-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, C2L7pas/5YRmcTM9XWmOlbPtXzJ5YQ4H20GZmMiaRdHn6vttbJejbbCSvOktfn/q Kz1KAEHJRFr/7e9mr0X95w== 0000007323-94-000017.txt : 19940606 0000007323-94-000017.hdr.sgml : 19940606 ACCESSION NUMBER: 0000007323-94-000017 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 10 FILED AS OF DATE: 19940601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ARKANSAS POWER & LIGHT CO CENTRAL INDEX KEY: 0000007323 STANDARD INDUSTRIAL CLASSIFICATION: 4911 IRS NUMBER: 710005900 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: 1935 Act SEC FILE NUMBER: 070-08405 FILM NUMBER: 94532640 BUSINESS ADDRESS: STREET 1: PO BOX 551 STREET 2: 40TH FLOOR CITY: LITTLE ROCK STATE: AR ZIP: 72203 BUSINESS PHONE: 5013774000 MAIL ADDRESS: STREET 1: P O BOX 551 CITY: LITTLE ROCK STATE: AR ZIP: 72203 U-1/A 1 FILE NO. 70-8405 File No. 70-8405 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM U-1 Amendment No. 2 to APPLICATION-DECLARATION under THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 Arkansas Power & Light Company 425 West Capitol, 40th Floor Little Rock, Arkansas 72201 (Name of company filing this statement and address of principal executive offices) Entergy Corporation (Name of top registered holding company parent of each applicant or declarant) Glenn E. Harder Vice President - Financial Strategies and Treasurer Arkansas Power & Light Company 639 Loyola Avenue New Orleans, Louisiana 70113 (Name and address of agent for service) The Commission is also requested to send copies of any communications in connection with this matter to: Laurence M. Hamric, Esq. Paul B. Benham, III, Esq. Entergy Services, Inc. Friday, Eldredge & Clark 225 Baronne Street 2000 First Commercial Building New Orleans, Louisiana 70112 400 West Capitol Avenue Little Rock, Arkansas 72201 Bonnie Wilkinson, Esq. David P. Falck, Esq. Reid & Priest Winthrop, Stimson, Putnam & 40 West 57th Street Roberts New York, New York 10019 One Battery Park Plaza New York, New York 10004 Item 2. Fees, Commissions and Expenses. The fees and expenses to be incurred in connection with the issuance and sale of the Tax-Exempt Bonds are estimated not to exceed the following: Each Sale *Filing fee - Securities and Exchange Commission..........................$ 2,000 *Rating Agencies' fees.......................... 40,000 *Trustees' fees................................. 35,000 *Fees of Bond Counsel........................... 55,000 *Fees of Company's Counsel: Friday, Eldredge & Clark..................... 35,000 Reid & Priest................................ 25,000 *Fees of Entergy Services, Inc.................. 10,000 *Accountants' fees.............................. 8,000 *Printing and engraving costs................... 10,000 *Miscellaneous expenses (including blue-sky expenses)........................... 10,000 *Total expenses.......................$230,000 Item 4. Procedure. The Company respectfully requests that the Commission's order authorizing the transactions proposed herein be issued as soon as practicable, but in any event no later than June 6, 1994. The Company requests that the Commission's order contain reservations of jurisdiction over the Company's entering into arrangements for the issuance of a letter of credit and insurance arrangements, pending completion of the record with respect thereto. The Company hereby waives a recommended decision by a hearing officer or any other responsible officer of the Commission; agrees that the staff of the Division of Investment Management may assist in the preparation of the Commission's decision; and requests that there be no waiting period between the date of the Commission's order and the date it is to become effective. Item 6. Exhibits and Financial Statements. (a) Exhibits B-1 Form of Loan Agreement between the Company and the Issuer. B-2 Form of Installment Sale Agreement between the Company and the Issuer. B-3 Form of Trust Indenture between the Issuer and the Trustee. D-1a Application to the Arkansas Public Service Commission. D-1b Order of the Arkansas Public Service Commission. D-2a Application to the Tennessee Public Service Commission. D-2b Order of the Tennessee Public Service Commission. F-1 Opinion of Reid & Priest. F-2 Opinion of Friday, Eldredge & Clark. SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this amendment to be signed on its behalf by the undersigned thereunto duly authorized. ARKANSAS POWER & LIGHT COMPANY By: /s/ Glenn E. Harder Glenn E. Harder Vice President-Financial Strategies and Treasurer Date: June 1, 1994 EX-99 2 EXHIBIT B-1 Exhibit B-1 _________________________________________________________________ _________ COUNTY, ARKANSAS and ARKANSAS POWER & LIGHT COMPANY ______________ LOAN AGREEMENT ______________ Dated as of __________________ _________________________________________________________________ $_________ _________ County, Arkansas Pollution Control Revenue Refunding Bonds, Series ____ (Arkansas Power & Light Company Project) LOAN AGREEMENT TABLE OF CONTENTS (This Table of Contents is not a part of the Loan Agreement and is only for convenience of reference.) Parties 1 Recitals 1 ARTICLE I DEFINITIONS Section 1.01 Definitions 2 Section 1.02 Use of Words and Phrases 4 ARTICLE II REPRESENTATIONS Section 2.01 Representations and Warranties of the County 5 Section 2.02 Representations and Warranties of the Company 5 ARTICLE III THE FACILITIES Section 3.01 Construction of the Facilities 7 Section 3.02 Maintenance of Facilities; Remodeling 7 Section 3.03 Insurance 7 ARTICLE IV ISSUANCE OF BONDS; DISPOSITION OF PROCEEDS OF BONDS Section 4.01 Issuance of the Series ____ Bonds 8 Section 4.02 Additional Bonds 8 Section 4.03 Disposition of Bond Proceeds 8 ARTICLE V LOAN PROVISIONS; FIRST MORTGAGE BONDS; OTHER OBLIGATIONS Section 5.01 Loan of Bond Proceeds 9 Section 5.02 Repayment of Loan 9 Section 5.03 Issuance, Delivery and Surrender of First Mortgage Bonds 10 Section 5.04 Payments Assigned; Obligation Absolute 12 Section 5.05 Payment of Expenses 12 Section 5.06 Indemnification 12 Section 5.07 Payment of Taxes; Discharge of Liens 13 ARTICLE VI SPECIAL COVENANTS AND AGREEMENTS Section 6.01 Maintenance of Corporate Existence 14 Section 6.02 Permits or Licenses 14 Section 6.03 County's and Trustee's Access to Facilities 14 Section 6.04 Arbitrage Covenant 14 Section 6.05 Use of Facilities 15 Section 6.06 Tax Exempt Status of Bonds 15 ARTICLE VII ASSIGNMENT, LEASING AND SELLING Section 7.01 By the County 17 Section 7.02 By the Company 17 Section 7.03 Limitation 17 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.01 Events of Default 18 Section 8.02 Force Majeure 18 Section 8.03 Remedies on Default 19 Section 8.04 No Remedy Exclusive 19 Section 8.05 Agreement to Pay Attorneys' Fees and Expenses20 Section 8.06 Waiver of Breach 20 ARTICLE IX REDEMPTION OR PURCHASE OF BONDS Section 9.01 Redemption of Bonds 21 Section 9.02 Purchase of Bonds 21 ARTICLE X RECORDATION AND OTHER INSTRUMENTS Section 10.01 Recording and Filing 22 Section 10.02 Photocopies and Reproductions 22 ARTICLE XI MISCELLANEOUS Section 11.01 Notices 23 Section 11.02 Severability 23 Section 11.03 Execution of Counterparts 23 Section 11.04 Amounts Remaining in Bond Fund 23 Section 11.05 Amendments, Changes and Modifications 24 Section 11.06 Governing Law 24 Section 11.07 Authorized Company Representatives 24 Section 11.08 Term of the Agreement 24 Section 11.09 No Personal Liability 24 Section 11.10 Parties in Interest 24 Signatures and Seals 26 Acknowledgments 27 Exhibit A - Description of Facilities 29 LOAN AGREEMENT This LOAN AGREEMENT, dated as of __________ _, ____, by and between _________ COUNTY, ARKANSAS, a political subdivision under the Constitution and laws of the State of Arkansas (hereinafter referred to as the "County"), and ARKANSAS POWER & LIGHT COMPANY, a corporation organized and existing under and by virtue of the laws of the State of Arkansas (hereinafter referred to as the "Company"). W I T N E S S E T H: WHEREAS, the County is authorized and empowered under the laws of the State of Arkansas, including particularly Title 14, Chapter 267 of the Arkansas Code of 1987 Annotated (the "Act"), to issue revenue bonds and to expend the proceeds thereof to finance and refinance the acquisition, construction, reconstruction, extension, equipment or improvement of pollution control facilities for the disposal or control of sewage, solid waste, water pollution, air pollution, or any combination thereof; and WHEREAS, certain pollution control facilities (hereinafter referred to as the "Facilities") have been acquired, constructed and equipped at _______ and _ of the electric generating plant jointly owned by the Company and others located within the boundaries of the County near ________, Arkansas and known as the __________________________________ (hereinafter referred to as the "Plant"); and WHEREAS, pursuant to and in accordance with the provisions of the Act, the County has heretofore issued and delivered its Pollution Control Revenue Bonds, Series ____ (Arkansas Power & Light Company Project), in the aggregate principal amount of $_________ (the "Prior Bonds"), for the purpose of financing and refinancing the cost of acquiring, constructing and equipping all or part of the Company's interest in the Facilities (hereinafter referred to as the "Project"), and paying the expenses of authorizing and issuing the Prior Bonds; and WHEREAS, the County proposes to issue $_________ aggregate principal amount of its revenue bonds under the Act (the "Series ____ Bonds") for the purpose of refunding the Prior Bonds; and WHEREAS, in connection with the issuance of the Series ____ Bonds the proceeds of the Series ____ Bonds will be loaned by the County to the Company upon the terms and conditions set forth herein; and NOW, THEREFORE, for and in consideration of the premises and the mutual covenants herein made, and subject to the conditions herein set forth, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. In addition to the words and terms elsewhere defined in this Agreement or in the Indenture, the following words and terms as used in this Agreement shall have the following meanings unless the context or use indicates another or different meaning: "Act" -- Title 14, Chapter 267 of the Arkansas Code of 1987 Annotated, as amended and enacted from time to time. "Additional Bonds" -- Bonds in addition to the Series ____ Bonds, which are issued under the provisions of Section 211 of the Indenture. "Administration Expenses" -- The reasonable and necessary expenses incurred by the County with respect to this Agreement, the Indenture and any transaction or event contemplated by this Agreement or the Indenture including the compensation and reimbursement of expenses and advances payable to the Trustee, any paying agent, any co-paying agent, and the registrar under the Indenture. "Agreement" -- This Loan Agreement and any amendments and supplements hereto. "Authorized Company Representative" -- The person or persons at the time designated to act on behalf of the Company, such designation in each case to be evidenced by a certificate furnished to the County and the Trustee containing the specimen signature of such person or persons and signed on behalf of the Company by its President, any Senior Vice President, any Vice President, or the Treasurer. "Bonds" -- The Series ____ Bonds and all Additional Bonds issued by the County pursuant to the Indenture. "Bond Counsel" -- Any firm of nationally recognized municipal bond counsel selected by the Company and acceptable to the County and the Trustee. "Bond Fund" -- The fund by that name created and established in Section 501 of the Indenture. "Clearing Fund" -- The fund by that name created and established in Section 601 of the Indenture. "Code" -- The Internal Revenue Code of 1954, as heretofore amended (the "1954 Code"), and the Internal Revenue Code of 1986, as heretofore or hereafter amended (the "1986 Code"), as applicable. "Company" -- Arkansas Power & Light Company, a corporation organized and operating under the laws of the State of Arkansas, and its permitted successors and assigns. "Company Mortgage" -- The Mortgage and Deed of Trust, dated as of October 1, 1944, between the Company and Guaranty Trust Company of New York (now Morgan Guaranty Trust Company of New York) and Henry A. Theis (John W. Flaherty, successor), and, as to property, real or personal, situated or being in Missouri, Marvin A. Mueller (The Boatmen's National Bank of St. Louis, successor), as trustees, as heretofore and hereafter amended and supplemented. "Company Mortgage Trustees" -- The trustees under the Company Mortgage. "County" -- _________ County, Arkansas, a political subdivision under the Constitution and laws of the State of Arkansas. "Event of Default" -- Any event of default specified in Section 8.01 hereof. "Facilities" -- The pollution control facilities at the Plant which were financed and refinanced, in whole or in part, with the proceeds of the Prior Bonds, which facilities are generally described in Exhibit A hereto. "First Mortgage Bonds" -- The bonds of one or more series issued and delivered under the Company Mortgage and held by the Trustee pursuant to Section 5.03 hereof. "Indenture" -- The Trust Indenture dated as of __________ _, ____, between the County and the Trustee, securing the Bonds, and any amendments and supplements thereto. "outstanding" -- When used with reference to the Bonds, as of any particular date, all Bonds authenticated and delivered under the Indenture except: (a) Bonds canceled at or prior to such date or delivered to or acquired by the Trustee prior to such date for cancellation; (b) Bonds deemed to be paid in accordance with Article IX of the Indenture; and (c) Bonds in lieu of or in exchange or substitution for which other Bonds shall have been authenticated and delivered pursuant to the Indenture. "Plant" -- The electric generating plant jointly owned by the Company and others located within the boundaries of the Countynear ________, Arkansas and known as the __________________________ _______. "Plant Agreements" -- All of the contracts relating to the ownership, construction and operation of the Plant, as from time to time amended or supplemented. "Prior Bonds" -- The County's Pollution Control Revenue Bonds, Series ____, in the aggregate principal amount of $_________. "Project" -- The interest of the Company in the Facilities on the date of issuance of the Prior Bonds. "Series ____ Bonds" -- The initial issue of Bonds under and secured by the Indenture in the aggregate principal amount of $_________. "Trustee" -- The banking corporation or association designated as Trustee in the Indenture, and its successor or successors as such Trustee. The original Trustee is _____________ _____________, __________, ________. Section 1.02. Use of Words and Phrases. "Herein", "hereby", "hereunder", "hereof", "hereinabove", "hereinafter", and other equivalent words and phrases refer to this Agreement and not solely to the particular portion thereof in which any such word is used. The definitions set forth in Section 1.01 hereof include both singular and plural. Whenever used herein, any pronoun shall be deemed to include both singular and plural and to cover all genders. ARTICLE II REPRESENTATIONS Section 2.01. Representations and Warranties of the County. The County makes the following representations and warranties as the basis for the undertakings on the part of the Company herein contained: (a) The County is a political subdivision duly existing under the Constitution and laws of the State of Arkansas. (b) The County has the power to enter into the trans actions contemplated by this Agreement and to carry out its obligations hereunder. By proper action of the governing body of the County, the County has been duly authorized to execute and deliver this Agreement. (c) The County has not, and will not, except as otherwise required by mandatory provisions of law, assign its interest in this Agreement other than to secure the Bonds. (d) The Facilities and their operation promote the securing and developing of industry and the health, safety and physical and economic welfare of the County and its inhabitants, and thereby further the public purposes of the Act. Section 2.02. Representations and Warranties of the Company. The Company makes the following representations and warranties as the basis for the undertakings on the part of the County herein contained: (a) The Company is a corporation duly incorporated and in good standing under the laws of the State of Arkansas, is not in violation of any provision of its Articles of Incorporation, or its Bylaws, has power to enter into this Agreement and to perform and observe the agreements and covenants on its part contained herein, including without limitation the power to issue the First Mortgage Bonds as contemplated herein and in the Company Mortgage, and has duly authorized the execution and delivery of this Agreement by proper corporate action. (b) The Facilities constitute a pollution control project of the type authorized and permitted by the Act. (c) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement, including, without limitation, the issuance and delivery of the First Mortgage Bonds, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the Companyis now a party or by which the Company is bound, or con stitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Company except any interests created herein and under the Company Mortgage. (d) The Securities and Exchange Commission, the Arkansas Public Service Commission, the Tennessee Public Service Commission, and the Public Service Commission of Missouri have each approved all matters relating to the Company's participation in the transactions contemplated by this Agreement which require said approval, and no other consent, approval, authorization or other order of any regulatory body or administrative agency or other governmental body is legally required for the Company's participation therein, except such as may have been obtained or may be required under the securities laws of any state or in connection with the issuance of series of Additional Bonds. ARTICLE III THE FACILITIES Section 3.01. Construction of the Facilities. The Company, in the exercise of its rights, powers, elections and options under the Plant Agreements, has caused the Facilities to be constructed in order to effectuate the purposes of the Act. Section 3.02. Maintenance of Facilities; Remodeling. The Company shall, at its expense, exercise all of its rights, powers, elections and options under the Plant Agreements to cause the Facilities, and every element and unit thereof, to be main tained, preserved and kept in good repair, working order and condition, and from time to time to cause all needful and proper repairs, replacements, additions, betterments and improvements to be made thereto; provided, however, that the Company may exercise all of such rights, powers, elections and options to cause the discontinuance of the operation of, or reduce the capacity of, the Facilities, or any element or unit thereof, if, in the judgment of the Company, any such action is necessary or desirable in the conduct of the business of the Company, or if the Company is ordered so to do by any regulatory authority having jurisdiction in the premises, or if the Company intends to sell or dispose of the same and within a reasonable time shall endeavor to effectuate such sale. The Company shall notify the County as to the nature and extent of any material damage or loss to the Facilities and of the discontinuance of the operation of the Facilities, or any material element or unit thereof. The Company may at its own expense cause the Facilities to be remodeled or cause substitutions, modifications and improvements to be made to the Facilities from time to time as it, in its discretion, may deem to be desirable for its uses and purposes, which remodeling, substitutions, modifications and improvements shall be included under the terms of this Agreement as part of the Facilities. Section 3.03. Insurance. The Company shall, at its expense, exercise all of its rights, powers, elections and options under the Plant Agreements to cause the Facilities to be kept insured against fire to the extent that property of similar character is usually so insured by companies similarly situated and operating like properties, 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 at least equal in protection to the method or plan of protection against such loss of companies similarly situated and operating like properties. All proceeds of such insurance, or such other method or plan, shall be for the account of the Company. ARTICLE IV ISSUANCE OF BONDS; DISPOSITION OF PROCEEDS OF BONDS Section 4.01. Issuance of the Series _____ Bonds. The County shall issue the Series ____ Bonds under and in accordance with the Indenture, subject to the provisions of any bond purchase agreement between the County and the original purchaser or purchasers of the Series ____ Bonds. The Company hereby approves the issuance of the Series ____ Bonds and all terms and conditions thereof. Section 4.02. Additional Bonds. So long as the Company shall not be in default hereunder, and at the request of the Company, the County may authorize and issue Additional Bonds in aggregate principal amounts specified from time to time by the Company in order to provide funds for the purpose of refunding the Series ____ Bonds or any series of Additional Bonds, in whole or in part, or any combination thereof. The right to issue Additional Bonds set forth in this Agreement and the Indenture shall not imply that the County and the Company may not enter into, and the County and the Company expressly reserve the right to enter into, to the extent permitted by law, another agreement or agreements with respect to the issuance by the County, under an indenture or indentures other than the Indenture, of refunding bonds to refund all or any principal amount of any series of Bonds, and the provisions of this Agreement and the Indenture governing the issuance of Additional Bonds shall not apply thereto. Section 4.03. Disposition of Bond Proceeds. The proceeds of the issuance and sale of the Series ____ Bonds and any Additional Bonds, other than accrued interest, if any, paid by the initial purchaser or purchasers thereof, shall be deposited into the Clearing Fund, and any such accrued interest shall be deposited into the Bond Fund, all in accordance with the provisions of the Indenture. ARTICLE V LOAN PROVISIONS; FIRST MORTGAGE BONDS; OTHER OBLIGATIONS Section 5.01. Loan of Bond Proceeds. Concurrently with the sale and delivery of each series of the Bonds, the County covenants and agrees that it will, upon the terms and conditions in this Agreement, lend to the Company an amount equal to the proceeds (other than accrued interest) of such series. Pursuant to said covenant and agreement, the County will issue the Bonds upon the terms and conditions contained in this Agreement and the Indenture and will cause the Bond proceeds to be applied as provided in Article IV hereof. The Bonds may be sold by the County, with the consent of the Company, at a discount from their principal amount. If the County does sell Bonds at a discount, the amount of such discount shall be deemed to have been loaned to the Company pursuant to the terms and conditions hereof. Section 5.02. Repayment of Loan. On or before any date that principal of or interest on the Bonds is due as set forth in the Indenture, or any date fixed for the redemption of any or all of the Bonds pursuant to the Indenture, the Company covenants and agrees to pay or to cause to be paid in lawful money of the United States of America to the Trustee for deposit in the Bond Fund, as a repayment of the loan made to the Company pursuant to Section 5.01 hereof, a sum equal to the amount payable on such payment date as principal (whether at maturity, upon redemption or otherwise) of and premium, if any, and interest on the Bonds as provided in the Indenture. Each payment made pursuant to this Section shall be made in immediately available funds at the principal corporate trust office of the Trustee during normal banking hours. In the event that the payment of the principal of and accrued interest on the Bonds is accelerated under Section 1002 of the Indenture, the Company covenants and agrees to pay, or cause to be paid, to the Trustee as provided above a sum equal to all the principal of and interest on the Bonds then outstanding. Each payment pursuant to this Section shall at all times be sufficient to pay the amount of principal (whether at maturity, upon redemption or otherwise) of and premium, if any, and interest payable on the Bonds on the date that such payment is due; provided that the obligation of the Company to make any payment of the principal of or premium, if any, or interest on the Bonds, whether at maturity, upon redemption or otherwise, shall be reduced by the amount of any reduction under the Indenture of the amount of the corresponding payment required to be made by the County thereunder in respect of the principal of or premium, if any, or interest on the Bonds. Section 5.03. Issuance, Delivery and Surrender of First Mortgage Bonds. (a) The obligation of the Company set forth in Section 5.02 hereof to repay the Bonds may be evidenced, in whole or in part, by the First Mortgage Bonds. With respect to the Series ____ Bonds, the Company shall issue and deliver to the County First Mortgage Bonds as provided in subsection (b) of this Section 5.03. With respect to any series of Additional Bonds, the Company shall issue and deliver to the County First Mortgage Bonds as provided in any amendment of or supplement to this Agreement. (b) Concurrently with the issuance and delivery by the County of the Series ____ Bonds, and in order to evidence the obligation of the Company under Section 5.02 hereof to repay those installments of the loan from the County which correspond to payment of the principal of the Series ____ Bonds, the excess of the principal amount thereof to be applied to the payment of accrued interest on the Series ____ Bonds, the Company shall issue and deliver to the County a series of First Mortgage Bonds (i) maturing on the stated maturity date of the Series ____ Bonds, (ii) in a principal amount equal to the principal of the Series ____ Bonds plus eight months (8/12) of the annual interest on the Series ____ Bonds, (iii) containing redemption provisions correlative to any provisions of the Indenture relating to the Series ____ Bonds requiring mandatory redemption thereof, (iv) requiring payments to be made to the Trustee for the account of the County, and (v) bearing no interest. (c) The obligation of the Company to make any payment of the principal of or premium, if any, or interest on the First Mortgage Bonds, whether at maturity, upon redemption or otherwise, shall be reduced by the amount of any reduction under the Indenture of the amount of the corresponding payment required to be made by the County thereunder in respect of the principal of or premium, if any, or interest on the Bonds. (d) The County shall not sell, assign or transfer the First Mortgage Bonds, except to the extent provided in Section 5.04 hereof. In view of the pledge and assignment referred to in said Section 5.04, the County agrees that (i) in satisfaction of the obligations of the Company set forth in paragraph (b) of this Section 5.03 with respect to the Series ____ Bonds, or in any amendment of or supplement to this Agreement with respect to any series of Additional Bonds, the First Mortgage Bonds shall be issued and delivered to, registered in the name of and held by the Trustee for the benefit of the owners and holders from time to time of the Bonds; (ii) the Indenture shall provide that the Trustee shall not sell, assign or transfer the First Mortgage Bonds except to a successor trustee under the Indenture, and shall surrender First Mortgage Bonds to the Company Mortgage Trustees in accordance with the provisions of subsection (e) of this Section 5.03; and (iii) the Company may take such actions as it shall deem to be desirable to effect compliance with such restrictions on transfer,including the placing of an appropriate legend on each First Mortgage Bond and the issuance of stop-transfer instructions to the Company Mortgage Trustees or any other transfer agent under the Company Mortgage. Any action taken by the Trustee in accordance with the provisions of Section 410 of the Indenture shall be binding upon the Company. (e) At the time any Bonds of any series cease to be outstanding (other than by reason of the payment or redemption of First Mortgage Bonds of the corresponding series and other than by reason of the applicability of clause (c) in the definition of "outstanding" herein): (i) in the event that such Bonds were not subject to redemption pursuant to a sinking fund therefor, the County shall cause the Trustee to surrender to the Company Mortgage Trustees a corresponding principal amount of First Mortgage Bonds, plus, in the case of the Series ____ Bonds, a principal amount of such First Mortgage Bonds equal to eight months (8/12) of the annual interest payable in respect of such series, of the series corresponding to such series of Bonds, maturing on the same date as such Bonds; or (ii) in the event that such Bonds were subject to redemption pursuant to a sinking fund therefor, the County shall cause the Trustee to surrender to the Company Mortgage Trustees a corresponding principal amount of First Mortgage Bonds, of the series corresponding to such series of Bonds, maturing, at the election of the Company: (A) on the same date as such Bonds; or (B) on any sinking fund redemption date relating to outstanding Bonds of such series; provided, however, that the Company shall have delivered to the Trustee pursuant to the Indenture an irrevocable certificate specifying that such Bonds are to be credited against the sinking fund payment or payments to be made on the maturity date, and in the principal amount, of the First Mortgage Bonds so to be surrendered. (f) For the purpose of determining whether or not any payment of the principal of or premium, if any, or interest on the First Mortgage Bonds shall have been made in full, any moneys paid by the Company in respect of the First Mortgage Bonds which shall have been withdrawn by the Trustee from the Bond Fund pursuant to Section 1102 of the Indenture shall be deemed to have been paid by the Company to the Trustee pursuant to Section 5.05 hereof and notto have been paid by the Company in respect of the First Mortgage Bonds. Section 5.04. Payments Assigned; Obligation Absolute. It is understood and agreed that all payments to be made by the Company of the loan by the County are, by the Indenture, to be pledged by the County to the Trustee, and that all rights and interest of the County hereunder (except for the County's rights under Sections 5.05, 5.06, 5.07, 6.03 and 8.05 hereof and any rights of the County to receive notices, certificates, requests, requisitions, directions and other communications hereunder), including the right to receive the First Mortgage Bonds and the First Mortgage Bonds, are to be pledged and assigned to the Trustee. The Company assents to such pledge and assignment and agrees that the obligation of the Company to make the payments of the purchase price of the Facilities shall be absolute, irrevocable and unconditional and shall not be subject to cancellation, termination or abatement, or to any defense other than payment or to any right of set-off, counterclaim or recoupment arising out of any breach under this Agreement, the Indenture or otherwise by the County or the Trustee or any other party, or out of any obligation or liability at any time owing to the Company by the County, the Trustee or any other party, and, further, that the payments of the loan from the County to the Company and the other payments due hereunder shall continue to be payable at the times and in the amounts specified herein and in the First Mortgage Bonds, whether or not the Facilities or the Plant, or any portion thereof, shall have been completed or shall have been destroyed by fire or other casualty, or title thereto, or the use thereof, shall have been taken by the exercise of the power of eminent domain, and that there shall be no abatement of or diminution in any such payments by reason thereof, whether or not the Facilities or the Plant shall be used or useful, and whether or not any applicable laws, regulations or standards shall prevent or prohibit the use of the Facilities or the Plant, or for any other reason. Section 5.05. Payment of Expenses. The Company shall pay, or cause to be paid, all of the Administration Expenses of the County, the payment of the compensation and the reimbursement of expenses and advances of the Trustee, any paying agent, any co-paying agent, and the registrar under the Indenture to be made directly to such entity. Section 5.06. Indemnification. The Company releases the County and the Trustee from, agrees that the County and the Trustee shall not be liable for, and agrees to indemnify and hold the County and the Trustee free and harmless from, any liability for any loss or damage to property or any injury to or death of any person that may be occasioned by any cause whatsoever pertaining to the Facilities, except in any case as a result of the negligence or bad faith of the County or the Trustee. The Company will indemnify and hold the County and the Trustee free and harmless from any loss, claim, damage, tax, penalty, liability (including but not limited to liability for any patent infringement), disbursement, litigation expenses, attorneys' fees and expenses or court costs arising out of, or in any way relating to, the execution or performance of this Agreement, the issuance or sale of the Bonds, actions taken under the Indenture, or any other cause whatsoever pertaining to the Facilities, including without limitation, recovery costs arising from the presence of hazardous substances, except in any case as a result of the negligence or bad faith of the Trustee, or as a result of the gross negligence or bad faith of the County. Under this Section 5.06, the Company shall also be deemed to release, indemnify and agree to hold harmless each employee, official or officer of the County and the Trustee to the same extent as the County and the Trustee. Section 5.07. Payment of Taxes; Discharge of Liens. The Company shall: (a) pay, or make provision for payment of, all lawful taxes and assessments, including income, profits, property or excise taxes, if any, or other municipal or governmental charges, levied or assessed by any federal, state or municipal government or political body upon the County with respect to the Facilities or any part thereof or upon any amounts payable hereunder; and (b) pay or cause to be satisfied and discharged or make adequate provision to satisfy and discharge, within sixty (60) days after the same shall accrue, any lien or charge upon any amounts payable hereunder, and all lawful claims or demands for labor, materials, supplies or other charges which, if unpaid, might be or become a lien upon such amounts; provided that if the Company shall first notify the County and the Trustee of its intention so to do, the Company may in good faith contest any such lien or charge or claims or demands in appropriate legal proceedings, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom, unless the County or the Trustee shall notify the Company in writing that, in the opinion of counsel to the County or the Trustee, by nonpayment of any such items the lien of the Indenture as to the amounts payable hereunder will be materially endangered, in which event the Company shall promptly pay and cause to be satisfied and discharged all such unpaid items. The County shall cooperate fully with the Company in any such contest. ARTICLE VI SPECIAL COVENANTS AND AGREEMENTS Section 6.01. Maintenance of Corporate Existence. The Company shall maintain its corporate existence, will not dissolve or otherwise dispose of all or substantially all its assets and will not consolidate with or merge with or into another corporation; provided, however, that the Company may consolidate with or merge with or into, or sell or otherwise transfer all or substantially all of its assets (and may thereafter dissolve) to, another corporation, incorporated under the laws of the United States, one of the states thereof or the District of Columbia, if the surviving, resulting or transferee corporation, as the case may be (if other than the Company), prior to or simultaneously with such consolidation, merger, sale or transfer, assumes, by delivery to the Trustee of an instrument in writing satisfactory in form and substance to the Trustee, all the obligations of the Company hereunder and on the First Mortgage Bonds. If consolidation, merger or sale or other transfer is made as permitted by this Section 6.01, the provisions of this Section 6.01 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 6.01. Section 6.02. Permits or Licenses. In the event that it may be necessary for the proper performance of this Agreement on the part of the Company or the County that any application or applications for any permit or license to do or to perform certain things be made to any governmental or other agency by the Company or the County, the Company and the County each shall, upon the request of either, execute such application or applications. Section 6.03. County's and Trustee's Access to Facilities. The County and the Trustee shall have the right, upon appropriate prior notice to the Company, to have reasonable access to the Facilities during normal business hours for the purpose of making examinations and inspections of the same. Section 6.04. Arbitrage Covenant. The County and the Company covenant that the proceeds of the sale of the Bonds, the earnings thereon, and any other moneys on deposit in any fund or account maintained in respect of the Bonds (whether such moneys were derived from the proceeds of the sale of the Bonds or from other sources) will not be used in a manner which would cause the Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Code. The Company further covenants that: (a) all actions with respect to the Bonds required by Section 148(f) of the Code shall be taken; (b) it shall make the determinations required by paragraph (b) of Section 702 of the Indenture and promptly notify the Trustee of the same, together with supportingcalculations; and (c) it shall within twenty-five (25) days after (i) the calendar date which corresponds to the final maturity of the respective series of Bonds and each anniversary thereof falling on or after the date of initial authentication and delivery thereof up to and including the final maturity of such series of the Bonds, unless the final payment, whether upon redemption in whole or at maturity, of such Bonds shall have occurred prior to such anniversary, and (ii) such final payment, file with the Trustee a statement signed by the chief financial officer of the Company to the effect that the Company is then in compliance with its covenants contained in clauses (a) and (b) of this sentence, together with supporting calculations; provided, however, that if the Company shall furnish an opinion of Bond Counsel to the Trustee to the effect that no further action by the Company is required for such compliance with respect to the Bonds, the Company shall not thereafter be required to deliver any such statements or calculations. Section 6.05. Use of Facilities. The Company shall exercise all of its rights, powers, elections and options under the Plant Agreements to cause the Facilities to be used for the abatement or control of pollution or for the disposal of sewage or solid waste. Section 6.06. Tax Exempt Status of Bonds. The County and the Company mutually covenant and agree that neither of them shall take or authorize or permit any action to be taken, and have not taken or authorized or permitted any action to be taken, which results in interest paid on the Bonds being included in gross income for purposes of federal income taxes. Without limiting the generality of the foregoing, the Company further covenants and agrees as follows: (a) Not less than 90% of the proceeds (within the meaning of Section 103(b)(4) of the 1954 Code and regulations thereunder) from the sale of the Prior Bonds was expended (or was used to retire bonds not less than 90% of the proceeds from the sale of which was expended) (i) for proper costs of land or property of a character subject to the allowance for depreciation under Section 167 of the Code, or which will be, for federal income tax purposes, chargeable to capital account or would have been so chargeable either with a proper election by the Company (for example under Section 266 of the Code) or but for a proper election by the Company to deduct such amounts, and (ii) to provide sewage or solid waste disposal facilities within the meaning of Section 103(b)(4)(E) or (F) of the Code and regulations thereunder. (b) Within thirty-one (31) days of the date of issuance of the Series ____ Bonds, there neither have been nor will be any private activity bonds (within the meaning of Section 141(a) of the 1986 Code) sold to finance facilities of the Company or any related person within the meaning of Section 147(a)(2) of the Code, under a common plan of marketing, at substantially the same rate of interest, and for which a common or pooled security will be used or available to pay debt service. (c) The average maturity of the Series ____ Bonds (within the meaning of Section 147(b) of the 1986 Code and regulations thereunder) does not exceed 120% of the average reasonably expected economic life of the Facilities (within the meaning of Section 147(b) of the 1986 Code and regulations thereunder). (d) No changes will be made in the Facilities which in any way impairs the exclusion of interest on any of the Bonds from gross income for purposes of federal income taxation. (e) No action shall be taken that will cause the Series ____ Bonds to be "federally guaranteed" as defined in Section 149(b) of the Code. (f) No portion of the proceeds of the Series ____ Bonds in excess of 2% of the proceeds thereof (within the meaning of Section 147(g) of the Code and regulations thereunder) will be used to finance costs of issuance of the Series ____ Bonds. (g) (i) The Facilities being refinanced out of the proceeds of the Series ____ Bonds are part of the facilities described in the Memorandum of Agreement dated ______, ____, between the County and the Company; (ii) acquisition and construction of each of such Facilities commenced on or after ______, ____, and (iii) none of such Facilities was placed in service or acquired (whichever occurred last) more than one year prior to the date of issuance of the Prior Bonds. The covenants and agreements contained in this Section 6.06 shall survive any termination of this Agreement. ARTICLE VII ASSIGNMENT, LEASING AND SELLING Section 7.01. By the County. Except as provided in Article V of this Agreement, the County will not sell, lease, assign, transfer, convey or otherwise dispose of its interest in the Facilities or any portion thereof or interest therein or in the revenues therefrom without the written consent of the Company, nor will it create or suffer to be created any debt, lien or charge thereon, not consented to by the Company, except Permitted Encumbrances. Section 7.02. By the Company. The Company's interest in this Agreement may be assigned in whole or in part, and the Facilities may be leased or sold as a whole or in part (whether a specific element or unit or an undivided interest), by the Company, subject, however, to the condition that no assignment, lease or sale (other than as described in Section 6.01 hereof) shall relieve the Company from primary liability for its obligations under Section 5.02 and 5.03 hereof (including its obligations on the First Mortgage Bonds) to repay the loan from the County to the Company, or for any other of its obligations hereunder, other than those obligations relating to the operation, maintenance and insurance of the Facilities which obligations (to the extent of the interest assigned, leased or sold and to the extent assumed by the assignee, lessee or purchaser) shall be deemed to be satisfied and discharged. After any lease or sale of any element or unit of the Facilities, or any interest therein, such element or unit, or interest therein, shall no longer be deemed to be part of the Facilities for the purposes of this Agreement. The Company shall, within fifteen (15) days after the delivery thereof, furnish to the County and the Trustee a true and complete copy of the agreements or other documents effectuating any such assignment, lease or sale. Section 7.03. Limitation. This Agreement shall not be assigned nor shall the Facilities be leased or sold, in whole or in part, except as provided in this Article VII or in Section 6.01 or in the Indenture. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.01. Events of Default. Each of the following events shall constitute and is referred to in this Agreement as an "Event of Default": (a) a "Default" as such term is defined in Section 65 of the Company Mortgage; (b) a failure by the Company to make when due any payment required to be made pursuant to Section 5.02 hereof, which failure shall have resulted in an "Event of Default" under clause (a) or (b) of Section 1001 of the Indenture; or (c) a failure by the Company to pay when due any other amount required to be paid under this Agreement or to observe and perform any covenant, condition or agreement on its part to be observed or performed which failure shall continue for a period of ninety (90) days after written notice, specifying such failure and requesting that it be remedied, shall have been given to the Company by the County or the Trustee, unless the County and the Trustee shall agree in writing to an extension of such period prior to its expiration; provided, however, that the County and the Trustee shall be deemed to have agreed to an extension of such period if corrective action is initiated by the Company within such period and is being diligently pursued. Section 8.02. Force Majeure. The provisions of Section 8.01 hereof are subject to the following limitations: If by reason of acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders or other acts of any kind of the Government of the United States or of the State of Arkansas, or any other sovereign entity or body politic, or any department, agency, political subdivision, court or official of any of them, or any civil or military authority; insurrections; riots; epidemics; landslides; lightning; earthquakes; volcanoes; fires; hurricanes; tornados; storms; floods; washouts; droughts; arrests; restraint of government and people; civil disturbances; explosions; breakage or accident to machinery; partial or entire failure of utilities; or any cause or event not reasonably within the control of the Company, the Company is unable in whole or in part to carry out any one or more of its agreements or obligations contained herein, other than its obligations under Section 5.02 hereof to repay the loan made to the Company and its obligations under Sections 5.06, 6.01, 6.04, 6.06 and 9.01 hereof, the Company shall not be deemed in default by reason of not carrying out said agreement or agreements or performing said obligation or obligations during the continuance of such inability. The Company agrees, however, to use its best efforts to remedy with all reasonable dispatch the causeor causes preventing it from carrying out its agreements; provided, that the settlement of strikes, lockouts and other industrial disturbances shall be entirely within the discretion of the Company, and the Company shall not be required to make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of the opposing party or parties when such course is in the judgment of the Company unfavorable to the Company. Section 8.03. Remedies on Default. (a) Upon the occurrence and continuance of any Event of Default described in clause (a) of Section 8.01 hereof, the Trustee, as the holder of the First Mortgage Bonds, shall, subject to the provisions of the Indenture, have the rights provided in the Company Mortgage. (b) Upon the occurrence and continuance of any Event of Default described in clause (b) of Section 8.01 hereof, and further upon the condition that, in accordance with the terms of the Indenture, the Bonds shall have become immediately due and payable pursuant to any provision of the Indenture, the payments required to be paid pursuant to Section 5.02 hereof shall, without further action, become and be immediately due and payable. (c) Upon the occurrence and continuance of any Event of Default, the County with the prior consent of the Trustee, or the Trustee, may take any action at law or in equity to collect the payments then due and thereafter to come due hereunder, or to enforce performance and observance of any obligation, agreement or covenant of the Company under this Agreement. (d) Any amounts collected pursuant to action taken under this Section shall be applied in accordance with the Indenture. (e) In case any proceeding taken by the County or the Trustee on account of any Event of Default shall have been dis continued or abandoned for any reason, or shall have been determined adversely to the County or the Trustee, then and in every case the County and the Trustee, shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies and powers of the County and the Trustee shall continue as though no such proceeding had been taken. Section 8.04. No Remedy Exclusive. No remedy conferred upon or reserved to the County 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 or in equity or by statute. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such 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 County or the Trustee toexercise any remedy reserved to it in this Article, it shall not be necessary to give any notice other than such notice as may be required in this Article. Section 8.05. Agreement to Pay Attorneys' Fees and Expenses. In the event the Company should default under any of the provisions of this Agreement and the County or the Trustee should employ attorneys or incur other expenses for the collection of payments due hereunder or on the First Mortgage Bonds or for the enforcement of performance or observance of any obligation or agreement on the part of the Company contained herein, the Company agrees that it will on demand therefor pay to the County or the Trustee, as the case may be, the reasonable fees of such attorneys and such other expenses so incurred. Section 8.06. Waiver of Breach. In the event that any agreement contained herein shall be breached by either the Company or the County and such breach shall thereafter be waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. In view of the assignment of the County's rights in and under this Agreement to the Trustee under the Indenture, the County shall have no power to waive any default hereunder by the Company without the consent of the Trustee. Any waiver of any "Event of Default" under the Indenture and a rescission and annulment of its consequences, and any waiver of any "Default" under the Company Mortgage and a rescission and annulment of its consequences, shall constitute a waiver of the corresponding Event of Default hereunder and a rescission and annulment of the consequence thereof. ARTICLE IX REDEMPTION OR PURCHASE OF BONDS Section 9.01. Redemption of Bonds. The County shall take the actions required by the Indenture to discharge the lien thereof through the redemption, or provision for payment or redemption, of all Bonds then outstanding, or to effect the redemption, or provision for payment or redemption, of less than all the Bonds then outstanding, upon receipt by the County and the Trustee from the Company of a notice designating the principal amounts, series and maturities of the Bonds to be redeemed, or for the payment or redemption of which provision is to be made, and, in the case of redemption of Bonds, or provision therefor, specifying the date of redemption, which shall not be less than forty-five (45) days from the date such notice is given, and the applicable redemption provision of the Indenture. Unless otherwise stated therein or otherwise required by the Indenture, such notice shall be revocable by the Company at any time prior to the time at which the Bonds to be redeemed, or for the payment or redemption of which provision is to be made, are first deemed to be paid in accordance with Article IX of the Indenture. The Company shall furnish, as a prepayment of the amounts due under Section 5.02 hereof, any moneys or Government Securities (as defined in the Indenture) required by the Indenture to be deposited with the Trustee or otherwise paid by the County in connection with any of the foregoing purposes. Section 9.02. Purchase of Bonds. The Company may at any time, and from time to time, furnish moneys to the Trustee accompanied by a notice directing the Trustee to apply such moneys to the purchase in the open market of Bonds in the principal amounts and of the series and maturities specified in such notice, and any Bonds so purchased shall thereupon be canceled by the Trustee. ARTICLE X RECORDATION AND OTHER INSTRUMENTS Section 10.01. Recording and Filing. The Company shall record and file, or cause to be recorded and filed, all documents and statements referred to in Section 404 of the Indenture. Section 10.02. Photocopies and Reproductions. A photocopy or other reproduction of this Agreement may be filed as a financing statement pursuant to the Uniform Commercial Code, although the signatures of the Company and the County on such reproduction are not original manual signatures. ARTICLE XI MISCELLANEOUS Section 11.01. Notices. Except as otherwise provided in this Agreement, all notices, certificates or other communications shall be sufficiently given and shall be deemed given when mailed by registered or certified mail, postage prepaid, to the County, the Company or the Trustee. Copies of each notice, certificate or other communication given hereunder by or to the Company shall be mailed by registered or certified mail, postage prepaid, to the Trustee; provided, however, that the effectiveness of any such notice shall not be affected by the failure to send any such copies. Notices, certificates or other communications shall be sent to the following addresses: Company: Arkansas Power & Light Company P.O. Box 551 Little Rock, Arkansas 72203 Attention: Treasurer County: _________ County, Arkansas _________ County Courthouse ___________________________ __________, Arkansas ______ Attention: County Judge Trustee: ___________________________ ___________________________ ___________________________ Attention: Corporate Trust Department Any of the foregoing may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 11.02. Severability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative, or unenforceable to any extent whatever. Section 11.03. Execution of Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 11.04. Amounts Remaining in Bond Fund. It is agreed by the parties hereto that after payment in full of (i) the Bonds (or the provision for payment thereof having been made in accordance with the provisions of the Indenture), (ii) the Administration Expenses of the County, and (iii) all other amountsrequired to be paid under this Agreement and the Indenture, any amounts remaining in the Bond Fund shall belong to and be paid by the Trustee to the Company. Section 11.05. Amendments, Changes and Modifications. Except as otherwise provided in this Agreement or the Indenture, subsequent to the initial issuance of Bonds and prior to payment in full of the Bonds (or the provision for payment thereof having been made in accordance with the provisions of the Indenture), this Agreement may not be effectively amended, changed, modified, altered or terminated nor any provision waived, without the written consent of the Trustee which shall not be unreasonably withheld. Section 11.06. Governing Law. This Agreement shall be governed exclusively by and construed in accordance with the applicable laws of the State of Arkansas. Section 11.07. Authorized Company Representatives. An Authorized Company Representative shall act on behalf of the Company whenever the approval of the Company is required or the Company requests the County to take some action, and the County and the Trustee shall be authorized to act on any such approval or request and neither party hereto shall have any complaint against the other or against the Trustee as a result of any such action taken. Section 11.08. Term of the Agreement. This Agreement shall be in full force and effect from the date hereof until the right, title and interest of the Trustee in and to the Trust Estate (as defined in the Indenture) shall have ceased, determined and become void in accordance with Article IX of the Indenture and until all payments required under this Agreement shall have been made. Section 11.09. No Personal Liability. No covenant or agreement contained in this Agreement shall be deemed to be the covenant or agreement of any official, officer, agent, or employee of the County in his individual capacity, and no such person shall be subject to any personal liability or accountability by reason of the issuance thereof. Section 11.10. Parties in Interest. This Agreement shall inure to the benefit of and shall be binding upon the County, the Company and their respective successors and assigns, and no other person, firm or corporation shall have any right, remedy or claim under or by reason of this Agreement; provided, however, that any obligation of the County created by or arising out of this Agreement shall be payable solely out of the revenues derived from this Agreement or the sale of the Bonds or income earned on invested funds as provided in the Indenture and shall not constitute, and no breach of this Agreement by the County shallimpose, a pecuniary liability upon the County or a charge upon the County's general credit or against its taxing powers. IN WITNESS WHEREOF, the County and the Company have caused this Agreement to be executed in their respective corporate names and their respective corporate seals to be hereunto affixed and attested by their duly authorized officers, all as of the date first above written. _________ COUNTY, ARKANSAS ATTEST: By _____________________________ ___________________________ County Judge County Clerk (SEAL) ARKANSAS POWER & LIGHT COMPANY ATTEST: By _____________________________ ___________________________ _____________________________ ___________________________ (title) (title) (SEAL) ACKNOWLEDGMENT STATE OF ARKANSAS ) ) COUNTY OF _________ ) On this ____ day of __________, ____, before me, a Notary Public duly commissioned, qualified and acting, within and for the County and State aforesaid, appeared in person the within named __________ and ____________________, County Judge and County Clerk, respectively, of _________ County, Arkansas, to me personally well known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the County, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this ____ day of __________, ____. ________________________________ Notary Public My commission expires: ___________________________ (SEAL) ACKNOWLEDGMENT STATE OF ______________ ) ) COUNTY OF _____________ ) On this ____ day of __________, ____, before me, a Notary Public duly commissioned, qualified and acting within and for the County and State aforesaid, appeared in person the within named Glenn E. Harder and Lee W. Randall, Vice President- Financial Strategies and Treasurer and Vice President, Chief Accounting Officer and Assistant Secretary, respectively, of Arkansas Power & Light Company, an Arkansas corporation, to me personally well known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name and behalf of the corporation, and further stated and acknowledged that they had so signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this ____ day of __________, ____. ________________________________ Notary Public My commission expires: __________________________ (SEAL) EXHIBIT A DESCRIPTION OF FACILITIES EX-99 3 EXHIBIT B-2 Exhibit B-2 _________________________________________________________________ ____ COUNTY, ARKANSAS and ARKANSAS POWER & LIGHT COMPANY __________________________ INSTALLMENT SALE AGREEMENT __________________________ Dated as of _______________ _________________________________________________________________ $__________ ____ County, Arkansas Pollution Revenue Refunding Bonds, Series ____ (Arkansas Power & Light Company Project) INSTALLMENT SALE AGREEMENT TABLE OF CONTENTS (This Table of Contents is not a part of the Installment Sale Agreement and is only for convenience of reference.) Parties 1 Recitals 1 ARTICLE I DEFINITIONS Section 1.01 Definitions 2 Section 1.02 Use of Words and Phrases 6 ARTICLE II REPRESENTATIONS Section 2.01 Representations and Warranties of the County 7 Section 2.02 Representations and Warranties of the Company 7 Section 2.03 Official Action Toward the Issuance 8 of the Series ____ Bonds ARTICLE III THE FACILITIES; CONVEYANCE TO THE COUNTY Section 3.01 Construction of the Facilities 10 Section 3.02 Insufficient Moneys in Construction Fund 10 Section 3.03 Revision of Plans and Specifications 10 Section 3.04 Certification of Completion Date 11 Section 3.05 Maintenance of Facilities; Remodeling 11 Section 3.06 Insurance 12 Section 3.07 Condemnation; Eminent Domain 12 Section 3.08 Termination of Construction 13 Section 3.09 Conveyance to the County 14 Section 3.10 Ledger 14 ARTICLE IV ISSUANCE OF BONDS; DISPOSITION OF PROCEEDS OF BONDS Section 4.01 Issuance of the Series ____ Bonds 15 Section 4.02 Additional Bonds 15 Section 4.03 Disposition of Bond Proceeds 15 Section 4.04 Disbursements from the Construction Fund 16 ARTICLE V SALE AND PURCHASE OF THE PROJECT; PURCHASE PRICE; FIRST MORTGAGE BONDS; OTHER OBLIGATIONS Section 5.01 Sale and Purchase of the Facilities 18 Section 5.02 Purchase Price 18 Section 5.03 Issuance, Delivery and Surrender of First Mortgage Bonds 19 Section 5.04 Payments Assigned; Obligation Absolute 21 Section 5.05 Payment of Expenses 21 Section 5.06 Indemnification 21 Section 5.07 Payment of Taxes; Discharge of Liens 22 ARTICLE VI SPECIAL COVENANTS AND AGREEMENTS Section 6.01 Maintenance of Corporate Existence 23 Section 6.02 Permits or Licenses 23 Section 6.03 County's and Trustee's Access to Facilities 23 Section 6.04 Arbitrage Covenant 23 Section 6.05 Use of Facilities 24 Section 6.06 No Warranties 24 Section 6.07 Quiet Enjoyment 24 Section 6.08 Tax Exempt Status of Bonds 24 ARTICLE VII ASSIGNMENT, LEASING AND SELLING Section 7.01 By the County 27 Section 7.02 By the Company 27 Section 7.03 Limitation 27 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.01 Events of Default 28 Section 8.02 Force Majeure 28 Section 8.03 Remedies on Default 29 Section 8.04 No Remedy Exclusive 29 Section 8.05 Agreement to Pay Attorneys' Fees and Expenses 30 Section 8.06 Waiver of Breach 30 ARTICLE IX REDEMPTION OR PURCHASE OF BONDS Section 9.01 Redemption of Bonds 31 Section 9.02 Purchase of Bonds 31 ARTICLE X RECORDATION AND OTHER INSTRUMENTS Section 10.01 Recording and Filing 32 Section 10.02 Photocopies and Reproductions 32 ARTICLE XI MISCELLANEOUS Section 11.01 Notices 33 Section 11.02 Severability 33 Section 11.03 Execution of Counterparts 33 Section 11.04 Amounts Remaining in Bond Fund 33 Section 11.05 Amendments, Changes and Modifications 34 Section 11.06 Governing Law 34 Section 11.07 Authorized Company Representatives 34 Section 11.08 Term of the Agreement 34 Section 11.09 No Personal Liability 34 Section 11.10 Parties in Interest 34 Signatures and Seals 36 Acknowledgments 37 Exhibit A - Description of Facilities 39 INSTALLMENT SALE AGREEMENT This INSTALLMENT SALE AGREEMENT, dated as of _______ _, ____, by and between ____ COUNTY, ARKANSAS, a political subdivision under the Constitution and laws of the State of Arkansas (hereinafter referred to as the "County"), and ARKANSAS POWER & LIGHT COMPANY, a corporation organized and existing under and by virtue of the laws of the State of Arkansas (hereinafter referred to as the "Company"). W I T N E S S E T H: WHEREAS, the County is authorized and empowered under the laws of the State of Arkansas, including particularly Title 14, Chapter 267 of the Arkansas Code of 1987 Annotated (the "Act"), to issue revenue bonds and to expend the proceeds thereof to finance and refinance the acquisition, construction, reconstruction, extension, equipment or improvement of pollution control facilities for the disposal or control of sewage, solid waste, water pollution, air pollution, or any combination thereof; and WHEREAS, certain pollution control facilities (hereinafter referred to as the "Facilities") have been acquired, constructed and equipped at _______ and _ of the electric generating plant jointly owned by the Company and others located within the boundaries of the County near ________, Arkansas and known as the __________________________________ (hereinafter referred to as the "Plant"); and WHEREAS, pursuant to and in accordance with the provisions of the Act, the County has heretofore issued and delivered its Pollution Control Revenue Bonds, Series ____ (Arkansas Power & Light Company Project), in the aggregate principal amount of $_________ (the "Prior Bonds"), for the purpose of financing and refinancing the cost of acquiring, constructing and equipping all or part of the Company's interest in the Facilities (hereinafter referred to as the "Project"), and paying the expenses of authorizing and issuing the Prior Bonds; and WHEREAS, the County proposes to issue $_________ aggregate principal amount of its revenue bonds under the Act (the "Series ____ Bonds") for the purpose of refunding the Prior Bonds; and WHEREAS, in connection with the issuance of the Bonds the Facilities will be acquired by purchase by the County and sold to the Company upon the terms and conditions set forth herein; and WHEREAS, there are initially being issued Bonds in the aggregate principal amount of $__________ (identified in Article I hereof and referred to herein as the "Series ____ Bonds"); NOW, THEREFORE, for and in consideration of the premises and the mutual covenants herein made, and subject to the conditions herein set forth, the parties hereto agree as follows: ARTICLE I DEFINITIONS Section 1.01. Definitions. In addition to the words and terms elsewhere defined in this Agreement or in the Indenture, the following words and terms as used in this Agreement shall have the following meanings unless the context or use indicates another or different meaning: "Act" -- Title 14, Chapter 267 of the Arkansas Code of 1987 Annotated, as amended and enacted from time to time. "Additional Bonds" -- Bonds in addition to the Series ____ Bonds, which are issued under the provisions of Section 211 of the Indenture. "Administration Expenses" -- The reasonable and necessary expenses incurred by the County with respect to this Agreement, the Indenture and any transaction or event contemplated by this Agreement or the Indenture including the compensation and reimbursement of expenses and advances payable to the Trustee, any paying agent, any co-paying agent, and the registrar under the Indenture. "Agreement" -- This Installment Sale Agreement and any amendments and supplements hereto. "Authorized Company Representative" -- The person or persons at the time designated to act on behalf of the Company, such designation in each case to be evidenced by a certificate furnished to the County and the Trustee containing the specimen signature of such person or persons and signed on behalf of the Company by its President, any Senior Vice President, any Vice President, or the Treasurer. "Bonds" -- The Series ____ Bonds and all Additional Bonds issued by the County pursuant to the Indenture. "Bond Counsel" -- Any firm of nationally recognized municipal bond counsel selected by the Company and acceptable to the County and the Trustee. "Bond Fund" -- The fund by that name created and established in Section 501 of the Indenture. "Capital Account" -- Any accounts by that name established under Section 601 of the Indenture. "Code" -- The Internal Revenue Code of 1986, as heretofore or hereafter amended. "Company" -- Arkansas Power & Light Company, a corporation organized and operating under the laws of the State of Arkansas, and its permitted successors and assigns. "Company Mortgage" -- The Mortgage and Deed of Trust, dated as of October 1, 1944, between the Company and Guaranty Trust Company of New York (now Morgan Guaranty Trust Company of New York) and Henry A. Theis (John W. Flaherty, successor), and, as to property, real or personal, situated or being in Missouri, Marvin A. Mueller (The Boatmen's National Bank of St. Louis, successor), as trustees, as heretofore and hereafter amended and supplemented. "Company Mortgage Trustees" -- The trustees under the Company Mortgage. "Completion Date" -- The date of completion of the Facilities as that date shall be certified as provided in Section 3.04 hereof. "construction" (and other forms of the word "con struct") -- When used with respect to the Facilities, the acquisition, construction and equipment of the Facilities within the meaning of the Act, including, without limitation, the acquisition, construction, reconstruction, extension, equipment or improvement of the Facilities. "Construction Fund" -- The fund by that name created and established in Section 601 of the Indenture. "Cost of Construction" -- All costs paid or incurred by the Company with respect to the Facilities and the financing thereof for the payment of which the County is authorized to issue bonds under the Act, and shall include without limitation (a) obligations paid or incurred by the Company for labor, materials and other expenses and to contractors, builders and materialmen in connection with the construction of the Facilities; (b) the costs paid or incurred by the Company of contract bonds and of insurance of all kinds that may be deemed by the Company to be desirable or necessary during the course of construction of the Facilities; (c) the expenses paid or incurred by the Company for test borings, surveys, estimates, plans and specifications, and preliminary investigations therefor, with respect to the Facilities and for supervising construction, as well as for the performance of all other duties required by or reasonably necessary for the proper construction of the Facilities; (d) Administration Expenses, legal, accounting, financial, underwriting, advertising, recording and printing expenses and all other expenses paid or incurred by the Company, in connection with the authorization, issuance and sale of the Bonds and the issuance of the First Mortgage Bonds; (e) the amount of the allowance for funds used during construction entered by the Company upon its accounting records in respect of any element or unit of the Facilities in accordance with the applicableregulatory uniform systems of accounts prior to the first issuance of Bonds to defray the Company's share of costs of constructing such element or unit; (f) interest (exclusive of accrued interest paid by the initial purchasers upon delivery thereof) accruing upon the Bonds during the period of construction of the Facilities; (g) all other costs that the Company shall be required to pay under the terms of any contract or contracts for the construction of the Facilities; (h) any other costs or expenses paid or incurred by the Company, and any sums required to reimburse the Company for work done by it, with respect to the Facilities which are properly chargeable to the capital account of the Company with respect to the Facilities or would be so chargeable for federal income tax purposes either with a proper election or but for a proper election to deduct the same; and (i) all costs and expenses relating to transfers of title between the Company and the County pursuant to this Agreement. "County" -- ____ County, Arkansas, a political subdivision under the Constitution and laws of the State of Arkansas. "Event of Default" -- Any event of default specified in Section 8.01 hereof. "Facilities" -- The pollution control facilities at the Plant which were financed and refinanced, in whole or in part, with the proceeds of the Prior Bonds, which facilities are generally described in Exhibit A hereto. "First Mortgage Bonds" -- The bonds of one or more series issued and delivered under the Company Mortgage and held by the Trustee pursuant to Section 5.03 hereof. "Indenture" -- The Trust Indenture dated as of _______ _, ____, between the County and the Trustee, securing the Bonds, and any amendments and supplements thereto. "Investment Account" -- Any of the accounts by that name established under Section 601 of the Indenture. "outstanding" -- When used with reference to the Bonds, as of any particular date, all Bonds authenticated and delivered under the Indenture except: (a) Bonds canceled at or prior to such date or delivered to or acquired by the Trustee prior to such date for cancellation; (b) Bonds deemed to be paid in accordance with Article IX of the Indenture; and (c) Bonds in lieu of or in exchange or substitution for which other Bonds shall have been authenticated and delivered pursuant to the Indenture. "Permitted Encumbrances" -- (a) The Installment Sale Agreement dated as of _________ _, ____, by and between the County and the Company, recorded in the office of the Circuit Clerk and Ex Officio Recorder of ____ County, Arkansas in Record Book ___ at page ___, and any amendments and supplements thereto; (b) the Trust Indenture dated as of _________ _, ____, by and between the County and ______________________________________, _____________________, as Trustee, recorded in the office of the Circuit Clerk and Ex Officio Recorder of ____ County, Arkansas in Record Book ___ at page ___, and any amendments and supplements thereto; (c) the Installment Sale Agreement dated as of ________ _, ____, by and between the County and the Company, recorded in the office of the Circuit Clerk and Ex Officio Recorder of ____ County, Arkansas in Record Book ____ at page ___, and any amendments and supplements thereto; (d) the Trust Indenture dated as of ________ _, ____, by and between the County and ___________________________________ _____, __________, ________, as Trustee, recorded in the office of the Circuit Clerk and Ex Officio Recorder of ____ County, Arkansas in Record Book ____ at page ___, and any amendments and supplements thereto; (e) the Installment Sale Agreement dated as of ________ _, ____, by and between the County and the Company, recorded in the office of the Circuit Clerk and Ex Officio Recorder of ____ County, Arkansas in Record Book ____ at page ___, and any amendments and supplements thereto; (f) the Trust Indenture dated as of ________ _, ____, by and between the County and _____________ ___________________________, __________, ________, as Trustee, recorded in the office of the Circuit Clerk and Ex Officio Recorder of ____ County, Arkansas in Record Book ____ at page ___, and any amendments and supplements thereto; (g) liens for taxes, assessments and other governmental charges not delinquent or which can be paid without penalty; (h) unfiled, inchoate mechanics' and materialmen's liens for construction work in progress; (i) workmen's, repairmen's, warehousemen's and carriers' liens and other similar liens, if any, arising in the ordinary course of business; (j) all the following, if they do not individually or in the aggregate materially impair the use of the Facilities or materially detract from the value thereof to the Company, viz.: any easements, restrictions, mineral, oil, gas and mining rights and reservations, zoning laws and defects in title or other encumbrances to which the Facilities may be subject because of the installation thereof at the Plant; (k) any lien for the satisfaction and discharge of which a sum of money or a surety bond is on deposit with the Trustee; (l) the rights of the County and the Company under this Agreement and any subsequent installment sale agreement or lease relating to all or any part of the Facilities; (m) the rights of the Trustee under the Indenture; and (n) the lien of the Company Mortgage and the "Excepted Encumbrances" referred to therein. "Plant" -- The Company's electric generating plant located within the boundaries of the County near ____________, Arkansas and known as Arkansas ___________. "Plans and Specifications" -- The plans and specifications prepared by or on behalf of the Company for the Facilities, as the same may be revised from time to time in accordance with Section 3.03 hereof. "Prior Bonds" -- The County's Pollution Control Revenue Bonds, Series ____, in the aggregate principal amount of $_________. "Series ____ Bonds" -- The initial issue of Bonds under and secured by the Indenture in the aggregate principal amount of $__________. "Trustee" -- The banking corporation or association designated as Trustee in the Indenture, and its successor or successors as such Trustee. The original Trustee is _____________ ___________________________, ____________________. Section 1.02. Use of Words and Phrases. "Herein", "hereby", "hereunder", "hereof", "hereinabove", "hereinafter", and other equivalent words and phrases refer to this Agreement and not solely to the particular portion thereof in which any such word is used. The definitions set forth in Section 1.01 hereof include both singular and plural. Whenever used herein, any pronoun shall be deemed to include both singular and plural and to cover all genders. ARTICLE II REPRESENTATIONS Section 2.01. Representations and Warranties of the County. The County makes the following representations and warranties as the basis for the undertakings on the part of the Company herein contained: (a) The County is a political subdivision duly existing under the Constitution and laws of the State of Arkansas. (b) The County has the power to enter into the trans actions contemplated by this Agreement and to carry out its obligations hereunder. By proper action of the governing body of the County, the County has been duly authorized to execute and deliver this Agreement. (c) The County has not, and will not, except as otherwise required by mandatory provisions of law, assign its interest in this Agreement other than to secure the Bonds. (d) The Facilities and their operation will promote the securing and developing of industry and the health, safety and physical and economic welfare of the County and its inhabitants, and will thereby further the public purposes of the Act. Section 2.02. Representations and Warranties of the Company. The Company makes the following representations and warranties as the basis for the undertakings on the part of the County herein contained: (a) The Company is a corporation duly incorporated and in good standing under the laws of the State of Arkansas, is not in violation of any provision of its Articles of Incorporation, or its Bylaws, has power to enter into this Agreement and to perform and observe the agreements and covenants on its part contained herein, including without limitation the power to issue the First Mortgage Bonds as contemplated herein and in the Company Mortgage, and has duly authorized the execution and delivery of this Agreement by proper corporate action. (b) The Facilities constitute a pollution control project of the type authorized and permitted by the Act. (c) The estimated Cost of Construction has been determined in accordance with sound engineering and accounting principles, and the Company estimates that all of the proceeds of the Bonds (exclusive of accrued interest, if any, paid by the original purchaser or purchasers of such Bonds upon delivery thereof) will be expended to pay such Cost of Construction. (d) Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions of this Agreement, including, without limitation, the issuance and delivery of the First Mortgage Bonds, conflicts with or results in a breach of the terms, conditions or provisions of any restriction or any agreement or instrument to which the Company is now a party or by which the Company is bound, or con stitutes a default under any of the foregoing, or results in the creation or imposition of any lien, charge or encumbrance whatsoever upon any of the property or assets of the Company except any interests created herein and under the Company Mortgage. (e) The Securities and Exchange Commission, the Arkansas Public Service Commission, the Tennessee Public Service Commission, and the Public Service Commission of Missouri have each approved all matters relating to the Company's participation in the transactions contemplated by this Agreement which require said approval, and no other consent, approval, authorization or other order of any regulatory body or administrative agency or other governmental body is legally required for the Company's participation therein, except such as may have been obtained or may be required under the securities laws of any state or in commection with the issuance of series of Additional Bonds. (f) (i) With respect to the Facilities at the date of this Agreement the Company has, (ii) with respect to the Facilities on the date of the first issuance of the Bonds the Company will have, and (iii) with respect to each portion or item of the Facilities constructed after the date of this Agreement the Company will, when the same is constructed and title thereto is to pass hereunder to the County, have good and marketable title to the Facilities, free and clear of all claims, liens and encumbrances other than Permitted Encumbrances. Section 2.03. Official Action Toward the Issuance of the Series ____ Bonds. The governing body of the County has heretofore authorized a Memorandum of Agreement dated _________ __, ____ (authorized by Order of the County Court entered as of ______ _, ____), a Memorandum of Agreement dated _____ _, ____ (authorized by Order of the County Court entered on _____ _, ____, and by Ordinance No. _______ adopted by the Quorum Court on _____ _, ____), and a Memorandum of Agreement dated _______ __, ____ (authorized by Order of the County Court entered on _______ __, ____), undertaking to furnish permanent financing of the pollution control facilities necessary to the construction and operation of the Plant by the issuance of one or more series of revenue bonds under the Act. The County intends each Memorandum of Agreement and the Order and Ordinance authorizing it as official action toward the issuance of the Series ____ Bonds within the meaning of the Code and regulations thereunder. The Company represents and warrants (i) that the Facilities being financed out of the proceedsof the Series ____ Bonds are part of the facilities described in the Memorandum of Agreement dated _________ __, ____, the Memorandum of Agreement dated _____ _, ____, or the Memorandum of Agreement dated _______ __, ____; (ii) that acquisition and construction of each of the Facilities described in the Memorandum of Agreement dated _________ __, ____, commenced prior to _________ _, ____, and that none of such Facilities had reached a degree of completion which would permit operation, nor was any of such Facilities in fact in operation, at substantially the level for which it was designed prior to _________ __, ____; and (iii) that acquisition and construction of each of the Facilities described in the Memorandum of Agreement dated _____ _, ____, commenced on or after _____ _, ____, that acquisition and construction of each of the Facilities described in the Memorandum of Agreement dated _______ __, ____, commenced on or after _______ __, ____, and that none of such Facilities will have been placed in service or acquired (whichever occurs last) more than one year prior to the date of issuance of the Series ____ Bonds. ARTICLE III THE FACILITIES; CONVEYANCE TO THE COUNTY Section 3.01. Construction of the Facilities. (a) The Company shall cause the Facilities to be constructed with all reasonable dispatch in order to effectuate the purposes of the Act. As between the Company and the County, the Company shall have the sole responsibility under this Agreement for the construction of the Facilities and may perform the same itself or through its agents, acting both on its own behalf and as agent for others, and may make or issue such contracts, orders, receipts and instructions, and in general do or cause to be done all such other things as it may in its sole discretion consider requisite or advisable for the construction of the Facilities and for fulfilling its obligations under this Article III. (b) The Company, itself or through its agents, acting both on its own behalf and as agent for others, may prosecute or defend any actions or proceedings arising out of the construction of the Facilities, and the County agrees to cooperate fully with the Company in any such action or proceeding. Section 3.02. Insufficient Moneys in Construction Fund. In the event the moneys in the Construction Fund available for payment of the Cost of Construction, together with moneys made available to pay the Cost of Construction from the proceeds of previous or subsequent issues of revenue bonds, should not be sufficient to pay the Cost of Construction in full, the Company agrees to pay all that portion of the Cost of Construction in excess of the moneys available therefor. The County does not make any warranty, either express or implied, that the moneys which will be paid into the Construction Fund and available for payment of the Cost of Construction will be sufficient to pay the Cost of Construction in full. If the Company shall make any payments pursuant to this Section 3.02, it shall not be entitled to any reimbursement therefor from the County, the Trustee or the holders of any of the Bonds, nor shall it be entitled to any diminution in or postponement of the payment of the principal of and premium, if any, and interest on the First Mortgage Bonds or the payment of any other amounts payable under this Agreement. Section 3.03. Revision of Plans and Specifications. The Company may revise the Plans and Specifications for the Facilities at any time and from time to time prior to the Completion Date in any respect, including without limitation any changes therein, additions thereto, substitutions therefor and deletions therefrom; provided, however, that, after giving effect to such revision, the representations contained in Section 2.02 of this Agreement shallremain true and correct; and provided, further, that no material revision to the Plans and Specifications shall be made, and no revision which shall render inaccurate the description of the Facilities contained in Exhibit A hereto shall be made, unless, in each case, the Company shall have theretofore delivered to the Trustee: (i) a certificate of an Authorized Company Representative describing the proposed revision and certifying that it complies with the requirements of this Section and will not have the effect of disqualifying the Facilities as facilities which can be financed under the Act, or as sewage or solid waste disposal facilities within the meaning of Section 142(a)(5) or (6) of the Code and regulations thereunder; (ii) an opinion of Bond Counsel to the effect that the proposed revision is such that the expenditure of the proceeds of Series ____ Bonds and any Additional Bonds thereon pursuant to this Agreement shall not impair the validity of the Bonds under the Act, or the exclusion of the interest on the Bonds from gross income for purposes of federal income taxation; and (iii) such documents, certificates and showings as may be required by Bond Counsel rendering the opinion in clause (ii) of this paragraph. Section 3.04. Certification of Completion Date. The Completion Date shall be the date on which the Facilities are com pleted in their entirety and ready to be placed in service and operated as sewage or solid waste disposal facilities at substantially the level for which they were designed, all as determined by the Company. Promptly after the Completion Date, the Company shall submit to the County and the Trustee a certificate, executed by an Authorized Company Representative, which shall specify the Completion Date and shall state that (a) construction of the Facilities has been completed and the Cost of Construction has been paid, except for any Costs of Construction which have been incurred but are not then due and payable, or the liability for the payment of which is being contested or disputed by the Company, and for the payment of which the Trustee is directed to retain specified amounts of moneys in specified accounts within the Construction Fund, and (b) the Facilities are suitable for operation for sewage or solid waste disposal purposes. Notwithstanding the foregoing, such certificate may state that it is given without prejudice to any rights against third parties which exist at the date thereof or which may subsequently come into being. Section 3.05. Maintenance of Facilities; Remodeling. The Company shall, at its expense, cause the Facilities, and every element and unit thereof, to be maintained, preserved and kept in good repair, working order and condition, and from time to time tocause all needful and proper repairs, replacements, additions, betterments and improvements to be made thereto; provided, however, that the Company may exercise all of such rights, powers, elections and options to cause the discontinuance of the operation of, or reduce the capacity of, the Facilities, or any element or unit thereof, if, in the judgment of the Company, any such action is necessary or desirable in the conduct of the business of the Company, or if the Company is ordered so to do by any regulatory authority having jurisdiction in the premises, or if the Company intends to sell or dispose of the same and within a reasonable time shall endeavor to effectuate such sale. The Company shall notify the County as to the nature and extent of any material damage or loss to the Facilities and of the discontinuance of the operation of the Facilities, or any material element or unit thereof. After the Completion Date, the Company may at its own expense cause the Facilities to be remodeled or cause substitutions, modifications and improvements to be made to the Facilities from time to time as it, in its discretion, may deem to be desirable for its uses and purposes, which remodeling, substitutions, modifications and improvements shall be included under the terms of this Agreement as part of the Facilities. Section 3.06. Insurance. The Company shall, at its expense, cause the Facilities to be kept insured against fire to the extent that property of similar character is usually so insured by companies similarly situated and operating like properties, 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 at least equal in protection to the method or plan of protection against such loss of companies similarly situated and operating like properties. All proceeds of such insurance, or such other method or plan, shall be for the account of the Company. Section 3.07. Condemnation; Eminent Domain. (a) In the event that title to or the temporary use of the Facilities, or any part thereof, shall be taken in condemnation or by the exercise of the power of eminent domain by any governmental body or by any person, firm or corporation acting under governmental authority, any proceeds received by the County from any award or awards in respect of the Facilities or any part thereof made in such condemnation or eminent domain proceedings, after payment of all expenses incurred in the collection thereof, shall to the extent of the Company's interest therein be paid for the account of the Company, and the County hereby assigns to the Company all of its right, title and interest in and to any claim for and rights with respect to any such condemnation award. (b) The County shall cooperate fully with the Company in the handling and conduct of any prospective or pending condemnation proceedings with respect to the Facilities or any part thereof. Inno event will the County voluntarily settle or consent to the settlement of any prospective or pending condemnation proceedings with respect to the Facilities or any part thereof without the written consent of the Company, and the County will, at the request of the Company, accept a sum in payment therefor at any stage of the condemnation proceedings which the Company shall certify to the County to be fair. Unless and until such a request is made by the Company, the County will take or cause to be taken all actions necessary to obtain the award of fair compensation for the taking and the collecting thereof. (c) The Company shall be entitled to the entire proceeds of any condemnation award or portion thereof made for damages to or takings of its own property other than the Facilities. Section 3.08. Termination of Construction. (a) Any thing in this Agreement to the contrary notwithstanding, the Company shall have the right at any time to terminate the construction of the Facilities, if: (i) the Company shall have determined that the continued operation of the Plant is impracticable, uneconomical or undesirable for any reason; (ii) the Company shall have determined that the continued construction or operation of the Facilities is impracticable, uneconomical or undesirable due to (A) the imposition of taxes, other than ad valorem taxes currently levied upon privately owned property used for the same general purpose as the Facilities, or other liabilities or burdens with respect to the Facilities or the construction or operation thereof, (B) changes in technology, in environmental standards or legal re-quirements or in the economic availability of materials, supplies, equipment or labor or (C) destruction of or damage to all or part of the Facilities; (iii) all or substantially all of the Facilities or the Plant shall have been condemned or taken by eminent domain; or (iv) the construction or operation of the Facilities or the Plant shall have been enjoined or shall have otherwise been prohibited by, or shall conflict with, any order, decree, rule or regulation of any court or of any federal, state or local regulatory body, administrative agency or other governmental body. (b) Promptly after the termination of the construction of the Facilities, the Company shall submit to the County and the Trustee a certificate, executed by an Authorized Company Representative, which shall state the reasons for such terminationand state that the Cost of Construction, to the extent of the construction of the Facilities as of the date of such termination, has been paid, except for any Costs of Construction which have been incurred but are not then due and payable, or the liability for the payment of which is being contested or disputed by the Company, and for the payment of which the Trustee is directed to retain specified amounts of moneys in specified accounts within the Construction Fund. Notwithstanding the foregoing, such certificate may state that it is given without prejudice to any rights against third parties which exist at the date thereof or which may subsequently come into being. Section 3.09. Conveyance to the County. The Company agrees to and hereby does sell and convey, and the County agrees to and hereby does purchase, upon the terms and conditions of, and at the times specified in, this Agreement, all of the Company's right, title and interest in the Facilities, subject only to Permitted Encumbrances. The right, title and interest of the Company in the Facilities shall remain in the Company until the first issuance of Bonds. Thereupon, all right, title and interest of the Company in the Facilities theretofore constructed shall vest in the County, and thereafter, as each portion or item of the Facilities is constructed, all right, title and interest therein shall thereupon vest in the County, without further action by the Company or the County. At any time or times upon or subsequent to the first issuance of Bonds, the Company may, and within forty-five (45) days after receipt of a written notice from the County requesting the same shall, deliver to the County such instrument or instruments further evidencing the conveyance and transfer from the Company to the County of the Company's right, title and interest in and to the Facilities theretofore having vested in the County in accordance with the foregoing provisions of this Section 3.09 as the County shall deem necessary or desirable for the purposes of this Agreement. Section 3.10. Ledger. The Company shall maintain or cause to be maintained a ledger in which it shall list each item of the Facilities on a current basis (reflecting all changes, additions, substitutions and deletions pursuant to Section 3.03 hereof) and reference is hereby made to such ledger for a complete itemization of the Facilities as they exist at any particular time. It shall not be necessary to amend Exhibit A hereto at any time to reflect such changes, additions, substitutions and deletions. The Company shall file a copy of the ledger (and all information from time to time necessary to keep the ledger current) with the Trustee. ARTICLE IV ISSUANCE OF BONDS; DISPOSITION OF PROCEEDS OF BONDS Section 4.01. Issuance of the Series ____ Bonds. The County shall issue the Series ____ Bonds under and in accordance with the Indenture, subject to the provisions of any bond purchase agreement between the County and the original purchaser or purchasers of the Series ____ Bonds. The Company hereby approves the issuance of the Series ____ Bonds and all terms and conditions thereof. Section 4.02. Additional Bonds. So long as the Company shall not be in default hereunder, and at the request of the Company, the County may authorize and issue Additional Bonds in aggregate principal amounts specified from time to time by the Company in order to provide funds for the purpose of (1) financing the cost of completing the Facilities, (2) financing the cost of additional sewage or solid waste disposal facilities at the Plant in conformity with the Act and the representations concerning the Facilities herein contained, and (3) refunding the Series ____ Bonds or any series of Additional Bonds, in whole or in part, or any combination thereof. The right to issue Additional Bonds set forth in this Agreement and the Indenture shall not imply that the County and the Company may not enter into, and the County and the Company expressly reserve the right to enter into, to the extent permitted by law, another agreement or agreements with respect to the issuance by the County, under an indenture or indentures other than the Indenture, of bonds to provide additional funds to pay the Cost of Construction or refunding bonds to refund all or any principal amount of all or any series of Bonds, or any combination thereof, and the provisions of this Agreement and the Indenture governing the issuance of Additional Bonds shall not apply thereto. Section 4.03. Disposition of Bond Proceeds. In con sideration of the conveyance by the Company to the County of the Company's right, title and interest in the Facilities as provided in Section 3.09 hereof, the County agrees that the proceeds of the Bonds shall be applied as in this Section 4.03 described. The proceeds of the issuance and sale of the Series ____ Bonds and any Additional Bonds issued for other than refunding purposes, other than accrued interest, if any, paid by the initial purchaser or purchasers thereof, shall be deposited into the Construction Fund, and any such accrued interest shall be deposited into the Bond Fund, all in accordance with the provisions of the Indenture. The proceeds of the issuance and sale of Additional Bonds issued for the purpose of refunding the Series ____ Bonds or any series of Additional Bonds shall be applied in accordance with the provisions of the Indenture and this Agreement, as each may besupplemented and amended in connection with the issuance of such Additional Bonds. The moneys on deposit in the Construction Fund shall be applied by the Trustee as provided in Section 4.04 hereof and as otherwise provided in Article VI of the Indenture. Until the moneys on deposit in the Construction Fund are so applied, such moneys shall be and remain the property of the County, subject to the lien of the Indenture, and the Company shall have no right, title or interest therein except as expressly provided in this Agreement and the Indenture. Section 4.04. Disbursements from the Construction Fund. (a) The moneys on deposit in the Construction Fund shall be disbursed from time to time to reimburse the Company for portions of the Cost of Construction paid by it or to make payments to persons designated by the Company in respect of portions of the Cost of Construction, upon receipt by the Trustee of requisitions executed by, or communications by telegram, telex or facsimile transmission from, an Authorized Company Representative, which requisitions or communications shall state with respect to each payment to be made: (i) the requisition number, (ii) the name and address of the person, firm or corporation to whom payment is due or has been made (or, in the case of payments to the Bond Fund, instructions to make such payments thereto), (iii) the amount paid or to be paid, (iv) the account or accounts within the Construction Fund from which payment of such requisition, or any portion thereof, shall be made, (v) that each obligation, item of cost or expense mentioned therein has been properly incurred and has been paid or is then due and payable as an item of the Cost of Construction, is a proper charge against the Construction Fund, and has not been the basis of any previous final payment therefrom or from the proceeds of any other revenue bonds issued by the County, and (vi) that the payment of such requisition will not result in a breach of any of the covenants of the Company contained in subsection (c) or (d) of this Section 4.04. Any such communication by telegram, telex or facsimile transmission shall be promptly confirmed by a requisition executed by an Authorized Company Representative. The Company shall upon request promptly furnish to the County a copy of any requisition delivered to the Trustee. (b) In paying any requisition under this Section 4.04, the Trustee shall be entitled to rely as to the completeness and accuracy of all statements in such requisition upon the approval of such requisition by an Authorized Company Representative, execution thereof to be conclusive evidence of such approval, and the Company shall indemnify and save harmless the County and the Trustee from any liability incurred in connection with any requisition so executed by an Authorized Company Representative. (c) The Company shall not submit any requisition which, if paid, would result, as of the date of such payment, in less than95% of the net proceeds (within the meaning of Section 142(a) of the Code and regulations thereunder) from the sale of any series of Bonds, including earnings, if any, on amounts held in the Construction Fund, having been used (i) for the acquisition, construction, reconstruction or improvement of land or property of a character subject to the allowance for depreciation under Section 167 of the Code, or for payment of amounts which are, for federal income tax purposes, chargeable to the Facilities' capital account (for example under Section 263 of the Code) or would be so chargeable either with a proper election by the Company or but for a proper election by the Company to deduct such amounts, (ii) to provide sewage or solid waste disposal facilities within the meaning of Section 142(a)(5) or (6) of the Code and regulations thereunder, and (iii) applied to pay any rebate owing to the United States with respect to the Bonds, pursuant to Section 148(f) of the Code; provided, however, that the moneys paid from the Investment Account within the Construction Fund shall be disregarded for purposes of any computation made in accordance with the foregoing covenant if the Company shall have submitted to the Trustee an opinion of Bond Counsel to the effect that such moneys may be so disregarded without impairing the exclusion of interest on the Bonds from gross income for purposes of federal income taxation. (d) The Company shall not submit or cause to be submitted to the Trustee any requisition pursuant to this Section 4.04, and shall have no claim upon any moneys in the Construction Fund, so long as there shall have occurred and be continuing any Event of Default described in Section 8.01 hereof. ARTICLE V SALE AND PURCHASE OF THE PROJECT; PURCHASE PRICE; FIRST MORTGAGE BONDS; OTHER OBLIGATIONS Section 5.01. Sale and Purchase of the Facilities. The County agrees to, and hereby does, sell and convey to the Company, without warranty of any kind whatsoever, and the Company agrees to, and hereby does, purchase and acquire from the County, upon the terms and conditions of, and at the times specified in, this Agreement, the right, title and interest in the Facilities acquired by the County under Section 3.09 hereof. Immediately upon the vesting in the County pursuant to Section 3.09 hereof of right, title and interest in the Facilities theretofore constructed and thereafter as each portion or item of the Facilities is constructed and all the Company's right, title and interest therein vests in the County pursuant to Section 3.09 hereof, all right, title and interest of the County in each and every such portion or item of the Facilities theretofore constructed shall, without any further action by the County or the Company, pass to and vest in the Company as part of the Facilities, subject to those liens and encumbrances existing prior to acquisition by the County of the Company's right, title and interest in such item or items or portion or portions of the Facilities or created by the Company or to the creation or suffering of which the Company consented and to Permitted Encumbrances. At any time or times upon or subsequent to the vesting in the Company of all the County's right, title and interest in and to any portion or item of the Facilities in accordance with the foregoing provisions of this Section 5.01, the County shall deliver to the Company such instrument or instruments further evidencing the conveyance and transfer from the County to the Company of the same as the Company shall deem necessary or desirable for the purposes of this Agreement. The Company shall pay all expenses, taxes, fees and charges applicable to or arising from the delivery of such instrument or instruments. Section 5.02. Purchase Price. The price to be paid by the Company for the Facilities shall be an amount equal to the aggregate principal amount of Bonds outstanding under the Indenture, and the interest to be paid by the Company on its obligation to pay such price shall be an amount equal to the aggregate of the premium, if any, and interest on the Bonds, such price together with such interest thereon being for all purposes of this Agreement referred to as the "purchase price of the Facilities". The Company shall pay the purchase price of the Facilities in installments due on the dates and in the amounts and in the manner provided in the Indenture for the County to cause payment to be made to the Trustee of principal of and premium, ifany, and interest on the Bonds, whether at maturity, upon redemption or acceleration, or otherwise; provided, however, that the obligation of the Company to make any such payment hereunder shall be reduced by the amount of any reduction under the Indenture of the amount of the corresponding payment required to be made by the County thereunder in respect of the principal of or premium, if any, or interest on the Bonds. Section 5.03. Issuance, Delivery and Surrender of First Mortgage Bonds. (a) The obligation of the Company set forth in Section 5.02 hereof to pay the purchase price of the Facilities may be evidenced, in whole or in part, by the First Mortgage Bonds. With respect to the Series ____ Bonds, the Company shall issue and deliver to the County First Mortgage Bonds as provided in subsection (b) of this Section 5.03. With respect to any series of Additional Bonds, the Company shall issue and deliver to the County First Mortgage Bonds as provided in any amendment of or supplement to this Agreement. (b) Concurrently with the issuance and delivery by the County of the Series ____ Bonds, and in order to evidence the obligation of the Company under Section 5.02 hereof to pay those installments of the purchase price of the Facilities which correspond to payment of the principal of the Series ____ Bonds, the excess of the principal amount thereof to be applied to the payment of accrued interest on the Series ____ Bonds, the Company shall issue and deliver to the County a series of First Mortgage Bonds (i) maturing on the stated maturity date of the Series ____ Bonds, (ii) in a principal amount equal to the principal of the Series ____ Bonds plus eight months (8/12) of the annual interest on the Series ____ Bonds, (iii) containing redemption provisions correlative to any provisions of the Indenture relating to the Series ____ Bonds requiring mandatory redemption thereof, (iv) requiring payments to be made to the Trustee for the account of the County, and (v) bearing no interest. (c) The obligation of the Company to make any payment of the principal of or premium, if any, or interest on the First Mortgage Bonds, whether at maturity, upon redemption or otherwise, shall be reduced by the amount of any reduction under the Indenture of the amount of the corresponding payment required to be made by the County thereunder in respect of the principal of or premium, if any, or interest on the Bonds. (d) The County shall not sell, assign or transfer the First Mortgage Bonds, except to the extent provided in Section 5.04 hereof. In view of the pledge and assignment referred to in said Section 5.04, the County agrees that (i) in satisfaction of the obligations of the Company set forth in paragraph (b) of this Section 5.03 with respect to the Series ____ Bonds, or in any amendment of or supplement to this Agreement with respect to any series of Additional Bonds, the First Mortgage Bonds shall beissued and delivered to, registered in the name of and held by the Trustee for the benefit of the owners and holders from time to time of the Bonds; (ii) the Indenture shall provide that the Trustee shall not sell, assign or transfer the First Mortgage Bonds except to a successor trustee under the Indenture, and shall surrender First Mortgage Bonds to the Company Mortgage Trustees in accordance with the provisions of subsection (e) of this Section 5.03; and (iii) the Company may take such actions as it shall deem to be desirable to effect compliance with such restrictions on transfer, including the placing of an appropriate legend on each First Mortgage Bond and the issuance of stop-transfer instructions to the Company Mortgage Trustees or any other transfer agent under the Company Mortgage. Any action taken by the Trustee in accordance with the provisions of Section 410 of the Indenture shall be binding upon the Company. (e) At the time any Bonds of any series cease to be outstanding (other than by reason of the payment or redemption of First Mortgage Bonds of the corresponding series and other than by reason of the applicability of clause (c) in the definition of "outstanding" herein): (i) in the event that such Bonds were not subject to redemption pursuant to a sinking fund therefor, the County shall cause the Trustee to surrender to the Company Mortgage Trustees a corresponding principal amount of First Mortgage Bonds, plus, in the case of the Series ____ Bonds, a principal amount of such First Mortgage Bonds equal to eight months (8/12) of the annual interest payable in respect of such series, of the series corresponding to such series of Bonds, maturing on the same date as such Bonds; or (ii) in the event that such Bonds were subject to redemption pursuant to a sinking fund therefor, the County shall cause the Trustee to surrender to the Company Mortgage Trustees a corresponding principal amount of First Mortgage Bonds, of the series corresponding to such series of Bonds, maturing, at the election of the Company: (A) on the same date as such Bonds; or (B) on any sinking fund redemption date relating to outstanding Bonds of such series; provided, however, that the Company shall have delivered to the Trustee pursuant to the Indenture an irrevocable certificate specifying that such Bonds are to be credited against the sinking fund payment or payments to be made on the maturity date, and in the principal amount, of the First Mortgage Bonds so to be surrendered. (f) For the purpose of determining whether or not any payment of the principal of or premium, if any, or interest on the First Mortgage Bonds shall have been made in full, any moneys paid by the Company in respect of the First Mortgage Bonds which shall have been withdrawn by the Trustee from the Bond Fund pursuant to Section 1102 of the Indenture shall be deemed to have been paid by the Company to the Trustee pursuant to Section 5.05 hereof and not to have been paid by the Company in respect of the First Mortgage Bonds. Section 5.04. Payments Assigned; Obligation Absolute. It is understood and agreed that all payments to be made by the Company of the purchase price of the Facilities are, by the Indenture, to be pledged by the County to the Trustee, and that all rights and interest of the County hereunder (except for the County's rights under Sections 5.05, 5.06, 5.07, 6.03 and 8.05 hereof and any rights of the County to receive notices, certificates, requests, requisitions, directions and other communications hereunder), including the right to receive the First Mortgage Bonds and the First Mortgage Bonds, are to be pledged and assigned to the Trustee. The Company assents to such pledge and assignment and agrees that the obligation of the Company to make the payments of the purchase price of the Facilities shall be absolute, irrevocable and unconditional and shall not be subject to cancellation, termination or abatement, or to any defense other than payment or to any right of set-off, counterclaim or recoupment arising out of any breach under this Agreement, the Indenture or otherwise by the County or the Trustee or any other party, or out of any obligation or liability at any time owing to the Company by the County, the Trustee or any other party, and, further, that the payments of the purchase price of the Facilities and the other payments due hereunder shall continue to be payable at the times and in the amounts specified herein and in the First Mortgage Bonds, whether or not the Facilities or the Plant, or any portion thereof, shall have been completed or shall have been destroyed by fire or other casualty, or title thereto, or the use thereof, shall have been taken by the exercise of the power of eminent domain, and that there shall be no abatement of or diminution in any such payments by reason thereof, whether or not the Facilities or the Plant shall be used or useful, and whether or not any applicable laws, regulations or standards shall prevent or prohibit the use of the Facilities or the Plant, or for any other reason. Section 5.05. Payment of Expenses. The Company shall pay, or cause to be paid out of the Construction Fund, all of the Administration Expenses of the County, the payment of the compensation and the reimbursement of expenses and advances of the Trustee, any paying agent, any co-paying agent, and the registrar under the Indenture to be made directly to such entity. Section 5.06. Indemnification. The Company releases the County and the Trustee from, agrees that the County and the Trusteeshall not be liable for, and agrees to indemnify and hold the County and the Trustee free and harmless from, any liability for any loss or damage to property or any injury to or death of any person that may be occasioned by any cause whatsoever pertaining to the Facilities, except in any case as a result of the negligence or bad faith of the County or the Trustee. The Company will indemnify and hold the County and the Trustee free and harmless from any loss, claim, damage, tax, penalty, liability (including but not limited to liability for any patent infringement), disbursement, litigation expenses, attorneys' fees and expenses or court costs arising out of, or in any way relating to, the execution or performance of this Agreement, the issuance or sale of the Bonds, actions taken under the Indenture, or any other cause whatsoever pertaining to the Facilities, including without limitation, recovery costs arising from the presence of hazardous substances, except in any case as a result of the negligence or bad faith of the Trustee, or as a result of the gross negligence or bad faith of the County. Under this Section 5.06, the Company shall also be deemed to release, indemnify and agree to hold harmless each employee, official or officer of the County and the Trustee to the same extent as the County and the Trustee. Section 5.07. Payment of Taxes; Discharge of Liens. The Company shall: (a) pay, or make provision for payment of, all lawful taxes and assessments, including income, profits, property or excise taxes, if any, or other municipal or governmental charges, levied or assessed by any federal, state or municipal government or political body upon the County with respect to the Facilities or any part thereof or upon any amounts payable hereunder; and (b) pay or cause to be satisfied and discharged or make adequate provision to satisfy and discharge, within sixty (60) days after the same shall accrue, any lien or charge upon any amounts payable hereunder, and all lawful claims or demands for labor, materials, supplies or other charges which, if unpaid, might be or become a lien upon such amounts, except Permitted Encumbrances; provided, that, if the Company shall first notify the County and the Trustee of its intention so to do, the Company may in good faith contest any such lien or charge or claims or demands in appropriate legal proceedings, and in such event may permit the items so contested to remain undischarged and unsatisfied during the period of such contest and any appeal therefrom, unless the County or the Trustee shall notify the Company in writing that, in the opinion of counsel to the County or the Trustee, by nonpayment of any such items the lien of the Indenture as to the amounts payable hereunder will be materially endangered, in which event the Company shall promptly pay and cause to be satisfied and discharged all such unpaid items. The County shall cooperate fully with the Company in any such contest. ARTICLE VI SPECIAL COVENANTS AND AGREEMENTS Section 6.01. Maintenance of Corporate Existence. The Company shall maintain its corporate existence, will not dissolve or otherwise dispose of all or substantially all its assets and will not consolidate with or merge with or into another corporation; provided, however, that the Company may consolidate with or merge with or into, or sell or otherwise transfer all or substantially all of its assets (and may thereafter dissolve) to, another corporation, incorporated under the laws of the United States, one of the states thereof or the District of Columbia, if the surviving, resulting or transferee corporation, as the case may be (if other than the Company), prior to or simultaneously with such consolidation, merger, sale or transfer, assumes, by delivery to the Trustee of an instrument in writing satisfactory in form and substance to the Trustee, all the obligations of the Company hereunder and on the First Mortgage Bonds. If consolidation, merger or sale or other transfer is made as permitted by this Section 6.01, the provisions of this Section 6.01 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 6.01. Section 6.02. Permits or Licenses. In the event that it may be necessary for the proper performance of this Agreement on the part of the Company or the County that any application or applications for any permit or license to do or to perform certain things be made to any governmental or other agency by the Company or the County, the Company and the County each shall, upon the request of either, execute such application or applications. Section 6.03. County's and Trustee's Access to Facilities. The County and the Trustee shall have the right, upon appropriate prior notice to the Company, to have reasonable access to the Facilities during normal business hours for the purpose of making examinations and inspections of the same. Section 6.04. Arbitrage Covenant. The County and the Company covenant that the proceeds of the sale of the Bonds, the earnings thereon, and any other moneys on deposit in any fund or account maintained in respect of the Bonds (whether such moneys were derived from the proceeds of the sale of the Bonds or from other sources) will not be used in a manner which would cause the Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Code. The Company further covenants that: (a) all actions with respect to the Bonds required by Section 148(f) of the Code shall be taken; (b) it shall make the determinations required by paragraph (b) of Section 702 of the Indenture and promptly notify the Trustee of the same, together with supportingcalculations; and (c) it shall within twenty-five (25) days after (i) the calendar date which corresponds to the final maturity of the respective series of Bonds and each anniversary thereof falling on or after the date of initial authentication and delivery thereof up to and including the final maturity of such series of the Bonds, unless the final payment, whether upon redemption in whole or at maturity, of such Bonds shall have occurred prior to such anniversary, and (ii) such final payment, file with the Trustee a statement signed by the chief financial officer of the Company to the effect that the Company is then in compliance with its covenants contained in clauses (a) and (b) of this sentence, together with supporting calculations; provided, however, that if the Company shall furnish an opinion of Bond Counsel to the Trustee to the effect that no further action by the Company is required for such compliance with respect to the Bonds, the Company shall not thereafter be required to deliver any such statements or calculations. Section 6.05. Use of Facilities. The Company shall cause the Facilities to be used for the abatement or control of pollution or for the disposal of sewage or solid waste. Section 6.06. No Warranties. The County makes no warranty, either express or implied, with respect to the Facilities as a whole or with respect to any item or portion of the Facilities. Without limiting the effect of the preceding sentence, it is expressly agreed that in connection with each sale or conveyance pursuant to Section 5.01 of this Agreement (a) the County makes no warranty that the title conveyed shall be good or that its transfer is rightful or that the goods shall be delivered free from any security interest or other lien or encumbrance, (b) the County makes NO WARRANTY OF MERCHANTABILITY, and (c) THERE ARE NO WARRANTIES WHICH EXTEND BEYOND THE DESCRIPTION ON THE FACE HEREOF. Section 6.07. Quiet Enjoyment. The County covenants that the Company, upon observing and performing the terms, conditions and covenants on the Company's part to be observed and performed under this Agreement, shall peaceably and quietly have, hold and enjoy the Facilities as purchaser in possession, free from molestation, hindrance, eviction or disturbance by the County or by any other person or persons claiming the same by, through or under the County. Section 6.08. Tax Exempt Status of Bonds. The County and the Company mutually covenant and agree that neither of them shall take or authorize or permit any action to be taken, and have not taken or authorized or permitted any action to be taken, which results in interest paid on the Bonds being included in gross income for purposes of federal income taxes. Without limiting the generality of the foregoing, the Company further covenants and agrees as follows: (a) Not less than 95% of the net proceeds (within the meaning of Section 142(a) of the Code and regulations thereunder) from the sale of the Series ____ Bonds and any issue of Additional Bonds will be expended (i) (A) for Cost of Construction which consist of proper costs of land or property of a character subject to the allowance for depreciation under Section 167 of the Code, or which will be, for federal income tax purposes, chargeable to capital account or would have been so chargeable either with a proper election by the Company (for example under Section 266 of the Code) or but for a proper election by the Company to deduct such amounts, and (B) to provide sewage or solid waste disposal facilities within the meaning of Section 142(a)(5) and (6) of the Code and regulations thereunder; (ii) for the redemption of all or part of the Series ____ Bonds or Additional Bonds the proceeds of which were used as stated in (i) above; or (iii) any combination thereof. (b) Within thirty-one (31) days of the date of issuance of the Series ____ Bonds or any series of Additional Bonds, there neither have been nor will be any private activity bonds (within the meaning of Section 141(a) of the Code) sold to finance facilities of the Company or any related person within the meaning of Section 147(a)(2) of the Code, under a common plan of marketing, at substantially the same rate of interest, and for which a common or pooled security will be used or available to pay debt service. (c) The average maturity of the Series ____ Bonds or any series of Additional Bonds (within the meaning of Section 147(b) of the Code and regulations thereunder) does not exceed 120% of the average reasonably expected economic life of the Facilities financed by such Bonds (within the meaning of Section 147(b) of the Code and regulations thereunder), determined with respect to any facility as of the later of the date on which the Bonds are issued or the date on which such facilities are or were placed in service (or expected to be placed in service). (d) No changes will be made in the Facilities which in any way impairs the exclusion of interest on any of the Bonds from gross income for purposes of federal income taxation. (e) No more than 25% of the proceeds of the Series ____ Bonds or any series of Additional Bonds will be used to provide land or a facility the primary purpose of which is one of the following: retail, food and beverageservices, automobile sales or service, or the provision of recreation or entertainment. (f) No portion of the proceeds of the Series ____ Bonds or any series of Additional Bonds will be used to provide or acquire any of the following: (i) any private or commercial golf course, country club, massage parlor, tennis club, skating facility (including roller skating, skateboard and ice skating), racquet sports facility (including any handball or racquetball court), hot tub facility, suntan facility, racetrack, airplane, skybox or other private luxury box, health club facility, facility primarily used for gambling, store the principal business of which is the sale of alcoholic beverages for consumption off premises; (ii) land to be used for farming purposes; or (iii) residential real property for family units. (g) No portion of the proceeds of the Series ____ Bonds or any series of Additional Bonds will be used for the acquisition of any property (or an interest therein) unless the first use of such property is pursuant to such acquisition, except for property with respect to which qualified rehabilitation expenditures are made pursuant to and in the amounts specified in Section 147(d) of the Code. (h) No action shall be taken that will cause the Series ____ Bonds or any series of Additional Bonds to be "federally guaranteed" as defined in Section 149(b) of the Code. (i) No portion of the proceeds of the Series ____ Bonds or any series of Additional Bonds in excess of 2% of the proceeds thereof (within the meaning of Section 147(g) of the Code and regulations thereunder) will be used to finance costs of issuance of such Bonds. The covenants and agreements contained in this Section 6.08 shall survive any termination of this Agreement. ARTICLE VII ASSIGNMENT, LEASING AND SELLING Section 7.01. By the County. Except as provided in Article V of this Agreement, the County will not sell, lease, assign, transfer, convey or otherwise dispose of its interest in the Facilities or any portion thereof or interest therein or in the revenues therefrom without the written consent of the Company, nor will it create or suffer to be created any debt, lien or charge thereon, not consented to by the Company, except Permitted Encumbrances. Section 7.02. By the Company. The Company's interest in this Agreement may be assigned in whole or in part, and the Facilities may be leased or sold as a whole or in part (whether a specific element or unit or an undivided interest), by the Company, subject, however, to the condition that no assignment, lease or sale (other than as described in Section 6.01 hereof) shall relieve the Company from primary liability for its obligations under Section 5.02 and 5.03 hereof (including its obligations on the First Mortgage Bonds) to pay the purchase price of the Facilities, or for any other of its obligations hereunder, other than those obligations relating to the construction of the Facilities (if such assignment, lease or sale occurs prior to the Completion Date) and to the operation, maintenance and insurance of the Facilities which obligations (to the extent of the interest assigned, leased or sold and to the extent assumed by the assignee, lessee or purchaser) shall be deemed to be satisfied and discharged. After any lease or sale of any element or unit of the Facilities, or any interest therein, such element or unit, or interest therein, shall no longer be deemed to be part of the Facilities for the purposes of this Agreement. The Company shall, within fifteen (15) days after the delivery thereof, furnish to the County and the Trustee a true and complete copy of the agreements or other documents effectuating any such assignment, lease or sale. Section 7.03. Limitation. This Agreement shall not be assigned nor shall the Facilities be leased or sold, in whole or in part, except as provided in this Article VII or in Section 6.01 or in the Indenture. ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES Section 8.01. Events of Default. Each of the following events shall constitute and is referred to in this Agreement as an "Event of Default": (a) a "Default" as such term is defined in Section 65 of the Company Mortgage; (b) a failure by the Company to make when due any payment required to be made pursuant to Section 5.02 hereof, which failure shall have resulted in an "Event of Default" under clause (a) or (b) of Section 1001 of the Indenture; or (c) a failure by the Company to pay when due any other amount required to be paid under this Agreement or to observe and perform any covenant, condition or agreement on its part to be observed or performed which failure shall continue for a period of ninety (90) days after written notice, specifying such failure and requesting that it be remedied, shall have been given to the Company by the County or the Trustee, unless the County and the Trustee shall agree in writing to an extension of such period prior to its expiration; provided, however, that the County and the Trustee shall be deemed to have agreed to an extension of such period if corrective action is initiated by the Company within such period and is being diligently pursued. Section 8.02. Force Majeure. The provisions of Section 8.01 hereof are subject to the following limitations: If by reason of acts of God; strikes, lockouts or other industrial disturbances; acts of public enemies; orders or other acts of any kind of the Government of the United States or of the State of Arkansas, or any other sovereign entity or body politic, or any department, agency, political subdivision, court or official of any of them, or any civil or military authority; insurrections; riots; epidemics; landslides; lightning; earthquakes; volcanoes; fires; hurricanes; tornados; storms; floods; washouts; droughts; arrests; restraint of government and people; civil disturbances; explosions; breakage or accident to machinery; partial or entire failure of utilities; or any cause or event not reasonably within the control of the Company, the Company is unable in whole or in part to carry out any one or more of its agreements or obligations contained herein, other than its obligations under Section 5.02 hereof to pay the purchase price of the Facilities and its obligations under Sections 5.07, 6.01, 6.08 and 9.01 hereof, the Company shall not be deemed in default by reason of not carrying out said agreement or agreements or performing said obligation or obligations during the continuance of such inability. The Company agrees, however, to use its best efforts to remedy with all reasonable dispatch the causeor causes preventing it from carrying out its agreements; provided, that the settlement of strikes, lockouts and other industrial disturbances shall be entirely within the discretion of the Company, and the Company shall not be required to make settlement of strikes, lockouts and other industrial disturbances by acceding to the demands of the opposing party or parties when such course is in the judgment of the Company unfavorable to the Company. Section 8.03. Remedies on Default. (a) Upon the occurrence and continuance of any Event of Default described in clause (a) of Section 8.01 hereof, the Trustee, as the holder of the First Mortgage Bonds, shall, subject to the provisions of the Indenture, have the rights provided in the Company Mortgage. (b) Upon the occurrence and continuance of any Event of Default described in clause (b) of Section 8.01 hereof, and further upon the condition that, in accordance with the terms of the Indenture, the Bonds shall have become immediately due and payable pursuant to any provision of the Indenture, the payments required to be paid pursuant to Section 5.02 hereof shall, without further action, become and be immediately due and payable. (c) Upon the occurrence and continuance of any Event of Default, the County with the prior consent of the Trustee, or the Trustee, may take any action at law or in equity to collect the payments then due and thereafter to come due hereunder, or to enforce performance and observance of any obligation, agreement or covenant of the Company under this Agreement. (d) Any amounts collected pursuant to action taken under this Section shall be applied in accordance with the Indenture. (e) In case any proceeding taken by the County or the Trustee on account of any Event of Default shall have been dis continued or abandoned for any reason, or shall have been determined adversely to the County or the Trustee, then and in every case the County and the Trustee, shall be restored to their former positions and rights hereunder, respectively, and all rights, remedies and powers of the County and the Trustee shall continue as though no such proceeding had been taken. Section 8.04. No Remedy Exclusive. No remedy conferred upon or reserved to the County 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 or in equity or by statute. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such 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 County or the Trustee toexercise any remedy reserved to it in this Article, it shall not be necessary to give any notice other than such notice as may be required in this Article. Section 8.05. Agreement to Pay Attorneys' Fees and Expenses. In the event the Company should default under any of the provisions of this Agreement and the County or the Trustee should employ attorneys or incur other expenses for the collection of payments due hereunder or on the First Mortgage Bonds or for the enforcement of performance or observance of any obligation or agreement on the part of the Company contained herein, the Company agrees that it will on demand therefor pay to the County or the Trustee, as the case may be, the reasonable fees of such attorneys and such other expenses so incurred. Section 8.06. Waiver of Breach. In the event that any agreement contained herein shall be breached by either the Company or the County and such breach shall thereafter be waived by the other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other breach hereunder. In view of the assignment of the County's rights in and under this Agreement to the Trustee under the Indenture, the County shall have no power to waive any default hereunder by the Company without the consent of the Trustee. Any waiver of any "Event of Default" under the Indenture and a rescission and annulment of its consequences, and any waiver of any "Default" under the Company Mortgage and a rescission and annulment of its consequences, shall constitute a waiver of the corresponding Event of Default hereunder and a rescission and annulment of the consequence thereof. ARTICLE IX REDEMPTION OR PURCHASE OF BONDS Section 9.01. Redemption of Bonds. The County shall take the actions required by the Indenture to discharge the lien thereof through the redemption, or provision for payment or redemption, of all Bonds then outstanding, or to effect the redemption, or provision for payment or redemption, of less than all the Bonds then outstanding, upon receipt by the County and the Trustee from the Company of a notice designating the principal amounts, series and maturities of the Bonds to be redeemed, or for the payment or redemption of which provision is to be made, and, in the case of redemption of Bonds, or provision therefor, specifying the date of redemption, which shall not be less than forty-five (45) days from the date such notice is given, and the applicable redemption provision of the Indenture. Unless otherwise stated therein or otherwise required by the Indenture, such notice shall be revocable by the Company at any time prior to the time at which the Bonds to be redeemed, or for the payment or redemption of which provision is to be made, are first deemed to be paid in accordance with Article IX of the Indenture. The Company shall furnish, as a prepayment of the purchase price of the Facilities, any moneys or Government Securities (as defined in the Indenture) required by the Indenture to be deposited with the Trustee or otherwise paid by the County in connection with any of the foregoing purposes. Section 9.02. Purchase of Bonds. The Company may at any time, and from time to time, furnish moneys to the Trustee accompanied by a notice directing the Trustee to apply such moneys to the purchase in the open market of Bonds in the principal amounts and of the series and maturities specified in such notice, and any Bonds so purchased shall thereupon be canceled by the Trustee. ARTICLE X RECORDATION AND OTHER INSTRUMENTS Section 10.01. Recording and Filing. The Company shall record and file, or cause to be recorded and filed, all documents and statements referred to in Section 404 of the Indenture. Section 10.02. Photocopies and Reproductions. A photocopy or other reproduction of this Agreement may be filed as a financing statement pursuant to the Uniform Commercial Code, although the signatures of the Company and the County on such reproduction are not original manual signatures. ARTICLE XI MISCELLANEOUS Section 11.01. Notices. Except as otherwise provided in this Agreement, all notices, certificates or other communications shall be sufficiently given and shall be deemed given when mailed by registered or certified mail, postage prepaid, to the County, the Company or the Trustee. Copies of each notice, certificate or other communication given hereunder by or to the Company shall be mailed by registered or certified mail, postage prepaid, to the Trustee; provided, however, that the effectiveness of any such notice shall not be affected by the failure to send any such copies. Notices, certificates or other communications shall be sent to the following addresses: Company: Arkansas Power & Light Company P.O. Box 551 Little Rock, Arkansas 72203 Attention: Treasurer County: ____ County, Arkansas ____ County Courthouse ____________, Arkansas _____ Attention: County Judge Trustee: ______________________________ ______________________________ ______________________________ ______________________________ Attention: Corporate Trust Department Any of the foregoing may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 11.02. Severability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative, or unenforceable to any extent whatever. Section 11.03. Execution of Counterparts. This Agreement may be simultaneously executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 11.04. Amounts Remaining in Bond Fund. It is agreed by the parties hereto that after payment in full of (i) the Bonds (or the provision for payment thereof having been made in accordance with the provisions of the Indenture), (ii) the Administration Expenses of the County, and (iii) all other amountsrequired to be paid under this Agreement and the Indenture, any amounts remaining in the Bond Fund shall belong to and be paid by the Trustee to the Company. Section 11.05. Amendments, Changes and Modifications. Except as otherwise provided in this Agreement or the Indenture, subsequent to the initial issuance of Bonds and prior to payment in full of the Bonds (or the provision for payment thereof having been made in accordance with the provisions of the Indenture), this Agreement may not be effectively amended, changed, modified, altered or terminated nor any provision waived, without the written consent of the Trustee which shall not be unreasonably withheld. Section 11.06. Governing Law. This Agreement shall be governed exclusively by and construed in accordance with the applicable laws of the State of Arkansas. Section 11.07. Authorized Company Representatives. An Authorized Company Representative shall act on behalf of the Company whenever the approval of the Company is required or the Company requests the County to take some action, and the County and the Trustee shall be authorized to act on any such approval or request and neither party hereto shall have any complaint against the other or against the Trustee as a result of any such action taken. Section 11.08. Term of the Agreement. This Agreement shall be in full force and effect from the date hereof until the right, title and interest of the Trustee in and to the Trust Estate (as defined in the Indenture) shall have ceased, determined and become void in accordance with Article IX of the Indenture and until all payments required under this Agreement shall have been made. Section 11.09. No Personal Liability. No covenant or agreement contained in this Agreement shall be deemed to be the covenant or agreement of any official, officer, agent, or employee of the County in his individual capacity, and no such person shall be subject to any personal liability or accountability by reason of the issuance thereof. Section 11.10. Parties in Interest. This Agreement shall inure to the benefit of and shall be binding upon the County, the Company and their respective successors and assigns, and no other person, firm or corporation shall have any right, remedy or claim under or by reason of this Agreement; provided, however, that any obligation of the County created by or arising out of this Agreement shall be payable solely out of the revenues derived from this Agreement or the sale of the Bonds or income earned on invested funds as provided in the Indenture and shall not constitute, and no breach of this Agreement by the County shallimpose, a pecuniary liability upon the County or a charge upon the County's general credit or against its taxing powers. IN WITNESS WHEREOF, the County and the Company have caused this Agreement to be executed in their respective corporate names and their respective corporate seals to be hereunto affixed and attested by their duly authorized officers, all as of the date first above written. ____ COUNTY, ARKANSAS ATTEST: By _____________________________ ___________________________ County Judge County Clerk (SEAL) ARKANSAS POWER & LIGHT COMPANY ATTEST: By _____________________________ ___________________________ Senior Vice President Assistant Secretary (SEAL) ACKNOWLEDGMENT STATE OF ARKANSAS ) ) COUNTY OF _________ ) On this ____ day of _______, ____, before me, a Notary Public duly commissioned, qualified and acting, within and for the County and State aforesaid, appeared in person the within named _______________ and ___________, County Judge and County Clerk, respectively, of ____ County, Arkansas, to me personally well known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the County, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this ____ day of _______, ____. ________________________________ Notary Public My commission expires: ___________________________ (SEAL) ACKNOWLEDGMENT STATE OF ARKANSAS ) ) COUNTY OF _______ ) On this ____ day of _______, ____, before me, a Notary Public duly commissioned, qualified and acting within and for the County and State aforesaid, appeared in person the within named ______________ and ______________, Senior Vice President and Assistant Secretary, respectively, of Arkansas Power & Light Company, an Arkansas corporation, to me personally well known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name and behalf of the corporation, and further stated and acknowledged that they had so signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this ____ day of _______, ____. ________________________________ Notary Public My commission expires: __________________________ (SEAL) EXHIBIT A DESCRIPTION OF FACILITIES EX-4 4 EXHIBIT B-3 Exhibit B-3 ________________________________________________________________ ___________ COUNTY, ARKANSAS to _________________________________________ ____________________ _______________ TRUST INDENTURE _______________ Dated as of _______________ _________________________________________________________________ $__________ _________ County, Arkansas Pollution Control Revenue Refunding Bonds, Series ____ (Arkansas Power & Light Company Project) TRUST INDENTURE TABLE OF CONTENTS (This Table of Contents is not part of the Trust Indenture and is only for convenience of reference.) Parties 1 Recitals 1 Granting Clauses 2 ARTICLE I DEFINITIONS Section 101 Definitions 5 Section 102 Use of Words 9 ARTICLE II THE BONDS Section 201 Authorized Form and Amount of Bonds 10 Section 202 Details of Series ____ Bonds 10 Section 203 Payment 11 Section 204 Execution 11 Section 205 Limited Obligation 11 Section 206 Authentication 11 Section 207 Delivery of the Bonds 12 Section 208 Mutilated, Destroyed or Lost Bonds 12 Section 209 Registration and Exchange of Bonds 13 Section 210 Cremation and Other Dispositions 14 Section 211 Additional Bonds 14 Section 212 Temporary Bonds 15 ARTICLE III REDEMPTION OF BONDS BEFORE MATURITY Section 301 Redemption Applicable to Series 16 ____ Bonds Only Section 302 Notice 17 Section 303 Redemption Payments 18 Section 304 Cancellation 18 Section 305 Partial Redemption of Bonds 18 ARTICLE IV GENERAL COVENANTS; THE FIRST MORTGAGE BONDS Section 401 Payment of Principal, Premium, If 19 Any, and Interest Section 402 Performance of Covenants 19 Section 403 Instruments of Further Assurance 20 Section 404 Recordation and Other Instruments 20 Section 405 Inspection of Project Books 20 Section 406 Rights Under Sale Agreement 20 Section 407 Prohibited Activities 20 Section 408 No Transfer of First Mortgage Bonds 21 Section 409 Voting of First Mortgage Bonds 21 Section 410 Surrender of First Mortgage Bonds 21 Section 411 Notice to Company Mortgage Trustees 21 ARTICLE V REVENUES AND FUNDS Section 501 Creation of Bond Fund 23 Section 502 Payments Into Bond Fund 23 Section 503 Use of Moneys in Bond Fund 23 Section 504 Withdrawals from Bond Fund 23 Section 505 Non-Presentment of Bonds 23 Section 506 Administration Expenses 24 Section 507 Moneys to be Held in Trust 24 Section 508 Refund to Company of Excess Payments 25 ARTICLE VI CUSTODY AND APPLICATION OF PROCEEDS OF BONDS Section 601 Creation of Construction Fund 26 Section 602 Payments Into Construction Fund 26 Section 603 Disbursements From Construction Fund 26 Section 604 Balance In Construction Fund 26 Section 605 Redemption of Bonds Pursuant to 27 Section 301(a) or Similar Provisions Section 606 Redemption Upon Taxability of Interest 28 Section 607 Acceleration of Bonds 28 Section 608 Refunding of Bonds 28 ARTICLE VII INVESTMENTS Section 701 Investment of Moneys 29 Section 702 Arbitrage Law Requirements 30 ARTICLE VIII RIGHTS OF THE COMPANY Section 801 Rights of Company Under Sale Agreement 32 Section 802 Enforcement of Rights and Obligations 32 ARTICLE IX DISCHARGE OF LIEN Section 901 Discharge of Lien 33 ARTICLE X DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS Section 1001 Events of Default 35 Section 1002 Acceleration 35 Section 1003 Other Remedies; Rights of Bondholders 36 Section 1004 Right of Bondholders to Direct 37 Proceedings Section 1005 Appointment of Receiver 37 Section 1006 Waiver 37 Section 1007 Application of Moneys 37 Section 1008 Remedies Vested in Trustee 39 Section 1009 Rights and Remedies of Bondholders 39 Section 1010 Termination of Proceedings 39 Section 1011 Waivers of Events of Default 40 ARTICLE XI THE TRUSTEE AND PAYING AGENTS Section 1101 Acceptance of Trusts 41 Section 1102 Fees, Charges and Expenses of Trustee 43 and Paying Agents Section 1103 Notice to Bondholders of Default 44 Section 1104 Intervention by Trustee 44 Section 1105 Merger or Consolidation of Trustee 44 Section 1106 Resignation by Trustee 44 Section 1107 Removal of Trustee 45 Section 1108 Appointment of Successor Trustee 45 Section 1109 Concerning Any Successor Trustee 45 Section 1110 Reliance Upon Instruments 46 Section 1111 Appointment of Co-Trustee 46 Section 1112 Designation and Succession of Paying Agents 47 Section 1113 Several Capacities 47 ARTICLE XII SUPPLEMENTAL INDENTURES Section 1201 Supplemental Indentures without 48 Bondholder Consent Section 1202 Supplemental Indentures requiring Bondholder 49 Consent Section 1203 Consent of Company 50 Section 1204 Opinion of Bond Counsel 50 ARTICLE XIII AMENDMENT TO SALE AGREEMENT Section 1301 Amendments Not Requiring Consent of 51 Bondholders Section 1302 Amendments Requiring Consent of 51 Bondholders Section 1303 Opinion of Bond Counsel 51 ARTICLE XIV MISCELLANEOUS Section 1401 Consents, etc. of Bondholders 52 Section 1402 Limitation of Rights 52 Section 1403 Severability 52 Section 1404 Notices 53 Section 1405 Applicable Provisions of Law 53 Section 1406 Counterparts 53 Section 1407 Successors and Assigns 54 Section 1408 Captions 54 Section 1409 Photocopies and Reproductions 54 Section 1410 Bonds Owned by the County or the Company 54 Section 1411 Holidays 54 Signatures and Seals 55 Acknowledgments 56 Exhibit A - Form of Series ____ Bond 58 TRUST INDENTURE This TRUST INDENTURE dated as of _______ _, ____, by and between _________ COUNTY, ARKANSAS, a political subdivision under the Constitution and laws of the State of Arkansas (here inafter referred to as the "County"), as party of the first part, and _________________________________________, an institution organized under and existing by virtue of the laws of the United States of America with its principal office, domicile and post office address in __________, ________ (hereinafter referred to as the "Trustee"), as party of the second part; W I T N E S S E T H: WHEREAS, the County is authorized and empowered under the laws of the State of Arkansas, including particularly Title 14, Chapter 267 of the Arkansas Code of 1987 Annotated (the "Act"), to issue revenue bonds and to expend the proceeds thereof to finance and refinance the acquisition, construction, reconstruction, extension, equipment or improvement of pollution control facilities for the disposal or control of sewage, solid waste, water pollution, air pollution, or any combination thereof; and WHEREAS, certain pollution control facilities (hereinafter referred to as the "Facilities") have been, and are being, acquired, constructed and equipped at the electric generating plant of Arkansas Power & Light Company, an Arkansas corporation (the "Company"), located within the boundaries of the County near ____________, Arkansas and known as ________________ ___ (hereinafter referred to as the "Plant"); and WHEREAS, pursuant to and in accordance with the provisions of the Act, the County has heretofore issued and delivered its Pollution Control Revenue Bonds, Series ____ (Arkansas Power & Light Company Project), in the aggregate principal amount of $_________ (the "Prior Bonds"), for the purpose of financing the cost of acquiring, constructing and equipping all or part of the Company's interest in the Facilities (hereinafter referred to as the "Project"), and paying the expenses of authorizing and issuing the Prior Bonds; and WHEREAS, the County proposes to issue $_________ aggregate principal amount of its revenue bonds under the Act (identified in Article I hereof and referred to herein as the "Series ____ Bonds") for the purpose of refunding the Prior Bonds; and WHEREAS, the Series ____ Bonds bear interest, mature and are subject to redemption as hereinafter in this Trust Indenture set forth in detail; and WHEREAS, all things necessary to make the Bonds, when authenticated by the Trustee and issued as in this Trust Indenture provided, the valid, binding and legal obligations of the Countyaccording to the import thereof, and to constitute this Trust Indenture a valid assignment and pledge of revenues to the payment of the principal of and premium, if any, and interest on the Bonds, in accordance with the provisions hereof, have or will have been done and performed, and the creation, execution and delivery of this Trust Indenture and the creation, execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized; NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, THIS TRUST INDENTURE WITNESSETH: That the County, in consideration of the premises and the acceptance by the Trustee of the trusts hereby created and of the purchase and acceptance of the Bonds by the holders and owners thereof, and the sum of One Dollar ($1.00), lawful money of the United States of America, to it duly paid by the Trustee, at or before the execution and delivery of these presents, and for other good and valuable considerations, the receipt of which is hereby acknowledged, and in order to secure the payment of the principal of and premium, if any, and interest on the Bonds according to their tenor and effect and to secure the performance and observance by the County of all the covenants expressed or implied herein and in the Bonds, subject to all of the provisions hereof, does hereby grant, bargain, sell, convey, mortgage, assign and pledge unto the Trustee, and unto its successor or successors in trust, and to them and their assigns forever, for the securing of the performance of the obligations of the County hereinafter set forth: 1. All the rights and interest of the County in and to the Sale Agreement (as hereinafter defined) (except for the rights of the County under Sections 5.05, 5.06, 5.07, 6.03, and 8.05 of the Sale Agreement and any rights of the County to receive notices, certificates, requests, requisitions, directions and other communications under the Sale Agreement), including, without limitation, its right to receive the First Mortgage Bonds (as hereinafter defined); all Revenues (as hereinafter defined) and the proceeds of all thereof; and the First Mortgage Bonds issued and delivered by the Company pursuant to the Sale Agreement. 2. All the rights and interest of the County in and to the Bond Fund and the Construction Fund (as hereinafter defined), and all moneys and investments therein, but subject to the provisions of this Trust Indenture pertaining thereto, including those pertaining to the making of disbursements therefrom. 3. All moneys, securities and obligations from time to time held by the Trustee under the terms of this Trust Indenture and any and all real and personal property of every kind and nature from time to time hereafter by delivery or by writing of any kind conveyed, mortgaged, pledged, assigned or transferred, as and for additional security hereunder by the County or by anyone in its behalf or with its written consent to the Trustee which is hereby authorized to receive any and all such property at any and all times and to hold and apply the same subject to the terms hereof; except for moneys, securities or obligations deposited with or paid to the Trustee for redemption or payment of Bonds which are deemed to have been paid in accordance with Article IX hereof and funds held pursuant to Section 505 hereof, which shall be held by the Trustee in accordance with the provisions of said Article IX or Section 505, as the case may be. TO HAVE AND TO HOLD all the same with all privileges and appurtenances hereby conveyed and assigned, or agreed or intended so to be, to the Trustee and its successors in said trusts and to them and their assigns forever; IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and proportionate benefit and security of all owners of the Bonds issued under and secured by this Trust Indenture without preference, priority or distinction as to lien of any Bonds over any other Bonds, except insofar as any sinking, amortization or other fund, or any terms or conditions of redemption or purchase, established under this Trust Indenture may afford additional benefit or security for the Bonds of any particular series. PROVIDED, HOWEVER, that if the County shall pay or cause to be paid to the owners of the Bonds the principal of and premium, if any, and interest to become due thereon at the times and in the manner stipulated therein, and if the County shall keep, perform and observe all and singular the covenants and promises in the Bonds and in this Trust Indenture expressed as to be kept, performed and observed by it on its part, all as provided in and subject to the provisions of Article IX hereof, then and in that case these presents and the estate and rights hereby granted, except as otherwise provided in Article IX, shall cease, determine and be void, and thereupon the Trustee shall cancel and discharge the lien of this Trust Indenture and execute and deliver to the County such instruments in writing as shall be requisite to evidence the discharge hereof pursuant to the provisions of said Article IX; otherwise this Trust Indenture to be and remain in full force and effect. THIS TRUST INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder areto be issued, authenticated and delivered, and the Trust Estate (as hereinafter defined) and the other estate and rights hereby granted, are to be dealt with and disposed of, under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes as hereinafter expressed, and the County has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the respective owners, from time to time, of the Bonds, as follows: ARTICLE I DEFINITIONS Section 101. Definitions. In addition to the words and terms elsewhere defined in this Indenture, the following words and terms as used in this Indenture shall have the following meanings: "Act" -- Title 14, Chapter 267 of the Arkansas Code of 1987 Annotated, as amended and enacted from time to time. "Additional Bonds" -- The Bonds in addition to the Series ____ Bonds, which are issued under the provisions of Section 211 of this Indenture. "Administration Expenses" -- The reasonable and necessary expenses incurred by the County with respect to the Sale Agreement, this Indenture and any transaction or event contemplated by the Sale Agreement or this Indenture including the compensation and reimbursement of expenses and advances payable to the Trustee, any Paying Agent, and the Bond Registrar. "Authorized Company Representative" -- The person or persons at the time designated to act on behalf of the Company, such designation in each case, to be evidenced by a certificate furnished to the County and the Trustee containing the specimen signature of such person or persons and signed on behalf of the Company by its President, any Senior Vice President, any Vice President, or the Treasurer. "Bonds" -- The Series ____ Bonds and all Additional Bonds issued by the County pursuant to this Indenture. "Bond Counsel" -- Any firm of nationally recognized municipal bond counsel selected by the Company and acceptable to the County and the Trustee. "Bond Fund" -- The fund by that name created and established in Section 501 of this Indenture. "Bond Registrar" -- The registrar of Bonds named herein. "Capital Account" -- Any of the accounts by that name created and established in Section 601 of this Indenture. "Clerk" -- The person holding the office and performing the duties of the County Clerk of the County. "Code" -- The Internal Revenue Code of 1986, as heretofore or hereafter amended. "Company" -- Arkansas Power & Light Company, an Arkansas corporation. The Company is a party to the Sale Agreement, and the reference includes any successor or assignee pursuant to the provisions thereof. "Company Mortgage" -- The Mortgage and Deed of Trust dated as of October 1, 1944, between the Company and Guaranty Trust Company of New York (now Morgan Guaranty Trust Company of New York) and Henry A. Theis (John W. Flaherty, successor), and, as to property, real or personal, situated or being in Missouri, Marvin A. Mueller (The Boatmen's National Bank of St. Louis, successor), as trustees, as heretofore and hereafter amended and supplemented. "Company Mortgage Trustees" -- The trustees under the Company Mortgage. "Completion Date" -- The date of completion of the Facilities as that date shall be certified as provided in Section 3.04 of the Sale Agreement. "Construction Fund" -- The fund by that name created and established in Section 601 of this Trust Indenture. "Cost of Construction" -- All costs paid or incurred by the Company with respect to the Facilities and the financing there-of for the payment of which the County is authorized to issue bonds under the Act, more particularly identified in the Sale Agreement. "County" -- ________ County, Arkansas, a political subdivi-sion under the Constitution and laws of the State of Arkansas. "County Judge" -- The person holding the office and performing the duties of the County Judge of the County. "Event of Default" -- Any event of default specified in Section 1001 hereof. "Facilities" -- The pollution control facilities at the Plant to be financed, in whole or in part, with the proceeds of the Bonds (including any changes in, additions to, substitutions for, or deletions of facilities or portions thereof made under Section 3.03 of the Sale Agreement), more particularly identified in the Sale Agreement. "First Mortgage Bonds" -- The bonds of one or more series issued and delivered under the Company Mortgage and held by the Trustee pursuant to Section 5.03 of the Sale Agreement. "Government Securities" -- (a) Direct or fully guaranteed obligations of the United States of America (including any suchsecurities issued or held in book-entry form on the books of the Department of Treasury of the United States of America); and (b) Certificates, depositary receipts or other instruments which evidence a direct ownership interest in obligations described in clause (a) above or in any specific interest or principal payments due in respect thereof; provided, however, that the custodian of such obligations or specific interest or principal payments shall be a bank or trust company organized under the laws of the United States of America or of any state or territory thereof or of the District of Columbia, with a combined capital stock surplus and undivided profits of at least $50,000,000; and provided, further, that except as may be otherwise required by law, such custodian shall be obligated to pay to the holders of such certificates, depositary receipts or other instruments the full amount received by such custodian in respect of such obligations or specific payments and shall not be permitted to make any deduction therefrom. "holder" or "bondholder" or "owner of the Bonds" -- The registered owner of any Bond. "Indenture" -- This Trust Indenture and all amendments and supplements hereto. "Investment Account" -- Any of the accounts by that name created and established in Section 601 of this Indenture. "outstanding" -- When used with reference to the Bonds, as of any particular date, all Bonds authenticated and delivered under this Indenture except: (a) Bonds canceled at or prior to such date or delivered to or acquired by the Trustee at or prior to such date for cancellation; (b) Bonds deemed to be paid in accordance with Article IX of this Indenture; and (c) Bonds in lieu of or in exchange or substitution for which other Bonds shall have been authenticated and delivered pursuant to this Indenture. "Paying Agent" -- Any bank or trust company designated pursuant to this Indenture as the place at which the principal of and premium, if any, and interest on the Bonds of a series are payable, and any successor designated pursuant to this Indenture. With respect to the Series ____ Bonds, the Trustee is the original Paying Agent. "Permitted Encumbrances" -- (a) The Installment Sale Agreement dated as of _________ _, ____, by and between the Countyand the Company, recorded in the office of the Circuit Clerk and Ex Officio Recorder of _______ County, Arkansas in Record Book ___ at page ___, and any amendments and supplements thereto; (b) the Trust Indenture dated as of _________ _, ____, by and between the County and ______________________________________, ___________, ________, as Trustee, recorded in the office of the Circuit Clerk and Ex Officio Recorder of _______ County, Arkansas in Record Book ___ at page ___, and any amendments and supplements thereto; (c) the Installment Sale Agreement dated as of ________ _, ____, by and between the County and the Company, recorded in the office of the Circuit Clerk and Ex Officio Recorder of ______ County, Arkansas in Record Book ____ at page ___, and any amendments and supplements thereto; (d) the Trust Indenture dated as of ________ _, ____, by and between the County and ___________________________________ ________________, ________, as Trustee, recorded in the office of the Circuit Clerk and Ex Officio Recorder of ______ County, Arkansas in Record Book ____ at page ___, and any amendments and supplements thereto; (e) the Installment Sale Agreement dated as of ________ _, ____, by and between the County and the Company, recorded in the office of the Circuit Clerk and Ex Officio Recorder of ________ County, Arkansas in Record Book ____ at page ___, and any amendments and supplements thereto; (f) the Trust Indenture dated as of ________ _, ____, by and between the County and _________________________________________, __________, ________, as Trustee, recorded in the office of the Circuit Clerk and Ex Officio Recorder of _______ County, Arkansas in Record Book ____ at page ___, and any amendments and supplements thereto; (g) liens for taxes, assess-ments and other governmental charges not delinquent or which can be paid without penalty; (h) unfiled, inchoate mechanics' and materialmen's liens for construction work in progress; (i) workmen's, repairmen's, warehousemen's and carriers' liens and other similar liens, if any, arising in the ordinary course of business; (j) all the following, if they do not individually or in the aggregate materially impair the use of the Facilities or materially detract from the value thereof to the Company, viz.: any easements, restrictions, mineral, oil, gas and mining rights and reservations, zoning laws and defects in title or other encumbrances to which the Facilities may be subject because of the installation thereof at the Plant; (k) any lien for the satisfaction and discharge of which a sum of money or a surety bond is on deposit with the Trustee; (l) the rights of the County and the Company under the Sale Agreement and any subsequent installment sale agreement or lease relating to all or any part of the Facilities; (m) the rights of the Trustee under this Indenture; and (n) the lien of the Company Mortgage and the "Excepted Encumbrances" referred to therein. "person" -- Includes natural persons, firms, associations, corporations and public bodies. "Plant" -- The Company's electric generating plant located within the boundaries of the County near ____________, Arkansas and known as ____________________. "Prior Bonds" -- The County's Pollution Control Revenue Bonds, Series ____, in the aggregate principal amount of $_________. "Record Date" -- With respect to any interest payment date of the Bonds occurring on the first day of any month, the fifteenth day of the calendar month next preceding such interest payment date; and with respect to any interest payment date of the Bonds occurring on the fifteenth day of any month, the first day of such month. "Revenues" -- All moneys paid or payable by the Company to the Trustee for the account of the County in respect of the principal of and premium, if any, and interest on the First Mortgage Bonds, including, without limitation, amounts paid or payable by the Company pursuant to Sections 5.02 and 9.01 of the Sale Agreement, and all receipts of the Trustee credited under the provisions of this Indenture against such payments. "Sale Agreement" -- The Installment Sale Agreement dated as of _______ _, ____, by and between the County and the Company, and any amendments and supplements thereto. "Series ____ Bonds" -- The initial issue of Bonds under and secured by this Indenture in the aggregate principal amount of $__________. "Trustee" -- The banking corporation or association designated as Trustee herein, and its successor or successors as such Trustee. The original Trustee is ___________________________ _____________, __________, ________. "Trust Estate" -- The property conveyed to the Trustee pursuant to the Granting Clauses hereof. Section 102. Use of Words. Words of the masculine gender shall be deemed and construed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, the words "Bond", "owner", "holder" and "person" shall include the plural, as well as the singular, number. ARTICLE II THE BONDS Section 201. Authorized Form and Amount of Bonds. No Bonds may be issued under the provisions of this Indenture except in accordance with this Article. All Bonds issued hereunder shall be in the form of registered Bonds without coupons. The total principal amount of Bonds that may be issued is hereby expressly limited to $__________, except as provided in Sections 208, 211 and 212 hereof. Section 202. Details of Series ____ Bonds. The Series ____ Bonds (i) shall be designated "______ County, Arkansas Pollution Control Revenue Refunding Bonds, Series ____ (Arkansas Power & Light Company Project)," (ii) shall be in the aggregate principal amount of $__________, (iii) shall be issued in the denomination of $_____ each, or any integral multiple thereof, (iv) shall be numbered consecutively from 1 upwards in order of issuance according to the records of the Trustee, (v) shall be dated as hereinafter provided, (vi) shall bear interest as hereinafter provided, payable semiannually on _______ 1 and ____ 1 of each year commencing ____ 1, ____, and (vii) shall mature on _______ 1, ____. The Series ____ Bonds shall bear interest from and including the date thereof until the principal thereof shall have become due and payable in accordance with the provisions hereof, whether at maturity, upon redemption or otherwise, at the rate of _____ percent (____%) per annum. Overdue principal of the Series ____ Bonds shall bear interest at the rate of ___ percent (_%) per annum until paid. Overdue installments of interest shall not bear interest. Series ____ Bonds issued before ____ 1, ____, shall be dated as of _______ 1, ____, and Series ____ Bonds issued on or subsequent to ____ 1, ____, shall be dated as of the interest payment date next preceding the date of authentication and delivery thereof by the Trustee, unless such date of authentication and delivery shall be an interest payment date, in which case they shall be dated as of such date of authentication and delivery; provided, however, that if, as shown by the records of the Trustee, interest on any Bonds surrendered for transfer or exchange shall be in default, the Bonds issued in exchange for Bonds surrendered for transfer or exchange shall be dated as of the date to which interest has been paid in full on the Bonds surrendered. The Series ____ Bonds shall be substantially in the form set forth in Exhibit A attached hereto with such appropriate variations, omissions and insertions as are permitted or required by this Indenture. Section 203. Payment. The principal of and premium, if any, on the Bonds shall be paid upon the presentation and surrender of said Bonds at the principal corporate trust office of the Trustee. The interest on the Bonds shall be payable by check drawn upon the Trustee and mailed to the registered owners as of the close of business on the Record Date with respect to the interest payment date at their respective addresses as such appear on the bond registration books kept by the Trustee. All payments shall be made in lawful money of the United States of America. Section 204. Execution. The Bonds shall be executed on behalf of the County by the County Judge and the County Clerk (by their manual or facsimile signatures) and shall have impressed or imprinted thereon the seal of the County. A facsimile signature shall have the same force and effect as if personally signed. In case any officer whose signature or facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of such Bonds, such signature or such facsimile shall nevertheless be valid and sufficient for all purposes, the same as if he had remained in office until delivery. Section 205. Limited Obligation. The Bonds, together with interest thereon, shall be payable from the Bond Fund, as hereinafter set forth, and shall be a valid claim of the holders thereof only against the Bond Fund and the revenues pledged to the Bond Fund, which revenues are hereby pledged and mortgaged for the equal and ratable payment of the Bonds (principal, premium, if any, and interest) and shall be used for no other purpose than to pay the principal of and premium, if any, and interest on the Bonds, except as may be otherwise expressly authorized in this Indenture. The Bonds (including premium, if any) and interest thereon shall not constitute an indebtedness of the County within the meaning of any constitutional or statutory provision and shall never constitute an obligation of or a charge against the general credit or taxing powers of the County. Section 206. Authentication. Only such Bonds as shall have endorsed thereon a Certificate of Authentication substantially in the form set forth in Exhibit A attached hereto duly executed by the Trustee shall be entitled to any right or benefit under this Indenture. No Bond shall be valid and obligatory for any purpose unless and until such Certificate of Authentication shall have been duly executed by the Trustee, and such Certificate of the Trustee upon any such Bond shall be conclusive evidence that such Bond has been authenticated and delivered under this Indenture. The Trustee's Certificate of Authentication on any Bond shall be deemed to have been executed if signed by an authorized officer of the Trustee, but it shall not be necessary that the same officer sign the Certificate of Authentication on all of the Bonds issued hereunder. Section 207. Delivery of the Bonds. The County shall execute and deliver to the Trustee and the Trustee shall authenticate the Bonds of any series and deliver said Bonds to the original purchaser or purchasers thereof as may be directed hereinafter in this Section 207, in Section 211 hereof, or in any supplemental indenture. Prior to the delivery on original issuance by the Trustee of any authenticated Bonds of any series there shall be or have been delivered to the Trustee: (a) An original duly executed counterpart or a duly certified copy of this Indenture and, in the case of Additional Bonds, a supplemental indenture by and between the County and the Trustee setting forth the details concerning such Bonds. (b) An original duly executed counterpart or a duly certified copy of the Sale Agreement and, in the case of Additional Bonds, an amendment of or supplement to the Sale Agreement, if any. (c) (i) An original duly executed counterpart or a duly certified copy of the indenture supplemental to the Company Mortgage creating the series of First Mortgage Bonds to be issued in respect of such series of Bonds as provided in Section 5.03 of the Sale Agreement and (ii) such First Mortgage Bonds. (d) A written order to the Trustee by the County to authenticate and deliver the Bonds of such series to the original purchasers thereof upon payment to Trustee, but for the account of the County, of a sum specified in such order. (e) A copy, duly certified by the Clerk, of the proceedings of the governing body of the County authorizing the issuance of the Bonds. (f) In the case of any series of Additional Bonds, a written opinion of Bond Counsel, to the effect that the issuance of such Bonds and the execution thereof have been duly authorized, all conditions precedent to the delivery thereof have been fulfilled, and that the exclusion of the interest on the Series ____ Bonds and any Additional Bonds theretofore issued from gross income for federal income tax purposes will not be affected by the issuance of the Bonds being issued. Section 208. Mutilated, Destroyed or Lost Bonds. In case any Bond issued hereunder shall become mutilated or be destroyed or lost, the County shall, if not then prohibited by law, cause to be executed and the Trustee shall authenticate and deliver a new Bond of the same series of like date, number, maturity and tenor in exchange and substitution for and upon cancellation of such mutilated Bond, or in lieu of and in substitution for such Bond destroyed or lost, upon the holder's paying the reasonable expensesand charges of the County and Trustee in connection therewith, and, in the case of a Bond destroyed or lost, his filing with the Trustee evidence satisfactory to the Company and the Trustee that such Bonds were destroyed or lost, and of his ownership thereof, and furnishing the County, the Company and the Trustee with indemnity satisfactory to them. The Trustee is hereby authorized to authenticate any such new Bond. In the event any such Bonds shall have matured, instead of issuing a new Bond, the County may pay the same without the surrender thereof. Section 209. Registration and Exchange of Bonds. The County hereby constitutes and appoints the Trustee as Bond Registrar of the County, and as Bond Registrar the Trustee shall keep books for the registration and for the transfer of the Bonds as provided in this Indenture at the principal corporate trust office of the Trustee. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of or on account of the principal of and interest on any such Bond shall be made only to or upon the order of the registered owner thereof or his legal representative, and neither the County, the Trustee, nor the Bond Registrar shall be affected by any notice to the contrary but such registration may be changed as herein provided. All payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. Bonds may be transferred on the books of registration kept by the Trustee by the registered owner in person or by his duly authorized attorney, upon surrender thereof, together with a written instrument of transfer duly executed by the registered owner or his duly authorized attorney in such form as shall be satisfactory to the Trustee. Upon surrender for transfer of any Bond at the principal corporate office of the Trustee, the County shall execute and the Trustee shall authenticate and deliver in the name of the transferee or transferees a new Bond or Bonds in the same aggregate principal amount and of any authorized denomination or denominations. Bonds may be exchanged at the principal corporate trust office of the Trustee for an equal aggregate principal amount of Bonds of any other authorized denomination or denominations of the same series with corresponding maturities. The County shall execute and the Trustee shall authenticate and deliver Bonds which the bondholder making the exchange is entitled to receive, bearing numbers not then outstanding. The execution by the County of any Bond of any denomination shall constitute full and due authorization of such denomination and the Trustee shall thereby be authorized to authenticate and deliver such Bond. Such transfers of registration or exchanges of Bonds shall be without charge to the holders of such Bonds, but any taxes or other governmental charges required to be paid with respect tothe same shall be paid by the holder of the Bond requesting such transfer or exchange as a condition precedent to the exercise of such privilege. The Trustee shall not be required to transfer or exchange any Bond after the mailing of notice calling such Bond for redemption has been made, nor during the period of fifteen (15) days next preceding mailing of a notice of redemption of any Bonds. At reasonable times and under reasonable regulations established by the Trustee, the list of registered owners of the Bonds may be inspected and copied by the Company or by holders or owners (or a designated representative thereof) of 10% or more in principal amount of Bonds then outstanding, such possession or ownership and the authority of such designated representative to be evidenced to the satisfaction of the Trustee. Section 210. Cremation and Other Dispositions. All Bonds surrendered for the purpose of payment or retirement, or for exchange, or for replacement or payment as provided above, or for cancellation, shall be canceled upon surrender thereof to the Trustee and, at the option of the Trustee, either cremated, shredded or otherwise disposed of. The Trustee shall execute and forward to the County an appropriate certificate describing the Bonds involved and the manner of disposition. Section 211. Additional Bonds. The County, at the request of the Company and to the extent permitted by law in effect at the time thereof, may issue from time to time one or more series of Additional Bonds for the purposes provided in Section 4.02 of the Sale Agreement. Additional Bonds shall be secured equally and ratably with the Series ____ Bonds and any other Additional Bonds theretofore issued and then outstanding, except insofar as any sinking, amortization or other fund, or any terms or conditions of redemption or purchase, established under this Indenture may afford additional benefit or security for the Bonds of any particular series, and except as set forth in Section 5.03 of the Sale Agreement. Before any Additional Bonds are authenticated there shall be delivered to the Trustee the items required for the issuance of Bonds by Section 207 hereof. The right to issue Additional Bonds set forth in this Indenture shall not imply that the County may not issue, and the County expressly reserves the right to issue, to the extent permitted by law, obligations under another indenture or indentures to provide additional funds to pay the Cost of Construction, or to refund all or any principal amount of all or any series of Bonds, or any combination thereof, and the provisions of this Indenture governing the issuance of Additional Bonds shall not apply thereto. The proceeds of the issuance and sale of any series of Additional Bonds, including purchase premium, if any, and accruedinterest, if any, thereon to the date of delivery thereof paid by the original purchasers thereof, shall be applied simultaneously with the delivery of such Additional Bonds in the manner provided in this Indenture and in the supplemental indenture authorizing such Additional Bonds. Notwithstanding anything herein to the contrary, no Additional Bonds shall be issued unless (i) the Sale Agreement is in effect, and (ii) at the time of issuance there is no Event of Default (as defined in the Sale Agreement) under the Sale Agreement or Event of Default under this Indenture. Section 212. Temporary Bonds. Until Bonds in definitive form are ready for delivery, the County may execute, and upon the request of the County, the Trustee shall authenticate and deliver, subject to the provisions, limitations and conditions set forth herein, one or more Bonds in temporary form, whether printed, typewritten, lithographed or otherwise produced, substantially in the form of the definitive Bonds, with appropriate omissions, variations and insertions, and in authorized denominations. Until exchanged for Bonds in definitive form, such Bonds in temporary form shall be entitled to the lien and benefit of this Indenture. Upon the presentation and surrender of any Bond or Bonds in temporary form, the County shall, without unreasonable delay, prepare, execute and deliver to the Trustee and the Trustee shall authenticate and deliver, in exchange therefor, a Bond or Bonds in definitive form. Such exchange shall be made by the Trustee without making any charge therefor to the holder of such Bond in temporary form. ARTICLE III REDEMPTION OF BONDS BEFORE MATURITY Section 301. Redemption Applicable to Series ____ Bonds Only. The Series ____ Bonds shall be subject to redemption prior to maturity as follows: (a) The Series ____ Bonds shall be subject to optional redemption by the County, at the direction of the Company, in whole but not in part, at any time, at a redemption price equal to the principal amount being redeemed plus accrued interest to the redemption date, if: (i) the Company shall have determined that the continued operation of the Plant is impracticable, uneconomical or undesirable for any reason; (ii) the Company shall have determined that the continued construction or operation of the Facilities is impracticable, uneconomical or undesirable due to (A) the imposition of taxes, other than ad valorem taxes currently levied upon privately owned property used for the same general purpose as the Facilities, or other liabilities or burdens with respect to the Facilities or the construction or operation thereof, (B) changes in technology, in environmental standards or legal re-quirements or in the economic availability of materials, supplies, equipment or labor or (C) destruction of or damage to all or part of the Facilities; (iii) all or substantially all of the Facilities or the Plant shall have been condemned or taken by eminent domain; or (iv) the construction or operation of the Facilities or the Plant shall have been enjoined or shall have otherwise been prohibited by any order, decree, rule or regulation of any court or of any federal, state or local regulatory body, administrative agency or other governmental body. (b) The Series ____ Bonds shall be subject to mandatory redemption, at a redemption price equal to the principal amount being redeemed plus accrued interest to the redemption date, on the one hundred eightieth day (or such earlier date as may be designated by the Company) after a final determination by a court of competent jurisdiction or an administrative agency, to the effect that as a result of a failure by the Company to perform or observe any covenant, agreement or representation contained in the Sale Agreement, the interest payable on the Series ____ Bonds is included for federal income tax purposes in the gross income of thebondholders thereof, other than any bondholder who is a "substantial user" of the Facilities or a "related person" within the meaning of Section 147(a) of the Code. No determination by any court or administrative agency will be considered final unless the Company has participated in the proceeding which resulted in such determination, either directly or through a bondholder, to a degree it reasonably deems sufficient and until the conclusion of any appellate review sought by any party to such proceeding or the expiration of the time for seeking such review. The Series ____ Bonds shall be redeemed either in whole or in part in such principal amount that the interest payable on the Series ____ Bonds remaining outstanding after such redemption would not be included in the gross income of any bondholder thereof, other than a bondholder who is a "substantial user" of the Facilities or a "related person" within the meaning of Section 147(a) of the Code. (c) The Series ____ Bonds shall be subject to optional redemption by the County, at the direction of the Company, on and after _______ _, ____, in whole at any time or in part from time to time (and if in part, by lot or in such other manner as may be determined by the Trustee to be fair and equitable), at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued interest to the redemption date: Redemption Redemption Period Price _________, ____ through ________ __, ____ ___% _________, ____ through ________ __, ____ ___% _________, ____ through ________ __, ____ ___% _________, ____ through ________ __, ____ ___% _________, ____ and thereafter 100% The Series ____ Bonds shall also be subject to optional redemption by the County, at the direction of the Company, in whole but not in part, at any time prior to _______ _, ____, at a redemption price equal to ___% of the principal amount being redeemed plus accrued interest to the redemption date, if the Company shall have consolidated with or merged with or into another corporation, or sold or otherwise transferred all or substantially all of its assets. In case a Series ____ Bond is of a denomination larger than $_____, a portion of such Bond ($_____ or any integral multiple thereof) may be redeemed if otherwise permitted, but Series ____ Bonds shall be redeemed only in the principal amount of $_____ or any integral multiple thereof. Section 302. Notice. Notice of the call for any redemption, identifying the Bonds or portions thereof being called and the date on which they shall be presented for payment, shall be given by the Trustee by first class mail, postage prepaid, to theregistered owner of each such Bond addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure to give such notice by mailing, or any defect therein, shall not affect the validity of any proceeding for the redemption of any Bond with respect to which no such failure or defect has occurred. Any notice mailed as provided in this Section shall be conclusively presumed to have been duly given, whether or not the holder or owner receives the notice. With respect to notice of redemption of the Bonds at the option of the County (at the direction of the Company), unless moneys sufficient to pay the principal of and premium, if any, and interest on the Bonds to be redeemed shall have been received by the Trustee prior to the giving of such notice, such notice shall state that said redemption shall be conditional upon the receipt of such moneys by the Trustee on or prior to the date fixed for such redemption. If such moneys shall not have been so received, such notice shall be of no force and effect, the County shall not redeem such Bonds and the Trustee shall give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. Section 303. Redemption Payments. Subject to the provisions of the last paragraph of Section 302 hereof, on or prior to the date fixed for redemption, funds shall be deposited with the Trustee to pay, and the Trustee is hereby authorized and directed to apply such funds to the payment of, the Bonds or portions thereof to be redeemed, together with accrued interest thereon to the redemption date and any required premium. Upon the giving of notice and the deposit of funds for redemption, interest on the Bonds or portions thereof thus redeemed shall no longer accrue after the date fixed for redemption. Section 304. Cancellation. All Bonds which have been redeemed shall not be reissued but shall be canceled and disposed of by the Trustee in accordance with Section 210 hereof. Section 305. Partial Redemption of Bonds. Upon surrender of any Bond for redemption in part only, the County shall execute and the Trustee shall authenticate and deliver to the holder thereof a new Bond or Bonds of the same series and the same maturity, of authorized denominations in an aggregate principal amount equal to the unredeemed portion of the Bond surrendered. ARTICLE IV GENERAL COVENANTS; THE FIRST MORTGAGE BONDS Section 401. Payment of Principal, Premium, If Any, and Interest. The County covenants that it will promptly pay or cause to be paid the principal of and premium, if any, and interest on every Bond issued under this Indenture at the place, on the dates and in the manner provided herein and in the Bond according to the true intent and meaning thereof; provided, however, that the obligation of the County hereunder to make or cause to be made any payment to the Trustee in respect of the principal of or premium, if any, or interest on the Bonds shall be reduced by the amount of moneys, if any, on deposit in the Bond Fund and available to be applied by the Trustee toward the payment of the principal of or premium, if any, or interest on the Bonds. The principal and premium, if any, and interest (except interest paid from the proceeds from the sale of the Bonds) are payable solely from the Revenues, which Revenues are hereby specifically pledged to the payment thereof in the manner and to the extent herein specified, and nothing in the Bonds or this Indenture should be considered as assigning or pledging any funds or assets of the County other than the Revenues and the right, title and interest of the County in the Sale Agreement (except for the rights of the County under Sections 5.05, 5.06, 5.07, 6.03, and 8.05 of the Sale Agreement and any rights of the County to receive notices, certificates, requests, requisitions, directions and other communications under the Sale Agreement) in the manner and to the extent herein specified. Anything in this Indenture to the contrary notwithstanding, it is understood that whenever the County makes any covenants involving financial commitments, including, without limitation, those in the various sections of this Article IV, it pledges no funds or assets other than the Revenues and the right, title and interest of the County in the Sale Agreement (except for the rights of the County under Sections 5.05, 5.06, 5.07, 6.03, and 8.05 of the Sale Agreement and any rights of the County to receive notices, certificates, requests, requisitions, directions and other communications under the Sale Agreement), the Bond Fund and the Construction Fund in the manner and to the extent herein specified, but nothing herein shall be construed as prohibiting the County from using any other funds or assets. Section 402. Performance of Covenants. The County covenants that it will faithfully perform at all times any and all covenants, undertakings, stipulations and provisions contained in this Indenture, in any and every Bond executed, authenticated and delivered hereunder and in all ordinances pertaining thereto. The County covenants that it is duly authorized under the Constitution and laws of the State of Arkansas, including particularly and without limitation the Act, to issue Bonds authorized hereby and to execute this Indenture and to make the pledge and covenants in the manner and to the extent herein set forth; that all action on itspart for the issuance of the Bonds and the execution and delivery of this Indenture has been duly and effectively taken; and that the Bonds in the hands of the holders and owners thereof are and will be valid and enforceable obligations of the County according to the import thereof. Section 403. Instruments of Further Assurance. The County covenants that it will do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered, such indenture or indentures supplemental hereto and such further acts, instruments and transfers as the Trustee may reasonably require for the better assuring, transferring, mortgaging, pledging, assigning and confirming unto the Trustee the Trust Estate. Section 404. Recordation and Other Instruments. The County and the Trustee covenant that they will cooperate with the Company in causing this Indenture, the Sale Agreement, such security agreements, financing statements and all supplements thereto and other instruments as may be required from time to time to be kept, to be recorded and filed in such manner and in such places as may be required by law in order to fully preserve and protect the security of the holders and owners of the Bonds and the rights of the Trustee hereunder, and to perfect the security interest created by this Indenture. Section 405. Inspection of Project Books. The County and the Trustee covenant and agree that all books and documents in their possession relating to the Facilities and the revenues derived from the Facilities (including the records pertaining to the Construction Fund) shall at all reasonable times be open to inspection by such accountants or other agencies as the other party may from time to time designate and by the Company. Section 406. Rights Under Sale Agreement. The Sale Agreement, a duly executed counterpart of which has been filed with the Trustee, sets forth the covenants and obligations of the County and the Company, including provisions that subsequent to the issuance of Bonds and prior to their payment in full or provision for payment thereof in accordance with the provisions hereof the Sale Agreement may not be effectively amended, changed, modified, altered or terminated, or any provision waived without the written consent of the Trustee, and reference is hereby made to the same for a detailed statement of said covenants and obligations of the Company thereunder, and the County agrees that the Trustee in its name or in the name of the County may enforce all rights of the County and all obligations of the Company under and pursuant to the Sale Agreement, for and on behalf of the bondholders, whether or not the County is in default hereunder. Section 407. Prohibited Activities. The County and the Trustee covenant that neither of them shall take any action or suffer or permit any action to be taken or condition to exist whichcauses or may cause the interest payable on the Bonds to be includable in gross income for purposes of federal income taxation. Without limiting the generality of the foregoing, the County and the Trustee covenant that (a) the proceeds of the sale of the Bonds, the earnings thereon, and any other moneys on deposit in any fund or account maintained in respect of the Bonds (whether such moneys were derived from the proceeds of the sale of the Bonds or from other sources) will not be used in a manner which would cause the Bonds to be treated as "arbitrage bonds" within the meaning of Section 148 of the Code, and (b) all action with respect to the Bonds required by Section 148(f) of the Code shall be taken in a timely manner. Section 408. No Transfer of First Mortgage Bonds. The Trustee shall not sell, assign or transfer the First Mortgage Bonds except to a successor trustee under this Indenture. Section 409. Voting of First Mortgage Bonds. The Trustee shall, as the holder of the First Mortgage Bonds, attend such meeting or meetings of bondholders under the Company Mortgage or, at its option, deliver its proxy in connection therewith, as relate to matters with respect to which it is entitled to vote or consent. So long as no Event of Default hereunder shall have occurred and be continuing, either at any such meeting or meetings, or otherwise when the consent of the holders of the Company's first mortgage bonds issued under the Company Mortgage is sought without a meeting, the Trustee shall vote as the holder of the First Mortgage Bonds, or shall consent with respect thereto, proportionately with what the Trustee reasonably believes will be the vote or consent of the holders of all other first mortgage bonds of the Company then outstanding under the Company Mortgage the holders of which are eligible to vote or consent; provided, however, that the Trustee shall not vote as such holder in favor of, or give its consent to, any amendment or modification of the Company Mortgage which is correlative to any amendment or modification of this Indenture referred to in Section 1202 hereof without the prior consent and approval, obtained in the manner prescribed in said Section 1202, of bondholders which would be required under said Section 1202 for such correlative amendment or modification of this Indenture. Any action taken by the Trustee in accordance with the provisions of this Section 409 shall be binding upon the County and the bondholders. Section 410. Surrender of First Mortgage Bonds. The Trustee shall surrender First Mortgage Bonds to the Company Mortgage Trustees in accordance with the provisions of Section 5.03(d) of the Sale Agreement. Section 411. Notice to Company Mortgage Trustees. In the event that a payment on the First Mortgage Bonds shall havebecome due and payable and shall not have been fully paid, the Trustee shall forthwith give notice thereof to the Company Mortgage Trustees specifying the amount of funds required to make such payment. In the event that any Bonds are to be redeemed pursuant to any provisions of this Indenture requiring mandatory redemption of Bonds of any series (other than at the direction of the Company), except for provisions which establish sinking fund redemption requirements, the Trustee shall forthwith give notice thereof to the Company Mortgage Trustees specifying the principal amount of Bonds so to be redeemed and the redemption date therefor. Any such notice given by the Trustee shall be signed by its President, a Vice President or a Trust Officer thereof. The Trustee shall incur no liability for failure to give any such notice and such failure shall have no effect on the obligations of the Company on the First Mortgage Bonds or on the rights of the Trustee or of the bondholders. ARTICLE V REVENUES AND FUNDS Section 501. Creation of Bond Fund. There is hereby created and ordered to be established with the Trustee a trust fund of and in the name of the County to be designated "________ County, Arkansas Pollution Control Revenue Refunding Bond Fund - Arkansas Power & Light Company Project". Section 502. Payments Into Bond Fund. There shall be deposited into the Bond Fund as and when received: (a) All accrued interest received at the time of the issuance and delivery of the Bonds; (b) Amounts transferred to the Bond Fund pursuant to the provisions of Sections 604, 605, 606 and 607 hereof; (c) All Revenues; and (d) All moneys received by the Trustee under and pursuant to any of the provisions of the Sale Agreement or this Indenture which are not directed to be paid into a fund (or held) other than the Bond Fund. Section 503. Use of Moneys in Bond Fund. Except as otherwise provided in Sections 508 and 1102 hereof, moneys in the Bond Fund shall be used solely for the payment of the principal of and premium, if any, and interest on the Bonds. Section 504. Withdrawals from Bond Fund. The Bond Fund shall be in the name of the County, designated as set forth in Section 501, and the County hereby irrevocably authorizes and directs the Trustee to withdraw from the Bond Fund sufficient funds to pay the principal of and premium, if any, and interest on the Bonds at maturity and redemption prior to maturity and to use such funds for the purpose of paying principal, premium, if any, and interest in accordance with the provisions hereof pertaining to payment, which authorization and direction the Trustee hereby accepts. Section 505. Non-Presentment of Bonds. In the event any Bonds shall not be presented for payment when the principal thereof becomes due, either at maturity or otherwise, or at the date fixed for redemption thereof, if there shall have been deposited with the Trustee for that purpose, or left in trust if previously so deposited, funds sufficient to pay the principal thereof, and premium, if any, together with all interest unpaid and due thereon, to the due date thereof, for the benefit of the holder thereof, allliability of the County to the holder thereof for the payment of the principal thereof, premium, if any, and interest thereon, shall forthwith cease, determine and be completely discharged, and thereupon it shall be the duty of the Trustee to hold such fund or funds, without liability for interest thereon, for benefit of the holder of such Bond, who shall thereafter be restricted exclusively to such fund or funds for any claim of whatever nature on his part under this Indenture or on, or with respect to, the Bond. Section 506. Administration Expenses. It is understood and agreed that pursuant to the provisions of Section 5.05 of the Sale Agreement, the Company agrees to pay the Administration Expenses of the County. All such payments under the Sale Agreement which are received by the Trustee shall not be paid into the Bond Fund, but shall be segregated by the Trustee and expended solely for the purpose for which such payments are received. Section 507. Moneys to be Held in Trust. All moneys required to be deposited with or paid to the Trustee for deposit into the Bond Fund or the Construction Fund under any provision of this Indenture and all moneys withdrawn from the Bond Fund and held by any Paying Agent, shall be held by the Trustee or such Paying Agent in trust, and except for moneys deposited with or paid to the Trustee for the redemption of Bonds, notice of which redemption has been duly given, and for moneys deposited with or paid to the Trustee pursuant to Article IX hereof, shall, while held by the Trustee or any Paying Agent, constitute part of the Trust Estate and be subject to the lien hereof. Any moneys received by or paid to the Trustee pursuant to any provisions of the Sale Agreement calling for the Trustee to hold, administer and disburse the same in accordance with the specific provisions of the Sale Agreement shall be held, administered and disbursed pursuant to such provisions, and where required by the provisions of the Sale Agreement the Trustee shall set the same aside in a separate account. The County agrees that if it shall receive any moneys pursuant to applicable provisions of the Sale Agreement, it will forthwith upon receipt thereof pay the same over to the Trustee to be held, administered and disbursed by the Trustee in accordance with the provisions of the Sale Agreement pursuant to which the County may have received the same. Furthermore, if for any reason the Sale Agreement ceases to be in force and effect while any Bonds are outstanding, the County agrees that if it shall receive any moneys derived from the Facilities, it will forthwith upon receipt thereof pay the same over to the Trustee to be held, administered and disbursed by the Trustee in accordance with provisions of the Sale Agreement that would be applicable if the Sale Agreement were then in force and effect, and if there be no such provisions which would be so applicable, then the Trustee shall hold, administer and disburse such moneys solely for the discharge of the County's obligations under this Indenture. Section 508. Refund to Company of Excess Payments. Anything herein to the contrary notwithstanding, the Trustee is authorized and directed to refund to the Company all excess amounts as specified in the Sale Agreement, whether such excess amounts be in the Bond Fund or in special accounts. ARTICLE VI CUSTODY AND APPLICATION OF PROCEEDS OF BONDS Section 601. Creation of Construction Fund. There is hereby created and ordered to be established with the Trustee a special account of the County to be designated "_________ County, Arkansas Pollution Control Revenue Refunding Bond Construction Fund - Arkansas Power & Light Company Project". The Trustee shall establish and maintain within the Construction Fund, in respect of each series of Bonds issued hereunder, a "Capital Account" and an "Investment Account." Section 602. Payments into Construction Fund. The proceeds from the issuance and sale of each series of Bonds, other than accrued interest, if any, on such Bonds to the date of delivery thereof paid by the original purchaser or purchasers thereof, shall be deposited into the Capital Account established in respect of such series of Bonds. All income or other gain from the investment of moneys in the Capital Account or the Investment Account maintained in respect of any series of Bonds shall be deposited into the Investment Account for such series of Bonds. Section 603. Disbursements from Construction Fund. Moneys in the Construction Fund shall be disbursed by the Trustee to pay Cost of Construction or to reimburse the Company for Cost of Construction paid by it, all in accordance with and pursuant to the provisions of the Sale Agreement. The Trustee shall keep and maintain adequate records pertaining to each account within the Construction Fund and all disbursements therefrom and shall file an accounting thereof if and when requested by the County or the Company. Section 604. Balance in Construction Fund. Upon receipt by the Trustee of a certificate furnished pursuant to Section 3.04 or Section 3.08 of the Sale Agreement, any balance remaining in the Capital Account or the Investment Account maintained within the Construction Fund in respect of a series of Bonds (except for amounts retained by the Trustee at the Company's direction for Cost of Construction not then due and payable), shall at the direction of the Company be transferred by the Trustee into the Bond Fund; provided, however, no amount shall be transferred into the Bond Fund unless an amount equal to at least 95% of the sum of the net proceeds of such series of Bonds (within the meaning of Section 142(a) of the Code), and the total amount of moneys accrued in the Investment Account and the investment income expected to be received from amounts so deposited in the Bond Fund, have been used (i) for the acquisition, construction, reconstruction or improvement of land or property of a character subject to the allowance for depreciation under Section 167 of the Code, or for payment of amounts which are, for federal income tax purposes, chargeable to the Facilities' capital account (for example, underSection 263 of the Code) or would be so chargeable either with a proper election by the Company or but for a proper election by the Company to deduct such amounts, and (ii) to provide sewage or solid waste disposal facilities within the meaning of Section 142(a)(5) or (6) of the Code and regulations thereunder, provided that the moneys paid from the Investment Account shall be disregarded for purposes of the foregoing computation if the Company shall have submitted to the Trustee an opinion of Bond Counsel to the effect that such moneys may be so disregarded without impairing the exemption from federal income taxes of interest on the Bonds. Any amount not transferred into the Bond Fund as provided above (exclusive of amounts retained by the Trustee in the Construction Fund for payment of Costs of Construction not then due and payable) shall be segregated by the Trustee and used by the Trustee for (a) the redemption of Bonds of the same series of Bonds from which such moneys were derived on or prior to the earliest redemption date permitted by this Indenture without a premium or penalty in accordance with the provisions of this Indenture; or (b) the payment of a portion of the annual principal due on Bonds of the same series from which such moneys were derived (i) in years before such Bonds are subject to redemption without premium or penalty, or (ii) in years when such Bonds are subject to redemption without premium or penalty but only in an amount in excess of the unexpended proceeds of such Bonds, provided, however, that the portion of the annual principal payment, if any, due on such Bonds that may be paid hereunder shall not exceed an amount that bears the same ratio to the annual principal due that the total unexpended proceeds of such Bonds (exclusive of investment earnings) bear to the face amount of such Bonds; or (c) any other purpose provided that the Trustee is furnished with an opinion of Bond Counsel to the effect that such use is lawful under the Act and will not adversely affect the exclusion of interest on any of the Bonds from gross income for purposes of federal income taxation. Until used for one or more of the foregoing purposes, such segregated amount may be invested as permitted by this Indenture but may not be invested, without an opinion of Bond Counsel to the effect that such investment will not adversely affect the exclusion of interest on any of the Bonds from gross income for purposes of federal income taxation, to produce a yield greater than the yield on the Bonds, all in accordance with Section 148 of the Code and regulations thereunder. Section 605. Redemption of Bonds Pursuant to Section 301(a) or Similar Provisions. In the event that Bonds of any series are to be redeemed pursuant to Section 301(a) hereof or any similar provision contained in any supplemental indenture, the Trustee shall, at the direction of the Company, withdraw from the Capital Account or the Investment Account maintained within the Construction Fund in respect of such series of Bonds, or both, and deposit into the Bond Fund amounts in the aggregate not exceeding the aggregate principal amount of, and accrued interest on, the Bonds of such series so to be redeemed, with advice to the Countyand the Company of such action, such withdrawals and deposits to be made on the date specified in such direction. Section 606. Redemption Upon Taxability of Interest. In the event that Bonds of any series are to be redeemed pursuant to Section 301(b) hereof, or any similar provision contained in any supplemental indenture, the Trustee shall, at the direction of the Company, withdraw from the Capital Account or the Investment Account maintained within the Construction Fund in respect of such series of Bonds, or both, and deposit into the Bond Fund amounts in the aggregate not exceeding the aggregate principal amount of, and accrued interest on, the Bonds so to be redeemed, with advice to the County and the Company of such action, such withdrawals and deposits to be made on the date specified in such direction. Section 607. Acceleration of Bonds. In the event that the principal of the Bonds shall have become due and payable pursuant to Section 1002 hereof, the Trustee may, and at the direction of the holders of twenty-five percent (25%) in aggregate principal amount of Bonds outstanding hereunder, shall deposit into the Bond Fund all amounts remaining in the Construction Fund, with advice to the County and the Company of such action. Section 608. Refunding of Bonds. In the event that all outstanding Bonds of any series are paid, redeemed or deemed to have been paid within the meaning of Article IX hereof by reason of the application of the proceeds of the sale of any obligations issued by the County under an indenture other than this Indenture, the Trustee shall, at the direction of the Company, withdraw all amounts remaining in the Capital Account and the Investment Account maintained within the Construction Fund in respect of such series of Bonds and deposit such amounts into corresponding accounts in the construction, acquisition or other similar fund created under the indenture under which such obligations of the County are issued, with advice to the County and the Company of such action, such withdrawals and deposits to be made, in accordance with the provisions of such indenture, on the date on which such Bonds are so paid, redeemed or deemed to have been paid. ARTICLE VII INVESTMENTS Section 701. Investment of Moneys. (a) Moneys held for the credit of the Construction Fund shall, upon direction by the Authorized Company Representative, be invested and reinvested by the Trustee in any one or more of the following obligations or securities on which neither the Company nor any of its subsidiaries is the obligor: (i) Government Securities; (ii) interest bearing deposit accounts (which may be represented by certificates of deposit) in national or state banks (which may include the Trustee, any Paying Agent, and the Bond Registrar) having a combined capital and surplus of not less than $10,000,000, or savings and loan associations having total assets of not less than $40,000,000; (iii) bankers' acceptances drawn on and accepted by commercial banks (which may include the Trustee, any Paying Agent, and the Bond Registrar) having a combined capital and surplus of not less than $10,000,000; (iv) direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, any State of the United States of America, the District of Columbia or the Commonwealth of Puerto Rico, or any political subdivision of any of the foregoing, which are rated in any of the three highest rating categories by a nationally recognized rating agency; (v) obligations of any agency or instrumentality of the United States of America; (vi) commercial or finance company paper which is rated in any of the three highest rating categories by a nationally recognized rating agency; (vii) corporate debt securities rated in any of the three highest rating categories by a nationally recognized rating agency; and (viii) repurchase agreements with banking or financial institutions having a combined capital and surplus of not less than $10,000,000 (which may include the Trustee, any Paying Agent, and the Bond Registrar) with respect to any of the foregoing obligations or securities. As used above, the reference to rating categories shall mean generic categories which may include numerical or other qualifications of ratings within each such generic rating category such as "+" or "-". Such investments shall have maturity dates, or shall be subject to redemption by the holder at the option of the holder, on or prior to the dates the moneys invested therein will be needed as reflected by a statement of the Authorized Company Representative which statement must be on file with the Trustee prior to any investment. (b) Moneys held for the credit of any other fund or account, including, without limitation, the Bond Fund, shall to the extent practicable be invested and reinvested in Government Securities which will mature, or which will be subject to redemption at the option of the holder, not later than the date or dates on which the money held for credit of the particular fund shall be required for the purposes intended. The Trustee shall soinvest and reinvest pursuant to instructions from the Authorized Company Representative. (c) Obligations so purchased as an investment of moneys in any fund or account shall be deemed at all times a part of such fund or account. Subject to the provisions of Section 602 hereof, any profit and income realized from such investments shall be credited to the fund or account and any loss shall be charged to the fund or account. Section 702. Arbitrage Law Requirements. In compliance with the provisions of Section 148 of the Code and regulations thereunder, all investments and reinvestments made under this Article VII shall be subject to the following: (a) In the event that the County or the Company is of the opinion that it is necessary or advisable to restrict or limit the yield on the investment of any moneys held in the Construction Fund, the Bond Fund or any other fund in order to avoid the Bonds being considered "arbitrage bonds" within the meaning of Section 148 of the Code, or any proposed, temporary or final regulations thereunder as such regulations may apply to obligations issued as of the date of original issuance and delivery of the Bonds, the County or the Company may issue to the Trustee a written certificate to such effect together with appropriate written instructions, in which event the Trustee shall take such action as is necessary so as to restrict or limit the yield on such investment in accordance with such certificate and instructions, irrespective of whether the Trustee shares such opinion. (b) The Trustee shall establish and maintain within the Bond Fund, the Construction Fund or any other fund, in respect of each series of Bonds issued hereunder, a separate account into which shall be deposited as and when received any amounts which are subject or could be subject to rebate to the United States under Section 148(f)(6) of the Code, which amounts shall be held in such separate accounts until paid to the United States pursuant to said Section or until the Trustee determines that no such payment is required. Moneys in such separate account within the Construction Fund shall be subject to prior withdrawal to pay the Cost of Construction in accordance with the provisions of the Sale Agreement; provided, however, that no withdrawal shall be permitted unless and until (i) all other moneys in the Construction Fund, together with any other moneys constituting gross proceeds (within the meaning of Section 148(f) of the Code) have first been so used within six (6) months of the date of issuance of the Bonds as provided in Section 148(f)(4)(B) of the Code, or (ii) the Company shall furnish an opinion of Bond Counsel to the Trustee to the effect that such moneys will not be subject to rebate to the United States under Section 148(f) of the Code and regulations thereunder. (c) The County and the Trustee shall not make or agree to make any payments or participate in any non-arms-length transaction which would have the effect of reducing the earnings on investments, thereby reducing the amount required to be rebated to the United States under Section 148(f) of the Code and regulations thereunder. (d) The Company has undertaken in the Sale Agreement to make the determinations required by paragraph (b) of this Section 702 and to provide statements to the Trustee to the effect that all actions with respect to the Bonds required by Section 148(f) of the Code has been taken. The Trustee shall be entitled to rely upon such determinations and statements as sufficient evidence of the facts therein contained. ARTICLE VIII RIGHTS OF THE COMPANY Section 801. Rights of Company Under Sale Agreement. Nothing herein contained shall be deemed to impair the rights and privileges of the Company set forth in the Sale Agreement and an Event of Default hereunder shall not constitute an "Event of Default" under the Sale Agreement unless by the terms of the Sale Agreement it constitutes an "Event of Default" thereunder. Section 802. Enforcement of Rights and Obligations. The County and the Trustee agree that the Company in its own name or in the name of the County may enforce all of the rights of the County, all obligations of the Trustee, and all of the Company's rights provided for in this Indenture. ARTICLE IX DISCHARGE OF LIEN Section 901. Discharge of Lien. If the County shall pay or cause to be paid to the holders and owners of the Bonds the principal of and premium, if any, and interest to become due thereon at the times and in the manner stipulated therein, and if the County shall keep, perform and observe all and singular the covenants and promises in the Bonds and in this Indenture expressed as to be kept, performed and observed by it on its part and shall pay or cause to be paid all other sums payable hereunder by the County, then these presents and the estate and rights hereby granted shall cease, determine and be void, and thereupon the Trustee shall cancel and discharge the lien of this Indenture, and execute and deliver to the County such instruments in writing as shall be requisite to satisfy the lien hereof, and reconvey to the County the estate hereby conveyed, and assign and deliver to the County any property at the time subject to the lien of this Indenture which may then be in its possession, except moneys or Government Securities held by it for the payment of the principal of and premium, if any, and interest on the Bonds. Any Bond shall be deemed to be paid within the meaning of this Article when payment of the principal of and premium, if any, and interest on such Bond (whether at maturity or upon redemption as provided in this Indenture, or otherwise), either (a) shall have been made or caused to be made in accordance with the terms thereof, or (b) shall have been provided for by irrevocably depositing with the Trustee, in trust and irrevocably set aside exclusively for such payment, (i) moneys sufficient to make such payment or (ii) Government Securities (provided that the Trustee shall have received an opinion of Bond Counsel to the effect that such deposit will not affect the exclusion of the interest on any of the Bonds from gross income for purposes of federal income taxation or cause any of the Bonds to be treated as arbitrage bonds within the meaning of Section 148(a) of the Code) maturing as to principal and interest in such amounts and at such times as will provide sufficient moneys to make such payment when due, and all necessary and proper fees, compensation and expenses of the Trustee and any Paying Agent pertaining to the Bonds with respect to which such deposit is made and all other liabilities of the Company under the Sale Agreement shall have been paid or the payment thereof provided for to the satisfaction of the Trustee. No deposit under (b) above shall constitute such discharge and satisfaction until the Company shall have irrevocably notified the Trustee of the date for payment of such Bond either at maturity or on a date on which such Bond may be redeemed in accordance with the provisions hereof and notice of such redemption shall have been given or irrevocable provisions shall have been made for the giving of such notice. The County or the Company may at any time surrender to the Trustee for cancellation by it any Bonds previously authenticated and delivered hereunder, which the County or the Company may have acquired in any manner whatsoever, and such Bonds, upon such surrender and cancellation, shall be deemed to be paid and retired. ARTICLE X DEFAULT PROVISIONS AND REMEDIES OF TRUSTEE AND BONDHOLDERS Section 1001. Events of Default. Each of the following events shall constitute and is referred to in this Indenture as an "Event of Default": (a) default in the due and punctual payment of any interest on any Bond hereby secured and outstanding and the continuance thereof for a period of sixty (60) days; (b) default in the due and punctual payment of the principal of and premium, if any, on any Bond hereby secured and outstanding, whether at the stated maturity thereof, or upon unconditional proceedings for redemption thereof, or upon the maturity thereof by acceleration; (c) an "Event of Default" as such term is defined in Section 8.01(a) of the Sale Agreement; or (d) default in the payment of any other amount required to be paid under this Indenture or the performance or observance of any other of the covenants, agreements or conditions contained in this Indenture, or in the Bonds issued under this Indenture, and continuance thereof for a period of ninety (90) days after written notice specifying such failure and requesting that it be remedied, shall have been given to the County and the Company by the Trustee, which may give such notice in its discretion and shall give such notice at the written request of Bondholders of not less than 10% in aggregate principal amount of the Bonds then outstanding, unless the Trustee, or the Trustee and bondholders of an aggregate principal amount of Bonds not less than the aggregate principal amount of Bonds the bondholders of which requested such notice, as the case may be, shall agree in writing to an extension of such period prior to its expiration; provided, however, that the Trustee, or the Trustee and the bondholders of such principal amount of Bonds, as the case may be, shall be deemed to have agreed to an extension of such period if corrective action is instituted by the County, or the Company on behalf of the County within such period and is being diligently pursued. The term "default" as used in clauses (a), (b) and (d) above shall mean default by the County in the performance or observance of any of the covenants, agreements or conditions on its part contained in this Indenture, or in the Bonds outstanding hereunder, exclusive of any period of grace required to constitute a default an "Event of Default" as hereinabove provided. Section 1002. Acceleration. Upon the occurrence and continuance of an Event of Default described in clause (a) or (b)of the first paragraph of Section 1001 hereof, the Bonds shall, without further action, become and be immediately due and payable, anything in this Indenture or in the Bonds to the contrary notwithstanding, and the Trustee shall give notice thereof in writing to the County and the Company, and notice to bondholders in the same manner as a notice of redemption under Section 302 hereof. Upon the occurrence and continuance of an Event of Default described in clause (c) of the first paragraph of Section 1001 hereof, and further upon the condition that, in accordance with the terms of the Company Mortgage, the First Mortgage Bonds shall have become immediately due and payable pursuant to any provision of the Company Mortgage, the Bonds shall, without further action, become and be immediately due and payable, anything in this Indenture or in the Bonds to the contrary notwithstanding, and the Trustee shall give notice thereof in writing to the County and the Company, and notice to bondholders in the same manner as a notice of redemption under Section 302 hereof. Section 1003. Other Remedies; Rights of Bondholders. Upon the occurrence and continuance of an Event of Default, the Trustee may, in addition or as an alternative, pursue any available remedy by suit at law or in equity to enforce the payment of the principal of and premium, if any, and interest on the Bonds then outstanding hereunder, then due and payable. If an Event of Default shall have occurred, and if it shall have been requested so to do by the holders of twenty-five percent (25%) in aggregate principal amount of Bonds outstanding hereunder and shall have been indemnified as provided in Section 1101 hereof, the Trustee shall be obligated to exercise such one or more of the rights and powers conferred upon it by this Section as the Trustee, being advised by counsel, shall deem most expedient in the interests of the bondholders. No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the bondholders) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given hereunder or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient. No waiver of any default or Event of Default hereunder, whether by the Trustee or by the bondholders, shall extend to orshall affect any subsequent default or Event of Default or shall impair any rights or remedies consequent thereon. Section 1004. Right of Bondholders to Direct Proceedings. Anything in this Indenture to the contrary notwithstanding the holders of a majority in aggregate principal amount of Bonds outstanding hereunder shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of this Indenture, or for the appointment of a receiver or any other proceeding hereunder; provided that such direction shall not be otherwise than in accordance with the provisions of law and of this Indenture. Section 1005. Appointment of Receiver. Upon the occurrence and continuance of an Event of Default, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the bondholders under this Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Trust Estate and of the tolls, rents, revenues, issues, earnings, income, products and profits thereof, pending such proceedings with such powers as the court making such appointment shall confer. Section 1006. Waiver. In case of an Event of Default on the part of the County, as aforesaid, to the extent that such rights may then lawfully be waived, neither the County nor anyone claiming through it or under it shall or will set up, claim, or seek to take advantage of any appraisement, valuation, stay, extension or redemption laws now or hereafter in force, in order to prevent or hinder the enforcement of this Indenture, but the County, for itself and all who may claim through or under it, hereby waives, to the extent that it lawfully may do so, the benefit of all such laws and all right of appraisement and redemption to which it may be entitled under the laws of the State of Arkansas. Section 1007. Application of Moneys. Available moneys remaining after discharge of costs, charges and liens prior to this Indenture shall be applied by the Trustee as follows: (a) Unless the principal of all the Bonds shall have become due and payable, all such moneys shall be applied: First: To the payment to the persons entitled thereto of all installments of interest then due, in the order of the maturity of the installments of such interest, and, if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the persons entitled thereto, without any discrimination or privilege; Second: To the payment to the persons entitled thereto of the unpaid principal of any of the Bonds which shall have become due (other than Bonds called for redemption for the payment of which moneys are held pursuant to the provisions of this Indenture), in the order of their due dates, with interest on such Bonds from the respective dates upon which they become due, and, if the amount available shall not be sufficient to pay in full Bonds due on any particular date, together with such interest, then to the payment ratably, according to the amount of principal due on such date, to the persons entitled thereto without any discrimination or privilege of any Bond over any other Bond and without preference or priority of principal over interest or of interest over principal; and Third: To the payment of the interest on and the principal of the Bonds, and to the redemption of Bonds, all in accordance with the provisions of Article V of this Indenture. (b) If the principal of all the Bonds shall have become due and payable, all such moneys shall be applied to the payment of the principal and interest then due and unpaid upon the Bonds, without preference or priority of principal over interest or of interest over principal, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the person entitled thereto without discrimination or privilege. (c) If the principal of all the Bonds shall have become due and payable, and if acceleration of the maturity of the Bonds by reason of an Event of Default shall thereafter have been rescinded and annulled under the provisions of this Article then, subject to the provisions of paragraph (b) of this Section in the event that the principal of all the Bonds shall later become due and payable, the moneys shall be applied in accordance with the provisions of paragraph (a) of this Section. Whenever moneys are to be applied by the Trustee pursuant to the provisions of this Section, such moneys shall be applied by it at such times, and from time to time, as it shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such funds, it shall fix the date (which shall be an interest payment date unless it shall deem another date more suitable) upon which such application is to be made and upon such date interest on the amounts of principal to be paid on such dates shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the deposit with it of any such moneys and of the fixing of any such date and shall not be required to make payment to the holder of any Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Section 1008. Remedies Vested in Trustee. All rights of action (including the right to file proof of claim) under this Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceeding relating thereto and any such suit or proceeding instituted by the Trustee shall be brought in its name as Trustee, without the necessity of joining as plaintiffs or defendants any holders of the Bonds hereby secured, and any recovery of judgment shall be for the equal benefit of the holders of the outstanding Bonds. Section 1009. Rights and Remedies of Bondholders. No holder of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of this Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other remedy hereunder, unless a default has occurred of which the Trustee has been notified as provided in subsection (g) of Section 1101, or of which by said subsection it is deemed to have notice, nor unless such default shall have become an Event of Default and the holders of twenty-five percent (25%) in aggregate principal amount of Bonds outstanding hereunder shall have made written request to the Trustee and shall have offered it reasonable opportunity either to proceed to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name, nor unless also they have offered to the Trustee indemnity as provided in Section 1101 nor unless the Trustee shall thereafter fail or refuse to exercise the powers hereinbefore granted, or to institute such action, suit or proceeding in its own name; and such notification, request and offer of indemnity are hereby declared in every such case at the option of the Trustee to be conditions precedent to the execution of the powers and trusts of this Indenture, and to any action or cause of action for the enforcement of this Indenture or for the appointment of a receiver or for any other remedy hereunder; it being understood and intended that no one or more holders of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of this Indenture by his or their action or to enforce any right hereunder except in the manner herein provided, and that all proceedings at law or in equity shall be instituted, held and maintained in the manner herein provided for the equal benefit of the holders of all Bonds outstanding hereunder. Nothing in this Indenture contained shall, however, affect or impair the right of any bondholders to enforce the payment of the principal of and interest on any Bonds at and after the maturity thereof, or the obligation of the County to pay the principal of and interest on each of the Bonds issued hereunder to the respective holders thereof at the time and place in said Bonds expressed. Section 1010. Termination of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and suchproceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee, then and in every such case the County and the Trustee shall be restored to their former positions and rights hereunder with respect to the property herein conveyed, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken, except to the extent the Trustee is legally bound by such adverse determination. Section 1011. Waivers of Events of Default. The provisions of Article X are subject to the condition that any waiver of any "Default" under the Company Mortgage and a rescission and annulment of its consequences shall constitute a waiver of the corresponding Event or Events of Default under clause (c) of the first paragraph of Section 1001 hereof and a rescission and annulment of the consequences thereof, but no such waiver, rescission and annulment shall extend to or affect any subsequent Event of Default or impair any right or remedy consequent thereon. ARTICLE XI THE TRUSTEE AND PAYING AGENTS Section 1101. Acceptance of Trusts. The Trustee hereby accepts the trust imposed upon it by this Indenture, and agrees to perform said trust (i) except during the continuance of an Event of Default as an ordinarily prudent trustee under a corporate mortgage, and (ii) during the continuance of an Event of Default, with the same degree of care and skill in the exercise of its rights hereunder as a prudent man would exercise or use under the circumstances in the conduct of his affairs, but only upon and subject to the following expressed terms and conditions: (a) The Trustee may execute any of the trusts or powers hereof and perform any duties required of it by or through attorneys, agents, receivers or employees, and shall be entitled to advice of counsel concerning all matters of trusts hereof and its duties hereunder, and may in all cases pay reasonable compensation to all such attorneys, agents, receivers and employees as may reasonably be employed in connection with the trusts hereof. The Trustee may act upon the opinion or advice of any attorney, surveyor, engineer or accountant selected by it in the exercise of reasonable care, or, if selected or retained by the County prior to the occurrence of a default of which the Trustee has been notified as provided in subsection (g) of this Section 1101, or of which by said subsection the Trustee is deemed to have notice, approved by the Trustee in the exercise of such care. The Trustee shall not be responsible for any loss or damage resulting from an action or non-action in accordance with any such opinion or advice. (b) The Trustee shall not be responsible for any recital herein, or in the Bonds (except in respect to the certificate of the Trustee endorsed on such Bonds), or for insuring the property herein conveyed or collecting any insurance moneys, or for the validity of the execution by the County of this Indenture or of any supplemental indentures or instrument of further assurance, or for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby, or for the value of the title of the property herein conveyed or otherwise as to the maintenance of the security hereof; except that in the event the Trustee enters into possession of a part or all of the property herein conveyed pursuant to any provision of this Indenture, it shall use due diligence in preserving such property; and the Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions and agreements aforesaid as to the condition of the property herein conveyed. (c) The Trustee may become the owner of Bonds secured hereby with the same rights which it would have if not Trustee. (d) The Trustee shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or document believed by it, in the exercise of reasonable care, to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken by the Trustee pursuant to this Indenture upon the request or authority or consent of the owner of any Bond secured hereby, shall be conclusive and binding upon all future owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. (e) As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a certificate of the County signed by its County Judge and attested by the Clerk of the County, as sufficient evidence of the facts therein contained and prior to the occurrence of a default of which it has been notified as provided in subsection (g) of this Section 1101, or of which by that subsection it is deemed to have notice, and shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion, at the reasonable expense of the County, in every case secure such further evidence as it may think necessary or advisable but shall in no case be bound to secure the same. The Trustee may accept a certificate of the Clerk of the County under its seal to the effect that a resolution or ordinance in the form therein set forth has been adopted by the County as conclusive evidence that such resolution or ordinance has been duly adopted, and is in full force and effect. (f) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty of the Trustee. (g) The Trustee shall not be required to take notice or be deemed to have notice of any default hereunder (except a default under clause (a) or (b) of the first paragraph of Section 1001 hereof concerning which the Trustee shall be deemed to have notice) unless the Trustee shall be specifically notified in writing of such default by the County or by the holders of at least ten percent (10%) in aggregate principal amount of Bonds outstanding hereunder and all notices or other instruments required by this Indenture to be delivered to the Trustee must, in order to be effective, be delivered to the office of the Trustee, and in the absence of such notice so delivered, the Trustee may conclusively assume there is no such default except as aforesaid. (h) The Trustee shall not be personally liable for any debts contracted or for damages to persons or to personal property injured or damaged, or for salaries or non-fulfillment of contracts during any period in which it may be in the possession of ormanaging the real and tangible personal property as in this Indenture provided. (i) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right fully to inspect any and all of the property herein conveyed, including all books, papers and records of the County pertaining to the Facilities and the Bonds, and to take such memoranda from and in regard thereto as may be desired, provided, however, that nothing contained in this subsection or in any other provision of this Indenture shall be construed to entitle the above named persons to any information or inspection involving the confidential know-how of the Company. (j) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises. (k) Notwithstanding anything elsewhere in this Indenture contained, the Trustee shall have the right, but shall not be required, to demand, in respect of the authentication of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Indenture, any showings, certificates, opinions, appraisals, or other information, or corporate action or evidence thereof, in addition to that by the terms hereof required as a condition of such action by the Trustee, deemed desirable for the purpose of establishing the right of the County to the authentication of any Bonds, the withdrawal of any cash, the release of any property, or the taking of any other action by the Trustee. (l) Before taking such action hereunder, the Trustee may require that it be furnished an indemnity bond satisfactory to it for the reimbursement to it of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from the negligence or willful default of the Trustee, by reason of any action so taken by the Trustee. Section 1102. Fees, Charges and Expenses of Trustee and Paying Agents. The Trustee and any Paying Agent shall be entitled to payment and/or reimbursement for reasonable fees for services rendered hereunder and all advances, counsel fees and other expenses reasonably and necessarily made or incurred in and about the execution of the trusts created by this Indenture. The County has made provisions in the Sale Agreement for the payment of such Administration Expenses and reference is hereby made to the Sale Agreement for the provisions so made. In this regard, it is understood that the County pledges no funds or revenues other than those derived from and the avails of the Trust Estate to the payment of any obligation of the County set forth in this Indenture, including the obligations set forth in this Section 1102, but nothing herein shall be construed as prohibiting theCounty from using any other funds and revenues for the payment of any of its obligations under this Indenture. Upon an Event of Default, but only upon an Event of Default, the Trustee and the Paying Agents shall have a first lien with right of payment prior to payment on account of principal or interest of any Bond issued hereunder upon the Trust Estate for such reasonable and necessary advances, fees, costs and expenses incurred by them respectively. Section 1103. Notice to Bondholders of Default. The Trustee shall be required to make demand upon and give notice to the Company and each registered owner of Bonds then outstanding as follows: (a) If the Company shall fail to make any installment payment under the Sale Agreement on the day such payment is due and payable, the Trustee shall give notice to and make demand upon the Company on the next succeeding business day. (b) If a default occurs of which the Trustee is pursuant to the provisions of Section 1101(g) deemed to have or is given notice, the Trustee shall promptly give notice to the Company and to bondholders. Section 1104. Intervention by Trustee. In any judicial proceeding to which the County is a party and which in the opinion of the Trustee and its counsel has a substantial bearing on the interests of holders of Bonds issued hereunder, the Trustee may intervene on behalf of bondholders and shall do so if requested in writing by the holders of at least ten percent (10%) of the aggregate principal amount of Bonds outstanding hereunder. The rights and obligations of the Trustee under this Section 1104 are subject to the approval of the court having jurisdiction in the premises. Section 1105. Merger or Consolidation of Trustee. Any bank or trust company to which the Trustee may be merged, or with which it may be consolidated, or to which it may sell or transfer its trust business and assets as a whole or substantially as a whole, or any bank or trust company resulting from any such sale, merger, consolidation or transfer to which it is a party, ipso facto, shall be and become successor trustee hereunder and vested with all of the title to the whole property or Trust Estate and all the trusts, powers, discretions, immunities, privileges, and all other matters as was its predecessor, without the execution or filing of any instrument or any further act, deed or conveyance on the part of any of the parties hereto, anything herein to the contrary notwithstanding; provided, however, that such successor trustee shall have capital and surplus of at least $10,000,000. Section 1106. Resignation by Trustee. The Trustee and any successor trustee may at any time resign from the trusts hereby created by giving thirty (30) days written notice to the County andto the Company, and such resignation shall take effect at the end of such thirty (30) days, or upon the earlier appointment of a successor trustee by the bondholders or by the County. Such notice may be served personally or sent by registered mail. Section 1107. Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Trustee and to the County, and signed by the holders of a majority in aggregate principal amount of Bonds outstanding hereunder. Section 1108. Appointment of Successor Trustee. In case the Trustee hereunder shall resign or be removed, or be dissolved, or shall be in course of dissolution or liquidation, or otherwise become incapable of acting hereunder, or in case it shall be taken under the control of any public officer or officers, or of a receiver appointed by the court, a successor may be appointed by the holders of a majority in aggregate principal amount of Bonds outstanding hereunder, by an instrument or concurrent instruments in writing signed by such holders, or by their attorneys in fact, duly authorized; provided, nevertheless, that in case of such vacancy the County by an instrument executed and signed by its County Judge and attested by its Clerk under its seal, shall appoint a temporary trustee to fill such vacancy until a successor trustee shall be appointed by the bondholders in the manner above provided; and any such temporary trustee so appointed by the County shall immediately and without further act be superseded by the trustee so appointed by such bondholders. Every such temporary trustee and every such successor trustee shall be a trust company or bank in good standing, having capital and surplus of not less than $10,000,000. Section 1109. Concerning Any Successor Trustee. Every successor or temporary trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the County an instrument in writing accepting such appointment hereunder, and thereupon such successor or temporary trustee, without any further act or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessor; but such predecessor shall, nevertheless, on the written request of the County or of its successor trustee, execute and deliver an instrument transferring to such successor all the estate, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor trustee shall deliver all securities, moneys and any other property held by it as trustee hereunder to its successor. Should any instrument in writing from the County be required by any successor trustee for more fully and certainly vesting in such successor the estates, rights, powers and duties hereby vested or intended to be vested in the predecessor trustee, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the County. The resignation of any trustee and the instrument or instrumentsremoving any trustee and appointing a successor hereunder, together with all other instruments provided for in this Article shall, at the expense of the County, be forthwith filed and/or recorded by the successor trustee in each recording office where the Indenture shall have been filed and/or recorded. Section 1110. Reliance Upon Instruments. The resolutions, opinions, certificates and other instruments provided for in this Indenture may be accepted and relied upon by the Trustee as conclusive evidence of the facts and conclusions stated therein and shall be full warrant, protection and authority to the Trustee for its actions taken hereunder. Section 1111. Appointment of Co-Trustee. The County and the Trustee shall have power to appoint and upon the request of the Trustee the County shall for such purpose join with the Trustee in the execution of all instruments necessary or proper to appoint another corporation or one or more persons approved by the Trustee, and satisfactory to the Company so long as there is no termination of the interest of the Company by virtue of an event of default or otherwise, either to act as co-trustee or co-trustees jointly with the Trustee of all or any of the property subject to the lien hereof, or to act as separate trustee or co-trustee of all or any such property, with such powers as may be provided in the instrument of appointment and to vest in such corporation or person or persons as such separate trustee or co-trustee any property, title, right or power deemed necessary or desirable. In the event that the County shall not have joined in such appointment within fifteen (15) days after the receipt by it of a request so to do, the Trustee alone shall have the power to make such appointment. Should any deed, conveyance or instrument in writing from the County be required by separate trustee or co-trustee so appointed for more fully and certainly vesting in and confirming to him or to it such properties, rights, powers, trusts, duties and obligations, any and all such deeds, conveyances and instruments in writing shall, on request, be executed, acknowledged and delivered by the County. Every such co-trustee and separate trustee shall, to the extent permitted by law, be appointed subject to the following provisions and conditions, namely: (1) The Bonds shall be authenticated and delivered, and all powers, duties, obligations and rights conferred upon the Trustee in respect of the custody of all money and securities pledged or deposited hereunder, shall be exercised solely by the Trustee; and (2) The Trustee, at any time by an instrument in writing, may remove any such separate trustee or co-trustee. Every instrument, other than this Indenture, appointing any such co-trustee or separate trustee, shall refer to this Indenture and the conditions of this Article XI expressed, and upon the acceptance in writing by such separate trustee or co-trustee, he, they or it shall be vested with the estate or property specified in such instrument, jointly with the Trustee (except insofar as local law makes it necessary for any separate trustee to act alone), subject to all the trusts, conditions and provisions of this Indenture. Any such separate trustee or co-trustee may at any time, by an instrument in writing, constitute the Trustee as his, their or its agent or attorney-in-fact with full power and authority, to the extent authorized by law, to do all acts and things and exercise all discretion authorized or permitted by him, them or it, for and on behalf of him, them or it and in his, their or its name. In case any separate trustee or co-trustee shall die, become incapable of acting, resign or be removed, all the estate, properties, rights, powers, trusts, duties and obligations of said separate trustee or co-trustee shall vest in and be exercised by the Trustee until the appointment of a new trustee or a successor to such separate trustee or co-trustee. Section 1112. Designation and Succession of Paying Agents. The Trustee and any other banks or trust companies, if any, designated as Paying Agent or Paying Agents in any supplemental indenture providing for the issuance of Additional Bonds as provided in Section 211 hereof or in an instrument appointing a successor Trustee, shall be the Paying Agent or Paying Agents for the applicable series of Bonds. Any bank or trust company with which or into which any Paying Agent may be merged or consolidated, or to which the assets and business of such Paying Agent may be sold, shall be deemed the successor of such Paying Agent for the purposes of this Indenture. If the position of Paying Agent shall become vacant for any reason, the County shall, within thirty (30) days thereafter, appoint such bank or trust company as shall be specified by the Company as such Paying Agent to fill such vacancy; provided, however, that, if the County shall fail to appoint such Paying Agent within said period, the Trustee shall make such appointment. The Paying Agents shall enjoy the same protective provisions in the performance of their duties hereunder as are specified in Section 1101 hereof with respect to the Trustee insofar as such provisions may be applicable. Section 1113. Several Capacities. Anything in this Indenture to the contrary notwithstanding, the same entity may serve hereunder as the Trustee, the Paying Agent, and the Bond Registrar and in any other combination of such capacities, to the extent permitted by law. ARTICLE XII SUPPLEMENTAL INDENTURES Section 1201. Supplemental Indentures Without Bondholder Consent. The County and the Trustee may, from time to time and at any time, without the consent of or notice to the bondholders, enter into supplemental indentures as follows: (a) to cure any formal defect, omission, inconsistency or ambiguity in this Indenture; (b) to grant to or confer or impose upon the Trustee for the benefit of the bondholders any additional rights, remedies, powers, authority, security, liabilities or duties which may lawfully be granted, conferred or imposed and which are not contrary to or inconsistent with this Indenture as theretofore in effect, provided that no such additional liabilities or duties shall be imposed upon the Trustee without its consent; (c) to add to the covenants and agreements of, and limitations and restrictions upon, the County in this Indenture other covenants, agreements, limitations and restrictions to be observed by the County which are not contrary to or inconsistent with this Indenture as theretofore in effect; (d) to confirm, as further assurance, any pledge under, and the subjection to any claim, lien or pledge created or to be created by, this Indenture, of the Revenues of the County from the Sale Agreement or of any other moneys, securities or funds; (e) to authorize the issuance and sale of one or more series of Additional Bonds; (f) to comply with the requirements of the Trust Indenture Act of 1939, as from time to time amended; (g) to provide for the registration and registration of transfer of the Bonds through a book-entry or similar method, whether or not the Bonds are evidenced by certificates; or (h) to modify, alter, amend or supplement this Indenture in any other respect which is not materially adverse to the bondholders and which does not involve a change described in clause (a), (b), (c), (d), (e) or (f) of Section 1202 hereof and which, in the judgment of the Trustee, is not to the prejudice of the Trustee. Section 1202. Supplemental Indentures Requiring Bondholder Consent. Subject to the terms and provisions contained in this Section, and not otherwise, the holders of not less than a majority in aggregate principal amount of the Bonds then outstanding shall have the right, from time to time, anything contained in this Indenture to the contrary notwithstanding, to consent to and approve the execution by the County and the Trustee of such indenture or indentures supplemental hereto as shall be deemed necessary and desirable by the County for the purpose of modifying, altering, amending, adding to or rescinding, in any particular, any of the terms or provisions contained in this Indenture or in any supplemental indenture; provided, however, that nothing herein contained shall permit, or be construed as permitting, unless approved by the holders of all Bonds then outstanding (a) an extension of the maturity (or mandatory sinking fund or other mandatory redemption date) of the principal of or the interest on any Bond issued hereunder, or (b) a reduction in the principal amount of or redemption premium or rate of interest on any Bond issued hereunder, or (c) the creation of any lien ranking prior to or on a parity with the lien of this Indenture on the Trust Estate or any part thereof, except as hereinbefore expressly permitted, or (d) a privilege or priority of any Bond or Bonds over any other Bond or Bonds, or (e) a reduction in the aggregate principal amount of the Bonds required for consent to such supplemental indenture, or (f) depriving the holder of any Bond then outstanding of the lien hereby created on the Trust Estate. Nothing herein contained, however, shall be construed as making necessary the approval of bondholders of the execution of any supplemental indenture as provided in Section 1201 of this Article. If, at any time the County shall request the Trustee to enter into any supplemental indenture for any of the purposes of this Section, the Trustee shall, at the expense of the County, cause notice of the proposed execution of such supplemental indenture to be mailed by first class mail to each registered owner of the Bonds. Such notice shall briefly set forth the nature of the proposed supplemental indenture and shall state that copies thereof are on file at the principal corporate trust office of the Trustee for inspection by bondholders. The Trustee shall not, however, be subject to any liability to any bondholder by reason of its failure to mail such notice, and any such failure shall not affect the validity of such supplemental indenture when consented to and approved as provided in this Section. If the holders of not less than a majority in aggregate principal amount of the Bonds outstanding at the time of the execution of any such supplemental indenture shall have consented to and approved the execution thereof as herein provided, no holder of any Bond shall have any right to object to any of the terms and provisions contained therein, or the operation thereof, or in any manner to question the propriety of the execution thereof, or to enjoin or restrain the Trustee or the County from executing the same or from taking any action pursuant to the provisions thereof. Upon the execution ofany such supplemental indenture, this Indenture shall be deemed to be modified and amended in accordance therewith. Section 1203. Consent of Company. Anything herein to the contrary notwithstanding, a supplemental indenture under this Article XII shall not become effective unless and until the Company shall have consented to the execution and delivery of such supplemental indenture. In this regard, the Trustee shall cause notice of the proposed execution and delivery of any such supplemental indenture together with a copy of the proposed supplemental indenture to be mailed by certified or registered mail to the Company at least fifteen (15) days prior to the proposed date of execution and delivery of any such supplemental indenture. The Company shall be deemed to have consented to the execution and delivery of any such supplemental indenture if the Trustee receives a letter or other instrument signed by an authorized officer of the Company expressing consent. Section 1204. Opinion of Bond Counsel. Anything herein to the contrary notwithstanding, a supplemental indenture under this Article XII shall not become effective unless and until the Trustee shall have received an opinion of Bond Counsel to the effect that such supplemental indenture will not affect the exclusion of interest on the Bonds from gross income for purposes of federal income taxation. ARTICLE XIII AMENDMENT TO SALE AGREEMENT Section 1301. Amendments Not Requiring Consent of Bondholders. The Trustee may from time to time, and at any time, consent to any amendment, change or modification of the Sale Agreement for the purpose of curing any ambiguity or formal defect or omission or making any other change therein, which in the reasonable judgment of the Trustee is not to the prejudice of the Trustee or the holders of the Bonds. The Trustee shall not consent to any other amendment, change or modification of the Sale Agreement without the approval or consent of the holders of not less than a majority in aggregate principal amount of the Bonds at the time outstanding, evidenced in the manner provided in Section 1401 hereof; provided the Trustee shall not, without the unanimous consent of the holders of all Bonds then outstanding, evidenced in the manner provided in Section 1401 hereof, consent to any amendment which would change the obligations of the Company under Section 5.02 or 5.03 of the Sale Agreement or the nature of the obligations of the Company on the First Mortgage Bonds as provided in Section 5.03 of the Sale Agreement. Section 1302. Amendments Requiring Consent of Bondholders. If at any time the County or the Company shall request the Trustee's consent to a proposed amendment, change or modification requiring bondholder approval under Section 1301, the Trustee, shall, at the expense of the requesting party, cause notice of such proposed amendment, change or modification to the Sale Agreement to be mailed in the same manner as provided by Section 1202 hereof with respect to supplemental indentures. Such notice shall briefly set forth the nature of such proposed amendment, change or modification and shall state that copies of the instrument embodying the same are on file in the principal office of the Trustee for inspection by any interested bondholder. The Trustee shall not, however, be subject to any liability to any bondholder by reason of its failure to publish or mail such notice, and any such failure shall not affect the validity of such amendment, change or modification when consented to by the Trustee in the manner hereinabove provided. Section 1303. Opinion of Bond Counsel. Anything herein to the contrary notwithstanding, any amendment to the Sale Agreement shall not become effective unless and until the Trustee shall have received an opinion of Bond Counsel to the effect that such amendment will not affect the exclusion of interest on the Bonds from gross income for purposes of federal income taxation. ARTICLE XIV MISCELLANEOUS Section 1401. Consents, etc. of Bondholders. Any request, direction, objection or other instrument required by this Indenture to be signed and executed by the bondholders may be in any number of concurrent writings of similar tenor and may be signed or executed by such bondholders in person or by agent appointed in writing. Proof of the execution of any such request, direction, objection or other instrument or of the writing appointing any such agent and of the ownership of Bonds, if made in the following manner, shall be sufficient for any of the purposes of this Indenture, and shall be conclusive in favor of the Trustee with regard to any action taken by it under such request or other instrument, namely: (a) The fact and date of the execution by any person of any such writing may be proved by the certificate of any officer in any jurisdiction who by law has power to take acknowledgments within such jurisdiction that the person signing such writing acknowledged before him the execution thereof, or by an affidavit of any witness to such execution. (b) The fact of ownership of Bonds and the amount or amounts, numbers and other identification of such Bonds, and the date of holding the same shall be proved by the registration books of the County maintained by the Trustee as Bond Registrar. Section 1402. Limitation of Rights. With the exception of rights herein expressly conferred, nothing expressed or mentioned in or to be implied from this Indenture, or the Bonds issued hereunder, is intended or shall be construed to give to any person or company other than the parties hereto, the Company, and the holders of the Bonds secured by this Indenture any legal or equitable rights, remedy or claim under or in respect to this Indenture or any covenants, conditions and provisions herein contained; this Indenture and all of the covenants, conditions and provisions hereof being intended to be and being for the sole exclusive benefit of the parties hereto, the Company, and the holders of the Bonds hereby secured as herein provided. Section 1403. Severability. If any provisions of this Indenture shall be held or deemed to be or shall, in fact, be inoperative or unenforceable as applied in any particular case in any jurisdiction or jurisdictions or in all jurisdictions or in all cases because it conflicts with any provisions of any constitution or statute or rule of public policy, or for any other reason, such circumstances shall not have the effect of rendering the provision in question inoperative or unenforceable in any other case or circumstance, or of rendering any other provision or provisionsherein contained invalid, inoperative or unenforceable to any extent whatever. The invalidity of any one or more phrases, sentences, clauses or paragraphs in this Indenture contained shall not affect the remaining portions of this Indenture or any part thereof. Section 1404. Notices. Except as otherwise provided in this Indenture, all notices, certificates or other communications shall be sufficiently given and shall be deemed given when mailed by registered or certified mail, postage prepaid, to the County, the Company, the Trustee and any Paying Agent. Notices, certificates or other communications shall be sent to the following addresses: Company: Arkansas Power & Light Company P.O. Box 551 Little Rock, Arkansas 72203 Attention: Treasurer County: ___________ County, Arkansas ___________ County Courthouse ____________, Arkansas ______ Attention: County Judge Trustee: ______________________________ ______________________________ ______________________________ Attention: Corporate Trust Department Any Paying Agent other than the Trustee: At the address designated to the County and the Trustee. Any of the foregoing may, by notice given hereunder, designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. Section 1405. Applicable Provisions of Law. This Indenture shall be considered to have been executed in the State of Arkansas and it is the intention of the parties that the substantive law of the State of Arkansas govern as to all questions of interpretation, validity and effect. Section 1406. Counterparts. This Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. Section 1407. Successors and Assigns. All the covenants, stipulations, provisions, agreements, rights, remedies and claims of the parties hereto in this Indenture contained shall bind and inure to the benefit of their successors and assigns. Section 1408. Captions. The captions or headings in this Indenture are for convenience only and in no way define, limit or describe the scope or intent of any provisions or sections of this Indenture. Section 1409. Photocopies and Reproductions. A photocopy or other reproduction of this Indenture may be filed as a financing statement pursuant to the Uniform Commercial Code, although the signatures of the County and the Trustee on such reproduction are not original manual signatures. Section 1410. Bonds Owned by the County or the Company. In determining whether bondholders of the requisite aggregate principal amount of the Bonds have concurred in any direction, consent or waiver under this Indenture, Bonds which are owned by the County or the Company or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company shall be disregarded and deemed not to be outstanding for the purpose of any such determination, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Bonds which the Trustee knows are so owned shall be so disregarded. Bonds so owned which have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to such Bonds and that the pledgee is not the County or the Company or any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Section 1411. Holidays. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Indenture, shall be a legal holiday or a day on which banking institutions in the city in which is located the principal corporate trust office of the Trustee are authorized by law to remain closed, such payment may be made or act performed or right exercised on the next succeeding day not a legal holiday or a day on which such banking institutions are authorized by law to remain closed, with the same force and effect as if done on the nominal date provided in this Indenture, and no interest shall accrue for the period after such nominal date. IN WITNESS WHEREOF, the County has caused these presents to be signed in its name and behalf by its County Judge and its corporate seal to be hereunto affixed and attested by its County Clerk, and, to evidence its acceptance of the trust hereby created, the Trustee has caused these presents to be signed in its behalf by its Executive Vice President and Trust Officer and its corporate seal to be hereto affixed and attested by its Corporate Trust Officer. ___________ COUNTY, ARKANSAS By ___________________________ ATTEST: County Judge _______________________________ County Clerk (SEAL) ________________________________ ________________________________ TRUSTEE By _____________________________ Executive Vice President and Trust Officer ATTEST: ______________________________ Corporate Trust Officer (SEAL) ACKNOWLEDGMENT STATE OF ARKANSAS ) ) COUNTY OF _________ ) On this ____ day of _______, ____, before me, a Notary Public duly commissioned, qualified and acting within and for the State and County aforesaid, appeared in person the within named _________________ and _______________, County Judge and County Clerk, respectively, of _________ County, Arkansas, to me personally well known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name of the municipality, and further stated and acknowledged that they had signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this ____ day of _______, ____. ________________________________ Notary Public My Commission expires: ______________________ (SEAL) ACKNOWLEDGMENT STATE OF __________ ) ) COUNTY OF _________ ) On this ____ day of _______, ____, before me, a Notary Public duly commissioned, qualified and acting within and for the State and County aforesaid, appeared in person the within named ________________ and _________________, ________________________ and _______________________________, respectively, of _____________ _______________________, __________, ________, to me personally well known, who stated that they were duly authorized in their respective capacities to execute the foregoing instrument for and in the name and behalf of the Bank, and further stated and acknowledged that they had so signed, executed and delivered the foregoing instrument for the consideration, uses and purposes therein mentioned and set forth. IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal this ______ day of _______, ____. ________________________________ Notary Public My Commission expires: ______________________ (SEAL) EXHIBIT A Form of Series ____ Bond No. ____ $_______ UNITED STATES OF AMERICA STATE OF ARKANSAS _________ COUNTY, ARKANSAS POLLUTION CONTROL REVENUE REFUNDING BOND, SERIES ____ (ARKANSAS POWER & LIGHT COMPANY PROJECT) Date of Bond: _________ Maturity Date: _______ 1, ____ Interest Rate: _% per annum CUSIP _________ Registered Owner: _________________________________________________ Principal Amount: _________________________________________ DOLLARS KNOW ALL MEN BY THESE PRESENTS: That _________ County, Arkansas, a political subdivision under the Constitution and laws of the State of Arkansas (the "County"), for value received, promises to pay to the registered owner shown above, or registered assigns, but solely from the source and in the manner hereinafter set forth, on the maturity date shown above, the principal amount shown above and in like manner to pay interest on said amount from the date hereof shown above until such principal amount becomes due and payable, at the rate per annum shown above, semiannually on _______ 1 and ____ 1 of each year commencing on the _______ 1 or ____ 1 next succeeding the date of this Bond, and to pay interest on overdue principal at the rate of ___ percent (_%) per annum until paid, except as the provisions hereinafter set forth with respect to redemption of this Bond prior to maturity may become applicable hereto. The principal of and premium, if any, on this Bond are payable in lawful money of the United States of America upon the presentation and surrender hereof at the principal corporate trust office of _____________ ___________________________, __________, ________, or its successor or successors, as Trustee (the "Trustee"), and interest on this Bond is payable in like money to the registered owner hereof by check drawn upon the Trustee and mailed to the person in whose name this Bond is registered at the close of business on the fifteenth day of the calendar month next preceding such interest payment date, at his address as it appears on the bond registration books of the County kept by the Trustee. This Bond, designated "________ County, Arkansas Pollution Control Revenue Refunding Bond, Series ____ (Arkansas Power & Light Company Project)," is one of a series of Bonds in the aggregate principal amount of ___________________ Dollars ($__________) (the "Bonds"), issued for the purpose of financing the cost of acquiring, constructing and equipping an undivided interest (the "Project") in certain pollution conterol facilities(the "Facilities") at the electric generating plant of Arkansas Power & Light Company, an Arkansas corporation (the "Company"), located within the boundaries of the County and known as Arkansas ___________ (the "Plant"), for sale to the Company, and paying a portion of the expenses of issuing the Bonds. The Bonds are all issued under and are all equally and ratably secured and entitled to the protection given by a Trust Indenture dated as of _______ _, ____ (the "Indenture"), duly executed and delivered by the County to the Trustee. The Indenture provides that the County may hereafter issue Additional Bonds from time to time under certain terms and conditions contained in the Indenture and, if issued, such Additional Bonds will be equally and ratably secured by and entitled to the protection of the Indenture. Reference is hereby made to the Indenture and all indentures supplemental thereto for the provisions, among others, with respect to the nature and extent of the security, the rights, duties and obligations of the County, the Trustee and the registered owners of the Bonds, and the terms upon which the Bonds are issued and secured. The terms and conditions of the acquisition, construction and equipment of the Facilities, the use of the proceeds of the Bonds for such purpose, and the sale of the Facilities by the County to the Company, are contained in an Installment Sale Agreement dated as of _______ _, ____ (the "Sale Agreement"), by and between the County and the Company. The Bonds are issued pursuant to and in full compliance with the Constitution and laws of the State of Arkansas, particularly Title 14, Chapter 267 of the Arkansas Code of 1987 Annotated (the "Act"), and pursuant to Orders of the County Court of the County, which Orders authorized the execution and delivery of the Indenture. The Bonds do not constitute an indebtedness of the County within the meaning of any constitutional or statutory limitation. REFERENCE IS HEREBY MADE TO THE ADDITIONAL PROVISIONS OF THIS BOND SET FORTH ON THE REVERSE SIDE HEREOF WHICH FOR ALL PURPOSES SHALL HAVE THE SAME EFFECT AS IF SET FORTH HEREIN. IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all acts, conditions and things required to exist, happen and be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law; that the indebtedness represented by the Bonds, together with all obligations of the County, does not exceed any constitutional or statutory limitation; and that the above referred to revenues pledged to the payment of the principal of and premium, if any, and interest on the Bonds as the same become due and payable will be sufficient in amount for that purpose. This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under theIndenture until the Certificate of Authentication hereon shall have been signed by the Trustee. IN WITNESS WHEREOF, _______ County, Arkansas, has caused this Bond to be executed by its County Judge and County Clerk, thereunto duly authorized (by their manual or facsimile signatures), and its corporate seal to be affixed or imprinted, all as of the date of this Bond shown above. _________ COUNTY, ARKANSAS By ____________________________ ATTEST: County Judge ______________________________ County Clerk (SEAL) (Form of Trustee's Certificate) TRUSTEE'S CERTIFICATE OF AUTHENTICATION This Bond is one of the Bonds of the issue described in and issued under the provisions of the within mentioned Indenture. _______________________________ _______________________________ TRUSTEE By_____________________________ Authorized Signature (Form of Assignment) ASSIGNMENT FOR VALUE RECEIVED, __________________________________ ("Transferor"), hereby sells, assigns and transfers unto _______________, the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints ________________ ("Transferee") as attorney to transfer the within Bond on the books kept for registration thereof with full power of substitution in the premises. DATE: __________________ _________________________________ Transferor GUARANTEED BY: ______________________ NOTICE: Signature(s) must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or a trust company. (Reverse Side of Series ____ Bond) ADDITIONAL PROVISIONS The Bonds are not general obligations of the County but are special obligations payable solely from revenues derived from the Facilities (including particularly payments under the Sale Agreement). The Sale Agreement provides for payments by the Company, for the purchase of the Facilities on an installment basis, in amounts sufficient to provide for the payment of the principal of and premium, if any, and interest on the Bonds as due and payable. Such payments will be made directly to the Trustee and deposited in a special account of the County designated "________ County, Arkansas Pollution Control Revenue Refunding Bond Fund - Arkansas Power & Light Company Project," and such payments have been duly assigned to the Trustee for that purpose. The obligation of the Company to make such payments is evidenced in part by the Company's first mortgage bonds issued and delivered to the Trustee an additional series under the Mortgage and Deed of Trust dated as of October 1, 1944, between the Company and Guaranty Trust Company of New York (now Morgan Guaranty Trust Company of New York) and Henry A. Theis (John W. Flaherty, successor), and, as to property, real and personal, situated or being in Missouri, Marvin A. Mueller (The Boatmen's National Bank of St. Louis, successor), as trustees, as amended and supplemented. All the rights and interest of the County in and to the Sale Agreement (except for certain rights specified in the Indenture) have been assigned under the Indenture to the Trustee to secure the payment of the principal of and premium, if any, and interest on the Bonds. The owner of this Bond shall have no right to enforce the provisions of the Indenture or to institute action to enforce the covenants therein, or to take any action with respect to any event of default under the Indenture, or to institute, appear in and defend any suit or other proceeding with respect thereto, except as provided in the Indenture. In certain events, on the conditions, in the manner and with the effect set forth in the Indenture, the principal of all the Bonds and Additional Bonds issued under the Indenture and then outstanding may be declared and may become due and payable before the stated maturity thereof, together with accrued interest thereon. Modifications or alterations of the Indenture, or of any indenture supplemental thereto, may be made only to the extent and in the circumstances permitted by the Indenture. The Bonds are subject to redemption prior to maturity as follows: (a) The Bonds shall be subject to optional redemption by the County, at the direction of the Company, in whole but not in part, at any time, at a redemption price equal to the principalamount being redeemed plus accrued interest to the redemption date, if: (i) the Company shall have determined that the continued operation of the Plant is impracticable, uneconomical or undesirable for any reason; (ii) the Company shall have determined that the continued construction or operation of the Facilities is impracticable, uneconomical or undesirable due to (A) the imposition of taxes, other than ad valorem taxes currently levied upon privately owned property used for the same general purpose as the Facilities, or other liabilities or burdens with respect to the Facilities or the construction or operation thereof, (B) changes in technology, in environmental standards or legal re-quirements or in the economic availability of materials, supplies, equipment or labor or (C) destruction of or damage to all or part of the Facilities; (iii) all or substantially all of the Facilities or the Plant shall have been condemned or taken by eminent domain; or (iv) the construction or operation of the Facilities or the Plant shall have been enjoined or shall have otherwise been prohibited by any order, decree, rule or regulation of any court or of any federal, state or local regulatory body, administrative agency or other governmental body. (b) The Bonds shall be subject to mandatory redemption, at a redemption price equal to the principal amount being redeemed plus accrued interest to the redemption date, on the one hundred eightieth day (or such earlier date as may be designated by the Company) after a final determination by a court of competent jurisdiction or an administrative agency, to the effect that as a result of a failure by the Company to perform or observe any covenant, agreement or representation contained in the Sale Agreement, the interest payable on the Bonds is included for federal income tax purposes in the gross income of the bondholders thereof, other than any bondholder who is a "substantial user" of the Facilities or a "related person" within the meaning of Section 147(a) of the Internal Revenue Code of 1986, as amended (the "Code"). No determination by any court or administrative agency will be considered final unless the Company has participated in the proceeding which resulted in such determination, either directly or through a bondholder, to a degree it reasonably deems sufficient and until the conclusion of any appellate review sought by any party to such proceeding or the expiration of the time for seeking such review. The Bonds shall be redeemed either in whole or in part in such principal amount that the interest payable on theBonds remaining outstanding after such redemption would not be included in the gross income of any bondholder thereof, other than a bondholder who is a "substantial user" of the Facilities or a "related person" within the meaning of Section 147(a) of the Code. (c) The Bonds shall be subject to optional redemption by the County, at the direction of the Company, on and after _______ 1, ____, in whole at any time or in part from time to time, by lot or in such other manner as may be determined by the Trustee to be fair and equitable, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued interest to the redemption date: Redemption Redemption Period Price _________, ____ through ___________, ____ ___% _________, ____ through ___________, ____ ___% _________, ____ through ___________, ____ ___% _________, ____ through ___________, ____ ___% _________, ____ and thereafter 100 The Bonds shall also be subject to optional redemption by the County, at the direction of the Company, in whole but not in part, at any time prior to _________, ____, at a redemption price equal to ___% of the principal amount being redeemed plus accrued interest to the redemption date, if the Company shall have consolidated with or merged with or into another corporation, or sold or otherwise transferred all or substantially all of its assets. In the event any of the Bonds or portions thereof (which shall be $_____ or any integral multiple thereof) are called for redemption, notice thereof shall be given by the Trustee by first class mail, postage prepaid, to the registered owner of each such Bond addressed to such registered owner at his registered address and placed in the mails not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption; provided, however, that failure to give such notice by mailing, or any defect therein, shall not affect the validity of any proceeding for the redemption of any Bond with respect to which no such failure or defect has occurred. Each notice shall identify the Bonds or portions thereof being called, and the date on which they shall be presented for payment. After the date specified in such call, the Bond or Bonds so called will cease to bear interest provided funds sufficient for their redemption have been deposited with the Trustee, and, except for the purpose of payment, shall no longer be protected by the Indenture and shall not be deemed to be outstanding under the provisions of the Indenture. With respect to notice of redemption of Bonds at the option of the County (at the direction of the Company), unless moneys sufficient to pay the principal of and premium, if any, andinterest on the Bonds to be redeemed shall have been received by the Trustee prior to the giving of such notice, such notice shall state that said redemption shall be conditional upon the receipt of such moneys by the Trustee on or prior to the date fixed for such redemption. If such moneys shall not have been so received, such notice shall be of no force and effect, the County shall not redeem such Bonds and the Trustee shall give notice, in the manner in which the notice of redemption was given, that such moneys were not so received. This Bond may be transferred on the books of registration kept by the Trustee by the registered owner or by his duly authorized attorney upon surrender hereof, together with a written instrument of transfer duly executed by the registered owner or his duly authorized attorney. The Bonds are issuable as registered Bonds without coupons in denominations of $_____ and any integral multiple thereof. Subject to the limitations and upon payment of the charges provided in the Indenture, Bonds may be exchanged for a like aggregate principal amount of Bonds of other authorized denominations. This Bond is issued with the intent that the laws of the State of Arkansas will govern its construction. EX-99 5 EXHIBIT D-1(A) Exhibit D-1(a) BEFORE THE ARKANSAS PUBLIC SERVICE COMMISSION IN THE MATTER OF APPLICATION OF ) ARKANSAS POWER & LIGHT COMPANY ) FOR AUTHORITY TO ENTER INTO ) TRANSACTIONS FOR THE ISSUANCE ) AND SALE OF TAX-EXEMPT BONDS AND COL- ) LATERAL FIRST MORTGAGE BONDS, TO ISSUE) AND SELL NOT MORE THAN 8,000,000 ) DOCKET NO. 94-126-U SHARES OF ITS COMMON STOCK, $0.01 ) PAR VALUE PER SHARE, FOR AN ) AGGREGATE MAXIMUM CONSIDERATION ) OF $100,000,000, AND TO ISSUE ) AND SELL NOT MORE THAN $100,000,000 ) AGGREGATE PAR VALUE OR LIQUIDATION ) VALUE OF ITS PREFERRED STOCK ) A P P L I C A T I O N Arkansas Power & Light Company, Little Rock, Arkansas ("Applicant"), respectfully states: 1. Applicant is a corporation organized under the laws of the State of Arkansas and a public utility as defined by Act 324 of the Acts of Arkansas of 1935, as amended ("Act 324"). Applicant's property consists of facilities for the generation, transmission, and distribution of electric power and energy to the public and of other property necessary to repair, maintain, and operate those facilities. These facilities are located principally in the State of Arkansas. Certain distribution and transmission facilities for wholesale customers are located in the State of Missouri and distribution lines are located in a small portion in the State of Tennessee for retail customers situated wholly on the west side of the main channel of the Mississippi River. 2. The Arkansas Public Service Commission ("APSC" or "Commission") has jurisdiction over this Application pursuant to Sections 58 and 59 of Act 324. Applicant is subject to the jurisdiction of the Securities and Exchange Commission ("SEC") under the Public Utility Holding Company Act of 1935, as amended, as an electric utility subsidiary of Entergy Corporation, a registered public utility holding company ("Entergy"). It is, therefore, necessary for Applicant to comply with the rules and regulations promulgated by the SEC under such Act and, in certain instances, to secure the approval of the SEC in connection with the transactions proposed herein. 3. Applicant proposes to enter into arrangements for the issuance and sale, by one or more governmental authorities (each an "Issuer"), of one or more series of tax-exempt bonds in an aggregate principal amount not to exceed $200 Million ("Tax-Exempt Bonds") at one time or from time to time through December 31, 1995. Applicant would enter into one or more installment sale agreements or loan agreements and/or one or more supplements or amendments thereto (collectively, the "Agreement") contemplating the issuance and sale by the Issuer(s) of one or more series of Tax-Exempt Bonds pursuant to one or more trust indentures and/or one or more supplements thereto (collectively, the "Indenture") between the Issuer and one or more trustees (collectively, the "Trustee"). The proceeds of the sale of Tax-Exempt Bonds, net of any underwriters' discounts or other expenses payable from proceeds, will be applied to acquire and construct certain pollution control or sewage and solid waste disposal facilities at Applicant's generating plants ("Facilities") or to refinance outstanding tax-exempt bonds issued for that purpose. 4. If the Agreement is an installment sale agreement, Applicant would sell Facilities to the Issuer for cash and simultaneously repurchase such Facilities from the Issuer for a purchase price payable on an installment basis over a period of years. If the Agreement is a loan agreement, the Issuer will loan the proceeds of the sale of Tax-Exempt Bonds to Applicant, and Applicant will agree to repay the loan on an installment payment basis over a period of years. Such installment payments or loan repayments will be in amounts sufficient (together with any other moneys held by the Trustee under the Indenture and available for such purpose) to pay the principal or purchase price of, the premium, if any, and the interest on the related series of Tax-Exempt Bonds as the same become due and payable, and will be made directly to the Trustee pursuant to an assignment and pledge thereof by the Issuer to the Trustee as set forth in the Indenture. Under the Agreement, Applicant also will be obligated to pay (i) the fees and charges of the Trustee and any registrar or paying agent under the Indenture, (ii) all expenses necessarily incurred by the Issuer in connection with its rights and obligations under the Agreement, (iii) all expenses necessarily incurred by the Issuer or the Trustee under the Indenture in connection with the transfer or exchange of Tax-Exempt Bonds, and (iv) all other payments which Applicant agrees to pay under the Agreement. 5. The Indenture may provide that, upon the occurrence of certain events relating to the operation of all or a portion of the Facilities financed, the Tax-Exempt Bonds will be redeemable by the Issuer, at the direction of Applicant. Any series of Tax-Exempt Bonds may be made subject to a mandatory cash sinking fund under which stated portions of the Tax- Exempt Bonds of such series are to be retired at stated times. The Tax- Exempt Bonds may be subject to mandatory redemption in other cases. The payments by Applicant under the Agreement in such circumstances shall be sufficient (together with any other moneys held by the Trustee under the Indenture and available therefor) to pay the principal of all the Tax- Exempt Bonds to be redeemed or retired and the premium, if any, thereon together with interest accrued or to accrue to the redemption date on such Tax-Exempt Bonds. 6. It is proposed that the Tax-Exempt Bonds mature not less than five years from the first day of the month of issuance nor later than 40 years from the date of issuance. Tax-Exempt Bonds will be subject to optional redemption, at the direction of Applicant, in whole or in part, at the redemption prices (expressed as percentages of principal amount) plus accrued interest to the redemption date, and at the times, set forth in the Indenture. 7. The Agreement and the Indenture may provide for a fixed interest rate or for an adjustable interest rate for each series of Tax-Exempt Bonds as hereinafter described. No series of Tax-Exempt Bonds will be sold if the fixed interest rate or initial adjustable rate thereon would exceed applicable interest rate maximums. If the series of Tax-Exempt Bonds has an adjustable interest rate, the interest rate during the first Rate Period (hereinafter referred to) would be determined in discussions between Applicant and the purchasers thereof from the Issuer and be based on the current tax-exempt market rate for comparable bonds having a maturity comparable to the length of the initial Rate Period. Thereafter, for each Rate Period, the interest rate on such Tax-Exempt Bonds would be that rate (subject to a specified maximum rate) which will be sufficient to remarket Tax-Exempt Bonds of such series at their principal amount. Such interest rates would be determined based on the market rates for bonds of comparable maturity and quality. The following subparagraphs (a) through (d) relate to Tax-Exempt Bonds having an adjustable interest rate: (a) The term "Rate Period," as used herein, means a period during which the interest rate on such Tax-Exempt Bonds bearing an adjustable rate (or method of determination of such interest rate) is fixed. The initial Rate Period would commence on the date as of which interest begins to accrue on such Tax-Exempt Bonds. The length of each Rate Period would be not less than one day nor more than five years. (b) The Agreement and Indenture would provide that holders of Tax-Exempt Bonds would have the right to tender or be required to tender their Tax-Exempt Bonds and have them purchased at a price equal to the principal amount thereof, plus any accrued and unpaid interest thereon, on dates specified in, or established in accordance with, the Indenture. A Tender Agent may be appointed to facilitate the tender of any Tax-Exempt Bonds by holders. Any holders of Tax-Exempt Bonds wishing to have their Tax-Exempt Bonds purchased may be required to deliver their Tax-Exempt Bonds during a specified period of time preceding such purchase date to the Tender Agent, if one shall be appointed, or to the Remarketing Agent appointed to offer such tendered Tax-Exempt Bonds for sale. (c) Under the Agreement, Applicant would be obligated to pay amounts equal to the amounts to be paid by the Remarketing Agent or the Tender Agent pursuant to the Indentures for the purchase of Tax- Exempt Bonds so tendered, such amounts to be paid by Applicant on the dates such payments by the Remarketing Agent or the Tender Agent are to be made; provided, however, that the obligation of Applicant to make any such payment under the Agreement would be reduced by the amount of any other moneys available therefor, including the proceeds of the sale of such tendered Tax-Exempt Bonds by the Remarketing Agent. (d) Upon the delivery of such Tax-Exempt Bonds by holders to the Remarketing Agent or the Tender Agent for purchase, the Remarketing Agent would use its best efforts to sell such Tax-Exempt Bonds at a price equal to the stated principal amount of such Tax-Exempt Bonds. 8. In order to obtain a more favorable rating on one or more series of the Tax-Exempt Bonds and, thereby, improve the marketability thereof, Applicant may arrange for an irrevocable letter of credit from a bank (the "Bank") in favor of the Trustee. In such event, payments with respect to principal, premium, if any, interest, and purchase obligations in connection with any such Tax-Exempt Bonds coming due during the term of such letter of credit would be secured by, and payable from funds drawn under, the letter of credit. In order to induce the Bank to issue such letter of credit, Applicant would enter into a Letter of Credit and Reimbursement Agreement ("Reimbursement Agreement") with the Bank pursuant to which Applicant would agree to reimburse the Bank for all amounts drawn under such letter of credit within a specified period after the date of the draw and with interest thereon. The terms of the Reimbursement Agreement would correspond to the terms of the Letter of Credit. 9. It is anticipated that the Reimbursement Agreement would require the payment by Applicant to the Bank of annual letter of credit fees and perhaps an up-front fee. Any such letter of credit may expire or be terminated prior to the maturity date of any such Tax-Exempt Bonds, and, in connection with such expiration or termination, such Tax-Exempt Bonds may be made subject to mandatory redemption or purchase on or prior to the date of expiration or termination of such letter of credit, possibly subject to the right of owners of such Tax-Exempt Bonds not to have their Tax-Exempt Bonds redeemed or purchased. Provision may be made for extension of the term of such letter of credit or for the replacement thereof, upon its expiration or termination, by another letter of credit from the Bank or a different bank. 10. In addition or as an alternative to the security provided by a letter of credit, in order to obtain a more favorable rating on one or more series of Tax-Exempt Bonds and consequently improve the marketability thereof, Applicant may determine (a) to provide an insurance policy for the payment of the principal of and/or interest and/or premium on such Tax- Exempt Bonds, and/or (b) to provide security for holders of such Tax-Exempt Bonds and/or the Bank equivalent to the security afforded to holders of first mortgage bonds outstanding under Applicant's Mortgage and Deed of Trust dated as of October 1, 1944, as supplemented ("Mortgage") by obtaining the authentication of and pledging one or more new series of Applicant's First Mortgage Bonds ("Collateral Bonds") under the Mortgage as it may be supplemented. Collateral Bonds would be issued on the basis of unfunded net property additions and/or previously-retired First Mortgage Bonds and delivered to the Trustee under the Indenture and/or the Bank to evidence and secure Applicant's obligation to pay the purchase price of the related Facilities or repay the loan made by the Issuer under the Agreement and Applicant's obligation to reimburse the Bank under the Reimbursement Agreement. Collateral Bonds could be issued in several ways. First, if the Tax-Exempt Bonds bear a fixed interest rate, Collateral Bonds could be issued in a principal amount equal to the principal amount of such Tax- Exempt Bonds and bear interest at a rate equal to the rate of interest on such Tax-Exempt Bonds. Secondly, they could be issued in a principal amount equivalent to the principal amount of such Tax-Exempt Bonds plus an amount equal to interest thereon for a specified period. In such a case, such Collateral Bonds would bear no interest. Thirdly, Collateral Bonds could be issued in a principal amount equivalent to the principal amount of such Tax-Exempt Bonds or in such amount plus an amount equal to interest thereon for a specified period, but carry a fixed interest rate that would be lower than the fixed rate of such Tax-Exempt Bonds. Fourthly, Collateral Bonds could be issued in a principal amount equivalent to the principal amount of such Tax-Exempt Bonds at an adjustable rate of interest, varying with such Tax-Exempt Bonds but having a "cap" above which the interest on Collateral Bonds could not rise. The terms of any Collateral Bonds relating to maturity, interest payment dates, if any, redemption provisions, and acceleration will correspond to the terms of the related Tax-Exempt Bonds. Upon issuance, the terms of any Collateral Bonds will not vary during the life of such series except for the interest rate in the event such Collateral Bonds bear interest at an adjustable rate. The maximum aggregate principal amount of Collateral Bonds would be $226 million. 11. It is contemplated that the Tax-Exempt Bonds will be sold by the Issuer pursuant to arrangements with an underwriter or a group of underwriters or by private placement in a negotiated sale or sales. Applicant will not be party to the underwriting or placement arrangements; however, the Agreement will provide that the terms of the Tax-Exempt Bonds, and their sale by the Issuer, shall be satisfactory to Applicant. Applicant understands that interest payable on the Tax-Exempt Bonds will not be included in the gross income of the holders thereof for Federal income tax purposes under the provisions of Section 103 of the Internal Revenue Code of 1986, as amended to the date of issuance of Tax-Exempt Bonds (except for interest on any Tax-Exempt Bond during a period in which it is held by a person who is a "substantial user" of the Facilities or a "related person" within the meaning of Section 147(a) of such Code). 12. Also pursuant to Section 59 of Act 324, Applicant hereby further applies to the Commission for an order authorizing it to issue and sell to Entergy, an aggregate amount of its common stock, $0.01 par value per share ("Common Stock") not exceeding 8,000,000 shares, at a minimum price of $12.50 per share, in one or more separate transactions occurring at such times as Applicant deems appropriate, but not later than December 31, 1995, for an aggregate maximum consideration of $100 million. Applicant will enter into such agreements with Entergy for the sale and purchase of the Common Stock to occur in such installments and at such times before December 31, 1995, as Applicant and Entergy shall determine. 13. The Common Stock will be issued in accordance with Applicant's Articles which currently authorize the issuance of 325,000,000 shares of its Common Stock of which 46,980,196 shares are issued and outstanding as of December 31, 1993. 14. Also pursuant to Section 59 of Act 324, Applicant hereby applies to the Commission for an order authorizing it to create and to issue and sell, from time to time not later than December 31, 1995, one or more series of its $100 Par Value, $25 Par Value or Class A Preferred Stock, cumulative, or any combination thereof (the "Preferred Stock"), each of such series consisting of such number of shares of the Preferred Stock as Applicant shall elect, but the total number of such shares of such Preferred Stock shall not exceed the number of shares authorized by Applicant's Articles, and such shares shall not have an aggregate par value or involuntary liquidation value, as the case may be, in excess of $100 Million. Each new series of the Preferred Stock shall have the same rank and relative rights as, and shall otherwise be identical to, each series of the Applicant's preferred stock presently issued and outstanding, except with respect to par value and/or involuntary liquidation value and except that the resolutions authorizing the creation of each such new series of the Preferred Stock may provide for different dividend rates, dates from which dividends shall commence to accumulate, redemption rates, and redemption restrictions, if any. 15. Applicant presently intends to solicit competitive proposals as to the dividend rate, the compensation to be paid to underwriters, if any, and the price to be paid to Applicant for the purchase of each series of the Preferred Stock under rules promulgated by the SEC. However, Applicant intends to offer the Preferred Stock from time to time over a period of years and Applicant cannot predict whether competitive bidding would produce the most advantageous terms for each issuance and sale. In the event that changes in Applicant's financial condition or regulatory situation, or changes in the market for the Preferred Stock, make it advisable, in order to achieve the best possible terms, to offer one or more series of the Preferred Stock by means of a negotiated public offering or private placement, Applicant wishes to have the flexibility to forego the solicitation of competitive proposals. Because the market for the Preferred Stock is constantly fluctuating, Applicant cannot forecast the precise dividend rate for any series of the Preferred Stock at this time. 16. The Preferred Stock will be issued in accordance with Applicant's Articles which currently authorize the issuance of 3,730,000 shares of its $100 Par Value Preferred Stock, 9,000,000 shares of its $25 Par Value Preferred Stock, and 15,000,000 shares of its Class A Preferred Stock, of which 1,433,500 shares, 1,521,085 shares, and 2,600,000 shares, respectively, are issued and outstanding as of December 31, 1993. 17. The issuance and sale of the Preferred Stock and the Common Stock have been approved by Applicant's Board of Directors at the meeting of the Board of Directors held on July 30, 1993. Minute excerpts setting forth the resolutions approving the issuance and sale of the Preferred Stock and the Common Stock are attached hereto as AP&L Exhibit A. 18. The net proceeds which Applicant will receive from the issuance and sale of the Preferred Stock and the Common Stock will be used to pay all or a portion of Applicant's short-term indebtedness outstanding from time to time, to provide funds for the retirement of a portion of Applicant's outstanding securities at or prior to maturity, and for other corporate purposes. 19. Applicant estimates its aggregate expenses in connection with the issuance and sale of the initial series and any subsequent series of the Tax-Exempt Bonds, the Preferred Stock, and the Common Stock will be as reflected in AP&L Exhibit B attached hereto. 20. Applicant states that after the issuance of the Tax-Exempt Bonds, the Preferred Stock, and the Common Stock, the aggregate amount of all of its outstanding stock, bonds, notes, and other evidences of indebtedness will not exceed the fair value of Applicant's properties and the reasonable cost of the issuance and sale of the Tax-Exempt Bonds, the Preferred Stock, and the Common Stock. 21. Attached hereto is AP&L Exhibit C, consisting of four parts: (1) Balance Sheet per books as of December 31, 1993, and Pro Forma after giving effect to the proposed transactions. (2) Earnings Statement for the 12 months ended December 31, 1993, per books and Pro Forma after giving effect to the proposed transactions. (3) Analysis of Capital Structure as to plant reserve, debt ratios, and earnings ratios, per books as of December 31, 1993, and Pro Forma after giving effect to the proposed transactions. (4) Proposed book entries giving effect to the proposed transactions. 22. Due to the volatile nature of the national financial markets, it is essential that Applicant be able to proceed with the proposed transactions to permit the issuance by the Issuer of the Tax- Exempt Bonds quickly when appropriate market conditions exist. Therefore, it is necessary that the Commission consider and act on this Application expeditiously, before May 20, 1994. 23. Pursuant to Rule 2.03 of the Commission's Rules of Practice and Procedure, Applicant requests the following individuals be shown on the Official Service List: James P. Herden Arkansas Power & Light Company 425 West Capitol Avenue P.O. Box 551 Little Rock, Arkansas 72203 Telephone: 377-4475 Paul B. Benham III Allison Graves Bazzel Friday, Eldredge & Clark 2000 First Commercial Building 400 West Capitol Avenue Little Rock, Arkansas 72201-3493 Telephone: 376-2011 WHEREFORE, Applicant, Arkansas Power & Light Company, respectfully requests that the Commission enter its order on or before May 20, 1994, authorizing it (a) to issue and sell in one or more series, from time to time not later than December 31, 1995, as requested herein, (i) the Tax- Exempt Bonds in an aggregate principal amount not to exceed $200 million and, in connection therewith, to enter into the Agreement related thereto as contemplated hereby, (ii) the Preferred Stock, in an aggregate par value or involuntary liquidation value, as the case may be, not to exceed $100 million, and (iii) the Common Stock, not to exceed 8,000,000 shares, at a minimum price of $12.50 per share, for an aggregate maximum consideration of $100 Million; (b) to apply the proceeds from the sale of the Tax-Exempt Bonds, the Preferred Stock, and the Common Stock for the purposes set forth herein; (c) to take all other action and to enter into all other agreements necessary therefor, including the issuance of one or more new series of Collateral Bonds as described herein [Such authorization for Collateral Bonds is separate and apart from the authorization granted by this Commission by Orders 2 and 3 of Docket No. 93-217-U.]; and (d) to be granted all other proper relief. DATED this 26th day of April, 1994. ARKANSAS POWER & LIGHT COMPANY By: FRIDAY, ELDREDGE & CLARK 2000 First Commercial Building 400 West Capitol Little Rock, Arkansas 72201-3493 Attorneys for Applicant By: /s/ Paul B. Benham, III PAUL B. BENHAM III, #71007 VERIFICATION STATE OF ARKANSAS ) ) ss. COUNTY OF PULASKI ) I, Paul B. Benham III, one of the attorneys for the Applicant, on oath state that I have read the foregoing Application and that the statements set forth therein are true and correct to the best of my knowledge and belief. /s/ Paul B. Benham, III Paul B. Benham III SUBSCRIBED AND SWORN to before me, a Notary Public, on this 26th day of April, 1994. /s/ Brenda Bennett Notary Public My Commission Expires: 9/1/2001 EX-99 6 EXHIBIT D-1(B) Exhibit D-1(b) ARKANSAS PUBLIC SERVICE COMMISSION IN THE MATTER OF APPLICATION OF ) ARKANSAS POWER & LIGHT COMPANY ) FOR AUTHORITY TO ENTER INTO ) TRANSACTIONS FOR THE ISSUANCE ) AND SALE OF TAX-EXEMPT BONDS AND COL- ) LATERAL FIRST MORTGAGE BONDS, TO ISSUE ) AND SELL NOT MORE THAN 8,000,000 ) DOCKET NO. 94-126-U SHARES OF ITS COMMON STOCK, $0.01 ) ORDER NO. 2 PAR VALUE PER SHARE, FOR AN ) AGGREGATE MAXIMUM CONSIDERATION ) OF $100,000,000, AND TO ISSUE ) AND SELL NOT MORE THAN $100,000,000 ) AGGREGATE PAR VALUE OR LIQUIDATION ) VALUE OF ITS PREFERRED STOCK ) O R D E R On April 27, 1994, Arkansas Power & Light Company (AP&L) filed an application in this Docket requesting an order from the Arkansas Public Service Commission (Commission) authorizing (1) the entrance by AP&L into arrangements for the issuance and sale by one or more governmental authorities in one or more series from time to time not later than December 31, 1995, of up to $200,000,000 in tax-exempt solid waste disposal bonds; (2) the issuance and sale of not more than $100,000,000 aggregate par value or liquidation value of its preferred stock; and (3) the issuance and sale of not more than 8,000,000 shares of its common stock, $0.01 par value per share, for an aggregate maximum consideration not to exceed $100,000,000. AP&L states that it is a corporation organized and existing under the laws of the State of Arkansas and a public utility within the meaning of Act 324 of the Acts of Arkansas of 1935, as amended, ("Act 324") in that its properties consist of facilities for the generation, transmission, and distribution of electric power and energy for the furnishing of electricity to the public. The Commission has jurisdiction over this Application pursuant to Sections 58 and 59 of Act 324, codified as Ark. Code Ann. 23-3- 103 and 23-3-104. AP&L states that it intends to use the net proceeds from the proposed issuance and sale of the tax-exempt bonds to acquire and construct certain pollution control or sewage and solid waste disposal facilities at AP&L's generating plants or to refinance outstanding tax-exempt bonds issued for that purpose. The proceeds from the sale of the preferred stock and the common stock will be used to pay all or a portion of short-term indebtedness outstanding from time to time, to provide funds for the retirement of a portion of its outstanding securities at or prior to maturity, and for other corporate purposes. AP&L proposes to enter into arrangements for the issuance and sale by one or more governmental authorities of tax-exempt bonds in one or more series from time to time through December 31, 1995. AP&L would enter into one or more installment sale agreements or loan agreements with the governmental authorities contemplating the issuance and sale by the governmental authority(ies) of one or more series of tax-exempt bonds pursuant to one or more trust indentures between it and one or more trustees. AP&L is also seeking authority to issue and sell not more than $100,000,000 aggregate par value or liquidation value of either its $100 par value, $25 par value, or Class A $0.01 par value cumulative preferred stock. The Company has requested authority to issue the preferred stock in one or more series, from time to time, and not later than December 31, 1995. AP&L states that it intends to solicit competitive bids as to the dividend rate, the compensation paid to underwriters, if any, and the price to be paid to AP&L for the purchase of each series of preferred stock. AP&L states, however, that it cannot predict whether competitive bidding would produce the most advantageous terms for each issuance and sale. Therefore, in order to achieve the best possible terms, AP&L is seeking flexibility to forego the solicitation of competitive proposals in the event that circumstances occur which would make it more beneficial to offer a series by means of a negotiated public offering or private placement. Finally, AP&L, a wholly owned subsidiary, is seeking authorization to sell to its parent, Entergy Corporation, an aggregate amount of its common stock not exceeding 8,000,000 shares, at a minimum price of $12.50 per share for total proceeds not in excess of $100,000,000. AP&L will enter into an agreement with Entergy for the sale and purchase of the shares to occur in such installments and at such times before December 31, 1995. On May 13, 1994, the Staff of the Arkansas Public Service Commission (Staff) filed the prepared testimony of Donna Gray, Director, Financial Analysis. Staff Witness Gray stated that she evaluated AP&L's capital structure after giving effect to the proposed transactions. She noted that Exhibit C of the Company's Application, on page 8, quantified the external sources of capital as of December 31, 1993, and the pro forma capital structure that would result from the proposed transactions. With the proposed issuance, AP&L's capital proportions, considering only external sources of capital, would be 47% long-term debt, 12% preferred stock, and 40% common equity. Staff Witness Gray further stated that AP&L's pro forma capital structure is generally consistent with bond rating agency industry-specific financial benchmarks. She further stated that, on the basis of her analysis, AP&L's proposal appeared reasonable, when considering the relative mix of capital components, and that she found no reason that the Application should not be approved. Staff Witness Gray noted that her testimony did not constitute a recommendation of value for ratemaking purposes, and she recommended that AP&L be required to report to the Commission, within 30 days after the completion of each transaction, the terms of the issuance, including all fees, premiums, or discounts, and all other relevant facts, along with detailed accounting entries to record the transactions. She further recommended that such report should include (i) the information of each class and series issued or retired/refinanced by AP&L and (ii) detailed calculations comparing the effective cost of any issuance(s) retired to the effective cost of any new issuance(s), and that the report should be filed in Docket No. 86-033-A referencing the docket number in this case. Based upon the Staff's analysis and investigation of the proposed transaction, Ms. Gray recommended that the Commission approve the transactions. Findings/Conclusions of Law The Administrative Law Judge, being well and sufficiently advised as to all matters of facts and law, finds as follows: 1. That the Commission has jurisdiction over AP&L's application for an order authorizing and approving (1) the entrance by AP&L into arrangements for the issuance and sale by one or more governmental authorities in one or more series from time to time not later than December 31, 1995, of up to $200,000,000 in tax-exempt solid waste disposal bonds; (2) the issuance and sale of not more than $100,000,000 aggregate par value or liquidation value of its preferred stock; and (3) the issuance and sale of not more than 8,000,000 shares of its common stock, $0.01 par value per share, for an aggregate maximum consideration not to exceed $100,000,000. 2. It is in the public interest for the Commission to approve AP&L's Application, and it is, therefore, hereby approved. 3. Nothing that is cited or stated in this order shall be construed as a finding of value for ratemaking purposes nor is it a determination of legitimate expenses for ratemaking purposes. The Commission expressly reserves judgment on those issues. 4. AP&L is hereby ordered to comply with Staff's recommended reporting requirements as set out in Staff Witness Gray's testimony on page 10. BY ORDER OF THE ADMINISTRATIVE LAW JUDGE PURSUANT TO DELEGATION. This 18th day of May, 1994. /s/ Burl C. Rotenberry Burl C. Rotenberry Administrative Law Judge /s/ Glenna Hooks (acting) Jan Sanders Secretary of the Commission CERTIFICATE This is to certify that the foregoing is a true, correct, and compared copy of Order No. 2 issued by the Arkansas Public Service Commission as of the 18th day of May, 1994, in Docket No. 94-126-U. WITNESS my hand as Secretary under the official seal of the Arkansas Public Service Commission, this 18th day of May, 1994. /s/ Jan Sanders Secretary of the Commission EX-99 7 EXHIBIT D-2(A) Exhibit D-2(a) BEFORE THE TENNESSEE PUBLIC SERVICE COMMISSION IN THE MATTER OF APPLICATION OF ) ARKANSAS POWER & LIGHT COMPANY ) FOR AUTHORITY TO ENTER INTO ) TRANSACTIONS FOR THE ISSUANCE ) AND SALE OF TAX-EXEMPT BONDS AND COL- ) LATERAL FIRST MORTGAGE BONDS, TO ISSUE ) AND SELL NOT MORE THAN 8,000,000 ) DOCKET NO. 94-01045-U SHARES OF ITS COMMON STOCK, $0.01 ) PAR VALUE PER SHARE, FOR AN ) AGGREGATE MAXIMUM CONSIDERATION ) OF $100,000,000, AND TO ISSUE ) AND SELL NOT MORE THAN $100,000,000 ) AGGREGATE PAR VALUE OR LIQUIDATION ) VALUE OF ITS PREFERRED STOCK ) A P P L I C A T I O N Arkansas Power & Light Company, Little Rock, Arkansas ("Applicant"), respectfully states: 1. Applicant is a corporation organized under the laws of the State of Arkansas and a public utility as defined by Act 324 of the Acts of Arkansas of 1935, as amended. Applicant's property consists of facilities for the generation, transmission, and distribution of electric power and energy to the public and of other property necessary to repair, maintain, and operate those facilities. These facilities are located principally in the State of Arkansas. Certain distribution and transmission facilities for wholesale customers are located in the State of Missouri and distribution lines are located in a small portion in the State of Tennessee for retail customers situated wholly on the west side of the main channel of the Mississippi River. 2. Applicant is a public utility under Arkansas law, and as such is subject to the jurisdiction of the Arkansas Public Service Commission ("APSC"). Applicant has applied to the APSC for approval of and authorization for issuance and sale of the securities hereinafter described. A copy of the Application to the APSC is attached hereto as AP&L Exhibit 1. Applicant is also subject to the jurisdiction of the Securities and Exchange Commission ("SEC") under the Public Utility Holding Company Act of 1935, as amended (the "1935 Act"), as an electric utility subsidiary of Entergy Corporation, a registered holding company ("Entergy"). It is, therefore, necessary for Applicant to comply with the rules and regulations promulgated by the SEC under the 1935 Act and, in certain instances, to secure the approval of the SEC in connection with the transactions proposed herein. 3. Applicant proposes to enter into arrangements for the issuance and sale, by one or more governmental authorities (each an "Issuer"), of one or more series of tax-exempt bonds in an aggregate principal amount not to exceed $200 million ("Tax- Exempt Bonds") at one time or from time to time through December 31, 1995. Applicant would enter into one or more installment sale agreements or loan agreements and/or one or more supplements or amendments thereto (collectively, the "Agreement") contemplating the issuance and sale by the Issuer(s) of one or more series of Tax-Exempt Bonds pursuant to one or more trust indentures and/or one or more supplements thereto (collectively, the "Indenture") between the Issuer and one or more trustees (collectively, the "Trustee"). The proceeds of the sale of Tax-Exempt Bonds, net of any underwriters' discounts or other expenses payable from proceeds, will be applied to acquire and construct certain pollution control or sewage and solid waste disposal facilities at Applicant's generating plants ("Facilities") or to refinance outstanding tax-exempt bonds issued for that purpose. 4. If the Agreement is an installment sale agreement, Applicant would sell Facilities to the Issuer for cash and simultaneously repurchase such Facilities from the Issuer for a purchase price payable on an installment basis over a period of years. If the Agreement is a loan agreement, the Issuer will loan the proceeds of the sale of Tax-Exempt Bonds to Applicant, and Applicant will agree to repay the loan on an installment payment basis over a period of years. Such installment payments or loan repayments will be in amounts sufficient (together with any other moneys held by the Trustee under the Indenture and available for such purpose) to pay the principal or purchase price of, the premium, if any, and the interest on the related series of Tax-Exempt Bonds as the same become due and payable, and will be made directly to the Trustee pursuant to an assignment and pledge thereof by the Issuer to the Trustee as set forth in the Indenture. Under the Agreement, Applicant will also be obligated to pay (i) the fees and charges of the Trustee and any registrar or paying agent under the Indenture, (ii) all expenses necessarily incurred by the Issuer in connection with its rights and obligations under the Agreement, (iii) all expenses necessarily incurred by the Issuer or the Trustee under the Indenture in connection with the transfer or exchange of Tax- Exempt Bonds, and (iv) all other payments which Applicant agrees to pay under the Agreement. 5. The Indenture may provide that, upon the occurrence of certain events relating to the operation of all or a portion of the Facilities financed, the Tax-Exempt Bonds will be redeemable by the Issuer, at the direction of Applicant. Any series of Tax- Exempt Bonds may be made subject to a mandatory cash sinking fund under which stated portions of the Tax-Exempt Bonds of such series are to be retired at stated times. The Tax-Exempt Bonds may be subject to mandatory redemption in other cases. The payments by Applicant under the Agreement in such circumstances shall be sufficient (together with any other moneys held by the Trustee under the Indenture and available therefor) to pay the principal of all the Tax-Exempt Bonds to be redeemed or retired and the premium, if any, thereon together with interest accrued or to accrue to the redemption date on such Tax-Exempt Bonds. 6. It is proposed that the Tax-Exempt Bonds mature not less than five years from the first day of the month of issuance nor later than 40 years from the date of issuance. Tax-Exempt Bonds will be subject to optional redemption, at the direction of Applicant, in whole or in part, at the redemption prices (expressed as percentages of principal amount) plus accrued interest to the redemption date, and at the times, set forth in the Indenture. 7. The Agreement and the Indenture may provide for a fixed interest rate or for an adjustable interest rate for each series of Tax-Exempt Bonds as hereinafter described. No series of Tax- Exempt Bonds will be sold if the fixed interest rate or initial adjustable rate thereon would exceed applicable interest rate maximums. If the series of Tax-Exempt Bonds has an adjustable interest rate, the interest rate during the first Rate Period (hereinafter referred to) would be determined in discussions between Applicant and the purchasers thereof from the Issuer and be based on the current tax-exempt market rate for comparable bonds having a maturity comparable to the length of the initial Rate Period. Thereafter, for each Rate Period, the interest rate on such Tax-Exempt Bonds would be that rate (subject to a specified maximum rate) which will be sufficient to remarket Tax- Exempt Bonds of such series at their principal amount. Such interest rates would be determined based on the market rates for bonds of comparable maturity and quality. The following subparagraphs (a) through (d) relate to Tax-Exempt Bonds having an adjustable interest rate: (a) The term "Rate Period," as used herein, means a period during which the interest rate on such Tax-Exempt Bonds bearing an adjustable rate (or method of determination of such interest rate) is fixed. The initial Rate Period would commence on the date as of which interest begins to accrue on such Tax-Exempt Bonds. The length of each Rate Period would be not less than one day nor more than five years. (b) The Agreement and Indenture would provide that holders of Tax-Exempt Bonds would have the right to tender or be required to tender their Tax-Exempt Bonds and have them purchased at a price equal to the principal amount thereof, plus any accrued and unpaid interest thereon, on dates specified in, or established in accordance with, the Indenture. A Tender Agent may be appointed to facilitate the tender of any Tax-Exempt Bonds by holders. Any holders of Tax-Exempt Bonds wishing to have their Tax-Exempt Bonds purchased may be required to deliver their Tax-Exempt Bonds during a specified period of time preceding such purchase date to the Tender Agent, if one shall be appointed, or to the Remarketing Agent appointed to offer such tendered Tax- Exempt Bonds for sale. (c) Under the Agreement, Applicant would be obligated to pay amounts equal to the amounts to be paid by the Remarketing Agent or the Tender Agent pursuant to the Indentures for the purchase of Tax-Exempt Bonds so tendered, such amounts to be paid by Applicant on the dates such payments by the Remarketing Agent or the Tender Agent are to be made; provided, however, that the obligation of Applicant to make any such payment under the Agreement would be reduced by the amount of any other moneys available therefor, including the proceeds of the sale of such tendered Tax-Exempt Bonds by the Remarketing Agent. (d) Upon the delivery of such Tax-Exempt Bonds by holders to the Remarketing Agent or the Tender Agent for purchase, the Remarketing Agent would use its best efforts to sell such Tax-Exempt Bonds at a price equal to the stated principal amount of such Tax-Exempt Bonds. 8. In order to obtain a more favorable rating on one or more series of the Tax-Exempt Bonds and, thereby, improve the marketability thereof, Applicant may arrange for an irrevocable letter of credit from a bank (the "Bank") in favor of the Trustee. In such event, payments with respect to principal, premium, if any, interest, and purchase obligations in connection with any such Tax-Exempt Bonds coming due during the term of such letter of credit would be secured by, and payable from funds drawn under, the letter of credit. In order to induce the Bank to issue such letter of credit, Applicant would enter into a Letter of Credit and Reimbursement Agreement ("Reimbursement Agreement") with the Bank pursuant to which Applicant would agree to reimburse the Bank for all amounts drawn under such letter of credit within a specified period after the date of the draw and with interest thereon. The terms of the Reimbursement Agreement would correspond to the terms of the Letter of Credit. 9. It is anticipated that the Reimbursement Agreement would require the payment by Applicant to the Bank of annual letter of credit fees and perhaps an up-front fee. Any such letter of credit may expire or be terminated prior to the maturity date of any such Tax-Exempt Bonds, and, in connection with such expiration or termination, such Tax-Exempt Bonds may be made subject to mandatory redemption or purchase on or prior to the date of expiration or termination of such letter of credit, possibly subject to the right of owners of such Tax-Exempt Bonds not to have their Tax-Exempt Bonds redeemed or purchased. Provision may be made for extension of the term of such letter of credit or for the replacement thereof, upon its expiration or termination, by another letter of credit from the Bank or a different bank. 10. In addition or as an alternative to the security provided by a letter of credit, in order to obtain a more favorable rating on one or more series of Tax-Exempt Bonds and consequently improve the marketability thereof, Applicant may determine (a) to provide an insurance policy for the payment of the principal of and/or interest and/or premium on such Tax- Exempt Bonds, and/or (b) to provide security for holders of such Tax-Exempt Bonds and/or the Bank equivalent to the security afforded to holders of first mortgage bonds outstanding under Applicant's Mortgage and Deed of Trust dated as of October 1, 1944, as supplemented ("Mortgage") by obtaining the authentication of and pledging one or more new series of Applicant's First Mortgage Bonds ("Collateral Bonds") under the Mortgage as it may be supplemented. Collateral Bonds would be issued on the basis of unfunded net property additions and/or previously-retired First Mortgage Bonds and delivered to the Trustee under the Indenture and/or the Bank to evidence and secure Applicant's obligation to pay the purchase price of the related Facilities or repay the loan made by the Issuer under the Agreement and Applicant's obligation to reimburse the Bank under the Reimbursement Agreement. Collateral Bonds could be issued in several ways. First, if the Tax-Exempt Bonds bear a fixed interest rate, Collateral Bonds could be issued in a principal amount equal to the principal amount of such Tax-Exempt Bonds and bear interest at a rate equal to the rate of interest on such Tax- Exempt Bonds. Secondly, they could be issued in a principal amount equivalent to the principal amount of such Tax-Exempt Bonds plus an amount equal to interest thereon for a specified period. In such a case, such Collateral Bonds would bear no interest. Thirdly, Collateral Bonds could be issued in a principal amount equivalent to the principal amount of such Tax- Exempt Bonds or in such amount plus an amount equal to interest thereon for a specified period, but carry a fixed interest rate that would be lower than the fixed rate of such Tax-Exempt Bonds. Fourthly, Collateral Bonds could be issued in a principal amount equivalent to the principal amount of such Tax-Exempt Bonds at an adjustable rate of interest, varying with such Tax-Exempt Bonds but having a "cap" above which the interest on Collateral Bonds could not rise. The terms of any Collateral Bonds relating to maturity, interest payment dates, if any, redemption provisions, and acceleration will correspond to the terms of the related Tax- Exempt Bonds. Upon issuance, the terms of any Collateral Bonds will not vary during the life of such series except for the interest rate in the event such Collateral Bonds bear interest at an adjustable rate. The maximum aggregate principal amount of Collateral Bonds would be $226 million. 11. It is contemplated that the Tax-Exempt Bonds will be sold by the Issuer pursuant to arrangements with an underwriter or a group of underwriters or by private placement in a negotiated sale or sales. Applicant will not be party to the underwriting or placement arrangements; however, the Agreement will provide that the terms of the Tax-Exempt Bonds, and their sale by the Issuer, shall be satisfactory to Applicant. Applicant understands that interest payable on the Tax-Exempt Bonds will not be included in the gross income of the holders thereof for Federal income tax purposes under the provisions of Section 103 of the Internal Revenue Code of 1986, as amended to the date of issuance of Tax-Exempt Bonds (except for interest on any Tax-Exempt Bond during a period in which it is held by a person who is a "substantial user" of the Facilities or a "related person" within the meaning of Section 147(a) of such Code). 12. Applicant hereby further applies to the Commission for an order authorizing it to issue and sell to Entergy an aggregate amount of its common stock, $0.01 par value per share ("Common Stock"), not exceeding 8,000,000 shares, at a minimum price of $12.50 per share, in one or more separate transactions occurring at such times as Applicant deems appropriate, but not later than December 31, 1995, for an aggregate maximum consideration of $100 million. Applicant will enter into such agreements with Entergy for the sale and purchase of the Common Stock to occur in such installments and at such times before December 31, 1995, as Applicant and Entergy shall determine. 13. The Common Stock will be issued in accordance with Applicant's Articles which currently authorize the issuance of 325,000,000 shares of its Common Stock of which 46,980,196 shares are issued and outstanding as of December 31, 1993. 14. Applicant hereby applies to the Commission for an order authorizing it to create and to issue and sell, from time to time not later than December 31, 1995, one or more series of its $100 Par Value, $25 Par Value or Class A Preferred Stock, cumulative, or any combination thereof (the "Preferred Stock"), each of such series consisting of such number of shares of the Preferred Stock as Applicant shall elect, but the total number of such shares of such Preferred Stock shall not exceed the number of shares authorized by Applicant's Articles, and such shares shall not have an aggregate par value or involuntary liquidation value, as the case may be, in excess of $100 million. Each new series of the Preferred Stock shall have the same rank and relative rights as, and shall otherwise be identical to, each series of the Applicant's preferred stock presently issued and outstanding, except with respect to par value and/or involuntary liquidation value and except that the resolutions authorizing the creation of each such new series of the Preferred Stock may provide for different dividend rates, dates from which dividends shall commence to accumulate, redemption rates, and redemption restrictions, if any. 15. Applicant presently intends to solicit competitive proposals as to the dividend rate, the compensation to be paid to underwriters, if any, and the price to be paid to Applicant for the purchase of each series of the Preferred Stock under rules promulgated by the SEC. However, Applicant intends to offer the Preferred Stock from time to time over a period of years and Applicant cannot predict whether competitive bidding would produce the most advantageous terms for each issuance and sale. In the event that changes in Applicant's financial condition or regulatory situation, or changes in the market for the Preferred Stock, make it advisable, in order to achieve the best possible terms, to offer one or more series of the Preferred Stock by means of a negotiated public offering or private placement, Applicant wishes to have the flexibility to forego the solicitation of competitive proposals. Because the market for the Preferred Stock is constantly fluctuating, Applicant cannot forecast the precise dividend rate for any series of the Preferred Stock at this time. 16. The Preferred Stock will be issued in accordance with Applicant's Articles which currently authorize the issuance of 3,730,000 shares of its $100 Par Value Preferred Stock, 9,000,000 shares of its $25 Par Value Preferred Stock, and 15,000,000 shares of its Class A Preferred Stock, of which 1,433,500 shares, 1,521,085 shares, and 2,600,000 shares, respectively, are issued and outstanding as of December 31, 1993. 17. The issuance and sale of the Preferred Stock and the Common Stock have been approved by Applicant's Board of Directors at the Meeting of the Board of Directors held on July 30, 1993. Minute excerpts setting forth the resolutions approving the issuance and sale of the Preferred Stock and the Common Stock are attached hereto as AP&L Exhibit A to AP&L Exhibit 1. 18. The net proceeds which Applicant will receive from the issuance and sale of the Preferred Stock and the Common Stock will be used to pay all or a portion of Applicant's short-term indebtedness outstanding from time to time, to provide funds for the retirement of a portion of Applicant's outstanding securities at or prior to maturity, and for other corporate purposes. 19. Applicant estimates its aggregate expenses in connection with the issuance and sale of the initial series and any subsequent series of the Tax-Exempt Bonds, the Preferred Stock, and the Common Stock will be as reflected in AP&L Exhibit B to AP&L Exhibit 1 attached hereto. 20. Applicant states that after the issuance of the Tax- Exempt Bonds, the Preferred Stock, and the Common Stock, the aggregate amount of all of its outstanding stock, bonds, notes, and other evidences of indebtedness will not exceed the fair value of Applicant's properties and the reasonable cost of the issuance and sale of the Tax-Exempt Bonds, the Preferred Stock, and the Common Stock. 21. Attached hereto is Exhibit C to Exhibit 1, consisting of four parts: (1) Balance Sheet per books as of December 31, 1993, and Pro Forma after giving effect to the proposed transactions. (2) Earnings Statement for the 12 months ended December 31, 1993, per books and Pro Forma after giving effect to the proposed transactions. (3) Analysis of Capital Structure as to plant reserve, debt ratios, and earnings ratios, per books as of December 31, 1993, and Pro Forma after giving effect to the proposed transactions. (4) Proposed book entries giving effect to the proposed transactions. 22. Due to the volatile nature of the national financial markets, it is essential that Applicant be able to proceed with the proposed transactions to permit the issuance by the Issuer of the Tax-Exempt Bonds quickly when appropriate market conditions exist. Therefore, it is necessary that the Commission consider and act on this Application expeditiously, before May 20, 1994. 23. The names and addresses of the representatives and attorneys for Applicant are: James P. Herden Arkansas Power & Light Company 425 West Capitol Avenue P.O. Box 551 Little Rock, Arkansas 72203 Telephone: 377-4475 Paul B. Benham III Allison Graves Bazzel Friday, Eldredge & Clark 2000 First Commercial Building 400 West Capitol Avenue Little Rock, Arkansas 72201-3493 Telephone: 376-2011 WHEREFORE, Applicant, Arkansas Power & Light Company, respectfully requests that the Commission enter its order on or before May 20, 1994, authorizing it (a) to issue and sell in one or more series, from time to time not later than December 31, 1995, as requested herein, (i) the Tax-Exempt Bonds in an aggregate principal amount not to exceed $200 Million and, in connection therewith, to enter into the Agreement related thereto as contemplated hereby, (ii) the Preferred Stock, in an aggregate par value or involuntary liquidation value, as the case may be, not to exceed $100 Million, and (iii) the Common Stock, not to exceed 8,000,000 shares, at a minimum price of $12.50 per share, for an aggregate maximum consideration of $100 Million; (b) to apply the proceeds from the sale of the Tax-Exempt Bonds, the Preferred Stock, and the Common Stock for the purposes set forth herein; (c) to take all other action and to enter into all other agreements necessary therefor, including the issuance of one or more new series of Collateral Bonds as described herein [Such authorization for Collateral Bonds is separate and apart from the authorization granted by this Commission by Orders [2 and 3 of Docket No. 93-217-U.]; and (d) to be granted all other proper relief. DATED this 26th day of April, 1994. ARKANSAS POWER & LIGHT COMPANY By: FRIDAY, ELDREDGE & CLARK 2000 First Commercial Building 400 West Capitol Little Rock, Arkansas 72201-3493 Attorneys for Applicant By: /s/ Paul B. Benham, III PAUL B. BENHAM III, #71007 VERIFICATION STATE OF ARKANSAS ) ) ss. COUNTY OF PULASKI ) I, Paul B. Benham III, one of the attorneys for the Applicant, on oath state that I have read the foregoing Application and that the statements set forth therein are true and correct to the best of my knowledge and belief. /s/ Paul B. Benham, III Paul B. Benham III SUBSCRIBED AND SWORN to before me, a Notary Public, on this 26th day of April, 1994. /s/ Brenda Bennett Notary Public My Commission Expires: 9/1/2001 EX-99 8 EXHIBIT D-2(B) Exhibit D-2(b) BEFORE THE TENNESSEE PUBLIC SERVICE COMMISSION Nashville, Tennessee May 27, 1994 IN RE: APPLICATION OF ARKANSAS POWER & LIGHT COMPANY FOR AUTHORITY TO ENTER INTO TRANSACTIONS FOR THE ISSUANCE AND SALE OF TAX-EXEMPT BONDS AND COLLATERAL FIRST MORTGAGE BONDS, AND TO ISSUE AND SELL NOT MORE THAN 8 MILLION SHARES OF ITS COMMON STOCK, $0.01 PAR VALUE PER SHARE, FOR AN AGGREGATE MAXIMUM CONSIDERATION OF $100,000,000 AND TO ISSUE AND SELL NOT MORE THAN $100,000,000 AGGREGATE PAR VALUE OR LIQUIDATION VALUE OF ITS PREFERRED STOCK. DOCKET NO. 94-01045 O R D E R This matter is before the Tennesses Public Service Commission upon the application of Arkansas Power & Light Company to issue and sell up to $200 million of tax-exempt "pollution control" bonds, up to $100 million of preferred stock, and up to $100 million of common stock. The proceeds from the sale of the bonds will be used to retire existing tax-exempt bonds and to construct certain pollution control or sewage and solid waste disposal facilities. Proceeds from the sale of the preferred and common stock will be used to repay short term loans, retire long term debt, or construct facilities. The Staff has prepared a report recommending approval of the application. IT IS THEREFORE ORDERED: 1. That Arkansas Power & Light Company is authorized to enter into transactions for the issuance and sale of tax-exempt bonds and collateral first mortgage bonds, and to issue and sell not more than 8 million shares of its common stock, $0.01 par value per share, for an aggregate maximum consideration of $100,000,000 and to issue and sell not more than $100,000,000 aggregate par value or liquidation value of its preferred stock. 2. That any party aggrieved with the Commission's decision in this matter may file a Petition for Reconsideration with the Commission within ten (10) days from and after the date of this Order; and 3. That any party aggrieved with the Commission's decision in this matter has the right of judicial review by filing a Petition for Review in the Tennessee Court of Appeals, Middle Section, within sixty (60) days from and after the date of this Order. CHAIRMAN COMMISSIONER COMMISSIONER ATTEST: EXECUTIVE DIRECTOR EX-5 9 EXHIBIT F-1 Exhibit F-1 [Letterhead of Reid & Priest] June 1, 1994 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Sirs: With reference to the Application-Declaration on Form U-1, as amended ("Application-Declaration") filed by Arkansas Power & Light Company ("Company") (File No. 70-8405) under the Public Utility Holding Company Act of 1935 contemplating the Company's entering into one or more loan agreements and/or supplements thereto ("Loan Agreement") with one or more governmental authorities ("Issuer"), and/or the disposition and reacquisition of certain pollution control or sewage and solid waste disposal facilities ("Facilities") pursuant to one or more installment sale agreements and/or supplements thereto with one or more Issuers, and the related issuance by the Issuer of one or more series of tax-exempt revenue bonds, all as more fully described in the Application- Declaration, we are of the opinion that: 1. The Company is a corporation duly organized and validly existing under the laws of the State of Arkansas. 2. In the event that the proposed transactions are consummated in accordance with the Application-Declaration and the order of the Securities and Exchange Commission with respect thereto: (a) all state laws applicable to the proposed transactions (other than so-called "blue-sky" laws or similar laws, upon which we do not pass herein) will have been complied with; (b) any Loan Agreement entered into by the Company will be a valid and binding obligation of the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws affecting enforcement of creditors' rights; (c) the Company will have legally acquired any Facilities to be reacquired by it; and (d) the consummation of the proposed transactions will not violate the legal rights of the holders of any securities issued by the Company or any associate company thereof. We are members of the New York Bar and do not hold ourselves out as experts on the laws of any other state. In giving this opinion, we have relied, as to all matters governed by the laws of any other state, upon the opinion of Friday, Eldredge & Clark, of Little Rock, Arkansas, General Counsel for the Company, which is to be filed as an exhibit to the Application-Declaration. We hereby consent to the use of this opinion as an exhibit to the Application-Declaration. Very truly yours, /s/ Reid & Priest REID & PRIEST EX-5 10 EXHIBIT F-2 Exhibit F-2 [Letterhead of Friday, Eldredge & Clark] June 1, 1994 Securities & Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Dear Ladies and Gentlemen: With reference to the Application-Declaration on Form U-1, as amended ("Application-Declaration"), filed by Arkansas Power & Light Company ("Company") (File No. 70-8405) under the Public Utility Holding Company Act of 1935 contemplating the Company's entering into one or more loan agreements and/or supplements thereto ("Loan Agreement") with one or more governmental authorities ("Issuer"), and/or the disposition and reacquisition of certain pollution control or sewage and solid waste disposal facilities ("Facilities") pursuant to one or more installment sale agreements and/or supplements thereto with one or more Issuers, and the related issuance by the Issuer of one or more series of tax-exempt revenue bonds, all as more fully described in the Application-Declaration, we are of the opinion that: 1. The Company is a corporation duly organized and validly existing under the laws of the State of Arkansas. 2. In the event that the proposed transactions are consummated in accordance with the Application-Declaration and the order of the Securities and Exchange Commission with respect thereto: (a) all state laws applicable to the proposed transactions (other than so-called "blue-sky" laws or similar laws, upon which we do not pass herein) will have been complied with; (b) any Loan Agreement entered into by the Company will be a valid and binding obligation of the Company in accordance with its terms, except as limited by bankruptcy, insolvency, or other laws affecting enforcement of creditors' rights; (c) the Company will have legally acquired any Facilities to be reacquired by it; and (d) the consummation of the proposed transactions will not violate the legal rights of the holders of any securities issued by the Company. In giving this opinion, we have relied, as to all matters governed by the laws of the State of New York, upon the opinion of Reid & Priest, of New York, New York, which is to be filed as an exhibit to the Application-Declaration. We consent to the use of this opinion as an exhibit to the Application-Declaration. Very truly yours, /s/ Friday, Eldredge & Clark FRIDAY, ELDREDGE & CLARK -----END PRIVACY-ENHANCED MESSAGE-----