Exhibit 10.2

 

 

 

LOAN AGREEMENT

BY AND BETWEEN

ILLINOIS FINANCE AUTHORITY

AND

COMMONWEALTH EDISON COMPANY

 

 

$91,000,000

POLLUTION CONTROL REVENUE REFUNDING BONDS

(COMMONWEALTH EDISON COMPANY PROJECT)

SERIES 2008F

 

 

DATED AS OF APRIL 15, 2008

 

 

 

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TABLE OF CONTENTS

 

ARTICLE I DEFINITIONS    2 ARTICLE II REPRESENTATIONS    2

Section 2.1.

   Representations and Warranties of the Authority.    2

Section 2.2.

   Representations and Warranties by the Borrower.    4

ARTICLE III THE PROJECT; ISSUANCE OF THE BONDS

   6

Section 3.1.

   Completed Project.    6

Section 3.2.

   Agreement to Issue Bonds; Application of Bond Proceeds.    6

Section 3.3.

   Covenants and Representations with Respect to Arbitrage.    7

Section 3.4.

   Authority’s and Trustee’s Right of Access to the Project.    7

Section 3.5.

   Maintenance and Repair; Insurance.    7 ARTICLE IV LOAN AND BORROWER BONDS   
7

Section 4.1.

   The Payment of the Loan and the Other Amounts.    7

Section 4.2.

   Borrower Bonds.    8

Section 4.3.

   Payment of the Bonds from Payment of the Borrower Bonds and Other Amounts.   
8

Section 4.4.

   No Defense or Set-Off.    9

Section 4.5.

   Assignment of Authority’s Rights.    9

Section 4.6.

   Prepayments.    10

Section 4.7.

   Agreement to Pay Purchase Price for Bonds.    10

Section 4.8.

   Rights to Purchase Fund.    10

Section 4.9.

   Credit Facilities.    10

Section 4.10.

   Liquidity Facility Option.    11 ARTICLE V COVENANTS OF THE BORROWER    11

Section 5.1.

   Additional Payments.    11

Section 5.2.

   Indemnity Against Claims.    12

Section 5.3.

   Authority and Borrower Cooperation.    14

Section 5.4.

   Maintenance of Existence and Qualification.    14

Section 5.5.

   Limited Obligations.    15

Section 5.6.

   Taxes and Governmental Charges.    16

Section 5.7.

   Exemption from Personal Liability.    16

Section 5.8.

   Recording and Maintenance of Liens    17

Section 5.9.

   Compliance with Laws.    17 ARTICLE VI EVENTS OF DEFAULT AND REMEDIES    18

Section 6.1.

   Events of Default.    18

Section 6.2.

   Events of Default Under the Borrower Indenture; Remedies.    18

Section 6.3.

   Certain Fees and Expenses.    19

Section 6.4.

   No Remedy Exclusive.    19

Section 6.5.

   Waiver.    19

Section 6.6.

   Default by the Authority – Limited Liability.    19 ARTICLE VII MISCELLANEOUS
   20

Section 7.1.

   Notices.    20

Section 7.2.

   Assignments.    20

Section 7.3.

   Amendments.    20

 

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Section 7.4.

   Further Assurances.    20

Section 7.5.

   Governing Law.    20

Section 7.6.

   Severability.    20

Section 7.7.

   Execution of Counterparts.    20

Section 7.8.

   Term of Agreement.    21

Section 7.9.

   Indenture Provisions.    21

Section 7.10.

   Annual Certificate.    21

Section 7.11.

   Supplements and Amendments to Agreement; Waivers.    21

 

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LOAN AGREEMENT

THIS LOAN AGREEMENT (this “Agreement”) is made and entered into as of April 15,
2008, by and between the ILLINOIS FINANCE AUTHORITY, a body politic and
corporate duly organized and existing under and by virtue of the Constitution
and the laws of the State of Illinois (the “Authority”), and COMMONWEALTH EDISON
COMPANY, a corporation organized and existing under the laws of the State of
Illinois (the “Borrower”).

RECITALS

The Authority is authorized by the Illinois Environmental Facilities Financing
Act, 20 ILCS 3515/1 et seq., as amended and supplemented (the “Environmental
Act”), and the Illinois Finance Authority Act, 20 ILCS 3501/801-1 et seq., as
amended and supplemented (the “Act”), to issue bonds to finance pollution
control and environmental facilities and to refund those bonds.

The Illinois Development Finance Authority (a predecessor entity to the
Authority) (“IDFA”) issued its $141,000,000 Pollution Control Revenue Refunding
Bonds (Commonwealth Edison Company Project) Series 1985 (the “Original Bonds”)
and loaned proceeds of those bonds to the Borrower for the purpose of financing
the acquisition and construction of the air and water pollution facilities and
disposal facilities, at the electric generating plants set forth in Exhibit A to
this Agreement (collectively, the “Project”).

IDFA previously issued its $50,000,000 Pollution Control Revenue Refunding Bonds
(Commonwealth Edison Company Project) Series 1994C (the “Series 1994C Bonds”)
and its $91,000,000 Pollution Control Revenue Refunding Bonds (Commonwealth
Edison Company Project) Series 1994D (the “Series 1994D Bonds”; the Series 1994C
Bonds and the Series 1994D Bonds collectively, the “Series 1994 Bonds”) to
refund an equal principal amount of the Original Bonds.

The Authority previously issued its $91,000,000 Pollution Control Revenue
Refunding Bonds (Commonwealth Edison Company Project) Series 1985 (the “Prior
Bonds”) to refund an equal principal amount of the Series 1994D Bonds.

In furtherance of the purposes set forth in the Act, the Authority is
undertaking the refunding of the outstanding $91,000,000 principal amount of the
Prior Bonds by the issuance and sale of its Pollution Control Revenue Refunding
Bonds (Commonwealth Edison Company Project) Series 2008F (the “Bonds”). The
Bonds are to be issued pursuant the Indenture (as defined below), and to be
secured and to be payable solely from the revenues and receipts and other
amounts received by the Authority pursuant to this Agreement and the Borrower
Bonds, all as provided in the Indenture.

The Bonds issued under the Indenture will be secured by an assignment and pledge
to the bond trustee of this Agreement and the Borrower Bonds issued under a
Supplemental Borrower Indenture all as defined in the Indenture.

Accordingly, in consideration of the premises and the mutual covenants contained
in this Agreement, the parties agree as follows:

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ARTICLE I

DEFINITIONS

All words and terms defined in Article I of the Indenture shall have the same
meanings in this Agreement. In addition, when used in this Agreement, words
defined elsewhere in this Agreement (including the Recitals) shall have the
meanings set forth therein, and the following words shall have the following
meanings.

“Indenture” means the Bond Indenture dated as of April 15, 2008, between the
Authority and The Bank of New York Trust Company, N.A., as trustee (the
“Trustee”), pursuant to which the Bonds are authorized to be issued, including
any indentures supplemental to it as permitted in the Indenture.

“Official Statement” means the Official Statement dated May 5, 2008 describing
the Bonds, as the same may be supplemented from time to time.

ARTICLE II

REPRESENTATIONS

Section 2.1. Representations and Warranties of the Authority. The Authority
represents as follows:

(a) The Authority is a body politic and corporate validly created and existing
under the Act, is authorized to enter into the transactions contemplated by this
Agreement and to carry out its obligations hereunder, and has been duly
authorized to execute and deliver this Agreement, the Bonds, the Indenture and
the Tax Certificate and Agreement;

(b) It is the Authority’s understanding, based upon certain representations of
the Borrower, that the issuance and sale of the Bonds and the loan of the
proceeds of the Bonds to the Borrower (which proceeds, along with certain other
moneys, will be applied for the benefit of the Borrower) is to provide a portion
of the moneys required to refund on a current basis all of the outstanding Prior
Bonds, the proceeds of which were used to finance or re-finance the costs of the
Project.

(c) To provide funds to loan to the Borrower for the purposes described in
(b) above, the Authority has authorized its Bonds in the aggregate principal
amount of $91,000,000 to be issued upon the terms set forth in the Indenture,
under the provisions of which the Authority’s interest in this Agreement and the
payments of principal, premium, if any, interest and other revenues hereunder
(other than the rights of the Authority under Sections 5.1, 5.2, 5.4, 5.5, 5.6,
5.7, 5.8, 6.3, 7.2 and 7.4 of this Agreement (“Unassigned Authority Rights”)),
have been assigned to the Trustee pursuant to the Indenture and under the
Borrower Bonds pledged and assigned to the Trustee as security for the payment
of the principal of, premium, if any, and interest on the Bonds. The Authority
covenants that it has not and will not pledge or assign its interest in this
Agreement, or the revenue and receipts derived pursuant to this Agreement,
excepting Unassigned Authority Rights, other than to the Trustee under the
Indenture to secure the Bonds.

 

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(d) To the best of its knowledge, no member of the Authority or officer, agent
or employee thereof is, in his or her own name or in the name of a nominee, an
officer, director or holder of an ownership interest of more than 7-1/2% in any
Person, which is, in its own name or in the name of a nominee, a party to any
contract or agreement upon which the member or officer, agent or employee may be
called upon to act or vote in connection with the Project.

(e) To the best of its knowledge, no member of the Authority or officer, agent
or employee thereof is, in his or her own name or in the name of a nominee, a
holder of any direct or indirect interest (other than a prohibited interest
described in paragraph (d) above) in any contract or agreement upon which the
member or officer, agent or employee may be called upon to act or vote in
connection with the Project, except for direct or indirect interests (other than
prohibited interests), (i) which such member, officer, agent or employee has
disclosed to the Secretary of the Authority prior to the taking of final action
by the Authority with respect to such contract or agreement in the manner
required by Section 845-45(b) of the Act, which disclosure has been publicly
acknowledged by the Authority and entered upon the minutes of the Authority, and
(ii) as to which the member, officer, agent or employee has refrained from
taking the actions described in said Section 845-45(b).

(f) Neither the Authority’s execution of this Agreement, its consummation of the
transaction contemplated on its part hereby, nor the Authority’s fulfillment or
compliance with the terms and conditions hereof conflicts with or results in a
breach of the terms, conditions and provisions of any material restriction,
agreement or instrument to which the Authority is a party, or by which it or any
of its property is bound, or constitutes a default under any of the foregoing.

(g) Subject to the limitation on the Authority’s liability as provided in this
Agreement and in the Indenture, the Authority has not knowingly engaged in, and
will not knowingly engage in, any action which would impair the exclusion of
interest paid on the Bonds from the federal gross income of the owners of the
Bonds (other than while held by a “substantial user” or a “related person”
within the meaning of the Code, of the facilities financed by the Bonds).

(h) This Agreement, the Tax Certificate and Agreement and the Indenture have
each been duly authorized, executed and delivered by the Authority and each
constitutes the legal, valid and binding obligation of the Authority enforceable
against the Authority in accordance with its terms.

(i) To the knowledge of the Authority, there is no litigation or proceeding
pending or threatened against or affecting the Authority which would adversely
affect the validity of this Agreement, the Indenture, the Tax Certificate and
Agreement or the Bonds or the ability of the Authority to comply with its
obligations under this Agreement, the Indenture, the Tax Certificate and
Agreement or the Bonds.

 

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(j) The Authority finds and determines that, based on representations of the
Borrower, all requirements of the Act and the Environmental Act have been
complied with and that the refunding of the financing of the Project through the
issuance of the Bonds will further the public purposes of the Act and the
Environmental Act. The Project constitutes and will constitute “environmental
facilities” as that term is defined in the Environmental Act.

(k) Neither the Executive Director of the Authority nor any of the members or
officers of the Authority have any interests in the Borrower and none of them
are in violation of the Act or the Environmental Act with respect to the
transactions contemplated by this Agreement.

(l) Subject to the limitations on the Authority’s liability as provided in this
Agreement and in the Indenture, so long as any of the Bonds remain outstanding
and except as may be authorized by the Indenture, the Authority will not issue
or sell any bonds or obligations, other than the Bonds, the principal of or
premium, if any, or interest on which will be payable from payments made under
this Agreement or amounts held under the Indenture. The Authority shall have the
right to request an opinion of counsel at the Borrower’s expense with respect to
its compliance with the preceding sentence.

Section 2.2. Representations and Warranties by the Borrower. The Borrower makes
the following representations and warranties as the basis for its covenants
herein:

(a) The Borrower is a corporation duly incorporated under the laws of the State
of Illinois, is in good standing and duly authorized to conduct its business in
the State of Illinois, is duly authorized and has full power under all
applicable laws and its restated articles of incorporation and by-laws to
create, issue, enter into, execute and deliver, as the case may be, this
Agreement, the Tax Certificate and Agreement, the Purchase Contract, the Initial
Reimbursement Agreement, the Remarketing Agreement, the Supplemental Borrower
Indenture and the Borrower Bonds (collectively, the “Borrower Agreements”).

(b) The execution and delivery of the Borrower Agreements on the Borrower’s part
have been duly authorized by all necessary corporate action, and neither the
Borrower’s execution and delivery of the Borrower Agreements, the Borrower’s
consummation of the transactions contemplated on its part thereby, nor the
Borrower’s fulfillment of or compliance with the terms and conditions thereof,
violates the restated articles of incorporation or by-laws of the Borrower or
conflicts with or results in a material breach of any material agreement or
instrument to which the Borrower is now a party or by which it is bound (except
for any such breaches for which the Borrower has obtained a waiver or a required
consent), or constitutes a material default (or would constitute a material
default with due notice or the passage of time or both) under any such material
agreement or instrument.

(c) The Project (i) is comprised of certain pollution control facilities at the
electric generating plants listed in Exhibit A hereto, and (ii) constitutes
“environmental facilities” as defined in the Environmental Act. No portion of
the Project includes any property

 

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used or to be used for sectarian instruction or study or as a place for
devotional activities or religious worship or any property which is used or to
be used primarily in connection with any part of the program of a school or
department of divinity for any religious denomination.

(d) No litigation, proceedings or investigations are pending or, to the
knowledge of the Borrower, threatened in writing against the Borrower seeking to
restrain, enjoin or in any way limit the approval or execution and delivery of
the Borrower Agreements or which would in any manner challenge or adversely
affect the corporate existence or powers of the Borrower to enter into and carry
out the transactions described in or contemplated by or the execution, delivery,
validity or performance by the Borrower of the Borrower Agreements. In addition,
except as described in the Official Statement, no litigation, proceedings or
investigations are pending or, to the knowledge of the Borrower, threatened in
writing against the Borrower, except litigation, proceedings or investigations
involving claims for which the probable ultimate recoveries and the estimated
costs and expenses of defense, in the opinion of management of the Borrower
(i) will be entirely within the applicable insurance policy limits (subject to
applicable deductibles) or are not in excess of the total of the available
assets held under applicable self-insurance programs or (ii) will not have a
material adverse effect on the operations or condition, financial or otherwise,
of the Borrower on a consolidated basis.

(e) The (i) consolidated statements of income, cash flows and changes in
shareholders’ equity of the Borrower for each of the fiscal years ended
December 31, 2005, 2006 and 2007 and the consolidated balance sheet as of
December 31, 2006 and 2007, together with the reports thereon of
PricewaterhouseCoopers LLP, independent registered public accounting firm, and
(ii) consolidated statements of income, cash flows and changes in shareholders’
equity of the Borrower for the three months ended March 31, 2007 and 2008, and
the consolidated balance sheet as of March 31, 2008, all included in the
Official Statement, fairly present in all material respects the financial
condition of the Borrower as of said dates, and the results of the operations of
the Borrower for each of such periods, respectively, all in accordance with
generally accepted accounting principles consistently applied except as stated
in the notes thereto and, in the case of the statements referred to in clause
(ii), the absence of certain notes and subject to year-end adjustments; and
there has been no material adverse change in the condition, financial or
otherwise, of the Borrower on a consolidated basis since December 31, 2007 from
that set forth in the information so utilized except as disclosed in the
Official Statement.

(f) The information used in the preparation of the financial statements referred
to in paragraph (e) above, this Agreement, the Tax Certificate and Agreement and
any other written statement furnished by the Borrower to the Authority
(including the descriptions and information contained in the Official Statement
relating to (i) the Borrower and the Project, (ii) the operations and financial
and other affairs of the Borrower, (iii) the application by the Borrower of the
proceeds to be received by it from the loan of the proceeds of sale of the
Bonds, and (iv) the participation by the Borrower in the transactions
contemplated herein and in the Official Statement) do not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained therein or herein, in light of the circumstances under
which they

 

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were made, not misleading. There is no fact which the Borrower has not disclosed
to the Authority in writing which materially adversely affects or, so far as the
Borrower can now foresee, will materially adversely affect the financial
condition of the Borrower on a consolidated basis, or the Borrower’s ability to
make payments under this Agreement when and as the same become due and payable.

(g) Compliance by the Borrower with the provisions of the Borrower Agreements
will not involve, to the extent applicable, any prohibited transaction within
the meaning of the Employee Retirement Income Security Act of 1974, as amended
(herein sometimes referred to as “ERISA”), or Section 4975 of the Code. No
“employee pension benefit plans”, that are subject to Title IV of ERISA (herein
sometimes referred to as “Plans”), maintained by the Borrower, nor any trust
created thereunder, have incurred any “accumulated funding deficiency” as
defined in Section 302 of ERISA, to the extent applicable.

(h) The representations and certifications contained in the Tax Certificate and
Agreement and the Project Agreement and Certificate are true and correct, and
are incorporated by reference herein.

(i) The Borrower has obtained the approval and authorization of the Illinois
Commerce Commission to borrow money, enter into loan agreements and issue and
deliver mortgage bonds as collateral for loan agreements. That approval includes
approval for this Agreement and the issuance of the Borrower Bonds to the
Trustee as assignee of the Authority. No further or additional approval,
authorization or consent of any governmental or public agency or authority is
required in connection with the execution and delivery by the Borrower of the
Borrower Agreements.

(j) The information contained in the written documents relating to the Project
and the use of the proceeds of the Original Bonds, the Prior Bonds and the Bonds
provided by the Borrower to the Authority and bond counsel for the Bonds is true
and correct in all material respects.

ARTICLE III

THE PROJECT; ISSUANCE OF THE BONDS

Section 3.1. Completed Project. The Borrower completed the acquisition,
construction, installation and equipping of the Project in accordance with the
representations of the Borrower made in connection with the issuance of the
Original Bonds.

Section 3.2. Agreement to Issue Bonds; Application of Bond Proceeds. In order to
provide for the refunding of the outstanding principal amount of the Prior
Bonds, the Authority agrees that it will issue and sell its Bonds in the
aggregate principal amount of $91,000,000 and will cause them to be delivered to
their purchasers. The Bonds shall bear interest and mature as set forth in the
Indenture. The Authority will loan the proceeds received from the sale of the
Bonds to the Borrower by depositing the proceeds with the Trustee in accordance
with Section 3.02 of the Indenture.

 

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Section 3.3. Covenants and Representations with Respect to Arbitrage. The
Authority, to the extent it has any control over proceeds of the Bonds and
subject to the limitations on its liability as provided in this Agreement and in
the Indenture, and the Borrower covenant and represent to each other and to and
for the benefit of the purchasers and owners of the Bonds from time to time
Outstanding that so long as any of the Bonds remain Outstanding, amounts on
deposit in any fund in connection with the Bonds, whether or not such amounts
were derived from the proceeds of the sale of the Bonds or from any other
sources, will not be used in a manner which will cause the Bonds to be
“arbitrage bonds” within the meaning of Section 148 of the Code, and any lawful
regulations promulgated under it, as the same exist on this date, or may from
time to time in this Agreement be amended, supplemented or revised.

The Borrower also covenants for the benefit of the Bondholders to comply with
all of the provisions of the Tax Certificate and Agreement. The Borrower
reserves the right, however, to make any investment of such amounts permitted by
Illinois law, if, when and to the extent that Section 148 of the Code or
regulations promulgated under it shall be repealed or relaxed or shall be held
void by final judgment of a court of competent jurisdiction, but only upon
receipt of a Favorable Opinion of Bond Counsel with respect to such investment.

Section 3.4. Authority’s and Trustee’s Right of Access to the Project. The
Borrower agrees that, during the term of this Agreement, it will use reasonable
efforts to assure that the Authority, the Trustee, and their duly authorized
agents shall have the right, but they shall be under no duty or obligation to
exercise this right, during regular business hours, with reasonable notice, to
enter upon the premises and examine and inspect the Project, subject to such
limitations, restrictions and requirements as the Borrower may reasonably
prescribe.

Section 3.5. Maintenance and Repair; Insurance. The Borrower will use reasonable
efforts to cause the Project to be maintained in a safe and sound operating
condition, cause to be made from time to time all needed material repairs
thereto, and cause to be maintained reasonable amounts of insurance coverage
with respect to the Project.

ARTICLE IV

LOAN AND BORROWER BONDS

Section 4.1. The Payment of the Loan and the Other Amounts.

(a) The Authority agrees, upon the terms and conditions in this Agreement, to
lend to the Borrower the proceeds received by the Authority from the sale of the
Bonds in order to provide for the refunding of the outstanding principal amount
of the Prior Bonds by depositing the same with the Trustee in accordance with
Section 3.02 of the Indenture. The Borrower shall, at its own expense, pay to
the trustee for the Prior Bonds on the date of delivery of the Bonds, all
amounts in excess of the proceeds of the Bonds necessary to accomplish that
refunding, without any right of reimbursement from the Authority.

(b) The Borrower agrees to repay the loan from the Authority in connection with
the issuance of the Bonds by making payments in amounts and at times, but in any
event not later than 2:30 p.m. New York City time on the date such payment is
due, sufficient

 

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to pay when due the principal of and interest and any premium on the Bonds. The
Borrower approves the form, terms and provisions of the Indenture and the
issuance by the Authority of the Bonds, including but not limited to, the
maturity, interest rates and redemption terms of the Bonds.

To repay the loan, the Borrower also agrees to make all payments when due on the
Borrower Bonds.

(c) The Borrower agrees to pay in the event that the Borrower exercises its
option to purchase Bonds in lieu of redemption pursuant to Section 4.01(E) of
the Indenture and the amount on deposit in the Bond Fund is insufficient to pay
the purchase price of any such Bonds to be purchased, to the Trustee for deposit
in the Borrower Purchase Account under the Purchase Fund sufficient money to pay
the purchase price of any such Bonds to be purchased on such date pursuant to
Section 4.01(E) of the Indenture. It is the intention of the parties hereto that
the purchase of the Bonds pursuant to Section 4.01(E) of the Indenture shall not
constitute a prepayment of the loan of Bond proceeds made to the Borrower
pursuant to this Agreement or a merger or extinguishment of the indebtedness of
the Borrower hereunder or the Bonds so purchased and that such Bonds shall for
all purposes continue to be regarded as Outstanding under the Indenture.

Section 4.2. Borrower Bonds. In order to secure its obligations under Sections
4.1, 4.6 and 4.7 of this Agreement, the Borrower shall execute and deliver to
the Trustee, as assignee of the Authority, its Borrower Bonds.

Each such Borrower Bond will be in substantially the form set forth in the
Supplemental Borrower Indenture.

Section 4.3. Payment of the Bonds from Payment of the Borrower Bonds and Other
Amounts. Payments, and amounts which are deemed to be payments as provided in
this Agreement, on the Borrower Bonds by the Borrower to the Trustee, as
assignee of the Authority, shall constitute payments on the loan made to the
Borrower under Section 4.1 of this Agreement. The Bonds shall be payable from
payments made by the Borrower to the Trustee of payments on the Borrower Bonds
delivered under this Agreement, or other payments made by or on behalf of the
Borrower for that purpose. Payments of principal of or premium, if any, or
interest on the Bonds with amounts held under the Indenture for that payment
shall be deemed to be payments with respect to the Borrower Bonds. Whenever the
Bonds are redeemable in whole or in part, the Authority will redeem them upon
the request of the Borrower, and the Borrower covenants and agrees to pay an
amount equal to the applicable redemption price of the Bonds as a prepayment of
payments due on the Borrower Bonds. Whenever principal is required to be paid on
the Bonds, whether at maturity or as a result of redemption or acceleration, an
amount of Borrower Bonds equal to the principal amount of such Bonds being paid
shall be subject to mandatory redemption on the date principal is due on the
Bonds. Whenever payment or provision for payment has been made in respect of the
principal of or premium, if any, or interest on all or any portion of the Bonds
in accordance with the Indenture from sources other than the proceeds of a
Credit Facility (whether at maturity or upon redemption or acceleration), the
Borrower Bonds shall be deemed paid in a principal amount equal to the principal
amount of the

 

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Bonds being paid, to the extent such payment or provision for payment of the
Bonds has been made and is considered to be a payment of principal of, or
premium, if any, or interest on the Bonds. If the Bonds or any portion of them
are deemed paid in full from sources other than the proceeds of a Credit
Facility, Borrower Bonds in a principal amount equal to the principal amount of
the Bonds so deemed to be paid shall be cancelled and returned to the Borrower.
Unless the Borrower is entitled to a credit under this Agreement or the
Indenture, all payments due under this Agreement shall be in the full amount
required under the Borrower Bonds and as required to make all payments of
principal of and premium, if any, and interest on the Bonds as those amounts
come due, for which no other funds are available.

The Authority, by the terms of the Indenture, shall require the Trustee to
notify in writing the Person then serving as Mortgage Trustee of all payments or
credits with respect to the Borrower Bonds.

All Borrower Bonds shall equally and ratably secure all outstanding Bonds.

Section 4.4. No Defense or Set-Off. The obligations of the Borrower to make the
payments required under Sections 4.1, 4.6 and 4.7 of this Agreement and under
the Borrower Bonds shall be absolute and unconditional, without defense,
recoupment or set-off by reason of any default by the Authority under this
Agreement or under any other agreement between the Borrower and the Authority or
for any other reason, or failure of the Authority to perform and observe any
agreement, whether express or implied, or any duty, liability or obligation to
the Borrower, whether or not arising out of or connected with this Agreement, it
being the intention of the parties that the payments required by the Borrower
under the Borrower Bonds and this Agreement will be paid in full when due
without any delay or diminution whatsoever.

Section 4.5. Assignment of Authority’s Rights. As security for the payment of
its Bonds, the Authority will concurrently with the issuance of the Bonds pledge
and assign to the Trustee the Authority’s rights under this Agreement (except
the Unassigned Authority Rights), including the right of the Authority to
receive the Borrower Bonds and the right to receive payments under them and
under Section 4.1 of this Agreement, and the Authority covenants and agrees with
the Borrower to pledge, assign and deliver the Borrower Bonds and payments made
under this Agreement for payment of principal, premium or interest on the Bonds
to the Trustee. The Authority directs the Borrower, and the Borrower agrees, to
pay to the Trustee at its Principal Corporate Trust Office all payments under
Section 4.1 of this Agreement and on the Borrower Bonds and other payments due
and payable to the Trustee under this Agreement. The Borrower will make payments
directly to the Trustee without defense or set-off by reason of any dispute
between the Borrower and the Trustee or the Authority. The Authority agrees that
the Trustee as assignee may enforce any and all rights and remedies under this
Agreement, but the Authority retains the right also to proceed in its own name
against the Borrower for the enforcement of the performance of any obligation of
the Borrower with respect to the Unassigned Authority Rights, including by
specific performance; provided, that in any such action seeking to enforce that
performance, the Authority shall have no rights with respect to the Borrower
Bonds, and in such event the obligation of the Borrower to make the payments
required to repay the loan under this Agreement and payments required under the
Borrower Bonds shall remain unconditional as provided in Section 4.4 of this
Agreement.

 

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The Authority and the Borrower covenant and agree that the Borrower Bonds will
at all times be (i) in fully registered form; (ii) registered in the name of the
Trustee; (iii) non-transferable except as provided in the Borrower Indenture;
and (iv) appropriately marked to indicate clearly the restrictions on their
transfer imposed by this Agreement.

Section 4.6. Prepayments. (a) Optional Prepayment. The Borrower may at any time
prepay to the Trustee all or any part of the amounts payable under Section 4.1
of this Agreement in connection with any redemption by giving notice to the
Trustee in accordance with Section 4.03 of the Indenture; such amounts will be
used to redeem Bonds callable for optional redemption in accordance with their
terms. A prepayment shall not relieve the Borrower of its obligations under this
Agreement until all the Bonds have been paid or provision for the payment of all
the Bonds has been made in accordance with the Indenture and of all other
amounts due under this Agreement.

(b) Mandatory Payment. In the event of a mandatory redemption of the Bonds
pursuant to Section 4.11 of the Indenture, the Borrower will prepay or cause to
be prepaid all amounts necessary for such redemption.

Section 4.7. Agreement to Pay Purchase Price for Bonds. The Borrower agrees to
pay to the Tender Agent on each date on which Bonds are subject to optional or
mandatory tender for purchase an amount which, together with other amounts held
by the Tender Agent or the Trustee under the Indenture and available for that
purpose, will enable the Tender Agent to make payment of the Purchase Price of
Bonds tendered for purchase on such date in full in a timely manner.

Section 4.8. Rights to Purchase Fund. Notwithstanding anything else in the
Indenture or this Agreement to the contrary, neither the Authority nor the
Borrower shall have any rights to or interest in the Purchase Fund or any
amounts in it. The Borrower acknowledges that it has no right, title or interest
in the Purchase Fund or in any amounts in it at any time and disclaims any such
right, title or interest and further acknowledges that the Tender Agent shall
have the sole right of withdrawal from that Fund.

Section 4.9. Credit Facilities.

(a) On the date of initial issuance of the Bonds, the Borrower shall deliver (or
cause to be delivered) to the Trustee the Initial Credit Facility.

(b) The Borrower may at any time provide a Credit Facility with respect to any
Bonds and terminate any such Credit Facility; provided that no such termination
may be effected with respect to the Bonds during any Commercial Paper Mode,
Fixed Rate Mode, Indexed Mode or Term Rate Mode then applicable with respect to
the Bonds. The Borrower may substitute a Credit Facility for any Credit Facility
then in effect; provided that no such substitution may be made with respect to
the Bonds during any Commercial Paper Mode, Fixed Rate Mode, Indexed Mode or
Term Rate Mode then applicable with respect to the Bonds. Prior to the provision
or termination by the Borrower of any Credit Facility (whether in connection
with the substitution of an existing Credit Facility or otherwise), there shall
be delivered to the Authority and the Trustee (i) an Opinion of

 

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Counsel, which shall be Bond Counsel, to the effect that the delivery or
termination, as the case may be, of such Credit Facility is permitted under the
Indenture and this Agreement and complies with the terms of this Agreement and
that the delivery or termination, as the case may be, of such Credit Facility
will not adversely affect the tax-exempt status of interest on the Bonds and
(ii) an Opinion of Counsel to the effect that such Credit Facility is the legal,
valid and binding obligation of the Credit Facility Provider, enforceable in
accordance with its terms. Upon provision of a Credit Facility to the Trustee
and the foregoing Opinion of Counsel to the Authority and the Trustee, the
Trustee shall accept such Credit Facility and, if so directed by the Borrower,
upon the effective date of the Credit Facility promptly surrender the previously
held Credit Facility, if any, in accordance with the respective terms thereof
for cancellation. If at any time there shall cease to be any Bonds Outstanding
secured by a Credit Facility or provision for payment of such Bonds has been
made in accordance with Article X of the Indenture, the Trustee shall promptly
surrender such Credit Facility in accordance with the terms of the Credit
Facility for cancellation. The Trustee shall comply with the procedures set
forth in the Credit Facility relating to the termination thereof.

(c) Not less than 15 days prior to the termination, removal, substitution or
delivery of any Credit Facility or the expiration of an existing Credit Facility
with respect to the Bonds, the Borrower shall send written notice of such
termination, removal, substitution, delivery or extension to the Trustee
together with, as applicable, an agreement to extend the Credit Facility. Such
notice shall also state, if applicable, the name of the provider of the proposed
Credit Facility and its terms.

Section 4.10. Liquidity Facility Option. On the date of initial issuance of the
Bonds, the Borrower shall deliver (or cause to be delivered) to the Trustee the
Initial Credit Facility which provides for the payment of the Purchase Price of
Bonds tendered for purchase and not remarketed as provided in the Indenture.
Section 9.06 of the Indenture permits the Borrower to deliver a separate
facility providing for the payment of such Purchase Price and correspondingly
request that the Authority amend the Indenture to provide for such a separate
facility. In such an event, this Agreement shall be amended upon the request of
the Borrower to provide for the delivery and substitution of such a facility in
a manner similar to that set forth in Section 4.9 hereof relating to Credit
Facilities. No consent shall be required of Bondholders to any such amendment.

ARTICLE V

COVENANTS OF THE BORROWER

Section 5.1. Additional Payments. The Borrower agrees to pay the following
within 30 days after receipt of a bill for the following item(s):

(a) The reasonable fees and expenses of the Authority in connection with and as
provided in this Agreement and the Bonds, such fees and expenses to be paid
directly to the Authority or as otherwise directed in writing by the Authority;

 

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(b) (i) The reasonable fees and expenses of the Trustee and all other
fiduciaries and agents serving under the Indenture (including any expenses in
connection with any redemption of the Bonds), and including any Remarketing
Agent and Tender Agent fees, and (ii) all reasonable fees and expenses,
including reasonable attorneys’ fees, of the Trustee for any extraordinary
services rendered by it under the Indenture. All such fees and expenses are to
be paid directly to the Trustee or other fiduciary or agent for its own account
as and when such fees and expenses become due and payable; and

(c) All other reasonable fees and expenses incurred in connection with the
issuance of the Bonds.

Section 5.2. Indemnity Against Claims.

(a) The Borrower will pay, and will protect, indemnify and save the Authority
and Trustee and its respective past, present and future members, officers,
directors, employees, agents, successor, assigns and any other person, if any,
who “controls” the Authority or Trustee, as the case may be, as that term is
defined in Section 15 of the Securities Act of 1933, as amended (the Authority,
the Trustee and the other listed persons, collectively referred to as, the
“Indemnified Persons”) harmless from and against any and all liabilities,
losses, damages, taxes, penalties, costs and expenses (including attorneys’ fees
and expenses of the Authority and Trustee), causes of action, suits,
proceedings, claims, demands, tax reviews, investigations and judgments of
whatsoever kind and nature (including, but not limited to, those arising or
resulting from any injury to or death of any person or damage to property)
arising from or in any manner directly or indirectly growing out of or connected
with the following:

(1) the use, financing, non-use, condition or occupancy of the Project, any
repairs, construction, alterations, renovation, relocation, remodeling and
equipping thereof or thereto or the condition of any such Project including
adjoining sidewalks, streets or alleys and any equipment or facilities at any
time located on or connected with such Project or used in connection therewith
but which are not the result of the gross negligence of the Authority or
Trustee;

(2) a violation of any agreement, warranty, covenant or condition of this
Agreement or any other agreement executed in connection with this Agreement;

(3) a violation of any contract, agreement or restriction by the Borrower
relating to the Project;

(4) a violation of any law, ordinance, rules, regulation or court order
affecting the Project or the ownership, occupancy or use thereof or the Bonds or
use of the proceeds thereof;

(5) any statement or information concerning the Borrower, any of its officers
and members, its operations or financial condition generally or the Project,
contained in any official statement or supplement or amendment thereto furnished
to the Authority or the purchaser of any Bonds, that is untrue or

 

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incorrect in any material respect, and any omission from such official statement
or any statement or information which should be contained therein for the
purpose for which the same is to be used or which is necessary to make the
statements therein concerning the Borrower, any of its officers and members and
the Project not misleading in any material respect, provided that such official
statement or supplement or amendment has been approved by the Borrower and the
Indemnified Persons did not have actual knowledge of the omission or
misstatement; and

(6) the acceptance or administration of the Indenture, including without
limitation the enforcement of any remedies under the Indenture and related
documents.

(b) In case any claim shall be made or any action shall be brought against one
or more of the Indemnified Persons in respect of which indemnity can be sought
against the Borrower pursuant to the preceding paragraph (a), the Indemnified
Party seeking indemnity shall promptly notify the Borrower, in writing, and the
Borrower shall promptly assume the defense thereof, including the employment of
counsel chosen by the Borrower and approved by the Authority or Trustee, or both
(provided, that such approval by the Authority or Trustee shall not be
unreasonably withheld), the payment of all expenses and the right to negotiate
and consent to settlement. If any Indemnified Person is advised in a written
opinion of counsel that there may be legal defenses available to such
Indemnified Person which are adverse to or in conflict with those available to
the Borrower or that the defense of such Indemnified Person should be handled by
separate counsel, the Borrower shall not have the right to assume the defense of
such Indemnified Person, but the Borrower shall be responsible for the
reasonable fees and expenses of counsel retained by such Indemnified Person in
assuming its own defense, and provided also that, if the Borrower shall have
failed to assume the defense of such action or to retain counsel reasonably
satisfactory to the Authority or Trustee within a reasonable time after notice
of the commencement of such action, the reasonable fees and expenses of counsel
retained by the Indemnified Person shall be paid by the Borrower.
Notwithstanding the foregoing, any one or more of the Indemnified Persons shall
have the right to employ separate counsel with respect to any such claim or in
any such action and to participate in the defense thereof, but the fees and
expenses of such counsel shall be paid by such Indemnified Person unless the
employment of such counsel has been specifically authorized by the Borrower or
unless the provisions of the immediately preceding sentence are applicable. The
Borrower shall not be liable for any settlement of any such action affected
without the consent of the Borrower, but if settled with the consent of the
Borrower or if there be a final judgment for the plaintiff in any such action
with or without consent, the Borrower agrees to indemnify and hold harmless the
Indemnified Person from and against any loss, liability or expense by reason of
such settlement or judgment.

(c) The Borrower shall also indemnify the Authority, Trustee and such
Indemnified Persons for all reasonable costs and expenses, including reasonable
counsel fees, incurred in: (i) enforcing any obligation of the Borrower under
this Agreement or any related agreement, (ii) taking any action requested by the
Borrower, (iii) taking any

 

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action required by this Agreement or any related agreement, or (iv) taking any
action considered necessary by the Authority and which is authorized by this
Agreement or any related agreement. If the Authority is to take any action under
this Agreement or any other instrument executed in connection herewith for the
benefit of the Borrower, it will do so if and only if (i) the Authority is a
necessary party to any such action or proceeding, and (ii) the Authority has
received specific written direction from the Borrower, as required hereunder or
under any other instrument executed in connection herewith, as to the action to
be taken by the Authority.

(d) All amounts payable to the Authority under this Section 5.2 shall be deemed
to be fees and expenses payable to the Authority for the purposes of the
provisions hereof and of the Indenture dealing with assignment of the
Authority’s rights hereunder. The Authority and its members, officers, agents,
employees and their successors and assigns shall not be liable to the Borrower
for any reason.

(e) Any provision of this Agreement or any other instrument or document executed
and delivered in connection therewith to the contrary notwithstanding, the
Authority retains the right to (i) enforce any applicable federal or state law
or regulation or resolution of the Authority, and (ii) enforce any rights
accorded to the Authority by federal or state law or regulation of the
Authority, and nothing in this Agreement shall be construed as an express or
implied waiver thereof.

Section 5.3. Authority and Borrower Cooperation. In the event it may be
necessary for the proper performance of this Agreement that 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 Borrower or the Authority, the
Borrower and the Authority each agree to execute upon the reasonable request of
the other such application or applications.

Section 5.4. Maintenance of Existence and Qualification.

Unless the Borrower complies with the following provisions of this Section 5.4,
the Borrower agrees that as long as any Bond is outstanding it will maintain its
existence, will not dissolve, liquidate or otherwise dispose of all or
substantially all of its assets, and will not consolidate with or merge into
another legal entity or permit one or more other legal entities (other than one
or more subsidiaries of the Borrower) to consolidate with or merge into it. Any
dissolution, liquidation, disposition, consolidation or merger shall be subject
to the following conditions:

(a) The Borrower provides a certificate to the Authority and Trustee, in form
and substance satisfactory to such parties, to the effect that no event of
default exists hereunder or under the Indenture and that no event of default
hereunder or thereunder will be caused by the dissolution, liquidation,
disposition, consolidation or merger;

(b) the entity surviving the dissolution, liquidation, disposition,
consolidation or merger (i) is organized and existing under the laws of the
United States, a state thereof or the District of Columbia and (ii) assumes in
writing and without condition or qualification the obligations of the Borrower
under each of the Borrower Agreements then in effect;

 

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(c) such dissolution, liquidation, disposition, consolidation or merger is
permitted under the Borrower Indenture;

(d) the Borrower or the entity surviving the dissolution, liquidation,
disposition, consolidation or merger, within ten (10) days after execution
thereof, furnishes to the Authority and Trustee a true and complete copy of the
instrument of dissolution, liquidation, disposition, consolidation or merger;

(e) neither the validity nor the enforceability of the Bonds, the Indenture or
any material agreement related to the Bonds to which the Borrower is a party is
adversely affected by the dissolution, liquidation, disposition, consolidation
or merger;

(f) the exclusion of the interest on the Bonds from gross income for federal
income tax purposes is not adversely affected by the dissolution, liquidation,
disposition, consolidation or merger, and the provisions of the Act, the
Indenture and the Borrower Agreements then in effect are complied with
concerning the dissolution, liquidation, disposition, consolidation or merger;

(g) no rating on the Bonds, if the Bonds are then rated, is reduced or withdrawn
as a result of the dissolution, liquidation, disposition, consolidation or
merger;

(h) the Project continues to be as described herein;

(i) any successor to the Borrower shall be qualified to do business in the State
of Illinois and shall continue to be qualified to do business in the State
throughout the term hereof; and

(j) the Authority has executed a certificate acknowledging receipt of all
documents, information and materials required by this Section 5.4.

As of the effective date of the dissolution, liquidation, disposition,
consolidation or merger, the Borrower (at its cost) shall furnish to the
Authority and Trustee (i) an Opinion of Counsel, which shall be Bond Counsel,
which opinion shall be in form and substance satisfactory to such parties, as to
items (e) and (f) above, and (ii) an Opinion of Counsel, in form and substance
satisfactory such parties, as to the legal, valid and binding nature of the
Borrower Agreements.

Section 5.5. Limited Obligations. The obligations of the Authority under this
Agreement are special, limited obligations of the Authority, payable solely out
of the revenues and income derived under this Agreement and as otherwise
provided under this Agreement and the Indenture. The obligations of the
Authority hereunder shall not be deemed to constitute an indebtedness or an
obligation of the Authority, the State of Illinois or any political subdivision
thereof within the purview of any constitutional limitation or statutory
provision, or a charge against the credit or general taxing powers, if any, of
any of them. The Authority does not have the power to levy taxes for any
purposes whatsoever. Neither the Authority nor any member,

 

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director, officer, employee or agent of the Authority nor any person executing
the Bonds shall be liable personally for the Bonds or be subject to any personal
liability or accountability by reason of the issuance of the Bonds. No recourse
shall be had for the payment of the principal of, premium, if any, and interest
on any of the Bonds or for any claim based thereon or upon any obligation,
covenant or agreement contained in the Indenture, this Agreement or the Purchase
Contract against any past, present or future member, officer, agent or employee
of the Authority, or any incorporator, member, officer, employee, director or
trustee of any successor corporation, as such, either directly or through the
Authority or any successor corporation, under any rule of law or equity, statute
or constitution or by the enforcement of any assessment or penalty or otherwise,
and all such liability of any such incorporator, member, officer, employee,
director, agent or trustee as such is hereby expressly waived and released as a
condition of and consideration for the execution of the Indenture and this
Agreement and the issuance of the Bonds.

Section 5.6. Taxes and Governmental Charges. The Borrower will promptly pay, as
they become due, all lawful taxes, assessments and governmental charges of any
kind whatsoever including, without limitation, income, profits, property and
excise taxes levied or assessed by federal, state or any local government upon
the Authority with respect to any payments under this Agreement. The Authority
agrees to give the Borrower prompt notice of any such assessments or
governmental charges.

The Borrower may, at its expense and in its own name and behalf or in the name
and behalf of the Authority, if it is a necessary party, in good faith contest
any such taxes, assessments and other charges and, in the event of any such
contest, permit the taxes, assessments or other charges so contested to remain
unpaid during the period of such contest and any appeal from it, provided during
such period enforcement of any such contested item shall be effectively stayed.
The Authority, at the expense of the Borrower, will cooperate fully with the
Borrower in any such contest.

Section 5.7. Exemption from Personal Liability. No recourse under or upon any
obligation, covenant or agreement created by this Agreement, or for any claim
based on this Agreement or otherwise in respect of it, shall be had against any
incorporator, stockholder, director, officer or employee, as such, past, present
or future, of the Borrower or of any predecessor or successor Person, either
directly or through the Borrower, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise;
it being expressly understood that this Agreement is solely a corporate
obligation of the Borrower, and that no such personal liability whatever shall
attach to, or is or shall be incurred by, the incorporators, stockholders,
directors, officers or employees, as such, of the Borrower or any predecessor or
successor Person, or any of them, under or by reason of the obligations,
covenants or agreements contained in this Agreement or implied from them; and
that any and all such personal liability, either at common law or in equity or
by constitution or statute, of, and any and all such rights and claims against,
every such incorporator, stockholder, director, officer or employee, as such,
under or by reason of the obligations, covenants or agreements contained in this
Agreement, or implied from them, are expressly waived and released as a
condition of, and as a consideration for, the execution of this Agreement.

 

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No recourse shall be had for the payment of the principal of or interest or
premium on any of the Bonds or for any claim based on the Bonds or upon any
obligation, covenant or agreement contained in this Agreement or in the
Indenture, against any past, present or future member, director, officer,
employee or agent of the Authority, or through the Authority, or any successor
corporation, under any rule of law or equity, statute or constitution or by the
enforcement of any assessment or penalty or otherwise, and all such liability of
any such member, director, officer, employee or agent as such is expressly
waived and released as a condition of and in consideration for the execution of
this Agreement, the Indenture and the issuance of any of the Bonds.

Section 5.8. Recording and Maintenance of Liens

(a) The Borrower will, at its own expense, take all necessary action to maintain
and preserve the liens and security interest of this Agreement, the Indenture,
and any other relevant documents so long as any principal, premium, if any, or
interest on the Bonds remains unpaid.

(b) The Borrower will, forthwith after the execution and delivery of this
Agreement, the Indenture, the Borrower Bonds, and any other relevant documents
and thereafter from time to time, cause this Agreement, the Indenture, the
Borrower Bonds, and any other relevant documents, including any amendments
thereof and supplements thereto, and any financing statements in respect thereof
to be filed, registered and recorded in such manner and in such places as may be
required by law in order to publish notice of and fully to perfect and protect
the lien and security interest therein granted to the Trustee to the rights, if
any, of the Authority assigned under this Agreement, the Indenture, the Borrower
Bonds, and any other relevant documents, and from time to time will perform or
cause to be performed any other act as provided by law and will execute or cause
to be executed any and all continuation statements and further instruments
necessary for such publication, perfection and protection. Except to the extent
it is exempt therefrom, the Borrower will pay or cause to be paid all filing,
registration and recording fees incident to such filing, registration and
recording, and all expenses incident to the preparation, execution and
acknowledgment of such instruments of further assurance, and all federal or
state fees and other similar fees, duties, imposts, assessments and charges
arising out of or in connection with the execution and delivery of this
Agreement, the Indenture, the Borrower Bonds, and any other relevant documents
and such instruments of further assurance.

(c) The Authority shall have no responsibility for the preparation, filing or
recording of any instrument, document or financing statement or for the
maintenance of any security interest intended to be perfected thereby. The
Authority will execute such instruments provided to it by the Borrower as may be
reasonably necessary in connection with such filing or recording.

Section 5.9. Compliance with Laws. The Borrower shall, through the term of this
Agreement and at no expense to the Authority, promptly comply or cause
compliance with all applicable laws, ordinances, orders, rules, regulations and
requirements of duly constituted public authorities which may be applicable to
any ownership interest it may have in the Project

 

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or to the repair and alteration thereof, or to the use or manner of use thereof,
including, but not limited to, the Americans with Disabilities Act, Illinois
Accessibility Code, all federal, state and local environmental, health and
safety laws, rules, regulations and orders applicable to or pertaining to the
Project, Federal Worker Adjustment and Retraining Notification Act and Illinois
Prevailing Wage Act.

ARTICLE VI

EVENTS OF DEFAULT AND REMEDIES

Section 6.1. Events of Default. The occurrence and continuation of any one of
the following shall constitute an “Event of Default” under this Agreement:

(i) failure by the Borrower to pay any loan repayments required to be paid under
this Agreement on the dates and in the manner specified in this Agreement, and
continuation of such failure after the expiration of any grace period applicable
to the Borrower Bonds under the Borrower Indenture; or

(ii) failure by the Borrower to observe and perform any covenant or agreement in
this Agreement to be observed or performed by it (other than as referred to in
subsection (i) above), which shall occur and continue for a period of 60 days
after written notice specifying such failure and requesting that it be remedied
is given to the Borrower by the Authority or the Trustee, unless (A) the
Authority and the Trustee shall agree in writing to an extension of such time
prior to its expiration or (B) if the failure is such that it can be corrected
(but not within such 60 day period), it shall not constitute an Event of Default
under this Agreement if corrective action is instituted by the Borrower within
such period and diligently pursued until such failure is corrected; provided,
however, that the failure to observe any covenant, agreement or representation
in this Agreement, which failure results in interest on the Bonds becoming
includable for federal income tax purposes in the gross income of any owner of a
Bond (other than an owner who is a “substantial user” of the Project or a
“related person” of the facilities financed by the Bonds as defined in the Code)
shall not be an Event of Default under this Agreement, and shall not give rise
to any action by any Bondholders for breach of such covenant agreement or
representation, so long as the Borrower is proceeding to redeem the Borrower
Bonds in order to effect the redemption of the Bonds upon a determination of
taxability as described in the Indenture and the Bonds; or

(iii) an Event of Default (as defined in the Borrower Indenture) shall occur and
be continuing; or

(iv) an Event of Default shall occur and be continuing under the Indenture.

Section 6.2. Events of Default Under the Borrower Indenture; Remedies. The
Trustee, as the assignee of the Authority and as an owner of the Borrower Bonds,
shall have the remedies provided in the Borrower Indenture for owners of bonds
issued under it upon the happening of any “Event of Default” as defined in the
Borrower Indenture.

 

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In addition to such remedies, the Authority (on its own behalf and without the
consent of the Trustee) or the Trustee, as assignee of certain rights of the
Authority under this Agreement, may at any time take any action at law or in
equity to collect any payments then due, or to enforce performance and
observance of any obligation, agreement or covenant of the Borrower under this
Agreement.

Any amounts collected pursuant to action taken under this Section or under the
Borrower Indenture shall be deposited with the Trustee and applied in accordance
with the Indenture.

Section 6.3. Certain Fees and Expenses. If an Event of Default shall occur under
this Agreement and the Authority or the Trustee shall employ attorneys or incur
other expenses for the collection of payments due under this Agreement or for
the enforcement of performance or observance of any obligation or agreement on
the part of the Borrower contained in this Agreement, the Borrower will on
demand reimburse the reasonable fees of such attorneys and such other reasonable
expenses so incurred.

Section 6.4. No Remedy Exclusive. No remedy in this Agreement conferred upon or
reserved to the Authority 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 in
this Agreement existing at law or in equity or by statute. No delay or omission
to exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver of any right or power, but
any such right or power may be exercised from time to time and as often as may
be deemed expedient. In order to entitle the Authority to exercise any remedy
reserved to it in this Article, it shall not be necessary to give any notice,
other than such notice as may be in this Agreement expressly required. Such
rights and remedies as are given the Authority under this Agreement shall also
extend to the Trustee, and the Trustee and the Bondholders, subject to the
provisions of the Indenture, shall be entitled to the benefit of all covenants
and agreements in this Agreement.

Section 6.5. Waiver. In the event that any agreement contained in this Agreement
shall be breached by either party and such breach shall subsequently be waived
by the other party with the consent of the Trustee, such waiver shall be limited
to the particular breach so waived and shall not be deemed to waive any other
breach under this Agreement.

Section 6.6. Default by the Authority – Limited Liability.

Notwithstanding any provision or obligation to the contrary set forth herein, no
provision of this Agreement shall be construed so as to give rise to a pecuniary
liability of the Authority or to give rise to a charge upon the general credit
of the Authority, the liability of the Authority hereunder shall be limited to
its interest in the Project, this Agreement and all other related documents and
collateral and the lien of any judgment shall be restricted thereto. In the
performance of the agreements of the Authority herein contained, any obligation
it may incur for the payment of money shall not be a debt of the Authority, nor
shall the Authority be liable on any obligation so incurred. The Authority does
not assume general liability for the repayment of the Bonds or for the costs,
fees, penalties, taxes, interest, commissions, charges, insurance or any other
payments recited herein, and shall be obligated to pay the same only out of the
amounts payable by the Borrower hereunder. The Authority shall not be required
to do any act whatsoever or exercise any diligence whatsoever to mitigate the
damages to the Borrower if a default shall occur hereunder.

 

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ARTICLE VII

MISCELLANEOUS

Section 7.1. Notices. All notices, requests, certificates or other
communications shall be sufficiently given if mailed by first class mail,
postage prepaid, addressed as follows: if to the Authority, at Illinois Finance
Authority, Two Prudential Plaza, 180 North Stetson Avenue, Suite 2555, Chicago,
Illinois 60601, Attention: Executive Director, with a copy to the attention of
the General Counsel; if to the Borrower, to Commonwealth Edison Company, 440
South LaSalle Street, Suite 3300, Chicago, Illinois 60605 Attention: Treasurer,
with a copy to the same address, Attention: General Counsel; and if to the
Trustee at The Bank of New York Trust Company, N.A., 2 North LaSalle Street,
Suite 1020, Chicago, Illinois 60602, Attention: Corporate Trust Division. A
duplicate of each notice, certificate or other communication given under this
Agreement by any party to the other shall also be given to the others. The
parties may, by notice given under this Agreement, designate any further or
different addresses to which subsequent notices, certificates or other
communications shall be sent.

Section 7.2. Assignments. This Agreement may not be assigned by either party
without consent of the other, except that the Authority shall pledge and assign
to the Trustee rights of the Authority under this Agreement and the Borrower
Bonds as provided by Section 4.5 of this Agreement or in the Indenture, and the
Borrower may assign its rights under this Agreement to any transferee or any
surviving or resulting Person pursuant to Section 5.4 of this Agreement.

Section 7.3. Amendments. This Agreement may not be amended except in accordance
with Section 6.07 of the Indenture.

Section 7.4. Further Assurances. The Borrower covenants and agrees to pay the
expenses of the Authority incurred, and to use its best efforts to cause the
Authority to perform the obligations of the Authority, under Section 6.09 of the
Indenture at the expense of the Borrower.

Section 7.5. Governing Law. This Agreement shall be governed exclusively by and
construed in accordance with the internal laws of the State of Illinois
applicable to contracts to be wholly performed therein.

Section 7.6. Severability. In the event any provision of this Agreement shall be
held invalid or unenforceable by any court of competent jurisdiction, that shall
not invalidate or render unenforceable any other provision of this Agreement.

Section 7.7. 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.

 

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Section 7.8. Term of Agreement. This Agreement shall be in full force and effect
from the date of this Agreement, and shall continue in effect until the payment
in full of all principal of and premium, if any, and interest on the Bonds, or
provision for their payment shall have been made pursuant to Article X of the
Indenture, all fees, charges and expenses of the Authority and the Trustee have
been fully paid or provision made for such payment (the payment of which fees,
charges, indemnities and expenses shall be evidenced by a written certification
of the Borrower that it has fully paid all such fees, charges and expenses) and
all other amounts due under this Agreement have been duly paid or provision made
for such payment. All representations, certifications and covenants by the
Borrower as to the indemnification of various parties and the payment of fees
and expenses of the Authority as described in Section 5.1 of this Agreement, and
all matters affecting the tax-exempt status of the Bonds shall survive the
termination of this Agreement.

Section 7.9. Indenture Provisions. The Indenture provisions concerning the Bonds
and other matters therein are an integral part of the terms and conditions of
the loan made by the Authority to the Borrower pursuant to this Agreement and
the execution of this Agreement shall constitute conclusive evidence of approval
of the Indenture by the Borrower to the extent it relates to the Borrower.
Additionally, the Borrower agrees that, whenever the Indenture by its terms
imposes a duty or obligation upon the Borrower, such duty or obligation shall be
binding upon the Borrower to the same extent as if the Borrower were an express
party to the Indenture, and the Borrower hereby agrees to carry out and perform
all of its obligations under the Indenture as fully as if the Borrower were a
party to the Indenture.

Section 7.10. Annual Certificate. For each year that the Agreement remains in
effect, the Borrower will furnish to the Authority and Trustee on or before
January 31 of each succeeding year, a certificate of the Borrower, signed by an
Authorized Borrower Representative, stating that (i) the Borrower has made a
review of its activities during the preceding calendar year for the purpose of
determining whether or not the Borrower has complied with all of the terms,
provisions and conditions of this Agreement, (ii) the Borrower has kept,
observed, performed and fulfilled each and every covenant, provision and
condition of this Agreement on its part to be performed, and (iii) the Borrower
is not in default in the performance or observance of any of the covenants,
provisions or conditions hereof, or if the Borrower shall be in default, such
certificate shall specify all such defaults and the nature thereof.

Section 7.11. Supplements and Amendments to Agreement; Waivers. Subject to the
terms, conditions and provisions of Section 6.07 of the Indenture, the Borrower
and Authority, with the consent of the Trustee and the Credit Facility Provider,
may from time to time enter into supplements and amendments to this Agreement.
An executed copy of any of the foregoing amendments, changes or modifications
shall be filed with the Trustee. The Trustee (with the consent of the Credit
Facility Provider) may grant such waivers of compliance by the Borrower with
provisions of this Agreement as to which the Trustee may deem necessary or
desirable to effectuate the purposes or intent hereof and which, in the opinion
of the Trustee, do not have a material adverse effect upon the interests of the
Bondholders, provided that the Trustee shall file with the Authority any and all
such waivers granted by the Trustee within three (3) Business Days thereof.

 

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IN WITNESS, the Authority and the Borrower have caused this Agreement to be duly
executed and their respective corporate seals to be affixed to this Agreement
and attested by their duly authorized officers, all as of April 15, 2008.

 

ILLINOIS FINANCE AUTHORITY By:  

/s/ Kym M. Hubbard

  Executive Director

(SEAL)

 

Attest:

/s/ Carla B. Burgess

            Assistant Secretary

 

COMMONWEALTH EDISON COMPANY By:  

/s/ Robert K. McDonald

  Robert K. McDonald   Senior Vice President, Chief Financial Officer and
Treasurer

(SEAL)

 

Attest:

/s/ Donna Massey

            Secretary

All right, title and interest of the Authority in and to this Agreement and the
Borrower Bonds except for the rights of the Authority under Sections 5.1, 5.2,
5.4, 5.5, 5.6, 5.7, 5.8, 6.3, 7.2 and 7.4 of this Agreement, have been assigned
to the Trustee pursuant to the Indenture.

 

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EXHIBIT A

Project

Electric Generating Plants

 

 

Braidwood Generating Station, Braidwood, Illinois

   

Byron Generating Station, Bryon, Illinois

   

LaSalle County Generating Station, Marseilles, Illinois

 

 

A-1