SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________
In the Matter of :
:
CENTRAL POWER AND LIGHT COMPANY : CERTIFICATE
:
PUBLIC SERVICE COMPANY OF OKLAHOMA : OF
WEST TEXAS UTILITIES COMPANY : NOTIFICATION
:
File No. 70-8869 :
:
(Public Utility Holding Company Act of 1935) :
:
_______________________________________________:
Central Power & Light Company (CPL), Public Service Company of
Oklahoma, (PSO), and West Texas Utilities, (WTU and, together with CPL and
PSO, the Companies), electric utility subsidiaries of Central and South West
Corporation (CSW), hereby certify that:
1. On July 1, 1996, the Boards of Directors of the Companies authorized
the execution, delivery and performance by the Companies of (i) an Installment
Payment Agreement between Red River Authority of Texas (the "District") and
the Company, and approved the form and provisions of a Bond Purchase Agreement
between the District and Morgan Stanley & Co., Inc. and Citicorp Securities,
Inc. (the "Underwriters").
2. On July 30, 1996, the Companies approved the terms of the Bond
Purchase Agreement which provided for the purchase by the Underwriters of
$63,300,000 aggregate principal amount of the District's Pollution Control
Revenue Refunding Bonds (Oklaunion Project) Series 1996 (the "Refunding
Bonds") due June 1, 2020. The Bond Purchase Agreement provided that the
Underwriter would pay the District 100% of the principal amount of the
Refunding Bonds.
3. The Installment Payment Agreement dated as of July 1, 1996, was
executed by the parties thereto in the form filed herewith as Exhibit 1(a).
4. On August 8, 1996, the District issued, sold and delivered
$63,300,000 aggregate principal amount of its Refunding Bonds at 100% of their
principal amount, being the price specified in the Bond Purchase Agreement.
5. The above-described transactions have been carried out in accordance
with the terms and conditions of, and for the purposes represented in, the Form
U-1 Application-Declaration of the Company, in File No. 70-8869, and in
accordance with the terms and conditions of the Commission's order dated July
30, 1996, permitting said Application-Declaration to become effective.
The following exhibits (in the final form thereof in which executed, filed
or used) are filed herewith: Exhibit 1(a) - Installment Payment Agreement, dated
as of July 1, 1996, between the Company and the District.
Exhibit 2(a) - Indenture of Trust, dated as of July 1, 1996, between
the District and the Trustee.
Exhibit 3(a) - Bond Purchase Agreement, dated July 30, 1996, between
the District and the Underwriters.
Exhibit 4(a) - Letter of Representation, dated July 30, 1996, from
the Company to the Issuer and the Purchasers.
Exhibit 5(a) - Official Statement relating to the Bonds, dated July
30, 1996.
Exhibit 7(a) - Final or "past tense" opinion of Milbank, Tweed,
Hadley & McCloy, counsel to CSW and the Company.
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 company has duly caused this document to
be signed on its behalf by the undersigned thereunto duly authorized.
DATED: August 22, 1996
CENTRAL POWER AND 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 TO EXHIBITS
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1(a) Installment Payment Agreement, Electronic
dated as of July 1, 1996,
between the Company and the
District.
2(a) Indenture of Trust, dated as of Electronic
July 1, 1996, between the
District and the Trustee.
3(a) Bond Purchase Agreement, dated Electronic
July 30, 1996, between the
District and the Underwriters.
4(a) Letter of Representation, dated Electronic
July 30, 1996, from the Company
to the Issuer and the Purchasers.
5(a) Official Statement relating to Electronic
the Bonds, dated July 30, 1996.
7(a) Final or "past tense" opinion of Electronic
Milbank, Tweed, Hadley & McCloy,
counsel to CSW and the Company.
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 SERVICES, INC.
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 SERVICES, INC. (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 July 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 the Agent 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, severally, but not jointly, 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 JULY 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 hereby
designates and authorizes 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 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
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.
(j) Neither this Agreement nor the security for the Bonds has been pledged
or hypothecated in any manner or for any purpose other than as provided in the
Indenture as security for the payment of the Bonds.
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 corporate charter 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
trans- actions 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 corporate charter 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 $4,391,437.50, which together shall be
sufficient to pay the redemption price of $67,691,437.50 and redeem all of the
Prior Bonds on September 15, 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 WTU, PSO and CPL 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 several obligations of each of WTU, PSO and CPL,
respectively. Prior to or simulta- neously 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, without investment, 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 Resolution 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 unconditional, 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 principal 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 Company 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 Company 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, howev- er, 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, reorganization, 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; land- slides;
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 any of WTU, PSO or CPL
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 Inden- ture, 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 Project or 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 given 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 the date of delivery of the Bonds 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
Bond Insurer, 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 Bond
Insurer, 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 may 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 Services, Inc.
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.
Any given notice hereunder shall also be given to the Bond Insurer at its
address set forth in Section 9.07(g) of the Indenture.
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
_____________________________________
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 SERVICES, INC.
By:_______________________________________
Authorized
Agent Representative
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 SERVICES, INC.
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................................................1
ARTICLE I
Definitions
Section 1.01. Definitions................................................2
Section 1.02. Agent to Act for Company...................................2
Section 1.03. Obligations of WTU, PSO and CPL Several but not Joint......2
Section 1.04. Change in Ownership Percentages............................2
ARTICLE II
Representations
Section 2.01. Representations by Issuer..................................3
Section 2.02. Representations by Company.................................4
ARTICLE III
The Project
Section 3.01. Intentionally Omitted......................................5
Section 3.02. Intentionally Omitted .....................................5
Section 3.03. Intentionally Omitted......................................5
Section 3.04. Maintenance and Repair ....................................5
Section 3.05. Right to Discontinue Operation of Project..................5
Section 3.06. Insurance and Condemnation Awards .........................5
Section 3.07. Taxation of Project........................................5
Section 3.08. Issuer's Limited Liability ................................5
Section 3.09. Governmental Regulation ...................................5
ARTICLE IV
Issuance of Bonds; Refunding the Prior Bonds;
Payments; Disbursements
Section 4.01. Issuance of Bonds .........................................6
Section 4.02. Bond Proceeds..............................................6
Section 4.03. Security for the Bonds ....................................6
Section 4.04. Bond Funds ................................................6
Section 4.05. Company Required to Pay in Event Monies Held Pursuant to
the Prior Indenture are Insufficient.....................6
Section 4.06. Notice to Bond Insurer.....................................6
ARTICLE V
The Company's Payments
Section 5.01. Company Approval of Issuance of the Bonds..................7
Section 5.02. Refunding of Bonds.........................................7
Section 5.03. Payment Upon Redemption of Bonds...........................7
Section 5.04. Installment Payments.......................................7
Section 5.05. Payments to Issuer.........................................8
Section 5.06. Issuer's Rights Assigned to Trustee........................8
Section 5.07. Payments to Trustee........................................8
Section 5.08. Payment to Remarketing Agent...............................8
Section 5.09. Company Option to Designate Interest Rate Determination
Methods..................................................9
Section 5.10. Purchase of Bonds..........................................9
Section 5.11. Usury......................................................9
ARTICLE VI
Defaults and Remedies
Section 6.01. Events of Default.........................................10
Section 6.02. Remedies of Default.......................................11
Section 6.03. Agreement to Pay Attorneys' Fees and Expenses.............12
ARTICLE VII
Special Covenants
Section 7.01. No Defense or Set-Off; Unconditional Obligation...........13
Section 7.02. Corporate Existence.......................................13
Section 7.03. Indemnities...............................................13
Section 7.04. Tax-Exempt Status of the Bonds............................14
Section 7.05. Arbitrage Covenants.......................................15
Section 7.06. Payment to Rebate Fund....................................15
Section 7.07. Qualification in Texas ...................................15
Section 7.08. Recordation...............................................15
Section 7.09. No Personal Liability.....................................15
Section 7.10 Compliance with Rule 15c2-12..............................15
ARTICLE VII
General Provisions
Section 8.01. General Provisions........................................16
Section 8.02. Intentionally Omitted.....................................16
Section 8.03. Amendment of Agreement....................................16
Section 8.04. Assignment................................................16
Section 8.05. Term of Agreement.........................................17
Section 8.06. Notices...................................................17
Section 8.07. Severability..............................................17
Section 8.08. Execution of Counterparts.................................17
Section 8.09. Governing Law.............................................17
Execution ..........................................................18
Exhibit A .........................................................A-1
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 Services,
Inc. (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, but only from the payments to be made
pursuant to the Agreement, 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
Act, Chapter 30, Chapter 383, Article 717k
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 Services, Inc., 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 Agent. 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, the Bond Insurer 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 Project or 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 mean direct 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:
WTU 70%
PSO 20%
CPL 10%
Pursuant to Section 1.04 of the Agreement, such Ownership Percentages may
be changed by agreement among WTU, PSO and CPL 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, collectively, the initial underwriters of the
Bonds, Morgan Stanley & Co. Incorporated and Citicorp Securities, Inc.
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" 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 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 Percentage of each Installment Payment or
other obligation under this Agreement or more than its own Ownership Percentage
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 Percentage.
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
Remarketing 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 through 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 Remarketing 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 determination 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 limited 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
accrued 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
Business 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
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 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
Quarterly 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
conversion 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 Conversion 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 Semiannual 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
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) 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
accrued 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), 2.02(G)(2) or 2.02(H)(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, the Bond Insurer 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
Services, Inc. (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 Percentage of each Installment Payment
or other obligation under the Agreement or more than its Ownership Percentage 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 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 NO-CALL PERIOD REDEMPTION PRICES
greater than or 10 years from the 102%, declining 1% per
equal to 11 years commencement of Interest year to 100%
Rate Period
less than 11 years No call
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 for purchase at the Purchase Price 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
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 Plant uneconomic;
(v) Any court or administrative body shall enter a judgment,
order or decree requiring any of WTU, PSO or CPL 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, any of WTU, PSO or CPL 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 any of WTU, PSO or CPL 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 Project 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 any of WTU, PSO or
CPL 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 any of WTU, PSO or CPL 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*, 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 the case of
Tendered Bonds that were in the Daily Mode, the words "on the Purchase Date,
which shall be a Business Day at least __________ (________) calendar days
following delivery of this instrument" shall be replaced by the words "on this
Business Day." 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
[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 any of WTU, PSO or CPL 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, any of WTU, PSO or CPL 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 any of WTU, PSO or CPL 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 less than 11 years NO-CALL
RATE PERIOD PERIOD
greater than or equal 10 years from the
to 11 years commencement of Interest
to 11 years
Rate Period
REDEMPTION PRICES
No Call
102%, declining 1% per year to
100%
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 suffi- cient, 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 Project 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 any of WTU, PSO or CPL 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 any of WTU, PSO or CPL 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 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,
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 Agent, to be
distributed among WTU, PSO and CPL according to their Ownership Percentages.
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 America 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, 9.04 and 9.07 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 but shall have no
impact on any subrogation rights of the Bond Insurer.
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 Services, Inc.
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 ...........................................................1
Granting Clauses ...........................................................2
Article I
Definitions and Interpretation
Section 1.01. Definitions................................................4
Section 1.02. Article and Section Headings..............................10
Section 1.03. Interpretation............................................10
Section 1.04. Agent to Act for Company..................................10
Section 1.05. Obligations of WTU, PSO and CPL Several but not Joint.....11
Article II
Authorization and Issuance of the Bonds
Section 2.01. Authorization of Bonds....................................12
Section 2.02. Interest..................................................13
Section 2.03. Form of Bond..............................................24
Section 2.04. Execution; Limited Obligations............................40
Section 2.05. Conditions Precedent to Delivery of Bonds; Authentication.41
Section 2.06. Redemption of Bonds......................................41
Section 2.07. Notice of Redemption......................................43
Section 2.08. Redemption Payments; Effect of Call for Redemption........44
Section 2.09. Partial Redemption........................................44
Section 2.10 Remarketing and Purchase..................................44
Section 2.11. Mandatory Tenders for Purchase............................46
Section 2.12. Special Conditions to Conversions from Multiannual or
Fixed Rate Mode.........................................47
Article III
General Provisions
Section 3.01. Authorization for Indenture; Indenture to Constitute
Contract................................................48
Section 3.02. Payment of Principal, Premium, if any, and Interest.......48
Section 3.03. Performance of Covenants; Issuer Immunity.................48
Section 3.04. Instruments of Further Assurance..........................48
Section 3.05. Recordation...............................................48
Section 3.06. Registration of Bonds; Trustee Appointed Bond Registrar;
Persons Treated as Owners...............................49
Section 3.07. Book-Entry Only System....................................49
Section 3.08. Successor Securities Depository; Transfers Outside
Book-Entry Only System..................................50
Section 3.09. Payments to Cede & Co.....................................50
Section 3.10. Cancellation..............................................50
Section 3.11. Non-presentment of Bonds..................................50
Section 3.12. Rights under Agreement....................................51
Section 3.13. Legal Existence of Issuer.................................51
Section 3.14. Diminution of, or Encumbrance on, Trust Estate............51
Section 3.15. Books, Records and Accounts...............................51
Section 3.16. Temporary Bonds...........................................51
Section 3.17. Mutilated, Lost, Stolen or Destroyed Bonds................51
Section 3.18. Intentionally Omitted.....................................52
Section 3.19. Arbitrage Covenants.......................................52
Page
Article IV
Use of Proceeds; Revenues and Funds
Section 4.01. Application of Original Proceeds of Bonds................53
Section 4.02. Creation of Bond Fund.....................................53
Section 4.03. Payments into Bond Fund and Use of Moneys in Bond Fund....53
Section 4.04. Creation and Use of Bond Purchase Fund....................53
Section 4.05. Investment of Moneys......................................54
Section 4.06. Moneys to be Held in Trust................................54
Section 4.07. Repayment to Company from Indenture Funds.................54
Section 4.08. Custody of Funds and Accounts.............................54
Section 4.09. Exemption from Federal Income Taxation....................54
Section 4.10. Covenants Regarding Rebate................................54
Article V
Discharge
Section 5.01. Discharge.................................................57
Section 5.02. Defeasance................................................57
Article VI
Events of Default and Remedies
Section 6.01. Events of Default.........................................58
Section 6.02. Acceleration..............................................58
Section 6.03. Other Remedies; Rights of Bond Owners.....................59
Section 6.04. Right of Bond Owners to Direct Proceedings................59
Section 6.05. Appointment of Receiver...................................59
Section 6.06. Waiver of Certain Laws....................................60
Section 6.07. Application of Moneys.....................................60
Section 6.08. Remedies Vested in Trustee................................61
Section 6.09. Rights and Remedies of Bond Owners........................61
Section 6.10. Termination of Proceedings................................61
Section 6.11. Waivers of Events of Default..............................61
Section 6.12. Notice of Default; Opportunity to Cure Defaults...........61
Section 6.13. Payments Under Municipal Bond Insurance Policy............62
Article VII
The Trustee
Section 7.01. Acceptance of Trust.......................................64
Section 7.02. Fees, Charges and Expenses of Trustee.....................66
Section 7.03. Trustee to Provide Additional Notices.....................66
Section 7.04. Intervention by Trustee...................................67
Section 7.05. Successor Trustee by Merger...............................67
Section 7.06. Resignation by Trustee....................................67
Section 7.07. Removal of Trustee........................................67
Section 7.08. Appointment of Successor Trustee..........................67
Section 7.09. Successor Trustee by Appointment..........................67
Section 7.10. Appointment of Separate Trustee or Co-Trustee.............67
Section 7.11. Qualifications............................................68
Section 7.12. Paying Agent..............................................68
Page
Article VIII
The Remarketing Agent
Section 8.01. The Remarketing Agent.....................................69
Section 8.02. Qualifications of Remarketing Agent.......................69
Article IX
Supplemental Indentures
Section 9.01. Supplemental Indentures Not Requiring Consent
of Bond Owners..........................................70
Section 9.02. Supplemental Indentures Requiring Consent of Bond Owners..70
Section 9.03. Limitation upon Amendments and Supplements................71
Section 9.04. Consent of Agent Required.................................71
Section 9.05. Amendments to Agreement...................................71
Section 9.06. Opinion of Counsel........................................71
Section 9.07. Bond Insurer to be Deemed Bondowner; Rights of Bond
Insurer; Payments by Bond Insurer in Advance of
Scheduled Maturity Dates; Notices.......................71
Article X
Miscellaneous
Section 10.01. Consents of Bond Owners...................................73
Section 10.02. Limitation of Rights......................................73
Section 10.03. Severability..............................................73
Section 10.04. Notices...................................................73
Section 10.05. Payments or Performance Due on Other Than Business Days...74
Section 10.06. Execution of Counterparts.................................74
Section 10.07. Applicable Law............................................74
Section 10.08. Disqualified Bonds........................................74
Section 10.09. No Personal Liability of Issuer or Trustee................75
Section 10.10. Notice of Change..........................................75
Execution ..........................................................76
EXHIBIT A
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 30, 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 July 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
Services, Inc., as agent for the Companies, have entered into an
Installment Payment Agreement dated as of July 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 E 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 July 19, 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 100% 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 June 1, 2020, and shall initially bear interest at the rate of 6% 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 August 8, 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) 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 Underwriters' 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, in form and substance reasonably
satisfactory to the Underwriters;
(iii) An opinion, dated the Closing Date, of
Gibson & Hotchkiss, L.L.P. ("Issuer's Counsel"),
counsel for the Issuer, in form and substance
reasonably satisfactory to the Underwriters;
(iv) An opinion, dated the Closing Date, of
Milbank, Tweed, Hadley & McCloy, special counsel
for the Companies, in form and substance
reasonably satisfactory to the Underwriters;
(v) An opinion, dated the Closing Date, of
Wagstaff, Alvis, Stubbeman, Seamster & Longacre,
L.L.P., special counsel for WTU, in form and
substance reasonably satisfactory to the
Underwriters;
(vi) An opinion, dated the Closing Date, of
Doerner, Saunders, Daniel & Anderson, special
counsel for PSO in the State of Oklahoma, in form
and substance reasonably satisfactory to the
Underwriters;
(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, in form and substance reasonably
satisfactory to the Underwriters;
(viii) An opinion, dated the Closing Date, of
Vinson & Elkins L.L.P., special counsel for CPL,
in form and substance reasonably satisfactory to
the Underwriters;
(ix) An opinion, dated the Closing Date, of
Sidley & Austin, counsel for the Underwriters, in
form and substance reasonably satisfactory to the
Underwriters;
(x) Letters, dated the Closing Date, from Arthur
Andersen LLP, independent certified public
accountants of each of the Companies, in form and
substance reasonably satisfactory to the
Underwriters and their counsel;
(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, in form and substance reasonably
satisfactory to the Underwriters; 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 F 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 be 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 (.831% 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:
Central and South West Services, Inc.
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 $42,200.00
Citicorp Securities, Inc. $21,100.00
----------
Total $63,300.00
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 30, 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
Appendices 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. WTU expects that the Commission will issue an
order (the "Order") under the 1935 Act on or prior to the Closing
Date 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
thereunder. A copy of the Order 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 Natural Resource Conservation Commission
("TNRCC") or its predecessor, 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. PSO expects that the Commission will issue the
Order under the 1935 Act on or prior to the Closing Date
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, such order being subject, however, to the
condition, among others, that PSO comply with such supplemental
order, if any, as the Commission may enter thereunder. A copy of
the Order 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 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, (iv) the order of the Oklahoma Corporation
Commission and (v) 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 TNRCC or its predecessor, 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. CPL expects that the Commission will issue the
Order under the 1935 Act on or prior to the Closing Date
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 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 TNRCC or its predecessor, 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 .831%
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
Central and South West Services, Inc.
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:
Title:
CENTRAL POWER AND LIGHT COMPANY
By:
Name
Title:
Accepted:
RED RIVER AUTHORITY OF TEXAS
By:
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED
CITICORP SECURITIES, INC.
By: MORGAN STANLEY & CO. INCORPORATED
By:
Name:
Title:
NEW ISSUE - BOOK-ENTRY ONLY
$63,300,000
Red River Authority of Texas
6% 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: June 1, 2020 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 June 1 and December 1, commencing December 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 100%
______________ (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 August
8, 1996. _______________
MORGAN STANLEY & CO. CITICORP SECURITIES, INC.
Incorporated
Dated: July 30, 1996
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. . . . . . . . . . . . . . . . . . . . . . . . . 15
THE MBIA INSURANCE CORPORATION INSURANCE POLICY. . . . . . . . 20
TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . 22
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . 24
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . 25
CONTINUING DISCLOSURE. . . . . . . . . . . . . . . . . . . . . 25
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 26
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
6% 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 June 1, 2020
_______________
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 17, 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 Services, Inc., as agent for the
Companies (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 each
Company's absolute unconditional and several obligation 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 676 megawatt electric generating unit which began commercial
operation in December 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 (predecessors to the Texas Natural Resources Conservation
Commission) 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, 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 June 1, 2020 and will bear interest at the rate of
6% 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 June 1 and
December 1 of each year, commencing December 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 June 1, 2006 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
June 1, 2006 through May 31, 2007 102%
June 1, 2007 through May 31, 2008 101%
June 1, 2008 and thereafter 100%
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 any Company 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, any Company is or will be thereby prevented from carrying on
its 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
any 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 (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 the Agent participates to
the extent it deems sufficient, or (b) 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 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
any 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 any 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 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 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 June 1, 2006, 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, the Bond Insurer 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, the Bond Insurer
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, the Bond Insurer 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, in proportion to their respective Ownership
Percentages, 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,
in proportion to their respective Ownership Percentages, 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 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 the
Agreement. Upon the delivery of such an instrument, WTU, PSO or
CPL, as the case may be, 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 WTU, PSO
or CPL, as the case may be, 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 any of the Companies to pay its Ownership
Percentage of Installment Payments with respect to principal
of or premium on any Bond at the times specified therein;
(b) failure by any of the Companies to pay its Ownership
Percentage of 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 any of the Companies 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 after notice thereof shall have been given by the
Trustee to the Agent and the Issuer;
(d) failure by any of the Companies 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 any of the
Companies; 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 any of WTU, PSO or
CPL 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, in proportion to their respective Ownership
Percentages, 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 any 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 Companies
in order to make conforming changes with respect to certain
amendments made to the Indenture. Notwithstanding the foregoing,
the Ownership Percentage of each of WTU, PSO and CPL may be changed
by agreement among WTU, PSO and CPL, 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%.
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 Agent 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, the 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 the 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 or the Agent, 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 Gibson & Hotchkiss, 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 100% 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
July 30, 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 .831% 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
severally obligated to make certain payments to the Issuer and have
severally 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 quarter 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 1995. . . . .Gas 65%; Coal 35%
SELECTED FINANCIAL INFORMATION
(in thousands, except percentages and ratios)
Twelve Months
Ended March 31, Year Ended December 31,
1996 1995 1994 1993
(Unaudited)
Income Summary:
Operating Revenues . . . . $325,703 $319,835 $342,991 $345,445
Operating Income. . . . . .$57,345 $ 59,486 $ 54,763 $46,576
Income. . . . . . . . . . . .$32,051 $ 34,530 $ 37,366 $30,296
Ratio of Earnings
to Fixed Charges* . . . . . .2.45 2.63 3.37 2.79
______________________
* 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%
RECENT DEVELOPMENTS
CSW, WTU's parent company, is performing a strategic review
in conjunction with its continuing efforts to better position
itself to meet increased competition in the electric utility
industry. As part of its continuing strategic review, CSW has
evaluated certain investments and contingencies, including WTU's
investment in plant sites, engineering studies and lignite
reserves. As previously disclosed, WTU has made approximately
$15 million of such investments. During the quarter ended June
30, 1996, WTU recorded an after-tax, non-cash reserve of
approximately $11 million primarily in respect of such
investments. As a result of recording such reserve, WTU
experienced a loss for the second quarter of 1996. However,
there could be a positive cash flow impact resulting from any tax
benefits generated by such reserves. The reserves will not have
a material adverse effect on WTU's ongoing results of operations
or financial condition.
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 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,
March 4, 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%
SELECTED FINANCIAL INFORMATION
(in thousands, except percentages and ratios)
Twelve Months
Ended March 31, Year Ended December 31,
1996 1995 1994 1993
(Unaudited)
Income Summary:
Operating Revenues $689,826 $690,823$740,496$707,536
Operating Income $112,925 $111,769$ 98,258$ 72,156
Net Income $79,857 $ 81,828$ 68,266$ 46,719
Ratio of Earnings
to Fixed Charges* 4.24 4.32 4.03 2.78
______________________
* 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. . . . . . . . . . . . . 409,625 4.7
Total Capitalization . . . . . . . . . . . . .$915,236 100.0%
RECENT DEVELOPMENTS
CSW, PSO's parent company, is performing a strategic review in
conjunction with its continuing efforts to better position itself to meet
increased competition in the electric utility industry. As part of its
continuing strategic review, CSW has evaluated certain investments and
contingencies, including PSO's investment in plant sites, engineering studies
and lignite reserves. As previously disclosed, PSO has made approximately $38
million of such investments. During the quarter ended June 30, 1996, PSO
recorded an after-tax, non-cash reserve of approximately $38 million primarily
in respect of such investments. As a result of recording such reserve, PSO
experienced a loss for the second quarter of 1996. However, there could be a
positive cash flow impact resulting from any tax benefits generated by such
reserves. The reserves will not have a material adverse effect on PSO's
ongoing results of operations or financial condition.
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 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
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 incorporated 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 1995. . . . .Gas 55%; Coal 21%; Nuclear 24%
SELECTED FINANCIAL INFORMATION
(in thousands, except percentages and ratios)
Twelve Months
Ended March 31, Year Ended December 31,
1996 1995 1994 1993
(Unaudited)
Income Summary:
Operating Revenues $1,199,575 $1,073,469 $1,217,979 $1,223,528
Operating Income $299,753 $282,184 $256,251 $190,079
Net Income $206,705 $206,447 $205,439 $172,425
Ratio of Earnings
to Fixed Charges* 3.07 2.63 3.24 2.69
______________________
* 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%
RECENT DEVELOPMENTS
CSW, CPL's parent company, is performing a strategic review in
conjunction with its continuing efforts to better position itself to meet
increased competition in the electric utility industry. As part of its
continuing strategic review, CSW has evaluated certain investments and
contingencies, including CPL's investment in plant sites, engineering studies
and lignite reserves. As previously disclosed, CPL has made approximately $24
million of such investments. During the quarter ended June 30, 1996, CPL
recorded an after-tax, non-cash reserve of approximately $15.6 million
primarily in respect of such investments. There could be a positive cash flow
impact resulting from any tax benefits generated by such reserves. The
reserves will not have a material adverse effect on CPL's ongoing results of
operations or financial condition.
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 incorporated 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, the Bond Insurer 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
WEST TEXAS UTILITIES COMPANY
PUBLIC SERVICE COMPANY OF OKLAHOMA
CENTRAL POWER AND LIGHT COMPANY
$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 30, 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.
EXHIBIT 7
August [ ], 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re:West Texas Utilities Company, Public
Service Company of Oklahoma and Central
Power and Light Company
Certificate of Notification to
Form U-1 Application-Declaration
(File No. 70-8869)
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"), and the Certificate of Notification thereto, filed
by West Texas Utilities Company ("WTU"), a Texas corporation, Public Service
Company of Oklahoma ("PSO"), an Oklahoma corporation, and Central Power and
Light Company ("CPL", and together with WTU and PSO, the "Companies"), a Texas
corporation, each, a wholly-owned electric utility subsidiary of Central and
South West Corporation ("CSW"), a Delaware corporation and a registered holding
company under the 1935 Act. The Certificate of Notification relates to the issue
and sale by Red River Authority of Texas (the "Authority") of $63,300,000
aggregate principal amount 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, due June 1, 2020 (the
"Bonds"). In connection with the issuance of the Bonds, the Companies entered
into an Installment Payment Agreement (the "Installment Payment Agreement") with
the Authority which obligated the Companies to pay amounts designed to be
sufficient to pay the principal of, premium, if any, and interest on the Bonds.
In connection with the Application-Declaration and the Certificate of
Notification, we have acted as special counsel for the Companies and, as such
counsel, we are familiar with the corporate proceedings taken by the Companies
in connection with the issuance and sale of the Bonds as described in the
Application-Declaration and Certificate of Notification.
In rendering the opinions expressed below, we have assumed, with respect to
all of the documents referred to in this opinion letter, that (except, to the
extent set forth in the opinions expressed below, as to the Companies): (i) such
documents have been duly authorized by, have been duly executed and delivered
by, and constitute legal, valid, binding and enforceable obligations of, all of
the parties to such documents; (ii) all signatories to such documents have been
duly authorized; and (iii) all of the parties to such documents are duly
organized and validly existing and have the power and authority (corporate or
other) to execute, deliver and perform such documents.
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, the conformity with the originals of all documents submitted to us as
copies and the authenticity of such originals. 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 and
the Certificate of Notification.
Based upon the foregoing, and having regard to legal considerations which
we deem relevant, we are of the opinion that:
1. WTU and CPL are duly incorporated, validly existing and in good standing
under the laws of the State of Texas.
2. PSO is duly incorporated, validly existing and in good standing under
the laws of the State of Oklahoma.
3. All state laws applicable to the execution of the Installment Payment
Agreement by the Companies have been complied with.
4. The Installment Payment Agreement is a valid and binding obligation of
the Companies enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium or other
similar laws of general applicability relating to or affecting the enforcement
of creditors' rights generally and to the effects of general principles of
equity (regardless of whether enforceability is considered in a proceeding in
equity or at law), including without limitation (a) the possible unavailability
of specific performance, injunctive relief or any other equitable remedies and
(b) concepts of materiality, reasonableness, good faith and fair dealing.
5. The consummation of the transactions as described in the
Application-Declaration and Certificate of Notification did not violate the
legal rights of the holders of any securities issued by any of the Companies or
any associate company of any of the Companies.
In rendering the opinions hereinabove expressed, we have relied upon
opinions of other counsel to the Companies who are qualified to practice in
jurisdictions pertaining to the transactions described above in which we are not
admitted to practice. We do not express any opinion as to matters governed by
any laws other than the Federal laws of the United States of America, the laws
of the State of New York and, to the extent hereinabove stated, the laws of
other jurisdictions pertaining to the transactions described above in reliance
upon said opinions of counsel to the Companies.
We hereby consent to the use of this opinion as an exhibit to
the Certificate of Notification.
Very truly yours,
