<PAGE>
File No. 70-8869
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
AMENDMENT NO. 1 TO
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
_________________________
CENTRAL POWER AND LIGHT COMPANY
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
PUBLIC SERVICE COMPANY OF OKLAHOMA
212 East Sixth Street
Tulsa, Oklahoma 74119-1212
WEST TEXAS UTILITIES COMPANY
301 Cypress
Abilene, Texas 79601
(Names of companies filing this statement and addresses
of principal executive offices)
_________________________
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
_________________________
Shirley S. Briones, Treasurer
Central Power and Light Company
539 North Carancahua Street
Corpus Christi, Texas 78401-2802
Shirley S. Briones, Treasurer
Public Service Company Of Oklahoma
212 East Sixth Street
Tulsa, Oklahoma 74119-1212
Shirley S. Briones, Treasurer
West Texas Utilities Company
301 Cypress
Abilene, Texas 79601
Wendy G. Hargus, Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
Central Power & Light Company ("CPL"), a Texas corporation,
Public Service Company of Oklahoma ("PSO"), a Oklahoma
corporation, and West Texas Utilities ("WTU" and, together with
CPL and PSO, the "Companies"), a Texas corporation, and wholly-
owned electric public utility subsidiaries of Central and South
West Corporation ("CSW"), a Delaware corporation and a registered
holding company under the Public Utility Holding Company Act of
1935, as amended (the "Act"), hereby amend their Form U-1
Application-Declaration in File No. 70-8869 for the purpose of
amending Items 1, 4 and 6 in the following respects. In all
other respects, the Application-Declaration as previously filed
will remain the same.
Item 1. Description of Proposed Transaction.
(a) The first paragraph of the section of Item 1 entitled
"Managing Interest Rates" is hereby amended and restated in its
entirety to read as follows:
"The Companies propose to manage interest rate risk, as
appropriate, through the used of hedging products, including
interest rate swaps, forward swaps, caps and collars. The
Companies may also use interest rate swaps for the purpose
of effectively lowering their interest costs on Old Bonds
and/or New Bonds. The Companies request authority to enter
into the foregoing types of transactions from time to time
in connection with the Old Bonds or the New Bonds."
(b) The heading of the section of Item 1 entitled "Terms of
the New Bonds" is hereby changed to "New Bonds."
(c) The following paragraph is added to the end of the
section of Item 1 entitled "New Bonds."
"Central and South West Services, Inc. will act as
agent for the Companies under the Installment Payment
Agreement and the Indenture."
Item 4. Regulatory Approval
Item 4 is hereby amended and restated in its entirety
as follows:
"The Amended Sale Agreement which PSO proposes to enter into
may require prior approval of the Oklahoma Corporation
Commission the "OCC"). PSO has filed an application with
the OCC and expects to receive a certificate of authority
prior to execution of any Amended Sale Agreement. No state
regulatory authority other than the OCC, and no federal
regulatory, other than the Commission under the Act, has
jurisdiction over the proposed transaction.
OCC approval may also be required in connection with
the entering into by PSO of one or more hedging products,
including interest rate swaps, forward swaps, caps, collars
and forward transactions ("Instruments") to manage interest
rate risk or to effectively lower the Companies' interest
cost on the Old Bonds and/or New Bonds. If required, PSO
will obtain a certificate of authority from the OCC prior to
entry into any such Instruments.
The Companies believe (based on a review of applicable
state laws) that no state approvals other than OCC approval
are required in connection with the entering into by the
Companies of any Instruments. The Companies will, however,
prior to entry into any such Instruments, provide
information on such products to members of the staffs of the
Public Utility Commission of Oklahoma and Texas."
Item 6. Exhibits and Financial Statements
Item 6 is hereby amended to file the following
exhibits:
Exhibit 1 - Form of Installment Sale Agreement
between the Companies and the Issuer.
Exhibit 2 - Form of Indenture of Trust between the
Issuer and the Trustee.
Exhibit 3 - Form of Bond Purchase Agreement between
the Issuer and the Underwriters.
Exhibit 4 - Form of Letter of Representation from
the Companies to the Purchasers.
Exhibit 5 - Preliminary Official Statement relating
to the New Bonds.
Exhibit 6 - Preliminary opinion of Milbank, Tweed,
Hadley & McCloy, counsel for the
Companies.
Exhibit 8 - Financial Statements per books and pro
forma as of March 31, 1996.
S I G N A T U R E
- - - - - - - - -
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, as amended, the undersigned Companies have
duly caused this document to be signed on their behalf by the
undersigned thereunto duly authorized.
Dated: July 10, 1996
CENTRAL POWER & LIGHT COMPANY
By:/s/SHIRLEY S. BRIONES
Shirley S. Briones
Treasurer
PUBLIC SERVICE COMPANY OF OKLAHOMA
By:/s/SHIRLEY S. BRIONES
Shirley S. Briones
Treasurer
WEST TEXAS UTILITIES COMPANY
By:/s/SHIRLEY S. BRIONES
Shirley S. Briones
Treasurer
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
1 Form of Installment Sale Agreement between Electronic
the Companies and the Issuer.
2 Form of Indenture of Trust between the Electronic
Issuer and the Trustee.
3 Form of Bond Purchase Agreement between Electronic
the Issuer and the Underwriters.
4 Form of Letter of Representation from Electronic
the Companies to the Purchasers.
5 Preliminary Official Statement relating Electronic
to the Bonds.
6 Preliminary opinion of Milbank, Tweed, Electronic
Hadley & McCloy, counsel for the Companies.
8 Financial Statements per books and pro Electronic
forma as of March 31, 1996.
<PAGE>
EXHIBIT 1
INSTALLMENT PAYMENT AGREEMENT
between
RED RIVER AUTHORITY OF TEXAS
and
WEST TEXAS UTILITIES COMPANY, PUBLIC SERVICE COMPANY OF
OKLAHOMA
AND CENTRAL POWER AND LIGHT COMPANY
and
CENTRAL AND SOUTH WEST CORPORATION
This Installment Payment Agreement dated as of July 1, 1996
(the "Agreement"), by and between RED RIVER AUTHORITY OF TEXAS
(the "Issuer"), and WEST TEXAS UTILITIES COMPANY ("WTU"), PUBLIC
SERVICE COMPANY OF OKLAHOMA ("PSO") AND CENTRAL POWER AND LIGHT
COMPANY ("CPL") (collectively, the "Company") and CENTRAL AND
SOUTH WEST CORPORATION (the "Agent'):
W I T N E S S E T H:
GENERAL RECITALS AND FINDINGS
(a) The terms used in these recitals shall have the
meanings assigned to such terms in the Indenture of Trust dated
as of August 1, 1996, entered into by and between the Issuer and
The Bank of New York, as trustee.
(b) The Issuer is a governmental agency and body politic
and corporate of the State of Texas, created and existing as a
conservation and reclamation district and political subdivision
of the State of Texas pursuant to Article XVI, Section 59 of the
Texas Constitution, and the laws of the State of Texas,
particularly the Issuer Act; and
(c) Pursuant to law, and particularly the Issuer Act,
Article 717k, Article 717q, Chapter 383, and Chapter 30, the
Issuer, being a "river authority" as defined in Chapter 383 and
Chapter 30 and being an "issuer" as defined in Article 717k and
Article 717q, is empowered to acquire, construct, and improve
various air and water pollution control facilities, and to issue
revenue bonds for such purpose and for the purpose of refunding
any such bonds or obligations issued for such purposes; and
(d) The Issuer and the Company and Central and South West
Services, Inc. have previously entered into the Prior Agreement
pursuant to which the Prior Bonds were issued; and
(e) The Issuer entered into the Prior Indenture to secure
the Prior Bonds; and
(f) Pursuant to the terms of the Prior Agreement, each of
WTU, PSO and CPL is severally obligated to pay its Ownership
Percentage of certain installment sale payments with respect to
the Project, which payments shall be made in amounts which,
together with other moneys available therefor will be sufficient
to pay the principal of, redemption premium, if any, and interest
on the Prior Bonds as the same come due, with such payments to be
made in funds which will be immediately available on the date
such principal of, redemption premium, if any, and interest is
due on such Prior Bonds; and
(g) The Company has requested that the Issuer issue its
revenue bonds for the purpose of refunding and retiring all of
the outstanding Prior Bonds; and
(h) Each of WTU, PSO and CPL has agreed to make payments
hereunder in lieu of its obligations under the Prior Agreement;
and
(i) This Agreement is authorized and executed pursuant to
applicable laws, including the Acts; and
(j) The Issuer and the Company have taken all action and
have complied with all provisions of law with respect to the
execution, delivery and performance of this Agreement and the due
authorization of the consummation of the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the covenants and
agreements herein made, and subject to the conditions herein set
forth, the Issuer and the Company and the Agent contract and
agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. CAPITALIZED TERMS USED BUT NOT
OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS ASSIGNED TO SUCH
TERMS IN THE INDENTURE OF TRUST DATED AS OF AUGUST 1, 1996,
ENTERED INTO BY AND BETWEEN THE ISSUER AND THE BANK OF NEW YORK,
AS TRUSTEE (THE "INDENTURE").
References in the singular number in this Agreement shall be
considered to include the plural, if and when appropriate. Any
times referred to herein shall be deemed to be references to New
York City time. Any accounting term not otherwise defined has
the meaning assigned to it in accordance with generally accepted
accounting principles.
Section 1.02. AGENT TO ACT FOR COMPANY. Each of WTU, PSO
and CPL has designated and authorized the Agent to act on behalf
of the Company for all purposes pursuant to the Indenture and
this Agreement. Any consent, instruction, approval, direction,
designation, selection, order, communication or notice to be
given by or on behalf of any of WTU, PSO or CPL hereunder shall
be given by the Agent and shall be binding upon each of WTU, PSO
and CPL. Any consent, instruction, approval, direction,
designation, selection, order, communication or notice to be
given to any of WTU, PSO or CPL hereunder shall be given to the
Agent, and receipt of such by the Agent shall be deemed to be
receipt of such by each of WTU, PSO and CPL. It is represented
and covenanted by the Agent that it is authorized by law and
proper corporate proceedings to execute this Agreement and to act
herein for and on behalf of each of WTU, PSO and CPL,
respectively, and as their agent, and that the Agent and each of
WTU, PSO and CPL, respectively, are legally bound and obligated
by and under this Agreement, in accordance with its terms and
conditions.
Section 1.03. OBLIGATIONS OF WTU, PSO AND CPL SEVERAL BUT
NOT JOINT. Notwithstanding the definition of the term "Company"
meaning WTU, PSO and CPL collectively, each of WTU, PSO and CPL
is liable severally, but not jointly, to make or pay, or cause to
be made or paid, its Ownership Percentage of each Installment
Payment or other obligation under this Agreement or the
Indenture, and none of WTU, PSO or CPL is obligated to make or
pay, or cause to be made or paid, more than its own Ownership
Interest of each Installment Payment or other obligation under
this Agreement or more than its own Ownership Interest of the
aggregate amount of all Installment Payments or other obligations
under this Agreement. In addition any payment to or for the
account of the Company hereunder shall be made pro rata to each
of WTU, PSO and CPL in accordance with its Ownership Interest.
Section 1.04. CHANGE IN OWNERSHIP PERCENTAGES. The
Ownership Percentage of each of WTU, PSO and CPL may be changed
by agreement among WTU, PSO and CPL with the written consent of
the Issuer, but without notice to, or the approval or consent of,
the holders of the Bonds; provided that the aggregate Ownership
Percentage of WTU, PSO and CPL will at all times equal 100%.
ARTICLE II
REPRESENTATIONS
Section 2.01. REPRESENTATIONS BY ISSUER. The Issuer makes
the following representations as the basis for the undertakings
on its part herein contained:
(a) The Issuer is a governmental agency, body politic and
corporate of the State of Texas, existing as a conservation and
reclamation district pursuant to the Issuer Act, and a "river
authority" and an "issuer" within the definitions set forth in
the Acts.
(b) The Issuer has the legal power under the Acts to enter
into the transactions contemplated by this Agreement, the
Indenture and the Bond Resolution and to carry out its
obligations hereunder and thereunder, including the issuance and
delivery of the Bonds, and to adopt and perform the Bond
Resolution; and each such instrument is a legal, valid and
binding obligation of the Issuer enforceable in accordance with
its terms, except to the extent that the enforcement thereof may
be limited by (i) bankruptcy, insolvency, reorganization,
moratorium, or other laws now or hereafter in effect relating to
or affecting creditors' rights generally, and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity). The Issuer has
been duly authorized to execute, deliver and perform its
obligations under this Agreement and the Indenture, and to adopt
and perform the Bond Resolution by proper action of the Board.
(c) The Issuer officially finds and determines that each
Project constitutes "control facilities" within the meaning of
Chapter 383 and "disposal systems" within the meaning of Chapter
30 and a "public utility" within the meaning of Article 717q.
(d) The Issuer, by carrying out the purposes of the Acts as
provided in this Agreement, will be performing an essential
public function under the Texas Constitution.
(e) The Issuer is not in default under any of the
provisions of the laws of the State which would impair, interfere
with, or otherwise adversely affect the ability of the Issuer to
make and perform the provisions of this Agreement, the Indenture,
or the Bonds.
(f) There are no actions, suits, proceedings, inquiries or
investigations pending or to the knowledge of the Issuer
threatened, against or affecting the Issuer in any court or
before any governmental authority or arbitration board or
tribunal, which involve the possibility of materially and
adversely affecting the transactions contemplated by this
Agreement or the Indenture or which, in any way, would adversely
affect the validity or enforceability of the Bonds, the Indenture
or this Agreement or the ability of the Issuer to perform its
obligations under the Indenture or this Agreement.
(g) The adoption of the Bond Resolution, the issuance and
sale of the Bonds and the execution and delivery by the Issuer of
this Agreement and the Indenture, and the compliance by the
Issuer with all of the provisions of each thereof and of the
Bonds (i) are within the powers and authority of the Issuer, (ii)
have been done in full compliance with the provisions of the
Acts, are legal and will not conflict with or constitute on the
part of the Issuer a violation of or a breach of or default
under, or result in the creation of any lien, charge or
encumbrance upon any property of the Issuer (other than as
contemplated by this Agreement and the Indenture) under the
provisions of, any charter instrument, by-law, indenture,
mortgage, deed of trust, note agreement or other agreement or
instrument to which the Issuer is a party or by which the Issuer
is bound, or any license, judgment, decree, law, statute, order,
rule or regulation of any court or governmental agency or body
having jurisdiction over the Issuer or any of its activities or
properties, and (iii) have been duly authorized by all necessary
action on the part of the Issuer.
(h) Neither the nature of the Issuer nor any of its
activities or properties, nor any relationship between the Issuer
and any other person, nor any circumstance in connection with the
offer, issue, sale or delivery of any of the Bonds is such as to
require the consent, approval or authorization of, or the filing,
registration or qualification with, any governmental authority on
the part of the Issuer in connection with the execution, delivery
and performance of this Agreement and the Indenture or the offer,
issue, sale or delivery of the Bonds, other than those already
obtained as of the date of issue of the Bonds; provided, however,
no representation is made herein as to compliance with the
securities or "blue sky" laws of any jurisdiction.
(i) No event has occurred and no condition exists with
respect to the Issuer which would constitute an "Event of
Default" under this Agreement or under the Indenture or which,
with the lapse of time or with the giving of notice or both,
would become an "Event of Default" under this Agreement or under
the Indenture.
Section 2.02. REPRESENTATIONS BY COMPANY. Each of WTU, PSO
and CPL makes the following representations as the basis for the
undertakings on its part herein contained:
(a) Each of WTU, PSO and CPL (i) is a corporation duly
incorporated and in good standing under the laws of the state of
its incorporation, (ii) is duly qualified to transact business in
the State of Texas, (iii) is not in violation of any provision of
its restated articles of incorporation or its by-laws, (iv) has
full corporate power to own its properties and conduct its
business, (v) has full legal right, power and authority to enter
into this Agreement and consummate all transactions contemplated
by this Agreement and (vi) by proper corporate action has duly
authorized the execution and delivery of this Agreement.
(b) Neither the execution and delivery by WTU, PSO or CPL
of this Agreement nor the consummation by WTU, PSO or CPL of the
transactions contemplated by this Agreement conflicts with, will
result in a breach of or default under or will result in the
imposition of any prohibited lien on any property of WTU, PSO or
CPL, as the case may be, pursuant to the restated articles of
incorporation or by-laws of WTU, PSO or CPL, as the case may be,
or the terms, conditions or provisions of any statute, order,
rule, regulation, agreement or instrument to which WTU, PSO or
CPL, as the case may be, is a party or by which it is bound.
(c) This Agreement has been duly authorized, executed and
delivered by each of WTU, PSO and CPL and constitutes the legal,
valid and binding obligation of each of them enforceable in
accordance with its terms, except to the extent that the
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, or other laws now or hereafter in
effect relating to or affecting creditors' rights generally, and
(ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity).
(d) There is no material litigation or proceeding pending,
or to the knowledge of any of WTU, PSO or CPL threatened, against
any of WTU, PSO or CPL which could reasonably be expected to have
a material adverse effect on the validity of this Agreement or
the ability of any of WTU, PSO or CPL to comply with its
obligations under this Agreement.
(e) The Company has requested the Issuer to refund the
Prior Bonds.
(f) The Project constitutes "control facilities" within the
meaning of Chapter 383 and "disposal systems" within the meaning
of Chapter 30 and a "public utility" within the meaning of
Article 717q.
(g) All statements of facts or other information furnished
by the Company to Bond Counsel in connection with Bond Counsel's
opinion relating to the Bonds, including particularly the Tax
Letter of Representation, were true and correct in all material
respects when made and nothing has come to the Company's
attention that would change the truth or correctness of such
statements of facts or other information furnished to Bond
Counsel. Moreover, to the extent that such representations and
statements relate to future events, the Company agrees, at all
times while the Bonds are Outstanding, to take such action to
prevent, or to refrain from any action which would result in,
such representations and statements becoming false, inaccurate or
incorrect.
(h) The representations of the Company stated in the Prior
Agreement were true and correct when made and nothing has come to
the Company's attention to make such representations untrue as of
the date hereof.
ARTICLE III
THE PROJECT
Section 3.01. INTENTIONALLY OMITTED.
Section 3.02. INTENTIONALLY OMITTED.
Section 3.03. INTENTIONALLY OMITTED.
Section 3.04. MAINTENANCE AND REPAIR. Subject to Section
1.03 hereof, all costs of operating and maintaining the Project
shall be paid by the Company, and the Issuer shall have no
obligation or liability in this regard. It is understood and
agreed that the Issuer shall have no duties or responsibilities
whatsoever with respect to the operation or maintenance of the
Project, or the performance of the Project for its designed
purposes.
Section 3.05. RIGHT TO DISCONTINUE OPERATION OF PROJECT.
Although the Company intends to operate, or cause to be operated,
the Project for its designed purposes until the date on which no
Bonds are Outstanding, the Company is not required by this
Agreement to operate, or cause to be operated, any portion of the
Project after the Company shall deem in its discretion that such
continued operation is not advisable and in such event it is not
prohibited by this Agreement from selling, leasing or retiring
all or any such portion of the Project; provided, however, that,
prior to any such sale, lease, or retirement, the Company shall
have provided to the Issuer and the Trustee a Favorable Opinion.
The net proceeds from such sale, lease or other disposition, if
any, shall belong to, and may be used for any lawful purpose by,
the Company.
Section 3.06. INSURANCE AND CONDEMNATION AWARDS. The net
proceeds of any insurance or condemnation award as a result of
the destruction or condemnation of the Project or any portion
thereof shall belong to, and may be used for any lawful purpose
by, the Company.
Section 3.07. TAXATION OF PROJECT. Subject to Section 1.03
hereof, during the term of this Agreement the Company will
promptly remit when due all taxes, including specifically all
sales taxes and ad valorem taxes, levied in respect of the
Project or the Installment Payments payable hereunder to the
appropriate taxing body. The Company may, at its own expense and
in its own name, in good faith contest any such taxes,
assessments and other charges and, in the event of such contest,
may permit the taxes, assessments or other charges so contested
to remain unpaid during the period of such contest and any appeal
therefrom. All taxes, assessments and other charges levied or
imposed with respect to the Project shall be the obligation of
the Company, and the Issuer shall have no obligation or liability
in this regard.
Section 3.08. ISSUER'S LIMITED LIABILITY. It is recognized
that the Issuer's only source of funds with which to carry out
its commitments under this Agreement will be from the proceeds
from the sale of the Bonds or from any available income or
earnings derived therefrom, from payment made or caused to be
made by the Company hereunder, or from any funds which otherwise
might be made available by the Company; and it is expressly
agreed that the Issuer shall have no financial liability,
obligation, or responsibility with respect to this Agreement or
the Project except to the extent of funds available from such
sources.
Section 3.09. GOVERNMENTAL REGULATION. The Company
recognizes and agrees that this Agreement and the issuance of the
Bonds pursuant hereto will not diminish or limit the authority of
the United States Environmental Protection Agency, the Texas
Natural Resources Conservation Commission, the Texas Water
Development Board, or any other State agency or local governments
in performing any of the powers, functions and duties vested in
such entities by federal and state laws, and that all applicable
laws shall be enforced without regard to ownership of the
Project; and that the Company will not be relieved of any
responsibility under any applicable federal or state laws or
regulations pertaining to pollution control, either now, or
during, or after the acquisition, construction and improvement of
the Project, and the Issuer shall have no responsibility or
obligation to take any action to comply with such laws or
regulations with respect to the Project.
ARTICLE IV
ISSUANCE OF BONDS; REFUNDING THE PRIOR BONDS;
PAYMENTS; DISBURSEMENTS
Section 4.01. ISSUANCE OF BONDS. In order to provide funds
for the refunding of the Prior Bonds, the Issuer, concurrently
with the execution of this Agreement, will sell, issue and
deliver to the initial purchasers thereof the Bonds, all in
accordance with the Indenture. The Issuer agrees to pay, from
the proceeds from the sale and delivery of the Bonds, or from any
available income or earnings derived therefrom, or from any funds
which otherwise might be made available to the Issuer for such
purpose by the Company, the cost of the Refunding of the Prior
Bonds, to the full extent provided in this Agreement and
permitted by the Acts.
Section 4.02. BOND PROCEEDS. (a) The Issuer shall cause to
be deposited into a separate account within the bond fund
established pursuant to the Prior Indenture proceeds from the
sale of the Bonds equal to $63,300,000, and the Company shall
cause to be deposited into such separate account the amount of
$_______________, which together shall be sufficient to pay the
redemption price of and redeem all of the Prior Bonds on
___________, 1996.
(b) The Company agrees to pay all fees, charges and
expenses of the Prior Trustee as required by the Prior Indenture.
Section 4.03. SECURITY FOR THE BONDS. Subject to Section
1.03 hereof, the obligations of the Company under this Agreement,
including specifically the obligation to make Installment
Payments as provided in Sections 5.01, 5.03 and 5.04 hereof,
shall be direct general obligations of the Company. Prior to or
simultaneously with the issuance of the Bonds, the Issuer will
assign to the Trustee under the terms of the Indenture all of the
Issuer's right, title, and interest in and to the Installment
Payments and certain other rights under this Agreement as
provided in the Indenture.
Section 4.04. BOND FUNDS. The Issuer has authorized and
directed the Trustee pursuant to the Indenture to transfer all of
the proceeds from the sale of the Bonds to the Prior Trustee, as
trustee and paying agent for the Prior Bonds. The Company agrees
(i) to direct the Prior Trustee to invest such proceeds, together
with amounts provided by the Company pursuant to Section 4.05
hereof, only in direct obligations of the United States of
America, including obligations the principal of and interest on
which are unconditionally guaranteed by the United States of
America, which may be in book-entry form, and which mature on or
before the redemption date for the Prior Bonds and (ii) that any
such funds which cannot be so invested shall remain uninvested.
Section 4.05. COMPANY REQUIRED TO PAY IN EVENT MONIES HELD
PURSUANT TO THE PRIOR INDENTURE ARE INSUFFICIENT. The Company
shall, on the Issue Date, cause to be deposited in the bond fund
for the Prior Bonds held by the Prior Trustee monies sufficient,
together with the Bond proceeds so transferred on the Issue Date,
to pay the total redemption price of the Prior Bonds on their
redemption date, plus any fees and charges due the Prior Trustee.
In the event that monies held pursuant to the Prior Indenture are
not sufficient to accomplish the Refunding on the redemption date
for the Prior Bonds, the Company shall at its own expense and
without any right of reimbursement in respect thereof immediately
pay that portion of such costs as may be in excess of said
monies.
Section 4.06. NOTICE TO BOND INSURER. The Agent agrees to
give written notice to Bond Insurer not less than two days prior
to any regularly scheduled payment date for principal of or
interest on the Bonds if any of WTU, PSO or CPL do not intend or
will be unable to make the corresponding payment to the Trustee
hereunder.
ARTICLE V
THE COMPANY'S PAYMENTS
Section 5.01. COMPANY APPROVAL OF ISSUANCE OF BONDS. (a)
Simultaneously with the authorization of this Agreement by the
Board of Directors of the Issuer, such Board has adopted the Bond
Resolution. In consideration of the covenants and agreements set
forth in this Agreement, and to enable the Issuer to issue the
Bonds to carry out the intents and purposes hereof, this
Agreement is executed to assure the issuance of such Bonds, and
to provide for the due and punctual payment by the Company to the
Issuer, or to the Trustee under the Indenture, of amounts not
less than those required to pay, as and when due (whether at
stated maturity, upon redemption, acceleration of maturity,
tender, deemed tender, or otherwise), all of the principal of,
redemption premium, if any, and interest on, and Purchase Price
of, the Bonds, and all other payments required in connection with
such Bonds, the Agreement, or the Indenture. Each such payment
is hereby designated as an "Installment Payment", and
collectively such payments are hereby designated as "Installment
Payments". Subject to Section 1.03 hereof, the Company hereby
agrees to make, or cause to be made, each Installment Payment, as
and when due, for the benefit of the owners of the Bonds into the
Bond Fund, or, in the case of an Installment Payment in respect
of Purchase Price, into the Bond Purchase Fund, all as provided
in the Indenture.
(b) By execution and delivery of this Agreement, the
Company hereby approves the Bond Resolution and the Indenture.
It is hereby agreed that the foregoing approval of the Bond Reso-
lution and the Indenture constitutes the acknowledgement and
agreement of the Company that the Bonds, when issued, sold, and
delivered as provided in the Bond Resolution and the Indenture,
will be issued in accordance with and in compliance with this
Agreement, notwithstanding any other provisions of this Agreement
or any other contract or agreement to the contrary. Any
Bondholder is entitled to rely fully and unconditionally on the
foregoing approval. Notwithstanding any provisions of this
Agreement or any other contract or agreement to the contrary, the
Company's approval of the Bond Resolution and the Indenture shall
be the Company's agreement that all covenants and provisions in
this Agreement and the Indenture affecting the Company shall,
upon the delivery of the Bonds and the Indenture, become uncondi-
tional, valid, and binding covenants and obligations of the
Company so long as the Bonds and the interest thereon are
outstanding and unpaid. Particularly, the obligation of the
Company to make, promptly when due, all Installment Payments
specified in this Agreement and the Indenture shall be absolute
and unconditional, subject to Section 1.03 hereof, and said
obligation may be enforced as provided in this Agreement and the
Indenture.
Section 5.02. REFUNDING OF BONDS. After the issuance of
any Bonds, the Issuer shall not refund any of the Bonds or change
or modify the Bonds in any way, except as provided for in the
Indenture, without the prior written approval of the Authorized
Agent Representative; nor shall the Issuer redeem any Bonds prior
to their scheduled maturities except upon the request of the
Authorized Agent Representative, unless such redemption is
required by the Indenture.
Section 5.03. PAYMENT UPON REDEMPTION OF BONDS. The
Issuer, upon the written request of the Agent (and provided that
the affected Bonds are subject to redemption or prepayment prior
to maturity at the option of the Issuer, or the Company, and
provided that such request is received in sufficient time prior
to the date upon which such redemption or prepayment is
proposed), forthwith shall take or cause to be taken all action
that may be necessary under the applicable redemption provisions
of the Indenture to effect such redemption prior to maturity, to
the full extent of funds either made available for such purpose
by the Company or already on deposit under the Indenture and
available for such purpose. The redemption of any outstanding
Bonds prior to maturity at any time shall not relieve the Company
of its absolute and unconditional obligation to pay each
remaining Installment Payment with respect to any Outstanding
Bonds, as specified in the Indenture. If a redemption of Bonds
is required pursuant to the provisions of the Indenture, the
Company agrees as provided herein to forthwith make Installment
Payments sufficient to pay the principal of, premium, if any, and
interest on the Bonds.
Section 5.04. INSTALLMENT PAYMENTS. Payment of all
Installment Payments shall be made and deposited so as to fund
payment on the Bonds as required by the Indenture, including all
such payments which may come due because of the acceleration of
the maturity or maturities of the Bonds upon default, call for
redemption, purchase or deemed purchase, or otherwise, under the
provisions of the Indenture. If any available funds in excess of
current requirements are held on deposit in the Bond Fund or the
Bond Purchase Fund, as the case may be, at the time payment of
any Installment Payment is due, such payment of Installment
Payment shall be reduced by the amount of the available funds so
held on deposit, to the benefit of the Company. The Installment
Payments, together with available funds held on deposit in the
Bond Fund or the Bond Purchase Fund, as the case may be, except
funds held therein for payment of matured installments of princi-
pal on the Bonds or interest payable thereon, shall be sufficient
to pay when due all principal of, redemption premium, if any, and
interest on, and Purchase Price of, the Bonds. The Company shall
have the right to prepay or cause to be prepaid all or a portion
of each Installment Payment at any time, and shall be obligated
to do so in a timely manner if and to the extent the Agent
requests redemption or prepayment of the Bonds. Any such
prepayment by the Company shall not relieve it of liability for
each remaining Installment Payment with respect to the
Outstanding Bonds except as provided in this Agreement and the
Indenture. In the event the Company should fail to make any of
the payments required in this Section 5.04, the amount so in
default shall continue as an obligation of the Company until such
amount in default shall have been fully paid. If the amount on
deposit in any fund is insufficient on any Interest Payment Date,
redemption date or Purchase Date to make timely payment due on
such date, the Company shall deposit sufficient moneys in such
fund to enable timely payment to be made on such date, subject to
Section 1.03 hereof.
Section 5.05. PAYMENTS TO ISSUER. Out of money from the
proceeds from the sale and delivery of the Bonds or out of funds
provided by the Company, there shall be paid all of the Issuer's
reasonable actual out-of-pocket expenses and Costs of Issuance in
connection with the Bonds. In addition, the Issuer shall receive
out of proceeds of the Bonds or from funds advanced by the
Company an amount equal to 1/2 of 1% of the aggregate principal
amount of the Bonds to pay and reimburse the Issuer for its
administrative and overhead expenses directly attributable and
chargeable to the issuance of the Bonds. Also the Company agrees
to pay directly to the Issuer on July 1 of each year while any of
the Bonds are outstanding, an amount equal to $3,500 to pay and
reimburse the Issuer for its annual administrative and overhead
expenses directly attributable and chargeable to the
administration of the Bonds during the prior twelve month period.
Section 5.06. ISSUER'S RIGHTS ASSIGNED TO TRUSTEE. The
Company is advised and recognizes that as security for the
payment of the Bonds, the Issuer will assign to the Trustee the
Issuer's rights under this Agreement, including the right to
receive payments hereunder (except the right to receive payments,
if any, under Section 5.05, 6.03, and 7.03 hereof), and hereby
directs the Company to make said payments directly to the
Trustee. The Company herewith assents to such assignment and
will make such payments directly to the Trustee without defense
or set-off by reason of any dispute between the Company and the
Issuer or the Trustee. All rights against the Company arising
under this Agreement or the Bond Resolution or Indenture and
assigned to the Trustee under the Indenture may be enforced by
the Trustee, or the owners of the Bonds, to the extent provided
in the Indenture, and the Trustee, or the owners of the Bonds,
shall be entitled to bring any suit, action, or proceeding
against the Company, to the extent provided in the Bond
Resolution or Indenture, for the enforcement of this Agreement,
and it shall not be necessary in any such suit, action, or
proceeding to make the Issuer a party thereto.
Section 5.07. PAYMENTS TO TRUSTEE. Subject to Section 1.03
hereof, the Company agrees to pay (1) the initial acceptance fee
of the Trustee and reasonable costs and expenses, including
reasonable attorneys fees, incurred by the Trustee in entering
into and executing the Indenture and the issuance of the Bonds
and (2) until the principal of, premium, if any, and interest on
the Bonds shall have been fully paid or provision for the payment
thereof shall have been made in accordance with the provisions of
the Indenture, (i) the reasonable annual fee of the Trustee for
the ordinary services of the Trustee, as trustee, rendered and
its reasonable ordinary expenses incurred under the Indenture,
including reasonable attorneys fees, as and when the same become
due, (ii) the reasonable fees, charges and expenses of the
Trustee, as Bond Registrar and as Paying Agent, and any other
Bond Registrar or Paying Agent on the Bonds, as and when the same
become due, (iii) the reasonable fees, charges and expenses of
the Trustee for the necessary extraordinary services rendered by
it and extraordinary expenses incurred by it under the Indenture
or this Agreement, as and when the same become due, including
reasonable attorneys fees; provided, that the Company may,
without creating a default hereunder, contest in good faith the
necessity for any such extraordinary services and extraordinary
expenses and the reasonableness of any such fees, charges, or
expenses, and (iv) the cost of printing any Bonds required to be
furnished by the Issuer. In the event the Company should fail to
make any of the payments required in this Section 5.07, the item
or installments so in default shall continue as an obligation of
the Company until the amount in default shall have been fully
paid.
Section 5.08. PAYMENT TO REMARKETING AGENT. The Company
agrees to pay to the Remarketing Agent the reasonable fees, costs
and expenses set forth in the Remarketing Agreement.
Section 5.09. COMPANY OPTION TO DESIGNATE INTEREST RATE
DETERMINATION METHODS. The Agent is hereby granted the option to
designate from time to time changes in interest rate
determination methods in the manner and to the extent set forth
in Section 2.02 of the Indenture. In the event the Agent elects
to exercise any such option, the Agent agrees that it shall cause
notices of changes in interest rate determination methods to be
given to the Issuer, the Trustee, the Paying Agent, and the
Remarketing Agent in accordance with Section 2.02 of the
Indenture.
Section 5.10. PURCHASE OF BONDS. (a) In consideration of
the issuance of the Bonds by the Issuer, but for the benefit of
the owners of the Bonds, the Company has agreed, and does hereby
covenant, to cause the necessary arrangements to be made and to
be thereafter continued whereby owners from time to time of the
Bonds may deliver Bonds for purchase and whereby such Bonds shall
be so purchased. In furtherance of the foregoing covenant of the
Company, the Issuer, at the direction of the Company, has set
forth in Section 2.10 of the Indenture the terms and conditions
relating to the delivery of Bonds by the registered holders
thereof to the Remarketing Agent for purchase and has set forth
in the Indenture or the Remarketing Agreement the duties and
responsibilities of the Remarketing Agent with respect to the
purchase and remarketing of Bonds. The Company hereby authorizes
and directs the Remarketing Agent to purchase, offer, sell, and
deliver Bonds in accordance with the provisions of Section 2.10
of the Indenture.
Without limiting the generality of the foregoing covenant of
the Company or the other provisions of this Article V, the
Company covenants, for the benefit of the owners of the Bonds, to
pay, or cause to be paid, to the Trustee such amounts as shall be
necessary to enable the Trustee to pay the Purchase Price of the
Bonds delivered to it for purchase or deemed delivered for
purchase, all as more particularly described in the Indenture;
provided, however, that the obligation of the Company to make, or
cause to be made, any such payment hereunder shall be subject to
Section 1.03 hereof and shall be reduced to the extent that funds
are received by the Trustee or the Paying Agent from the
remarketing of the Bonds by the Remarketing Agent or, in the
event sufficient funds are not available from such remarketing,
from the Company.
(b) The Issuer shall have no obligation or responsibility,
financial or otherwise, with respect to the purchase of Bonds or
the making or continuation of arrangements therefor other than as
expressly set forth in subsection (a) of this Section 5.10,
except that the Issuer shall generally cooperate with the Company
and the Remarketing Agent as contemplated by the Indenture.
Section 5.11. USURY. Anything herein to the contrary
notwithstanding, it is the intention of the parties hereto to
conform strictly to the usury laws in force that are applicable
to this transaction. Accordingly, all agreements among the
parties hereto and beneficiaries hereof and their assigns or any
of them, whether now existing or hereafter arising, and whether
written or oral, are hereby limited so that in no contingency,
whether by reason of acceleration of amounts due hereunder or any
part thereof or otherwise, shall the interest (including all sums
that are deemed to be interest) contracted for, charged or
received hereunder and/or with respect to the refinancing of the
Project exceed the maximum amount permissible under applicable
law. The parties hereto agree that to the extent interest is
payable by the Company under this Agreement, Article 5069-1.04,
Vernon's Texas Civil Statutes, as amended, shall apply, and, to
the extent Article 5069-1.04 is applicable to this Agreement, the
indicated rate ceiling thereunder shall apply.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. EVENTS OF DEFAULT. The occurrence and
continuation of any one of the following shall constitute an
"Event of Default" under this Agreement (an "Event of Default"):
(a) failure by any of WTU, PSO or CPL to pay its
Ownership Percentage of Installment Payments with respect
to principal of or premium on any Bond at the times
specified therein; or
(b) failure by any of WTU, PSO or CPL to pay its
Ownership Percentage of Installment Payments with respect to
interest on any Bond at the times specified therein and (i)
if such Bond bears interest at a Flexible, Daily, Weekly,
Monthly, Quarterly or Semiannual Rate, the continuation of
such failure for a period of one Business Day or more or
(ii) if such Bond bears interest at a Multiannual or Fixed
Rate, the continuation of such failure for a period of sixty
days or more; or
(c) failure by any of WTU, PSO or CPL to pay its
Ownership Percentage of Installment Payments with respect to
the Purchase Price of any Bond at the times specified
therein and the continuation of such failure for a period of
one Business Day or more; or
(d) failure by any of WTU, PSO or CPL to observe and
perform any covenant, condition or agreement on its part
required to be observed or performed in this Agreement,
other than as referred to in (a), (b) or (c) above, for a
period of 90 days after receipt by the Agent of written
notice specifying such failure and requesting that it be
remedied, given to the Agent by the Issuer or the Trustee,
unless the Issuer and the Trustee shall agree in writing to
an extension of such time prior to its expiration; provided,
however, that if the failure stated in the notice can, in
the reasonable judgment of the Agent, be corrected, but
cannot be corrected within the applicable period, the Issuer
and the Trustee will not unreasonably withhold their consent
to an extension of such time if corrective action is
instituted within the applicable period and diligently
pursued until the default is corrected; or
(e) dissolution or liquidation of any of WTU, PSO &
CPL. However, the term "dissolution or liquidation of any
of WTU, PSO & CPL", as used in this paragraph, shall not be
construed to include the cessation of the corporate
existence of any of WTU, PSO, or CPL resulting either from a
merger or consolidation of any of WTU, PSO & CPL into or
with another corporation or a dissolution or liquidation of
any of WTU, PSO & CPL following a transfer of all or
substantially all of its assets as an entirety under the
conditions permitting such actions contained in Section
7.02; or
(f) any of WTU, PSO & CPL shall commence a voluntary
case or other proceeding seeking liquidation, reorganiz-
ation, or other relief with respect to itself or its debts
under any bankruptcy, insolvency, or other similar law now
or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar
official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary
case or other proceeding commenced against it, or shall make
a general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
or
(g) an involuntary case or other proceeding shall be
commenced against any of WTU, PSO or CPL seeking
liquidation, reorganization, or other relief with respect to
it or its debts under any bankruptcy, insolvency, or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian,
or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of sixty
(60) days; or
(h) the occurrence of an "Event of Default" under the
Indenture.
The provisions of paragraph (d) of this Section 6.01 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 regulations of any kind of the
government of the United States of America or of the State of
Texas or any of their departments, agencies, political
subdivisions, or officials, or any civil military authority;
insurrections; riots; epidemics; landslides; lightning;
earthquakes; tidal waves; fires; hurricanes; tornadoes; blue
northers; other storms; floods; washouts; droughts; arrests;
restraints of government and people; civil disturbances;
explosions; breakage or accident to machinery, transmission
pipes, transmission facilities or canals; partial or entire
failure of utilities; shortages of labor, material, supplies or
transportation; or any other cause or event not reasonably within
the control of the Company (collectively, "events of force
majeure"), the Company is unable in whole or in part to carry out
the agreements on the Company's part herein contained, the
Company shall not be deemed in default during the continuance of
such inability. The Company, however, will use its best efforts
to remedy with all reasonable dispatch the cause or causes
preventing the Company from carrying out such 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 Agent,
unfavorable to the Company. The occurrence of any event of force
majeure shall not suspend or otherwise abate, and the Company
shall not be relieved from, any obligation under this Agreement
to the extent that the failure of the Company to observe or
perform any such obligation would result in the failure to pay
when due the principal of, premium, if any, and interest on the
Bonds or would result in the interest on any Bonds becoming
includable in the gross income of the owners thereof for federal
income tax purposes.
The above provisions, however, are subject to the condition
that, after any such Event of Default, subject to and as provided
in Article VI of the Indenture, the Trustee may waive such Event
of Default and rescind and annul any remedial step theretofore
taken by it or by the Issuer with respect to such default and its
consequences; but no such waiver, rescission or annulment shall
extend to or affect any subsequent default or impair any right or
remedy consequent thereon.
Section 6.02. REMEDIES ON DEFAULT. Whenever any Event of
Default shall have occurred and is continuing, the Issuer, with
the consent of the Trustee, or the Trustee may take any one or
more of the following remedial steps, but only if acceleration of
the principal amount of the Bonds has been declared pursuant to
Section 6.02 of the Indenture:
(a) By notice in writing to the Agent, declare the
unpaid Installment Payments to be due and payable
immediately, if concurrently with or prior to such notice
the unpaid principal amount of the Bonds has been declared
to be due and payable under the Indenture, and upon any such
declaration the amounts payable under Sections 5.01 and 5.04
hereof shall become and shall be immediately due and payable
in the amount set forth in Section 6.02 of the Indenture;
provided, however, that an Event of Default shall be deemed
waived and a declaration accelerating payment of unpaid
Installment Payments payable under this Agreement shall be
deemed rescinded without further action on the part of the
Trustee or the Issuer upon any rescission by the Trustee of
the corresponding declaration of acceleration of the Bonds
under Section 6.02 of the Indenture.
(b) Whatever action at law or in equity may appear
necessary or desirable to collect the payment and other
amounts then due or to enforce performance and observance of
any obligation, agreement or covenant of the Company under
this Agreement.
In case the Issuer, with the consent of the Trustee, or the
Trustee shall have proceeded to enforce its rights under this
Agreement and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely
to the Issuer and/or the Trustee, then and in every such case the
Issuer, the Agent, the Company and the Trustee shall be restored
respectively to their several positions and rights hereunder, and
all rights, remedies and powers of the Issuer, the Company and
the Trustee shall continue as though no such proceeding had been
taken.
Subject to Section 1.03 hereof, the Company covenants that,
in case an Event of Default shall occur with respect to the
payment of any Installment Payment payable under Sections 5.01
and 5.04 hereof, then, upon demand of the Trustee, the Company
will pay to the Trustee the whole amount that then shall have
become due and payable under said Sections 5.01 and 5.04, with
interest (to the extent permitted by law) on such amount at the
rate of interest borne by the Bonds at the time of such failure
from the due date thereof until paid.
Subject to Section 1.03 hereof, in case the Company shall
fail forthwith to pay such amounts upon such demand, the Trustee
shall be entitled and empowered to institute any action or
proceeding at law or in equity for the collection of the sums so
due and unpaid, and may prosecute any such action or proceeding
to judgment or final decree, and may enforce any such judgment or
final decree against the Company and collect in the manner
provided by law out of the property of the Company, the moneys
adjudged or decreed to be payable.
The remedies for any "Event of Default" under the Indenture
shall be as specified in Article VI of the Indenture and are in
addition to any remedies hereunder.
In acting or omitting to act pursuant to the provisions of
this Agreement, the Trustee shall be entitled to all of the
rights, protections and immunities accorded to the Trustee under
the terms of the Indenture, including but not limited to those
set out in Article VII thereof.
Section 6.03. AGREEMENT TO PAY ATTORNEYS' FEES AND
EXPENSES. In the event the Company defaults under any of the
provisions of this Agreement and the Issuer or the Trustee
employs attorneys or incurs other expenses for the collection of
the payments due under this Agreement or the enforcement of
performance or observance of any obligation or agreement on the
part of the Company herein contained, the Company agrees, subject
to Section 1.03 hereof, that it will on demand therefor, and upon
presentation of an itemized bill, pay to the Issuer or the
Trustee the reasonable fees of such attorneys and such other
expenses so incurred by the Issuer or the Trustee; provided,
however, the Company, without creating a default hereunder or
under the Indenture, may contest in good faith the necessity for
and the reasonableness of any such fees and expenses of the
Trustee.
ARTICLE VII
SPECIAL COVENANTS
Section 7.01. NO DEFENSE OR SET-OFF; UNCONDITIONAL
OBLIGATION. Subject to Section 1.03 hereof, the obligations of
the Company to make the payments required by this Agreement and
to perform and observe the other agreements on its part contained
herein shall be absolute and unconditional, irrespective of any
defense or any rights of set-off, recoupment or counterclaim it
might otherwise have against the Issuer or any other person, and
the Company shall pay during the term of this Agreement the
payments to be made as prescribed in Sections 5.01, 5.03, 5.04,
5.05 or 5.10 and all other payments required hereunder free of
any deductions and without abatement, diminution or set-off; and
until such time as the principal of, premium, if any, and
interest on the Bonds shall have been fully paid, or provision
for the payment thereof shall have been made in accordance with
the Indenture, the Company: (i) will not suspend or discontinue
any payments provided for in Sections 5.01, 5.03, 5.04, 5.05 or
5.10 hereof; (ii) will perform and observe all of its other
agreements contained in this Agreement; and (iii) except as
permitted herein, will not terminate this Agreement for any
cause, including, without limiting the generality of the
foregoing, failure of the Company to use the Project,
destruction of or damage to the Project, commercial frustration
of purpose, any change in the tax laws of the United States of
America or of the State or any political subdivision of either
of these, or any failure of the Issuer or the Trustee to perform
and observe any agreement, whether express or implied, or any
duty, liability or obligation arising out of or connected with
this Agreement or the Indenture, except to the extent permitted
by this Agreement. Nothing contained in this Section shall be
construed to relieve the Issuer or the Trustee from the
performance of any agreements on their respective parts contained
herein and the Company shall be entitled to institute such action
against the Issuer or the Trustee as the Company shall deem
appropriate to compel performance of any such agreement, duty or
obligation; provided, however, that the Issuer shall not be
required to carry out any such agreement, duty or obligation
unless it is reimbursed for its costs and expenses and no
agreement, duty or obligation of the Issuer shall arise out of
this Agreement other than as specifically set forth herein.
Section 7.02. CORPORATE EXISTENCE. Each of WTU, PSO and
CPL agrees that it will not dispose of all or substantially all
of its assets as an entirety (whether by liquidation,
dissolution, or otherwise) and will not consolidate with or merge
into another corporation, or permit one or more corporations to
consolidate with or merge into it, unless the resulting,
surviving, or transferee corporation, as the case may be, if
other than WTU, PSO or CPL, as the case may be, irrevocably and
unconditionally assumes, in an instrument delivered to the Issuer
and to the Trustee, the due and punctual performance of the
obligations of WTU, PSO or CPL, as the case may be, under this
Agreement. Upon the delivery of such instrument, WTU, PSO or
CPL, as the case may be, shall thereupon be relieved of any
further obligation or liability under this Agreement or with
respect to the Bonds; and the resulting, surviving, or transferee
corporation, as the case may be, shall succeed to and be
substituted for WTU, PSO or CPL, as the case may be, under this
Agreement with the same effect as if such resulting or surviving
corporation or transferee had been named herein as WTU, PSO or
CPL, as the case may be. If consolidation, merger, or sale, or
other transfer is made as provided in this Section 7.02, the
provisions of this Section 7.02 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 7.02.
Section 7.03. INDEMNITIES. The Company releases the
Issuer, its officers, directors, employees, agents, and attorneys
(collectively, the "Indemnified Parties") from, and the
Indemnified Parties shall not be liable for, and the Company
agrees, and shall be liable to protect, indemnify, defend, and
hold the Indemnified Parties harmless from any and all liability,
cost, expense, damage, or loss of whatever nature (including, but
not limited to, attorneys' fees, litigation and court costs,
amounts paid in settlement, and amounts paid to discharge
judgments) directly or indirectly resulting from, arising out of,
in connection with, or related to (i) the issuance, offering,
sale or delivery of the Bonds, the Indenture, this Agreement, and
the obligations imposed on Issuer hereby and thereby; or the
design, construction, installation, operation, use, occupancy,
maintenance, or ownership of the Project; (ii) any written
statements or representations made or given by the Company, or
any of its officers or employees, to the Indemnified Parties, the
Trustee, or any underwriters or purchasers of any of the Bonds,
with respect to the Issuer, the Company, the Project, or the
Bonds, including, but not limited to, statements or
representations of facts, financial information, or corporate
affairs; (iii) damage to property or any injury to or death of
any person that may be occasioned by any cause whatsoever
pertaining to the Project; and (iv) any loss or damage incurred
by the Issuer as a result of violation by the Company of the
provisions of the Prior Agreement or Section 7.04 or 7.05
hereof. The provisions of the preceding sentence shall remain
and be in full force and effect even if any such liability, cost,
expense, damage, or loss or claim therefor by any person,
directly or indirectly results from, arises out of, or relates to
or is asserted to have resulted from, arisen out of, or related
to, in whole or in part, one or more negligent acts or omissions
of the Issuer or its officers, directors, employees, agents,
servants, or any other party acting for or on behalf of the
Issuer in connection with the matters set forth in clauses (i)
through (iv) of said sentence.
Section 7.04. TAX-EXEMPT STATUS OF THE BONDS. It is the
intention of the Company and the Issuer that the interest on the
Bonds be excludable from the gross income of the holders thereof
for federal income tax purposes, except for any Bond for any
period that such Bond is owned by a person who is a "substantial
user" of the Project or a "related person" within the meaning of
Section 103(b)(13) of the Internal Revenue Code of 1954 (the
"1954 Code"). To that end, the Company and the Issuer (to the
extent reasonably within the control of the Issuer) covenant with
each other, and with the Trustee for the benefit of the
Bondholders, to refrain from any action which would adversely
affect, and to take such action to assure, the treatment of the
Bonds as obligations described in Section 103 (a) of the Code,
the interest on which is not includable in the "gross income" of
the holder (other than the income of a "substantial user" of the
Projector a "related person" within the meaning of Section
103(b)(13) of the 1954 Code) for purposes of federal income
taxation. Furthermore, the Company hereby covenants as follows:
(a) to use all of the proceeds of the Bonds for the
payment of principal on the Prior Bonds;
(b) to refrain from using the facilities constituting
the Project in a manner that would result in the Bonds not
being "exempt facility bonds" within the meaning of Section
103(b)(4) of the 1954 Code.
(c) to refrain from taking any action that would
result in the Bonds being "federally guaranteed" within the
meaning of Section 149(b) of the Code;
(d) to refrain from using any portion of the proceeds
of the Bonds, directly or indirectly, to acquire or to
replace funds which were used, directly or indirectly, to
acquire investment property (as defined in Section 148(b)(2)
of the Code) which produces a materially higher Yield over
the term of the Bonds than the Yield on the Bonds, other
than investment property acquired with --
(1) proceeds of the Bonds invested for a period
of 90 days or less until such proceeds are needed for
the purpose for which the Bonds are issued,
(2) amounts invested in a bona fide debt service
fund, within the meaning of Section 1.148-1 of the
Regulations, and
(3) amounts deposited in any reasonably required
reserve or replacement fund to the extent such amounts
do not exceed 10 percent of the proceeds of the Bonds
and to the extent that at no time during any bond year
will the aggregate amount so invested exceed 150
percent of debt service on the Bonds for such year;
(e) to otherwise restrict the use or investment of the
proceeds of the Bonds or amounts treated as proceeds of the
Bonds, as may be necessary, to satisfy the requirements of
Section 148 of the Code (relating to arbitrage);
(f) to provide to the Trustee, at such time as
required by the Trustee, all information required by the
Trustee with respect to Nonpurpose Investments not held in
any fund under the Indenture; and
(g) to use no more than 2 percent of the gross
proceeds of the Bonds for the payment of costs of issuance.
The terms Nonpurpose Investments, Excess Earnings, and Yield
shall have the meanings give to such terms in section 148 of the
Code and the Regulations promulgated pursuant to such section.
It is the understanding of the Issuer and the Company that
the covenants contained herein are intended to assure compliance
with the Code and any regulations or rulings promulgated by the
United States Department of the Treasury pursuant thereto. In
the event that regulations or rulings are hereafter promulgated
which modify or expand provisions of the Code, as applicable to
the Bonds, the Issuer and the Company will not be required to
comply with any covenant contained herein to the extent that such
failure to comply, in the opinion of Bond Counsel delivered to
the Issuer, the Company, and the Trustee, will not adversely
affect the exclusion of interest on the Bonds from the gross
income of the owners of the Bonds for federal income tax purposes
under Section 103 of the Code. In the event that regulations or
rulings are hereafter promulgated which impose additional
requirements which are applicable to the Bonds, the Company and
the Issuer agree to comply with the additional requirements to
the extent necessary, in the opinion of Bond Counsel delivered to
the Issuer, the Company, and the Trustee, to preserve the
exclusion of interest on the Bonds from the gross income of the
owners of the Bonds for federal income tax purposes under Section
103 of the Code. In furtherance of such intention, the Issuer
hereby authorizes and directs its Executive Vice President and
General Manager to execute any documents, certificates or reports
required by the Code and to make such elections, on behalf of the
Issuer, which may be permitted by the Code as are consistent with
the purpose for the issuance of the Bonds.
Section 7.05. ARBITRAGE COVENANTS. The Issuer and the
Company covenant and agree, for the benefit of the Trustee and
the owners of the Bonds, that they will not knowingly take any
action or omit from taking any action within their respective
control, which would result in a loss of the exemption from
federal income taxation of interest on the Bonds by virtue of the
Bonds being considered "arbitrage bonds" within the meaning of
Section 148 of the Code.
Section 7.06. PAYMENT TO REBATE FUND. The Company hereby
covenants and agrees to make the determinations and to pay any
deficiency in the Rebate Fund, at the times and as described in
Section 4.10 of the Indenture. In any event, if the amount of
cash held in the Rebate Fund shall be insufficient to permit the
Trustee to make payment to the United States of any amount due
under Section 148(f)(2) of the Code, the Company forthwith shall
pay the amount of such insufficiency on such date to the Trustee
in immediately available funds. The obligations of the Company
under this Section 7.06 are direct obligations of the Company,
acting under the authorization of, and on behalf of, the Issuer
and the Issuer shall have no further obligation or duty with
respect to the Rebate Fund.
Section 7.07. QUALIFICATION IN TEXAS. Each of WTU, PSO and
CPL agrees that, so long as it owns and operates the Project, it
will be incorporated under the laws of the State or will be
qualified to do business in the State.
Section 7.08. RECORDATION. The Company agrees that it will
record and file any of the financing statements and all
supplements thereto, and such other instruments as may be
required from time to time to be recorded or filed, in such
manner and in such places as from time to time may be required by
law in order fully to preserve and protect the securities of the
Owners of the Bonds and the rights of the Trustee hereunder and
under the Indenture.
Section 7.09. NO PERSONAL LIABILITY. No officer, employee,
representative, or agent of the Issuer or the Company shall be
personally liable on this Agreement.
Section 7.10. COMPLIANCE WITH RULE 15C2-12. Each of WTU,
PSO and CPL hereby agrees that it will comply with and perform
its duties under the Rule 15c2-12 Undertakings dated as of
___________, 1996 and attached to this Agreement as Exhibit A and
that the Issuer shall have no responsibility or obligation with
respect to compliance with Rule 15c2-12.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. GENERAL PROVISIONS. (a) The terms of this
Agreement may be enforced as to one or more breaches either
separately or cumulatively.
(b) No remedy conferred upon or reserved to the Issuer, the
Company, the Trustee, the Agent or the owners of the Bonds in
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 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, omission, or failure of performance hereunder shall
impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In
the event any provision contained in this Agreement should be
breached by the Issuer or the Company and thereafter duly waived,
such waiver shall be limited to the particular breach so waived
and shall not be deemed to waive any other breach of this
Agreement. No waiver by either party of any breach by the other
party of any of the provisions of this Agreement shall be
construed as a waiver of any subsequent breach, whether of the
same or of a different provision of this Agreement.
(c) Headings of the Sections of this Agreement have been
inserted for convenience of reference only and in no way shall
they affect the interpretation of any of the provisions of this
Agreement.
(d) This Agreement is made for the exclusive benefit of the
Issuer, the Trustee, the owners of the Bonds, the Agent and the
Company, and their respective successors and assigns herein
permitted, and not for any third party or parties; and nothing in
this Agreement, expressed or implied, is intended to confer upon
any party or parties other than the Issuer, the Trustee, the
owners of the Bonds, the Agent and the Company, and their
respective successors and assigns herein permitted, any rights or
remedies under or by reason of this Agreement. In particular,
but not by way of limitation, the Trustee shall be a third-party
beneficiary for purposes of enforcing its rights and the
Company's obligations under Sections 5.07 and 7.03 of this
Agreement as fully as if the Trustee had been a party in privity
of contract with the Company hereunder.
Section 8.02. INTENTIONALLY OMITTED.
Section 8.03. AMENDMENT OF AGREEMENT. No amendment,
change, addition to, or waiver of any of the provisions of this
Agreement shall be binding upon the parties hereto unless in
writing signed by an authorized officer of each of WTU, PSO and
CPL, the Authorized Agent Representative and the Authorized
Issuer Representative and in compliance with Sections 9.05 and
9.06 of the Indenture. A copy of any such amendment, change,
addition to, or waiver shall be provided to the Trustee.
Notwithstanding any of the foregoing or anything in the Indenture
to the contrary, but subject to Section 1.04 hereof, it is
covenanted and agreed, for the benefit of the holders of the
Bonds and the Trustee, that the provisions of this Agreement
shall not be amended, changed, added to, or waived in any way
which would relieve, reduce or abrogate the obligations of the
Company to make or pay, or cause to be made or paid, when due,
any and all Installment Payments with respect to any then
Outstanding Bonds, in the manner and under the terms and
conditions provided herein and in the Bond Resolution or
Indenture, or which would change or affect Article II, Sections
5.01, 5.03, 5.04, 5.05, 5.06, 5.10, 6.01, 7.01, 7.02, 8.03, or
8.04 hereof or the provisions of this sentence unless, in the
judgment of the Trustee, such change or amendment would not
materially adversely affect the interests of the Bondholders.
Section 8.04. ASSIGNMENT. Each of WTU, PSO and CPL may
assign its interest in this Agreement in whole or in part,
provided, however, no such assignment shall relieve WTU, PSO or
CPL, as the case may be, from primary liability for any of its
obligations hereunder, and without limiting the generality of the
foregoing, in the event of any such assignment, WTU, PSO or CPL,
as the case may be, shall continue to remain primarily liable for
its payments specified herein and for performance and observance
of the other covenants and agreements on its part herein
provided. In addition, each of WTU, PSO and CPL also assign its
interest in this Agreement in connection with a consolidation
with or merger into another domestic corporation, or the sale or
transfer of all or substantially all of its assets as an entirety
to another domestic corporation, if such transaction complies
with the requirements of Section 7.02 hereof. Anything in this
Agreement notwithstanding, no assignment of the interest of any
of WTU, PSO and CPL in this Agreement shall be effective unless
WTU, PSO or CPL, as the case may be, shall, on or prior to the
effective date of any such assignment, furnish or cause to be
furnished to the Issuer and the Trustee notice of such
assignment, together with a Favorable Opinion.
Section 8.05. TERM OF AGREEMENT. The term of this
Agreement shall be from the date hereof until all payments and
indemnities required to be made by the Company pursuant hereto
shall have been made.
Section 8.06. NOTICES. Any notice, request or other
communication under this Agreement shall be given in writing and
shall be deemed to have been given by either party to the other
party at the addresses shown below upon any of the following
dates:
(a) The date of notice by Electronic Notice;
(b) Three Business Days after the date of the mailing
thereof, as shown by the post office receipt if mailed to
the other party hereto by registered or certified mail;
(c) The date of the receipt thereof by such other
party if not given pursuant to (a) or (b) above.
The address for notice for each of the parties shall be
as follows:
Red River Authority of Texas
Hamilton Building
900 Eighth Street, Suite 520
Wichita Falls, Texas 76301
Attention: Executive Vice President and
General Manager
Telephone No.: (817) 723-0855
Telecopy No.: (817) 723-8531
West Texas Utilities Company, Public Service
Company of Oklahoma and
Central Power and Light Company
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone No.: (214) 777-1205
Telecopy No.: (214) 777-1223
or the latest address specified by such other party in
writing.
Section 8.07. SEVERABILITY. If any clause, provision or
Section of this Agreement should be held illegal or invalid by
any court, the invalidity of such clause, provision or Section
shall not affect any of the remaining clauses, provisions or
Sections hereof and this Agreement shall be construed and
enforced as if such illegal or invalid clause, provision or
Section had not been contained herein. In case any agreement or
obligation contained in this Agreement should be held to be in
violation of law, then such agreement or obligation shall be
deemed to be the agreement or obligation of the Company or the
Issuer, as the case may be, to the full extent permitted by law.
Section 8.08. 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 8.09. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED EXCLUSIVELY BY AND CONSTRUED IN ACCORDANCE WITH THE
APPLICABLE LAWS OF THE STATE OF TEXAS. VENUE FOR ANY ACTIONS
BROUGHT HEREUNDER TO WHICH THE ISSUER IS A PARTY SHALL LIE IN
WICHITA COUNTY, TEXAS.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be signed in multiple counterparts, each of which
shall be considered an original for all purposes, as of the day
and year first set out above.
RED RIVER AUTHORITY OF TEXAS
By:____________________________________
President
ATTEST:
_____________________________________
Secretary
(SEAL)
WEST TEXAS UTILITIES COMPANY
By:_______________________________________
Authorized Agent
PUBLIC SERVICE COMPANY OF OKLAHOMA
By:_______________________________________
Authorized Agent
CENTRAL POWER AND LIGHT COMPANY
By:_______________________________________
Authorized Agent
CENTRAL AND SOUTH WEST CORPORATION
By:_______________________________________
Authorized Agent
for and on behalf of, and as agent for:
WEST TEXAS UTILITIES COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
CENTRAL POWER AND LIGHT COMPANY
INSTALLMENT PAYMENT AGREEMENT
between
RED RIVER AUTHORITY OF TEXAS
and
WEST TEXAS UTILITIES COMPANY, PUBLIC SERVICE COMPANY OF OKLAHOMA
AND CENTRAL POWER AND LIGHT COMPANY
and
CENTRAL AND SOUTH WEST CORPORATION
Dated as of
July 1, 1996
Relating to
Red River Authority of Texas
Pollution Control Revenue Refunding Bonds
(West Texas Utilities Company, Public Service Company of Oklahoma
and Central Power and Light Company Oklaunion Project)
Series 1996
TABLE OF CONTENTS
General Recitals and Findings. . . . . . . . . . . . . . .
ARTICLE I
Definitions
Section 1.01. Definitions. . . . . . . . . . . . . . . .
Section 1.02. Agent to Act for Company . . . . . . . . .
Section 1.03. Obligations of WTU, PSO and CPL Several
but not Joint. . . . . . . . . . . . . . .
Section 1.04. Change in Ownership Percentages. . . . . .
ARTICLE II
Representations
Section 2.01. Representations by Issuer. . . . . . . . .
Section 2.02. Representations by Company . . . . . . . .
ARTICLE III
The Project
Section 3.01. Intentionally Omitted. . . . . . . . . . .
Section 3.02. Intentionally Omitted . . . . . . . . . .
Section 3.03. Intentionally Omitted. . . . . . . . . . .
Section 3.04. Maintenance and Repair . . . . . . . . . .
Section 3.05. Right to Discontinue Operation of Project.
Section 3.06. Insurance and Condemnation Awards . . . .
Section 3.07. Taxation of Project. . . . . . . . . . . .
Section 3.08. Issuer's Limited Liability . . . . . . . .
Section 3.09. Governmental Regulation . . . . . . . . .
ARTICLE IV
Issuance of Bonds; Refunding the Prior Bonds;
Payments; Disbursements
Section 4.01. Issuance of Bonds . . . . . . . . . . . .
Section 4.02. Bond Proceeds. . . . . . . . . . . . . . .
Section 4.03. Security for the Bonds . . . . . . . . . .
Section 4.04. Bond Funds . . . . . . . . . . . . . . . .
Section 4.05. Company Required to Pay in Event Monies Held
Pursuant to the Prior Indenture
are Insufficient . . . . . . . . . . . . .
Section 4.06. Notice to Bond Insurer . . . . . . . . . .
ARTICLE V
The Company's Payments
Section 5.01. Company Approval of Issuance of the Bonds.
Section 5.02. Refunding of Bonds . . . . . . . . . . . .
Section 5.03. Payment Upon Redemption of Bonds . . . . .
Section 5.04. Installment Payments . . . . . . . . . . .
Section 5.05. Payments to Issuer . . . . . . . . . . . .
Section 5.06. Issuer's Rights Assigned to Trustee. . . .
Section 5.07. Payments to Trustee. . . . . . . . . . . .
Section 5.08. Payment to Remarketing Agent . . . . . . .
Section 5.09. Company Option to Designate Interest Rate
Determination Methods. . . . . . . . . . .
Section 5.10. Purchase of Bonds. . . . . . . . . . . . .
Section 5.11. Usury. . . . . . . . . . . . . . . . . . .
ARTICLE VI
Defaults and Remedies
Section 6.01. Events of Default. . . . . . . . . . . . .
Section 6.02. Remedies of Default. . . . . . . . . . . .
Section 6.03. Agreement to Pay Attorneys' Fees and Expenses
ARTICLE VII
Special Covenants
Section 7.01. No Defense or Set-Off; Unconditional Obligation
Section 7.02. Corporate Existence. . . . . . . . . . . .
Section 7.03. Indemnities. . . . . . . . . . . . . . . .
Section 7.04. Tax-Exempt Status of the Bonds . . . . . .
Section 7.05. Arbitrage Covenants. . . . . . . . . . . .
Section 7.06. Payment to Rebate Fund . . . . . . . . . .
Section 7.07. Qualification in Texas . . . . . . . . . .
Section 7.08. Recordation. . . . . . . . . . . . . . . .
Section 7.09. No Personal Liability. . . . . . . . . . .
Section 7.10 Compliance with Rule 15c2-12 . . . . . . .
ARTICLE VII
General Provisions
Section 8.01. General Provisions . . . . . . . . . . . .
Section 8.02. Intentionally Omitted. . . . . . . . . . .
Section 8.03. Amendment of Agreement . . . . . . . . . .
Section 8.04. Assignment . . . . . . . . . . . . . . . .
Section 8.05. Term of Agreement. . . . . . . . . . . . .
Section 8.06. Notices. . . . . . . . . . . . . . . . . .
Section 8.07. Severability . . . . . . . . . . . . . . .
Section 8.08. Execution of Counterparts. . . . . . . . .
Section 8.09. Governing Law. . . . . . . . . . . . . . .
Execution . . . . . . . . . . . . . . . . . . . . .
Exhibit A . . . . . . . . . . . . . . . . . . . .A-1
EXHIBIT A
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
WEST TEXAS UTILITIES COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
CENTRAL POWER AND LIGHT COMPANY
$63,330,000
Red River Authority of Texas
Pollution Control Revenue Refunding Bonds
(West Texas Utilities Company, Public Service Company of
Oklahoma and Central Power and Light Company Oklaunion Project)
Series 1996
July, 1996
RULE 15C2-12 UNDERTAKINGS
(1) The agreements of West Texas Utilities Company, a Texas corporation
("WTU"), Public Service Company of Oklahoma, an Oklahoma
corporation ("PSO"), and Central Power and Light Company, a Texas
corporation ("CPL" and, together with WTU and PSO, collectively
referred to herein as the "Companies" and, each sometimes referred
to herein individually as a "Company"), contained herein (a) are
made solely for the purpose of enabling the Underwriters (as
defined below) of the Red River Authority of Texas Pollution
Control Revenue Refunding Bonds (West Texas Utilities Company,
Public Service Company of Oklahoma and Central Power and Light
Company Oklaunion Project) Series 1996 (the "Refunding Bonds") to
comply with the requirements of Rule 15c2-12(b)(5) (the "Rule")
promulgated by the Securities and Exchange Commission
("Commission") pursuant to the Securities Exchange Act of 1934, as
amended, (b) are not intended to impose obligations on any of the
Companies that are not required by the Rule, (c) do not constitute
an acknowledgment by any of the Companies of the validity of the
Rule and (d) are valid and binding only to the extent that the
Rule is valid. Each of the Companies expressly reserves the right
to contest the validity of all or any portion of the Rule,
including, without limitation, as a defense in any action. Each
of the Companies and its officers and directors shall have no
liability by reason of any act taken or not taken by reason of the
undertakings herein except to the extent required for the
agreements contained herein to satisfy the requirements of the
Rule. Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings assigned thereto in the Bond
Purchase Agreement between Red River Authority of Texas (the
"Issuer") and Morgan Stanley & Co. Incorporated and Citicorp
Securities, Inc. (the "Underwriters") pursuant to which the Issuer
has agreed to sell the Refunding Bonds to the Underwriters.
. . . . . . . . . . . . . . . . . . . .(2)Each
of the Companies agrees to provide, either directly or indirectly
through the Trustee, to each nationally recognized municipal
securities information repository ("NRMSIR") and to the
appropriate state information depository, if any, for the State of
Texas ("SID"), in each case as designated by the Commission in
accordance with the Rule, a copy of its (a) annual financial
information with respect to the fiscal year of such Company ended
December 31, 1996, and each fiscal year of such Company ending
thereafter, on or before the date 10 days following the date that
such Company is required to file its Annual Report on Form 10-K
(or any successor form) ("Form 10-K") with the Commission for such
fiscal year (or if such Company is no longer required to file its
Form 10-K with the Commission, on or before the date 100 days
following the last day of each fiscal year of such Company,
commencing with the fiscal year ending December 31, 1996) and (b)
to the extent that audited financial statements of such Company
are not submitted as part of the annual financial information,
audited financial statements of such Company, when and if
available.
(3) Each of the Companies agrees to provide, either directly
or indirectly through the Trustee, to each NRMSIR or to the
Municipal Securities Rulemaking Board (the "MSRB") and to a SID,
in a timely manner, notice of any of the following events with
respect to the Refunding Bonds, if such event is material to such
Company:
(a)principal and interest payment delinquencies;
(b)non-payment related defaults;
(c)unscheduled draws on debt service reserves reflecting financial
difficulties;
(d)unscheduled draws on credit enhancements
reflecting financial difficulties;
(e)substitution of credit or liquidity providers, or their failure to
perform;
(f)adverse tax opinions or events affecting the tax-
exempt status of the Refunding Bonds;
(g)modifications to rights of the holders of the Refunding Bonds;
(h)Refunding Bond calls;
(i)defeasances;
(j)release, substitution, or sale of property
securing repayment of the Refunding Bonds; and
(k)rating changes.
(4)Each of the Companies agrees to provide, either directly or indirectly
through the Trustee, to each NRMSIR or to the MSRB and to the SID,
in a timely manner, notice of any failure of such Company to
provide the information specified in paragraph 2 on or before the
date specified in paragraph 2.
(5)Information contained in any filing by any of the Companies with
the Commission may be filed with each NRMSIR, the MSRB and the SID
by specific cross-reference to such filing with the Commission, to
the extent consistent with the requirements of the Rule.
(6)All obligations of each of the Companies to provide information
pursuant to paragraph 2 and notices pursuant to paragraphs 3 and 4
shall terminate if and when such Company is no longer an obligated
person with respect to the Refunding Bonds within the meaning of
the Rule.
(7)Each of the Companies agrees that the agreements contained herein are
for the benefit of the beneficial owners from time to time of the
Refunding Bonds and shall be enforceable by the Trustee on behalf
of such beneficial owners in accordance with the provisions of the
Indenture as well as by the beneficial owners individually through
a suit for specific performance.
(8)Each of the Companies' Form 10-K will be the financial information and
operating data required to be provided. The financial statements
will be prepared in accordance with the accounting principles
applicable to such Company's financial information contained in
its Form 10-K.
(9)Until such time as it shall be definitively established to the contrary,
each of the Companies may assume for purposes of the agreements
contained herein:
(a)that its Form 10-K contains all of the annual financial information and
operating data required by the Rule and the audited financial information
set forth therein constitutes all the audited financial statements required
by the Rule;
(b)the phrase "adverse tax opinions or events affecting the tax-exempt
status" as used in the Rule refers to opinions of Bond Counsel rendered to the
Companies and the words "events affecting" means events transpiring in the
operation of such Company or its service area;
(c)that its Form 10-K filed hereunder need not include exhibits thereto or
documents incorporated by reference therein;
(d)the term "defaults" as used in the Rule means Events of Default as such
term is defined in the Indenture;
(e)the term "timely" as used in the Rule means the taking of action or giving
of notice within ten business days of any event; and
(f)there are no "debt services reserves," "credit enhancements," or "credit
or liquidity providers" as such terms are used in the Rule [,except the
Municipal Bond Insurance Policy].
(10) Each of the Companies reserves the right to modify from time to time
the information to be provided to each NRMSIR, the MSRB and to SID
and the format of the presentation of such information, provided
that the modified information or format is consistent with the
requirements of the Rule. If the Rule is amended to reduce the
undertakings required to be obtained from "obligated persons,"
within the meaning of the Rule, from those set forth herein, the
requirements contained herein shall be deemed to be amended to
like extent. Any amendment of the requirements contained herein
must satisfy the following conditions:
(a)The amendment may only be made in connection with a
change in circumstances that arises from a change
in legal requirements, change in law, or change in
the identity, nature, or status of the obligated
person, or type of business conducted;
(b)Any undertaking, as amended, would have complied with
the requirements of the Rule at the time of the
primary offering, after taking into account any
amendments or interpretations of the Rule, as well
as any change in circumstances; and
(c)The amendment does not materially impair the interests
of beneficial owners of the Refunding Bonds, as
determined either by the Trustee or Bond Counsel,
or by approving vote of the holders of the
Refunding Bonds pursuant to the terms of the
Indenture.
Additionally, any annual financial information containing amended
operating data or financial information must explain, in narrative
form, the reasons for the amendment and the impact of the change
in the type of operating data or financial information being
provided.
<PAGE>
EXHIBIT 2
INDENTURE OF TRUST
This Indenture of Trust, made and entered into as
of July 1, 1996, by and between Red River Authority of Texas, a
governmental agency and body politic and corporate of the State of
Texas (herein called the "Issuer") created and existing as a
conservation and reclamation district and political subdivision of
the State of Texas pursuant to Article XVI, Section 59 of the
Texas Constitution and the laws of the State of Texas,
particularly Article 8280-228, Vernon's Texas Civil Statutes, as
amended (the "Issuer Act"), and The Bank of New York, a New York
banking corporation, having a principal corporate trust office in
The City of New York, New York, and being qualified to accept and
administer the trusts hereby created acting as trustee (herein
called the "Trustee")
WITNESSETH:
WHEREAS, pursuant to law, and particularly the
Issuer Act, Article 717k, Vernon's Texas Civil Statutes, as
amended ("Article 717k"), Article 717q, Vernon's Texas Civil
Statutes, as amended ("Article 717q"), the Clean Air Financing
Act, Chapter 383, Texas Health and Safety Code, as amended,
("Chapter 383"), and the Regional Waste Disposal Act, Chapter 30
of the Texas Water Code, as amended ("Chapter 30"), the Issuer,
being a "river authority" as defined in Chapter 383 and Chapter 30
and being an "issuer" as defined in Article 717k and Article 717q,
is empowered to acquire, construct and improve various pollution
control facilities, and to issue bonds to refund and retire bonds
previously issued for such purpose;
WHEREAS, the Acts also authorize the Issuer to
issue revenue bonds to finance such projects, payable solely from
the revenues derived from payments to the Issuer by the user of
the project for the purpose of defraying the cost of financing,
acquiring, constructing or improving any project;
WHEREAS, the Issuer has previously issued its
Adjustable Rate Pollution Control Revenue Bonds (West Texas
Utilities Company, Public Service Company of Oklahoma and Central
Power and Light Company Oklaunion Project) Series 1984 (the "Prior
Bonds") in the original principal amount of $63,300,000, which
were issued for the purpose of paying a portion of the costs of
acquiring, constructing and improving certain pollution control
facilities (the "1984 Project") at the Oklaunion electric
generating plant of West Texas Utilities Company ("WTU"), Public
Service Company of Oklahoma ("PSO") and Central Power and Light
Company ("CPL") in Wilbarger County, Texas;
WHEREAS, the Acts empower the Issuer to issue
refunding bonds to refund all or any part of its outstanding
bonds;
WHEREAS, WTU, PSO and CPL (collectively, the
"Company") have requested that the Issuer issue its revenue bonds
to refund and retire all of the outstanding Prior Bonds;
WHEREAS, an Installment Payment Agreement, dated
as of July 1, 1996 (hereinafter the "Agreement"), relating to the
below defined Bonds has been duly executed between the Issuer and
the Company and Central and South West Corporation (the "Agent");
WHEREAS, the recitals and provisions of the
Agreement are incorporated herein as if set forth in its entirety,
and the capitalized terms of this Indenture shall have the same
meanings, and shall be defined, as set forth in the Agreement and
the Bond Resolution (hereinafter defined);
WHEREAS, the Board of Directors of the Issuer duly
adopted a Resolution authorizing Red River Authority of Texas
Pollution Control Revenue Refunding Bonds (West Texas Utilities
Company, Public Service Company of Oklahoma and Central Power and
Light Company Oklaunion Project) Series 1996; the execution of an
Indenture of Trust, an Installment Payment Agreement, and a Bond
Purchase Agreement; approval of an Official Statement; and other
matters in connection therewith (together with any amendment or
supplement to such resolution as authorized therein, hereinafter
called the "Bond Resolution");
WHEREAS, the Bond Resolution authorized the
issuance of Red River Authority of Texas Pollution Control Revenue
Refunding Bonds (West Texas Utilities Company, Public Service
Company of Oklahoma and Central Power and Light Company Oklaunion
Project) Series 1996 (hereinafter called the "Bonds") for the
purpose of paying a portion of the costs of refunding the Prior
Bonds, all as authorized by the Issuer Act, Chapter 383, Chapter
30, Article 717k and Article 717q;
WHEREAS, the Bonds, and the interest thereon, are
and shall be payable from and secured by a first and superior lien
on and pledge of the payments designated as "Installment Payments"
to be made by each of WTU, PSO and CPL (each of whom is severally,
but not jointly, liable for its Ownership Percentage (as
hereinafter defined) of such Installment Payments) pursuant to the
Agreement in amounts sufficient to pay and redeem, and provide for
the payment of the principal of, premium, if any, and interest on,
and Purchase Price (hereinafter defined) of, the Bonds, when due,
and the fees and expenses of the Trustee and any paying agent for
the Bonds, all as required by the Bond Resolution;
WHEREAS, certified copies of the Bond Resolution
have been duly filed with the Trustee;
WHEREAS, the Trustee has agreed to accept the
trusts herein created upon the terms herein set forth; and
WHEREAS, all things necessary to make the Bonds,
when issued as provided in this Indenture, the valid, binding and
legal special obligations of the Issuer according to the import
thereof, and to constitute this Indenture a valid assignment of
the amounts pledged to the payment of the principal of, premium,
if any, and interest on, and Purchase Price of, the Bonds have
been done and performed, and the creation, execution and delivery
of this Indenture and the execution and issuance of the Bonds,
subject to the terms hereof, in all respects have been duly
authorized;
NOW, THEREFORE, the Issuer, in consideration of
the premises and the acceptance by the Trustee of the trusts
hereby created, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, and in order to secure
the payment of the principal of, premium, if any, and interest on,
and Purchase Price of, the Bonds according to their tenor and
effect, and to secure the payment, performance and observance by
the Issuer of all of the covenants and obligations expressed or
implied herein and in the Bonds, does hereby irrevocably grant,
alienate, bargain, sell, convey, transfer, assign and pledge unto
the Trustee (to the extent of its legal capacity to hold the same
for the purposes hereof), and the successors in trust and assigns
of the Trustee, forever.
GRANTING CLAUSE FIRST
All right, title, and interest of the Issuer in,
to and under the Agreement (except Unassigned Rights), and all
extensions and renewals of the term thereof, if any, and to do any
and all other things which the Issuer is or may become entitled to
do under the Agreement; provided, however, that the assignment
made pursuant to this clause shall not impair or diminish any
obligation of the Issuer under the Agreement or alter the rights,
duties and obligations of the Trustee under the remaining terms of
this Indenture;
GRANTING CLAUSE SECOND
All moneys, income, revenues, issues, profits,
receipts and other amounts payable to or receivable by the Issuer
under or with respect to the Agreement, including the Installment
Payments (except Unassigned Rights);
GRANTING CLAUSE THIRD
All right, title, and interest of the Issuer in
and to all moneys and securities from time to time held by the
Trustee under the terms of this Indenture (except amounts held in
the Rebate Fund and the Bond Purchase Fund); and
GRANTING CLAUSE FOURTH
All right, title and interest of the Issuer in and
to any and all property, rights, and interest of every kind or
description which, from time to time hereafter, may be sold,
transferred, conveyed, assigned, pledged, mortgaged or delivered
to the Trustee as additional security hereunder.
TO HAVE AND TO HOLD all and singular the Trust
Estate (as hereinafter defined), whether now owned or hereafter
acquired, irrevocably unto the Trustee and its successors in trust
and assigns forever;
IN TRUST, NEVERTHELESS, upon the terms and trusts
herein set forth for the equal and proportionate benefit, security
and protection of all present and future owners of the Bonds from
time to time issued under and secured by this Indenture without
privilege, priority, or distinction as to the lien or otherwise of
any of the Bonds over any of the other Bonds;
PROVIDED, HOWEVER, that if the Issuer, its
successors or assigns, shall well and truly pay, or cause to be
paid, the principal of, premium, if any, and interest on the Bonds
due or to become due thereon at the times and in the manner
mentioned in the Bonds according to the true intent and meaning
thereof, and shall cause the payments to be made on the Bonds as
required under Article IV hereof or shall provide, as permitted
hereby, for the payment thereof by depositing with the Trustee the
entire amount due or to become due thereon (or Governmental
Obligations sufficient for that purpose as provided in Article V
hereof), and shall pay or cause to be paid to the Trustee all sums
of money due or to become due to it in accordance with the terms
and provisions hereof, then upon the final payment thereof or
provisions therefor this Indenture and the rights hereby granted
shall cease, determine, and be void; otherwise this Indenture
shall remain in full force and effect.
THIS INDENTURE FURTHER WITNESSETH, and it is
expressly declared, that all Bonds issued and secured hereunder
are to be issued, authenticated and delivered, and all said
property, rights and interest, including, without limitation, the
amounts hereby assigned, are to be dealt with and disposed of
under, upon and subject to the terms, conditions, stipulations,
covenants, agreements, trusts, uses and purposes hereinafter
expressed, and that the Issuer has agreed and covenanted, and
hereby does agree and covenant, with the Trustee and with the
Owners, from time to time, of the Bonds, as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01.Definitions. Each of the following terms shall
have the meaning assigned to it in this Section 1.01 whenever used in this
Indenture, unless the context in which such term is used clearly requires
otherwise:
Acts - shall mean, collectively, the Issuer Act,
Chapter 30, Chapter 383, Article 717k and Article 717q.
Agent - shall mean Central and South West
Corporation, or any wholly owned subsidiary thereof, which may
from time to time be designated by the Company to act as its agent
hereunder by written notice of such designation by the Company to
the Issuer and the Trustee.
Agreement - shall mean the Installment Payment
Agreement, dated as of July 1, 1996, by and between the Issuer and
the Company and the Agent, including all amendments thereof or
supplements thereto.
Approval Certificate - shall mean the certificate
of the President of the Issuer approving certain terms of the
Bonds.
Article 717k - shall mean Article 717k, Vernon's
Texas Civil Statutes, as amended.
Article 717q - shall mean Article 717q, Vernon's
Texas Civil Statutes, as amended.
Authorized Agent Representative - shall mean such
person at the time and from time to time designated by written
certificate furnished to the Issuer and the Trustee containing the
specimen signature of such person and signed on behalf of the
Agent by the Chairman of the Board of Directors, the President,
any Vice President, Treasurer or Assistant Treasurer of the Agent
to act on behalf of the Company. Such certificate may designate
an alternate or alternates.
Authorized Denominations - shall mean (i) for
Bonds in the Daily or Weekly Mode, $100,000 or any integral
multiple thereof; provided that if the principal amount of Bonds
in the Daily or Weekly Mode, as the case may be, is not evenly
divisible by $100,000, then the remainder of such principal amount
shall be added to another Bond in the same Mode that is in a
principal amount of $100,000 or any integral multiple thereof,
(ii) for Bonds in the Flexible Mode, $100,000 or any integral
multiple of $1,000 in excess of $100,000, and (iii) for Bonds in
the Monthly, Quarterly, Semiannual, Multiannual or Fixed Rate
Mode, $5,000 or any integral multiple thereof.
Authorized Issuer Representative - shall mean such
person at the time and from time to time designated by written
certificate furnished to the Company and the Trustee containing
the specimen signature of such person and signed on behalf of the
Issuer by its President or Secretary. Such certificate may
designate an alternate or alternates.
Beneficial Owner - shall mean the actual purchaser
of a Bond.
Board - shall mean the lawfully qualified Board
of Directors of the Issuer.
Bond Counsel - shall mean McCall, Parkhurst &
Horton L.L.P. or such other firm of attorneys of nationally
recognized standing in the field of law relating to municipal bond
law and the exemption from federal income taxation of interest on
state or local bonds, selected by the Issuer and acceptable to the
Trustee and the Agent.
Bond Fund - shall mean the fund by that name
established by Section 4.02 of this Indenture.
Bond Insurer - shall mean MBIA Insurance
Corporation and its successors and assigns.
Bond Owner, Bondowner, Owner, Bondholder,
bondholder, holder, Registered Owner or owner of the Bonds -when
used with respect to a Bond, shall mean the person or entity in
whose name such Bond shall be registered.
Bond Purchase Agreement - shall mean the Bond
Purchase Agreement dated the date of its execution between the
Issuer and the Underwriter.
Bond Purchase Fund - shall mean the fund by that
name established by Section 4.04 of this Indenture.
Bond Registrar - shall mean the Trustee or any
successor bond registrar serving as such under this Indenture.
Principal Office of the Bond Registrar shall mean the office
thereof designated in writing to the Trustee.
Bond Resolution or Resolution - shall mean the
Resolution of the Board of Directors authorizing the issuance of
the Bonds (including the Indenture prescribed and authorized to be
executed in the Bond Resolution) together with any supplemental
resolutions or amendments to the Resolution or such Indenture.
Bonds - shall mean the Red River Authority of
Texas Pollution Control Revenue Refunding Bonds (West Texas
Utilities Company, Public Service Company of Oklahoma and Central
Power and Light Company Oklaunion Project) Series 1996, executed
and delivered pursuant hereto.
Business Day - shall mean any day on which
commercial banks located in all of the cities in which the
Principal Offices of the Trustee, the Paying Agent and the
Remarketing Agent are located are not required or authorized by
law or regulation to remain closed and on which the New York Stock
Exchange is not closed.
Chapter 30 - shall mean Chapter 30 of the Texas
Water Code, as amended.
Chapter 383 - shall mean Chapter 383 of the Texas
Health and Safety Code, as amended.
Code - shall mean the Internal Revenue Code of
1986, as amended, and the rulings and regulations (including
temporary and proposed regulations) promulgated thereunder or, to
the extent applicable, under the Internal Revenue Code of 1954, as
amended.
Company - shall mean collectively WTU, PSO and CPL
and their respective successors and assigns as permitted by
Section 7.02 of the Agreement.
Company-Held Bonds - shall mean Bonds owned by or
held in the name of the Company or its designee or held by the
Trustee for the account of the Company or its designee as
described in Section 2.10(b) hereof.
Conversion or conversion - shall mean a change
from one Mode to another with respect to a Bond, and with respect
to a Bond in the Multiannual Mode, a change from one Interest Rate
Period to another.
Conversion Date - shall mean the date on which a
new Mode becomes effective with respect to a Bond, and with
respect to a Bond in the Multiannual Mode, the date on which a new
Interest Rate Period becomes effective.
Costs of Issuance - shall mean all costs and
expenses incurred by the Issuer or the Company in connection with
the issuance and sale of the Bonds, including without limitation
(i) reasonable fees and expenses of accountants, attorneys,
engineers, and financial advisors, (ii) materials, supplies, and
printing and engraving costs, (iii) recording and filing fees,
(iv) rating agency fees, and (v) the Issuer's administrative
expenses as provided in Section 5.05 of the Agreement.
CPL - shall mean Central Power and Light Company,
and its successors and assigns as permitted by Section 7.02 of the
Agreement.
Daily Mode - shall mean the Mode in which the
interest rate on the Bonds is set at the Daily Rate, all as set
forth in the form of Bond set forth in Section 2.03 hereof.
Daily Rate - shall mean the rate of interest that
is set on the Bonds by the Remarketing Agent while they are in the
Daily Mode.
Delivery Date - shall mean, with respect to a Bond
tendered for purchase, the Purchase Date or any subsequent
Business Day on which such Bond is delivered to the Paying Agent
as provided in the form of Bond.
DTC - shall mean The Depository Trust Company, New
York, New York, or any successor securities depository.
DTC Participant - shall mean any securities broker
dealer, bank, trust company, clearing corporation or other
organization with Bonds credited to an account maintained on its
behalf by DTC.
Effective Date - shall mean with respect to a Bond
(a) in the Daily, Flexible, Weekly, Monthly, Quarterly, Semiannual
and Multiannual Modes, the date on which a new Interest Rate
Period for that Bond takes effect and (b) in the Multiannual or
Fixed Rate Mode, any date on which such Bond is subject to
optional redemption pursuant to Section 2.06(b)(ii) hereof.
Electronic Notice - shall mean notice transmitted
through a time-sharing terminal, by facsimile transmission or by
telephone (promptly confirmed in writing or by facsimile
transmission).
Event of Default - used with respect to this
Indenture, shall mean any event specified in Section 6.01 of this
Indenture.
Favorable Opinion - shall mean an opinion of Bond
Counsel addressed to the Issuer, the Agent, the Company and the
Trustee to the effect that the action proposed to be taken is
authorized or permitted by, to the extent applicable, the Acts and
this Indenture and will not adversely affect the excludability of
interest on the Bonds from gross income of the owners thereof for
federal income tax purposes (other than as held by a "substantial
user" of the Projector a "related person" within the meaning of
the Code).
Fixed Rate - shall mean a rate of interest on a
Bond that is fixed for the remaining term of the Bond or until
such Bond is converted to a different Mode.
Fixed Rate Conversion Date - shall mean with
respect to a Bond, the date upon which the Fixed Rate first
becomes effective for the Bond, and shall mean the Issue Date if
the Bonds are initially delivered bearing interest at a Fixed
Rate.
Fixed Rate Mode - shall mean the Mode in which the
interest rate on the Bonds is set at the Fixed Rate Conversion
Date until the Maturity Date or until such Bond is converted to a
different Mode.
Flexible Mode - shall mean the Mode in which the
interest rate on the Bonds is set at the Flexible Rate, all as set
forth in the form of Bond set forth in Section 2.03 hereof.
Flexible Rate - shall mean a rate of interest set
by the Remarketing Agent for periods from 1 to 270 days.
Government Obligations - shall meandirect
obligations of, or obligations the timely payment of principal of
and interest on which is fully and unconditionally guaranteed by,
the United States of America.
Indenture - shall mean this Indenture of Trust, as
originally executed and as amended, modified or supplemented
thereafter in accordance with the terms hereof.
Installment Payment - shall mean each payment
required to pay amounts due and owing on the Bonds issued pursuant
to the Agreement, as defined in Section 5.01 thereof and as
provided for in this Indenture, including the principal of,
redemption premium, if any, and interest on, and Purchase Price
of, such Bonds.
Interest Accrual Date - shall mean the first day
of any Interest Rate Period and thereafter, each Interest Payment
Date in respect thereof, other than the last such Interest Payment
Date.
Interest Payment Date - shall mean (i) each June 1
and December 1 for Bonds in the Semiannual, Multiannual or Fixed
Rate Mode, (ii) the first day (which must be a Business Day) after
an Interest Rate Period for Bonds in the Flexible Mode; (iii) the
first Business Day of each calendar month for Bonds in the Daily,
Weekly or Monthly Mode; (iv) each March 1, June 1, September 1 and
December 1 for Bonds in the Quarterly Mode; and (v) the Maturity
Date.
Interest Rate Period or Rate Period - shall mean,
when used with respect to any particular rate of interest for a
Bond, the period during which such rate of interest determined for
such Bond will remain in effect as described herein.
Notwithstanding anything in this Indenture to the contrary, the
Interest Rate Period with respect to each Bond in the Flexible
Mode shall end on a day which is immediately followed by a
Business Day, and, in any event, not later than the day next
preceding the Maturity Date.
Issue Date - shall mean the date on which the
Bonds are first authenticated and delivered to the initial
purchasers against payment therefor.
Issuer - shall mean Red River Authority of Texas,
a conservation and reclamation district and a governmental agency
and body politic and corporate of the State of Texas.
Issuer Act - shall mean Article 8280-228, Vernon's
Texas Civil Statutes, as amended.
Maturity Date - shall mean the Maturity Date as
set forth in the Approval Certificate.
Maximum Rate - shall mean a "net effective
interest rate" (as defined and calculated in accordance with the
provisions of Article 717k-2, Vernon's Texas Civil Statutes) of
twelve percent (12%) per annum.
Mode - shall mean the period for and the manner in
which the interest rates on the Bonds are set and includes the
Daily Mode, the Flexible Mode, the Weekly Mode, the Monthly Mode,
the Quarterly Mode, the Semiannual Mode, the Multiannual Mode and
the Fixed Rate Mode.
Monthly Mode - shall mean the Mode in which the
interest rate on the Bonds is set at the Monthly Rate, all as set
forth in the form of Bond set forth in Section 2.03 hereof.
Monthly Rate - shall mean the rate of interest
that is set on the Bonds while they are in the Monthly Mode.
Moody's - shall mean Moody's Investors Service,
Inc., or any successor thereto maintaining a rating on the Bonds
at the request of the Company.
Multiannual Mode - shall mean the Mode in which
the interest rate on the Bonds is fixed for periods of one year or
multiples thereof designated by the Remarketing Agent, after
consultation with the Agent, as described in the form of Bond set
forth in Section 2.03 hereof.
Multiannual Rate - shall mean the rate of interest
that is set on Bonds while they are in the Multiannual Mode.
Municipal Bond Insurance Policy - shall mean the
financial guaranty insurance policy issued by the Bond Insurer
insuring the payment when due of the principal of and interest on
the Bonds as provided therein.
Official Statement - shall mean the Official
Statement relating to the Bonds.
Outstanding, Bonds Outstanding or Bonds then
Outstanding - shall mean when used with reference to Bonds at any
date as of which the amount of Outstanding Bonds is to be
determined, means all Bonds authenticated and delivered under the
Indenture, except:
a)Bonds canceled or delivered for cancellation at
or prior to such date;
(b)Bonds deemed to be paid pursuant to the terms of
this Indenture;
(c)Bonds in lieu of which others have been authenticated
and delivered under this Indenture;
(d)Bonds registered in the name of the Issuer;
(e)On or after any Purchase Date for Bonds, all Bonds (or
portions of Bonds) which are tendered or deemed to
have been tendered for purchase on such date,
provided that funds sufficient for such purchase
are on deposit with the Paying Agent; and
(f)For purposes of any consent, request, demand,
authorization, direction, notice, waiver or other
action to be taken by the holders of a specified
percentage of outstanding Bonds hereunder, all
Bonds held by or for the account of the Issuer,
the Agent or the Company, except that for purposes
of any such consent, request, demand,
authorization, direction, notice, waiver or action
the Trustee shall be obligated to consider as not
being outstanding only Bonds known by the Trustee
by actual notice thereof to be so held.
In determining whether the owners of a requisite
aggregate principal amount of Bonds outstanding have concurred in
any request, demand, authorization, direction, notice, consent or
waiver under the provisions hereof, Bonds which are held by or on
behalf of the Company or any affiliates thereof (unless all of
the Outstanding Bonds are then owned by said parties) shall be
disregarded for the purpose of any such determination.
Notwithstanding the foregoing, Bonds so owned which have been
pledged in good faith shall not be disregarded as aforesaid if the
pledgee has established to the satisfaction of the Bond Registrar
the pledgee's right so to act with respect to such Bonds and that
the pledgee is not the Company or an affiliate thereof.
Ownership Percentage - shall mean the respective
payment obligations of each of WTU, PSO and CPL expressed as a
percentage as set forth below:
WTU70%
PSO20%
CPL10%
Pursuant to Section 1.04 of the Agreement, such Ownership
Percentages may be changed by agreement among WTU, PSO and CPL
with the written consent of the Issuer, but without notice to, or
the approval or consent of, the holders of the Bonds; provided
that the aggregate Ownership Percentage of WTU, PSO and CPL will
at all times equal 100%.
Paying Agent - shall mean the Trustee or any
successor paying agent or co-paying agent serving as such under
this Indenture. Principal Office of the Paying Agent shall mean
the office thereof designated in writing to the Trustee. So long
as any Bond is Outstanding hereunder, the Paying Agent shall
maintain an office or have an agent with an office in New York
City.
Permitted Investments - shall mean any of the
following obligations or securities, to the extent permitted by
law, on which the Issuer is not the obligor:
(a). . . . . . . . .Government Obligations;
. . . . . . . . . . . . . . . . . . . .(b)money
market funds registered under the Investment
Company Act of 1940, whose shares are registered
under the Securities Act of 1933, and having a
rating by S&P of AAAm-G; AAAm; or Aam; and
. . . . . . . . . . . . . . . . . . . .(c)
obligations or securities approved in writing by
the Bond Insurer.
Plant - shall mean the Oklaunion electric
generating plant of the Company in Wilbarger County, Texas.
Principal Office - is defined in the definitions
of Trustee, Paying Agent, Bank, Bond Registrar and Remarketing
Agent, herein.
Prior Agreement - shall mean the Installment Sale
Agreement, dated as of September 15, 1984, between the Issuer and
the Company and Central and South West Services, Inc.
Prior Bonds - shall mean Red River Authority of
Texas Adjustable Rate Pollution Control Revenue Bonds (West Texas
Utilities Company, Public Service Company of Oklahoma and Central
Power and Light Company Oklaunion Project) Series 1984.
Prior Indenture - shall mean the Indenture of
Trust, dated as of September 15, 1984, between the Issuer and the
Prior Trustee.
Prior Trustee - shall mean The Bank of New York.
Project - shall mean, collectively, the
facilities, as described more fully in Exhibit A to the Prior
Agreement.
Purchase Date - shall mean the date upon which
Bonds are required to be purchased pursuant to a mandatory or
optional tender in accordance with the provisions in the forms of
Bonds set forth in Section 2.03 hereof.
Purchase Price - shall mean, with respect to a
Bond on a Purchase Date, a price equal to par plus accrued
interest to the Purchase Date; provided, that in the event that
the Purchase Date is an Interest Payment Date for such Bond and
such Bond is not in the Flexible Mode, accrued interest will be
paid separately and not as a part of the Purchase Price on such
Date; and further provided that in the event such Bond bears
interest at a Multiannual or Fixed Rate and is subject to
mandatory tender on a date on which the Bond is subject to
optional redemption, Purchase Price shall include any premium that
would be payable on the Purchase Date if such Bond were redeemed
on the Purchase Date.
Quarterly Mode - shall mean the Mode in which the
interest rate on the Bonds is set at the Quarterly Rate, all as
set forth in Section 2.03 hereof.
Quarterly Rate - shall mean the rate of interest
that is set on the Bonds while they are in the Quarterly Mode.
Rating Agencies - shall mean S&P and/or Moody's,
according to which of such rating agencies then rates the Bonds;
and provided that if neither of such rating agencies then rates
the Bonds, the term "Rating Agencies" shall refer to any national
rating agency (if any), mutually acceptable to the Agent and the
Remarketing Agent, which provides such rating.
Rebate Fund - shall mean the fund by that name
established in Section 4.10 hereof.
Record Date - shall mean (i) with respect to Bonds
in the Flexible Mode, the time of payment on the Interest Payment
Date; (ii) with respect to Bonds in the Daily, Weekly, Monthly,
Quarterly or Semiannual Mode, the close of business on the
Business Day preceding an Interest Payment Date; and (iii) with
respect to Bonds in the Multiannual or Fixed Rate Mode, the 15th
day of the calendar month immediately preceding any Interest
Payment Date, regardless of whether such day is a Business Day or,
in the case of an Interest Payment Date which shall not be at
least 15 days after the first day of a Quarterly, Semiannual,
Multiannual or Fixed Rate Period, the first day of such Quarterly,
Semiannual, Multiannual or Fixed Rate Period.
Refunding - shall mean the refunding of the Prior
Bonds, as described in the Agreement and this Indenture.
Registration Books - shall mean the registration
records of the Issuer, maintained by the Trustee, as registrar for
the Bonds.
Regulations - shall mean the Income Tax
Regulations promulgated pursuant to the Code or under the 1954
Code.
Remarketing Account - shall mean the special
account of that name within the Bond Purchase Fund.
Remarketing Agent - shall mean the initial and any
successor remarketing agent appointed in accordance with Article
VIII hereof. Principal Office of the Remarketing Agent shall mean
the office thereof designated in writing to the Trustee.
Remarketing Agreement - means any remarketing
agreement executed by the Company and the Remarketing Agent
pursuant to Article VIII hereof.
Remarketing Proceeds - shall mean proceeds from
the sale of the Bonds by the Remarketing Agent other than to the
Issuer or the Company.
S&P - shall mean Standard & Poor's Rating
Services, a division of McGraw Hill, Inc., or any successor
thereto maintaining a rating on the Bonds at the request of the
Company.
Semiannual Mode - shall mean the Mode in which the
interest rate on the Bonds is set at the Semiannual Rate, all as
set forth in the form of Bond set forth in Section 2.03 hereof.
Semiannual Rate - shall mean the rate of interest
that is set on the Bonds while they are in the Semiannual Mode.
State - shall mean the State of Texas.
Tax Letter of Representation - shall mean the
letter of representation regarding the use of the proceeds of the
Bonds and the Prior Bonds and other facts that are within the
Company's knowledge, furnished by the Agent acting on behalf of
the Company to Bond Counsel in connection with the issuance of the
Bonds.
Tendered Bond - shall mean any Bond tendered or
deemed tendered for purchase pursuant to Sections 2.02(A)(3),
2.02(B)(3) or (4), 2.02(C)(3) or (4), 2.02(D)(3) or (4),
2.02(E)(3) or (4), 2.02(F)(3) or (4), 2.02(G)(3) or (4) or
2.02(H)(3) hereof.
Trustee - shall mean The Bank of New York, or any
successor trustee or co-trustee serving as such under this
Indenture. Principal Office of the Trustee shall mean the
business address designated in writing to the Issuer and the
Remarketing Agent as its principal office for its duties
hereunder.
Trustee's Prime Rate - shall mean, on any day, the
lesser of (a) the corporate base rate for that day as announced by
the Trustee in its commercial banking capacity and (b) the highest
nonusurious interest rate ("Ceiling Rate") permitted for each such
day by whichever of Texas or federal laws permit the higher
nonusurious rate, stated as a rate per annum.
Trust Estate - shall mean the property conveyed to
the Trustee pursuant to the Granting Clauses of this Indenture.
Unassigned Rights - shall mean the rights of the
Issuer under Sections 5.05, 6.03 and 7.03(a) of the Agreement and
the right to receive notices thereunder.
Undelivered Bonds - shall mean Bonds which are
deemed to have been tendered as provided in the forms of the Bonds
for the Daily Mode, Flexible Mode, Weekly Mode, Monthly Mode,
Quarterly Mode, Semiannual Mode, Multiannual Mode and Fixed Rate
Mode set forth in Section 2.03 hereof.
Underwriter - shall mean the initial underwriter
of the Bonds, Morgan Stanley & Co. Incorporated
Weekly Mode - shall mean the Mode in which the
interest rate on the Bonds is set at the Weekly Rate, all as set
forth in the form of the Bond set forth in Section 2.03 hereof.
Weekly Rate - shall mean the rate of interest that
is set on the Bonds while they are in the Weekly Mode.
Section 1.02. Article and Section Headings. The headings or
titles of the several Articles and Sections of this Indenture, and
the Table of Contents appended hereto, are solely for convenience
of reference and shall not affect the meaning or construction of
the provisions hereof.
Section 1.03. Interpretation. The singular form of any word
used herein shall include the plural, and vice versa, if
applicable. The use of a word of any gender shall include all
genders, if applicable. This Indenture and all of the terms and
provisions hereof shall be construed so as to effectuate the
purposes contemplated hereby and to sustain the validity hereof.
All references to any person or entity defined in Section 1.01
shall be deemed to include any person or entity succeeding to the
rights, duties and obligations of such person or entity. Unless
otherwise specified herein, all references to specific times shall
be deemed to refer to New York City time.
Section 1.04. Agent to Act for Company. Each of WTU, PSO and
CPL has designated and authorized the Agent to act on behalf of
the Company for all purposes pursuant to this Indenture and the
Agreement. Any consent, instruction, approval, direction,
designation, selection, order, communication or notice to be given
by or on behalf of any of WTU, PSO or CPL hereunder shall be given
by the Agent and shall be binding upon each of WTU, PSO and CPL.
Any consent, instruction, approval, direction, designation,
selection, order, communication or notice to be given to any of
WTU, PSO or CPL hereunder shall be given to the Agent, and receipt
of such by the Agent shall be deemed to be receipt of such by each
of WTU, PSO and CPL.
Section 1.05. Obligations of WTU, PSO and CPL Several but not
Joint. Notwithstanding the definition of the term "Company" any
meaning WTU, PSO and CPL collectively, each of WTU, PSO and CPL is
liable severally, but not jointly, to make or pay, or cause to be
made or paid, its Ownership Percentage of each Installment Payment
or other obligation under the Agreement or this Indenture, and
none of WTU, PSO or CPL is obligated to make or pay, or cause to
be made or paid, more than its own Ownership Interest of each
Installment Payment or other obligation under this Agreement or
more than its own Ownership Interest of the aggregate amount of
all Installment Payments or other obligations under the Agreement.
In addition any payment to or for the account of the Company
hereunder shall be made pro rata to each of WTU, PSO and CPL in
accordance with its Ownership Interest.
ARTICLE II
AUTHORIZATION AND ISSUANCE OF THE BONDS
Section 2.01. Authorization of Bonds. (a) The Bonds are hereby
authorized to be issued in one series, designated "Red River
Authority of Texas Pollution Control Revenue Refunding Bonds (West
Texas Utilities Company, Public Service Company of Oklahoma and
Central Power and Light Company Oklaunion Project) Series 1996".
The Bonds shall be issued for the purpose of accomplishing the
Refunding as provided herein and in the Agreement. No Bonds may
be issued pursuant to this Indenture in addition to those
authorized by this Section 2.01, except Bonds issued upon transfer
or exchange pursuant to Section 3.06 hereof, temporary Bonds
issued pursuant to Section 3.16 hereof, replacement Bonds issued
pursuant to Section 3.17 hereof and Bonds issued pursuant to
Section 2.09 hereof.
(b) The Bonds (i) shall be dated as provided in the
paragraph next preceding the last paragraph of this Section, (ii)
shall be in the aggregate principal amount set forth in the
Approval Certificate, (iii) shall bear interest initially in the
Mode set forth in the Approval Certificate and thereafter as set
forth in Section 2.02 and as provided in the form of the Bond,
until paid; and (iv) shall mature on the Maturity Date set forth
in the Approval Certificate.
The Bonds are subject to redemption prior to
maturity as set forth in Section 2.06 hereof.
The Bonds are issuable in the form of registered
Bonds without coupons in Authorized Denominations. The Bonds
shall be numbered from 1 upwards, provided that the number
assigned to each definitive Bond shall be prefixed by the letters
"R." Temporary Bonds shall be prefixed by the letters "TR."
Subject to the provisions related to the
book-entry only system of Section 3.07 hereof, principal of, and
premium, if any, on the Bonds shall be payable to the Bondholders
upon presentation and surrender of the Bonds as the same become
due at the Principal Office of the Paying Agent. Interest on the
Bonds shall be paid as provided in the form of the Bond. Such
interest shall be paid notwithstanding the cancellation of any
Bonds upon any exchange or registration of transfer thereof
subsequent to the Record Date and prior to such Interest Payment
Date, except that, if and to the extent there shall be a default
in the payment of the interest due on such Interest Payment Date,
such defaulted interest shall be paid to the Bondholders in whose
names any such Bonds (or any Bond or Bonds issued upon
registration of transfer or exchange thereof) are registered at
the close of business on the Business Day next preceding the date
of payment of such defaulted interest. Payment of principal of,
premium, if any, and interest on the Bonds shall be made in such
lawful money of the United States of America as, at the respective
times of payment, shall be legal tender for the payment of public
and private debts.
The Bonds shall be dated as of July 1, 1996, and
shall initially bear interest from the Issue Date unless initially
issued bearing interest at a Fixed Rate, in which case, the Bonds
shall initially bear interest from July 1, 1996. Thereafter, the
Bonds shall bear interest from the Interest Payment Date to which
interest has been paid or duly provided for, or unless no interest
has been paid or duly provided for on the Bonds, in which case
from the Issue Date until paid, in each case at the rates set
forth in Section 2.02 hereof and as provided in the Bonds. If, as
shown by the records of the Trustee, interest on the Bonds is in
default, Bonds issued in exchange for Bonds surrendered for
registration of transfer or exchange shall note such default and
shall bear interest from the date to which interest has been paid
in full on the Bonds, or, if no interest has been paid on the
Bonds, from the Issue Date. Each Bond shall bear interest on
overdue principal and, to the extent permitted by law, on overdue
interest at the applicable rate in effect on the date which such
principal and interest became due and payable.
With respect to Bonds in the Daily, Flexible,
Weekly, Monthly, Quarterly or Semiannual Mode, on the Business Day
before each Interest Payment Date and for Bonds in the Multiannual
and Fixed Rate Mode, on the fifteenth day of the calendar month
prior to each Interest Payment Date, the Trustee shall calculate
the amount of interest to be paid on the next succeeding Interest
Payment Date and shall, not later than 11:00 a.m., New York City
time, on such date the calculation is made, notify the Company and
the Paying Agent of the amount of interest to be paid. Any
contest by the Company of the amount calculated by the Trustee to
be due on an Interest Payment Date shall not relieve the Company
of its obligation to pay such amount to enable the Trustee to pay
the interest payable on the Bonds on such Interest Payment Date.
Section 2.02.Interest. The interest rate on the Bonds, as
provided in the Bonds, will be the lesser of (i) the Maximum Rate
or (ii) the rate determined as provided in this Section 2.02. In
no event shall the Interest Rate exceed the Maximum Rate.
Initially, the Bonds shall bear interest at the interest rate set
forth in the Approval Certificate determined by the Underwriter in
accordance with the Mode set forth in the Approval Certificate.
Interest on the Bonds in a Flexible Mode, Daily Mode, Weekly Mode
or Monthly Mode shall be payable on the applicable Interest
Payment Date as herein described, computed on the basis of a 365
or 366-day year, as applicable for the number of days actually
elapsed based on the calendar year in which such Rate Period
commences. The interest on the Bonds in a Fixed Rate Mode,
Multiannual Mode, Semiannual Mode or Quarterly Mode shall be
payable on the applicable Interest Payment Date as herein
described, computed on the basis of a 360-day year of twelve
30-day months. While there exists an Event of Default under this
Indenture, the interest rate on the Bonds will be the rate on the
Bonds on the day before the Event of Default occurred.
(A) Flexible Mode.
(1) Determination of Flexible Rates. The Flexible
Rate for Bonds in the Flexible Mode shall be the rate of interest
determined by the Remarketing Agent, for each Interest Rate
Period, to be the lowest rate which in its judgment, on the basis
of prevailing financial market conditions, is necessary on and as
of the Effective Date, to remarket each Bond having such Interest
Rate Period (as determined by the Remarketing Agent) in a
secondary market transaction at a price equal to the principal
amount thereof, but not in excess of the Maximum Rate. The Remark
eting Agent shall determine the initial Flexible Rate or Rates and
Interest Rate Period or Periods on or before the date of
conversion to the Flexible Mode. Thereafter, the Remarketing
Agent shall redetermine the Flexible Rate for each Interest Rate
Period and shall redetermine each Interest Rate Period. While any
Bonds are in the Flexible Mode, such Bonds may have successive
Interest Rate Periods and any Bond may bear interest at a rate and
for a period different from any other Bond. The interest rate and
the Interest Rate Period for each particular Bond in the Flexible
Mode will be determined by the Remarketing Agent and will remain
in effect from and including the Effective Date of the Interest
Rate Period selected for that Bond by the Remarketing Agent throug
h the last date thereof. The Remarketing Agent shall notify the
Paying Agent of the Flexible Rate and Interest Rate Period by
Electronic Notice not later than 1:00 p.m., New York City time, on
the Effective Date. The Paying Agent shall give written notice of
the Flexible Rate and Interest Rate Period to the Trustee and the
Agent. Each determination and redetermination of the Flexible
Rate shall be conclusive and binding on the Issuer, the Trustee,
the Paying Agent, the Bond Registrar, the Company, the Agent and
the Bondowners. If the Remarketing Agent fails for any reason to
determine the Flexible Rate or Interest Rate Period for any Bond
while in the Flexible Mode, or if for any reason such manner of
determination shall be determined to be invalid or unenforceable,
the Bond shall be deemed to be in an Interest Rate Period ending
on the next succeeding day which is immediately followed by a
Business Day and the Flexible Rate shall be equal to 100% of the
rate for the Public Securities Association Municipal Swap Index as
published by Municipal Market Data for 7 day high-grade tax-exempt
variable rate demand obligations on the day on which such rate is
determined or, if such rate is not published on that day, the most
recent publication of such rate.
In determining the Flexible Rate and remarketing Bonds in the
Flexible Mode, the Remarketing Agent shall (i) not offer Interest
Rate Periods greater than 270 days, (ii) not offer Interest Rate
Periods applicable to Bonds to be converted extending beyond the
day preceding any scheduled conversion of the Bonds to another
Mode or the final maturity of the Bonds, and (iii) follow any
written directions of the Agent not inconsistent with the
preceding clauses (i) and (ii) as to the Interest Rate Periods to
be made available. The Agent, the Trustee, the Paying Agent and
the Remarketing Agent shall cooperate to ensure compliance with
this requirement.
(2) Conversions from the Flexible Mode. Bonds in the Flexible
Mode or any portion of such Bonds may be converted at the election
of the Agent from the Flexible Mode to the Daily, Weekly, Monthly,
Quarterly, Semiannual, Multiannual or Fixed Rate Mode as provided
in the form of Bond, so long as no Event of Default hereunder
exists as certified to the Trustee by the Agent. Written notice
of a conversion of Bonds from the Flexible Mode shall be given by
the Agent to the Issuer, the Trustee, the Paying Agent, the
Remarketing Agent and the Rating Agencies not fewer than 30 days
before the proposed Conversion Date, which date shall be specified
by the Agent in such notice and shall not be earlier than the day
following the expiration of the Interest Rate Period with the
longest remaining term then in effect for the Bonds to be
converted. Prior to the proposed Conversion Date, the Remarketing
Agent shall not offer Interest Rate Periods for the Bonds to be
converted extending beyond the proposed Conversion Date.
Conversions to the Fixed Rate Mode shall also be governed by
Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to conversion
to a new Mode established by the preceding paragraph and Section
2.02(K) are not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Agent and the Remarketing Agent and the Bonds subject
to such failed conversion shall remain in the Flexible Mode with
an Interest Rate Period ending on the next succeeding day which is
immediately followed by a Business Day. In such event, such Bonds
shall remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3) Mandatory Tender for Purchase. Bonds in the Flexible Mode
are subject to mandatory tender for purchase as provided in the
form of Bond and in Section 2.11 hereof.
(B) Daily Mode.
(1) Determination of Daily Rates. The Daily Rate shall be the
rate of interest determined by the Remarketing Agent for each
Interest Rate Period, to be the lowest rate which in its judgment,
on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Daily Mode at par plus accrued
interest on and as of the Effective Date, but not in excess of the
Maximum Rate. The Remarketing Agent shall determine the initial
Daily Rate on or before the date of conversion to the Daily Mode.
Thereafter, the Remarketing Agent shall redetermine the Daily Rate
for each subsequent Interest Rate Period. When such Bond is in
the Daily Mode, the Daily Rate in effect for each Interest Rate
Period (the "Effective Rate" for such Period) shall be determined
not later than the Effective Date and shall be effective from the
Effective Date until the next succeeding Business Day. The Remark
eting Agent shall notify the Paying Agent of the Daily Rate by
Electronic Notice not later than 10:30 a.m., New York City time,
on such Business Day. The Paying Agent shall give written notice
of the Daily Rate to the Trustee and the Agent. Each determinatio
n and redetermination of the Daily Rate shall be conclusive and
binding on the Issuer, the Trustee, the Paying Agent, the Company,
the Agent and the Bondowners. If for any reason the Remarketing
Agent fails to determine the Daily Rate (including, but not limite
d to, a failure to determine the Daily Rate for a day that is not
a Business Day) or if for any reason such manner of determination
shall be determined to be invalid or unenforceable, the Daily Rate
to take effect on such date will be the Daily Rate in effect on
the day next preceding such date.
(2) Conversions from the Daily Mode. The Bonds in the Daily Mode
or any portion of such Bonds may be converted on any Interest
Payment Date at the election of the Agent from the Daily Mode to
the Flexible, Weekly, Monthly, Quarterly, Semiannual, Multiannual
or Fixed Rate Mode as provided in the form of Bond, so long as no
Event of Default hereunder exists as certified to the Trustee by
the Agent. Written notice of a conversion from the Daily Mode
shall be given by the Agent to the Issuer, the Trustee, the Paying
Agent, the Remarketing Agent and the Rating Agencies not fewer
than 30 days prior to the proposed Conversion Date, which date
shall be specified by the Agent in such notice. Notice of a
conversion of Bonds from the Daily Mode and the mandatory tender
of Bonds for purchase on such Conversion Date shall be given to
the owners of such Bonds as provided in Section 2.02(B)(4) hereof
and the form of Bond. Conversions to the Fixed Rate Mode shall
also be governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to conversion
to another Mode established by the preceding paragraph and Section
2.02(K) are not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Agent and the Remarketing Agent, and the Bonds shall
be subject to mandatory tender as provided in Section 2.02(B)(4)
hereof. In addition, the failed conversion shall cause the
interest rate on the Bonds subject to such failed conversion to
immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided herein.
(3) Bondowners' Option to Tender Bonds in Daily Mode. Bonds in
the Daily Mode are subject to tender, at the election of the owner
thereof, in the manner and subject to the limitations described in
the form of Bond. The owners of Tendered Bonds shall receive on
the Delivery Date 100% of the principal amount of the Tendered
Bonds plus accrued interest to the Purchase Date, provided that if
the Purchase Date is an Interest Payment Date, accrued interest
shall be paid separately, and not as part of the Purchase Price on
such date. The purchase of Tendered Bonds shall not extinguish
the debt represented by such Bonds which shall remain Outstanding
and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly tendered
to it for purchase as provided in the form of Bond and in this
subsection (3); provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price therefor shall
not be paid if on the Purchase Date the principal of the Bonds
shall have been accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
Notice of the Bondholder's option to tender Bonds in the Daily
Mode shall be given to the Paying Agent at the time and as
provided in the form of Bond. The Bondowners' Election Notice
delivered to the Paying Agent at the time and as provided in the
form of Bond shall be in substantially the form provided in the
form of Bond.
As soon as practicable after receiving notice of a tender of Bonds
under this Section, the Paying Agent shall notify the Remarketing
Agent, the Agent and the Trustee by telephone promptly confirmed
in writing of the amount of Tendered Bonds and the specified
Purchase Date.
During the time Bonds are issued in the book-entry-only system,
all Bondowners' Election Notices shall be given by the Beneficial
Owner in accordance with the procedures of DTC or its successor.
The Remarketing Agent and the Paying Agent shall be entitled to
rely on the accuracy of any Bondowners' Election Notice delivered
to the Paying Agent.
(4) Mandatory Tender of Bonds. Bonds in the Daily Mode are
subject to mandatory tender for purchase as provided in the form
of Bond and in Section 2.11 hereof
(C) Weekly Mode.
(1) Determination of Weekly Rates. The Weekly Rate shall be the
rate of interest determined by the Remarketing Agent for each
Interest Rate Period, to be the lowest rate which in its judgment,
on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Weekly Mode at par plus accrue
d interest on and as of the Effective Date, but not in excess of
the Maximum Rate. The Remarketing Agent shall determine the
initial Weekly Rate on or before the date of issue in or
conversion to the Weekly Mode. Thereafter, the Remarketing Agent
shall redetermine the Weekly Rate for each subsequent Interest
Rate Period. The Weekly Rate in effect for each Interest Rate
Period shall be determined not later than the Effective Date which
shall be a Wednesday unless the Effective Date is also a
Conversion Date, in which case the Conversion Date will be the
Effective Date. The Remarketing Agent shall notify the Paying
Agent of the Weekly Rate by Electronic Notice not later than 10:00
a.m., New York City time, on the Effective Date (or if the
Effective Date is not a Business Day, on the next preceding Busine
ss Day). The Paying Agent shall give written notice of the Weekly
Rate to the Trustee and the Agent. Each determination and
redetermination of the Weekly Rate shall be conclusive and binding
on the Issuer, the Trustee, the Paying Agent, the Company, the
Agent and the Bondowners. If for any reason the Remarketing
Agent fails to determine the Weekly Rate for any Bond or if for
any reason such manner of determination shall be determined to be
invalid or unenforceable, the Bond shall be deemed to be in a
Flexible Mode with an Interest Rate Period ending on the next
succeeding day which is immediately followed by a Business Day.
(2) Conversions from the Weekly Mode. The Bonds in the Weekly
Mode or any portion of such Bonds may be converted on any Interest
Payment Date at the election of the Agent from the Weekly Mode to
the Daily, Monthly, Quarterly, Semiannual, Multiannual, Flexible
or Fixed Rate Mode as provided in the form of Bond, so long as no
Event of Default hereunder exists as certified to the Trustee by
the Agent. Written notice of a conversion from the Weekly Mode
shall be given by the Agent to the Issuer, the Trustee, the Paying
Agent, the Remarketing Agent and the Rating Agencies not fewer
than 30 days prior to the proposed Conversion Date, which date
shall be specified by the Agent in such notice. Notice of a
conversion of Bonds from the Weekly Mode and the mandatory tender
of Bonds for purchase on such Conversion Date shall be given to
the owners of such Bonds as provided in Section 2.02(C)(4) hereof
and the form of Bond. Conversions to the Fixed Rate Mode shall
also be governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to conversion
to another Mode established by the preceding paragraph and Section
2.02(K) are not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Agent and the Remarketing Agent, and the Bonds shall
be subject to mandatory tender as provided in Section 2.02(C)(4)
hereof. In addition, the failed conversion shall cause the
interest rate on the Bonds subject to such failed conversion to
immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted
to another Mode for any reason be deemed to be, in and of itself,
an Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3) Bondowners' Option to Tender Bonds in Weekly Mode. Bonds in
the Weekly Mode are subject to tender, at the election of the
owner thereof, in the manner and subject to the limitations descri
bed in the form of Bond. The owners of Tendered Bonds shall
receive on the Delivery Date 100% of the principal amount of the
Tendered Bonds plus accrued interest to the Purchase Date,
provided that if the Purchase Date is an Interest Payment Date,
accrued interest shall be paid separately, and not as part of the
Purchase Price on such date. The purchase of Tendered Bonds shall
not extinguish the debt represented by such Bonds which shall
remain Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly tendered
to it for purchase as provided in the form of Bond and in this
subsection (3); provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price therefor shall
not be paid if on the Purchase Date the principal of the Bonds
shall have been accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
Notice of the Bondholders' option to tender Bonds in the Weekly
Mode shall be given to the Paying Agent at the time and as
provided in the form of Bond. The Bondowners' Election Notice
delivered to the Paying Agent at the time and as provided in the
form of Bond shall be in substantially the form provided in the
form of Bond.
As soon as practicable after receiving notice of a tender of Bonds
under this Section, the Paying Agent shall notify the Remarketing
Agent, the Agent and the Trustee by telephone promptly confirmed
in writing of the amount of Tendered Bonds and the specified
Purchase Date.
During the time Bonds are issued in the book-entry-only system,
all Bondowners' Election Notices shall be given by the Beneficial
Owner in accordance with the procedures of DTC or its successor.
The Remarketing Agent and the Paying Agent shall be entitled to
rely on the accuracy of any Bondowners' Election Notice delivered
to the Paying Agent.
(4) Mandatory Tender of Bonds. Bonds in the Weekly Mode are
subject to mandatory tender for purchase as provided in the form
of Bond and in Section 2.11 hereof.
(5) Interest Rate Periods for Bonds in Weekly Mode. The Interest
Rate Period for Bonds in a Weekly Rate Mode shall commence on
Wednesday of each week and end on the next following Tuesday;
except that (a) in the case of a Conversion of Bonds to a Weekly
Mode from a different Mode, the Interest Rate Period for such
Bonds shall commence on the last Interest Payment Date in respect
of the immediately preceding Interest Rate Period and end on the
next following Tuesday; and (b) in the case of a Conversion of
Bonds from a Weekly Mode to a different Mode, the last Interest
Rate Period for such Bonds prior to Conversion shall end on the
last day immediately preceding the Conversion.
(D) Monthly Mode.
(1) Determination of Monthly Rates. The Monthly Rate shall be
the rate of interest determined by the Remarketing Agent for each
Interest Rate Period, to be the lowest rate which in its judgment,
on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Monthly Mode at par plus
accrued interest on and as of the Effective Date, but not in
excess of the Maximum Rate. The Remarketing Agent shall determine
the initial Monthly Rate on or before the date of conversion to
the Monthly Mode, which Rate shall remain in effect as provided in
this Indenture. Thereafter, the Remarketing Agent shall
redetermine the Monthly Rate for each subsequent Interest Rate
Period. The Monthly Rate in effect for each Interest Rate
Period shall be determined not later than the Business Day next
preceding the Effective Date which shall be the first Business Day
of a month. Each Monthly Rate will remain in effect through the
day preceding the first Business Day of the succeeding month. The
Remarketing Agent shall notify the Paying Agent of the Monthly
Rate by Electronic Notice not later than 2:00 p.m., New York City
time, on the Business Day immediately preceding the Effective
Date. The Paying Agent shall give written notice of the Monthly
Rate to the Trustee and the Agent. Each determination and
redetermination of the Monthly Rate shall be conclusive and
binding on the Issuer, the Trustee, the Paying Agent, the Company,
the Agent and the Bondowners. If for any reason the Remarketing
Agent fails to determine the Monthly Rate for any Bond or if for
any reason such manner of determination shall be determined to be
invalid or unenforceable, the Bond shall be deemed to be in a
Flexible Mode with an Interest Rate Period ending on the next
succeeding day which is immediately followed by a Business Day.
(2) Conversions from the Monthly Mode. The Bonds in the Monthly
Mode or any portion of such Bonds may be converted on any Interest
Payment Date at the election of the Agent from the Monthly Mode to
the Daily, Flexible, Weekly, Quarterly, Semiannual, Multiannual or
Fixed Rate Mode as provided in the form of Bond, so long as no
Event of Default hereunder exists as certified to the Trustee by
the Agent. Written notice of a conversion from the Monthly Mode
shall be given by the Agent to the Issuer, the Trustee, the Paying
Agent, the Remarketing Agent and the Rating Agencies not fewer
than 45 days prior to the proposed Conversion Date, which date
shall be specified by the Agent in such notice. Notice of a
conversion of Bonds from the Monthly Mode and the mandatory tender
of Bonds for purchase on such Conversion Date shall be given to
the owners of such Bonds as provided in Section 2.02(D)(4) hereof
and the form of Bond. Conversions to the Fixed Rate Mode shall
also be governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to conversion
to another Mode established by the preceding paragraph and Section
2.02(K) are not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Agent and the Remarketing Agent, and the Bonds shall
be subject to mandatory tender as provided in Section 2.02(D)(4)
hereof. In addition, the failed conversion shall cause the
interest rate on the Bonds subject to such failed conversion to
immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3) Bondowners' Option to Tender Bonds in Monthly Mode. Bonds in
the Monthly Mode are subject to tender, at the election of the
owner thereof, in the manner and subject to the limitations
described in the form of Bond. The owners of Tendered Bonds shall
receive on the Delivery Date 100% of the principal amount of the
Tendered Bonds. Accrued interest shall be paid separately, and
not as part of the Purchase Price on such date. The purchase of
Tendered Bonds shall not extinguish the debt represented by such
Bonds which shall remain Outstanding and unpaid under this
Indenture.
The Paying Agent shall accept all Tendered Bonds properly tendered
to it for purchase as provided in the form of Bond and in this
subsection (3); provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price therefor shall
not be paid if on the Purchase Date the principal of the Bonds
shall have been accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the Paying Agent at
the time and as provided in the form of Bond shall be in
substantially the form provided in the form of Bond.
As soon as practicable after receiving notice of a tender of Bonds
under this Section, the Paying Agent shall notify the Remarketing
Agent, the Agent and the Trustee by telephone promptly confirmed
in writing of the amount of Tendered Bonds and the specified
Purchase Date.
During the time Bonds are issued in the book-entry-only system,
all Bondowners' Election Notices shall be given by the Beneficial
Owner in accordance with the procedures of DTC or its successor.
The Paying Agent shall be entitled to rely on the accuracy of any
Bondowners' Election Notice delivered to the Paying Agent.
(4) Mandatory Tender of Bonds. Bonds in the Monthly Mode are
subject to mandatory tender for purchase as provided in the form
of Bond and in Section 2.11 hereof.
(E) Quarterly Mode.
(1) Determination of Quarterly Rates. The Quarterly Rate shall
be the rate of interest determined by the Remarketing Agent for
each Interest Rate Period, to be the lowest rate which in its
judgment, on the basis of prevailing financial market conditions,
would permit the sale of the Bonds in the Quarterly Mode at par
plus accrued interest on and as of the Effective Date, but not in
excess of the Maximum Rate. The Remarketing Agent shall determine
the initial Quarterly Rate on or before the date of conversion to
the Quarterly Mode. Thereafter, the Remarketing Agent shall
redetermine the Quarterly Rate for each subsequent Interest Rate
Period. The Quarterly Rate in effect for each Interest Rate
Period shall be determined not later than the Business Day next
preceding the Effective Date. The Remarketing Agent shall notify
the Paying Agent of the Quarterly Rate by Electronic Notice not
later than 2:00 p.m., New York City time, on the Business Day
immediately preceding the Effective Date. The Paying Agent shall
give written notice of the Quarterly Rate to the Trustee and the
Agent. Each determination and redetermination of the Quarterly
Rate shall be conclusive and binding on the Issuer, the Trustee,
the Paying Agent, the Company, the Agent and the Bondowners. If
for any reason the Remarketing Agent fails to determine the Quarte
rly Rate for any Bond or if for any reason such manner of
determination shall be determined to be invalid or unenforceable,
the Quarterly Rate Bond shall be deemed to be in a Flexible Mode
with an Interest Rate Period ending on the next succeeding day
which is immediately followed by a Business Day.
(2) Conversions from the Quarterly Mode. The Bonds in the
Quarterly Mode or any portion of such Bonds may be converted on
any Interest Payment Date at the election of the Agent from the
Quarterly Mode to the Flexible, Daily, Weekly, Monthly,
Semiannual, Multiannual or Fixed Rate Mode as provided in the form
of Bond, so long as no Event of Default hereunder exists as
certified to the Trustee by the Agent. Written notice of a conver
sion from the Quarterly Mode shall be given by the Agent to the
Issuer, the Trustee, the Paying Agent, the Remarketing Agent and
the Rating Agencies not fewer than 45 days prior to the proposed
Conversion Date, which date shall be specified by the Agent in
such notice. Notice of a conversion of Bonds from the Quarterly
Mode and the mandatory tender of Bonds for purchase on such Conver
sion Date shall be given to the owners of such Bonds as provided
in Section 2.02(E)(4) hereof and the form of Bond. Conversions to
the Fixed Rate Mode shall also be governed by Section 2.02(H)
hereof.
Notwithstanding the foregoing, if the preconditions to conversion
to another Mode established by the preceding paragraph and Section
2.02(K) are not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Agent and the Remarketing Agent, and the Bonds shall
be subject to mandatory tender as provided in Section 2.02(E)(4)
hereof. In addition, the failed conversion shall cause the
interest rate on the Bonds subject to such failed conversion to
immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3) Bondowners' Option to Tender Bonds in Quarterly Mode. Bonds
in the Quarterly Mode are subject to tender, at the election of
the owner thereof, in the manner and subject to the limitations
described in the form of Bond. The owners of Tendered Bonds shall
receive on the Delivery Date 100% of the principal amount of the
Tendered Bonds. Accrued interest shall be paid separately, and
not as part of the Purchase Price on such date. The purchase of
Tendered Bonds shall not extinguish the debt represented by such
Bonds which shall remain Outstanding and unpaid under this
Indenture.
The Paying Agent shall accept all Tendered Bonds properly tendered
to it for purchase as provided in the form of Bond and in this
subsection (3); provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price therefor shall
not be paid if on the Purchase Date the principal of the Bonds
shall have been accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the Paying Agent at
the time and as provided in the form of Bond shall be in
substantially the form provided in the form of Bond.
As soon as practicable after receiving notice of a tender of Bonds
under this Section, the Paying Agent shall notify the Remarketing
Agent, the Agent and the Trustee by telephone promptly confirmed
in writing of the amount of Tendered Bonds and the specified
Purchase Date.
During the time Bonds are issued in the book-entry-only system,
all Bondowners' Election Notices shall be given by the Beneficial
Owner in accordance with the procedures of DTC or its successor.
The Paying Agent shall be entitled to rely on the accuracy of any
Bondowners' Election Notice delivered to the Paying Agent.
(4) Mandatory Tender of Bonds. Bonds in the Quarterly Mode are
subject to mandatory tender for purchase as provided in the form
of Bond and in Section 2.11 hereof.
(F) Semiannual Mode.
(1) Determination of Semiannual Rates. The Semiannual Rate shall
be the rate of interest determined by the Remarketing Agent, for
each Interest Rate Period, to be the lowest rate which in its
judgment, on the basis of prevailing financial market conditions,
would permit the sale of the Bonds in the Semiannual Mode at par
plus accrued interest on and as of the Effective Date, but not in
excess of the Maximum Rate. The Remarketing Agent shall determine
the initial Semiannual Rate on or before the date of conversion to
the Semiannual Mode. Thereafter, the Remarketing Agent shall
redetermine the Semiannual Rate for each subsequent Interest Rate
Period. The Semiannual Rate in effect for each Interest Rate
Period shall be determined not later than the Business Day next
preceding the Effective Date. The Remarketing Agent shall notify
the Paying Agent of the Semiannual Rate by Electronic Notice not
later than 2:00 p.m., New York City time, on the Business Day
immediately preceding the Effective Date. The Paying Agent shall
give written notice of the Semiannual Rate to the Trustee and the
Agent. Each determination and redetermination of the Semiannual
Rate shall be conclusive and binding on the Issuer, the Trustee,
the Paying Agent, the Company, the Agent and the Bondowners. If
for any reason the Remarketing Agent fails to determine the Semian
nual Rate for any Bond or if for any reason such manner of
determination shall be determined to be invalid or unenforceable,
the Bond shall be deemed to be in a Flexible Mode with an Interest
Rate Period ending on the next succeeding day which is immediately
followed by a Business Day.
(2) Conversions from the Semiannual Mode. The Bonds in the
Semiannual Mode or any portion of such Bonds may be converted on
any Interest Payment Date at the election of the Agent from the
Semiannual Mode to the Flexible, Daily, Weekly, Monthly,
Quarterly, Multiannual or Fixed Rate Mode as provided in the form
of Bond, so long as no Event of Default hereunder exists as
certified to the Trustee by the Agent. Written notice of a
conversion from the Semiannual Mode shall be given by the Agent to
the Issuer, the Trustee, the Paying Agent, the Remarketing Agent
and the Rating Agencies not fewer than 45 days prior to the
proposed Conversion Date, which date shall be specified by the
Agent in such notice. Notice of a conversion of Bonds from the
Semiannual Mode and the mandatory tender of Bonds for purchase on
such Conversion Date shall be given to the owners of such Bonds as
provided in Section 2.02(F)(4) hereof and the form of Bond.
Conversions to the Fixed Rate Mode shall also be governed by
Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to conversion
to another Mode established by the preceding paragraph and Section
2.02(K) are not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Agent and the Remarketing Agent, and the Bonds shall
be subject to mandatory tender as provided in Section 2.02(F)(4)
hereof. In addition, the failed conversion shall cause the
interest rate on the Bonds to immediately convert to the Flexible
Mode with an Interest Rate Period ending on the next succeeding
day which is immediately followed by a Business Day. In such
event, such Bonds shall remain subject to mandatory tender
pursuant to Section 2.11 hereof. In no event shall the failure of
Bonds to be converted to another Mode for any reason be deemed to
be, in and of itself, an Event of Default under this Indenture, so
long as the Purchase Price of all Bonds required to be purchased
is made available as provided above.
(3) Bondowners' Option to Tender Bonds in Semiannual Mode. Bonds
in the Semiannual Mode are subject to tender, at the election of
the owner thereof, in the manner and subject to the limitations
described in the form of Bond. The owners of Tendered Bonds shall
receive on the Delivery Date 100% of the principal amount of the
Tendered Bonds. Accrued interest shall be paid separately, and
not as part of the Purchase Price on such date. The purchase of
Tendered Bonds shall not extinguish the debt represented by such
Bonds which shall remain Outstanding and unpaid under this
Indenture.
The Paying Agent shall accept all Tendered Bonds properly tendered
to it for purchase as provided in the form of Bond and in this
subsection (3); provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price therefor shall
not be paid if on the Purchase Date the principal of the Bonds
shall have been accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the Paying Agent at
the time and as provided in the form of Bond shall be in
substantially the form provided in the form of Bond.
As soon as practicable after receiving notice of a tender of Bonds
under this Section, the Paying Agent shall notify the Remarketing
Agent, the Agent and the Trustee by telephone promptly confirmed
in writing of the amount of Tendered Bonds and the specified
Purchase Date.
During the time Bonds are issued in the book-entry-only system,
all Bondowners' Election Notices shall be given by the Beneficial
Owner in accordance with the procedures of DTC or its successor.
The Paying Agent shall be entitled to rely on the accuracy of any
Bondowners' Election Notice delivered to the Paying Agent.
(4) Mandatory Tender of Bonds. Bonds in the Semiannual Mode are
subject to mandatory tender for purchase as provided in the form
of Bond and in Section 2.11 hereof.
(G) Multiannual Mode.
(1) Determination of Multiannual Rates. The Multiannual Rate
shall be the rate of interest determined by the Remarketing Agent
for each Interest Rate Period, to be the lowest rate which in its
judgment, on the basis of prevailing financial market conditions,
would permit the sale of the Bonds with the same Interest Rate
Period in a secondary market transaction on and as of the
Effective Date, at a price equal to the principal amount thereof
plus accrued interest, but not in excess of the Maximum Rate. The
Remarketing Agent shall determine the initial Multiannual Rate and
Interest Rate Period on or before the date of conversion to the
Multiannual Mode. Thereafter, the Remarketing Agent shall
redetermine the Multiannual Rate for each subsequent Interest Rate
Period as provided herein and shall redetermine each subsequent
Interest Rate Period. The Multiannual Rate in effect for each
Interest Rate Period and the duration of the Interest Rate Period
shall be determined not later than two (2) Business Days prior to
the Effective Date. The Effective Date shall be the first
Business Day of a month if the preceding Interest Rate Period is a
Flexible, Daily, Weekly, or Monthly Rate Period and shall be the
first day of a month if the preceding Interest Rate Period is a
Quarterly, Semiannual, or Multiannual Rate Period. The
Multiannual Rate will remain in effect until the first day of the
month following the whole number of years specified as the
duration of the Interest Rate Period for the Bonds in the
Multiannual Mode; provided that if the following Rate Period is a
Flexible, Daily, Weekly, or Monthly Rate Period, the Multiannual
Rate will remain in effect until the day preceding the first
Business Day of the month following the whole number of years
specified as the duration of the Multiannual Rate Period and if
the following Rate Period is a Quarterly, Semiannual, Multiannual
or Fixed Rate Period, the Effective Date will remain in effect
until the day preceding the first day of the month following the
whole number of years specified as the Multiannual Rate Period.
The Remarketing Agent shall notify the Paying Agent of the
Multiannual Rate and the Interest Rate Period by Electronic Notice
not later than 2:00 p.m., New York City time, two (2) Business
Days preceding the Effective Date. The Paying Agent shall give
written notice of the Multiannual Rate to the Trustee and the
Agent. Each determination and redetermination of the Multiannual
Rate shall be conclusive and binding on the Issuer, the Trustee,
the Paying Agent, the Company, the Agent and the Bondowners. If
the Remarketing Agent fails to make such determination or fails to
announce the Multiannual Rate as required with respect to any
Bonds in the Multiannual Mode, or if for any reason such manner of
determination shall be determined to be invalid or unenforceable,
the Bonds shall be automatically converted to the Flexible Mode
with an Interest Rate Period ending on the next succeeding day
which is immediately followed by a Business Day.
(2) Conversions from the Multiannual Mode. The Bonds in the
Multiannual Mode or any portion of such Bonds may be converted on
any Effective Date at the election of the Agent from the
Multiannual Mode to the Daily, Weekly, Flexible, Monthly,
Quarterly, Semiannual or Fixed Rate Mode and may be converted
within the Multiannual Mode to a new Interest Rate Period with the
same or a different length as provided in the form of Bond, so
long as no Event of Default hereunder exists as certified to the
Trustee by the Agent. Written notice of a change in Mode or
Interest Rate Period within the Multiannual Mode shall be given by
the Agent to the Issuer, the Trustee, the Paying Agent, the Remark
eting Agent and the Rating Agencies not fewer than 45 days prior
to the proposed Conversion Date. Conversions to the Fixed Rate
Mode shall also be governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to conversion
to another Mode established by the preceding paragraph and Section
2.02(K) are not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Agent and the Remarketing Agent and the Bonds shall
automatically convert to a Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode or Interest Rate Period for any reason be deemed to
be, in and of itself, an Event of Default under this Indenture, so
long as the Purchase Price of all Bonds required to be purchased
is made available as provided above.
(3) Bondowners' Option to Tender Bonds in Multiannual Mode.
Bonds in the Multiannual Mode are subject to tender, at the
election of the owner thereof, in the manner and subject to the
limitations described in the form of Bond. The owners of Tendered
Bonds shall receive on the Delivery Date 100% of the principal
amount of the Tendered Bonds. Accrued interest shall be paid
separately, and not as part of the Purchase Price on such date.
The purchase of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain Outstanding and
unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly tendered
to it for purchase as provided in the form of Bond and in this
subsection (3); provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price therefor shall
not be paid if on the Purchase Date the principal of the Bonds
shall have been accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the Paying Agent at
the time and as provided in the form of Bond shall be in
substantially the form provided in the form of Bond.
As soon as practicable after receiving notice of a tender of Bonds
under this Section, the Paying Agent shall notify the Remarketing
Agent, the Agent and the Trustee by telephone promptly confirmed
in writing of the amount of Tendered Bonds and the specified
Purchase Date.
During the time Bonds are issued in the book-entry-only system,
all Bondowners' Election Notices shall be given by the Beneficial
Owner in accordance with the procedures of DTC or its successor.
The Paying Agent shall be entitled to rely on the accuracy of any
Bondowners' Election Notice delivered to the Paying Agent.
(4) Mandatory Tender for Purchase. Bonds in the Multiannual Mode
are subject to mandatory tender for purchase as provided in the
form of Bond and in Section 2.11 hereof.
(H) Fixed Rate Mode.
(1) Determination of Fixed Rate and Conversion to Fixed Rate
Mode. The interest rate on all or any portion of the Bonds may be
converted by the Agent to the Fixed Rate as provided in the form
of Bond and Sections 2.02(A), (B), (C), (D), (E), (F) and (G)
hereof. Written notice of conversion to the Fixed Rate Mode shall
be given by the Agent to the Issuer, the Trustee, the Paying
Agent, the Remarketing Agent and the Rating Agencies not fewer
than 30 days prior to the proposed Conversion Date. Upon receipt
of the notice of conversion to the Fixed Rate Mode from the Agent,
the Remarketing Agent shall determine the Fixed Rate not later
than 12:00 noon, New York City time, on the Business Day
immediately preceding the Conversion Date. The Fixed Rate shall
be the lowest rate which in the judgment of the Remarketing Agent,
on the basis of prevailing financial market conditions, would
permit the sale of the Bonds being so converted at par plus accrue
d interest as of the Conversion Date on the basis of their terms
as converted.
On the date of determination thereof, the Remarketing Agent shall
notify the Paying Agent, the Agent and the Trustee by Electronic
Notice of the Fixed Rate. The Trustee shall promptly notify the
Issuer in writing of the Fixed Rate. The determination of the
Fixed Rate shall be conclusive and binding on the Issuer, the
Trustee, the Paying Agent, the Company, the Agent and the
Bondowners. The first Interest Payment Date of Bonds converted to
the Fixed Rate shall be the next June 1 or December 1 after the
Conversion Date. The Fixed Rate shall become effective on the
Conversion Date.
Notwithstanding the foregoing, if the preconditions to conversion
to the Fixed Rate Mode established by this subsection and Section
2.02(K) are not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall immediately notify the
Trustee and the Agent by telephone promptly confirmed in writing.
Upon such notice, the Trustee shall deem the proposed conversion
to have failed and shall proceed as such under Sections
2.02(A)(2), 2.02(B)(2), 2.02(C)(2), 2.02(D)(2), 2.02(E)(2),
2.02(F)(2) or 2.02(G)(2) hereof, whichever is applicable.
(2) Conversions from the Fixed Rate Mode. The Bonds in the Fixed
Rate Mode or any portion of such Bonds may be converted on any
Effective Date at the election of the Agent from the Fixed Rate
Mode to the Daily, Weekly, Flexible, Monthly, Quarterly,
Semiannual, Multiannual or Fixed Rate Mode, so long as no Event of
Default hereunder exists as certified to the Trustee by the Agent.
Written notice of a change in Mode shall be given by the Agent to
the Issuer, the Trustee, the Paying Agent, the Remarketing Agent
and the Rating Agencies not fewer than 45 days prior to the
proposed Conversion Date. Conversions to the Fixed Rate Mode
shall also be governed by Section 2.02(H)(1) hereof.
Notwithstanding the foregoing, if the preconditions to conversion
to another Mode established by the preceding paragraph and Section
2.02(K) are not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Agent and the Remarketing Agent and the Bonds shall
automatically convert to a Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3) Mandatory Tender of Bonds. Bonds in the Fixed Rate Mode are
subject to mandatory tender for purchase as provided in the form
of Bond and in Section 2.11 hereof.
(I) Partial Conversions.
(1) General. The Bonds may be converted in whole or in part to
the Daily Mode, the Flexible Mode, the Weekly Mode, the Monthly
Mode, the Quarterly Mode, the Semiannual Mode, any Interest Rate
Period in the Multiannual Mode or the Fixed Rate Mode upon
compliance with the conditions set forth in this Indenture. In
the event the Bonds are in (or are to be converted to) more than
one Mode, the provisions herein relating to Bonds in a particular
Mode (or to be converted to a particular Mode) shall apply only to
the Bonds in (or to be converted to) such Mode and, where
necessary or appropriate, any reference in this Indenture to the
Bonds shall be construed to mean the Bonds in (or to be converted
to) such Mode.
(2) Selection. In the event of any partial conversion of the
Bonds to a new Mode, the Bonds to be converted shall be selected
by the Paying Agent from the Bonds in the Mode selected by the
Agent. The particular Bonds (or portions thereof) to be converted
shall be selected by lot by the Paying Agent from all the Bonds in
the Mode (or in the case of Bonds in the Multiannual Mode, the
Interest Rate Period) from which Bonds are to be converted. The
principal amount of Bonds to be converted shall be determined so
that all of the Bonds shall be in Authorized Denominations. Bonds
(or portions thereof) in the Daily Mode, Weekly Mode, Monthly
Mode, Quarterly Mode and Semiannual Mode shall be selected by lot
and the selection of the Bonds to be converted shall occur prior
to the date notice of mandatory tender is sent by the Paying Agent
to the Bondowners pursuant to Sections 2.02(B)(4), 2.02(C)(4),
2.02(D)(4), 2.02(E)(4) and 2.02(F)(4).
(3) Amendments. The provisions of this Indenture may be amended
to permit or facilitate partial conversions of the Bonds without
Bondowner consent in accordance with Section 9.01 hereof.
(J) Notice to Registered Owners of Change in Mode. When a change
in Mode is to be made, or upon commencement of a new Interest
Rate Period in the Multiannual Mode, the Paying Agent will notify
the registered owners of the affected Bonds in the Daily Mode,
Weekly Mode, Monthly Mode, Quarterly Mode and Semiannual Mode at
least 15 days, and will notify the registered owners of the
affected Bonds in the Multiannual Mode and Fixed Rate Mode at
least 30 days, before the effective date of the change. The
notice will state:
(1) that the Mode will be changed or that a new Interest Rate
Period in the Multiannual Mode, will commence,
(2) the effective date or dates of the new rate or a new Interest
Rate Period, as applicable, and
(3) that a mandatory tender will result on the Effective Date of
the change as provided in the Indenture.
(K) Change In Interest Rate Mode - Opinion of Counsel; Issuer
Veto Right. No (i) conversion of Bonds to or from a Multiannual
Mode with an Interest Rate Period of over one year, including for
this purpose the conversion to a new Interest Rate Period in the
Multiannual Mode, or (ii) conversion to or from the Fixed Rate
Mode shall be effective unless on or prior to the Conversion Date
the Agent shall provide the Issuer, the Paying Agent, and the
Trustee with a Favorable Opinion. Furthermore, all Conversions
are subject to veto by the Issuer, which veto may not be
unreasonably exercised and must be exercised by the Authorized
Issuer Representative within one hour after the receipt of notice
from the Agent of such change in interest rate determination
method by the sending of a telephonic notice, confirmed in
writing, to the Agent, the Trustee, and the Remarketing Agent.
Section 2.03. Form of Bond. The Bonds, the Trustee's
Certificate of Authentication to be executed by the Trustee for
all Bonds delivered hereunder except those initially delivered
hereunder, the Registration Certificate of the Comptroller of
Public Accounts of the State of Texas to be attached to or
endorsed upon the Bonds initially delivered hereunder, the
provision for registration and the form of assignment shall be in
substantially the forms hereinafter set forth, with such
appropriate variations, omissions, substitutions and insertions as
are permitted or required hereby and may have such letters,
numbers or other marks of identification and such legends and
endorsements placed thereon as may be required to comply with any
applicable laws or rules or regulations, or as may, consistently
herewith, be determined by the officers executing such Bonds, as
evidenced by their execution of the Bonds.
FORM OF BOND
Dollars
No. ___ $__________
[The following legend shall appear
so long as the Book-Entry System
described in Section 3.07 of the
Indenture has not been
discontinued; provided that such
legend shall not appear on the
Bond initially delivered under
this Indenture.]
THE ISSUER HAS ESTABLISHED A BOOK ENTRY SYSTEM OF REGISTRATION FOR
THIS BOND. EXCEPT AS SPECIFICALLY PROVIDED OTHERWISE IN THE
INDENTURE, CEDE & CO., AS NOMINEE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION ("DTC"), WILL BE THE REGISTERED OWNER AND
WILL HOLD THIS BOND ON BEHALF OF EACH BENEFICIAL OWNER HEREOF. BY
ACCEPTANCE OF A CONFIRMATION OF PURCHASE, DELIVERY OR TRANSFER,
EACH BENEFICIAL OWNER OF THIS BOND SHALL BE DEEMED TO HAVE AGREED
TO SUCH ARRANGEMENT. CEDE & CO., AS REGISTERED OWNER OF THIS
BOND, MAY BE TREATED AS THE OWNER OF IT FOR ALL PURPOSES.
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS BOND IS SUBJECT TO MANDATORY TENDER FOR PURCHASE AT THE TIME
AND IN THE MANNER HEREINAFTER DESCRIBED AND MUST BE SO TENDERED OR
WILL BE DEEMED TO HAVE BEEN SO TENDERED UNDER CERTAIN
CIRCUMSTANCES AS DESCRIBED HEREIN.
ANY BONDHOLDER WHO FAILS TO DELIVER A BOND FOR PURCHASE AT THE
TIMES AND AT THE PLACE REQUIRED HEREIN SHALL HAVE NO FURTHER
RIGHTS HEREUNDER EXCEPT THE RIGHT TO RECEIVE THE PURCHASE PRICE
HEREOF UPON DELIVERY OF THIS BOND TO THE PAYING AGENT, AND SHALL
HOLD THIS BOND AS AGENT FOR THE PAYING AGENT.
UNITED STATES OF AMERICA
STATE OF TEXAS
RED RIVER AUTHORITY OF TEXAS
POLLUTION CONTROL REVENUE REFUNDING BONDS
(WEST TEXAS UTILITIES COMPANY, PUBLIC SERVICE COMPANY OF OKLAHOMA
AND CENTRAL POWER AND LIGHT COMPANY OKLAUNION PROJECT)
SERIES 1996
Maturity Date: ________________ CUSIP _______________
Dated Date: July 1, 1996
Issue Date: ____________, 1996
Interest Rate:**_________________
Registered Owner:
Principal Amount: $__________
Mode:
Last Day of Flexible Rate Period* ______________Interest Rate*___________
Number of Days in Period* _____Interest Due at End of
Period*______
_______________________
* Complete only for Bonds accruing interest at Flexible Rates
**Complete only for Bonds accruing interest at the Fixed Rate
Red River Authority of Texas (the "Issuer"), a
governmental agency and body politic and corporate created and
operating as a conservation and reclamation district and
political subdivision of the State of Texas pursuant to Article
XVI, Section 59 of the Texas Constitution and the laws of the
State of Texas, particularly Article 8280-228, Vernon's Texas
Civil Statutes (the "Issuer Act"), for value received, hereby
promises to pay (but only out of the sources hereinafter
mentioned) to the Registered Owner set forth above, or registered
assigns, on the Maturity Date specified above, unless this Bond
shall have been called for redemption in whole or in part, upon
surrender hereof, the Principal Amount set forth above and to pay
(but only out of the sources hereinafter mentioned) to the
Registered Owner, or registered assigns, interest thereon at the
rate determined as herein provided from the most recent Interest
Payment Date (hereinafter defined) to which interest has been
paid or duly provided for, or if no interest has been paid or
duly provided for, from the Issue Date (unless this Bond
initially bears interest at the Fixed Rate, in which case from
July 1, 1996), such payments of interest to be made on each
Interest Payment Date until the principal or redemption price
hereof has been paid or duly provided for as aforesaid. The
principal or redemption price of this Bond (or of a portion of
this Bond, in the case of a partial redemption) is payable to the
Registered Owner hereof in immediately available funds upon
presentation and surrender hereof at the Principal Office of the
Trustee or its successor, as paying agent (the "Paying Agent"),
under the Indenture of Trust, dated as of July 1, 1996 (the
"Indenture") by and between the Issuer and The Bank of New York,
or its successor, as trustee (the "Trustee") securing the series
of Bonds of which this Bond is one. All payments of interest on
Bonds accruing interest at Multiannual or Fixed Rates shall be
paid to the Registered Owner hereof whose name appears in the
Bond Register kept by the Bond Registrar as of the close of
business on the applicable Record Date (as described below) by
check mailed on the Interest Payment Date, provided that any
Registered Owner of $1,000,000 or more in aggregate principal
amount of the Bonds may, upon written request given to the Paying
Agent at least five Business Days prior to an Interest Payment
Date designating an account in a domestic bank, be paid by wire
transfer of immediately available funds. All payments of
interest on Bonds accruing interest at Flexible, Daily, Weekly,
Monthly, Quarterly, or Semiannual Rates shall be paid to the
Registered Owner hereof whose name appears in the Bond Register
kept by the Bond Registrar as of the close of business on the
applicable Record Date in immediately available funds by wire
transfer to a bank within the continental United States or
deposited to a designated account if such account is maintained
with the Paying Agent as directed by the Registered Owner in
writing or as otherwise directed in writing by the Registered
Owner prior to the time of payment with respect to Bonds accruing
interest at a Flexible, Daily, Weekly, Monthly, Quarterly, or
Semiannual Rate or five Business Days prior to the Interest
Payment Date with respect to Bonds accruing interest at Daily or
Weekly Rates. The Record Date for any Interest Payment Date
shall be the close of business on the Business Day immediately
preceding the Interest Payment Date, except that, (i) while this
Bond bears interest at the Flexible Rate (as described herein),
the Record Date shall be the time of payment on the Interest
Payment Date and (ii) while this Bond accrues interest at the
Multiannual or Fixed Rates (as described herein), the Record Date
shall be the close of business on the 15th day (whether or not a
Business Day) of the calendar month immediately preceding such
Interest Payment Date. This Bond is registered as to both
principal and interest in the Bond Register kept by the Bond
Registrar and may be transferred or exchanged, subject to the
further conditions specified in the Indenture, only upon
surrender hereof at the office of the Bond Registrar. This Bond
is payable solely from the sources hereinafter mentioned.
The principal of, premium, if any, and interest
on, and Purchase Price of, this Bond are payable in lawful money
of the United States of America.
CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN
SHALL HAVE THE MEANINGS SPECIFIED THEREFOR IN THE INDENTURE.
THE BONDS SHALL BE DEEMED NOT TO CONSTITUTE A
DEBT OF THE STATE OF TEXAS, THE ISSUER, OR OF ANY OTHER POLITICAL
CORPORATION, SUBDIVISION, OR AGENCY OF THE STATE OR A PLEDGE OF
THE FAITH AND CREDIT OF ANY OF THEM. NO RECOURSE SHALL BE HAD
FOR ANY CLAIM BASED ON THE AGREEMENT, THE INDENTURE, OR THE BONDS
AGAINST ANY MEMBER, OFFICER OR EMPLOYEE, PAST, PRESENT OR FUTURE,
OF THE ISSUER, OR OF ANY SUCCESSOR BODY THERETO, EITHER DIRECTLY
OR THROUGH THE ISSUER, OR ANY SUCH SUCCESSOR BODY, UNDER ANY
CONSTITUTIONAL PROVISION, STATUTE OR RULE OF LAW OR BY THE
ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR OTHERWISE. NEITHER
THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF TEXAS,
THE ISSUER, OR ANY OTHER POLITICAL CORPORATION, SUBDIVISION, OR
AGENCY IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, REDEMPTION
PREMIUM, IF ANY, OR INTEREST ON, OR PURCHASE PRICE OF, THE BONDS.
THIS BOND IS A SPECIAL REVENUE OBLIGATION OF THE ISSUER PAYABLE
SOLELY FROM THE SOURCES DESCRIBED HEREIN AND THE HOLDER HEREOF
SHALL NEVER HAVE THE RIGHT TO DEMAND PAYMENT FROM MONEYS DERIVED
BY TAXATION OR ANY REVENUES OF THE ISSUER EXCEPT THE FUNDS
PLEDGED TO THE PAYMENT HEREOF.
This Bond is authorized and issued under and
pursuant to authority conferred by the Issuer Act, Chapter 30,
Texas Water Code, as amended, Chapter 383, Texas Health and
Safety Code, as amended, Article 717k, Vernon's Texas Civil
Statutes, as amended, and Article 717q, Vernon's Texas Civil
Statutes, as amended (collectively, the "Acts"), a resolution
adopted by the Issuer (the "Bond Resolution") and the Indenture.
This Bond is one of a duly authorized issue of revenue bonds of
the Issuer issued in the aggregate principal amount of
$63,300,000 designated "Red River Authority of Texas Pollution
Control Revenue Refunding Bonds (West Texas Utilities Company,
Public Service Company of Oklahoma and Central Power and Light
Company Oklaunion Project) Series 1996" (the "Bonds") issued
under the Indenture. The Bonds are being issued by the Issuer
for the purpose of paying a portion of the costs of refunding
$63,300,000 in aggregate principal amount of Red River Authority
of Texas Adjustable Rate Pollution Control Revenue Bonds (West
Texas Utilities Company, Public Service Company of Oklahoma and
Central Power and Light Company Oklaunion Project) Series 1984.
The Indenture pledges substantially all right, title and interest
of the Issuer, in and to the Installment Payment Agreement, dated
as of July 1, 1996 (the "Agreement"), between the Issuer and West
Texas Utilities Company ("WTU"), Public Service Company of
Oklahoma ("PSO") and Central Power and Light Company ("CPL")
(collectively, the "Company") and Central and South West
Corporation (the "Agent"), together with all moneys payable
thereunder including "Installment Payments" to be made by the
Company in amounts equal to the principal of, premium, if any,
and interest on and Purchase Price of, the Bonds, when due, but
excluding certain payments to the Issuer for fees, expenses, and
indemnification.
Notwithstanding the definition of the term
"Company" as meaning WTU, PSO and CPL collectively, each of WTU,
PSO and CPL is liable severally, but not jointly, to make or pay,
or cause to be made or paid, its Ownership Percentage of each
Installment Payment or other obligation under the Agreement or
the Indenture, and none of WTU, PSO or CPL is obligated to make
or pay, or cause to be made or paid, more than its Ownership
Interest of each Installment Payment or other obligation under
the Agreement or more than its Ownership Interest of the
aggregate amount of all Installment Payments or other obligations
under the Agreement.
"Ownership Percentage" means the respective
payment obligations of each of WTU, PSO and CPL expressed as a
percentage as set forth below:
WTU 70%
PSO 20%
CPL 10%
Pursuant to the Agreement, such Ownership Percentages may be
changed by agreement among WTU, PSO and CPL with the written
consent of the Issuer, but without notice to, or the approval or
consent of, the holders of the Bonds; provided that the aggregate
Ownership Percentage of WTU, PSO and CPL will at all times equal
100%.
FOR SO LONG AS THIS BOND IS HELD IN BOOK-ENTRY
FORM REGISTERED IN THE NAME OF CEDE & CO. ON THE REGISTRATION
BOOKS OF THE ISSUER KEPT BY THE TRUSTEE, AS BOND REGISTRAR, THIS
BOND, IF CALLED FOR PARTIAL REDEMPTION IN ACCORDANCE WITH THE
INDENTURE, SHALL BECOME DUE AND PAYABLE ON THE REDEMPTION DATE
DESIGNATED IN THE NOTICE OF REDEMPTION GIVEN IN ACCORDANCE WITH
THE INDENTURE AT, AND ONLY TO THE EXTENT OF, THE REDEMPTION
PRICE, PLUS ACCRUED INTEREST TO THE SPECIFIED REDEMPTION DATE;
AND THIS BOND SHALL BE PAID, TO THE EXTENT SO REDEEMED, (i) UPON
PRESENTATION AND SURRENDER THEREOF AT THE OFFICE SPECIFIED IN
SUCH NOTICE OR (ii) AT THE WRITTEN REQUEST OF CEDE & CO., BY
CHECK OR DRAFT MAILED TO CEDE & CO. BY THE TRUSTEE OR BY WIRE
TRANSFER TO CEDE & CO. BY THE TRUSTEE IF CEDE & CO. AS BONDOWNER
SO ELECTS. IF, ON THE REDEMPTION DATE, MONEYS FOR THE REDEMPTION
OF BONDS TO BE REDEEMED, TOGETHER WITH INTEREST TO THE REDEMPTION
DATE, SHALL BE HELD BY THE TRUSTEE SO AS TO BE AVAILABLE THEREFOR
ON SUCH DATE, AND AFTER NOTICE OF REDEMPTION SHALL HAVE BEEN
GIVEN IN ACCORDANCE WITH THE INDENTURE, THEN, FROM AND AFTER THE
REDEMPTION DATE, THE AGGREGATE PRINCIPAL AMOUNT OF THIS BOND
SHALL BE IMMEDIATELY REDUCED BY AN AMOUNT EQUAL TO THE AGGREGATE
PRINCIPAL AMOUNT THEREOF SO REDEEMED, NOTWITHSTANDING WHETHER
THIS BOND HAS BEEN SURRENDERED TO THE TRUSTEE FOR CANCELLATION.
If an Event of Default occurs, the principal of
all Bonds issued under the Indenture may become due and payable
upon the conditions and in the manner and with the effect
provided in the Indenture.
No recourse shall be had for the payment of the
principal, Purchase Price or redemption price of, premium, if
any, or interest on, this Bond, or for any claim based hereon or
on the Indenture, against any member, officer or employee, past,
present or future, of the Issuer or of any successor body, as
such, either directly or through the Issuer or any such successor
body, under any constitutional provision, statute or rule of law,
or by the enforcement of any assessment or by any legal or
equitable proceeding or otherwise.
Interest on the Bonds
The Bonds shall accrue interest at interest rates
and for Interest Rate Periods as determined in accordance with
the applicable provisions of the Indenture. The Bonds will be
subject to conversion as herein provided. Interest on the Bonds
in a Flexible Mode, Daily Mode, Weekly Mode or Monthly Mode shall
be payable on the applicable Interest Payment Date as herein
described, computed on the basis of a 365 or 366-day year, as
applicable for the number of days actually elapsed based on the
calendar year in which such Rate Period commences. The interest
on the Bonds in a Fixed Rate Mode, Multiannual Mode, Semiannual
Mode or Quarterly Mode shall be payable on the applicable
Interest Payment Date as herein described, computed on the basis
of a 360-day year of twelve 30-day months. While there exists an
Event of Default under this Indenture, the interest rate on the
Bonds will be the rate on the Bonds on the day before the Event
of Default occurred.
At the option of the Agent and subject to certain
conditions provided for in the Indenture, including being subject
to veto by the Issuer, which veto may not be unreasonably
exercised, all or a portion of the Bonds (a) may be converted or
reconverted from time to time to or from the Daily Mode, the
Weekly Mode, the Monthly Mode, the Quarterly Mode, the Semiannual
Mode or the Multiannual Mode, which means that the Interest Rate
Period for Bonds in such Mode is, respectively, one day, one
week, one month, three months, six months or one year or any
multiple of one year, (b) may be converted or reconverted from
time to time to or from the Flexible Mode, and will have Interest
Rate Periods of from one to 270 days during the Flexible Mode as
provided herein, or (c) may be converted to or from the Fixed
Rate Mode; provided, however, that in the Multiannual Mode the
first Interest Rate Period occurring after conversion to such
Mode may be shorter than the applicable multiple of one year as
provided herein.
Each determination and redetermination of
interest rates and Interest Rate Periods shall be made in
accordance with the Indenture and shall be conclusive and binding
on the Issuer, the Trustee, the Paying Agent, the Company, the
Agent and the Bondowners. Any Bondowner may ascertain the rate
of interest on its Bond or Bonds, at any time by contacting the
Paying Agent or the Remarketing Agent.
Unless otherwise defined herein, capitalized
terms used in this Bond shall have the meaning given them in the
Indenture. As used herein, "premium" shall mean, with respect to
any amount payable on the Bonds, the amount, if any, by which the
redemption price thereof (exclusive of interest) exceeds the
principal amount thereof at the time such amount is payable. The
following terms are defined as follows:
"Business Day" means any day on which commercial
banks located in all of the cities in which the Principal Offices
of the Trustee, the Paying Agent and the Remarketing Agent are
located are not required or authorized by law or regulation to
remain closed and on which the New York Stock Exchange is not
closed.
"Conversion Date" means the date on which a new
Mode becomes effective with respect to a Bond, and with respect
to a Bond in the Multiannual Mode, the date on which a new
Interest Rate Period for such Bond becomes effective.
"Effective Date" means, with respect to a Bond
(a) in the Daily, Flexible, Weekly, Monthly, Quarterly,
Semiannual and Multiannual Modes, the date on which a new
Interest Rate Period for that Bond takes effect and (b) in the
Multiannual or Fixed Rate Mode, any date on which such Bond is
subject to optional redemption.
"Electronic Notice" means notice transmitted
through a time-sharing terminal, by facsimile transmission or by
telephone (promptly confirmed in writing or by facsimile
transmission).
"Interest Rate Period" or " Rate Period" means,
when used with respect to any particular rate of interest for a
Bond in the Daily, Flexible, Weekly, Monthly, Quarterly,
Semiannual or Multiannual Mode, the period during which such rate
of interest determined for such Bond will remain in effect as
described herein.
"Mode" means the period for and the manner in
which the interest rates on the Bonds are set and includes the
Daily Mode, the Flexible Mode, the Weekly Mode, the Monthly Mode,
the Quarterly Mode, the Semiannual Mode, the Multiannual Mode and
the Fixed Rate Mode.
"Principal Office" means the business address
designated as a principal office pursuant to the Indenture. In
the case of the initial Trustee and Paying Agent, "Principal
Office" refers to its principal corporate trust office in New
York, New York.
"Purchase Date" means the date on which this Bond
shall be required to be purchased pursuant to a mandatory or
optional tender in accordance with the provisions hereof.
"Purchase Price" means, with respect to a Bond on
a Purchase date, a price equal to par plus accrued interest to
the Purchase Date; provided that in the event that the Purchase
Date is an Interest Payment Date for such Bond and such Bond is
not in the Flexible Mode, accrued interest will be paid
separately and not as a part of the Purchase Price on such date;
and further provided that in the event such Bond bears interest
at a Multiannual or Fixed Rate and is subject to mandatory tender
on a date on which the Bond is subject to optional redemption,
Purchase Price shall include any premium that would be payable on
the Purchase Date if such Bond were redeemed on the Purchase
Date..
Flexible Rate
While the Bonds accrue interest at Flexible
Rates, the Remarketing Agent shall determine the Flexible Rate
and the Flexible Rate Period for each Bond and such Flexible Rate
will remain in effect from and including the commencement date of
the Flexible Rate Period selected for that Bond by the
Remarketing Agent to, but not including, the last date thereof.
While the Bonds are in the Flexible Mode, Bonds may have
successive Interest Rate Periods of any duration up to 270 days
each and any Bond may accrue interest at a rate and for a period
different from any other Bond. No Interest Rate Period may be
established which exceeds such maximum Interest Rate Period or,
if the Remarketing Agent has given or received notice of any
conversion to a Multiannual or Fixed Rate, the remaining number
of days prior to the Conversion Date or, if the Remarketing Agent
has given or received notice of any conversion to a Daily,
Weekly, Monthly, Quarterly or Semiannual Mode, the length of
each Interest Rate Period for each Bond in the Flexible Mode
shall be determined by the Remarketing Agent to be either (A)
that length of period that, as soon as possible, shall enable the
Interest Rate Periods for all Bonds to end on the day before the
Conversion Date, or (B) that length of period which, based on the
Remarketing Agent's judgment, will best promote an orderly
transition to the next Interest Rate Period.
Daily Rate
While the Bonds accrue interest at a Daily Rate,
the interest rate established for the Bonds will be effective
from day to day until changed by the Remarketing Agent in
accordance with the Indenture.
Weekly Rate
While the Bonds accrue interest at a Weekly Rate,
the rate of interest on the Bonds will be determined weekly by
the Remarketing Agent in accordance with the Indenture to be
effective for a seven day period commencing on Wednesday of the
week of such determination. (The length of the period, the day
of commencement and the last day of the period may vary in the
event of a conversion to or from a Weekly Mode.)
Monthly Rate
While the Bonds accrue interest at a Monthly
Rate, the rate of interest on the Bonds will be determined
monthly by the Remarketing Agent in accordance with the Indenture
to be effective from the first Business Day of a month through
the day preceding the first Business Day of the succeeding month.
(The length of the period, the day of commencement and the last
day of the period may vary in the event of a conversion to or
from a Monthly Mode.)
Quarterly Rate
While the Bonds accrue interest at a Quarterly
Rate, the rate of interest on the Bonds will be determined
quarterly by the Remarketing Agent in accordance with the
Indenture to be effective for a calendar quarter, commencing on
March 1, June 1, September 1 and December 1. (The length of the
period, the day of commencement and the last day of the period
may vary in the event of a conversion to or from a Quarterly
Mode.)
Semiannual Rate
While the Bonds accrue interest at a Semiannual
Rate, the rate of interest on the Bonds will be determined
semiannually by the Remarketing Agent in accordance with the
Indenture to be effective for a six month period, commencing on
June 1 or December 1. (The length of the period, the day of
commencement and the last day of the period may vary in the event
of a conversion to or from a Semiannual Mode.)
Multiannual Rate
While the Bonds accrue interest at a Multiannual
Rate, the interest rate will be determined by the Remarketing
Agent in accordance with the Indenture to remain in effect for a
term of one year or any whole multiple of one year selected by
the Agent provided that the initial Interest Rate Period may be
shorter than the applicable multiple of one year. The length of
any such Interest Rate Period established will remain in effect
until changed by the Agent, in accordance with the Indenture.
Fixed Rate
Upon conversion to a Fixed Rate, the Bonds shall
bear interest to the Maturity Date set forth above or until
converted to a different Mode at a fixed rate of interest
determined by the Remarketing Agent in accordance with the
Indenture. If initially issued at a Fixed Rate, the Bonds shall
bear interest to the Maturity Date set forth above or until
converted to a different Mode at the Interest Rate set forth
above.
Authorized Denominations
Bonds which accrue interest at a Flexible Rate
will be issued in denominations of $100,000 and any integral
multiples of $1,000 in excess thereof. Bonds which accrue
interest at a Daily or Weekly Rate will be issued in
denominations of $100,000 and whole multiples thereof; provided
that if the principal amount of Bonds in the Daily or Weekly
Mode, as the case may be, is not evenly divisible by $100,000,
then the remainder of such amount shall be added to another Bond
in the same Mode that is in a principal amount of $100,000 or any
integral multiples thereof. Bonds which accrue interest at a
Monthly, Quarterly, Semiannual, Multiannual or Fixed Rate will be
issued in the denomination of $5,000 and whole multiples thereof.
Optional Tenders
While this Bond accrues interest at a Daily,
Weekly, Monthly, Quarterly, Semiannual or Multiannual Rate, the
Registered Owner of this Bond has the right to tender this Bond
for purchase at the principal amount hereof plus accrued interest
as follows: (i) during a Daily Rate Period on any Business Day
upon written notice, telephonic notice, or Electronic Notice to
the Paying Agent on the Purchase Date, (ii) during a Weekly Mode
on any Business Day upon written or Electronic Notice to the
Paying Agent on a Business Day not fewer than seven days prior to
the Purchase Date or (iii) during a Monthly, Quarterly,
Semiannual, or Multiannual Rate Period, on any Interest Payment
Date, which also must be an Effective Date of a Rate Period, upon
written notice to the Paying Agent not less than fifteen days
before the Purchase Date.
As long as the book-entry system is in effect,
the Beneficial Owner of a Bond may demand purchase of the Bond
(or portion thereof) owned by it by providing notice as provided
above through the Beneficial Owner's DTC Participant; provided
such notice shall be given by 10:00 a.m., New York City time, on
the date such notice is required to be given. If the book-entry
system is not in effect, the registered owner of this Bond may
demand purchase of this Bond (or portion thereof in Authorized
Denominations) by providing notice to the Paying Agent as
provided above and delivering this Bond to the Paying Agent at
its Principal Office.
If the Registered Owner of a Bond has elected to
tender such Bond for purchase, such Registered Owner shall be
deemed to have agreed irrevocably to sell such Bond to any
purchaser determined in accordance with the provisions of the
Indenture on the date fixed for purchase at the Purchase Price
and any Bond not delivered shall be deemed tendered (an
"Undelivered Bond") and shall cease to be Outstanding under the
Indenture and no further interest shall accrue as of the Purchase
Date. Notice of tender of a Bond is irrevocable. All notices of
tender of Bonds shall be made to the Paying Agent in writing or
by Electronic Notice (or such other notice as may be specified by
the procedures of The Depository Trust Company or its successor
so long as this Bond is held in book-entry form) at its Principal
Office in substantially the form as provided in the Form of
Bondholder's Election Notice for Bonds Subject to Optional Tender
attached hereto or such other form of notice satisfactory to the
Paying Agent which sets forth the principal amount of Bonds to be
purchased, the purchase date on which such Bonds shall be
purchased, the name, address and taxpayer identification number
of the Registered Owner and the payment instructions for the
Purchase Price. All deliveries of tendered Bonds, including
deliveries of Bonds subject to mandatory tender, shall be made to
the Paying Agent at its Principal Office.
Mandatory Tenders
While this Bond accrues interest at a Flexible
Rate, this Bond is subject to mandatory tender on each Effective
Date applicable to this Bond at the Purchase Price.
This Bond is subject to mandatory tender on the
effective date of a change from one Mode to a different Mode
(other than from a Daily Mode to a Weekly Mode or a Weekly Mode
to a Daily Mode) or a change from one Interest Rate Period to an
Interest Rate Period of different duration within the Multiannual
Mode at the Purchase Price.
BY ACCEPTANCE OF THIS BOND, THE REGISTERED OWNER
HEREOF AGREES THAT THIS BOND WILL BE PURCHASED, WHETHER OR NOT
SURRENDERED, ON THE PURCHASE DATE AS DESCRIBED ABOVE. IN SUCH
EVENT, THE REGISTERED OWNER OF THIS BOND SHALL NOT BE ENTITLED TO
RECEIVE ANY FURTHER INTEREST HEREON, SHALL HAVE NO FURTHER RIGHTS
UNDER THIS BOND OR THE INDENTURE EXCEPT TO RECEIVE PAYMENT OF THE
PURCHASE PRICE HELD THEREFOR, AND SHALL THEREAFTER HOLD THIS BOND
AS AGENT FOR THE PAYING AGENT.
Payment of Purchase Price
The Purchase Price for Bonds (except Bonds in the
Multiannual Mode, which shall be in clearinghouse funds) is
payable by wire or bank transfer within the continental United
States in immediately available funds from the Paying Agent to
the Registered Owner. If on any date this Bond is subject to
mandatory tender for purchase or is required to be purchased at
the election of the Registered Owner, payment of the Purchase
Price of this Bond to such Registered Owner shall be made on the
Purchase Date if delivery of this Bond is made prior to 11:00
a.m., New York City time, on the Purchase Date or on such later
Business Day upon which delivery of this Bond is made prior to
11:00 a.m., New York City time.
BY ACCEPTANCE OF THIS BOND, THE REGISTERED OWNER
HEREOF AGREES THAT THIS BOND WILL BE PURCHASED, WHETHER OR NOT
SURRENDERED, ON THE PURCHASE DATE AS DESCRIBED ABOVE. IN SUCH
EVENT, THE REGISTERED OWNER OF THIS BOND SHALL NOT BE ENTITLED TO
RECEIVE ANY FURTHER INTEREST HEREON, SHALL HAVE NO FURTHER RIGHTS
UNDER THIS BOND OR THE INDENTURE EXCEPT TO RECEIVE PAYMENT OF THE
PURCHASE PRICE HELD THEREFOR, AND SHALL THEREAFTER HOLD THIS BOND
AS AGENT FOR THE PAYING AGENT.
The initial Remarketing Agent under the Indenture
is Morgan Stanley & Co. Incorporated The Remarketing Agent may
be changed at any time in accordance with the Indenture.
Written Notice of Mode or Interest Rate Period Change
The Trustee shall give notice, by first class
mail, to the Registered Owners of all Bonds of the proposed
conversion from one Mode to another Mode, or the commencement of
a new Interest Rate Period in the Multiannual Mode, at least 15
days before the proposed Conversion Date while the Bonds accrue
interest at Flexible, Daily, Weekly, Monthly, Quarterly or
Semiannual Rates and at least 30 days before the proposed
Conversion Date while the Bonds accrue interest at Multiannual or
Fixed Rates.
Interest Payment Dates
While this Bond accrues interest at a Flexible
Rate, interest is payable on the first Business Day after the
last day of each Interest Rate Period. While this Bond accrues
interest at Daily, Weekly or Monthly Rates, interest is payable
on the first Business Day of each calendar month following a
month in which interest at such rate has accrued. While this
Bond accrues interest at a Quarterly Rate, interest is payable on
each March 1, June 1, September 1 and December 1. While this
Bond accrues interest at a Semiannual, Multiannual or Fixed Rate,
interest is payable on the first day of the immediately
succeeding June or December after Conversion to such Mode and
thereafter on each June 1 and December 1.
Optional Redemption
The Bonds are subject to optional redemption as
follows:
(A) During any Daily, Flexible, Weekly, Monthly, Quarterly or
Semiannual Mode, the Bonds in such Mode shall be subject to
redemption prior to maturity at the option of the Issuer upon
written direction of the Agent delivered to the Trustee in whole
or in part (and if in part in an Authorized Denomination) on any
Interest Payment Date, at a redemption price equal to the
principal amount thereof plus accrued interest thereon to the
redemption date.
(B) During any Multiannual or Fixed Rate Mode other than the
initial Fixed Rate Mode, the Bonds in such Mode shall be subject
to redemption prior to maturity at the option of the Issuer upon
written direction of the Agent delivered to the Trustee in whole
or in part (and if in part in an Authorized Denomination) on any
Business Day after the No-Call Period described below, at the
following redemption prices (expressed as percentages of the
principal amount of the Bonds called for redemption) plus accrued
interest to the date fixed for redemption:
LENGTH OF
INTEREST
RATE PERIOD
greater than or
equal to 11 years
less than 11 years<PAGE>
NO-CALL PERIOD
10 years from the
commencement of
Interest
Rate Period
No call
REDEMPTION PRICES
102%, declining 1%
per year to 100%
<PAGE>
The optional redemption dates and redemption
prices set forth above may be changed as provided in the
Indenture, provided that any alternate redemption schedule shall
be accompanied by a Favorable Opinion.
[Insert Redemption Provisions for Initial Fixed
Rate Mode Interest Period from Approval Certificate]
So long as any Bond is in the Multiannual or
Fixed Rate Mode, such Bond is subject to mandatory tender in lieu
of optional redemption at the election of the Agent.
Extraordinary Optional Redemption
The Bonds are subject to redemption in whole on
the next available Interest Payment Date for which notice of
redemption can be given, at a redemption price equal to the
aggregate principal amount of the Bonds Outstanding plus accrued
interest thereon to the redemption date, without premium, upon
receipt by the Trustee of a written notice from the Agent stating
that any of the following events has occurred within the
preceding 270 days and that it intends to exercise its option to
effect the redemption of the Bonds as a whole:
(i) In the reasonable judgment of the Agent unreasonable burdens
or excessive liabilities shall have been imposed upon the Issuer
or the Company with respect to the Project or the Plant,
including without limitation (A) the imposition of any income or
other taxes not being imposed on July 1, 1996 or (B) the imposi-
tion of any ad valorem property or other taxes (other than ad
valorem property or other taxes being imposed on July 1, 1996
upon similarly assessed property within the same taxing juris-
diction);
(ii) The Project or the Plant shall have been damaged or
destroyed to such extent that, in the opinion of the Agent, (A)
within a period of six consecutive months following such damage
or destruction, it is not practicable or desirable to rebuild,
repair or restore the same, (B) the Company will be thereby
prevented from carrying on its normal operations of the Project
or the Plant for a period of six or more consecutive months or
(C) the cost of restoration would exceed by $1,500,000 or more
the net proceeds of insurance thereon;
(iii) Title to, or temporary use of, all or substantially all of
the Project or the Plant shall have been taken under the exercise
of the power of eminent domain;
(iv) Changes in the economic availability of materials, labor,
services, supplies (including fuel), equipment or other property,
facilities or things necessary for the operation of the Project
or the Plant shall have occurred, or technological, regulatory or
other changes shall have occurred, which, in the opinion of the
Agent, render the continued operation of the Project or the
Plant uneconomic;
(v) Any court or administrative body shall enter a judgment,
order or decree requiring the Company to cease, or dispose of,
all or any substantial part of its operations of the Project or
the Plant to such extent that, in the opinion of the Agent, the
Company is or will be thereby prevented from carrying on its
normal operations of the Project or the Plant for a period of six
or more consecutive months; or
(vi) As a result of any change in the Constitution of the State
of Texas or the Constitution of the United States of America or
of any legislative or administrative action (whether state or
federal) or of any final decree, judgment, or order of any court
or administrative body (whether state or federal), the
obligations of the Company under the Agreement shall have become
unenforceable or impossible of performance in any material
respect in accordance with the intent and purpose of the parties
as expressed in the Agreement.
Extraordinary Mandatory Redemption
The Bonds are subject to mandatory redemption in
whole or in part at any time if such partial redemption will
preserve the exemption from federal income taxation of interest
on the remaining Bonds Outstanding, at a redemption price equal
to the principal amount thereof together with unpaid interest
accrued to the date fixed for redemption, and without premium, if
(i) a final decree or judgment of any federal court, in which the
Agent participates to the extent it deems sufficient, or (ii) a
final action by the Internal Revenue Service, in proceedings in
which the Agent participates to the extent it deems sufficient,
determines that the interest paid or payable on any such Bonds to
other than, as provided in the Code, a "substantial user" of the
Projector a "related person" is or was includable in the gross
income of the owner thereof for federal income tax purposes under
the Code, as a result of the failure by the Company to observe or
perform any covenant, condition, or agreement on its part to be
observed or performed under the Agreement or the inaccuracy of
any representation by the Company under the Agreement; provided,
however, that no decree or judgment by any court or action by the
Internal Revenue Service shall be considered final unless the
Registered Owner involved in such proceeding or action (A) gives
the Agent and the Trustee prompt notice of the commencement
thereof and (B), if the Agent agrees to pay all expenses in
connection therewith and to indemnify such Registered Owner
against all liabilities in connection therewith, offers the Agent
the opportunity to control the defense thereof. Any such
redemption shall be made on a date determined by the Trustee not
more than 180 days after the time of such final decree, judgment
or action. The Trustee shall give the Issuer and the Agent not
less than forty-five days written notice of such date.
Not less than 30 nor more than 60 days prior to
any redemption date, the Trustee shall cause notice of the call
for redemption, identifying each Bond or portion thereof to be
redeemed, given in the name of the Issuer, to be sent by first
class mail (except when DTC is the Registered Owner of all of the
Bonds and except for persons or entities owning or providing
evidence of ownership satisfactory to the Trustee of a legal or
beneficial ownership in at least $1,000,000 in principal amount
of Bonds, in which cases, certified mail) to the Registered Owner
of each Bond to be redeemed at the address shown on the books
kept by the Trustee as Bond Registrar; should any Bond called for
redemption not be presented for payment within 30 days of the
redemption date therefor, the Trustee shall cause a second notice
of the call for redemption to be given by certified mail within
60 days after the redemption date. Failure to give such notice
or any defect therein shall not affect the sufficiency or
validity of any proceedings for the redemption of any other Bond.
By the date fixed for any such redemption, due provision shall be
made with the Trustee for the payment of the redemption price of,
and interest on, the Bonds to be redeemed on the date of
redemption. If notice of redemption is given and if due
provision for payment of the redemption price and interest is
made, all as provided in the Indenture, the Bonds or portions
thereof which are to be redeemed shall not bear interest after
the date fixed for redemption, and shall not be entitled to any
benefit or security under the Indenture, except for the right of
the Registered Owner to receive the redemption price thereof and
accrued interest thereon out of the funds provided for such
payment.
Notwithstanding the provisions of the foregoing
paragraph, no notice of redemption is required to be given to the
owner of any Bond which is subject to mandatory tender on the
date fixed for redemption.
If at the time of mailing of notice of any
optional redemption in connection with a refunding of the Bonds,
the Company shall not have deposited with the Trustee moneys
sufficient to redeem all of the Bonds called for redemption, such
notice may state that it is conditional in that it is subject to
the deposit of the proceeds of refunding bonds with the Trustee
not later than the redemption date, and such notice shall be of
no effect unless such moneys are so deposited.
General Provisions
The Bonds are all issued under and entitled to
the benefits of the Indenture. Pursuant to the Indenture, the
Issuer has pledged and assigned to the Trustee the Trust Estate
(as defined in the Indenture), which includes the Installment
Payments, as security for its obligation to pay the principal of,
premium, if any, and interest on, and Purchase Price of, the
Bonds. Reference is made to the Indenture for definitions of the
terms used herein, for a description of the Trust Estate and for
the provisions thereof with respect to the nature and extent of
the security granted by the Issuer to the Trustee thereunder, the
rights, duties and obligations of the Issuer and the Trustee, the
rights of the Registered Owners of the Bonds, and the terms on
which the Bonds are issued and secured, to all of which
provisions, and to all other provisions of the Indenture, the
Registered Owner hereof by the acceptance of this Bond assents.
The Registered Owner hereof shall never have the right to demand
payment out of any funds raised or to be raised by taxation or
from any source whatsoever except the Trust Estate. Except for
the lien on and the assignment and pledge of the Trust Estate, no
property of the Issuer is encumbered by any lien or security
interest for the benefit of the Registered Owner of this Bond.
The ownership of this Bond may be transferred (in
Authorized Denominations) only upon presentation and surrender of
this Bond at the Principal Office of the Trustee as Bond
Registrar together with an assignment duly executed by the
Registered Owner hereof or his duly authorized attorney-in-fact
in such form as shall be satisfactory to the Trustee, and subject
to the provisions made therefor in the Indenture, provided that
the Trustee shall not be required to make any such transfer of
any Bond during the 10 Business Days immediately preceding the
mailing of a notice of Bonds selected for redemption or, with
respect to a Bond, after such Bond or any portion thereof has
been selected for redemption. Bonds may be exchanged at the
principal corporate trust office of the Trustee or at the offices
of the Trustee's Agent for other Bonds aggregating a like
principal amount. Bonds issued in exchange for other Bonds may
be issued only in Authorized Denominations. Any service charge
made by the Trustee or the Trustee's Agent for any such
registration, transfer or exchange hereinbefore referred to shall
be paid by the Company. The Trustee, the Trustee's Agent, or the
Issuer may require payment by the Registered Owner of a sum
sufficient to cover any tax or other governmental charge payable
in connection therewith. The Issuer, the Company, the Agent, the
Trustee and the Trustee's Agent may treat the person in whose
name this Bond is registered as the absolute owner hereof for any
purpose, whether or not this Bond would be overdue, and neither
the Issuer, the Company, the Agent, the Trustee, nor the
Trustee's Agent shall be affected by notice to the contrary.
Provisions may be made for the payment of amounts
represented by the Bonds as provided in the Indenture, in which
event all liability of the Issuer to the Registered Owners of the
applicable Bonds for the payment of such Bonds shall forthwith
cease, terminate and be completely discharged, and thereupon it
shall be the duty of the Trustee to hold such funds (but only for
the period specified and as provided in the Indenture), without
liability for interest thereon, for the benefit of the Registered
Owners of such Bonds, who shall thereafter be restricted
exclusively to such funds for any claims of whatever nature under
the Indenture or on, or with respect to, said Bonds.
The Bonds are secured by the Indenture,
whereunder the Trustee undertakes to enforce the rights of the
Registered Owners of the Bonds and to perform other duties to the
extent and under the conditions stated in the Indenture. In case
an Event of Default shall occur, the principal of the Bonds then
Outstanding may, and, under certain circumstances, shall, be
declared to be due and payable immediately upon the conditions
and in the manner provided in the Indenture. Failure to pay
interest on any Bond when due does not constitute an Event of
Default until such failure has continued for a period of one
Business Day or more, except while the Bonds bear interest at a
Multiannual Rate or the Fixed Rate, in which case until such
failure has continued for a period of sixty days or more. Under
the circumstances provided in the Indenture, the Trustee may in
its discretion and upon written request of the Registered Owners
of a majority in aggregate principal amount of the Bonds then
Outstanding shall, waive any Event of Default and its
consequences; provided, however, that default in the payment of
the principal of, premium, if any, or interest on, or Purchase
Price of, the Bonds may not be so waived. The Registered Owners
of the Bonds shall have no right to institute any action, suit or
proceeding at law or in equity to enforce the Indenture, except
as provided in the Indenture; provided, however, that nothing in
the Indenture shall affect or impair the right of the Registered
Owner of any Bond to enforce the payment of the principal of,
premium, if any, and interest on such Bond from the source and in
the manner herein expressed. Reference is hereby made to the
Indenture and the Agreement for additional provisions with
respect to the nature and extent of the security, the rights,
duties, and obligations of the Company, the Agent, the Issuer,
the Trustee, and the owners of the Bonds, the terms upon which
the Bonds are issued and secured, and the modification of any of
the foregoing.
The Issuer has reserved the right to amend the
Indenture. Under some (but not all) circumstances amendments
thereto must also be approved by (a) the Registered Owners of at
least a majority in aggregate principal amount of the Outstanding
Bonds or (b) if less than all of the Bonds are in a particular
Mode and the amendment affects only the Owners of Bonds in that
Mode, the Owners of at least a majority in aggregate principal
amount of the Outstanding Bonds in such Mode.
No recourse shall be had for the payment of the
principal, Purchase Price or redemption price of, premium, if
any, or interest on, this Bond, or for any claim based hereon or
on the Indenture, against any member, officer or employee, past,
present or future, of the Issuer or of any successor body, as
such, either directly or through the Issuer or any such successor
body, under any conditional provision, statute or rule of law, or
by the enforcement of any assessment of by any legal or equitable
proceeding or otherwise.
This Bonds shall not be valid or become
obligatory for any purpose or be entitled to any security or
benefit under the Indenture until either (i) the Certificate of
Authentication hereon shall have been signed by the Trustee as
Bond Registrar, or any successor, or (ii) a manually signed
Comptroller's Registration Certificate has been attached hereto
or endorsed hereon.
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 execution and delivery of the
Indenture and the issuance of this Bond do exist, have happened
and have been performed in due time, form and manner as required
by law; and that the issuance of this Bond and the issue of which
it forms a part, together with all other obligations of the
Issuer, does not exceed or violate any constitutional or
statutory limitation.
IN WITNESS WHEREOF, the Issuer has caused this
Bond to be executed in its name by the manual or facsimile
signature of its President and attested by the manual or
facsimile signature of its Secretary, all as of the date first
above written.
RED RIVER AUTHORITY OF TEXAS
By:_____________________________
President
ATTEST:
By:______________________________
Secretary
(SEAL)
(FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE FOR BONDS)
TRUSTEE'S CERTIFICATE
DATE: __________
This bond is one of the bonds described in the
within mentioned Indenture of Trust.
THE BANK OF NEW YORK, Trustee
__________________________________
Authorized Signatory
(INSERT APPROPRIATE BOND INSURANCE LEGEND, IF ANY)
(FORM OF BONDOWNERS' ELECTION NOTICE FOR BONDS
SUBJECT TO OPTIONAL TENDER)
(to be used only in connection with Bonds
subject to optional tender)
Red River Authority of Texas
Pollution Control Revenue Refunding Bond
(West Texas Utilities Company, Public Service Company of Oklahoma
and Central Power and Light Company Oklaunion Project)
Series 1996
Principal Principal Amount
Amount CUSIP Tendered for Purchase Bond Numbers Purchase Date
The undersigned hereby certifies that it is the
Registered Owner or the Beneficial Owner (as described below) of
the Bonds described above (the "Tendered Bonds"), all of which are
in the _________________ Mode [insert Mode of Tendered Bonds], and
hereby agrees that the delivery of this instrument of transfer to
the Paying Agent by 10:00 A.M. New York City time on this Business
Day (for Daily Mode Bonds only) constitutes an irrevocable offer to
sell the Tendered Bonds to the Company or its designee on the
Purchase Date, which shall be a Business Day at least __________
(____) calendar days following delivery of this instrument [FN], at
a purchase price equal to the unpaid principal balance thereof plus
accrued and unpaid interest thereon to the Purchase Date (the
"Purchase Price") provided that if the Purchase Date is an Interest
Payment Date, it is recognized that accrued interest will be paid
separately and not as part of the Purchase Price on such date. The
undersigned acknowledges and agrees that this election notice is
irrevocable and that the undersigned will have no further rights
with respect to the Tendered Bonds, except payment, upon
presentation and surrender, of the Purchase Price by wire or bank
transfer within the continental United States from the Paying
Agent, at its address shown on the registration books of the Bond
Registrar (i) on the Purchase Date if the Tendered Bonds shall have
been surrendered to the Paying Agent prior to 11:00 A.M., New York
City time, on the Purchase Date or (ii) on any Delivery Date
subsequent to the Purchase Date on which Tendered Bonds are
delivered to the Paying Agent by 11:00 A.M., New York City time.
Except as otherwise indicated herein and unless the
context otherwise requires, the terms used herein shall have the
meanings set forth in the Indenture of Trust dated as of July 1,
1996 between the Red River Authority of Texas and The Bank of New
York, as Trustee, relating to the Bonds.
Date: ______________________________
Signature(s)
_________________________________
_________________________________
_________________________________
(Street City State Zip)
IMPORTANT: The above signature(s) must correspond with the name(s)
as set forth on the face of the Tendered Bond(s) with respect to
which this Bondowner's Election Notice is being delivered without
any change whatsoever. If this notice is signed by a person other
than the Registered Owner of any Tendered Bond(s), the Tendered
Bond(s) must be either endorsed on the Assignment appearing on each
Bond or accompanied by appropriate Bond powers, in each case signed
exactly as the name or names of the Registered Owner or owners
appear on the Bond Register. The method of presenting this notice
to the Paying Agent is the choice of the person making such
presentation. If it is made by mail, it should be by registered
mail with return receipt requested.
Notwithstanding the foregoing, during the time the
Bonds are issued in book-entry-only form, this Bondowner's Election
Notice must be signed by the Beneficial Owner of the Bonds or by a
duly authorized attorney and must be accompanied by an affidavit in
the form attached hereto.
AFFIDAVIT
State of ______________________
Parish/County of _______________
Before Me, the undersigned authority, duly
commissioned and qualified within and for the State and
Parish/County aforesaid, personally came and appeared
_____________________________________
who being by me first duly sworn, deposed and said that he/she is
the owner of the following Red River Authority of Texas Pollution
Control Revenue Refunding Bonds (West Texas Utilities Company,
Public Service Company of Oklahoma and Central Power and Light
Company Oklaunion Project) Series 1996.
Principal Amount CUSIP Maturity Date
Sworn to and subscribed before me this _______ day
of ____________________, ______.
________________________________
Notary Public
[FN] In the case of Tendered Bonds taht were in the Daily Mode,
the words "on the Purchase Date, which shall be a Business Day at
least _____ (____) c;aemdar daus following delivery of this
instrument" shall be repleaced by the words "on this Business Day."
[FORM OF ASSIGNMENT]
ASSIGNMENT
THIS ASSIGNMENT IS SUBJECT TO THE RESTRICTIONS ON
TRANSFERABILITY SET FORTH ON THE FACE OF THE BOND
The following abbreviations, when used in the
inscription on the face of this Bond, shall be construed as though
they were written out in full according to applicable laws or
regulations:
UNIF GIFT MIN ACT--TEN COM --as tenants in common ____ Custodian
____TEN ENT --as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with right under Uniform Gifts to
of survivorship and not as Minors Act _________tenants in common
(State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, the undersigned sells, assigns
and transfers unto
Please Insert Social Security or
Other Identifying Number of Assignee
/___________________________________/
____________________________________________________________
(Name and Address of Assignee)
the within Bond and does hereby irrevocably constitute and appoint
_________________________ to transfer said Bond on the books kept
for registration thereof with full power of substitution in the
premises.
Date: _____________________
____________________________________
Signature Guaranteed:
____________________________________
NOTICE: The signature to this assignment must correspond with the
name as it appears upon the face of the within Bond in every
particular, without alteration or enlargement or any change
whatever; and
NOTICE: Signature(s) must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Trustee, which
requirements include membership or participation in STAMP or such
other "signature guaranty program" as may be determined by the
Trustee in addition to or in substitution for STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
[FORM OF REGISTRATION INFORMATION]
REGISTRATION INFORMATION
Under the terms of the Indenture, the Trustee will
register a Bond in the name of a transferee only if the owner of
such Bond (or his duly authorized representative) provides as much
of the information requested below as is applicable to such owner
prior to submitting this Bond for transfer.
Name:___________________________________
Address:___________________________________
Social Security or Employer
Identification Number: __________________________________
If a Trust, Name and Address of
Trustee(s) and Date of Trust:___________________________________
[FORM OF REGISTRATION CERTIFICATE
(to be attached to initial bonds only)]
COMPTROLLER'S REGISTRATION CERTIFICATE:REGISTER NO.
I hereby certify that this bond has been examined,
certified as to validity, and approved by the Attorney General of
the State of Texas, and that this bond has been registered by the
Comptroller of Public Accounts of the State of Texas.
Witness my signature and seal this
________________________________ Comptroller of Public Accounts
of the State of Texas
Section 2.04. Execution; Limited Obligations. The Bonds shall be
executed on behalf of the Issuer with the manual or facsimile
signature of the President of the Issuer, and attested, under a
manual or facsimile impression of the seal of the Issuer, with the
manual or facsimile signature of the Secretary of the Issuer. All
authorized facsimile signatures shall have the same force and
effect as manual signatures. A facsimile impression of the
Issuer's seal shall have the same force and effect as a manual
impression. In case any officer of the Issuer whose signature or
a facsimile thereof appears on a Bond shall cease to be such
officer before the delivery of such Bond, such signature or such
facsimile shall nevertheless be valid and sufficient for all
purposes, the same as if such officer had remained in office until
delivery.
The Bonds are not and never shall become general
obligations of the Issuer, but are limited obligations payable by
the Issuer solely and only from the payments received under or with
respect to the documents executed by the Company (except to the
extent paid out of moneys attributable to the proceeds derived from
the sale of the Bonds or income from the temporary investment of
such funds or other funds held hereunder), which amounts, together
with any other security provided herein, are hereby specifically
assigned and pledged to such purposes, in the manner and to the
extent provided herein. The Bonds shall be deemed not to
constitute a debt of the State of Texas, the Issuer, or of any
other political corporation, subdivision, or agency of the State or
a pledge of the faith and credit of any of them. No recourse shall
be had for any claim based on the Agreement, the Indenture, or the
Bonds against any member, officer or employee, past, present or
future, of the Issuer, or of any successor body thereto, either
directly or through the Issuer, or any such successor body, under
any constitutional provision, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise. Neither the
State of Texas nor any political corporation, subdivision, or agent
or the State of Texas shall be obligated to pay the Bonds and
neither the faith and credit nor the taxing power of the State of
Texas or any other political corporation, subdivision, or agency is
pledged to the payment of the principal of, redemption premium, if
any, or interest on, or Purchase Price of, the Bonds. This Bond is
a special revenue obligation of the Issuer payable solely from the
sources described herein and the holder hereof shall never have the
right to demand payment from moneys derived by taxation or any
revenues of the Issuer except the funds pledged to the payment
hereof.
Section 2.05. Conditions Precedent to Delivery of Bonds;
Authentication. The Issuer shall execute and deliver the Bonds to
the Trustee, and the Trustee shall, upon receipt by the Trustee of
the purchase price for the Bonds, deliver the Bonds to the initial
purchasers thereof. Prior to and as a condition precedent to the
delivery of the Bonds there shall be filed with and delivered to
the Trustee:
(i) a certified copy of the Bond Resolution;
(ii) original executed counterparts of this Indenture, the
Approval Certificate, and the Agreement;
(iii) a written order of the Issuer, directed to the Trustee,
instructing the Trustee to deliver the Bonds to the initial
purchasers thereof upon payment to the Trustee for the account of
the Issuer of the sum specified in such written order; and
(iv) an opinion of Bond Counsel substantially to the effect that
(A) the Bonds constitute legal, valid and binding limited
obligations of the Issuer, enforceable in accordance with their
terms, subject to bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting the rights of
creditors and to the exercise of judicial discretion in accordance
with general principles of equity and (B) the interest on the Bonds
is excludable from gross income for Federal income tax purposes
under existing statutes, regulations, published rulings and
judicial decisions, except for interest on any Bond for any period
during which such Bond is held by a "substantial user" of any
facilities financed with the proceeds of the Bonds or a "related
person," as such terms are used in Section 147(a) of the Code, and
other customary exclusions.
No Bond shall be valid or obligatory for any
purpose or entitled to any security or benefit under this Indenture
unless and until either (i) a certificate of authentication on such
Bond shall have been duly executed by the Trustee or (ii) a
Comptroller's Registration Certificate attached to or endorsed on
such Bond has been duly executed. Such executed certificate of the
Trustee or Comptroller's Registration Certificate upon any such
Bond shall be conclusive evidence that such Bond has been
authenticated or registered and delivered under this Indenture.
The certificate of authentication on any Bond shall be deemed to
have been executed by the Trustee if signed by an authorized
officer or signatory of the Trustee, but it shall not be necessary
that the same officer or signatory sign the certificates of
authentication on all Bonds issued hereunder.
Section 2.06. Redemption of Bonds. The Bonds shall be subject to
redemption by the Issuer prior to maturity only as follows:
(a) Extraordinary Optional Redemption of Bonds. The Bonds are
subject to redemption in whole on the next available Interest
Payment Date for which notice of redemption can be given, at a
redemption price equal to the aggregate principal amount of the
Bonds outstanding plus accrued interest thereon to the redemption
date, without premium, upon receipt by the Trustee of a written
notice from the Agent stating that any of the following events has
occurred within the preceding 270 days and that it therefore
intends to exercise its option to effect the redemption of Bonds in
whole:
(i) In the reasonable judgment of the Agent unreasonable burdens
or excessive liabilities shall have been imposed upon the Issuer or
the Company with respect to the Project or the Plant, including
without limitation (A) the imposition of any income or other taxes
not being imposed on July 1, 1996 or (B) the imposition of any ad
valorem property or other taxes (other than ad valorem property or
other taxes being imposed on July 1, 1996 upon similarly assessed
property within the same taxing jurisdiction);
(ii) The Project or the Plant shall have been damaged or destroyed
to such extent that, in the opinion of the Agent, (A) within a
period of six consecutive months following such damage or
destruction, it is not practicable or desirable to rebuild, repair
or restore the same, (B) the Company will be thereby prevented from
carrying on its normal operations of the Project or the Plant for
a period of six or more consecutive months or (C) the cost of
restoration would exceed by $1,500,000 or more the net proceeds of
insurance thereon;
(iii) Title to, or temporary use of, all or substantially all of
the Project or the Plant shall have been taken under the exercise
of the power of eminent domain;
(iv) Changes in the economic availability of materials, labor,
services, supplies (including fuel), equipment or other property,
facilities or things necessary for the operation of the Project or
the Plant shall have occurred, or technological, regulatory or
other changes shall have occurred, which, in the opinion of the
Agent, render the continued operation of the Project or the Plants
uneconomic;
(v) Any court or administrative body shall enter a judgment, order
or decree requiring the Company to cease, or dispose of, all or any
substantial part of its operations of the Project or the Plant to
such extent that, in the opinion of the Agent, the Company is or
will be thereby prevented from carrying on its normal operations of
the Project or the Plant for a period of six or more consecutive
months; or
(vi) As a result of any change in the Constitution of the State of
Texas or the Constitution of the United States of America or of any
legislative or administrative action (whether state or federal) or
of any final decree, judgment, or order of any court or
administrative body (whether state or federal), the obligations of
the Company under the Agreement shall have become unenforceable or
impossible of performance in any material respect in accordance
with the intent and purpose of the parties as expressed in the
Agreement.
(b) Optional Redemption. The Bonds are subject to optional
redemption as follows:
(i) During any Daily, Flexible, Weekly, Monthly, Quarterly or
Semiannual Mode, the Bonds in such Mode shall be subject to
redemption prior to maturity at the option of the Issuer upon
written direction of the Agent delivered to the Trustee, in whole
or in part (and if in part in an Authorized Denomination) on any
Interest Payment Date applicable to the Bonds in such Mode, at a
redemption price equal to the principal amount thereof plus accrued
interest thereon to the redemption date.
(ii) During any Multiannual or Fixed Rate Mode, the Bonds in such
Mode shall be subject to redemption prior to maturity at the option
of the Issuer upon written direction of the Agent delivered to the
Trustee, in whole or in part (and if in part in an Authorized
Denomination) on any Business Day after the No-Call Period
described below, at the following redemption prices (expressed as
percentages of the principal amount of the Bonds called for
redemption) plus accrued interest to the date fixed for redemption:
LENGTH OF
INTEREST
RATE PERIOD
greater than or
equal to 11 years
less than 11 years<PAGE>
NO-CALL
PERIOD
10 years from the
commencement of
Interest
Rate Period
No call
REDEMPTION PRICES
102%, declining 1%
per year to 100%
<PAGE>
Notwithstanding the foregoing, if the Bonds
initially bear interest at a Multiannual Rate or a Fixed Rate, the
redemption schedule shall be as set forth in the Approval
Certificate. In connection with a Conversion with respect to Bonds
to bear interest at the Multiannual or Fixed Interest Rate, the
Remarketing Agent, upon the request of the Agent (which request
shall not unreasonably be refused) and in order to achieve the
lowest rate which, in the judgment of the Remarketing Agent, on the
basis of prevailing financial market conditions, would permit the
sale of the Bonds so converted at par plus accrued interest as of
the Conversion Date, may deliver to the Issuer and the Trustee an
alternative redemption schedule to that shown above, provided that
the Agent delivers to the Issuer, the Remarketing Agent and the
Trustee a Favorable Opinion with respect to the alternative
schedule of redemption. Prior to such Conversion, the Trustee
shall determine the optional redemption provisions applicable to
the Bonds in such Modes, and such provisions shall be inserted in
the form of Bond. After the Conversion Date succeeding the delivery
of such alternative schedule and Favorable Opinion during any Mode,
the Bonds shall be subject to redemption in accordance with the
provisions of such alternative schedule.
So long as any Bond is in the Multiannual or Fixed
Rate Mode, such Bond is subject to mandatory tender in lieu of
optional redemption at the election of the Agent as provided in
Section 2.11 hereof.
(c) Extraordinary Mandatory Redemption. The Bonds are subject to
mandatory redemption in whole or in part at any time if such
partial redemption will preserve the exemption from federal income
taxation of interest on the remaining Bonds Outstanding, at a
redemption price equal to the principal amount thereof together
with unpaid interest accrued to the date fixed for redemption, and
without premium, if (i) a final decree or judgment of any federal
court, in which the Agent participates to the extent it deems
sufficient, or (ii) a final action by the Internal Revenue Service,
in proceedings in which the Agent participates to the extent it
deems sufficient, determines that the interest paid or payable on
any such Bonds to other than, as provided in the Code, a
"substantial user" of the Projector a "related person" is or was
includable in the gross income of the owner thereof for federal
income tax purposes under the Code, as a result of the failure by
the Company to observe or perform any covenant, condition, or
agreement on its part to be observed or performed under the
Agreement or the inaccuracy of any representation by the Company
under the Agreement; provided, however, that no decree or judgment
by any court or action by the Internal Revenue Service shall be
considered final unless the Registered Owner involved in such
proceeding or action (A) gives the Agent and the Trustee prompt
written notice of the commencement thereof and (B), if the Agent
agrees to pay all expenses in connection therewith and to indemnify
such Registered Owner against all liabilities in connection
therewith, offers the Agent the opportunity to control the defense
thereof. Any such redemption shall be made on a date determined by
the Trustee not more than 180 days after the time of such final
decree, judgment or action. The Trustee shall give the Issuer and
the Agent not less than forty-five days written notice of such
date.
Section 2.07. Notice of Redemption. Not less than thirty (30)
days or more than sixty (60) days prior to any date fixed for
redemption of Bonds, the Trustee shall give notice of any
redemption by sending such notice by (i) first-class mail to the
Owner of each Bond to be redeemed in whole or in part at the
address shown on the Registration Books, (ii) by certified mail,
return receipt requested, to DTC (so long as it owns all the
Bonds), and upon request, to any person or entities which provide
evidence acceptable to the Trustee that such person has a legal or
beneficial interest in at least $1,000,000 in principal amount of
the Bonds, and (iii) by certified mail, return receipt requested,
or by overnight delivery, received by the registered depositories
at least two (2) days prior to the general publication date for
such redemption notices and to be received by at least two (2) of
the national information services that disseminate bond redemption
notices on or before the general mailing date for such notices;
provided, however, that the failure to send, mail, or receive such
notice described above, or any defect therein or in the sending or
mailing thereof, with respect to any Bond shall not affect the
validity or effectiveness of the proceedings for the redemption of
any other Bond. In addition, within sixty (60) days after the
redemption date an additional redemption notice shall be sent to
any Owner of the Bonds who has not surrendered Bonds for redemption
during the thirty (30) day period following the redemption date and
to any person or entities having legal or beneficial ownership
interest in at least $1,000,000 in principal amount of such Bonds
which have not been surrendered.
All notices of redemption shall state: (i) the
redemption date, (ii) the redemption price, (iii) the
identification, including complete designation (including series)
and issue date of the Bonds and the CUSIP number, certificate
number (and in the case of partial redemption, the respective
principal amounts), interest rates and maturity dates of the Bonds
to be redeemed, (iv) that on the redemption date the redemption
price will become due and payable upon each such Bond, and that
interest thereon shall cease to accrue from and after said date,
and (v) the name and address of Trustee and any Paying Agent for
such Bonds, including the place where such Bonds are to be
surrendered for payment of the redemption price therefor.
Upon written request of any Owner, or of any person
or entity which provides evidence acceptable to the Trustee that
such person or entity has a legal or beneficial interest in Bonds
in an aggregate principal amount of at least $1,000,000, the
Trustee shall send an additional copy of any notice to be given to
such Owner, person or entity by the Trustee under the Indenture by
first-class mail to a second address specified by such Owner,
person or entity. Any such additional notices shall be given
simultaneously with the original notices.
Section 2.08. Redemption Payments; Effect of Call for Redemption.
On the date fixed for redemption of any Bond, funds for the payment
thereof shall be on deposit in the Bond Fund representing moneys
deposited or caused to be deposited by the Company with the
Trustee, and the Trustee hereby is authorized and directed to apply
such funds to the payment of each Bond or portion thereof called
for redemption, together with accrued interest thereon to the
redemption date and any required premium. If at the time of
mailing of notice of any optional redemption in connection with a
refunding of the Bonds the Company shall not have deposited with
the Trustee moneys sufficient to redeem all of the Bonds called for
redemption, such notice may state that it is conditional in that it
is subject to the deposit of the proceeds of refunding bonds with
the Trustee not later than the redemption date, and such notice
shall be of no effect unless such moneys are so deposited. On the
date so designated for redemption, notice having been given in the
manner and under the conditions hereinabove provided, any Bond or
portion thereof so called for redemption shall become and be due
and payable at the redemption price provided for herein; and if, in
accordance with the provisions of Article V hereof, sufficient
moneys and/or Government Obligations, the principal of, and
interest on, which at maturity will provide sufficient moneys at
the times required for payment of the redemption price and accrued
interest to the redemption date are then held by the Trustee in
trust for the Owners of every Bond or portion thereof to be
redeemed, interest on each such Bond or portion so called for
redemption shall cease to accrue and each such Bond or portion
thereof shall cease to be entitled to any benefit or security under
this Indenture, and the Owner of each such Bond or portion thereof
shall have no rights in respect thereof except to receive payment
of the redemption price thereof and accrued interest thereon to the
redemption date from such moneys and/or Government Obligations.
Section 2.09. Partial Redemption . If fewer than all of the
Bonds shall be called for redemption, the Agent may designate the
principal amount of Bonds in each Mode to be redeemed, and the
Bonds to be redeemed in each Mode shall be selected by lot by the
Trustee from among all Outstanding Bonds in such Mode for this
purpose, each minimum increment of Authorized Denominations
represented by any Bond shall be considered a separate Bond for
purposes of selecting the Bonds to be redeemed. If it is
determined that one or more, but not all, of the minimum increments
of Authorized Denominations represented by any Bond is to be called
for redemption, then, upon notice of intention to redeem such
minimum increments of Authorized Denominations of such Bond, the
Owner of such Bond, upon surrender of such Bond to the Trustee for
payment to such Owner of the redemption price or the principal
amount of such Bond called for redemption, shall be entitled to
receive a new Bond or Bonds in the aggregate principal amount of
the unredeemed balance of the principal amount of such Bond. New
Bonds representing the unredeemed balance of the principal amount
of such Bonds shall be issued to the Owner thereof without a charge
therefor.
If the owner of any Bond of a denomination greater
than the minimum increment of Authorized Denominations shall fail
to present such Bond to the Trustee for payment and exchange as
aforesaid, such Bond shall, nevertheless, become due and payable on
the date fixed for redemption to the extent of the minimum
increments of Authorized Denominations called for redemption (and
to that extent only), and, after the date fixed for redemption,
interest shall cease to accrue on such principal amount called for
redemption.
Section 2.10. Remarketing and Purchase. (a) Remarketing of
Tendered Bonds. Unless otherwise instructed by the Agent, the
Remarketing Agent shall offer for sale and use its best efforts to
find purchasers for all Bonds or portions thereof for which notice
of tender has been received pursuant hereto or which are subject to
mandatory tender. While the Bonds are in book-entry only form, the
Remarketing Agent will make payment for the Purchase Price for
tendered Bonds in accordance with the procedures established by
DTC. If the book-entry only system is not in effect, the terms of
any sale by the Remarketing Agent shall provide for the payment of
the Purchase Price for tendered Bonds by the Remarketing Agent to
the Paying Agent (i) in immediately available funds at or before
3:00 p.m., New York City time, on the Purchase Date, in the case of
Bonds accruing interest at Flexible Rates, (ii) in immediately
available funds at or before 4:00 p.m., New York City time, on the
Purchase Date, in the case of Bonds accruing interest at Daily
Rates, Weekly Rates, Monthly Rates, Quarterly Rates or Semiannual
Rates, and (iii) in clearinghouse funds at or before 12:00 noon,
New York City time, on the Purchase Date, in the case of bonds
accruing interest at Multiannual or Fixed Rates. The Remarketing
Agent shall not sell any Bond as to which a notice of conversion
from one type of Rate Period to another or as to which a notice of
redemption has been given by the Trustee unless the Remarketing
Agent has advised the person to whom the sale is made of the
conversion or redemption, as applicable. The Remarketing Agent
shall not remarket any Bonds pursuant to this Section if the
Remarketing Agent has received notice that an Event of Default
shall have occurred and is continuing hereunder with respect to the
Bonds.
(b) Purchase of Tendered Bonds.
(i) Notice. At or before 3:00 p.m., New York City time, on the
Business Day immediately preceding the Purchase Date of tendered
Bonds bearing interest at Multiannual or Fixed Rates (or 11:30
a.m., New York City time, on the Purchase Date in the case of Bonds
accruing interest at Daily, Weekly, Flexible, Monthly, Quarterly or
Semiannual Rates), the Remarketing Agent shall give Electronic
Notice to the Trustee of the principal amount of tendered Bonds as
to which the Remarketing Agent has found purchasers. Not later
than 4:00 p.m. for Bonds bearing interest at Multiannual or Fixed
Rates (or 11:45 a.m., in the case of Bonds accruing interest at
Daily, Weekly, Flexible, Monthly, Quarterly or Semiannual Rates ),
New York City time, on the date of receipt of such notice the
Trustee shall give Electronic Notice to the Paying Agent and the
Agent, specifying the principal amount of tendered Bonds as to
which the Remarketing Agent has found purchasers (the "Deficiency
Notice"). At or before 3:00 p.m., New York City time, on the
Business Day prior to the Purchase Date to the extent known to the
Remarketing Agent, but in any event, no later than 12:00 noon, New
York City time, on the Purchase Date (or two Business Days prior to
the Purchase Date in the event tendered Bonds accrue interest at
Multiannual or Fixed Rates), the Remarketing Agent shall give
notice to the Paying Agent by Electronic Notice of the names,
addresses and taxpayer identification numbers of the purchasers,
the denominations of Bonds to be delivered to each purchaser and,
if available, payment instructions for regularly scheduled interest
payments, or of any changes in any such information previously
communicated.
(ii) Sources of Payments. The Remarketing Agent shall cause to be
paid to the Paying Agent on the Purchase Date of tendered Bonds,
all amounts representing proceeds of the remarketing of such Bonds
to persons other than the Issuer, the Company or an affiliate
thereof, such payments to be made in the manner and at the time
specified in subsection 2.10 (a) above. If the amounts specified
in the Deficiency Notice will not be sufficient to pay the Purchase
Price on the Purchase Date, the Company shall deliver or cause to
be delivered such amounts at such times so that there will be
delivered to the Paying Agent (A) immediately available funds in an
amount equal to such deficiency prior to 2:30 p.m., New York City
time, on the Purchase Date of tendered Bonds accruing interest at
Daily Rates (3:00 p.m., New York City time, in the case of Flexible
Rate Bonds), (B) immediately available funds in an amount equal to
such deficiency prior to 1:15 p.m., New York City time, on the
Purchase Date of tendered Bonds accruing interest at Weekly,
Monthly, Quarterly or Semiannual Rates, and (C) clearinghouse funds
in an amount equal to such deficiency prior to 12:15 p.m., New York
City time, on the Purchase Date of tendered Bonds accruing interest
at Multiannual or Fixed Rates (the obligation of the Company to
deliver such moneys not being conditioned on receipt by the Company
or the Agent of the foregoing notice from the Trustee). All
moneys received by the Paying Agent as remarketing proceeds and
additional amounts, if any, received from the Company, as the case
may be, shall be deposited by the Paying Agent in the appropriate
account of the Bond Purchase Fund to be used solely for the payment
of the Purchase Price of tendered Bonds and shall not be commingled
with other funds held by the Paying Agent and shall not be
invested.
(iii) Payments by the Paying Agent. At or before 4:30 p.m., New
York City time, on the Purchase Date for tendered Bonds and upon
receipt by the Paying Agent of 100% of the aggregate Purchase Price
of the tendered Bonds, the Paying Agent shall pay or receipt the
Purchase Price of such Bonds to the Registered Owners thereof.
Such payments shall be made in immediately available funds (or by
wire transfer), unless the Bonds to be purchased accrue interest at
Multiannual or Fixed Rates, in which event such payments shall be
made in clearinghouse funds. The Paying Agent shall make payment
of the Purchase Price by applying in order of priority (A) first,
moneys paid to it by the Remarketing Agent as proceeds of the
remarketing of such Bonds by the Remarketing Agent, and (B) second,
other moneys made available by the Company.
(iv) Registration and Delivery of Tendered or Purchased Bonds. On
the date of purchase, the Paying Agent shall register and deliver
(or hold) or cancel all Bonds purchased on any Purchase Date as
follows: (A) Bonds purchased or remarketed by the Remarketing
Agent shall be registered and made available to the Remarketing
Agent by 2:15 p.m., New York City time, in accordance with the
instructions of the Remarketing Agent, and (B) Bonds purchased with
amounts provided by the Company shall be registered in the name of
the Company and shall be delivered to the Trustee to be held in
trust by the Trustee on behalf of the Company and shall not be
released from such trust unless the Trustee shall have received
written instructions from the Company. Notwithstanding anything
herein to the contrary, so long as the Bonds are held under the
book-entry only system in accordance with Section 3.07 hereof,
Bonds will not be delivered as set forth above; rather, transfers
of beneficial ownership of the Bonds to the person indicated above
will be effected on the registration books of DTC pursuant to its
rules and procedures.
(v) (Intentionally Omitted).
(vi) Resale of Bonds Purchased by the Company. In the event that
any Bonds are registered to the Company pursuant to subparagraph
(iv) above, to the extent requested by the Agent, the Remarketing
Agent shall offer for sale and use its best efforts to sell such
Bonds at a price equal to the principal amount thereof plus accrued
interest.
(vii) Delivery of Tendered Bonds; Effect of Failure to Surrender
Bonds. All Bonds to be purchased on any date shall be required to
be delivered to the principal office of the Paying Agent at or
before 11:00 a.m., New York City time, on the Purchase Date. If
the Owner of any Bond (or portion thereof) in certificated form
that is subject to optional or mandatory purchase pursuant to this
Article fails to deliver such Bond to the Trustee for purchase on
the Purchase Date, and if the Paying Agent is in receipt of the
Purchase Price therefor, such Bond (or portion thereof) shall
nevertheless be deemed purchased on the Purchase Date thereof and
ownership of such Bond (or portion thereof) shall be transferred to
the purchaser thereof as provided in subsection (ii) above. Any
Owner who fails to deliver such Bond for purchase shall have no
further rights thereunder except the right to receive the Purchase
Price thereof upon presentation and surrender of said Bond to the
Paying Agent. The Paying Agent shall, as to any tendered Bonds
which have not been delivered to it (1) promptly notify the
Remarketing Agent of such nondelivery, and (2) place or cause to be
placed a stop transfer against an appropriate amount of Bonds
registered in the name of such Registered Owner(s) on the bond
registration books. The Paying Agent shall place or cause to be
placed such stop(s) commencing with the lowest serial number Bond
registered in the name of such Registered Owner(s) until stop
transfers have been placed against an appropriate amount of Bonds
until the appropriate tendered Bonds are delivered to the Paying
Agent. Upon such delivery, the Paying Agent shall make or cause
the Bond Registrar to make any necessary adjustments to the bond
registration books. Notwithstanding anything herein to the
contrary, so long as the Bonds are held under the book-entry only
system in accordance with Section 3.07 hereof, Bonds will not be
delivered as set forth above; rather, transfers of beneficial
ownership of the Bonds to the person indicated above will be
effected on the registration books of the DTC pursuant to its rules
and procedures.
Section 2.11. Mandatory Tenders for Purchase.
(a) Flexible. Each Bond accruing interest at a Flexible Rate
shall be subject to mandatory tender for purchase on each Interest
Payment Date applicable to such Bond, at the Purchase Price
applicable to such Bond. The Registered Owner of any Bond accruing
interest at a Flexible Rate shall provide the Paying Agent with
written payment instructions for the Purchase Price of its Bond on
or before tender thereof to the Paying Agent.
(b) Conversions between Interest Rate Periods. Bonds to be
converted from one Mode to a different Mode (other than from a
Daily Mode to a Weekly Mode or from a Weekly Mode to a Daily Mode)
or a change from one Interest Rate Period to an Interest Rate
Period of different duration within the Multiannual Mode are
subject to mandatory tender for purchase on the Conversion Date at
the Purchase Price applicable to such Bonds. The Paying Agent
shall give notice of such mandatory tender for purchase to the
Registered Owners of Bonds by first class mail, not less than 15
days before the mandatory tender date. If the Bonds are in
certificated form, such notice shall include information with
respect to required delivery of Bond certificates and payment of
the Purchase Price.
(c) Mandatory Tender in lieu of Optional Redemption. For any Bond
in the Multiannual or Fixed Rate Mode, the Agent may elect to
convert from the Multiannual or Fixed Rate Mode to a different Mode
or change from one Interest Rate Period to an Interest Rate Period
of different duration within the Multiannual Mode on any optional
redemption date for such Bond. The Agent shall make such election
in accordance with Section 2.02 hereof and upon such election such
Bond shall be subject to mandatory tender for purchase on the
Conversion Date in lieu of optional redemption at the Purchase
Price applicable to such Bonds. The Paying Agent shall give notice
of such mandatory tender for purchase to the Registered Owners of
Bonds by first class mail, not less than 30 days before the
mandatory tender date. If the Bonds are in certificated form, such
notice shall include information with respect to required delivery
of Bond certificates and payment of the Purchase Price.
Section 2.12. Special Conditions to Conversions from Multiannual
or Fixed Rate Mode. Notwithstanding any other provision contained
herein, no conversion from the Multiannual or Fixed Rate Mode to a
different Mode or change from one Interest Rate Period to an
Interest Rate Period of different duration within the Multiannual
Mode on any optional redemption date for a Bond shall take place
unless there is delivered to the Trustee at least 45 days prior to
the proposed Conversion Date (a) written evidence that the Bonds
will qualify for a short-term credit rating from a Rating Agency
and (b) written consent of the Bond Insurer to the conversion of
such Bond, which consent shall not be unreasonably withheld.
ARTICLE III
GENERAL PROVISIONS
Section 3.01. Authorization for Indenture; Indenture to
Constitute Contract. This Indenture is entered into pursuant to
the Acts. In consideration of the purchase of the Bonds by the
Bond Owners, the provisions of this Indenture shall be part of the
contract of the Issuer with the Owners of the Bonds, and shall be
deemed to be and shall constitute a contract among the Issuer, the
Trustee and the Bond Owners. The provisions hereof are covenants
and agreements with such Bond Owners, which the Issuer hereby
determines to be necessary and desirable for the security and
payment of the Bonds.
Section 3.02. Payment of Principal, Premium, if any, and
Interest. (a) The Issuer covenants that it will duly and
punctually pay or cause to be paid the principal of, premium, if
any, and interest on the Bonds issued under this Indenture at the
place, on the dates and in the manner provided herein and therein
according to the true intent and meaning thereof, but solely from
the payments, revenues and receipts specifically assigned herein
for such purposes as set forth in Section 4.03 of this Indenture.
(b) The Trustee is appointed as the Paying Agent for the Bonds.
The principal of, premium, if any, and interest on the Bonds shall
be payable, without exchange or collection charges, in lawful money
of the United States of America. During any period in which the
Bonds are on deposit at DTC, in accordance with Section 3.07
hereof, payment of principal of, together with any premium and
interest on, the Bonds shall be paid to DTC in immediately
available or next day funds on each payment date, and shall be
payable as directed in writing by DTC.
(c) The Company in issuing the Bonds may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders;
provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the
Bonds or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers
printed on the Bonds, and any such redemption shall not be affected
by any defect in or omission of such numbers.
(d) Notwithstanding any other provision of this Indenture or in
the forms of Bond, if the Bonds are on deposit at DTC in accordance
with Section 3.07 hereof, presentation and surrender of the Bonds
at the Principal Office of the Trustee shall not be required other
than at the maturity thereof.
Section 3.03. Performance of Covenants; Issuer Immunity. (a)
The Issuer covenants that it will faithfully comply with the
stipulations and provisions required to be performed by it and
contained in this Indenture, or in any of its proceedings
pertaining hereto.
(b) Upon execution of this Indenture, the Issuer shall not be
liable for any action taken, suffered or omitted to be taken by it
in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture. The Issuer's immunity and protection from liability
hereunder shall survive the final payment of the Bonds.
Section 3.04. Instruments of Further Assurance. The Issuer
covenants that it will do, execute, acknowledge and deliver, or
cause to be done, executed, acknowledged and delivered, such
indentures supplemental hereto and such further acts, instruments
and transfers as reasonably may be required for the better and more
effectual assignment to the Trustee of all payments, revenues and
other amounts payable under or with respect to the Agreement and
any other income and other moneys assigned hereby to the payment of
the principal of, premium, if any, and interest on the Bonds. The
Issuer further covenants that it will not create or suffer to be
created any lien, encumbrance or charge upon its interest in the
revenues and other amounts payable under or with respect to the
Trust Estate, except the lien and charge granted hereby.
Section 3.05. Recordation. The Trustee agrees that it will
cooperate with the Company, at the direction and expense of the
Company, to record and file any financing statements and all
supplements thereto, and such other instruments as may be directed
by the Company from time to time to be recorded or filed, in such
manner and in such places as from time to time may be directed by
the Company.
Section 3.06. Registration of Bonds; Trustee Appointed Bond
Registrar; Persons Treated as Owners.
(a) Registration. The Trustee is hereby appointed as Bond
Registrar of the Bonds and as such shall maintain the Registration
Books in the State of Texas as provided by this Indenture. The
Registration Books shall reflect the information required to be
provided by Bond Owners in connection with the transfer of Bonds.
At reasonable times and under reasonable regulations established by
the Trustee, the Registration Books may be inspected and copied by
the Company, the Agent, the Issuer or the Owners (or designated
representatives thereof) of at least 25% in aggregate principal
amount of Bonds then Outstanding.
(b) Transfer and Exchange. The ownership of a Bond may be
transferred (in Authorized Denominations) only upon surrender
thereof at the Principal Office of the Trustee, accompanied by an
assignment, duly executed by the Owner of such Bond or his duly
authorized attorney-in-fact, in such form as shall be satisfactory
to the Trustee, along with the address and social security number
or federal employer identification number of such transferee (or,
if registration is to be made in the name of multiple individuals,
of all such transferees) and, if such transferee is a trust, the
name and address of the trustee(s) and the date of the trust of the
proposed transferee. Upon the due presentation of any Bond for
transfer and on request of the Trustee, the Issuer shall execute in
the name of the transferee, and the Trustee shall authenticate and
deliver, a new fully registered Bond or Bonds of the same Mode, in
any denomination permitted by this Indenture, in an aggregate
principal amount equal to the unmatured and unredeemed aggregate
principal amount of such transferred fully registered Bond, and
bearing interest at the same rate, and maturing on the same date,
as such transferred Bond.
Bonds may be exchanged at the Principal Office of
the Trustee or the Paying Agent for other Bonds of the same Mode
(and same Interest Rate Period with respect to Bonds in the
Flexible Mode or Multiannual Mode) aggregating a like principal
amount. Bonds issued in exchange for other Bonds may be issued
only in Authorized Denominations of the same Mode. All Bonds
surrendered to the Trustee for exchange pursuant to this Section
3.06 shall be canceled by the Trustee and shall not be redelivered.
Neither the Issuer nor the Trustee shall be required to make any
such transfer or exchange of any Bond during the 10 Business Days
immediately preceding the mailing of a notice of Bonds selected for
redemption or, with respect to a Bond, after such Bond or any
portion thereof has been selected for redemption.
(c) Charges. In all cases of the transfer of a Bond, the Trustee
shall register at the earliest practicable time, on the
Registration Books, such Bond in accordance with the provisions of
this Indenture. The Issuer or the Trustee may make a charge to the
Bond Owner for every transfer or exchange of a Bond sufficient to
reimburse it for any tax or other governmental charge required to
be paid with respect to such transfer or exchange, and may demand
that such charge be paid before any new Bond is delivered.
(d) Ownership. As to any Bond, the person in whose name the
ownership of such Bond shall be registered on the Registration
Books shall be deemed and regarded as the absolute owner thereof
for all purposes, and payment of or on account of the principal of
any such Bond and the premium, if any, and interest thereon shall
be made only to or upon the order of the registered Owner thereof
or his legal representative. All such payments shall be valid and
effectual to satisfy and discharge the liability upon such Bond,
including the premium, if any, and interest thereon, to the extent
of the sum or sums so paid.
Section 3.07. Book-Entry Only System. The Bonds shall be
initially issued in the form of a single fully registered Bond.
Upon initial issuance, the ownership of each such Bond shall be
registered in the name of Cede & Co., as nominee of DTC, and,
except as provided in Section 3.08 hereof, all of the outstanding
Bonds shall be registered in the name of Cede & Co., as nominee of
DTC.
With respect to Bonds registered in the name of
Cede & Co., as nominee of DTC, the Issuer and the Trustee shall
have no responsibility or obligation to any DTC Participant or to
any person on behalf of whom such a DTC Participant holds an
interest in the Bonds, except as provided in this Indenture.
Without limiting the immediately preceding sentence, the Issuer and
the Trustee shall have no responsibility or obligation with respect
to (i) the accuracy of the records of DTC, Cede & Co. or any DTC
Participant with respect to any ownership interest in the Bonds,
(ii) the delivery to any DTC Participant or any other person, other
than a Bondholder, as shown on the Registration Books, of any
notice with respect to the Bonds, including any notice of
redemption, or (iii) the payment to any DTC Participant or any
other person, other than a Bondholder, as shown in the Registration
Books of any amount with respect to principal of, premium, if any,
or interest on, the Bonds. Notwithstanding any other provision of
this Indenture to the contrary, the Issuer and the Trustee shall be
entitled to treat and consider the person in whose name each Bond
is registered in the Registration Books as the absolute owner of
such Bond for the purpose of payment of principal, premium, if any,
and interest with respect to such Bond, for the purpose of giving
notices of redemption and other matters with respect to such Bond,
for the purpose of registering transfers with respect to such Bond,
and for all other purposes whatsoever. The Trustee shall pay all
principal of, premium, if any, and interest on the Bonds only to or
upon the order of the respective owners, as shown in the
Registration Books as provided in this Indenture, or their
respective attorneys duly authorized in writing, and all such
payments shall be valid and effective to fully satisfy and
discharge the Issuer's obligations with respect to payment of
principal of, premium, if any, and interest on, the Bonds to the
extent of the sum or sums so paid. No person other than an owner,
as shown in the Registration Books, shall receive a Bond
certificate evidencing the obligation of the Issuer to make
payments or principal, premium, if any, and interest, pursuant to
this Indenture. Upon delivery by DTC to the Trustee of written
notice to the effect that DTC has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions in
this Indenture with respect to interest checks or drafts being
mailed to the registered owner at the close of business on the
Record Date, the words "Cede & Co." in this Indenture shall refer
to such new nominee of DTC.
Section 3.08. Successor Securities Depository; Transfers Outside
Book-Entry Only System. (a) In the event that the Issuer, at the
direction of the Company, determines that DTC is incapable of
discharging its responsibilities described herein and in the
representation letter of the Issuer to DTC, the Issuer shall (i)
appoint a successor securities depository, qualified to act as such
under Section 17(a) of the Securities Exchange Act of 1934, as
amended, notify DTC and DTC Participants, identified by DTC, of the
appointment of such successor securities depository and transfer
one or more separate Bonds to such successor securities depository
or (ii) notify DTC and DTC Participants, identified by DTC, of the
availability through DTC of Bonds and transfer one or more separate
Bonds to DTC Participants, identified by DTC, having Bonds credited
to their DTC accounts. In such event, the Bonds shall no longer be
restricted to being registered in the Registration Books in the
name of Cede & Co., as nominee of DTC, but may be registered in the
name of the successor securities depository, or its nominee, or in
whatever name or names Bondholders transferring or exchanging Bonds
shall designate, in accordance with the provisions of this
Indenture.
(b) In addition to (a) above, upon the written consent of 100% of
the beneficial owners of the Bonds, the Trustee shall withdraw the
Bonds from DTC, and authenticate and deliver Bonds fully registered
to the assignees of DTC or its nominee. If the request for such
withdrawal is not the result of any Issuer action or inaction, such
withdrawal, authentication and delivery shall be at the cost and
expense (including costs of printing, preparing and delivering such
Bonds) of the persons requesting such withdrawal, authentication
and delivery.
Section 3.09. Payments to Cede & Co. Notwithstanding any other
provision of this Indenture to the contrary, so long as any Bond is
registered in the name of Cede & Co., as nominee of DTC, all
payments with respect to principal of, premium, if any, and
interest on, such Bond and all notices with respect to such Bond
shall be made and given, respectively, in the manner provided in
the representation letter of the Issuer to DTC.
Section 3.10. Cancellation. All Bonds which have been paid at
maturity or redeemed prior to maturity shall not be reissued but
shall be canceled by the Trustee. All Bonds which are canceled by
the Trustee shall be disposed of by the Trustee, in accordance with
its document retention policies, and a certificate of cancellation
shall be furnished promptly to the Issuer upon request; provided,
however, that if the Issuer shall so direct the Trustee, the
Trustee shall forward the canceled Bonds to the Issuer.
Section 3.11. Non-presentment of Bonds. If any check or draft
representing payment of interest, principal or premium on any Bond
is returned to the Trustee or is not presented for payment by the
payee thereof, or any Bond is not presented for payment of
principal or premium at the maturity or redemption date, if moneys
and/or Government Obligations sufficient to pay such interest, or
such principal and premium, shall have been deposited with and made
available to the Trustee for the benefit of the Owner of the
applicable Bond, all liability of the Issuer to the Owner of such
Bond for such interest or such principal and premium shall
forthwith cease, terminate and be completely discharged, and
thereupon it shall be the duty of the Trustee to hold such moneys
and/or Government Obligations, without investing or reinvesting the
same and without liability for interest thereon, for the benefit of
the Owner of such Bond, who shall thereafter be restricted
exclusively to such funds for any claim of whatever nature on such
Owner's part under this Indenture or on, or with respect to, such
Bond, and such Bond shall no longer be considered to be
Outstanding. The Trustee's obligation to hold such moneys and/or
Government Obligations relating to the Bonds shall continue for a
period equal to two years following the date on which the principal
of all Bonds has become due, whether at maturity, or at the date
fixed for redemption or purchase thereof, or otherwise, at which
time the Trustee, upon payment of all fees and expenses due and
owing to it and receipt of indemnity satisfactory to it, shall
surrender any remaining funds so held to the Company. Following
such surrender, any claim under this Indenture by the Owner of any
Bond of whatever nature shall be made only upon the Company.
The provisions of this Section 3.11 shall be
subject to all applicable escheat laws, including Title 6 of the
Texas Property Code.
Section 3.12. Rights under Agreement. This Indenture, the
Agreement and the documents executed by the Company in connection
therewith, duly executed counterparts or originals of which have
been filed with the Trustee, set forth the covenants and the
obligations of the Issuer, the Company and the Trustee. Reference
hereby is made to such documents for detailed statements of the
covenants and obligations set forth therein. The Issuer and the
Trustee agree that the Trustee, for and on behalf of the Bond
Owners, in its name or, to the extent permitted by law, in the name
of the Issuer, may enforce all rights of the Issuer (except for
Unassigned Rights) and all obligations of the Company under and
pursuant to the Agreement and such documents.
Section 3.13. Legal Existence of Issuer. The Issuer covenants
that it will take any action within its control to maintain its
legal existence and will duly procure any necessary renewals and
extensions thereof; will use its best efforts to maintain, preserve
and renew all the rights, powers, privileges and franchises owned
by it; and will comply with all valid acts, rules, regulations and
orders of any legislative, executive, judicial or administrative
body applicable to the Issuer in connection with the Bonds.
Section 3.14. Diminution of, or Encumbrance on, Trust Estate.
The Issuer covenants not to sell, transfer, assign, pledge,
release, encumber or otherwise diminish or dispose of, directly or
indirectly, by merger or otherwise, or cause or suffer the same to
occur, or create or allow to be created or to exist any lien upon,
all or any part of its interests in the Trust Estate, except as
expressly permitted by this Indenture.
Section 3.15. Books, Records and Accounts. The Trustee shall
keep proper books for the registration of, and transfer of
ownership of, each Bond, and proper books, records and accounts in
which complete and correct entries shall be made of all
transactions relating to the receipt, disbursement, investment,
allocation and application of the proceeds received from the sale
of the Bonds, the revenues received from the Agreement, the
documents executed by the Company in connection therewith, the
funds and accounts created pursuant to this Indenture, and all
other moneys held by the Trustee hereunder. The Trustee shall,
during regular business hours and upon reasonable prior notice,
make such books, records and accounts available for inspection by
the Issuer and the Company.
Section 3.16. Temporary Bonds. Until definitive Bonds are ready
for delivery, there may be executed, and, upon written request of
the Issuer, the Trustee shall authenticate and deliver, in lieu of
definitive Bonds, but subject to the same limitations and
conditions, temporary printed, engraved, lithographed or
typewritten registered Bonds (without coupons), in the minimum
denomination permitted for definitive Bonds or any integral
multiple thereof, substantially of the tenor hereinabove set forth
for definitive Bonds, and with such omissions, insertions and
variations as may be appropriate. If temporary Bonds shall be
issued, the Issuer shall cause the definitive Bonds to be prepared
and to be executed and deposited with the Trustee, without undue
delay, and the Trustee, upon presentation to it at its Principal
Office of any temporary Bond, shall cancel the same and
authenticate and deliver in exchange therefor at the required
location, without charge to the Owner thereof, a definitive Bond or
Bonds of an equal aggregate principal amount and bearing interest
at the same rate as the temporary Bond or Bonds so surrendered.
Until so exchanged the temporary Bonds shall be entitled in all
respects to the same benefit and security of this Indenture as the
definitive Bonds to be issued and authenticated hereunder.
Section 3.17. Mutilated, Lost, Stolen or Destroyed Bonds. If any
Bond is mutilated, lost, stolen or destroyed, the Trustee, upon
request, shall authenticate a new Bond, dated as provided in
Article II hereof, of the same denomination and Mode and bearing
interest at the same rate as the Bond mutilated, lost, stolen or
destroyed; provided, however, that, in the case of any mutilated
Bond, such mutilated Bond shall first be surrendered to the
Trustee, and, in the case of any lost, stolen or destroyed Bond,
there shall first be furnished to the Trustee evidence of such
loss, theft or destruction satisfactory to the Trustee, together
with indemnity covering the Trustee, the Company and the Issuer
satisfactory to the Trustee. If any such Bond shall have matured
instead of issuing a duplicate Bond the Trustee may pay the same.
The Trustee and the Issuer may charge the Owner of such Bond with
their reasonable fees and expenses in connection with the issuance
of any such duplicate Bond.
Section 3.18. Intentionally Omitted.
Section 3.19. Arbitrage Covenants. The Issuer covenants and
agrees, for the benefit of the owners of the Bonds, that it will
not knowingly take any action or omit from taking nor instruct the
Trustee to take or to omit from taking any action, which would
result in a loss of the exemption from federal income taxation of
interest on the Bonds by virtue of the Bonds being considered
"arbitrage bonds" within the meaning of section 148 of the Code.
ARTICLE IV
USE OF PROCEEDS; REVENUES AND FUNDS
Section 4.01. Application of Original Proceeds of Bonds. (a)
The proceeds of the sale of the Bonds, except accrued interest
thereon, if any, shall, on the Issue Date, be transferred by the
Trustee to the Prior Trustee for deposit into the bond fund created
under the Prior Indenture.
(b) The Company, prior to or on the Issue Date, will deposit or
cause to be deposited into the bond fund relating to the Prior
Bonds an amount which, together with the Bond proceeds described in
(a) above, will equal the principal of, premium and interest on
the Prior Bonds due on the date fixed for their redemption.
Section 4.02. Creation of Bond Fund. There is hereby created by
the Issuer and ordered established with the Trustee a trust fund to
be designated the "Red River Authority of Texas Pollution Control
Revenue Refunding Bonds (West Texas Utilities Company, Public
Service Company of Oklahoma and Central Power and Light Company
Oklaunion Project) Series 1996 Bond Fund" (the "Bond Fund").
Section 4.03. Payments into Bond Fund and Use of Moneys in Bond
Fund. (a) There shall be deposited into the Bond Fund, when
received: (i) accrued interest, if any, on the Bonds from the date
thereof to the date of delivery to the initial purchaser thereof;
(ii) all payments specified in the Agreement (except for certain
payments of fees, expenses, and indemnification arising out of the
Issuer's Unassigned Rights); (iii) all moneys required to be so
deposited in connection with any redemption of Bonds; (iv) any
amounts directed to be transferred into the Bond Fund pursuant to
any provision of this Indenture; and (v) all other moneys when
received by the Trustee which are required to be deposited into the
Bond Fund or which are accompanied by directions that such moneys
are to be paid into the Bond Fund.
(b) Moneys held in the Bond Fund shall be used solely for the
payment of the principal of, premium, if any, and interest on the
Bonds on the dates due for the payment or redemption thereof. The
Issuer hereby authorizes and directs the Trustee to withdraw
sufficient funds from the Bond Fund to pay the principal of,
premium, if any, and interest on the Bonds as the same become due
and payable, which authorization and direction the Trustee hereby
accepts.
Section 4.04. Creation and Use of Bond Purchase Fund. There is
hereby created and established a Bond Purchase Fund with respect to
the Bonds to be held as a separate escrow fund, in trust and
administered and distributed by the Trustee as provided in this
Section. All moneys deposited in the Bond Purchase Fund shall be
used solely for the purposes set forth herein.
The Trustee shall deposit into the Bond Purchase
Fund (i) all Remarketing Proceeds received by the Trustee from the
Remarketing Agent; and (ii) funds paid by the Company pursuant to
Section 5.10 of the Agreement. The Trustee shall apply moneys on
deposit in the Bond Purchase Fund to pay the Purchase Price of
Bonds purchased hereunder; provided, however, that any amounts
received by the Trustee from the Remarketing Agent that are not
needed to pay the Purchase Price of Bonds because such Bonds have
been accelerated or called for redemption shall be returned to the
Remarketing Agent.
The funds held by the Paying Agent in the Bond
Purchase Fund shall not constitute part of the Trust Estate which
is subject to the lien of this Indenture. The moneys in the Bond
Purchase Fund shall be used solely to pay the Purchase Price of
Bonds as aforesaid and may not be used for any other purposes. It
shall be the duty of the Paying Agent to hold the moneys in the
Bond Purchase Fund, without liability for interest thereon, for the
benefit of the Registered Owners of Bonds which have been properly
tendered for purchase or deemed tendered on the Purchase Date, and
if sufficient funds to pay the Purchase Price for such tendered
Bonds shall be held by the Paying Agent in the Bond Purchase Fund
for the benefit of the Registered Owners thereof, each such
Registered Owner shall thereafter be restricted exclusively to the
Bond Purchase Fund for any claim of whatever nature on such
Registered Owner's part under this Indenture or on, or with respect
to, such tendered Bond. Funds held in the Bond Purchase Fund for
the benefit of Registered Owners of untendered Bonds shall be held
in trust and not invested. The provisions of Section 3.11 hereof
shall govern any funds held in the Bond Purchase Fund for such
Registered Owners of the Bonds which remain unclaimed for a period
of two years after the applicable Purchase Date.
Section 4.05. Investment of Moneys. Subject to the restrictions
hereinafter set forth in this Section 4.05 and in Section 4.08, any
moneys held in the Bond Fund shall be invested and reinvested by
the Trustee upon the written instructions of the Agent solely in
Permitted Investments, maturing no later than the date on which it
is estimated by the Agent that such moneys will be required to be
paid out hereunder. All investment instructions hereunder shall be
provided to the Trustee no later than one Business Day prior to the
making of the investment directed therein. The Trustee may make
any and all such investments through its own investment department
and may trade with itself in the purchase and sale of securities
for such investment when authorized to do so by the Agent. The
Trustee shall be entitled to rely on all written investment
instructions provided by the Agent hereunder. The Trustee shall
not be responsible or liable for the performance of any such
investments or for keeping the moneys held by it hereunder fully
invested at all times. Any moneys for which the Trustee has
received no investment instructions shall be automatically
reinvested into The Bank of New York Deposit Reserve or a permitted
money market fund as may be authorized by the Agent. Any
obligations acquired by the Trustee as a result of such investment
or reinvestment shall be held by or under the control of the
Trustee (except for such investments held in book entry form) and
shall be deemed to constitute a part of the Fund from which the
moneys used for its purchase were taken. All investment income
shall be retained in the Fund to which the investment is credited
from which such income is derived. Although the Company recognizes
that it may obtain a broker confirmation or written statement
containing comparable information at no additional cost, the
Company hereby agrees that confirmations of investments made by the
Trustee pursuant to this Section 4.05 are not required to be issued
by the Trustee for each month in which a monthly statement is
rendered. No such statement need be rendered pursuant to the
provisions hereof if no activity occurred in the fund or account
during such preceding month. All funds held under this Indenture
shall be secured to the fullest extent required by Texas law. In
the event of a loss on the sale of such investments (after giving
effect to any interest or other income thereon except to the extent
theretofore paid to the Company), the Trustee shall have no
responsibility in respect of such loss except that the Trustee
shall notify the Agent of the amount of such loss and the Company
shall promptly pay such amount to the Trustee to be credited as
part of the moneys originally invested. If the amount on deposit
in any fund is insufficient on any Interest Payment Date,
redemption date or Purchase Date to make timely payment due on such
date, the Company shall deposit sufficient moneys in such fund to
enable timely payment to be made on such date.
Section 4.06.Moneys To Be Held in Trust. All moneys required to be
deposited with or paid to the Trustee for the account of any Fund
under any provisions of this Indenture shall be held by the Trustee
in trust, and, except for (i) moneys in the Bond Purchase Fund, and
(ii) moneys deposited with or paid to the Trustee for the
redemption of Bonds, notice of the redemption for which has been
duly given, shall, while held by the Trustee, constitute part of
the Trust Estate and be subject to the security interest created
hereby.
Section 4.07.Repayment to Company from Indenture Funds. Subject to
Section 3.11 hereof, any amounts remaining in any Fund created
under this Indenture, after payment in full of the Bonds in
accordance with Article V hereof, the reasonable fees, charges and
expenses of the Issuer, the Trustee and any co-trustee appointed
hereunder, and all other amounts required to be paid hereunder or
under the Agreement, shall be paid, upon the expiration of, or upon
the sooner termination of, the terms of this Indenture, to the
Company.
Section 4.08. Custody of Funds and Accounts. All Funds created
pursuant to this Indenture shall be in the custody of the Trustee
but held in trust, in the name of the Issuer, for the benefit of
the Bondholders (other than amounts held in the Bond Purchase
Fund).
Section 4.09. Exemption from Federal Income Taxation. The Issuer
will not knowingly take any action, or omit to take any action
within its control, which action or omission will adversely affect
the exclusion from gross income for federal income tax purposes of
interest on the Bonds, and in the event of such action or omission
will promptly, upon receiving knowledge thereof, take all lawful
actions, based on advice of counsel and at the expense of the
Company, as may rescind or otherwise negate such action or
omission.
Section 4.10. Covenants Regarding Rebate.
(a) A special Rebate Fund is hereby established by the Issuer.
The Rebate Fund shall be for the sole benefit of the United States
of America and shall not be subject to the claim of any other
person, including without limitation the Bondholders. The Rebate
Fund is established for the purpose of complying with section 148
of the Code and the Treasury Regulations promulgated pursuant
thereto. The money deposited in the Rebate Fund, together with all
investments thereof and investment income therefrom, shall be held
in trust and applied solely as provided in this Section. The
Rebate Fund is not a portion of the Trust Estate and is not subject
to the lien of this Indenture. Notwithstanding the foregoing, the
Trustee with respect to the Rebate Fund is afforded all the rights,
protections and immunities otherwise accorded to it hereunder.
(b) Within ten days after the close of each fifth anniversary date
of the issuance of the Bonds, the Trustee shall receive from the
Agent a computation in the form of a certificate of an authorized
officer of the Agent of the amount of "Excess Earnings," if any,
for the period beginning on the date of delivery of the Bonds and
ending at the close of such "Bond Year" and the Company shall pay
to the Trustee for deposit into the Rebate Fund an amount equal to
the difference, if any, between the amount then in the Rebate Fund
and the Excess Earnings so computed. The term "Bond Year" means
with respect to the Bonds each one-year period ending on the
anniversary of the date of delivery of the Bonds or such other
period as may be elected by the Issuer in accordance with the
Regulations and notice of which election has been given to the
Trustee. If, at the close of any Bond Year, the amount in the
Rebate Fund exceeds the amount that would be required to be paid to
the United States of America under paragraph (d) below if the Bonds
had been paid in full, such excess may be transferred from the
Rebate Fund and paid to the Company at the written instructions of
the Company, and the Company shall use such excess for such
purposes for which, or to be redeposited to such fund from which,
such amounts were originally derived.
(c) In general, "Excess Earnings" for any period of time means the
sum of
(i)the excess of --
(A)the aggregate amount earned during such period
of time on all "Nonpurpose Investments" (including gains on the
disposition of such Obligations) in which "Gross Proceeds" of the
issue are invested (other than amounts attributable to an excess
described in this subparagraph (c)(i), over
(B)the amount that would have been earned during
such period of time if the "Yield" on such Nonpurpose Investments
(other than amounts attributable to an excess described in this
subparagraph (c)(i)) had been equal to the yield on the issue, plus
(ii)any income during such period of time
attributable to the excess described in subparagraph (c)(i) above.
The term Nonpurpose Investments, Gross Proceeds,
and Yield shall have the meanings given to such terms in section
148 of the Code and the Regulations promulgated pursuant to such
section.
(d) The Trustee shall pay to the United States of American at
least once every five years, to the extent that funds are available
in the Rebate Fund or otherwise provided by the Company, an amount
that ensures that at least 90 percent of the Excess Earnings from
the date of delivery of the Bonds to the close of the period for
which the payment is being made will have been paid. The Trustee
shall pay to the United States of America not later than 60 days
after the Bonds have been paid in full, to the extent that funds
are available in the Rebate Fund or otherwise provided by the
Company, 100 percent of the amount then required to be paid under
section 148(f) of the Code as a result of Excess Earnings.
(e) The amounts to be computed, paid, deposited or disbursed under
this Section shall be determined by the Agent acting on behalf of
the Issuer within ten days after each fifth anniversary of the
issuance of the Bonds. By such date, the Agent shall also notify,
in writing, the Trustee and the Issuer of the determinations the
Agent has made and the payment to be made pursuant to the
provisions of this section. Upon written request of any registered
owner of Bonds, the Agent shall furnish to such registered owner of
Bonds a certificate (supported by reasonable documentation, which
may include calculation by Bond Counsel or by some other service
organization) showing compliance with this Section and other
applicable provisions of section 148 of the Code.
(f) The Trustee shall maintain a record of the periodic
determinations by the Agent of the Excess Earnings for a period
beginning on the first anniversary date of the issuance of the
Bonds and ending on the date six years after the final retirement
of the Bonds. Such records shall state each such anniversary date
and summarize the manner in which the Excess Earnings, if any, was
determined.
(g) If the Trustee shall declare the principal of the Bonds and
the interest accrued thereon immediately due and payable as the
result of an Event of Default specified in the Indenture, or if the
Bonds are optionally or mandatorily prepaid or redeemed prior to
maturity as a whole in accordance with their terms, any amount
remaining in any of the funds shall be transferred to the Rebate
Fund at the written instructions of the Agent, to the extent that
the amount therein is less than the Excess Earnings computed by the
Agent as of the date of such acceleration or redemption, and the
balance of such amount shall be used immediately by the Trustee for
the purpose of paying principal of, redemption premium, if any, and
interest on the Bonds when due. In furtherance of such intention,
the Issuer hereby authorizes and directs its President to execute
any documents, certificates or reports required by the Code and to
make such elections, on behalf of the Issuer, which may be
permitted by the Code as are consistent with the purpose for the
issuance of the Bonds.
(h) The requirements contained in this Section relating to the
computation and payment of Excess Earnings shall not be applicable
if all Gross Proceeds of the Bonds are expended within 180 days of
the Issue Date.
ARTICLE V
DISCHARGE OF INDENTURE
Section 5.01. Discharge. If the Issuer shall pay or cause to be
paid, or there shall be otherwise paid, or provision shall be made
to or for the Owners of all Bonds for the payment of, the
principal, premium, if any, and interest due or to become due on
the Bonds at the times and in the manner stipulated therein, and if
the Issuer shall not then be in default under any of the other
covenants and promises in such Bonds and this Indenture to be kept,
performed and observed by it or on its part, and if the Issuer
shall pay or cause to be paid to the Trustee all sums of money due
or to become due according to the provisions hereof or of the Bonds
and of the Agreement, then, except for the rights, protections and
immunities of the Trustee under Article VII hereof, these presents
and the interest in the Trust Estate and rights hereby granted
shall cease, determine and be void, and the Trustee shall take such
actions as may be necessary to evidence the cancellation and
discharge of the lien of this Indenture. Any Bond, other than a
Bond in the Daily or the Weekly Mode, shall be deemed to be paid
within the meaning of this Article V and for all purposes of this
Indenture when (i) payment of the principal of, and applicable
premium, if any, on such Bond plus the interest thereon to the due
date thereof (whether such due date be by reason of maturity or
upon redemption as provided in this Indenture or otherwise), or, in
the case of a Bond in the Flexible Mode, the Monthly Mode, the
Quarterly Mode, the Semiannual Mode or the Multiannual Mode, to the
date next following on which such Bond is required to be, or may at
the option of the Owner be, tendered for purchase, shall have been
provided to the Trustee by irrevocably depositing with the Trustee,
in trust, and the Trustee shall have irrevocably set aside
exclusively for such payment, any combination of (1) moneys
provided by the Company sufficient to make such payment and/or (2)
Government Obligations acquired with moneys provided by the
Company, not subject to redemption or prepayment and maturing as to
principal and interest in such amounts and at such times as will,
in the opinion of an independent certified public accountant
delivered to the Trustee, provide sufficient moneys to make such
payment without reinvestment (and there shall be no reinvestment);
(ii) all necessary and proper fees, compensation and expenses of
the Trustee pertaining to the Bonds shall have been paid or the
payment thereof provided for to the satisfaction of the Trustee;
(iii) the Trustee shall have received in form satisfactory to it
irrevocable instructions from an Authorized Agent Representative to
redeem such Bonds on the date next following on which such Bond is
required to be, or may at the option of the Owner be, tendered for
purchase and either evidence that all redemption notices required
by this Indenture have been given or irrevocable instructions to
the Trustee to give such redemption notices has been given; and
(iv) there shall be delivered to the Trustee and the Issuer an
opinion of Bond Counsel to the effect that the deposit of such
moneys will not adversely affect the excludability from gross
income for purposes of federal income taxation of interest on any
of the Bonds.
Notwithstanding the foregoing, upon the deposit of
funds as described in the first paragraph of this Section, the
Purchase Price of Bonds tendered for optional or mandatory purchase
shall be made from the remarketing of such Bonds under Section 2.10
hereof. If payment of such Purchase Price is not made from such
source, payment shall be made from funds on deposit pursuant to
this Section, in which case such Bonds shall be surrendered to the
Trustee and canceled.
Section 5.02. Defeasance. So long as the Municipal Bond
Insurance Policy shall be in full force and effect, prior to any
defeasance becoming effective under this Indenture, (i) the amounts
required to be deposited pursuant to this Indenture and any escrow
deposit agreement shall be invested only in Government Obligations,
(ii) the Bond Insurer and the Trustee shall have received (a) any
final official statement that may be delivered in connection with
any refunding obligations, (b) a copy of the accountants'
verification report, (c) a copy of an escrow deposit agreement, if
any, in form and substance acceptable to the Bond Insurer, and (d)
a copy of an opinion of bond counsel, addressed to the Bond Insurer
and the Trustee, to the effect that such Bonds have been paid
within the meaning and with the effect expressed in this Indenture,
and that the covenants, agreements and other obligations of the
Issuer to the holders of such Bonds have been discharged and
satisfied and (iii) the Trustee shall have received the written
consent of the Bond Insurer to such defeasance, which consent shall
not be unreasonably withheld.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.01. Events of Default. Each of the following events is
hereby defined as, and declared to constitute an "Event of Default"
under this Indenture:
(i) default in the due and punctual payment of the principal of or
premium, if any, on any Outstanding Bond, as the same shall become
due and payable, whether at the stated maturity thereof, upon any
proceedings for redemption, or upon the maturity thereof by
declaration of acceleration;
(ii) default in the due and punctual payment of the interest on
any Outstanding Bond, as the same shall become due and payable, and
(i) if such Bond bears interest at a Flexible, Daily, Weekly,
Monthly, Quarterly or Semiannual Rate, the continuation of such
default for a period of one Business Day or more or (ii) if such
Bond bears interest at a Multiannual or Fixed Rate, the
continuation of such failure for a period of sixty days or more;
(iii) default in the due and punctual payment of the Purchase
Price of any Outstanding Bond, as the same shall become due and
payable and the continuation of such default for a period of one
Business Day or more;
(iv) default by the Issuer in its performance or observance of any
of the other covenants, agreements or conditions contained in the
Indenture, and the continuation thereof without corrective action
for the period after notice specified in Section 6.12 hereof ; or
(v) an Event of Default (as defined in the Agreement) has occurred
and is continuing under the Agreement.
Section 6.02. Acceleration. If any Event of Default occurs and
is continuing, the Trustee may, and upon request of the owners of
at least 25% in principal amount of all Bonds then Outstanding,
shall, by notice in writing to the Issuer and the Agent, declare
the principal of all Bonds then Outstanding to be immediately due
and payable; and upon such declaration the said principal, together
with interest accrued thereon to the date of acceleration, shall
become due and payable immediately at the place of payment provided
therein, anything in the Indenture or in the Bonds to the contrary
notwithstanding. Upon the occurrence of any acceleration
hereunder, the Trustee shall immediately declare all payments under
the Agreement pursuant to Section 5.04 thereof to be due and
payable immediately.
Immediately after any acceleration hereunder, the
Trustee, to the extent it has not already done so, shall notify in
writing the Issuer, the Agent, the Paying Agent and the Remarketing
Agent of the occurrence of such acceleration. Upon the occurrence
of any acceleration hereunder, the Trustee shall notify by first
class mail, postage prepaid, the owners of all Bonds Outstanding of
the occurrence of such acceleration.
If, after the principal of the Bonds has become due
and payable, all arrears of interest upon the Bonds are paid by the
Issuer, and the Issuer also performs all other things in respect to
which it may have been in default hereunder and pays the reasonable
charges of the Trustee and the Bondholders, including reasonable
and necessary attorneys' fees, then, and in every such case, the
owners of a majority in principal amount of the Bonds then
Outstanding, by notice to the Issuer and to the Trustee, may annul
such acceleration and its consequences, and such annulment shall be
binding upon the Trustee and upon all owners of Bonds issued
hereunder. No such annulment shall extend to or affect any
subsequent default or impair any right or remedy consequent
thereon. The Trustee shall forward a copy of any notice from
Bondholders received by it pursuant to this paragraph to the Agent.
Immediately upon such annulment, the Trustee shall cancel, by
notice to the Agent, any demand for prepayment of all amounts due
under the Agreement made by the Trustee pursuant to this Section.
The Trustee shall promptly give written notice of such annulment to
the Issuer, the Agent, the Paying Agent, the Remarketing Agent,
and, if notice of the acceleration of the Bonds shall have been
given to the Bondholders, shall give notice thereof to the
Bondholders.
Section 6.03. Other Remedies; Rights of Bond Owners. Upon the
occurrence of any Event of Default, the Trustee may pursue any
available remedy by suit at law or in equity to enforce the payment
of the principal of, premium, if any, and interest on the Bonds
then outstanding, and the performance by the Issuer of its
obligations hereunder, including, without limitation, the
following:
(i) by mandamus, or other suit, action or proceeding at law or in
equity, enforce all rights of the Bondholders and require the
Issuer to carry out its obligations under this Indenture and the
Acts;
(ii) bring suit upon the Bonds;
(iii) by action, suit or proceeding at law or in equity, require
the Issuer to account as if it were the trustee of an express trust
for the Bondholders; and
(iv) by action, suit or proceeding at law or in equity, enjoin any
acts or things which may be unlawful or in violation of the rights
of the Bondholders.
Any judgment against the Issuer shall be enforceable only against
the Trust Estate. There shall not be authorized any deficiency
judgment against any assets of, or the general credit of, the
Issuer. Subject to the prior rights of the Bond Owners, the Issuer
shall be entitled to reimbursement for any of its expenses in
connection with such proceeding from any available funds in the
Trust Estate.
If any Event of Default shall have occurred, and if
requested to do so in writing by the Owners of not less than 25% in
aggregate principal amount of the Bonds then Outstanding and if
indemnified as provided in Section 7.01(l) hereof, the Trustee
shall be obligated to exercise one or more of the rights and powers
conferred by this Section 6.03, or by Section 6.02 hereof as the
Trustee, being advised by counsel, shall deem most expedient in the
interests of the Bond Owners, unless the Trustee shall determine,
upon the advice of counsel, that to take such action will prejudice
the rights of the majority of the Bond Owners.
No remedy conferred upon or reserved to the Trustee
or the Bond Owners by the terms of this Indenture is intended to be
exclusive of any other remedy, but each and every such remedy shall
be cumulative and in addition to any other remedy given to the
Trustee or the Bond Owners hereunder or now or hereafter existing
at law or in equity. 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 an acquiescence therein;
and every such right and power may be exercised from time to time
as often as may be deemed expedient. No waiver of any default or
Event of Default hereunder, whether by the Trustee or the Bond
Owners, shall extend to or affect any subsequent default or Event
of Default, or impair any right or remedy consequent thereon.
Section 6.04. Right of Bond Owners to Direct Proceedings.
Anything in this Indenture to the contrary notwithstanding, upon
the occurrence of an Event of Default, the Owners of a majority in
aggregate principal amount of the Bonds then Outstanding 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 for any other proceedings
hereunder, other than for the payment of the principal of, premium,
if any, and interest on the Bonds or any part thereof; provided,
however, that direction shall not be otherwise than in accordance
with the provisions of law and this Indenture and shall be
accompanied by an indemnity as provided in Section 7.01(1) hereof.
Section 6.05. Appointment of Receiver. Upon the occurrence 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 the Bond Owners under this Indenture, the Trustee shall
be entitled, as a matter of right, to request the appointment of a
receiver or receivers of the Trust Estate and the revenues, issues,
earnings, income, products and profits thereof, pending such
proceedings, with such powers as the court making such appointment
shall confer.
Section 6.06. Waiver of Certain Laws. Upon the occurrence of an
Event of Default, to the extent that such rights may then lawfully
be waived, neither the Issuer, nor anyone claiming through or under
it, shall 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. The Issuer, 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.
Section 6.07. Application of Moneys. All moneys relating to the
Bonds received by the Trustee pursuant to any right given or action
taken under the provisions of this Article VI shall (after payment
of the costs and expenses of the proceedings resulting in the
collection of such moneys and of the fees and expenses, liabilities
and advances of the Issuer and the Trustee, it being understood
that such payment shall not be made from any moneys already held
for the benefit of the Bondholders) be deposited in the Bond Fund,
and all moneys in the Bond Fund shall be applied as follows:
(i) Unless the principal of all the Bonds Outstanding shall have
become or been declared due and payable, all such moneys shall be
applied:
First: (a) in case the principal of the Bonds shall not have
become due, to the payment of the interest in default, in the order
of the maturity of the installments of such interest, with
interest, so far as the same may be legally enforceable, on the
overdue installments thereof at the highest rate borne by any
Outstanding Bonds, such payments to be made ratably to the persons
or parties entitled thereto, without discrimination or preference;
or
(b) in case the principal of any of the Bonds shall have become
due, by declaration or otherwise, first to the payment of the
interest in default, in the order of the maturity of the
installments of such interest, and thereafter to the payment of the
principal of, and premium, if any, on all Bonds then due with
interest, so far as the same may be legally enforceable, on the
overdue interest and principal (including premium) at the highest
rate borne by any Outstanding Bonds, such payments, respectively,
to be made ratably to the persons or parties entitled thereto,
without discrimination or preference.
Second: to the payment of the fees, counsel fees, and advances and
expenses of the Trustee and of the receiver, if any, and all costs
and disbursements allowed by the court if there be any court
action, and all other Trustee expenses accrued hereunder.
Third: to the payment of the Issuer's counsel fees and other
expenses, if any.
Fourth: to the payment of the surplus, if any, to whomever is
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
(ii) If the principal of all the Outstanding Bonds shall have
become due or shall have been declared due and payable, all such
moneys shall be applied first to the payment of any amounts owed to
the Trustee; and second to the payment of the principal, premium,
if any, and interest then due on such Bonds, without preference or
priority of principal and premium over interest or of interest over
principal and premium, or of any installment or interest over any
other installment of interest, or of any Bond over any other Bond,
ratably, according to the amounts due respectively for principal,
premium, if any, and interest, to the persons entitled thereto,
without any discrimination or privilege.
(iii) If the principal of all the Outstanding Bonds shall have
been declared due and payable by acceleration, and if such
declaration shall thereafter have been rescinded and annulled under
the provisions of this Article VI, then the moneys shall be applied
in accordance with the provisions of subsection (i) above;
provided, however, that in the event that the principal of all the
Bonds shall later become due or be declared due and payable by
acceleration, the moneys shall be applied in accordance with the
provisions of subsection (ii) of this Section 6.07.
Whenever the Trustee shall apply such funds it
shall fix the date of application, which shall be an Interest
Payment Date unless it shall deem another date more suitable. The
Trustee shall give such notice of the deposit with it of any such
moneys and of the fixing of any such date.
Section 6.08. Remedies Vested in Trustee. All rights of action
(including the right to file proofs of claim) under this Indenture
and the Bonds may be enforced by the Trustee without the possession
of any Bond or the production thereof in any trial or proceedings
related 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 plaintiff or defendant the Owner of any
Bond.
Section 6.09. Rights and Remedies of Bond Owners. No Owner 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:
(i) an Event of Default has occurred of which the Trustee has been
notified as provided in Section 7.01(h) hereof, or of which by said
Section 7.01(h) the Trustee is deemed to have notice;
(ii) the Owners of not less than 25% in aggregate principal amount
of the Bonds then Outstanding shall have made written request to
the Trustee and shall have offered it reasonable opportunity either
to proceed to exercise the powers hereinabove granted or to
institute such action, suit or proceeding in the name or names of
such Owners, and shall have offered to the Trustee indemnity as
provided in Section 7.01(1) hereof; and
(iii) 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 within 60 days;
and such notification, request and offer of indemnity are hereby
declared in every 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. No one or more Owners of the
Bonds shall have any right in any manner whatsoever to affect,
disturb or prejudice the lien of this Indenture by such Owners'
action, and all proceedings at law or in equity shall be
instituted, had and maintained in the manner herein provided and
(except as herein otherwise provided) for the equal and ratable
benefit of the Owners of all Bonds then Outstanding. Nothing in
this Indenture, however, shall affect or impair the right of any
Owner to enforce the payment of the principal of, premium, if any,
and interest on any Bond owned by such Owner at and after the
maturity thereof, or the obligation of the Issuer to pay the
principal of, premium, if any, and interest on any Bond to the
owner thereof at the time and place, from the source, and in the
manner expressed in such Bond. Nothing contained herein shall be
construed as permitting or affording any Owner a right or cause of
action against the Trustee or in respect of the Bonds where a
default has been waived under Section 6.11 hereof or cured under
Section 6.12 hereof.
Section 6.10. 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 such proceedings
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 Issuer, the Trustee and the Owners shall be restored
to their former positions and rights hereunder, and all rights,
remedies and powers of the Trustee shall continue as if no such
proceedings had been taken.
Section 6.11. Waivers of Events of Default. The Trustee may
waive any default or Event of Default hereunder and its
consequences and shall do so upon the written request of the Owners
of a majority in aggregate principal amount of the Bonds then
Outstanding, provided, however, that the Trustee may not waive an
Event of Default described in subparagraphs (i), (ii) or (iii) of
Section 6.01 hereof without the written consent of the Owners of
all of the Bonds.
Section 6.12. Notice of Default; Opportunity to Cure Defaults.
(a) Anything herein to the contrary notwithstanding, no default
under Section 6.01(iv) hereof shall constitute an Event of Default
hereunder until actual notice of such default by registered or
certified mail shall be given to the Issuer and the Agent by the
Trustee or the Owners of not less than 25% in aggregate principal
amount of all Bonds Outstanding, and the Issuer and the Company
shall have had 90 days after receipt of such notice, at their
option, to correct said default or to cause said default to be
corrected, and shall not have corrected said default or caused said
default to be corrected within the applicable period; provided,
however, that if said default be such that it can be corrected, but
cannot be corrected within the applicable period, it shall not
constitute an Event of Default if corrective action is instituted
by the Issuer and the Company, or either of them, within the
applicable period and diligently pursued until the default is
corrected.
(b) Upon the occurrence of an Event of Default or upon the giving
of written notice to the Issuer and the Agent of a default, the
Trustee shall give notice thereof by first-class mail to the Owners
of all Bonds then Outstanding and, subject to Section 7.03 hereof,
to persons or entities which provide evidence acceptable to the
Trustee that such person or entity has legal or beneficial interest
in at least $1,000,000 in principal amount of Bonds.
(c) With regard to any default concerning which notice is given
under the provisions of this Section 6.12, the Issuer, to the full
extent permitted by law, hereby grants the Company full authority
to perform and observe for the account of the Issuer any covenants
or obligation alleged in said notice not to have been performed or
observed in the name and stead of the Issuer with full power to do
any and all things and acts to the same extent that the Issuer
could do and perform any such things and acts, with power of
substitution. The Trustee hereby consents to such grant of
authority.
Section 6.13. Payments under Municipal Bond Insurance Policy. So
long as the Municipal Bond Insurance Policy shall be in full force
and effect, the Issuer and the Trustee hereby agree to comply with
the following provisions:
(a) If the Trustee has notice that any owner of the Bonds has been
required to disgorge payments of principal or interest on the Bonds
to a trustee in bankruptcy or creditors or others pursuant to a
final judgment by a court of competent jurisdiction that such
payment constitutes a voidable preference to such owner of Bonds
within the meaning of any applicable bankruptcy laws, then the
Trustee shall notify Bond Insurer or its designee of such fact by
telephone, facsimile, telecopy or telegraphic notice, confirmed in
writing by registered or certified mail.
(b) the Trustee is hereby irrevocably designated, appointed,
directed and authorized to act as attorney-in-fact for owners of
the Bonds as follows:
(i) If and to the extent there is a deficiency in amounts
required to pay interest on the Bonds, the Trustee shall (A)
execute and deliver to State Street Bank and Trust Company, N.A.,
or its successors under the Municipal Bond Insurance Policy (the
"Insurance Paying Agent"), in form satisfactory to the Insurance
Paying Agent, an instrument appointing Bond Insurer as agent for
such owners in any legal proceeding related to the payment of such
interest and an assignment to Bond Insurer of the claims for
interest to which such deficiency relates and which are paid by
Bond Insurer, (B) receive as designee of the respective owners (and
not as Trustee) in accordance with the tenor of the Municipal Bond
Insurance Policy payment from the Insurance Paying Agent with
respect to the claims for interest so assigned, and (C) disburse
the same to such respective owners; and
(ii) If and to the extent of a deficiency in amounts required to
pay principal of the Bonds, the Trustee shall (A) execute and
deliver to the Insurance Paying Agent in form satisfactory to the
Insurance Paying Agent an instrument appointing Bond Insurer as
agent for such owner in any legal proceeding relating to the
payment of such principal and an assignment to Bond Insurer of any
of the Bonds surrendered to the Insurance Paying Agent of so much
of the principal amount thereof as has not previously been paid or
for which moneys are not held by the Trustee and available for such
payment (but such assignment shall be delivered only if payment
from the Insurance Paying Agent is received), (B) receive as
designee of the respective owners (and not as the Trustee) in
accordance with the tenor of the Municipal Bond Insurance Policy
payment therefor from the Insurance Paying Agent, and (C) disburse
the same to such owners.
(c) Payments with respect to claims for interest on and
principal of Bonds disbursed by the Trustee from proceeds of the
Municipal Bond Insurance Policy shall not be considered to
discharge the obligation of the Issuer or the Company with respect
to such Bonds, and Bond Insurer shall become the owner of such
unpaid Bonds and claims for the interest in accordance with the
tenor of the assignment made to it under the provisions of this
subsection or otherwise.
(d) Irrespective of whether any such assignment is executed and
delivered, Issuer and the Trustee hereby agree for the benefit of
Bond Insurer that:
(i) To the extent Bond Insurer makes payments, directly or
indirectly (as by paying through the Trustee), on account of
principal of or interest on the Bonds, Bond Insurer will be
subrogated to the rights of such owners to receive the amount of
such principal and interest from the Issuer, with interest thereon
as provided and solely from the sources stated in this Indenture
and the Bonds; and
(ii) They will accordingly pay Bond Insurer the amounts of such
principal and interest (including principal and interest recovered
under subparagraph (ii) of the first paragraph of the Municipal
Bond Insurance Policy, which principal and interest shall be deemed
past due and not have been paid), with interest thereon as provided
in this Indenture and the Bonds, but only from the sources and in
the manner provided herein for the payment of principal of and
interest on the Bonds to owners, and will otherwise treat Bond
Insurer as the owner of such rights to the amount of such principal
and interest.
ARTICLE VII
THE TRUSTEE
Section 7.01. Acceptance of Trust. The Trustee hereby accepts
the trusts imposed upon it by this Indenture, and agrees to perform
said trusts, but only upon and subject to the following express
terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default
and after the curing or waiver of all Events of Default which may
have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee. Subject to the limitation on the liability of
the Trustee contained in Section 7.01(g), in case an Event of
Default has occurred of which the Trustee is deemed hereunder to
have knowledge (which has not been cured or waived), the Trustee
shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) The Trustee may execute any of the trusts or powers hereof and
perform any of its duties by or through attorneys, agents,
receivers or employees, but shall not be answerable for the conduct
of the same if chosen with due care. The Trustee shall be entitled
to advice of counsel of its selection concerning all matters of
trust hereof and the duties hereunder, and in all cases may pay
such reasonable compensation and expenses to all such attorneys,
agents, receivers and employees as may reasonably be employed in
connection with the trust hereof. The Trustee may act upon the
opinion or advice of any attorneys approved by the Trustee in the
exercise of reasonable care. The Trustee shall not be responsible
for any loss or damage resulting from any action or non-action
exercised in good faith in reliance upon such opinion or advice.
(c) The Trustee shall not be responsible for any recital herein or
in the Bonds (other than the certificate of authentication
thereon), the legality, sufficiency or validity of this Indenture,
the Agreement, the Bonds or any document or instrument relating
thereto; the recording or filing of any instrument required by this
Indenture to secure the Bonds; insuring the Project or collecting
any insurance proceeds; the validity of the execution by the Issuer
of this Indenture or of any supplement hereto or of any instrument
of further assurance; or the validity, priority, perfection or
sufficiency of the security for the Bonds issued hereunder or
intended to be secured hereby, or otherwise as to the maintenance
of the security hereof, except for the filing of Uniform Commercial
Code continuation statements as directed in writing by and at the
expense of, the Company pursuant to Section 3.05 hereof.
(d) The Trustee shall not be accountable for the use of any Bonds
authenticated or delivered hereunder or for the use or application
by the Company of any moneys disbursed by the Trustee in accordance
with the provisions hereof. To the extent permitted by law, the
Trustee may in good faith buy, sell, own and hold any of the Bonds
and may join in any action which any Bond Owner may be entitled to
take with like effect as if the Trustee were not a party to this
Indenture. The Trustee may also engage in or be interested in
financial or other transactions with the Issuer or the Company;
provided, however, that if the Trustee determines that any such
relationship is in conflict with its duties under this Indenture,
it shall eliminate the conflict or resign as Trustee. To the
extent permitted by law, the Trustee may also purchase Bonds with
like effect as if it were not the Trustee.
(e) The Trustee shall be protected in acting upon, and may
conclusively rely upon, any notice, request or other paper or
document reasonably believed to be genuine and correct, and
reasonably believed 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, authority or consent of any person
who at the time of making such request or giving such authority or
consent is the Owner of any Bond, shall be conclusive and binding
upon all future Owners of the same Bond and any Bond issued in
replacement therefor.
(f) As to the existence or nonexistence 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 signed by a
duly authorized representative of the Issuer or the Company as
sufficient evidence of the facts therein contained; and prior to
the occurrence of a default of which the Trustee has been notified
as provided in subsection (h) of this Section 7.01, or of which by
said subsection (h) it is deemed to have notice, shall also be at
liberty to accept a similar certificate to the effect that any
particular dealing, transaction or action is necessary or
expedient. The Trustee may at its discretion secure such further
evidence deemed necessary or advisable, but shall in no case be
bound to secure the same. The Trustee may accept a certificate of
an Authorized Issuer Representative to the effect that a resolution
in the form therein set forth has been adopted, and is in full
force and effect.
(g) The right of the Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty. The
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of its powers and duties
under this Indenture.
(h) The Trustee shall not be required to take notice or be deemed
to have notice of any default or Event of Default hereunder, or in
any other document or instrument executed in connection with the
execution and delivery of the Bonds, except an Event of Default
under Section 6.01(i), (ii) or (iii) hereof or Section 6.01(a),
(b), or (c) of the Agreement, unless the Trustee shall be
specifically notified in writing of such default or Event of
Default by the Issuer, the Company or the Owners of at least 25% in
aggregate principal amount of the Bonds then Outstanding. All
notices or other instruments required by this Indenture to be
delivered to the Trustee shall be delivered at the principal
corporate trust office of the Trustee, and, in the absence of such
notice so delivered, the Trustee may conclusively assume there is
no default except as aforesaid.
(i) At any and all reasonable times, the Trustee and its duly
authorized agents, attorneys, experts, engineers, accountants and
representatives shall have the right to inspect fully all books,
papers and records of the Issuer pertaining to the Agreement and
the Bonds, and to take such photocopies and memoranda therefrom and
in regard thereto as may be desired.
(j) The Trustee shall not be required to give any bond or surety
in respect of the execution of the trust created hereby or the
powers granted hereunder.
(k) Notwithstanding anything contained elsewhere in this
Indenture, the Trustee shall have the right, but not the
obligation, to demand, in respect of the withdrawal of any amount,
the release of any property, or the taking of any action whatsoever
within the purview of this Indenture, any showing, certificate,
opinion, appraisal or other information, or corporate action or
evidence thereof, in addition to that required by the terms hereof
as a condition of such action by the Trustee, as deemed desirable
for the purposes of establishing the right of the Issuer or the
Company to the withdrawal of any amount, the release of any
property or the taking of any other action by the Trustee.
(l) Before taking any action referred to in Article VI or Section
7.04 hereof (except with respect to making payment on the Bonds
when due, acceleration of the Bonds and payment of the Bonds upon
such acceleration), the Trustee may require that a satisfactory
indemnity bond be furnished for the reimbursement of all expenses
which it may incur and to protect it against all liability, except
liability which is adjudicated to have resulted from its negligence
or willful misconduct, by reason of any action so taken.
(m) All moneys received by the Trustee shall, until used, applied
or invested as herein provided, be held in trust for the purposes
for which they were received but need not be segregated from other
funds, except to the extent required by law or this Indenture. The
Trustee shall be under no liability for interest on any moneys
received hereunder.
(n) Notwithstanding the effective date of this Indenture or
anything to the contrary in this Indenture, the Trustee shall have
no liability or responsibility for any act or event relating to
this Indenture which occurs prior to the date the Trustee formally
executes this Indenture and commences acting as Trustee hereunder.
(o) Upon the execution of this Indenture, the Trustee shall not be
liable for any action taken, suffered, or omitted to be taken by it
in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture.
(p) No provision of this Indenture shall be deemed to require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of its rights or powers, if the
Trustee shall have reasonable grounds for believing that repayment
of such funds or, in the alternative, adequate indemnity against
such risk or liability is not reasonably assured to it.
(q) The Trustee has no obligation or liability to the Bondholders
for the payment of interest or premium, if any, on or principal of
the Bonds, but rather the Trustee's sole obligations are to
administer, for the benefit of the Company and the Bondholders, the
various Funds and Accounts established hereunder.
(r) In the event the Trustee shall receive inconsistent or
conflicting requests and indemnity from two or more groups of
Bondholders, each representing less than a majority of the
aggregate principal amount of the Bonds then Outstanding, the
Trustee shall not be required to take any action hereunder.
(s) Except for information provided by the Trustee concerning the
Trustee, the Trustee shall have no responsibility with respect to
any information in any Official Statement or other disclosure
material distributed with respect to the Bonds. The Trustee shall
have no responsibility for compliance with securities laws in
connection with issuance of the Bonds.
(t) The Trustee's immunities and protections from liability, and
its right to payment of compensation and indemnification in
connection with performance of its duties and obligations under the
Indenture and the Agreement, shall survive the Trustee's
resignation or removal, or the final payment of the Bonds.
(u) In acting or omitting to act pursuant to the provisions of the
Agreement, the Trustee shall be entitled to all of the rights,
protections and immunities accorded to the Trustee under the terms
of this Indenture, including but not limited to those set out in
this Article VII.
Section 7.02. Fees, Charges and Expenses of Trustee.
(a) The Issuer has agreed with the Company in the Agreement that,
as part of the Installment Payments the Company shall pay to the
Trustee its charges for performing the duties of Trustee, Bond
Registrar, and Paying Agent for the Bonds. It is agreed by the
Trustee that the Company may, without causing or creating a
default or Event of Default hereunder, contest in good faith (and
withhold payment of the contested amount until such contest is
resolved) the reasonableness of any of the foregoing charges for
service. All payments due the Trustee for such charges, fees, or
expenses shall be paid by the Company upon prompt presentation of
an invoice therefor and no such charges, fees, or expenses shall be
charged against or be payable by the Issuer. Until the Trustee is
paid in full pursuant to its final notice, the rights of the
Trustee under this Section 7.02 shall survive the payment in full
of the Bonds and the discharge of this Indenture.
(b) In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action
taken or omitted by it as a Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable
attorney's fees and expenses, against any party litigant in the
suit, having due regard to the merits and good faith of the claims
or defenses made by the party litigant. This Section does not
apply to a suit by the Trustee or the Issuer, a suit by an Owner
pursuant to enforcement of the payment of the principal of or
interest hereunder or a suit by Owners of more than 10% in
principal amount of the then Outstanding Bonds.
Section 7.03. Trustee to Provide Additional Notices.
(a) Upon written request of any Owner of Bonds in an aggregate
principal amount of at least $1,000,000 (or any person or entity
which provides written evidence acceptable to the Trustee that such
person or entity has a legal or beneficial interest in Bonds in an
aggregate principal amount of at least $1,000,000), the Trustee
shall give an additional copy of any notice to be given by the
Trustee under this Indenture by first-class mail to a second
address specified by such Bond Owner, person or entity. Any such
additional notices shall be given simultaneously with the original
notices.
(b) Upon written request of any person or entity which provides
evidence acceptable to the Trustee that such person or entity has
a legal or beneficial interest in at least $1,000,000 in principal
amount of the Bonds, the Trustee shall for the calendar year in
which such request is received provide one or more of the following
as requested to such person or entity: (i) notices of redemption
pursuant to Section 2.06; (ii) notices of default pursuant to
Section 6.12(b); (iii) copies of all notices to which such person
or entity is entitled under the Indenture to a specific second
address pursuant to Section 7.03(a); and (iv) outstanding balances
by maturity, redemption history, including redemption date, amount
and sources of funds, and distribution of the call to maturity.
Section 7.04. Intervention by Trustee. In any judicial
proceeding to which the Issuer or the Company is a party, and which
in the opinion of the Trustee and its counsel has a substantial
bearing on the interests of Owners of the Outstanding Bonds, the
Trustee may intervene on behalf of the Owners of the Bonds and
shall do so if requested in writing by the Owners of at least 25%
in aggregate principal amount of the Bonds then Outstanding, and
when provided with sufficient indemnity pursuant to Section 7.01(1)
hereof.
Section 7.05. Successor Trustee by Merger. Subject to Section
7.11 hereof, any corporation or association into which the Trustee
may be converted or merged, 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 corporation or
association resulting from any such conversion, sale, merger,
consolidation or transfer to which it is a party, ipso facto, shall
(if it is qualified to be Trustee hereunder) be and become the
Trustee hereunder and vested with all of the title to the Trust
Estate and all the trusts, powers, discretions, immunities,
privileges, responsibilities, obligations 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.
Section 7.06. Resignation by Trustee. The Trustee may resign
from the trusts hereby created by giving written notice to the
Issuer, the Agent and the Owners of the Bonds then Outstanding, and
shall so resign whenever it ceases to be qualified to act as
Trustee hereunder. Such notice may be sent by first class mail,
postage prepaid, to the Owners of the Bonds, and by certified mail,
postage prepaid, to the Issuer and the Agent. Such resignation
shall take effect only upon the appointment of a successor Trustee.
If no successor Trustee is appointed pursuant to Section 7.08
hereof within 30 days after the delivery of such notice, a
temporary Trustee may be appointed by the Issuer, pursuant to
Section 7.08 hereof. If no successor Trustee or temporary Trustee
is appointed within 45 days after delivery of such notice, the
resigning Trustee may petition any court of competent jurisdiction
for the appointment of a successor Trustee.
Section 7.07. Removal of Trustee. The Trustee may be removed at
any time by an instrument or substantially concurrent instruments
in writing delivered to the Trustee and the Bond Owners and signed
by the Issuer and the Agent. Such removal shall take effect only
upon the appointment of a successor Trustee.
Section 7.08. Appointment of Successor Trustee. In case the
Trustee shall resign, be removed, be dissolved, be in the course of
dissolution or liquidation or otherwise become incapable of acting
or not qualified to act hereunder, or in case the Trustee shall be
taken under the control of any public officer or officers or a
receiver appointed by a court, a successor may be appointed by the
Issuer with the consent of the Agent.
Section 7.09. Successor Trustee by Appointment. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver
to its predecessor, the Agent and the Issuer an instrument in
writing accepting such appointment hereunder, and thereupon such
successor, without any further act, deed or conveyance, shall
become fully vested with the title to the Trust Estate and all of
the trust powers, discretions, immunities, privileges,
responsibilities, obligations and all other matters of its
predecessor; but such predecessor shall, nevertheless, on the
written request of the Issuer, or of its successor Trustee, execute
and deliver an instrument transferring to such successor Trustee
all the estates, properties, rights, powers and trusts of such
predecessor hereunder; and every predecessor Trustee shall deliver
all securities and moneys held by it hereunder to its successor.
Should any instrument in writing from the Issuer 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, any and all such
instruments in writing shall, on request, be executed, acknowledged
and delivered by the Issuer. The resignation of any Trustee and
the instrument or instruments removing any Trustee and appointing
a successor hereunder, together with all other instruments provided
for in this Article VII, shall be filed and/or recorded by the
successor Trustee in each recording office where this Indenture
shall have been filed and/or recorded. No appointment of a
successor Trustee hereunder shall become effective unless such
successor meets the qualifications set forth in Section 7.11.
Section 7.10. Appointment of Separate Trustee or Co-Trustee. It
is the intent of the parties to this Indenture that there shall be
no violations of any law of any jurisdiction (including
particularly the laws of the State) denying or restricting the
rights of banking corporations or associations to transact business
as a trustee in such jurisdiction. It is recognized that in case
of litigation under this Indenture, and in particular in the case
of enforcement of this Indenture on default, or in case the Trustee
deems that by reason of any present or future law of any
jurisdiction it may not exercise any of the powers, rights or
remedies herein granted to the Trustee, or hold title to the
properties, in trust, as herein granted, or take any other action
which may be desirable or necessary in connection therewith, it may
be necessary that, subject to the qualifications set forth in
Section 7.11 hereof, the Trustee appoint an additional institution
as a separate trustee or co-trustee. The following provisions of
this Section 7.10 are adapted to these ends.
If the Trustee appoints an additional institution
as a separate trustee or co-trustee, each and every remedy, power,
right, claim, demand, cause of action, immunity, estate, duty,
obligation, title, interest and lien expressed or intended by this
Indenture to be exercised by, vested in or conveyed by the Trustee
with respect thereto shall be exercisable by, vested in and
conveyed to such separate trustee or co-trustee, but only to the
extent necessary to enable such separate trustee or co-trustee to
exercise such powers, rights and remedies, and every covenant and
obligation necessary for the exercise thereby by such separate
trustee or co-trustee shall run to and be enforceable by either of
them.
Should any instrument in writing from the Issuer be
required by the separate trustee or co-trustee so appointed by the
Trustee for more fully vesting in and confirming to them such
properties, rights, powers, trusts, duties and obligations, any and
all such instruments in writing shall, on request, be executed,
acknowledged and delivered by the Issuer. If any separate trustee
or co-trustee, or a successor to either, shall die, become
incapable of acting or not qualified to act, resign or be removed,
all the estates, properties, rights, powers, trusts, duties and
obligations of such separate trustee or co-trustee, so far as
permitted by law, shall vest in and be exercised by the Trustee
until the appointment of a successor to such separate trustee or
co-trustee.
The appointment of any separate trustee or
co-trustee shall be subject to written approval of the Agent so
long as no Event of Default has occurred and is continuing under
this Indenture.
Section 7.11. Qualifications. (a) Each successor to the Trustee
pursuant to Sections 7.05 and 7.09 hereof and each separate trustee
or co-trustee (if any) pursuant to Section 7.10 shall at all times
be a bank or trust company which (i) is organized as a corporation
or banking association and doing business under the laws of the
United States or any state thereof, (ii) is authorized under such
laws to exercise corporate trust powers and to perform all the
duties imposed upon it by this Indenture and the Agreement, (iii)
is subject to supervision or examination by federal or state
authority, (iv) has combined capital and surplus (as set forth in
its most recent published report of condition) of at least
$50,000,000, (v) shall not have become incapable of acting or have
been adjudged a bankrupt or an insolvent nor have had a receiver
appointed for itself or for any of its property, nor have had a
public officer take charge or control of it or its property or
affairs for the purpose of rehabilitation, conservation or
liquidation and (vi) must be an institution rated at least "Baa3"
by Moody's (or Moody's shall have provided written evidence that
such successor Trustee is otherwise acceptable to Moody's) if the
Bonds are then rated by Moody's, and at least "BBB-" or "A-3" by
S&P (or S&P shall have provided written evidence that such
successor Trustee is otherwise acceptable to S&P) if the Bonds are
then rated by S&P.
(b) Should the Trustee or any separate trustee or co-trustee at
any time cease to be eligible, pursuant to this Section 7.11, to
act as Trustee or co-trustee (as the case may be), it shall
promptly notify the Owners of all Outstanding Bonds, the Issuer and
the Agent of such fact. Any such notice shall set forth all the
relevant facts known to the Trustee.
Section 7.12. Paying Agent. All provisions of this Article VII
shall apply with equal force and effect to the Paying Agent named
hereunder, and, to the extent applicable, the Paying Agent shall
comply with the provisions of this Article VII.
ARTICLE VIII
THE REMARKETING AGENT
Section 8.01. The Remarketing Agent. At the direction of the
Company, Morgan Stanley & Co. Incorporated is hereby appointed by
the Issuer as Remarketing Agent for the Bonds. The Remarketing
Agent shall act as remarketing agent as provided in this Indenture,
and, in accordance with the agreement between the Remarketing Agent
and the Company shall remarket Bonds required to be purchased
pursuant to Sections 2.10 and 2.11 hereof. The Issuer shall, at
the direction of the Agent, appoint any successor Remarketing Agent
for the Bonds, subject to the conditions set forth in Section 8.02
hereof. The Remarketing Agent shall designate its principal office
to the Trustee and signify its acceptance of the duties and
obligations imposed upon it hereunder by a written instrument of
acceptance delivered to the Issuer and the Trustee under which the
Remarketing Agent will agree, particularly, to:
(a) determine the Flexible Rates, Daily Rates, Weekly Rates,
Monthly Rates, Quarterly Rates, Semiannual Rates, Multiannual Rates
and Fixed Rates and give notice of such rates in accordance with
Section 2.02 and the form of Bond set forth in Section 2.03 hereof;
(b) keep such books and records with respect to its duties as
remarketing agent as shall be consistent with prudent industry
practice; and
(c) remarket Bonds in accordance with this Indenture and the
Remarketing Agreement.
Section 8.02. Qualifications of Remarketing Agent. The
Remarketing Agent shall be authorized by law to perform all the
duties imposed upon it by this Indenture. The Remarketing Agent
may resign and be discharged of the duties and obligations created
by this Indenture or may be removed, at the times and in the manner
set forth in the Remarketing Agreement. Any successor Remarketing
Agent shall be an institution rated at least "Baa3" by Moody's (or
Moody's shall have provided written evidence that such successor
Remarketing Agent is otherwise acceptable to Moody's) if the Bonds
are then rated by Moody's, and at least "BBB-" or "A-3" by S&P (or
S&P shall have provided written evidence that such successor
Remarketing Agent is otherwise acceptable to S&P) if the Bonds are
then rated by S&P, and authorized by law to perform all the duties
imposed upon it by this Indenture.
In the event of the resignation or removal of the
Remarketing Agent, the Remarketing Agent shall pay over, assign and
deliver any moneys and Bonds held by it in such capacity to its
successor or, if there is no successor, to the Trustee.
In the event that the Agent should fail to direct
the Issuer to appoint a Remarketing Agent hereunder, or in the
event that the Remarketing Agent shall resign or be removed, or be
dissolved, or if the property or affairs of the Remarketing Agent
shall be taken under the control of any state or federal court or
administrative body because of bankruptcy or insolvency or for any
other reason, and the Agent shall not have appointed its successor
as Remarketing Agent, the Trustee, notwithstanding the provisions
of the first paragraph of this Section 8.02 shall ipso facto be
deemed to be the Remarketing Agent for all purposes of this
Indenture until the appointment by the Agent of the Remarketing
Agent or successor Remarketing Agent, as the case may be; provided,
however, that the Trustee, in its capacity as Remarketing Agent,
shall not be required to sell Bonds or determine the interest rates
on the Bonds or to perform the duties set forth in Sections 2.02
and 2.03 hereof.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Not Requiring Consent of
Bond Owners. Subject to the terms and provisions of Sections 9.03
and 9.04 of this Indenture, the Issuer and the Trustee may, but
shall not be obligated to, without the consent of, or notice to,
any of the Bond Owners, enter into an indenture or indentures
supplemental to this Indenture, for any one or more of the
following purposes: (i) to cure any ambiguity, formal defect or
omission in this Indenture or to make such other changes which
shall not have a material adverse effect upon the interests of the
Bond Owners; (ii) to grant to or confer upon the Trustee, for the
benefit of the Bond Owners, any additional rights, remedies, powers
or authorities, or any additional security, that may lawfully be
granted to or conferred upon the Owners or the Trustee; (iii) to
subject to this Indenture additional revenues, properties or
collateral; (iv) to modify, amend or supplement this Indenture, or
any indenture supplemental hereto, in such manner as to permit the
qualification hereof and thereof under the Trust Indenture Act of
1939, as amended, or any similar federal statute hereafter in
effect, or to permit the qualification of the Bonds for sale under
the securities laws of any of the states of the United States, and
if the Issuer so determines, to add to this Indenture or any
indenture supplemental hereto such other terms, conditions and
provisions as may be permitted by the Trust Indenture Act of 1939,
as amended, or any similar federal statute; (v) to add to the
covenants and agreements of the Issuer contained in this Indenture
other covenants and agreements thereafter to be observed for the
protection of the Owners or to surrender or limit any right, power
or authority herein reserved to or conferred upon the Issuer; (vi)
effective upon any Conversion Date to a new Mode, to make any
amendment affecting only the Bonds being converted, including
revision to Authorized Denominations; (vii) to add or modify
provisions relating to the partial conversion of Bonds to a new
Mode; (viii) to conform to the requirements of any Rating Agency,
(ix) to add provisions permitting a mandatory tender of Bonds in
lieu of redemption and (x) to add provisions permitting the
addition of a credit facility or a liquidity facility.
Section 9.02. Supplemental Indentures Requiring Consent of Bond
Owners. (a) Exclusive of supplemental indentures covered by
Section 9.01 hereof, this Indenture may be amended or supplemented
only as provided in this Section 9.02.
(b) Subject to the terms and provisions contained in Sections 9.03
and 9.04 of this Indenture, the Owners of a majority in aggregate
principal amount of the Bonds then Outstanding shall have the
right, from time to time, to approve the execution by the Issuer
and the Trustee of such indenture or indentures supplemental hereto
as shall be deemed necessary and desirable by the Issuer for the
purposes 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.
(c) Subject to the terms and provisions contained in Sections 9.03
and 9.04 of this Indenture, if any proposed amendment or supplement
affects only the Owners of Bonds in a particular Mode or Modes, the
Owners of a majority in aggregate principal amount of the Bonds
then Outstanding in such affected Mode or Modes shall have the
right, from time to time, to approve the execution by the Issuer
and the Trustee of such amendment or supplement.
(d) If at any time the Issuer shall request the Trustee to enter
into any such supplemental indenture for any of the purposes of
this Section, the Trustee shall, upon being satisfactorily
indemnified with respect to expenses, cause notice of the proposed
execution of such supplemental indenture to be mailed by first
class mail to each of the Bond Owners at the addresses of such Bond
Owners indicated on the Registration Books. 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 all Bond
Owners. If, within 90 days, or such longer period as shall be
prescribed by the Issuer, following the mailing of such notice, the
owners of the percentage required by this Section 9.02 or Section
9.03 hereof, as applicable, in aggregate principal amount of the
Bonds Outstanding (or, as provided in subsection (c) above, of the
Bonds Outstanding in a particular Mode or Modes) at the time of the
execution of such supplemental indenture shall have consented to
and approved the execution thereof as herein provided, no Owner 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 Issuer (subject to Section
9.04) from executing the same or from taking any action pursuant to
the provisions thereof. Upon the execution of any such
supplemental indenture as in this Section and Section 9.04
permitted and provided, this Indenture shall be and be deemed to be
modified and amended in accordance therewith.
(e) The Agent may, but shall not be obligated to, fix a record
date for the purpose of determining the Owners entitled to consent
to any indenture supplemental hereto. If a record date is fixed,
the Owners on such record date, or their duly designated proxies,
and only such Owners, shall be entitled to consent to such
supplemental indenture, whether or not such Owners remain Owners
after such record date; provided, that unless such consent shall
have become effective by virtue of the requisite percentage having
been obtained prior to the date which is 90 days after such record
date, any such consent previously given shall automatically and
without further action by any Owner be cancelled and of no further
effect.
Section 9.03. Limitation upon Amendments and Supplements.
Nothing contained in Sections 9.01 and 9.02 hereof shall permit, or
be construed as permitting, without the consent and approval of the
Owners of all of the Bonds then Outstanding and affected (i) an
extension of the maturity of the principal of, or the time for
payment of any redemption premium or interest on, any Bond or a
reduction in the principal amount of any Bond, or the rate of
interest or redemption premium thereon, or a reduction in the
amount of, or extension of the time of any payment required by, any
Bond; (ii) a privilege or priority of any Bond over any other Bond
(except as herein provided); (iii) a reduction in the aggregate
principal amount of the Bonds required for consent to such a
supplemental indenture; (iv) the deprivation of the owner of any
Bond then outstanding of the lien created by the Indenture; or (v)
the amendment of this Section 9.03. With respect to any amendment
or supplement to be entered into pursuant to Sections 9.01 or 9.02
hereof, the Trustee shall be entitled to receive a Favorable
Opinion.
Section 9.04. Consent of Agent Required. Anything herein to the
contrary notwithstanding, an amendment or supplemental indenture
under this Article IX shall not become effective unless and until
the Agent shall have consented in writing to the execution and
delivery thereof.
Section 9.05. Amendments to Agreement. The Agreement may be
amended by written agreement of the Issuer and the Company,
provided that no amendment may be made which would materially
adversely affect the rights of the Owners of any of the Outstanding
Bonds without the consent of the Owners of a majority in aggregate
principal amount of the Bonds then Outstanding of each Mode that
would be so affected; and no amendment may be made which would (i)
decrease the amounts payable under the Agreement; (ii) change the
date of payment or prepayment provisions under the Agreement; or
(iii) change the amendment provisions of the Agreement without the
consent of all of the Owners of the Bonds adversely affected
thereby, and provided further that the Agreement may be amended by
written agreement of the Issuer and the Company in order to make
conforming changes with respect to amendments made to this
Indenture pursuant to Section 9.01 hereof.
Section 9.06. Opinion of Counsel. In executing, or accepting any
additional trusts created by any supplemental indenture permitted
by this Article or the modification thereby of the trusts created
by this Indenture, the Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 9.07. Bond Insurer to be Deemed Bondowner; Rights of Bond
Insurer; Payments by Bond Insurer in Advance of Scheduled Maturity
Dates; Notices. (a) Notwithstanding any provision of this
Indenture to the contrary, Bond Insurer shall at all times be
deemed the exclusive owner of all Bonds for the purposes of all
approvals, consents, waivers, institution of any action, and the
direction of all remedies. No acceleration of the Bonds shall be
permitted, and no Event of Default relating to the Bonds shall be
waived, without Bond Insurer's consent. Subject to Section
7.01(l), Bond Insurer shall have the right to direct all remedies
pursuant to this Indenture.
(b) No amendment or supplement shall be made to
this Indenture or to the Agreement without the prior written
consent of Bond Insurer to such amendment or supplement. A copy of
such amendment or supplement shall be sent by the Trustee to
Standard & Poor's Corporation, 25 Broadway, 21st Floor, New York,
New York 10004.
(c) To the extent that Bond Insurer makes payment of the principal
of or interest on the Bonds, it shall become the owner of such
Bonds, appurtenant coupons or right to payment of such principal of
or interest on such Bonds and shall be fully subrogated to all of
the registered owners' rights to payment thereof. To evidence such
subrogation (i) in the case of subrogation as to claims for past
due interest, the Trustee shall note Bond Insurer's rights as
subrogee on the registration books of Issuer maintained by the
Trustee upon receipt of proof from Bond Insurer as to payment of
interest thereon to the registered owners of the Bonds, and (ii) in
the case of subrogation as to claims for past due principal, the
Trustee shall note Bond Insurer's rights as subrogee on the
registration books of the Issuer maintained by the Trustee upon
surrender of the Bonds by the registered owners thereof to the
Insurance Paying Agent.
(d) In the event that the principal of and/or interest on the
Bonds shall be paid by Bond Insurer pursuant to the terms of the
Municipal Bond Insurance Policy, (i) such Bonds shall continue to
be Outstanding under this Bond Indenture, (ii) the assignment and
pledge of the Trust Estate and all covenants, agreements and other
obligations of Issuer to the registered owners shall continue to
exist, and Bond Insurer shall be fully subrogated to all of the
rights of such registered owners in accordance with the terms and
conditions of subparagraph (c) above and the Municipal Bond
Insurance Policy, and (iii) the Company shall reimburse Bond
Insurer for the amounts paid by Bond Insurer under the policy.
Amounts paid to Bond Insurer as bond owner and subrogee shall, to
the extent of such payment, be credited against the amounts to be
paid to Bond Insurer pursuant to clause (iii).
(e) In the event that Bond Insurer shall make any payments of
principal of, and/or interest on, any of the Bonds pursuant to the
terms of the Municipal Bond Insurance Policy, and the Bonds are
accelerated, Bond Insurer may, at any time and at its sole option,
pay to the owners of the Bonds all or any portion of amounts due
under the Bonds prior to the stated maturity dates thereof.
(f) Bond Insurer shall be notified (i) in advance of the execution
of any supplemental indenture and of any amendment, change or
modifications of the Agreement in the event consent of the owners
of Bonds is not required, (ii) immediately upon the occurrence of
any Event of Default or of any event that with notice and/or with
the lapse of time could become an Event of Default, and (iii) of
any redemption of Bonds at the same time that the owners of the
Bonds to be redeemed are notified. In addition, all notices,
reports, certificates and opinions to be delivered to or by Bond
Trustee or to the owners of Bonds or available at the request of
the owners of the Bonds shall also be delivered to Bond Insurer or
made available at Bond Insurer's request, as the case may be.
(g) The Trustee shall also notify Bond Insurer immediately (a)
upon the resignation or removal of the Trustee or the appointment
of a successor Trustee and (b) upon receiving any notice from the
Company pursuant to Section 4.06 of the Agreement. Any notice
that is required to be given to the owners of the Bonds or to the
Trustee pursuant to this Indenture, any supplemental indenture and
the Agreement shall also be provided to Bond Insurer. All notices
required to be given to Bond Insurer under this Indenture shall be
in writing and shall be sent by registered or certified mail or by
overnight delivery, addressed to Manager, Surveillance Department,
MBIA Insurance Corporation, 113 King Street, Armonk, New York
10504.
(h) Notwithstanding the foregoing, the provisions of this Section
9.07 shall apply only so long as the Municipal Bond Insurance
Policy is in full force and effect.
ARTICLE X
MISCELLANEOUS
Section 10.01. Consents of Bond Owners. Any consent, request,
direction, approval, objection or other instrument required by this
Indenture to be signed and executed by a Bond Owner may be in any
number of concurrent writings of similar tenor, and may be signed
or executed by such Bond Owner in person or by his or her agent
appointed in writing. The fact and date of the execution by any
person of any such consent, request, direction, approval, objection
or other instrument, or of the writing appointing any such agent,
and of the ownership of a Bond, may be proved in any jurisdiction
by the certificate of any officer who by law has power to take
acknowledgment 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, and, if made in such
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.
Section 10.02. 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 is intended or shall be
construed to give to any person other than the parties hereto, the
Company and the Owners of the Bonds any legal or equitable right,
remedy or claim under or with respect to this Indenture or any
covenants, conditions and provisions herein contained. This
Indenture and all of the covenants, conditions and provisions
hereof are intended to be, and are, for the sole and exclusive
benefit of the parties hereto, the Company, the Bond Insurer and
the Owners of the Bonds as herein provided.
Section 10.03. Severability. If any provisions of this Indenture
shall be held or deemed to be, or shall in fact be, invalid,
inoperative or unenforceable, the same shall not affect any other
provision herein contained or render the same invalid, inoperative
or unenforceable to any extent whatever.
Section 10.04. Notices. Except as otherwise provided in this
Indenture, any notice, request or other communication under this
Indenture shall be given in writing and shall be deemed to have
been given by either party to the other party at the addresses
shown below upon any of the following dates:
(a) The date of notice by telefax, telecopy, or similar
telecommunications, which is confirmed promptly in writing;
(b) Three Business Days after the date of the mailing thereof, as
shown by the post office receipt if mailed to the other party
hereto by registered or certified mail;
(c) The date of the receipt thereof by such other party if not
given pursuant to (a) or (b) above.
The address for notice for each of the parties shall be as follows:
If to the Issuer:
Red River Authority of Texas
Hamilton Building
900 Eighth Street, Suite 520
Wichita Falls, Texas 76301
Attention: Executive Vice President and General
Manager
Telephone No.: (817) 723-0855
Telecopy No.: (817) 723-8531
If to the Trustee:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telephone No.: (212) 815-5733
Telecopy No.: (212) 815-7185
If to the Company or the Agent:
West Texas Utilities Company,
Public Service Company of Oklahoma and
Central Power and Light Company
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone No.: (214) 777-1205
Telecopy No.: (214) 777-1223
If to the Remarketing Agent:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Janet Salem
Telephone No.: (212) 296-7614
Telecopy No.: (212) 296-7513
A duplicate copy of each notice given hereunder by any party shall
be given to each of the Issuer, the Trustee and the Agent. Any
person or entity listed above may, by notice given hereunder,
designate any further or different addresses to which subsequent
notices, certificates or other communications shall be sent.
Section 10.05. Payments or Performance Due on Other Than Business
Days. If the last day for making any payment or taking any action,
including, without limitation, exercising any remedy, under this
Indenture falls on a day other than a Business Day, such payment
may be made, or such action may be taken, on the next succeeding
Business Day, and, if so made or taken, shall have the same effect
as if made or taken on the date required by this Indenture. The
amount of any payment due under this Indenture shall not be
affected because payment is made on a date other than the date
specified in this Indenture pursuant to this Section 10.05.
Section 10.06. Execution of 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 10.07. Applicable Law. THIS INDENTURE SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE;
PROVIDED, HOWEVER, THAT THE RIGHTS, DUTIES, IMMUNITIES AND
STANDARDS OF CARE RELATING TO THE TRUSTEE SHALL BE GOVERNED BY THE
LAW OF THE JURISDICTION IN WHICH ITS PRINCIPAL CORPORATE TRUST
OFFICE IS LOCATED.
Section 10.08. Disqualified Bonds. In determining whether the
Owners of the requisite aggregate principal amount of Bonds have
concurred with any demand, request, direction, consent or waiver
under this Indenture, Bonds which are owned or held by or for the
account of the Company or the Issuer, or by any person directly or
indirectly controlling or controlled by, or under direct or
indirect common control with, the Company or the Issuer, shall be
disregarded and deemed not to be Outstanding for purposes of any
such determination.
Section 10.09. No Personal Liability of Issuer or Trustee. No
covenant or agreement contained in the Bonds or in this Indenture,
shall be deemed to be the covenant or agreement of any officer,
director, agent or employee of the Issuer or the Trustee in such
person's individual capacity, and no such person of the Issuer or
the Trustee executing or authenticating the Bonds shall be liable
personally on the Bonds or subject to any personal liability or
accountability by reason of the issuance thereof.
Section 10.10. Notice of Change. The Trustee shall, upon written
instructions to do so by the Agent, give notice to Moody's (if the
Bonds are then rated by Moody's) at 99 Church Street, New York, NY
10007, and S&P (if the Bonds are then rated by S&P) at 25 Broadway,
New York, New York 10004, of any of the following events:
(i) a change in the Trustee or Paying Agent;
(ii) a change in the Remarketing Agent;
(iii) an amendment to the Indenture or the Agreement;
(iv) payment or provision therefor of all the Bonds;
(v) conversion to a Multiannual or Fixed Rate Mode; and
(vi) conversion from a Multiannual or Fixed Rate Mode to a
different Mode.
IN WITNESS WHEREOF, the Board of the Issuer has
caused these presents to be signed in its name and on its behalf by
its President and by its Secretary, and the Trustee, to evidence
its acceptance of the trusts hereby created, has caused these
presents to be signed in its name and on its behalf by its duly
authorized officer, all as of the day and year first above written.
RED RIVER AUTHORITY OF TEXAS
By:_________________________
President
(SEAL)
ATTEST:
______________________________________
Secretary
THE BANK OF NEW YORK, as Trustee
(SEAL) By:____________________________
Vice President
Indenture of Trust
by and between
Red River Authority of Texas
and
The Bank of New York,
as Trustee
Dated as of July 1, 1996
Red River Authority of Texas
Pollution Control Revenue Refunding Bonds
(West Texas Utilities Company, Public Service Company of Oklahoma
and Central Power and Light Company Oklaunion Project)
Series 1996
TABLE OF CONTENTS
Section Heading Page
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Granting Clauses . . . . . . . . . . . . . . . . . . . . . . . . .
Article I
Definitions and Interpretation
Section 1.01. Definitions . . . . . . . . . . . . . . . . . .
Section 1.02. Article and Section Headings. . . . . . . . . .
Section 1.03. Interpretation. . . . . . . . . . . . . . . . .
Section 1.04. Agent to Act for Company. . . . . . . . . . . .
Section 1.05. Obligations of WTU, PSO and CPL Several but not
Joint . . . . . . . . . . . . . . . . . . . . .
Article II
Authorization and Issuance of the Bonds
Section 2.01. Authorization of Bonds . . . . . . . . . . . . .
Section 2.02. Interest . . . . . . . . . . . . . . . . . . . .
Section 2.03. Form of Bond . . . . . . . . . . . . . . . . . .
Section 2.04. Execution; Limited Obligations . . . . . . . . .
Section 2.05. Conditions Precedent to Delivery of Bonds; . . .
Authentication
Section 2.06. Redemption of Bonds . . . . . . . . . . . . . .
Section 2.07. Notice of Redemption . . . . . . . . . . . . . .
Section 2.08. Redemption Payments; Effect of Call for
Redemption . . . . . . . . . . . . . . . . . . .
Section 2.09. Partial Redemption . . . . . . . . . . . . . . .
Section 2.10 Remarketing and Purchase . . . . . . . . . . . .
Section 2.11. Mandatory Tenders for Purchase . . . . . . . . .
Section 2.12. Special Conditions to Conversions from
Multiannual or Fixed Rate Mode . . . . . . . . .
Article III
General Provisions
Section 3.01. Authorization for Indenture; Indenture to
Constitute Contract. . . . . . . . . . . . . . .
Section 3.02. Payment of Principal, Premium, if any,
and Interest . . . . . . . . . . . . . . . . . .
Section 3.03. Performance of Covenants; Issuer Immunity. . . .
Section 3.04. Instruments of Further Assurance . . . . . . . .
Section 3.05. Recordation . . . . . . . . . . . . . . . . . .
Section 3.06. Registration of Bonds; Trustee Appointed
Bond Registrar; Persons Treated as Owners. . . .
Section 3.07. Book-Entry Only System . . . . . . . . . . . . .
Section 3.08. Successor Securities Depository; Transfers Outside
Book-Entry Only System . . . . . . . . . . . . .
Section 3.09. Payments to Cede & Co. . . . . . . . . . . . . .
Section 3.10. Cancellation . . . . . . . . . . . . . . . . . .
Section 3.11. Non-presentment of Bonds . . . . . . . . . . . .
Section 3.12. Rights under Agreement . . . . . . . . . . . . .
Section 3.13. Legal Existence of Issuer. . . . . . . . . . . .
Section 3.14. Diminution of, or Encumbrance on, Trust Estate .
Section 3.15. Books, Records and Accounts. . . . . . . . . . .
Section 3.16. Temporary Bonds. . . . . . . . . . . . . . . . .
Section 3.17. Mutilated, Lost, Stolen or Destroyed Bonds . . .
Section 3.18. Intentionally Omitted. . . . . . . . . . . . . .
Section 3.19. Arbitrage Covenants. . . . . . . . . . . . . . .
Article IV
Use of Proceeds; Revenues and Funds
Section 4.01. Application of Original Proceeds of Bonds. . . .
Section 4.02. Creation of Bond Fund. . . . . . . . . . . . . .
Section 4.03. Payments into Bond Fund and Use of Moneys
in Bond Fund . . . . . . . . . . . . . . . . . .
Section 4.04. Creation and Use of Bond Purchase Fund . . . . .
Section 4.05. Investment of Moneys . . . . . . . . . . . . . .
Section 4.06. Moneys to be Held in Trust . . . . . . . . . . .
Section 4.07. Repayment to Company from Indenture Funds. . . .
Section 4.08. Custody of Funds and Accounts. . . . . . . . . .
Section 4.09. Exemption from Federal Income Taxation . . . . .
Section 4.10. Covenants Regarding Rebate . . . . . . . . . . .
Article V
Discharge
Section 5.01. Discharge. . . . . . . . . . . . . . . . . . . .
Section 5.02. Special Conditions to Conversions from
Multiannual or Fixed Rate Mode . . . . . . . . .
Article VI
Events of Default and Remedies
Section 6.01. Events of Default. . . . . . . . . . . . . . . .
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . .
Section 6.03. Other Remedies; Rights of Bond Owners. . . . . .
Section 6.04. Right of Bond Owners to Direct Proceedings . . .
Section 6.05. Appointment of Receiver. . . . . . . . . . . . .
Section 6.06. Waiver of Certain Laws . . . . . . . . . . . . .
Section 6.07. Application of Moneys. . . . . . . . . . . . . .
Section 6.08. Remedies Vested in Trustee . . . . . . . . . . .
Section 6.09. Rights and Remedies of Bond Owners . . . . . . .
Section 6.10. Termination of Proceedings . . . . . . . . . . .
Section 6.11. Waivers of Events of Default . . . . . . . . . .
Section 6.12. Notice of Default; Opportunity to Cure Defaults.
Section 6.13. Payments Under Municipal Bond Insurance Policy .
Article VII
The Trustee
Section 7.01. Acceptance of Trust. . . . . . . . . . . . . . .
Section 7.02. Fees, Charges and Expenses of Trustee. . . . . .
Section 7.03. Trustee to Provide Additional Notices. . . . . .
Section 7.04. Intervention by Trustee. . . . . . . . . . . . .
Section 7.05. Successor Trustee by Merger. . . . . . . . . . .
Section 7.06. Resignation by Trustee . . . . . . . . . . . . .
Section 7.07. Removal of Trustee . . . . . . . . . . . . . . .
Section 7.08. Appointment of Successor Trustee . . . . . . . .
Section 7.09. Successor Trustee by Appointment . . . . . . . .
Section 7.10. Appointment of Separate Trustee or Co-Trustee. .
Section 7.11. Qualifications . . . . . . . . . . . . . . . . .
Section 7.12. Paying Agent . . . . . . . . . . . . . . . . . .
Article VIII
The Remarketing Agent
Section 8.01. The Remarketing Agent. . . . . . . . . . . . . .
Section 8.02. Qualifications of Remarketing Agent. . . . . . .
Article IX
Supplemental Indentures
Section 9.01. Supplemental Indentures Not Requiring Consent of
Bond Owners . . . . . . . . . . . . . . . . . . .
Section 9.02. Supplemental Indentures Requiring Consent of Bond
Owners. . . . . . . . . . . . . . . . . . . . . .
Section 9.03. Limitation upon Amendments and Supplements. . . .
Section 9.04. Consent of Agent Required . . . . . . . . . . . .
Section 9.05. Amendments to Agreement . . . . . . . . . . . . .
Section 9.06. Opinion of Counsel. . . . . . . . . . . . . . . .
Section 9.07. Bond Insurer to be Deemed Bondowner; Rights
of Bond Insurer; Payments by Bond Insurer in
Advance of Scheduled Maturity Dates;
Notices. . . . . . . . . . . . . . . . . . . . .
Article X
Miscellaneous
Section 10.01. Consents of Bond Owners . . . . . . . . . . . . .
Section 10.02. Limitation of Rights. . . . . . . . . . . . . . .
Section 10.03. Severability. . . . . . . . . . . . . . . . . . .
Section 10.04. Notices . . . . . . . . . . . . . . . . . . . . .
Section 10.05. Payments or Performance Due on Other Than
Business Days . . . . . . . . . . . . . . . . . .
Section 10.06. Execution of Counterparts . . . . . . . . . . . .
Section 10.07. Applicable Law. . . . . . . . . . . . . . . . . .
Section 10.08. Disqualified Bonds. . . . . . . . . . . . . . . .
Section 10.09. No Personal Liability of Issuer or Trustee. . . .
Section 10.10. Notice of Change . . . . . . . . . . . . . . . . .
Execution . . . . . . . . . . . . . . . . . . . . . . . . .
<PAGE>
EXHIBIT 3
BOND PURCHASE AGREEMENT
RED RIVER AUTHORITY OF TEXAS
$63,300,000
Pollution Control Revenue Refunding Bonds
(West Texas Utilities Company, Public Service Company of
Oklahoma and Central Power and Light Company Oklaunion Project)
Series 1996
BOND PURCHASE AGREEMENT (this "Purchase Agreement")
dated July __, 1996 between RED RIVER AUTHORITY OF TEXAS, a
governmental agency and body politic and corporate of the State of
Texas (the "Issuer") and MORGAN STANLEY & CO. INCORPORATED and
Citicorp Securities, Inc. (the "Underwriters").
1. Background
(a) Subject to the terms and conditions herein set forth, the
Underwriters hereby agree to purchase from the Issuer, and the
Issuer hereby agrees to sell and deliver to the Underwriters, the
Issuer's Pollution Control Revenue Refunding Bonds (West Texas
Utilities Company, Public Service Company of Oklahoma and Central
Power and Light Company Oklaunion Project) Series 1996 (the
"Refunding Bonds") in the principal amount of $63,300,000. The
Refunding Bonds shall be dated, shall mature and shall bear
interest from time to time at adjustable or fixed rates as set
forth in Section 2 hereof and shall otherwise have such terms and
provisions as set forth in the Refunding Bonds, the Official
Statement and the Indenture (as hereinafter defined).
(b) The Refunding Bonds will be issued pursuant to the resolution
adopted by the Board of Directors of the Issuer on July [17], 1996
(the "Resolution"), and under an Indenture of Trust dated as of
August 1, 1996 (the "Indenture") between the Issuer and The Bank of
New York, as trustee (the "Trustee"). The Refunding Bonds are to
be issued to provide funds for the redemption and cancellation of
all or a portion of the Issuer's 7-7/8% Adjustable Rate Pollution
Control Revenue Bonds (West Texas Utilities Company, Public Service
Company of Oklahoma and Central Power and Light Company Oklaunion
Project) Series 1984 (the "Old Bonds"). The proceeds of the Old
Bonds were used to acquire, construct and improve certain air and
water pollution control and solid waste disposal facilities (the
"Facilities") at the Oklaunion Electric Generating Plant (the
"Plant") located in Wilbarger County, Texas in which West Texas
Utilities Company, a Texas corporation ("WTU"), Public Service
Company of Oklahoma, an Oklahoma corporation ("PSO"), and Central
Power and Light Company, a Texas corporation ("CPL" and, together
with WTU and PSO, collectively the "Companies" and each
individually, a "Company") owns 54.7%, 15.6%, and 7.8% undivided
interests, respectively. In connection with the issuance of the
Refunding Bonds, the Issuer and the Companies and Central and South
West Corporation, as agent for the Companies, have entered into an
Installment Payment Agreement dated as of August 1, 1996 (the
"Installment Agreement"), which obligates the Companies severally,
but not jointly, to pay amounts designed to be sufficient to pay
the principal of, premium, if any, and interest on the Refunding
Bonds. The Issuer has assigned the right to receive such payments
from the Companies to the Trustee pursuant to the Indenture.
(c) Concurrently with the execution and delivery of this Purchase
Agreement, the Companies are delivering to the Issuer and the
Underwriters their Letter of Representation dated of even date
herewith in substantially the form of Appendix A hereto (the
"Letter of Representation") indicating their respective approvals
of the terms and provisions of this Purchase Agreement and
acknowledging that the Issuer will sell the Refunding Bonds to the
Underwriters and the Underwriters will purchase the Refunding Bonds
and make a public offering thereof in reliance upon the
representations, covenants and indemnities contained in the Letter
of Representation.
(d) The Facilities constitute solid waste disposal facilities or
air or water pollution control facilities for purposes of Section
103(b)(4)(E) or (F) of the Internal Revenue Code of 1954, as
amended. The Refunding Bonds will be obligations described in
Section 1313 of the Tax Reform Act of 1986 so that interest on the
Refunding Bonds will not be includible in gross income for federal
tax purposes (except as noted in the opinion of Bond Counsel
included as Appendix [D] to the Official Statement) and the
Underwriters may offer the Refunding Bonds for sale without
registration under the Securities Act of 1933, as amended (the
"Securities Act"), or qualification of the Indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Act").
(e) A Preliminary Official Statement dated _______, 1996,
including all Appendices thereto and all documents incorporated
therein by reference (the "Preliminary Official Statement"), has
been prepared for use in the offering of the Refunding Bonds, and
a final Official Statement dated as of the date hereof, including
all Appendices thereto and all documents incorporated therein by
reference (the "Final Official Statement"), has been delivered by
the Issuer to the Underwriters. The Final Official Statement, as
it may be amended or supplemented with the consent of the Issuer,
the Underwriters and the Company, is hereinafter referred to as the
"Official Statement."
(f) MBIA Insurance Corporation ("MBIA") has made a commitment to
issue a municipal bond insurance policy (the "Municipal Bond
Insurance Policy") relating to the Refunding Bonds effective as of
the date of issuance of the Refunding Bonds. The Municipal Bond
Insurance Policy will insure payment only as principal or interest
payments become due but are not paid.
2. Purchase, Sale and Closing. Subject to the terms and
conditions herein set forth, the Underwriters agree to jointly and
severally purchase from the Issuer, and the Issuer agrees to sell
to the Underwriters, Refunding Bonds in the principal amount set
forth opposite each Underwriters's name on Schedule I hereto at a
purchase price equal to ___% of the principal amount thereof, plus
accrued interest from July 1, 1996 through the day preceding the
Closing Date (as herein defined). The Refunding Bonds shall be
dated July 1, 1996, shall mature on ______, ____, and shall
initially bear interest at the rate of % per annum. Payment for
the Refunding Bonds shall be made in immediately available Federal
funds payable to the order of the Trustee for the account of the
Issuer. Closing (the "Closing") will be at the offices of Milbank,
Tweed, Hadley & McCloy, 1 Chase Manhattan Plaza, New York, New York
at 10:00 a.m., New York time, on ______, 1996 (the "Closing Date"),
or at such other date, time or place as may be agreed on by the
Issuer, the Companies and the Underwriters. Refunding Bonds will
be delivered to The Depository Trust Company ("DTC") at least 24
hours before Closing; the Refunding Bond will be registered in the
name of CEDE & Co., as nominee for DTC, in the denomination of
$63,300,000.
3. Issuer's Representations. The Issuer makes the following
representations and warranties, all of which shall survive Closing:
(a) The information under the caption "The Issuer" contained in
the Preliminary Official Statement and in the Final Official
Statement is, and, as such information may be amended or
supplemented as of the Closing Date will be, true and correct in
all material respects, and such information does not, and as it may
be amended or supplemented as of the Closing Date will not, include
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements under the caption
"The Issuer" in the Preliminary Official Statement and the Official
Statement, in the light of the circumstances under which they were
made, not misleading.
(b) The Issuer is a duly constituted and validly existing
governmental agency and body politic and corporate of the State of
Texas, with full legal right, power and authority under and
pursuant to Chapters 30 and 383, Texas Water Code (the "Enabling
Legislation"), to execute and deliver this Purchase Agreement, the
Installment Agreement and the Indenture, to sign and deliver the
Official Statement, to carry out and consummate the transactions
contemplated by each of the foregoing and all other agreements
relating thereto, and to issue, sell and deliver the Refunding
Bonds for the purpose of refunding all or any portion of
outstanding Old Bonds.
(c) The Issuer has full legal right, power and authority and has
taken all necessary action and has complied with all applicable
provisions of law required (i) to adopt the Resolution, (ii) to
execute and deliver this Purchase Agreement, the Installment
Agreement, the Refunding Bonds and the Indenture, (iii) to issue
and sell the Refunding Bonds to the Underwriters pursuant hereto
and to the Indenture and (iv) to carry out and consummate all other
transactions contemplated by each of such documents, and the Issuer
has complied with all applicable provisions of law in all matters
relating to such transactions.
(d) The Issuer has duly authorized (i) the delivery and due
performance of the Resolution and the execution, delivery and due
performance of this Purchase Agreement, the Installment Agreement,
the Refunding Bonds and the Indenture, including, without
limitation, the issuance and sale of the Refunding Bonds to the
Underwriters and (ii) the taking of any and all such action as may
be required on the part of the Issuer to carry out, give effect to
and consummate the transactions contemplated by each of the
foregoing. None of the proceedings or actions taken by the Issuer
with respect to any of the Refunding Bonds, the Indenture, the
Installment Agreement, the Preliminary Official Statement, the
Official Statement or this Purchase Agreement have been repealed,
rescinded or revoked. The Official Statement is deemed final by
the Issuer for purposes of Rule 15c2-12 ("Rule 15c2-12") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
(e) The Issuer has not been notified of any listing or proposed
listing by the Internal Revenue Service to the effect that the
Issuer is a bond issuer whose arbitrage certifications may not be
relied upon.
(f) The Resolution has been duly adopted by the Issuer, is in
full force and effect and constitutes the legal, valid and binding
act of the Issuer. This Purchase Agreement has been duly executed
and delivered by the Issuer and constitutes the legal, valid and
binding obligation of the Issuer enforceable against the Issuer in
accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting the enforcement of creditors' rights
generally and to the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding
in equity or at law). The Installment Agreement and the Indenture
each will be duly executed by the Issuer and, when delivered, each
will constitute the legal, valid and binding obligation of the
Issuer enforceable against the Issuer in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditors' rights generally and to the
effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law).
(g) When delivered to and paid for by the Underwriters at
Closing in accordance with the provisions of this Purchase
Agreement, the Refunding Bonds initially delivered will have been
duly approved by the Attorney General of the State of Texas and
registered by the Comptroller of Public Accounts of the State of
Texas, and the Refunding Bonds will be duly authorized, executed,
issued and delivered and will constitute legal, valid, binding and
enforceable limited obligations of the Issuer in accordance with
their terms and in conformity with the Enabling Legislation and
will be entitled to the benefit and security of the Installment
Agreement, the Resolution and the Indenture.
(h) No approval, permit, consent or authorization of any
governmental or public agency, authority or person not already
obtained (other than (i) the approval of the Attorney General of
the State of Texas with respect to the Refunding Bonds, which
approval and registration shall be obtained on or prior to the
Closing Date, and (ii) the registration of the Refunding Bonds by
the Comptroller of Public Accounts of the State of Texas and (iii)
any order or approval of any federal or state governmental agency
or authority necessary to authorize WTU's, PSO's and CPL's
respective obligations with respect to the Refunding Bonds, the
Letter of Representation, the Municipal Bond Insurance Policy and
the Installment Agreement, which approvals and orders are to be
obtained by the companies on or prior to the Closing Date, the
receipt of all of which are expressly made a condition to the
Issuer's, the Underwriters' and each of the Companies' respective
obligations to issue, purchase and sell the Refunding Bonds
hereunder and under the Letter of Representation; and other than
any approvals that might be required under the Blue Sky or
securities laws of any jurisdiction) is required in connection with
the issuance and sale of the Refunding Bonds, the adoption of the
Resolution or the execution and delivery by the Issuer of the
Refunding Bonds, the Installment Agreement, the Indenture or this
Purchase Agreement or the performance of its obligations under any
of such instruments.
(i) The adoption of the Resolution, the issuance and sale of the
Refunding Bonds, the acceptance of the Letter of Representation,
the execution and delivery by the Issuer of this Purchase
Agreement, the Installment Agreement, the Refunding Bonds and the
Indenture, the execution and delivery by the Issuer of the Official
Statement and compliance with the provisions hereof and thereof,
will not conflict with, violate or result in a breach of any
provision of, or constitute a default (or an event which with
notice or passage of time, or both, would constitute a default) on
the part of the Issuer under, any indenture, commitment, agreement
or other instrument to which the Issuer is a party or by which it
is bound, or under any provision of the Texas Constitution or any
existing law, rule, regulation, judgment, ordinance, order or
decree to which the Issuer (or any of its directors or officers in
their respective capacities as such) is subject, or result in the
creation or imposition of any lien, charge or other security
interest or encumbrance of any nature whatsoever upon any of the
property, assets or revenues of the Issuer, except as provided in
the Refunding Bonds and the Indenture.
(j) The Issuer is solvent and, since its creation, the Issuer
has not been in default in the payment of principal of, premium, if
any, or interest on, or otherwise been in default with respect to,
any of its bonds, notes or other securities or any legally
authorized obligation issued or guaranteed by it; and no bankruptcy
or insolvency proceedings have been taken by or against the Issuer.
(k) Payments under the Installment Agreement, the Indenture, the
Resolution and the Refunding Bonds, and the interest on the
Refunding Bonds, are not subject to taxation in the State of Texas.
No legislation, ordinance, rule or regulation has been enacted by,
or is currently pending before, any governmental body, department
or agency of the State of Texas, nor has any decision been rendered
by any court of competent jurisdiction of the State of Texas, which
would adversely affect the exemption from all taxation in the State
of Texas of (i) any payments under the Installment Agreement, the
Indenture, the Resolution or the Refunding Bonds and the interest
on the Refunding Bonds or (ii) all bonds and obligations of the
general character of the Refunding Bonds. There are no stamp,
documentary, transfer or like taxes in the State of Texas which
would be applicable to the original issuance or subsequent
transfers of the Refunding Bonds.
(l) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public
board, governmental agency or body or arbitrator, pending or, to
the best of the knowledge of the Issuer, threatened (nor to the
best of the knowledge of the Issuer is there any basis therefor),
which in any way questions the validity of the Enabling
Legislation, the powers of the Issuer referred to in paragraphs (b)
and (c) of this Section 3 above, or the validity of any proceedings
taken by the Issuer in connection with the issuance and sale of the
Refunding Bonds, or wherein an unfavorable decision, ruling or
finding might adversely affect the transactions contemplated hereby
or by the Installment Agreement, the Indenture or the Official
Statement or which, in any way, might adversely affect the validity
or enforceability of the Refunding Bonds, the Resolution, the
Installment Agreement, the Indenture or this Purchase Agreement (or
of any other instrument required or contemplated for use in
consummating the transactions contemplated thereby or hereby) or
the exclusion from gross income for federal income tax purposes of
interest on the Refunding Bonds.
4. Covenants and Agreements of the Issuer. The Issuer covenants
and agrees with the Underwriters that it will:
(a) Furnish or cause to be furnished to the Underwriters (i) on
the date of the execution of this Purchase Agreement, two copies of
the Final Official Statement and, on the date of any amendment or
supplement thereto, two copies of such amendment or supplement,
prepared in a manner consistent with (b) below and (ii) on or prior
to the Closing Date, two specimens of the form of Refunding Bond,
two certified copies of the Resolution and two executed copies of
the Indenture and of the Installment Agreement (which documents
shall be in the forms previously delivered to the Underwriters,
subject to such changes as the Underwriters shall approve); the
Issuer agrees that the Companies may at the Companies' expense
furnish to the Underwriters, without charge, as many copies of the
Official Statement and any amendment or supplement thereto as the
Underwriters may reasonably request.
(b) Before amending or supplementing the Official Statement,
furnish to the Underwriters two copies and to the Companies two
copies of each proposed amendment or supplement. No amendment or
supplement to the Official Statement will contain material
information with respect to the Issuer different from that
contained in the Final Official Statement which is reasonably
unsatisfactory to the Underwriters or the Companies.
(c) During such period as the Underwriters believe delivery of
the Official Statement is necessary or desirable in connection with
sales of the Refunding Bonds by the Underwriters or a dealer, if
any event shall occur as a result of which it may be necessary to
amend or supplement the Official Statement in order to make the
statements therein, in the light of the circumstances when the
Official Statement is delivered to a purchaser, not misleading,
immediately notify the Underwriters and the Companies of such event
and cooperate at the request of the Underwriters in the preparation
of amendments or supplements to the Official Statement which in the
judgment of the Underwriters are necessary so that the statements
with respect to the Issuer in the Official Statement as so amended
or supplemented will not, in light of the circumstances when the
Official Statement is delivered to a purchaser, be misleading.
(d) Cooperate in qualifying the Refunding Bonds for offer and
sale and in determining their eligibility for investment under the
laws of such jurisdictions as the Underwriters may reasonably
request, provided that the Issuer shall not be required to qualify
to do business or consent to general service of process in any
state or jurisdiction other than the State of Texas.
(e) Apply the proceeds from the issuance and sale of the
Refunding Bonds in the manner set forth in the Official Statement,
and not take any action which will adversely affect the exclusion
from gross income for federal income tax purposes of the interest
on the Refunding Bonds.
(f) Promptly make or cause to be made under the Uniform
Commercial Code of the State of Texas, or under any other
applicable law, at such times as may be required, all filings, if
any, required in order to establish, maintain, protect or preserve
the interest of the Trustee in the rights assigned to it under the
Resolution, the Installment Agreement and the Indenture.
(g) The Issuer will refrain from knowingly taking any action
with regard to which the Issuer may exercise control that would
result, or could reasonably be expected to result, in the loss of
the exclusion from gross income for federal income tax purposes of
the interest on the Refunding Bonds referred to under the caption
"Tax Matters" in the Official Statement.
5. Survival of Representations, Warranties and Agreements. The
respective covenants, agreements, representations, warranties and
other statements of each of the Issuer and the Underwriters, as set
forth in this Purchase Agreement or made by them pursuant to this
Purchase Agreement, shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Issuer
or any Underwriter or any officer, director or controlling person
thereof, and shall survive the termination of this Purchase
Agreement and the delivery of and payment for the Refunding Bonds.
6. Conditions of Underwriter's Obligations. The Underwriters'
obligation to purchase and pay for the Refunding Bonds at Closing
is subject to the performance by the Issuer of its obligations and
agreements to be performed hereunder and under the Installment
Agreement, the Resolution and the Indenture at or prior to Closing
and the performance by each of the Companies of the obligations to
be performed by each Company under the Letter of Representation and
the Installment Agreement at or prior to Closing and to the
fulfillment of the following conditions at or prior to Closing:
(a) Each of the Companies shall have executed and the Issuer
shall have accepted the Letter of Representation, and the
representations and warranties of the Issuer herein and of each of
the Companies in the Letter of Representation shall be true and
correct on and as of the Closing Date;
(b) Each of the Indenture and the Installment Agreement shall
have been duly authorized, executed and delivered by the respective
parties thereto and shall be in full force and effect, and each
shall not have been amended, modified or supplemented since the
date hereof except as may have been agreed to by the Underwriters;
(c) Neither the Issuer nor any of the Companies shall be in
default in the performance of any of its covenants and agreements
herein or in the Letter of Representation, respectively;
(d) Subsequent to the execution of this Purchase Agreement,
there shall not have been any downgrading of any rating by Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group of any
securities issued by any of the Companies or of any bonds issued by
the Issuer with respect to the Facilities or of the Refunding
Bonds;
(e) The Underwriters shall have received:
(i) The Final Official Statement, together with any amendments
or supplements thereto to the Closing Date;
(ii) Opinions of McCall, Parkhurst & Horton L.L.P., Bond Counsel
("Bond Counsel"), dated the Closing Date, substantially in the
forms attached hereto as Exhibit A-1 and Exhibit A-2;
(iii) An opinion, dated the Closing Date, of Gibson & Hotchkiss,
L.L.P. ("Issuer's Counsel"), counsel for the Issuer, substantially
in the form attached hereto as Exhibit B;
(iv) An opinion, dated the Closing Date, of Milbank, Tweed,
Hadley & McCloy, special counsel for the Companies, substantially
in the form attached hereto as Exhibit C;
(v) An opinion, dated the Closing Date, of Wagstaff, Alvis,
Stubbeman, Seamster & Longacre, L.L.P., special counsel for WTU,
substantially in the form attached hereto as Exhibit D;
(vi) An opinion, dated the Closing Date, of Doerner, Stuart,
Saunders, Daniel & Anderson, special counsel for PSO in the State
of Oklahoma, substantially in the form attached hereto as Exhibit
E;
(vii) An opinion, dated the Closing Date, of Wagstaff, Alvis,
Stubbeman, Seamster & Longacre, L.L.P., special counsel for PSO in
the State of Texas, substantially in the form attached hereto as
Exhibit F;
(viii) An opinion, dated the Closing Date, of Vinson & Elkins
L.L.P., special counsel for CPL, substantially in the form attached
hereto as Exhibit G;
(ix) An opinion, dated the Closing Date, of Sidley & Austin,
counsel for the Underwriters, substantially in the form attached
hereto as Exhibit H;
(x) Letters, dated the Closing Date, from Arthur Andersen LLP,
independent certified public accountants of each of the Companies,
in form and substance satisfactory to the Underwriters and their
counsel and covering the matters set forth in Exhibit I hereto;
(xi) A certificate, dated the Closing Date, signed by the President
of the Issuer or other appropriate official satisfactory to the
Underwriters, to the effect that each of the representations and
warranties of the Issuer set forth in this Purchase Agreement is
true and correct on and as of the Closing Date as if made on and as
of the Closing Date and that all agreements to be complied with and
obligations to be performed by the Issuer hereunder and under the
Installment Agreement, the Resolution and the Indenture on or prior
to the Closing Date or as contemplated hereby or thereby have been
complied with and performed;
(xii) Certificates, dated the Closing Date, signed by the
President or the Treasurer of each of the Companies to the effect
that, (A) the representations and warranties contained in the
Letter of Representation or in any certificate delivered by such
Company hereunder or thereunder are true and correct in all
material respects on and as of the Closing Date as if made on and
as of the Closing Date, (B) all agreements to be complied with and
obligations to be performed by such Company pursuant to the Letter
of Representation or as contemplated by the Letter of
Representation, the Resolution, the Installment Agreement or the
Indenture on or prior to the Closing Date have been complied with
and performed and (C) there has been no material adverse change in
such Company's financial condition or any adverse development
concerning its business or assets which would result in a material
adverse change in its prospective financial condition or results of
operations from that described in or contemplated by the Official
Statement or, if such change has occurred, full information with
respect thereto;
(xiii) A certificate, satisfactory in form and substance to the
Underwriters, of one or more duly authorized officers of the
Trustee, dated the Closing Date, as to the due authentication and
delivery of the Refunding Bonds by the Trustee under the Indenture;
(xiv) Arbitrage certifications, satisfactory in form to the
Underwriters and Underwriters' counsel, by each of the Companies
and the Issuer (which may be in the form of a single document);
(xv) Evidence, satisfactory to the Underwriters, of the ratings
on the Refunding Bonds;
(xvi) Such additional certificates (including appropriate no
litigation certificates), instruments or other documents as the
Underwriters or Underwriters' counsel may reasonably request to
evidence compliance with applicable law, the authority of the
Trustee to act under the Indenture, and the due performance and
satisfaction by each of the Companies at or prior to such date of
all agreements then to be performed and all conditions then to be
satisfied by it, in connection with this Purchase Agreement, the
Letter of Representation, the Installment Agreement, the Resolution
and the Indenture, and to evidence that the interest on the
Refunding Bonds is excludable from the gross income of the owners
thereof for federal income tax purposes under the statutes,
regulations, published rulings and court decisions on the Closing
Date, and the status of the offering under the Securities Act, the
Public Utility Holding Company Act of 1935, as amended (the "1935
Act"), the laws of the State of Oklahoma and the Trust Act;
(xvii) An opinion, dated the Closing Date, of a Vice President and
Assistant General Counsel of MBIA, substantially in the form
attached hereto as Exhibit J; and
(xviii) A copy of the Municipal Bond Insurance Policy, as issued by
MBIA and delivered to the Trustee, substantially in the form of
Exhibit [D] to the Official Statement, together with evidence
satisfactory to the Underwriters that all general and special
conditions to the effectiveness of the Municipal Bond Insurance
Policy have been satisfied.
(f) At Closing there shall not have been any material adverse
change in the financial condition of any of the Companies or any
adverse development concerning the business or assets of any of the
Companies which would result in a material adverse change in the
prospective financial condition or results of operations of any
Company from that described in the Official Statement which, in the
sole judgment of the Underwriters, makes it inadvisable to proceed
with the sale of the Refunding Bonds;
(g) The Securities and Exchange Commission (the "Commission")
shall have issued an order under the 1935 Act, authorizing WTU's,
PSO's and CPL's respective obligations with respect to the
Refunding Bonds, the Letter of Representation, the Installment
Agreement and the Municipal Bond Insurance Policy, which order
shall be in full force and effect; the Attorney General of the
State of Texas shall have examined the Refunding Bonds and the
records relating to their issuance, shall have certified as to
their validity and shall have approved the Refunding Bonds; the
Refunding Bonds shall have been registered by the Comptroller of
Public Accounts of the State of Texas; and the Oklahoma Corporation
Commission shall have issued an order authorizing PSO's obligations
with respect to the Refunding Bonds, the Letter of Representation
and the Installment Agreement which order shall in full force and
effect;
(h) All matters relating to this Purchase Agreement, the Official
Statement, the Refunding Bonds and the sale thereof, the
Installment Agreement, the Indenture, the Resolution, the Letter of
Representation, and the consummation of the transactions
contemplated hereby or thereby shall be satisfactory to and
approved by the Underwriters as of the Closing, which approval
shall not be unreasonably withheld. Any certificate signed by or
on behalf of the Issuer or any of the Companies and delivered at
the Closing shall be a representation and warranty by the Issuer or
such Company, as the case may be, to the Underwriters as to the
statements made therein;
(i) The Underwriters shall have received from the Companies
payment on the Closing Date by wire transfer of the Underwriters'
fees (___% of the principal amount of the Refunding Bonds) as set
forth in Section 7 of the Letter of Representation; and
(j) Subsequent to the dates as of which information is given in
the Official Statement, there shall not have been any change or
decrease specified in any of the letters required by subsection
(e)(x) which is, in the judgment of the Underwriters, so material
and adverse as to make it impractical or inadvisable to proceed
with the offering or delivery of the Refunding Bonds as
contemplated in the Official Statement.
7. Events Permitting the Underwriters to Terminate. The
Underwriters may terminate their obligations to purchase the
Refunding Bonds at any time before Closing if any of the following
occurs:
(a) A legislative, executive or regulatory action (including the
introduction or proposal for adoption of legislation, executive
orders or regulations) or a court decision which, in the sole
judgment of the Underwriters, casts sufficient doubt on the
legality of, or the tax-free status of interest on, obligations of
the general kind and character as the Refunding Bonds so as to
materially impair the marketability or materially lower the market
price thereof or would make it impractical to market the Refunding
Bonds on the terms and in the manner contemplated in the Official
Statement;
(b) Any action by the Commission, any other governmental agency,
or a court which, directly or indirectly, would require, in the
reasonable judgment of the Underwriters, (i) registration of the
Refunding Bonds under the Securities Act or (ii) qualification of
an indenture in respect of the Refunding Bonds under the Trust Act,
or any such action or legislative, executive or regulatory action
(including action by the Oklahoma Corporation Commission) with the
purpose or effect of otherwise prohibiting the issuance, offering
or sale of the Refunding Bonds as contemplated hereby or by the
Official Statement or of obligations of the general character of
the Refunding Bonds;
(c) (i) Any general suspension or material limitation on trading
in securities on the New York Stock Exchange or by the Commission
or by any federal or state agency or by the decision of any court,
any limitation on prices for such trading or any restrictions on
the distribution of securities, (ii) trading in any securities of
any of the Companies shall have been suspended by the Commission or
a national securities exchange, (iii) a general banking moratorium
on commercial banking activities in New York shall have been
declared either by federal or New York State authorities, (iv) the
rating assigned by any nationally recognized securities rating
agency to any securities of any of the Companies as of the date of
this Purchase Agreement shall have been lowered since that date or
(v) there shall have occurred any outbreak or material escalation
of hostilities or other calamity or crisis, the effect of which on
the financial markets of the United States is such as to make it,
in the judgment of the Underwriters, impracticable to market the
Refunding Bonds; or
(d) Any event or condition not expressly contemplated in the
Official Statement which, in the sole judgment of the Underwriters,
renders untrue or incorrect, in any material respect as of the
time to which the same purports to relate, the information,
including the financial statements, contained in the Official
Statement, including Appendices thereto and documents incorporated
therein by reference, or which requires that information not
reflected in such Official Statement should be reflected therein in
order to make the statements and information contained therein not
misleading in any material respect at such time, which, in either
event, in the sole judgment of the Underwriters, makes it
inadvisable to proceed with the sale of the Refunding Bonds;
provided, however, that the Underwriters shall not exercise the
termination right provided in this subparagraph (d) (i) until the
Underwriters shall have consulted with the Companies with respect
to the event or condition at issue and (ii) so long as the
Companies and the Underwriters shall reasonably believe that such
event or condition can be eliminated or cured prior to the Closing
Date.
8. Execution in Counterparts. This Purchase Agreement may be
executed in any number of counterparts, all of which taken together
shall constitute one and the same instrument, and any of the
parties hereto may execute this Purchase Agreement by signing any
such counterpart.
9. Notices and Other Actions. All notices, requests, demands and
formal actions hereunder will be in writing mailed, telecopied or
delivered to:
The Underwriters:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Tax-Exempt Finance Dept.
Telephone No. (212) 761-4000
Telecopy No. (212) 761-0446
Citicorp Securities, Inc.
399 Park Avenue
6th Floor
New York, New York 10043
Telephone No. (212) 559-5249
Telecopy No. (212) 793-6611
The Issuer:
Red River Authority of Texas
Hamilton Building
900 Eighth Street, Suite 520
Wichita Falls, Texas 76301
Attention: Executive Vice President
and General Manager
Telephone No. (817) 723-0855
Telecopy No. (817) 723-8531
WTU, PSO and/or CPL:
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone No. (214) 777-1205
Telecopy No. (214) 777-1223
10. GOVERNING LAW. THIS PURCHASE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
11. Successors. This Purchase Agreement shall inure to the
benefit of and be binding upon the parties and their respective
successors, and will not confer any rights upon any other person.
The term "successor" shall not include any holder of any Refunding
Bonds merely by virtue of such holding.
RED RIVER AUTHORITY OF TEXAS
By:
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED
CITICORP SECURITIES, INC.
By: MORGAN STANLEY & CO.
INCORPORATED
By:
Name:
Title:
SCHEDULE I
Underwriters Principal Amount
of Refunding Bonds
Morgan, Stanley & Co. Incorporated $
Citicorp Securities, Inc. $
___________
Total $63,300,000
<PAGE>
EXHIBIT 4
APPENDIX A
WEST TEXAS UTILITIES COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
CENTRAL POWER AND LIGHT COMPANY
LETTER OF REPRESENTATION
$63,300,000
Red River Authority of Texas
Pollution Control Revenue Refunding Bonds
(West Texas Utilities Company, Public Service Company of Oklahoma
and Central Power and Light Company Oklaunion Project)
Series 1996
July __, 1996
Red River Authority of Texas
Hamilton Building
900 Eighth Street
Suite 520
Wichita Falls, Texas 76301
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Citicorp Securities, Inc.
399 Park Avenue
6th Floor
New York, New York 10043
Ladies and Gentlemen:
1. Introduction and Background. Pursuant to a Bond Purchase
Agreement of even date herewith (the "Purchase Agreement")
between Red River Authority of Texas (the "Issuer") and Morgan
Stanley & Co. Incorporated and Citicorp Securities, Inc. (the
"Underwriters"), the Issuer has agreed to sell to the
Underwriters, and the Underwriters have jointly and severally
agreed to purchase from the Issuer and to offer for sale the
bonds described above (the "Refunding Bonds"), by means of the
Final Official Statement of even date herewith, as it may be
amended or supplemented with the consent of the Underwriters, the
Issuer and West Texas Utilities Company, a Texas corporation
("WTU"), Public Service Company of Oklahoma, an Oklahoma
corporation ("PSO"), and Central Power and Light Company, a Texas
corporation ("CPL" and, together with WTU and PSO, being referred
to herein collectively as the "Companies" and each sometimes
referred to herein individually as a "Company"). The Final
Official Statement describes the definitive terms and provisions
of the Refunding Bonds and contains in Appendix A, B and C
thereto information concerning WTU, PSO and CPL, respectively,
which Appendices, including all documents incorporated therein by
reference, shall for all purposes hereof be deemed to be a part
of the Official Statement, all on terms approved by the
Companies. Unless otherwise defined herein, all capitalized
terms used herein shall have the meanings assigned thereto in the
Purchase Agreement.
Each of the Companies hereby (i) approves the terms and
provisions of the Purchase Agreement and of the Refunding Bonds,
(ii) requests the Issuer to issue and sell the Refunding Bonds
and (iii) acknowledges that the Issuer and the Underwriters are
entering into the Purchase Agreement and agreeing to sell and
purchase the Refunding Bonds on the terms and subject to the
conditions therein set forth, in reliance on the representations,
covenants and agreements of each of the Companies contained in
this Letter of Representation.
2. Representations by WTU. WTU makes the following
representations and warranties, all of which shall survive the
termination of the Purchase Agreement and the sale and delivery
of the Refunding Bonds to the Underwriters.
(a) That it is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas, with
full corporate power and authority to engage in the business and
activities conducted by it as described in the Official Statement
and, subject to the opinion of the Attorney General of the State
of Texas approving the Refunding Bonds and the registration of
the Refunding Bonds upon initial issue by the Comptroller of
Public Accounts of the State of Texas, the receipt of which are
expressly made a condition to WTU's obligations under the
Installment Agreement, has full power and authority to execute
and deliver and to carry out and perform its obligations under
this Letter of Representation and the Installment Agreement.
(b) That it has duly approved the forms of the Resolution,
the Indenture and the Purchase Agreement. The Installment
Agreement has been duly authorized, executed and delivered by WTU
and is a legal, valid and binding obligation of WTU enforceable
in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally
and to the effect of general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or
at law). WTU has duly authorized the taking of all action
necessary to carry out and give effect to the transactions
contemplated to be performed by it by the Official Statement, the
Installment Agreement, the Purchase Agreement and this Letter of
Representation. The Commission has issued an order (the "Order")
under the 1935 Act authorizing WTU's (and PSO's and CPL's)
obligations with respect to this Letter of Representation, the
Installment Agreement, the Municipal Bond Insurance Policy, the
Refunding Bonds and the Purchase Agreement, such order being
subject, however, to the condition, among others, that WTU comply
with such supplemental order, if any, as the Commission may enter
hereunder. A copy of the Order heretofore entered by the
Commission has been or will be delivered to the Underwriters.
(c) That this Letter of Representation has been duly executed
and delivered by WTU.
(d) That the approval of the Resolution, the Indenture and
the Purchase Agreement, the execution and delivery of this Letter
of Representation and the Installment Agreement and compliance
with the provisions of such instruments and consummation of the
transactions contemplated hereby and thereby, do not and will not
conflict with, violate or result in a breach of any provision of
or constitute a default (or an event which with notice or passage
of time, or both, would constitute a default) on the part of WTU
under its Restated Articles of Incorporation or By-laws, under
any indenture, commitment, agreement or other instrument to which
WTU is a party or by which it is bound or under any existing law,
rule, regulation, judgment, ordinance, order or decree to which
WTU is subject; nor will such approval, execution, delivery,
compliance or consummation result in the creation or imposition
of any lien, charge or other security interest or encumbrance of
any nature whatsoever upon any of the property or assets of WTU
(except the lien, if any, created by the Installment Agreement).
(e) That no consent, approval, authorization or order of any
court or governmental agency or body is required in respect of
the approval of the Resolution by WTU, the approval of the terms
of the Purchase Agreement, the valid execution, delivery and
performance by WTU of this Letter of Representation and the
Installment Agreement or the consummation by WTU of the
transactions contemplated by the Purchase Agreement, this Letter
of Representation, the Installment Agreement and the Official
Statement, except (i) the Order, (ii) the approving opinion of
the Attorney General of the State of Texas relating to the
Refunding Bonds, (iii) the registration of the Refunding Bonds
upon initial issuance by the Comptroller of Public Accounts of
the State of Texas and (iv) such as may be required under
securities or Blue Sky laws of any jurisdiction in connection
with the offering and sale of the Refunding Bonds.
(f) That the information with respect to it (including
Appendix A) and the Facilities and the use of the proceeds from
the issuance and sale of the Refunding Bonds included in the
Indenture, the Resolution, the Purchase Agreement and the
Refunding Bonds and the information (other than under the
captions "The Issuer", "The Bonds - Book-Entry Only System", "Tax
Matters" and "Underwriting") contained or incorporated by
reference in the Official Statement (including any amendments or
supplements thereto) is true and correct in all material respects
and does not include, and the Preliminary Official Statement as
of its date did not include, any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein not misleading in light of the
circumstances under which they were made; that it has approved
the Official Statement and consents to the use thereof by the
Underwriters in connection with the offering of the Refunding
Bonds; that the Official Statement is deemed final by WTU for
purposes of Rule 15c2-12 under the Exchange Act; and that the
financial statements relating to it included or incorporated by
reference in the Official Statement (including Appendix A
thereto) and the Preliminary Official Statement (including
Appendix A thereto) have been prepared in accordance with
generally accepted accounting principles applied on a consistent
basis (except as otherwise disclosed in the notes to such
financial statements) and fairly present its financial condition
and the results of its operations at the dates and for the
respective periods indicated therein.
(g) That any document, certificate or other written statement
furnished by WTU to the Underwriters or McCall, Parkhurst &
Horton L.L.P., Bond Counsel, or Sidley & Austin, counsel to the
Underwriters, relating to WTU, the Facilities or the Refunding
Bonds is true and correct in all material respects and does not
or will not, as the case may be, include any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein not misleading in light of the circumstances under which
they were made.
(h) Except as may be specifically set forth in the Official
Statement and except for the proceedings relating to the
approving opinion of the Attorney General of the State of Texas
on the Refunding Bonds and to the registration of the Refunding
Bonds upon initial issuance by the Comptroller of Public Accounts
of the State of Texas, there is no action, suit, proceeding or
investigation, at law or in equity, before or by any court,
governmental agency or body or arbitrator, involving WTU or the
Facilities, pending or, to the best knowledge of WTU, threatened
(i) which might reasonably be expected to (x) materially and
adversely affect the condition (financial or otherwise), results
of operations, business or properties of WTU or (y) materially
and adversely affect the operation, condition or feasibility of
the Facilities or (ii) wherein any unfavorable decision, ruling
or finding might reasonably be expected to (x) adversely affect
the transactions contemplated to be performed by WTU hereby, by
the Purchase Agreement, by the Installment Agreement, or by the
Official Statement or (y) adversely affect the validity or
enforceability of the Refunding Bonds, the Installment Agreement,
the Indenture, the Resolution, the Purchase Agreement or this
Letter of Representation or any agreement or instrument to which
WTU is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(i) Arthur Andersen LLP, are independent public accountants
with respect to WTU, as would be required under the Securities
Act and the rules and regulations thereunder if the Securities
Act and the rules and regulations thereunder were applicable to
the Official Statement.
(j) That (i) the Facilities consist of either land or
property of a character subject to depreciation for federal
income tax purposes and will be used to abate or control air and
water pollution or contamination by removing, altering, disposing
or storing pollutants, contaminants, wastes or heat or to
collect, store or treat sewage or solid wastes prior to final
disposal thereof; (ii) the Facilities will not result in an
increase in production or capacity, production efficiencies, the
production of a by-product, the extension of the useful life of
any manufacturing or production facility or any part thereof at
the Plant or other property which is not part of the Plant, which
would jeopardize the exclusion of the interest on the Refunding
Bonds from the gross income of the recipients thereof for federal
income tax purposes, and none of the Facilities would have been
installed but for the purpose of disposing of sewage or solid
waste or controlling pollution; and (iii) all other information
supplied by WTU in connection with the transactions contemplated
hereby and by the Official Statement with respect to the
exclusion from gross income for federal income tax purposes of
interest on the Refunding Bonds is correct and complete.
(k) That all required certificates that the Facilities (other
than the solid waste disposal facilities that require no
certifications), as designed, are in furtherance of the purpose
of abating or controlling air or water pollution have been
obtained from the Texas Air Control Board and the Texas
Department of Water Resources, respectively, and remain in full
force and effect.
(l) That WTU is eligible as an issuer to file registration
statements on Form S-3 under the Securities Act, and each
document filed by it under the Exchange Act and incorporated (or
to be incorporated) in the Preliminary Official Statement or the
Official Statement by reference complied when so filed (or will
comply when so filed) in all material respects with the act under
which it was so filed, and, during the period that an Official
Statement is required to be delivered, no such document hereafter
so filed will include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(m) That there has been no material adverse change in WTU's
financial condition or any adverse development concerning WTU's
business and assets which would reasonably be expected to result
in a material adverse change in its prospective financial
condition or results of operations from that shown in the
Official Statement.
(n) That no event of default or event which, with notice or
passage of time, or both, would constitute an event of default or
a default under any agreement or instrument to which WTU is a
party or by which it is or may be bound or to which any of its
property or assets is or may be subject and which would
materially and adversely affect the transactions contemplated by
the Installment Agreement, the Official Statement or this Letter
of Representation has occurred and is continuing.
(o) WTU is not currently in default in the payment of the
principal of, or interest on, any security or other legally
authorized obligation issued by it.
3. Representations by PSO. PSO makes the following
representations and warranties, all of which shall survive the
termination of the Purchase Agreement and the sale and delivery
of the Refunding Bonds to the Underwriters.
(a) That it is a corporation duly organized, validly existing
and in good standing under the laws of the State of Oklahoma and
is duly qualified as a foreign corporation and in good standing
under the laws of the State of Texas, with full corporate power
and authority to engage in the business and activities conducted
by it as described in the Official Statement and, subject to the
opinion of the Attorney General of the State of Texas approving
the Refunding Bonds and the registration of the Refunding Bonds
upon initial issue by the Comptroller of Public Accounts of the
State of Texas, the receipt of which are expressly made a
condition to PSO's obligations under the Installment Agreement,
has full power and authority to execute and deliver and to carry
out and perform its obligations under this Letter of
Representation and the Installment Agreement.
(b) That it has duly approved the forms of the Resolution,
the Indenture and the Purchase Agreement. The Installment
Agreement has been duly authorized, executed and delivered by PSO
and is a legal, valid and binding obligation of PSO enforceable
in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally
and to the effect of general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or
at law). PSO has duly authorized the taking of all action
necessary to carry out and give effect to the transactions
contemplated to be performed by it by the Official Statement, the
Installment Agreement, the Purchase Agreement and this Letter of
Representation. The Commission has issued the Order authorizing
PSO's (and WTU's and CPL's) obligations with respect to this
Letter of Representation, the Installment Agreement, the
Municipal Bond Insurance Policy, the Refunding Bonds and the
Purchase Agreement. A copy of the Order heretofore entered has
been or will be delivered to the Underwriters.
(c) That this Letter of Representation has been duly executed
and delivered by PSO.
(d) That the approval of the Resolution, the Indenture and
the Purchase Agreement, the execution and delivery of this Letter
of Representation and the Installment Agreement and compliance
with the provisions of such instruments and consummation of the
transactions contemplated hereby and thereby, do not and will not
conflict with, violate or result in a breach of any provision of
or constitute a default (or an event which with notice or passage
of time, or both, would constitute a default) on the part of PSO
under its Amended and Restated Certificate of Incorporation or
By-laws, under any indenture, commitment, agreement or other
instrument to which PSO is a party or by which it is bound or
under any existing law, rule, regulation, judgment, ordinance,
order or decree to which PSO is subject; nor will such approval,
execution, delivery, compliance or consummation result in the
creation or imposition of any lien, charge or other security
interest or encumbrance of any nature whatsoever upon any of the
property or assets of PSO (except the lien, if any, created by
the Installment Agreement).
(e) That no consent, approval, authorization or order of any
court or governmental agency or body (including, without
limitation, the Oklahoma Corporation Commission) is required in
respect of the approval of the Resolution by PSO, the approval of
the terms of the Purchase Agreement, the valid execution,
delivery and performance by PSO of this Letter of Representation
and the Installment Agreement or the consummation by PSO of the
transactions contemplated by the Purchase Agreement, this Letter
of Representation, the Installment Agreement and the Official
Statement, except (i) the Order, (ii) the approving opinion of
the Attorney General of the State of Texas relating to the
Refunding Bonds, (iii) the registration of the Refunding Bonds
upon initial issuance by the Comptroller of Public Accounts of
the State of Texas and (iv) such as may be required under
securities or Blue Sky laws of any jurisdiction in connection
with the offering and sale of the Refunding Bonds.
(f) That the information with respect to it (including
Appendix B) and the Facilities and the use of the proceeds from
the issuance and sale of the Refunding Bonds included in the
Indenture, the Resolution, the Purchase Agreement and the
Refunding Bonds and the information (other than under the
captions "The Issuer", "The Bonds - Book-Entry Only System", "Tax
Matters" and "Underwriting") contained or incorporated by
reference in the Official Statement (including any amendments or
supplements thereto) is true and correct in all material respects
and does not include, and the Preliminary Official Statement as
of its date did not include, any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein not misleading in light of the
circumstances under which they were made; that it has approved
the Official Statement and consents to the use thereof by the
Underwriters in connection with the offering of the Refunding
Bonds; that the Official Statement is deemed final by PSO for
purposes of Rule 15c2-12 under the Exchange Act; and that the
financial statements relating to it included or incorporated by
reference in the Official Statement (including Appendix B
thereto) and the Preliminary Official Statement (including
Appendix B thereto) have been prepared in accordance with
generally accepted accounting principles applied on a consistent
basis (except as otherwise disclosed in the notes to such
financial statements) and fairly present its financial condition
and the results of its operations at the dates and for the
respective periods indicated therein.
(g) That any document, certificate or other written statement
furnished by PSO to the Underwriters or McCall, Parkhurst &
Horton L.L.P., Bond Counsel, or Sidley & Austin, counsel to the
Underwriters, relating to PSO, the Facilities or the Refunding
Bonds is true and correct in all material respects and does not
or will not, as the case may be, include any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein not misleading in light of the circumstances under which
they were made.
(h) Except as may be specifically set forth in the Official
Statement and except for the proceedings relating to the
approving opinion of the Attorney General of the State of Texas
on the Refunding Bonds and to the registration of the Refunding
Bonds upon initial issuance by the Comptroller of Public Accounts
of the State of Texas, there is no action, suit, proceeding or
investigation, at law or in equity, before or by any court,
governmental agency or body or arbitrator, involving PSO or the
Facilities, pending or, to the best knowledge of PSO, threatened
(i) which might reasonably be expected to (x) materially and
adversely affect the condition (financial or otherwise), results
of operations, business or properties of PSO or (y) materially
and adversely affect the operation, condition or feasibility of
the Facilities or (ii) wherein any unfavorable decision, ruling
or finding might reasonably be expected to (x) adversely affect
the transactions contemplated to be performed by PSO hereby, by
the Purchase Agreement, by the Installment Agreement or by the
Official Statement or (y) adversely affect the validity or
enforceability of the Refunding Bonds, the Installment Agreement,
the Indenture, the Resolution, the Purchase Agreement or this
Letter of Representation or any agreement or instrument to which
PSO is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(i) Arthur Andersen LLP, are independent public accountants
with respect to PSO, as would be required under the Securities
Act and the rules and regulations thereunder if the Securities
Act and the rules and regulations thereunder were applicable to
the Official Statement.
(j) That (i) the Facilities consist of either land or
property of a character subject to depreciation for federal
income tax purposes and will be used to abate or control air and
water pollution or contamination by removing, altering, disposing
or storing pollutants, contaminants, wastes or heat or to
collect, store or treat sewage or solid wastes prior to final
disposal thereof; (ii) the Facilities will not result in an
increase in production or capacity, production efficiencies, the
production of a by-product, the extension of the useful life of
any manufacturing or production facility or any part thereof at
the Plant or other property which is not part of the Plant, which
would jeopardize the exclusion of the interest on the Refunding
Bonds from the gross income of the recipients thereof for federal
income tax purposes, and none of the Facilities would have been
installed but for the purpose of disposing of sewage or solid
waste or controlling pollution; and (iii) all other information
supplied by PSO in connection with the transactions contemplated
hereby and by the Official Statement with respect to the
exclusion from gross income for federal income tax purposes of
interest on the Refunding Bonds is correct and complete.
(k) That all required certificates that the Facilities (other
than the solid waste disposal facilities that require no
certifications), as designed, are in furtherance of the purpose
of abating or controlling air or water pollution have been
obtained from the Texas Air Control Board and the Texas
Department of Water Resources, respectively, and remain in full
force and effect.
(l) That PSO is eligible as an issuer to file registration
statements on Form S-3 under the Securities Act, and each
document filed by it under the Exchange Act and incorporated (or
to be incorporated) in the Preliminary Official Statement or the
Official Statement by reference complied when so filed (or will
comply when so filed) in all material respects with the act under
which it was so filed, and, during the period that an Official
Statement is required to be delivered, no such document hereafter
so filed will include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(m) That there has been no material adverse change in PSO's
financial condition or any adverse development concerning PSO's
business and assets which would reasonably be expected to result
in a material adverse change in its prospective financial
condition or results of operations from that shown in the
Official Statement.
(n) That no event of default or event which, with notice or
passage of time, or both, would constitute an event of default or
a default under any agreement or instrument to which PSO is a
party or by which it is or may be bound or to which any of its
property or assets is or may be subject and which would
materially and adversely affect the transactions contemplated by
the Installment Agreement, the Official Statement or this Letter
of Representation has occurred and is continuing.
(o) PSO is not currently in default in the payment of the
principal of, or interest on, any security or other legally
authorized obligation issued by it.
4. Representations by CPL. CPL makes the following
representations and warranties, all of which shall survive the
termination of the Purchase Agreement and the sale and delivery
of the Refunding Bonds to the Underwriters.
(a) That it is a corporation duly organized, validly existing
and in good standing under the laws of the State of Texas, with
full corporate power and authority to engage in the business and
activities conducted by it as described in the Official Statement
and, subject to the opinion of the Attorney General of the State
of Texas approving the Refunding Bonds and the registration of
the Refunding Bonds upon initial issue by the Comptroller of
Public Accounts of the State of Texas, the receipt of which are
expressly made a condition to CPL's obligations under the
Installment Agreement, has full power and authority to execute
and deliver and to carry out and perform its obligations under
this Letter of Representation and the Installment Agreement.
(b) That it has duly approved the forms of the Resolution,
the Indenture and the Purchase Agreement. The Installment
Agreement has been duly authorized, executed and delivered by CPL
and is a legal, valid and binding obligation of CPL enforceable
in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights generally
and to the effect of general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or
at law). CPL has duly authorized the taking of all action
necessary to carry out and give effect to the transactions
contemplated to be performed by it by the Official Statement, the
Installment Agreement, the Purchase Agreement and this Letter of
Representation. The Commission has issued the Order under the
1935 Act authorizing CPL's (and WTU's and PSO's) obligations with
respect to this Letter of Representation, the Installment
Agreement, the Municipal Bond Insurance Policy, the Refunding
Bonds and the Purchase Agreement, such order being subject,
however, to the condition, among others, that CPL comply with
such supplemental order, if any, as the Commission may enter
thereunder. A copy of the Order heretofore entered by the
Commission has been or will be delivered to the Underwriters.
(c) That this Letter of Representation has been duly executed
and delivered by CPL.
(d) That the approval of the Resolution, the Indenture and
the Purchase Agreement, the execution and delivery of this Letter
of Representation and the Installment Agreement and compliance
with the provisions of such instruments and consummation of the
transactions contemplated hereby and thereby, do not and will not
conflict with, violate or result in a breach of any provision of
or constitute a default (or an event which with notice or passage
of time, or both, would constitute a default) on the part of CPL
under its Restated Articles of Incorporation or By-laws, under
any indenture, commitment, agreement or other instrument to which
CPL is a party or by which it is bound or under any existing law,
rule, regulation, judgment, ordinance, order or decree to which
CPL is subject; nor will such approval, execution, delivery,
compliance or consummation result in the creation or imposition
of any lien, charge or other security interest or encumbrance of
any nature whatsoever upon any of the property or assets of CPL
(except the lien, if any, created by the Installment Agreement).
(e) That no consent, approval, authorization or order of any
court or governmental agency or body is required in respect of
the approval of the Resolution by CPL, the approval of the terms
of the Purchase Agreement, the valid execution, delivery and
performance by CPL of this Letter of Representation, the
Installment Agreement or the consummation by CPL of the
transactions contemplated by the Purchase Agreement, this Letter
of Representation, the Installment Agreement and the Official
Statement, except (i) the Order, (ii) the approving opinion of
the Attorney General of the State of Texas relating to the
Refunding Bonds, (iii) the registration of the Refunding Bonds
upon initial issuance by the Comptroller of Public Accounts of
the State of Texas and (iv) such as may be required under
securities or Blue Sky laws of any jurisdiction in connection
with the offering and sale of the Refunding Bonds.
(f) That the information with respect to it (including
Appendix C) and the Facilities and the use of the proceeds from
the issuance and sale of the Refunding Bonds included in the
Indenture, the Resolution, the Purchase Agreement and the
Refunding Bonds and the information (other than under the
captions "The Issuer", "The Bonds - Book-Entry Only System", "Tax
Matters" and "Underwriting") contained or incorporated by
reference in the Official Statement (including any amendments or
supplements thereto) is true and correct in all material respects
and does not include, and the Preliminary Official Statement as
of its date did not include, any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements therein not misleading in light of the
circumstances under which they were made; that it has approved
the Official Statement and consents to the use thereof by the
Underwriters in connection with the offering of the Refunding
Bonds; that the Official Statement is deemed final by CPL for
purposes of Rule 15c2-12 under the Exchange Act; and that the
financial statements relating to it included or incorporated by
reference in the Official Statement (including Appendix C
thereto) and the Preliminary Official Statement (including
Appendix C thereto) have been prepared in accordance with
generally accepted accounting principles applied on a consistent
basis (except as otherwise disclosed in the notes to such
financial statements) and fairly present its financial condition
and the results of its operations at the dates and for the
respective periods indicated therein.
(g) That any document, certificate or other written statement
furnished by CPL to the Underwriters or McCall, Parkhurst &
Horton L.L.P., Bond Counsel, or Sidley & Austin, counsel to the
Underwriters, relating to CPL, the Facilities or the Refunding
Bonds is true and correct in all material respects and does not
or will not, as the case may be, include any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein not misleading in light of the circumstances under which
they were made.
(h) Except as may be specifically set forth in the Official
Statement and except for the proceedings relating to the
approving opinion of the Attorney General of the State of Texas
on the Refunding Bonds and to the registration of the Refunding
Bonds upon initial issuance by the Comptroller of Public Accounts
of the State of Texas, there is no action, suit, proceeding or
investigation, at law or in equity, before or by any court,
governmental agency or body or arbitrator, involving CPL or the
Facilities, pending or, to the best knowledge of CPL, threatened
(i) which might reasonably be expected to (x) materially and
adversely affect the condition (financial or otherwise), results
of operations, business or properties of CPL or (y) materially
and adversely affect the operation, condition or feasibility of
the Facilities or (ii) wherein any unfavorable decision, ruling
or finding might reasonably be expected to (x) adversely affect
the transactions contemplated to be performed by CPL hereby, by
the Purchase Agreement, by the Installment Agreement or by the
Official Statement or (y) adversely affect the validity or
enforceability of the Refunding Bonds, the Installment Agreement,
the Indenture, the Resolution, the Purchase Agreement or this
Letter of Representation or any agreement or instrument to which
CPL is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(i) Arthur Andersen LLP, are independent public accountants
with respect to CPL, as would be required under the Securities
Act and the rules and regulations thereunder if the Securities
Act and the rules and regulations thereunder were applicable to
the Official Statement.
(j) That (i) the Facilities consist of either land or
property of a character subject to depreciation for federal
income tax purposes and will be used to abate or control air and
water pollution or contamination by removing, altering, disposing
or storing pollutants, contaminants, wastes or heat or to
collect, store or treat sewage or solid wastes prior to final
disposal thereof; (ii) the Facilities will not result in an
increase in production or capacity, production efficiencies, the
production of a by-product, the extension of the useful life of
any manufacturing or production facility or any part thereof at
the Plant or other property which is not part of the Plant, which
would jeopardize the exclusion of the interest on the Refunding
Bonds from the gross income of the recipients thereof for federal
income tax purposes, and none of the Facilities would have been
installed but for the purpose of disposing of sewage or solid
waste or controlling pollution; and (iii) all other information
supplied by CPL in connection with the transactions contemplated
hereby and by the Official Statement with respect to the
exclusion from gross income for federal income tax purposes of
interest on the Refunding Bonds is correct and complete.
(k) That all required certificates that the Facilities (other
than the solid waste disposal facilities that require no
certifications), as designed, are in furtherance of the purpose
of abating or controlling air or water pollution have been
obtained from the Texas Air Control Board and the Texas
Department of Water Resources, respectively, and remain in full
force and effect.
(l) That CPL is eligible as an issuer to file registration
statements on Form S-3 under the Securities Act, and each
document filed by it under the Exchange Act and incorporated (or
to be incorporated) in the Preliminary Official Statement or the
Official Statement by reference complied when so filed (or will
comply when so filed) in all material respects with the act under
which it was so filed, and, during the period that an Official
Statement is required to be delivered, no such document hereafter
so filed will include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(m) That there has been no material adverse change in CPL's
financial condition or any adverse development concerning CPL's
business and assets which would reasonably be expected to result
in a material adverse change in its prospective financial
condition or results of operations from that shown in the
Official Statement.
(n) That no event of default or event which, with notice or
passage of time, or both, would constitute an event of default or
a default under any agreement or instrument to which CPL is a
party or by which it is or may be bound or to which any of its
property or assets is or may be subject and which would
materially and adversely affect the transactions contemplated by
the Installment Agreement, the Official Statement or this Letter
of Representation has occurred and is continuing.
(o) CPL is not currently in default in the payment of the
principal of, or interest on, any security or other legally
authorized obligation issued by it.
5. Covenants of the Companies. Each of the Companies will:
(a) Notify the Underwriters of any material adverse change in
its business, properties or financial condition occurring before
Closing or within three months thereafter which would require
revision of the information in the Official Statement in order to
make the representations set forth in Sections 2(f), 3(f) or 4(f)
hereof, as the case may be, true and correct.
(b) Refrain from taking any action, or from permitting any
action, with regard to which it may exercise control, to be
taken, that (i) would in any way cause the proceeds from the sale
of the Refunding Bonds to be applied in a manner other than as
provided in the Resolution, the Installment Agreement, the
Indenture and discussed in the Official Statement, (ii) would
result in the loss of the exclusion from gross income for federal
income tax purposes of interest on the Refunding Bonds, or (iii)
it has reason to believe will adversely jeopardize the continued
validity and effectiveness of such exemption.
(c) Deliver to the Underwriters upon request copies of
documents of such Company incorporated by reference into the
Official Statement and all documents to which Section 5(d) hereof
refers at such times and in such quantities as are necessary to
enable the Underwriters to satisfy requests for such information,
and enable the Underwriters to make such documents available for
inspection, as described in the Official Statement.
(d) During the period commencing on the date hereof and
ending upon completion of the distribution of the Refunding Bonds
(but in no event later than 90 days after the date of the
Closing), promptly after filing any document with the Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act, furnish
a copy thereof to the Underwriters and the Issuer.
(e) Comply with and perform its obligations set forth in its
Rule 15c2-12 Undertakings attached hereto as Exhibit 1, which is
hereby incorporated by reference herein.
(f) Before amending or supplementing the Official Statement,
furnish to the Underwriters two copies and to the Issuer two
copies of each proposed amendment or supplement. No amendment or
supplement to the Official Statement will contain material
information different from that contained in the Final Official
Statement which is reasonably unsatisfactory to the Underwriters
or the Issuer.
(g) During such period as the Underwriters believe delivery
of the Official Statement is necessary or desirable in connection
with sales of the Refunding Bonds by the Underwriters or a
dealer, if any event shall occur as a result of which it may be
necessary to amend or supplement the Official Statement in order
to make the statement therein, in the light of the circumstances
when the Official Statement is delivered to a purchaser, not
misleading, immediately notify the Underwriters and the Issuer of
such event and cooperate at the request of the Underwriters in
the preparation of amendments or supplements to the Official
Statement which in the judgment of the Underwriters are necessary
so that the statements in the Official Statement as so amended or
supplemented will not, in light of the circumstances when the
Official Statement is delivered to a purchaser, be misleading.
6. Indemnification; Contribution. (a) Each of the Companies
agrees to indemnify and hold harmless the Issuer, its officials,
directors, members, officers, employees and agents and each of
the Underwriters, their respective officers, directors,
officials, employees and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (collectively, "Indemnified
Parties") from and against any and all losses, claims, damages or
liabilities to which such Indemnified Party may become subject
under the Securities Act, the Exchange Act or the common law or
otherwise, and to reimburse each such Indemnified Party for any
reasonable legal or other expenses (including reasonable counsel
fees) incurred by it or them in connection with defending against
any such losses, claims, damages or liabilities, arising out of
or in connection with the offering and sale of the Refunding
Bonds (i) on the ground that the Preliminary Official Statement
or the Final Official Statement (except with respect to the
Issuer for the information relating to the Issuer under the
caption "The Issuer" and with respect to any such Underwriter for
information under the caption "Underwriting" and any information
furnished in writing by such Underwriter specifically for use
therein) includes any untrue statement or an alleged untrue
statement of material fact or any omission or an alleged omission
to state a material fact necessary in order to make the
statements therein not misleading in light of the circumstances
under which they were made, or (ii) arising by virtue of the
failure to register the Refunding Bonds under the Securities Act
or to qualify the Indenture under the Trust Act. The obligation
of the Companies to indemnify and hold harmless the Indemnified
Parties shall be (i) borne entirely by each Company with respect
to the appendix to the Preliminary Official Statement or Final
Official Statement which relates to it and (ii) otherwise shall
be borne by each Company in accordance with its Ownership
Percentage (as defined in the Indenture).
(b) By its acceptance hereof, each of the Underwriters agrees
severally and not jointly to indemnify and hold harmless the
Issuer, its officers, directors, employees and agents and each of
the Companies, their respective officers, directors and
employees, and each person, if any, who controls such Company
within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively, "Indemnified
Parties"), from and against any and all losses, claims, damages
or liabilities to which such Indemnified Party may become subject
under the Securities Act, the Exchange Act or the common law or
otherwise, and to reimburse each such Indemnified Party for any
reasonable legal or other expenses (including reasonable counsel
fees) incurred by it or them in connection with defending against
any such losses, claims, damages or liabilities, arising out of
or in connection with the offering and sale of the Refunding
Bonds on the grounds that the information under the caption
"Underwriting" furnished by such Underwriter in writing
specifically for use in the Preliminary Official Statement or the
Final Official Statement includes any untrue statement or alleged
untrue statement of a material fact or an omission or an alleged
omission to state a material fact necessary in order to make the
statements therein not misleading in light of the circumstances
under which they were made.
(c) Promptly after the commencement of any action against an
Indemnified Party hereunder in respect of which indemnity is to
be sought against the Companies (or any Company) or any
Underwriter, as the case may be (the "Indemnifying Party"), such
Indemnified Party will notify the Indemnifying Party in writing
of such action and the Indemnifying Party may participate in,
and, to the extent that it may wish, jointly with any other
Indemnifying Party similarly notified, assume the defense
thereof, including the employment of counsel and the payment of
all expenses; but the omission so to notify the Indemnifying
Party will not relieve the Indemnifying Party from any liability
which it may have to any Indemnified Party otherwise than
hereunder. The Indemnifying Party shall not be liable for any
settlement of any such action effected without its consent, but
if settled with the consent of the Indemnifying Party or if there
is a final judgment for the plaintiff in any such action, the
Indemnifying Party will indemnify and hold harmless any
Indemnified Party from and against any loss or liability by
reason of such settlement or judgment. The indemnity agreements
contained herein shall include reimbursement for expenses
reasonably incurred by an Indemnified Party in investigating the
claim and in defending it if the Indemnifying Party declines to
assume the defense and shall survive termination of the Purchase
Agreement, this Letter of Representation and the delivery of the
Refunding Bonds.
(d) If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an Indemnified
Party under Subsection (a) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each of the Companies shall contribute
to the amount paid or payable by such Indemnified Party as a
result of such losses, claims, damages or liabilities (or actions
in respect thereof) in such proportion as is appropriate to
reflect the relative fault of the Companies (or any Company) on
the one hand and the Indemnified Party on the other in connection
with the statements or omissions or other matters which resulted
in such losses, claims, damages and liabilities (or actions in
respect thereof), as well as any other relevant equitable
considerations. Relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by any
of the Companies on the one hand or the Indemnified Party on the
other and each such party's relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue
statement or omission. Each of the Companies and the
Underwriters agree that it would not be just and equitable if
contribution pursuant to this Subsection (d) were determined
solely by pro rata allocation or by any other method of
allocation which does not take account of the equitable
considerations referred to above in this Subsection (d). The
amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this Subsection (d) shall be deemed
to include any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or
defending any such action or claim. No Indemnified Party guilty
of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution
from the Companies if none of the Companies is guilty of such
fraudulent misrepresentation. The obligations of each of the
Companies under this Subsection (d) shall be in addition to any
liability which such Company may have otherwise than under this
Section 6.
7. Payment of Costs and Expenses. All expenses and costs of the
authorization, issuance, sale and delivery of the Refunding Bonds
(including, without limitation: the preparation and furnishing
to the Underwriters of the Preliminary Official Statement and the
Official Statement and any amendments or supplements thereto, and
the preparation and execution of the Indenture, the Refunding
Bonds, the Installment Agreement, the Resolution, the Letter of
Representation and the Purchase Agreement; fees and expenses
relating to the Municipal Bond Insurance Policy, if any, rating
agency fees, the issuance and closing fees of the Issuer, the
fees and disbursements of Bond Counsel, Counsel to the Issuer,
the financial advisor to the Issuer and Counsel to the Companies;
the expenses, including the legal fees, of Counsel to the
Underwriter incurred in connection with qualifying the Refunding
Bonds for sale under the securities laws of various jurisdictions
and preparing Blue Sky memoranda) shall be paid by the Companies
in accordance with each Company's Ownership Percentage (as
defined in the Indenture). In addition, the Companies shall pay
to the Underwriters on the Closing Date by wire transfer the fees
of the Underwriters in connection with the offering of the
Refunding Bonds in an aggregate amount equal to ___% of the
principal amount of the Refunding Bonds. Each Underwriter will
pay its own costs and expenses, including advertising and legal
expenses (except as noted in this Section 7).
8. Execution in Counterparts. This Letter of Representation may
be executed and accepted in any number of counterparts, all of
which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute and accept
this Letter of Representation by signing any such counterpart.
9. Notices. All notices, requests, demands and formal actions
hereunder will be in writing mailed, telecopied or delivered to:
The Underwriters:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Municipal Department
Telephone No. (212) 761-4000
Telecopy No. (212) 761-0446
Citicorp Securities, Inc.
399 Park Avenue
6th Floor
New York, New York 10043
Telephone No. (212) 559-5249
Telecopy No. (212) 793-6611
The Issuer:
Red River Authority of Texas
Hamilton Building
900 Eighth Street
Suite 520
Wichita Falls, Texas 76301
Attention: Executive Vice President and
General Manager
Telephone No. (817) 723-0855
Telecopy No. (817) 723-8531 . . . . . .
WTU, POS and/or CPL
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone No. (214) 777-1205
Telecopy No. (214) 777-1223
10. Successors. This Letter of Representation will inure to the
benefit of and be binding upon the parties and their successors
and each other Indemnified Party and will not confer any rights
upon any other person. The term "successor" shall not include
any holder of any Refunding Bonds merely by virtue of such
holding.
11. Survival of Agreements and Representations. The indemnity
and other agreements contained and the representations and
warranties of each of the Companies set forth in this Letter of
Representation shall remain operative and in full force and
effect regardless of (i) any termination of the Purchase
Agreement, (ii) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter or by or on
behalf of each of the Companies, their respective directors or
officers or any person controlling such Company, and (iii) sale
and delivery of the Refunding Bonds.
12. Governing Law. This Letter of Representation shall be
governed by and construed in accordance with the laws of the
State of New York, except that the rights, privileges, duties and
immunities of the Issuer shall be governed by the laws of the
State of Texas.
Very truly yours,
WEST TEXAS UTILITIES
By: ____________________________
Name:
Title:
PUBLIC SERVICE COMPANY OF OKLAHOMA
By:
Name:
Accepted: Title:
RED RIVER AUTHORITY OF TEXAS
By:
Name:
Title: CENTRAL POWER AND LIGHT COMPANY
By:____________________________
Name:
Accepted: Title:
MORGAN STANLEY & CO. INCORPORATED
CITICORP SECURITIES, INC.
By: MORGAN STANLEY & CO. INCORPORATED
By:
Name:
Title:
<PAGE>
EXHIBIT 5
PRELIMINARY OFFICIAL STATEMENT DATED , 1996
NEW ISSUE - BOOK-ENTRY ONLY
$63,300,000
Red River Authority of Texas
% Pollution Control Revenue Refunding Bonds
(West Texas Utilities Company, Public Service Company
of Oklahoma and Central Power and Light Company Oklaunion
Project)
Series 1996
Dated: July 1, 1996 Due:
The Bonds are limited obligations of the Issuer and do not
constitute an indebtedness or a charge against the general credit
or taxing powers of the Issuer or the State of Texas. The Bonds
are payable solely from, and secured by a pledge of, the revenues
to be received by the Issuer under an Installment Payment
Agreement from
West Texas Utilities Company
Public Service Company of Oklahoma
Central Power and Light Company
_______________
AS DESCRIBED HEREIN, THE OBLIGATIONS OF WEST
TEXAS UTILITIES COMPANY, PUBLIC SERVICE COMPANY OF OKLAHOMA AND
CENTRAL POWER AND LIGHT COMPANY UNDER THE INSTALLMENT PAYMENT
AGREEMENT ARE SEVERAL BUT NOT JOINT, AND EACH SUCH COMPANY IS
OBLIGATED TO PAY ONLY ITS PRO RATA SHARE OF THE PAYMENTS
THEREUNDER EQUAL TO ITS RESPECTIVE OWNERSHIP PERCENTAGE OF THE
FACILITIES. SEE "INTRODUCTION" HEREIN.
The Bonds will be delivered as fully registered
bonds without coupons and when initially issued are expected to
be registered in the name of Cede & Co., as registered owner and
nominee of The Depository Trust Company, New York, New York
("DTC"). DTC will act as securities depository for the Bonds.
Bonds will be delivered only in book-entry form in denominations
of $5,000 or any integral multiple thereof and, except under the
limited circumstances described herein, beneficial owners of the
Bonds will not receive certificates representing their ownership
interests. Principal of and premium, if any, and interest on the
Bonds (payable on ____ 1 and ________ 1, commencing ________ 1,
1996), will be paid in the manner described herein. So long as
DTC or its nominee is the registered owner of the Bonds, payments
of principal, interest and premium, if any, will be made through
DTC and its Participants and disbursements of such payments to
beneficial owners will be the responsibility of such
Participants. See "BOOK-ENTRY ONLY SYSTEM" herein.
The Bonds are subject to redemption prior to
maturity as described herein. Subject to certain conditions
described herein, the Bonds will be subject to mandatory tender
for purchase and the Companies may elect to convert the Bonds, in
whole or in part, on any optional redemption date, to a different
interest rate Mode as described herein. The Purchase Price for
tendered Bonds will include any applicable premium that would be
payable if the Bonds were redeemed on the Purchase Date. See
"THE BONDS" herein.
_______________
MBIA
Payment of the principal and interest on the
Bonds when due will be insured by a financial guaranty insurance
policy to be issued by MBIA Insurance Corporation simultaneously
with the delivery of the Bonds. See "The MBIA Insurance
Corporation Insurance Policy" herein.
_______________
Price ___%
_______________
(Plus accrued interest from July 1, 1996)
In the opinion of Bond Counsel, interest on the
Bonds will be excludable from gross income for federal income tax
purposes under existing statutes, regulations, rulings and court
decisions, except as explained under "TAX MATTERS" herein, and
will not be treated as a preference item in calculating the
alternative minimum tax imposed on individuals and corporations.
For further information, see "TAX MATTERS" herein.
_______________
The Bonds are offered, subject to prior sale,
when, as and if issued by the Issuer and accepted by the
Underwriters, subject to the approval of legality by the Attorney
General of the State of Texas and McCall, Parkhurst & Horton
L.L.P., Bond Counsel, the approval of certain other legal matters
by Sidley & Austin, counsel for the Underwriters, and certain
other conditions. It is expected that the Bonds will be
available for delivery to DTC on or about , 1996.
_______________
MORGAN STANLEY & CO. CITICORP SECURITIES, INC.
Incorporated
Dated: , 1996
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
This Preliminary Official Statement and the information contained
herein are subject to completion or amendment. Under no
circumstances shall this Preliminary Official Statement
constitute an offer to sell or solicitation of an offer to buy
nor shall there be any sale of these securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
IN CONNECTION WITH THIS OFFERING, THE
UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE
OR MAINTAIN THE MARKET PRICE OF THE BONDS OFFERED HEREBY AT A
LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT
ANY TIME.
THE BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
No dealer, salesman or any other person is
authorized to give any information or to make any representation
not contained in this Official Statement, and any information not
contained herein must not be relied upon as having been
authorized by Red River Authority of Texas, West Texas Utilities
Company, Public Service Company of Oklahoma, Central Power and
Light Company or any Underwriter. This Official Statement does
not constitute an offer to sell or the solicitation of an offer
to buy, nor shall there be any sale of the Bonds, by any person
in any jurisdiction in which it is unlawful for such person to
make such offer, solicitation or sale.
Neither the delivery of this Official Statement
nor any sale hereunder shall under any circumstances create any
implication that there has been no change in the affairs of Red
River Authority of Texas, West Texas Utilities Company, Public
Service Company of Oklahoma or Central Power and Light Company
since the date hereof.
_____________________
TABLE OF CONTENTS
Page
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . 2
THE FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . 2
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 2
THE BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
BOOK-ENTRY ONLY SYSTEM . . . . . . . . . . . . . . . . . . . . 7
THE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 10
THE INDENTURE. . . . . . . . . . . . . . . . . . . . . . . . . 14
THE MBIA INSURANCE CORPORATION INSURANCE POLICY. . . . . . . . 20
TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . 22
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . 24
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . 25
CONTINUING DISCLOSURE. . . . . . . . . . . . . . . . . . . . . 25
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 25
APPENDIX A - WEST TEXAS UTILITIES COMPANY. . . . . . . . . . .A-1
APPENDIX B - PUBLIC SERVICE COMPANY OF OKLAHOMA. . . . . . . .B-1
APPENDIX C - CENTRAL POWER AND LIGHT COMPANY . . . . . . . . .C-1
APPENDIX D - CERTAIN DEFINITIONS . . . . . . . . . . . . . . .D-1
APPENDIX E - FORM OF OPINION OF BOND COUNSEL . . . . . . . . .E-1
APPENDIX F - FORM OF MUNICIPAL BOND INSURANCE POLICY . . . . .F-1
$63,300,000
RED RIVER AUTHORITY OF TEXAS
% POLLUTION CONTROL REVENUE REFUNDING BONDS
(West Texas Utilities Company, Public Service Company of Oklahoma
and Central Power and Light Company Oklaunion Project)
Series 1996
Due __________, ____
_______________
INTRODUCTION
This Official Statement is provided to furnish
information regarding the issuance by Red River Authority of
Texas, a governmental agency and body politic and corporate of
the State of Texas (the "Issuer"), of its Pollution Control
Revenue Refunding Bonds (West Texas Utilities Company, Public
Service Company of Oklahoma and Central Power and Light Company
Oklaunion Project) Series 1996 (the "Bonds") in the aggregate
principal amount of $63,300,000.
The issuance and sale of the Bonds has been
authorized by a Resolution adopted by the Issuer on July __, 1996
(the "Resolution"). The Bonds will be issued pursuant to an
Indenture of Trust to be dated as of July 1, 1996 (the
"Indenture") between the Issuer and The Bank of New York, as
trustee (the "Trustee").
The proceeds of the Bonds will be used to refund
$63,300,000 of the Issuer's outstanding Adjustable Rate Pollution
Control Revenue Refunding Bonds (West Texas Utilities Company,
Public Service Company of Oklahoma and Central Power and Light
Company Oklaunion Project) Series 1984 (the "Prior Bonds"). The
Prior Bonds were originally issued to acquire, construct and
improve certain air and water pollution control and solid waste
disposal facilities (the "Facilities") at the Oklaunion Electric
Generating Plant near Vernon, Texas (the "Plant") in which West
Texas Utilities Company, a Texas corporation ("WTU"), Public
Service Company of Oklahoma, an Oklahoma corporation ("PSO"), and
Central Power and Light Company, a Texas corporation ("CPL")
(collectively, the "Companies" or individually, a "Company"), own
54.7%, 15.6% and 7.8% undivided interests, respectively. The
respective undivided Ownership Percentages of each of the
Companies (the "Ownership Percentage") of the portion of the
facilities financed from the proceeds of the Prior Bonds is 70%
for WTU, 20% for PSO and 10% for CPL.
Pursuant to an Installment Payment Agreement
dated as of July 1, 1996 (the "Agreement") between the Issuer,
the Companies and Central and South West Corporation, as agent
for the Companies ("CSW" or the "Agent"), the Companies will be
obligated to make payments at such times and in such amounts as
shall be required to pay, when due, the principal of, premium, if
any, interest on, and Purchase Price for, the Bonds. The
payments will be made directly to the Trustee. Neither the
Facilities nor the Plant constitute security for the Bonds, which
will be secured only by the assignment and pledge of the
Agreement, the moneys deposited or required to be deposited under
the Indenture (other than moneys deposited to the Rebate Fund and
the Bond Purchase Fund), and the Companies' absolute
unconditional and several obligations to make payments thereunder
pro rata according to each such Company's Ownership Percentage.
There follows in this Official Statement brief
descriptions of the Issuer, the Facilities, the Use of Proceeds,
the Bonds, the Agreement and the Indenture. The descriptions
herein of the Agreement and the Indenture do not purport to be
complete and are qualified in their entirety by reference to such
documents, and the descriptions herein of the Bonds are qualified
in their entirety by reference to the forms thereof and the
information with respect thereto included in the Indenture. See
"MISCELLANEOUS" herein for information with respect to obtaining
copies of such documents. Appendices A, B & C to this Official
Statement have been furnished by, and contain information
concerning, WTU, PSO and CPL, respectively, including certain
financial statements and other information incorporated therein
by reference. Terms not defined herein have the meanings set
forth in the Agreement, the Indenture, or in Appendix D to this
Official Statement.
THE ISSUER
Red River Authority of Texas is a governmental
agency and body politic and corporate of the State of Texas,
created as a conservation and reclamation district pursuant to
Article XVI, Section 59, of the Constitution of Texas and by
Chapter 279, Acts of the Regular Session of the 56th Texas
Legislature, 1959 (Article 8280-228, Vernon's Annotated Texas
Civil Statutes) (the "Act"). The principal office of the Issuer
is in Wichita Falls, Texas. The jurisdiction of the Issuer is
comprised of most of the territory lying within the watershed of
the Red River and its tributary streams which is located within
the State of Texas.
THE FACILITIES
The Facilities consist of the Companies' portion
of the air and water pollution control and solid waste disposal
facilities acquired, constructed and improved as a part of the
total environmental control program at the Plant. The Plant is a
coal-fired 640 megawatt electric generating unit which began
commercial operation in 1986.
The Facilities consist primarily of an
electrostatic precipitator, ash handling system, sulfur dioxide
removal system, sludge handling and treating system, dust control
system, water handling equipment and solid waste disposal
landfill for the Plant. The Texas Air Control Board and the
Texas Department of Water Resources have certified that the
Facilities (other than certain solid waste disposal facilities
for which no certification is required), as built and designed,
are in furtherance of the purpose of abating or controlling
atmospheric pollutants or contaminants or water pollution, as the
case may be.
USE OF PROCEEDS
The Bonds are being issued by the Issuer for the
purpose of providing funds for the redemption of all outstanding
Prior Bonds. The proceeds to be received by the Issuer from the
issuance and sale of the Bonds [will be deposited into a separate
account within the bond fund with respect to the Prior Bonds
maintained by The Bank of New York (successor to RepublicBank
Dallas, National Association) ("The Bank of New York")] pursuant
to an Indenture of Trust dated as of September 15, 1984, as
supplemented, between the Issuer and The Bank of New York. The
Companies will provide any additional funds required to redeem
all of the Prior Bonds from either internally generated funds or
short-term borrowings.
THE BONDS
The Bonds will be issuable only as fully
registered bonds without coupons in denominations of $5,000 or
any integral multiple thereof. Bonds may be transferred or
exchanged without cost, except for any tax or other governmental
charge.
The Bonds initially will be dated July 1, 1996.
The Bonds will mature on ____________ and will bear interest at
the rate of __% per annum until maturity, unless converted in
lieu of optional redemption as described under the caption
"Redemption-Mandatory Tender and Conversion in Lieu of Optional
Redemption." Principal of and premium, if any, on the Bonds will
be payable at the corporate trust office of the Trustee in New
York, New York. Interest on the Bonds will be payable semi-
annually on ____ 1 and ________ 1 of each year, commencing
________ 1, 1996, and will be paid by check mailed on the
Interest Payment Date to the registered owners thereof of record
as of the 15th day (whether or not a Business Day) of the
calendar month immediately preceding an Interest Payment Date,
provided that any Registered Owner of $1,000,000 or more in
aggregate principal amount of the Bonds may, upon written request
given to the Paying Agent at least five Business Days prior to an
Interest Payment Date designating an account in a domestic bank,
be paid by wire transfer of immediately available funds. Each
such payment date is hereinafter referred to as an "Interest
Payment Date."
The Bank of New York, the Trustee under the
Indenture, has been appointed as Paying Agent (the "Paying
Agent") under the Indenture. The Principal Office of the Paying
Agent is located at 101 Barclay Street, New York, New York 10286.
Limited Obligations of the Issuer
The Bonds will be limited obligations of the
Issuer, payable solely from, and secured equally and ratably by,
a first lien on and pledge of all the right, title and interest
of the Issuer in and to the Agreement, including all moneys
payable thereunder (except for certain rights of the Issuer
relating to the payment of expenses and indemnification). Each
Company is absolutely and unconditionally obligated under the
Agreement to pay to the Trustee, for the account of the Issuer,
an amount sufficient to pay, or provide for the payment of its
Ownership Percentage of, the principal of, premium, if any, and
interest on the Bonds when due (whether upon maturity, redemption
or otherwise), and to pay certain other charges. Neither the
credit nor the taxing power of the State of Texas, the Issuer or
any other political subdivision of the State of Texas is pledged
for the payment of the principal of, premium, if any, or interest
on the Bonds; the Bonds shall not be deemed a general obligation
of the State of Texas, the Issuer or any other political
subdivision of the state of Texas; and none of the State of
Texas, the Issuer or any other political subdivision of the State
of Texas shall be liable for the payment of the principal of,
premium, if any, or interest on the Bonds, except from those
revenues to be derived by the Issuer pursuant to the Agreement
and pledged to such payment. No holder of a Bond shall have the
right to demand payment from moneys derived by taxation or any
revenues of the Issuer, except the funds pledged to the payment
of the Bonds.
Notwithstanding its authorization of the Bonds
and its approval of the distribution of this Official Statement,
the Issuer does not endorse, or in any manner guarantee or
promise, directly or indirectly, to pay any obligations on the
Bonds from any source of funds other than as described herein,
nor does the Issuer guarantee, warrant or endorse the
creditworthiness or credit standing of the Companies or in any
manner guarantee, warrant or endorse the investment quality or
value of the Bonds.
Redemption
The Bonds are subject to redemption prior to
maturity as follows:
Optional Redemption
The Bonds are subject to redemption prior to
maturity at the option of the Issuer, upon written direction of
the Agent delivered to the Trustee, in whole or in part on
____________ and on any Business Day thereafter at the following
redemption prices (expressed as percentages of the principal
amount of the Bonds called for redemption) plus accrued interest
to the date fixed for redemption:
Redemption Date (dates inclusive). . . . .Redemption Price
Extraordinary Optional Redemption
The Bonds are subject to redemption in whole on
the next available Interest Payment Date for which notice of
redemption can be given, at a redemption price equal to the
aggregate principal amount of the Bonds Outstanding plus accrued
interest thereon to the redemption date, without premium, upon
receipt by the Trustee of a written notice from the Agent stating
that any of the following events has occurred within the
preceding 270 days and that it intends to exercise its option to
effect the redemption of the Bonds as a whole:
(a) in the reasonable judgment of the Agent, unreasonable
burdens or excessive liabilities shall have been imposed upon the
Issuer or the Companies with respect to the Facilities or the
Plant, including, without limitation, (i) the imposition of any
income or other taxes not imposed on July 1, 1996 or (ii) the
imposition of any ad valorem property or other taxes (other than
ad valorem property or other taxes imposed on July 1, 1996 upon
similarly assessed property within the same taxing jurisdiction);
(b) the Facilities or the Plant shall have been damaged or
destroyed to such extent that, in the opinion of the Agent, (i)
within a period of six consecutive months following such damage
or destruction, it is not practicable or desirable to rebuild,
repair or restore the same, (ii) the Companies will be thereby
prevented from carrying on their normal operations of the
Facilities or the Plant for a period of six or more consecutive
months or (iii) the cost of restoration would exceed by
$1,500,000 or more the net proceeds of insurance thereon;
(c) title to, or temporary use of, all or substantially all of
the Facilities or the Plant shall have been taken under the
exercise of the power of eminent domain;
(d) changes in the economic availability of materials, labor,
services, supplies (including fuel), equipment or other property,
facilities or things necessary for the operation of the
Facilities or the Plant shall have occurred, or technological,
regulatory or other changes shall have occurred, which, in the
opinion of the Agent, render the continued operation of the
Facilities or the Plant uneconomic;
(e) any court or administrative body shall enter a judgment,
order or decree requiring the Companies to cease, or dispose of,
all or any substantial part of its operations of the Facilities
or the Plant to such extent that, in the opinion of the Agent,
the Companies are or will be thereby prevented from carrying on
their normal operations of the Facilities or the Plant for a
period of six or more consecutive months; or
(f) as a result of any change in the Constitution of the State
of Texas or the Constitution of the United States of America or
of any legislative or administrative action (whether state or
federal), or of any final decree, judgment or order of any court
or administrative body (whether state or federal), the
obligations of the Companies under the Agreement shall have
become unenforceable or impossible of performance in any material
respect in accordance with the intent and purpose of the parties
as expressed in the Agreement (as specified in the Indenture).
Extraordinary Mandatory Redemption
The Bonds are subject to mandatory redemption in
whole or in part at any time if such partial redemption will
preserve the exemption from federal income taxation of interest
on the remaining Bonds Outstanding, at a redemption price equal
to the principal amount thereof together with unpaid interest
accrued to the date fixed for redemption, and without premium, if
(a) a final decree or judgment of any federal court, in which a
Company participates to the extent it deems sufficient, or (b) a
final action by the Internal Revenue Service, in proceedings in
which a Company participates to the extent it deems sufficient,
determines that the interest paid or payable on any Bonds to
other than, as provided in the Internal Revenue Code of 1986, as
amended (the "Code"), a "substantial user" of the Facilities or a
"related person" is or was includable in the gross income of the
owner thereof for federal income tax purposes under the Code, as
a result of the failure by a Company to observe or perform any
covenant, condition or agreement on its part to be observed or
performed under the Agreement or the inaccuracy of any
representation by a Company under the Agreement; provided,
however, that no decree or judgment by any court or action by the
Internal Revenue Service shall be considered final unless the
Registered Owner involved in such proceeding or action (i) gives
the Agent and the Trustee prompt written notice of the
commencement thereof and (ii) if the Companies agree to pay all
expenses in connection therewith and to indemnify such Registered
Owner against all liabilities in connection therewith, offers the
Companies the opportunity to control the defense thereof. Any
such redemption shall be made on a date determined by the Trustee
not more than 180 days after the date of such final decree,
judgment or action. The Trustee shall give the Issuer and the
Agent not less than 45 days written notice of such date.
Notice of Redemption
Not less than thirty (30) days or more than sixty
(60) days prior to any date fixed for redemption of Bonds, the
Trustee shall give notice of any redemption by sending such
notice by (i) first-class mail to the Owner of each Bond to be
redeemed in whole or in part, (ii) by certified mail, return
receipt requested, to DTC (so long as it owns all the Bonds), and
upon request, to any person or entities which provide evidence
acceptable to the Trustee that such person has a legal or
beneficial interest in at least $1,000,000 in principal amount of
the Bonds, and (iii) by certified mail, return receipt requested,
or by overnight delivery, received by the registered depositories
at least two (2) days prior to the general publication date for
such redemption notices and to be received by at least two (2) of
the national information services that disseminate bond
redemption notices on or before the general mailing date for such
notices; provided, however, that the failure to send, mail or
receive such notice described above, or any defect therein or in
the sending or mailing thereof, with respect to any Bond shall
not affect the validity or effectiveness of the proceedings for
the redemption of any other Bond. In addition, within sixty (60)
days after the redemption date an additional redemption notice
shall be sent to any Owner of the Bonds who has not surrendered
Bonds for redemption during the thirty (30) day period following
the redemption date and to any person or entities having legal or
beneficial ownership interest in at least $1,000,000 in principal
amount of such Bonds which have not been surrendered.
All notices of redemption shall state (i) the
redemption date, (ii) the redemption price, (iii) the
identification, including complete designation (including series)
and issue date of the Bonds and the CUSIP number, certificate
number (and in the case of partial redemption, the respective
principal amounts), interest rates and maturity dates of the
Bonds to be redeemed, (iv) that on the redemption date the
redemption price will become due and payable upon each such Bond,
and that interest thereon shall cease to accrue from and after
said date, and (v) the name and address of the Trustee and any
Paying Agent for such Bonds, including the place where such Bonds
are to be surrendered for payment of the redemption price
therefor.
Mandatory Tender and Conversion in Lieu of Optional Redemption
So long as no Event of Default exists under the
Indenture, the Agent may elect, on any optional redemption date
for the Bonds, beginning ______________, to convert all or any
part of the Bonds to a different interest rate Mode. The Agent
shall make such election as specified in the Indenture and upon
such election such Bonds shall be subject to mandatory tender for
purchase on such mandatory tender date, in lieu of optional
redemption, at the applicable Purchase Price. The Paying Agent
shall give notice of such mandatory tender for purchase to the
Registered Owners of Bonds by first class mail, not less than
thirty (30) days before the mandatory tender date. Mandatory
tender and conversion in lieu of optional redemption is subject
to certain conditions relating to rating the Bonds and obtaining
consent from MBIA Insurance Corporation (the "Bond Insurer").
The Bonds will be initially issued in the "Fixed
Rate Mode". Other than the Fixed Rate Mode the permitted Modes
for the Bonds are "Flexible Mode," for periods of from one to 270
days, and "Daily Mode," "Weekly Mode," "Monthly Mode," "Quarterly
Mode," "Semiannual Mode" and "Multiannual Mode," for periods of
one day, one week, one month, three months, six months or one
year or integral multiples thereof, respectively. Except as
otherwise provided in the Indenture, the interest rates in each
Mode and the period during which a particular Mode is in effect
will be determined by a remarketing agent to be appointed under
the Indenture. The Mode for all or a portion of the Bonds after
conversion as described above is subject to subsequent conversion
to a different Mode from time to time at the election of the
Agent as provided in the Indenture. Purchasers of Bonds after
conversion will receive an offering document describing the
alternative Modes and other features of the Bonds.
BOOK-ENTRY ONLY SYSTEM
The Depository Trust Company ("DTC"), New York,
New York, will act as securities depository for the Bonds (the
"Securities Depository"). The Bonds will be issued as fully-
registered securities registered in the name of Cede & Co., as
nominee for DTC. One fully-registered Bond certificate for Bonds
of each Mode will be issued in the aggregate principal amount of
the Bonds of that Mode and will be deposited with DTC.
DTC is a limited-purpose trust company organized
under the New York Banking Law, a "banking organization" within
the meaning of the New York Banking Law, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of
the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the
Securities Exchange Act of 1934, as amended. DTC holds
securities that its participants deposit with DTC (such
participants or the participants of any successor Securities
Depository are herein referred to as "Participants" or "DTC
Participants"). DTC also facilitates the settlement among DTC
Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized
book-entry changes in DTC Participants' accounts, thereby
eliminating the need for physical movement of securities
certificates. Participants include securities brokers and
dealers, banks, trust companies, clearing corporations and
certain other organizations. DTC is owned by a number of its
Participants and by the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks
and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly
("Indirect Participants"). The rules applicable to DTC and the
Participants are on file with the Securities and Exchange
Commission.
Purchases of beneficial ownership interests in
the Bonds under the DTC system must be made by or through
Participants, which will receive a credit for the Bonds on DTC's
records. The ownership interest of each Beneficial Owner of a
Bond is in turn to be recorded on the Participant's and Indirect
Participants' records. Beneficial Owners will not receive
written communication from DTC of their purchase, but Beneficial
Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of
their holdings, from the Participant or Indirect Participant
through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests of the Bonds are to be
accomplished by entries made on the books of Participants acting
on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in
the Bonds, except in the event that use of the book-entry system
for the Bonds is discontinued as described under the caption
"Discontinuation of Book-Entry Only System."
To facilitate subsequent transfers, all Bonds
deposited with DTC are registered in the name of DTC's
partnership nominee, Cede & Co. The deposit of Bonds with DTC
and their registration in the name of Cede & Co. effect no change
in beneficial ownership. DTC has no knowledge of the actual
Beneficial Owners of the Bonds. DTC's records reflect only the
identity of the Participants to whose accounts such Bonds are
credited, which may or may not be the Beneficial Owners. The
Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by
DTC to Participants, by Participants to Indirect Participants,
and by Participants and Indirect Participants to Beneficial
Owners will be governed by arrangements among them, subject to
any statutory or regulatory requirements as may be in effect from
time to time.
Notices of redemption of Bonds will be sent to
Cede & Co. If less than all of the Bonds of a particular Mode
are being redeemed, DTC's practice is to determine by lot the
amount of the interest of each Participant in Bonds of such Mode
to be redeemed.
Neither DTC nor Cede & Co. will consent or vote
with respect to Bonds. Under its usual procedures, DTC mails an
"Omnibus Proxy" to the Issuer as soon as possible after the
record date. The "Omnibus Proxy" assigns Cede & Co.'s consenting
or voting rights to those Participants to whose accounts the
Bonds are credited on the record date identified in a listing
attached to the "Omnibus Proxy."
Principal and interest payments on the Bonds will
be made to DTC. DTC's practice is to credit DTC Participants'
accounts on a payment date in accordance with their respective
holdings shown on DTC's records unless DTC has reason to believe
that it will not receive payment on a payment date. Payments by
Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as in the case with
securities held for the accounts of customers in bearer form or
registered in "street name" and will be the responsibility of
such Participant and not of DTC, the Trustee, the Issuer, the
Agent or the Companies, subject to any statutory or regulatory
requirements as may be in effect from time to time. Payments of
principal and interest to DTC is the responsibility of the
Trustee. Disbursement of such payments to Participants is the
responsibility of DTC and disbursement of such payments to the
Beneficial Owners is the responsibility of the Participants and
Indirect Participants.
DTC may discontinue providing its services as
securities depository with respect to the Bonds at any time by
giving reasonable notice to the Issuer. Under such
circumstances, in the event that a successor securities
depository is not obtained, Bond certificates are required to be
printed and delivered as described herein under the caption
"Discontinuation of Book-Entry Only System."
The Issuer may decide to discontinue use of the
system of book-entry transfers through DTC or a successor
securities depository. In that event, Bond certificates will be
printed and delivered as described herein under the caption
"Discontinuation of Book-Entry Only System."
THE INFORMATION PROVIDED IMMEDIATELY ABOVE UNDER
THIS CAPTION HAS BEEN PROVIDED BY DTC. NO REPRESENTATION IS MADE
BY THE ISSUER, THE AGENT, THE COMPANIES OR THE UNDERWRITERS AS TO
THE ACCURACY OR ADEQUACY OF SUCH INFORMATION PROVIDED BY DTC OR
AS TO THE ABSENCE OF MATERIAL ADVERSE CHANGES IN SUCH INFORMATION
SUBSEQUENT TO THE DATE HEREOF.
For so long as the Bonds are registered in the
name of DTC or its nominee, Cede & Co., the Issuer and the
Trustee will recognize only DTC or its nominee, Cede & Co., as
the Registered Owner of the Bonds for all purposes, including
payments, notices (including notices of redemption or mandatory
tender) and voting.
Under the Indenture, payments made by the Trustee
to DTC or its nominee shall satisfy the Issuer's obligations
under the Indenture and the Companies' obligations under the
Agreement to the extent of the payments so made.
Neither the Issuer, the Agent, the Companies nor
the Trustee shall have any responsibility or obligation with
respect to:
(i) the accuracy of the records of DTC, its nominee or any
Participant or Indirect Participant with respect to any
beneficial ownership interest in any Bonds;
(ii) the delivery to any Participant or Indirect Participant or
any other person, other than an owner, as shown in the bond
register, of any notice with respect to any Bond including,
without limitation, any notice of redemption, tender, purchase or
any event which would or could give rise to a tender or purchase
right or option with respect to any Bond;
(iii) the payment to any Participant or Indirect Participant or
any other person, other than an owner, as shown in the bond
register, of any amount with respect to the principal of,
premium, if any, or interest on, or the Purchase Price of, any
Bond; or
(iv) any consent given by DTC as Registered Owner.
Prior to any discontinuation of the Book-Entry Only System
described above, the Issuer and the Trustee may treat DTC as, and
deem DTC to be, the absolute owner of the Bonds for all purposes
whatsoever, including, without limitation:
(i) the payment of principal of, premium, if any, and interest
on the Bonds;
(ii) giving notices of redemption and other matters with respect
to the Bonds;
(iii) registering transfers with respect to the Bonds; and
(iv) the selection of Bonds for redemption.
Discontinuation of Book-Entry Only System
In the event that the Issuer determines to remove
the Securities Depository, the Issuer will (i) appoint a
successor Securities Depository and transfer one or more separate
Bond certificates to such successor or (ii) notify the
Participants of the Securities Depository of the availability
through the Securities Depository of Bond certificates and
transfer one or more separate Bond certificates to the
Participants of the Securities Depository having Bonds credited
to their accounts with the Securities Depository. In such event,
the Bonds will no longer be restricted to being registered in the
bond register in the name of the Securities Depository, or its
nominee, but may be registered in the name of any successor
Securities Depository, or its nominee, or in whatever name or
names the Participants of the Securities Depository receiving
Bonds shall designate, in accordance with the provisions of the
Indenture.
THE AGREEMENT
General
The following is a summary of certain provisions
of the Agreement. Reference is hereby made to the Agreement in
its entirety for the detailed provisions thereof.
Use of Bond Proceeds
The Issuer will issue the Bonds to provide funds
to currently refund the Prior Bonds. Upon the sale of the Bonds,
the Issuer will transfer the proceeds of the Bonds to [the
trustee for the Prior Bonds for deposit into the bond fund
created under the indenture for the Prior Bonds.]
Installment Payments
The Companies will make Installment Payments, in
proportion to their respective Ownership Percentages, to fund
payments on the Bonds in such amounts which, together with other
moneys available therefor in the Bond Fund created under the
Indenture, will be sufficient to pay when due the principal of,
premium, if any, and interest on the Outstanding Bonds as they
shall mature, be redeemed, be purchased or deemed purchased or
otherwise become due as provided in the Indenture. The Companies
shall make such payments directly to the Trustee for the account
of the Issuer.
Installment Payment obligations of each Company
under the Agreement will be absolute, several and unconditional,
and each Company will make such payments free of any deductions
and without abatement, diminution or setoff. In the event that a
Company fails to make any of such payments, the item or
installment so in default will continue as an obligation of such
Company until the amount in default has been fully paid.
Other Payments Under the Agreement
In addition to the Installment Payments, the
Companies severally agree to pay taxes, assessments and other
charges of any kind whatsoever that may at any time be lawfully
levied or imposed with respect to the Facilities or the
Installment Payments under the Agreement and all costs and
expenses of the operation and maintenance of the Facilities. The
Companies also severally agree to pay certain costs and expenses
of the Issuer and the Trustee in connection with the Bonds and to
indemnify such parties against certain liabilities arising in
connection with the sale of the Bonds and the execution and
delivery of the related bond documents.
Corporate Existence
Each Company agrees that it will not dispose of
all or substantially all of its assets as an entirety (whether by
liquidation, dissolution, or otherwise) and will not consolidate
with or merge into another corporation, or permit one or more
corporations to consolidate with or merge into it, unless the
resulting, surviving, or transferee corporation, as the case may
be, if other than such Company, irrevocably and unconditionally
assumes, in an instrument delivered to the Issuer and to the
Trustee, the due and punctual performance of the obligations of
such Company under the Agreement. Upon the delivery of such an
instrument, such Company shall thereupon be relieved of any
further obligation or liability under the Agreement or with
respect to the Bonds, and the resulting, surviving, or transferee
corporation, as the case may be, shall succeed to and be
substituted for such Company under the Agreement with the same
effect as if such resulting or surviving corporation or
transferee had been a party to the Agreement.
Assignment
Under certain conditions, the Agreement may be
assigned by a Company, but such assignment will not relieve such
Company from primary liability for any of its several obligations
under the Agreement. No assignment will be effective without a
Favorable Opinion being furnished to the Issuer and the Trustee,
together with notice of such assignment.
Defaults and Remedies
The Agreement provides that the occurrence and
continuation of any one of the following shall constitute an
"Event of Default" thereunder:
(a) failure by a Company to pay Installment
Payments with respect to principal of or premium on any Bond at
the times specified therein;
(b) failure by a Company to pay Installment
Payments with respect to interest on any Bond at the times
specified therein and the continuation of such failure for a
period of 60 days or more;
(c) failure by a Company to pay Installment
Payments with respect to the Purchase Price of any Bond at the
times specified therein and the continuation of such failure for
a period of one Business Day or more after notice thereof shall
have been given by the Trustee to the Agent and the Issuer;
(d) failure by a Company to observe and perform
any covenant, condition or agreement on its part required to be
observed or performed in the Agreement, other than as referred to
in (a), (b) or (c) above, for a period of 90 days after receipt
by the Agent of written notice specifying such failure and
requesting that it be remedied, given to the Agent by the Issuer
or the Trustee, unless the Issuer and the Trustee shall agree in
writing to an extension of such time prior to its expiration;
provided, however, that if the failure stated in the notice can,
in the reasonable judgment of the Agent, be corrected, but cannot
be corrected within the applicable period, the Issuer and the
Trustee will not unreasonably withhold their consent to an
extension of such time if corrective action is instituted within
the applicable period and diligently pursued until the default is
corrected;
(e) certain events of dissolution, liquidation,
insolvency, bankruptcy or reorganization involving a Company; or
(f) the occurrence of an "Event of Default"
under the Indenture.
The provisions of paragraph (d) above 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 regulations of any kind of the
government of the United States of America or of the State of
Texas or any of their departments, agencies, political
subdivisions, or officials, or any civil or military authority;
insurrections; riots; epidemics; landslides; lightning;
earthquakes; tidal waves; fires; hurricanes; tornadoes; blue
northers; other storms; floods; washouts; droughts; arrests;
restraints of government and people; civil disturbances;
explosions; breakage or accident to machinery, transmission
pipes, transmission facilities or canals; partial or entire
failure of utilities; shortages of labor, material, supplies or
transportation; or any other cause or event not reasonably within
the control of the Companies (collectively, "events of force
majeure"), the Companies are unable in whole or in part to carry
out the agreements on the Companies' part herein contained, the
Companies shall not be deemed in default during the continuance
of such inability. The Companies, however, will use their best
efforts to remedy with all reasonable dispatch the cause or
causes preventing the Companies from carrying out such
agreements; provided, that the settlement of strikes, lockouts
and other industrial disturbances shall be entirely within the
discretion of the Companies, and the Companies 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 Agent, unfavorable to the Companies. The occurrence of any
event of force majeure shall not suspend or otherwise abate, and
the Companies shall not be relieved from, any obligation under
this Agreement to the extent that the failure of the Companies to
observe or perform any such obligation would result in the
failure to pay when due the principal of, premium, if any,
interest on, or the Purchase Price for, the Bonds or would result
in the interest on any Bonds becoming includable in the gross
income of the owners thereof for federal income tax purposes.
The above provisions, however, are subject to the
conditions that, after any such Event of Default, subject to and
as provided in the Indenture, the Trustee may waive such Event of
Default and rescind and annul any remedial step theretofore taken
by it or by the Issuer with respect to such default and its
consequences; but no such waiver, rescission or annulment shall
extend to or affect any subsequent default or impair any right or
remedy consequent thereon.
Whenever any Event of Default under the Agreement
shall have occurred and is continuing, the Issuer, with the
consent of the Trustee, or the Trustee may take any one or more
of the following remedial steps but only if acceleration of the
principal amount of the Bonds has been declared pursuant to the
Indenture:
(a) By notice in writing to the Agent, declare
the unpaid Installment Payments to be due and payable
immediately, if concurrently with or prior to such notice the
unpaid principal amount of the Bonds has been declared to be due
and payable under the Indenture, and upon any such declaration
the Installment Payments payable under the Agreement shall become
and shall be immediately due and payable in the amount equal to
the principal of and all accrued interest on the Bonds (without
premium); provided, however, that an Event of Default shall be
deemed waived and a declaration accelerating payment of unpaid
Installment Payments payable under the Agreement shall be deemed
rescinded without further action on the part of the Trustee or
the Issuer upon any rescission by the Trustee of the
corresponding declaration of acceleration of the Bonds under the
Indenture.
(b) Whatever action at law or in equity may
appear necessary or desirable to collect the payment and other
amounts then due or to enforce performance and observance of any
obligation, agreement or covenant of the Companies under the
Agreement.
The Companies have covenanted that, in case an
Event of Default shall occur with respect to the payment of any
Installment Payment payable then, upon demand of the Trustee, the
Companies will severally pay to the Trustee the whole amount that
then shall have become due and payable, with interest (to the
extent permitted by law) on such amount, at the rate of interest
borne by the Bonds at the time of such failure, from the due date
thereof until paid.
In case a Company shall fail to pay such amounts
upon such demand, the Trustee shall be entitled and empowered to
institute any action or proceeding at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any
such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against such Company
and collect, in the manner provided by law out of the property of
such Company, the moneys adjudged or decreed to be payable.
Certain Covenants Regarding Arbitrage and Tax Exemption
The Issuer and the Companies have agreed not to
knowingly take any action or omit to take any action, which would
result in a loss of the exemption from federal income taxation of
interest on the Bonds by virtue of the Bonds being considered
"arbitrage bonds" within the meaning of Section 148 of the Code.
The Issuer and the Companies have agreed to refrain from any
action which would adversely affect, and to take such action to
assure, the treatment of the Bonds as obligations described in
Section 103(a) of the Code, the interest on which is not
includable in the "gross income" of the holder (other than the
income of a "substantial user" of the Facilities or a "related
person" within the meaning of Section 147(a) of the Code) for
purposes of federal income taxation.
Amendment of Agreement
The Agreement may be amended by written agreement
of the Issuer, the Agent, each Company and the Bond Insurer,
provided that no amendment may be made which would adversely
affect the rights of the Owners of any of the Outstanding Bonds
without the consent of the Owners of a majority in aggregate
principal amount of the Bonds then Outstanding; provided,
however, that no amendment may be made which would (i) decrease
the amounts payable under the Agreement; (ii) change the date of
payment or prepayment provisions under the Agreement; or
(iii) change the amendment provisions of the Agreement without
the consent of all of the Owners of the Bonds adversely affected
thereby; and provided further that the Agreement may be amended
by written agreement of the Issuer and the Company in order to
make conforming changes with respect to certain amendments made
to the Indenture.
THE INDENTURE
General
The following is a summary of certain provisions
of the Indenture. Reference is hereby made to the Indenture in
its entirety for the detailed provisions thereof.
Bond Fund
The Indenture creates and establishes with the
Trustee a separate trust fund designated the "Red River Authority
of Texas, Pollution Control Revenue Refunding Bonds (West Texas
Utilities Company, Public Service Company of Oklahoma and Central
Power and Light Company Oklaunion Project) Series 1996 Bond Fund"
(the "Bond Fund"), which will be used solely for the payment of
the principal of, premium, if any, and interest on the Bonds.
All Installment Payments made by the Companies in connection with
principal of, premium, if any, and interest on the Bonds will be
made to the Trustee for deposit in the Bond Fund. There shall be
deposited into the Bond Fund, when received: (i) accrued
interest, if any, on the Bonds from the date thereof to the date
of delivery to the initial purchaser thereof; (ii) all payments
specified in the Agreement (except for certain payments of fees,
expenses, and indemnification arising out of the Issuer's
Unassigned Rights); (iii) all moneys required to be so deposited
in connection with any redemption of Bonds; (iv) any amounts
directed to be transferred into the Bond Fund pursuant to any
provision of the Indenture, and (v) all other moneys when
received by the Trustee which are required to be deposited into
the Bond Fund or which are accompanied by directions that such
moneys are to be paid into the Bond Fund.
Moneys held in the Bond Fund shall be used solely
for the payment of the principal of, premium, if any, and
interest on the Bonds on the dates due for the payment or
redemption thereof. The Issuer has authorized and directed the
Trustee to withdraw sufficient funds from the Bond Fund to pay
the principal of, premium, if any, and interest on the Bonds as
the same become due and payable, which authorization and
direction the Trustee has accepted.
Investment
Except as provided in the Indenture, any moneys
held as part of the Bond Fund shall be invested or reinvested by
the Trustee as provided in written instructions of the Company
solely in Permitted Investments.
Moneys Held in Trust
All moneys required to be deposited with or paid
to the Trustee for the account of any fund under the Indenture
shall be held by the Trustee in trust and, except for (i) moneys
in the Bond Purchase Fund and the Rebate Fund, and (ii) moneys
deposited with or paid to the Trustee for the redemption of
Bonds, notice of the redemption for which has been duly given,
shall, while held by the Trustee, be part of the trust estate and
be subject to the security interest created by the Indenture.
Events of Default and Remedies
The Indenture provides that each of the following
constitutes an "Event of Default" thereunder:
(a) default in the due and punctual payment of
the principal of or premium, if any, on any Outstanding Bond, as
the same shall become due and payable, whether at the stated
maturity thereof, upon any proceedings for redemption, or upon
the maturity thereof by declaration of acceleration;
(b) default in the due and punctual payment of
the interest on any Outstanding Bond, as the same shall become
due and payable, and the continuation of such default for a
period of 60 days or more;
(c) default in the due and punctual payment of
the Purchase Price of any Outstanding Bond, as the same shall
become due and payable and the continuation of such default for a
period of one Business Day or more;
(d) default by the Issuer in its performance or
observance of any of the other covenants, agreements or
conditions contained in the Indenture, and the continuation
thereof without corrective action for a period of 90 days after
receipt by the Issuer and the Agent of notice given by the
Trustee or the Owners of not less than 25% in aggregate principal
amount of all Bonds Outstanding as specified in the Indenture; or
(e) an Event of Default (as defined in the
Agreement) has occurred and is continuing under the Agreement.
If any Event of Default occurs and is continuing, the Trustee
may, and upon request of the owners of at least 25% in principal
amount of all Bonds then Outstanding shall, by notice in writing
to the Issuer and the Agent, declare the principal of all Bonds
then Outstanding to be immediately due and payable, and upon such
declaration the said principal, together with interest accrued
thereon to the date of acceleration, shall become due and payable
immediately at the place of payment provided therein, anything in
the Indenture or in the Bonds to the contrary notwithstanding.
Upon the occurrence of any such acceleration, the Trustee shall
immediately declare all Installment Payments to be due and
payable immediately.
If, after the principal of the Bonds has become
due and payable, all arrears of interest upon the Bonds are paid
by the Issuer, and the Issuer also performs all other things in
respect to which it may have been in default under the Indenture
and pays the reasonable charges of the Trustee and the
Bondholders, including reasonable and necessary attorneys' fees,
then, and in every such case, the owners of a majority in
principal amount of the Bonds then Outstanding, by notice to the
Issuer and to the Trustee, may annul such acceleration and its
consequences. No such annulment shall extend to or affect any
subsequent default or impair any right or remedy consequent
thereon.
Upon the occurrence of an Event of Default, the
Trustee may pursue any available remedy by suit at law or in
equity to enforce the payment of the principal of, premium, if
any, and interest on the Bonds then Outstanding, and the
performance by the Issuer of its obligations under the Indenture,
including, without limitation, the following: (a) by mandamus,
or other suit, action or proceeding at law or in equity, enforce
all rights of the Bondholders and require the Issuer to carry out
its agreements under the Indenture and the Acts; (b) bring suit
upon the Bonds; (c) by action, suit or proceeding at law or in
equity, require the Issuer to account as if it were the trustee
of an express trust for the Bondholders; or (d) by action, suit
or proceeding at law or in equity, enjoin any acts or things
which may be unlawful or in violation of the rights of the
Bondholders.
MBIA Insurance Corporation Deemed to be a Bondholder
Notwithstanding any provision of the Indenture to
the contrary, Bond Insurer shall at all times be deemed the
exclusive owner of all Bonds for the purposes of all approvals,
consents, waivers, institution of any action, and the direction
of all remedies. No acceleration shall be permitted, and no
Event of Default shall be waived, without the Bond Insurer's
consent. The Bond Insurer shall have the right to direct all
remedies pursuant to the Indenture.
Defeasance
Subject to consent of the Bond Insurer, any Bond
shall be deemed to have been paid and discharged when payment of
the principal of and premium, if any, on such Bond plus the
interest thereon to the due date thereof (whether such due date
be by reason of maturity or upon redemption as provided in the
Indenture or otherwise) either (a) shall have been made in
accordance with the terms of the Indenture or (b) shall have been
provided for by irrevocably depositing with the Trustee, in trust
solely for such payment, any combination of (1) sufficient moneys
to make such payment and/or (2) Government Obligations not
subject to redemption or prepayment and maturing as principal and
interest in such amounts as in the opinion of an independent
certified public accountant delivered to the Trustee are
sufficient to make such payment without reinvestment and to pay
all fees and expenses in connection therewith.
Discharge of Lien
When all of the Bonds have been paid or deemed
paid and the Issuer is not in default under any of the covenants
and promises contained in such Bonds and the Indenture, and if
the Issuer shall pay or cause to be paid to the Trustee all sums
of money due or to become due according to the Indenture or of
the Bonds and of the Agreement, then the rights under the
Indenture will become null and void; provided, however, that the
rights of the Trustee under the Indenture to receive its fees,
charges and expenses shall survive the discharge of the Indenture
until paid in full. See the caption "Defeasance" above for a
discussion of the conditions under which the Bonds will be deemed
to have been paid.
The Trustee; New York Paying Agent
To the extent permitted by law, the Trustee may
invest in and treat itself as any other holder of the Bonds. The
Trustee may resign at any time after notice to the Issuer, the
Agent and the Bondholders, such resignation to take effect only
upon the appointment of a successor Trustee. The Trustee may be
removed at any time by written notice signed by the Issuer and
the Agent and delivered to the Trustee and the Bondholders. Such
removal shall take effect only upon the appointment of a
successor Trustee. Every successor trustee may be appointed by
the Issuer with the consent of the Agent and shall be a bank or
trust company which (i) is organized as a corporation or banking
association and doing business under the laws of the United
States of America or any state thereof, (ii) is authorized under
such laws to exercise corporate trust powers and to perform all
the duties imposed upon it by the Indenture and the Agreement,
(iii) is subject to supervision or examination by federal or
state authority, (iv) has combined capital and surplus of at
least $50,000,000, (v) shall not have become incapable of acting
or have been adjudged a bankrupt or an insolvent or have had a
receiver appointed for itself or for any of its property or have
had a public officer take charge or control of it or its property
or affairs for the purpose of rehabilitation, conservation or
liquidation and (vi) must be an institution rated at least "Baa3"
by Moody's (or Moody's shall have provided written evidence that
such successor Trustee is otherwise acceptable to Moody's) if the
Bonds are then rated by Moody's, and at least "BBB-" or "A-3" by
S&P (or S&P shall have provided written evidence that such
successor Trustee is otherwise acceptable to S&P) if the Bonds
are then rated by S&P. Should the Trustee cease to be eligible
to act as trustee under the Indenture, it shall promptly notify
the Owners of all Bonds then Outstanding, the Issuer and the
Agent of such fact. The Issuer may appoint a temporary trustee
until the appointment of such successor.
The Paying Agent is required to maintain an
office, or have an agent with an office, in New York City at all
times that any Bonds are outstanding.
Additional Notices
Upon written request of any Owner of Bonds in an
aggregate principal amount of at least $1,000,000 (or any person
or entity which provides written evidence acceptable to the
Trustee that such person or entity has a legal or beneficial
interest in Bonds in an aggregate principal amount of at least
$1,000,000), the Trustee shall give an additional copy of any
notice to be given by the Trustee under the Indenture by first-
class mail to a second address specified by such Owner, person or
entity. Any such additional notices shall be given
simultaneously with the original notices.
Upon written request of any person or entity
which provides evidence acceptable to the Trustee that such
person or entity has a legal or beneficial interest in at least
$1,000,000 in principal amount of the Bonds, the Trustee shall,
for the calendar year in which such request is received, provide
one or more of the following as requested to such person or
entity: (i) notices of redemption; (ii) notices of default;
(iii) copies of all notices to which such person or entity is
entitled under the Indenture to a specific second address; and
(iv) outstanding balances by maturity, redemption history,
including redemption date, amount and source of funds and
distribution of the call to maturity.
Supplemental Indentures
The Issuer and the Trustee, with the written
consent of the Agent and the Bond Insurer, but without the
consent of or notice to the Bondholders, may enter into an
indenture or indentures supplemental to the Indenture, for any of
the following purposes:
(a) to cure any ambiguity, formal defect or
omission in the Indenture or to make such other changes which
shall not have a material adverse effect upon the interests of
the Bondholders;
(b) to grant to or confer upon the Trustee, for
the benefit of the Bondholders, any additional rights, remedies,
powers or authorities, or any additional security, that may
lawfully be granted to or conferred upon the Bondholders or the
Trustee;
(c) to subject to the Indenture additional
revenues, properties or collateral;
(d) to modify, amend or supplement the
Indenture, or any indenture supplemental thereto, in such manner
as to permit the qualification thereof under the Trust Indenture
Act of 1939, as amended, or any similar federal statute hereafter
in effect, or to permit the qualification of the Bonds for sale
under the securities laws of any of the states of the United
States and, if the Issuer so determines, to add to the Indenture
or any indenture supplemental thereto such other terms,
conditions and provisions as may be permitted by the Trust
Indenture Act of 1939, as amended, or any similar federal
statute;
(e) to add to the covenants and agreements of
the Issuer contained in the Indenture other covenants and
agreements thereafter to be observed for the protection of the
Bondholders or to surrender or limit any right, power or
authority therein reserved to or conferred upon the Issuer;
(f) effective upon any Conversion Date to a new
Mode, to make any amendment affecting only the Bonds being
converted, including revision to Authorized Denominations;
(g) to add provisions relating to the partial
conversion of Bonds to a new Mode;
(h) to conform the Indenture to the requirements
of the Rating Agencies;
(i) to add or modify provisions permitting a
mandatory tender of Bonds in lieu of redemption; and
(j) to add provisions permitting the addition of
a credit facility or a liquidity facility.
Exclusive of the purposes described in
subparagraphs (a) through (j) above, the Owners of a majority in
aggregate principal amount of the Bonds then Outstanding will
have the right, from time to time, to approve any supplemental
indenture deemed necessary and desirable by the Issuer for the
purposes of modifying, altering, amending, adding to or
rescinding any of the terms or provisions contained in the
Indenture or any supplemental indenture. No modification or
alteration may be made without the consent of the holders of all
Bonds then Outstanding which permits (i) an extension of the
maturity of the principal of, or the time for payment of any
redemption premium or interest on, any Bond or a reduction in the
principal amount of any Bond, or the rate of interest or
redemption premium thereon, or a reduction in the amount of, or
extension of the time of any payment required by, any Bond;
(ii) a privilege or priority of any Bond over any other Bond
(except as provided in the Indenture); (iii) a reduction in the
aggregate principal amount of the Bonds required for consent to
such a supplemental indenture; (iv) the deprivation of the Owner
of any Bond then Outstanding of the lien created by the
Indenture; or (v) the amendment of the limitations described in
this paragraph.
THE MBIA INSURANCE CORPORATION INSURANCE POLICY
The following information has been furnished by
the Bond Insurer for use in this Official Statement. Reference
is made to Appendix F to this Official Statement for a specimen
of the Bond Insurer's policy.
The Bond Insurer's policy unconditionally and
irrevocably guarantees the full and complete payment required to
be made by or on behalf of the Issuer to the Paying Agent or its
successor of an amount equal to (i) the principal of (either at
the stated maturity or by a mandatory redemption upon the
occurrence of a determination of taxability) and interest on, the
Bonds as such payments shall become due but shall not be so paid
(except that in the event of any acceleration of the due date of
such principal by reason of mandatory or optional redemption or
acceleration resulting from default or otherwise, other than a
mandatory redemption upon the occurrence of a determination of
taxability, the payments guaranteed by the Bond Insurer's policy
shall be made in such amounts and at such times as such payments
of principal would have been due had there not been any such
acceleration); and (ii) the reimbursement of any such payment
which is subsequently recovered from any owner of the Bonds
pursuant to a final judgment by a court of competent jurisdiction
that such payment constitutes an avoidable preference to such
owner within the meaning of any applicable bankruptcy law (a
"Preference").
The Bond Insurer's policy does not insure against
loss of any prepayment premium which may at any time be payable
with respect to any Bond. The Bond Insurer's policy does not,
under any circumstance, insure against loss relating to: (i)
optional or mandatory redemptions (other than a mandatory
redemption upon the occurrence of a determination of taxability);
(ii) any payments to be made on an accelerated basis; (iii)
payments of the purchase price of Bonds under tender by an owner
thereof; or (iv) any Preference relating to (i) through (iii)
above. The Bond Insurer's policy also does not insure against
nonpayment of principal of or interest on the Bonds resulting
from the insolvency, negligence or any other act or omission of
the Paying Agent or any other paying agent for the Bonds.
Upon receipt of telephonic or telegraphic notice,
such notice subsequently confirmed in writing by registered or
certified mail, or upon receipt of written notice by registered
or certified mail, by the Bond Insurer from the Paying Agent or
any owner of a Bond the payment of an insured amount for which is
then due, that such required payment has not been made, the Bond
Insurer on the due date of such payment or within one business
day after receipt of notice of such nonpayment, whichever is
later, will make a deposit of funds, in an account with State
Street Bank and Trust Company, N.A., in New York, New York, or
its successor, sufficient for the payment of any such insured
amounts which are then due. Upon presentment and surrender of
such Bonds or presentment of such other proof of ownership of the
Bonds, together with any appropriate instruments of assignment to
evidence the assignment of the insured amounts due on the Bonds
as are paid by the Bond Insurer, and appropriate instruments to
effect the appointment of the Bond Insurer as agent for such
owners of the Bonds in any legal proceeding related to payment of
insured amounts on the Bonds, such instruments being in a form
satisfactory to State Street Bank and Trust Company, N.A., State
Street Bank and Trust Company, N.A. shall disburse to such owners
or the Paying Agent payment of the insured amounts due on such
Bonds, less any amount held by the Paying Agent for the payment
of such insured amounts and legally available therefor.
The Bond Insurer, formerly known as Municipal
Bond Investors Assurance Corporation, is the principal operating
subsidiary of MBIA Inc., a New York Stock Exchange listed
company. MBIA Inc. is not obligated to pay the debts of or
claims against the Bond Insurer. The Bond Insurer is domiciled
in the State of New York and licensed to do business in all 50
states, the District of Columbia, the Commonwealth of Puerto
Rico, the Commonwealth of the Northern Mariana Islands, the
Virgin Islands of the United States and the Territory of Guam.
The Bond Insurer has one European branch in the Republic of
France.
As of December 31, 1995 the Bond Insurer had
admitted assets of $3.8 billion (audited), total liabilities of
$2.5 billion (audited), and total capital and surplus of $1.3
billion (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance
regulatory authorities. As of March 31, 1996, the Bond Insurer
had admitted assets of $4.0 billion (unaudited), total
liabilities of $2.7 billion (unaudited), and total capital and
surplus of $1.3 billion (unaudited) determined in accordance with
statutory accounting practices prescribed or permitted by
insurance regulatory authorities. All information regarding the
Bond Insurer, a wholly owned subsidiary of MBIA Inc., including
the financial statements of the Bond Insurer for the year ended
December 31, 1995, prepared in accordance with generally accepted
accounting principles, included in the Annual Report on Form 10-K
of MBIA Inc. for the year ended December 31, 1995 is hereby
incorporated by reference into this Official Statement and shall
be deemed to be a part hereof. Any statement contained in a
document incorporated by reference herein shall be modified or
superseded for purposes of this Official Statement to the extent
that a statement contained herein or in any other subsequently
filed document which also is incorporated by reference herein
modifies or supersedes such statement. Any statement so modified
or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Official Statement.
Furthermore, copies of the Bond Insurer's year
end financial statements prepared in accordance with statutory
accounting practices are available from the Bond Insurer. A copy
of the Annual Report on Form 10-K of MBIA Inc. is available from
the Bond Insurer or the Securities and Exchange Commission. The
address of the Bond Insurer is 113 King Street, Armonk, New York
10504.
Moody's Investors Service ("Moody's") rates the
claims paying ability of the Bond Insurer "Aaa".
Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc. ("Standard & Poor's"), rates the
claims paying ability of the Bond Insurer "AAA".
Fitch Investors Service, L.P., rates the claims
paying ability of the Bond Insurer "AAA".
Each rating of the Bond Insurer should be
evaluated independently. The ratings reflect the respective
rating agency's current assessment of the creditworthiness of the
Bond Insurer and its ability to pay claims on its policies of
insurance. Any further explanation as to the significance of the
above ratings may be obtained only from the applicable rating
agency.
The above ratings are not recommendations to buy,
sell or hold the Bonds, and such ratings may be subject to
revision or withdrawal at any time by the rating agencies. Any
downward revision or withdrawal of any of the above ratings may
have an adverse effect on the market price of the Bonds. The
Bond Insurer does not guaranty the market price of the Bonds nor
does it guaranty that the ratings on the Bonds will not be
revised or withdrawn.
Disclosure of Guaranty Fund Non Participation
In the event the Bond Insurer is unable to
fulfill its contractual obligation under the policy or contract
or application or certificate or evidence of coverage, the
policyholder or certificateholder is not protected by an
insurance guaranty fund or other solvency protection arrangement.
TAX MATTERS
On the date of the initial delivery of the Bonds,
McCall, Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel,
will render its opinion that, in accordance with statutes,
regulations, published rulings and court decisions existing on
the date thereof, (1) interest on the Bonds will be excludable
from the "gross income" of the holders thereof, except for any
holder who is treated pursuant to Section 103(b)(13) of the
Internal Revenue Code of 1954 as a "substantial user" of the
Facilities or a "related person" to such user and (2) the Bonds
will not be treated as "specified private activity bonds" the
interest on which would be included as an alternative minimum tax
preference item under Section 57(a)(5) of the Code. Except as
stated above, Bond Counsel will express no opinion as to any
other federal, state or local tax consequences of the purchase,
ownership or disposition of the Bonds. See Appendix E -- Form of
Opinion of Bond Counsel.
In rendering its opinion, Bond Counsel will rely
upon (a) information furnished by the Companies, and,
particularly, written representations of officers and agents of
the Companies with respect to certain material facts that are
solely within their knowledge relating to the use of the proceeds
of the Bonds and the Prior Bonds, and the construction and use of
the Facilities, and (b) covenants of the Issuer and the Companies
with respect to arbitrage, the application of the proceeds to be
received from the issuance and sale of the Bonds and the Prior
Bonds and certain other matters. Failure of the Issuer or the
Companies to comply with these representations or covenants could
cause the interest on the Bonds to become includable in gross
income retroactively to the date of issuance of the Bonds.
The law upon which Bond Counsel has based its
opinion is subject to change by Congress and to subsequent
judicial and administrative interpretation by the courts and the
Department of the Treasury. There can be no assurance that such
law or the interpretation thereof will not be changed in a manner
which would adversely affect the tax treatment of the purchase,
ownership or disposition of the Bonds.
Collateral Federal Income Tax Consequences
The following discussion is a summary of certain
collateral federal income tax consequences resulting from the
purchase, ownership or disposition of the Bonds. This discussion
is based on existing statutes, regulations, published rulings and
court decisions, all of which are subject to change or
modification, retroactively.
The following discussion is applicable to
investors, other than those who are subject to special provisions
of the Code, such as financial institutions, property and
casualty insurance companies, life insurance companies,
individual recipients of Social Security or Railroad Retirement
benefits, certain S corporations with Subchapter C earnings and
profits, taxpayers claiming an earned income tax credit and
taxpayers who may be deemed to have incurred or continued
indebtedness to purchase tax-exempt obligations.
INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO
SPECIAL PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX
ADVISORS AS TO THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO
RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT
OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE BONDS.
Interest on the Bonds will be includable as an
adjustment for "adjusted earnings and profits" to calculate the
alternative minimum tax imposed on corporations by Section 55 of
the Code. Section 55 of the Code imposes a tax equal to 20
percent of the taxpayer's "alternative minimum taxable income" if
the amount of such alternative minimum tax is greater than the
taxpayer's regular income tax for the taxable year.
Interest on the Bonds is includable in the
"alternative minimum taxable income" of a corporation (other than
a regulated investment company or a real estate investment trust)
for purposes of determining the environmental tax imposed by
Section 59A of the Code. Section 59A of the Code imposes on a
corporation an environmental tax, in addition to any other income
tax imposed by the Code, equal to 0.12 percent of the excess of
the modified alternative minimum taxable income of such
corporation for the taxable year over $2,000,000.
Interest on the Bonds may be subject to the
"branch profits tax" imposed on the effectively-connected
earnings and profits of a foreign corporation doing business in
the United States.
Under the Code, holders of tax-exempt
obligations, such as the Bonds, may be required to disclose
interest received or accrued during each taxable year on their
returns of federal income taxation.
Section 1276 of the Code provides for ordinary
income tax treatment of gain recognized upon the disposition of a
tax-exempt obligation, such as the Bonds, if such obligation was
acquired at a "market discount" and if the fixed maturity of such
obligations is equal to, or exceeds, one year from the date of
issue. Such treatment applies to "market discount bonds" to the
extent such gain does not exceed the accrued market discount of
such bonds, although for this purpose, a de minimis amount of
market discount is ignored. A "market discount bond" is one
which is acquired by the holder at a purchase price which is less
than the stated redemption price at maturity. The "accrued
market discount" is the amount which bears the same ratio to the
market discount as the number of days during which the holder
holds the obligation bears to the number of days between the
acquisition date and the final maturity date.
State, Local and Foreign Taxes
Investors should consult their own tax advisors
concerning the tax implications of the purchase, ownership or
disposition of the Bonds under applicable state or local laws.
Foreign investors should also consult their own tax advisors
regarding the tax consequences unique to investors who are not
United States persons.
LEGAL PROCEEDINGS
Legal matters incident to the authorization,
issuance and sale of the Bonds are subject to the unqualified
approval of the Attorney General of the State of Texas and of
Bond Counsel. McCall, Parkhurst & Horton L.L.P. has acted in the
capacity as Bond Counsel for the purpose of rendering an opinion
with respect to the authorization, issuance, delivery, legality
and validity of the Bonds and for the purpose of rendering an
opinion on the exclusion of the interest on the Bonds from gross
income for federal income tax purposes and certain other tax
matters. Such firm has not been requested to examine, and has
not investigated or verified, any statements, records, material
or matters relating to the financial condition or capabilities of
the Companies, and has not assumed responsibility for the
preparation of this Official Statement, except that, in its
capacity as Bond Counsel, such firm has reviewed the information
in this Official Statement under the captions "The Issuer," "The
Bonds," "The Agreement," "The Indenture" and "Tax Matters."
Certain legal matters are being passed upon for the Issuer by the
firm of Roberts, Hill & Calk, a Professional Corporation, as
counsel to the Issuer. McCall, Parkhurst & Horton L.L.P. has not
participated in the preparation of, or examined (and they
therefore will express no opinion on and assume no responsibility
for), the contents of this Official Statement, other than as
described above, and it has not considered it necessary to do so
in order to render its opinions.
Certain legal matters will be passed upon for the
Companies by their counsel, Milbank, Tweed, Hadley & McCloy, New
York, New York and for the Underwriter by their counsel, Sidley &
Austin, Chicago, Illinois. Sidley & Austin has represented the
Companies, the Agent, and other affiliates of the Agent from time
to time in connection with certain legal matters.
UNDERWRITING
Morgan Stanley & Co. Incorporated and Citicorp
Securities, Inc. (the "Underwriters") have jointly and severally
agreed to purchase the Bonds at a price equal to ___% of the
principal amount thereof plus accrued interest from July 1, 1996
to the date of delivery. Under the terms of the Bond Purchase
Agreement dated ____________, 1996 between the Underwriters and
the Issuer, the Underwriters have agreed, subject to the approval
of certain legal matters by counsel and to certain other
conditions, to purchase all of the Bonds if any such Bonds are
purchased. The Companies have severally agreed to pay the
Underwriters a fee equal to ___% of the principal amount of the
Bonds. The Bonds may be offered and sold to certain dealers
(including dealers depositing such Bonds into investment
accounts) and others at prices lower than the public offering
price set forth on the cover page hereof. After such Bonds are
released for sale to the public, the offering price and other
selling terms may from time to time be varied by the
Underwriters.
The Company has agreed to indemnify the
Underwriters against or to contribute toward certain liabilities,
including liabilities under federal securities laws.
CONTINUING DISCLOSURE
Each Company has made certain undertakings to
provide annual financial statements of such Company (commencing
with the fiscal year of such Company ended December 31, 1996) and
notice of certain material events relating to the Bonds to each
nationally recognized municipal securities information repository
or, in certain cases, the Municipal Securities Rulemaking Board,
and the appropriate state information depository, if any, in each
case to the extent required by Rule 15c2-12 (the "Rule")
promulgated by the Securities and Exchange Commission pursuant to
the Securities Exchange Act of 1934, as amended. Each Company
has made such covenants solely for the purpose of enabling the
Underwriters to comply with the Rule and such covenants do not
constitute an acknowledgement by such Company of the validity of
the Rule and are valid and binding only to the extent that the
Rule is valid. Each Company expressly reserves the right to
contest the validity of all or any portion of the Rule,
including, without limitation, as a defense in any action. The
Companies and their officers and directors shall have no
liability in respect of such covenants except to the extent
required for such covenants to satisfy the requirements imposed
by the Rule.
MISCELLANEOUS
The foregoing summaries do not purport to be
complete and are expressly made subject to the exact provisions
of the applicable documents which are incorporated herein by
reference. For details of all terms and conditions with respect
to the Bonds, reference is made to the Indenture and the
Agreement, copies of which may be obtained from the Agent and the
Underwriters during the initial offering period for the Bonds and
thereafter from the Trustee. Information concerning the
Companies is contained or incorporated by reference in the
Appendices to this Official Statement. All the information
contained under the heading "THE FACILITIES" has been furnished
by the Companies, and the Issuer makes no representations as to
the accuracy or completeness of such information.
Under the Agreement, and otherwise, the Companies
are obligated to make certain payments to the Issuer and have
agreed to indemnify the Issuer against certain liabilities,
including liabilities under federal securities laws.
The Issuer does not assume any responsibility for
the matters contained in this Official Statement, except for the
matters contained under the heading "THE ISSUER." All findings
and determinations by the Issuer relating to the issuance of the
Bonds, are, and have been, made by it for its own internal uses
and purposes in performing its duties under the laws of the State
of Texas.
APPENDIX A
WEST TEXAS UTILITIES COMPANY
The information contained in this Appendix to the Official
Statement has been obtained from West Texas Utilities Company.
WEST TEXAS UTILITIES COMPANY
West Texas Utilities Company ("WTU") is a public
utility engaged in generating, purchasing, transmitting,
distributing and selling electricity in central west Texas. It
is a wholly-owned subsidiary of Central and South West
Corporation ("CSW"), a registered public utility holding company
under the Public Utility Holding Company Act of 1935.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The
following documents filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange
Act of 1934, as amended (the "1934 Act"), are incorporated in
this Official Statement by reference:
1. WTU's Annual Report on Form 10-K for the year ended December
31, 1995.
2. WTU's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1996.
3. WTU's Current Report on Form 8-K dated June 24, 1996.
All documents filed by WTU pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Official Statement and prior to the termination of this offering
shall be deemed to be incorporated by reference in this Appendix
A from their respective dates of filing.
WTU is subject to the informational requirements
of the 1934 Act and the Public Utility Holding Company Act of
1935 and, in accordance therewith, files reports and other
information with the Commission. Such reports and other
information filed by WTU can be inspected and copied at the
public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the
Commission's Regional Offices at Northwestern Atrium Center, 500
West Madison Street, Chicago, Illinois 60661-2511 and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of
such material can also be obtained at prescribed rates from the
Public Reference Section of the Commission at its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission maintains a Web site (http://www.sec.gov) that
contains reports, proxy and information statements and other
information regarding registrants who file electronically with
the Commission.
WTU hereby undertakes to provide without charge
to each person to whom a copy of this Official Statement has been
delivered, on the written or oral request of any such person, a
copy of any or all of the documents referred to above which have
been or may be incorporated in this Appendix by reference, other
than exhibits to such documents. Written requests should be
directed to Stephen D. Wise, Director, Finance, Central and South
West Corporation, 1616 Woodall Rogers Freeway, Dallas, Texas
75202, as agent for WTU. The telephone number of CSW is (214)
777-1000.
SUMMARY INFORMATION
Business. . . . . . . . . . . .. . . . . . Electric Utility
Service Area.... . . . . . . . Approximately 53,000 square
miles in central west Texas
Population of Service Area . . . .Approximately 413,000
Customers. . . . . . . . . . . . .Approximately 187,000
Generating Fuels for 1994. . . . .Gas 65%; Coal 35%
<TABLE>
SELECTED FINANCIAL INFORMATION
(in thousands, except percentages and ratios)
<CAPTION>
Twelve Months
Ended March 31, Year Ended December 31,
1996 1995 1994 1993
(Unaudited)
<S> <C> <C> <C> <C>
Income Summary:
Operating Revenues $325,702 $319,835 $342,991 $345,445
Operating Income $ 57,345 $ 59,486 $ 54,763 $ 46,576
Net Income $ 31,788 $ 34,530 $ 37,366 $ 30,296
Ratio of Earnings
to Fixed Charges* 2.45 2.63 3.37 2.79
______________________
</TABLE>
* For computation of the foregoing ratios (i) earnings consist
of net income plus fixed charges, federal and state income taxes,
deferred income taxes and investment tax credits and (ii) fixed
charges consist of interest on long-term debt, other interest
charges, the interest component of leases and amortization of
debt discount, premium and expense.
Capitalization at
March 31, 1996
(Unaudited)
Capitalization Summary:
Common Equity $261,909 48.3 %
Preferred Stock 6,291 1.2
Long-term Debt 274,120 50.5
Total Capitalization $542,320 100.0%
CONSTRUCTION PROGRAM
WTU's capital expenditures for 1996-1998, including
allowance for funds used during construction ("AFUDC"), are
estimated at $42 million, $42 million and $43 million,
respectively. WTU anticipates that the majority of the funds
required for its 1996-1998 capital expenditure program will be
provided from internal sources. These estimates are subject to
change due to numerous factors, including load growth, escalation
of construction costs, changes in nuclear and environmental
regulation, delays from regulatory hearings, adequacy of rate
relief and the availability of necessary external capital.
EXPERTS
The audited financial statements and schedules of WTU
included in its Annual Report on Form 10-K for the year ended
December 31, 1995, which has been incorporated herein by
reference, have been examined by Arthur Andersen LLP, independent
public accountants, as indicated in their report dated
February 28, 1996 with respect thereto, which has been incor-
porated herein by reference, in reliance upon the authority of
said firm as experts in accounting and auditing in giving said
report.
APPENDIX B
PUBLIC SERVICE COMPANY OF OKLAHOMA
The information contained in this Appendix to the Official
Statement has been obtained from Public Service Company of
Oklahoma.
PUBLIC SERVICE COMPANY OF OKLAHOMA
Public Service Company of Oklahoma ("PSO") is a public
utility engaged in generating, purchasing, transmitting,
distributing and selling electricity in eastern and southwestern
Oklahoma. It is a wholly-owned subsidiary of Central and South
West Corporation ("CSW"), a registered public utility holding
company under the Public Utility Holding Company Act of 1935.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), are
incorporated in this Official Statement by reference:
1. PSO's Annual Report on Form 10-K for the year ended
December 31, 1995.
2. PSO's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996.
3. PSO's Current Reports on Form 8-K dated February 23,
1996 and June 24, 1996.
All documents filed by PSO pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act after the date of this
Official Statement and prior to the termination of this offering
shall be deemed to be incorporated by reference in this Appendix
B from their respective dates of filing.
PSO is subject to the informational requirements of the
1934 Act and the Public Utility Holding Company Act of 1935 and,
in accordance therewith, files reports and other information with
the Commission. Such reports and other information filed by PSO
can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's Regional Offices
at Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661-2511 and 7 World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material can also be
obtained at prescribed rates from the Public Reference Section of
the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants who file
electronically with the Commission.
PSO hereby undertakes to provide without charge to each
person to whom a copy of this Official Statement has been
delivered, on the written or oral request of any such person, a
copy of any or all of the documents referred to above which have
been or may be incorporated in this Appendix by reference, other
than exhibits to such documents. Written requests should be
directed to Stephen D. Wise, Director, Finance, Central and South
West Corporation, 1616 Woodall Rogers Freeway, Dallas, Texas
75202, as agent for PSO. The telephone number of CSW is (214)
777-1000.
SUMMARY INFORMATION
Business. . . . . . . . . . . .. .Electric Utility
Service Area . . . . . . . . . . .Approximately 30,000 square
miles in Oklahoma
Population of Service Area . . . .Approximately 1,031,000
Customers. . . . . . . . . . . . .Approximately 473,000
Generating Fuels for 1995. . . . .Gas 62%; Coal 38%
<TABLE>
SELECTED FINANCIAL INFORMATION
(in thousands, except percentages and ratios)
<CAPTION>
Twelve Months
Ended March 31, Year Ended December 31,
1996 1995 1994 1993
(Unaudited)
<S> <C> <C> <C> <C>
Income Summary:
Operating Revenues $689,827 $690,823 $740,496 $707,536
Operating Income $113,207 $111,769 $ 98,258 $ 72,156
Net Income $ 79,574 $ 81,828 $ 68,266 $ 46,719
Ratio of Earnings
to Fixed Charges* 4.24 4.32 4.03 2.78
______________________
</TABLE>
* For computation of the foregoing ratios (i) earnings consist
of net income plus fixed charges, federal and state income taxes,
deferred income taxes and investment tax credits and (ii) fixed
charges consist of interest on long-term debt, other interest
charges, the interest component of leases and amortization of
debt discount, premium and expense.
Capitalization at
March 31, 1996
(Unaudited)
Capitalization Summary:
Common Equity . . . . . . . . . . . . . .$485,785 53.1%
Preferred Stock . . . . . . . . . . . . . 19,826 2.2
Long-term Debt. . . . . . . . . . . . . . 409,624 44.7
Total Capitalization . . . . . . . . . . . . .$915,235 100.0%
CONSTRUCTION PROGRAM
PSO's capital expenditures for 1996-1998, including
allowance for funds used during construction ("AFUDC"), are
estimated at $68 million, $72 million and $69 million,
respectively. PSO anticipates that the majority of the funds
required for its 1995-1997 capital expenditure program will be
provided from internal sources. These estimates are subject to
change due to numerous factors, including load growth, escalation
of construction costs, changes in nuclear and environmental
regulation, delays from regulatory hearings, adequacy of rate
relief and the availability of necessary external capital.
EXPERTS
The audited financial statements and schedules of PSO
included in its Annual Report on Form 10-K for the year ended
December 31, 1995, which has been incorporated herein by
reference, have been examined by Arthur Andersen LLP, independent
public accountants, as indicated in their report dated
February 28, 1996 with respect thereto, which has been incor-
porated herein by reference, in reliance upon the authority of
said firm as experts in accounting and auditing in giving said
report.
APPENDIX C
CENTRAL POWER AND LIGHT COMPANY
The information contained in this Appendix to the Official
Statement has been obtained from Central Power and Light Company.
CENTRAL POWER AND LIGHT COMPANY
Central Power and Light Company ("CPL") is a public utility
engaged in generating, purchasing, transmitting, distributing and
selling electricity in south Texas. It is a wholly-owned
subsidiary of Central and South West Corporation ("CSW"), a
registered public utility holding company under the Public
Utility Holding Company Act of 1935.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), are
incorporated in this Official Statement by reference:
1. CPL's Annual Report on Form 10-K for the year ended
December 31, 1995.
2. CPL's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996.
3. CPL's Current Reports on Form 8-K dated February 13,
1996 and June 24, 1996.
All documents filed by CPL pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act after the date of this
Official Statement and prior to the termination of this offering
shall be deemed to be incorporated by reference in this Appendix
C from their respective dates of filing.
CPL is subject to the informational requirements of the 1934
Act and the Public Utility Holding Company Act of 1935 and, in
accordance therewith, files reports and other information with
the Commission. Such reports and other information filed by CPL
can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's Regional Offices
at Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661-2511 and 7 World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material can also be
obtained at prescribed rates from the Public Reference Section of
the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants who file
electronically with the Commission.
CPL hereby undertakes to provide without charge to each
person to whom a copy of this Official Statement has been
delivered, on the written or oral request of any such person, a
copy of any or all of the documents referred to above which have
been or may be incorporated in this Appendix by reference, other
than exhibits to such documents. Written requests should be
directed to Stephen D. Wise, Director, Finance, Central and South
West Corporation, 1616 Woodall Rogers Freeway, Dallas, Texas
75202, as agent for CPL. The telephone number of CSW is (214)
777-1000.
SUMMARY INFORMATION
Business. . . . . . . . . . . .. .Electric Utility
Service Area . . . . . . . . . . .Approximately 44,000 square
miles in south Texas
Population of Service Area . . . .Approximately 2,065,000
Customers. . . . . . . . . . . . .Approximately 614,000
Generating Fuels for 1994. . . . .Gas 55%; Coal 21%; Nuclear 24%
<TABLE>
SELECTED FINANCIAL INFORMATION
(in thousands, except percentages and ratios)
<CAPTION>
Twelve Months
Ended March 31, Year Ended December 31,
1996 1995 1994 1993
(Unaudited)
<S> <C> <C> <C> <C>
Income Summary:
Operating Revenues $1,199,575 $1,073,469 $1,217,979 $1,223,528
Operating Income $ 299,754 $ 282,184 $ 256,251 $ 190,079
Net Income $ 192,695 $ 206,447 $ 205,439 $ 172,425
Ratio of Earnings
to Fixed Charges* 2.69 2.63 3.24 2.69
______________________
</TABLE>
* For computation of the foregoing ratios (i) earnings consist
of net income plus fixed charges, federal and state income taxes,
deferred income taxes and investment tax credits and (ii) fixed
charges consist of interest on long-term debt, other interest
charges, the interest component of leases and amortization of
debt discount, premium and expense.
Capitalization at
March 31, 1996
(Unaudited)
Capitalization Summary:
Common Equity . . . . . . . . . . . . .$1,425,516 44.6%
Preferred Stock . . . . . . . . . . . . . 250,351 7.8
Long-term Debt. . . . . . . . . . . . . 1,519,563 47.6
Total Capitalization . . . . . . . . . . . .$3,195,430 100.0%
CONSTRUCTION PROGRAM
CPL's capital expenditures for 1996-1998, including
allowance for funds used during construction ("AFUDC"), are
estimated at $137 million, $157 million and $137 million,
respectively. CPL anticipates that the majority of the funds
required for its 1996-1998 capital expenditure program will be
provided from internal sources. These estimates are subject to
change due to numerous factors, including load growth, escalation
of construction costs, changes in nuclear and environmental
regulation, delays from regulatory hearings, adequacy of rate
relief and the availability of necessary external capital.
EXPERTS
The audited financial statements and schedules of CPL
included in its Annual Report on Form 10-K for the year ended
December 31, 1995, which has been incorporated herein by
reference, have been examined by Arthur Andersen LLP, independent
public accountants, as indicated in their report dated
February 28, 1996 with respect thereto, which has been incor-
porated herein by reference, in reliance upon the authority of
said firm as experts in accounting and auditing in giving said
report.
APPENDIX D
CERTAIN DEFINITIONS
CERTAIN DEFINITIONS
Certain capitalized terms used in the forepart of this
Official Statement and not defined therein have the meanings set
forth below:
Acts - shall mean, collectively, Chapter 30 of the Texas
Water Code, as amended, Chapter 383 of the Texas Health and
Safety Code, as amended, and Articles 8280-133 and Articles 717k
and 717q, Vernon's Texas Civil Statutes, as amended.
Beneficial Owner - shall mean the actual purchaser of a
Bond.
Bond Counsel - shall mean McCall, Parkhurst & Horton L.L.P.
or such other firm of attorneys of nationally recognized standing
in the field of law relating to municipal bond law and the
exemption from federal income taxation of interest on state or
local bonds, selected by the Issuer and acceptable to the Trustee
and the Agent.
Bond Owner, Bondowner, Owner, owner, Bondholder, bondholder,
holder, Registered Owner or owner of the Bonds - when used with
respect to a Bond, shall mean the person or entity in whose name
such Bond shall be registered.
Bond Registrar - shall mean the Trustee or any successor
bond registrar serving as such under the Indenture.
Business Day - shall mean any day on which commercial banks
located in all of the cities in which the Principal offices of
the Trustee, the Paying Agent and the Remarketing Agent are
located are not required or authorized by law or regulation to
remain closed and on which the New York Stock Exchange is not
closed.
Conversion Date - shall mean the date on which a new Mode
becomes effective with respect to a Bond, and with respect to a
Bond in the Multiannual Mode, the date on which a new Interest
Rate Period becomes effective.
The terms "substantial user" and "related person" shall have
the meanings given such terms in section 147(a) of the Code.
Favorable Opinion - shall mean an opinion of Bond Counsel
addressed to the Issuer, the Agent, the Companies and the Trustee
to the effect that the action proposed to be taken is authorized
or permitted by, to the extent applicable, the Acts and the
Indenture and will not adversely affect the excludability of
interest on the Bonds from gross income of the Owners thereof for
federal income tax purposes (other than as held by a "substantial
user" of the Facilities or a "related person" within the meaning
of the Code).
Government Obligations - shall mean direct obligations of,
or obligations the timely payment of the principal of and
interest on which is fully guaranteed by, the United States of
America.
Mode - shall mean the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily Mode,
the Flexible Mode, the Weekly Mode, the Monthly Mode, the
Quarterly Mode, the Semiannual Mode, the Multiannual Mode and the
Fixed Rate Mode.
Outstanding, Bonds Outstanding or Bonds then Outstanding -
shall mean when used with a reference to Bonds at any date as of
which the amount of Outstanding Bonds is to be determined, means
all Bonds authenticated and delivered under the Indenture,
except:
(a) Bonds canceled or delivered for cancellation at or prior to
such date;
(b) Bonds deemed to be paid pursuant to the terms of the
Indenture;
(c) Bonds in lieu of which others have been authenticated and
delivered under the Indenture;
(d) Bonds registered in the name of the Issuer;
(e) On or after any Purchase Date for Bonds, all Bonds (or
portions of Bonds) which are tendered or deemed to have been
tendered for purchase on such date, provided that funds
sufficient for such purchase are on deposit with the Paying
Agent; and
(f) For purposes of any consent, request, demand, authorization,
direction, notice, waiver or other action to be taken by the
holders of a specified percentage of outstanding Bonds, all Bonds
held by or for the account of the Issuer, the Agent or the
Companies, except that for purposes of any such consent, request,
demand, authorization, direction, notice, waiver or action the
Trustee shall be obligated to consider as not being outstanding
only Bonds known by the Trustee by actual notice thereof to be so
held.
Permitted Investments - shall mean any of the following
obligations or securities, to the extent permitted by law, on
which the Issuer is not the obligor:
(a) Government Obligations;
(b) money market funds registered under the Investment Company
Act of 1940, whose shares are registered under the Securities Act
of 1933, and having a rating by S&P of AAAm-G; AAAm; or Aam; and
(c) obligations or securities approved in writing by the Bond
Insurer.
Purchase Date - shall mean the date upon which Bonds are
required to be purchased pursuant to a mandatory or optional
tender.
Purchase Price - shall mean, with respect to a Bond on a
Purchase Date, a price equal to par plus accrued interest to the
Purchase Date; provided that in the event that the Purchase Date
is an Interest Payment Date for such Bond and such Bond is not in
the Flexible Mode, accrued interest will be paid separately and
not as part of the Purchase Price on such date; and further
provided that in the event such Bond is in the Multiannual or
Fixed Rate Mode and is subject to mandatory tender on a date on
which the Bond is subject to optional redemption, the Purchase
Price shall include any premium that would be payable on the
Purchase Date if such Bond were redeemed on the Purchase Date.
Rating Agencies - shall mean Standard & Poor's Ratings
Services, a division of McGraw-Hill, Inc. and/or Moody's Investor
Service, Inc., according to which of such rating agencies then
rates the Bonds; and provided that if neither of such rating
agencies then rates the Bonds, the term "Rating Agencies" shall
refer to any national rating agency (if any), mutually acceptable
to the Agent and the Remarketing Agent, and approved by the Bond
Insurer, which provides such rating.
APPENDIX E
FORM OF OPINION OF BOND COUNSEL
APPENDIX F
FORM OF MUNICIPAL BOND INSURANCE POLICY
<PAGE>
EXHIBIT 6
June __, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Central Power and Light Company
Public Service Company of Oklahoma
West Texas Utilities Company
Form U-1 Application-Declaration
Dear Sirs:
We refer to the Form U-1 Application-Declaration (File No. 70-8869)
(the "Application-Declaration"), under the Public Utility Holding
Company Act of 1935, as amended (the "1935 Act"), filed by
Central Power and Light Company ("CPL"), a Texas corporation,
West Texas Utilities Company ("WTU"), a Texas corporation, and
Public Service Company of Oklahoma ("PSO"), an Oklahoma
corporation (collectively, the "Companies," and each
individually, a "Company"), each Company being a wholly-owned
electric public utility subsidiary of Central and South West
Corporation ("CSW"), a Delaware corporation and a registered
holding company under the 1935 Act. The Application-Declaration
relates to the proposed issue and sale by Red River Authority of
Texas ("Red River"), in one or more series, of Pollution Control
Revenue Bonds and/or Pollution Control Revenue Refunding Bonds
(West Texas Utilities Company, Public Service Company of Oklahoma
and Central Power and Light Company Oklaunion Project) (the "New
Bonds") in an aggregate principal amount not to exceed
$113,300,000 and the possible issue, as security for the New
Bonds, of one or more series of First Mortgage Bonds of the
Companies (the "First Mortgage Bonds") in the same aggregate
principal amount as the related issue of the New Bonds. In
connection with the issuance of the New Bonds, the Companies
expect to enter into a new or amended installment sale agreement
(the "Amended Sale Agreement"). As more fully described in the
Application-Declaration, proceeds of the issuance of the New
Bonds will be used to redeem Red River's $59,710,000 of
outstanding Adjustable Rate Pollution Control Revenue Bonds (West
Texas Utilities Company, Public Service Company of Oklahoma and
Central Power and Light Company Oklaunion Project) Series 1984
(the "Old Bonds"). The proceeds of the New Bonds may also be
used to reimburse the Companies' treasuries for any expenditures
made that qualify for tax exempt financing or to provide for
current solid waste expenditures.
The Application-Declaration also relates to the proposed use
by the Companies of forward refinancing techniques and hedging
products including interest rate swaps, forward swaps, caps,
collars, floors, and related instruments (the "Instruments") to
manage interest rate risk or effectively lower the Companies'
interest cost on one or more series of New Bonds, all as more
fully described in the Application-Declaration.
In connection with the Application-Declaration, we have
acted as special counsel for the Companies and, as such counsel,
we are familiar with the corporate proceedings taken and to be
taken by the Companies in connection with the proposed issue and
sale of the New Bonds, the possible issue of the First Mortgage
Bonds, the proposed entering into of the Instruments, and the
redemption of the Old Bonds as described in the Application-
Declaration.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of the Companies,
certificates of public officials, certificates of officers and
representatives of the Companies and other documents as we have
deemed it necessary to require as a basis for the opinions
hereinafter expressed. In such examination we have assumed the
genuineness of all signatures and the authenticity of all
documents submitted to us as originals and the conformity with
the originals of all documents submitted to us as copies. As to
various questions of fact material to such opinions we have, when
relevant facts were not independently established, relied upon
certificates by officers of the Companies and other appropriate
persons and statements contained in the Application-Declaration.
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion
that, in the event that the proposed transactions are consummated
in accordance with the Application-Declaration, as it may be
amended, and subject to the assumptions and conditions set forth
below:
1. Each Company is validly organized and duly existing under
the laws of the state of its incorporation (with respect to WTU
and CPL, the State of Texas, and with respect to PSO, the State
of Oklahoma).
2. All state laws applicable to the execution of any Amended
Sale Agreement, the issue of any First Mortgage Bonds, and, to
the extent they are deemed to be securities within the meaning of
the 1935 Act, the entering into of the Instruments, as described
in the Application-Declaration, will have been complied with.
3. Any First Mortgage Bonds issued by the Companies will be
valid and binding obligations of the Companies in accordance with
their terms, subject in respect of the enforceability of the
indentures pursuant to which the First Mortgage Bonds are to be
issued, to (a) bankruptcy, insolvency, reorganization, moratorium
or other similar laws of general applicability affecting the
enforcement of creditors' rights, and (b) the application of
general principles of equity (regardless of whether considered in
a proceeding in equity or at law), including without limitation
(i) the possible unavailability of specific performance,
injunctive relief or any other equitable remedies and (ii)
concepts of materiality, reasonableness, good faith and fair
dealing.
4. Any Amended Sale Agreement will be a valid and binding
obligation of the Companies in accordance with its terms, subject
to the qualifications stated in paragraph 3 above.
5. Any Instruments, to the extent they are deemed to be
securities within the meaning of the 1935 Act, will be valid and
binding obligations of the Companies in accordance with their
terms, subject to the qualifications stated in paragraph 3 above.
6. The consummation of the proposed transactions as described
in the Application-Declaration will not violate the legal rights
of the holders of any securities issued individually or jointly
by the Companies or any associate company of the Companies.
The opinions expressed above in respect of the transactions
described in the Application-Declaration are subject to the
following assumptions or conditions:
a. The transactions shall have been duly authorized and
approved to the extent required by state law by the Board of
Directors of each Company.
b. The Securities and Exchange Commission (the "Commission")
shall have duly entered an appropriate order or orders granting
and permitting the Application-Declaration to become effective
with respect to the transactions described therein.
c. Any First Mortgage Bonds issued by a Company shall have been
duly issued and sold in accordance with the authorization of the
Board of Directors of such Company and such order or orders of
the Commission.
d. Any First Mortgage Bonds shall have been duly issued and
sold in accordance with required approvals, authorizations,
consents, certificates and orders of any state commission or
regulatory authority with respect thereto.
e. Any Instruments, to the extent they are deemed to be
securities within the meaning of the 1935 Act, shall have been
duly authorized, executed and delivered by the party thereto
other than the Companies and such party is duly organized and
validly existing under the laws of its jurisdiction of
organization and has full power and authority to make and perform
any of the Instruments.
f. The consummation of the transactions shall be conducted
under our supervision and all legal matters incident thereto
shall be satisfactory to us, including the receipt in
satisfactory form of opinions of other counsel qualified to
practice in jurisdictions pertaining to the transactions in which
we are not admitted to practice.
Prior to the consummation of the issuance of First Mortgage
Bonds, as contemplated by the Application-Declaration, such First
Mortgage Bonds must be qualified or registered under Blue Sky or
securities laws or regulations of any state or other jurisdiction
in which they are offered for sale or sold to the extent required
by such laws or regulations.
We hereby consent to the use of this opinion as an exhibit
to the Application-Declaration.
Very truly yours,
<PAGE> 1
INDEX EXHIBIT 8
TO
FINANCIAL STATEMENTS Page
Number
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
Consolidated Balance Sheets - Per Books and Pro Forma
as of March 31, 1996 3 - 4
Consolidated Statement of Income for the Twelve Months Ended
March 31, 1996 5
Consolidated Statement of Retained Earnings for the Twelve Months
Ended March 31, 1996 6
Statements of Long-Term Debt Outstanding as of March 31, 1996 7 - 10
Statements of Preferred Stock Outstanding as of March 31, 1996 11
CENTRAL AND SOUTH WEST CORPORATION (CORPORATE)
Balance Sheets - Per Books and Pro Forma as of March 31, 1996 12
Statement of Income for the Twelve Months Ended March 31, 1996 13
CENTRAL POWER AND LIGHT COMPANY
Balance Sheets - Per Books and Pro Forma as of March 31, 1996 14 - 15
Statement of Income for the Twelve Months Ended March 31, 1996 16
Statement of Retained Earnings for the Twelve Months Ended
March 31, 1996 17
PUBLIC SERVICE COMPANY OF OKLAHOMA
Balance Sheets - Per Books and Pro Forma as of March 31, 1996 18 - 19
Statement of Income for the Twelve Months Ended March 31, 1996 20
Statement of Retained Earnings for the Twelve Months Ended
March 31, 1996 21
<PAGE> 2
INDEX
TO
FINANCIAL STATEMENTS
Page
(CONTINUED) Number
WEST TEXAS UTILITIES COMPANY
Balance Sheets - Per Books and Pro Forma as of March 31, 1996 22 - 23
Statement of Income for the Twelve Months Ended March 31, 1996 24
Statement of Retained Earnings for the Twelve Months Ended
March 31, 1996 25
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS 26 - 27
STATEMENT OF CHANGES 28
CAPITALIZATION RATIOS - Per books and Pro forma 29
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 30
<PAGE> 3
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
ASSETS
PLANT
Electric utility
Production $5,899 $50 $5,949
Transmission 1,494 1,494
Distribution 3,847 3,847
General 1,281 1,281
Construction work in progress 279 279
Nuclear fuel 170 170
Gas 878 878
Other diversified 24 24
-------- -------- --------
13,872 50 13,922
Less - Accumulated depreciation 4,864 4,864
-------- -------- --------
9,008 50 9,058
-------- -------- --------
CURRENT ASSETS
Cash and temporary cash investments 262 262
Accounts receivable 1,041 1,041
Materials and supplies, at average cost 184 184
Electric fuel inventory, substantially at
average cost 124 124
Prepayments and other 171 171
-------- -------- --------
1,782 1,782
-------- -------- --------
DEFERRED CHARGES AND OTHER ASSETS
Deferred plant costs 513 513
Mirror CWIP asset - net 309 309
Other non-utility investments 358 358
Income tax related regulatory assets, net 257 257
Goodwill 1,355 1,355
Other 390 390
-------- -------- --------
3,182 3,182
-------- -------- --------
$13,972 $50 $14,022
======== ======== ========
<PAGE> 4
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common Stock Equity -
Common stock, $3.50 par value,
authorized 350,000,000 shares;
issued and outstanding 208,400,000
shares $732 $732
Paid-in capital 977 977
Retained earnings 1,860 1,860
Foreign currency translation adjustment (24) (24)
-------- -------- --------
Total Common Stock Equity 3,545 3,545
Preferred stock
Not subject to mandatory redemption 292 292
Subject to mandatory redemption 34 34
Long-term debt 4,728 $50 4,778
-------- -------- --------
Total Capitalization 8,599 50 8,649
-------- -------- --------
CURRENT LIABILITIES
Long-term debt/preferred stock
due within twelve months 4 4
Short-term debt 770 770
Short-term debt - CSW Credit 588 588
Accounts payable 583 583
Accrued taxes 137 137
Accrued interest 84 84
Provision for SEEBOARD acceptances 122 122
Other 196 196
-------- -------- --------
2,484 2,484
-------- -------- --------
DEFERRED CREDITS
Income taxes 2,385 2,385
Investment tax credits 302 302
Other 202 202
-------- -------- --------
2,889 2,889
-------- -------- --------
$13,972 $50 $14,022
======== ======== ========
<PAGE> 5
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED MARCH 31, 1996
UNAUDITED
(Millions)
OPERATING REVENUES $3,836
--------
OPERATING EXPENSES AND TAXES
Fuel and purchased power 1,577
Other operating 709
Maintenance 152
Depreciation and amortization 384
Taxes, other than income 173
Income taxes 163
--------
3,158
--------
OPERATING INCOME 678
--------
OTHER INCOME AND DEDUCTIONS 74
--------
74
INCOME BEFORE INTEREST CHARGES 752
--------
INTEREST CHARGES
Interest on long-term debt 294
Interest on short-term debt and other 54
--------
348
--------
INCOME FROM CONTINUING OPERATIONS 404
DISCONTINUED OPERATIONS
Income from discontinued operations, net of tax 29
--------
NET INCOME 433
Preferred stock dividends 18
--------
NET INCOME FOR COMMON STOCK $415
========
<PAGE> 6
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1996
UNAUDITED
(Millions)
RETAINED EARNINGS AT MARCH 31, 1995 $1,781
Add: Net income for common stock 415
--------
2,196
Deduct: Common stock dividends 332
True-up of proir period liability 4
--------
RETAINED EARNINGS AT MARCH 31, 1996 $1,860
========
<PAGE> 7
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
CENTRAL POWER AND LIGHT COMPANY
First mortgage bonds -
Series J, 6-5/8%, due January 1, 1998 $28
Series L, 7%, due February 1, 2001 36
Series T, 7-1/2%, due December 15, 2014 112
Series AA, 7-1/2%, due March 1, 2020 50
Series BB, 6%, due October 1, 1997 200
Series CC, 7-1/4%, due October 1, 2004 100
Series DD, 7-1/8%, due December 1, 1999 25
Series EE, 7-1/2%, due December 1, 2002 115
Series FF, 6-7/8%, due February 1, 2003 50
Series GG, 7-1/8%, due February 1, 2008 75
Series HH, 6%, due April 1, 2000 100
Series II, 7-1/2%, due April 1, 2023 100
Series JJ, 7-1/2%, due May 1, 1999 100
Series KK, 6-5/8%, due July 1, 2005 200
Installment sales agreements -
Pollution control bonds
Series 1984, 7-7/8%, due September 15, 2014 6
Series 1986, 7-7/8%, due December 1, 2016 60
Series 1993, 6%, due July 1, 2028 120
Series 1995, 6-1/10%, due July 1, 2028 101
Series 1995, variable, due November 1, 2015 41
Unamortized discount (6)
Unamortized costs of reacquired debt (93)
--------
$1,520
--------
<PAGE> 8
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING (Continued)
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
PUBLIC SERVICE COMPANY OF OKLAHOMA
First mortgage bonds -
Series K, 7-1/4%, due January 1, 1999 $25
Series L, 7-3/8%, due March 1, 2002 30
Series S, 7-1/4%, due July 1, 2003 65
Series T, 7-3/8%, due December 1, 2004 50
Series U, 6-1/4%, due April 1, 2003 35
Series V, 7-3/8%, due April 1, 2023 100
Series W, 6-1/2%, due June 1, 2005 50
Long-term note
Series A-1, 5.89%, due December 15, 2000 10
Series A-2, 5.91%, due March 1, 2001 6
Series A-3, 6.02%, due March 1, 2001 5
Series A-4, 6.02%, due March 1, 2001 9
Installment sales agreements -
Pollution control bonds
Series A, 5.9%, due December 1, 2007 35
Series 1984 7-7/8, due September 15, 2014 12 *
Unamortized discount (4)
Unamortized costs of reacquired debt (19)
--------
* Rounded down from 12,660,000 $409
--------
<PAGE> 9
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING (Continued)
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
SOUTHWESTERN ELECTRIC POWER COMPANY
First mortgage bonds -
Series V, 7-3/4%, due June 1, 2004 $40
Series W, 6-1/8%, due September 1, 1999 40
Series X, 7%, due September 1, 2007 90
Series Y, 6-5/8%, due February 1, 2003 55
Series Z, 7-1/4%, due July 1, 2023 45
Series AA, 5-1/4%, due April 1, 2000 45
Series BB, 6-7/8%, due October 1, 2025 80
1976 Series A, 6.2%, due November 1, 2006 7
1976 Series B, 6.2%, due November 1, 2006 1
Installment sales agreements -
Pollution control bonds
1978 Series A, 6%, due January 1, 2008 14
Series 1986, 8.2%, due July 1, 2014 82
1991 Series A, 8.2%, due August 1, 2011 17
1991 Series B, 6.9%, due November 1, 2004 12
Series 1992, 7.6%, due January 1, 2019 54
Bank loan, variable rate, due June 15, 2000 50
Railcar lease obligations 14
Unamortized costs of reacquired debt (43)
Amount to be redeemed within one year (4)
--------
$599
--------
WEST TEXAS UTILITIES COMPANY
First mortgage bonds -
Series P, 7-3/4%, due July 1, 2007 25
Series Q, 6-7/8%, due October 1, 2002 35
Series R, 7%, due October 1, 2004 40
Series S, 6-1/8%, due February 1, 2004 40
Series T, 7-1/2%, due April 1, 2000 40
Series U, 6-3/8%, due October 1, 2005 80
Installment sales agreement -
Pollution control bonds
Series 1984, 7-7/8%, due September 15, 2014 44
Unamortized discount and premium (1)
Unamortized costs of reacquired debt (29)
--------
$274
--------
<PAGE> 10
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING (Continued)
AS OF MARCH 31, 1996
UNAUDITED
(millions)
SEEBOARD plc
Long-term debt facility, floating rate, due 2001 $1,084
Eurobond, 8-1/2%, due October 3, 2005 152
Unamortized discount and premium (1)
--------
$1,235
--------
TRANSOK, INC.
Note payable, 8.960%, due April 17, 2017 $15
Note payable, 8.280%, due April 16, 2007 3
Note payable, 7.712%, due April 16, 2002 3
Note payable, 7.712%, due April 22, 2002 17
Note payable, 8.625%, due May 21, 2012 5
Note payable, 7.106%, due May 20, 1999 3
Note payable, 7.694%, due May 20, 2004 1
Note payable, 7.762%, due May 22, 2003 2
Note payable, 7.106%, due May 21, 1999 5
Note payable, 7.694%, due May 28, 2004 2
Note payable, 7.762%, due June 3, 2003 4
Note payable, 7.694%, due June 2, 2004 2
Note payable, 8.625%, due August 27, 2012 5
Note payable, 7.712%, due August 26, 2002 5
Note payable, 7.712%, due August 26, 2002 1
Note payable, 7.712%, due August 28, 2002 14
Note payable, 7.106%, due December 1, 1999 15
Note payable, 7.694%, due March 1, 2004 10
Note payable, 7.694%, due March 1, 2004 3
Note payable, 7.694%, due December 15, 2004 2
Note payable, 7.694%, due December 15, 2004 1
Note payable, 7.694%, due March 1, 2004 1
Note payable, 7.712%, due May 15, 2002 5
Note payable, 7.712%, due May 15, 2002 5
Note payable, 7.762%, due December 23, 2003 11
Note payable, 6.875%, due March 18, 2005 1
Note payable, 6.875%, due March 18, 2005 1
Note payable, 6.875%, due March 1, 2005 6
Note payable, 6.875%, due March 24, 2005 5
Note payable, 6.875%, due March 28, 2005 12
Note payable, 7.750%, due April 24, 2023 10
Note payable, 6.875%, due April 25, 2005 3
Note payable, 7.750%, due April 26, 2023 5
Note payable, 6.875%, due April 26, 2005 7
Note payable, 7.762%, due April 29, 2003 2
Note payable, 7.694%, due April 30, 2004 1
Note payable, 6.875%, due May 5, 2005 1
Note payable, 7.070%, due May 5, 2008 1
Note payable, 7.694%, due January 12, 2004 5
--------
$200
--------
CENTRAL AND SOUTH WEST CORPORATION
Credit facility(for SEEBOARD purchase), 6.287%, due
November 13, 2000 431
--------
$431
CENTRAL AND SOUTH WEST SERVICES, INC. --------
Term loan facility, Variable rate, due
December 1, 2001 60
--------
$60
--------
TOTAL CONSOLIDATED $4,728
========
<PAGE> 11
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF PREFERRED STOCK OUTSTANDING
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
NOT SUBJECT TO MANDATORY REDEMPTION
CENTRAL POWER AND LIGHT COMPANY
4.00% Series, 100,000 shares $10
4.20% Series, 75,000 shares 7
7.12% Series, 260,000 shares 26
8.72% Series, 500,000 shares 50
Auction Money Market, 750,000 shares 75
Auction Series A, 425,000 shares 42
Auction Series B, 425,000 shares 43
Issuance expense (3)
--------
$250
--------
PUBLIC SERVICE COMPANY OF OKLAHOMA
4.00% Series, 97,900 shares $10
4.24% Series, 100,000 shares 10
--------
$20
--------
SOUTHWESTERN ELECTRIC POWER COMPANY
5.00% Series, 75,000 shares $8
4.65% Series, 25,000 shares 2
4.28% Series, 60,000 shares 6
--------
$16
--------
WEST TEXAS UTILITIES COMPANY
4.40% Series, 60,000 shares 6
--------
Total Consolidated $292
========
SUBJECT TO MANDATORY REDEMPTION
SOUTHWESTERN ELECTRIC POWER COMPANY
6.95% Series, 352,000 shares $36
Amount to be redeemed within one year (2)
--------
Total Consolidated $34
========
<PAGE> 12
CENTRAL AND SOUTH WEST CORPORATION
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
ASSETS
Electric Utility
General $4 $4
Less - Accumulated depreciation (1) (1)
-------- -------- --------
NET PLANT 3 3
INVESTMENTS IN COMMON STOCK
OF SUBSIDIARY COMPANIES (at equity) 3,741 3,741
-------- -------- --------
CURRENT ASSETS
Cash and temporary cash investments 9 9
Advances to affiliates 423 423
Accounts receivable - Affiliated 586 586
Prepayments and other 20 20
-------- -------- --------
1,038 1,038
-------- -------- --------
DEFERRED CHARGES AND OTHER ASSETS 50 50
-------- -------- --------
$4,832 $0 $4,832
======== ======== ========
CAPITALIZATION
Common Stock Equity -
Common stock, $3.50 par value;
authorized 350,000,000 shares;
issued and outstanding 192,900,000
shares $732 $732
Paid-in capital 977 977
Retained earnings 1,860 1,860
-------- -------- --------
Total Common Stock Equity 3,569 3,569
-------- -------- --------
Long-term debt 431 431
-------- -------- --------
Total Capitalization 4,000 4,000
-------- -------- --------
CURRENT LIABILITIES
Short-term debt 770 770
Accounts payable and other 24 24
-------- -------- --------
794 794
-------- -------- --------
DEFERRED CREDITS 38 38
-------- -------- --------
$4,832 $0 $4,832
======== ======== ========
<PAGE> 13
CENTRAL AND SOUTH WEST CORPORATION
STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED MARCH 31, 1996
UNAUDITED
(Millions)
INCOME
Equity in earnings of subsidiaries
Central Power and Light Company $193
Public Service Company of Oklahoma 79
Southwestern Electric Power Company 113
West Texas Utilities Company 32
SEEBOARD plc 30
Transok, Inc. 29
CSW Credit, Inc. 7
CSW Energy, Inc. 6
CSW Leasing, Inc. 1
CSW International, Inc. (4)
CSW Communications, Inc. (2)
Enershop Inc. (1)
Central and South West Services, Inc. 0
Other Income 52
--------
$535
--------
EXPENSES AND TAXES
General and administrative expenses 75
Interest expense 67
Federal income taxes (25)
Other 3
--------
120
--------
NET INCOME $415
========
<PAGE> 14
CENTRAL POWER AND LIGHT COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
ASSETS
ELECTRIC UTILITY PLANT
Production $3,111 $5 $3,116
Transmission 494 494
Distribution 897 897
General 256 256
Construction work in progress 110 110
Nuclear fuel 170 170
-------- -------- --------
5,038 5 5,043
Less - Accumulated depreciation
and amortization 1,588 1,588
-------- -------- --------
3,450 5 3,455
-------- -------- --------
CURRENT ASSETS
Cash and temporary cash investments 0 0
Special deposits 1 1
Accounts receivable 49 49
Materials and supplies, at average cost 72 72
Fuel inventory, at average cost 23 23
Accumulated deferred income taxes 23 23
Prepayments and other 2 2
-------- -------- --------
170 170
-------- -------- --------
DEFERRED CHARGES AND OTHER ASSETS
Deferred STP costs 488 488
Mirror CWIP asset 309 309
Income tax related regulatory assets, net 348 348
Other 106 106
-------- -------- --------
1,250 1,250
-------- -------- --------
$4,870 $5 $4,875
======== ======== ========
<PAGE> 15
CENTRAL POWER AND LIGHT COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustment Forma
-------- -------- --------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $25 par value;
authorized 12,000,000 shares;
issued and outstanding 6,755,535
shares $169 $169
Paid-in capital 405 405
Retained earnings 852 852
-------- -------- --------
Total common stock equity 1,426 1,426
Preferred stock
Not subject to mandatory redemption 250 250
Long-term debt 1,519 5 1,524
-------- -------- --------
Total capitalization 3,195 5 3,200
-------- -------- --------
CURRENT LIABILITIES
Long-term debt due within twelve months 0 0
Advances from affiliates 188 188
Accounts payable 36 36
Accrued taxes 33 33
Accrued interest 38 38
Over-recovered fuel costs 8 8
Other 49 49
-------- -------- --------
352 352
-------- -------- --------
DEFERRED CREDITS
Income taxes 1,158 1,158
Investment tax credits 151 151
Mirror CWIP liability and other 14 14
-------- -------- --------
1,323 1,323
-------- -------- --------
$4,870 $5 $4,875
======== ======== ========
<PAGE> 16
CENTRAL POWER AND LIGHT COMPANY
STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED MARCH 31, 1996
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $1,200
--------
OPERATING EXPENSES AND TAXES
Fuel 292
Purchased power 29
Other operating 215
Maintenance 56
Depreciation and amortization 153
Taxes, other than income 75
Income taxes 80
--------
900
--------
OPERATING INCOME 300
--------
OTHER INCOME AND DEDUCTIONS
Mirror CWIP liability amortization 31
Other 9
--------
40
--------
INCOME BEFORE INTEREST CHARGES 340
--------
INTEREST CHARGES
Interest on long-term debt 115
Interest on short-term debt and other 18
--------
133
--------
NET INCOME 207
PREFERRED STOCK DIVIDENDS 14
--------
NET INCOME FOR COMMON STOCK $193
========
<PAGE> 17
CENTRAL POWER AND LIGHT COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1996
UNAUDITED
(Millions)
RETAINED EARNINGS AT MARCH 31, 1995 $835
Add: Net income (loss) for common stock 193
--------
1,028
Deduct: Common stock dividends 176
--------
RETAINED EARNINGS AT MARCH 31, 1996 $852
========
<PAGE> 18
PUBLIC SERVICE COMPANY OF OKLAHOMA
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
ASSETS
ELECTRIC UTILITY PLANT
Production $940 $10 $950
Transmission 367 367
Distribution 723 723
General 180 180
Construction work in progress 62 62
-------- -------- --------
2,272 10 2,282
Less - Accumulated depreciation 944 944
-------- -------- --------
1,328 10 1,338
-------- -------- --------
CURRENT ASSETS
Cash and temporary cash investments 2 2
Accounts receivable 19 19
Materials and supplies, at average cost 40 40
Fuel inventory, at LIFO cost 15 15
Accumulated deferred income taxes 7 7
Prepayments 1 1
-------- -------- --------
84 84
-------- -------- --------
DEFERRED CHARGES AND OTHER ASSETS 67 67
-------- -------- --------
$1,479 $10 $1,489
======== ======== ========
<PAGE> 19
PUBLIC SERVICE COMPANY OF OKLAHOMA
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $15 par value;
authorized 11,000,000 shares;
issued 10,482,000 shares;
outstanding 9,013,000 shares $157 $157
Paid-in capital 180 180
Retained earnings 149 149
-------- -------- --------
Total common stock equity 486 486
Preferred stock 20 20
Long-term debt 409 10 419
-------- -------- --------
Total capitalization 915 10 925
-------- -------- --------
CURRENT LIABILITIES
Long-term debt due within twelve months 0 0
Advances from affiliates 77 77
Payable to affiliates 43 43
Accounts payable 25 25
Payables to customers 22 22
Accrued taxes 18 18
Accrued interest 11 11
Other 8 8
-------- -------- --------
204 204
-------- -------- --------
DEFERRED CREDITS
Income taxes 266 266
Investment tax credits 45 45
Income tax related regulatory
liabilities, net 41 41
Other 8 8
-------- -------- --------
360 360
-------- -------- --------
$1,479 $10 $1,489
======== ======== ========
<PAGE> 20
PUBLIC SERVICE COMPANY OF OKLAHOMA
STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED MARCH 31, 1996
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $690
--------
OPERATING EXPENSES AND TAXES
Fuel 266
Purchased power 27
Other operating 115
Maintenance 35
Depreciation and amortization 70
Taxes, other than income 26
Income taxes 38
--------
577
--------
OPERATING INCOME 113
--------
OTHER INCOME AND DEDUCTIONS
Allowance for equity funds used during
construction 1
Other 0
--------
1
--------
INCOME BEFORE INTEREST CHARGES 114
--------
INTEREST CHARGES
Interest on long-term debt 30
Interest on short-term debt and other 4
--------
34
--------
NET INCOME 80
PREFERRED STOCK DIVIDENDS 1
--------
NET INCOME FOR COMMON STOCK $79
========
<PAGE> 21
PUBLIC SERVICE COMPANY OF OKLAHOMA
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1996
UNAUDITED
(Millions)
RETAINED EARNINGS AT MARCH 31, 1995 $132
Add: Net income (loss) for common stock 79
--------
211
Deduct: Common stock dividends 62
--------
RETAINED EARNINGS AT MARCH 31, 1996 $149
========
<PAGE> 22
WEST TEXAS UTILITIES COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
ASSETS
ELECTRIC UTILITY PLANT
Production $431 $35 $466
Transmission 200 200
Distribution 331 331
General 89 89
Construction work in progress 26 26
-------- -------- --------
1,077 35 1,112
Less - Accumulated depreciation 397 397
-------- -------- --------
680 35 715
-------- -------- --------
CURRENT ASSETS
Cash and temporary cash investments 0 0
Accounts receivable 25 25
Materials and supplies, at average cost 17 17
Fuel inventory, at average cost 8 8
Coal inventory, at LIFO cost 5 5
Accumulated deferred income taxes 5 5
Prepayments and other 1 1
-------- -------- --------
61 61
-------- -------- --------
DEFERRED CHARGES AND OTHER ASSETS
Deferred Oklaunion costs 25 25
Regulatory assets 12 12
Other 31 31
-------- -------- --------
68 68
-------- -------- --------
$809 $35 $844
======== ======== ========
<PAGE> 23
WEST TEXAS UTILITIES COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1996
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $25 par value;
authorized 7,800,000 shares;
issued and outstanding 5,488,560 shares $137 $137
Paid-in capital 2 2
Retained earnings 123 123
-------- -------- --------
Total common stock equity 262 262
Preferred stock
Not subject to mandatory redemption 6 6
Long-term debt 274 35 309
-------- -------- --------
Total capitalization 542 35 577
-------- -------- --------
CURRENT LIABILITIES
Long-term debt due within twelve months 0 0
Advances from affiliates 33 33
Payables to affiliates 10 10
Accounts payable 10 10
Accrued taxes 6 6
Accrued interest 8 8
Over-recovered fuel cost 1 1
Refund due customers 2 2
Other 3 3
-------- -------- --------
73 73
-------- -------- --------
DEFERRED CREDITS
Income taxes 146 146
Investment tax credits 30 30
Investment tax related regulatory
liabilities, 14 14
Other 4 4
-------- -------- --------
194 194
-------- -------- --------
$809 $35 $844
======== ======== ========
<PAGE> 24
WEST TEXAS UTILITIES COMPANY
STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED MARCH 31, 1996
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $326
--------
OPERATING EXPENSES AND TAXES
Fuel 125
Purchased power 15
Other Operating 53
Maintenance 14
Depreciation and amortization 35
Taxes, other than income 22
Income taxes 4
--------
268
--------
OPERATING INCOME 58
--------
OTHER INCOME AND DEDUCTIONS 0
--------
INCOME BEFORE INTEREST CHARGES 58
--------
INTEREST CHARGES
Interest on long-term debt 22
Interest on short-term debt and other 4
--------
26
--------
NET INCOME 32
PREFERRED STOCK DIVIDENDS 0
--------
NET INCOME FOR COMMON STOCK $32
========
<PAGE> 25
WEST TEXAS UTILITIES COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED MARCH 31, 1996
UNAUDITED
(Millions)
RETAINED EARNINGS AT MARCH 31, 1995 $137
Add: Net income (loss) for common stock 32
--------
169
Deduct: Common stock dividends 46
--------
RETAINED EARNINGS AT MARCH 31, 1996 $123
========
<PAGE> 26
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS
MARCH 31, 1996
UNAUDITED
(Millions)
DR CR
-------- --------
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
Cash 63
Long-term Debt 63
To issue new pollution control revenue bonds
Long-term Debt 63
Cash 63
To redeem old bonds
Cash 50
Long-term Debt 50
To issue new money bonds
Production Plant 50
Cash 50
To purchase pollution control equipment
CENTRAL POWER AND LIGHT COMPANY
Cash 6
Long-term Debt 6
To issue new pollution control revenue bonds
Long-term Debt 6
Cash 6
To redeem old bonds
Cash 5
Long-term Debt 5
To issue new money bonds
Production Plant 5
Cash 5
To purchase pollution control equipment
PUBLIC SERVICE COMPANY OF OKLAHOMA
Cash 13
Long-term Debt 13
To issue new pollution control revenue bonds
Long-term Debt 13
Cash 13
To redeem old bonds
Cash 10
Long-term Debt 10
To issue new money bonds
Production Plant 10
Cash 10
To purchase pollution control equipment
<PAGE> 27
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS
MARCH 31, 1996
UNAUDITED
(Millions)
(CONTINUED)
DR CR
-------- --------
WEST TEXAS UTILITIES COMPANY
Cash 44
Long-term Debt 44
To issue new pollution control revenue bonds
Long-term Debt 44
Cash 44
To redeem old bonds
Cash 35
Long-term Debt 35
To issue new money bonds
Production Plant 35
Cash 35
To purchase pollution control equipment
<PAGE> 28
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES
There has been a significant change in the financial statements of
Central and South West Corporation and Subsidiary Companies subsequent to
March 31, 1996. A wholly owned subsidiary of Central and South West
Corporation, Transok, Inc. was sold to Tejas Gas Corporation on June 6, 1996
for approximately $890 million.
<PAGE> 29
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CAPITALIZATION RATIOS
PER BOOKS AND PRO FORMA
AS OF MARCH 31, 1996
Common
Stock Preferred Long-term
Equity Stock Debt
-------- -------- --------
Central and South West Corporation
and Subsidiary Companies
(Consolidated) Per books * 41.2% 3.8% 55.0%
Central and South West Corporation
and Subsidiary Companies
(Consolidated) Pro forma * 41.0% 3.8% 55.2%
Central and South West Corporation (Corporate)
Per books 89.2% 0.0% 10.8%
Central and South West Corporation (Corporate)
Pro forma 89.2% 0.0% 10.8%
Central Power and Light Company
Per books 44.6% 7.8% 47.6%
Central Power and Light Company
Pro forma 44.6% 7.8% 47.6%
Public Service Company of Oklahoma
Per books 53.1% 2.2% 44.7%
Public Service Company of Oklahoma
Pro forma 52.5% 2.2% 45.3%
West Texas Utilities Company
Per books 48.3% 1.1% 50.6%
West Texas Utilities Company
Pro forma 45.4% 1.0% 53.6%
(*) Long Term Debt includes Transok's Medium-Term Notes Payable
<PAGE> 30
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The notes to consolidated financial statements included in Central and
South West Corporation's 1995 Annual Report on Form 10-K are hereby
incorporated by reference and made a part of this report.
Page
Reference
1995 Annual Report on Form 10-K pages 2-32 through 2-67
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 001
<NAME> CENTRAL AND SOUTH WEST CORPORATION CONSOLIDATED\
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996 MAR-31-1996
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<TOTAL-NET-UTILITY-PLANT> 8,351 8,401
<OTHER-PROPERTY-AND-INVEST> 657 657
<TOTAL-CURRENT-ASSETS> 1,782 1,782
<TOTAL-DEFERRED-CHARGES> 3,182 3,182
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 13,972 14,022
<COMMON> 732 732
<CAPITAL-SURPLUS-PAID-IN> 977 977
<RETAINED-EARNINGS> 1,836 1,836
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,545 3,545
34 34
292 292
<LONG-TERM-DEBT-NET> 4,714 4,764
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
1 1
<CAPITAL-LEASE-OBLIGATIONS> 11 11
<LEASES-CURRENT> 3 3
<OTHER-ITEMS-CAPITAL-AND-LIAB> 5,372 5,372
<TOT-CAPITALIZATION-AND-LIAB> 13,972 14,022
<GROSS-OPERATING-REVENUE> 3,836 3,836
<INCOME-TAX-EXPENSE> 163 163
<OTHER-OPERATING-EXPENSES> 2,995 2,995
<TOTAL-OPERATING-EXPENSES> 3,158 3,158
<OPERATING-INCOME-LOSS> 678 678
<OTHER-INCOME-NET> 74 74
<INCOME-BEFORE-INTEREST-EXPEN> 752 752
<TOTAL-INTEREST-EXPENSE> 348 348
<NET-INCOME> 433 433
18 18
<EARNINGS-AVAILABLE-FOR-COMM> 415 415
<COMMON-STOCK-DIVIDENDS> 330 330
<TOTAL-INTEREST-ON-BONDS> 211 211
<CASH-FLOW-OPERATIONS> 846 846
<EPS-PRIMARY> 2.14 2.14
<EPS-DILUTED> 2.14 2.14
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 002
<NAME> CENTRAL AND SOUTH WEST CORP.
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996 MAR-31-1996
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<TOTAL-NET-UTILITY-PLANT> 3 3
<OTHER-PROPERTY-AND-INVEST> 3,741 3,741
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<TOTAL-DEFERRED-CHARGES> 50 50
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<RETAINED-EARNINGS> 1,860 1,860
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0 0
0 0
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0 0
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<CASH-FLOW-OPERATIONS> (67) (67)
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</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 003
<NAME> CENTRAL AND SOUTH WEST CORPORATION
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996 MAR-31-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 3,450 3,455
<OTHER-PROPERTY-AND-INVEST> 0 0
<TOTAL-CURRENT-ASSETS> 170 170
<TOTAL-DEFERRED-CHARGES> 1,250 1,250
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 4,870 4,875
<COMMON> 169 169
<CAPITAL-SURPLUS-PAID-IN> 405 405
<RETAINED-EARNINGS> 852 852
<TOTAL-COMMON-STOCKHOLDERS-EQ> 1,426 1,426
0 0
250 250
<LONG-TERM-DEBT-NET> 1,519 1,524
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0 0
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<OTHER-ITEMS-CAPITAL-AND-LIAB> 1,675 1,675
<TOT-CAPITALIZATION-AND-LIAB> 4,870 4,875
<GROSS-OPERATING-REVENUE> 1,200 1,200
<INCOME-TAX-EXPENSE> 80 80
<OTHER-OPERATING-EXPENSES> 820 820
<TOTAL-OPERATING-EXPENSES> 900 900
<OPERATING-INCOME-LOSS> 300 300
<OTHER-INCOME-NET> 40 40
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<TOTAL-INTEREST-EXPENSE> 133 133
<NET-INCOME> 207 207
14 14
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<TOTAL-INTEREST-ON-BONDS> 115 115
<CASH-FLOW-OPERATIONS> 319 319
<EPS-PRIMARY> 1.00 1.00
<EPS-DILUTED> 1.00 1.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 004
<NAME> PUBLIC SERVICE COMPANY OF OKLAHOMA
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996 MAR-31-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 1,328 1,338
<OTHER-PROPERTY-AND-INVEST> 0 0
<TOTAL-CURRENT-ASSETS> 84 84
<TOTAL-DEFERRED-CHARGES> 67 67
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 1,479 1,489
<COMMON> 157 157
<CAPITAL-SURPLUS-PAID-IN> 180 180
<RETAINED-EARNINGS> 149 149
<TOTAL-COMMON-STOCKHOLDERS-EQ> 486 486
0 0
20 20
<LONG-TERM-DEBT-NET> 409 419
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 564 564
<TOT-CAPITALIZATION-AND-LIAB> 1,479 1,489
<GROSS-OPERATING-REVENUE> 690 690
<INCOME-TAX-EXPENSE> 38 38
<OTHER-OPERATING-EXPENSES> 539 539
<TOTAL-OPERATING-EXPENSES> 577 577
<OPERATING-INCOME-LOSS> 113 113
<OTHER-INCOME-NET> 1 1
<INCOME-BEFORE-INTEREST-EXPEN> 114 114
<TOTAL-INTEREST-EXPENSE> 34 34
<NET-INCOME> 80 80
1 1
<EARNINGS-AVAILABLE-FOR-COMM> 79 79
<COMMON-STOCK-DIVIDENDS> 62 62
<TOTAL-INTEREST-ON-BONDS> 30 30
<CASH-FLOW-OPERATIONS> 136 136
<EPS-PRIMARY> .41 .41
<EPS-DILUTED> .41 .41
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<CIK> 0000105860
<NAME> WEST TEXAS UTILITIES CORPORATION
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996 MAR-31-1996
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 680 715
<OTHER-PROPERTY-AND-INVEST> 0 0
<TOTAL-CURRENT-ASSETS> 61 61
<TOTAL-DEFERRED-CHARGES> 68 68
<OTHER-ASSETS> 0 0
<TOTAL-ASSETS> 809 844
<COMMON> 137 137
<CAPITAL-SURPLUS-PAID-IN> 2 2
<RETAINED-EARNINGS> 123 123
<TOTAL-COMMON-STOCKHOLDERS-EQ> 262 262
0 0
6 6
<LONG-TERM-DEBT-NET> 274 309
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 267 267
<TOT-CAPITALIZATION-AND-LIAB> 809 844
<GROSS-OPERATING-REVENUE> 326 326
<INCOME-TAX-EXPENSE> 4 4
<OTHER-OPERATING-EXPENSES> 264 264
<TOTAL-OPERATING-EXPENSES> 268 268
<OPERATING-INCOME-LOSS> 58 58
<OTHER-INCOME-NET> 0 0
<INCOME-BEFORE-INTEREST-EXPEN> 58 58
<TOTAL-INTEREST-EXPENSE> 26 26
<NET-INCOME> 32 32
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 32 32
<COMMON-STOCK-DIVIDENDS> 46 46
<TOTAL-INTEREST-ON-BONDS> 22 22
<CASH-FLOW-OPERATIONS> 53 53
<EPS-PRIMARY> .16 .16
<EPS-DILUTED> .16 .16
</TABLE>
