LOAN AGREEMENT
between
CITY OF PRINCETON, INDIANA
and
PSI ENERGY, INC.
_______________________________
$24,600,000
City of Princeton, Indiana
Pollution Control
Revenue Refunding Bonds, 1996 Series
(PSI Energy, Inc. Project)
_______________________________
Dated
as of
November 1, 1996
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.1. Use of Defined Terms
Section 1.2. Definitions
Section 1.3. Interpretation
Section 1.4. Captions and Headings
ARTICLE II REPRESENTATIONS
Section 2.1. Representations of the Issuer
Section 2.2. No Warranty by Issuer of Condition or
Suitability of the Project
Section 2.3. Representations and Covenants of the Company
ARTICLE III COMPLETION OF THE PROJECT; ISSUANCE
OF THE BONDS
Section 3.1. Acquisition, Construction and Installation
Section 3.2. Project Description
Section 3.3. Issuance of the Bonds; Application of
Proceeds
Section 3.4. Investment of Fund Moneys
Section 3.5. Rebate Fund
ARTICLE IV LOAN BY ISSUER; LOAN PAYMENTS;
ADDITIONAL PAYMENTS; AND CREDIT
FACILITY
Section 4.1. Loan Repayment
Section 4.2. Additional Payments
Section 4.3. Place of Payments
Section 4.4. Obligations Unconditional
Section 4.5. Assignment of Revenues and Agreement
Section 4.6. Credit Facility; Alternate Credit Facility;
Cancellation
Section 4.7. Company's Option to Elect Rate Period
Section 4.8. Company's Obligation to Purchase Bonds
ARTICLE V ADDITIONAL AGREEMENTS AND COVENANTS
Section 5.1. Right of Inspection
Section 5.2. Maintenance
Section 5.3. Removal of Portions of the Project
Facilities
Section 5.4. Operation of Project Facilities
Section 5.5. Insurance
Section 5.6. Workers' Compensation Coverage
Section 5.7. Damage; Destruction and Eminent Domain
Section 5.8. Company to Maintain its Corporate
Existence; Conditions Under Which
Exceptions Permitted
Section 5.9. Indemnification
Section 5.10. Company Not to Adversely Affect
Exclusion of Interest on Bonds
From Gross Income For Federal
Income Tax Purposes
Section 5.11. Use of Project Facilities
Section 5.12. Assignment by Company
ARTICLE VI REDEMPTION
Section 6.1. Optional Redemption
Section 6.2. Extraordinary Optional Redemption
Section 6.3. Mandatory Redemption
Section 6.4. Notice of Redemption
Section 6.5. Actions by Issuer
ARTICLE VII EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default
Section 7.2. Remedies on Default
Section 7.3. No Remedy Exclusive
Section 7.4. Agreement to Pay Attorneys' Fees and
Expenses
Section 7.5. No Waiver
Section 7.6. Notice of Default
ARTICLE VIII MISCELLANEOUS
Section 8.1. Term of Agreement
Section 8.2. Amounts Remaining in Funds
Section 8.3. Notices
Section 8.4. Extent of Covenants of the Issuer; No
Personal Liability
Section 8.5. Binding Effect
Section 8.6. Amendments and Supplements
Section 8.7. References to Credit Facility
Section 8.8. Execution Counterparts
Section 8.9. Severability
Section 8.10. Governing Law
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of November 1, 1996
between the CITY OF PRINCETON, INDIANA (the "Issuer"), a municipal corporation
organized and existing under the laws of the State of Indiana, and PSI ENERGY,
INC. (the "Company"), a public utility and corporation duly organized and
validly existing under the laws of the State of Indiana. Capitalized terms
used in the following recitals are used as defined in Article I of this
Agreement.
Pursuant to Indiana Code, Title 36, Article 7, Chapters 11.9 and 12, and
Indiana Code, Title 5, Article 1, Chapter 5 (collectively, the "Act"), the
Issuer has determined to issue, sell and deliver the Bonds, and to lend the
proceeds derived from the sale thereof to the Company to assist in the
refunding of the Refunded Bonds as defined below. The Refunded Bonds were
originally issued to provide funds to make loans to the Company to assist in
the financing of its portion of the costs of the Project as defined below.
The Company and the Issuer each have full right and lawful authority to
enter into this Agreement and to perform and observe the provisions hereof on
their respective parts to be performed and observed.
NOW THEREFORE, in consideration of the premises and the mutual
representations and agreements hereinafter contained, the Issuer and the
Company agree as follows (provided that any obligation of the Issuer or the
State created by or arising out of this Agreement shall never constitute a
general debt of the Issuer or the State or give rise to any pecuniary
liability of the Issuer or the State but shall be payable solely out of
Revenues, including the Loan Payments made pursuant hereto and moneys drawn
under any Credit Facility):
ARTICLE I
DEFINITIONS
Section I.1. Use of Defined Terms. In addition to the words and terms
defined elsewhere in this Agreement or by reference to another document, the
words and terms set forth in Section 1.2 hereof shall have the meanings set
forth therein unless the context or use clearly indicates another meaning or
intent. Such definitions shall be equally applicable to both the singular and
plural forms of any of the words and terms defined therein.
Section I.2. Definitions. As used herein:
"Act" means, collectively, Indiana Code, Title 36, Article 7, Chapters
11.9 and 12, and Title 5, Article 1, Chapter 5 as amended.
"Additional Payments" means the amounts required to be paid by the
Company pursuant to the provisions of Section 4.2 hereof.
"Administration Expenses" means the compensation (which compensation
shall not be greater than that typically charged in similar circumstances) and
reimbursement of reasonable expenses and advances payable to the Trustee, the
Registrar, the Remarketing Agent, any Paying Agent and any Authenticating
Agent.
"Agreement" means this Loan Agreement, as amended or supplemented from
time to time.
"Alternate Credit Facility" means an Alternate Credit Facility as defined
in the Indenture.
"Authenticating Agent" means the Authenticating Agent as defined in the
Indenture.
"Bank" means the Bank as defined in the Indenture.
"Bond Fund" means the Bond Fund created in the Indenture.
"Bond Purchase Fund" means the Bond Purchase Fund as defined in the
Indenture.
"Bond Resolution" means the ordinance of the Issuer providing for the
issuance of the Bonds and approving this Agreement, the Indenture and related
matters, as amended or supplemented from time to time.
"Bond Service Charges" means, for any period or time, the principal of,
premium, if any, and interest due on the Bonds for that period or payable at
that time whether due at maturity or upon acceleration or redemption or
otherwise.
"Bonds" means the $24,600,000 Pollution Control Revenue Refunding Bonds,
1996 Series (PSI Energy, Inc. Project), issued by the Issuer pursuant to the
Bond Resolution and the Indenture.
"Bonds Outstanding" or "Outstanding Bonds" means Outstanding Bonds as
defined in the Indenture.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time. References to the Code and Sections of the Code include relevant
applicable regulations and proposed regulations thereunder and under the
Internal Revenue Code of 1954, as amended, and any successor provisions to
those Sections, regulations or proposed regulations and, in addition, all
applicable official rulings and judicial determinations under the foregoing
applicable to the Bonds.
"Conversion Date" means the Conversion Date as defined in the Indenture.
"Credit Facility" means a Credit Facility as defined in the Indenture.
"Credit Facility Account" means the Credit Facility Account as defined in
the Indenture.
"Credit Facility Issuer" means a Credit Facility Issuer as defined in the
Indenture.
"Eligible Investments" means Eligible Investments as defined in the
Indenture.
"Engineer" means an engineer (who may be an employee of the Company) or
engineering firm qualified to practice the profession of engineering under the
laws of the State and who or which is acceptable to the Trustee.
"EPA" means the Department of Environmental Management of the State and
any successor body, agency, commission or department.
"Event of Default" means any of the events described as an Event of
Default in Section 7.1 hereof.
"Force Majeure" means any of the causes, circumstances or events
described as constituting Force Majeure in Section 7.1 hereof.
"Government Obligations" means Government Obligations as defined in the
Indenture.
"Holder" or "Holder of a Bond" means the Person in whose name a Bond is
registered on the Register.
"Indenture" means the Trust Indenture, dated as of the same date as this
Agreement, between the Issuer and the Trustee, as amended or supplemented from
time to time.
"Interest Rate for Advances" means the interest rate per year payable on
the Bonds.
"Letter of Credit" means the Letter of Credit as defined in the
Indenture.
"Loan" means the loan by the Issuer to the Company of the proceeds
received from the sale of the Bonds.
"Loan Payment Date" means any date on which any Bond Service Charges are
due and payable.
"Loan Payments" means the amounts required to be paid by the Company in
repayment of the Loan pursuant to Section 4.1 hereof.
"1954 Code" means the Internal Revenue Code of 1954 as amended from time
to time through the date of enactment of the Code. References to the 1954
Code and Sections of the 1954 Code include relevant applicable regulations
(including temporary regulations) and proposed regulations thereunder and any
successor provisions to those Sections, regulations or proposed regulations.
"Notice Address" means:
(a) As to the Issuer: City of Princeton, Indiana
City Building
Princeton, Indiana 47670
Attention: Mayor
(b) As to the Company: PSI Energy, Inc.
1000 East Main Street
Plainfield, Indiana 46168
Attention: Treasurer
with a copy to:
PSI Energy, Inc.
139 East Fourth Street
Cincinnati, Ohio 45202
Attention: Treasurer
(c) As to the Trustee: The Fifth Third Bank of Central Indiana
Fifth Third Center
38 Fountain Square
Cincinnati, Ohio 45263
Attention: Corporate Trust Administration
or such additional or different address, notice of which is given under
Section 8.3 hereof.
"Opinion of Bond Counsel" means a written opinion of nationally
recognized bond counsel selected by the Company and acceptable to the Trustee
who is experienced in matters relating to the exclusion from gross income for
federal income tax purposes of interest on obligations issued by states and
their political subdivisions. Bond Counsel may be counsel to the Trustee or
the Company.
"Original Purchaser" means the Original Purchaser as defined in the
Indenture.
"Paying Agent" means the Paying Agent as defined in the Indenture.
"Person" or words importing persons mean firms, associations,
partnerships (including without limitation, general and limited partnerships),
limited liability entities, joint ventures, societies, estates, trusts,
corporations, public or governmental bodies, other legal entities and natural
persons.
"Plant" means the Gibson Generating Station.
"Pollution Control Facility" or "Pollution Control Facilities" means
those facilities which are pollution control facilities as defined in Section
9 of Chapter 11.9 of the Act.
"Project" or "Project Facilities" means the real, personal or real and
personal property, including undivided or other interests therein, identified
in the Project Description, financed with the proceeds of the Series 1973
Bonds and Series 1979 Bonds, respectively.
"Project Description" means collectively the description of the Project
Facilities financed with the proceeds of the Series 1973 Bonds and the Project
Facilities financed with the proceeds of the Series 1979 Bonds, attached
hereto as Exhibit A, as the same may be amended in accordance with this
Agreement.
"Project Purposes" means the purposes of Pollution Control Facilities as
described in the Act and as particularly described in Exhibit A hereto.
"Project Site" means the Gibson Generating Station in Princeton, Indiana.
"Rate Period" means a Rate Period as defined in the Indenture.
"Rebate Fund" means the Rebate Fund created in the Indenture.
"Refunded Bonds" means collectively the Series 1973 Bonds and the Series
1979 Bonds.
"Refunded Bonds Indenture" means collectively the Series 1973 Indenture
for the Series 1973 Bonds and the Series 1979 Indenture for the Series 1979
Bonds.
"Refunded Bonds Loan Agreement" means collectively the Series 1973 Loan
Agreement and the Series 1979 Loan Agreement.
"Refunded Bonds Trustee" means Bank One, Indianapolis, National
Association (as successor to American Fletcher National Bank and Trust
Company), as trustee under the Refunded Bonds Indenture.
"Refunding Fund" means the Refunding Fund created in the Indenture.
"Register" means the books kept and maintained for the registration and
transfer of Bonds pursuant to Section 3.05 of the Indenture.
"Registrar" means the Registrar as defined in the Indenture.
"Reimbursement Agreement" means the Reimbursement Agreement as defined in
the Indenture.
"Remarketing Agent" means the Remarketing Agent as defined in the
Indenture.
"Revenues" means (a) the Loan Payments, (b) all other moneys received or
to be received by the Issuer (excluding the Issuer Fee) or the Trustee in
respect of repayment of the Loan, including without limitation, all moneys and
investments in the Bond Fund, (c) any moneys and investments in the Refunding
Fund, and (d) all income and profit from the investment of the foregoing
moneys. The term "Revenues" does not include any moneys or investments in the
Rebate Fund or the Bond Purchase Fund.
"Series 1973 Bonds" means the City of Princeton, Indiana Pollution
Control Revenue Bonds 1973 Series (Public Service Company of Indiana, Inc.
Project A).
"Series 1979 Bonds" means the City of Princeton, Indiana Pollution
Control Revenue Bonds 1979 Series (Public Service Company of Indiana, Inc.
Project B).
"Series 1973 Indenture" means the Trust Indenture dated as of December
15, 1973 between Bank One, Indianapolis, National Association (as successor to
American Fletcher National Bank and Trust Company) and Public Service Company
of Indiana, Inc.
"Series 1979 Indenture" means the Trust Indenture dated as of March 1,
1979 between Bank One, Indianapolis, National Association (as successor to
American Fletcher National Bank and Trust Company) and Public Service Company
of Indiana, Inc.
"Series 1973 Loan Agreement" means the Loan Agreement dated as of
December 15, 1973 between the City of Princeton, Indiana and Public Service
Company of Indiana, Inc.
"Series 1979 Loan Agreement" means the Loan Agreement dated as of March
1, 1979 between the City of Princeton, Indiana and Public Service Company of
Indiana, Inc.
"State" means the State of Indiana.
"Term Rate Period" means a Term Rate Period as defined in the Indenture.
"Trustee" means The Fifth Third Bank of Central Indiana located in
Indianapolis, Indiana, a corporation duly organized and validly existing under
the laws of the State, until a successor Trustee shall have become such
pursuant to the applicable provisions of the Indenture, and thereafter
"Trustee" shall mean the successor Trustee. "Principal Office" of the Trustee
shall mean the principal corporate trust office of the Trustee, which office
at the date of issuance of the Bonds is located at its Notice Address.
"Unassigned Issuer Rights" means all of the rights of the Issuer to
receive Additional Payments under Section 4.2 hereof, to inspection pursuant
to Section 5.1 hereof, to be held harmless and indemnified under Section 5.9
hereof, to be reimbursed for attorney's fees and expenses under Section 7.4
hereof and to give or withhold consent to amendments, changes, modifications,
alterations and termination of this Agreement under Section 8.6 hereof and its
right to enforce such rights.
"Variable Rate" means a Variable Rate as defined in the Indenture.
Section I.3. Interpretation. Any reference herein to the State, to the
Issuer or to any member or officer of either includes entities or officials
succeeding to their respective functions, duties or responsibilities pursuant
to or by operation of law or lawfully performing their functions.
Any reference to a section or provision of the Constitution of the State
or the Act, or to a section, provision or chapter of the Indiana Code, or to
any statute of the United States of America, includes that section, provision
or chapter as amended, modified, revised, supplemented or superseded from time
to time; provided, that no amendment, modification, revision, supplement or
superseding section, provision or chapter shall be applicable solely by reason
of this provision, if it constitutes in any way an impairment of the rights or
obligations of the Issuer, the State, the Holders, the Trustee, the Registrar,
an Authenticating Agent, a Paying Agent, the Credit Facility Issuer, the
Remarketing Agent, or the Company under this Agreement, the Indenture or the
Bonds.
Unless the context indicates otherwise, words importing the singular
number include the plural number, and vice versa; the terms "hereof",
"hereby", "herein", "hereto", "hereunder" and similar terms refer to this
Agreement; and the term "hereafter" means after, and the term "heretofore"
means before, the date of delivery of the Bonds. Words of any gender include
the correlative words of the other genders, unless the sense indicates
otherwise.
Section I.4. Captions and Headings. The captions and headings in this
Agreement are used solely for convenience of reference and in no way define,
limit or describe the scope or intent of any Articles, Sections, subsections,
paragraphs or subparagraphs or clauses hereof.
(End of Article I)
ARTICLE II
REPRESENTATIONS
Section II.1. Representations of the Issuer. The Issuer represents
that: (a) it is a municipal corporation duly organized and validly existing
under the laws of the State; (b) it has duly accomplished all conditions
necessary to be accomplished by it prior to the issuance and delivery of the
Bonds and the execution and delivery of this Agreement and the Indenture; (c)
it is not in violation of or in conflict with any provisions of the laws of
the State which would impair its ability to carry out its obligations
contained in this Agreement or the Indenture; (d) it is empowered to enter
into the transactions contemplated by this Agreement and the Indenture; (e) it
has duly authorized the execution, delivery and performance of this Agreement
and the Indenture; (f) it will do all things in its power in order to maintain
its existence or assure the assumption of its obligations under this Agreement
and the Indenture by any successor municipal corporation; and (g) following
reasonable notice, a public hearing was held on October 21, 1996 with respect
to the issuance of the Bonds as required by Section 147(f) of the Code.
Section II.2. No Warranty by Issuer of Condition or Suitability of the
Project. The Issuer makes no warranty, either express or implied, as to the
suitability or utilization of the Project for the Project Purposes, or as to
the condition of the Project Facilities or that the Project Facilities are or
will be suitable for the Company's purposes or needs.
Section II.3. Representations and Covenants of the Company. The Company
represents that:
(a) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State, with power and
authority (corporate and other) to own its properties and conduct its business,
to execute and deliver this Agreement and to perform its obligations under this
Agreement.
(b) This Agreement has been duly authorized, executed and delivered by
the Company and this Agreement constitutes a valid and legally binding
obligation of the Company, enforceable in accordance with its terms, subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
(c) The execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby will not
violate any provision of law or regulation applicable to the Company, or of any
writ or decree of any court or governmental instrumentality, or of the Articles
of Incorporation, as amended, or the Regulations of the Company, or of any
mortgage, indenture, contract, agreement or other undertaking to which the
Company is a party or which purports to be binding upon the Company or upon any
of its assets.
(d) Substantially all (at least 90%) of the proceeds of each of the
Series 1973 Bonds and the Series 1979 Bonds were used to provide "pollution
control facilities" within the meaning of Section 103(b)(4)(F) of the 1954
Code, the original use of which facilities commenced with the Company, and
which facilities were described in inducement resolutions adopted by the Issuer
on August 27, 1973 with respect to those facilities financed with the proceeds
of the Series 1973 Bonds and on January 19, 1976 with respect to those
facilities financed with the proceeds of the Series 1979 Bonds. Construction
of the cooling lake financed with the proceeds of the Series 1973 Bonds was
commenced by the Company prior to August 31, 1972 and such cooling lake was not
placed in service by the Company prior to August 27, 1973. Construction of the
other pollution control facilities financed with the proceeds of the Series
1973 Bonds and the construction of the pollution control facilities financed
with the proceeds of the Series 1979 Bonds was not commenced prior to August
27, 1973 and January 19, 1976, respectively. All of the proceeds of the Series
1973 Bonds have been spent for the Series 1973 Bonds portion of the Project
pursuant to the Series 1973 Loan Agreement or to pay costs of issuance of the
Series 1973 Bonds, and all of the proceeds of the Series 1979 Bonds have been
spent for the Series 1979 Bonds portion of the Project pursuant to the Series
1979 Loan Agreement or to pay costs of issuance of the Series 1979 Bonds. The
proceeds of the Bonds (other than any accrued interest thereon) will be used
exclusively to refund the Refunded Bonds; any investment earnings thereon will
be used to pay principal, premium or interest on the Refunded Bonds; and none
of the proceeds of the Bonds will be used to pay for any costs of issuance of
the Bonds. The Refunded Bonds were issued prior to August 16, 1986. The
principal amount of the Bonds does not exceed the outstanding principal amount
of the Refunded Bonds. The proceeds of the Bonds will be used to retire the
Refunded Bonds not later than 90 days after the date of issuance of the Bonds.
(e) It has caused the Project to be substantially completed. The
Project constitutes Pollution Control Facilities under the Act and is
consistent with the purposes of the Act. The Project is being, and the Company
will cause the Project to be, operated and maintained in such manner to conform
with all applicable zoning, planning, building, environmental and other
applicable governmental regulations and all permits, variances and orders
issued or granted pursuant thereto, including the permit-to-install for the
Project, which permits, variances and orders have not been withdrawn or
otherwise suspended, and to be consistent with the Act.
(f) It has used or operated or has caused to be used or operated, and
presently intends to use or operate or cause to be used or operated the Project
Facilities in a manner consistent with the Project Purposes until the date on
which the Bonds have been fully paid and knows of no reason why the Project
Facilities will not be so operated. The Company does not intend to sell or
otherwise dispose of the Project or any portion thereof.
(g) None of the proceeds of the Refunded Bonds were used and none of
the proceeds of the Bonds will be used to provide any airplane, skybox or other
private luxury box, or health club facility, any facility primarily used for
gambling or any store the principal business of which is the sale of alcoholic
beverages for consumption off premises.
(h) Less than 25% of the proceeds of the Series 1973 Bonds and less
than 25% of the proceeds of the Series 1979 Bonds have been used and less than
25% of the proceeds of the Bonds will be used directly or indirectly to acquire
land or any interest therein, and none of such proceeds has been or will be
used to provide land which is to be used for farming purposes.
(i) No portion of the proceeds of the Refunded Bonds has been used and
no portion of the proceeds of the Bonds will be used to acquire existing
property or any interest therein unless the first use of such property was by
the Company and was pursuant to and followed such acquisition.
(j) After the expiration of any applicable temporary period under
Section 148(d)(3) of the Code, at no time during any bond year will the
aggregate amount of gross proceeds of the Bonds invested in higher yielding
investments (within the meaning of Section 148(b) of the Code) exceed 150
percent of the debt service on the Bonds for such bond year and the aggregate
amount of gross proceeds of the Bonds invested in higher yielding investments,
if any, will be promptly and appropriately reduced as the outstanding amount
of the Bonds is reduced, provided however that the foregoing shall not require
the sale or disposition of any investments in higher yielding investments if
such sale or disposition would result in a loss which exceeds the amount which
would be paid to the United States (but for such sale or disposition) at the
time of such sale or disposition if a payment were due at such time. At no
time will any funds constituting gross proceeds of the Bonds be used in a
manner as would constitute failure of compliance with Section 148 of the Code.
The terms "bond year", "gross proceeds", "higher yielding investments",
"yield", and "debt service" have the meanings assigned to them for purposes of
Section 148 of the Code.
(k) The Refunded Bonds were not, and the Bonds will not be, "federally
guaranteed" within the meaning of Section 149(b) of the Code.
(l) It is not anticipated that as of the date hereof, there will be
created any "replacement proceeds", within the meaning of Section 1.148-1(c) of
the Treasury Regulations, with respect to the Bonds; however, in the event that
any such replacement proceeds are deemed to have been created, such amounts
will be invested in compliance with Section 148 of the Code.
(m) On the dates of issuance and delivery of each of the Series 1973
Bonds and the Series 1979 Bonds, the Company reasonably expected that at least
85% of the spendable proceeds of each of the Series 1973 Bonds and the Series
1979 Bonds would be expended to carry out the respective governmental purpose
of each such issue within the 3-year period beginning on the respective date
each such issue was issued. All of the spendable proceeds of the Refunded
Bonds have been expended as of the date of issuance of the Bonds. None of the
proceeds of either the Series 1973 Bonds or the Series 1979 Bonds were invested
in nonpurpose investments having a substantially guaranteed yield for four
years or more.
(n) The average maturity of the Bonds does not exceed 120% of the
average reasonably expected economic life of the Project Facilities financed by
the proceeds of the Refunded Bonds (determined under Section 147(b) of the
Code).
(o) The information furnished by the Company and used by the Issuer in
preparing the certifications and statements pursuant to Sections 148 and 149(e)
of the Code or their statutory predecessors with respect to the Refunded Bonds
was accurate and complete as of the respective dates of issuance of the
Refunded Bonds, and the information furnished by the Company and used by the
Issuer in preparing the certification pursuant to Section 148 of the Code and
in preparing the information statement pursuant to Section 149(e) of the Code,
both referred to in the Bond Resolution, will be accurate and complete as of
the date of issuance of the Bonds.
(p) The Project Facilities do not include any office except for
offices (i) located on the Project Site and (ii) not more than a de minimis
amount of the functions to be performed at which is not directly related to the
day-to-day operations of the Project Facilities.
(End of Article II)
ARTICLE III
COMPLETION OF THE PROJECT; ISSUANCE OF THE BONDS
Section III.1. Acquisition, Construction and Installation. The Company
represents that it has caused the Project Facilities to be acquired,
constructed and installed on the Project Site, substantially in accordance with
the Project Description and in conformance with all applicable zoning,
planning, building and other similar regulations of all governmental
authorities having jurisdiction over the Project and all permits, variances and
orders issued in respect of the Project by EPA, and that the proceeds derived
from the Refunded Bonds, including any investment thereof, were expended in
accordance with the Refunded Bonds Indenture and the Refunded Bonds Loan
Agreement.
Section III.2. Project Description. The Project Description may be
changed from time to time by, or with the consent of, the Company provided that
any such change shall also be filed with the Issuer and provided further that
no change in the Project Description shall materially change the function of
the Project Facilities unless the Trustee shall have received (i) an Engineer's
certificate that such changes will not impair the significance or character of
the Project Facilities as Pollution Control Facilities and (ii) an Opinion of
Bond Counsel or ruling of the Internal Revenue Service to the effect that such
amendment will not adversely affect the exclusion of interest on the Bonds from
gross income for federal income tax purposes.
Section III.3. Issuance of the Bonds; Application of Proceeds. To
provide funds to make the Loan to the Company to assist the Company in the
refunding of the Refunded Bonds, the Issuer will issue, sell and deliver the
Bonds to the Original Purchaser. The Bonds will be issued pursuant to the
Indenture in the aggregate principal amount, will bear interest, will mature
and will be subject to redemption as set forth therein. The Company hereby
approves the terms and conditions of the Indenture and the Bonds, and the terms
and conditions under which the Bonds will be issued, sold and delivered.
The Company hereby requests that the Issuer notify the Refunded Bonds
Trustee (unless the Refunded Bonds Trustee has already received such notice),
pursuant to the Refunded Bonds Indenture, that the entire outstanding principal
amount of the Refunded Bonds is to be redeemed on December 16, 1996 at a
redemption price of 100% of the principal amount thereof plus accrued interest
to that redemption date.
The proceeds from the sale of the Bonds (other than any accrued interest)
shall be loaned to the Company to assist the Company in refunding the Refunded
Bonds in order to reduce the interest cost payable by the Company; those
proceeds shall be deposited in the Refunding Fund. On December 13, 1996 all
moneys on deposit in the Refunding Fund shall be disbursed by the Trustee as
provided in Section 5.02 of the Indenture to the Refunded Bonds Trustee for
deposit in the Bond Fund created in the Series 1973 Indenture and the Series
1979 Indenture and applied by the Refunded Bonds Trustee to the payment of
principal of and interest on the Series 1973 Bonds and the Series 1979 Bonds on
their redemption on December 16, 1996.
Pending disbursement pursuant to this Section, the proceeds so deposited
in the Refunding Fund, together with any investment earnings thereon, shall
constitute a part of the Revenues assigned by the Issuer to the Trustee for the
payment of Bond Service Charges. Any accrued interest shall be deposited in
the Bond Fund.
Section III.4. Investment of Fund Moneys. At the oral (confirmed
promptly in writing) or written request of the Company, any moneys held as part
of the Bond Fund, the Refunding Fund or the Rebate Fund shall be invested or
reinvested by the Trustee in Eligible Investments; provided, that such moneys
shall be invested or reinvested by the Trustee only in Eligible Investments
which shall mature, or which shall be subject to redemption by the holder
thereof at the option of such holder, not later than the date upon which the
moneys so invested are needed to make payments from those Funds. The Issuer
(to the extent it retained or retains direction or control) and the Company
each hereby represents that the investment and reinvestment and the use of the
proceeds of the Refunded Bonds were restricted in such manner and to such
extent as was necessary so that the Refunded Bonds would not constitute
arbitrage bonds under the statutory predecessor of the Code and each hereby
covenants that it will restrict that investment and reinvestment and the use of
the proceeds of the Bonds in such manner and to such extent, if any, as may be
necessary so that the Bonds will not constitute arbitrage bonds under Section
148 of the Code.
The Company shall provide the Issuer with, and the Issuer may base its
certificate and statement, each as authorized by the Bond Resolution, on a
certificate of an appropriate officer, employee or agent of or consultant to
the Company for inclusion in the transcript of proceedings for the Bonds,
setting forth the reasonable expectations of the Company on the date of
delivery of and payment for the Bonds regarding the amount and use of the
proceeds of the Bonds and the facts, estimates and circumstances on which those
expectations are based.
Section III.5. Rebate Fund. To the extent required by Section 5.08 of
the Indenture, within five days after the end of the fifth Bond Year (as
defined in the Indenture) and every fifth Bond Year thereafter, and within five
days after payment in full of all outstanding Bonds, the Company shall
calculate the amount of Excess Earnings (as defined in the Indenture) as of the
end of that Bond Year or the date of such payment and shall notify the Trustee
of that amount. If the amount then on deposit in the Rebate Fund created under
the Indenture is less than the amount of Excess Earnings (computed by taking
into account the amount or amounts, if any, previously paid to the United
States pursuant to Section 5.08 of the Indenture and this Section), the Company
shall, within five days after the date of the aforesaid calculation, pay to the
Trustee for deposit in the Rebate Fund an amount sufficient to cause the Rebate
Fund to contain an amount equal to the Excess Earnings. The obligation of the
Company to make such payments shall remain in effect and be binding upon the
Company notwithstanding the release and discharge of the Indenture. The
Company shall obtain and keep such records of the computations made pursuant to
this Section as are required under Section 148(f) of the Code.
(End of Article III)
ARTICLE IV
LOAN BY ISSUER; LOAN PAYMENTS;
ADDITIONAL PAYMENTS; AND CREDIT FACILITY
Section IV.1. Loan Repayment. Upon the terms and conditions of this
Agreement, the Issuer agrees to make the Loan to the Company. The proceeds of
the Loan shall be deposited with the Trustee pursuant to Section 3.3 hereof.
In consideration of and in repayment of the Loan, the Company shall make, as
Loan Payments, to the Trustee for the account of the Issuer, payments which
correspond, as to time, and are equal in amount as of the Loan Payment Date, to
the corresponding Bond Service Charges payable on the Bonds. All Loan Payments
received by the Trustee shall be held and disbursed in accordance with the
provisions of the Indenture and this Agreement for application to the payment
of Bond Service Charges.
The Company shall be entitled to a credit against the Loan Payments
required to be made on any Loan Payment Date to the extent that the balance of
the Bond Fund is then in excess of amounts required (a) for the payment of
Bonds theretofore matured or theretofore called for redemption, or to be called
for redemption pursuant to Section 6.1 hereof (b) for the payment of interest
for which checks or drafts have been drawn and mailed by the Trustee or Paying
Agent, and (c) to be deposited in the Bond Fund by the Indenture for use other
than for the payment of Bond Service Charges due on that Loan Payment Date.
The Company's obligation to make Loan Payments shall be reduced to the
extent of any payments made by any Credit Facility Issuer to the Trustee in
respect of the principal of, premium, if any, or interest on the Bonds when due
pursuant to any Credit Facility, provided, that the Credit Facility Issuer has
been reimbursed for such payments in accordance with the terms of the
Reimbursement Agreement.
Except for such interest of the Company as may hereafter arise pursuant to
Section 8.2 hereof or Sections 5.06 or 5.07 of the Indenture, the Company and
the Issuer each acknowledge that neither the Company, the State nor the Issuer
has any interest in the Bond Fund or the Bond Purchase Fund, and any moneys
deposited therein shall be in the custody of and held by the Trustee in trust
for the benefit of the Holders.
Section IV.2. Additional Payments. The Company shall pay to the Issuer,
as Additional Payments hereunder, any and all costs and expenses incurred or to
be paid by the Issuer in connection with the issuance and delivery of the Bonds
or otherwise related to actions taken by the Issuer under this Agreement or the
Indenture.
The Company shall pay the Administration Expenses to the Trustee, the
Registrar, the Remarketing Agent, and any Paying Agent or Authenticating Agent,
as appropriate, as Additional Payments hereunder.
The Company may, without creating a default hereunder, contest in good
faith the reasonableness of any such cost or expense incurred or to be paid by
the Issuer and any Administration Expenses claimed to be due to the Trustee,
the Registrar, the Remarketing Agent, any Paying Agent or any Authenticating
Agent.
In the event the Company should fail to pay any Loan Payments, Additional
Payments or Administration Expenses when due, the payment in default shall
continue as an obligation of the Company until the amount in default shall have
been fully paid together with interest thereon during the default period at the
Interest Rate for Advances.
Section IV.3. Place of Payments. The Company shall make all Loan
Payments directly to the Trustee at its Principal Office. Additional Payments
shall be made directly to the person or entity to whom or to which they are
due.
Section IV.4. Obligations Unconditional. The obligations of the Company
to make Loan Payments, Additional Payments and any payments required of the
Company under Section 5.09 of the Indenture shall be absolute and
unconditional, and the Company shall make such payments without abatement,
diminution or deduction regardless of any cause or circumstances whatsoever
including, without limitation, any defense, set-off, recoupment or counterclaim
which the Company may have or assert against the Issuer, the Trustee, the
Registrar, the Remarketing Agent or any other Person.
Section IV.5. Assignment of Revenues and Agreement. To secure the
payment of Bond Service Charges, the Issuer shall, by the Indenture, (a)
absolutely and irrevocably assign to the Trustee, its successors in trust and
its and their assigns forever, (1) all right, title and interest of the Issuer
in and to all moneys and investments (including, without limitation, the
proceeds of the Credit Facility) in the Bond Fund and (2) all of the Issuer's
rights and remedies under this Agreement (except for the Unassigned Issuer
Rights), and (b) grant a security interest to the Trustee, its successors in
trust and its and their assigns forever, in all of its rights to and interest
in the Revenues including, without limitation, all Loan Payments and other
amounts receivable by or on behalf of the Issuer under the Agreement in respect
of repayment of the Loan (other than the Credit Facility Account, all moneys
and investments therein and the proceeds of the Credit Facility). The Company
hereby agrees and consents to those assignments and that grant of a security
interest.
Section IV.6. Credit Facility; Alternate Credit Facility; Cancellation.
(a) The Company agrees to provide for the payment of the principal of and
interest on the Bonds and for payment of the purchase price of Bonds delivered
to the Trustee or Paying Agent pursuant to the Indenture by causing the Letter
of Credit to be delivered to the Trustee on the date of the delivery of the
Bonds. The Company hereby authorizes and directs the Trustee to draw moneys
under the Letter of Credit, in accordance with its terms and the terms of the
Indenture, to the extent necessary to pay the principal of and interest on the
Bonds when due and to pay the purchase price of Bonds as provided 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 beyond its then
stated date of expiration.
(b) Upon satisfaction of the requirements contained in Section 14.03
of the Indenture, the Company may provide for the delivery of an Alternate
Credit Facility.
(c) Upon satisfaction of the conditions contained in Section 14.02 of
the Indenture, the Company may cancel any Credit Facility in effect at such
time and direct the Trustee in writing to surrender such Credit Facility to
the Credit Facility Issuer by which it was issued in accordance with the
Indenture; provided, that no such cancellation shall become effective and no
such surrender shall take place until all Bonds subject to purchase pursuant to
Section 4.07(d) of the Indenture have been so purchased or redeemed with the
proceeds of such Credit Facility.
Section .1. Company's Option to Elect Rate Period. The Company shall
have, and is hereby granted, the option to elect to convert on any Conversion
Date the interest rate borne by the Bonds to another Variable Rate to be
effective for a Rate Period pursuant to the provisions of Article II of the
Indenture and subject to the terms and conditions set forth therein. To
exercise such options, the Company shall give the written notice required by
the Indenture.
Section .2. Company's Obligation to Purchase Bonds. The Company hereby
agrees to pay or cause to be paid to the Trustee or the Paying Agent, on or
before each day on which Bonds may be or are required to be tendered for
purchase, amounts equal to the amounts to be paid by the Trustee or the Paying
Agent with respect to the Bonds tendered for purchase on such dates pursuant to
Article IV of the Indenture; provided, however, that the obligation of the
Company to make any such payment under this Section shall be reduced by the
amount of (A) moneys paid by the Remarketing Agent as proceeds of the
remarketing of such Bonds by the Remarketing Agent, (B) moneys drawn under any
Credit Facility, for the purpose of paying such purchase price and (C) other
moneys made available by the Company, as set forth in Section 4.08(b)(ii) of
the Indenture.
(End of Article IV)
ARTICLE I
ADDITIONAL AGREEMENTS AND COVENANTS
Section I.1. Right of Inspection. The Company agrees that, subject to
reasonable security and safety regulations and to reasonable requirements as to
notice, the Issuer and the Trustee and their or any of their respective duly
authorized agents shall have the right at all reasonable times to enter upon
the Project Site to examine and inspect the Projects.
Section I.2. Maintenance. The Company shall use its best efforts to keep
and maintain the Project Facilities, including all appurtenances thereto and
any personal property therein or thereon, in good repair and good operating
condition so that the Project Facilities will continue to constitute Pollution
Control Facilities, for the purposes of the operation thereof as required by
Section 5.4 hereof.
So long as such shall not be in violation of the Act or impair the
character of the Project Facilities as Pollution Control Facilities, and
provided there is continued compliance with applicable laws and regulations of
governmental entities having jurisdiction thereof, the Company shall have the
right to remodel the Project Facilities or make additions, modifications and
improvements thereto, from time to time as it, in its discretion, may deem to
be desirable for its uses and purposes, the cost of which remodeling,
additions, modifications and improvements shall be paid by the Company and the
same shall, when made, become a part of the Project Facilities.
Section I.3. Removal of Portions of the Project Facilities. The Company
shall not be under any obligation to renew, repair or replace any inadequate,
obsolete, worn out, unsuitable, undesirable or unnecessary portions of the
Project Facilities, except that, subject to Section 5.4 hereof, it will use its
best efforts to ensure the continued character of the Project Facilities as
Pollution Control Facilities. The Company shall have the right from time to
time to substitute personal property or fixtures for any portions of the
Project Facilities, provided that the personal property or fixtures so
substituted shall not impair the character of the Project Facilities as
Pollution Control Facilities. Any such substituted property or fixtures shall,
when so substituted, become a part of the Project Facilities. The Company
shall also have the right to remove any portion of the Project Facilities,
without substitution therefor; provided, that the Company shall deliver to the
Trustee a certificate signed by an Engineer describing said portion of the
Project Facilities and stating that the removal of such property or fixtures
will not impair the character of the Project Facilities as Pollution Control
Facilities.
Section I.4. Operation of Project Facilities. The Company will, subject
to its obligations and rights to maintain, repair or remove portions of the
Project Facilities, as provided in Sections 5.2 and 5.3 hereof, use its best
efforts to continue operation of the Project Facilities so long as and to the
extent that operation thereof is required to comply with laws or regulations of
governmental entities having jurisdiction thereof or unless the Issuer shall
have approved the discontinuance of such operation (which approval shall not be
unreasonably withheld). The Company agrees that it will, within the design
capacities thereof, use its best efforts to operate and maintain the Project
Facilities in accordance with all applicable, valid and enforceable rules and
regulations of governmental entities having jurisdiction thereof; provided,
that the Company reserves the right to contest in good faith any such laws or
regulations.
Nothing in this Agreement shall prevent or restrict the Company, in its
sole discretion, at any time, from discontinuing or suspending either
permanently or temporarily its use of any facility of the Company served by the
Project Facilities and in the event such discontinuance or suspension shall
render unnecessary the continued operation of the Project Facilities, the
Company shall have the right to discontinue the operation of the Project
Facilities during the period of any such discontinuance or suspension.
Section I.5. Insurance. The Company shall cause the Project Facilities
to be kept insured against fire or other casualty to the extent that property
of similar character is usually so insured by companies similarly situated and
operating like properties, to a reasonable amount by reputable insurance
companies or, in lieu of or supplementing such insurance in whole or in part,
adopt some other method or plan of protection against loss by fire or other
casualty at least equal in protection to the method or plan of protection
against loss by fire or other casualty of companies similarly situated and
operating properties subject to similar or greater fire or other hazards or on
which properties an equal or higher primary fire or other casualty insurance
rate has been set by reputable insurance companies.
Section I.6. Workers' Compensation Coverage. Throughout the term of this
Agreement, the Company shall comply, or cause compliance, with applicable
workers' compensation laws of the State.
Section I.7. Damage; Destruction and Eminent Domain. If, during the term
of this Agreement, the Project Facilities or any portion thereof is destroyed
or damaged in whole or in part by fire or other casualty, or title to, or the
temporary use of, the Project Facilities or any portion thereof shall have been
taken by the exercise of the power of eminent domain, the Company (unless it
shall have exercised its option to prepay the Loan Payments pursuant to Section
6.2 hereof) shall promptly repair, rebuild or restore the portion of the
Project Facilities so damaged, destroyed or taken with such changes,
alterations and modifications (including the substitution and addition of other
property) as may be necessary or desirable for the administration and operation
of the Project Facilities as Pollution Control Facilities and as shall not
impair the character or significance of the Project Facilities as furthering
the purposes of the Act.
Section I.8. Company to Maintain its Corporate Existence; Conditions
Under Which Exceptions Permitted. The Company agrees that, during the term of
this Agreement, it will 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 into another corporation or permit one or more other
corporations to consolidate with or merge into it; provided that the Company
may, without violating its agreement contained in this Section, consolidate
with or merge into another corporation, or permit one or more other
corporations to consolidate with or merge into it, or sell or otherwise
transfer to another corporation all or substantially all of its assets as an
entirety and thereafter dissolve, provided the surviving, resulting or
transferee corporation, as the case may be (if other than the Company), is a
corporation organized and existing under the laws of one of the states of the
United States, and assumes in writing all of the obligations of the Company
herein, and, if not an Indiana corporation, is qualified to do business in the
State.
If consolidation, merger or sale or other transfer is made as provided in
this Section, the provisions of this Section 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.
Section I.9. Indemnification. The Company releases the Issuer from,
agrees that the Issuer shall not be liable for, and indemnifies the Issuer
against, all liabilities, claims, costs and expenses imposed upon or asserted
against the Issuer on account of: (a) any loss or damage to property or injury
to or death of or loss by any person that may be occasioned by any cause
whatsoever pertaining to the construction, maintenance, operation and use of
the Project Facilities; (b) any breach or default on the part of the Company in
the performance of any covenant or agreement of the Company under this
Agreement or any related document, or arising from any act or failure to act by
the Company, or any of its agents, contractors, servants, employees or
licensees; (c) the authorization, issuance and sale of the Bonds, and the
provision of any information furnished in connection therewith concerning the
Project Facilities or the Company (including, without limitation, any
information furnished by the Company for inclusion in any certifications made
by the Issuer under Section 3.4 hereof or for inclusion in, or as a basis for
preparation of, the Form 8038 information statement to be filed by the Issuer);
and (d) any claim or action or proceeding with respect to the matters set forth
in (a), (b) and (c) above brought thereon.
The Company agrees to indemnify the Trustee, the Paying Agent, the
Remarketing Agent and the Registrar (each hereinafter referred to in this
section as an "indemnified party") for and to hold each of them harmless
against all liabilities, claims, costs and expenses incurred without negligence
or willful misconduct on the part of the indemnified party, on account of any
action taken or omitted to be taken by the indemnified party in accordance with
the terms of this Agreement, the Bonds or the Indenture or any action taken at
the request of or with the consent of the Company, including the costs and
expenses of the indemnified party in defending itself against any such claim,
action or proceeding brought in connection with the exercise or performance of
any of its powers or duties under this Agreement, the Bonds or the Indenture.
In case any action or proceeding is brought against the Issuer or an
indemnified party in respect of which indemnity may be sought hereunder, the
party seeking indemnity promptly shall give notice of that action or proceeding
to the Company, and the Company upon receipt of that notice shall have the
obligation and the right to assume the defense of the action or proceeding;
provided, that failure of a party to give that notice shall not relieve the
Company from any of its obligations under this Section unless that failure
prejudices the defense of the action or proceeding by the Company. At its own
expense, an indemnified party may employ separate counsel and participate in
the defense; provided, however, where it is ethically inappropriate for one
firm to represent the interests of the Issuer and any other indemnified party
or parties, the Company shall pay the Issuer's legal expenses in connection
with the Issuer's retention of separate counsel. The Company shall not be
liable for any settlement made without its consent.
The indemnification set forth above is intended to and shall include the
indemnification of all affected officials, directors, officers and employees of
the Issuer, the Trustee, the Paying Agent, the Remarketing Agent and the
Registrar, respectively. That indemnification is intended to and shall be
enforceable by the Issuer, the Trustee, the Paying Agent, the Remarketing Agent
and the Registrar, respectively, to the full extent permitted by law.
Section I.10. Company Not to Adversely Affect Exclusion of Interest on
Bonds From Gross Income For Federal Income Tax Purposes. The Company hereby
covenants and represents that it has taken and caused to be taken and shall
take and cause to be taken all actions that may be required of it for the
interest on the Bonds to be and remain excluded from the gross income of the
Holders for federal income tax purposes, and that it has not taken or permitted
to be taken on its behalf, and covenants that it will not take, or permit to be
taken on its behalf, any action which, if taken, would adversely affect that
exclusion under the provisions of the Code.
Section I.11. Use of Project Facilities. The Issuer agrees that it will
not take any action, or cause any action to be taken on its behalf, to
interfere with the Company's ownership interest in the Project or to prevent
the Company from having possession, custody, use and enjoyment of the Project
other than pursuant to Article VII of this Agreement or Article VII of the
Indenture.
Section I.12. Assignment by Company. This Agreement may be assigned in
whole or in part by the Company without the necessity of obtaining the consent
of either the Issuer or the Trustee, subject, however, to each of the following
conditions:
(a) No assignment (other than pursuant to Section 5.8 hereof) shall
relieve the Company from primary liability for any of its obligations
hereunder, and in the event of any such assignment the Company shall continue
to remain primarily liable for the payment of the Loan Payments and Additional
Payments and for performance and observance of the agreements on its part
herein provided to be performed and observed by it.
(b) Any assignment by the Company must retain for the Company such
rights and interests as will permit it to perform its obligations under this
Agreement, and any assignee from the Company shall assume the obligations of
the Company hereunder to the extent of the interest assigned.
(c) The Company shall, within 30 days after execution thereof, furnish
or cause to be furnished to the Issuer and the Trustee a true and complete copy
of each such assignment together with any instrument of assumption.
(d) Any assignment from the Company shall not materially impair
fulfillment of the Project Purposes to be accomplished by operation of the
Project as herein provided.
(End of Article V)
ARTICLE II
REDEMPTION
Section II.1. Optional Redemption. Provided no Event of Default shall
have occurred and be subsisting, at any time and from time to time, the Company
may deliver moneys to the Trustee in addition to Loan Payments or Additional
Payments required to be made and direct the Trustee to use the moneys so
delivered for the purpose of calling Bonds for optional redemption in
accordance with the applicable provisions of the Indenture providing for
optional redemption at the redemption price stated in the Indenture. Pending
application for those purposes, any moneys so delivered shall be held by the
Trustee in a special account in the Bond Fund and delivery of those moneys
shall not, except as set forth in Section 4.1 hereof, operate to abate or
postpone Loan Payments or Additional Payments otherwise becoming due or to
alter or suspend any other obligations of the Company under this Agreement.
Section II.2. Extraordinary Optional Redemption. The Company shall have,
subject to the conditions hereinafter imposed, the option during a Term Rate
Period to direct the redemption of the Bonds in whole in accordance with the
applicable provisions of the Indenture upon the occurrence of any of the
following events:
(a) The Project or the Plant shall have been damaged or destroyed to
such an extent that (1) the Project or the Plant cannot reasonably be expected
to be restored, within a period of six consecutive months, to the condition
thereof immediately preceding such damage or destruction or (2) the Company is
reasonably expected to be prevented from carrying on its normal use and
operation of the Project or the Plant for a period of six consecutive months.
(b) Title to, or the temporary use of, all or a significant part of
the Project or the Plant shall have been taken under the exercise of the power
of eminent domain to such an extent (1) that the Project or the Plant cannot
reasonably be expected to be restored within a period of six consecutive months
to a condition of usefulness comparable to that existing prior to the taking or
(2) the Company is reasonably expected to be prevented from carrying on its
normal use and operation of the Project or the Plant for a period of six
consecutive months.
(c) As a result of any changes in the Constitution of the State, the
Constitution of the United States of America or any state or federal laws or as
a result of legislative or administrative action (whether state or federal) or
by final decree, judgment or order of any court or administrative body
(whether state or federal) entered after any contest thereof by the Issuer or
the Company in good faith, this Agreement shall have become void or
unenforceable or impossible of performance in accordance with the intent and
purpose of the parties as expressed in this Agreement.
(d) Unreasonable burdens or excessive liabilities shall have been
imposed upon the Issuer or the Company with respect to the Project or the Plant
or the operation thereof, including, without limitation, the imposition of
federal, state or other ad valorem, property, income or other taxes other than
ad valorem taxes at the rates presently levied upon privately owned property
used for the same general purpose as the Project or the Plant.
(e) Changes in the economic availability of raw materials, operating
supplies, energy sources or supplies or facilities (including, but not limited
to, facilities in connection with the disposal of industrial wastes) necessary
for the operation of the Project or the Plant for the Project Purposes occur or
technological or other changes occur which the Company cannot reasonably
overcome or control and which in the Company's reasonable judgment render the
Project or the Plant uneconomic or obsolete for the Project Purposes.
(f) Any court or administrative body shall enter a judgment, order or
decree, or shall take administrative action, requiring the Company to cease all
or any substantial part of its operations served by the Project or the Plant to
such extent that the Company is or will be prevented from carrying on its
normal operations at the Project or the Plant for a period of six consecutive
months.
(g) The termination by the Company of operations at the Plant.
The amount payable by the Company in the event of its exercise of the
option granted in this Section shall be the sum of the following:
(i) An amount of money which, when added to the moneys and
investments held to the credit of the Bond Fund, will be sufficient pursuant to
the provisions of the Indenture to pay, at 100% of the principal amount thereof
plus accrued interest to the redemption date, and discharge, all Outstanding
Bonds on the earliest applicable redemption date, that amount to be paid to the
Trustee, plus
(ii) An amount of money equal to the Additional Payments relating
to those Bonds accrued and to accrue until actual final payment and redemption
of those Bonds, that amount or applicable portions thereof to be paid to the
Trustee or to the Persons to whom those Additional Payments are or will be due.
The requirement of (ii) above with respect to Additional Payments to accrue may
be met if provisions satisfactory to the Trustee and the Issuer are made for
paying those amounts as they accrue.
The rights and options granted to the Company in this Section may be
exercised whether or not the Company is in default hereunder; provided, that
such default will not relieve the Company from performing those actions which
are necessary to exercise any such right or option granted hereunder.
Section II.3. Mandatory Redemption. The Company shall deliver to the
Trustee the moneys needed to redeem the Bonds in accordance with any mandatory
redemption provisions relating thereto as may be set forth in Sections 4.01(b)
and 4.01(d) of the Indenture.
Section II.4. Notice of Redemption. In order to exercise an option
granted in, or to consummate a redemption required by, this Article VI, the
Company shall, within 180 days following the event authorizing the exercise of
such option, or at any time during the continuation of the condition referred
to in paragraphs (c), (d) or (e) of Section 6.2 hereof, or at any time that
optional redemption of the Bonds is permitted under the Indenture as provided
in Section 6.1 hereof, or promptly upon the occurrence of a Determination of
Taxability (as defined in the Indenture), give written notice to the Issuer and
the Trustee that it is exercising its option to direct the redemption of Bonds,
or that the redemption thereof is required by Section 4.01(b) of the Indenture
due to the occurrence of a Determination of Taxability, as the case may be, in
accordance with the Agreement and the Indenture, and shall specify therein the
date on which such redemption is to be made, which date shall not be more than
180 days from the date such notice is mailed. No notice from the Company will
be required in connection with a redemption of Bonds pursuant to the mandatory
sinking fund redemption pursuant to Section 4.01(d) of the Indenture. The
Company shall make arrangements satisfactory to the Trustee for the giving of
the required notice of redemption to the Holders of the Bonds, in which
arrangements the Issuer shall cooperate.
Section II.5. Actions by Issuer. At the request of the Company or the
Trustee, the Issuer shall take all steps required of it under the applicable
provisions of the Indenture or the Bonds to effect the redemption of all or a
portion of the Bonds pursuant to this Article VI.
(End of Article VI)
ARTICLE III
EVENTS OF DEFAULT AND REMEDIES
Section III.1. Events of Default. Each of the following shall be an
Event of Default:
(a) The occurrence of an event of default as defined in Section 7.01
(a), (b), (c) or (d) of the Indenture;
(b) The Company shall fail to observe and perform any other agreement,
term or condition contained in this Agreement, other than such failure as will
have resulted in an event of default described in (a) above and the
continuation of that failure for a period of 90 days after notice thereof shall
have been given to the Company by the Issuer or the Trustee, or for such longer
period as the Issuer and the Trustee may agree to in writing; provided, that
failure shall not constitute an Event of Default so long as the Company
institutes curative action within the applicable period and diligently pursues
that action to completion within 150 days after the expiration of initial cure
period as determined above, or within such longer period as the Issuer and the
Trustee may agree to in writing; and
(c) By decree of a court of competent jurisdiction the Company shall
be adjudicated a bankrupt, or an order shall be made approving a petition or
answer filed seeking reorganization or readjustment of the Company under the
federal bankruptcy laws or other law or statute of the United States of America
or of the state of incorporation of the Company or of any other state, or, by
order of such a court, a trustee in bankruptcy, a receiver or receivers shall
be appointed of all or substantially all of the property of the Company, and
any such decree or order shall have continued unstayed on appeal or otherwise
and in effect for a period of sixty (60) days; and
(d) The Company shall file a petition in voluntary bankruptcy or shall
make an assignment for the benefit of creditors or shall consent to the
appointment of a receiver or receivers of all or any part of its property, or
shall file a petition seeking reorganization or readjustment under the Federal
bankruptcy laws or other law or statute of the United States of America or any
state thereof, or shall file a petition to take advantage of any debtors' act.
Notwithstanding the foregoing, if, by reason of Force Majeure, the Company
is unable to perform or observe any agreement, term or condition hereof which
would give rise to an Event of Default under subsection (b) hereof, the Company
shall not be deemed in default during the continuance of such inability.
However, the Company shall promptly give notice to the Trustee and the Issuer
of the existence of an event of Force Majeure and shall use its best efforts to
remove the effects thereof; provided that the settlement of strikes or other
industrial disturbances shall be entirely within its discretion.
The term Force Majeure shall mean the following:
(i) acts of God; strikes, lockouts or other industrial
disturbances; acts of public enemies; orders or restraints of any kind of the
government of the United States of America or of the State or any of their
departments, agencies, political subdivisions or officials, or any civil or
military authority; insurrections; civil disturbances; riots; epidemics;
landslides; lightning; earthquakes; fires; hurricanes; tornados; storms;
droughts; floods; arrests; restraint of government and people; explosions;
breakage, nuclear accidents or other malfunction or accident to facilities,
machinery, transmission pipes or canals; partial or entire failure of a
utility serving the Project; shortages of labor, materials, supplies or
transportation; or
(ii) any cause, circumstance or event not reasonably within the
control of the Company.
The exercise of remedies hereunder shall be subject to any applicable
limitations of federal bankruptcy law affecting or precluding that declaration
or exercise during the pendency of or immediately following any bankruptcy,
liquidation or reorganization proceedings.
Section III.2. Remedies on Default. Whenever an Event of Default shall
have happened and be subsisting, either or both of the following remedial steps
may be taken:
(a) The Issuer or the Trustee may have access to, inspect, examine and
make copies of the books, records, accounts and financial data of the Company,
only, however, insofar as they pertain to the Project; or
(b) The Issuer or the Trustee may pursue all remedies now or hereafter
existing at law or in equity to recover all amounts, including all Loan
Payments and Additional Payments and under Section 4.8 hereof the purchase
price of Bonds tendered for purchase, then due and thereafter to become due
under this Agreement, or to enforce the performance and observance of any other
obligation or agreement of the Company under this Agreement.
Notwithstanding the foregoing, the Issuer shall not be obligated to take any
step which in its opinion will or might cause it to expend time or money or
otherwise incur liability unless and until a satisfactory indemnity bond has
been furnished to the Issuer at no cost or expense to the Issuer. Any amounts
collected as Loan Payments or applicable to Loan Payments and any other amounts
which would be applicable to payment of Bond Service Charges collected pursuant
to action taken under this Section shall be paid into the Bond Fund and applied
in accordance with the provisions of the Indenture or, if the outstanding Bonds
have been paid and discharged in accordance with the provisions of the
Indenture, shall be paid as provided in Section 5.07 of the Indenture for
transfers of remaining amounts in the Bond Fund.
The provisions of this Section are subject to the further limitation that
the rescission and annulment by the Trustee of its declaration that all of the
Bonds are immediately due and payable also shall constitute a rescission and
annulment of any corresponding declaration made pursuant to this Section and a
rescission and annulment of the consequences of that declaration and of the
Event of Default with respect to which that declaration has been made, provided
that no such rescission and annulment shall extend to or affect any subsequent
or other default or impair any right consequent thereon.
Section III.3. No Remedy Exclusive. No remedy conferred upon or reserved
to the Issuer or the Trustee by this Agreement 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 under this
Agreement, or now or hereafter existing at law, in equity or by statute. No
delay or omission to exercise any right or power accruing upon any default
shall impair that 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 Issuer or the Trustee to
exercise any remedy reserved to it in this Article, it shall not be necessary
to give any notice, other than any notice required by law or for which express
provision is made herein.
Section III.4. Agreement to Pay Attorneys' Fees and Expenses. If an
Event of Default should occur and the Issuer or the Trustee should incur
expenses, including attorneys' fees, in connection with the enforcement of this
Agreement or the collection of sums due hereunder, the Company shall be
required, to the extent permitted by law, to reimburse the Issuer and the
Trustee, as applicable, for the expenses so incurred upon demand.
Section III.5. No Waiver. No failure by the Issuer or the Trustee to
insist upon the strict performance by the Company of any provision hereof shall
constitute a waiver of their right to strict performance and no express waiver
shall be deemed to apply to any other existing or subsequent right to remedy
the failure by the Company to observe or comply with any provision hereof.
Section III.6. Notice of Default. The Company shall notify the Trustee
immediately if it becomes aware of the occurrence of any Event of Default
hereunder or of any fact, condition or event which, with the giving of notice
or passage of time or both, would become an Event of Default.
(End of Article VII)
ARTICLE IV
MISCELLANEOUS
Section IV.1. Term of Agreement. This Agreement shall be and remain in
full force and effect from the date of delivery of the Bonds to the Original
Purchaser until such time as (i) all of the Bonds shall have been fully paid
(or provision made for such payment) and the Indenture has been released
pursuant to Section 9.01 thereof and (ii) all other sums payable by the Company
under this Agreement shall have been paid.
Section IV.2. Amounts Remaining in Funds. Any amounts in the Bond Fund
remaining unclaimed by the Holders of Bonds for four years after the due date
thereof (whether at stated maturity, by redemption, upon acceleration or
otherwise), at the option of the Company, shall be deemed to belong to and
shall be paid, subject to Section 5.06 of the Indenture, at the written request
of the Company, to the Company by the Trustee. With respect to that principal
of and any premium and interest on the Bonds to be paid from moneys paid to the
Company pursuant to the preceding sentence, the Holders of the Bonds entitled
to those moneys shall look solely to the Company for the payment of those
moneys. Further, any amounts remaining in the Bond Fund and any other special
funds or accounts created under this Agreement or the Indenture, except the
Rebate Fund, after all of the Bonds shall be deemed to have been paid and
discharged under the provisions of the Indenture and all other amounts required
to be paid under this Agreement and the Indenture have been paid, shall be paid
to the Company to the extent that those moneys are in excess of the amounts
necessary to effect the payment and discharge of the Outstanding Bonds.
Section IV.3. Notices. All notices, certificates, requests or other
communications hereunder shall be in writing, except as provided in Section 3.4
hereof, and shall be deemed to be sufficiently given when mailed by registered
or certified mail, postage prepaid, and addressed to the appropriate Notice
Address. A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Issuer, the Company, any Credit Facility
Issuer or the Trustee shall also be given to the others. The Company, the
Issuer, any Credit Facility Issuer and the Trustee, by notice given hereunder,
may designate any further or different addresses to which subsequent notices,
certificates, requests or other communications shall be sent.
Section IV.4. Extent of Covenants of the Issuer; No Personal Liability.
All covenants, obligations and agreements of the Issuer contained in this
Agreement or the Indenture shall be effective to the extent authorized and
permitted by applicable law. No such covenant, obligation or agreement shall
be deemed to be a covenant, obligation or agreement of any present or future
member, officer, agent or employee of the Issuer in other than his official
capacity, and neither the members of the Issuer nor any official executing the
Bonds shall be liable personally on the Bonds or be subject to any personal
liability or accountability by reason of the issuance thereof or by reason of
the covenants, obligations or agreements of the Issuer contained in this
Agreement or in the Indenture.
Section IV.5. Binding Effect. This Agreement shall inure to the benefit
of and shall be binding in accordance with its terms upon the Issuer, the
Company and their respective permitted successors and assigns provided that
this Agreement may not be assigned by the Company (except as permitted under
Sections 5.8 or 5.12 hereof) and may not be assigned by the Issuer except to
(i) the Trustee pursuant to the Indenture or as otherwise may be necessary to
enforce or secure payment of Bond Service Charges or (ii) any successor public
body to the Issuer.
Section IV.6. Amendments and Supplements. Except as otherwise expressly
provided in this Agreement or the Indenture, subsequent to the issuance of the
Bonds and prior to all conditions provided for in the Indenture for release of
the Indenture having been met, this Agreement may not be effectively amended,
changed, modified, altered or terminated by the parties hereto except with the
consents required by, and in accordance with, the provisions of Article XI of
the Indenture, as applicable.
Section IV.7. References to Credit Facility. During such time or times
as no Credit Facility is in effect, and during the continuation of any event of
default under the Indenture due to a failure by the Credit Facility Issuer to
honor a drawing by the Trustee under the Credit Facility then in effect in
accordance with the terms thereof, references herein to the Credit Facility
Issuer shall be ineffective.
Section IV.8. Execution Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be regarded as an original and
all of which shall constitute but one and the same instrument.
Section IV.9. Severability. If any provision of this Agreement, or any
covenant, obligation or agreement contained herein is determined by a judicial
or administrative authority to be invalid or unenforceable, that determination
shall not affect any other provision, covenant, obligation or agreement, each
of which shall be construed and enforced as if the invalid or unenforceable
portion were not contained herein. That invalidity or unenforceability shall
not affect any valid and enforceable application thereof, and each such
provision, covenant, obligation or agreement shall be deemed to be effective,
operative, made, entered into or taken in the manner and to the full extent
permitted by law.
Section IV.10. Governing Law. This Agreement shall be deemed to be a
contract made under the laws of the State and for all purposes shall be
governed by and construed in accordance with the laws of the State.
(End of Article VIII)
IN WITNESS WHEREOF, the Issuer and the Company have caused this Agreement
to be duly executed in their respective names, all as of the date hereinbefore
written.
CITY OF PRINCETON, INDIANA
By: /s/ George B. Taylor
Mayor
Attest:
/s/ Shirley Robb
Clerk-Treasurer
PSI ENERGY, INC.
By: /s/ William L. Sheafer
Treasurer
Exhibit A
DESCRIPTION OF POLLUTION CONTROL FACILITIES
AT
GIBSON GENERATING STATION
Financed by Series 1973 Bonds
Financed by Series 1979 Bonds