EXHIBIT 99.6
EXECUTION COPY
AMENDED AND RESTATED
REIMBURSEMENT AGREEMENT
among
ARIZONA PUBLIC SERVICE COMPANY
THE BANKS PARTY HERETO
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and Issuing Bank and
BARCLAYS BANK PLC,
as Syndication Agent
dated as of May 19, 2005
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J.P. Morgan Securities Inc. and Barclays Capital,
Joint Lead Arrangers and Joint Bookrunners
TABLE OF CONTENTS
Section 1. Definitions; Accounting Terms...................................................... 2
Section 2. Reimbursement...................................................................... 13
Section 3. Amendment and Restatement of Letter of Credit; Conditions to Effectiveness;
Transitional Provisions................................................................. 18
Section 4. Adjustment of Maximum Drawing Amount; Terms of Drawing............................. 21
Section 5. Obligations Absolute............................................................... 21
Section 6. Representations and Warranties of the Company...................................... 21
Section 7. Affirmative Covenants.............................................................. 25
Section 8. Negative Covenants................................................................. 30
Section 9. Reimbursement Events of Default.................................................... 32
Section 10. Amendments and Waivers............................................................ 35
Section 11. Notices........................................................................... 35
Section 12. No Waiver; Remedies............................................................... 37
Section 13. Waiver of Right of Setoff......................................................... 37
Section 14. Participations of the Banks....................................................... 38
Section 15. Assignees; Participants........................................................... 40
Section 16. Continuing Obligation; Binding Effect............................................. 41
Section 17. Extension of the Letter of Credit................................................. 41
Section 18. Limited Liability of the Banks.................................................... 42
Section 19. Cost, Expenses and Taxes.......................................................... 42
Section 20. Administrative Agent; Issuing Bank................................................ 43
Section 21. Indemnification................................................................... 44
Section 22. Confidentiality................................................................... 46
Section 23. Severability...................................................................... 46
Section 24. Governing Law; Consent to Jurisdiction............................................ 46
Section 25. Headings.......................................................................... 47
Section 26. Counterparts; Integration......................................................... 47
Section 27. WAIVER OF JURY TRIAL.............................................................. 47
SCHEDULE I - Letter of Credit Commission Rates
SCHEDULE II - Participation Amounts and Participation Percentages
EXHIBIT A Form of Amended and Restated Letter of Credit
THE TABLE OF CONTENTS IS NOT A PART OF THIS AGREEMENT.
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AMENDED AND RESTATED REIMBURSEMENT AGREEMENT
AMENDED AND RESTATED REIMBURSEMENT AGREEMENT among ARIZONA PUBLIC SERVICE
COMPANY, JPMORGAN CHASE BANK, N.A. (successor to JPMORGAN CHASE BANK ("JPMC")),
as Administrative Agent and as Issuing Bank, and the BANKS listed on the
signature pages hereto, as amended and restated as of May 19, 2005. (Unless
otherwise indicated, all capitalized terms used herein have the meanings
referred to or set forth in Section 1.)
WHEREAS, the Company has entered into a Participation Agreement dated as
of August 1, 1986 (as amended and in effect on May 19, 2005, the "PARTICIPATION
AGREEMENT") among the Company, U.S. Bank National Association (as successor to
State Street Bank and Trust Company, as successor to The First National Bank of
Boston), for itself and as Owner Trustee (together with its successors in such
capacity, the "OWNER TRUSTEE"), JPMorgan Chase Bank, N.A. (as successor to
Chemical Bank), for itself and as Indenture Trustee (together with its
successors in such capacity, the "INDENTURE TRUSTEE"), PVNGS Funding Corp.,
Inc., PVNGS II Funding Corp., Inc. and Emerson Finance LLC, as Equity
Participant (together with its successors and assigns, the "EQUITY
PARTICIPANT"), relating to the acquisition of an undivided interest in Unit 2 of
the Palo Verde Nuclear Generating Station through a trust for the benefit of the
Equity Participant which interest has been leased to the Company pursuant to a
lease dated as of August 1, 1986 between the Owner Trustee and the Company (as
amended and in effect on May 19, 2005, the "FACILITY LEASE");
WHEREAS, pursuant to Section 10(b)(3)(ix) of the Participation Agreement,
the Company has agreed to maintain at all times during the Basic Lease Term (as
defined in the Participation Agreement) an irrevocable letter of credit for the
benefit of the Equity Participant;
WHEREAS, in order to comply with the requirements of Section 10(b)(3)(ix)
of the Participation Agreement, the Company entered into a Reimbursement
Agreement dated as of August 1, 1986 (as amended and restated thereafter from
time to time prior to July 22, 2002, further amended and restated as of July 22,
2002 and in effect immediately prior to May 19, 2005, the "EXISTING
REIMBURSEMENT AGREEMENT") between the Company and JPMC, pursuant to which JPMC
issued to the Equity Participant its irrevocable transferable letter of credit
(such letter of credit, as amended and restated and in effect from time to time
before May 19, 2005, as further amended and restated as of May 19, 2005, and as
the same may be amended in accordance with this Agreement and in effect from
time to time thereafter, and any successor Letter of Credit as provided in such
Letter of Credit, being referred to herein as the "LETTER OF CREDIT"), to secure
the payment of Rent (as defined in the Participation
Agreement) by the Company under the Facility Lease to the extent of the amount
available to be drawn from time to time under the Letter of Credit;
WHEREAS, the Letter of Credit will expire on July 22, 2005, if not
extended; and
WHEREAS, pursuant to Section 17 of the Existing Reimbursement Agreement,
the Company has requested that the Letter of Credit be amended and restated,
that the term of the Letter of Credit be extended for five years, and that
certain provisions of the Existing Reimbursement Agreement be amended, and the
Banks are willing to comply with such requests on the terms and conditions set
forth below;
NOW, THEREFORE, in consideration of the premises and in order to induce
the Banks to agree to the amendment and restatement of the Letter of Credit, the
extension of the term of the Letter of Credit and the amendment of certain
provisions of the Existing Reimbursement Agreement, the parties hereto agree
that, upon satisfaction of the conditions set forth in Section 3(b) below and
subject to Section 3(c) below, the Existing Reimbursement Agreement will,
without any further action by the parties hereto, be amended and restated to
read in full as follows:
Section 1 Definitions; Accounting Terms. (a) Definitions. Capitalized
terms used herein and not otherwise defined herein have the respective meanings
assigned thereto in Appendix A to the Facility Lease. The following terms as
used herein have the following respective meanings:
"ACC" means the Arizona Corporation Commission or any successor thereto.
"ADMINISTRATIVE AGENT" means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Banks hereunder, and its successors in such
capacity.
"ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Administrative Agent
and submitted to the Administrative Agent (with a copy to the Company) duly
completed by such Bank.
"AFFILIATE" means, as to any Person, any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such
Person or is a director or officer of such Person.
"AGENT PARTIES" has the meaning given in Section 11(d).
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"AGREEMENT" means, when used with reference to this Agreement, this
Reimbursement Agreement as originally executed as of August 1, 1986, as amended
or amended and restated from time to time before May 19, 2005, as amended and
restated as of May 19, 2005, and as the same may be amended in accordance with
its terms from time to time thereafter.
"AMENDED AND RESTATED LETTER OF CREDIT" means the Amended and Restated
Irrevocable Transferable Letter of Credit No. 010152 (formerly numbered as
S-1002), dated as of May 19, 2005, amending the Existing Letter of Credit,
substantially in the form of Exhibit A hereto.
"AMENDMENT AND RESTATEMENT" means the Amendment and Restatement dated as
of May 19, 2005, amending and restating the Existing Reimbursement Agreement.
"APPLICABLE BOOKING OFFICE" means, as to each Bank, its office, branch or
affiliate located at its address set forth in its Administrative Questionnaire
(or identified in its Administrative Questionnaire as its Applicable Booking
Office) or such other office, branch or affiliate of such Bank as it may
hereafter designate as its Applicable Booking Office by notice to the Company
and the Administrative Agent.
"ASSIGNEE" has the meaning set forth in Section 15(a).
"AUTHORIZED OFFICER" means the chairman of the board, chief executive
officer, president, chief financial officer, chief operating officer, treasurer,
controller, any vice president or any assistant treasurer of the Company.
"BANK" means (i) each bank or financial institution listed on the
signature pages hereof, each Assignee that becomes a Bank pursuant to Section
15(a), and their respective successors, and (ii) the Issuing Bank with respect
to its Participation.
"BASE RATE" means, for any day, a rate per annum equal to the higher of
(i) the Prime Rate for such day and (ii) the sum of 1/2 of 1% plus the Federal
Funds Rate for such day.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York, Chicago, Illinois or the State of
California or, for purposes of Sections 2(a), 2(g) and 9(i) only, Phoenix,
Arizona, are authorized by law to close.
"CAPITAL LEASE OBLIGATIONS" means as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
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required to be classified and accounted for as a capital lease on the balance
sheet of such Person under generally accepted accounting principles and, for the
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with generally accepted
accounting principles.
"CODE" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"COMPANY" means Arizona Public Service Company, an Arizona corporation,
and its successors and permitted assigns.
"COMPANY MATERIALS" has the meaning given in Section 7(g).
"CONFIDENTIAL INFORMATION" means information that the Company furnishes to
any other party hereto in a writing designated as confidential, or that such
party obtains pursuant to its rights under Section 7(e), but does not include
any such information that (a) is or becomes generally available to the public
other than as a result of a breach by such party of its obligations hereunder,
(b) was available to such party on a nonconfidential basis prior to its
disclosure to such party by the Company or any of its Affiliates or (c) is or
becomes available to such party from a source other than the Company that is
not, to the knowledge of such party, acting in violation of a confidentiality
agreement with the Company.
"CONSOLIDATED CAPITALIZATION" has the meaning set forth in Section 8(e).
"CONSOLIDATED CASH COVERAGE RATIO" means, with respect to the Company and
its Consolidated Subsidiaries, for each twelve-month period ending on the last
day of each fiscal quarter (determined as of the last day of such fiscal
quarter), the ratio of:
(a) an amount equal to:
(i) consolidated net income of the Company and its Consolidated
Subsidiaries for such period, plus
(ii) all material non-recurring items which decreased said net
income for such period, minus
(iii) all material non-recurring items which increased said net
income for such period, plus
(iv) income taxes deducted in determining said net income for such
period, plus
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(v) total "Interest Charges", as defined in clause (b) below, of the
Company and its Consolidated Subsidiaries for such period, plus
(vi) depreciation and amortization, and nuclear fuel amortization
for such period, minus
(vii) allowance for equity and borrowed funds used during
construction for such period, minus
(viii) deferrals as described in Financial Accounting Standards
Board Statement No. 71 for such period, plus or minus
(ix) other significant noncash items for such period as may be
specified under Financial Accounting Standards Board Statements or other
accounting guidelines, to
(b) without duplication of any item, an amount equal to the sum (such
amount being the "INTEREST CHARGES") of:
(i) interest on long-term debt for such period as reported in the
consolidated income statement for such period, plus
(ii) interest on short-term debt for such period as reported in the
consolidated income statement for such period, plus
(iii) imputed interest on the Sale Leaseback Obligation Bonds for
such period, such amount being equal to the product of (A) the principal
amount of Sale Leaseback Obligation Bonds outstanding during such period
and (B) the rate of interest applicable to such Sale Leaseback Obligation
Bonds during such period, plus
(iv) all rental payments in respect of operating leases (excluding
any portion of such rental payments attributable to operating expenses and
excluding any payments in respect of Sale Leaseback Obligation Bonds) with
respect to which the payment obligations of the Company or a Consolidated
Subsidiary of the Company have a present value of at least $25,000,000.
"CONSOLIDATED INDEBTEDNESS" has the meaning set forth in Section 8(e).
"CONSOLIDATED NET WORTH" has the meaning set forth in Section 8(e).
"CONSOLIDATED SUBSIDIARY" means at any date any Subsidiary or other entity
the accounts of which would be consolidated with those of the Company in its
consolidated financial statements if such statements were prepared as of such
date.
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"DATE OF EARLY TERMINATION" has the meaning set forth in the Letter of
Credit.
"ELIGIBLE INSTITUTION" means (i) a commercial bank or a savings and loan
association having a net worth in excess of $250,000,000 (or the equivalent in
any other currency), (ii) a Bank or an affiliate of a Bank or (iii) any other
Person which the Company designates as an Eligible Institution with the consent
of the Administrative Agent.
"EQUITY PARTICIPANT" has the meaning set forth in the first recital
hereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Company or is under common control (within
the meaning of Section 414(c) of the Code) with the Company.
"EXISTING LETTER OF CREDIT" means the Letter of Credit, as amended and in
effect immediately prior to May 19, 2005.
"EXISTING REIMBURSEMENT AGREEMENT" has the meaning set forth in the third
recital hereto.
"FACILITY LEASE" has the meaning set forth in the first recital hereto.
"FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (ii) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate quoted to JPMorgan
Chase Bank, N.A. on such day as determined by the Administrative Agent.
"FEE LETTER" means the Fee Letter dated as of April 14, 2005, among the
Company, JPMorgan Chase Bank, N.A., J.P. Morgan Securities Inc., Barclays Bank
PLC and Barclays Capital, the investment banking division of Barclays Bank PLC.
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"FINANCIAL INFORMATION" means (i) the annual report of the Company on Form
10-K for the year ended December 31, 2004, as filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended,
(ii) the Company's quarterly report on Form 10-Q for the fiscal quarter of the
Company ended March 31, 2005, as so filed, and (iii) the Company's current
reports on Form 8-K filed January 28, 2005, March 1, 2005, March 29, 2005, April
13, 2005, April 26, 2005 and May 19, 2005, as so filed.
"GUARANTEE" means as to any Person, any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person or in any manner providing for the payment of any
Indebtedness of any other Person or otherwise protecting the holder of such
Indebtedness against loss (whether by virtue of partnership arrangements,
agreements to keep well, to purchase assets, goods, securities or services, or
to take-or-pay or otherwise), provided that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "GUARANTEE" used as a verb has a corresponding meaning.
"INDEBTEDNESS" means as to any Person at any date (without duplication):
(a) indebtedness created, issued, incurred or assumed by such Person for
borrowed money or evidenced by bonds, debentures, notes or similar instruments;
(b) all obligations of such Person to pay the deferred purchase price of
property or services, excluding, however, trade accounts payable (other than for
borrowed money) arising in, and accrued expenses incurred in, the ordinary
course of business of such Person so long as such trade accounts payable are
paid within 180 days of the date incurred; (c) all Indebtedness secured by a
lien on any asset of such Person, to the extent such Indebtedness has been
assumed by, or is a recourse obligation of, such Person; (d) all Guarantees by
such Person; (e) all Capital Lease Obligations of such Person; and (f) the
amount of all reimbursement obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, bankers' acceptances, surety or
other bonds and similar instruments in support of Indebtedness.
"INDENTURE TRUSTEE" has the meaning set forth in the first recital hereto.
"ISSUING BANK" means JPMorgan Chase Bank, N.A. and its successors in their
capacity as issuer of the Letter of Credit.
"LETTER OF CREDIT" has the meaning set forth in the third recital hereto.
"LETTER OF CREDIT COMMISSION RATE" means a rate per annum determined in
accordance with Schedule I hereto.
"LIEN" means any lien, security interest or other charge or encumbrance of
any kind, including, without limitation, the lien or retained security title of
a
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conditional vendor and any easement, right of way or other encumbrance on title
to real property.
"MATERIAL SUBSIDIARY" means, at any time, a Subsidiary of the Company
which as of such time meets the definition of a "significant subsidiary"
included as of May 19, 2005 in Regulation S-X of the Securities and Exchange
Commission or whose assets at such time exceed 10% of the assets of the Company
and the Subsidiaries (on a consolidated basis).
"MAXIMUM CREDIT AMOUNT" means, at any date, the Maximum Credit Amount, as
defined in the Letter of Credit.
"MAXIMUM DRAWING AMOUNT" means, at any date, the Maximum Drawing Amount,
as defined in the Letter of Credit.
"MULTIEMPLOYER PLAN" means a plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Company or any ERISA
Affiliate within any of the preceding five plan years and which is covered by
Title IV of ERISA.
"1986 ORDER" means Decision No. 55120, dated July 24, 1986, of the ACC.
"OTHER TAXES" has the meaning set forth in Section 2(e).
"OWNER TRUSTEE" has the meaning set forth in the first recital hereto.
"PARENT" means, as to any Bank, any Person controlling such Bank.
"PARTICIPANT" has the meaning set forth in Section 15(b).
"PARTICIPATION" means a participating interest of a Bank in the credit
represented by the Letter of Credit including, without limitation, the interest
therein retained by the Issuing Bank after giving effect to all participating
interests therein granted by it pursuant to Section 14(a), but prior to giving
effect to any interest therein granted to any Participant pursuant to Section
15(b).
"PARTICIPATION AGREEMENT" has the meaning set forth in the first recital
hereto.
"PARTICIPATION AMOUNT" means, with respect to any Bank, the amount set
forth in Schedule II hereto opposite the name of such Bank therein, as such
amount may be changed by reason of an assignment by or to such Bank in
accordance with Section 15(a). Such amount shall be reduced from time to time by
such Bank's ratable share of each reduction of the Maximum Credit Amount.
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"PARTICIPATION PERCENTAGE" means, with respect to any Bank at any time,
the percentage equivalent of a fraction (i) the numerator of which is the
Participation Amount of such Bank at such time and (ii) the denominator of which
is the Maximum Credit Amount at such time.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERMITTED LIEN" of the Company or any Material Subsidiary means any of
the following:
(i) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with generally accepted accounting
principles shall have been made;
(ii) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business, including, without
limitation, landlord's liens arising under Arizona law under leases
entered into by the Company in the 1986 sale and leaseback transactions
with respect to Unit 2, including without limitation the Facility Lease,
and securing the payment of rent under such leases, to the extent such
leases are properly treated as operating leases, in each case, for sums
not overdue or being contested in good faith by appropriate proceedings
and for which adequate reserves in accordance with generally accepted
accounting principles shall have been made;
(iii) Liens incurred in the ordinary course of business in
connection with worker's compensation, unemployment insurance or other
forms of governmental insurance or benefits or other similar statutory
obligations;
(iv) Liens to secure obligations on surety or appeal bonds;
(v) rights of setoff and banker's Liens with respect to funds on
deposit in a financial institution in the ordinary course of business;
(vi) easements, restrictions and other minor defects of title that
are not, in the aggregate, material to the use of such property;
(vii) Liens securing claims against any Person other than the
Company or any Subsidiary of the Company neither assumed nor guaranteed by
the Company or any Subsidiary of the Company nor on which the Company or
any Subsidiary of the Company customarily pays
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interest, existing upon real estate or rights in or relating to real
estate acquired by the Company or any Subsidiary of the Company for
substation, transmission line, transportation line, distribution line or
right of way purposes;
(viii) rights reserved to or vested in any municipality or public
authority by the terms of any right, power, franchise, grant, license or
permit or by any provision of law, to terminate such right, power,
franchise, grant, license or permit, or to purchase or recapture or to
designate a purchaser of any of the property of the Company;
(ix) rights reserved to or vested in others to take or receive any
part of the power pursuant to firm power commitment contracts, purchased
power contracts and similar agreements, gas, oil or other minerals or
timber generated, developed, manufactured or produced by, or grown on, or
acquired with, any property of the Company;
(x) rights reserved to or vested in any municipality or public
authority to control or regulate any property of the Company, or to use
such property in a manner that does not materially impair the use of such
property for the purposes for which it is held by the Company;
(xi) security interests granted in favor of the Unit 2 sale
leaseback transaction lessors in the Company's Decommissioning Trust
Agreement (PVNGS Unit 2) dated as of January 31, 1992 (such agreement, as
amended or otherwise modified from time to time, being the "Unit 2 Trust
Agreement") to secure the Company's obligations in respect of the
decommissioning of Unit 2 or related facilities;
(xii) Liens that may exist with respect to the Unit 2 Trust
Agreement (other than as described in clause (xi) above), or with respect
to either of the Company's Decommissioning Trust Agreement (PVNGS Unit 1)
or Decommissioning Trust Agreement (PVNGS Unit 3), each dated as of July
1, 1991, as amended or otherwise modified from time to time, relating to
the Company's obligation to set aside funds for the decommissioning and
retirement from service of such Units;
(xiii) pledges of pollution control bonds and related rights to
secure the Company's reimbursement obligations in respect of letters of
credit and bond insurance supporting pollution control bond transactions,
provided that such pollution control bonds are not secured by any other
assets of the Company or any Material Subsidiary;
(xiv) Liens established on specified bank accounts of the Company to
secure the Company's reimbursement obligations in respect
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of letters of credit supporting commercial paper issued by the Company and
similar arrangements for collateral security with respect to refinancings
or replacements of the same;
(xv) interests of other participants under agreements governing
jointly-owned electric generating facilities and transmission facilities
and transfers of operational or other control of facilities to a regional
transmission organization or other similar body and Liens on such
facilities to cover expenses, fees and other costs of such an organization
or body;
(xvi) rights of transmission users or any regional transmission
organizations or similar entities in transmission facilities;
(xvii) Liens on property of the Company sold in a transaction
permitted by Section 8(a) hereof to another Person pursuant to a
conditional sales agreement where the Company retains title; and
(xviii) any Liens securing a claim (other than in respect of
Indebtedness) in an amount less than $10,000,000;
provided, however, that no Lien in favor of the PBGC shall, in any event, be a
Permitted Lien.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PLAN" means an employee benefit plan within the meaning of Section 3(3)
of ERISA established or maintained by the Company or any ERISA Affiliate which
is covered by Title IV of ERISA, other than a Multiemployer Plan.
"PLATFORM" has the meaning given in Section 7(g).
"PRIME RATE" means the rate of interest publicly announced by JPMorgan
Chase Bank, N.A. in New York City from time to time as its Prime Rate.
"PVNGS" means the Palo Verde Nuclear Generating Station.
"PWCC" means Pinnacle West Capital Corporation, an Arizona corporation and
its successors.
"REIMBURSEMENT DEFAULT" means any event or condition which constitutes a
Reimbursement Event of Default or which with the giving of notice or the lapse
of time or both would, unless cured or waived, become a Reimbursement Event of
Default.
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"REIMBURSEMENT EVENT OF DEFAULT" has the meaning set forth in Section 9.
"REQUIRED BANKS" means, at any time, Banks with Participation Percentages
aggregating more than 50% at such time.
"RESTATEMENT EFFECTIVE DATE" has the meaning set forth in Section 3(b).
"SALE LEASEBACK OBLIGATION BONDS" means PVNGS II Funding Corp. Inc.'s (i)
7.39% Secured Lease Obligation Bonds, Series 1993, due 2005; (ii) 8.00% Secured
Lease Obligation Bonds, Series 1993, due 2015; (iii) any other bonds issued by
the Company in connection with a sale/leaseback transaction; and (iv) any
refinancing or refunding of the obligations specified in clauses (i) through
(iii) above.
"STATED TERMINATION DATE" means May 19, 2010 or such later date to which
such Stated Termination Date shall have been extended pursuant to Section 17.
"SUBSEQUENT ORDER" means any decision, order or ruling of the ACC issued
after May 19, 2005 that amends, supersedes or otherwise modifies the 1986 Order
or any successor decision, order or ruling.
"SUBSIDIARY" of any Person means any corporation of which more than 50% of
the issued and outstanding capital stock having ordinary voting power to elect a
majority of the Board of Directors of such corporation (irrespective of whether
at the time capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any contingency) is at
the time directly or indirectly owned or controlled by such Person, such Person
and one or more of its other Subsidiaries, or one or more of such Person's other
Subsidiaries.
"TAXES" has the meaning set forth in Section 2(e).
"TERMINATION DATE" means the earliest of (i) the date on which the Issuing
Bank pays a drawing under the Letter of Credit for the lesser of the Maximum
Drawing Amount and the Maximum Credit Amount, (ii) if a drawing is not requested
by the Equity Participant after a notice of termination is given under the
Letter of Credit, the Date of Early Termination, (iii) if a drawing is requested
by the Equity Participant after a notice of termination is given under the
Letter of Credit, the date on which the Issuing Bank pays such drawing, (iv) the
date on which the Company delivers a certificate to the Issuing Bank certifying
that the Company has paid the amounts due under Section 9(c) of the Facility
Lease (so long as the Equity Participant shall have acknowledged such payment by
its express confirmation thereof in, and its countersignature to, such
certificate),
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(v) the date on which the Company delivers a certificate to the Issuing Bank
certifying that the Company has paid the amounts due under Section 9(d) of the
Facility Lease (so long as the Equity Participant shall have acknowledged such
payment by its express confirmation thereof in, and its countersignature to,
such certificate), and (vi) the latest of (x) the Stated Termination Date, (y)
if a draft and certificate all in strict conformity with the terms and
conditions of the Letter of Credit are presented on the Stated Termination Date
at such time and at such office as specified in the fifth paragraph of the
Letter of Credit, the date on which the Issuing Bank is required to honor the
draft in accordance with the provisions of such paragraph pursuant to such
presentation, and (z) if a corrected draft and certificate all in strict
conformity with the terms and conditions of the Letter of Credit are presented
on the date specified in, and in accordance with, the provisions of the sixth
paragraph of the Letter of Credit, the date on which the Issuing Bank is
required to honor the draft in accordance with the provisions of such paragraph
pursuant to such presentation.
"TOTAL ASSETS" means the aggregate of all assets properly appearing on the
most recent balance sheet of the Company and its Consolidated Subsidiaries
furnished pursuant to Section 6(f) or Section 7(g).
"UNITED STATES" means the United States of America, including the States
and the District of Columbia, but excluding its territories and possessions.
"WHOLLY-OWNED SUBSIDIARY" of any Person means any corporation of which all
shares of the issued and outstanding capital stock (other than any director's
qualifying shares) having ordinary voting power to elect a majority of the Board
of Directors of such corporation (irrespective of whether at the time capital
stock of any other class or classes of such corporation shall or might have
voting power upon the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person, such Person and one or more of
its other Subsidiaries, or one or more of such Person's other Subsidiaries.
(b) Accounting Terms. Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all accounting determinations hereunder
shall be made, and all financial statements required to be delivered hereunder
shall be prepared, in accordance with generally accepted accounting principles
as in effect from time to time, applied on a basis consistent (except for
changes concurred in by the Company's independent public accountants) with the
most recent audited consolidated financial statements of the Company delivered
to the Agent.
Section 2 Reimbursement. (a) The Company agrees to pay to the
Administrative Agent for the account of the Issuing Bank (i) not later than 2:00
p.m., New York City time, on the fifth Business Day after the Issuing Bank shall
have paid any draft under the Letter of Credit a sum equal to the amount so paid
13
under the Letter of Credit, (ii) interest on each amount paid by the Issuing
Bank under the Letter of Credit from and including the date such amount is paid
by the Issuing Bank under the Letter of Credit until but excluding the earlier
of (x) the date the Issuing Bank shall have received from the Company the
amounts due under clause (i) above and this clause (ii) and (y) the fifth
Business Day after the Issuing Bank shall have paid the relevant draft, payable
on demand, at a rate per annum equal to the Base Rate, and (iii) interest on any
amount not paid by the Company when due under clauses (i) and (ii) above from
and including the fifth Business Day after the relevant draft is paid by the
Issuing Bank under the Letter of Credit until such overdue amount is paid in
full, payable on demand, at a rate per annum equal to 2% per annum above the
Base Rate; provided that such interest rate shall in no event be higher (with
respect to each amount due and payable hereunder, from the date such amount is
due and payable until the date such amount is paid in full) than the maximum
rate permitted by applicable law.
(b) The Company agrees to pay to the Administrative Agent for the account
of the Banks ratably in proportion to their Participation Percentages a letter
of credit commission computed at the Letter of Credit Commission Rate on the
Maximum Credit Amount of the Letter of Credit from and including the Restatement
Effective Date to, but excluding, the Termination Date. Such commission accrued
through and including the last day of March, June, September and December of
each year shall be payable in arrears on the third Business Day following such
last day, commencing on the first such date to occur after the Restatement
Effective Date.
(c) The Company agrees to pay to the Administrative Agent for the account
of the Issuing Bank a fronting fee at the rate per annum heretofore mutually
agreed by the Company and the Issuing Bank pursuant to the Fee Letter, on the
Maximum Credit Amount of the Letter of Credit from and including the Restatement
Effective Date to, but excluding, the Termination Date. Such fronting fee
accrued through and including the last day of March, June, September and
December of each year shall be payable in arrears on the third Business Day
following such last day, commencing on the first such date to occur after the
Restatement Effective Date.
(d) (i) If after May 19, 2005 the adoption of any applicable law, rule or
regulation, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank with any request or directive (whether or not having the force of
law) of any such authority, central bank or comparable agency shall impose,
modify or deem applicable any reserve, special deposit or similar requirement
(including, without limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System) against letters of credit issued by or
assets held by, deposits with or for the account of, or credit extended by, any
Bank or shall
14
impose on any Bank any other condition regarding this Agreement or the Letter of
Credit or its Participation therein, and the result of any of the foregoing is
to increase the cost to such Bank of the issuance or maintenance of the Letter
of Credit or its Participation therein, or to reduce the amount of any sum
received or receivable by such Bank under this Agreement with respect thereto,
by an amount deemed by such Bank to be material, then within 15 days after
demand by such Bank (with a copy to the Administrative Agent), the Company shall
pay to the Administrative Agent for the account of such Bank such additional
amount or amounts as will compensate such Bank for such increased cost or
reduction.
(ii) If any Bank shall have determined that, after May 19, 2005, the
adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any such law, rule or regulation, or any change
in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof, or any request or directive
regarding capital adequacy (whether or not having the force of law) of any
such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on capital of such Bank (or its
Parent) as a consequence of such Bank's obligations hereunder to a level
below that which such Bank (or its Parent) could have achieved but for
such adoption, change, request or directive (taking into consideration its
policies with respect to capital adequacy) by an amount deemed by such
Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Administrative Agent), the Company shall
pay to such Bank such additional amount or amounts as will compensate such
Bank (or its Parent) for such reduction.
(iii) Each Bank will notify the Company and the Administrative Agent
of any event of which it has knowledge, occurring after May 19, 2005 which
will entitle such Bank to compensation pursuant to clause (i) or (ii) of
this Section 2(d) as promptly as practicable, but in any event within 90
days after such Bank obtains knowledge thereof; provided that, if such
Bank fails to give such notice within 90 days after it obtains knowledge
of such an event, such Bank shall, with respect to compensation payable in
respect of any costs resulting from such event, only be entitled to
payment for costs incurred on and after the date that such Bank does give
such notice. A certificate of any Bank claiming compensation under this
Section 2(d) and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of demonstrable error.
In determining such amount, such Bank may use any reasonable averaging and
attribution methods.
(e) (i) For the purposes of this Section 2(e), the following terms have
the following meanings:
15
"TAXES" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Company pursuant to this Agreement, and all liabilities with respect thereto,
excluding (i) in the case of each Bank and the Administrative Agent, taxes
imposed on its net income, and franchise or similar taxes imposed on it, by the
United States, or by the jurisdiction under the laws of which such Bank or the
Administrative Agent (as the case may be) is organized or in which its principal
executive office is located or, in the case of each Bank, in which its
Applicable Booking Office is located and (ii) in the case of each Bank, any
United States withholding tax imposed with respect to any payment by the Company
pursuant to this Agreement, but only up to the rate (if any) at which United
States withholding tax would apply to such payments to such Bank at the time
such Bank first becomes a party to this Agreement.
"OTHER TAXES" means any present or future stamp or documentary taxes and
any other excise or property taxes, or similar charges or levies, which arise
from any payment made pursuant to this Agreement or from the execution or
delivery of, or otherwise with respect to, this Agreement or the Letter of
Credit.
(ii) Any and all payments by the Company to or for the account of
any Bank or the Administrative Agent hereunder shall be made without
deduction for any Taxes or Other Taxes; provided that, if the Company
shall be required by law to deduct any Taxes or Other Taxes from any such
payments, (A) the sum payable shall be increased as necessary so that
after making all required deductions for any Taxes or Other Taxes
(including deductions applicable to additional sums payable under this
Section) such Bank or the Administrative Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made, (B) the Company shall make such deductions, (C) the
Company shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (D) the
Company shall furnish to the Administrative Agent the original or a
certified copy of a receipt evidencing payment thereof.
(iii) The Company agrees to indemnify each Bank and the
Administrative Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed or
asserted by any jurisdiction on amounts payable under this Section) paid
by such Bank or the Administrative Agent (as the case may be) and any
liability (including penalties, interest and expenses) arising therefrom
or with respect thereto. This indemnification shall be paid within 30 days
after such Bank or the Administrative Agent (as the case may be) makes
demand therefor. Such demand shall be made as promptly as practicable, but
in any event within 90 days after such Bank obtains actual knowledge of
such event; provided, however, that if any Bank fails to make such
16
demand within 90 days after such Bank obtains knowledge of such event,
such Bank shall, with respect to compensation payable in respect of such
event, not be entitled to compensation in respect of the costs and losses
incurred between the 90th day after such Bank obtains actual knowledge of
such event and the date such Bank makes such demand.
(iv) Each Bank organized under the laws of a jurisdiction outside
the United States shall provide the Company and the Administrative Agent
with Internal Revenue Service Form W-8BEN, W-8ECI, or other type of W-8,
as appropriate, or any successor form prescribed by the Internal Revenue
Service: (i) on or prior to the date of its execution and delivery of this
Agreement in the case of each Bank listed on the signature pages hereof
and on or prior to the date on which it becomes a Bank in the case of each
other Bank, (ii) before the end of each third calendar year thereafter,
and (iii) at any time that a change of circumstances occurs that makes any
information on the form so provided incorrect, certifying that such Bank
is entitled to benefits under an income tax treaty to which the United
States is a party which exempts such Bank from United States withholding
tax or reduces the rate of withholding tax on payments under this
Agreement or certifying that the income receivable pursuant to this
Agreement is effectively connected with the conduct of a trade or business
in the United States. Further, each such Bank that is not an exempt
recipient listed in Section 6049(b)(4) of the Code shall provide the
Company and the Administrative Agent with Internal Revenue Service Form
W-8 or W-9, as appropriate, or other successor form prescribed by the
Internal Revenue Service, certifying that it is exempt from United States
back-up withholding.
(v) For any period with respect to which a Bank has failed to
provide the Company or the Administrative Agent with the appropriate forms
pursuant to Section 2(e)(iv) (unless such failure is due to a change in
treaty, law or regulation occurring subsequent to the date on which such
form originally was required to be provided), such Bank shall not be
entitled to indemnification under Section 2(e)(ii) or (iii) with respect
to Taxes imposed by the United States; provided that if a Bank, which is
otherwise exempt from or subject to a reduced rate of withholding tax,
becomes subject to Taxes because of its failure to deliver a form required
hereunder, the Company shall take such steps as such Bank shall reasonably
request to assist such Bank to recover such Taxes.
(vi) If the Company is required to pay additional amounts to or for
the account of any Bank pursuant to this Section, then such Bank will
change the jurisdiction of its Applicable Booking Office if, in the
judgment of such Bank, such change (A) will eliminate or reduce any such
17
additional payment which may thereafter accrue and (B) is not otherwise
disadvantageous to such Bank.
(f) If the payments claimed by any such Bank pursuant to Section 2(d) or
Section 2(e) are substantially in excess, as reasonably determined by the
Company, relative to the amount of such Bank's Participation, of the payments
claimed by the other Banks pursuant to such Sections, the Company shall have the
right, with the assistance of the Administrative Agent, to seek one or more
mutually satisfactory substitute Eligible Institutions to assume all of the
rights and obligations of such Bank in respect of its Participation pursuant to
an assignment and assumption agreement in form and substance satisfactory to the
Administrative Agent; provided that the aggregate amount of the Participation so
assigned to each such Eligible Institution (together with any Participation then
held by such Eligible Institution) shall not be less than $5,000,000.
(g) The Company shall make each payment hereunder to the Administrative
Agent at 270 Park Avenue, New York, New York 10017, not later than 2:00 p.m.
(New York City time) on the date when due in lawful money of the United States
of America and in Federal or other funds immediately available in New York City.
Whenever any payment under this Section 2 shall be due on a day which is not a
Business Day, the date for payment thereof shall be extended to the next
succeeding day that is a Business Day. If the date for any payment of principal
is extended by operation of law or otherwise, interest thereon shall be payable
for such extended time.
(h) Computations of the letter of credit commission, the fee referred to
in Section 2(c), and interest based on the Prime Rate shall be made by the
Administrative Agent on the basis of a year of 365 or 366 days, as the case may
be, for the actual number of days (including the first day but excluding the
last day) elapsed. Computations of all other interest hereunder shall be made by
the Administrative Agent on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day) elapsed.
Section 3. Amendment and Restatement of Letter of Credit; Conditions to
Effectiveness; Transitional Provisions. (a) On the terms and conditions herein
set forth, the Issuing Bank agrees to execute and deliver to the Equity
Participant on the Restatement Effective Date, or, if all of the conditions
precedent to the effectiveness of this Amendment and Restatement shall not have
been satisfied by 3:00 p.m., New York City time, on the Restatement Effective
Date, on the next succeeding Business Day, the Amended and Restated Letter of
Credit substantially in the form of Exhibit A hereto, amending and restating the
Existing Letter of Credit.
18
(b) This Amendment and Restatement shall become effective on the date (the
"RESTATEMENT EFFECTIVE DATE") on which all of the following conditions shall
have been satisfied (or waived in accordance with Section 10):
(i) receipt by the Administrative Agent of a counterpart of this
Amendment and Restatement signed by each party hereto;
(ii) receipt by the Administrative Agent of fees payable by the
Company on or before the Restatement Effective Date in such amounts and
for the accounts of such parties as heretofore mutually agreed pursuant to
the Fee Letter;
(iii) receipt by the Administrative Agent of evidence to its
satisfaction that all amounts accrued and unpaid under the Existing
Reimbursement Agreement to (but not including) the Restatement Effective
Date payable by any party thereto have been paid;
(iv) receipt by the Administrative Agent of an opinion of Snell &
Wilmer L.L.P., special counsel for the Company, dated the Restatement
Effective Date, in form and substance satisfactory to the Administrative
Agent;
(v) receipt by the Administrative Agent of an opinion of Davis Polk
& Wardwell, special counsel for the Administrative Agent, dated the
Restatement Effective Date, in form and substance satisfactory to the
Administrative Agent;
(vi) receipt by the Administrative Agent of copies, certified by the
Secretary, an Associate Secretary or an Assistant Secretary of the
Company, of the resolutions of the Board of Directors of the Company
authorizing the execution, delivery and performance of this Amendment and
Restatement and the transactions contemplated hereby;
(vii) receipt by the Administrative Agent of a certificate of the
Secretary, an Associate Secretary or an Assistant Secretary of the
Company, dated the Restatement Effective Date, certifying the names and
true signatures of the officers of the Company authorized to sign this
Amendment and Restatement;
(viii) receipt by the Administrative Agent of a certificate, dated
the Restatement Effective Date, signed by the chief financial officer,
vice president, finance, or treasurer of the Company to the effect that
(x) (A) no Default or Event of Default; (B) no Reimbursement Default (as
defined in the Existing Reimbursement Agreement) and (C) no Reimbursement
Default (as defined in this Amendment and Restatement) shall have
19
occurred and be continuing on the Restatement Effective Date or would
result from the amendment and restatement of the Letter of Credit pursuant
to subsection (a) of this Section 3; and (y) that the representations and
warranties of the Company set forth in Section 6 of this Amendment and
Restatement shall be true and correct on and as of the Restatement
Effective Date as though made on and as of such date;
(ix) receipt by the Administrative Agent of certified copies of all
approvals, authorizations, orders or consents of, or notices to or
registrations with, any governmental body or agency, if any, required for
the Company to enter into this Amendment and Restatement;
(x) receipt by the Administrative Agent of such other approvals,
opinions or documents as the Administrative Agent may reasonably request;
and
(xi) receipt by the Administrative Agent of all documents the
Administrative Agent may reasonably request relating to the existence of
the Company, the corporate authority for and the validity of this
Amendment and Restatement and any other matters relevant hereto;
provided that all documents (or copies thereof) to be delivered to the
Administrative Agent on or before the Restatement Effective Date shall be
provided to each Bank and shall be in form and substance satisfactory to the
Required Banks.
(c) Promptly after this Amendment and Restatement becomes effective, the
Administrative Agent shall give notice thereof and of the Restatement Effective
Date to each party hereto. Immediately upon the effectiveness of this Amendment
and Restatement, the Issuing Bank will be obligated to extend the Letter of
Credit as provided in subsection (a) of this Section 3 and each party hereto
will be bound by the provisions of this subsection (c). The rights and
obligations of the parties hereto on and after the Restatement Effective Date
shall be governed by the provisions of this Amendment and Restatement and as the
same may be further amended and in effect from time to time thereafter. The
rights and obligations of the parties hereto with respect to the period prior to
the Restatement Effective Date will continue to be governed by the provisions of
this Agreement as in effect prior to the Restatement Effective Date.
(d) Each of the parties hereto (other than Citibank, N.A. and KBC Bank
NV), together comprising all of the parties to the Existing Reimbursement
Agreement and their successors in such capacity, hereby agrees that by its
execution hereof, it is deemed to have provided each written consent or
agreement required on its part under Sections 10 and 17 of the Existing
Reimbursement Agreement to the extension and amendment of the Existing Letter of
Credit and
20
the amendment and restatement of the Existing Reimbursement Agreement on the
terms provided herein.
Section 4. Adjustment of Maximum Drawing Amount; Terms of Drawing. The
Maximum Drawing Amount shall be modified as specified in the third paragraph of
the Letter of Credit and drawings under the Letter of Credit shall be subject to
the other terms and conditions set forth in the Letter of Credit.
Section 5. Obligations Absolute. The payment obligations of the Company
under this Agreement shall be absolute, unconditional and irrevocable, and shall
be performed strictly in accordance with the terms of this Agreement under all
circumstances whatsoever, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of the Letter of Credit
or any of the Transaction Documents or Financing Documents;
(ii) any amendment or waiver of or any consent to departure from all
or any of the Transaction Documents or Financing Documents;
(iii) the existence of any claim, set-off, defense or other rights
which the Company may have at any time against the Equity Participant, the
Owner Trustee or any transferee of the Letter of Credit (or any persons or
entities for whom any of the foregoing may be acting), the Administrative
Agent, any Bank, any Participant or any other person or entity, whether in
connection with this Agreement, the Transaction Documents or Financing
Documents, the transactions contemplated hereby or thereby or any
unrelated transaction; provided that nothing herein shall prevent the
assertion of such claim by separate suit or compulsory counterclaim;
(iv) any statement or any other document presented under the Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect
whatsoever;
(v) payment by the Issuing Bank under the Letter of Credit against
presentation of a draft or certificate which does not comply with the
terms of the Letter of Credit; or
(vi) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing.
Section 6. Representations and Warranties of the Company. The Company
represents and warrants as of the Restatement Effective Date as follows:
21
(a) Corporate Existence. Each of the Company and each Material Subsidiary:
(i) is a corporation duly organized and validly existing under the laws of the
jurisdiction of its incorporation; (ii) has all requisite corporate power
necessary to own its assets and carry on its business as presently conducted;
(iii) has all governmental licenses, authorizations, consents and approvals
necessary to own its assets and carry on its business as presently conducted,
unless the failure to have any such license, authorization, consent or approval
would not have a material adverse effect on the financial condition or financial
prospects of the Company and its Consolidated Subsidiaries, taken as a whole,
and except as disclosed in the Financial Information or by written notice
delivered to the Banks more than five Business Days prior to the execution and
delivery of this Amendment and Restatement; and (iv) is qualified to do business
in all jurisdictions in which the nature of the business conducted by it makes
such qualification necessary and where failure so to qualify would have a
material adverse effect on the financial condition or financial prospects of the
Company and its Consolidated Subsidiaries, taken as a whole. All of the issued
and outstanding common stock of the Company is owned by PWCC.
(b) Noncontravention, Etc. The execution, delivery, and performance by the
Company of this Agreement are within the Company's corporate powers, have been
duly authorized by all necessary corporate action, and do not (i) contravene the
Company's charter or by-laws or (ii) contravene any Applicable Law or any
contractual restriction binding on or affecting the Company. The execution,
delivery, and performance by the Company of this Agreement do not cause the
creation or imposition of any Lien upon the assets of the Company or any
Material Subsidiary, except as it may be necessary for the Company to grant a
Lien to the Administrative Agent for the benefit of the Banks pursuant to
Section 8(c).
(c) Approvals. No authorization or approval or other action by, and no
notice to or filing or registration with, any governmental authority or
regulatory body is required for the due execution, delivery and performance by
the Company of this Agreement, except for (w) the 1986 Order which has been duly
issued by the ACC and is in full force and effect in the form originally issued,
(x) such other Governmental Actions as have been duly obtained, given or
accomplished, (y) the filing with the ACC of a copy of this Agreement within
five days of the execution hereof, in accordance with the 1986 Order and (z) as
may be required under Applicable Law not now in effect. The execution, delivery,
and performance by the Company of this Agreement do not require the consent or
approval of the Equity Participant or the Owner Trustee (except as specified in
this Agreement) or PWCC or any trustee or holder of any indebtedness or other
obligation of the Company, other than such consents and approvals as have been
duly obtained, given or accomplished. No Governmental Action by any Federal,
Arizona or New York Governmental Authority relating to the Securities Act, the
Securities Exchange Act, the Trust Indenture Act, the Federal Power Act, the
Atomic
22
Energy Act, the Nuclear Waste Act, the Holding Company Act, the Arizona Public
Utility Act, energy or nuclear matters, public utilities, the environment,
health and safety or Unit 2 is or will be required in connection with the
participation by the Administrative Agent, any Bank or any Participant in the
consummation of the transactions contemplated by this Agreement, except such
Governmental Actions (A) as have been, duly obtained, given or accomplished or
(B) as may be required by Applicable Law not now in effect.
(d) Binding Agreement. This Agreement is a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, subject, however, to the application by a court of general principles of
equity and to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally.
(e) Litigation. There is no pending or (to the knowledge of the Company)
threatened action or proceeding affecting the Company or any of its Subsidiaries
before any court, governmental agency or arbitrator, that, if adversely
determined, could have a material adverse effect on the financial condition or
financial prospects of the Company and its Consolidated Subsidiaries, taken as a
whole, except as disclosed in the Financial Information or by written notice
delivered to the Banks more than five Business Days prior to the execution and
delivery of this Amendment and Restatement.
(f) Financial Statements. The balance sheet of the Company and its
Consolidated Subsidiaries as of December 31, 2004 and the related statements of
income and cash flows of the Company and its Consolidated Subsidiaries for the
fiscal year then ended, copies of which have been furnished to the Banks, fairly
present in all material respects the financial condition of the Company and its
Consolidated Subsidiaries as of such date and the results of operations and cash
flows of the Company and its Consolidated Subsidiaries for such fiscal year, all
in accordance with generally accepted accounting principles consistently applied
(except as disclosed therein). The balance sheet of the Company and its
Consolidated Subsidiaries as of March 31, 2005 and the related statements of
income and cash flows of the Company and its Consolidated Subsidiaries for the
quarter then ended, copies of which have been furnished to the Banks, fairly
present in all material respects the financial condition of the Company and its
Consolidated Subsidiaries as of such date and the results of operations and cash
flows of the Company and its Consolidated Subsidiaries for the quarter then
ended, all in accordance with generally accepted accounting principles
consistently applied (except as disclosed therein and subject to normal year-end
audit adjustments). Since March 31, 2005, there has been no material adverse
change in the financial condition or financial prospects of the Company and its
Consolidated Subsidiaries, taken as a whole.
23
(g) ERISA. The Company and the ERISA Affiliates have fulfilled their
respective obligations under the minimum funding standards of ERISA and the Code
with respect to each Plan and are in compliance in all material respects with
the presently applicable provisions of ERISA and the Code, and have not incurred
any liability to the PBGC or any Plan or Multiemployer Plan, other than
liability to the PBGC for premiums prior to the due date for such premiums and
liability to any Plan maintained by the Company or an ERISA Affiliate or to any
Multiemployer Plan for contributions prior to the due date for such
contributions which shall be paid in accordance with the provisions of the
minimum funding standards of ERISA and the Code.
(h) Taxes. The Company and its Subsidiaries have filed all United States
Federal income tax returns and all other material tax returns which are required
to be filed by them and have paid all taxes due pursuant to such returns or
pursuant to any assessment received by the Company or any of its Subsidiaries,
except to the extent that (i) such taxes are being contested in good faith and
by appropriate proceedings and appropriate reserves for the payment thereof have
been maintained by the Company and its Subsidiaries in accordance with generally
accepted accounting principles or (ii) the failure to make such filings or such
payments is not likely to have a material adverse effect on the financial
condition or the financial prospects of the Company and its Consolidated
Subsidiaries, taken as a whole. The charges, accruals and reserves on the books
of the Company and its Material Subsidiaries as set forth in the most recent
financial statements of the Company delivered to the Banks pursuant to Section
6(f) or Section 7(g)(i) or Section 7(g)(ii) hereof in respect of taxes and other
governmental charges are, in the opinion of the Company, adequate.
(i) Environmental. The operations and properties of the Company and its
Subsidiaries comply in all material respects with all environmental laws, the
noncompliance with which would have a material adverse effect on the financial
condition or financial prospects of the Company and its Consolidated
Subsidiaries taken as a whole, except as disclosed in the Financial Information
or by written notice delivered to the Banks more than five Business Days prior
to the execution and delivery of this Amendment and Restatement.
(j) Investment Company. The Company is not an "investment company", or a
company "controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940, as amended.
(k) No Material Misstatements or Omissions. The Financial Information did
not, and any documents to be filed with the Securities and Exchange Commission
and delivered to the Banks pursuant to Section 7(g)(i) or Section 7(g)(ii) after
December 31, 2004 will not, as of the date furnished, contain any untrue
statement of a material fact or omit to state any material fact necessary
24
to make the statements made therein, in the light of the circumstances under
which they were or shall be made, not misleading.
(l) No Amendments. Except as provided to the Banks prior to the
Restatement Effective Date, there has been no amendment or waiver of, or consent
with respect to, the payment obligations of the Company under any Transaction
Document or Financing Document since March 17, 1993.
Section 7. Affirmative Covenants. So long as a drawing is available under
the Letter of Credit or the Company shall have any obligation to pay any amount
hereunder to or for the account of the Administrative Agent or any Bank, the
Company will, unless the Required Banks shall otherwise consent in writing:
(a) Preservation of Corporate Existence, Business, Etc. (i) Preserve and
maintain its corporate existence and all rights and privileges (other than
"franchises" as described in Arizona Revised Statutes, Section 40-283 or any
successor provision) reasonably necessary in the normal conduct of its business,
unless the failure to maintain such rights and privileges would not have a
material adverse effect on the financial condition or financial prospects of the
Company and its Consolidated Subsidiaries taken as a whole, and use its best
efforts to preserve and maintain such franchises reasonably necessary in the
normal conduct of its business, except that (A) the Company from time to time
may make minor extensions of its lines, plants, services or systems prior to the
time a related franchise, certificate of convenience and necessity, license or
permit is procured, (B) from time to time communities served by the Company may
become incorporated and considerable time may elapse before such a franchise is
procured, (C) certain such franchises may have expired prior to the
renegotiation thereof, (D) certain minor defects and exceptions may exist which,
individually and in the aggregate, are not material and (E) certain franchises,
certificates, licenses and permits may not be specific as to their geographical
scope.
(ii) Continue to conduct the same general type of business conducted
on May 19, 2005.
(b) Compliance with Laws, Etc. (i) Comply, and cause each Material
Subsidiary to comply, in all material respects with all applicable laws, rules,
regulations and orders of governmental or regulatory authorities if the failure
to comply would have a material adverse effect on the financial condition or
financial prospects of the Company and its Consolidated Subsidiaries, taken as a
whole.
(ii) Comply at all times with the 1986 Order and any Subsequent
Order, unless the failure to so comply could not affect the validity or
enforceability of the indebtedness of the Company pursuant to this
Agreement.
25
(c) Payment of Taxes and Claims. Pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent, all
taxes, assessments and governmental charges or levies imposed on it or its
property; provided that neither the Company nor any of its Subsidiaries shall be
required to pay or discharge any such tax, assessment, charge or levy (i) that
is being contested in good faith and by proper proceedings and as to which
adequate reserves are being maintained in accordance with generally accepted
accounting principles or (ii) if the failure to pay such tax, assessment, charge
or levy is not likely to have a material adverse effect on the financial
condition or financial prospects of the Company and its Consolidated
Subsidiaries, taken as a whole.
(d) Maintenance of Insurance. Maintain, and cause each Material Subsidiary
to maintain, insurance, either with responsible and reputable insurance
companies or associations, or through its own program of self-insurance, in such
amounts and covering such risks as is usually carried by companies engaged in
similar businesses and owning similar properties in the same general areas in
which the Company or such Material Subsidiary operates.
(e) Visitation Rights. Permit, and cause each of its Subsidiaries to
permit, at any reasonable time and from time to time, any Bank or any of its
agents or representatives to examine and make copies of and abstracts from the
records and books of account of, and visit the properties of, the Company and
any of its Subsidiaries, and to discuss the affairs, finances and accounts of
the Company and any of its Subsidiaries with any of their respective officers or
directors; provided that the Company and its Subsidiaries reserve the right to
restrict access to any of its properties in accordance with reasonably adopted
procedures relating to safety and security; and provided further that the costs
and expenses incurred by any Bank or its agents or representatives in connection
with any such examinations, copies, abstracts, visits or discussions shall be,
upon the occurrence and during the continuation of a Reimbursement Default, for
the account of the Company and, in all other circumstances, for the account of
such Bank.
(f) Maintenance of Property. Keep, and cause each Material Subsidiary to
keep, all property useful and necessary in its business in good working order
and condition (ordinary wear and tear excepted), it being understood that this
covenant relates only to the working order and condition of such properties and
shall not be construed as a covenant not to dispose of properties.
(g) Reporting Requirements. Furnish to each of the Banks:
(i) as soon as available and in any event within 60 days after the
end of each of the first three fiscal quarters of each fiscal year of the
Company, (A) for each such fiscal quarter of the Company, statements of
income and cash flows of the Company and its Consolidated Subsidiaries
26
for such fiscal quarter and the related balance sheet of the Company and
its Consolidated Subsidiaries as at the end of such fiscal quarter,
setting forth in each case in comparative form the corresponding figures
for the corresponding fiscal quarter in the preceding fiscal year and (B)
for the period commencing at the end of the previous fiscal year and
ending with the end of such fiscal quarter, statements of income and cash
flows of the Company and its Consolidated Subsidiaries for such period
setting forth in each case in comparative form the corresponding figures
for the corresponding period in the preceding fiscal year; provided that
so long as the Company remains subject to the reporting requirements of
the Securities Exchange Act of 1934, as amended, the Company may provide,
in satisfaction of the requirements of this first sentence of this Section
7(g)(i), its report on Form 10-Q for such fiscal quarter. Each set of
financial statements provided under this Section 7(g)(i) shall be
accompanied by a certificate of an Authorized Officer, which certificate
shall state that said financial statements fairly present in all material
respects the financial condition and results of operations and cash flows
of the Company and its Consolidated Subsidiaries in accordance with
generally accepted accounting principles, consistently applied (except as
disclosed therein), as at the end of, and for, such period (subject to
normal year-end audit adjustments);
(ii) as soon as available and in any event within 90 days after the
end of each fiscal year of the Company, statements of income, changes in
common stock equity and cash flows of the Company and its Consolidated
Subsidiaries for such year and the related balance sheets of the Company
and its Consolidated Subsidiaries as at the end of such year, setting
forth in each case in comparative form the corresponding figures for the
preceding fiscal year; provided that, so long as the Company remains
subject to the reporting requirements of the Securities Exchange Act of
1934, as amended, the Company may provide, in satisfaction of the
requirements of this first sentence of this Section 7(g)(ii), its report
on Form 10-K for such fiscal year. Each set of financial statements
provided pursuant to this Section 7(g)(ii) shall be accompanied by an
opinion thereon of independent certified public accountants of recognized
national standing, which opinion shall state that said financial
statements fairly present in all material respects the financial condition
and results of operations and cash flows of the Company and its
Consolidated Subsidiaries as at the end of, and for, such fiscal year, in
accordance with generally accepted accounting principles consistently
applied (except as disclosed therein);
(iii) as soon as possible and in any event within ten days after an
Authorized Officer knows of the occurrence of any Reimbursement Default
continuing on the date of such statement, a statement of an
27
Authorized Officer setting forth details of such Reimbursement Default and
the action which the Company has taken and proposes to take with respect
thereto;
(iv) as soon as possible, and in any event within ten days after an
Authorized Officer knows that any of the events or conditions specified
below with respect to any Plan or Multiemployer Plan have occurred or
exist, a statement signed by an Authorized Officer setting forth details
respecting such event or condition and the action, if any, which the
Company or its ERISA Affiliate proposes to take with respect thereto (and
a copy of any report or notice required to be filed with or given to the
PBGC by the Company or an ERISA Affiliate with respect to such event or
condition):
(A) any reportable event, as defined in Section 4043 of ERISA
and the regulations issued thereunder, with respect to a Plan, as to
which the PBGC has not by regulation or other ruling or notice of
general applicability waived the requirement of Section 4043(a) of
ERISA that it be notified within 30 days of the occurrence of such
event; provided that a failure to meet the minimum funding standard
of Section 412 of the Code or Section 302 of ERISA shall be a
reportable event regardless of the issuance of any waivers in
accordance with Section 412(d) of the Code;
(B) the filing under Section 4041(c) of ERISA of a notice of
intent to terminate any Plan in a distress termination or the
termination of any Plan in a distress termination;
(C) the institution by the PBGC of proceedings under Section
4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer
Plan:
(D) the complete or partial withdrawal by the Company or any
ERISA Affiliate under Part 1 of Subtitle E of Title IV of ERISA from
a Multiemployer Plan, or the receipt by the Company or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of
ERISA or that it intends to terminate or has terminated under
Section 4041A of ERISA; and
28
(E) the institution of a proceeding by a fiduciary of any
Multiemployer Plan against the Company or any ERISA Affiliate to
enforce Section 515 of ERISA, which proceeding is not dismissed
within 45 days;
(v) promptly after (A) any amendment or modification of the 1986
Order or (B) the promulgation, amendment or modification of any Subsequent
Order by the ACC, a copy thereof;
(vi) promptly after the sending or filing thereof, copies of all
reports which the Company sends to its public security holders as a group,
and copies of all reports and registration statements which the Company or
any of its Subsidiaries files with the Securities and Exchange Commission
or any national securities exchange;
(vii) as soon as practicable and in any event within 30 days after
the execution thereof, a copy of each amendment, waiver or consent
relating to the payment obligations of the Company under any Transaction
Document or Financing Document; and
(viii) such other information respecting the condition or
operations, financial or otherwise, of the Company or any of its
Subsidiaries as the Administrative Agent at the request of any Bank may
from time to time reasonably request.
The Company will furnish to the Banks, at the time it furnishes each set
of financial statements pursuant to Section 7(g)(i) or 7(g)(ii) above, a
certificate of an Authorized Officer (x) to the effect that no Reimbursement
Default has occurred and is continuing (or, if any Reimbursement Default has
occurred and is continuing, describing the same in reasonable detail and
describing the action that the Company has taken and proposes to take with
respect thereto) and (y) setting forth in reasonable detail the computations
necessary to determine whether the Company is in compliance with Sections 7(h)
and 8(e) as of the end of the relevant fiscal quarter or fiscal year.
Financial statements required to be delivered pursuant to clause (i) or
(ii) of Section 7(g) or reports and registration statements required to be
delivered pursuant to clause (vi) of Section 7(g) (to the extent any such
documents are included in materials otherwise filed with the Securities and
Exchange Commission) may be delivered electronically and if so delivered, shall
be deemed to have been delivered on the date (i) on which the Company posts such
documents, or provides a link thereto on the Company's website on the Internet
at the website address at
http://www.pinnaclewest.com/main/pnw/investors/financials/filings/default.html;
or (ii) on which such documents are posted on the Company's behalf on an
29
Internet or intranet website, if any, to which each Bank and the Administrative
Agent have access (whether a commercial, third-party website or whether
sponsored by the Administrative Agent); provided that: (x) the Company shall
deliver paper copies of such documents to any Bank that requests the Company to
deliver such paper copies until a written request to cease delivering paper
copies is given by such Bank and (y) the Company shall notify each Bank (which
notice may be given by telecopier or electronic mail) of the posting of any such
documents and provide to each Bank by electronic mail electronic versions (i.e.,
soft copies) of such documents. Notwithstanding anything contained herein, in
every instance the Company shall be required to provide to the Banks paper
copies of certificates of Authorized Officers required under Section 7(g). The
Company hereby acknowledges that the Administrative Agent may make available to
the Banks materials and/or information provided by or on behalf of the Company
hereunder (collectively, "COMPANY MATERIALS") by posting the Company Materials
on IntraLinks or another similar electronic system (the "PLATFORM"); provided,
however, that to the extent such Company Materials constitute Confidential
Information, they shall be treated as set forth in Section 22.
(h) Consolidated Cash Coverage Ratio. Maintain for each twelve-month
period ending on the last day of each fiscal quarter (determined as of the last
day of such fiscal quarter) a Consolidated Cash Coverage Ratio of no less than
2.0:1.0.
(i) Filing with ACC. File a copy of this Amendment and Restatement, as
executed by each of the parties hereto, with the ACC within five days of the
execution hereof.
Section 8 . Negative Covenants. So long as a drawing is available under
the Letter of Credit or the Company shall have any obligation to pay any amount
hereunder to or for the account of the Administrative Agent or any Bank, the
Company will not, without the written consent of the Required Banks:
(a) Sale of Assets. Permit the Company nor any Material Subsidiary to, in
one or a series of transactions after December 31, 2004, sell, lease, transfer
or otherwise dispose of assets to any Person other than the Company or any
Subsidiary of the Company (excluding individual dispositions occurring in the
ordinary course of business which involve assets with a book value not exceeding
$5,000,000) if, immediately after giving effect to such transaction, the
aggregate book value of the assets disposed of in all such transactions after
December 31, 2004, would equal or exceed 30% of the total of all assets properly
appearing on the December 31, 2004 balance sheet of the Company and its
Consolidated Subsidiaries included in its annual report on Form 10-K for the
year ended December 31, 2004. No Lien on any asset will be considered a sale,
lease, transfer or disposition under this provision, but will be governed
exclusively under Section 8(c).
30
(b) Mergers, Etc. Merge or consolidate with or into any Person, or permit
any Material Subsidiary to do so, except that:
(i) any Material Subsidiary may merge with any Wholly-Owned
Subsidiary of the Company;
(ii) any Material Subsidiary may merge into the Company; and
(iii) the Company may merge with, and any Material Subsidiary may
merge with, any other Person;
provided that, in each case, immediately after giving effect to such proposed
transaction, no Reimbursement Default would exist; and provided further that, in
the case of any such merger to which the Company is a party, the Company is the
surviving corporation and in the case of any such merger to which any Material
Subsidiary and any other Person are the parties, such Material Subsidiary is the
surviving corporation.
(c) Negative Pledge. Permit the aggregate amount of all claims secured by
Liens (other than Permitted Liens) upon or with respect to any of its assets or
the assets of any of its Material Subsidiaries, whether now owned or hereafter
acquired, to exceed 55% of Total Assets, unless the Company shall simultaneously
(i) grant to the Administrative Agent, for the benefit of the Banks, Liens on
its assets as collateral for its obligations under this Agreement in a form and
on terms satisfactory to the Administrative Agent and the Required Banks in
their sole and absolute discretion and (ii) obtain the consent of the Equity
Participant thereto.
(d) Assignment of Transaction Documents or Financing Documents. Enter into
any assignment of the Company's obligations under any of the Transaction
Documents or Financing Documents.
(e) Indebtedness. Permit Consolidated Indebtedness to exceed 65% of
Consolidated Capitalization at any time.
"CONSOLIDATED CAPITALIZATION" means, at any date, the sum as of such date
of Consolidated Indebtedness and Consolidated Net Worth.
"CONSOLIDATED INDEBTEDNESS" means, at any date, the Indebtedness of the
Company and its Consolidated Subsidiaries determined on a consolidated basis as
of such date.
"CONSOLIDATED NET WORTH" means, at any date, the sum as of such date of
(a) the par value (or value stated on the books of the Company) of all classes
of capital stock of the Company and its Subsidiaries, excluding the Company's
capital stock owned by the Company and/or its Subsidiaries, plus (or minus in
the
31
case of a surplus deficit) (b) the amount of the consolidated surplus, whether
capital or earned, of the Company, determined in accordance with generally
accepted accounting principles as of the end of the most recent calendar month
(excluding (x) cumulative charges of up to $300 million to consolidated surplus
resulting from, or in anticipation of, discontinuation of Financial Accounting
Standards Board Statement No. 71, accounting for all or part of the business and
(y) the effect on the Company's accumulated other comprehensive income/loss of
the ongoing application of Financial Accounting Standards Board Statement No.
133).
Section 9 . Reimbursement Events of Default. If any of the following
events ("REIMBURSEMENT EVENTS OF DEFAULT") shall occur and be continuing:
(i) The Company shall fail to pay when due any amount payable under
Section 2(a) or fail to pay any other amount payable under Section 2
within five Business Days after the same becomes due and payable; or
(ii) The Company shall fail to perform or observe (A) any term,
covenant or agreement contained in Section 7(a)(ii), 7(g)(iv), 7(h), 8(a),
8(b), 8(c), 8(e), or (B) any term, covenant or agreement contained in this
Agreement (other than those covered by clause (i) above or subclause (A)
of this clause (ii) or Section 7(e) or Section 19) on its part to be
performed or observed if the failure to perform or observe such term,
covenant or agreement shall remain unremedied for 30 days after written
notice thereof shall have been given to the Company by the Administrative
Agent; or
(iii) Any representation or warranty made by the Company herein or
by the Company (or any of its officers) in any certificate delivered in
connection with this Agreement shall prove to have been false or
misleading in any material respect when made; or
(iv) Any material provision of this Agreement shall at any time for
any reason cease to be valid and binding upon the Company, or shall be
declared to be null and void, or the validity or enforceability thereof
shall be contested by the Company or any governmental agency or authority,
or the Company shall deny that it has any or further liability or
obligation under this Agreement; or
(v) The Company shall fail to pay any principal of or premium or
interest on any Indebtedness which is outstanding in a principal amount of
at least $5,000,000 (but excluding Indebtedness owing hereunder) of the
Company, when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or
32
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Indebtedness; or the Company shall fail to perform or comply with any
other term or covenant in any agreement or instrument relating to any such
Indebtedness and such failure shall continue after the applicable grace
period, if any, specified in such agreement or instrument, if the effect
of such failure is to accelerate, or to permit the acceleration of, the
maturity of such Indebtedness; or
(vi) The Company shall fail to pay any principal of or premium or
interest in respect of any operating lease in respect of which the payment
obligations of the Company have a present value of at least $25,000,000,
when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure
shall continue after the applicable grace period, if any, specified in
such operating lease, if the effect of such failure is to terminate, or to
permit the termination of, such operating lease; or
(vii) The Company shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the Company
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief,
or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of
an order for relief or the appointment of a receiver, trustee, custodian
or other similar official for it or for any substantial part of its
property and, in the case of any such proceeding instituted against it
(but not instituted by it), either such proceeding shall remain
undismissed or unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an
order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or for any substantial part of
its property) shall occur; or the Company shall take any corporate action
to authorize any of the actions set forth above in this clause (vii); or
(viii) Any Material Subsidiary shall generally not pay its debts as
such debts become due, or shall admit in writing its inability to pay its
debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against any
Material Subsidiary seeking to adjudicate it a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of debtors,
or seeking
33
the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for it or for any substantial
part of its property and, in the case of any such proceeding instituted
against it (but not instituted by it), either such proceeding shall remain
undismissed or unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an
order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of
its property) shall occur; or any Material Subsidiary shall take any
corporate action to authorize any of the actions set forth above in this
clause (viii) and, in each case, the Required Banks determine that such
circumstances could have a material adverse effect on the financial
condition or financial prospects of the Company and its Consolidated
Subsidiaries, taken as a whole; or
(ix) Any judgment or order for the payment of money that exceeds any
applicable insurance coverage by more than $5,000,000 shall be rendered
against the Company and such judgment or order shall remain unsatisfied or
unstayed for a period of 30 days; or
(x) Any judgment or order for the payment of money that exceeds any
applicable insurance coverage by more than $25,000,000 shall be rendered
against any Material Subsidiary; such judgment or order shall remain
unsatisfied or unstayed for 30 days; and the Required Banks determine that
such judgment or order could have a material adverse effect on the
financial condition or financial prospects of the Company and its
Consolidated Subsidiaries, taken as a whole; or
(xi) An event or condition specified in Section 7(g)(iv) shall occur
or exist with respect to any Plan or Multiemployer Plan and, as a result
of such event or condition, together with all other such events or
conditions, the Company or any ERISA Affiliate shall incur or in the
opinion of the Required Banks shall be reasonably likely to incur a
liability to a Plan, a Multiemployer Plan or the PBGC (or any combination
of the foregoing) which is, in the determination of the Required Banks,
material in relation to the financial condition or the financial prospects
of the Company and its Consolidated Subsidiaries, taken as a whole; or
(xii) any change in Applicable Law or any Governmental Action shall
occur which has the effect of making the transactions contemplated by the
Transaction Documents unauthorized, illegal or otherwise contrary to
Applicable Law; or
(xiii) any event specified in subsection (vii), (viii) or (x) of
Section 15 of the Facility Lease shall occur; or
34
(xiv) the Company shall fail to make, or cause to be made, any
payment specified in Section 15(i) of the Facility Lease equal to or
exceeding $1,000,000 within the periods specified in that Section.
then, in every such event the Issuing Bank may, and if instructed to do so by
the Required Banks the Issuing Bank shall, by notice to the Company and the
Equity Participant, terminate the Letter of Credit as provided therein. The
Administrative Agent shall give notice to the Company under Section 9(ii)
promptly upon being requested to do so by the Required Banks and will promptly
notify each Bank of any such notice given at the request of the Required Banks.
Section 10 . Amendments and Waivers. No modification, amendment or waiver
of any provision of this Agreement or the Letter of Credit or any consent to the
assignment of the Company's obligations under any of the Transaction Documents
or the Financing Documents shall be effective unless the same shall be in
writing and signed by (or with the written consent of) the Company and the
Required Banks (and, if the rights or duties of the Issuing Bank or the
Administrative Agent are affected thereby, by it); provided that no such
modification, amendment, waiver or consent shall, unless signed by (or with the
written consent of) each Bank affected thereby, (i) increase the Maximum Credit
Amount or Maximum Drawing Amount or subject any Bank to any additional
obligation under this Agreement or the Letter of Credit, (ii) reduce the
principal of or rate of interest on any reimbursement obligation or reduce the
letter of credit commission payable under Section 2(b), (iii) postpone the date
fixed for any payment of principal of or interest on any reimbursement
obligation or any payment of such letter of credit commission, (iv) extend the
Stated Termination Date or the Termination Date or (v) change the definition of
Required Banks or the provisions of this Section 10 or any provision of this
Agreement that requires action by all the Banks. Any waiver of any provision of
this Agreement or the Letter of Credit shall be effective only in the specific
instance and for the specific purpose for which given.
Section 11 . Notices. (a) All notices, requests, demands and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including facsimile transmission, electronic transmission (subject
to Section 11(c) below), or similar transmission) and mailed, sent or delivered:
(i) if to the Company, in the case of deliveries, to its street
address at 400 North Fifth Street, Phoenix, Arizona 85004; in the case of
mailings, to its mailing address at P.O. Box 53999, Phoenix, Arizona
85072-3999, and in the case of facsimile transmission, to telecopy no.
(602) 250-5640, in each case to the attention of the Treasurer; and in the
case of electronic mail, to Barbara.Gomez@pinnaclewest.com;
35
(ii) if to the Administrative Agent, in the case of deliveries or
mailings, to its address at 1111 Fannin Street, 10th Floor, Houston, Texas
77002, and in the case of facsimile transmission, to telecopy no.
713-427-6307, in each case to the attention of Kelly Collins, Loan and
Agency Services; and in the case of electronic mail, to
kelly.collins@jpmchase.com;
(iii) if to the Issuing Bank, in the case of deliveries or mailings,
to its address at JPMorgan Chase Bank, N.A., c/o JPMorgan Treasury
Services, 10420 Highland Manor Drive, 4th Floor, Tampa, Florida 33610, and
in the case of facsimile transmission, to telecopy no. 813-432-5161, in
each case to the attention of James Alonzo, Standby Letter of Credit
Manager - Immediate Action Required; and in the case of electronic mail,
to james.alonzo@chase.com;
(iv) if to any other Bank, at such address, electronic mail address,
or telecopy number as shall be designated by it in its Administrative
Questionnaire;
or, as to each party, to such other person and/or to such other address or
number as shall be designated by such party in a written notice to each other
party. All such notices, requests, demands and other communications shall be
effective when mailed or sent, addressed as aforesaid (subject to Section 11(c)
below in the case of electronic communications), except that notices to the
Administrative Agent shall not be effective until received by the Administrative
Agent and any notice to the Equity Participant pursuant to Section 9 shall not
be effective until received by the Equity Participant. Notices of any
Reimbursement Default shall be sent by the Company to the Administrative Agent
by facsimile transmission.
(b) As promptly as practicable after receipt by the Administrative Agent
of any notice or other communication delivered hereunder by the Company, the
Administrative Agent shall furnish a copy thereof to each Bank, to the extent
such notice or other communication is not otherwise required by the terms
thereof to be delivered by the Company to each Bank.
(c) Notices and other communications to the Banks hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent (including electronic mail and Internet
websites); provided that the foregoing shall not apply to notices pursuant to
Sections 2, 14 or 17 unless otherwise agreed by the Administrative Agent and the
applicable Bank. The Administrative Agent and the Company may, each in its
discretion, agree to accept notices and other communications to it hereunder by
electronic communications pursuant to procedures approved by it; provided that
approval of such procedures may be limited to particular notices or
communications. Notices and other communications sent to an electronic mail
36
address shall be deemed received upon the sender's receipt of an acknowledgement
from the intended recipient (such as by the "return receipt requested" function,
as available, return electronic mail or other written acknowledgement); provided
that (x) if such notice or other communication is not sent during the normal
business hours of the recipient, such notice or communication shall be deemed to
have been sent at the opening of business on the next business day for the
recipient, and (y) notices or communications posted to an Internet website shall
be deemed received upon the deemed receipt by the intended recipient at its
electronic mail address as described in immediately foregoing clause (x) of
notification that such notice or communication is available and identifying the
website address therefor.
(d) The Platform is provided "as is" and "as available." The Agent Parties
(as defined below) do not warrant the accuracy or completeness of the Company
Materials or the adequacy of the Platform, and expressly disclaim any liability
for errors in or omissions from the Company Materials. No warranty of any kind,
express or implied or statutory, is made by any Agent Party in connection with
the Company Materials or the Platform. In no event shall the Administrative
Agent, its Affiliates, or any partners, directors, officers, employees, agents
and advisors of the Administrative Agent or of its Affiliates (collectively, the
"AGENT PARTIES") have any liability to the Company, any Bank or any other Person
for losses, claims, damages, liabilities or expenses of any kind (whether in
tort, contract or otherwise) arising out of the Company's or the Administrative
Agent's transmission of Company Materials through the Internet, except to the
extent that such losses, claims, damages, liabilities or expenses are determined
by a court of competent jurisdiction by a final and nonappealable judgment to
have resulted from the gross negligence or willful misconduct of such Agent
Party; provided, however, that in no event shall any Agent Party have any
liability to the Company, any Bank, or any other Person for indirect, special,
incidental, consequential or punitive damages (as opposed to direct or actual
damages).
Section 12 . No Waiver; Remedies. No failure on the part of the
Administrative Agent or any Bank to exercise, and no delay in exercising, any
right, power, or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 13 . Waiver of Right of Setoff. The Administrative Agent and each
Bank hereby waive any right to set off and apply any and all deposits (general
or special, time or demand, provisional or final) and collateral at any time
held and other indebtedness at any time owing by it to or for the credit or the
account of the Company if there shall be a drawing under the Letter of Credit at
any time during the pendency of any proceeding by or against the Company seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization,
37
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, custodian, trustee or other similar official for it or for any
substantial part of its property (collectively the "BANKRUPTCY EVENTS"), against
any and all of the obligations of the Company now or hereafter existing in
respect of any reimbursement obligation of the Company set forth in Section
2(a), provided that any such waiver shall be deemed ineffective as and to the
extent that the Administrative Agent and each Bank receive, after any of the
bankruptcy events occur, an unqualified opinion of nationally-recognized counsel
with bankruptcy law experience (which counsel shall be mutually satisfactory to
the Administrative Agent and the Equity Participant, each of which shall use its
best efforts to agree on such counsel), that non-waiver would not, as a result
of the application of bankruptcy or similar laws as then in effect, lead to the
Administrative Agent or any Bank being refused, prevented, permanently enjoined
or restrained from or delayed in fulfilling its obligation under the Letter of
Credit. This Section 13 shall not constitute a waiver of any right of setoff if
there shall be a drawing under the Letter of Credit at any time other than that
described in this Section 13.
Section 14 . Participations of the Banks. (a) The Issuing Bank hereby
sells to each other Bank, and each Bank hereby severally purchases from the
Issuing Bank, as of the Restatement Effective Date, a Participation in an amount
equal to such Bank's Participation Percentage of the Letter of Credit and in
each drawing thereunder, all on the terms and conditions set forth herein.
(b) If at any time on or after the Restatement Effective Date the Company
shall fail to reimburse a drawing under the Letter of Credit in accordance with
Section 2(a), the Administrative Agent shall promptly (but in any event no later
than 1:00 p.m., New York City time, on the date payment is due from the Banks
under this Section 14(b)) advise each Bank thereof and of the amount due from
the Company and the amount of such Bank's Participation therein, and each Bank
shall pay, no later than 4:00 p.m. (New York City time) on such date such Bank's
Participation Percentage of such amount by transferring the same in immediately
available funds to the Administrative Agent for the account of the Issuing Bank
at the Administrative Agent's address specified in Section 11. With respect to
any such drawing, each Bank agrees that the Issuing Bank shall have no
responsibility to the Banks other than obtaining the draft and certificates
referred to in the Letter of Credit and notifying each Bank thereof. The
Administrative Agent shall promptly credit each Bank's account with such Bank's
Participation Percentage of (i) all amounts representing principal of, or
interest on, any reimbursement obligations, in each case in respect of drawings
under the Letter of Credit of which such Bank has funded its Participation
Percentage in accordance with the foregoing provisions of this Section 14(b) and
(ii) letter of credit commissions payable to each Bank pursuant to Section 2(b)
of this
38
Agreement and accruing on and after the Restatement Effective Date, but, in the
case of both clause (i) and clause (ii), only if, when and to the extent
received by the Administrative Agent from the Company. All such payments shall
be made if, when and to the extent the Administrative Agent receives payment
from the Company in respect of reimbursement for drawings under the Letter of
Credit and of the letter of credit commission pursuant to Section 2(b) of this
Agreement, and in the same funds in which such amounts are received, by credit
to an account at a bank located in the United States of America as each Bank
shall designate in writing to the Administrative Agent.
(c) If the Administrative Agent should for any reason make any payment to
any Bank in anticipation of the receipt of funds from the Company and such funds
are not received by the Administrative Agent from the Company on the date
payment is due, then such Bank shall, on demand by the Administrative Agent,
forthwith return to the Administrative Agent any such amounts transferred to
such Bank by the Administrative Agent in respect of such Bank's Participation
plus interest thereon from the day such amounts were transferred by the
Administrative Agent to such Bank to but not including the day such amounts are
returned by such Bank at a rate per annum equal to the Federal Funds Rate. If
the Administrative Agent is required at any time to return to the Company or to
a trustee, receiver, liquidator, custodian or other similar official any portion
of the payments made by the Company to the Administrative Agent for the account
of any Bank, then such Bank shall, on demand by the Administrative Agent,
forthwith return to the Administrative Agent any such payments transferred to
such Bank by the Administrative Agent in respect of such Bank's Participation,
but without interest on such payments (unless the Administrative Agent is
required to pay interest on such amounts to the Person recovering such
payments).
(d) Each Bank agrees that if it should receive any amount due to it under
this Agreement in respect of its Participation other than from the
Administrative Agent, such Bank will remit all of the same to the Administrative
Agent to distribute to the Banks pursuant to this Agreement, and such Bank's
Participation shall be adjusted to reflect such remittance. Each Bank further
agrees to send the Administrative Agent a copy of any notice sent by such Bank
to the Company hereunder.
(e) Each Bank acknowledges and represents that it has made its own
independent appraisal of the Company, and the business, affairs and financial
condition of the Company, based on such documents and information as such Bank
has deemed appropriate, and each Bank will continue to be responsible for making
its own independent appraisal of such matters, based on such documents and
information as such Bank shall deem appropriate at the time, and has not relied
upon and will not hereafter rely upon the Administrative Agent or any other Bank
or any information prepared, distributed or otherwise made available by the
39
Administrative Agent for such appraisal or other assessment or review of the
Company. Each Bank represents, and in granting a Participation to such Bank it
is specifically understood and agreed, that such Bank is acquiring its
Participation in the Letter of Credit for its own account in the ordinary course
of its commercial banking business and not with a view to, or for sale in
connection with, any distribution thereof.
Section 15 . Assignees; Participants. (a) Each Bank shall have the right,
with the prior written consent of the Company (which shall not be unreasonably
withheld, and shall not be required if a Reimbursement Event of Default has
occurred and is continuing) and the prior written consent of the Administrative
Agent, to assign all or a pro rata portion of all of its rights and obligations
under its Participation at any time and from time to time to one or more
Eligible Institutions (each an "ASSIGNEE"); provided that (i) each such Assignee
shall assume such rights and obligations and agree, for the benefit of each
other party hereto, to be bound by the provisions of, and perform the
obligations of a Bank under, this Agreement, pursuant to an assignment and
assumption agreement in form and substance satisfactory to the Administrative
Agent and (ii) the aggregate amount of the Participation or Participations
assigned to each such Assignee pursuant to this Section 15(a) shall not be less
than $5,000,000. Each Bank shall give prompt notice to the Administrative Agent
and the Company of each such assignment made by it.
(b) (i) Each Bank shall also have the right, without the consent of the
Company, to grant participating interests in its Participation at any time and
from time to time to one or more other financial institutions or other entities
(each a "PARTICIPANT"); provided that (A) such Bank's obligations under this
Agreement shall remain unchanged, (B) such Bank shall remain solely responsible
to the other parties hereto for the performance of such obligations and (C) the
Company, the Administrative Agent and the other Banks shall continue to deal
solely and directly with such Bank in connection with such Bank's rights and
obligations under this Agreement. Each such participation granted by a Bank
shall be evidenced by a participation agreement in form acceptable to such Bank.
Each such participation agreement shall provide that such Bank shall retain the
sole right to exercise its rights under this Agreement and to enforce the
obligations owed to it hereunder pursuant to its Participation including,
without limitation, the right to consent to any modification, amendment or
waiver of any provision of this Agreement or the Letter of Credit or any
assignment of the Company's obligations under any of the Transaction Documents
or the Financing Documents; provided that any such participation agreement may
provide that such Bank will not, without the consent of the Participant, consent
to any modification, amendment or waiver of this Agreement or the Letter of
Credit that (w) increases the Maximum Credit Amount or Maximum Drawing Amount or
subjects such Bank to any additional obligation under this Agreement or the
Letter of Credit, (x) reduces the principal of or rate of interest on any
reimbursement obligation or
40
reduces the letter of credit commission payable under Section 2(b), (y)
postpones the date fixed for any payment of principal of or interest on any
reimbursement obligation or any payment of such letter of credit commission or
(z) extends the Stated Termination Date or the Termination Date.
(i) Subject to clause (iii) below, the Company agrees that each
Participant shall be entitled to the benefits of Sections 2(d) and 2(e) to
the same extent as if it were a Bank and had acquired its interest by
assignment pursuant to Section 15(a).
(ii) A Participant shall not be entitled to receive any greater
payment under Section 2(d) or 2(e) than the applicable Bank would have
been entitled to receive with respect to the participating interest
granted to such Participant, unless the granting of such interest to such
Participant is made with the Company's prior written consent. A
Participant organized under the laws of a jurisdiction outside the United
States shall not be entitled to the benefits of Section 2(d) or 2(e)
unless the Company is notified of the participating interest granted to
such Participant and such Participant agrees, for the benefit of the
Company, to comply with Section 2(d) or 2(e) as though it were a Bank.
Section 16 . Continuing Obligation; Binding Effect. The obligations of the
Company under this Agreement shall continue until the later of (i) the
Termination Date and (ii) the date upon which all amounts due and owing to the
Administrative Agent or any Bank hereunder shall have been paid in full. This
Agreement shall be binding upon and inure to the benefit of each of the parties
hereto and their respective successors. The Company shall not have the right to
assign its rights hereunder or any interest herein to any Person without the
prior written consent of the Issuing Bank and each Bank. The Issuing Bank shall
not have the right to assign its rights as the Issuing Bank hereunder without
the prior written consent of the Company (which shall not be unreasonably
withheld) and each Bank.
Section 17 . Extension of the Letter of Credit. At least 105 days but not
more than 180 days before the Stated Termination Date, the Company may request
the Administrative Agent in writing (each such request being irrevocable and
binding), with a copy to each Bank, to extend for not less than three years, nor
more than eight years, the Stated Termination Date, specifying the terms and
conditions, including fees, to be applicable to such extension. Within 45 days
after receiving such extension request (or such later date as the Company may
authorize in writing, but in no event later than 60 days before the Stated
Termination Date), each Bank shall notify the Company of its consent or
nonconsent to such extension request, and if any Bank shall give no such notice,
it shall be deemed not to have consented to such extension request. No such
requested extension shall be effective without the consent of all the Banks. The
41
consent of any Bank shall be in its sole discretion and shall be conditional
upon the preparation, execution and delivery of legal documentation in form and
substance satisfactory to such Bank and its counsel, incorporating substantially
the terms and conditions contained in the extension request as the same may be
modified by agreement among the Company, and the Banks, and evidence
satisfactory to it of the due authorization and validity thereof.
Section 18 . Limited Liability of the Banks. The Company assumes all risks
of the acts or omissions of the Equity Participant and any beneficiary or
transferee of the Letter of Credit with respect to its use of the Letter of
Credit. None of the Administrative Agent and the Banks, nor their respective
Affiliates nor any officer or director of any of the foregoing shall be liable
or responsible for: (a) the use which may be made of the Letter of Credit or any
acts or omissions of the Equity Participant or any beneficiary or transferee in
connection therewith; (b) the validity, sufficiency or genuineness of documents,
or of any endorsement thereon, even if such documents shall prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (c) payment by the
Issuing Bank against presentation of documents which do not comply with the
terms of the Letter of Credit, including failure of any documents to bear any
reference or adequate reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under the Letter
of Credit, except that the Company shall have a claim against the Issuing Bank,
and the Issuing Bank shall be liable to the Company, to the extent, but only to
the extent, of any direct, as opposed to consequential, damages suffered by the
Company which the Company proves were caused by (i) the willful misconduct or
gross negligence of the Issuing Bank in determining whether a draft or
certificate presented under the Letter of Credit complied with the terms of the
Letter of Credit or (ii) the Issuing Bank's willful failure to make lawful
payment under the Letter of Credit after the presentation to it by the Equity
Participant of a draft and certificate strictly complying with the terms and
conditions of the Letter of Credit. In furtherance and not in limitation of the
foregoing, the Issuing Bank may accept documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary unless the Equity Participant and the
Company have notified the Issuing Bank in writing prior to a drawing under the
Letter of Credit that such documents do not comply with the Letter of Credit.
Section 19 . Cost, Expenses and Taxes. The Company agrees to pay not later
than 30 days after demand therefor all reasonable costs and expenses in
connection with the preparation, execution, delivery, filing, recording and
administration of this Agreement and any other documents which may be delivered
in connection with this Agreement and any waiver or consent under, or amendment
of, this Agreement or any of the Transaction Documents or Financing Documents,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Administrative Agent, and local counsel who may be
42
retained by said counsel, with respect thereto and with respect to advising the
Administrative Agent as to its rights and responsibilities under this Agreement;
all costs and expenses (including counsel fees and expenses) in connection with
(i) the enforcement of this Agreement and such other documents which may be
delivered in connection with this Agreement or (ii) any action or proceeding
relating to a court order, injunction or other process or decree restraining or
seeking to restrain the Issuing Bank from paying any amount under the Letter of
Credit; and all costs and expenses (including reasonable counsel fees and
expenses) in connection with each transfer of the Letter of Credit in accordance
with its terms. In addition, the Company shall pay any and all stamp,
documentary, filing, recording or other similar taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of this Agreement and such other documents, and agrees to save the
Administrative Agent and each Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees, provided that the Administrative Agent and each Bank
agree promptly to notify the Company of any such taxes and fees which are
incurred by the Administrative Agent or such Bank.
Section 20 . Administrative Agent; Issuing Bank. (a) Each Bank irrevocably
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement as are delegated to
the Administrative Agent by the terms hereof, together with all such powers as
are reasonably incidental thereto.
(b) The Administrative Agent and its Affiliates may accept deposits from,
make loans or otherwise extend credit to, and generally engage in any kind of
business with, the Company, the Equity Participant and their respective
Subsidiaries and Affiliates and receive payment on such loans or extensions of
credit and otherwise act with respect thereto freely and without accountability
in the same manner as if this Agreement and the transactions contemplated hereby
were not in effect.
(c) The Administrative Agent may consult with legal counsel (who may be
counsel for the Company), independent public accountants and other experts as it
may select and shall not be liable for any action taken or omitted to be taken
by it in good faith in accordance with the advice of such counsel, accountants
or experts.
(d) It is understood that the Issuing Bank will exercise and give the same
care and attention to the Letter of Credit as it gives to its other letters of
credit and loans for its own account and that the Issuing Bank shall have no
obligation to the Company or any other Bank and no duty or responsibility with
respect to this Agreement or the Letter of Credit, except as expressly provided
herein and in the Letter of Credit. Without limiting the generality of the
43
foregoing, neither the Administrative Agent nor the Issuing Bank shall be
required to take any action with respect to any Reimbursement Default, except as
expressly provided in Section 9 hereof. Neither the Administrative Agent nor the
Issuing Bank shall be liable for any action taken or not taken at the request or
with the approval of the Required Banks (or all the Banks, as applicable) or for
the performance or non-performance of the obligations of any other party under
this Agreement or any Transaction Document or Financing Document or any other
document contemplated thereby. It is further understood that: (i) except as
expressly limited by the provisions of this Agreement, the Issuing Bank retains
the sole right to exercise its rights and enforce the obligations of the Company
under this Agreement, and the Issuing Bank may use its sole discretion with
respect to exercising or refraining from exercising any rights or taking or
refraining from taking any actions which may be vested in it or which it may be
entitled to take or assert under this Agreement or any of the Transaction
Documents or Financing Documents (including, without limitation, the giving of
any notice to any Person of any Reimbursement Event of Default under this
Agreement except as provided in Section 9); and (ii) the Issuing Bank shall not,
in the absence of gross negligence or willful misconduct, be under any liability
to any other Bank with respect to anything which the Issuing Bank may do or
refrain from doing in the exercise of its best judgment or which it may deem to
be necessary or desirable. Neither the Administrative Agent nor the Issuing Bank
shall incur any liability by acting in reliance upon any written communication
or any telephone conversation which it reasonably believes to be genuine and
correct or to have been signed, sent or made by the proper Person. Neither the
Administrative Agent nor the Issuing Bank shall have any obligation to make any
claim on, or assert any lien upon, or assert any setoff against, any property
held by it and, if it elects to do so, it may in its discretion apply the same
against indebtedness of the Company other than the Company's obligations under
this Agreement; provided that, to the extent any funds received pursuant to any
of the foregoing are applied to the obligations of the Company under Section
2(a) or 2(b) hereof, each Bank shall be entitled to receive its pro rata share
thereof in accordance with Section 14(b) above. Any such setoff or other action
in respect of any reimbursement obligation of the Company set forth in Section
2(a) will be subject to Section 13.
Section 21 . Indemnification. (a) The Company indemnifies and holds
harmless the Administrative Agent, each Bank, and their respective officers,
directors, agents, affiliates and employees from and against any and all claims,
damages, losses, liabilities, costs or expenses whatsoever which the
Administrative Agent or such Bank may incur (or which may be claimed against the
Administrative Agent or such Bank by any Person whatsoever):
(i) by reason of any inaccuracy in any material respect, or any
untrue statement or alleged untrue statement of any material fact
contained or incorporated by reference in any offering document
distributed by or on
44
behalf of the Company in connection with obtaining purchasers of the
Company's undivided interest in Unit 2 of the Palo Verde Nuclear
Generating Station, or in any supplement or amendment to either thereof,
or by reason of the omission or alleged omission to state therein a
material fact necessary to make such statements, in the light of the
circumstances under which they are or were made, not misleading;
(ii) by reason of or in connection with the execution, delivery and
performance of the Transaction Documents and Financing Documents, or any
transaction contemplated by the Transaction Documents or the Financing
Documents; or
(iii) by reason of or in connection with the execution and delivery
or transfer of, or payment or failure to make lawful payment under, the
Letter of Credit; provided that the Company shall not be required to
indemnify the Administrative Agent or any Bank pursuant to this Section 21
for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (A) the willful misconduct or
gross negligence of the Issuing Bank in determining whether a draft or
certificate presented under the Letter of Credit complied with the terms
of the Letter of Credit or (B) the Issuing Bank's willful failure to make
lawful payment under the Letter of Credit after the presentation to it by
the Equity Participant of a draft and certificate strictly complying with
the terms and conditions of the Letter of Credit.
Nothing in this Section 21(a) is intended to limit the Company's obligations
contained in Section 2. Without prejudice to the survival of any other
obligation of the Company hereunder, the indemnities and obligations of the
Company contained in this Section 21(a) shall survive the payment in full of all
amounts payable pursuant to Section 2 and the termination of the Letter of
Credit.
(b) To the extent that the Administrative Agent or the Issuing Bank is not
reimbursed and indemnified by the Company under this Agreement, each Bank will
reimburse and indemnify the Administrative Agent and the Issuing Bank on demand
for and against such Bank's Participation Percentage of any and all claims,
demands, liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements (including fees and
disbursements of counsel) of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Administrative Agent or the Issuing
Bank in any way relating to or arising out of this Agreement, the Letter of
Credit, or any of the Transaction Documents or Financing Documents or any action
taken or omitted to be taken by the Administrative Agent or the Issuing Bank
hereunder or thereunder, or the transactions contemplated hereby and thereby or
the enforcement of any of the terms hereof and thereof; provided that such Bank
shall not be liable for any portion of such claims, demands, liabilities,
45
obligations, losses, damages, penalties, actions, judgments, suits, costs,
out-of-pocket expenses or disbursements resulting from the gross negligence or
willful misconduct of the Administrative Agent or the Issuing Bank or which are
expressly excluded from the indemnification by the Company by the proviso to
Section 21(a)(iii) of this Agreement. Each Bank's obligations under this Section
21(b) shall survive the termination of this Agreement and the Letter of Credit.
If the Administrative Agent or the Issuing Bank is reimbursed by the Company for
any amounts previously received from any Bank pursuant to this Section 21(b), it
will promptly pay to such Bank its proportionate share of any amounts so
received.
Section 22 . Confidentiality. Neither the Administrative Agent nor any
Bank shall disclose any Confidential Information to any Person without the
consent of the Company, other than (a) to the Administrative Agent's or such
Bank's respective Affiliates or any officer, director, employee, accountant and
advisor of any of the foregoing, and to actual or prospective Assignees and
Participants, and then only on a confidential basis, (b) as required by any law,
rule or regulation or judicial process and (c) as requested or required by any
state, federal or foreign authority or examiner regulating banks or banking or
otherwise regulating the business of the Administrative Agent or such Bank, as
the case may be.
Section 23 . Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section 24 . Governing Law; Consent to Jurisdiction. (a) This Agreement
shall be governed by, and construed in accordance with, the laws of the State of
New York.
(b) Each party hereto submits, for itself and its property, to the
non-exclusive jurisdiction of the Supreme Court of the State of New York sitting
in New York County and of the United States District Court of the Southern
District of New York, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or for recognition or
enforcement of any judgment, and each party hereto hereby agrees, to the fullest
extent permitted by law, that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any party
46
hereto may otherwise have to bring action or proceeding relating to this
Agreement in the courts of any jurisdiction.
Section 25 . Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 26 . Counterparts; Integration. This Amendment and Restatement may
be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement and that certain Letter Agreement dated as of July
22, 2002 between the Issuing Bank and the Company constitute the entire
agreement and understanding among the parties hereto and, subject to Section
3(c), supersede any and all prior agreements and understandings, oral or
written, relating to the subject matter hereof.
Section 27 . WAIVER OF JURY TRIAL. EACH OF THE COMPANY, THE BANKS AND THE
ADMINISTRATIVE AGENT HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Signature Pages Follow
47
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
ARIZONA PUBLIC SERVICE COMPANY
By: /s/ Barbara M. Gomez
____________________________________
Name: Barbara M. Gomez
Title: Vice President and Treasurer
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent and Issuing Bank
By: /s/ Peter M. Ling
------------------------------------
Name: Peter M. Ling
Title: Managing Director
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
BARCLAYS BANK PLC
By: /s/ Gary B. Wenslow
------------------------------------
Name: Gary B. Wenslow
Title: Associate Director
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
BANK HAPOALIM B.M.
By: /s/ Marc Bosc
-----------------------------
Name: Marc Bosc
Title: Vice President
By: /s/ Lenroy Hackett
-----------------------------
Name: Lenroy Hackett
Title: First Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
CITIBANK, N.A.
By: /s/ Dhaya Ranganathan
--------------------------
Name: Dhaya Ranganathan
Title: Director
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Efrain Soto
--------------------------
Name: Efrain Soto
Title: Vice President
IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Restatement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
KBC BANK NV
By: /s/ Rik Scheerlinck
-----------------------------
Name: Rik Scheerlinck
Title: Sr. Vice President &
General Manager
By: /s/ Eric Raskin
-----------------------------
Name: Eric Raskin
Title: Vice President
SCHEDULE I
The "LETTER OF CREDIT COMMISSION RATE" for any day is the rate set forth
below (in basis points per annum) under the column corresponding to the Status
that exists on such day:
Status Level I Level II Level III Level IV Level V Level VI
- --------------- ------- -------- --------- -------- ------- --------
Letter of Credit 50.0 60.0 70.0 87.5 112.5 137.5
Commission Rate
For purposes of this Schedule, the following terms have the following
meanings:
"LEVEL I STATUS" exists at any date if, at such date, the higher of the
two Ratings is:
A- or higher by S&P or A3 or higher by Moody's.
"LEVEL II STATUS" exists at any date if, at such date, (i) Level I Status
does not exist and (ii) the higher of the two Ratings is:
BBB+ or higher by S&P or Baa1 or higher by Moody's.
"LEVEL III STATUS" exists at any date if, at such date, (i) neither Level
I Status nor Level II Status exists and (ii) the higher of the two Ratings is:
BBB or higher by S&P or Baa2 or higher by Moody's.
"LEVEL IV STATUS" exists at any date if, at such date, (i) none of Level I
Status, Level II Status and Level III Status exists and (ii) the higher of the
two Ratings is:
BBB- or higher by S&P or Baa3 or higher by Moody's.
"LEVEL V STATUS" exists at any date if, at such date, (i) none of Level I
Status, Level II Status, Level III Status or Level IV Status exists, and (ii)
the higher of the two Ratings is:
BB+ or higher by S&P or Ba1 or higher by Moody's.
"LEVEL VI STATUS" exists at any date if, at such date, no other Status
exists.
"MOODY'S" means Moody's Investors Service, Inc.
Schedule I-1
"RATING AGENCIES" means Moody's and S&P.
"RATINGS" means the credit ratings assigned to the senior unsecured
long-term debt securities of the Company without third-party credit enhancement
by the Rating Agencies. If there is no rating assigned to debt securities, the
corporate credit rating will be used. Any rating assigned to any other debt
security of the Company shall be disregarded. The rating in effect at any date
is that in effect at the close of business on such date. In the case of split
ratings from S&P or Moody's, the rating to be used to determine which pricing
level applies is the higher of the two (e.g., BBB+/Baa2 results in Level II
Status); provided that if the split is more than one full rating category, the
rating category immediately above the lower of the two rating categories will be
used (e.g., BBB+/Baa3 results in Level III Status, as does A-/Baa3).
"S&P" means Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies, Inc.
"STATUS" refers to the determination of which of Level I Status, Level II
Status, Level III Status, Level IV Status, Level V Status or Level VI Status
exists at any date.
Schedule I-2
SCHEDULE II
BANK PARTICIPATION PERCENTAGE PARTICIPATION AMOUNT
- ------------------------------ ------------------------ --------------------
JPMorgan Chase Bank, N.A. 18.9256646% $ 10,448,412.70
Barclays Bank PLC 18.9256646% $ 10,448,412.70
Bank Hapoalim B.M. 17.3247282% $ 9,564,573.47
Citibank, N.A. 14.9413142% $ 8,248,746.86
Union Bank of California, N.A. 14.9413142% $ 8,248,746.86
KBC Bank NV 14.9413142% $ 8,248,746.86
Schedule II
EXHIBIT A
[Form of Amended and Restated Letter of Credit]
[SEE ATTACHED]
AMENDED AND RESTATED
IRREVOCABLE TRANSFERABLE LETTER OF CREDIT
No. P-010152
(formerly numbered as S-1002)
Originally Issued August 18, 1986
Reissued May 19, 2005
Emerson Finance LLC
8000 W. Florissant Avenue
P.O. Box 4100
St. Louis, Missouri 63136
Attention: President
Dear Sirs:
We hereby establish, at the request of Arizona Public Service Company (the
"COMPANY"), in your favor, our Irrevocable Transferable Letter of Credit No.
P-010152 (formerly numbered as S-1002) (the "LETTER OF CREDIT"), in a maximum
amount at any date (the "MAXIMUM CREDIT AMOUNT") equal to the amount shown
opposite the period including such date in the Table of Maximum Credit Amounts
attached hereto as Schedule II-A, effective immediately and expiring at 5:00
p.m. (New York City time) on the Termination Date. Capitalized terms used herein
and in Schedules II-A, II-B and III and Exhibits 1, 2, 3 and 4 hereto shall have
the meanings set forth in Schedule I hereto. This Letter of Credit is issued in
connection with the leasing of an undivided interest in Unit 2 of the Palo Verde
Nuclear Generating Station to the Company pursuant to a Facility Lease dated as
of August 1, 1986 (the "FACILITY LEASE") as amended and in effect on the date
hereof, between the Company and State Street Bank and Trust Company (as
successor to The First National Bank of Boston), as Owner Trustee under a trust
agreement with you.
We hereby irrevocably authorize you to draw on us, in accordance with the
terms and conditions hereinafter set forth, an amount not in excess of the
amount shown opposite the period including the date of such drawing (the "DATE
OF DRAWING") in the Table of Maximum Drawing Amounts attached hereto as Schedule
II-B as such amounts are modified from time to time in accordance with the next
paragraph. Such amounts, as modified in accordance with the next
Letter of Credit - Page 1
paragraph, are hereinafter referred to collectively as the "MAXIMUM DRAWING
AMOUNTS" and individually as the "MAXIMUM DRAWING AMOUNT". A drawing in respect
of a payment hereunder honored by us shall not exceed the lesser of the Maximum
Drawing Amount applicable on the Date of Drawing and the Maximum Credit Amount
applicable on the Date of Drawing. All payments hereunder shall be made from our
own general funds.
The Maximum Drawing Amounts shall be modified from time to time as
follows:
(a) upon payment by the Issuing Bank of each drawing under the Letter of
Credit, the Maximum Drawing Amounts applicable to each Date of Drawing
subsequent to such payment shall be automatically reduced by an amount equal to
the amount of the drawing so paid and shall not be reinstated; and
(b) if adjustments are made to Modified Special Casualty Values,
corresponding adjustments shall be made to the Maximum Drawing Amounts shown in
Schedule II-B, (as theretofore reduced pursuant to clause (a) above), provided
that if any such adjustment of Modified Special Casualty Values would cause the
Maximum Drawing Amount for any period to exceed the Maximum Credit Amount for
such period (minus the amount of any drawing theretofore honored by us
hereunder), such Maximum Credit Amount (as so reduced) shall apply for such
period and provided further that adjustments pursuant to this clause (b) shall
be effective automatically upon receipt by us of a notice from you in the form
of Exhibit 1 hereto.
Upon surrender of this Letter of Credit together with a notice in the form
of Exhibit 1 hereto, we will promptly issue an irrevocable transferable letter
of credit containing a revised Schedule II-B reflecting the adjustments
contained in such notice and in all other respects identical to this Letter of
Credit.
Funds under this Letter of Credit are available to you against
presentation on or prior to the Termination Date of (a) your draft in the form
of Exhibit 2 attached hereto and (b) a completed certificate signed by you in
the form of Exhibit 3 attached hereto. Such draft and certificate shall be dated
the date of its presentation and shall be presented at our Tampa, Florida office
specified below, or at our Brooklyn, New York office specified below (or at any
other office in New York City which may be designated by us by written notice
(given in the manner set forth in the next paragraph) delivered to you at least
15 days prior to the applicable Date of Drawing). If we receive such draft and
certificate at our Tampa, Florida office specified below, all in strict
conformity with the terms and conditions of this Letter of Credit, prior to
10:00 a.m. (New York City time) on any Business Day, we will honor the draft on
the same Business Day. If we receive such draft and certificate at our Tampa,
Florida office specified below on
Letter of Credit - Page 2
or after 10:00 a.m. and prior to 5:00 p.m. (New York City time) on any Business
Day, or if we receive such draft and certificate at our Brooklyn, New York
office specified below prior to 5:00 p.m. (New York City time) on any Business
Day, in each case all in strict conformity with the terms and conditions of this
Letter of Credit, we will honor the draft on the next Business Day. If requested
by you, payment under this Letter of Credit may be made by wire transfer of
federal funds to your account with any bank located in the United States of
America or by deposit of immediately available funds into a designated account
that you maintain with us.
Notwithstanding any provisions of Articles 13(b) and 14(d)(i) of the
Uniform Customs and of Section 5-108(b) of the New York Uniform Commercial Code
to the contrary, which provisions are hereby expressly waived, if the
presentation of such draft and certificate are not in strict conformity with the
terms and conditions of this Letter of Credit, we will give you prompt notice
prior to the time we would have been obliged to make payment as set forth in the
preceding paragraph by facsimile transmission addressed to you at the fax number
set forth in the next succeeding paragraph, effective upon confirmation, that we
have refused such non-conforming draft and certificate, and stating all
discrepancies in respect of which the Issuing Bank refuses such non-conforming
draft and certificate. If you correct such non-conforming demand by presentation
of the draft and certificate corrected to be in strict conformity with the terms
and conditions of the Letter of Credit within two Business Days of your receipt
of our notice of refusal, then we will honor the draft and make payment in
accordance with the terms provided herein based upon the time such corrected
draft and certificate are presented, provided that you may make only one such
corrected demand with respect to any such non-conforming demand, and provided
further that for purposes of determining whether the draft and certificate have
been timely presented, the corrected draft and certificate shall be deemed to
have been presented on the date the non-conforming draft and certificate were
presented.
Notwithstanding any other provision of this Letter of Credit, we shall
have the right, upon the occurrence of any of the events listed in Schedule III
hereto, to terminate this Letter of Credit by delivering to you a written notice
indicating the date of such termination (the "DATE OF EARLY TERMINATION"),
provided that on or before the Date of Early Termination you will have the right
to draw once an amount not in excess of the lesser of the Maximum Credit Amount
and the Maximum Drawing Amount in accordance with the procedures described
herein. The written notice referred to in the preceding sentence shall be given
by facsimile transmission addressed to you at Emerson Finance LLC, 8000 W.
Florissant Avenue, P.O. Box 4100, St. Louis, Missouri 63136; Attention:
President; Fax: 314-553-2463 (or to such other address or facsimile number
designated by you by written notice delivered to us at least 15 days prior to
the notice of early termination) and shall be effective upon receipt of the
appropriate confirmation of the facsimile transmission. We will also forward a
copy of such
Letter of Credit - Page 3
notice by overnight delivery service to the address set forth above. The Date of
Early Termination specified in such written notice shall be:
(a) in the case of events specified in paragraphs A and G of Schedule III,
not earlier than ten days after such notice is given, and
(b) in the case of all other events specified in Schedule III, not earlier
than 30 days after such notice is given.
Except as set forth herein, this Letter of Credit shall be governed by the
Uniform Customs and Practice for Documentary Credits (1993 Revision)
International Chamber of Commerce Publication No. 500, other than the provisions
of Article 48 thereof. This Letter of Credit shall be deemed to be a contract
made under the laws of the State of New York and shall, as to matters not
governed by the Uniform Customs, be governed by and construed in accordance with
the laws of such State.
All demands for payment, notices and other communications to us in respect
of this Letter of Credit shall be in writing, specifically referring to the
number of this Letter of Credit, and addressed and presented to us (and all
courier or physical deliveries should be addressed to us) at JPMorgan Chase
Bank, N.A., c/o JP Morgan Treasury Services, Standby Letter of Credit Manager -
Immediate Action Required, 4th Floor, 10240 Highland Manor Drive, Tampa, Florida
33610. Although we prefer physical presentations be made to our Tampa, Florida
location, our location at 4 Chase Metrotech Center, 10th Floor, Brooklyn, New
York 11245 is also available for your physical presentations. Should you use our
4 Chase Metrotech Center location for physical presentations, documents must be
directed to: Governmental Agency Unit, Attention: Global Trade.
Notwithstanding Article 48 of the Uniform Customs and Practice for
Documentary Credits referred to above, this Letter of Credit may be transferred
in its entirety more than once, but in each case only to the successor Equity
Participant under the Trust Agreement dated as of August 1, 1986 between
yourself and State Street Bank and Trust Company as successor to The First
National Bank of Boston. Upon receipt by us at the address for presentation of
documents set forth above of a copy of the instrument effecting such transfer,
signed by the transferor and by the transferee, in the form of Exhibit 4 hereto
(which shall be conclusive evidence of such transferee's authority without any
inquiry by us into the terms of the Trust Agreement) then, in such case, we
will, upon surrender of this Letter of Credit (and amendments thereto, if any),
issue an irrevocable transferable letter of credit in the name of the transferee
and providing for notices to be sent to the transferee at the address set forth
therein and in all other respects identical to this Letter of Credit and the
transferee, instead of the transferor, shall, without necessity of further act,
be entitled to all the benefits of, and rights under, this Letter of Credit in
the transferor's place.
Letter of Credit - Page 4
We hereby notify you of our agreement to the terms and conditions of
Section 13 of the Reimbursement Agreement.
This Letter of Credit sets forth in full our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein, except
only Schedules I, II-A, II-B and III and Exhibits 1, 2, 3 and 4 hereto and the
notices referred to herein; and any such reference shall not be deemed to
incorporate herein by reference any document, instrument or agreement except as
set forth above.
Letter of Credit - Page 5
This Letter of Credit No. P-010152 (formerly numbered as S-1002) amends
and restates our Letter of Credit No. S-1002 dated as of August 15, 1986, as
heretofore amended.
JPMORGAN CHASE BANK, N.A.
By: ______________________________
Name:
Title:
LETTER OF CREDIT NO. P-010152 (FORMERLY NUMBERED AS S-1002)
ISSUED BY JPMORGAN CHASE BANK, N.A.
SIGNATURE PAGE
EXHIBIT 1
TO LETTER OF CREDIT
JPMorgan Chase Bank, N.A.
[c/o JP Morgan Treasury Services
Standby Letter of Credit Manager -
Immediate Action Required
4th Floor
10240 Highland Manor Drive
Tampa, Florida 33610]
[Governmental Agency Unit
4 Chase Metrotech Center
10th Floor
Brooklyn, New York 11245
Attention: Global Trade]
Dear Sirs:
Reference is made to that certain amended and restated irrevocable
transferable Letter of Credit bearing Letter of Credit No. P-010152 (formerly
numbered as S-1002) dated May 19, 2005, which has been established by you in
favor of Emerson Finance LLC (the "EQUITY PARTICIPANT").
The undersigned, a duly authorized representative of the Equity
Participant, hereby certifies that Modified Special Casualty Values have been
adjusted and the amounts shown on Schedule II-B to the Letter of Credit should
be modified, in accordance with the terms of clauses (a) and (b) of the third
paragraph of the Letter of Credit, to the amounts shown in Appendix A hereto.
The Letter of Credit is returned herewith and we request that you issue an
irrevocable transferable letter of credit with the revised Schedule II-B
attached and in all other respects identical to the Letter of Credit.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings given to them in the Letter of Credit.
____________________________________
[Name of Equity Participant]
____________________________________
[Name and Title of Authorized
Representative of Equity Participant]
Letter of Credit - Exhibit 1
EXHIBIT 2
TO LETTER OF CREDIT
[Place]
[Date], 20__
ON [Business Day on which payment is required in accordance with the
provisions o f the fifth paragraph of the Letter of Credit]
PAY TO U.S.$ [not to exceed the lesser of the
[Name of beneficiary] Maximum Drawing Amount or the Maximum
Credit Amount] DOLLARS
FOR VALUE RECEIVED AND CHARGE TO ACCOUNT OF LETTER OF
CREDIT NO. P-010152 (formerly numbered as S-1002)
OF
JPMorgan Chase Bank, N.A.
[c/o JP Morgan Treasury Services
Standby Letter of Credit Manager -
Immediate Action Required
4th Floor
10240 Highland Manor Drive
Tampa, Florida 33610]
[Governmental Agency Unit
4 Chase Metrotech Center
10th Floor
Brooklyn, New York 11245
Attention: Global Trade]
[Name and address of Equity Participant]
By: ____________________________________
[Authorized Representative]
Letter of Credit - Exhibit 2
EXHIBIT 3
TO LETTER OF CREDIT
CERTIFICATE
The undersigned, a duly authorized representative of Emerson Finance LLC
(the "EQUITY PARTICIPANT"), as beneficiary under that certain amended and
restated irrevocable transferable Letter of Credit No. P-010152 (formerly
numbered as S-1002) dated May 19, 2005, established by JPMorgan Chase Bank, N.A.
(the "ISSUING BANK") and issued pursuant to that certain Amended and Restated
Reimbursement Agreement dated as of May 19, 2005 between Arizona Public Service
Company (the "COMPANY"), the Issuing Bank and the other Banks named therein,
hereby certifies as follows:
1. An Event of Default under the Facility Lease has occurred and is
continuing.
2. The amount of the accompanying draft does not exceed the Maximum
Drawing Amount available under the Letter of Credit on the date hereof, as
determined in accordance with the terms of the Letter of Credit.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings given to them in the Letter of Credit.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of ,
20__ .
__________________________________________
[Name of Equity Participant]
__________________________________________
[Name and Title of Authorized
Representative of Equity Participant]
Letter of Credit - Exhibit 3
EXHIBIT 4
TO LETTER OF CREDIT
JPMorgan Chase Bank, N.A.
[c/o JP Morgan Treasury Services
Standby Letter of Credit Manager -
Immediate Action Required
4th Floor
10240 Highland Manor Drive
Tampa, Florida 33610]
[Governmental Agency Unit
4 Chase Metrotech Center
10th Floor
Brooklyn, New York 11245
Attention: Global Trade]
Dear Sirs:
Reference is made to the certain amended and restated irrevocable
transferable Letter of Credit bearing Letter of Credit No. P-010152 (formerly
numbered as S-1002) dated May 19, 2005 (the "LETTER OF CREDIT"), which has been
established by you in favor of [name of Equity Participant (the "TRANSFEROR")].
The Transferor has transferred (and hereby confirms to you said transfer)
all of its rights in and under said Letter of Credit to [name of Transferee (the
"TRANSFEREE")] and confirms that the Transferor no longer has any rights under
or interest in said Letter of Credit.
The Letter of Credit is returned herewith and we request that you issue an
irrevocable transferable letter of credit in the name of the Transferee and
providing for notices to be sent to the Transferee at the address set forth
below and in all other respects identical to the Letter of Credit.
Transferee hereby certifies that it is a duly authorized transferee under
the terms of said Letter of Credit and is accordingly entitled, upon
presentation of the drafts and certificates called for therein, to receive
payments thereunder. Notices under the Letter of Credit should be sent to the
Transferee as follows: [Name], [Address], [Facsimile Number], Attention: -.
___________________________________________
[Name of Transferor]
___________________________________________
Letter of Credit - Exhibit 4 - Page 1
___________________________________________
[Name and Title of Authorized
Representative of Transferor]
___________________________________________
[Name of Transferee]
___________________________________________
[Name and Title of Authorized
Representative of Transferee]
Letter of Credit - Exhibit 4 - Page 2
SCHEDULE I
TO LETTER OF CREDIT
The following terms have the following meanings for purposes of the Letter
of Credit and the Schedules and Exhibits thereto. Terms defined in the Letter of
Credit have the meanings given to them therein. Terms defined by reference to
the Facility Lease have the meanings assigned to them therein from time to time.
"ADMINISTRATIVE AGENT" means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Banks under the Reimbursement Agreement, and its
successors in such capacity.
"APPLICABLE LAW" has the meaning assigned to it in the Facility Lease.
"BANK" means (i) each bank or financial institution listed on the
signature pages of the Reimbursement Agreement, each Assignee that becomes a
Bank pursuant to Section 15(a) of the Reimbursement Agreement, and their
respective successors, and (ii) the Issuing Bank with respect to its
Participation.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York, Chicago, Illinois or the State of
California are authorized by law to close.
"CAPITAL LEASE OBLIGATIONS" means as to any Person, the obligations of
such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal property, which obligations are
required to be classified and accounted for as a capital lease on the balance
sheet of such Person under generally accepted accounting principles and, for the
purposes of this Agreement, the amount of such obligations shall be the
capitalized amount thereof, determined in accordance with generally accepted
accounting principles.
"CODE" means the Internal Revenue Code of 1986, as amended, or any
successor statute.
"EQUITY PARTICIPANT" means Emerson Finance LLC, as Equity Participant, and
its successors and assigns.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.
"ERISA AFFILIATE" means any corporation or trade or business which is a
member of the same controlled group of corporations (within the meaning of
Letter of Credit - Schedule I - Page 1
Section 414(b) of the Code) as the Company or is under common control (within
the meaning of Section 414(c) of the Code) with the Company.
"GOVERNMENTAL ACTION" has the meaning assigned to it in the Facility
Lease.
"GUARANTEE" means as to any Person, any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Indebtedness
of any other Person or in any manner providing for the payment of any
Indebtedness of any other Person or otherwise protecting the holder of such
Indebtedness against loss (whether by virtue of partnership arrangements,
agreements to keep well, to purchase assets, goods, securities or services, or
to take-or-pay or otherwise), provided that the term "Guarantee" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"INDEBTEDNESS" means as to any Person at any date (without duplication):
(a) indebtedness created, issued, incurred or assumed by such Person for
borrowed money or evidenced by bonds, debentures, notes or similar instruments;
(b) all obligations of such Person to pay the deferred purchase price of
property or services, excluding, however, trade accounts payable (other than for
borrowed money) arising in, and accrued expenses incurred in, the ordinary
course of business of such Person so long as such trade accounts payable are
paid within 180 days of the date incurred; (c) all Indebtedness secured by a
lien on any asset of such Person, to the extent such Indebtedness has been
assumed by, or is a recourse obligation of, such Person; (d) all Guarantees by
such Person; (e) all Capital Lease Obligations of such Person; and (f) the
amount of all reimbursement obligations of such Person (whether contingent or
otherwise) in respect of letters of credit, bankers' acceptances, surety or
other bonds and similar instruments in support of Indebtedness.
"ISSUING BANK" means JPMorgan Chase Bank, N.A., and its successors in
their capacity as issuer of the Letter of Credit.
"MATERIAL SUBSIDIARY" means, at any time, a Subsidiary of the Company
which as of such time meets the definition of a "significant subsidiary"
included as of May 19, 2005 in Regulation S-X of the Securities and Exchange
Commission or whose assets at such time exceed 10% of the assets of the Company
and the Subsidiaries (on a consolidated basis).
"MODIFIED SPECIAL CASUALTY VALUE" has the meaning assigned to it in the
Facility Lease.
"MULTIEMPLOYER PLAN" means a plan defined as such in Section 3(37) of
ERISA to which contributions have been made by the Company or any ERISA
Letter of Credit - Schedule I - Page 2
Affiliate within any of the preceding five plan years and which is covered by
Title IV of ERISA.
"PARTICIPANT" has the meaning set forth in Section 15(b) of the
Reimbursement Agreement.
"PARTICIPATION" means a participating interest in the credit represented
by the Letter of Credit including, without limitation, the interest therein
retained by the Issuing Bank after giving effect to all participating interests
therein granted by it pursuant to Section 14(a) of the Reimbursement Agreement,
but prior to giving effect to any interest therein granted to any Participant
pursuant to Section 15(b) of the Reimbursement Agreement.
"PARTICIPATION AMOUNT" means, with respect to any Bank, the amount set
forth in Schedule II to the Reimbursement Agreement opposite the name of such
Bank therein, as such amount may be changed by reason of an assignment by or to
such Bank in accordance with Section 15(a). Such amount shall be reduced from
time to time by such Bank's ratable share of each reduction of the Maximum
Credit Amount.
"PARTICIPATION PERCENTAGE" means, with respect to any Bank at any time,
the percentage equivalent of a fraction (i) the numerator of which is the
Participation Amount of such Bank at such time and (ii) the denominator of which
is the Maximum Credit Amount at such time.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PLAN" means an employee benefit plan within the meaning of Section 3(3)
of ERISA established or maintained by the Company or any ERISA Affiliate which
is covered by Title IV of ERISA, other than a Multiemployer Plan.
"REIMBURSEMENT AGREEMENT" means the Reimbursement Agreement as originally
executed as of August 1, 1986, as amended or amended and restated from time to
time before May 19, 2005, as amended and restated as of May 19, 2005 among
Arizona Public Service Company, the Banks party thereto, and JPMorgan Chase
Bank, N.A., as Administrative Agent and Issuing Bank, and as the same may be
amended and restated from time to time thereafter.
"REQUIRED BANKS" means, at any time, Banks holding Participation
Percentages aggregating more than 50% at such time.
Letter of Credit - Schedule I - Page 3
"STATED TERMINATION DATE" means May 19, 2010 or such later date to which
such Stated Termination Date shall have been extended pursuant to Section 17 of
the Reimbursement Agreement.
"SUBSIDIARY" of any Person means any corporation of which more than 50% of
the issued and outstanding capital stock having ordinary voting power to elect a
majority of the Board of Directors of such corporation (irrespective of whether
at the time capital stock of any other class or classes of such corporation
shall or might have voting power upon the occurrence of any contingency) is at
the time directly or indirectly owned or controlled by such Person and one or
more of its other Subsidiaries or by one or more of such Person's other
Subsidiaries.
"TERMINATION DATE" means the earliest of (i) the date on which the Issuing
Bank pays a drawing under the Letter of Credit for the lesser of the Maximum
Drawing Amount and the Maximum Credit Amount, (ii) if a drawing is not requested
by the Equity Participant after a notice of termination is given under the
Letter of Credit, the Date of Early Termination, (iii) if a drawing is requested
by the Equity Participant after a notice of termination is given under the
Letter of Credit, the date on which the Issuing Bank pays such drawing, (iv) the
date on which the Company delivers a certificate to the Issuing Bank certifying
that the Company has paid the amounts due under Section 9(c) of the Facility
Lease (so long as the Equity Participant shall have acknowledged such payment by
its express confirmation thereof in, and its countersignature to, such
certificate), (v) the date on which the Company delivers a certificate to the
Issuing Bank certifying that the Company has paid the amounts due under Section
9(d) of the Facility Lease (so long as the Equity Participant shall have
acknowledged such payment by its express confirmation thereof in, and its
countersignature to, such certificate), and (vi) the latest of (x) the Stated
Termination Date, (y) if a draft and certificate all in strict conformity with
the terms and conditions of the Letter of Credit are presented on the Stated
Termination Date at such time and at such office as specified in the fifth
paragraph of the Letter of Credit, the date on which the Issuing Bank is
required to honor the draft in accordance with the provisions of such paragraph
pursuant to such presentation, and (z) if a corrected draft and certificate all
in strict conformity with the terms and conditions of the Letter of Credit are
presented on such date as specified in, and in accordance with the provisions
of, the sixth paragraph of the Letter of Credit, the date on which the Issuing
Bank is required to honor the draft in accordance with the provisions of such
paragraph pursuant to such presentation.
"TRANSACTION DOCUMENTS" means the Participation Agreement, the Refinancing
Agreement, the Indemnity Agreement, the Escrow Deposit Agreement, the Facility
Lease, the Trust Agreement, the Indenture, the Decommissioning Trust Agreement,
the Tax Indemnification Agreement, the Mortgage Release, the Assignment and
Assumption, the Purchase Documents,
Letter of Credit - Schedule I - Page 4
any ground lease contemplated by Section 10(b)(3)(xvii) of the Participation
Agreement and the Notes, each as defined in the Facility Lease.
Letter of Credit - Schedule I - Page 5
SCHEDULE II-A
TO LETTER OF CREDIT
TABLE OF MAXIMUM CREDIT AMOUNTS
EMERSON FINANCE LLC
APPLICABLE PERIOD MAXIMUM CREDIT AMOUNT
- ------------------------------------------- ---------------------
From May 19, 2005 through July 10, 2005 $ 55,207,639.45
From July 11, 2005 through January 10, 2006 $ 54,073,073.44
From January 11, 2006 through July 10, 2006 $ 51,520,058.76
From July 11, 2006 through January 10, 2007 $ 50,939,589.19
From January 11, 2007 through July 10, 2007 $ 47,820,443.92
From July 11, 2007 through January 10, 2008 $ 47,088,800.23
From January 11, 2008 through July 10, 2008 $ 43,631,504.04
From July 11, 2008 through January 10, 2009 $ 42,847,098.46
From January 11, 2009 through July 10, 2009 $ 39,198,185.36
From July 11, 2009 through January 10, 2010 $ 38,352,436.54
From January 11, 2010 through May 19, 2010 $ 34,494,359.44
Letter of Credit - Schedule II-A
SCHEDULE II-B
TO LETTER OF CREDIT
TABLE OF MAXIMUM DRAWING AMOUNTS
EMERSON FINANCE LLC
APPLICABLE PERIOD MAXIMUM DRAWING AMOUNT
- ------------------------------------------- ----------------------
From May 19, 2005 through July 10, 2005 $ 55,207,639.45
From July 11, 2005 through January 10, 2006 $ 54,073,073.44
From January 11, 2006 through July 10, 2006 $ 51,520,058.76
From July 11, 2006 through January 10, 2007 $ 50,939,589.19
From January 11, 2007 through July 10, 2007 $ 47,820,443.92
From July 11, 2007 through January 10, 2008 $ 47,088,800.23
From January 11, 2008 through July 10, 2008 $ 43,631,504.04
From July 11, 2008 through January 10, 2009 $ 42,847,098.46
From January 11, 2009 through July 10, 2009 $ 39,198,185.36
From July 11, 2009 through January 10, 2010 $ 38,352,436.54
From January 11, 2010 through May 19, 2010 $ 34,494,359.44
Letter of Credit - Schedule II-B
SCHEDULE III
TO LETTER OF CREDIT
The Issuing Bank shall have the right upon the occurrence of any of the
events listed below to terminate the Letter of Credit in accordance with the
terms of the Letter of Credit:
(A) The Company shall fail to pay when due any amount payable under
Section 2(a) of the Reimbursement Agreement or fail to pay any other amount
payable under Section 2 of the Reimbursement Agreement within five Business Days
after the same becomes due and payable; or
(B) The Company shall fail to perform or observe (i) any term, covenant or
agreement contained in Section 7(a)(ii), 7(g)(iv), 7(h), 8(a), 8(b), 8(c) or
8(e) of the Reimbursement Agreement, or (ii) any term, covenant or agreement
contained in the Reimbursement Agreement (other than those covered by clause (A)
above or subclause (i) of this clause (B) or Section 7(e) or Section 19 of the
Reimbursement Agreement) on its part to be performed or observed if the failure
to perform or observe such term, covenant or agreement shall remain unremedied
for 30 days after written notice thereof shall have been given to the Company by
the Administrative Agent; or
(C) Any representation or warranty made by the Company in the
Reimbursement Agreement or by the Company (or any of its officers) in any
certificate delivered in connection with the Reimbursement Agreement shall prove
to have been false or misleading in any material respect when made; or
(D) Any material provision of the Reimbursement Agreement shall at any
time for any reason cease to be valid and binding upon the Company, or shall be
declared to be null and void, or the validity or enforceability thereof shall be
contested by the Company or any governmental agency or authority, or the Company
shall deny that it has any or further liability or obligation under the
Reimbursement Agreement; or
(E) The Company shall fail to pay any principal of or premium or interest
on any Indebtedness which is outstanding in a principal amount of at least
$5,000,000 (but excluding Indebtedness owing under the Reimbursement Agreement)
of the Company, when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Indebtedness; or the Company shall
fail to perform or comply with any other term or covenant in any agreement or
instrument relating to any such Indebtedness and such failure shall continue
after the applicable grace period, if any, specified in such agreement or
instrument,
Letter of Credit - Schedule III - Page 1
if the effect of such failure is to accelerate, or to permit the acceleration
of, the maturity of such Indebtedness; or
(F) The Company shall fail to pay any principal of or premium or interest
in respect of any operating lease in respect of which the payment obligations of
the Company have a present value of at least $25,000,000, when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in such operating lease, if the
effect of such failure is to terminate, or to permit the termination of, such
operating lease; or
(G) The Company shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts generally, or
shall make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Company seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur; or the Company shall take any corporate action to authorize any of
the actions set forth above in this clause (G) or
(H) Any Material Subsidiary shall generally not pay its debts as such
debts become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of creditors; or
any proceeding shall be instituted by or against any Material Subsidiary seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition of
it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee, custodian or other similar official
for it or for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 60 days, or any
of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial part of its
property) shall occur; or any Material Subsidiary shall take any corporate
action to authorize any of the actions set forth above in this clause (H) and,
in each case,
Letter of Credit - Schedule III - Page 2
the Required Banks determine that such circumstances could have a material
adverse effect on the financial condition or financial prospects of the Company
and its consolidated Subsidiaries, taken as a whole; or
(I) Any judgment or order for the payment of money that exceeds any
applicable insurance coverage by more than $5,000,000 shall be rendered against
the Company and such judgment or order shall remain unsatisfied or unstayed for
a period of 30 days; or
(J) Any judgment or order for the payment of money that exceeds any
applicable insurance coverage by more than $25,000,000 shall be rendered against
any Material Subsidiary; such judgment or order shall remain unsatisfied or
unstayed for 30 days; and the Required Banks determine that such judgment or
order could have a material adverse effect on the financial condition or
financial prospects of the Company and its consolidated Subsidiaries, taken as a
whole; or
(K) An event or condition specified in Section 7(g)(iv) of the
Reimbursement Agreement shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result of such event or condition, together with
all other such events or conditions, the Company or any ERISA Affiliate shall
incur or in the opinion of the Required Banks shall be reasonably likely to
incur a liability to a Plan, a Multiemployer Plan or the PBGC (or any
combination of the foregoing) which is, in the determination of the Required
Banks, material in relation to the financial condition or the financial
prospects of the Company and its consolidated Subsidiaries, taken as a whole; or
(L) any change in Applicable Law or any Governmental Action shall occur
which has the effect of making the transactions contemplated by the Transaction
Documents unauthorized, illegal or otherwise contrary to Applicable Law; or
(M) any event specified in Sections 15(vii), (viii) or (x) of the Facility
Lease shall occur; or
(N) the Company shall fail to make, or cause to be made, any payment
specified in Section 15(i) of the Facility Lease equal to or exceeding
$1,000,000 within the periods specified in that Section.
Capitalized terms used herein and not otherwise defined herein shall have
the meanings given to them in the Letter of Credit.
Letter of Credit - Schedule III - Page 3