments, Etc 35
SECTION 7.2 Notices, Etc 35
SECTION 7.3 No Waiver; Remedies 35
SECTION 7.4 Right of Set-off; Sharing of Payments 36
SECTION 7.5 Indemnification 37
SECTION 7.6 Liability of the Banks 38
SECTION 7.7 Costs, Expenses and Taxes 38
SECTION 7.8 Binding Effect 39
SECTION 7.9 Severability 40
SECTION 7.10 Governing Law 40
SECTION 7.11 Headings 40
SECTION 7.12 Subparticipation 40
SECTION 7.13 Acknowledgements and Agreements by the
Banks 40
SECTION 7.14 Authorization 41
SECTION 7.15 Action by the Agent 41
SECTION 7.16 Indemnification by the Banks 42
SECTION 7.17 Exculpation of the Agent 42
SECTION 7.18 Knowledge 43
SECTION 7.19 Resignation 43
SECTION 7.20 Submission To Jurisdiction; Waivers 43
SECTION 7.21 WAIVERS OF JURY TRIAL 44
||
EXHIBIT A - Form of Irrevocable Letter of Credit with
Exhibits 1 through 6 thereto
EXHIBIT B - Form of Custodian and Pledge Agreement
EXHIBIT C - Form of Bond Delivery Agreement
EXHIBIT D-1 - Form of Opinion of Counsel to the Company
EXHIBIT D-2 - Form of Opinion of General Counsel of the Company
EXHIBIT D-3 - Form of Opinion of New Mexico Counsel to the Company
EXHIBIT D-4 - Form of Opinion of Arizona Counsel to the Company
_______________________________
1/ Insert appropriate bracketed language.
2/ To be used upon scheduled or accelerated maturity of the
Bonds.
3/ To be used for redemption of Bonds.
4/ To be used for a mandatory tender of the Bonds for purchase
pursuant to Section 2.02(h)(iv) of the Indenture.
5/ To be used upon optional or mandatory redemption of the
Bonds in full.
6/ Calculated by multiplying the amount of the principal amount
in the last line of paragraph (2) by twelve percent (12%)
and multiplying the product thereof by the quotient of 300
divided by 365.