Document:

Amendment No. 4 to Tax Indemnity Agreement (SELCO)

    Exhibit
      10.5

    
      
        

      

     

    AMENDMENT
      NO. 4

     

    dated
      as
      of June 1, 2006

     

    to

     

    TAX
      INDEMNITY AGREEMENT

    dated
      as
      of December 1, 1985

     

    between

     

    SELCO
      SERVICE CORPORATION 

    (as
      successor to

    IBM
      Credit LLC)

    beneficiary
      under a Trust Agreement

    dated
      as
      of December 1, 1985

    with
      Wilmington Trust Company

    and

    William
      J. Wade,

    as
      Owner
      Trustee and Cotrustee, respectively,

    Lessor

    and

     

    TUCSON
      ELECTRIC POWER COMPANY,

    and

    SAN
      CARLOS RESOURCES INC.,

    Lessee

     

    _______________________________________

    Common
      Plant

    Springerville
      Generating Station

     

     

    
      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    AMENDMENT
      NO. 4

    to

    TAX
      INDEMNITY AGREEMENT

     

    This
      AMENDMENT
      NO. 4
      (this
“Amendment”),
      dated
      as of June 1, 2006 to TAX
      INDEMNITY AGREEMENT,
      dated as
      of December 1, 1985, between TUCSON
      ELECTRIC POWER COMPANY,
      an
      Arizona corporation, and SAN
      CARLOS RESOURCES INC.,
      an
      Arizona corporation, as Lessee (the “Lessee”),
      and
SELCO
      SERVICE CORPORATION (as
      successor to IBM Credit LLC), an Ohio corporation (the “Owner
      Participant”),
      beneficiary under a Trust Agreement, dated as of December 1, 1985, with
Wilmington
      Trust Company and
      William
      J. Wade,
      as
      Owner Trustee and Cotrustee, respectively (the “Lessor”).

     

    W
      I T N E S S E T H

     

    WHEREAS,
      the
      Owner Participant (or its predecessor in interest) and the Lessee entered into
      a
      Tax Indemnity Agreement, dated as of December 1, 1985, as amended by Amendment
      No. 1, dated as of December 15, 1992, to Tax Indemnity Agreement dated as of
      December 1, 1985, by Amendment No. 2, dated as of December 1, 1999, to Tax
      Indemnity Agreement dated as of December 1, 1985 and by Amendment No. 3, dated
      as of June 1, 2003 (such Tax Indemnity Agreement, as so amended and as further
      amended, modified or supplemented from time to time, being referred to herein
      as
      the “Tax
      Indemnity Agreement”);

     

    WHEREAS,
      the
      Lessee, the Lessor, the Owner Participant and certain other parties have agreed
      pursuant to an Refinancing Agreement, dated as June 1, 2006 (as amended,
      modified or supplemented from time to time, the “Refinancing Agreement”) to
      amend the Lease and the Indenture to permit a refinancing of the outstanding
      Secured Notes on the Amendment Date (as defined in the Refinancing
      Agreement);

     

    WHEREAS,
      the
      Owner Participant and the Lessee wish to amend the Tax Indemnity Agreement
      as
      contemplated herein in order to reflect agreements and amendments contemplated
      by the Refinancing Agreement;

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and other good and valuable consideration, the
      receipt and sufficiency of which is hereby acknowledged, the parties hereto
      agree as follows:

     

    Section
      1. Definitions.
      General.
      Capitalized terms used herein and not otherwise defined herein shall have the
      respective meanings specified in the Tax Indemnity Agreement and the Indenture,
      as amended and supplemented from time to time, including, without limitation,
      by
      Supplemental Indenture No. 3, dated as of June 1, 2003, and the Supplemental
      Indenture No. 4, dated as of the date hereof.

     

    Section
      2. Additional
      Definition. As
      used
      herein, Refinancing Agreement shall mean the Refinancing Agreement dated as
      of
      June 1, 2006, among Lessee, Owner Participant, Lessor and certain parties (as
      such Refinancing Agreement may be amended, modified or supplemented from time
      to
      time). 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      3. Indemnified
      Losses.
      (a)
      Section 3.1(c) is hereby amended to read in its entirety as set forth
      below:

     

    “(c)
      if,
      as a result of the Lessee paying any Transaction Expenses (as defined in the
      Refinancing Agreement), Transaction Expenses (as defined in the Refunding
      Agreement) or Transaction Expenses (as defined in the 1999 Refunding Agreement)
      the Owner Participant shall be required to include any amount in its gross
      income; or”.

     

    (c)
      Section 3.1 is hereby amended by adding at the end of subsection (e) (i.e.
      prior
      to the phrase “(any of the events”) the following:

     

    “;
      or (f)
      if, as a result of the Lessee paying any Supplemental Rent under Section 3(c)
      of
      the Lease with respect to payments contemplated by Section 2 of the Supplemental
      Indenture No. 4, dated as of June 1, 2006, to the Indenture the Owner
      Participant shall be required to include any amount in its gross
      income”.

     

    (d)
      Section 3.1 is hereby amended by replacing the phrase “(any of the events
      described in these subsections (a)(2), (b), (c), (d) or (e) being referred
      to
      hereinafter as a “Loss”)” with the following:

     

    “(any
      of
      the events described in these subsections (a)(2), (b), (c), (d), (e) or (f)
      being referred to hereinafter as a “Loss”)”.

     

    Section
      4. Counterpart
      Execution.
      This
      Amendment may be executed by the parties hereto in separate counterparts, each
      of which when so executed and delivered shall be deemed an original, but all
      such counterparts shall together constitute but one and the same
      instrument.

     

    Section
      5. Ratification
      of the Tax Indemnity Agreement.
      As
      amended by this Amendment, the Tax Indemnity Agreement is in all respects
      ratified, approved and confirmed, and the Tax Indemnity Agreement and this
      Amendment shall together constitute one and the same instrument.

     

    Section
      6. Governing
      Law.
      This
      Amendment has been delivered in, and shall in all respects be governed by,
      construed in accordance with, the laws of the State of New York applicable
      to
      agreements made and to be performed entirely within such State, including such
      laws applicable to matters of construction, validity and
      performance.

     

    Section
      7. Representation
      of Lessee. Lessee
      represents that the rate of interest payable in respect of the Series 4 Notes
      as
      determined pursuant to Supplemental Indenture No. 4, dated as of June 1, 2006,
      to the Indenture, including the use of Applicable Base Rate Margin and
      Applicable Libor Margin that increase over time (i) represents an arm’s length
      rate, (ii) is consistent with market practice for long-term floating rate
      financings, and (iii) was determined without reference to federal income tax
      considerations to any person.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Owner Participant and the Lessee have caused this Amendment to be duly executed
      by their respective officers hereunto duly authorized as of the date set forth
      above.

     

     

    
      	 	 	 
	 	TUCSON
              ELECTRIC POWER COMPANY
	 
 	 
 	 
 
	 	By  	 
	 	
              
Name:
	 	Title: 

    

     

     

    
      	 	 	 
	 	SAN
              CARLOS RESOURCES INC.
	 
 	 
 	 
 
	 	By  	 
	 	
              
Name:
	 	Title: 

    

     

     

    
      	 	 	 
	 	SELCO
              SERVICE CORPORATION
	 
 	 
 	 
 
	 	By  	 
	 	
              
Name:
	 	Title:Amendment No. 4 to Tax Indemnity Agreement (Emerson)

    Exhibit
      10.6

    
      
        

      

    

    

     

    AMENDMENT
      NO. 4

     

    dated
      as
      of June 1, 2006

     

    to

     

    TAX
      INDEMNITY AGREEMENT

    dated
      as
      of December 1, 1985

     

    between

     

    EMERSON
      FINANCE LLC

    (formerly
      known as

    Emerson
      Finance Co.)

    beneficiary
      under a Trust Agreement

    dated
      as
      of December 1, 1985

    with
      Wilmington Trust Company

    and

    William
      J. Wade,

    as
      Owner
      Trustee and Cotrustee, respectively,

    Lessor

    and

     

    TUCSON
      ELECTRIC POWER COMPANY,

    and

    SAN
      CARLOS RESOURCES INC.,

    Lessee

     

    _______________________________________

    Common
      Plant

    Springerville
      Generating Station

     

     

    
      
        

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    

    AMENDMENT
      NO. 4

    to

    TAX
      INDEMNITY AGREEMENT

     

    This
      AMENDMENT
      NO. 4
      (this
“Amendment”),
      dated
      as of June 1, 2006 to TAX
      INDEMNITY AGREEMENT,
      dated as
      of December 1, 1985, between TUCSON
      ELECTRIC POWER COMPANY,
      an
      Arizona corporation, and SAN
      CARLOS RESOURCES INC.,
      an
      Arizona corporation, as Lessee (the “Lessee”),
      and
EMERSON
      FINANCE LLC (formerly
      known as Emerson Finance Co.), a Delaware limited liability company (the
“Owner
      Participant”),
      beneficiary under a Trust Agreement, dated as of December 1, 1985, with
Wilmington
      Trust Company and
      William
      J. Wade,
      as
      Owner Trustee and Cotrustee, respectively (the “Lessor”).

     

    W
      I T N E S S E T H

     

    WHEREAS,
      the
      Owner Participant (or its predecessor in interest) and the Lessee entered into
      a
      Tax Indemnity Agreement, dated as of December 1, 1985, as amended by Amendment
      No. 1, dated as of December 15, 1992, to Tax Indemnity Agreement dated as of
      December 1, 1985, by Amendment No. 2, dated as of December 1, 1999, to Tax
      Indemnity Agreement dated as of December 1, 1985 and by Amendment No. 3, dated
      as of June 1, 2003 (such Tax Indemnity Agreement, as so amended and as further
      amended, modified or supplemented from time to time, being referred to herein
      as
      the “Tax
      Indemnity Agreement”);

     

    WHEREAS,
      the
      Lessee, the Lessor, the Owner Participant and certain other parties have agreed
      pursuant to an Refinancing Agreement, dated as June 1, 2006 (as amended,
      modified or supplemented from time to time, the “Refinancing Agreement”) to
      amend the Lease and the Indenture to permit a refinancing of the outstanding
      Secured Notes on the Amendment Date (as defined in the Refinancing
      Agreement);

     

    WHEREAS,
      the
      Owner Participant and the Lessee wish to amend the Tax Indemnity Agreement
      as
      contemplated herein in order to reflect agreements and amendments contemplated
      by the Refinancing Agreement;

     

    NOW,
      THEREFORE,
      in
      consideration of the premises and other good and valuable consideration, the
      receipt and sufficiency of which is hereby acknowledged, the parties hereto
      agree as follows:

     

    Section
      1. Definitions.
      General.
      Capitalized terms used herein and not otherwise defined herein shall have the
      respective meanings specified in the Tax Indemnity Agreement and the Indenture,
      as amended and supplemented from time to time, including, without limitation,
      by
      Supplemental Indenture No. 3, dated as of June 1, 2003, and the Supplemental
      Indenture No. 4, dated as of the date hereof.

     

    Section
      2. Additional
      Definition. As
      used
      herein, Refinancing Agreement shall mean the Refinancing Agreement dated as
      of
      June 1, 2006, among Lessee, Owner Participant, Lessor and certain parties (as
      such Refinancing Agreement may be amended, modified or supplemented from time
      to
      time). 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      3. Indemnified
      Losses.
      (a)
      Section 3.1(c) is hereby amended to read in its entirety as set forth
      below:

     

    “(c)
      if,
      as a result of the Lessee paying any Transaction Expenses (as defined in the
      Refinancing Agreement), Transaction Expenses (as defined in the Refunding
      Agreement) or Transaction Expenses (as defined in the 1999 Refunding Agreement)
      the Owner Participant shall be required to include any amount in its gross
      income; or”.

     

    (c)
      Section 3.1 is hereby amended by adding at the end of subsection (e) (i.e.
      prior
      to the phrase “(any of the events”) the following:

     

    “;
      or (f)
      if, as a result of the Lessee paying any Supplemental Rent under Section 3(c)
      of
      the Lease with respect to payments contemplated by Section 2 of the Supplemental
      Indenture No. 4, dated as of June 1, 2006, to the Indenture the Owner
      Participant shall be required to include any amount in its gross
      income”.

     

    (d)
      Section 3.1 is hereby amended by replacing the phrase “(any of the events
      described in these subsections (a)(2), (b), (c), (d) or (e) being referred
      to
      hereinafter as a “Loss”)” with the following:

     

    “(any
      of
      the events described in these subsections (a)(2), (b), (c), (d), (e) or (f)
      being referred to hereinafter as a “Loss”)”.

     

    Section
      4. Counterpart
      Execution.
      This
      Amendment may be executed by the parties hereto in separate counterparts, each
      of which when so executed and delivered shall be deemed an original, but all
      such counterparts shall together constitute but one and the same
      instrument.

     

    Section
      5. Ratification
      of the Tax Indemnity Agreement.
      As
      amended by this Amendment, the Tax Indemnity Agreement is in all respects
      ratified, approved and confirmed, and the Tax Indemnity Agreement and this
      Amendment shall together constitute one and the same instrument.

     

    Section
      6. Governing
      Law.
      This
      Amendment has been delivered in, and shall in all respects be governed by,
      construed in accordance with, the laws of the State of New York applicable
      to
      agreements made and to be performed entirely within such State, including such
      laws applicable to matters of construction, validity and
      performance.

     

    Section
      7. Representation
      of Lessee. Lessee
      represents that the rate of interest payable in respect of the Series 4 Notes
      as
      determined pursuant to Supplemental Indenture No. 4, dated as of June 1, 2006,
      to the Indenture, including the use of Applicable Base Rate Margin and
      Applicable Libor Margin that increase over time (i) represents an arm’s length
      rate, (ii) is consistent with market practice for long-term floating rate
      financings, and (iii) was determined without reference to federal income tax
      considerations to any person.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    Section
      8. Affiliated Group.
      Section
      9 is hereby amended to read in its entirety as set forth below: 

     

    “Section
      9. Affiliated Group. For purposes of this Tax Indemnity Agreement, the term
      “Owner Participant” shall include the Owner Participant and any beneficial owner
      of the Owner Participant and the group or any member of an affiliated group
      of
      corporations of which the Owner Participant or any beneficial owner of the
      Owner
      Participant is, or may become, a member if consolidated or combined returns
      are
      filed for such affiliated group for federal income tax purposes.”

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF,
      the
      Owner Participant and the Lessee have caused this Amendment to be duly executed
      by their respective officers hereunto duly authorized as of the date set forth
      above.

     

    
      	 	 	 
	 	TUCSON
              ELECTRIC POWER COMPANY
	 
 	 
 	 
 
	 	By  	 
	 	
              
                

              

              Name:

            
	 	Title: 

    

     

     

    
      	 	 	 
	 	SAN
              CARLOS
              RESOURCES INC.
	 
 	 
 	 
 
	 	By  	 
	 	
              
Name:
	 	Title: 

    

     

     

    
      	 	 	 
	 	EMERSON
              FINANCE LLC
	 
 	 
 	 
 
	 	By  	 
	 	
              
Name:
	 	Title:

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