EXHIBIT 4.17
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Broker-Dealer Agreement
Dated __________, 2002
among
BANKERS TRUST COMPANY,
as Auction Agent
and
J.P. MORGAN SECURITIES INC.
and
CHUGACH ELECTRIC ASSOCIATION, INC.
relating to
$60,000,000
New Bonds, 2002 Series B Due 2012
Auction Rate Bonds
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<Table>
<Caption>
TABLE OF CONTENTS
Page
Section 1. DEFINITIONS AND RULES OF CONSTRUCTION..........................................................1
1.1 Terms Defined by Reference to the Eleventh Supplemental Indenture..............................1
1.2 Terms Defined Herein...........................................................................1
1.3 Rules of Construction..........................................................................2
1.4 Warranties of BD...............................................................................3
Section 2. THE AUCTION....................................................................................3
2.1 Purpose; Incorporation by Reference of Auction Procedures and Settlement Procedures............3
2.2 Preparation for Each Auction...................................................................4
2.3 Auction Schedule; Method of Submission of Orders...............................................4
2.4 Notices........................................................................................5
2.5 Compensation...................................................................................6
2.6 Settlement.....................................................................................7
Section 3. THE AUCTION AGENT..............................................................................8
3.1 Duties and Responsibilities of the Auction Agent...............................................8
3.2 Rights of the Auction Agent....................................................................9
3.3 The Auction Agent's Disclaimer................................................................10
Section 4. DISCLOSURE; INDEMNIFICATION...................................................................10
4.1 Disclosure....................................................................................10
4.2 Indemnification and Contribution..............................................................11
Section 5. MISCELLANEOUS.................................................................................13
5.1 Termination...................................................................................13
5.2 Participant...................................................................................13
5.3 Communications................................................................................13
5.4 Entire Agreement..............................................................................14
5.5 Benefits; Successors and Assigns..............................................................14
5.6 Amendment; Waiver.............................................................................14
5.7 Severability..................................................................................15
5.8 Execution in Counterparts.....................................................................15
5.9 Governing Law.................................................................................15
5.10 No Implied Duties.............................................................................15
</Table>
Broker-Dealer Agreement
This Broker-Dealer Agreement, dated ___________, 2002 (the
"Broker-Dealer Agreement"), among (i) BANKERS TRUST COMPANY (the "Auction
Agent"), a New York banking corporation, not in its individual capacity but
solely as agent of U.S. BANK NATIONAL ASSOCIATION (the "Trustee"), pursuant to
authority granted to the Auction Agent in the Auction Agreement, of even date
herewith (the "Auction Agreement"), between the Trustee and the Auction Agent
and acknowledged by the Company, as hereinafter defined; (ii) J.P. Morgan
Securities Inc., a New York corporation ("BD"); and (iii) CHUGACH ELECTRIC
ASSOCIATION, INC., an Alaskan electric cooperative (the "Company").
WITNESSETH
WHEREAS, the Company is issuing $60,000,000 in aggregate principal
amount of its New Bonds, 2002 Series B Due 2012 (the "2002 Series B Bonds" or
the "Auction Rate Bonds"); and
WHEREAS, BD is to perform certain duties set forth herein; and
WHEREAS, the Eleventh Supplemental Indenture of Trust, dated as of
________, 2002, authorizing the issuance of the 2002 Series B Bonds (including
all appendices, exhibits and other attachments thereto, and as amended, the
"Eleventh Supplemental Indenture") provides that, except as provided therein,
the interest rate on the 2002 Series B Bonds shall be the Auction Rate which
shall be, except as otherwise provided therein, the rate per annum that the
Auction Agent determines to have resulted from the implementation of the Auction
Procedures; and
WHEREAS, Bankers Trust Company has been appointed as Auction Agent for
purposes of the Auction Agreement, and pursuant to Section 2.6(a) of the Auction
Agreement, the Company has requested and directed the Auction Agent to execute
and deliver this Broker-Dealer Agreement; and
WHEREAS, the Auction Procedures require the participation of one or
more Broker-Dealers;
NOW, THEREFORE, the Auction Agent, as agent for the Trustee, BD, for
the benefit of the Existing Owners and the Potential Owners of the 2002 Series B
Bonds, and the Company agree as follows:
Section 1. Definitions and Rules of Construction.
1.1 Terms Defined by Reference to the Eleventh Supplemental Indenture.
Capitalized terms not defined herein shall have the respective meanings
specified in the Eleventh Supplemental Indenture. Unless otherwise specified,
section references to the Auction Agreement refer to such sections in the
Auction Agreement.
1.2 Terms Defined Herein. As used herein and in the exhibits hereto, the
following terms shall have the following meanings, unless the context otherwise
requires.
<Page>
(a) "Auction Procedures Description" shall mean Exhibit A of Appendix 2
to the Eleventh Supplemental Indenture.
(b) "Authorized Officers" shall mean such Senior Vice President, Vice
President, Assistant Vice President and Associate of the Auction Agent assigned
to its Corporate Trust & Agency Services Department and every other officer or
employee of the Auction Agent designated as an "Authorized Officer" for purposes
hereof in a communication to BD.
(c) "BD Officer" shall mean each officer or employee of BD designated
as a "BD Officer" for purposes of this Broker-Dealer Agreement in a
communication to the Auction Agent.
(d) "Broker-Dealer Agreement" shall mean this Broker-Dealer Agreement
and any substantially similar agreement between the Auction Agent and a
Broker-Dealer.
(e) "Closing Date" shall mean the date of the delivery of the 2002
Series B Bonds to the initial Holders thereof.
(f) "Disclosure Statement" shall have the meaning set forth in Section
4.1(b) hereof.
(g) "Exchange Act" shall have the meaning set forth in Section 4.2(a)
hereof.
(h) "Indemnified Person" shall have the meaning set forth in Section
4.2(c) hereof.
(i) "Indemnifying Person" shall have the meaning set forth in Section
4.2(c) hereof.
(j) "Prospectus" shall have the meaning set forth in Section 4.1(a)
hereof.
(k) "Securities Act" shall have the meaning set forth in Section 4.2(a)
hereof.
(l) "Settlement Procedures" shall mean the Settlement Procedures for
the Auction Rate Bonds and shall be substantially in the form attached hereto as
EXHIBIT A.
1.3 Rules of Construction. Unless the context or rules indicates another or
different meaning or intent, the following rules shall apply to the construction
of this Broker-Dealer Agreement:
(a) Words importing the singular number shall include the plural number
and vice versa.
(b) The captions and headings herein are solely for the convenience of
reference and shall not constitute a part of this Broker-Dealer Agreement nor
shall they affect its meaning, construction or effect.
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(c) The words "hereof," "herein," "hereto," and other words of similar
import refer to this Broker-Dealer Agreement as a whole.
(d) All references herein to a particular time of day shall be to New
York City time.
(e) Each reference to the purchase, sale or holding of "2002 Series B
Bonds" or "Auction Rate Bonds" shall refer to beneficial ownership interests in
2002 Series B Bonds unless the context clearly requires otherwise.
1.4 Warranties of BD. BD hereby represents and warrants that this Broker-Dealer
Agreement has been duly authorized, executed and delivered by BD and that,
assuming the due authorization, execution and delivery hereof by the Auction
Agent, this Broker-Dealer Agreement constitutes a valid and binding agreement of
BD, enforceable against it in accordance with its terms.
Section 2. THE AUCTION.
2.1 Purpose; Incorporation by Reference of Auction Procedures and Settlement
Procedures.
(a) The Auction Procedures will be followed by the Auction Agent for
the purpose of determining the Auction Rate for each Auction Period after the
Initial Period for the 2002 Series B Bonds. Each periodic implementation of such
procedures is hereinafter referred to as an "Auction."
(b) All of the provisions contained in the Auction Procedures and the
Settlement Procedures are incorporated herein by reference in their entirety and
shall be deemed to be a part of this Broker-Dealer Agreement to the same extent
as if such provisions were fully set forth herein.
(c) BD agrees to act as, and assumes the obligations of, and
limitations and restrictions placed upon, a Broker-Dealer under this
Broker-Dealer Agreement. BD understands that other Persons meeting the
requirements specified in the definition of "Broker-Dealer" contained in the
Eleventh Supplemental Indenture may execute Broker-Dealer Agreements and
participate as Broker-Dealers in Auctions. BD agrees to handle customer orders
in accordance with its respective duties under applicable securities laws and
rules.
(d) BD and other Broker-Dealers may participate in Auctions for their
own accounts. The Company may, however, by notice to BD and all other
Broker-Dealers, prohibit all of the Broker-Dealers from submitting Bids in
Auctions for their own accounts, provided that Broker-Dealers may continue to
submit Hold Orders and Sell Orders. Notwithstanding the foregoing, if BD is an
affiliate of the Company it may not submit Bids to purchase the 2002 Series B
Bonds in Auctions for its own account, but may submit Hold Orders and Sell
Orders in Auctions with respect to 2002 Series B Bonds otherwise acquired for
its own account. The Auction Agent shall be under no duty or liability with
respect to monitoring compliance with this Section 2.1(d).
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2.2 Preparation for Each Auction.
(a) Not later than 9:30 A.M. on each Auction Date, the Auction Agent
shall advise the Broker-Dealers by telephone or other electronic communication
acceptable to the parties of the Minimum Auction Rate, the Maximum Auction Rate
and the Index.
(b) On the Closing Date and from time to time thereafter as the Auction
Agent shall request, BD shall provide the Auction Agent with a list,
substantially in the form of EXHIBIT E hereto, of the names of its customers
that it believes are Existing Owners of 2002 Series B Bonds and the principal
amount of 2002 Series B Bonds held by each of such customers. The Auction Agent
shall not disclose any such information so provided to any Person other than the
Trustee, the Company or BD except as otherwise required by law.
(c) Not later than 3:00 P.M. on the Regular Record Date preceding each
Auction Date, the Auction Agent shall notify BD of any change in the aggregate
principal amount of 2002 Series B Bonds, as of the opening of business on such
Regular Record Date by delivering a notice to BD by telecopy or other electronic
communication acceptable to the parties.
2.3 Auction Schedule; Method of Submission of Orders.
(a) The Auction Agent shall conduct Auctions for the 2002 Series B
Bonds in accordance with the schedule set forth below. Such schedule may be
changed at any time by the Auction Agent at the written direction of the Company
to reflect then currently accepted market practices for similar auctions. The
Auction Agent shall give notice of any such change to BD, the Company and the
Trustee, which notice shall be given prior to the close of business on the
Business Day next preceding the first Auction Date on which any such change
shall be effective.
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Time Event
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By 9:30 A.M. Auction Agent advises the Broker-Dealers of the Minimum
Auction Rate, the Maximum Auction Rate and the Index,
as set forth in Section 2.2(a).
9:30 A.M. -- 1:00 P.M. (11:00 A.M. in the case of a daily Auction Agent assembles information communicated to it
Auction Period) by Broker-Dealers as provided in Section 2.02 of the
Auction Procedures Description. Submission Deadline is
1:00 P.M. (11:00 A.M. in the case of a daily Auction
Period).
As soon as practical after 1:00 P.M. (by 11:30 A.M. in the Auction Agent makes determinations pursuant to Section
case of a daily Auction Period) 2.03(b) of the Auction Procedures Description.
By approximately 3:00 P.M. but not later than the close of Submitted Bids and Submitted Sell Orders are accepted
business (by 12:00 Noon in the case of a daily Auction and rejected and 2002 Series B Bonds allocated as
Period) provided in Section 2.04 of the Auction Procedures
Description. Auction Agent gives notice of the Auction
results as set forth in Section 2.4(a) hereof.
</Table>
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(b) BD agrees, for the purpose of implementing the Auctions (and
thereby achieving the lowest possible interest rate on the 2002 Series B Bonds),
to contact Potential Owners, including Persons that are not Existing Owners,
prior to the Submission Deadline on each Auction Date to determine the principal
amount of 2002 Series B Bonds, if any, that each such Potential Owner offers to
purchase if the rate determined by the Auction Procedures for the next
succeeding Auction Period is not less than the rate per annum requested by such
Potential Owner. BD further agrees, upon request, to deliver a copy of the
Auction Procedures and other relevant documents prepared for the purpose of
disclosure to Potential Owners by the Company relating to the 2002 Series B
Bonds to each Potential Owner prior to such Potential Owner's participation in
any Auction.
(c) In each Auction in which BD submits one or more Orders, BD shall
submit a separate Order to the Auction Agent for each Potential Owner or
Existing Owner on whose behalf BD is submitting an Order and shall not net the
Orders of different Potential Owners or Existing Owners on whose behalf BD is
submitting Orders. Each Order shall be in writing in substantially the form
attached hereto as EXHIBIT B or in such other form as may be reasonably
acceptable to the Auction Agent.
(d) BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as EXHIBIT C of transfers of 2002
Series B Bonds made through BD by an Existing Owner to another Person other than
pursuant to an Auction, and (ii) a written notice, substantially in the form
attached hereto as EXHIBIT D of the failure of any 2002 Series B Bonds to be
transferred to or by any Person that purchased or sold 2002 Series B Bonds
through BD pursuant to an Auction. The Auction Agent is not required to accept
any such notice specified in this Subsection (d) for an Auction if it is
received by it after 3:00 P.M. on the Business Day preceding such Auction.
2.4 Notices.
(a) On each Auction Date, the Auction Agent shall notify BD by
telephone or other electronic communication acceptable to the parties of the
results of the Auction as set forth in paragraph (a) of the Settlement
Procedures. As soon as reasonably practicable thereafter, the Auction Agent
shall notify BD, if so requested, in writing of the disposition of all Orders
submitted by BD in the Auction held on such Auction Date.
(b) The Auction Agent shall notify BD of any change in the Auction
schedule set forth in Section 2.3(a) hereof.
(c) BD shall notify each Existing Owner or Potential Owner on whose
behalf BD has submitted an Order as set forth in paragraph (b) of the Settlement
Procedures, and take such other action as is required of BD pursuant to the
Settlement Procedures.
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(d) The Auction Agent shall deliver to BD after receipt all notices and
certificates which the Auction Agent is required to deliver to BD pursuant to
Section 2 of the Auction Agreement at the times and in the manner set forth in
the Auction Agreement.
2.5 Compensation.
(a) The initial Broker-Dealer Fee shall equal one-quarter of one
percent (0.25%) per annum and shall be calculated and paid in accordance with
paragraph 2.5(b) hereof. The Broker-Dealer Fee for the 2002 Series B Bonds shall
be paid by the Company and represents compensation for the services of the
Broker-Dealer in facilitating Auctions for the benefit of the beneficial owners
of the 2002 Series B Bonds. The Broker-Dealer Fee Rate may be adjusted from time
to time with the approval of the Company upon a written request of the
Broker-Dealer delivered to the Company.
(b) (i) While the 2002 Series B Bonds are in an Auction Period other
than a daily Auction Period, on each Interest Payment Date following each
Auction Date, each Broker-Dealer shall be entitled to receive an amount equal to
the product of:
(x) one-quarter of one percent (0.25%), multiplied by
(y) (A) if an Auction was held on such Auction Date, the sum of the
aggregate principal amount of 2002 Series B Bonds that were (1)
the subject of a valid Hold Order of an Existing Owner submitted
by such Broker-Dealer, (2) the subject of a Submitted Bid of an
Existing Owner submitted by such Broker-Dealer and continued to
be held by such Existing Owner as a result of such Auction, (3)
the subject of a Submitted Bid of a Potential Owner submitted by
such Broker-Dealer and were purchased by such Potential Owner as
a result of such Auction and (4) deemed to be the subject of a
Hold Order by an Existing Owner that were acquired by such
Existing Owner from such Broker-Dealer, or
(B) if an Auction was not held on such Auction Date, the
aggregate principal amount of Outstanding 2002 Series B
Bonds that were acquired by an Existing Owner through such
Broker-Dealer, multiplied by
(z) a fraction, the numerator of which is (i) if the Auction Period
is seven days, 28 days, 35 days, three months or a Flexible
Auction Period of 180 days or less, the actual number of days in
the Auction Period next succeeding such Auction Date or (ii) if
the Auction Period is six months or a Flexible Auction Period of
more than 180 days, the number of days in the Auction Period next
succeeding such Auction Date calculated on the basis of twelve 30
day months in a year, and in either case the denominator of which
is 360.
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(ii) If the 2002 Series B Bonds are in a daily Auction Period each
Broker-Dealer shall be entitled to receive on each Interest Payment Date an
amount equal to the sum calculated for each Auction Period in the preceding
month of the product of:
(x) one-quarter of one percent (0.25%) multiplied by
(y) the aggregate principal amount of 2002 Series B Bonds for each
Auction Period that were (1) the subject of a valid Hold Order
submitted by such Broker-Dealer, (2) the subject of a Submitted
Bid of an Existing Owner submitted by such Broker-Dealer and
continued to be held by such Existing Owner as a result of such
Auction, (3) the subject of a Submitted Bid of a Potential Owner
submitted by such Broker-Dealer and were purchased by such
Potential Owner as a result of such Auction, (4) deemed to be the
subject of a Hold Order by an Existing Owner that were acquired
by such Existing Owner from such Broker-Dealer and (5) if an
Auction was not held for any Auction Period, the aggregate
principal amount of Outstanding 2002 Series B Bonds that were
acquired by an Existing Owner through such Broker-Dealer,
multiplied by
(z) a fraction, the numerator of which is the number of days in the
Auction Period and denominator of which is 360.
(iii) The Broker-Dealer Fee shall be calculated by the Auction Agent,
and shall be conclusive absent manifest error. Such amounts shall be
communicated by the Auction Agent to the Company and the Trustee by 4:00 P.M.,
New York City time, on the Business Day immediately preceding each Interest
Payment Date. On or before 10:00 A.M. on each Interest Payment Date, the Company
shall pay to the Trustee the amount due to the Broker-Dealer. By noon on each
Interest Payment Date, the Trustee shall deliver to the Auction Agent the amount
constituting the Broker-Dealer Fee, by wire transfer of immediately available
funds to such account as the Auction Agent may designate. The amount
constituting the Broker-Dealer Fee shall be held by the Auction Agent on behalf
of the Broker-Dealer, and immediately upon receipt of such Fee, the Auction
Agent shall deliver such Fee to the Broker-Dealer, pursuant to the written
instructions of the Broker-Dealer. If any Existing Owner who acquired 2002
Series B Bonds through a Broker-Dealer transfers any such 2002 Series B Bonds to
another Person other than through an Auction, the Broker-Dealer for the 2002
Series B Bonds so transferred shall continue to be the Broker-Dealer with
respect to such 2002 Series B Bonds, provided, however, that if the transfer was
effected by, or if the transferee is, another Person who has met the
requirements specified in the definition of "Broker-Dealer" contained in the
2002 Series B Bonds and executed a Broker-Dealer Agreement, such Person shall be
the Broker-Dealer for such 2002 Series B Bonds.
2.6 Settlement.
(a) If any Potential Owner on whose behalf BD has submitted an Order
fails to deliver funds with respect to any Auction, BD shall promptly deliver
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such funds to the party entitled to receive such funds. If any Existing Owner on
whose behalf BD has submitted an Order fails to instruct its Agent Member to
deliver 2002 Series B Bonds subject to such Order against payment therefor, BD
shall instruct such Agent Member to deliver such 2002 Series B Bonds against
payment therefor. The delivery of funds by BD for the purchase of 2002 Series B
Bonds by a Potential Owner, as provided above, shall not relieve such Potential
Owner of any liability to BD for payment for such 2002 Series B Bonds.
Notwithstanding the foregoing provisions of this Section 2.6(a), any delivery or
nondelivery of 2002 Series B Bonds which represents any departure from the
results of an Auction, as determined by the Auction Agent, shall be of no effect
unless and until the Auction Agent shall have been notified of such delivery or
non-delivery in accordance with the terms of Section 2.3(d) hereof. The Auction
Agent shall have no duty or liability with respect to enforcement of this
Section 2.6(a).
(b) The Auction Agent, the Trustee and the Company shall have no
responsibility or liability with respect to the failure of an Existing Owner, a
Potential Owner or its respective Agent Member to deliver 2002 Series B Bonds or
to pay for 2002 Series B Bonds sold or purchased pursuant to the Auction
Procedures or otherwise.
Section 3. THE AUCTION AGENT.
3.1 Duties and Responsibilities of the Auction Agent.
(a) The Auction Agent is acting solely as agent of the Trustee and owes
no duties, fiduciary or otherwise, to any other person by reason of this
Broker-Dealer Agreement except as expressly set forth herein or in the Auction
Agreement, and no implied duties, fiduciary or otherwise, shall be read into
this Broker-Dealer Agreement against the Auction Agent.
(b) The Auction Agent undertakes to perform such duties and only such
duties as are expressly set forth herein, or expressly incorporated herein by
reference pursuant to Section 2.1(b) hereof, to be performed by it, and no
implied covenants or obligations shall be read into this Broker-Dealer Agreement
against the Auction Agent.
(c) In the absence of bad faith or gross negligence on its part, the
Auction Agent, whether acting directly or through agents or attorneys as
provided in Section 3.2(d) hereof, shall not be liable for any action taken,
suffered, or omitted or for any error of judgment made by it in the performance
of its duties hereunder. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining the pertinent facts necessary to make such judgment. In no event
shall the Auction Agent be liable for special, indirect or consequential damages
of any kind whatsoever (including but not limited to lost profits) even if the
Auction Agent has been informed of the likelihood of such loss or damage, and
regardless of the form of action or inaction.
(d) The Auction Agent shall: (i) not be required to and shall make no
representations and have no responsibilities as to the validity, accuracy, value
or genuineness of any signatures or endorsements, other than its own; (ii) not
be obligated to take any legal action hereunder that might, in its judgment,
involve any expense or liability, unless it has been furnished with reasonable
indemnity; and (iii) not be responsible for or liable in any respect on account
of the identity, authority or rights of any person executing or
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delivering or purporting to execute or deliver any document under this
Broker-Dealer Agreement.
3.2 Rights of the Auction Agent.
(a) The Auction Agent may conclusively rely upon, and shall be fully
protected in acting or refraining from acting upon, any communication authorized
hereby and upon any such written instruction, notice, request, direction,
consent, report, certificate, share certificate or other instrument, paper or
other document believed by it to be genuine. The Auction Agent shall not be
liable for acting in good faith upon any such communication made by telephone,
other electronic communication acceptable to the parties which the Auction Agent
reasonably believes to have been given by the particular party or parties. To
the extent permitted by law, the Auction Agent may record telephone
communications with the Broker-Dealers, and each of such Broker-Dealers may
record telephone communications with the Auction Agent.
(b) The Auction Agent may consult with counsel of its choice (provided
that such selection is made with reasonable care), and the advice of such
counsel shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon.
(c) The Auction Agent shall not be required to advance, expend or risk
its own funds or otherwise incur or become exposed to financial liability in the
performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys and shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it with due care.
(e) Whenever in the administration of the provisions of this Agreement
the Auction Agent shall deem it necessary or desirable that a matter be proved
or established prior to taking or suffering any action to be taken hereunder,
such matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of gross negligence or bad faith on the part of
the Auction Agent, be deemed to be conclusively proved and established by a
certificate signed by the Company, Trustee or Broker-Dealer, and delivered to
the Auction Agent and such certificate, in the absence of gross negligence or
bad faith on the part of the Auction Agent, shall be full warrant to the Auction
Agent for any action taken, suffered or omitted by it under the provisions of
this Agreement upon the faith thereof.
(f) The Auction Agent shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, entitlement order,
approval or other paper or document.
(g) Any corporation into which the Auction Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Auction Agent shall be
a party, or any corporation succeeding to the business of the Auction Agent
shall be the successor of the Auction Agent hereunder without the execution or
filing of any paper with any party hereto or any further act on the part of any
of the parties hereto, except where any instrument of transfer or assignment is
required by law to effect such succession, anything herein to the contrary
notwithstanding.
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3.3 The Auction Agent's Disclaimer. The Auction Agent makes no representations
as to and shall have no liability with respect to the correctness of the
recitals in, or the adequacy, accuracy or validity of this Broker-Dealer
Agreement, the Auction Agreement, the Eleventh Supplemental Indenture, or the
Auction Rate Bonds or any offering document or agreement or instrument related
thereto.
Section 4. DISCLOSURE; INDEMNIFICATION.
4.1 Disclosure.
(a) The Company agrees to supply to BD, at the Company's expense, such
number of copies of the Prospectus, dated ___________, 2002, including any
amendments thereto (the "Prospectus"), as BD shall reasonably request from time
to time and, upon request of BD, to amend the Prospectus so that the Prospectus
will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(b) If BD determines (upon consultation and mutual agreement with the
Company) that it is necessary or desirable to use a disclosure statement (other
than the Prospectus), relating specifically to the 2002 Series B Bonds (a
"Disclosure Statement") in connection with the solicitation of Orders for the
2002 Series B Bonds, BD will notify the Company, and the Company will provide BD
with a Disclosure Statement reasonably satisfactory to BD and its counsel. The
Company will supply BD, at the Company's expense, with such number of copies of
such Disclosure Statement as BD requests from time to time and will, upon
request of BD, amend such Disclosure Statement (as well as the documents
incorporated by reference therein) so that such Disclosure Statement will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. In connection with the use of any
Disclosure Statement by BD in its solicitation of Orders for the 2002 Series B
Bonds (other than the Prospectus), the Company will furnish to BD such
certificates, accountants' letters and opinions of counsel as would be customary
in a public offering of securities underwritten by BD. In addition, the Company
will, at its own expense, take all steps reasonably requested by BD that BD or
its counsel may consider necessary or desirable to effect compliance with
applicable federal or state securities laws.
4.2 Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless BD and each
person, if any, who controls BD within the meaning of either Section 15 of the
Securities Act of 1933, as amended (the "Securities Act"), or Section 20 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), from and
against any and all losses, claims, damages and liabilities (including, without
limitation, the legal fees and other expenses incurred in connection with any
suit, action or proceeding or any claim asserted) caused by any untrue statement
or alleged untrue statement of a material fact contained in a Prospectus or
Disclosure Statement (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading.
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(b) BD agrees to indemnify and hold harmless the Company, its
directors, its officers who sign a Prospectus or Disclosure Statement and each
person who controls the Company within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to BD, but only with reference to
information relating to BD furnished to the Company in writing by BD expressly
for use in such Prospectus or Disclosure Statement or any amendment or
supplement thereto.
(c) If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them. It is
understood that the Indemnifying Person shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all Indemnified Persons, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for BD and such
control persons of BD shall be designated in writing by BD and any such separate
firm for the Company, its directors, its officers who sign the Prospectus or a
Disclosure Statement and such control persons of the Company shall be designated
in writing by the Company. The Indemnifying Person shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Person agrees to indemnify any Indemnified Person from and against
any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an Indemnified Person shall have
requested an Indemnifying Person to reimburse the Indemnified Person for fees
and expenses of counsel as contemplated by the third sentence of this paragraph,
the Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement. No Indemnifying Person shall, without the prior written consent of
the Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Person,
unless such settlement includes an unconditional release of such Indemnified
Person from all liability on claims that are the subject matter of such
proceeding.
11
(d) If the indemnification provided for in paragraphs (a) and (b) of
this Section 4.2 is unavailable to an Indemnified Person or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each Indemnifying Person under such paragraph, in lieu of indemnifying such
Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities (i) in such proportion that BD is responsible for that portion
represented by the percentage that the underwriters' discount on the sale of the
2002 Series B Bonds bears to the initial public offering price appearing on the
cover page of the Prospectus and the Company is responsible for the balance or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and BD on the other in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and BD on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or by BD and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) The Company and BD agree that it would not be just and equitable if
contribution pursuant to this Section 4.2 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an Indemnified Person as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding paragraph shall
be deemed to include, subject to the limitations set forth above, any legal or
other expenses incurred by such Indemnified Person in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 4.2, in no event shall BD be required to contribute
any amount in excess of the amount by which the total price at which the 2002
Series B Bonds were offered to the public exceeds the amount of any damages that
BD has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) The remedies provided for in this Section 4.2 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
indemnified party at law of in equity.
(g) The indemnity and contribution agreements contained in this Section
4.2 and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, and (ii) any investigation made by or on
behalf of BD or the person controlling BD or by or on behalf of the Company, its
officers or directors or any other person controlling the Company.
12
Section 5. MISCELLANEOUS.
5.1 Termination. BD may resign at any time, upon five Business Days' notice to
the Auction Agent; provided, however, that BD may resign immediately if it
determines, in its reasonable judgment that it is not advisable to attempt to
Auction the 2002 Series B Bonds, for any reason, including, without limitation,
(i) trading generally shall have been suspended or materially limited on or by,
as the case may be, any of the New York Stock Exchange, the American Stock
Exchange, the National Association of Securities Dealers, Inc., the Chicago
Board Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade, (ii) trading of any securities of or guaranteed by the Company shall have
been suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities shall have been declared by
either federal authorities or state authorities of New York or the state where
the paying office of the Trustee with respect to the 2002 Series B Bonds is
located, (iv) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis that,
in the judgment of the BD, is material and adverse and which, in the judgment of
the BD, makes it impracticable to market the 2002 Series B Bonds on the terms
and in the manner contemplated in the Disclosure Statement, (v) a material
adverse change in the financial condition of the Company, (vi) a down-rating of
the 2002 Series B Bonds, (vii) an imposition of material restrictions on the
2002 Series B Bonds or similar obligations, or (viii) notice is received of an
event of default under the Indenture. The Auction Agent upon the written
direction of the Company may terminate this Broker-Dealer Agreement at any time
on five Business Days' notice to the other parties hereto; and provided that
this Broker-Dealer Agreement shall terminate upon the resignation or removal of
BD pursuant to this Section 5.1 or termination of the Auction Agreement.
5.2 Participant. BD is and for the term of this Broker-Dealer Agreement shall
remain a member of, a participant in, or an affiliate of such a member or
participant in DTC; and will give the Auction Agent, each other Broker-Dealer,
the Company and the Trustee two Business Days' notice if it ceases to be so or
if it changes its participation or affiliation to a different Bond Depository.
5.3 Communications. Except for (i) communications authorized to be by telephone
pursuant to this Broker-Dealer Agreement or the Auction Procedures and (ii)
communications in connection with Auctions (other than those expressly required
to be in writing) all notices, requests and other communications to any party
hereunder shall be in writing (including telecopy or similar writing or other
electronic communication acceptable to the parties) and shall be given to such
party, addressed to it, at its address, telecopy number or e-mail address set
forth below and, where appropriate, reference the particular Auction to which
such notice relates:
If to BD addressed: J.P. MORGAN SECURITIES INC.
60 Wall Street
New York, New York 10260-0060
Attention: Kevin O'Connor
Telecopier Number: (212) 648-5628
Telephone Number: (212) 648-0945
13
If to the Auction Agent addressed: BANKERS TRUST COMPANY
100 Plaza One
6th Floor
Jersey City, New Jersey 07311
Attention: Corporate Trust & Agency Services
Telecopier Number: (201) 593-6447
Telephone Number: (201) 860-6881
If to the Company addressed: CHUGACH ELECTRIC ASSOCIATION, INC.
5601 Minnesota Drive
Anchorage, Alaska 99518
Attention: Executive Manager, Finance and
Energy Supply
Telecopier Number: (907) 762-4514
Telephone Number: (907) 762-4790
or such other address, telecopy number or e-mail address as such party may
hereafter specify for such purpose by notice to the other party. Each such
notice, request or communication shall be effective (i) if given by telecopier,
when such telecopy is transmitted to the telecopy number specified herein or
(ii) if given by any other means, when delivered at the address specified
herein. Communications shall be given on behalf of BD by a BD Officer and on
behalf of the Auction Agent by an Authorized Officer.
5.4 Entire Agreement. This Broker-Dealer Agreement, and the other agreements and
instruments executed and delivered in connection with the issuance of the 2002
Series B Bonds, contain the entire agreement between the parties relating to the
subject matter hereof, and there are no other representations, endorsements,
promises, agreements or understandings, oral, written or inferred, between the
parties relating to the subject matter hereof
5.5 Benefits; Successors and Assigns. This Broker-Dealer Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the respective
successors and assigns of BD and the Auction Agent. Nothing in this
Broker-Dealer Agreement, express or implied, shall give to any person, other
than the Auction Agent and BD and their respective successors and assigns, any
benefit of any legal or equitable right, remedy or claim under this
Broker-Dealer Agreement, other than the rights expressly granted to the Company
herein.
5.6 Amendment; Waiver.
(a) This Broker-Dealer Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the parties
hereto and consented to in writing by a duly authorized officer of the Company.
14
(b) Failure of any party to this Broker-Dealer Agreement
to exercise any right or remedy hereunder in the event of a breach of this
Broker-Dealer Agreement by any other party shall not constitute a waiver of any
such right or remedy with respect to any subsequent breach.
5.7 Severability. If any clause, provision or section of this Broker-Dealer
Agreement shall be ruled invalid or unenforceable by any court of competent
jurisdiction, the invalidity or unenforceability of such clause, provision or
section shall not affect any of the remaining clauses, provisions or sections
hereof.
5.8 Execution in Counterparts. This Broker-Dealer Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
5.9 Governing Law. This Broker-Dealer Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
5.10 No Implied Duties. Nothing contained in this Broker-Dealer Agreement, the
Eleventh Supplemental Indenture or the Auction Agreement shall be deemed to
imply any duties, covenants or obligations on the part of the Company not
otherwise expressly set forth herein or therein.
(Signatures follow on next page.)
15
IN WITNESS WHEREOF, the parties hereto have caused this Broker-Dealer
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the date first above written.
BANKERS TRUST COMPANY,
as Auction Agent
By:
----------------------------------
Authorized Signatory
J.P. MORGAN SECURITIES INC.
By:
----------------------------------
Authorized Signatory
CHUGACH ELECTRIC ASSOCIATION, INC.
By:
----------------------------------
Authorized Signatory
16
EXHIBIT A
SETTLEMENT PROCEDURES FOR AUCTION RATE BONDS
(a) On each Auction Date, the Auction Agent shall notify by telephone
or other electronic communication acceptable to the parties each Broker-Dealer
that participated in the Auction held on such Auction Date and submitted an
Order on behalf of any Existing Owner or Potential Owner of:
(i) the Auction Rate fixed for the succeeding Auction Period
or, in the case of Auction Rate Bonds in a daily Auction Period, the Auction
Rate on the Auction Rate Bonds fixed for the current Auction Period;
(ii) whether Sufficient Clearing Bids existed for the
determination of the Winning Bid Rate;
(iii) if such Broker-Dealer submitted a Bid or a Sell Order on
behalf of an Existing Owner, whether such Bid or Sell Order was accepted or
rejected, in whole or in part, and the principal amount of Auction Rate Bonds,
if any, to be sold by such Existing Owner;
(iv) if such Broker-Dealer submitted a Bid on behalf of a
Potential Owner, whether such Bid was accepted or rejected, in whole or in part,
and the principal amount of Auction Rate Bonds, if any, to be purchased by such
Potential Owner;
(v) if the aggregate principal amount of Auction Rate Bonds to
be sold by all Existing Owners on whose behalf such Broker-Dealer submitted Bids
or Sell Orders is different from the aggregate principal amount of Auction Rate
Bonds to be purchased by all Potential Owners on whose behalf such Broker-Dealer
submitted a Bid, the name or names of one or more other Broker-Dealers (and the
Agent Member, if any, of each such other Broker-Dealer) and the principal amount
of Auction Rate Bonds to be (A) purchased from one or more Existing Owners on
whose behalf such other Broker-Dealers submitted Bids or Sell Orders or (B) sold
to one or more Potential Owners on whose behalf such other Broker-Dealers
submitted Bids; and
(vi) the immediately succeeding Auction Date.
(b) On each Auction Date, each Broker-Dealer that submitted an Order on
behalf of any Existing Owner or Potential Owner shall:
(i) advise each Existing Owner and Potential Owner on whose
behalf such Broker-Dealer submitted a Bid or Sell Order whether such Bid or Sell
Order was accepted or rejected, in whole or in part;
(ii) instruct each Potential Owner on whose behalf such
Broker-Dealer submitted a bid that was accepted, in whole or in part, to
instruct such Potential Owner's Agent Member to pay to such Broker-Dealer (or
its Agent Member) through DTC the amount necessary to purchase the principal
amount of Auction Rate Bonds to be purchased pursuant to such Bid (including,
with respect to the Auction Rate Bonds in a daily Auction Period, accrued
interest if the purchase date is not an Interest Payment Date for such Auction
Rate Bond) against receipt of such principal amount of Auction Rate Bonds;
A-1
(iii) instruct each Existing Owner on whose behalf such
Broker-Dealer submitted a Sell Order that was accepted or a Bid that was
rejected, in whole or in part, to instruct such Existing Owner's Agent Member to
deliver to such Broker-Dealer (or its Agent Member) through DTC the principal
amount of Auction Rate Bonds to be sold pursuant to such Bid or Sell Order
against payment therefor;
(iv) advise each Existing Owner on whose behalf such
Broker-Dealer submitted an Order and each Potential Owner on whose behalf such
Broker-Dealer submitted a Bid of the Auction Rate for the next succeeding
Auction Period or, in the case of Auction Rate Bonds in a daily Auction Period,
the Auction Rate for the current Auction Period;
(v) advise each Existing Owner on whose behalf such
Broker-Dealer submitted an Order of the Auction Date of the next succeeding
Auction; and
(vi) advise each Potential Owner on whose behalf such
Broker-Dealer submitted a Bid that was accepted, in whole or in part, of the
Auction Date of the next succeeding Auction.
(c) on the basis of the information provided to it pursuant to
paragraph (a) above, each Broker-Dealer that submitted a Bid or Sell Order shall
allocate any funds received by it pursuant to subparagraph (b) (ii) above, and
any Auction Rate Bonds received by it pursuant to (b) (iii) above, among the
Potential Owners, if any, on whose behalf such Broker-Dealer submitted Bids, the
Existing Owners, if any, on whose behalf such Broker-Dealer submitted Bids or
Sell Orders, and any Broker-Dealer identified to it by the Auction Agent
pursuant to subparagraph (a)(v) above.
(d) On the Business Day after the Auction Date or, in the case of
Auction Rate Bonds in a daily Auction Period, on such Auction Date, DTC shall
execute the transactions described above, debiting and crediting the accounts of
the respective Agent Members as necessary to effect the purchase and sale of
Auction Rate Bonds as determined in the Auction.
A-2
EXHIBIT B
(Submit only one Order on this Order Form)
$60,000,000
Chugach Electric Association, Inc.
New Bonds, 2002 Series B Due 2012
Auction Rate Bonds
Attention:
- ------------------------
Date of Auction
The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:
Name of Bidder:
----------------------------------------------------------------
Bidder places the Order listed below covering the Auction Rate Bonds indicated
(complete only one blank):
$____________ Auction Rate Bonds now held by Bidder (an Existing
Owner), and the Order is a (check one):
_____ Hold Order; or
_____ Bid at rate of %; or
_____ Sell Order.
OR
$____________ Auction Rate Bonds not now held by Bidder (a Potential
Owner), and the Order is a Bid at a rate of _____%.
Notes: (1) If submitting more than one Order for one Bidder, use
additional Order Forms.
(2) If one or more Orders covering in the aggregate more
than the number of Outstanding Auction Rate Bonds held
by any Existing Owner are submitted, such Orders shall
be considered valid in the order or priority set forth
in the Auction Procedures.
B-1
(3) A Hold Order may be placed only by an Existing Owner
covering a number of Outstanding Auction Rate Bonds not
greater than the number of Outstanding Auction Rate
Bonds currently held.
(4) Potential Owners may make only Bids, each of which must
specify a rate. If more than one Bid is submitted on
behalf of any Potential Owner, each Bid submitted shall
be a separate Bid with the rate specified.
(5) Bids may contain no more than three figures to the
right of the decimal point.
(6) An Order must be submitted in integral multiples
of $50,000.
Name of Broker-Dealer:
-------------------------------
By
------------------------------------------------------------
B-2
EXHIBIT C
(To be used only for transfers of Auction Rate Bonds made
other than pursuant to an Auction)
$60,000,000
Chugach Electric Association, Inc.
New Bonds, 2002 Series B Due 2012
Auction Rate Bonds
TRANSFER FORM
Attention:
--------------------------
--------------, -----
Check I, II or III
I. We are the Existing Owner named below.
- ---------
II. We are the Agent Member for such Existing Owner.
- ---------
III. We are a Broker-Dealer for such Existing Owner.
- ---------
We hereby notify you that the Existing Owner named below has transferred:
$ Auction Rate Bonds* to
----------------- ----------------------------
C-1
Complete either I or II
I. Corporate Name of Existing Owner:
By:
-------------------------------------
Printed Name:
Title:
II. Corporate Name of Existing Owner:
-------------------------------------
Name of Agent Member or
Broker-Dealer Submitting this notice:
-------------------------------------
By:
-------------------------------------
Printed Name:
Title:
- --------------------
*Auction Rate Bonds may only be transferred in integral multiples of $50,000.
C-2
EXHIBIT D
(To be used for failure to deliver Auction Rate Bonds
sold pursuant to an Auction)
$60,000,000
Chugach Electric Association, Inc.
New Bonds, 2002 Series B Due 2012
Auction Rate Bonds
NOTICE OF FAILURE TO DELIVER
Attention:
----------------------------------
Complete either I or II _____________,____ ___________,____
I. We are a Broker-Dealer for __________________ (the "Purchaser"),
who was to purchase $______ Auction Rate Bonds * in the Auction
held on ______________.
II. We are a Broker-Dealer for __________________ (the "Seller"), who
was to sell $_______ Auction Rate Bonds * in the Auction held on
_______________.
We hereby notify you that (check one) -
________ the Seller failed to deliver such Auction Rate Bonds to us.
________ the Purchaser failed to make payment to us upon delivery of such
Auction Date Bonds.
________ the following Broker-Dealer failed to deliver to us such Auction
Rate Bonds.
________ the following Broker-Dealer failed to make payment to us upon
delivery of such Auction Rate Bonds:
Name:
---------------------------------------------------------
D-1
(Name of Broker-Dealer submitting this notice)
By:
----------------------------------------------
Printed Name:
Title:
* Auction Rate Bonds may only be transferred in integral multiples of $50,000.
D-2
EXHIBIT E
TO BROKER - DEALER AGREEMENT
LISTING OF EXISTING OWNERS OF AUCTION RATE BONDS
$60,000,000
Chugach Electric Association, Inc.
New Bonds, 2002 Series B Due 2012
Auction Rate Bonds
Attention:
----------------------------------
The undersigned Broker-Dealer hereby provides the names and related
principal amounts of each of its customers that it believes is an Existing Owner
of Auction Rate Bonds:
Name of Existing Owner Principal Amount of Auction Rate Bonds
Name of Broker-Dealer:
By:
-----------------------------------
Name:
Title: