EXECUTION
LOAN AGREEMENT
between
OHIO AIR QUALITY DEVELOPMENT AUTHORITY
and
THE CINCINNATI GAS & ELECTRIC COMPANY
______________________________
$47,000,000
State of Ohio
Air Quality Development Revenue Bonds
2004 Series B
(The Cincinnati Gas & Electric Company Project)
_______________________________
Dated
as of
November 1, 2004
INDEX
(This Index is not a part of the Agreement
but rather is for convenience of reference only.)
Page
Preambles.................................................................... 1
ARTICLE I
DEFINITIONS
Section 1.1 Use of Defined Terms......................................... 2
Section 1.2 Definitions.................................................. 2
Section 1.3 Interpretation............................................... 6
Section 1.4 Captions and Headings........................................ 7
ARTICLE II
REPRESENTATIONS
Section 2.1 Representations of the Authority............................. 8
Section 2.2 No Warranty by Authority of Condition or Suitability
of the Projects............................................. 8
Section 2.3 Representations and Covenants of the Company................. 8
ARTICLE III
COMPLETION OF THE PROJECTS;
ISSUANCE OF THE BONDS
Section 3.1 Acquisition, Construction and Installation................... 11
Section 3.2 Project Descriptions......................................... 11
Section 3.3 Issuance of the Bonds; Application of Proceeds............... 12
Section 3.4 Disbursements from the Project Fund.......................... 12
Section 3.5 Company Required to Pay Costs in Event Project Fund
Insufficient................................................ 14
Section 3.6 Completion Date.............................................. 14
Section 3.7 Investment of Fund Moneys.................................... 14
Section 3.8 Rebate Fund.................................................. 15
ARTICLE IV
LOAN BY AUTHORITY; LOAN PAYMENTS;
ADDITIONAL PAYMENTS; BOND INSURANCE POLICY; AND LIQUIDITY FACILITY
Section 4.1 Loan Repayment............................................... 16
Section 4.2 Additional Payments.......................................... 16
Section 4.3 Place of Payments............................................ 17
Section 4.4 Obligations Unconditional.................................... 17
Section 4.5 Assignment of Revenues and Agreement ........................ 17
Section 4.6 Bond Insurance Policy; Liquidity Facility; Cancellation...... 17
Section 4.7 Company's Option to Elect Rate Period; Changes in Auction
Date and Length of Auction Periods.......................... 17
Section 4.8 Company's Obligation to Purchase Bonds ...................... 17
ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
Section 5.1 Right of Inspection ......................................... 18
Section 5.2 Maintenance.................................................. 18
Section 5.3 Removal of Portions of the Project Facilities................ 18
Section 5.4 Operation of Project Facilities.............................. 18
Section 5.5 Insurance.................................................... 19
Section 5.6 Workers' Compensation Coverage............................... 19
Section 5.7 Damage; Destruction and Eminent Domain....................... 19
Section 5.8 Company to Maintain its Corporate Existence;
Conditions Under Which Exceptions Permitted.................. 19
Section 5.9 Indemnification.............................................. 19
Section 5.10 Company Not to Adversely Affect Exclusion of Interest on
Bonds From Gross Income For Federal Income Tax Purposes..... 20
Section 5.11 Ownership of Projects; Use of Projects....................... 20
Section 5.12 Assignment of Agreement in Whole or in Part by Company....... 20
Section 5.13 Assignment of Agreement in Whole by Company (Novation)....... 21
ARTICLE VI
REDEMPTION
Section 6.1 Optional Redemption.......................................... 23
Section 6.2 Extraordinary Optional Redemption............................ 23
Section 6.3 Mandatory Redemption......................................... 25
Section 6.4 Notice of Redemption......................................... 25
Section 6.5 Actions by Authority......................................... 25
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default............................................ 26
Section 7.2 Remedies on Default.......................................... 27
Section 7.3 No Remedy Exclusive.......................................... 27
Section 7.4 Agreement to Pay Attorneys' Fees and Expenses................ 27
Section 7.5 No Waiver.................................................... 28
Section 7.6 Notice of Default............................................ 28
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Term of Agreement............................................ 29
Section 8.2 Amounts Remaining in Funds................................... 29
Section 8.3 Notices...................................................... 29
Section 8.4 Extent of Covenants of the Authority; No Personal Liability.. 29
Section 8.5 Binding Effect............................................... 29
Section 8.6 Amendments and Supplements................................... 30
Section 8.7 Continuing Disclosure........................................ 30
Section 8.8 Execution Counterparts....................................... 30
Section 8.9 Severability................................................. 30
Section 8.10 Governing Law................................................ 30
Signatures................................................................... 31
Exhibit A - DESCRIPTION OF AIR QUALITY FACILITIES AT MIAMI FORT
ELECTRIC GENERATING STATION...................................A-1
Exhibit B - FORM OF DISBURSEMENT REQUEST.....................................B-1
LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of November 1, 2004 between
the OHIO AIR QUALITY DEVELOPMENT AUTHORITY (the "Authority"), a body politic and
corporate organized and existing under the laws of the State of Ohio, and THE
CINCINNATI GAS & ELECTRIC COMPANY (the "Company"), a public utility and
corporation duly organized and validly existing under the laws of the State of
Ohio. Capitalized terms used in the following recitals are used as defined in
Article I of this Agreement.
Pursuant to Section 13 of Article VIII of the Ohio Constitution and the
Act, the Authority has determined to issue, sell and deliver the Bonds as
provided in the Indenture (as defined below) and to lend the proceeds derived
from the sale thereof to the Company to assist in the financing of its portion
of the costs of the Projects as defined below.
The Company and the Authority each have full right and lawful authority to
enter into this Agreement and to perform and observe the provisions hereof on
their respective parts to be performed and observed.
NOW THEREFORE, in consideration of the premises and the mutual
representations and agreements hereinafter contained, the Authority and the
Company agree as follows (provided that any obligation of the Authority or the
State created by or arising out of this Agreement shall never constitute a
general debt of the Authority or the State or give rise to any pecuniary
liability of the Authority or the State but shall be payable solely out of
Revenues, including the Loan Payments made pursuant hereto):
ARTICLE I
DEFINITIONS
Section 1.1. Use of Defined Terms. In addition to the words and terms
defined elsewhere in this Agreement, the Indenture or by reference to another
document, the words and terms set forth in Section 1.2 hereof shall have the
meanings set forth therein unless the context or use clearly indicates another
meaning or intent. Such definitions shall be equally applicable to both the
singular and plural forms of any of the words and terms defined therein.
Section 1.2. Definitions. As used herein:
"Additional Payments" means the amounts required to be paid by the Company
pursuant to the provisions of Section 4.2 hereof.
"Administration Expenses" means the compensation (which compensation shall
not be greater than that typically charged in similar circumstances) and
reimbursement of reasonable out-of-pocket expenses and advances payable to the
Trustee, the Registrar, the Remarketing Agent, the Broker-Dealer, the Auction
Agent, any Paying Agent and any Authenticating Agent.
"Agreement" means this Loan Agreement, as amended or supplemented from time
to time.
"Air Quality Facility" or "Air Quality Facilities" means those facilities
which are air quality facilities as defined in Section 3706.01, Ohio Revised
Code.
"Authority Fee" means the aggregate fee of $287,500 due to the Authority
from the Company in connection with the issuance of the Bonds hereunder and the
$47,000,000 of bonds to be issued and sold on the same date as the Bonds by the
Authority under a separate loan agreement and a separate trust indenture, each
dated the same date as this Agreement, all for the same purpose as set forth in
Section 3.3 hereof for the Bonds.
"Completion Date" means the date of completion of the Projects as set forth
in the certificate to be furnished by the Company pursuant to Section 3.6
hereof.
"Construction Period" means the period between the beginning of the
acquisition, construction, installation, equipping and improvement of the
Projects and the Completion Date.
"Engineer" means an engineer (who may be an employee of the Company) or
engineering firm qualified to practice the profession of engineering under the
laws of the State.
"EPA" means the Environmental Protection Agency of the State and any
successor body, agency, commission or department.
"Event of Default" means any of the events described as an Event of Default
in Section 7.1 hereof.
"Force Majeure" means any of the following:
(i) acts of God; strikes, lockouts or other industrial
disturbances; acts of public enemies; orders or restraints of any kind
of the government of the United States of America or of the State or
any of their departments, agencies, political subdivisions or
officials, or any civil or military authority; insurrections; civil
disturbances; riots; epidemics; landslides; lightning; earthquakes;
fires; hurricanes; tornados; storms; droughts; floods; arrests;
restraint of government and people; explosions; breakage, nuclear
accidents or other malfunction or accident to facilities, machinery,
transmission pipes or canals; partial or entire failure of a utility
serving the Projects; shortages of labor, materials, supplies or
transportation; or
(ii) any cause, circumstance or event not reasonably within the
control of the Company.
"Generating Station" means the generating station described in Exhibit A
hereto.
"Indenture" means the Trust Indenture related to the Bonds, dated as of the
same date as this Agreement, between the Authority and the Trustee, as amended
or supplemented from time to time.
"Insurance Agreement" means the Insurance Agreement between the Company and
the Bond Insurer, as amended or supplemented from time to time.
"Interest Rate for Advances" means the interest rate per year payable on
the Bonds.
"Investment Grade Rating" means a long-term debt rating by a Rating Agency
that is included in one of the four highest debt rating categories of the Rating
Agency, provided that such rating categories shall mean generic categories and
without regard to or other qualifications of ratings within each such generic
rating category such as "+", "-", "1", "2" or "3".
"Issuance Costs" means those costs relating to the issuance of the Bonds as
that term is used in Section 147(g) of the Code, including financial, legal,
accounting and printing fees, charges and expenses, underwriting fees, the
Authority Fee, initial acceptance fees of the Trustee, any Authenticating Agent,
the Registrar and any Paying Agent, and all other such fees, charges and
expenses incurred in connection with the authorization, sale, issuance and
delivery of the Bonds.
"Loan" means the loan by the Authority to the Company of the proceeds
received from the sale of the Bonds.
"Loan Payment Date" means any date on which any Bond Service Charges are
due and payable.
"Loan Payments" means the amounts required to be paid by the Company in
repayment of the Loan pursuant to Section 4.1 hereof.
"Notice Address" means:
(a) As to the Authority: Ohio Air Quality Development Authority
1718 ▇▇▇▇▇▇▇ Tower
▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Executive Director
(b) As to the Company: The Cincinnati Gas & Electric Company
26th Floor Atrium II
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▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
(c) As to the Trustee: Deutsche Bank National Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
or such additional or different address, notice of which is given under Section
8.3 hereof.
"Opinion of Bond Counsel" means a written opinion of nationally recognized
bond counsel selected by the Company and acceptable to the Trustee who is
experienced in matters relating to the exclusion from gross income for federal
income tax purposes of interest on obligations issued by states and their
political subdivisions. Bond Counsel may be counsel to the Trustee or the
Company.
"Person" or words importing persons mean firms, associations, partnerships
(including without limitation, general and limited partnerships), limited
liability entities, joint ventures, societies, estates, trusts, corporations,
public or governmental bodies, other legal entities and natural persons.
"Project Costs" means the costs of the Projects specified in Section 3.4
hereof.
"Projects" or "Project Facilities" means the real, personal or real and
personal property, including undivided or other interests therein, identified in
the Project Descriptions, financed with the proceeds of the Bonds, at least 95%
of which constitute "solid waste disposal facilities" under Section 142(a)(6) of
the Code.
"Project Descriptions" means the descriptions of the Project Facilities
attached hereto as Exhibit A, as the same may be amended in accordance with this
Agreement.
"Project Purposes" means the purposes of Air Quality Facilities as
described in the Act and as particularly described in Exhibit A hereto.
"Project Site" means the site of the Generating Station.
"Restructuring Transaction" means the sale or transfer by the Company of
some or all of its electric generating facilities and associated assets and
liabilities, which sale or transfer includes the Generating Station, to an
entity or entities organized and existing under the laws of one of the states of
the United States of America, the District of Columbia or under the laws of the
United States of America and qualified to do business in the State (the "GenCo")
if such transfer or sale is, in the sole discretion of the Company, necessary or
desirable in order to permit the Company or an affiliate of the Company to
provide retail electric service in the State or to comply with any law of the
State relating to electric utility restructuring.
"Revenues" means (a) the Loan Payments, (b) all other moneys received or to
be received by the Authority (excluding the Authority Fee) or the Trustee in
respect of repayment of the Loan, including without limitation, all moneys and
investments in the Bond Fund, (c) any moneys and investments in the Project
Fund, and (d) all income and profit from the investment of the foregoing moneys.
The term "Revenues" does not include any moneys or investments in the Rebate
Fund or the Bond Purchase Fund.
"State" means the State of Ohio.
"Trustee" means Deutsche Bank National Trust Company, a banking corporation
duly organized and validly existing under the laws of the United States of
America and duly authorized to exercise corporate trust powers in the State,
until a successor Trustee shall have become such pursuant to the applicable
provisions of the Indenture, and thereafter "Trustee" shall mean the successor
Trustee. "Principal Office" of the Trustee shall mean a corporate trust office
of the Trustee, which office at the date of issuance of the Bonds is located at
its Notice Address.
"Unassigned Authority Rights" means all of the rights of the Authority to
receive Additional Payments under Section 4.2 hereof, to inspection pursuant to
Section 5.1 hereof, to be held harmless and indemnified under Section 5.9
hereof, to be reimbursed for attorney's fees and expenses under Section 7.4
hereof and to give or withhold consent to amendments, changes, modifications,
alterations and termination of this Agreement under Section 8.6 hereof and its
right to enforce such rights.
Section 1.3. Interpretation. Any reference herein to the State, to the
Authority or to any member or officer of either includes entities or officials
succeeding to their respective functions, duties or responsibilities pursuant to
or by operation of law or lawfully performing their functions.
Any reference to a section or provision of the Constitution of the State or
the Act, or to a section, provision or chapter of the Ohio Revised Code, or to
any statute of the United States of America, includes that section, provision or
chapter as amended, modified, revised, supplemented or superseded from time to
time; provided, that no amendment, modification, revision, supplement or
superseding section, provision or chapter shall be applicable solely by reason
of this provision, if it constitutes in any way an impairment of the rights or
obligations of the Authority, the State, the Holders, the Trustee, the
Registrar, the Auction Agent, an Authenticating Agent, a Paying Agent, the Bond
Insurer, the Remarketing Agent, or the Company under this Agreement, the
Indenture or the Bonds.
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 1.4. Captions and Headings. The captions and headings in this
Agreement are used solely for convenience of reference and in no way define,
limit or describe the scope or intent of any Articles, Sections, subsections,
paragraphs or subparagraphs or clauses hereof.
(End of Article I)
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations of the Authority. The Authority represents
that: (a) it is a body politic and corporate duly organized and validly existing
under the laws of the State; (b) it has duly accomplished all conditions
necessary to be accomplished by it prior to the issuance and delivery of the
Bonds and the execution and delivery of this Agreement and the Indenture; (c) it
is not in violation of or in conflict with any provisions of the laws of the
State which would impair its ability to carry out its obligations contained in
this Agreement or the Indenture; (d) it is empowered to enter into the
transactions contemplated by this Agreement and the Indenture; (e) it has duly
authorized the execution, delivery and performance of this Agreement and the
Indenture; (f) it will do all things in its power in order to maintain its
existence or assure the assumption of its obligations under this Agreement and
the Indenture by any successor public body; and (g) following reasonable notice,
a public hearing was held on October 12, 2004 with respect to the issuance of
the Bonds as required by Section 147(f) of the Code.
Section 2.2. No Warranty by Authority of Condition or Suitability of the
Projects. The Authority makes no warranty, either express or implied, as to the
suitability or utilization of the Projects for the Project Purposes, or as to
the condition of the Project Facilities or that the Project Facilities are or
will be suitable for the Company's purposes or needs.
Section 2.3. Representations and Covenants of the Company. The Company
represents that:
(a) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State, with power and
authority (corporate and other) to own its properties and conduct its
business, to execute and deliver this Agreement and to perform its
obligations under this Agreement;
(b) This Agreement and the Continuing Disclosure Agreement have each
been duly authorized, executed and delivered by the Company and this
Agreement and the Continuing Disclosure Agreement each constitute a valid
and legally binding obligation of the Company, enforceable in accordance
with their terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
(c) The execution, delivery and performance by the Company of this
Agreement and the Continuing Disclosure Agreement and the consummation of
the transactions contemplated hereby and thereby will not violate any
provision of law or regulation applicable to the Company, or of any writ or
decree of any court or governmental instrumentality, or of the Articles of
Incorporation, as amended, or the Regulations of the Company, or of any
mortgage, indenture, contract, agreement or other undertaking to which the
Company is a party or which purports to be binding upon the Company or upon
any of its assets;
(d) The acquisition, construction, installation, equipping and
improvement of the Projects were not commenced prior to the adoption of
Resolution No. 04-61 of the Authority on September 14, 2004 evidencing the
intent of the Authority to issue the Bonds with the exception of
"preliminary expenditures" within the meaning of Treas.
Reg.ss.1.150-2(f)(2); provided further, however, with respect to certain
costs of the Projects that were paid or incurred on and prior to such date,
such costs will not be financed with the net proceeds of the Bonds except
to the extent that they (i) consist of costs paid on or after 60 days prior
to September 14, 2004 or (ii) consist, in an amount not in excess of 20% of
the aggregate issue price of the Bonds, of "preliminary expenditures"
within the meaning of Treas. Reg.ss.1.150-2(f)(2), which include
architectural, engineering, surveying, soil testing and similar costs that
were incurred prior to commencement of acquisition or construction of the
Projects, other than land acquisition, site preparation and similar costs
incident to commencement of acquisition or construction. Moreover, no costs
of the Projects to be financed with the net proceeds of the Bonds were
originally expended more than 3 years prior to the issuance date of the
Bonds;
(e) The Projects to be acquired, constructed, equipped, installed and
improved at the Project Site, as provided under this Agreement, constitute
Air Quality Facilities under the Act and are consistent with and will
further the purposes of the Act and Section 13 of Article VIII of the Ohio
Constitution and will be located entirely within the State. The Company
will cause the Projects to be operated and maintained in such manner as to
conform to all applicable zoning, planning, building, environmental and
other applicable governmental regulations and all permits, variances and
orders issued or granted pursuant thereto, including the permit-to-install
for each portion of the Projects, which permits, variances and orders have
not been withdrawn or otherwise suspended, and to be consistent with the
Act;
(f) It is expected that the Projects will be utilized as Air Quality
Facilities under the Act commencing promptly as portions thereof become
available for utilization, but in any event on or before the Completion
Date;
(g) It presently intends to use or operate or cause to be used or
operated the Projects in a manner consistent with the Project Purposes
until the date on which the Bonds have been fully paid and knows of no
reason why the Projects will not be so operated. The Company does not
presently intend to sell or otherwise dispose of the Projects or any
portion thereof;
(h) At least 95% of the net proceeds (as defined in Section 150 of the
Code) of the Bonds will be used to provide land or property of a character
subject to the allowance for depreciation for purposes of Section 167 of
the Code. The Company will not request or authorize any disbursement
pursuant to Section 3.4 hereof, which, if paid, would result in less than
95% of such net proceeds being so used. The Issuance Costs of the Bonds
financed with the proceeds of the Bonds will not exceed 2% of the proceeds
of the Bonds (within the meaning of Section 147(g) of the Code). None of
the proceeds of the Bonds will be used to provide working capital;
(i) In accordance with Section 147(b) of the Code, the weighted
average maturity of the Bonds does not exceed 120% of the weighted average
reasonably expected economic life of the facilities being financed by the
Bonds;
(j) None of the proceeds of the Bonds will be used to provide any
airplane; skybox or other private luxury box; health club facility; any
facility primarily used for gambling; or any store the principal business
of which is the sale of alcoholic beverages for consumption off premises;
(k) Less than 25% of the net proceeds of the Bonds will be used
directly or indirectly to acquire land or any interest therein, and none of
such land is being or will be used for farming purposes; no portion of the
net proceeds of the Bonds will be used to acquire existing property or any
interest therein unless the first use of such property or interest therein
is pursuant to such acquisition;
(l) At no time will any funds constituting gross proceeds of the Bonds
be used in a manner as would constitute failure of compliance with Section
148 of the Code;
(m) It is not anticipated that as of the date hereof, there will be
created any "replacement proceeds", within the meaning of Section
1.148-1(c) of the Treasury Regulations, with respect to the Bonds; however,
in the event that any such replacement proceeds are deemed to have been
created, such amounts will be invested in compliance with Section 148 of
the Code;
(n) The Bonds are not "federally guaranteed" within the meaning of
Section 149(b) of the Code;
(o) At least 95% of the proceeds of the Bonds will be used to provide
"solid waste disposal facilities" within the meaning of Section 142(a)(6)
of the Code;
(p) The information furnished by the Company and used by the Authority
in preparing the certification pursuant to Section 148 of the Code and in
preparing the information statement pursuant to Section 149(e) of the Code,
both referred to in the Bond Resolution, will be accurate and complete as
of the date of issuance of the Bonds; and
(q) The Project Facilities do not include any office except for
offices (i) located on the Project Site and (ii) not more than a de minimis
amount of the functions to be performed at which is not directly related to
the day-to-day operations of the Project Facilities.
(End of Article II)
ARTICLE III
COMPLETION OF THE PROJECTS;
ISSUANCE OF THE BONDS
Section 3.1. Acquisition, Construction and Installation. The Company
represents and agrees that it (a) has caused or will cause the Projects to be
acquired, constructed and installed on the Project Site in accordance with the
Project Descriptions and in conformance with all applicable, valid and
enforceable (i) zoning, planning, building, environmental and other similar
regulations of all governmental authorities having jurisdiction over the
Projects and (ii) permits, variances and orders issued in respect of the
Projects by EPA, noncompliance with which would have a material adverse effect
on the Company's ability to operate and maintain the Projects or to perform its
obligations hereunder, provided that the Company reserves the right to contest
in good faith any such regulations, permits, variances or orders, (b) will use
its reasonable efforts to cause the acquisition, construction and installation
of other facilities and real and personal property deemed necessary in
connection with the Projects to the end that the Projects will fulfill the
Project Purposes, (c) will pay all fees, costs and expenses incurred in such
acquisition, construction and installation and (d) will use its reasonable
efforts to ask, demand, ▇▇▇ for, ▇▇▇▇, recover and receive all such sums of
money, debts and other demands whatsoever which may be due, owing and payable
under the terms of any contract, order, receipt, writing and instruction in
connection with the acquisition, construction and installation of the Projects,
and to enforce the provisions of any contract, agreement, obligation, bond or
other performance security with respect thereto; provided that in all instances
the Company shall retain the option of settlement of any dispute. Any amounts
received in connection with actions taken under clause (d) of the preceding
sentence, after deduction of expenses incurred in such recovery, prior to the
Completion Date and full disposition of the Project Fund in accordance with this
Agreement and the Indenture, shall be paid into the Project Fund.
It is understood that the Projects are those of the Company and any
contracts made by the Company with respect thereto, whether acquisition
contracts, installation contracts or otherwise, or any work to be done by the
Company on the Projects are made or done by the Company on its own behalf and
not as agent or contractor for the Authority.
With knowledge of the provisions of the January 27, 1972 Executive Order of
the Governor of Ohio, relating to equal employment opportunity, the Company
hereby makes the pledges and commitments enumerated in said order with respect
to the construction and installation of the Projects and to the extent that said
Executive Order is applicable, agrees that the same requirement and commitment
shall be included in all contracts and subcontracts awarded for the construction
and installation of the Projects.
All laborers and mechanics employed on the Projects have been or will be
paid the prevailing rates of wages of laborers and mechanics for the class of
work called for by the Projects, which wages were or will be determined in
accordance with the requirements of Chapter 4115, Ohio Revised Code, for
determination of prevailing wage rates; provided, that should the Company or
other nonpublic user of the Projects undertake, as part of the Projects,
construction to be performed by its regular bargaining unit employees who are
covered under a collective bargaining agreement which was in existence prior to
the date of the commitment instrument undertaking to issue the Bonds, then, in
that event, the rate of pay provided under the collective bargaining agreement
may be paid to those employees.
Section 3.2. Project Descriptions. The Project Descriptions may be changed
from time to time by, or with the consent of, the Company provided that any such
change shall also be filed with the Authority and provided further that no
change in the Project Descriptions shall materially change the function of the
Project Facilities unless the Trustee shall have received (i) an Engineer's
certificate that such changes will not impair the significance or character of
the Project Facilities as Air Quality Facilities and (ii) an Opinion of Bond
Counsel or ruling of the Internal Revenue Service to the effect that such
amendment will not adversely affect the exclusion of interest on the Bonds from
gross income for federal income tax purposes.
Section 3.3. Issuance of the Bonds; Application of Proceeds. To provide
funds to make the Loan to the Company to assist the Company in the financing of
a portion of the costs of the Projects, the Authority will issue, sell and
deliver the Bonds to the Original Purchaser. The Bonds will be issued pursuant
to the Indenture in the aggregate principal amount, will bear interest, will
mature and will be subject to redemption as set forth therein. The Company
hereby approves the terms and conditions of the Indenture and the Bonds, and the
terms and conditions under which the Bonds will be issued, sold and delivered.
The Company, for the benefit of the Authority and each Bondholder, shall do and
perform all acts and things required or contemplated in the Indenture to be done
or performed by the Company.
The proceeds from the sale of the Bonds (other than any accrued interest)
shall be loaned to the Company to assist the Company in the financing of its
portion of the costs of the Projects. Those proceeds shall be deposited in the
Project Fund. Any accrued interest shall be deposited in the Bond Fund. Pending
disbursement pursuant to Section 3.4 hereof, the proceeds so deposited in the
Project Fund, together with any investment earnings thereon, shall constitute a
part of the Revenues assigned by the Authority to the payment of Bond Service
Charges as provided in the Indenture.
Section 3.4. Disbursements from the Project Fund. Disbursements from the
Project Fund shall be made only to reimburse or pay the Company, or any Person
designated by the Company, for the following Project Costs:
(a) Costs incurred directly or indirectly for or in connection with
the acquisition, construction, equipping, installation or improvement of
the Projects, including but not limited to those costs incurred for
preliminary planning and studies, architectural, legal, engineering and
supervisory services, labor, services, materials, acquisition, construction
and installation, recording of documents and title work relating to the
Project Site.
(b) Premiums attributable to all insurance required to be taken out
and maintained during the Construction Period with respect to the Projects
and the premium on each surety bond, if any, required with respect to work
on the Projects.
(c) Taxes, assessments, interest on the Bonds and other charges in
respect of the Projects that may become due and payable during the
Construction Period for the Projects.
(d) Costs incurred directly or indirectly in seeking to enforce any
remedy against any contractor or subcontractor in respect of any default
under any contract relating to the Projects.
(e) Financial, legal, accounting, appraisal, printing and engraving
fees, charges and expenses, title insurance premiums, if any, and all other
such fees, charges and expenses incurred in connection with the
authorization, sale, issuance and delivery of the Bonds and the preparation
and delivery of the Agreement, the Indenture and other related documents.
(f) Fees and expenses of the Trustee, Authenticating Agent, Paying
Agent and Registrar (as such terms are defined in the Indenture), including
reasonable counsel fees and expenses, properly incurred under the Indenture
that may become due and payable during the Construction Period, including
the initial or acceptance fee of the Trustee.
(g) Any other incidental and necessary costs including without
limitation any expenses, fees and charges relating to the acquisition,
construction or installation of the Projects.
(h) Payments made to the Rebate Fund.
(i) Any other expense permissible, in the opinion of Bond Counsel,
under the Act.
Any disbursements from the Project Fund for the payment of Project Costs
shall be made by the Trustee only upon the written order of the Authorized
Company Representative. Each such written order shall be in the form of the
disbursement request attached hereto as Exhibit B and shall be consecutively
numbered. In the case of any contract providing for the retention of a portion
of the contract price, there shall be paid initially from the Project Fund only
the net amount remaining after deduction of any such portion, and when the
amount of any such retention is due and payable, then such retention may be paid
from the Project Fund.
In addition, the Company shall not request or authorize any disbursements
from the Project Fund prior to the Completion Date for a purpose or function
other than to provide solid waste disposal facilities within the meaning of
Section 142(a)(6) of the Code, unless such disbursement would not result in more
than 5% of the net proceeds of the Bonds (including those amounts disbursed
pursuant to this Section 3.4) being used other than to provide solid waste
disposal facilities (treating Issuance Costs so paid as being used other than to
provide solid waste disposal facilities), unless in connection with any such
disbursement request the Company provides the Trustee with an opinion of Bond
Counsel or ruling of the Internal Revenue Service to the effect that such
disbursement will not cause the interest on the Bonds to be included in the
gross income of the Holders for federal income tax purposes.
Receipt of a disbursement request, in the form of the disbursement request
attached hereto as Exhibit B, shall be full authorization for the Trustee to
make the disbursements requested thereby, and the Trustee shall be entitled to
rely without further inquiry on, and shall have no duty to check, verify or
investigate, the statements and certifications made therein or included
therewith.
Any moneys in the Project Fund remaining after the Completion Date and
payment, or provision for payment, in full of the Project Costs at the direction
of the Authorized Company Representative promptly shall be (a) used to acquire,
construct or install such additional real and personal property comprising Air
Quality Facilities as defined in the Act for use in connection with the Projects
as is designated by the Authorized Company Representative and the acquisition,
construction, equipment, installation and improvement of which will be such as
is permitted under the Act, (b) used for the purchase of Bonds in the open
market for the purpose of cancellation at prices not exceeding the fair market
value thereof plus accrued interest to the date of payment therefor, (c) paid
into the Bond Fund to be applied to the payment of Bond Service Charges on the
Bonds or the redemption of the Bonds, or (d) used for a combination of the
foregoing as is provided in that direction or for any other purposes as are or
may be permitted under the Act; provided that, in all such cases, (A) those
moneys shall be so used or applied only to the extent that such use or
application will not, in the opinion of Bond Counsel or under a ruling of the
Internal Revenue Service, adversely affect the exclusion of the interest on the
Bonds from the gross income of the Holders thereof and (B) any money remaining
in the Project Fund following completion of the Projects shall be invested in
accordance with the Code in such manner as not to adversely affect the exclusion
of the interest on the Bonds from the gross income of the Holders thereof.
Section 3.5. Company Required to Pay Costs in Event Project Fund
Insufficient. If moneys in the Project Fund are not sufficient to pay all
Project Costs, the Company, nonetheless, will complete the Projects or cause the
Projects to be completed, in order to fulfill the Project Purposes and shall pay
all such additional Project Costs from its own funds. The Company shall not be
entitled to any reimbursement for any such additional Project Costs from the
Authority, the Trustee or the Holders of any of the Bonds, nor shall it be
entitled to any abatement, diminution or postponement of the Loan Payments. The
Authority does not make any representation that the moneys which will be paid
into the Project Fund and which under the provisions of this Agreement will be
available for payment of Project Costs, will be sufficient to pay all the costs
which will be incurred in that connection. The Company agrees that if after
exhaustion of the moneys in the Project Fund, the Company should pay pursuant
hereto any portion of the costs listed in Section 3.4 hereof, it shall not be
entitled to any reimbursement therefor from the State, the Authority, the
Trustee or the Holders of any of the Bonds.
Section 3.6. Completion Date. The Company shall notify the Authority and
the Trustee of the Completion Date by a certificate signed by the Authorized
Company Representative stating:
(a) the date on which the Projects were substantially completed and
all other facilities necessary in connection with the Projects have been
acquired, constructed and installed;
(b) that the acquisition, construction and installation of the
Projects and such other facilities have been accomplished in such a manner
as to conform with all applicable, legal and valid zoning, planning,
building, environmental and other similar governmental regulations, so as
not to have a material adverse effect on the Company's ability to operate
the Projects for the Project Purposes and perform its obligations
hereunder;
(c) that, except as provided in clause (d) of this Section 3.6, all
costs of that acquisition and installation then and theretofore due and
payable have been paid; and
(d) the amount which the Trustee shall retain in the Project Fund for
the payment of Project Costs not yet due or for liabilities which the
Company is contesting or which otherwise should be retained and the reasons
such amount should be retained.
That certificate may state that it is given without prejudice to any rights
against third parties which then exist or subsequently may come into being. The
Authorized Company Representative shall include with that certificate a
statement describing the items of personal property comprising a part of the
Projects. The certificate shall be delivered as promptly as practicable after
the occurrence of the events and conditions referred to in clauses (a) through
(d) of this Section.
Section 3.7. Investment of Fund Moneys. At the oral (confirmed promptly in
writing) or written request of the Company, any moneys held as part of the Bond
Fund, the Project Fund or the Rebate Fund shall be invested or reinvested by the
Trustee in Eligible Investments; provided, that such moneys shall be invested or
reinvested by the Trustee only in Eligible Investments which shall mature, or
which shall be subject to redemption by the holder thereof at the option of such
holder, not later than the date upon which the moneys so invested are needed to
make payments from those Funds. The Authority and the Company each hereby
covenants that it will restrict that investment and reinvestment and the use of
the proceeds of the Bonds in such manner and to such extent, if any, as may be
necessary so that the Bonds will not constitute arbitrage bonds under Section
148 of the Code.
The Company shall provide the Authority with, and the Authority may base
its certificate and statement, each as authorized by the Bond Resolution, on a
certificate of an appropriate officer, employee or agent of or consultant to the
Company for inclusion in the transcript of proceedings for the Bonds, setting
forth the reasonable expectations of the Company on the date of delivery of and
payment for the Bonds regarding the amount and use of the proceeds of the Bonds
and the facts, estimates and circumstances on which those expectations are
based.
Section 3.8. Rebate Fund. To the extent required by Section 5.09 of the
Indenture, within five days after the end of the fifth Bond Year and every fifth
Bond Year thereafter, and within five days after payment in full of all
outstanding Bonds, the Company shall calculate the amount of Excess Earnings as
of the end of that Bond Year or the date of such payment and shall notify the
Trustee of that amount. If the amount then on deposit in the Rebate Fund created
under the Indenture is less than the amount of Excess Earnings (computed by
taking into account the amount or amounts, if any, previously paid to the United
States pursuant to Section 5.09 of the Indenture and this Section), the Company
shall, within five days after the date of the aforesaid calculation, pay to the
Trustee for deposit in the Rebate Fund an amount sufficient to cause the Rebate
Fund to contain an amount equal to the Excess Earnings. The obligation of the
Company to make such payments shall remain in effect and be binding upon the
Company notwithstanding the release and discharge of the Indenture. The Company
shall obtain and keep such records of the computations made pursuant to this
Section as are required under Section 148(f) of the Code.
(End of Article III)
ARTICLE IV
LOAN BY AUTHORITY; LOAN PAYMENTS;
ADDITIONAL PAYMENTS; BOND INSURANCE POLICY; AND LIQUIDITY FACILITY
Section 4.1. Loan Repayment. Upon the terms and conditions of this
Agreement, the Authority agrees to make the Loan to the Company. The proceeds of
the Loan shall be deposited with the Trustee pursuant to Section 3.3 hereof. In
consideration of and in repayment of the Loan, the Company shall under all
circumstances and without reduction for any reason make, as Loan Payments, to
the Trustee for the account of the Authority, payments which correspond, as to
time, and are equal in amount as of the Loan Payment Date, to the corresponding
Bond Service Charges payable on the Bonds. All Loan Payments received by the
Trustee shall be held and disbursed in accordance with the provisions of the
Indenture and this Agreement for application to the payment of Bond Service
Charges.
The Company shall be entitled to a credit against the Loan Payments
required to be made on any Loan Payment Date to the extent that the balance of
the Bond Fund is then in excess of amounts required (a) for the payment of Bonds
theretofore matured or theretofore called for redemption, or to be called for
redemption pursuant to Section 6.1 hereof (b) for the payment of interest for
which checks or drafts have been drawn and mailed by the Trustee or Paying
Agent, and (c) to be deposited in the Bond Fund by the Indenture for use other
than for the payment of Bond Service Charges due on that Loan Payment Date.
The Company's obligation to make Loan Payments shall be reduced to the
extent of any payments made by the Bond Insurer to the Trustee in respect of the
principal of, premium, if any, or interest on the Bonds when due pursuant to the
Bond Insurance Policy, provided, that the Bond Insurer has been reimbursed for
such payments in accordance with the terms of the Insurance Agreement.
Except for such interest of the Company as may hereafter arise pursuant to
Section 8.2 hereof or Sections 5.07 or 5.08 of the Indenture, the Company and
the Authority each acknowledge that neither the Company, the State nor the
Authority has any interest in the Bond Fund or the Bond Purchase Fund, and any
moneys deposited therein shall be in the custody of and held by the Trustee in
trust for the benefit of the Holders.
Section 4.2. Additional Payments. The Company shall pay to the Authority
the Authority Fee and, as Additional Payments hereunder, any and all reasonable
costs and expenses incurred or to be paid by the Authority in connection with
the issuance and delivery of the Bonds or otherwise related to actions taken by
the Authority under this Agreement or the Indenture.
The Company shall pay the Administration Expenses to the Trustee, the
Registrar, the Remarketing Agent, the Auction Agent, and any Paying Agent or
Authenticating Agent, as appropriate, as Additional Payments hereunder.
The Company may, without creating a default hereunder, contest in good
faith the reasonableness of any such cost or expense incurred or to be paid by
the Authority and any Administration Expenses claimed to be due to the Trustee,
the Registrar, the Auction Agent, the Remarketing Agent, any Paying Agent or any
Authenticating Agent.
In the event the Company should fail to pay any Loan Payments, Additional
Payments or Administration Expenses as provided herein when due, the payment in
default shall continue as an obligation of the Company until the amount in
default shall have been fully paid together with interest thereon during the
default period at the Interest Rate for Advances.
Section 4.3. Place of Payments. The Company shall make all Loan Payments
directly to the Trustee at its Principal Office. Additional Payments shall be
made directly to the person or entity to whom or to which they are due.
Section 4.4. Obligations Unconditional. The obligations of the Company to
make Loan Payments, Additional Payments and any payments required of the Company
under Section 5.09 of the Indenture shall be absolute and unconditional, and the
Company shall make such payments without abatement, diminution or deduction
regardless of any cause or circumstances whatsoever including, without
limitation, any defense, set-off, recoupment or counterclaim which the Company
may have or assert against the Authority, the Trustee, the Registrar, the
Remarketing Agent, the Auction Agent, the Paying Agent or any other Person.
Section 4.5. Assignment of Revenues and Agreement. To secure the payment of
Bond Service Charges, the Authority shall, by the Indenture, (a) absolutely and
irrevocably assign to the Trustee, its successors in trust and its and their
assigns forever, all of the Authority's rights and remedies under this Agreement
(except for the Unassigned Authority Rights), and (b) grant a security interest
to the Trustee, its successors in trust and its and their assigns forever, in
all of its rights to and interest in the Revenues including, without limitation,
all Loan Payments and other amounts receivable by or on behalf of the Authority
under the Agreement in respect of repayment of the Loan. The Company hereby
agrees and consents to those assignments and that grant of a security interest.
Section 4.6. Bond Insurance Policy; Liquidity Facility; Cancellation. (a)
The Company agrees to support the payment of the principal of and interest on
the Bonds by causing the Bond Insurance Policy to be delivered to the Trustee on
the date of the delivery of the Bonds.
(b) The Company may provide for the delivery of a Liquidity Facility.
(c) The Company may cancel any Liquidity Facility then in effect at
such time and direct the Trustee in writing to surrender such Liquidity
Facility to the Liquidity Facility Issuer by which it was issued in
accordance with the Indenture; provided, that no such cancellation shall
become effective and no such surrender shall take place until all Bonds
subject to purchase pursuant to Section 4.07(d) of the Indenture have been
so purchased or redeemed with the proceeds of such Liquidity Facility.
Section 4.7. Company's Option to Elect Rate Period; Changes in Auction Date
and Length of Auction Periods. The Company shall have, and is hereby granted,
the option to elect to convert on any Conversion Date the interest rate borne by
the Bonds to another Variable Rate, or to return to the Auction Rate, to be
effective for a Rate Period pursuant to the provisions of Article II of the
Indenture and subject to the terms and conditions set forth therein. The Company
shall also have the option to direct the change of Auction Dates and/or the
length of Auction Rate Periods (as such terms are defined in the Indenture) in
accordance with the Indenture. To exercise such options, the Company shall give
the written notice required by the Indenture.
Section 4.8. Company's Obligation to Purchase Bonds. The Company hereby
agrees to pay or cause to be paid to the Trustee or the Paying Agent, on or
before each day on which Bonds may be or are required to be tendered for
purchase, amounts equal to the amounts to be paid by the Trustee or the Paying
Agent with respect to the Bonds tendered for purchase on such dates pursuant to
Article IV of the Indenture; provided, however, that the obligation of the
Company to make any such payment under this Section shall be reduced by the
amount of (A) moneys paid by the Remarketing Agent as proceeds of the
remarketing of such Bonds by the Remarketing Agent, (B) moneys drawn under a
Liquidity Facility, if any, for the purpose of paying such purchase price and
(C) other moneys made available by the Company, as set forth in Section
4.08(b)(ii) of the Indenture.
(End of Article IV)
ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
Section 5.1. Right of Inspection. The Company agrees that, subject to
reasonable security and safety regulations and to reasonable requirements as to
notice, the Authority and the Trustee and their or any of their respective duly
authorized agents shall have the right at all reasonable times to enter upon the
Project Site to examine and inspect the Projects.
Section 5.2. Maintenance. The Company shall use its best efforts to keep
and maintain the Project Facilities, including all appurtenances thereto and any
personal property therein or thereon, in good repair and good operating
condition so that the Project Facilities will continue to constitute Air Quality
Facilities for the purposes of the operation thereof as required by Section 5.4
hereof.
So long as such shall not be in violation of the Act or impair the
character of the Project Facilities as Air Quality Facilities, and provided
there is continued compliance with applicable laws and regulations of
governmental entities having jurisdiction thereof, the Company shall have the
right to remodel the Project Facilities or make additions, modifications and
improvements thereto, from time to time as it, in its discretion, may deem to be
desirable for its uses and purposes, the cost of which remodeling, additions,
modifications and improvements shall be paid by the Company and the same shall,
when made, become a part of the Project Facilities.
Section 5.3. Removal of Portions of the Project Facilities. The Company
shall not be under any obligation to renew, repair or replace any inadequate,
obsolete, worn out, unsuitable, undesirable or unnecessary portions of the
Project Facilities, except that, subject to Section 5.4 hereof, it will use its
best efforts to ensure the continued character of the Project Facilities as Air
Quality Facilities. The Company shall have the right from time to time to
substitute personal property or fixtures for any portions of the Project
Facilities, provided that the personal property or fixtures so substituted shall
not impair the character of the Project Facilities as Air Quality Facilities.
Any such substituted property or fixtures shall, when so substituted, become a
part of the Project Facilities. The Company shall also have the right to remove
any portion of the Project Facilities, without substitution therefor; provided,
that the Company shall deliver to the Trustee a certificate signed by an
Engineer describing said portion of the Project Facilities and stating that the
removal of such property or fixtures will not impair the character of the
Project Facilities as Air Quality Facilities.
Section 5.4. Operation of Project Facilities. The Company will, subject to
its obligations and rights to maintain, repair or remove portions of the Project
Facilities, as provided in Sections 5.2 and 5.3 hereof, use its best efforts to
continue operation of the Project Facilities so long as and to the extent that
operation thereof is required to comply with laws or regulations of governmental
entities having jurisdiction thereof or unless the Authority shall have approved
the discontinuance of such operation (which approval shall not be unreasonably
withheld). The Company agrees that it will, within the design capacities
thereof, use its best efforts to operate and maintain the Project Facilities in
accordance with all applicable, valid and enforceable rules and regulations of
governmental entities having jurisdiction thereof; provided, that the Company
reserves the right to contest in good faith any such laws or regulations.
Nothing in this Agreement shall prevent or restrict the Company, in its
sole discretion, at any time, from discontinuing or suspending either
permanently or temporarily its use of any facility of the Company served by the
Project Facilities and in the event such discontinuance or suspension shall
render unnecessary the continued operation of the Project Facilities, the
Company shall have the right to discontinue the operation of the Project
Facilities during the period of any such discontinuance or suspension.
Section 5.5. Insurance. The Company shall cause the Project Facilities to
be kept insured against fire or other casualty to the extent that property of
similar character is usually so insured by companies similarly situated and
operating like properties (including self-insurance generally consistent with
industry practice), to a reasonable amount by reputable insurance companies or,
in lieu of or supplementing such insurance in whole or in part, adopt some other
method or plan of protection against loss by fire or other casualty at least
equal in protection to the method or plan of protection against loss by fire or
other casualty of companies similarly situated and operating properties subject
to similar or greater fire or other hazards or on which properties an equal or
higher primary fire or other casualty insurance rate has been set by reputable
insurance companies.
Section 5.6. Workers' Compensation Coverage. Throughout the term of this
Agreement, the Company shall comply, or cause compliance, with applicable
workers' compensation laws of the State.
Section 5.7. Damage; Destruction and Eminent Domain. If, during the term of
this Agreement, the Project Facilities or any portion thereof is destroyed or
damaged in whole or in part by fire or other casualty, or title to, or the
temporary use of, the Project Facilities or any portion thereof shall have been
taken by the exercise of the power of eminent domain, the Company (unless it
shall have exercised its option to prepay the Loan Payments pursuant to Section
6.2 hereof) shall promptly repair, rebuild or restore the portion of the Project
Facilities so damaged, destroyed or taken with such changes, alterations and
modifications (including the substitution and addition of other property) as may
be necessary or desirable for the administration and operation of the Project
Facilities as Air Quality Facilities and as shall not impair the character or
significance of the Project Facilities as furthering the purposes of the Act.
Section 5.8. Company to Maintain its Corporate Existence; Conditions Under
Which Exceptions Permitted. The Company agrees that, during the term of this
Agreement, it will maintain its corporate existence, will not dissolve or
otherwise dispose of all or substantially all of its assets and will not
consolidate with or merge into another corporation or permit one or more other
corporations to consolidate with or merge into it; provided that the Company
may, without violating its agreement contained in this Section, consolidate with
or merge into another corporation, or permit one or more other corporations to
consolidate with or merge into it, or sell or otherwise transfer to another
corporation all or substantially all of its assets as an entirety and thereafter
dissolve, provided the surviving, resulting or transferee corporation, as the
case may be (if other than the Company), is a corporation organized and existing
under the laws of one of the states of the United States, and assumes in writing
all of the obligations of the Company herein, and, if not an Ohio corporation,
is qualified to do business in the State.
If consolidation, merger or sale or other transfer is made as provided in
this Section, the provisions of this Section shall continue in full force and
effect and no further consolidation, merger or sale or other transfer shall be
made except in compliance with the provisions of this Section.
Section 5.9. Indemnification. The Company releases the Authority from,
agrees that the Authority shall not be liable for, and indemnifies the Authority
against, all liabilities, claims, costs and expenses imposed upon or asserted
against the Authority on account of: (a) any loss or damage to property or
injury to or death of or loss by any person that may be occasioned by any cause
whatsoever pertaining to the construction, maintenance, operation and use of the
Project Facilities; (b) any breach or default on the part of the Company in the
performance of any covenant or agreement of the Company under this Agreement or
any related document, or arising from any act or failure to act by the Company,
or any of its agents, contractors, servants, employees or licensees; (c) the
authorization, issuance and sale of the Bonds, or the subsequent remarketing or
determination of the interest rate or rates on the Bonds, and the provision of
any information furnished in connection therewith concerning the Project
Facilities or the Company (including, without limitation, any information
furnished by the Company for inclusion in any certifications made by the
Authority under Section 3.4 hereof or for inclusion in, or as a basis for
preparation of, the Form 8038 information statement to be filed by the
Authority; and (d) any claim or action or proceeding with respect to the matters
set forth in (a), (b) and (c) above brought thereon.
The Company agrees to indemnify the Trustee, the Paying Agent, the
Remarketing Agent, the Auction Agent and the Registrar (each hereinafter
referred to in this section as an "indemnified party") for and to hold each of
them harmless against all liabilities, claims, reasonable costs and expenses
incurred without negligence or willful misconduct on the part of the indemnified
party, on account of any action taken or omitted to be taken by the indemnified
party in accordance with the terms of this Agreement, the Bonds or the Indenture
or any action taken at the request of or with the consent of the Company,
including the reasonable costs and expenses of the indemnified party in
defending itself against any such claim, action or proceeding brought in
connection with the exercise or performance of any of its powers or duties under
this Agreement, the Bonds or the Indenture.
In case any action or proceeding is brought against the Authority or an
indemnified party in respect of which indemnity may be sought hereunder, the
party seeking indemnity promptly shall give notice of that action or proceeding
to the Company, and the Company upon receipt of that notice shall have the
obligation and the right to assume the defense of the action or proceeding;
provided, that failure of a party to give that notice shall not relieve the
Company from any of its obligations under this Section unless that failure
prejudices the defense of the action or proceeding by the Company. At its own
expense, an indemnified party may employ separate counsel and participate in the
defense; provided, however, where it is ethically inappropriate for one firm to
represent the interests of the Authority and any other indemnified party or
parties, the Company shall pay the Authority's legal expenses in connection with
the Authority's retention of separate counsel. The Company shall not be liable
for any settlement made without its consent.
The indemnification set forth above is intended to and shall include the
indemnification of all affected officials, directors, officers and employees of
the Authority, the Trustee, the Paying Agent, the Remarketing Agent, the Auction
Agent and the Registrar, respectively. That indemnification is intended to and
shall be enforceable by the Authority, the Trustee, the Paying Agent, the
Remarketing Agent and the Registrar, respectively, to the full extent permitted
by law.
Section 5.10. Company Not to Adversely Affect Exclusion of Interest on
Bonds From Gross Income For Federal Income Tax Purposes. The Company hereby
covenants and represents that it has taken and caused to be taken and shall take
and cause to be taken all actions that may be required of it for the interest on
the Bonds to be and remain excluded from the gross income of the Holders for
federal income tax purposes, and that it has not taken or permitted to be taken
on its behalf, and covenants that it will not take, or permit to be taken on its
behalf, any action which, if taken, would adversely affect that exclusion under
the provisions of the Code.
Section 5.11. Ownership of Projects; Use of Projects. The Authority agrees
that it does not have and shall not have any interest in, title to or ownership
of the Projects or the Project Site. The Authority does hereby covenant and
agree that it will not take any action, or cause any action to be taken on its
behalf, during the term of this Agreement, other than pursuant to Article VII of
this Agreement or Article VII of the Indenture, to interfere with the Company's
ownership interest in the Projects or to prevent the Company from having
possession, custody, use and enjoyment of the Projects, except such action as is
requested by the Trustee in enforcing any remedies available to it under this
Agreement or the Indenture.
Section 5.12. Assignment of Agreement in Whole or in Part by Company. This
Agreement may be assigned in whole or in part by the Company without the
necessity of obtaining the consent of either the Authority or the Trustee,
subject, however, to each of the following conditions:
(a) No assignment (other than pursuant to Section 5.8 or Section 5.13
hereof) shall relieve the Company from primary liability for any of its
obligations hereunder, and in the event of any such assignment the Company
shall continue to remain primarily liable for the payment of the Loan
Payments and Additional Payments and for performance and observance of the
agreements on its part herein provided to be performed and observed by it.
(b) Any assignment by the Company must retain for the Company such
rights and interests as will permit it to perform its obligations under
this Agreement, and any assignee from the Company shall assume the
obligations of the Company hereunder to the extent of the interest
assigned.
(c) The Company shall, within 30 days after execution thereof, furnish
or cause to be furnished to the Authority and the Trustee a true and
complete copy of each such assignment together with any instrument of
assumption.
(d) Any assignment from the Company shall not materially impair
fulfillment of the Project Purposes to be accomplished by operation of the
Projects as herein provided.
5.13 Assignment of Agreement in Whole by Company (Novation). In addition to
an assignment contemplated by Sections 5.8 and 5.12 hereof, this Agreement may
be assigned as a whole by the Company, subject, however, to each of the
following conditions:
(a) The Company's rights, duties and obligations under this Agreement
and all related documents are assigned to, and assumed in full by, the
assignee either (i) as of a date the Bonds are subject to mandatory
purchase under Section 4.07 of the Indenture or (ii) as of a date specified
by the Company in connection with a Restructuring Transaction but, in such
case, only if the assignee is the GenCo and the Company has delivered to
the Authority and the Trustee written evidence of an Investment Grade
Rating (taking into account such assignment to, and assumption in full by,
the GenCo) with respect to the Bonds from each Rating Agency.
(b) The assignee and the Company shall execute an assignment and
assumption agreement, in form and substance reasonably acceptable to the
Company, and acknowledged and agreed to by the Authority and the Trustee,
whereby the assignee shall confirm and acknowledge that it has assumed all
of the rights, duties and obligations of the Company under this Agreement
and all related documentation and agrees to be bound by and to perform and
comply with the terms and provisions of this Agreement and all related
documentation as if it had originally executed the same; provided further
that if there is more than one assignee, such assignment and assumption
agreement shall be on a joint and several basis among all assignees.
(c) The Company shall furnish to the Authority, the Bond Insurer and
the Trustee (i) an Opinion of Bond Counsel that such assignment is
authorized or permitted by the Act and will not adversely affect the
exclusion from gross income of interest on the Bonds, (ii) an opinion of
counsel to the assignee to the effect that such assignment and assumption
agreement has been duly authorized by the assignee and constitutes the
legal, valid and binding obligation of the assignee, enforceable against
the assignee in accordance with its terms, subject to laws relating to or
affecting generally the enforcement of creditors' rights, including,
without limitation, bankruptcy and insolvency laws and to general
principles of equity (regardless of whether considered in a proceeding in
equity or at law) and (iii) a certificate of an Authorized Company
Representative and an opinion of counsel to the Company, each stating that
such transaction complies with this Section 5.13 and that all conditions
precedent herein relating to such transaction have been complied with.
(d) The Company shall, within 30 days after execution thereof, furnish
or cause to be furnished to the Authority and the Trustee a true and
complete copy of such assignment and assumption agreement.
(e) Any assignment from the Company shall not materially impair
fulfillment of the purpose of the Projects as herein provided.
(f) Upon the effectiveness of such assignment and assumption, the
assignee shall be deemed to be the "Company" hereunder and the assignor
shall be relieved of all liability hereunder.
(g) Such assignment shall have been approved in writing by the Bond
Insurer in its absolute discretion; provided, however, such approval shall
not be unreasonably denied if the assignment is to a Regulated Utility
Company (as defined in the Insurance Agreement) with a credit rating equal
to or better than that of the Company.
(End of Article V)
ARTICLE VI
REDEMPTION
Section 6.1. Optional Redemption. Provided no Event of Default shall have
occurred and be subsisting, at any time and from time to time, the Company may
deliver moneys to the Trustee in addition to Loan Payments or Additional
Payments required to be made and direct the Trustee to use the moneys so
delivered for the purpose of calling Bonds for optional redemption in accordance
with the applicable provisions of the Indenture providing for optional
redemption at the redemption price stated in the Indenture. Pending application
for those purposes, any moneys so delivered shall be held by the Trustee in a
special account in the Bond Fund and delivery of those moneys shall not, except
as set forth in Section 4.1 hereof, operate to ▇▇▇▇▇ or postpone Loan Payments
or Additional Payments otherwise becoming due or to alter or suspend any other
obligations of the Company under this Agreement.
Section 6.2. Extraordinary Optional Redemption. The Company shall have,
subject to the conditions hereinafter imposed, the option during a Term Rate
Period to direct the redemption of the Bonds in whole upon the occurrence of the
event described below in paragraph (c) and in part upon the occurrence of the
other events described below in accordance with the applicable provisions of the
Indenture. In the event that any of the events described below affect less than
all of the Project Facilities and the Generating Station which they serve, the
Bonds may be redeemed in an amount equal to the outstanding principal amount of
the Bonds multiplied by the following allocable percentage figures for each
Project Facility: 48% for Unit No. 7 at the Generating Station and 52% for Unit
No. 8 at the Generating Station.
(a) The Project Facilities or the Generating Station which they serve
shall have been damaged or destroyed to such an extent that (1) such
Project Facilities or such Generating Station cannot reasonably be expected
to be restored, within a period of six consecutive months, to the condition
thereof immediately preceding such damage or destruction or (2) the Company
is reasonably expected to be prevented from carrying on its normal use and
operation of such Project Facilities or such Generating Station for a
period of six consecutive months.
(b) Title to, or the temporary use of, all or a significant part of
one or more of the Project Facilities or the Generating Station which they
serve shall have been taken under the exercise of the power of eminent
domain to such an extent that (1) such Project Facilities or such
Generating Station cannot reasonably be expected to be restored within a
period of six consecutive months to a condition of usefulness comparable to
that existing prior to the taking or (2) the Company is reasonably expected
to be prevented from carrying on its normal use and operation of such
Project Facilities or such Generating Station for a period of six
consecutive months.
(c) As a result of any changes in the Constitution of the State, the
Constitution of the United States of America or any state or federal laws
or as a result of legislative or administrative action (whether state or
federal) or by final decree, judgment or order of any court or
administrative body (whether state or federal) entered after any contest
thereof by the Authority or the Company in good faith, this Agreement shall
have become void or unenforceable or impossible of performance in
accordance with the intent and purpose of the parties as expressed in this
Agreement.
(d) Unreasonable burdens or excessive liabilities shall have been
imposed upon the Authority or the Company with respect to one or more of
the Project Facilities or the Generating Station which they serve or the
operation thereof, including, without limitation, the imposition of
federal, state or other ad valorem, property, income or other taxes other
than ad valorem taxes at the rates presently levied upon privately owned
property used for the same general purpose as such Project Facilities or
such Generating Station.
(e) Changes in the economic availability of raw materials, operating
supplies, energy sources or supplies or facilities (including, but not
limited to, facilities in connection with the disposal of industrial
wastes) necessary for the operation of one or more of the Project
Facilities or the Generating Station which they serve for the Project
Purposes occur or technological or other changes occur which the Company
cannot reasonably overcome or control and which in the Company's reasonable
judgment render such Project Facilities or such Generating Station
uneconomic or obsolete for the Project Purposes.
(f) Any court or administrative body shall enter a judgment, order or
decree, or shall take administrative action, requiring the Company to cease
all or any substantial part of its operations served by one or more of the
Project Facilities or the Generating Station which they serve to such
extent that the Company is or will be prevented from carrying on its normal
operations at such Project Facilities or such Generating Station for a
period of six consecutive months.
(g) The termination by the Company of operations at the Generating
Station which is served by any of the Project Facilities.
The amount payable by the Company in the event of its exercise of the
option granted in this Section shall be the sum of the following:
(i) An amount of money which, when added to the moneys and
investments held to the credit of the Bond Fund, will be sufficient
pursuant to the provisions of the Indenture to pay, at 100% of the
principal amount thereof plus accrued interest to the redemption date,
and discharge, all or such portion of Outstanding Bonds to be redeemed
on the earliest applicable redemption date, that amount to be paid to
the Trustee, plus
(ii) An amount of money equal to the Additional Payments relating
to those Bonds accrued and to accrue until actual final payment and
redemption of those Bonds, that amount or applicable portions thereof
to be paid to the Trustee or to the Persons to whom those Additional
Payments are or will be due.
The requirement of (ii) above with respect to Additional Payments to accrue may
be met if provisions satisfactory to the Trustee and the Authority are made for
paying those amounts as they accrue.
The rights and options granted to the Company in this Section may be
exercised whether or not the Company is in default hereunder; provided, that
such default will not relieve the Company from performing those actions which
are necessary to exercise any such right or option granted hereunder.
Section 6.3. Mandatory Redemption. The Company shall deliver to the Trustee
the moneys needed to redeem the Bonds in accordance with any mandatory
redemption provisions relating thereto as may be set forth in Section 4.01(b) of
the Indenture.
Section 6.4. Notice of Redemption. In order to exercise an option granted
in, or to consummate a redemption required by, this Article VI, the Company
shall, within 180 days following the event authorizing the exercise of such
option, or at any time during the continuation of the condition referred to in
paragraphs (c), (d) or (e) of Section 6.2 hereof, or at any time that optional
redemption of the Bonds is permitted under the Indenture as provided in Section
6.1 hereof, or promptly upon the occurrence of a Determination of Taxability,
give written notice to the Authority and the Trustee that it is exercising its
option to direct the redemption of Bonds, or that the redemption thereof is
required by Section 4.01(b) of the Indenture due to the occurrence of a
Determination of Taxability, as the case may be, in accordance with the
Agreement and the Indenture, and shall specify therein the date on which such
redemption is to be made, which date shall not be more than 180 days from the
date such notice is mailed. The Company shall make arrangements satisfactory to
the Trustee for the giving of the required notice of redemption to the Holders
of the Bonds, in which arrangements the Authority shall cooperate.
Section 6.5. Actions by Authority. Subject to Section 4.2 hereof, at the
request of the Company or the Trustee, the Authority shall take all steps
required of it under the applicable provisions of the Indenture or the Bonds to
effect the redemption of all or a portion of the Bonds pursuant to this Article
VI.
(End of Article VI)
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1. Events of Default. Each of the following shall be an Event of
Default:
(a) The occurrence of an event of default as defined in Section 7.01
(a), (b) or (c) of the Indenture;
(b) The Company shall fail to observe and perform any other agreement,
term or condition contained in this Agreement, other than such failure as
will have resulted in an event of default described in (a) above and the
continuation of that failure for a period of 90 days after notice thereof
shall have been given to the Company by the Authority or the Trustee, or
for such longer period as the Authority and the Trustee may agree to in
writing; provided, that failure shall not constitute an Event of Default so
long as the Company institutes curative action within the applicable period
and diligently pursues that action to completion within 150 days after the
expiration of initial cure period as determined above, or within such
longer period as the Authority and the Trustee may agree to in writing; and
(c) The receipt by the Trustee of written notice from the Bond Insurer
that an event of default has occurred and is continuing under the Insurance
Agreement; and
(d) By decree of a court of competent jurisdiction the Company shall
be adjudicated a bankrupt, or an order shall be made approving a petition
or answer filed seeking reorganization or readjustment of the Company under
the federal bankruptcy laws or other law or statute of the United States of
America or of the state of incorporation of the Company or of any other
state, or, by order of such a court, a trustee in bankruptcy, a receiver or
receivers shall be appointed of all or substantially all of the property of
the Company, and any such decree or order shall have continued unstayed on
appeal or otherwise and in effect for a period of sixty (60) days; and
(e) The Company shall file a petition in voluntary bankruptcy or shall
make an assignment for the benefit of creditors or shall consent to the
appointment of a receiver or receivers of all or any part of its property,
or shall file a petition seeking reorganization or readjustment under the
Federal bankruptcy laws or other law or statute of the United States of
America or any state thereof, or shall file a petition to take advantage of
any debtors' act.
Notwithstanding the foregoing, if, by reason of Force Majeure, the Company
is unable to perform or observe any agreement, term or condition hereof which
would give rise to an Event of Default under subsection (b) hereof, the Company
shall not be deemed in default during the continuance of such inability.
However, the Company shall promptly give notice to the Trustee and the Authority
of the existence of an event of Force Majeure and shall use its best efforts to
remove the effects thereof; provided that the settlement of strikes or other
industrial disturbances shall be entirely within its discretion.
The exercise of remedies hereunder shall be subject to any applicable
limitations of federal bankruptcy law affecting or precluding that declaration
or exercise during the pendency of or immediately following any bankruptcy,
liquidation or reorganization proceedings.
Section 7.2. Remedies on Default. Whenever an Event of Default shall have
happened and be subsisting, either or both of the following remedial steps may
be taken:
(a) The Authority or the Trustee may have access to, inspect, examine
and make copies of the books, records, accounts and financial data of the
Company, only, however, insofar as they pertain to the Projects; or
(b) The Authority or the Trustee may pursue all remedies now or
hereafter existing at law or in equity to recover all amounts, including
all Loan Payments and Additional Payments and under Section 4.8 hereof the
purchase price of Bonds tendered for purchase, then due and thereafter to
become due under this Agreement, or to enforce the performance and
observance of any other obligation or agreement of the Company under this
Agreement.
Notwithstanding the foregoing, the Authority shall not be obligated to take any
step which in its opinion will or might cause it to expend time or money or
otherwise incur liability unless and until a satisfactory indemnity bond has
been furnished to the Authority at no cost or expense to the Authority. Any
amounts collected as Loan Payments or applicable to Loan Payments and any other
amounts which would be applicable to payment of Bond Service Charges collected
pursuant to action taken under this Section shall be paid into the Bond Fund and
applied in accordance with the provisions of the Indenture or, if the
outstanding Bonds have been paid and discharged in accordance with the
provisions of the Indenture, shall be paid as provided in Section 5.08 of the
Indenture for transfers of remaining amounts in the Bond Fund.
The provisions of this Section are subject to the further limitation that
the rescission and annulment by the Trustee of its declaration that all of the
Bonds are immediately due and payable also shall constitute a rescission and
annulment of any corresponding declaration made pursuant to this Section and a
rescission and annulment of the consequences of that declaration and of the
Event of Default with respect to which that declaration has been made, provided
that no such rescission and annulment shall extend to or affect any subsequent
or other default or impair any right consequent thereon.
Section 7.3. No Remedy Exclusive. No remedy conferred upon or reserved to
the Authority or the Trustee by this Agreement is intended to be exclusive of
any other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement, or now or hereafter existing at law, in equity or by statute. No
delay or omission to exercise any right or power accruing upon any default shall
impair that right or power or shall be construed to be a waiver thereof, but any
such right or power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle the Authority or the Trustee to exercise
any remedy reserved to it in this Article, it shall not be necessary to give any
notice, other than any notice required by law or for which express provision is
made herein.
Section 7.4. Agreement to Pay Attorneys' Fees and Expenses. If an Event of
Default should occur and the Authority or the Trustee should incur expenses,
including attorneys' fees, in connection with the enforcement of this Agreement
or the collection of sums due hereunder, the Company shall be required, to the
extent permitted by law, to reimburse the Authority and the Trustee, as
applicable, for the expenses so incurred upon demand.
Section 7.5. No Waiver. No failure by the Authority or the Trustee to
insist upon the strict performance by the Company of any provision hereof shall
constitute a waiver of their right to strict performance and no express waiver
shall be deemed to apply to any other existing or subsequent right to remedy the
failure by the Company to observe or comply with any provision hereof.
Section 7.6. Notice of Default. The Company shall notify the Trustee
immediately if it becomes aware of the occurrence of any Event of Default
hereunder or of any fact, condition or event which, with the giving of notice or
passage of time or both, would become an Event of Default.
(End of Article VII)
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Term of Agreement. This Agreement shall be and remain in full
force and effect from the date of delivery of the Bonds to the Original
Purchaser until such time as (i) all of the Bonds shall have been fully paid (or
provision made for such payment) and the Indenture has been released pursuant to
Section 9.01 thereof and (ii) all other sums payable by the Company under this
Agreement shall have been paid; provided, however, the obligations of the
Company under Sections 4.2 and 5.9 hereof shall survive any termination of this
Agreement.
Section 8.2. Amounts Remaining in Funds. Any amounts in the Bond Fund
remaining unclaimed by the Holders of Bonds for four years after the due date
thereof (whether at stated maturity, by redemption, upon acceleration or
otherwise), at the option of the Company, shall be deemed to belong to and shall
be paid, subject to Section 5.07 of the Indenture, at the written request of the
Company, to the Company by the Trustee. With respect to that principal of and
any premium and interest on the Bonds to be paid from moneys paid to the Company
pursuant to the preceding sentence, the Holders of the Bonds entitled to those
moneys shall look solely to the Company for the payment of those moneys.
Further, any amounts remaining in the Bond Fund and any other special funds or
accounts created under this Agreement or the Indenture, except the Rebate Fund,
after all of the Bonds shall be deemed to have been paid and discharged under
the provisions of the Indenture and all other amounts required to be paid under
this Agreement and the Indenture have been paid, shall be paid to the Company to
the extent that those moneys are in excess of the amounts necessary to effect
the payment and discharge of the Outstanding Bonds.
Section 8.3. Notices. All notices, certificates, requests or other
communications hereunder shall be in writing, except as provided in Section 3.4
hereof, and shall be deemed to be sufficiently given when mailed by registered
or certified mail, postage prepaid, and addressed to the appropriate Notice
Address. A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Authority, the Company, the Bond Insurer or
the Trustee shall also be given to the others. The Company, the Authority, the
Bond Insurer and the Trustee, by notice given hereunder, may designate any
further or different addresses to which subsequent notices, certificates,
requests or other communications shall be sent.
Section 8.4. Extent of Covenants of the Authority; No Personal Liability.
All covenants, obligations and agreements of the Authority contained in this
Agreement or the Indenture shall be effective to the extent authorized and
permitted by applicable law. No such covenant, obligation or agreement shall be
deemed to be a covenant, obligation or agreement of any present or future
member, officer, agent or employee of the Authority in other than his official
capacity, and neither the members of the Authority nor any official executing
the Bonds shall be liable personally on the Bonds or be subject to any personal
liability or accountability by reason of the issuance thereof or by reason of
the covenants, obligations or agreements of the Authority contained in this
Agreement or in the Indenture.
Section 8.5. Binding Effect. This Agreement shall inure to the benefit of
and shall be binding in accordance with its terms upon the Authority, the
Company and their respective permitted successors and assigns provided that this
Agreement may not be assigned by the Company (except as permitted under Sections
5.8, 5.12 or 5.13 hereof) and may not be assigned by the Authority except to (i)
the Trustee pursuant to the Indenture or as otherwise may be necessary to
enforce or secure payment of Bond Service Charges or (ii) any successor public
body to the Authority.
Section 8.6. Amendments and Supplements. Except as otherwise expressly
provided in this Agreement or the Indenture, subsequent to the issuance of the
Bonds and prior to all conditions provided for in the Indenture for release of
the Indenture having been met, this Agreement may not be effectively amended,
changed, modified, altered or terminated by the parties hereto except with the
consents required by, and in accordance with, the provisions of Article XI of
the Indenture, as applicable.
Section 8.7. Continuing Disclosure. The Authority hereby acknowledges the
entry by the Company into the Continuing Disclosure Agreement under which the
Company has assumed certain obligations for the benefit of the Holders of the
Bonds. The Company agrees to perform its obligations under the Continuing
Disclosure Agreement. The Company acknowledges and agrees that the Authority is
not an "obligated person" (as defined in the Continuing Disclosure Agreement)
with respect to the Bonds and represents that the Company is the only obligated
person with respect to the Bonds. Notwithstanding any other provision of this
Agreement, any failure by the Company to comply with any provision of the
Continuing Disclosure Agreement shall not be a failure or a default, or an Event
of Default, under this Agreement or the Indenture.
Section 8.8. Execution Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be regarded as an original and all
of which shall constitute but one and the same instrument.
Section 8.9. Severability. If any provision of this Agreement, or any
covenant, obligation or agreement contained herein is determined by a judicial
or administrative authority to be invalid or unenforceable, that determination
shall not affect any other provision, covenant, obligation or agreement, each of
which shall be construed and enforced as if the invalid or unenforceable portion
were not contained herein. That invalidity or unenforceability shall not affect
any valid and enforceable application thereof, and each such provision,
covenant, obligation or agreement shall be deemed to be effective, operative,
made, entered into or taken in the manner and to the full extent permitted by
law.
Section 8.10. Governing Law. This Agreement shall be deemed to be a
contract made under the laws of the State and for all purposes shall be governed
by and construed in accordance with the laws of the State.
(End of Article VIII)
IN WITNESS WHEREOF, the Authority and the Company have caused this
Agreement to be duly executed in their respective names, all as of the date
hereinbefore written.
OHIO AIR QUALITY DEVELOPMENT
AUTHORITY
By:
Executive Director
THE CINCINNATI GAS & ELECTRIC
COMPANY
By:
Treasurer
B-1
EXHIBIT A
DESCRIPTION OF AIR QUALITY FACILITIES
AT
MIAMI FORT ELECTRIC GENERATING STATION
The Projects for which financing is being requested are located at Miami Fort
Generating Station, which is a coal-fired, steam powered electric generating
station located in the southwest area of ▇▇▇▇▇▇▇▇ County, Ohio (the "Generating
Station"). The Generating Station consists of five coal-fired boilers of various
ages and ratings. Units 7 & 8 are of similar size and rating, each being 525 MW.
Units 7 and 8 are co-owned by The Cincinnati Gas & Electric Company ("CG&E"; 64%
ownership interest) and The Dayton Power and Light Company (36% ownership
interest)1. CG&E is responsible for operation of the Generating Station.
Air emission control regulations require removal and disposal of combustion
byproducts from the Generating Station, including from Units 7 and 8. These
byproducts include flue gas particulates and sulfur dioxide (SO2). The Projects
being financed under this Agreement are described below and consist of any
property or portion thereof used for the collection, storage, treatment,
utilization, processing, or final disposal of solid waste resulting from the
supply, installation and construction of Flue Gas Desulfurization Systems (FGDS)
for Units 7 and 8 for the purpose of the removal and disposal of SO2. The
Generating Station does not presently have any FGDS installed.
Removal of SO2 from the flue gas exhaust is to be accomplished using a
forced oxidation wet limestone FGDS scrubber technology. In the scrubber,
calcium carbonate (reagent) neutralizes and absorbs the SO2 which produces a
solid waste of primarily calcium sulfite (waste reagent). Calcium sulfite is
transformed into calcium sulfate (gypsum) through a forced oxidation process in
the absorber. The waste reagent must be processed and disposed of as a solid
waste.
The design of the Miami Fort FGDS for Units 7 & 8 is based on two principal
requirements. First, the scrubber must achieve the required level of SO2
emission control. Second, the scrubber must produce a waste-by-product that is
suitable for solid waste disposal.
Project 1- This project includes the construction, expansion of and
improvements to solid waste collection, transport, processing and disposal
facilities for the Miami Fort Generating Station Unit #8 as a result of removing
sulfur dioxide from the flue gas stream by means of the installation and use of
the FGDS. Use of the FGDS to remove sulfur dioxide from the flue gas stream
creates a solid waste that is collected, transported, processed and stored in a
waste disposal or recycling facility.
Project 2- This project includes the construction, expansion of and
improvements to solid waste collection, transport, processing and disposal
facilities for the Miami Fort Generating Station Unit #7 as a result of removing
sulfur dioxide from the flue gas stream by means of the installation and use of
the FGDS. Use of the FGDS to remove sulfur dioxide from the flue gas stream
creates a solid waste that is collected, transported, processed and stored in a
waste disposal or recycling facility.
1 The ownership percentages are different with respect to certain common
facilities.
EXHIBIT B
FORM OF DISBURSEMENT REQUEST
STATEMENT NO. ___ REQUESTING DISBURSEMENT
OF FUNDS FROM PROJECT FUND PURSUANT TO
SECTION 3.4 OF THE LOAN AGREEMENT DATED AS
OF NOVEMBER 1, 2004 BETWEEN THE OHIO
AIR QUALITY DEVELOPMENT AUTHORITY AND
THE CINCINNATI GAS & ELECTRIC COMPANY
Pursuant to Section 3.4 of the Loan Agreement (the "Agreement") between the
Ohio Air Quality Development Authority (the "Authority") and The Cincinnati Gas
& Electric Company (the "Company") dated as of November 1, 2004, the undersigned
Authorized Company Representative hereby authorizes Deutsche Bank National Trust
Company, as trustee (the "Trustee"), as depository of the Project Fund created
by the Indenture (the "Indenture") by and between the Authority and said
Trustee, to pay to the Company out of the moneys deposited in said Project Fund
the aggregate sum of $_______________ to pay the person(s) listed on Schedule I
which may include reimbursements to the Company, for the advances, payments and
expenditures made by it in connection with the items listed in Schedule I, which
is incorporated herein by reference.
The undersigned in connection with the foregoing request for disbursements
from said Project Fund hereby certifies that:
(a) Each item is properly payable out of the Project Fund in
accordance with the terms and conditions of the Agreement and
none of such items for which payment is requested has formed the
basis for any payment heretofore made from said Project Fund.
(b) Each item for which payment is requested hereunder is or was
necessary or appropriate in connection with the acquisition,
construction, equipping, installation or improvement of the
Projects, as defined in the Indenture and Agreement, or costs
related thereto as permitted by the Agreement.
(c) This document evidences the approval of the undersigned
Authorized Company Representative of each payment hereby
authorized.
(d) Each item for which disbursement is requested hereunder, and the
cost for each item, is as described in the information statement
filed by the Authority in connection with the issuance of the
Bonds (as defined in the Agreement), as required by Section
149(e) of the Code (as defined in the Agreement); provided that
if the foregoing statement is not true, the average reasonably
expected economic life of the facilities which have been and will
be paid for with moneys in the Project Fund is not less than
5/6ths of the average maturity of the Bonds.
This _______ day of _______________, ____.
Authorized Company Representative
Schedule I
TO STATEMENT NO. ________________ REQUESTING DISBURSEMENT OF FUNDS FROM PROJECT
FUND PURSUANT TO SECTION 3.4 OF LOAN AGREEMENT DATED AS OF NOVEMBER 1, 2004,
BETWEEN THE OHIO AIR QUALITY DEVELOPMENT AUTHORITY AND THE CINCINNATI GAS &
ELECTRIC COMPANY.
PAYEE AMOUNT PURPOSE
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