05/09/96/DMG/06361/009/AGREE/35272.3
LOAN AGREEMENT
between
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
and
TUCSON ELECTRIC POWER COMPANY
Dated as of May 1, 1996
Relating To
Pollution Control Refunding Revenue Bonds,
1996 Series B
(Tucson Electric Power Company Project)
TABLE OF CONTENTS*
Page
LOAN AGREEMENT 1
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions 1
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01 Representations and Warranties of the Pollution Control
Corporation 6
SECTION 2.02 Representations and Warranties of the Company 7
ARTICLE III
THE FACILITIES
SECTION 3.01 Facilities; Property of the Company 8
SECTION 3.02 Revision of Plans and Specifications 8
SECTION 3.03 Maintenance of Facilities; Remodeling 8
SECTION 3.04 Insurance 8
SECTION 3.05 Condemnation 8
SECTION 3.06 Termination of Construction 8
ARTICLE IV
ISSUANCE OF THE BONDS; THE LOANS; DISPOSITION OF PROCEEDS
OF THE BONDS
SECTION 4.01 Issuance of the Bonds 9
SECTION 4.02 Issuance of Other Obligations. 9
SECTION 4.03 The Loan; Disposition of Bond Proceeds. 9
ARTICLE V
LOAN PAYMENTS; OTHER OBLIGATIONS
SECTION 5.01 Loan Payments. 9
SECTION 5.02 Payments Assigned; Obligation Absolute 9
SECTION 5.03 Payment of Expenses 10
SECTION 5.04 Indemnification 10
SECTION 5.05 Payment of Taxes; Discharge of Liens 10
ARTICLE VI
SPECIAL COVENANTS
SECTION 6.01 Maintenance of Corporate Existence 11
SECTION 6.02 Permits or Licenses 11
SECTION 6.03 Pollution Control Corporation's Access to
Facilities 11
SECTION 6.04 Tax-Exempt Status of Interest on Bonds. 12
SECTION 6.05 Use of Facilities 13
SECTION 6.06 Financing Statements 13
SECTION 6.07 Security Arrangements 13
SECTION 6.08 Neither the Company nor the Pollution
Control Corporation to be Initial
Purchasers of the Bonds. 14
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
SECTION 7.01 Conditions 14
SECTION 7.02 Instrument Furnished to Trustee 15
SECTION 7.03 Limitation 15
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01 Events of Default 16
SECTION 8.02 Force Majeure 16
SECTION 8.03 Remedies 16
SECTION 8.04 No Remedy Exclusive 17
SECTION 8.05 Reimbursement of Attorneys' and Agents'
Fees 17
SECTION 8.06 Waiver of Breach 17
ARTICLE IX
REDEMPTION OF BONDS
SECTION 9.01 Redemption of Bonds 17
SECTION 9.02 Compliance with the Indenture 18
ARTICLE X
PURCHASE AND REMARKETING OF BONDS
SECTION 10.01 Purchase of Bonds 18
SECTION 10.02 Optional Purchase of Bonds 18
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 Term of Agreement 19
SECTION 11.02 Notices 19
SECTION 11.03 Parties in Interest 19
SECTION 11.04 Amendments 19
SECTION 11.05 Counterparts 19
SECTION 11.06 Severability 19
SECTION 11.07 Governing Law 20
Signatures 21
Exhibit A A-1
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of May 1, 1996 (this
"Agreement"), between COCONINO COUNTY, ARIZONA POLLUTION CONTROL
CORPORATION, an Arizona nonprofit corporation and a political
subdivision of the State of Arizona (hereinafter called the
"Pollution Control Corporation"), and TUCSON ELECTRIC POWER
COMPANY, a corporation organized and existing under the laws of
the State of Arizona (hereinafter called the "Company"),
W I T N E S S E T H :
WHEREAS, the Pollution Control Corporation is authorized and
empowered under Title 35, Chapter 6, Arizona Revised Statutes, as
amended (the "Act"), to issue its bonds in accordance with the
Act and to make secured or unsecured loans for the purpose of
financing or refinancing the acquisition, construction,
improvement or equipping of pollution control facilities
consisting of real and personal properties, including but not
limited to machinery and equipment whether or not now in
existence or under construction, which are used in whole or in
part to control, prevent, abate, alter, dispose or store, solid
waste, thermal, noise, atmospheric or water pollutants,
contaminants or products therefrom, whether such facilities serve
one or more purposes or functions in addition to controlling,
preventing, abating, altering, disposing or storing such
pollutants, contaminants or the products therefrom, and to charge
and collect interest on such loans and pledge the proceeds of
loan agreements as security for the payment of the principal of
and interest on bonds, or designated issues of bonds, issued by
the Pollution Control Corporation and any agreements made in
connection therewith, whenever the Board of Directors of the
Pollution Control Corporation finds such loans to be in
furtherance of the purposes of the Pollution Control Corporation;
WHEREAS, the Pollution Control Corporation has heretofore
issued and sold $25,000,000 aggregate principal amount of its
Pollution Control Revenue Bonds, 1974 Series A (Tucson Gas &
Electric Company Project) (the "1974 Bonds") due December 17,
1975;
WHEREAS, the Pollution Control Corporation has also heretofore
issued and sold $15,700,000 aggregate principal amount of its
Pollution Control Revenue Bonds, 1975 Series A (Tucson Gas and
Electric Company Project), of which $14,700,000 remain
outstanding (the "1975 Bonds"), the proceeds of which were loaned
to the Company (formerly known as Tucson Gas & Electric Company)
to pay a portion of the principal amount of the 1974 Bonds; and
WHEREAS, the Pollution Control Corporation proposes to issue
and sell its revenue bonds to refinance, by the payment or
redemption of the 1975 Bonds, or provisions therefor, a portion
of the cost of the pollution control facilities described in
Exhibit A hereto paid from the proceeds of the 1975 Bonds;
NOW, THEREFORE, the parties hereto, intending to be legally
bound hereby and in consideration of the premises, DO HEREBY
AGREE as follows:
ARTICLE I
DEFINITIONS
2.01 Definitions. The terms defined in this Article I shall
for all purposes of this Agreement have the meanings herein
specified, unless the context clearly requires otherwise:
Act:
"Act" shall mean Title 35, Chapter 6, Arizona Revised Statutes,
and all acts supplemental thereto or amendatory thereof.
Administration Expenses:
"Administration Expenses" shall mean the reasonable expenses
incurred by the Pollution Control Corporation with respect to
this Agreement, the Indenture and any transaction or event
contemplated by this Agreement or the Indenture, including the
compensation and reimbursement of expenses and advances payable
to the Trustee, to the paying agent, any co-paying agent and the
registrar under the Indenture, and to the Tender Agent and the
Remarketing Agent.
Agreement:
"Agreement" shall mean this Loan Agreement, dated as of May 1,
1996, between the Pollution Control Corporation and the Company,
and any and all modifications, alterations, amendments and
supplements hereto.
Authorized Company Representative:
"Authorized Company Representative" shall mean each person at
the time designated to act on behalf of the Company by written
certificate furnished to the Pollution Control Corporation and
the Trustee containing the specimen signature of such person and
signed on behalf of the Company by its President, any Vice
President or its Treasurer, together with its Secretary or any
Assistant Secretary.
Bank:
"Bank" shall mean Societe Generale, Los Angeles Branch, a
banking corporation organized and existing under the laws of
France, so long as the Letter of Credit shall be in effect, in
its capacity as issuer of the Letter of Credit, its successors in
such capacity and their assigns and, if any other Security
Arrangement on which the Company shall not be the obligor shall
have been issued and delivered as a Security Arrangement in
accordance with Section 6.07(a) hereof, "Bank" shall mean the
obligor on such other Security Arrangement so long as such other
Security Arrangement shall be in effect, in its capacity as
issuer of such other Security Arrangement, its successors and
their assigns.
Bond Counsel:
"Bond Counsel" shall mean any firm or firms of nationally
recognized bond counsel experienced in matters pertaining to the
validity of, and exclusion from gross income for federal tax
purposes of interest on bonds issued by states and political
subdivisions, selected by the Company and acceptable to the
Pollution Control Corporation.
Bond Fund:
"Bond Fund" shall mean the fund created by Section 4.01 of the
Indenture.
Bonds:
"Bond" or "Bonds" shall mean the Pollution Control Refunding
Revenue Bonds, 1996 Series B (Tucson Electric Power Company
Project) of the Pollution Control Corporation.
Business Day:
"Business Day" shall mean a day of the year on which banks
located in The City of New York, New York, and in the city in
which the Principal Office of the Trustee is located, and in the
city in which the office of the Bank at which drawings or other
demands for payment on a Security Arrangement on which the
Company shall not be the obligor, if any, are made, are not
required or authorized to remain closed and on which The New York
Stock Exchange is not closed.
Capital Account:
"Capital Account" shall the account so named established under
Section 4.01 of the Indenture.
Code:
"Code" shall mean the Internal Revenue Code of 1986 or any
successor statute thereto. Each reference to a section of the
Code herein shall be deemed to include the United States Treasury
Regulations proposed or in effect thereunder and applicable to
the Bonds or the use of the proceeds thereof, unless the context
clearly requires otherwise. Reference to any particular Code
section shall, in the event of a successor Code, be deemed to be
a reference to the successor to such Code section.
Company:
"Company" shall mean Tucson Electric Power Company, a
corporation organized and existing under the laws of the State of
Arizona, its successors and their assigns.
Completion Date:
"Completion Date" shall be the date on which the Facilities are
completed in their entirety and ready to be placed in service and
operated, all as determined by the Company.
Facilities:
"Facilities" shall mean the real and personal properties,
machinery and equipment currently existing, under construction
and to be constructed which are described in Exhibit A hereto, as
revised from time to time to reflect any changes therein,
additions thereto, substitutions therefor and deletions therefrom
permitted by the terms hereof, subject, however, to the
provisions of Section 7.01 hereof.
Fixed Rate Period:
"Fixed Rate Period" shall have the meaning set forth in the
Indenture.
Flexible Rate:
"Flexible Rate" shall have the meaning set forth in the
Indenture.
Indenture:
"Indenture" shall mean the Indenture of Trust, dated as of May
1, 1996, between the Pollution Control Corporation and the
Trustee relating to the Bonds, and any and all modifications,
alterations, amendments and supplements thereto.
Interest Payment Date:
"Interest Payment Date" shall have the meaning set forth in the
Indenture.
Investment Account:
"Investment Account" shall mean any account so named
established under Section 4.01 of the Indenture.
Letter of Credit:
"Letter of Credit" shall mean an irrevocable letter of credit
issued by the Bank to the Trustee in accordance with Section
6.07(b) hereof, and, upon the issuance and delivery of any other
letter of credit as a Security Arrangement in accordance with
Section 6.07(a) hereof, "Letter of Credit" shall mean such other
letter of credit, and, upon the Termination or Expiration of the
Letter of Credit, "Letter of Credit" shall mean any credit
facility having terms substantially the same as those of the
Letter of Credit delivered as a Security Arrangement in
accordance with Section 6.07(a) hereof.
Loan Payments:
"Loan Payments" shall mean the payments required to be made by
the Company pursuant to Section 5.01 hereof.
Moody's:
"Moody's" shall mean Moody's Investors Service, Inc., a
corporation organized and existing under the laws of the State of
Delaware, its successors and their assigns, and, if such
corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Pollution Control
Corporation, with the approval of the Company, by notice to the
Trustee and the Remarketing Agent.
1954 Code:
"1954 Code" shall mean the Internal Revenue Code of 1954, as
amended.
1975 Bonds:
"1975 Bonds" shall mean the $15,700,000 aggregate principal
amount of the Pollution Control Corporation's Pollution Control
Revenue Bonds, 1975 Series A (Tucson Gas and Electric Company
Project), of which $14,700,000 remain outstanding.
1974 Bonds:
"1974 Bonds" shall mean the $25,000,000 aggregate principal
amount of the Pollution Control Corporation's Pollution Control
Revenue Bonds, 1974 Series A (Tucson Gas and Electric Company
Project).
Outstanding:
"Outstanding", when used in reference to the Bonds, shall mean,
as at any particular date, the aggregate of all Bonds
authenticated and delivered under the Indenture except:
(a) those canceled by the Trustee at or prior to such date
or delivered to or acquired by the Trustee at or prior to such
date for cancellation;
(b) those deemed to be paid in accordance with Article VIII
of the Indenture;
(c) those deemed to be purchased in accordance with Section
13.03(b) of the Indenture; and
(d) those in lieu of or in exchange or substitution for
which other Bonds shall have been authenticated and delivered
pursuant to the Indenture, unless proof satisfactory to the
Trustee and the Company is presented that such Bonds are held
by a bona fide holder in due course.
Person:
"Person" means (i) any corporation, limited liability company,
partnership, joint venture, association, joint-stock company,
business trust, unincorporated organization, in each case formed
or organized under the laws of the United States of America, any
state thereof or the District of Columbia, or (ii) the United
States of America or any state thereof, or any political
subdivision of either thereof, or any agency, authority or other
instrumentality of any of the foregoing.
Plant:
"Plant" shall mean the Navajo Generating Station, an electric
power generating plant near Page, Arizona, in Coconino County,
Arizona, and any additions or improvements thereto or
replacements thereof.
Plant Agreements:
"Plant Agreements" shall mean all contracts relating to the
ownership, construction and operation of the Plant, including the
Facilities, as from time to time amended or supplemented.
Pollution Control Corporation:
"Pollution Control Corporation" shall mean Coconino County,
Arizona Pollution Control Corporation, an Arizona nonprofit
corporation and a political subdivision of the State of Arizona
incorporated for and with the approval of the County of Coconino,
Arizona, pursuant to the provisions of the Constitution of the
State of Arizona and the Act, its successors and their assigns.
Reimbursement Agreement:
"Reimbursement Agreement" shall mean the agreement between the
Company and the Bank pursuant to which the Letter of Credit or
other Security Arrangement is issued by the Bank and delivered to
the Trustee, and any and all modifications, alterations,
amendments and supplements thereto.
Remarketing Agent:
"Remarketing Agent" shall mean the remarketing agent engaged in
accordance with Section 13.04 of the Indenture.
Security Arrangement; Termination thereof; Expiration thereof:
"Security Arrangement" shall mean any of the following: (i) the
Letter of Credit; (ii) the bonds of one or more series issued
under the Indenture, dated as of April 1, 1941, between the
Company and The Chase Manhattan Bank (National Association), as
trustee, as heretofore and hereafter amended and supplemented,
and delivered to the Trustee as contemplated by Section 12.06 of
the Indenture; and (iii) any credit facility, insurance policy or
other credit support agreement or mechanism obtained, delivered,
made, entered into or otherwise arranged by the Company for the
purpose of securing, evidencing or being otherwise in furtherance
of the obligations of the Company under Section 5.01 or 10.01
hereof, or both, or for the purpose of securing the Bonds but
shall not include any facility, arrangement or mechanism, such as
a liquidity facility or line of credit, that is not an
irrevocable obligation to pay amounts in respect of the
obligations of the Company under Section 5.01 hereof.
"Termination" (and other forms of the word "terminate") shall
mean, when used with respect to any Security Arrangement, the
replacement, removal, surrender or other termination of such
Security Arrangement by the Trustee or the Company other than the
Expiration of such Security Arrangement. "Expiration" (and other
forms of the word "expire") shall mean when used with respect to
any Security Arrangement, the expiration or termination of such
Security Arrangement in accordance with its terms.
S&P:
"S&P" shall mean Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc., a corporation organized and
existing under the laws of the State of New York, its successors
and their assigns, and if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any
other nationally recognized securities rating agency designated
by the Pollution Control Corporation, with the approval of the
Company, by notice to the Trustee, Remarketing Agent and the
Company.
Tax Agreement:
"Tax Agreement" shall mean that tax certificate and agreement,
dated May 1, 1996, between the Pollution Control Corporation and
the Company, relating to the requirements of the Code, and any
and all modifications, alterations, amendments and supplements
thereto.
Tender Agent:
"Tender Agent" shall mean the tender agent appointed in
accordance with Section 13.01 of the Indenture.
Term Rate Period:
"Term Rate Period" shall have the meaning set forth in the
Indenture.
Trustee:
"Trustee" shall mean First Trust of New York, National
Association, as trustee under the Indenture, its successors in
trust and their assigns.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.02 Representations and Warranties of the Pollution Control
Corporation. The Pollution Control Corporation makes the
following representations and warranties as the basis for the
undertakings on the part of the Company contained herein:
(a) The Pollution Control Corporation is an Arizona nonprofit
corporation and a political subdivision of the State of Arizona
created and existing under the Constitution and laws of the State
of Arizona;
(b) The Pollution Control Corporation has the power to enter
into this Agreement and the Indenture and to perform and observe
the agreements and covenants on its part contained herein and
therein, including without limitation the power to issue and sell
the Bonds as contemplated herein and in the Indenture, and by
proper action has duly authorized the execution and delivery
hereof and thereof;
(c) The execution and delivery of this Agreement and the
Indenture by the Pollution Control Corporation do not, and
consummation of the transactions contemplated hereby and
fulfillment of the terms hereof and thereof by the Pollution
Control Corporation will not, result in a breach of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust or other agreement or
instrument to which the Pollution Control Corporation is now a
party or by which it is now bound, or any order, rule or
regulation applicable to the Pollution Control Corporation of any
court or of any regulatory body or administrative agency or other
governmental body having jurisdiction over the Pollution Control
Corporation or over and of its properties, or the Constitution or
laws of the State of Arizona;
(d) No consent, approval, authorization or other order of any
regulatory body or administrative agency or other governmental
body is legally required for the Pollution Control Corporation's
participation in the transactions contemplated by this Agreement,
except such as may have been obtained or may be required under
the securities laws of any jurisdiction; and
(e) The Pollution Control Corporation has found and determined
that all requirements of the Act with respect to the issuance of
the Bonds and the execution and delivery of the Indenture and
this Agreement have been complied with and that the refinancing
of the Company's share of the cost of construction of the
Facilities by issuing the Bonds and entering into the Indenture
and this Agreement will be in furtherance of the purposes of the
Act.
2.03 Representations and Warranties of the Company. The
Company makes the following representations and warranties as the
basis for the undertakings on the part of the Pollution Control
Corporation contained herein:
(a) The Company is a corporation duly organized and existing
in good standing under the laws of the State of Arizona and duly
qualified as a foreign corporation in the State of New Mexico;
(b) The Company has power to enter into this Agreement and to
perform and observe the agreements and covenants on its part
contained herein and by proper corporate action has duly
authorized the execution and delivery hereof;
(c) The execution and delivery of this Agreement by the
Company do not, and consummation of transactions contemplated
hereby and fulfillment of the terms hereof by the Company will
not, result in a breach of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust or other agreement or instrument to which the Company is a
party or by which it is now bound, or the Restated Articles of
Incorporation or by-laws of the Company, or any order, rule or
regulation applicable to the Company of any court or of any
regulatory body or administrative agency or other governmental
body having jurisdiction over the Company or over any of its
properties, or any statute of any jurisdiction applicable to the
Company;
(d) The Arizona Corporation Commission has approved all
matters relating to the Company's participation in the
transactions contemplated by this Agreement which require said
approval, and no other consent, approval, authorization or other
order of any regulatory body or administrative agency or other
governmental body is legally required for the Company's
participation therein, except such as may have been obtained or
may be required under the securities laws of any jurisdiction;
(e) The Facilities to be refinanced constitute "pollution
control facilities" as such term is defined in the Act.
ARTICLE III
THE FACILITIES
2.04 Facilities; Property of the Company. An undivided
interest in the Facilities shall be the property of the Company
and the Pollution Control Corporation shall have no right, title
or interest in the Facilities.
2.05 Revision of Plans and Specifications. The Company may
consent to one or more revisions to the plans and specifications
for the Facilities (including without limitation any changes
therein, additions thereto, substitutions therefor and deletions
therefrom), at any time and from time to time prior to the
Completion Date in any respect; provided, however, that, if any
such revision shall render inaccurate the description of the
Facilities contained in Exhibit A hereto, the Company shall
deliver to the Pollution Control Corporation and the Trustee (a)
a revised Exhibit A containing a description of the Facilities as
revised, the accuracy of which shall have been certified by an
Authorized Company Representative, and (b) an opinion of Bond
Counsel to the effect that the Facilities as described in the
revised Exhibit A are such that the expenditure of the proceeds
of the Bonds pursuant to this Agreement will not, in and of
itself, impair the validity of the Bonds under the Act or the
exclusion from gross income for federal tax purposes of interest
on the Bonds. A revision of Exhibit A hereto pursuant to this
Section 3.02 shall not constitute an amendment, change or
modification of this Agreement within the meaning of Article XII
of the Indenture.
2.06 Maintenance of Facilities; Remodeling. The Company shall
at all times exercise all of its rights, powers, elections and
options under the Plant Agreements to cause the Facilities, and
every element and unit thereof, to be maintained, preserved and
kept in thorough repair, working order and condition and to cause
all needful and proper repairs and renewals thereto to be made;
provided, however, that the Company may exercise all of its
rights, powers, elections and options under the Plant Agreements
to cause the operation of the Facilities, or any element or unit
thereof, to be discontinued if, in the judgment of the Company,
it is no longer advisable to operate the same, or if the Company
intends to sell or dispose of the same and within a reasonable
time shall endeavor to effectuate such sale or disposition.
After the Completion Date, the Company may, subject to the
provisions of Section 6.05 hereof, at its own expense consent to
the remodeling of the Facilities or to the making of such
substitutions, modifications and improvements to the Facilities
from time to time as it, in its discretion, may deem to be
desirable for its uses and purposes, which remodeling,
substitutions, modifications and improvements shall be included
under the terms of this Agreement as part of the Facilities.
2.07 Insurance. The Company shall exercise all of its rights,
powers, elections and options under the Plant Agreements to keep
the Facilities insured against fire and other risks to the extent
usually insured against by companies owning and operating similar
property, by reputable insurance companies or, at the Company's
election, with respect to all or any element or unit of the
Facilities, by means of an adequate insurance fund set aside and
maintained by it out of its own earnings or in conjunction with
other companies through an insurance fund, trust or other
agreement or, by means of unfunded self-insurance as may be
reasonable and customary by companies owning and operating
similar property. All proceeds of such insurance shall be for
the account of the Company.
2.08 Condemnation. The Company shall be entitled to the entire
proceeds of any condemnation award or portion thereof made for
damages to or takings of the Facilities or other property of the
Company.
2.09 Termination of Construction. Anything in this Agreement
to the contrary notwithstanding, the Company shall have the right
at any time to exercise all of its rights, powers, elections and
options under the Plant Agreements to terminate the construction
of the Facilities, in whole, if the Company shall have determined
that the continued construction or operation of the Facilities,
in whole, is impracticable, uneconomical or undesirable for any
reason.
ARTICLE IV
ISSUANCE OF THE BONDS; THE LOANS; DISPOSITION OF PROCEEDS
OF THE BONDS
2.010 Issuance of the Bonds. The Pollution Control
Corporation shall issue the Bonds under and in accordance with
the Indenture, subject to the provisions of the bond purchase
agreement among the Pollution Control Corporation, the initial
purchaser or purchasers of the Bonds and the Company. The
Company hereby approves the issuance of the Bonds and all terms
and conditions thereof.
2.011 Issuance of Other Obligations. The Pollution Control
Corporation and the Company expressly reserve the right to enter
into, to the extent permitted by law, but shall not be obligated
to enter into, an agreement or agreements other than this
Agreement with respect to the issuance by the Pollution Control
Corporation, under an indenture or indentures other than the
Indenture, of obligations to provide additional funds to pay the
cost of construction of the Facilities or obligations to refund
all or any principal amount of the Bonds, or any combination
thereof.
2.012 The Loan; Disposition of Bond Proceeds. The
Pollution Control Corporation and the Company shall enter into
escrow arrangements with the trustee for the 1975 Bonds and shall
cause the proceeds of the Bonds, other than accrued interest, if
any, paid by the initial purchaser or purchasers thereof, to be
deposited in escrow with such trustee to be applied to the
payment of the 1975 Bonds upon the redemption thereof.
The Pollution Control Corporation shall establish the Bond Fund
with the Trustee in accordance with Section 4.01 of the
Indenture.
ARTICLE V
LOAN PAYMENTS; OTHER OBLIGATIONS
2.013 Loan Payments. In consideration of the issuance of
the Bonds and the disposition of the proceeds thereof as
contemplated in Section 4.03 hereof, the Company shall pay, or
cause to be paid, to the Trustee for the account of the Pollution
Control Corporation an amount equal to the aggregate principal
amount of the Bonds from time to time Outstanding and, as
interest on its obligation to pay such amount, an amount equal to
premium, if any, and interest on such Bonds, such amounts to be
paid in installments due on the dates, in the amounts and in the
manner provided in the Indenture for the Pollution Control
Corporation to cause amounts to be deposited in the Bond Fund for
the payment of the principal of and premium, if any, and interest
on the Bonds whether at stated maturity, upon redemption or
acceleration or otherwise; provided, however, that the obligation
of the Company to make any such payment hereunder shall be
reduced by the amount of any reduction under the Indenture of the
amount of the corresponding payment required to be made by the
Pollution Control Corporation thereunder; and provided, further,
that the obligation of the Company to make any payment hereunder
shall be deemed to be satisfied and discharged to the extent of
the corresponding payment made to the Trustee under any Security
Arrangement.
2.014 Payments Assigned; Obligation Absolute. It is
understood and agreed that all Loan Payments are, by the
Indenture, to be pledged by the Pollution Control Corporation to
the Trustee, and that all rights and interest of the Pollution
Control Corporation hereunder (except for the Pollution Control
Corporation's rights under Sections 5.03, 5.04, 6.03 and 8.05
hereof and any rights of the Pollution Control Corporation to
receive notices, certificates, requests, requisitions and other
communications hereunder), including any right to delivery of any
Security Arrangement, are to be pledged and assigned to the
Trustee. The Company assents to such pledge and assignment and
agrees that the obligation of the Company to make the Loan
Payments and to make, or cause to be made, payments under Section
10.01(a) hereof shall be absolute, irrevocable and unconditional
and shall not be subject to cancellation, termination or
abatement, or to any defense other than payment or to any right
of set-off, counterclaim or recoupment arising out of any breach
by the Pollution Control Corporation or the Trustee or any other
party under this Agreement, the Indenture or otherwise, or out of
any obligation or liability at any time owing to the Company by
the Pollution Control Corporation, the Trustee or any other
party, and, further, that the Loan Payments and the other
payments due hereunder shall continue to be payable at the times
and in the amounts herein and therein specified, whether or not
the Facilities, or any portion thereof, shall have been completed
or shall have been destroyed by fire or other casualty, or title
thereto, or the use thereof, shall have been taken by the
exercise of the power of eminent domain, and that there shall be
no abatement of or diminution in any such payments by reason
thereof, whether or not the Facilities shall be used or useful,
whether or not any applicable laws, regulations or standards
shall prevent or prohibit the use of the Facilities, or for any
other reason, all of the foregoing being subject, however, to the
provisions of Sections 6.01 and 7.01 hereof.
2.015 Payment of Expenses. The Company shall pay all
Administration Expenses of the Pollution Control Corporation,
including, without limitation, Administration Expenses incurred
at and subsequent to the time the Bonds are deemed to have been
paid in accordance with Article VIII of the Indenture. The
payment of the compensation and the reimbursement of expenses and
advances of the Trustee, of the paying agent, any co-paying agent
and the registrar under the Indenture and of the Tender Agent and
the Remarketing Agent shall be made directly to such entities.
2.016 Indemnification. The Company releases the Pollution
Control Corporation, the Trustee, the Tender Agent and the
Remarketing Agent and their directors, officers, employees and
agents from, agrees that the Pollution Control Corporation, the
Trustee, the Tender Agent and the Remarketing Agent shall not be
liable for, and agrees to indemnify and hold the Pollution
Control Corporation, the Trustee, any predecessor Trustee, the
Tender Agent and the Remarketing Agent and their directors,
officers, employees and agents free and harmless from, any
liability for any loss or damage to property or any injury to or
death of any person (including, without limitation, attorneys'
and other agents' fees and expenses) that may be occasioned by
any cause whatsoever pertaining to the Facilities, except in any
case as a result of the negligence or bad faith or willful
misconduct of the party otherwise to be indemnified.
The Company will indemnify and hold the Pollution Control
Corporation, the Trustee, any predecessor Trustee, the Tender
Agent and the Remarketing Agent free and harmless from any loss,
claim, damage, tax, penalty, liability, disbursement, litigation
expenses, attorneys' and other agents' fees and expenses or court
costs arising out of, or in any way relating to, the execution or
performance of this Agreement, the issuance or sale of the Bonds,
actions taken under the Indenture or any other cause whatsoever
pertaining to the Facilities, except in any case as a result of
the negligence or bad faith or willful misconduct of the party
otherwise to be indemnified.
The Company will indemnify and hold the Pollution Control
Corporation and its directors, officers, employees and agents
free and harmless from any loss, claim, damage, tax, penalty,
liability, disbursement, litigation expenses, attorney's fees and
expenses or court costs arising out of or in any way relating to
any untrue statement or alleged untrue statement of any material
fact or omission or alleged omission to state a material fact
necessary to make the statements made, in light of the
circumstances under which they were made, not misleading in any
official statement or other offering material utilized in
connection with the sale of any bonds.
2.017 Payment of Taxes; Discharge of Liens. The Company
shall: (a) pay, or make provision for payment of, all lawful
taxes and assessments, including income, profits, property or
excise taxes, if any, or other municipal or governmental charges,
levied or assessed by any federal, state or municipal government
or political body upon the Facilities or any part thereof or upon
the Pollution Control Corporation with respect to the Loan
Payments or payments pursuant to Section 10.01(a) hereof, when
the same shall become due; and (b) pay or cause to be satisfied
and discharged or make adequate provision to satisfy and
discharge, within sixty (60) days after the same shall accrue,
any lien or charge upon the Loan Payments or payments pursuant to
Section 10.01(a) hereof, and all lawful claims or demands for
labor, materials, supplies or other charges which, if unpaid,
might be or become a lien upon such amounts; provided, that, if
the Company shall first notify the Pollution Control Corporation
and the Trustee of its intention so to do, the Company may in
good faith contest any such lien or charge or claims or demands
in appropriate legal proceedings, and in such event may permit
the items so contested and identified as such by the Company to
remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom, unless the Trustee shall notify
the Company in writing that, in the opinion of counsel to the
Trustee based upon material facts disclosed to the Trustee
without any duty of investigation, by nonpayment of any such
items the lien of the Indenture as to the Loan Payments will be
materially endangered, in which event the Company shall promptly
pay and cause to be satisfied and discharged all such unpaid
items. The Pollution Control Corporation shall cooperate fully
with the Company in any such contest.
ARTICLE VI
SPECIAL COVENANTS
2.018 Maintenance of Corporate Existence. Except as
permitted in this Section 6.01, the Company shall maintain its
corporate existence, will not dissolve or otherwise dispose of
all or substantially all of its assets and will not consolidate
with or merge with or into another corporation. The Company may
consolidate with or merge into another corporation incorporated
under the laws of the United States of America, any state thereof
or the District of Columbia, or sell, transfer or otherwise
dispose of all or substantially all of its assets (and may
thereafter dissolve) to any Person if the surviving or resulting
corporation (if other than the Company) or the transferee Person,
as the case may be, prior to or simultaneously with such merger,
consolidation, sale, transfer or disposition, assumes, by
delivery to the Trustee and the Pollution Control Corporation of
an instrument in writing satisfactory in form to the Trustee, all
the obligations of the Company hereunder including without
limitation the obligations of the Company under Sections 5.01 and
10.01(a) hereof. Notwithstanding the foregoing, in the case of
any such sale, transfer or other disposition by the Company of
all or substantially all of its assets, (x) any such sale,
transfer or other disposition of assets which includes the
Facilities shall be subject to the provisions of Section 7.01
hereof and shall not be subject to the provisions of this Section
6.01 and (y) in the case of any such sale, transfer or other
disposition of substantially all of the Company's assets but not
including the Facilities, the transferee shall not be required to
assume any obligations hereunder and the Company shall remain
liable in respect of its obligations hereunder.
If consolidation, merger or sale or other transfer is made as
permitted by this Section 6.01, the provisions of this Section
6.01 shall continue in full force and effect and no further
consolidation, merger or sale or other transfer shall be made
except in compliance with the provisions of this Section 6.01.
2.019 Permits or Licenses. In the event that it may be
necessary for the proper performance of this Agreement on the
part of the Company or the Pollution Control Corporation that any
application or applications for any permit or license to do or to
perform certain things be made to any governmental or other
agency by the Company or the Pollution Control Corporation, the
Company and the Pollution Control Corporation each shall, upon
the request of either, execute such application or applications.
2.020 Pollution Control Corporation's Access to Facilities.
The Pollution Control Corporation shall have the right, upon
appropriate prior notice to the Company, to have reasonable
access to the Facilities during normal business hours for the
purpose of making examinations and inspections of the same.
2.021 Tax-Exempt Status of Interest on Bonds. (a) It is
the intention of the parties hereto that interest on the Bonds
shall be and remain tax-exempt, and to that end the covenants and
agreements of the Pollution Control Corporation and the Company
in this Section 6.04 and the Tax Agreement are for the benefit of
the Owners from time to time of the Bonds.
(b) Each of the Company and the Pollution Control
Corporation covenants and agrees for the benefit of the Owners
from time to time of the Bonds that it will not directly or
indirectly use or permit the use of (to the extent within its
control) the proceeds of any of the Bonds or any other funds, or
take or omit to take any action, if and to the extent such use,
or the taking or omission to take such action, would cause any of
the Bonds to be "arbitrage bonds" within the meaning of Section
148 of the Code or otherwise subject to federal income taxation
by reason of Section 103 and 141 through 150 of the Code or
Section 103 of the 1954 Code and Title XIII of the Tax Reform Act
of 1986, as applicable, and any applicable regulations
promulgated thereunder. To such ends, the Pollution Control
Corporation and the Company will comply with all requirements of
such Section 148 to the extent applicable to the Bonds. In the
event that at any time the Pollution Control Corporation or the
Company is of the opinion that for purposes of this Section
6.04(b) it is necessary to restrict or limit the yield on the
investment of any moneys held by the Trustee under the Indenture,
the Pollution Control Corporation or the Company shall so notify
the Trustee in writing.
Without limiting the generality of the foregoing, the
Company and the Pollution Control Corporation agree that there
shall be paid from time to time all amounts required to be
rebated to the United States of America pursuant to Section
148(f) of the Code and any applicable Treasury Regulations. This
covenant shall survive payment in full or defeasance of the Bonds
and the satisfaction and discharge of the Indenture. The Company
specifically covenants to pay or cause to be paid for and on
behalf of the Pollution Control Corporation to the United States
of America at the times and in the amounts determined under
Section 7.08 of the Indenture the Rebate Requirement as described
in the Tax Agreement.
(c) The Pollution Control Corporation certifies and
represents that it has not taken, and the Pollution Control
Corporation covenants and agrees that it will not take, any
action which results in interest paid on the Bonds being included
in gross income of the Owners of the Bonds for federal tax
purposes pursuant to Sections 103 and 141 of the Code or to
Section 103 of the 1954 Code and Title XIII of the Tax Reform Act
of 1986, as applicable, and any regulations thereunder; and the
Company certifies and represents that it has not taken or (to the
extent within its control) permitted to be taken, and the Company
covenants and agrees that it will not take or (to the extent
within its control) permit to be taken any action which will
cause the interest on the Bonds to become includable in gross
income for federal income tax purposes; provided, however, that
neither the Company nor the Pollution Control Corporation shall
be deemed to have violated these covenants if the interest on any
of the Bonds becomes taxable to a person solely because such
person is a "substantial user" of the Project or a "related
person" within the meaning of Section 103(b)(13) of the 1954 Code
and provided, further, that none of the covenants and agreements
herein contained shall require either the Company or the
Pollution Control Corporation to enter an appearance or intervene
in any administrative, legislative or judicial proceeding in
connection with any changes in applicable laws, rules or
regulations or in connection with any decisions of any court or
administrative agency or other governmental body affecting the
taxation of interest on the Bonds. The Company acknowledges
having read Section 7.08 of the Indenture and agrees to perform
all duties imposed on it by such Section 7.08, by this Section
and by the Tax Agreement. Insofar as Section 7.08 of the
Indenture and the Tax Agreement impose duties and
responsibilities on the Company, they are specifically
incorporated herein by reference.
(d) Notwithstanding any provision of this Section 6.04 and
Section 7.08 of the Indenture, if the Company shall provide to
the Pollution Control Corporation and the Trustee an opinion of
Bond Counsel to the effect that any specified action required
under this Section 6.04 and Section 7.08 of the Indenture is no
longer required or that some further or different action is
required to maintain the tax-exempt status of interest on the
Bonds, the Company, the Trustee and the Pollution Control
Corporation may conclusively rely upon such opinion in complying
with the requirements of this Section 6.04, and the covenants
hereunder shall be deemed to be modified to that extent.
2.022 Use of Facilities. So long as the Facilities are
operated by or for the benefit of the Company, the Company shall
exercise all of its rights, powers, elections and options under
the Plant Agreements to cause the Facilities to be used for
purposes contemplated by the Act.
2.023 Financing Statements. The Company shall file and
record, or cause to be filed and recorded, all financing
statements and continuation statements referred to in Section
7.07 of the Indenture.
2.024 Security Arrangements. (a) In order to secure,
evidence or be otherwise in furtherance of the obligations of the
Company under Section 5.01 or 10.01 hereof, or both, the Company
may, but (except as otherwise provided in subsection (b) of this
Section 6.07) shall not be obligated to, provide, subject to the
provisions of subsection (g) of this Section 6.07, one or more
Security Arrangements (which shall not have a stated Expiration
Date earlier than the earlier of (x) the date which is one year
from the date of the provision of any such Security Arrangement
and (y) [final maturity date]) at any time, and from time to
time, and, subject to the provisions of subsections (c) and (d)
of this Section 6.07, may, at any time and from time to time,
Terminate, or cause or allow to be terminated, any such Security
Arrangement. The Company hereby authorizes and directs the
Trustee to draw moneys under the Letter of Credit, and to take
actions under any other Security Arrangement, in accordance with
the terms thereof and of the Indenture.
(a) Upon the initial authentication and delivery of the Bonds,
the Company shall provide for the payment of its obligations
under Sections 5.01 and 10.01 hereof by the delivery of the
Letter of Credit.
The Letter of Credit shall be the obligation of the Bank to pay
to the Trustee or its designee, in accordance with the terms
thereof, such amounts as shall be specified therein and available
to be drawn thereunder for the timely payment of the principal of
and premium, if any, and interest on the Bonds, and the purchase
price of Bonds, required to be made pursuant to, and in
accordance with, the provisions of the Indenture. Drawings under
the Letter of Credit shall be made in accordance with the
provisions set forth therein and in the Indenture.
The Company may, at its election, and with the consent of the
Bank, provide for one or more extensions of the Letter of Credit
in accordance with the terms of the Reimbursement Agreement.
(b) In the event that the Company shall cause or allow a
Security Arrangement to be Terminated, not more than sixty (60)
days nor less than twenty (20) days prior to the Interest Payment
Date next preceding, or, while the Bonds bear interest at a
Flexible Rate, prior to the latest then scheduled Interest
Payment Date for any Bond, the proposed effective date of such
Termination:
(i) the Company shall deliver to the Pollution Control
Corporation, the Trustee, the Tender Agent, the Remarketing
Agent and the Bank a notice which (A) states the effective
date of such Termination (which date shall not be earlier than
the first Business Day after such Interest Payment Date), (B)
describes any substitute Security Arrangement which is to be
provided in lieu thereof and (C) directs the Trustee, after
taking such actions thereunder as are required to be taken to
provide moneys due under the Indenture in respect of the Bonds
or the purchase thereof, to surrender any evidence of the
Security Arrangement to be Terminated to the obligor thereon
on the effective date of such Termination, and to thereupon
deliver any and all instruments to effect such Termination
which may be reasonably requested by such obligor; and
(ii) the Company shall furnish to the Trustee and the
Tender Agent an opinion of Bond Counsel to the effect that the
Termination of such Security Arrangement and the provision, if
any, of a substitute Security Arrangement in lieu thereof (A)
are authorized under this Agreement and (B) will not impair
the validity under the Act of the Bonds or the exclusion of
interest on the Bonds from gross income for federal income tax
purposes.
(c) The Interest Payment Date next preceding the date of any
such Termination shall not be prior to the first date on which
the Bonds are redeemable at a redemption price (including
premium, if any) not exceeding the amount available to be drawn
under the Security Arrangement in respect of such redemption
price pursuant to Section 3.01(c) of the Indenture unless the
Company shall have furnished to the Trustee, the Tender Agent and
the Remarketing Agent, no later than the fortieth (40th) day
preceding such Interest Payment Date, and prior to taking any
action under such Security Arrangement to effect the Termination
thereof, letters or certificates to the effect specified in
Section 2.02(h)(iii) of the Indenture.
Anything in this Agreement or the Indenture to the contrary
notwithstanding, (i) if a substitute Security Arrangement is to
be provided, the substitute Security Arrangement shall become
effective on or before the Termination date of the then existing
Security Arrangement and (ii) in the event that a Termination of
a Security Arrangement, or the Termination of a Security
Arrangement and the provision of another Security Arrangement in
lieu thereof, shall require the Bonds to be tendered for
purchase, the Termination of such Security Arrangement shall not
occur until the Trustee or its duly authorized agent shall have
made such drawings, if any, or taken such other actions, if any,
thereunder as shall be required under the Indenture in order to
provide sufficient moneys for payment of the purchase price of
Bonds on the date fixed for such mandatory tender for purchase
and such moneys shall have been provided to the Trustee or its
duly authorized agent.
(d) The Company shall, prior to the provision of any
Security Arrangement (other than the initial Letter of Credit),
deliver to the Trustee, the Tender Agent, the Remarketing Agent
and the Bank a notice which describes any Security Arrangement
which is to be provided and states the effective date thereof,
and shall, concurrently with the giving of such notice, furnish
to the Trustee an opinion of Bond Counsel to the same effect as
the opinion described in subsection (c) of this Section 6.07.
(e) The Company shall Terminate, or cause or allow to be
Terminated, any Security Arrangement on the first day of a Term
Rate Period or the Fixed Rate Period if such Security Arrangement
will Expire prior to the first date on which the Bonds will be
redeemable pursuant to Section 3.01(c) of the Indenture at a
redemption price (including premium, if any) not exceeding the
amount available to be drawn under such Security Arrangement.
(f) The Company shall not, on or after the fortieth (40th) day
preceding the first day of a Term Rate Period or the Fixed Rate
Period, provide a Security Arrangement which will Expire prior to
the first date on which the Bonds will be redeemable pursuant to
Section 3.01(c) of the Indenture at a redemption price (including
premium, if any) not exceeding the amount available to be drawn
under such Security Arrangement.
SECTION 6.08 Neither the Company nor the Pollution Control
Corporation to be Initial Purchasers of the Bonds. In no event
shall the initial purchasers of the Bonds be the Company or any
affiliate of the Company or the Pollution Control Corporation or
any "insider" of either thereof within the meaning of the United
States Bankruptcy Code, 11 U.S.C. Section 101 et seq., if there
shall be in effect a security arrangement on which the Company
shall not be the Obligor.
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
2.025 Conditions. The Company's interest in this Agreement
may be assigned as a whole or in part, and its interest in the
Facilities may be leased, sold, transferred or otherwise disposed
of by the Company as a whole or in part (whether an interest in a
specific element or unit or an undivided interest), to any
Person; provided, however, that no such assignment, lease, sale,
transfer or other disposition (a) shall relieve the Company from
its primary liability for its obligations under Sections 5.01 and
10.01(a) hereof or (b) shall be made unless the assignee, lessee,
purchaser or other transferee, as the case may be, prior to or
simultaneously with such assignment, lease, sale, transfer or
other disposition, assumes, by delivery of an instrument to the
Trustee and the Pollution Control Corporation, all other
obligations of the Company hereunder to the extent of the
interest assigned, leased, sold, transferred or otherwise
disposed of, and the Company shall be released of and discharged
from such obligations to the extent so assumed. Notwithstanding
the foregoing, (a) if (i) the Company's interest in this
Agreement shall be assigned as a whole or in undivided part, (ii)
the Company's interest in the Facilities shall be leased as a
whole or in undivided part and the term of such leasehold or the
term of any extension or extensions thereof at the option of the
Company shall extend beyond the maturity date of the Bonds or
(iii) the Company's interest in the Facilities shall be sold,
transferred or otherwise disposed of as a whole or in undivided
part, and (b) in the event that the assignee, lessee, purchaser
or other transferee shall assume the obligations of the Company
under either or both of Sections 5.01 and 10.01(a) hereof for the
remaining term of this Agreement to the extent of such
assignment, lease, sale, transfer or other disposition, the
Company shall be released from and discharged of all liability in
respect of such obligations to the extent so assumed (but only to
such extent); provided, however, that if there shall not be a
Security Arrangement in effect on which the Company is not the
obligor, the release and discharge of the Company pursuant to
clause (b) shall be conditioned upon delivery by the Company to
the Trustee and the Pollution Control Corporation of written
evidence from Moody's, if the Bonds are rated by Moody's, and
S&P, if the Bonds are rated by S&P, in each case to the effect
that such release and discharge of the Company, after giving
effect to such assumption by the assignee, lessee, purchaser or
other transferee, will not, by itself, result in a reduction or
withdrawal of its ratings then in effect on the Bonds; and
provided, further, that after any such assumption, release and
discharge as aforesaid, the Company may again assume such
obligations under Section 5.01 or 10.01(a) hereof, or both, in
whole or in part, at any time and from time to time, and, to the
extent of any such assumption by the Company (but only to such
extent), the aforesaid assignee, lessee, purchaser or other
transferee shall be released from and discharged of all liability
in respect of such obligations.
Anything herein to the contrary notwithstanding, the Company
shall not make any assignment, lease or sale as provided in the
immediately preceding paragraph unless it shall have furnished to
the Pollution Control Corporation and the Trustee an opinion of
Bond Counsel to the effect that the proposed assignment, lease or
sale will not impair the validity under the Act of the Bonds or
the exclusion of interest on the Bonds from gross income for
federal tax purposes.
After any lease, sale, transfer or other disposition of any
element or unit of the Facilities, or any interest therein, the
Company may, at its option, cause such element or unit, or
interest therein, to no longer be deemed to be part of the
Facilities for the purposes of this Agreement by delivering to
the Pollution Control Corporation and the Trustee the agreements
or other documents required pursuant to Section 7.02 hereof
together with an instrument signed by an Authorized Company
Representative stating that such element or unit, or interest
therein, shall no longer be deemed to be part of the Facilities
for the purposes of this Agreement.
2.026 Instrument Furnished to Trustee. The Company shall,
within fifteen (15) days after the delivery thereof, furnish to
the Pollution Control Corporation and the Trustee a true and
complete copy of the agreements or other documents effectuating
any such assignment, lease, sale, transfer or other disposition.
2.027 Limitation. This Agreement shall not be assigned nor
shall the Facilities be leased, sold, transferred or otherwise
disposed of, in whole or in part, except as provided in this
Article VII or in Section 6.01 or 5.02 hereof.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
2.028 Events of Default. Each of the following events
shall constitute and is referred to in this Agreement as an
"Event of Default":
(a) a failure by the Company to make any Loan Payment or any
payment required under Section 10.01(a) hereof, which failure
shall have resulted in an "Event of Default" under clause (a),
(b) or (c) of Section 9.01 of the Indenture;
(b) a failure by the Company to pay when due any amount
required to be paid under this Agreement or to observe and
perform any covenant, condition or agreement on its part to be
observed or performed (other than a failure described in clause
(a) above), which failure shall continue for a period of ninety
(90) days after written notice, specifying such failure and
requesting that it be remedied, shall have been given to the
Company by the Pollution Control Corporation or the Trustee,
unless the Pollution Control Corporation and the Trustee shall
agree in writing to an extension of such period prior to its
expiration; provided, however, that the Pollution Control
Corporation and the Trustee shall be deemed to have agreed to an
extension of such period if corrective action is initiated by the
Company within such period and is being diligently pursued; or
(c) the dissolution or liquidation of the Company, or failure
by the Company promptly to lift any execution, garnishment or
attachment of such consequence as will impair its ability to make
any payments under this Agreement, or the entry of an order for
relief by a court of competent jurisdiction in any proceeding for
its liquidation or reorganization under the provisions of any
bankruptcy act or under any similar act which may be hereafter
enacted, or an assignment by the Company for the benefit of its
creditors, or the entry by the Company into an agreement of
composition with its creditors (the term "dissolution or
liquidation of the Company," as used in this clause, shall not be
construed to include the cessation of the corporate existence of
the Company resulting either from a merger or consolidation of
the Company into or with another corporation or a dissolution or
liquidation of the Company following a transfer of all or
substantially all its assets as an entirety, under the conditions
permitting such actions contained in Section 6.01 hereof).
2.029 Force Majeure. The provisions of Section 8.01 hereof
are subject to the following limitations: if by reason of acts of
God; strikes, lockouts or other industrial disturbances; acts of
public enemies; orders of any kind of the government of the
United States or of the State of Arizona, or any department,
agency, political subdivision, court or official of any of them,
or any civil or military authority; insurrections; riots;
epidemics; landslides; lightning; earthquakes; volcanoes; fires;
hurricanes; tornadoes; storms; floods; washouts; droughts;
arrests; restraint of government and people; civil disturbances;
explosions; breakage or accident to machinery; partial or entire
failure of utilities; or any cause or event not reasonably within
the control of the Company, the Company is unable in whole or in
part to carry out any one or more of its agreements or
obligations contained herein, other than its obligations under
Sections 5.01, 5.03, 5.05, 6.01 and 10.01(a) hereof, the Company
shall not be deemed in default by reason of not carrying out said
agreement or agreements or performing said obligation or
obligations during the continuance of such inability. The
Company shall make reasonable effort to remedy with all
reasonable dispatch the cause or causes preventing it from
carrying out its agreements; provided, that the settlement of
strikes, lockouts and other industrial disturbances shall be
entirely within the discretion of the Company, and the Company
shall not be required to make settlement of strikes, lockouts and
other industrial disturbances by acceding to the demands of the
opposing party or parties when such course is in the judgment of
the Company unfavorable to the Company.
2.030 Remedies. (a) Upon the occurrence and continuance
of any Event of Default described in clause (a) of Section 8.01
hereof, and further upon the condition that, in accordance with
the terms of the Indenture, the Bonds shall have been declared to
be immediately due and payable pursuant to any provision of the
Indenture, the Loan Payments shall, without further action,
become and be immediately due and payable.
Any waiver of any "Event of Default" under the Indenture and a
rescission and annulment of its consequences shall constitute a
waiver of the corresponding Event or Events of Default under this
Agreement and a rescission and annulment of the consequences
thereof.
(a) Upon the occurrence and continuance of any Event of
Default, the Pollution Control Corporation, or the Trustee with
respect to the rights of the Pollution Control Corporation
assigned to the Trustee by the Indenture, may take any action at
law or in equity to collect any payments then due and thereafter
to become due, or to enforce performance and observance of any
obligation, agreement or covenant of the Company hereunder.
(b) Any amounts collected by the Trustee from the Company
pursuant to this Section 8.03 shall be applied in accordance with
the Indenture.
2.031 No Remedy Exclusive. No remedy conferred upon or
reserved to the Pollution Control Corporation hereby is intended
to be exclusive of any other available remedy or remedies, but
each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or
hereafter existing at law or in equity or by statute. No delay
or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right or power may
be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Pollution Control Corporation
to exercise any remedy reserved to it in this Article VIII, it
shall not be necessary to give any notice, other than such notice
as may be herein expressly required.
2.032 Reimbursement of Attorneys' and Agents' Fees. If the
Company shall default under any of the provisions hereof and the
Pollution Control Corporation or the Trustee shall employ
attorneys or agents or incur other reasonable expenses for the
collection of payments due hereunder or for the enforcement of
performance or observance of any obligation or agreement on the
part of the Company contained herein, the Company will on demand
therefor reimburse the Pollution Control Corporation or the
Trustee and any predecessor Trustee, as the case may be, for the
reasonable fees of such attorneys and such other reasonable
expenses so incurred.
2.033 Waiver of Breach. In the event any obligation
created hereby shall be breached by either of the parties and
such breach shall thereafter be waived by the other party, such
waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder. In view
of the assignment of certain of the Pollution Control
Corporation's rights and interest hereunder to the Trustee, the
Pollution Control Corporation shall have no power to waive any
breach hereunder by the Company in respect of such rights and
interest without the consent of the Trustee, and the Trustee may
exercise any of the rights of the Pollution Control Corporation
hereunder.
ARTICLE IX
REDEMPTION OF BONDS
2.034 Redemption of Bonds. The Pollution Control
Corporation shall take, or cause to be taken, the actions
required by the Indenture to discharge the lien created thereby
through the redemption, or provision for payment or redemption,
of all Bonds then Outstanding, or to effect the redemption, or
provision for payment or redemption, of less than all the Bonds
then Outstanding, upon receipt by the Pollution Control
Corporation and the Trustee from the Company of a notice
designating the principal amount of the Bonds to be redeemed, or
for the payment or redemption of which provision is to be made,
and, in the case of redemption of Bonds, or provision therefor,
specifying the date of redemption and the applicable redemption
provision of the Indenture. Such redemption date shall not be
less than 45 days from the date such notice is given (unless a
shorter notice is satisfactory to the Trustee). Unless otherwise
stated therein, such notice shall be revocable by the Company at
any time prior to the time at which the Bonds to be redeemed, or
for the payment or redemption of which provision is to be made,
are first deemed to be paid in accordance with Article VIII of
the Indenture. The Company shall furnish any moneys or
Government Obligations (as defined in the Indenture) required by
the Indenture to be deposited with the Trustee or otherwise paid
by the Pollution Control Corporation in connection with any of
the foregoing purposes.
2.035 Compliance with the Indenture. Anything in this
Agreement to the contrary notwithstanding, the Pollution Control
Corporation and the Company shall take all actions required by
this Agreement and the Indenture in order to comply with any
provisions of the Indenture requiring the mandatory redemption of
Bonds.
ARTICLE X
PURCHASE AND REMARKETING OF BONDS
2.036 Purchase of Bonds. (a) In consideration of the
issuance by the Pollution Control Corporation of the Bonds, but
for the benefit of the owners of the Bonds, the Company has
agreed, and does hereby covenant, to cause the necessary
arrangements to be made and to be thereafter continued whereby
Owners from time to time of the Bonds may deliver Bonds for
purchase and whereby such Bonds shall be so purchased. In
furtherance of the foregoing covenant of the Company, the
Pollution Control Corporation, at the direction of the Company,
has set forth in Section 2.02 of the Indenture the terms and
conditions relating to the delivery of Bonds by the Owners
thereof for purchase, has set forth in Article XIII of the
Indenture the duties and responsibilities of the Tender Agent
with respect to the purchase of Bonds, and of the Remarketing
Agent with respect to the remarketing of Bonds and has therein
provided for the appointment by the Company of the Tender Agent
and the Remarketing Agent. The Company hereby authorizes and
directs the Tender Agent and the Remarketing Agent to purchase,
offer, sell and deliver Bonds in accordance with the provisions
of Article XIII of the Indenture.
In consideration of the Pollution Control Corporation's having
set forth in the Indenture the aforesaid provisions of Section
2.02 and the Article XIII thereof, the Company covenants, for the
benefit of the owners of Outstanding Bonds, to pay, cause to be
paid, to the Tender Agent for the account of such holders such
amounts as shall be necessary to effect the payment of the
purchase price of Outstanding Bonds delivered for purchase, all
as more particularly described in Sections 2.02 and 13.03 of the
Indenture; provided, however, that the obligation of the Company
to make any such payment hereunder to the Tender Agent shall be
reduced by the amount of any moneys available for such payment
described in clause (i), (iii) or (iv) of Section 13.03(a) of the
Indenture; and provided, further, that such obligation of the
Company shall be deemed to be satisfied and discharged to the
extent of the corresponding payment made by the obligor (other
than the Company) under any Security Arrangement.
(a) The Pollution Control Corporation shall have no obligation
or responsibility, financial or otherwise, with respect to the
purchase of Bonds or the making or continuation of arrangements
therefor other than as expressly set forth in subsection (a) of
this Section 10.01, except that the Pollution Control Corporation
shall generally cooperate with the Company, the Tender Agent and
the Remarketing Agent as contemplated in Article XIII of the
Indenture.
2.037 Optional Purchase of Bonds. The Company may at any
time, and from time to time, furnish moneys to the Tender Agent
accompanied by a notice directing such moneys to be applied to
the purchase of Bonds delivered for purchase pursuant to the
terms of the Indenture, which Bonds shall be delivered to the
Trustee for cancellation in accordance with Section 13.07(b) of
the Indenture. The Company shall deliver to the Remarketing
Agent and the Bank a copy of any such notice.
ARTICLE XI
MISCELLANEOUS
2.038 Term of Agreement. This Agreement shall remain in
full force and effect from the date hereof until the right, title
and interest of the Trustee in and to the Trust Estate (as
defined in the Indenture) shall have ceased, terminated and
become void in accordance with Article VIII of the Indenture and
until all payments required under this Agreement shall have been
made. Notwithstanding the foregoing, the covenant contained in
Section 5.03, 5.04, Section 6.04 and 8.05 hereof shall survive
the termination of this Agreement.
2.039 Notices. Except as otherwise provided in this
Agreement, all notices, certificates, requests, requisitions and
other communications hereunder shall be in writing and shall be
sufficiently given and shall be deemed given when mailed by
registered mail, postage prepaid, addressed as follows: if to the
Pollution Control Corporation, c/o Mangum, Wall, Stoops & Warden,
222 East Birch Avenue, Flagstaff, Arizona 86001, Attention:
President; if to the Company, at 220 West Sixth Street, Tucson,
Arizona 85702, Attention: Treasurer; if to the Trustee or to the
Tender Agent, at such address as shall be designated by it in the
Indenture; and if to the Remarketing Agent, at such address as
shall be designated by it pursuant to the Indenture. A copy of
each notice, certificate, request or other communication given
hereunder to the Pollution Control Corporation, the Company, or
the Trustee shall also be given to the others. The Pollution
Control Corporation, the Company, and the Trustee may, by notice
given hereunder, designate any further or different addresses to
which subsequent notices, certificates, requests or other
communications shall be sent.
2.040 Parties in Interest. This Agreement shall inure to
the benefit of and shall be binding upon the Pollution Control
Corporation, the Company and their respective successors and
assigns, and no other person, firm or corporation shall have any
right, remedy or claim under or by reason of this Agreement;
provided, however, that the lien and security interest granted to
the Trustee in Section 4.03 hereof, as well as the rights and
remedies granted to the Pollution Control Corporation in Article
VIII hereof, shall inure to the benefit of the Trustee, on behalf
of the owners from time to time of the Bonds, and shall be
enforceable by the Trustee as a third party beneficiary or as
assignee of the Pollution Control Corporation; and provided,
further, that the obligations of the Company under Section
10.01(a) hereof shall inure to the benefit of the Tender Agent,
on behalf of the owners from time to time of the Bonds, and shall
be enforceable by the Tender Agent as a third party beneficiary;
and provided, further, that neither the County of Coconino,
Arizona nor the State of Arizona shall in any event be liable for
the payment of the principal of or premium, if any, or interest
on the Bonds or for the performance of any pledge, mortgage,
obligation or agreement created by or arising out of this
Agreement or the issuance of the Bonds, and further that neither
the Bonds nor any such obligation or agreement of the Pollution
Control Corporation shall be construed to constitute an
indebtedness of the County of Coconino, Arizona or the State of
Arizona within the meaning of any constitutional or statutory
provisions whatsoever, but shall be limited obligations of the
Pollution Control Corporation payable solely out of the revenues
derived from this Agreement or any Security Arrangement provided
hereunder, or from the sale of the Bonds, or from the investment
or reinvestment of any of the foregoing, as provided herein and
in the Indenture.
2.041 Amendments. This Agreement may be amended only by
written agreement of the parties hereto, subject to the
limitations set forth herein and in the Indenture.
2.042 Counterparts. This Agreement may be executed in any
number of counterparts, each of which, when so executed and
delivered, shall be an original; but such counterparts shall
together constitute but one and the same Agreement.
2.043 Severability. If any clause, provision or section of
this Agreement shall, for any reason, be held illegal or invalid
by any court, the illegality or invalidity of such clause,
provision or section shall not affect any of the remaining
clauses, provisions or sections hereof, and this Agreement shall
be construed and enforced as if such illegal or invalid clause,
provision or section had not been contained herein. In case any
agreement or obligation contained in this Agreement be held to be
in violation of law, then such agreement or obligation shall be
deemed to be the agreement or obligation of the Pollution Control
Corporation or the Company, as the case may be, to the full
extent permitted by law.
2.044 Governing Law. The laws of the State of Arizona
shall govern the construction and enforcement of this Agreement,
except that the provisions of Section 14.09 of the Indenture,
construed as provided in Section 14.07 of the Indenture, shall
apply to this Agreement as if contained herein.
2.045 Notice Regarding Cancellation of Contracts. As
required by the provisions of Section 38-511, Arizona Revised
Statutes, as amended, notice is hereby given that political
subdivisions of the State of Arizona or any of their departments
or agencies may, within three (3) years of its execution, cancel
any contract, without penalty or further obligation, made by the
political subdivisions or any of their departments or agencies on
or after September 30, 1988, if any person significantly involved
in initiating, negotiating, securing, drafting or creating the
contract on behalf of the political subdivisions or any of their
departments or agencies is, at any time while the contract or any
extension of the contract is in effect, an employee or agent of
any other party to the contract in any capacity or a consultant
to any other party of the contract with respect to the subject
matter of the contract. The cancellation shall be effective when
written notice from the chief executive officer or governing body
of the political subdivision is received by all other parties to
the contract unless the notice specifies a later time.
The Company covenants and agrees not to employ as an employee,
agent or, with respect to the subject matter of this Agreement, a
consultant, any person significantly involved in initiating,
negotiating, securing, drafting or creating such Agreement on
behalf of the Issuer within three (3) years from the execution
hereof, unless a waiver is provided by the Pollution Control
Corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be duly executed as of the day and year first above
written.
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
ATTEST:
By_____________________________
President
_______________________________
Secretary
TUCSON ELECTRIC POWER COMPANY
ATTEST:
By_____________________________
Vice President
________________________________
Assistant Secretary
EXHIBIT A
A portion of the costs of the construction, improvement or
equipping of the following Facilities will be refinanced with the
proceeds of the Pollution Control Refunding Revenue Bonds, 1996
Series B (Tucson Electric Power Company Project) issued by
Coconino County, Arizona Pollution Control Corporation and
referred to in the foregoing Loan Agreement.
____________________
_______________________________
* This table of contents is not part of the Loan Agreement, and
is for convenience only. The captions herein are of no legal
effect and do not vary the meaning or legal effect of any part
of the Loan Agreement.