EXHIBIT 4e
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LOAN AGREEMENT
BETWEEN
COCONINO COUNTY, ARIZONA
POLLUTION CONTROL CORPORATION
AND
TUCSON ELECTRIC POWER COMPANY
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DATED AS OF APRIL 1, 1997
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RELATING TO
POLLUTION CONTROL REVENUE BONDS,
1997 SERIES B
(TUCSON ELECTRIC POWER COMPANY NAVAJO PROJECT)
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TABLE OF CONTENTS*
Page
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LOAN AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions . . . . . . . . . . . . . . . 2
SECTION 1.02. Incorporation of Certain Definitions by
Reference . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Representations and Warranties of the
Pollution Control Corporation . . . . . . . . . . . . . 5
SECTION 2.02. Representations and Warranties of the
Company . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
THE FACILITIES
SECTION 3.01. Facilities; Property of the Company . . . 6
SECTION 3.02. Revision of Plans and Specifications . . 6
SECTION 3.03. Maintenance of Facilities; Remodeling . . 6
SECTION 3.04. Insurance . . . . . . . . . . . . . . . . 7
SECTION 3.05. Condemnation . . . . . . . . . . . . . . 7
SECTION 3.06. Termination of Construction . . . . . . . 7
ARTICLE IV
ISSUANCE OF THE BONDS; THE LOANS; DISPOSITION OF PROCEEDS
OF THE BONDS
SECTION 4.01. Issuance of the Bonds . . . . . . . . . . 7
SECTION 4.02. Issuance of Other Obligations. . . . . . 7
SECTION 4.03. The Loan; Disposition of Bond Proceeds. . 7
SECTION 4.04. Investment of Moneys in Funds and Accounts 7
ARTICLE V
LOAN PAYMENTS; OTHER OBLIGATIONS
SECTION 5.01. Loan Payments. . . . . . . . . . . . . . 8
SECTION 5.02. Payments Assigned; Obligation Absolute . 8
SECTION 5.03. Payment of Expenses . . . . . . . . . . . 8
SECTION 5.04. Indemnification . . . . . . . . . . . . . 8
SECTION 5.05. Payment of Taxes; Discharge of Liens . . 9
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* 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.
ARTICLE VI
SPECIAL COVENANTS
SECTION 6.01. Maintenance of Corporate Existence . . . 9
SECTION 6.02. Permits or Licenses . . . . . . . . . . . 10
SECTION 6.03. Pollution Control Corporation's Access to
Facilities .. . . . . . . . . . . . . . . 10
SECTION 6.04. Tax-Exempt Status of Interest on Bonds. . 10
SECTION 6.05. Use of Facilities . . . . . . . . . . . . 11
SECTION 6.06. Financing Statements . . . . . . . . . . 11
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
SECTION 7.01. Conditions . . . . . . . . . . . . . . . 11
SECTION 7.02. Instrument Furnished to Pollution Control
Corporation and Trustee . . . . . . . . . 13
SECTION 7.03. Limitation . . . . . . . . . . . . . . . 13
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01. Events of Default . . . . . . . . . . . . 13
SECTION 8.02. Force Majeure . . . . . . . . . . . . . . 14
SECTION 8.03. Remedies . . . . . . . . . . . . . . . . 14
SECTION 8.04. No Remedy Exclusive . . . . . . . . . . . 14
SECTION 8.05. Reimbursement of Attorneys' and Agents'
Fees . . . . . . . . . . . . . . . . . . 14
SECTION 8.06. Waiver of Breach . . . . . . . . . . . . 15
ARTICLE IX
REDEMPTION OF BONDS
SECTION 9.01. Redemption of Bonds . . . . . . . . . . . 15
SECTION 9.02. Compliance with the Indenture . . . . . . 15
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Term of Agreement . . . . . . . . . . . 15
SECTION 10.02. Notices . . . . . . . . . . . . . . . . 15
SECTION 10.03. Parties in Interest . . . . . . . . . . 16
SECTION 10.04. Amendments . . . . . . . . . . . . . . . 16
SECTION 10.05. Counterparts . . . . . . . . . . . . . . 16
SECTION 10.06. Severability . . . . . . . . . . . . . . 16
SECTION 10.07. Governing Law . . . . . . . . . . . . . 16
SECTION 10.08. Notice Regarding Cancellation of
Contracts. . . . . . . . . . . . . . . 16
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 18
Exhibit A - Description of the Facilities . . . . . . . . . . A-1
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of April 1, 1997 (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 formerly known as Tucson Gas & Electric
Company (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) (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 has also heretofore
issued and sold $14,700,000 aggregate principal amount of its
Pollution Control Refunding Revenue Bonds, 1996 Series B (Tucson
Electric Power Company Project), all of which remain outstanding
(the "1996 Bonds"), the proceeds of which were loaned to the
Company to pay the outstanding principal amount of the 1975
Bonds; and
WHEREAS, the Pollution Control Corporation proposes to issue
and sell its revenue bonds for the purpose of refinancing, by the
payment or redemption of the 1996 Bonds, or provisions therefor,
a portion of the cost of the pollution control facilities
described in Exhibit A hereto (the "Facilities") 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
SECTION 1.01. 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.
Agreement:
"Agreement" shall mean this Loan Agreement, dated as of April
1, 1997, 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.
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 Revenue
Bonds, 1997 Series B (Tucson Electric Power Company Navajo
Project) of the Pollution Control Corporation.
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, including, without
limitation, any successor obligor under Section 6.01 or 7.01 to
the extent of the obligations assumed thereunder.
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.
Indenture:
"Indenture" shall mean the Indenture of Trust, dated as of
April 1, 1997, between the Pollution Control Corporation and the
Trustee relating to the Bonds, and any and all modifications,
alterations, amendments and supplements thereto.
Loan Payments:
"Loan Payments" shall mean the payments required to be made by
the Company pursuant to Section 5.01 hereof.
1954 Code:
"1954 Code" shall mean the Internal Revenue Code of 1954, as
amended.
1996 Bonds:
"1996 Bonds" shall mean the $14,700,000 aggregate principal
amount of the Pollution Control Corporation's Pollution Control
Refunding Revenue Bonds, 1996 Series B (Tucson Electric Power
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; and
(c) 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, or 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.
Tax Agreement:
"Tax Agreement" shall mean that tax certificate and agreement,
dated the date of the initial authentication and delivery of the
Bonds, 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.
Trustee:
"Trustee" shall mean First Trust of New York, National
Association, as trustee under the Indenture, its successors in
trust and their assigns.
SECTION 1.02. Incorporation of Certain Definitions by
Reference. Each capitalized term used herein and not otherwise
defined herein shall have the meaning set forth in the Indenture.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. 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 any 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.
SECTION 2.02. 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; and
(f) All of the proceeds of the Bonds (exclusive of accrued
interest, if any, paid by the initial purchasers of such Bonds
upon delivery thereof) will be expended to refinance the
Facilities through the payment or redemption of the 1996
Bonds, or provisions therefor.
ARTICLE III
THE FACILITIES
SECTION 3.01. 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.
SECTION 3.02. 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.
SECTION 3.03. 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.
SECTION 3.04. 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.
SECTION 3.05. 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.
SECTION 3.06. 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
SECTION 4.01. 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.
SECTION 4.02. 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.
SECTION 4.03. The Loan; Disposition of Bond Proceeds. The
Pollution Control Corporation and the Company shall enter into
escrow arrangements with the trustee for the 1996 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 1996 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.
SECTION 4.04. Investment of Moneys in Funds and Accounts.
The Company and the Pollution Control Corporation agree that any
moneys held in any fund or account created by the Indenture shall
be invested as provided in the Indenture.
ARTICLE V
LOAN PAYMENTS; OTHER OBLIGATIONS
SECTION 5.01. 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.
SECTION 5.02. 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) 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 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.
SECTION 5.03. Payment of Expenses. The Company shall pay all
Administration Expenses, 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 shall be made directly to such entities.
SECTION 5.04. Indemnification. The Company releases the
Pollution Control Corporation, the Trustee and their directors,
officers, employees and agents from, agrees that the Pollution
Control Corporation and the Trustee shall not be liable for, and
agrees to indemnify and hold the Pollution Control Corporation,
the Trustee and any predecessor Trustee and their directors,
officers, employees and agents free and harmless from, any
liability (including, without limitation, attorneys' and other
agents' fees and expenses) for any loss or damage to property or
any injury to or death of any person 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 and any predecessor Trustee 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.
SECTION 5.05. 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, 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, 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
SECTION 6.01. Maintenance of Corporate Existence. Except as
permitted in this Section 6.01, the Company shall maintain its
corporate existence, shall not sell, transfer or otherwise
dispose of all of its assets, as or substantially as an entirety,
and shall 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 of its assets, as
or substantially as an entirety, 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 under this
Agreement, including, without limitation, the obligations of the
Company under Section 5.01 hereof. Upon such an assumption
following any such sale, transfer or other disposition of assets,
the Company shall be released and discharged from all liability
in respect of all obligations under this Agreement.
Notwithstanding the foregoing, in the case of any such sale,
transfer or other disposition of assets, which do not include the
Facilities, the Company shall remain liable in respect of all
obligations under this Agreement other than the obligations under
Section 5.01 hereof, and the transferee shall not be required to
assume any obligations hereunder other than the obligations under
Section 5.01 hereof; provided, however, that the transferee shall
be required to assume all such other obligations unless the
Company shall have delivered to the Pollution Control Corporation
and the Trustee an opinion of Bond Counsel to the effect that the
non-assumption by the transferee of such other obligations will
not impair the validity under the Act of the Bonds and will not
adversely affect the exclusion from gross income for federal tax
purposes of interest on the Bonds.
If consolidation, merger or sale, transfer or other
disposition 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.
Anything in this Agreement to the contrary notwithstanding,
the sale, transfer or other disposition by the Company of all of
its facilities (a) for the generation of electric energy, (b) for
the transmission of electric energy or (c) for the distribution
of electric energy, in each case considered alone, or all of its
facilities described in clauses (a) and (b), considered together,
or all of its facilities described in clauses (b) and (c),
considered together, shall in no event be deemed to constitute a
sale, transfer or other disposition of all the properties of the
Company, as or substantially as an entirety, unless, immediately
following such sale, transfer or other disposition, the Company
shall own no properties in the other such categories of property
not so sold, transferred or otherwise disposed of. The character
of particular facilities shall be determined by reference to the
Uniform System of Accounts prescribed for public utilities and
licensees subject to the Federal Power Act, as amended, to the
extent applicable.
SECTION 6.02. 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.
SECTION 6.03. 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.
SECTION 6.04. 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
the Rebate Requirement as defined and 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 Facilities 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.
SECTION 6.05. Use of Facilities. So long as any Bonds are
Outstanding and 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
and in the Tax Agreement.
SECTION 6.06. 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.
ARTICLE VII
ASSIGNMENT, LEASING AND SELLING
SECTION 7.01. 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 Section 5.01
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 in
writing satisfactory in form 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 Section 5.01 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 the release and discharge
of the Company pursuant to clause (b) shall be conditioned upon
the delivery by the Company to the Pollution Control Corporation
and the Trustee of a certificate of an Independent Expert (as
hereinafter defined) describing the interests so assigned,
leased, sold, transferred or otherwise disposed of, together with
all other rights, interests, assets and/or properties assigned,
leased, sold, transferred or otherwise disposed of by the Company
to the same Person in the same or a related transaction, stating
that such rights, interests, assets and/or properties so
described constitute facilities for the generation, transmission
and/or distribution of electric energy and stating that, in the
opinion of such Independent Expert, the Fair Value (as
hereinafter defined) of such rights, interests, assets and/or
properties as the Person acquiring the same is not less than an
amount equal to 10/7 of the sum of (x) the aggregate principal
amount of the Bonds then Outstanding and (y) the outstanding
principal amount of all other obligations of the Company
representing indebtedness for borrowed money or for the deferred
purchase price of property which are being assumed by such
Person; provided, further, that after any such assumption,
release and discharge as aforesaid, the Company may again assume
such obligations under Section 5.01 hereof, 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 and
will not adversely affect 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.
For purposes of this Section 701:
(a) "Independent Expert" means a Person which (i) is an
engineer, appraiser or other expert and which, with respect to
any certificate to be delivered pursuant to this Section, is
qualified to pass upon the matter set forth in such
certificate and (ii)(A) is in fact independent, (B) does not
have any direct material financial interest in the transferee
or in any obligor upon the Bonds or under this Agreement or in
any affiliate of the transferee or any such obligor, (C) is
not connected with the transferee or any such obligor as an
officer, employee, promoter, underwriter, trustee, partner,
director or any person performing similar functions and (D) is
approved by the Trustee in the exercise of reasonable care;
for purposes of this definition "engineer" means a Person
engaged in the engineering profession or otherwise qualified
to pass upon engineering matters (including, but not limited
to, a Person licensed as a professional engineer, whether or
not then engaged in the engineering profession); and for
purposes of this definition "appraiser" means a Person engaged
in the business of appraising property or otherwise qualified
to pass upon the Fair Value or fair market value of property.
(b) "Fair Value" means the fair value of the interests,
rights, assets and/or properties assigned, leased, sold,
transferred or otherwise disposed of (but, in the case of a
lease, only to the extent of such lease) as may be determined
by reference to (i) except in the case of a lease, the amount
which would be likely to be obtained in an arm's-length
transaction with respect to such interests, rights, assets
and/or properties between an informed and willing buyer and an
informed and willing seller, under no compulsion,
respectively, to buy or sell, (ii) in the case of a lease, the
amount (discounted to present value at a rate not lower than
the taxable equivalent of the yield to maturity of the Bonds
based on prevailing market prices immediately prior to the
first public announcement of the proposed transaction) which
would be likely to be obtained in an arm's-length transaction
with respect to such interests, rights, assets and/or
properties between an informed and willing lessee and an
informed and willing lessor, neither under any compulsion to
lease; (iii) the amount of investment with respect to such
interests, rights, assets and/or properties which, together
with a reasonable return thereon, would be likely to be
recovered through ordinary business operations or otherwise,
(iv) the cost, accumulated depreciation and replacement cost
with respect to such interests, rights, assets and/or
properties and/or (v) any other relevant factors; provided,
however, that (x) Fair Value shall be determined without
deduction for any mortgage, deed of trust, pledge, security
interest, encumbrance, lease, reservation, restriction,
servitude, charge or similar right or any other lien of any
kind and (y) the Fair Value to the transferee of any property
shall not reflect any reduction relating to the fact that such
property may be of less value to a Person which is not the
owner, lessee or operator of the property or any portion
thereof than to a Person which is such owner, lessee or
operator. Fair Value may be determined, without physical
inspection, by the use of accounting and engineering records
and other data maintained by the Company or the transferee or
otherwise available to the Expert certifying the same.
SECTION 7.02. Instrument Furnished to Pollution Control
Corporation and 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.
SECTION 7.03. 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. This Article
VII shall not apply to any sale, transfer or other disposition by
the Company of all of its assets, as or substantially as an
entirety, as contemplated in Section 6.01.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01. 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,
which failure shall have resulted in an "Event of Default"
under clause (a) or (b) 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 sixty (60) 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).
SECTION 8.02. 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, and 6.01 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.
SECTION 8.03. 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.
(b) 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.
(c) Any amounts collected by the Trustee from the Company
pursuant to this Section 8.03 shall be applied in accordance with
the Indenture.
SECTION 8.04. 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.
SECTION 8.05. 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.
SECTION 8.06. 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
SECTION 9.01. 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.
SECTION 9.02. 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
MISCELLANEOUS
SECTION 10.01. 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
covenants contained in Section 5.03, 5.04, Section 6.04 and 8.05
hereof shall survive the termination of this Agreement.
SECTION 10.02. 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; and if to the Trustee, at
such address as shall be designated by it in 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.
SECTION 10.03. 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 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 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 from the sale of the Bonds, or
from the investment or reinvestment of any of the foregoing, as
provided herein and in the Indenture.
SECTION 10.04. 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.
SECTION 10.05. 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.
SECTION 10.06. 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.
SECTION 10.07. Governing Law. The laws of the State of
Arizona shall govern the construction and enforcement of this
Agreement, except that the provisions of Section 13.09 of the
Indenture, construed as provided in Section 13.07 of the
Indenture, shall apply to this Agreement as if contained herein.
SECTION 10.08. 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 /s/ Bruce J. Nordstrom
-----------------------------
President
/s/ Terrence J. Rice
-------------------------------
Secretary
TUCSON ELECTRIC POWER COMPANY
ATTEST: By /s/ Kevin Larson
------------------------
Vice President
/s/ Vincent Nitido, Jr.
----------------------------
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, 1997
Series B (Tucson Electric Power Company Navajo Project) issued by
Coconino County, Arizona Pollution Control Corporation and
referred to in the foregoing Loan Agreement.
--------------------
The air and water pollution control facilities, sewage
disposal facilities and solid waste disposal and related
facilities more particularly described in Exhibit A to the Loan
and Escrow Agreement, dated as of December 17, 1974, among the
Coconino County, Arizona Pollution Control Corporation, Tucson
Gas & Electric Company and Security Pacific National Bank as
escrow agent, a copy of which is attached as Exhibit A-1.
EXHIBIT A-1
The air and water pollution control facilities, sewage
disposal facilities and solid waste disposal facilities in whole
or in part with the proceeds of the Bonds will consist of the
following systems:
1. SO2 Removal System. This System consists of the
Basic Removal and Disposal System, and other additional features
for in-plant SO2 removal. The Basic Removal and Disposal System
includes several five-chamber alkaline scrubbing modules which
may be of either a vertical or horizontal design, and associated
equipment and piping. The other additional in-plant features
include by-pass dampers and ductwork modifications, connections
for steam extraction, induced draft fans sized to overcome the
loss of velocity of the flue gas caused by the Basic Removal and
Disposal System, chimney coating to protect the stack from
corrosion due to lower exit gas temperatures caused by the Basic
Removal and Disposal System, miscellaneous electrical equipment
and building space needed to accommodate the other SO2 removal
equipment, and a supplementary SO2 monitoring system.
2. Particulate Removal System. This System, which is
designated to charge and collect particles contained in the flue
gas produced by the steam generator, includes a sixteen chamber
hot electrostatic precipitator, the structural supports for the
precipitator, guillotine dampers, louver isolation dampers
ductwork, totally enclosed Nova feeders, opacity monitoring
equipment, induced draft fans sized to accommodate a maximum
efficiency precipitator, several electrical fields complete with
casings and hoppers and the structural steel for such fields.
3. Flue Gas Monitoring System. This System consists
of chimney equipment common to both SO2 particulate removal
systems and NOx particulate removal systems, and includes the
instrumentation and connections necessary to continuously monitor
and record emissions from the chimneys and a personal hoist and
related equipment to permit performance testing and maintenance
of the monitoring equipment.
4. Dust Suppression System. The equipment comprising
this System includes (i) enclosures for the coal conveyors and
transfer towers, (ii) a shed-like enclosure for the tract hopper,
(iii) several dust collectors, baghouses, rotary screw conveyors,
separators and a vacuum conveying system to provide dust
collection in the cascade gallery, silo, sample building and
plant surge bin areas, (iv) a dust collector with a baghouse and
rotary screw conveyor for the yard bin area, (v) a dust
suppression spray system consisting of jet sprays and associated
equipment located throughout the plant, (vi) enclosures to
partition the coal gallery area from the boiler turbine area to
control coal dust, (vii) a fixed header vacuum cleaning system
for the coal unloading hopper basement and the coal silo gallery,
and (viii) portable vacuum cleaners for use in the coal
pulverizer area and the feeder deck area.
5. Sanitary Sewer System. Two pumping lift stations
with dual pumps will be installed on the main collector line and
an aerated tank located below grade will be provided. Secondary
treatment by chlorine dosing may be utilized, and treated
effluent will be discharged to the evaporation pond system. A
service water line will be installed to permit the sewage
treatment area to be washed and the sump weirs to be cleaned.
Equipment will be installed downstream from the sewage treatment
plant to monitor sanitary waster discharges.
6. Waste Water Disposal System. This System includes
the Waste Water Collection System, the Water Reclamation Unit,
Evaporation Ponds, and the Ground Water Monitoring System.
(A) Waste Water Collection System. The various
types of wastewaters from the Project will be collected
and transported by the following facilities: (i) sumps
and duplex regenerative sump pumps to receive drainage
from the chemical feed area and the anion-cation
regeneration area; (ii) the primary softener tank
drain, the sand filter backwash drain, the sodium
zeolite softener regeneration rinse tank drain, and a
special primary water treatment pump to accommodate
those drains; (iii) sumps and acid resistant duplex
pumps to accommodate the acid trench and chemical tank
area; (iv) a surface drain and associated pumps to
receive runoff from the coal storage area; (v) special
drains, pumps and piping to permit boiler water to by-
pass other boiler water drains and to be pumped
directly to the evaporation ponds; (vi) special
drainage ditches and culverts to direct all surface
water runoff from the coal storage area to the
evaporation ponds, and (vii) sumps and associated pumps
and piping to permit oily wastes to be transported to
the evaporation ponds.
(B) Water Reclamation Unit. This Unit includes
several clarifiers and associated pumps and piping to
permit clarification of cooling tower blowdown.
(C) Evaporation Ponds. A series of terraced and
diked evaporation ponds will be provided to receive
sanitary wastes, surface water runoff and process
wastes, and a second series of terraced diked
evaporation ponds will be provided to receive only
process wastes.
(D) Ground Water Monitoring System. An extensive
observation well and associated equipment will be
installed to monitor seepage from the ash disposal area
and the evaporation ponds to insure that such seepage
does not enter the underground waterway leading to Lake
Powell.
7. Bottom Ash and Economizer Ash Disposal System.
This System, which causes bottom ash, economizer ash and
pulverizer rejects to be transported to dewatering bins, water to
be drained from the dewatering bins into settling tanks, and
water from the settling tanks to be recirculated and reused for
ash transport, includes six dewatering bins, two settling tanks,
three water surge tanks, one operating centrifugal ash pump, one
standby centrifugal ash pump and associated piping, an auxiliary
tank for sluicing economizer ash and the necessary control valves
and piping to transport water to the mixing chamber and
economizer ash slurry to the bottom ash hopper.
8. Fly Ash Disposal System. This System, which
transports fly ash from the precipitation hoppers to the fly ash
storage silos, includes several pneumatic conveyors and
associated blowers, filters and pipelines for transporting ash to
the ash storage silos, two ash storage silos and associated steel
support structures, stairs and platforms, and eight dustless
unloaders.
9. Solid Waste Common Systems. The equipment
included in the Systems consists of the trucks that will be used
to haul damp fly ash, bottom ash, scrubber solids and evaporator
solids to the disposal area, the initial dikes for the solids
disposal canyon, the road from the ash handling area to the
canyon, and fencing for the road and the solids disposal area.
10. Electrical Equipment. This equipment consists of
transformers, buses, bus ducts, breakers, switching equipment and
associated equipment necessary for the operation of the
facilities.