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$39,250,000
The Industrial Development Authority of the City of Show Low,
Arizona
Solid Waste Disposal Revenue Bonds
(Snowflake White Mountain Power, LLC Project)
Series 2006
Exhibit 10.40
BOND PURCHASE AGREEMENT
Dated September 7, 2006
The Industrial Development Authority
of the City of Show Low, Arizona
550 North 9th Place
Show Low, Arizona 85901
Snowflake White Mountain Power, LLC
3418 North Val Vista Drive
Mesa, Arizona 85213
Ladies and Gentlemen:
Thornton Farish Inc. (the "Underwriter") offers to enter into
the following
agreement with Snowflake White Mountain Power, LLC, an Arizona
limited liability
company (the "Company"), and a wholly-owned indirect subsidiary
of NZ Legacy,
LLC, an Arizona limited liability company, and The Industrial
Development
Authority of the City of Show Low, Arizona (the "Issuer"), a
nonprofit
corporation designated as a political subdivision under the laws
of the State of
Arizona, which, upon the acceptance by the Company and the
Issuer of this offer,
will be binding upon the Company and the Issuer and, subject to
the terms and
conditions set forth herein, upon the Underwriter. Terms not
otherwise defined
herein shall have the same meanings assigned to such terms in
the Indenture
hereinafter referred to.
This offer is made subject to acceptance by the Company and the
Issuer on
or before 5:00 p.m., eastern time, on the date hereof.
SECTION 1. PURCHASE AND SALE OF THE BONDS. (a) Upon the terms
and
conditions and upon the basis of the respective representations,
warranties and
covenants herein, the Underwriter hereby agrees to purchase from
the Issuer, and
the Issuer hereby agrees to sell to the Underwriter, $39,250,000
aggregate
principal amount of the Issuer's Solid Waste Disposal Revenue
Bonds (Snowflake
White Mountain Power, LLC Project) Series 2006 (the "Bonds"),
bearing interest
as described in the Official Statement (as defined below), at
the purchase price
of 99.25% of the principal amount thereof plus accrued interest
(if any) thereon
to the date of Closing (as defined in Section 5 hereof). The
obligations of the
Issuer to sell, and of the Underwriter to purchase hereunder,
are with respect
to all (but not less than all) of the Bonds.
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(b) The Bonds shall be substantially as described in the
Official Statement
dated September 7, 2006 relating to the Bonds (including the
cover page thereof
and the Appendices thereto, as it may be amended or supplemented
from time to
time, the "Official Statement"), and in the Indenture of Trust
dated as of
September 1, 2006 (the "Indenture") between J.P. Morgan Trust
Company, National
Association acting as Trustee (the "Trustee") and the Issuer,
authorizing the
issuance of the Bonds, which shall be issued and secured under
and pursuant to
the Indenture. The proceeds of the sale of the Bonds will be
used to provide
funds to loan to the Company pursuant to the Loan Agreement
dated as of
September 1, 2006 (the "Loan Agreement"), between the Issuer and
the Company, to
finance the costs of the acquisition, construction and
installation of certain
solid waste disposal facilities (the "Project") for use by the
Company, as part
of the Company's electric generation facility in Navajo County,
Arizona. The
Company will also cause CoBank, ACB (the "Fronting Credit
Facility Provider"),
to deliver its irrevocable direct-pay letter of credit (the
"Fronting Credit
Facility") to the Trustee and will cause JPMorgan Chase Bank,
N.A. (the
"Confirming Credit Facility Provider") to deliver its
irrevocable confirmation
(the "Confirming Credit Facility" and, together with the
Fronting Credit
Facility, the "Initial Credit Facility") to the Trustee, to
support payment of
the principal and purchase prices of and interest on the Bonds
during the term
of the Initial Credit Facility. Pursuant to the Fronting Credit
Facility
Agreement (as defined in the Indenture), the Company will agree
to reimburse the
Fronting Credit Facility Provider for amounts drawn on the
Fronting Credit
Facility. The Company's obligations under the Fronting Credit
Facility Agreement
will be secured by certain collateral documents of the Company,
including a Bond
Pledge Agreement, dated as of September 1, 2006, between the
Company and the
Fronting Credit Facility Provider (the "Pledge Agreement")
(collectively, the
"Collateral Documents"). Pursuant to the Confirming Credit
Facility Agreement
(as defined in the Indenture), the Fronting Credit Facility
Provider will agree
to reimburse the Confirming Credit Facility Provider for amounts
drawn on the
Confirming Credit Facility.
SECTION 2. APPROVAL OF OFFICIAL STATEMENT AND OTHER DOCUMENTS.
On or before
the Closing, the Company shall deliver to the Underwriter such
reasonable number
of copies of the Official Statement as the Underwriter shall
request. The Issuer
and the Company authorize and approve the Official Statement and
consent to the
use by the Underwriter of the Official Statement. The Company
and the Issuer
have authorized or approved or will authorize or approve the
Indenture, the
Bonds, the Loan Agreement and the Tax Exemption Certificate and
Agreement dated
as of the date of Closing (the "Tax Agreement") among the
Issuer, the Trustee
and the Company, each with such changes made prior to Closing as
may be approved
by the Issuer, the Company and the Underwriter. The Issuer and
the Company
approve and consent to the use by the Underwriter of the
Official Statement
(including the cover page thereof and the Appendices thereto) in
connection with
the offering of the Bonds, which the Issuer and the Company
heretofore deemed
final as of its date within the meaning of Rule 15c2-12 of the
Securities and
Exchange Commission ("Rule 15c2-12").
SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
COMPANY. The
Company represents and warrants to and covenants with the
Underwriter that:
(i) The Company is a limited liability company duly organized
and in
good standing under the laws of the State of Arizona, and is
duly qualified
to conduct its
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business as presently conducted and as contemplated in the
Official
Statement, except where the failure to be so qualified would not
have a
material adverse effect, financial or otherwise.
(ii) The information with respect to the Company, the use of
Bond
proceeds, the Project and the descriptions of the Bonds, the
Indenture and
the Loan Agreement contained or incorporated by reference in the
Official
Statement as of the date hereof and as of the date of the
Closing does not
and will not contain any untrue statement of a material fact or
omit to
state a material fact required to be stated therein, or
necessary to make
the statements made therein, in light of the circumstances under
which they
were made, not misleading.
(iii) At or prior to the Closing, the Company will have entered
into
the Loan Agreement, the Tax Agreement, the Fronting Credit
Facility
Agreement, the Pledge Agreement, and the Remarketing Agreement
dated as of
September 1, 2006 with Thornton Farish Inc. (the "Remarketing
Agreement")
(such documents collectively referred to as the "Company
Documents"). The
Company Documents will thereupon constitute valid and binding
agreements of
the Company and, assuming the due authorization, execution and
delivery by
the other parties thereto, will be enforceable against the
Company in
accordance with their respective terms (subject in each instance
to
applicable bankruptcy, reorganization, insolvency, moratorium or
other
similar laws affecting the enforcement of creditors' rights
generally and
to the availability of equitable remedies), except as any rights
to
indemnity contained therein may be limited by applicable law,
including
state and federal securities laws.
(iv) This Bond Purchase Agreement has been authorized, executed
and
delivered by the Company and, assuming the due authorization,
execution and
delivery by the other parties hereto, is a valid and binding
agreement of
the Company enforceable against the Company in accordance with
its terms
(subject to applicable bankruptcy, reorganization, insolvency,
moratorium
or other similar laws affecting the enforcement of creditors'
rights
generally and to the availability of equitable remedies), except
as rights
to indemnity hereunder may be limited by applicable law,
including federal
and state securities laws.
(v) Except as may be set forth in the Official Statement, there
is no
action, suit, proceeding, inquiry or investigation at law or in
equity or
before or by any court, public board or body pending (and, to
the knowledge
of the Company, no basis therefor) or, to the knowledge of the
Company,
threatened, against or affecting the Company or the Project or
involving
the business or property of the Company wherein an unfavorable
decision,
ruling or finding would (a) adversely affect (i) the
transactions
contemplated herein or in the Company Documents or the Official
Statement,
or (ii) the validity or enforceability of the Company Documents,
this Bond
Purchase Agreement or any other material agreement or instrument
to which
the Company is a party and which is used or contemplated for use
in the
operation of the Project or in the consummation of the
transactions
contemplated herein or in the Company Documents or the
Official
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Statement, or (b) have a materially adverse effect upon the
financial
condition or operations of the Company taken as a whole.
(vi) The Company is not in default in the performance of any
obligation, agreement or condition contained in any bond,
debenture, note
or any other evidence of indebtedness or in any indenture,
lease, loan or
other agreement to which the Company is a party or its property
is subject
which would have a materially adverse effect on its obligations
hereunder
or the transactions contemplated hereby or upon the financial
condition or
operations of the Company and its consolidated subsidiaries
taken as a
whole.
(vii) The execution and delivery by the Company of this Bond
Purchase
Agreement and the Company Documents, and compliance with the
provisions
thereof and hereof, do not and will not conflict with or
constitute on the
part of the Company a breach or violation of, or (with or
without the
giving of notice or lapse of time or both) a default under, its
articles of
organization or by-laws, or any agreement, indenture, mortgage
or lease by
which the Company is or may be bound, or any existing law,
administrative
regulation, decree or order applicable to the Company or to
which its
property is subject.
(viii) No approval of any governmental or regulatory body is
required
in connection with the execution and delivery of, and
performance by the
Company of its obligations under, this Bond Purchase Agreement
and the
Company Documents.
(ix) The Company will furnish such information, execute such
instruments and take such other action in cooperation with the
Underwriter
as the Underwriter may reasonably request to qualify the Bonds
for offering
and sale under the "blue sky" or other securities laws and
regulations of
such states and other jurisdictions of the United States as the
Underwriter
may request; provided, that in no event shall the Company be
obligated to
qualify to do business in any jurisdiction where it would not
otherwise be
required to qualify or to take any action which would subject it
to general
service of process in any jurisdiction where it would not
otherwise be so
subject.
(x) The Company will notify the Underwriter of any event
occurring
before Closing or within 25 days after the end of the
underwriting period
for the Bonds (within the meaning of Rule 15c2-12) which would
require a
change in the Official Statement in order to make the statements
therein,
in light of the circumstances under which made, not misleading
and will
furnish at the Company's expense to the Underwriter such
reasonable number
of copies as the Underwriter shall request of amendments or
supplements to
the Official Statement in order that the statements in the
Official
Statement, as so amended or supplemented, will not, in the light
of the
circumstances under which made, when the Official Statement as
so amended
or supplemented is delivered to a purchaser, be misleading.
(xi) The Company has not entered into, or been required to enter
into,
any undertaking to provide continuing disclosure pursuant to
Rule 15c2-12.
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The Company may presume for purposes of this Section 3 that
the
underwriting period for the Bonds will end on the date of
issuance and delivery
thereof unless the Company is otherwise notified in writing at
the Closing by
the Underwriter.
Any certificate signed by any official of the Company and
delivered to the
Underwriter shall be deemed a representation and warranty by the
Company to the
Underwriter as to statements made therein.
SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
ISSUER. The
Issuer represents and warrants to and covenants with the
Underwriter that:
(i) The Issuer is a nonprofit corporation designated as a
political
subdivision under the Constitution and the laws of the State of
Arizona.
(ii) The Issuer has full power and authority to issue and sell
the
Bonds as provided in the Loan Agreement, the Indenture and the
Official
Statement and to enter into the Loan Agreement, the Indenture,
the Tax
Agreement and this Bond Purchase Agreement.
(iii) The Issuer has adopted a Resolution on July 18, 2006 (the
"Bond
Resolution"), authorizing the execution and delivery of the Loan
Agreement,
the Indenture, the Tax Agreement and this Bond Purchase
Agreement, the
issuance and sale of the Bonds and all actions necessary or
appropriate to
carry out the same. The Loan Agreement, the Indenture and the
Tax Agreement
are collectively referred to as the "Issuer Documents."
(iv) Each meeting of the Issuer at which action was taken or
considered in connection with the Project, the Issuer Documents,
this Bond
Purchase Agreement and the Bonds, including the meeting at which
the Bond
Resolution was adopted, was a duly noticed and held meeting of
the Issuer
open to the public at all times.
(v) This Bond Purchase Agreement has been authorized, executed
and
delivered by the Issuer.
(vi) The information with respect to the Issuer contained under
the
heading "THE ISSUER" in the Official Statement does not at the
date hereof,
and will not as of the Closing, include any untrue statement of
a material
fact or omit to state any material fact necessary to make the
statements
therein not misleading in light of the circumstances under which
they were
made.
(vii) To the best knowledge of the undersigned officer of the
Issuer,
there is no action, suit, proceeding or investigation at law or
in equity
before or by any court, either state or federal, or public board
or body,
pending or threatened, calling into question the existence or
operations of
the Issuer, the validity of the Issuer Documents or this Bond
Purchase
Agreement or the authority of the Issuer to enter into the
Issuer Documents
or to issue the Bonds.
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(viii) The authorization, execution and delivery by the Issuer
of the
Issuer Documents and this Bond Purchase Agreement and the
issuance of the
Bonds will not violate any existing decree, writ or injunction
and will not
contravene the provisions of, constitute a default under, or
result in the
creation of a lien, charge or encumbrance prohibited by, any
existing
agreement, indenture, bond resolution or other instrument to
which the
Issuer is a party or by which the Issuer or any of its assets
are bound.
(ix) The Issuer will cooperate with the Company in preparing
and
making available to the Underwriter any amendments or
supplements to the
Official Statement pursuant to Section 3(x) hereof at the
Company's
expense.
(x) The Issuer will furnish such information, execute such
instruments
and take such other action in cooperation with the Underwriter
as the
Underwriter may reasonably request to qualify the Bonds for
offering and
sale under the "blue sky" or other securities laws and
regulations of such
states and other jurisdictions of the United States as the
Underwriter may
request; provided, that in no event shall the Issuer be
obligated to
qualify to do business in any jurisdiction or consent to service
of process
in any jurisdiction other than the State of Arizona.
Any certificate signed by any official of the Issuer and
delivered to the
Underwriter shall be deemed a representation and warranty by the
Issuer to the
Underwriter as to statements made therein.
SECTION 5. CLOSING. On or prior to 11:00 a.m., Chicago time, on
September
8, 2006, at the offices of Chapman and Cutler LLP, Chicago,
Illinois, or at such
other time or such other date or such other place as shall have
been mutually
agreed upon by the Company, the Issuer and the Underwriter, the
Issuer will
deliver, or cause to be delivered through the facilities of The
Depository Trust
Company ("DTC"), to the Underwriter, the Bonds in definitive
form duly executed
by the Issuer and authenticated by the Trustee, and the
Underwriter will accept
such delivery and pay the purchase price of the Bonds, subject
to the provisions
hereof including, without limitation, Section 7 hereof. Payment
of the purchase
price for the Bonds by the Underwriter will be made by wire
transfer in
immediately available funds, payable to the Trustee, as provided
in the
Indenture, or by such other means as is acceptable to the
Issuer, the Company,
the Underwriter and the Trustee. The above described payment and
delivery is
herein called the "Closing."
The Bonds will be delivered as one fully registered bond
registered in the
name of Cede & Co. and will be available upon request for
checking by the
Underwriter not less than one business day prior to the
Closing.
It is anticipated that a CUSIP identification number will be
printed on the
Bonds, but neither the failure to print such number on any Bond
nor any error in
the printing of such number shall constitute cause for a f
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