INDENTURE OF TRUST

Exhibit 4.01

EXECUTION COPY

 

INDENTURE OF TRUST

between

MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION

and

UNION BANK, N.A.,

as Trustee

Dated as of March 1, 2009

Relating to

$63,500,000

Maricopa County, Arizona Pollution Control Corporation

Pollution Control Refunding Revenue Bonds

2009 Series A

(El Paso Electric Company Palo Verde Project)

 

TABLE OF CONTENTS

 

 

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ARTICLE IX DEFEASANCE

 

 

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THIS INDENTURE OF TRUST is made and entered into as of March 1, 2009, by and between MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION, an Arizona nonprofit corporation designated as a political subdivision under the laws of the State of Arizona incorporated for and with the approval of the County of Maricopa, Arizona, pursuant to the provisions of the Constitution of the State of Arizona and Title 9, Chapter 12, Arizona Revised Statutes, enacted by Chapter 69, Section 2, Laws of Arizona of 1972, renumbered as Title 35, Chapter 6, Arizona Revised Statutes, by Chapter 281, Section 2, Laws of Arizona of 1986, and all acts supplemental thereto or, amendatory thereof (hereinafter, together with any successor to its functions, called the “Issuer”), and Union Bank, N.A., a national banking association authorized to exercise corporate trust powers, with a principal corporate trust office in Los Angeles, California (hereinafter, together with any successor in such capacity, called the “Trustee”).

W I T N E S S E T H:

WHEREAS, Title 35, Chapter 6, Arizona Revised Statutes (formerly Title 9, Chapter 12, Arizona Revised Statutes, enacted by Chapter 69, Section 2, Laws of Arizona of 1972), as amended (hereinafter called the “Act”), empowers any pollution control corporation organized pursuant to Article 1 of the Act to issue revenue bonds in accordance with Article 2 of the Act and to make secured or unsecured loans for the purpose of financing or refinancing the acquisition, construction, improvement or equipping of pollution control facilities, to charge and collect interest on such loans and pledge the proceeds of loan agreements as security for the payment of the principal of and interest on bonds, or designated issues of bonds, issued by the corporation and any agreements made in connection therewith, whenever the board of directors finds such loans to be in furtherance of the purposes of the corporation; and

WHEREAS, Chapter 69, Section 1, Laws of Arizona of 1972, declares it to be the purpose of the Act to authorize the incorporation in the several municipalities and counties of the State of Arizona of corporations which shall constitute political subdivisions of the State, to finance the acquisition and installation of, or the construction and leasing of, properties, machinery and equipment intended to prevent or limit air, water and other forms of pollution for the purpose of protecting the health and welfare of the citizens of the State of Arizona, and to facilitate compliance with existing or future air, water and other quality standards designed to improve the environment, and declares that such corporations shall serve a public purpose and perform an essential governmental function; and

WHEREAS, in response to an application by four qualified electors of the County of Maricopa, Arizona (the “County”), a political subdivision of the State of Arizona, the Board of Supervisors of said County on December 5, 1983, adopted a resolution by which it determined that it was wise, expedient, advisable and in the public interest that said application be approved, approved said application, and authorized said four electors to proceed with the incorporation of the Issuer as a pollution control corporation for said County, all in accordance with Section 35¬802 of the Act to issue bonds and to carry out the other functions and fulfill the purposes of the Issuer; and

WHEREAS, the Issuer was thereupon organized and incorporated in accordance with the provisions of the Act, and, on December 5, 1983, the Articles of Incorporation of the Issuer were

filed with the Arizona Corporation Commission, in accordance with Section 35-809 of the Act; and

WHEREAS, the Issuer has heretofore issued and sold its $63,500,000 aggregate principal amount of Pollution Control Refunding Revenue Bonds, 2005 Series B (El Paso Electric Company Palo Verde Project) (the “Prior Bonds”), the proceeds of which were used to refinance a portion of the costs of acquisition, construction, improvement or equipping of the Project; and

WHEREAS, the Board of Directors of the Issuer on March 17, 2009 determined to sell additional revenue bonds of the Issuer to provide the moneys necessary to redeem and refund the outstanding principal amount of the Prior Bonds; and

WHEREAS, appropriate certifications have been received stating that the portion of the Generating Station which constitutes the pollution control facilities, as described in Exhibit A to the Agreement (defined below) (the “Generating Station”), as designed, are in furtherance of the purpose of abating or controlling atmospheric or water pollutants or contaminants resulting from the generation of electricity at the Generating Station; and

WHEREAS, the Issuer and the Borrower have executed and delivered that certain Loan Agreement, dated as of March 1, 2009 (hereinafter called the “Agreement”), setting forth the undertaking by the Issuer to issue and sell its revenue bonds under the Act (hereinafter called the “Bonds”), and to lend the proceeds of the Bonds to the Borrower to provide a portion of the moneys necessary to redeem and refund the outstanding principal amount of Prior Bonds; and

WHEREAS, in the Agreement the Borrower releases the Issuer and agrees that the Issuer shall not be liable for, and will indemnify and hold the Issuer and the Trustee harmless from, certain matters; and

WHEREAS, certain findings and determinations relating to the Agreement and the Generating Station and the Project have heretofore been made and are set forth in this Indenture; and

WHEREAS, the execution and delivery of the Agreement and this Indenture and the issuance of the Bonds have been in all respects duly and validly authorized, and duly adopted and approved by resolutions of the Board of Directors of the Issuer, and the Project, the plan of financing for the Project and the issuance of the Bonds have been duly approved by the Board of Supervisors of the County, as required by the Act and otherwise; and

WHEREAS, all other things necessary to make the Bonds, when issued, executed and delivered by the Issuer and authenticated by the Trustee pursuant to this Indenture, the valid, legal and binding limited obligations of the Issuer, and to constitute this Indenture a valid pledge and assignment of all right, title and interest of the Issuer in the Agreement (except as to certain payments to the Issuer under provisions for indemnification of, and reimbursement of expenses of, the Issuer), and of certain income and revenues derived from the Agreement, for the payment of the principal of and interest on the Bonds authenticated and delivered under this Indenture, and the creation, execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized;

 

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NOW, THEREFORE, the Issuer, in consideration of the covenants herein contained and of the purchase and acceptance of the Bonds by the holders thereof, in order to secure the payment of all Bonds at any time Outstanding under this Indenture, according to their tenor and effect, and the performance and observance of all the covenants and conditions in the Bonds and herein contained, and to declare the terms and conditions upon and subject to which the Bonds are issued and secured, does grant a security interest in and pledge to the Trustee (as hereinafter defined), and to its successors and assigns forever, the Trust Estate (as hereinafter defined) for the equal and proportionate benefit, security and protection of all holders and owners of the Bonds issued under and secured by this Indenture without privilege, priority or distinction as to the lien or otherwise of any of the Bonds over any other of the Bonds, all upon the terms stated in this Indenture.

ARTICLE I

DEFINITIONS

Section 1.01 Definitions . The terms defined in this Article I shall, for all purposes of this Indenture and of any supplemental indenture hereto have the meanings herein specified, unless the context clearly requires otherwise. Capitalized terms used herein, defined in the Agreement and not otherwise defined herein, shall have the meaning specified in the Agreement.

“Act” shall mean Title 35, Chapter 6, Arizona Revised Statutes (formerly Title 9, Chapter 12, Arizona Revised Statutes, enacted by Chapter 69, Section 2, Laws of Arizona of 1972), and all acts supplemental thereto or amendatory thereof.

“Agreement” shall mean the Loan Agreement, of even date herewith, between the Issuer and the Borrower and relating to the loan of the proceeds of the Bonds, as originally executed or as it may from time to time be supplemented or amended.

“All-Hold Rate” shall mean, on any date of determination, the interest rate per annum equal to 65% of the Index on such date; provided, that in no event shall the All-Hold Rate be more than the Maximum Lawful Rate.

“Alternate Credit Support” shall mean any letter of credit, credit facility, insurance policy, guarantee or other credit support agreement or security mechanism provided by the Borrower in accordance with Section 6.08 of the Agreement and any extension thereof.

“Applicable ARS Rate” shall mean, with respect to ARS, the rate per annum at which interest accrues on the Bonds for any Auction Period.

“ARS” or “Auction Rate Securities” shall mean, on any date, the Bonds when bearing interest as auction rate securities as provided in Article IIIA of this Indenture and the Auction Procedures applicable thereto.

“ARS Beneficial Owner” shall mean the Person who is the beneficial owner of ARS according to the records of (i) DTC or its participants or a successor Securities Depository while such ARS are in book-entry form, or (ii) the Trustee while such ARS are not in book-entry form.

 

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“ARS Defaulted Interest” shall mean interest on any ARS which is payable but is not punctually paid or duly provided for on any ARS Interest Payment Date.

“ARS Interest Payment Date” shall mean, when used with respect to ARS in an Auction Period other than a Special Auction Period, the Business Day immediately following each Auction Period, and, when used with respect to a Special Auction Period of seven days or more but fewer than 183 days, the Business Day immediately following such Special Auction Period, and, when used with respect to a Special Auction Period of 183 days or more, each February 1 and August 1 and on the Business Day immediately following such Special Auction Period.

“ARS Interest Period” shall mean the period commencing on and including an ARS Interest Payment Date and ending on but excluding the next succeeding ARS Interest Payment Date; provided, that the first ARS Interest Period within each ARS Interest Rate Period shall commence on and include the Issue Date or the Conversion Date, as the case may be.

“ARS Interest Rate Period” shall mean each period during which the Bonds are ARS.

“ARS Maximum Rate” shall mean 15% per annum; provided that in no event shall the ARS Maximum Rate be more than the Maximum Lawful Rate.

“ARS Payment Default” shall mean (a) (i) a default by the Issuer in the due and punctual payment of any installment of interest on ARS, or (ii) a default by the Issuer in the due and punctual payment of any principal of ARS at stated maturity or pursuant to a mandatory redemption and (b) a payment default by the Bond Insurer under the Bond Insurance Policy.

“ARS Rating Agency” shall mean Moody’s or S&P, or if any of Moody’s or S&P discontinues its securities rating service, then such other nationally recognized securities rating agency as may be specified by the Broker-Dealer with the consent of the Borrower.

“Auction” shall mean the implementation of the Auction Procedures on an Auction Date.

“Auction Agent” shall mean the Auction Agent unless and until a Substitute Auction Agent Agreement becomes effective, after which “Auction Agent” shall include both the initial Auction Agent (if it is continuing to act in such capacity under this Indenture) and each such Substitute Auction Agent so acting.

“Auction Agent Agreement” shall mean, on any date, each Auction Agent Agreement and each Substitute Auction Agent Agreement, in each case as from time to time in effect.

“Auction Agent Fee” shall have the meaning provided in each Auction Agent Agreement.

“Auction Date” shall mean, with respect to ARS, the Business Day next preceding the first day of each Auction Period, other than

(i) each Auction Period commencing after the ownership of such ARS is no longer maintained in book-entry form by a Securities Depository;

 

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(ii) each Auction Period commencing after the occurrence and during the continuance of an ARS Payment Default; or

(iii) any Auction Period commencing less than two Business Days after the cure or waiver of an ARS Payment Default.

The Auction Date determined as provided in this definition may be adjusted as provided in Section 3A.11(b).

“Auction Period” shall mean (i) with respect to ARS in a seven-day mode, any of (A) a period, generally of seven days, beginning on and including a Monday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Sunday) and ending on and including the Sunday thereafter (unless such Sunday is not followed by a Business Day, in which case ending on and including the next succeeding day which is followed by a Business Day), (B) a period, generally of seven days, beginning on and including a Tuesday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Monday) and ending on and including the Monday thereafter (unless such Monday is not followed by a Business Day, in which case ending on and including the next succeeding day which is followed by a Business Day), (C) a period, generally of seven days, beginning on and including a Wednesday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Tuesday) and ending on and including the Tuesday thereafter (unless such Tuesday is not followed by a Business Day, in which case ending on and including the next succeeding day which is followed by a Business Day), (D) a period, generally of seven days, beginning on and including a Thursday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Wednesday) and ending on and including the Wednesday thereafter (unless such Wednesday is not followed by a Business Day, in which case ending on and including the next succeeding day which is followed by a Business Day) or (E) a period, generally of seven days, beginning on and including a Friday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Thursday) and ending on and including the Thursday thereafter (unless such Thursday is not followed by a Business Day, in which case ending on and including the next succeeding day which is followed by a Business Day); (ii) with respect to ARS in a 28-day mode, any of (A) a period, generally of 28 days, beginning on and including a Monday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Sunday) and ending on and including the fourth Sunday thereafter (unless such Sunday is not followed by a Business Day, in which case ending on and including the next succeeding day which is followed by a Business Day), (B) a period, generally of 28 days, beginning on and including a Tuesday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Monday) and ending on and including the fourth Monday thereafter (unless such Monday is not followed by a Business Day, in which case ending on and including the next succeeding day followed by a Business Day), (C) a period, generally of 28 days, beginning on and including a Wednesday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Tuesday) and ending on and including the fourth Tuesday thereafter (unless such Tuesday is not followed by a Business Day, in which case ending on and including the next succeeding day followed by a Business Day), (D) a period, generally of 28 days, beginning on and including a Thursday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Wednesday) and ending on and including

 

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the fourth Wednesday thereafter (unless such Wednesday is not followed by a Business Day, in which case ending on and including the next succeeding day followed by a Business Day), or (E) a period, generally of 28 days, beginning on and including a Friday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Thursday) and ending on and including the fourth Thursday thereafter (unless such Thursday is not followed by a Business Day, in which case ending on and including the next succeeding day which is followed by a Business Day); (iii) with respect to ARS in a 35-day mode, any of (A) a period, generally of 35 days, beginning on and including a Monday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Sunday) and ending on and including the fifth Sunday thereafter (unless such Sunday is not followed by a Business Day, in which case ending on and including the next succeeding day which is followed by a Business Day), (B) a period, generally of 35 days, beginning on and including a Tuesday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Monday) and ending on and including the fifth Monday thereafter (unless such Monday is not followed by a Business Day, in which case ending on and including the next succeeding day followed by a Business Day), (C) a period, generally of 35 days, beginning on and including a Wednesday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Tuesday) and ending on and including the fifth Tuesday thereafter (unless such Tuesday is not followed by a Business Day, in which case ending on and including the next succeeding day followed by a Business Day), (D) a period, generally of 35 days, beginning on and including a Thursday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Wednesday) and ending on and including the fifth Wednesday thereafter (unless such Wednesday is not followed by a Business Day, in which case ending on and including the next succeeding day followed by a Business Day), or (E) a period, generally of 35 days, beginning on and including a Friday (or the day following the last day of the prior Auction Period if the prior Auction Period does not end on a Thursday) and ending on and including the fifth Thursday thereafter (unless such Thursday is not followed by a Business Day, in which case ending on and including the next succeeding day which is followed by a Business Day) and (iv) a Special Auction Period; provided, however, that the initial Auction Period with respect to the Bonds shall begin on and include the Issue Date, and that in the event of a Conversion of the Bonds from another Interest Rate Period to an ARS Interest Rate Period the initial Auction Period following such Conversion shall begin on and include the Conversion Date.

“Auction Procedures” shall mean the provisions set forth in Exhibit B to this Indenture.

“Auction Rate” shall mean, with respect to the interest rate on ARS, the rate of interest per annum that results from implementation of the Auction Procedures, and determined as described in Section 1.03 of the Auction Procedures; provided, however, that the Auction Rate shall not exceed the ARS Maximum Rate. While Auction Procedures are suspended, the Auction Rate will be determined as otherwise described herein.

“Authorized Borrower Representative” shall mean each person at the time designated to act on behalf of the Borrower by written certificate furnished to the Issuer and the Trustee containing the specimen signature of such person and signed on behalf of the Issuer.

 

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“Authorized Denominations” shall mean (a) with respect to any Long-Term Interest Rate Period, $5,000 and any integral multiple thereof; (b) with respect to any Daily Interest Rate Period, Weekly Interest Rate Period or Short-Term Interest Rate Period, $100,000 and any integral multiple of $5,000 in excess of $100,000; and (c) with respect to ARS, $25,000 and any integral multiple thereof while the ARS are in any Auction Period.

“Available ARS” shall have the meaning provided in Section 1.03(b) of the Auction Procedures.

“Available Moneys” shall mean (i) with respect to any date occurring during the term of a Credit Facility, (a) proceeds of a drawing under a Credit Facility which have been directly deposited in the Bond Fund or the Purchase Fund, as applicable, (b) moneys deposited in the Bond Fund or the Purchase Fund by or on behalf of the Borrower and which have been on deposit with the Trustee or the Tender Agent, as applicable, for at least one hundred and twenty-four (124) days prior to and during which no petition by or against the Issuer or the Borrower or any affiliate of the Borrower, under any Bankruptcy Act shall have been filed or any bankruptcy or similar proceeding shall have been commenced, unless such petition or proceeding shall have been dismissed and such dismissal shall be final and not subject to appeal, (c) any other money (including the proceeds of the sale of refunding obligations of the Issuer) the application of which would not, in the written opinion of Bond Counsel or other nationally recognized counsel experienced in bankruptcy matters and acceptable to the Issuer, the Rating Agencies, if any, and the Trustee and delivered to the Trustee and the Tender Agent, constitute a voidable preference in the case of a filing for protection under the Bankruptcy Act of the Issuer or the Borrower or any affiliate of the Borrower, and (d) the proceeds from the investment of moneys described above, and (ii) with respect to any date not occurring during the term of a Credit Facility, any moneys furnished to the Trustee or the Tender Agent, as applicable, and the proceeds from the investment thereof.

“Bank” shall mean the issuer of a Letter of Credit, if any, with respect to the Bonds, and, any subsequently issued Credit Facility, the issuer of such other Credit Facility so long as such other Credit Facility shall be in effect, in its capacity as such issuer, its successors in such capacity and their assigns.

“Bankruptcy Act” shall mean the United States Bankruptcy Code, any successor act thereto or amendment thereof or any other applicable federal or state bankruptcy, insolvency, reorganization, liquidation, dissolution or similar law, now or hereafter in effect.

“Beneficial Owner” shall mean any Person which (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bond (including any Person holding a Bond through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bond for federal income tax purposes.

“Bid” shall have the meaning provided in Section 1.01(a) of the Auction Procedures.

“Bond” or “Bonds” shall mean the bonds issued in accordance with this Indenture as referenced in Section 2.01(a).

 

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“Bond Counsel” shall mean Katten Muchin Rosenman LLP, New York, New York or any firm of nationally recognized bond counsel which is experienced in the financing of pollution control facilities and acceptable to the Issuer, the Remarketing Agent, the Trustee and the Borrower.

“Bond Fund” shall mean the fund created by Section 5.01 hereof.

“Bond Insurance Policy” shall mean a municipal bond new issue insurance policy issued by a Bond Insurer that guarantees payment of principal of and interest on the Bonds.

“Bond Insurer” shall mean the issuer of a Bond Insurance Policy, if any, with respect to the Bonds, and, any subsequently issued Bond Insurance Policy, the issuer of such other Bond Insurance Policy so long as such other Bond Insurance Policy shall be in effect, in its capacity as such issuer, its successors in such capacity and their assigns.

“Bond Interest Term” or “BIT” shall mean, with respect to each Bond bearing interest at a BIT Rate, the period established in accordance with the terms of Section 2.01(c)(v) hereof.

“Bond Interest Term Rate” or “BIT Rate” shall mean the interest rate on any Bond established in accordance with Section 2.01(c)(v) hereof.

“Book-Entry Bonds” shall mean any Bonds which are then held in book-entry form as provided in Section 2.01(e) hereof.

“Borrower” shall mean (i) El Paso Electric Company, a corporation organized under the laws of the State of Texas and its successors and assigns, and (ii) any surviving, resulting or transferee corporation as provided in Section 6.02 of the Agreement.

“Broker-Dealer” shall mean J.P. Morgan Securities Inc. or any other broker or dealer (each as defined in the Securities Exchange Act), commercial bank or other entity permitted by law to perform the functions required of a Broker-Dealer set forth in the Auction Procedures which (i) is a participant in or member of the Securities Depository as determined by the rules or bylaws of the Securities Depository (or an affiliate of such a participant or member), (ii) has been appointed as such by the Borrower pursuant to Section 3A.08 of this Indenture, and (iii) has entered into a Broker-Dealer Agreement that is in effect on the date of reference. When used herein at a time when more than one Broker-Dealer is acting under this Indenture, the term “the Broker-Dealer” shall mean, as the context dictates, either all such Broker-Dealers collectively, or only each Broker-Dealer acting with respect to the ARS.

“Broker-Dealer Agreement” means each agreement among the Auction Agent, Borrower and a Broker-Dealer pursuant to which the Broker-Dealer agrees to participate in Auctions as set forth in the Auction Procedures, as from time to time amended or supplemented.

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which the New York Stock Exchange, Inc. or banks are authorized or required to close in New York, New York, or in the cities in which the Principal Offices of the Trustee, the Auction Agent, the Registrar, the Paying Agent, the Tender Agent, if any, and the Remarketing Agent, if any, are

 

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located, and in the city or cities in which drawings under a Credit Facility are required to be made.

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. Each reference herein to a section of the Code shall be deemed to include the United States Treasury Regulations adopted under the Code, as the same may be in effect from time to time, unless the context clearly requires otherwise.

“Conversion” shall mean a conversion of the Bonds from one Interest Rate Period to another Interest Rate Period (including the establishment of a new interest period within the Long-Term Interest Rate Period) as provided in Sections 2.01(c)(ii)(B), (iii)(B), (iv)(B), (v)(B) or 3A.12 of this Indenture.

“Conversion Date” shall mean the effective date of a Conversion of the Bonds.

“Credit Facility” shall mean, collectively, the Letter of Credit, if any, and any extensions thereof, and, upon the issuance and delivery of any Alternate Credit Support in accordance with Section 6.08 of the Agreement, “Credit Facility” shall mean such Alternate Credit Support.

“County” shall mean the County of Maricopa, Arizona.

“Daily Interest Rate” shall mean the variable interest rate on any Bond established in accordance with Section 2.01(c)(ii) hereof.

“Daily Interest Rate Period” shall mean each period during which a Daily Interest Rate is in effect.

“Default” shall mean any Event of Default or any event or condition which, with the passage of time, or giving of notice or both, would constitute an Event of Default.

“Determination of Taxability” means a determination that, due to the untruth or inaccuracy of any representation or warranty made by the Borrower in the Agreement or the breach of any covenant or warranty of the Borrower contained in the Agreement, interest on the Bonds, or any of them, is determined not to be Tax-Exempt by a final administrative determination of the Internal Revenue Service or a final judicial decision of a court of competent jurisdiction in a proceeding of which the Borrower received notice and in which the Borrower was afforded an opportunity to participate to the full extent permitted by law. A determination or decision will not be considered final for purposes of the preceding sentence unless (A) the Issuer or the holder or Owners of the Bonds involved in the proceeding in which the issue is raised (i) shall have given the Borrower and the Trustee prompt written notice of the commencement thereof, and (ii) shall have offered the Borrower the opportunity to control the proceeding; provided the Borrower agrees to pay all expenses in connection therewith and to indemnify such holder or holders against all liability for such expenses (except that any such holder may engage separate counsel, and the Borrower shall not be liable for the fees or expenses of such counsel); and (B) such proceeding shall not be subject to a further right of appeal or shall not have been timely appealed.

“DTC” shall mean The Depository Trust Company, New York, New York.

 

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“Electronic” notice shall mean notice by any form of electronic transmission capable of producing a written record and shall constitute written notice as required herein.

“Event of Default” shall mean any of the events listed in Section 10.01.

“Existing Owner” shall mean, with respect to any Auction, a Person who is the Beneficial Owner of ARS at the close of business on the Business Day immediately preceding such Auction; provided, however, that for purposes of conducting an Auction, the Auction Agent may consider a Broker-Dealer acting on behalf of its customer as an Existing Owner.

“Facilities” or “Project” shall mean the pollution control, solid waste disposal and sewage disposal facilities at the Plant, which are described in Exhibit A to the Agreement, as from time to time revised, changed, amended or modified, and related improvements and any substitutions therefor.

“Favorable Opinion of Bond Counsel” shall mean, with respect to any action relating to the Bonds, the occurrence of which requires such an opinion, a written legal opinion of Bond Counsel addressed to the Issuer, the Bank, the Trustee, the Borrower, the Remarketing Agent or the Broker-Dealers, as applicable, to the effect that the action proposed to be taken (i) is authorized or permitted by the laws of the State of Arizona and federal law and this Indenture, and all conditions precedent, if any, have been satisfied, and (ii) will not adversely affect any exclusion from gross income for federal income tax purposes of interest on the Bonds.

“Fitch” shall mean Fitch Ratings, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, shall be deemed to refer to any other nationally recognized securities rating agency designated by the Borrower by notice to the Issuer and the Trustee.

“Government Obligations” shall mean direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed as to full and timely payment by, the United States of America and which are not subject to prepayment or redemption prior to maturity.

“Hold Order” shall have the meaning provided in Section 1.01(a) of the Auction Procedures.

“Indenture” shall mean this Indenture of Trust, as originally executed or as it may from time to time be supplemented, modified or amended by any supplemental indenture entered into pursuant to the provisions hereof.

“Index” shall mean, on any Auction Date with respect to the Bonds in any Auction Period of 35 days or less, the One Month LIBOR Rate on such date and, with respect to ARS in any Auction Period of more than 35 days, the yield on United States Treasury securities on the date the Auction Period began which has a maturity which most closely matches the last day of the Auction Period. If such rate is unavailable, the Index for the Bonds means an index or rate agreed to by all Broker-Dealers. If for any reason on any Auction Date the Index shall not be

 

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determined as provided above, the Index shall mean the Index for the Auction Period ending on such Auction Date.

“Initial Long-Term Interest Rate” shall mean the Interest Rate for the Bonds on the date of issuance and delivery of the Bonds as specified in Section 2.01(b) hereof.

“Initial Long-Term Interest Rate Period” shall mean the period commencing March 26, 2009 and ending on the Maturity Date.

“Insurance Agreement” shall mean an Insurance Agreement between the Bond Insurer and the Borrower, as amended or supplemented from time to time.

“Interest Accrual Date” shall mean (i) with respect to any Daily Interest Rate Period, the first day thereof and, thereafter, the first day of each calendar month during that Daily Interest Rate Period, (ii) with respect to any Weekly Interest Rate Period, the first day thereof and, thereafter, the first day of each calendar month during that Weekly Interest Rate Period, (iii) with respect to any Long-Term Interest Rate Period, the first day thereof and, thereafter, each Interest Payment Date in respect thereof, other than the last such Interest Payment Date, (iv) with respect to each Bond Interest Term within a Short-Term Interest Rate Period, the first day thereof, and (v) with respect to each ARS Interest Rate Period, the first day thereof.

“Interest Payment Date” shall mean (i) with respect to any Daily Interest Rate Period or Weekly Interest Rate Period, the first Business Day of each calendar month, (ii) with respect to any Long-Term Interest Rate Period, each February 1 and August 1, commencing August 1, 2009 and occurring during such Long-Term Interest Rate Period and the Business Day next succeeding the last day thereof, (iii) with respect to any Short-Term Interest Rate Period, the Business Day next succeeding the last day of thereof, (iv) with respect to ARS, each ARS Interest Payment Date, and (v) in all events, the redemption date or the Maturity Date.

“Interest Rate Period” shall mean any Daily Interest Rate Period, Weekly Interest Rate Period, Short-Term Interest Rate Period, Long- Term Interest Rate Period or ARS Interest Rate Period.

“Investment Securities” shall mean any of the following obligations or securities (only to the extent investment therein would not violate the laws of the State of Arizona) on which the Borrower (or any affiliate) is not the obligor, maturing at such time or times as to enable disbursements to be made from the Bond Fund in accordance with the terms hereof, or which shall be marketable prior to the maturities thereof

(i) direct obligations of, or obligations the principal and interest of which are guaranteed as to the full and timely payment by, the United States of America, which obligations, in either case, are not subject to redemption or prepayment at less than par by anyone other than the holder;

(ii) obligations issued or guaranteed by an instrumentality of the United States of America pursuant to authority granted by the Congress of the United States of America, including obligations of the Federal National Mortgage Association,

 

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Federal Intermediate Credit Banks, Banks for Cooperatives, Federal Land Banks or Federal Home Loan Banks;

(iii) commercial paper rated at the time of investment in the highest short-term grade by the Rating Agencies;

(iv) bankers’ acceptances drawn on and accepted by commercial banks (including the Trustee, the Paying Agent, and the Bank) having at least $10,000,000 in capital stock, surplus and undivided profits the unsecured, uninsured obligations of which are rated not less than “Prime - 1” or “Aa2” by Moody’s and “A-1” or “A+” by S&P;

(v) certificates of deposit, deposit accounts and savings accounts fully insured by the Federal Deposit Insurance Corporation;

(vi) repurchase agreements with solvent banking or other financial institutions (including the Trustee, the Paying Agent, and the Bank) rated at the time of investment not less than the then current rating of the Bonds by each of the Rating Agencies;

(vii) obligations of a state, a territory, Puerto Rico, or a possession of the United States of America, or any political subdivision of the foregoing, or of the District of Columbia and which are rated at the time of investment not less than the then current rating of the Bonds by each of the Rating Agencies;

(viii) money market funds registered under the federal Investment Company Act of 1940, whose shares are registered under the federal Securities Act of 1933, and having a rating by S&P of “AAAm-G”, “AAAm” or “Aam”, and by Moody’s of “Aaa” or “Aa”, including funds for which the Trustee (or any affiliate of the Trustee) provides investment advice or other services;

(ix) custodial agreements providing for the investment of moneys through a custodian, reverse purchase agreements, option agreements and agreements to lend securities; and

(x) any other obligations and securities not prohibited by law and which are rated at least “Aaa” or “Aa” by Moody’s and “AAA” or “AA” by S&P.

“Issue Date” shall mean March 26, 2009, the date of issuance and delivery of the Bonds to the Underwriters against payment therefor.

“Issuer” shall mean Maricopa County, Arizona Pollution Control Corporation, an Arizona nonprofit corporation designated as a political subdivision existing under the laws of the State of Arizona, incorporated for and with the approval of the County, pursuant to the provisions of the Constitution of the State of Arizona and the Act, and its successors and assigns.

“Letter of Credit” shall mean the irrevocable direct pay letter of credit, if any, issued by the Bank and delivered to the Trustee in accordance with Section 6.08 of the Agreement and any extension thereof.

 

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“Long-Term Interest Rate” shall mean with respect to each Bond, a fixed, non-variable interest rate on such Bond established in accordance with Section 2.01(c)(iv) hereof.

“Long-Term Interest Rate Period” shall mean each period during which a Long-Term Interest Rate is in effect.

“Maturity Date” shall mean February 1, 2040.

“Maximum Bond Interest Rate” shall mean (a) with respect to Bonds other than ARS the lesser of 12% per annum and the Maximum Lawful Rate, and (b) with respect to ARS, the lesser of 15% per annum and the Maximum Lawful Rate, in each case calculated in the same manner as interest is calculated for the particular interest rate on the Bonds.

“Maximum Lawful Rate” shall mean the maximum rate of interest on the relevant obligation permitted by applicable law.

“Moody’s” shall mean Moody’s Investors Service, Inc., a corporation organized and existing under the laws of the State of Delaware, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Borrower, with the approval of the Remarketing Agent, the Bank and the Bond Insurer, by notice to the Trustee, the Tender Agent and the Issuer.

“Nominee” shall have the meaning specified in Section 2.01(e) hereof.

“Non-Payment Rate” shall mean, on any date of determination, 15% per annum; provided, that in no event shall the Non-Payment Rate be more than the Maximum Lawful Rate.

“Notice of ARS Payment Default” shall mean a notice substantially in the form of Exhibit A to the Auction Agent Agreement.

“Notice of Cure of ARS Payment Default” shall mean a notice substantially in the form of Exhibit B to the Auction Agent Agreement.

“Official Statement” shall mean the Official Statement relating to the Bonds, including all appendices thereto.

“One Month LIBOR Rate” shall mean, as of any date of determination, the offered rate (rounded up to the next highest 0.001%) for deposits in U.S. dollars for a one-month period which appears on the Telerate Page 3750 at approximately 11:00 a.m., London time, on such date, or if such date is not a date on which dealings in U.S. dollars are transacted in the London interbank market, then on the next preceding day on which such dealings were transacted in such market.

“Order” shall have the meaning provided in Section 1.01(a) of the Auction Procedures.

“Outstanding” when used in reference to the Bonds, shall mean, as at any particular date, the aggregate of all Bonds authenticated and delivered in accordance with this Indenture except:

 

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(iv) those cancelled at or prior to such date or delivered to or held by the Trustee at or prior to such date for cancellation;

(v) those deemed to be paid in accordance with Article IX hereof;

(vi) those in lieu of or in exchange, replacement or substitution for which other Bonds shall have been authenticated and delivered in accordance with this Indenture, unless proof satisfactory to the Trustee and the Borrower is presented that such Bond is held by a bona fide holder in due course; and

(vii) Bonds deemed purchased pursuant to Section 4.10 hereof.

“Owner” shall mean the person or entity in whose name any Bond is registered upon the registration books maintained pursuant to Section 2.04 hereof.

“Participant” shall mean, with respect to DTC or another Securities Depository, a member of or participant in DTC or such other Securities Depository, respectively.

“Paying Agent” shall mean the initial and any successor paying agent or agents appointed in or in accordance with Section 11.21 hereof. “Principal Office” of the Paying Agent shall mean the Principal Office of the Trustee (if the Trustee is the Paying Agent) or such other office of the Paying Agent designated in writing to the Issuer, the Trustee, the Auction Agent, the Broker-Dealers, the Bank, the Tender Agent and the Remarketing Agent, as applicable.

“Payment Date” shall mean each Interest Payment Date or any other date on which any principal of, premium, if any, or interest on any Bond is due and payable for any reason, including without limitation upon any redemption of Bonds pursuant to Section 4.01.

“Person” shall mean a corporation, association, partnership, limited liability company, joint venture, trust, organization, business, individual or government or any governmental agency or political subdivision thereof.

“Plant” shall mean Units 1, 2 and 3 of the Palo Verde Nuclear Generating Station, a nuclear power generating plant located in Maricopa County, Arizona, at which the Project is located.

“Potential Owner” shall mean, with respect to any Auction, any Person, including any Existing Owner, who may be interested in acquiring a beneficial interest in ARS subject to such Auction in addition to the ARS, if any, currently owned by such Person.

“Prior Bonds” shall have the meaning set forth in the 5th Whereas clause of this Indenture.

“Purchase Fund” shall mean the fund created by Section 6.01 hereof.

“Rating Agencies” shall mean S&P and Moody’s.

 

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“Receipts and Revenues” shall mean (a) the Repayment Installments including all moneys drawn by the Trustee under a Credit Facility in satisfaction of the Borrower’s obligations to make Repayment Installments (b) all other moneys received by the Trustee (for the account of the Issuer) pursuant to the Agreement, (c) all moneys and investments in the Bond Fund and (d) all income and profit from the investment of the foregoing moneys. The term “Receipts and Revenues” does not include any moneys or investments in the Purchase Fund or amounts required to be paid to the Issuer pursuant to Sections 5.04, 5.07, 8.03 and 8.05 of the Agreement.

“Record Date” shall mean (a) with respect to any Interest Payment Date in respect of any Daily Interest Rate Period, the last Business Day of each calendar month or, in the case of the last Interest Payment Date in respect of a Daily Interest Rate Period, the Business Day immediately preceding such Interest Payment Date, (b) with respect to any Interest Payment Date in respect of any Weekly Interest Rate Period or any Bond Interest Term within a Short-Term Interest Rate Period, the Business Day immediately preceding such Interest Payment Date, (c) with respect to any Interest Payment Date in respect of any Long-Term Interest Rate Period, the fifteenth day of the month immediately preceding such Interest Payment Date or, in the event that an Interest Payment Date shall occur within 16 days after the first day of a Long-Term Interest Rate Period, such first day, and (d) with respect to ARS, the second Business Day next preceding each ARS Interest Payment Date.

“Registrar” shall mean the registrar or registrars appointed in or in accordance with Section 11.23 hereof. “Principal Office” of the Registrar shall mean the Principal Office of the Trustee (if the Trustee is the Registrar) or such other office of the Registrar designated in writing to the Issuer, the Trustee, the Tender Agent and the Remarketing Agent.

“Reimbursement Agreement” shall mean the Reimbursement Agreement, between the Borrower and the Bank issued in connection with the Letter of Credit and delivered to the Trustee in connection with Section 6.08 of the Agreement and any extension thereof.

“Remarketing Agent” shall mean J.P. Morgan Securities Inc. and any successor remarketing agent appointed in accordance with Section 14.01 hereof. “Principal Office” of the Remarketing Agent shall mean J.P. Morgan Securities Inc., 383 Madison Avenue, 23rd Floor, New York, NY 10179 Attention: Tax-Exempt Capital Markets, or such other office thereof designated in writing to the Issuer, the Trustee, the Bank and the Tender Agent.

“Remarketing Agreement” shall mean a Remarketing Agreement, that may be executed and delivered, between the Borrower and the Remarketing Agent, relating to the Bonds other than ARS, as supplemented or amended in accordance with the provisions thereof.

“Repayment Installment” shall mean any amount that the Borrower is required to pay to the Trustee pursuant to Section 5.02(a) of the Agreement as a repayment of the loan made by the Issuer under the Agreement.

“Representation Letter” shall have the meaning set forth in Section 2.01(e) hereof.

“S&P” shall mean Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc., a corporation organized and existing under the laws of the State of New York, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall

 

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no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to any other nationally recognized securities rating agency designated by the Borrower, with the approval of the Remarketing Agent and the Bank and the Bond Insurer, by notice to the Trustee, the Tender Agent and the Issuer.

“Securities Act” shall mean the Securities Act of 1933, as amended, and any successor thereto.

“Securities Depository” shall mean DTC or, if applicable, any successor securities depository appointed pursuant to this Indenture.

“Securities Exchange Act” shall mean the Securities and Exchange Act of 1934, as amended, and any successor thereto.

“Sell Order” shall have the meaning provided in Section 1.01(a) of the Auction Procedures.

“Short-Term Interest Rate Period” shall mean, with respect to each Bond bearing interest at a BIT Rate, the period established in accordance with Section 2.01(c)(v) hereof.

“SIFMA” means Securities Industry and Financial Markets Association or any person acting in cooperation with or under the sponsorship of SIFMA and acceptable to the Remarketing Agent and effective from such date.

“SIFMA Index” shall mean on any date, a rate determined on the basis of the seven-day high grade market index of tax-exempt variable rate demand obligations, as produced by Municipal Market Data (“MMD”) and published or made available by SIFMA.

“Special Auction Period” shall mean, with respect to ARS, (a) any period of less than 183 days which is not another Auction Period and which is divisible by seven and which begins on an Interest Payment Date and ends (i) in the case of ARS with Auctions generally conducted on Fridays, on a Sunday unless such Sunday is not followed by a Business Day, in which case on the next succeeding day which is followed by a Business Day, (ii) in the case of ARS with Auctions generally conducted on Mondays, on a Monday unless such Monday is not followed by a Business Day, in which case on the next succeeding day which is followed by a Business Day, (iii) in the case of ARS with Auctions generally conducted on Tuesdays, on a Tuesday unless such Tuesday is not followed by a Business Day, in which case on the next succeeding day which is followed by a Business Day, (iv) in the case of ARS with Auctions generally conducted on Wednesdays, on a Wednesday unless such Wednesday is not followed by a Business Day, in which case on the next succeeding day which is followed by a Business Day, and (v) in the case of ARS with Auctions generally conducted on Thursdays, on a Thursday unless such Thursday is not followed by a Business Day, in which case on the next succeeding day which is followed by a Business Day, or (b) any period which is 183 days or longer which begins on an Interest Payment Date and ends not later than the day prior to the final scheduled maturity date of ARS.

“Special Record Date” shall mean, (a) with respect to any Bond other than ARS, the date established by the Trustee in connection with the payment of overdue interest on that Bond pursuant to Section 2.01(b) hereof and (b) with respect to ARS, a special date fixed to determine

 

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the names and addresses of holders of ARS for purposes of paying interest on a special interest payment date for the payment of defaulted interest, all as further provided in Section 3A.02(f)(ii) hereof.

“State” shall mean the State of Arizona.

“Submission Processing Deadline” shall mean the earlier of (i) 40 minutes after the Submission Deadline, and (ii) the time when the Auction Agent begins to disseminate the results of the Auction to the Broker-Dealers.

“Submission Processing Representation” shall mean the written representation in the form attached to the Broker-Dealer Agreement as Exhibit D to be used in the event that Broker-Dealers submit an Order after the Submission Deadline and prior to the Submission Processing Deadline and the Order was (i) received by the Broker-Dealer from Existing Owners or Potential Owners prior to the Submission Deadline, or (ii) initiated internally by the Broker-Dealer for its own account prior to the Submission Deadline. Each Order submitted to the Auction Agent after the Submission Deadline and prior to the Submission Processing Deadline shall constitute a representation by the Broker-Dealer that such Order was (i) received from an Existing Owner or Potential Owner prior to the Submission Deadline, or (ii) initiated internally by the Broker-Dealer for its own account prior to the Submission Deadline (the “Submission Processing Representation”).

“Submitted Hold Order” shall have the meaning provided in Section 1.03(b) of the Auction Procedures.

“Substitute Auction Agent” shall mean the Person with whom the Trustee at the direction of the Borrower enters into a Substitute Auction Agent Agreement.

“Substitute Auction Agent Agreement” shall mean an auction agent agreement containing terms substantially similar to the terms of the Auction Agent Agreement whereby a Person having the qualifications required by Section 3A.07 of this Indenture agrees with the Trustee at the direction of the Borrower to perform the duties of the Auction Agent herein with respect to the Bonds.

“Sufficient Clearing Bids” shall have the meaning provided in Section 1.03(b) of the Auction Procedures.

“Supplemental Indenture” shall mean any supplemental indenture hereafter duly authorized and entered into between the Issuer and the Trustee in accordance with the provisions of this Indenture.

“Tax Certificate” shall mean the Tax Compliance Certificate dated March 26, 2009, executed by the Issuer in connection with the issuance of the Bonds.

“Tax-Exempt” shall mean, with respect to interest on any obligations of a state or local government, including the Bonds, that such interest is excluded from the gross income of the holders thereof (other than any holder who is a “substantial user” of facilities financed with such obligations or a “related person” within the meaning of Section 147(a) of the Code) for federal

 

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income tax purposes, whether or not such interest is includable as an item of tax preference or otherwise includable directly or indirectly for purposes of calculating other tax liabilities, including any alternative minimum tax or environmental tax under the Code.

“Tender Agent” shall initially mean the Trustee, and any such other party as shall be designated by the Issuer as a Tender Agent and appointed in accordance with Section 14.01 hereof. “Principal Office” of the Tender Agent shall initially mean the Principal Office of the Trustee, or such other office thereof designated in writing to the Issuer, the Trustee and the Remarketing Agent.

“Tender Agreement” shall mean the Tender Agreement, if any, that may be executed and delivered, between the Borrower and the Tender Agent, relating to the Bonds other than ARS, as supplemented or amended in accordance with the provisions thereof.

“Trustee” shall mean Union Bank, N.A., as trustee under this Indenture, and its successor or successors hereunder. “Principal Office” of the Trustee shall mean a principal office of the Trustee at which at any particular time its corporate trust business shall be administered in California, which office at the date of the execution of this Indenture, is 120 South San Pedro Street, 4th Floor, Los Angeles, California 90012, Corporate Trust Department; except that with respect to the presentation of Bonds for payment or for registration of transfer, exchange or tender, such term shall mean the office or agency of the Trustee at Union Bank, N.A., Corporate Trust Department, 120 South San Pedro Street, 4th Floor, Los Angeles, California 90012, Attention: Bond Redemption.

“Trust Estate” shall mean at any particular time all right, title and interest of the Issuer in and to the Agreement (except its rights under Sections 5.04, 5.07 and 8.05 thereof and any rights of the Issuer to receive notices, certificates, requests, requisitions, directions and other communications thereunder), including without limitation the Receipts and Revenues, all moneys and obligations which at such time are deposited or are required to be deposited with, or are held or are required to be held by or on behalf of, the Trustee or any Paying Agent in trust under any of the provisions of this Indenture and all other rights, titles and interests which at such time are subject to the lien of this Indenture, except for moneys or obligations deposited with or paid to the Trustee or any Paying Agent for the redemption or payment of Bonds which are deemed to have been paid in accordance with Article IX hereof and funds held pursuant to Section 5.06 hereof.

“Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended, and any successor thereto.

“Underwriters” means J.P. Morgan Securities Inc. and BNY Mellon Capital Markets, LLC.

“Weekly Interest Rate” shall mean a variable interest rate on the Bonds established in accordance with Section 2.01(c)(iii) hereof.

“Weekly Interest Rate Period” shall mean each period during which a Weekly Interest Rate is in effect.

 

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“Winning Bid Rate” shall have the meaning provided in Section 1.03(b) of the Auction Procedures.

Section 1.02 Number and Gender . The singular form of any word used herein, including the terms defined in Section 1.01, shall include the plural, and vice versa. The use herein of a word of any gender shall include all genders.

Section 1.03 Articles, Sections, Etc . All references herein to “Articles,” “Sections” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture as originally executed; and the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof. The headings or titles of the several Articles and Sections hereof, and any table of contents appended to copies hereof, shall be solely for convenience of reference and shall not affect the meaning, construction or effect of this Indenture.

Section 1.04 Content of Certificates and Opinions . Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture or the Agreement (except for the certificate of cancelled Bonds provided for in Sections 2.05, 2.06 and 4.05 hereof) shall include (a) a statement that the person or persons making or giving such certificate or opinion have read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such covenant or condition has been complied with; and (d) a statement as to whether, in the opinion of the signers, such condition or covenant has been complied with.

Any such certificate or opinion made or given by an officer of the Issuer or the Borrower may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should have known that the same were erroneous. Any such certificate or opinion made or given by counsel may be based, insofar as it relates to factual matters (with respect to which information is in the possession of the Issuer or the Borrower), upon the certificate or opinion of or representations by an officer of the Issuer or the Borrower, as applicable, unless such counsel knows that the certificate or opinion or representations with respect to the matters upon which his or her opinion may be based as aforesaid are erroneous, or in the exercise of reasonable care should have known that the same were erroneous.

Section 1.05 Findings . It is hereby found and determined by the Issuer that:

(a) The Borrower is a corporation which is conducting operations in the County and is qualified under the Act to borrow the proceeds of the sale of the Bonds from the Issuer to redeem and repay the outstanding principal amount of the Prior Bonds for purposes of the Act;

 

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(b) The Project promotes the purposes of the Act by preventing or limiting air, water and other forms of pollution for the purpose of protecting the health and welfare of the citizens of the State of Arizona, and facilitates compliance by the Borrower with existing and possible future air, water and other quality standards designed to improve the environment in the State of Arizona;

(c) The loan pursuant to the Agreement is in furtherance of the purposes of the Issuer;

(d) It is advisable that the Bonds be subject to redemption as provided in this Indenture;

(e) The manner in which the Bonds are sold is most advantageous and it is necessary and advantageous that the expenses, premiums and commissions, if any, in connection with the issuance of the Bonds be paid by the Borrower; and

(f) It is advisable that this Indenture contain the provisions set forth herein.

ARTICLE II

THE BONDS

Section 2.01 Authorization and Terms of Bonds .

(a) Authorization . Bonds designated as “Maricopa County, Arizona Pollution Control Corporation Pollution Control Refunding Revenue Bonds, 2009 Series A (El Paso Electric Company Palo Verde Project)” may be issued under this Indenture. The aggregate principal amount of Bonds which may be issued and Outstanding under this Indenture shall not exceed Sixty-three Million Five Hundred Thousand Dollars ($63,500,000). No Bonds may be issued hereunder except in accordance with this Article.

(b) General Terms . The Bonds shall be issued as fully registered Bonds, without coupons, in Authorized Denominations and shall be dated as of the Issue Date. The Bonds shall mature, subject to prior redemption as provided in Article IV, upon the terms and conditions hereinafter set forth, on the Maturity Date. The Bonds shall initially bear interest at the Long Term Interest Rate for a Long-Term Interest Rate Period commencing on March 26, 2009 and ending on the Maturity Date (the “Initial Long-Term Interest Rate Period”). The Initial Long-Term Interest Rate shall be 7.25% per annum.

The Bonds shall be numbered from R-1 consecutively upwards in order of authentication. Each Bond shall bear interest from the last date to which interest has been paid in full or, if no interest has been paid in full or duly provided on such Bond, from the Issue Date. All Bonds shall mature on the Maturity Date and shall bear interest at the rates determined from time to time in accordance with the provisions of this Indenture. Payment of the interest on any Bond shall be made to the person appearing on the bond registration books of the Registrar as the registered holder thereof as of the close of business on the Record Date, such interest to be paid by the Paying Agent to such registered holder (i) in the event such Bond is a Book-Entry Bond, in immediately available funds on the Interest Payment Date in accordance with the

 

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Representation Letter, and (ii) in the event such Bond is not a Book-Entry Bond (A) in immediately available funds (by wire transfer or by deposit to the account of the holder of at least $1,000,000 of Bonds if such account is maintained with the Paying Agent), according to the written instructions given by such holder to the Registrar prior to the Record Date, or (B) in all other cases, by check mailed by first class mail to the holder at such holder’s address as it appears as of the Record Date on the registration books of the Registrar; except, in each case, that, if and to the extent that there shall be a default in the payment of the interest due on such Interest Payment Date, such defaulted interest shall be paid to the holders in whose name any such Bonds are registered as of a Special Record Date to be fixed by the Trustee, notice of which shall be given to such holders not less than ten (10) days prior thereto. Both the principal of and premium, if any, on the Bonds shall be payable upon surrender thereof in lawful money of the United States of America at the Principal Office of the Paying Agent. Notwithstanding the foregoing, interest on any Bond bearing a Bond Interest Term Rate (except any such Bond which is a Book-Entry Bond) shall be paid only upon presentation to the Tender Agent of the Bond on which such payment is due. The Bonds shall be dated as of the Issue Date. The Bonds shall be substantially in the form attached hereto as Exhibit A.

If and to the extent, however, that the Issuer fails to make payment or provision for payment of interest on any Bond on any Interest Payment Date, that interest shall cease to be payable to the Owner of that Bond on the applicable Record Date. When moneys become available for payment of the interest, (a) the Trustee shall, pursuant to Section 10.10 hereof, establish a Special Record Date for the payment of that interest which shall be not more than 15 nor fewer than 10 days prior to the date of the proposed payment, and (b) the Trustee shall give notice by first-class mail of the proposed payment and of the Special Record Date to each owner not fewer than 10 days prior to the Special Record Date and, thereafter, the interest shall be payable to the owners of the Bonds as of the Special Record Date at the close of business on the Special Record Date.

(c) Interest Rates and Rate Periods . The Bonds shall bear interest until final payment of the principal or redemption price thereof shall have been made in accordance with the provisions hereof, whether at the Maturity Date, upon redemption or otherwise: During Daily Interest Rate Periods, interest on the Bonds shall be computed on the basis of a 365- or 366-day year for the number of days actually elapsed during Daily Interest Rate Periods. During Short-Term Interest Rate Periods or Weekly Interest Rate Periods, interest on the Bonds shall be computed on the basis of a 365- or 366-day year for the number of days actually elapsed based on the calendar year in which the Short-Term Interest Rate Period or Weekly Interest Rate Period commences. During any Long-Term Interest Rate Period, interest on the Bonds shall be computed upon the basis of a 360-day year, consisting of twelve 30-day months.

(i) Rate Periods . The Bonds shall initially bear interest as set forth in Section 2.01(b), and shall remain in such Interest Rate Period until adjusted to a different Interest Rate Period as provided herein. After any such adjustment, the term of the Bonds shall be divided into consecutive Interest Rate Periods during which the Bonds may bear interest at the Daily Interest Rate, Weekly Interest Rate, Bond Interest Term Rate, Long-Term Interest Rate or Applicable ARS Rate. Any Daily Interest Rate Period, Weekly Interest Rate Period or Short-Term Interest Rate Period established with respect to the Bonds shall continue in effect unless and until adjusted to a different Interest Rate

 

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Period as provided herein. Notwithstanding any other provision herein, the Bonds are not subject to an adjustment to a different Interest Rate Period from the Initial Long-Term Interest Rate Period until after such Bonds have been purchased in lieu of redemption pursuant to Section 4.12 hereof.

(ii) Daily Interest Rate .

(A) Determination of Daily Interest Rate . During each Daily Interest Rate Period, the Bonds shall bear interest at the Daily Interest Rate, determined by the Remarketing Agent on or before each Business Day for such Business Day. The Daily Interest Rate shall be the rate of interest per annum determined by the Remarketing Agent to be the lowest interest rate which would enable the Remarketing Agent to sell the Bonds for delivery on the effective date of such interest rate at a price (without regard to accrued interest) equal to 100% of the principal amount thereof. The Remarketing Agent shall provide the Trustee and the Borrower with telephonic or Electronic notice of the Daily Interest Rate determined by 10:30 a.m. (New York City time) on the date of determination. If the Remarketing Agent shall not have determined a Daily Interest Rate for any day by 10:30 a.m. (New York City time) on such day, the Daily Interest Rate shall be the same as the Daily Interest Rate for the immediately preceding day. In no event shall the Daily Interest Rate be greater than the Maximum Bond Interest Rate.

(B) Adjustment to a Daily Interest Rate Period . At any time, the Borrower, by written notice to the Issuer, the Trustee, the Bank, the Tender Agent and the Remarketing Agent may elect that the Bonds shall bear interest at a Daily Interest Rate. Such notice (1) shall specify the effective date of such adjustment to a Daily Interest Rate, which shall be (a) a Business Day not earlier than thirty-five (35) days after delivery of such notice (or such shorter period as shall be acceptable to the Trustee); (b) in the case of an adjustment from a Long-Term Interest Rate Period, a day on which the Bonds would be permitted to be redeemed at the option of the Borrower pursuant to Section 4.01(a)(ii)(C) hereof; and (c) in the case of an adjustment from a Weekly Interest Rate Period or a Short-Term Interest Rate Period, an Interest Payment Date on which interest is payable for the Weekly Interest Rate Period or Bond Interest Term from which the adjustment is to be made; provided, however, that if prior to the Borrower’s making such election, any Bonds shall have been called for redemption and such redemption shall not have theretofore been effected, the effective date of such Daily Interest Rate Period shall not precede such redemption date; and (2) if the adjustment is from a Long-Term Interest Rate Period, shall be accompanied by a Favorable Opinion of Bond Counsel addressed to the Trustee to the effect that such adjustment (a) is authorized or permitted by the Indenture and the Act, and (b) will not adversely affect the Tax-Exempt status of the interest on the Bonds.

(C) Notice of Adjustment to a Daily Interest Rate Period . The Trustee shall give notice by first class mail of an adjustment to a Daily Interest Rate Period to the Owners of the Bonds not less than 15 days (30 days if the then

 

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current Interest Rate Period is a Long-Term Interest Rate Period) prior to the effective date of such Daily Interest Rate Period. Such notice shall state (1) that the interest rate on the Bonds will be adjusted to a Daily Interest Rate (subject to the Borrower’s ability to rescind its election as described in Section 2.01(c)(viii) hereof), (2) the effective date of the Daily Interest Rate Period, (3) that the Bonds are subject to mandatory tender for purchase on such effective date (except in the case of adjustment between Daily Interest Rate Periods and Weekly Interest Rate Periods), (4) the procedures for such mandatory tender, and (5) the purchase price of the Bonds on such effective date (expressed as a percentage of the principal amount thereof).

(iii) Weekly Interest Rate .

(A) Determination of Weekly Interest Rate . During each Weekly Interest Rate Period, the Bonds shall bear interest at the Weekly Interest Rate, which shall be determined by the Remarketing Agent no later than the first day of such Weekly Interest Rate Period and thereafter no later than 10:00 a.m. (New York City time) on Wednesday of each week during such Weekly Interest Rate Period, unless any such Wednesday shall not be a Business Day, in which event the Weekly Interest Rate shall be determined by the Remarketing Agent no later than the Business Day immediately preceding such Wednesday. The Weekly Interest Rate shall be the rate of interest per annum determined by the Remarketing Agent to be the lowest interest rate which would enable the Remarketing Agent to sell the Bonds for delivery on the effective date of such interest rate at a price (without regard to accrued interest) equal to 100% of the principal amount thereof. If for any reason, a Weekly Interest Rate is not so established for any period by the time specified above by the Remarketing Agent, the Weekly Interest Rate shall be the same as the Weekly Interest Rate in effect for the immediately preceding week. In no event shall any Weekly Interest Rate exceed the Maximum Bond Interest Rate. The first Weekly Interest Rate determined for each Weekly Interest Rate Period shall apply to the period commencing on the first day of such Weekly Interest Rate Period and ending on the next succeeding Tuesday. Thereafter, each Weekly Interest Rate shall apply to the period commencing on each Wednesday and ending on the next succeeding Tuesday, unless such Weekly Interest Rate Period shall end on a day other than Tuesday, in which event the last Weekly Interest Rate for such Weekly Interest Rate Period shall apply to the period commencing on the Wednesday preceding the last day of such Weekly Interest Rate Period and ending on such last day. The Remarketing Agent shall provide the Trustee and the Borrower with written, telephonic or Electronic notice of each Weekly Interest Rate, as determined, by 12:00 noon (New York City time) on the effective date of such Weekly Interest Rate.

(B) Adjustment to Weekly Interest Rate . At any time, the Borrower, by written direction to the Issuer, the Trustee, the Bank, the Tender Agent and the Remarketing Agent may elect that the Bonds shall bear interest at a Weekly Interest Rate. Such direction (1) shall specify the effective date of such

 

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adjustment to a Weekly Interest Rate, which shall be (a) a Business Day not earlier than thirty-five (35) days after delivery of such notice (or such shorter period as shall be acceptable to the Trustee); (b) in the case of an adjustment from a Long-Term Interest Rate Period, a day on which the Bonds would otherwise be permitted to be redeemed at the option of the Borrower pursuant to Section 4.01(a)(ii)(C) hereof; and (c) in the case of an adjustment from a Daily Interest Rate Period or Short-Term Interest Rate Period, an Interest Payment Date on which interest is payable for the Daily Interest Rate Period or Bond Interest Term from which the adjustment is to be made; provided, however, that if prior to the Borrower’s making such election, any Bonds shall have been called for redemption and such redemption shall not have theretofore been effected, the effective date of such Weekly Interest Rate Period shall not precede such redemption date; and (2) if the adjustment is from a Long-Term Interest Rate Period, shall be accompanied by a Favorable Opinion of Bond Counsel addressed to the Trustee to the effect that such adjustment (a) is authorized or permitted by the Indenture and the Act, and (b) will not adversely affect the Tax-Exempt status of interest on the Bonds.

(C) Notice of Adjustment to a Weekly Interest Rate Period . The Trustee shall give notice by first class mail of an adjustment to a Weekly Interest Rate Period to the Owners of the Bonds not less than fifteen (15) days (thirty (30) days if the then current Interest Rate Period is a Long-Term Interest Rate Period) prior to the effective date of such Weekly Interest Rate Period. Such notice shall state (1) that the Interest Rate on the Bonds will be adjusted to a Weekly Interest Rate (subject to the Borrower’s ability to rescind its election as provided in Section 2.01(c)(viii) hereof), (2) the effective date of the Weekly Interest Rate Period, (3) that the Bonds are subject to mandatory tender for purchase on such effective date (except in the case of adjustments between Daily Interest Rate Periods and Weekly Interest Rate Periods), (4) the procedures for such mandatory tender, and (5) the purchase price of such Bonds on such effective date (expressed as a percentage of the principal amount thereof).

(iv) Long-Term Interest Rate .

(A) Determination of Long-Term Interest Rate . During each Long-Term Interest Rate Period, the Bonds shall bear interest at the Long-Term Interest Rate, which shall be determined by the Remarketing Agent on a Business Day selected by the Remarketing Agent, but not more than forty (40) days prior to and not later than the effective date of such Long-Term Interest Rate Period. The Long-Term Interest Rate shall be the rate of interest per annum determined by the Remarketing Agent on such date, and communicated by the close of business on such date to the Trustee, the Paying Agent and the Borrower, by written, telephonic or Electronic notice, as being the lowest interest rate which would enable the Remarketing Agent to sell the Bonds for delivery on the effective date of such Long-Term Interest Rate Period at a price (without regard to accrued interest) equal to 100% of the principal amount thereof, provided, however, that if, for any reason, a Long-Term Interest Rate for any Long-Term Interest Rate

 

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Period shall not be determined or effective or if an adjustment from a Long-Term Interest Rate Period to another Interest Rate Period shall not be effective, the Interest Rate Period for the Bonds shall automatically convert to a Daily Interest Rate Period; provided, further, however, that in the event the Borrower elected to have the right to terminate the mandatory tender for purchase required by Section 4.08(b)(i)(A) hereof pursuant to the fourth paragraph of this Section 2.01(c)(iv)(B), the Borrower may exercise such right in accordance with the fourth paragraph of this Section 2.01(c)(iv)(B); provided, further, however, that if the Favorable Opinion of Bond Counsel required by Section 2.01(c)(ii)(B) in connection with an adjustment to a Daily Interest Rate Period from a Long-Term Interest Rate Period cannot be obtained, then the Interest Rate Period for the Bonds shall automatically convert to a Long-Term Interest Rate Period of one year and one day. If a Daily Interest Rate for the first day of such Daily Interest Rate Period is not determined as provided in Section 2.01(c)(ii) hereof, the Daily Interest Rate for the first day of such Daily Interest Rate Period shall be equal to the SIFMA Index. In no event shall any Long-Term Interest Rate be greater than the Maximum Bond Interest Rate.

(B) Adjustment to or Continuation of a Long-Term Interest Rate Period . At any time, the Borrower, by written notice to the Issuer, the Bank, the Trustee, the Tender Agent and the Remarketing Agent may elect that the Bonds shall bear, or continue to bear, interest at a Long-Term Interest Rate, and if it shall so elect, shall determine the duration of the Long-Term Interest Rate Period during which the Bonds shall bear interest at such Long-Term Interest Rate. Each Long-Term Interest Rate Period shall have a duration such that the last day of such Long-Term Interest Rate Period is (1) a day which both immediately precedes a Business Day and is at least one year after the effective date of such Long-Term Interest Rate Period, or (2) if earlier, the day immediately preceding the Maturity Date. At the time the Borrower so elects an adjustment to or continuation of a Long-Term Interest Rate Period, the Borrower may specify two or more consecutive Long-Term Interest Rate Periods and, if the Borrower so specifies, shall specify the duration of each such Long-Term Interest Rate Period as provided in this paragraph. Such notice shall specify the effective date of each Long-Term Interest Rate Period, which shall be (a) a Business Day not earlier than thirty-five (35) days after delivery of such notice (or such shorter period as shall be acceptable to the Trustee); (b) in the case of an adjustment from or continuation of a Long-Term Interest Rate Period, a day on which the Bonds would be permitted to be redeemed by the Borrower pursuant to Section 4.01(a)(ii)(C) hereof, and (c) in the case of an adjustment from a Daily, Weekly or Short-Term Interest Rate Period, an Interest Payment Date on which interest is payable for the Daily or Weekly Interest Rate Period or Bond Interest Term from which the adjustment is to be made; provided, however, that if prior to the Borrower’s making such election, any Bonds shall have been called for redemption and such redemption shall not have theretofore been effected, the effective date of such Long-Term Interest Rate Period shall not precede such redemption date. In addition, such notice (i) shall specify the last day of such Long-Term Interest Rate Period, and (ii) if the adjustment is from a Daily,

 

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Weekly or Short-Term Interest Rate Period, shall be accompanied by a Favorable Opinion of Bond Counsel addressed to the Trustee to the effect that such adjustment (a) is authorized or permitted by the Indenture and the Act, and (b) will not adversely affect the Tax-Exempt status of interest on the Bonds.

If, by the thirty-fifth day prior to the last day of any Long-Term Interest Rate Period, the Trustee shall not have received notice of the Borrower’s election that, during the next succeeding Interest Rate Period, the Bonds shall bear interest at a Daily Interest Rate, a Weekly Interest Rate, a Long-Term Interest Rate or a Bond Interest Term Rate accompanied by appropriate opinions of Bond Counsel, if required by Section 2.01(c)(ii)(B), (iii)(B), (iv)(B) or (v)(B) hereof, the next succeeding Interest Rate Period for the Bonds shall be a Daily Interest Rate Period; provided, however, that if the Favorable Opinion of Bond Counsel required by Section 2.01(c)(ii)(B) hereof in connection with an adjustment to a Daily Interest Rate Period from a Long-Term Interest Rate Period cannot be obtained, then the Interest Rate Period for the Bonds shall automatically convert to a Long-Term Interest Rate Period of one year and one day. If a Daily Interest Rate for the first day of such Daily Interest Rate Period is not determined as provided in Section 2.01(c)(ii) hereof, the Daily Interest Rate for the first day of such Daily Interest Rate Period shall be equal to the SIFMA Index.

At the same time that the Borrower elects to have the Bonds bear interest at a Long-Term Interest Rate or continue to bear interest at a Long-Term Interest Rate, the Borrower may also specify to the Trustee optional redemption prices and periods different from (including that there be no such optional redemption) those set out in Section 4.01(a)(ii)(C) during the Long-Term Interest Rate Period(s) with respect to which such election is made; provided, however, that such notice shall be accompanied by a Favorable Opinion of Bond Counsel addressed to the Trustee to the effect that such changes (i) are authorized or permitted by the Act and this Indenture, and (ii) will not adversely affect the Tax-Exempt status of interest on the Bonds.

At the same time that the Borrower elects to have the Bonds bear interest at a Long-Term Interest Rate or continue to bear interest at a Long-Term Interest Rate, the Borrower may elect to have the right to terminate the mandatory tender for purchase required by Section 4.08(b)(i)(A) (“Mandatory Tender”) in accordance with this paragraph. The Borrower may terminate the Mandatory Tender by providing, no later than 2 p.m. on the last day of the Long-Term Interest Rate Period, to the Trustee written notice rescinding the Mandatory Tender. If the Borrower terminates the Mandatory Tender, the Borrower shall have no obligation to redeem or purchase the Bonds prior to maturity except as otherwise provided herein and the Bonds shall bear interest from the expiration of the Long-Term Interest Rate Period at a rate per annum, in no event greater than the Maximum Bond Interest Rate, as determined at the same time the Borrower elected to have the Bonds bear interest at a Long-Term Interest Rate or continue to bear interest at a Long-Term Interest Rate. Following such rescission, at the option of the Borrower, the Bonds are subject to tender for purchase at 100% of

 

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the principal amount of the Bonds on any Business Day, if the Borrower provides written notice to the Trustee no later than noon on such Business Day.

(C) Notice of Adjustment to or Continuation of a Long-Term Interest Rate Period . The Trustee shall give notice by first class mail of an adjustment to or continuation of a Long-Term Interest Rate Period to the Owners of the Bonds not less than fifteen (15) days (thirty (30) days if the then current Interest Rate Period is a Long-Term Interest Rate Period) prior to the effective date of such Long-Term Interest Rate Period. Such notice shall state (1) that the interest rate on the Bonds will be adjusted to, or continue to be, a Long-Term Interest Rate (subject to the Borrower’s ability to rescind its election as provided in Section 2.01(c)(viii) hereof), (2) the effective date of such Long-Term Interest Rate Period, (3) that the Bonds shall be subject to mandatory tender for purchase on such effective date, (4) the procedures for such mandatory tender, and (5) the purchase price of the Bonds on such effective date (expressed as a percentage of the principal amount thereof).

(v) Bond Interest Term Rate .

(A) Determination of Bond Interest Terms and Bond Interest Term Rates . During each Short-Term Interest Rate Period, each Bond shall bear interest during each Bond Interest Term for such Bond at the Bond Interest Term Rate for such Bond. Each Bond Interest Term for any Bond shall be a period of at least one day but not more than the lesser of (x) 270 days or (y) the number of days of interest coverage on the Bonds provided for in any Credit Facility then in effect minus five (5) days. When a Credit Facility, if any, other than any initial Letter of Credit is in effect with respect to the Bonds or no Credit Facility is in effect with respect to the Bonds, each Bond Interest Term for any Bond shall be a period of at least one day but not more than 270 days. Each Bond Interest Term for any Bond shall be a period determined by the Remarketing Agent to be, in its judgment, the period which, taking into account prevailing market conditions and all other Bond Interest Terms and Bond Interest Term Rates for all Bonds then Outstanding, is likely to result in the lowest overall net interest expense on all such Bonds; provided, however, that any such Bond purchased on behalf of the Borrower and remaining unsold in the hands of the Remarketing Agent as of 1:00 p.m. (New York City time) on the effective date of the Bond Interest Term for such Bond shall have a Bond Interest Term of one day or, if such Bond Interest Term would not end on a day immediately preceding a Business Day, a Bond Interest Term of more than one day ending on the day immediately preceding the next Business Day; provided, further, however, that (1) each Bond Interest Term shall end on a day which immediately precedes a Business Day and no Bond Interest Term shall extend beyond the day immediately preceding the Maturity Date or, if a Credit Facility, if any, is then in effect with respect to the Bonds, the fifth day immediately preceding the scheduled expiration date of such Credit Facility, and (2) if for any reason the Remarketing Agent fails or is unable to determine a Bond Interest Term on any Bond, the Bond Interest Term for such Bond shall be one day, unless such Bond Interest Term would end on a day which

 

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does not precede a Business Day, in which case such Bond Interest Term shall end on the day immediately preceding the next succeeding Business Day.

The Bond Interest Term Rate for each Bond Interest Term for each Bond shall be the rate of interest per annum determined by the Remarketing Agent no later than 1:00 p.m. (New York City time) on the first day of such Bond Interest Term to be the lowest interest rate which would enable the Remarketing Agent to sell such Bonds on the effective date of such interest rate at a price (without regard to accrued interest) equal to 100% of the principal amount thereof. The Remarketing Agent shall provide the Trustee and the Borrower with telephonic or Electronic notice of each Bond Interest Term Rate and Bond Interest Term by 1:00 p.m. (New York City time) on the date of determination. If a Bond Interest Term Rate for a Bond Interest Term of one day is not determined or effective by 1:00 p.m. (New York City time) on such day, the Bond Interest Term Rate for such Bond Interest Term of one day shall be equal to the SIFMA Index. In no event shall any Bond Interest Term Rate exceed the Maximum Bond Interest Rate.

Notwithstanding the foregoing, in the event that notice of redemption with respect to any Bond in a Short-Term Interest Rate Period shall have been given to the holder of such Bond by the Trustee pursuant to Section 4.03 hereof, no subsequent Bond Interest Terms or Bond Interest Term Rates shall be determined with respect to such Bond.

(B) Adjustment to or Continuation of Bond Interest Term Rates . At any time, the Borrower, by written direction to the Issuer, the Trustee, the Bank, if any, the Tender Agent and the Remarketing Agent may elect that the Bonds shall bear interest at Bond Interest Term Rates. Such direction (1) shall specify the effective date of the Short-Term Interest Rate Period during which the Bonds shall bear interest at Bond Interest Term Rates, which shall be (a) a Business Day not earlier than thirty-five (35) days after delivery of such notice (or such shorter period as shall be acceptable to the Trustee), (b) in the case of an adjustment from a Long-Term Interest Rate Period, a day on which the Bonds would be permitted to be redeemed at the option of the Borrower pursuant to Section 4.01(a)(ii)(C) hereof, and (c) in the case of an adjustment from a Daily or Weekly Interest Rate Period, an Interest Payment Date on which interest is payable for the Daily or Weekly Interest Rate Period from which the adjustment is to be made; provided, however, that if prior to the Borrower’s making such election any Bonds shall have been called for redemption and such redemption shall not have theretofore been effected, the effective date of such Short-Term Interest Rate Period shall not precede such redemption date; and (2) shall be accompanied by a Favorable Opinion of Bond Counsel addressed to the Trustee to the effect that such adjustment (a) is authorized or permitted by the Indenture and the Act and (b) will not adversely affect the Tax-Exempt status of interest on the Bonds.

 

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(C) Notice of Adjustment to a Bond Interest Term . The Trustee shall give notice by first class mail of an adjustment to a Short-Term Interest Rate Period to the Owners of the Bonds not less than fifteen (15) days (thirty (30) days if the then current Interest Rate Period is a Long-Term Interest Rate Period) prior to the effective date of such Short-Term Interest Rate Period. Such notice shall state (1) that the interest rate on the Bonds will be adjusted to Bond Interest Term Rates (subject to the Borrower’s ability to rescind its election as provided in Section 2.01(c)(viii) hereof), (2) the effective date of the Short-Term Interest Rate Period, (3) that the Bonds are subject to mandatory tender for purchase on the effective date of such Short-Term Interest Rate Period, (4) the procedures for such mandatory tender, and (5) the purchase price of the Bonds on such effective date (expressed as a percentage of the principal amount thereof).

(D) Adjustment from a Short-Term Interest Rate Period . At any time during a Short-Term Interest Rate Period, the Borrower may elect that the Bonds shall no longer bear interest at Bond Interest Term Rates and shall instead bear interest as otherwise permitted under this Indenture. The Borrower shall give written notice to the Issuer, the Trustee, the Paying Agent and the Remarketing Agent, if any, of such election and shall specify the Interest Rate Period to follow with respect to such Bonds upon cessation of the Short-Term Interest Rate Period and instruct the Remarketing Agent to (1) determine Bond Interest Terms of such duration that, as soon as possible, all Bond Interest Terms shall end on the same date, not earlier than twenty-four (24) days (or such shorter period acceptable to the Trustee) following the delivery by the Borrower of such written notice, and upon the establishment of such Bond Interest Term the day next succeeding the last day of all such Bond Interest Terms shall be the effective date of the Interest Rate Period elected by the Borrower; or (2) determine Bond Interest Terms that will best promote an orderly transition to the next succeeding Interest Rate Period to apply to the Bonds, beginning not earlier than twenty-four (24) days (or such shorter period acceptable to the Trustee) following the delivery by the Borrower of such written notice. If the alternative in clause (2) above is selected (and if the Trustee requests, a Favorable Opinion of Bond Counsel is received), the day next succeeding the last day of the Bond Interest Term for each Bond shall be with respect to such Bond the effective date of the Interest Rate Period elected by the Borrower. The Remarketing Agent, promptly upon the determination thereof, shall give written notice of such last day and such effective dates to the Borrower, the Trustee and the Tender Agent. During any transitional period from a Short-Term Interest Rate Period to the next succeeding Interest Rate Period in accordance with clause (2) above, the provisions of this Indenture shall be deemed to apply to the Bonds as follows: the Bonds continuing to bear interest at Bond Interest Term Rates shall have applicable to them the provisions hereunder theretofore applicable to such Bonds as if all Bonds were continuing to bear interest at Bond Interest Term Rates and the Bonds bearing interest in the Interest Rate Period to which the transition is being made will have applicable to them the provisions hereunder as if all Bonds were bearing interest in such Interest Rate Period.

 

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(vi) Applicable ARS Rate . The Borrower may elect that the Bonds shall bear interest at the Applicable ARS Rate pursuant to Article IIIA hereof. In the event that the Borrower makes such an election, the provisions of this Article II shall be subject to the provisions of Article IIIA hereof. and the Auction Procedures set forth in Exhibit B to this Indenture.

(vii) Terms of Credit Facility, If Any . If a Credit Facility in the form of a letter of credit is to be held by the Trustee after the effective date of any adjustment from one Interest Rate Period to another Interest Rate Period, such Credit Facility, if any, shall be in an amount sufficient to provide payment of (x) the principal amount of the Outstanding Bonds plus (y) the amount of interest (computed on the basis of a 365-day year in the case of an adjustment to a Daily Interest Rate Period, Weekly Interest Rate Period or Short-Term Interest Rate Period, and on the basis of a 360-day year consisting of twelve 30-day months in the case of an adjustment to a Long-Term Interest Rate Period) which will accrue on the Outstanding Bonds for a period equal to the maximum number of days between Interest Payment Dates during the new Interest Rate Period plus five (5) days. In the case of an adjustment to a Long-Term Interest Rate Period, a Credit Facility, if any, to be in effect after the effective date of such adjustment shall (i) extend for a period ending on a date no earlier than five (5) days after the first date on which the Bonds may be called for redemption pursuant to Section 4.01(a)(ii)(C), and (ii) cover the premium, if any, which would be included in the purchase price upon mandatory purchase of the Bonds pursuant to Section 4.08(b) hereof if the term of such Credit Facility was not extended beyond the expiration date set forth therein.

(viii) Determination Conclusive . The determination of any Bond Interest Term Rate, Daily Interest Rate, Weekly Interest Rate and Long-Term Interest Rate and each Bond Interest Term and the calculation of interest payable on the Bonds by the Remarketing Agent shall be conclusive and binding upon such Remarketing Agent, the Trustee, the Tender Agent, the Issuer, the Borrower, the Bank and the Owners of the Bonds.

(ix) Rescission of Election . Notwithstanding anything herein to the contrary, the Borrower may rescind any election by it to adjust to or continue an Interest Rate Period pursuant to Sections 2.01(c)(ii)(B), (iii)(B), (iv)(B), (v)(B) or 3A.12 hereof prior to the effective date of such adjustment or continuation by giving written notice thereof to the Issuer, the Trustee, the Tender Agent, the Auction Agent, the Broker-Dealers and the Remarketing Agent, if any, prior to such effective date. If the Trustee receives notice of such rescission prior to the time the Trustee has given notice to the Owners of the Bonds pursuant to Section 2.01(c)(ii)(C), (iii)(C), (iv)(C), (v)(C) or 3A.12 as applicable, then the notice of adjustment or continuation previously delivered by the Borrower shall be of no force and effect. If the Trustee receives notice from the Borrower of rescission of an adjustment to or continuation of an Interest Rate Period after the Trustee has given notice to the Owners of the Bonds pursuant to Section 2.01(c)(ii)(C), (iii)(C), (iv)(C), (v)(C) or 3A.12, as applicable, then the Interest Rate Period for the Bonds shall automatically adjust to a Daily Interest Rate Period on the date originally scheduled for such adjustment or continuation; provided, however, that in the event the Borrower elected to have the right to terminate the Mandatory Tender pursuant

 

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to the fourth paragraph of Section 2.01(c)(iv)(B), the Borrower may exercise such right in accordance with the fourth paragraph of Section 2.01(c)(iv)(B); provided, however, that if the Bonds are then in a Long-Term Interest Rate Period and the Favorable Opinion of Bond Counsel required by Section 2.01(c)(ii)(B) in connection with an adjustment to a Daily Interest Rate Period from a Long-Term Interest Rate Period cannot be obtained, then the Interest Rate Period for the Bonds shall automatically convert to a Long-Term Interest Rate Period of one year and one day. If a Daily Interest Rate for the first day of such Daily Interest Rate Period is not determined as provided in Section 2.01(c)(ii) hereof, the Daily Interest Rate for the first day of such Daily Interest Rate Period shall be equal to the SIFMA Index.

(d) Form of Bonds . The Bonds may be engraved, printed, lithographed or typewritten, shall be in Authorized Denominations and may contain such references to any of the provisions of this Indenture as may be appropriate. The form of the Bonds, the certificate of authentication to be executed on all the Bonds by the Trustee and the forms for registration of transfer shall be in substantially the forms thereof set forth in Exhibit A hereto, with necessary or appropriate variations, omissions and insertions as permitted or required by this Indenture. The Bonds and the certificate of authentication to be executed thereon shall be in substantially the form attached hereto as Exhibit A, with such appropriate variations, omissions and insertions as are permitted or required by this Indenture. Pursuant to recommendations promulgated by the Committee on Uniform Security Identification Procedures, “CUSIP” numbers may be printed on the Bonds. The Bonds may bear such endorsement or legend relating thereto as may be required to conform to usage or law with respect thereto. If appropriate, the Bonds may be printed with a portion of the text printed on the reverse side thereof and with a legend printed on the front referring to such text to the following effect: “Reference is hereby made to the further provisions of this Bond set forth on the back hereof and such further provisions are hereby incorporated by reference as if set forth here in full.” Upon adjustment to a Long-Term Interest Rate Period, the form of Bond may include a summary of the rescission of the Mandatory Tender pursuant to paragraph four of Section 2.01(c)(iv)(B), a summary of the mandatory and optional redemption provisions to apply to the Bonds during such Long-Term Interest Rate Period, or a statement to the effect that the Bonds will not be optionally redeemed during such Long-Term Interest Rate Period, provided that the Registrar shall not authenticate such a revised Bond form prior to receiving a Favorable Opinion of Bond Counsel that such Bond form conforms to the terms of the Act and of this Indenture and that authentication thereof will not adversely affect the Tax-Exempt status of the Bonds, and a summary.

(e) Book-Entry System . Bonds shall be issued in the form of a single certificated fully registered Bond, registered in the name of Cede & Co., as nominee of the Depository Trust Company (such entity and its successors and assigns are referred to herein as “DTC”), or such other name as may be requested by an authorized representative of DTC, or any successor nominee (the “Nominee”). Except as provided in paragraph (C) below, all of the Outstanding Bonds shall be so registered in the registration books kept by the Registrar, and the provisions of this Section 2.01(e) shall apply thereto.

(i) The Issuer, the Borrower, the Remarketing Agent, the Tender Agent, the Trustee, the Registrar, the Paying Agent and any Co-Registrar and Co-Paying Agent shall have no responsibility or obligation to any DTC participant or to any person

 

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on behalf of which a DTC participant holds an interest in the Bonds, except as otherwise expressly provided herein. Without limiting the immediately preceding sentence, the Issuer, the Borrower, the Trustee, the Registrar, the Paying Agent, the Tender Agent, the Remarketing Agent and any Co-Registrar and Co-Paying Agent shall have no responsibility or obligation with respect to (i) the accuracy of the records of DTC, the Nominee, any DTC participant or indirect participant with respect to any ownership interest in the Bonds, (ii) the delivery to any DTC participant or any other person, other than an Owner as shown in the registration books kept by the Registrar, of any notice with respect to the Bonds, including any notice of redemption (except that the Trustee and Tender Agent, if any, shall have the obligation to deliver notices of optional and mandatory tender to the Remarketing Agent, if any, as provided herein) or (iii) the payment to any DTC participant or any other person, other than an Owner, as shown in the registration books kept by the Registrar, of any amount with respect to principal or purchase price of, premium, if any, or interest on the Bonds. The Paying Agent shall pay all principal, premium, if any, and interest on the Bonds only to or upon the order of the respective Owners, as shown in the registration books kept by the Registrar, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Issuer’s obligations with respect to payment of principal of, premium, if any, and interest on the Bonds to the extent of the sum or sums so paid. The Issuer, the Borrower, the Trustee, the Registrar, the Paying Agent, the Tender Agent, the Remarketing Agent and any Co-Registrar and Co-Paying Agent may treat and consider the person in whose name each Bond is registered in the registration books kept by the Registrar as the holder and absolute owner of such Bond for the purpose of payment of principal, purchase price, premium and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever; provided, however, notwithstanding the foregoing provisions, the Tender Agent, if any, shall accept any notice of optional tender pursuant to Section 4.08(a) from any Owner of any Book-Entry Bond, but shall make payment of the purchase price thereof only to the registered owner of such Bond in the manner provided in the Representation Letter (as defined below); and provided further, that no person other than an Owner, as shown in the registration books kept by the Registrar, shall receive a certificated Bond evidencing the obligation of the Issuer to make payments of principal, premium, if any, and interest pursuant to this Indenture.

(ii) The Issuer, the Paying Agent, the Registrar, the Tender Agent and/or the Trustee shall, if not previously on file, execute and deliver to DTC a letter of representation in customary form with respect to the Bonds (the “Representation Letter”), but such Representation Letter shall not in any way limit the provisions of the foregoing paragraph (i) or in any other way impose upon the Issuer any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the registration books kept by the Registrar. The Trustee, the Tender Agent and the Paying Agent shall take all actions necessary for representations of the Issuer in the Representation Letter with respect to the Trustee, the Tender Agent and the Paying Agent to be complied with at all times.

 

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(iii) The Issuer, with the consent of the Borrower, may, and upon request of the Borrower shall, terminate the services of DTC with respect to the Bonds. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving written notice and all relevant information on the Beneficial Owners of the Bonds to the Issuer, the Borrower, the Tender Agent, if any, and the Trustee and discharging its responsibilities with respect thereto under applicable law. Upon the discontinuance or termination of the services of DTC with respect to the Bonds, unless a substitute securities depository is appointed by the Issuer (with the consent, or at the request, of the Borrower) to undertake the functions of DTC hereunder, the Issuer, at the expense of the Borrower, is obligated to deliver Bond certificates to the Owners of such Bonds, as described in this Indenture, and such Bonds shall no longer be restricted to being registered in the registration books kept by the Registrar in the name of the Nominee, but may be registered in whatever name or names Owners transferring or exchanging such Bonds shall designate, in accordance with the provisions of this Indenture.

(iv) In connection with any notice or other communication to be provided to Owners pursuant to this Indenture by the Issuer, the Borrower the Remarketing Agent, the Tender Agent, the Trustee, the Registrar, the Paying Agent, and any Co-Registrar and Co-Paying Agent with respect to any consent or other action to be taken by the Owners of the Bonds, the Issuer, the Borrower the Remarketing Agent, the Tender Agent, the Trustee, the Registrar, the Paying Agent, any Co-Registrar and Co-Paying Agent, as the case may be, the Trustee shall establish a record date for such consent or other action and give DTC notice of such record date not less than 15 calendar days in advance of such record date to the extent possible.

(v) So long as any Bond is registered in the name of the Nominee, all payments with respect to principal, purchase price, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Representation Letter. Owners shall have no lien or security interest in any rebate or refund paid by DTC to the Tender Agent, if any, or the Paying Agent which arises from the payment by the Tender Agent, if any, or Paying Agent of principal of or purchase price, premium, if any, or interest on the Bonds in immediately available funds to DTC.

Section 2.02 Execution of Bonds . The Bonds shall be executed on behalf of the Issuer by its President, a Vice President, Secretary, Treasurer, Assistant Secretary or Assistant Treasurer and such execution shall be attested by its President, a Vice-President, Secretary, Treasurer, Assistant Secretary or Assistant Treasurer; provided that the officer so attesting such execution shall not be the same officer that executed such Bond. The signatures of the President, a Vice President, Secretary, Treasurer, Assistant Secretary or Assistant Treasurer of the Issuer may be facsimile signatures.

The Bonds and the interest thereon shall not be general obligations or an indebtedness of the Issuer but shall be limited obligations of the Issuer, which is obliged to pay the principal and premium, if any, and interest on the Bonds only out of the Receipts and Revenues of the Issuer from the Agreement and other moneys pledged therefor under this Indenture. The Bonds shall

 

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never constitute an indebtedness of the State of Arizona, or the County, or the Issuer within the meaning of any Arizona Constitutional provision or statutory limitation and shall never constitute or give rise to a pecuniary liability of the State of Arizona, or the County, or the Issuer or a charge against the general credit or taxing powers of the State of Arizona, or the County, or the general credit of the Issuer and such fact shall be plainly stated on each Bond. The Issuer has no taxing power.

The Bonds shall then be delivered to the Trustee for authentication by the Trustee. In case any officer who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee or issued by the Issuer, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issuance, shall be as binding upon the Issuer as though those who signed and attested the same had continued to be such officers of the Issuer. Also, any Bond may be signed on behalf of the Issuer by such persons as on the actual date of the execution of such Bond shall be the proper officers although on the nominal date of such Bond any such person shall not have been such officer.

Only such of the Bonds as shall bear thereon a certificate of authentication in the form recited in Exhibit A hereto, manually executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture. The Trustee’s certificate of authentication on any Bond shall be deemed to have been executed by it if manually signed by an authorized signatory on behalf of the Trustee but it shall not be necessary that the same person sign the certificate of authentication on all of the Bonds issued hereunder.

Upon authentication of any Bond, the Trustee, Registrar or the Tender Agent, if any, as the case may be, shall set forth on such Bond (1) the date of such authentication, and (2) in the case of a Bond bearing interest at a Bond Interest Term Rate which is not a Book-Entry Bond, such Bond Interest Term Rate, the day next succeeding the last day of the applicable Short-Term Interest Rate Period, the number of days comprising such Short-Term Interest Rate Period and the amount of interest to accrue during such Short-Term Interest Rate Period.

So long as Union Bank, N.A. is serving as Trustee hereunder, it shall also serve as Registrar hereunder.

Section 2.03 Transfer and Exchange of Bonds . Registration of any Bond may, in accordance with the terms of this Indenture, be transferred, upon the books of the Registrar required to be kept pursuant to the provisions of Section 2.04, by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Bond for cancellation, accompanied by a written instrument of transfer in a form approved by the Registrar, duly executed. Whenever any Bond shall be surrendered for registration of transfer, the Issuer shall execute and the Trustee shall authenticate and deliver a new Bond or Bonds of the same tenor in Authorized Denominations. No registration of transfer of Bonds upon the books of the Registrar required to be kept pursuant to the provisions of Section 2.04 hereof shall be required to be made during the period after any Record Date and prior to the related Interest Payment Date or during the period of fifteen (15) days immediately preceding the date on which

 

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the Trustee mails any notice of redemption, nor shall any registration of transfer of Bonds called for redemption be required.

Bonds may be exchanged at the Principal Office of the Trustee for a like aggregate principal amount of Bonds of the same tenor of Authorized Denominations. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange, and there shall be no other charge to any owners for any such exchange. Except with respect to Bonds remarketed after being purchased pursuant to Sections 4.07 and 4.08 hereof, no exchange of Bonds shall be required to be made during the period after any Record Date and prior to the related Interest Payment Date or during the period of fifteen (15) days immediately preceding the date on which the Trustee gives notice of redemption, nor shall any exchange of Bonds called for redemption be required. If a Bond is presented for transfer or exchange after notice of redemption of such Bond has been given as provided in Section 4.03 hereof, the Registrar shall deliver a copy of such notice of redemption to the new owner of such Bond.

Section 2.04 Bond Register . The Registrar will keep or cause to be kept at its Principal Office sufficient books for the registration and the registration of transfer of the Bonds, which shall at all times, during regular business hours, be open to inspection by the Issuer, the Trustee, the Bond Insurer and the Borrower; and, upon presentation for such purpose, the Registrar shall, under such reasonable regulations as it may prescribe, register the transfer or cause to be registered the transfer, on said books, of Bonds as hereinbefore provided.

Section 2.05 Bonds Mutilated Lost Destroyed or Stolen . If any Bond shall become mutilated, the Issuer, upon the request and at the expense of the holder of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver a new Bond of like tenor in exchange and substitution for the Bond so mutilated, but only upon surrender to the Registrar of the Bond so mutilated. Every mutilated Bond so surrendered to the Registrar shall be treated by the Trustee in accordance with its document retention policies (provided that the Trustee shall not be required to destroy such Bonds) and, upon the written request of the Issuer, a certificate evidencing such disposition shall be delivered to the Issuer, with a copy to the Borrower. If any Bond issued hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Issuer, the Borrower and the Registrar, and if such evidence be satisfactory to them and indemnity satisfactory to them shall be given by or on behalf of the holder of such lost, destroyed or stolen Bond, the Issuer, at the expense of the holder, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall be about to mature, instead of issuing a substitute Bond the Trustee shall, at the direction of the Issuer, pay the same without surrender thereof). The Issuer may require payment of a reasonable fee for each new Bond issued under this Section and payment of the expenses which may be incurred by the Issuer and the Trustee. Any Bond issued under the provisions of this Section in lieu of any Bond mutilated or alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Issuer whether or not the Bond mutilated or so alleged to be lost, destroyed or stolen shall be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds secured by this Indenture.

 

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All Bonds shall be held and owned upon the express condition that, to the extent permitted by law, the foregoing provisions are exclusive with respect to the replacement or payment of lost, destroyed or improperly cancelled Bonds, notwithstanding any law or statute now existing or hereafter enacted.

Section 2.06 Disposition of Cancelled Bonds . When paid in full, all Bonds shall be delivered to the Trustee, who shall forthwith cancel such Bonds and deliver upon request a certificate evidencing such cancellation to the Issuer and the Borrower. The Trustee shall treat such cancelled Bonds in accordance with its document retention policies, provided that the Trustee shall not be required to destroy such Bonds.

Section 2.07 CUSIP Number . As provided in Section 2.01(d) of this Indenture, the Issuer in issuing the Bonds may use “CUSIP” number (if then generally in use), and, if so, the Trustee shall use “CUSIP” number in notices of redemption as a convenience to holders of Bonds; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Bonds or as contained in any notice of a redemption and that reliance may be placed only on the other identification number printed on the Bonds, and any such redemption shall not be affected by any defect in or omission of such CUSIP number. The Issuer shall promptly notify the Trustee of any changes in the CUSIP number.

Section 2.08 Other Obligations . The Issuer expressly reserves the right to issue, to the extent permitted by law, obligations under another ordinance(s) and/or indenture(s) to provide additional funds or, at the request of the Borrower, to refund all or any principal amount of the Bonds.

Section 2.09 Temporary Bonds . Pending the preparation of definitive Bonds, the Issuer may execute and the Trustee shall authenticate and deliver temporary Bonds. Temporary Bonds shall be issuable as fully registered Bonds, of any Authorized Denomination, and substantially in the form of the definitive Bonds but with such omissions, insertions and variations as may be appropriate for temporary Bonds, all as may be determined by the Issuer. Temporary Bonds may contain such reference to any provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Issuer and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with like effect, as the definitive Bonds. As promptly as practicable, the Issuer shall execute and shall furnish definitive Bonds and thereupon temporary Bonds may be surrendered in exchange therefor without charge at the Principal Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Bonds a like aggregate principal amount of the definitive Bonds of Authorized Denominations. Until so exchanged the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds.

ARTICLE III

ISSUANCE OF BONDS

Section 3.01 Authentication and Delivery of Bonds . Forthwith upon the execution and delivery of this Indenture, the Issuer shall execute and deliver to the Trustee and the Trustee shall

 

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authenticate the Bonds and deliver the Bonds to the initial purchasers thereof as directed hereinafter in this Section 3.01. Without any further action on the part of the Issuer, the Trustee shall authenticate the Bonds in an aggregate principal amount of Sixty-Three Million Five Hundred Thousand Dollars ($63,500,000). Prior to the delivery on original issuance by the Trustee of any authenticated Bonds there shall be or have been delivered to the Trustee:

(i) An original duly executed counterpart of this Indenture.

(ii) An original duly executed counterpart of the Agreement.

(iii) A written order of the Issuer to the Trustee to authenticate and deliver the Bonds to the purchaser or purchasers therein identified upon payment to the Trustee, but for the account of the Issuer, of a sum specified in such request and authorization plus any accrued interest on such Bonds to the date of delivery.

(iv) A written statement on behalf of the Borrower, executed by an Authorized Borrower Representative, (i) approving the issuance and delivery of the Bonds and (ii) consenting to each and every provision of this Indenture.

Section 3.02 Application of Proceeds of Bonds . The proceeds received by the Issuer from the sale of the Bonds in the amount of $63,500,000 shall be deposited with the Trustee, and the Trustee shall transfer such proceeds to Union Bank, N.A., as trustee for the Prior Bonds, to be applied to the redemption of the Prior Bonds.

Section 3.03 Payment of Principal and Interest . For the payment of interest on the Bonds, the Issuer shall cause to be deposited in the Bond Fund established under Section 5.01 hereof, on or prior to each Interest Payment Date, solely out of the Receipts and Revenues, an amount sufficient to pay the interest to become due on such Interest Payment Date. The obligation of the Issuer to cause any such deposit to be made hereunder shall be reduced by the amount of moneys in the Bond Fund available on such Interest Payment Date for the payment of interest on the Bonds.

For the payment of the principal of the Bonds on the Maturity Date or upon earlier redemption, the Issuer shall cause to be deposited in the Bond Fund, on or prior to the Maturity Date or redemption date of the Bonds, solely out of the Receipts and Revenues, an amount sufficient to pay the principal of the Bonds then due. The obligation of the Issuer to cause any such deposit to be made hereunder shall be reduced by the amount of moneys in the Bond Fund available on the Maturity Date or redemption date for the payment of the principal of the Bonds.

ARTICLE IIIA

ARS PROVISIONS

Section 3A.01 Amendments with Conversion to Applicable ARS Rate .

Notwithstanding any other provision in this Indenture, at the time of conversion of the Bonds to Auction Rate Securities mode pursuant to Section 3A.12 hereof, the Borrower shall have the right direct the Issuer to amend without further consent any provisions in this Indenture

 

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relating to the Bonds in Auction Rate Securities mode in accordance with the then current market practice with respect to similar securities and provisions.

Section 3A.02 Payments with Respect to ARS .

(a) Interest with respect to ARS shall accrue from and including, as applicable, the Issue Date, the Conversion Date or the most recent ARS Interest Payment Date to which interest has been paid or duly provided for.

(b) The Trustee shall determine the aggregate amount of interest payable in accordance with subsection (e) below with respect to ARS on each ARS Interest Payment Date. Interest due on any ARS Interest Payment Date with respect to each $25,000 in principal amount of ARS shall equal (i) the Applicable ARS Rate multiplied by (ii) the principal amount of $25,000 multiplied by (iii) if the number of days in the Auction Period is less than 183, the number of days in the applicable ARS Interest Period, and, if the number of days in the Auction Period is 183 or greater, the number of days in the applicable ARS Interest Period assuming twelve 30-day months, divided by (iv) 360, and rounding the resultant figure to the nearest cent (a half cent being rounded upward). The Trustee shall notify the Securities Depository of its calculations, as provided in Section 3A.04(b) of this Indenture.

(c) Interest on the ARS shall be computed on the basis of a 360-day year for the actual number of days elapsed, except in the case of a Special Auction Period of 183 days or more in which case it will be computed on the basis of twelve 30-day months. The Applicable ARS Rate for each ARS Interest Period after the first ARS Interest Period shall be the Auction Rate; provided that

(i) Reserved .

(ii) in the event the Auction Agent fails to calculate or, for any reason, fails to timely provide the Auction Rate for any Auction Period (except as contemplated otherwise herein pursuant to (x), (y) and (z) below), the new Auction Period shall be the same as the preceding Auction Period if the preceding Auction Period was a period of 35 days or less and the new Auction Period shall be a seven-day Auction Period if the preceding Auction Period was a period of greater than 35 days and the Auction Rate for the new Auction Period shall be the same as the Auction Rate for the preceding Auction Period. The ARS shall continue in such Auction Period until changed pursuant to Section 3 A.10(a) hereof.

Notwithstanding the foregoing:

(x) if the ownership of the ARS is no longer maintained in book-entry form by a Securities Depository, the Applicable ARS Rate for any Auction Period commencing after the delivery of certificates representing the ARS shall equal the ARS Maximum Rate;

(y) if an ARS Payment Default shall have occurred with respect to the ARS, the Applicable ARS Rate for the Auction Period commencing on or immediately after such ARS Payment Default and for each Auction Period thereafter, to and including the

 

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Auction Period, if any, during which, or commencing less than two Business Days after, such ARS Payment Default is cured in accordance with this Indenture, shall equal the Non-Payment Rate on the first day of each such Auction Period, provided that if an” Auction occurred on the Business Day immediately preceding any such Auction Period, the Applicable ARS Rate for such Auction Period shall be the Non-Payment Rate; or

(z) for any Auction Period during which there is no duly appointed Auction Agent, or during which there is no duly appointed Broker-Dealer, no Auction will be held and, if the preceding Auction Period was 35 days or less, the new Auction Period shall be the same as the preceding Auction Period and, if the preceding Auction Period was more than 35 days, the new Auction Period shall be a seven-day Auction Period and the Auction Rate in each case shall be the ARS Maximum Rate. The ARS shall continue in such Auction Period until changed pursuant to Section 3A.11(a) hereof.

(d) Medium of Payment .

(i) The principal of and interest on the ARS shall be payable in any currency of the United States of America which on the respective dates for payment thereof is legal tender for the payment of public and private debts. The principal of and interest on the ARS (other than at maturity) shall be payable by check mailed on the date due to the registered owner thereof on the Record Date at the address of such registered owner as it appears on the registration books maintained by the Trustee.

(ii) Interest payable on any ARS Interest Payment Date to a registered owner of ARS in the aggregate principal amount of $1,000,000 or more may, upon written request by such registered owner received by the Trustee prior to the Record Date preceding such ARS Interest Payment Date, be paid by wire transfer on the date due to a designated account in the United States. Such written request shall remain in effect until rescinded in writing by such registered owner. The principal of each ARS at maturity will be paid upon presentation and surrender thereof at the Principal Office of the Trustee.

(iii) Unless otherwise requested by the Securities Depository, payments of the principal of ARS, at maturity or upon redemption, and payments of interest on ARS made by wire transfer, shall be made by the Trustee in immediately available funds, provided, however, that such method of payment may be modified by written agreement among the Trustee, the Securities Depository and the Auction Agent.

(e) Computation of Interest Distributable on ARS . The amount of interest distributable to ARS Beneficial Owners, in respect of each $25,000 in principal amount thereof for any ARS Interest Period or part thereof, shall be calculated by the Trustee by applying the Applicable ARS Rate with respect to the ARS, for such ARS Interest Period or part thereof, to the principal amount of $25,000, multiplying such product by the actual number of days in such ARS Interest Period or part thereof if the number of days in the Auction Period is less than 183 and multiplying the product by the number of days in such ARS Interest Period assuming twelve 30-day months if the number of days in the Auction Period is 183 days or more in each case

 

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divided by 360 and rounding the resultant figure to the nearest cent (half a cent being rounded upward).

(f) ARS Defaulted Interest .

(i) The Trustee shall determine not later than 2:00 p.m., New York City time, on each ARS Interest Payment Date, whether an ARS Payment Default has occurred. If an ARS Payment Default has occurred, the Trustee shall, not later than 2:30 p.m. New York City time on such Business Day, send a Notice of ARS Payment Default to the Auction Agent and each Broker-Dealer by telecopy or similar means and, if such ARS Payment Default is cured, the Trustee shall immediately send a Notice of Cure of ARS Payment Default to the Auction Agent and each Broker-Dealer by telecopy or similar means.

(ii) ARS Defaulted Interest shall forthwith cease to be payable to the ARS Beneficial Owner on the relevant Record Date by virtue of having been such ARS Beneficial Owner and such ARS Defaulted Interest shall be payable to the Person in whose name the ARS are registered at the close of business on a Special Record Date fixed therefor by the Trustee, which shall not be more than 15 days and not less than ten days prior to the date of the proposed payment of ARS Defaulted Interest. The Trustee shall promptly notify the Issuer and the Borrower of the Special Record Date and, at the Borrower’s expense, mail to each ARS Beneficial Owner of which it has knowledge pursuant to Section 11.01, not less than ten days before the Special Record Date, notice of the Special Record Date and the date of the proposed payment of such ARS Defaulted Interest.

Section 3A.03 Calculation of All-Hold Rate . The Auction Agent shall calculate the All-Hold Rate on each Auction Date. If the ownership of the ARS is no longer maintained in book-entry form by the Securities Depository, the Auction Agent shall announce the ARS Maximum Rate on the Business Day immediately preceding each ARS Interest Payment Date after the delivery of certificates representing the ARS. If an ARS Payment Default shall have occurred, the Trustee shall announce the Non-Payment Rate on the first day of (i) each Auction Period commencing on or after the date of the occurrence and during the continuance of such ARS Payment Default, and (ii) any Auction Period commencing less than two Business Days after the cure of any ARS Payment Default. The determination by the Auction Agent of the All-Hold Rate shall (in the absence of manifest error) be final and binding upon all ARS Beneficial Owners and all other parties. The Auction Agent shall promptly advise the Trustee of the All-Hold Rate.

Section 3A.04 Notification of Rates, Amounts and Payment Dates .

(a) So long as the ownership of the ARS is maintained in book-entry form by the Securities Depository, the Trustee shall advise the Securities Depository (i) of each Record Date for the ARS at least two Business Days prior thereto and (ii) of each succeeding Interest Payment Date on each Interest Payment Date.

 

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(b) On the Issue Date, or as soon as practicable thereafter, and on the Business Day preceding each ARS Interest Payment Date with respect to the ARS, the Trustee shall advise the Securities Depository, so long as the ownership of the ARS is maintained in book-entry form by the Securities Depository, of the amount of interest distributable in respect of each $25,000 in principal amount of ARS for any ARS Interest Period or part thereof, calculated in accordance with Section 3A.02(e) of this Indenture.

If any day scheduled to be an ARS Interest Payment Date shall be changed after the Trustee shall have given notice, the Trustee shall, not later than 9:15 a.m., New York City time, on the Business Day next preceding the earlier of the new ARS Interest Payment Date or the old ARS Interest Payment Date, by such means as the Trustee deems practicable, give notice of such change to the Auction Agent, so long as no ARS Payment Default has occurred and is continuing and the ownership of the ARS is maintained in book-entry form by the Securities Depository.

Section 3A.05 Adjustments with Respect to ARS Provisions . Notwithstanding any other provision of this Indenture relating to ARS, including without limitation the mandatory tender provisions and the definitions of terms used in this Article IIIA (including without limitation the definitions of Applicable ARS Rate, All-Hold Rate, ARS Maximum Rate and Non-Payment Rate), the ARS provisions may be amended by the Issuer at the written request of the Borrower, (i) upon obtaining an opinion of Counsel that the same does not materially adversely affect the rights of the ARS Beneficial Owners or (ii) by obtaining the consent of a majority of the ARS Beneficial Owners and, in each case, delivering a Favorable Opinion of Bond Counsel. In the case of clause (ii) above, the Trustee shall mail notice of such amendment to the ARS Beneficial Owners of which it has knowledge pursuant to Section 11.01, and if, on the first Auction Date occurring at least 20 days after the date on which the Trustee mailed such notice, Sufficient Clearing Bids have been received or all of the ARS are subject to Submitted Hold Orders, the proposed amendment shall be deemed to have been consented to by the ARS Beneficial Owners. Written notice of each such amendment shall be delivered by the Issuer to the Trustee, the Borrower, the Auction Agent, and each Broker-Dealer.

Section 3A.06 Maximum Bond Interest Rate, Non-Payment Rate . If the Auction Rate on the Bonds shall be the Maximum Bond Interest Rate, the ARS Maximum Rate, or Non-Payment Rate for a period (A) in excess of thirty (30) days, the Borrower agrees to take all steps necessary to ensure that the Auction Rate does not exceed the interest rate payable on similar securities (taking into account the interest period and enhanced/insured rating of the Bonds), or (B) in excess of sixty (60) days, the Borrower agrees to convert, or cause to be converted, all Bonds to a Long-Term Interest Rate Period extending through the maturity of the Bonds or, with the approval of the Bond Insurer, to a variable interest rate mode, in each case at the lowest interest rate that will permit the Remarketing Agent to sell all the Bonds on the conversion date at a price equal to 100% of the principal amount thereof plus accrued interest thereon. If an Event of Default shall have occurred and be continuing under the Indenture or the Borrower fails to cause a conversion of the Bonds to another interest rate mode as required by the foregoing sentence, the Bond Insurer may, in its discretion, direct the conversion of the Bonds to a fixed rate or any other interest rate mode.

 

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Section 3A.07 Auction Agent .

(c) The Trustee is hereby directed to enter into an Auction Agent Agreement with an Auction Agent as directed by the Borrower. Any Substitute Auction Agent shall be (i) subject to the written approval of each Broker-Dealer, (ii) a bank or trust company duly organized under the laws of the United States of America or any state or territory thereof and having a combined capital stock, surplus and undivided profits of at least $15,000,000, or (iii) a member of the National Association of Securities Dealers, Inc., having a capitalization of at least $15,000,000, and, in either case, authorized by law to perform all the duties imposed upon it hereunder and under the Auction Agent Agreement and a member of or a participant in, the Securities Depository. The Auction Agent may at any time resign and be discharged of the duties and obligations created by this Indenture by giving at least 45 days’ notice to the Trustee, the Broker-Dealer, the Issuer, the Borrower, and the Bond Insurer. The Auction Agent may be removed at any time by the Trustee, upon the written direction of (i) the Borrower, with the consent of the Bond Insurer, (ii) the Bond Insurer, or (iii) the ARS Beneficial Owners of 66  ² / 3 % of the aggregate principal amount of the ARS then Outstanding, with the consent of the Bond Insurer, by an instrument signed by the Trustee and filed with the Auction Agent, the Bond Insurer, the Issuer and the Borrower upon at least 30 days’ notice. Neither the resignation nor the removal of the Auction Agent pursuant to the preceding two sentences shall be effective until and unless a Substitute Auction Agent has been appointed and has accepted such appointment; provided, however, that if a Substitute Auction Agent has not been so appointed within 45 days of the notice of resignation of the Auction Agent, the Auction Agent may petition a court of competent jurisdiction to appoint a Substitute Auction Agent. Notwithstanding the foregoing, the Auction Agent may terminate the Auction Agent Agreement if, within 30 days after notifying the Trustee, the Issuer, the Borrower, and the Bond Insurer in writing that it has not received payment of any Auction Agent Fee due it in accordance with the terms of the Auction Agent Agreement, the Auction Agent does not receive such payment.

(d) If the Auction Agent shall resign or be removed or be dissolved, or if the property or affairs of the Auction Agent shall be taken under the control of any state or federal court or administrative body because of bankruptcy or insolvency, or for any other reason, the Trustee, at the direction of the Borrower, shall use its best efforts to appoint a Substitute