LOAN AGREEMENT

Exhibit 4.02

 

LOAN AGREEMENT

Between

MARICOPA COUNTY, ARIZONA

POLLUTION CONTROL CORPORATION

and

EL PASO ELECTRIC COMPANY

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)

Dated as of March 1, 2009

 

TABLE OF CONTENTS

 

 

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LOAN AGREEMENT

THIS LOAN AGREEMENT, dated as of March 1, 2009 (this “Agreement”), is made by and between MARICOPA COUNTY, ARIZONA POLLUTION CONTROL CORPORATION, a nonprofit corporation designated as a political subdivision of the State of Arizona, incorporated for and with the approval of the County of Maricopa, Arizona, existing under the Constitution and laws of the State of Arizona (the “ Issuer ”), and EL PASO ELECTRIC COMPANY, a corporation organized and existing under the laws of the State of Texas (the “ Borrower ”).

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 (the “ State ”) 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, 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, 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 Issuer intends to issue its Pollution Control Refunding Revenue Bonds, 2009 Series A (El Paso Electric Company Palo Verde Project) (the “ Bonds ”) pursuant to an Indenture of Trust dated as of March 1, 2009, between the Issuer and Union Bank, N.A., as Trustee (the “ Indenture ”), and to lend the proceeds of the Bonds to the Borrower for the purpose of providing a portion of the moneys necessary to refund the outstanding principal amount of the Prior Bonds; and

WHEREAS, the appropriate agencies exercising jurisdiction over the Project have certified that the Project, as described in Exhibit A hereto, as designed, is in furtherance of the purpose of abating or controlling atmospheric or water pollutants or contaminants resulting from the generation of electricity at the Plant;

NOW, THEREFORE, in consideration of the premises and the respective representations and covenants herein contained, the parties hereto agree as follows (provided, that in the performance of the agreements of the Issuer herein contained, any obligation it may thereby incur shall not constitute or give rise to a pecuniary liability or a charge upon its general credit or against its taxing powers but shall be payable solely out of the Receipts and Revenues (as defined in the hereinabove defined Indenture) derived from this Agreement and the Bonds):

ARTICLE I

DEFINITIONS

Section 1.01. Definitions of Terms .

Capitalized terms not defined herein shall have the meanings set forth in the Indenture. As used herein:

“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.

“Administration Expenses” shall mean the reasonable expenses incurred by the Issuer with respect to this Agreement, the Indenture and any transaction or event contemplated by this Agreement or the Indenture, including, without limitation, the reasonable fees and disbursements of counsel and out-of-pocket expenses of the Issuer incurred in connection with the authorization, issuance and sale of the Bonds and the compensation and reimbursement of reasonable fees, expenses and advances payable to the Trustee, the Registrar, the Paying Agent, the Tender Agent, the Bank and the Remarketing Agent under the Indenture.

“Agreement” shall mean this Loan Agreement dated as of March 1, 2009 and any and all modifications, alterations, amendments and supplements hereto.

 

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“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 hereof and any extension thereof.

“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 Borrower.

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

“Bond” or “Bonds” shall mean the bonds authorized to be issued under the Indenture.

“Bond Counsel” shall mean any firm of nationally recognized bond counsel 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 of the Indenture.

“Bond Insurance Policy” shall mean the municipal bond new issue insurance policy issued by the 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, designated by the Issuer and the Borrower, or any successor thereto.

“Borrower” shall mean El Paso Electric Company, a corporation formed and existing under the laws of the State of Texas, its successors and their assigns and any transferee entity to the extent permitted by Section 6.02 hereof

“Borrower Indentures” shall mean (i) that certain Indenture of Mortgage, dated as of October 1, 1946, between the Borrower and State Street Bank and Trust Company, as trustee, as supplemented and modified by the indentures supplemental thereto, (ii) that certain Indenture of Mortgage, dated as of June 1, 1981, from the Borrower to IBJ Schroder Bank & Trust Company, as successor trustee, as the same has heretofore been supplemented and may be hereafter supplemented and modified, or (iii) any indenture or mortgage made by the Borrower in accordance with the plan of reorganization to secure substantially the same obligations as are currently secured by the Borrower Indentures, and subjecting thereto substantially the same property, and subject to substantially the same prior liens and encumbrances, and having substantially similar provisions for the issuance of additional debt thereunder, as the Borrower Indentures.

“Claim” shall mean liabilities, obligations, losses, damages, taxes (other than taxes on income), penalties, claims (including, without limitation, claims involving liability in tort, whether strict or otherwise), actions, suits, judgments, costs, interest, expenses and disbursements, whether or not any of the foregoing shall be founded or unfounded, contingent or

 

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otherwise (including, without limitation, legal fees and expenses and costs of investigation) of any kind and nature whatsoever without any limitation as to amount.

“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.

“Counsel” shall mean an attorney at law selected by the Borrower (who may be counsel to either or both of the Issuer and the Borrower) and acceptable to the Trustee or, if not selected by the Borrower within a reasonable time following any request therefor, by the Issuer and acceptable to the Trustee.

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

“Credit Facility” shall mean, collectively, a 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 hereof, “Credit Facility” shall mean such Alternate Credit Support.

“Environmental Law” shall mean any federal, state or local law, rule, regulation, order, writ, judgment, injunction, decree, determination or award relating to the environment, health or safety or to the release or threatened release of any materials into the environment, including, without limitation, the Clean Air Act, as amended, the Clean Water Act of 1977, as amended, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, the Hazardous Materials Transportation Act, as amended, the Toxic Substance Control Act, as amended, and the Resource Conservation and Recovery Act of 1976, as amended.

“Facilities” or “Project” shall mean the pollution control systems and facilities presently existing, under construction and to be constructed at the Plant, which are described in Exhibit A hereto, as from time to time revised, changed, amended or modified and related improvements and any substitutions therefor.

“Fitch” shall mean Fitch Ratings 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, “Fitch” 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.

“Hazardous Materials” shall mean all materials that are, or become, subject to any Environmental Law, including, without limitation, materials listed in 49 I.E. §172.101, materials defined as hazardous pursuant to Section 101(14) of the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, flammable, explosive or radioactive materials, hazardous or toxic wastes or substances, petroleum or petroleum distillates, PCB’s or asbestos or urea formaldehyde-containing materials.

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

 

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“Issuance Expenses” shall mean any and all expenses incurred in connection with the issuance of the Bonds including, but not limited to, any (a) underwriters’ compensation; (b) counsel fees; (c) financing advisor fees; (d) rating agency fees; (e) trustee fees; (f) paying agent and certifying and authenticating agent fees; (g) accounting fees; (h) printing costs; (i) costs incurred in connection with any required public approval process; (j) costs of engineering and feasibility studies necessary to the issuance of the Bonds (as opposed to such studies relating to completion of the Project); and (k) the issuance fee charged by, and expenses and disbursements of, the Issuer. Notwithstanding anything to the contrary herein, “Issuance Expenses” shall not include any bond insurance premiums and certain letter of credit fees that would be treated as interest expenses under the arbitrage restrictions of the Code.

“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 an irrevocable, direct-pay letter of credit, if any, issued by the Bank and delivered to the Trustee in accordance with Section 6.08 hereof and any extension thereof.

“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 and the Bank, by notice to the Trustee, the Tender Agent and the Issuer.

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

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

(ii) those deemed to have been paid in accordance with Article IX of the Indenture;

(iii) those in lieu of, or in exchange, replacement or substitution for which, other Bonds shall have been authenticated and delivered pursuant to the 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

(iv) undelivered Bonds.

“Owner” or “Bondholder” or “holders” used with reference to the Bonds shall mean the person or entity in whose name any Bond is registered upon the registration books maintained pursuant to Section 2.04 of the Indenture.

 

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“Permitted Encumbrances” shall mean and include (a) liens for taxes, assessments and other governmental charges not delinquent or which can be paid without penalty; (b) unfiled, inchoate mechanics’ and materialmen’s liens for construction work in progress; (c) workmen’s, repairmen’s, warehousemen’s and carriers’ liens and other similar liens, if any, arising in the ordinary course of business; (d) all the following, if they do not individually or in the aggregate materially impair the use of the Facilities or materially detract from the value thereof to the Borrower, viz. any easements, restrictions, mineral, oil, gas and mining rights and reservations, zoning laws and defects in title or other encumbrances to which the Facilities may be subject because of the installation thereof at the Plant; (e) any lien for the satisfaction and discharge of which a sum of money or surety bond deemed adequate by the Trustee is on deposit with the Trustee; (t) the rights of the Issuer under this Agreement or any other sale agreement or lease agreement between the Issuer and the Borrower relating to the issuance of bonds under the Act; and (g) the lien of the Borrower Indentures and the permitted encumbrances and other prior liens referred to therein.

“Plant” shall mean Units 1, 2 and 3 (each, a “Unit”) of the Palo Verde Nuclear Generating Station in Maricopa County, Arizona, at which the Project is located.

“Prior Bonds” shall mean the Maricopa County, Arizona Pollution Control Corporation Pollution Control Refunding Revenue Bonds, 2005 Series B (El Paso Electric Company Palo Verde Project).

“Purchase Date” shall mean the date on which the Bonds shall be required to be purchased pursuant to a mandatory or an optional tender in accordance with the Indenture.

“Purchase Price” shall have the meaning set forth in the forms of the Bonds.

“Reimbursement Agreement” shall mean (i) any Reimbursement Agreement, made by the Borrower in favor of the Bank, relating to payments for moneys drawn under the Letter of Credit, if any, and any amendments, modifications and supplements thereto, and (ii) from and after the issuance of an Alternate Credit Support, any letter of credit reimbursement agreement or other arrangement between the Borrower and the issuer of any Alternate Credit Support, and any amendments, modifications and supplements thereto.

“Remarketing Agent” shall mean any remarketing agent appointed in accordance with Section 14.01(x) of the Indenture.

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

“Representation and Indemnity Agreement” shall mean the Representation and Indemnity Agreement dated as of March 19, 2009 among the Issuer, the Borrower and the Underwriters.

“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 no longer perform the functions of a securities rating agency, “S&P” shall be deemed to refer to

 

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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.

“State” shall mean the State of Arizona.

“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 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, or any successor tender agent subsequently appointed in accordance with Section 14.01(b) of the Indenture.

“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 the principal office of the Trustee so designated 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 Loan Agreement, is 120 South San Pedro Street, 4th Floor, Los Angeles, California 90012, Attention: 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.

“Underwriters” shall have the meaning set forth in the Official Statement for the Bonds.

“Unit” shall have the meaning set forth in the definition of “Plant” under this Section 1.01.

Section 1.02. Interpretation . Unless the context indicates otherwise, words importing the singular number include the plural number, and vice versa; the terms “hereof’, “hereby”, “herein”, “hereto”, “hereunder” and similar terms refer to this Agreement; and the term “hereafter” means after, and the term “heretofore” means before, the date of delivery of the Bonds. Words of any gender include the correlative words of the other genders, unless the sense indicates otherwise.

Section 1.03. Captions and Headings . The captions and headings in this Agreement are solely for convenience of reference and in no way define, limit or describe the scope or intent of any Articles, Sections, subsections, paragraphs, subparagraphs or clauses hereof.

 

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ARTICLE II

REPRESENTATIONS AND WARRANTIES

Section 2.01. Representations and Warranties of the Issuer . The Issuer makes the following representations and warranties as the basis for its undertakings herein contained:

(a) The Issuer is an Arizona nonprofit corporation designated as a political subdivision under the laws of the State, incorporated pursuant to the Act for and with the approval of the County, created and existing under the Constitution and laws of the State;

(b) The Issuer has the power to enter into the transactions contemplated by this Agreement and the Indenture and to carry out its obligations hereunder and thereunder;

(c) The Issuer has the power to enter into this Agreement and by proper corporate action has duly authorized the execution and delivery hereof; and

(d) The execution and delivery of this Agreement and the Indenture and compliance with the provisions hereof and thereof will not conflict with, or constitute on the part of the Issuer a breach of or a default under, any existing law, court or administrative regulation, decree or order to which the Issuer is subject or any agreement, ordinance, indenture, mortgage, lease or other instrument by which the Issuer is or may be bound.

Section 2.02. Representations and Warranties of the Borrower . The Borrower makes the following representations and warranties as the basis for the undertakings on the part of the Issuer herein contained:

(a)(i) The Borrower is a corporation duly incorporated under the laws of the State of Texas and is in good standing under the laws of the State of Texas, has power to enter into this Agreement and to perform and observe the agreements and covenants on its part contained herein, and by proper corporate action has duly authorized the execution and delivery hereof, (ii) the Borrower is duly qualified to hold property and transact business as a foreign corporation and is in good standing under the laws of the State of Arizona, (iii) all of the proceeds of the Bonds will be used to redeem and refund the Prior Bonds, (iv) prior to the issuance of the Bonds, the Federal Energy Regulatory Commission will have approved all matters relating to the Borrower’s participation in the transactions contemplated by this Agreement which require said approval, and no other consent, approval, authorization or other order of any regulatory body or administrative agency or other governmental body is legally required for the Borrower’s participation therein except such as have been or will have been obtained prior to the issuance of the Bonds or such, if any, as may be required under state securities or Blue Sky laws, and (v) the execution and delivery of this Agreement by the Borrower do not, and consummation of the transactions contemplated hereby and fulfillment of the terms hereof will not, result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust or other agreement or instrument to which the Borrower is a party, or the Restated Articles of Incorporation or Bylaws of the Borrower, or any order, rule or regulation applicable to the Borrower of any court or of any Federal or state regulatory body or administrative agency or other governmental body having jurisdiction over

 

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the Borrower or over any of its properties, or any statute of any jurisdiction applicable to the Borrower other than breaches or defaults that individually or in the aggregate are not expected to have a material adverse effect on the Borrower.

(b) The Facilities meet applicable Federal, state and local requirements for the control of pollution now in effect and are used for the reduction, abatement and prevention of pollution.

(c) The Borrower does not presently expect that the description of the Facilities contained in Exhibit A hereto will be revised.

(d) To the extent necessary to preserve the security for the Bonds, the validity of the Bonds under the Act and the Tax-Exempt status of interest on the Bonds, all material certificates, approvals, permits and authorizations of agencies of applicable local governmental entities, the State and the federal government have been obtained with respect to the construction of the Project and, pursuant to such certificates, approvals, permits and authorizations, the Project has been constructed and is in operation.

(e) To the best knowledge of the Borrower, no member, officer or other official of the Issuer has any interest whatsoever in the Borrower or in the transactions contemplated by this Agreement.

ARTICLE III

CONSTRUCTION OF THE FACILITIES

Section 3.01. Construction of the Facilities . The Borrower has caused the acquisition, construction, improvement or equipping of the Facilities.

ARTICLE IV

ISSUANCE, SALE AND DISPOSITION OF PROCEEDS OF THE BONDS

Section 4.01. Issuance and Sale of the Bonds . The Issuer agrees with the Borrower that it will cooperate with the Borrower and will issue and deliver the Bonds in accordance with its obligations hereunder.

Section 4.02. No Additional Bonds . It is understood and agreed that the Issuer shall not issue any additional series of Bonds, other than the Bonds pursuant to the Indenture.

Section 4.03. Disposition of Proceeds of Bonds . The proceeds of the Bonds will be used as provided in the Indenture.

Section 4.04. Investment of Moneys Held in Funds Under the Indenture . (a) The Borrower and the Issuer agree that any moneys held in the Bond Fund and the Purchase Fund or any other trust fund created by the Indenture (except any moneys held by the Trustee pursuant to Section 5.07 of the Indenture) or any moneys held by the Trustee pursuant to Section 8.02 of the

 

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Indenture shall be invested or reinvested only as provided in Articles VII and XIV of the Indenture.

(b) The Issuer and the Borrower mutually covenant for the benefit of the purchasers of the Bonds and the Issuer that, with respect to the proceeds of the Bonds and the earnings thereon, no use thereof will be made which would (1) but for the covenant contained in this Section 4.04, have been reasonably expected at the time of issuance of the Bonds, and (2) if so reasonably expected, have caused the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code and the regulations proposed or in effect hereunder on the date of such use and applicable to obligations issued on the issue date of the Bonds. Pursuant to such covenant, the Borrower and the Issuer obligate themselves to comply throughout the term of the Bonds with the requirements of Section 148 of the Code and any regulations promulgated thereunder.

ARTICLE V

LOAN TO BORROWER, REPAYMENT PROVISIONS

Section 5.01. Loan to Borrower . The Issuer covenants and agrees, upon the terms and conditions in this Agreement, to make a loan to the Borrower for the purpose of refunding the Prior Bonds. Pursuant to said covenant and agreement, the Issuer will issue the Bonds upon the terms and conditions contained in this Agreement and the Indenture. The Issuer and the Borrower agree that the application of the proceeds of sale of the Bonds to refund and redeem the Prior Bonds will be deemed to be and treated for all purposes as a loan to the Borrower of an amount equal to the aggregate principal amount of the Bonds. The Borrower covenants and agrees to pay to the trustee for the Prior Bonds an amount which, when added to the amounts transferred to such trustee pursuant to Section 3.02 of the Indenture, will be sufficient to pay, on or before April 3, 2009, the redemption price of the Prior Bonds and all other amounts due under the indenture pursuant to which such Prior Bonds were issued all in accordance with the terms of such indenture.

Section 5.02. Amounts and Dates for Payment .

(a) With respect to the Bonds, the Borrower shall, and hereby covenants and agrees to: (i) pay to the Trustee as a Repayment Installment on or before each date provided in the Indenture, an amount equal to the aggregate principal, premium, if any, and interest due on the Bonds as the same become due, whether at maturity, by reason of redemption, upon acceleration or otherwise, and (ii) pay on or before each Purchase Date a sum equal to the Purchase Price of any Bonds required to be purchased by the Paying Agent pursuant to Section 4.08 of the Indenture and Section 10.01 hereof. The Borrower shall, and hereby agrees to, pay the Repayment Installment by delivery or causing delivery of such further installments, in immediately available funds, necessary on the dates and in the amounts and in the manner in the Indenture as may be necessary to enable the Issuer to cause payment to be made to the Trustee of principal of and premium, if any, and interest on the Bonds, whether at maturity, upon redemption, or otherwise, provided that any amount credited under the Indenture against any cash payment required to be made by the Issuer thereunder shall be credited against the corresponding cash payment required to be made by the Borrower hereunder.

 

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(b) The Borrower shall, and hereby agrees to, pay in addition to the Repayment Installment an amount equal to the aggregate of all other payments to be made out of the Bond Fund, payment thereof to be made not later than the principal or interest payment date next following any such payment out of the Bond Fund but in any event in time to prevent any failure to pay when due the principal of, premium, if any, and interest on any of the Bonds.

(c) In the event the Borrower shall fail to make any of the payments required in this Section 5.02, the item or installment so in default shall continue as an obligation of the Borrower until the amount in default shall have been fully paid. Draws by the Trustee under the Credit Facility to pay the principal of, premium, if any, or interest on the Bonds shall be deemed to satisfy the Borrower’s obligation to make purchase price payments to the extent of such draws.

(d) The obligation of the Borrower to make the payments described in subsection (a) of this Section may be accelerated or prepaid in accordance with the provisions of this Agreement, notwithstanding the provisions of this Section.

Section 5.03. Payments by Borrower to be Assigned to the Trustee; Obligation for Payments Absolute .

It is understood and agreed that all payments under Section 5.02 hereof are, by the Indenture, to be pledged by the Issuer to the Trustee, and that all rights and interest of the Issuer under this Agreement, except for the Issuer’s rights under Sections 5.04, 5.07 and 8.05 of this Agreement and any rights of the Issuer to receive notices, certificates, requests, requisitions, directions and other communications hereunder, are to be pledged and assigned to the Trustee. The Borrower assents to such pledge and assignment and agrees that the obligation of the Borrower to make the payments under Section 5.02 hereof shall be absolute, irrevocable and unconditional and shall not be subject to any defense (other than payment) or any right of set-off counterclaim, abatement, offset, diminution or recoupment arising out of any breach under this Agreement, the Reimbursement Agreement, the Indenture, the Credit Facility or otherwise by the Issuer, the Trustee, the Tender Agent, the Remarketing Agent, the Bank or any other party, or out of any obligation or liability at any time owing to the Borrower by the Issuer, the Trustee, the Tender Agent, the Remarketing Agent, the Bank or any other party. The Issuer directs the Borrower, and the Borrower agrees, to pay to the Trustee at its Corporate Trust Office all payments pursuant to Section 5.02 hereof.

Section 5.04. Payment of Expenses . The Borrower agrees to pay all compensation and reasonable fees and expenses of, and to reimburse for the expenses and advances incurred by each of the Trustee, the Registrar, the Remarketing Agent, the Paying Agent and the Tender Agent under the Indenture. So long as any Bonds are Outstanding, the Borrower will pay to the Issuer semiannually, on a date to be agreed upon, or within 30 days of receipt of a statement therefor submitted to the Borrower pursuant to Section 5.07 hereof, the amount of any other Administration Expenses not theretofore provided for which have accrued and become payable.

Section 5.05. Maintenance of Facilities . So long as any Bonds are Outstanding, the Borrower will maintain, preserve and keep the Facilities or to cause such Facilities to be maintained, preserved and kept in good repair, working order or condition and from time to time

 

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to make or cause to be made all necessary and proper repairs, replacements and renewals; provided, however, that the Borrower will have no obligation to maintain, preserve, keep, repair, replace or renew any item or portion of such Facilities (a) the maintenance, preservation, keeping, repair, replacement or renewal of which becomes uneconomic to the Borrower because of damage or destruction by a cause not within the control of