SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- --------------------------------------------------
:
In the Matter of :
: CERTIFICATE
CENTRAL POWER AND LIGHT COMPANY :
: OF
File No. 70-8597 :
: NOTIFICATION
(Public Utility Holding Company Act of 1935) :
:
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Central Power and Light Company (the "Company"), an electric
utility subsidiary of Central and South West Corporation ("CSW"), hereby
certifies that:
1. On June 7, 1995, the Board of Directors of the Company
authorized the execution, delivery and performance by the Company of an
Installment Payment Agreement between Matagorda County Navigation District
Number One (Texas) (the "District") and the Company and approved the form
and provisions of a Bond Purchase Agreement between the District and Morgan
Stanley & Co. Incorporated, Goldman, Sachs & Co. and J.P. Morgan Securities
Inc. (the "Underwriters").
2. On July 17, 1995, the Company approved the terms of the Bond
Purchase Agreement which provided for the purchase by the Underwriters of
$100,635,000 aggregate principal amount of the District's 6.10% Pollution
Control Revenue Refunding Bonds (Central Power and Light Company Project)
Series 1995 (the "Refunding Bonds") due July 1, 2028. The Bond Purchase
Agreement provided that the Underwriters would pay the District 100% of the
principal amount of the Refunding Bonds, plus accrued interest from July 1,
1995, and that the Bonds would have an interest rate of 6.10%.
3. The Installment Payment Agreement dated as of July 1, 1995,
was executed by the parties thereto in the form filed herewith as Exhibit
1(a).
4. On July 27, 1995, the District issued, sold and delivered
$100,635,000 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. 70-8597, and in accordance with the terms and conditions of the
Commission's Order dated June 15, 1995, 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 July 1,
1995, between the Company and the District.
Exhibit 2(a) - Indenture of Trust, dated July 1, 1995, between
the District and the Trustee.
Exhibit 3(a) - Bond Purchase Agreement, dated July 13, 1995,
between the District and the Underwriters.
Exhibit 4(a) - Letter of Representation, dated July 13, 1995,
from the Company to the Issuer and the
Purchasers.
Exhibit 5(a) - Official Statement relating to the Bonds, dated
July 13, 1995.
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: July 28, 1995
CENTRAL POWER AND LIGHT 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 July 1, 1995, between the
Company and the District.
2(a) Indenture of Trust, dated July 1, Electronic
1995, between the District and
the Trustee.
3(a) Bond Purchase Agreement, dated Electronic
July 13, 1995, between the
District and the Underwriters.
4(a) Letter of Representation, dated Electronic
July 13, 1995, from the Company
to the Issuer and the Purchasers.
5(a) Official Statement relating to Electronic
the Bonds, dated July 13, 1995.
7(a) Final or "past tense" opinion of Electronic
Milbank, Tweed, Hadley & McCloy,
counsel to CSW and the Company.
EXHIBIT 1(a)
------------
INSTALLMENT PAYMENT AGREEMENT
BETWEEN
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE
AND
CENTRAL POWER AND LIGHT COMPANY
____________________
Dated as of July 1, 1995
Relating to
Matagorda County Navigation District Number One
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
SERIES 1995
INSTALLMENT PAYMENT AGREEMENT
TABLE OF CONTENTS
(This Table of Contents is not a part of this Agreement
and is only for convenience of reference)
PAGE
Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.02. Certain Rules of Interpretation . . . . . . . . . . . . .5
ARTICLE II
Representations
Section 2.01. Representations by Issuer . . . . . . . . . . . . . . . .6
Section 2.02. Representations by Company . . . . . . . . . . . . . . .7
ARTICLE III
The Bonds and the Company's Payments
Section 3.01. Issuance of the Bonds . . . . . . . . . . . . . . . . . .8
Section 3.02. Refunding of Bonds . . . . . . . . . . . . . . . . . . .9
Section 3.03. Redemption of Bonds. . . . . . . . . . . . . . . . . . .9
Section 3.04. Installment Payments . . . . . . . . . . . . . . . . . .9
Section 3.05. Issuer's Rights Assigned to Trustee . . . . . . . . . . 10
ARTICLE IV
Other Payments
Section 4.01. Intentionally Omitted . . . . . . . . . . . . . . . . . 10
Section 4.02. Intentionally Omitted.. . . . . . . . . . . . . . . . . 10
Section 4.03. Trustee Expenses . . . . . . . . . . . . . . . . . . . 10
Section 4.04. Issuer Expenses . . . . . . . . . . . . . . . . . . . . 11
Section 4.05. Taxes and Other Governmental Charges and Utility
Charges . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.06. Payment to Special Rebate Fund . . . . . . . . . . . . 11
<PAGE>
PAGE
ARTICLE V
Special Covenants
Section 5.01. Compliance with Rule 15c2-12 . . . . . . . . . . . . . . 11
Section 5.02. Intentionally Omitted. . . . . . . . . . . . . . . . . . 11
Section 5.03. Indemnities. . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.04. Facilities to be Used for Pollution Abatement. . . . . . 12
Section 5.05. Intentionally Omitted. . . . . . . . . . . . . . . . . . 12
Section 5.06. Intentionally Omitted. . . . . . . . . . . . . . . . . . 12
Section 5.07. Company to Maintain Corporate Existence;
Conditions Under Which Exceptions Permitted . . . . . . 13
Section 5.08. Qualification in Texas . . . . . . . . . . . . . . . . . 13
Section 5.09. Permits or Licenses. . . . . . . . . . . . . . . . . . . 13
Section 5.10. Preservation of Existence of Issuer;
Obligations Under the Indenture. . . . . . . . . . . . 13
Section 5.11. No Personal Liability. . . . . . . . . . . . . . . . . . 13
Section 5.12. Tax Exempt Status of the Bonds . . . . . . . . . . . . . 13
Section 5.13. Arbitrage Covenants. . . . . . . . . . . . . . . . . . . 15
Section 5.14. Annual Report. . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE VI
Events of Default and Remedies
Section 6.01. Event of Default . . . . . . . . . . . . . . . . . . . .15
Section 6.02. Remedies on Default. . . . . . . . . . . . . . . . . . 17
Section 6.03. No Remedy Exclusive. . . . . . . . . . . . . . . . . . 18
Section 6.04. Agreement to Pay Attorneys' Fees and Expenses. . . . . 18
Section 6.05. No Additional Waiver Implied by One Waiver . . . . . . 18
Section 6.06. Notice to Bond Insurer . . . . . . . . . . . . . . . . 18
ARTICLE VII
Prepayments
Section 7.01. Prepayments. . . . . . . . . . . . . . . . . . . . . . 18
Section 7.02. Amount of Prepayments When Bonds to be Redeemed. . . . 19
Section 7.03. Notice of Prepayment . . . . . . . . . . . . . . . . . 19
Section 7.04. Time of Prepayments. . . . . . . . . . . . . . . . . . 19
PAGE
ARTICLE VIII
Miscellaneous
Section 8.01. Disposition of Bond Fund Upon Termination. . . . . . . . 19
Section 8.02. Notices. . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.03. Unconditional Obligation . . . . . . . . . . . . . . . . 20
Section 8.04. Assignment of the Agreement by Company . . . . . . . . . 20
Section 8.05. Assignment to Trustee by Issuer. . . . . . . . . . . . . 21
Section 8.06. Binding Effect . . . . . . . . . . . . . . . . . . . . . 21
Section 8.07. Amendments, Changes, Modifications and
Financed Interest . . . . . . . . . . . . . . . . . . . 21
Section 8.08. Execution in Counterparts. . . . . . . . . . . . . . . . 21
Section 8.09. Severability . . . . . . . . . . . . . . . . . . . . . . 22
Section 8.10. Laws Governing . . . . . . . . . . . . . . . . . . . . . 22
Section 8.11. Section Headings . . . . . . . . . . . . . . . . . . . . 22
Section 8.12. Entire Agreement . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IX
Term of Agreement
Section 9.01. Term of Agreement. . . . . . . . . . . . . . . . . . . . 22
EXECUTION
Execution by Issuer. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Execution by Company . . . . . . . . . . . . . . . . . . . . . . . . . . 23
INSTALLMENT PAYMENT AGREEMENT
THE STATE OF TEXAS :
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE :
THIS AGREEMENT is made and entered into as of July 1, 1995, by and
between MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE ("Issuer"), a
governmental agency and body politic and corporate of the State of Texas,
operating as a conservation and reclamation district pursuant to Article
XVI, Section 59 of the Texas Constitution and the general laws of the
State of Texas, and CENTRAL POWER AND LIGHT COMPANY ("Company").
W I T N E S S E T H:
WHEREAS, this Agreement is authorized and executed pursuant to
applicable Texas laws, including the Regional Waste Disposal Act, Chapter
30, Texas Water Code ("Chapter 30"), the Clean Air Financing Act, Chapter
383, Texas Health and Safety Code (the "Air Act"), and Article 717q
V.A.T.C.S. ("Art. 717q", which together with Chapter 30 and the Air Act
are sometimes hereinafter collectively referred to as the "Acts"); and
WHEREAS, Issuer and Company have previously entered into an
Installment Sale Agreement dated as of October 15, 1984 (the "1984
Agreement") pursuant to which Issuer issued its Matagorda County
Navigation District Number One Adjustable Rate Pollution Control Revenue
Bonds (Central Power and Light Company Project) Series 1984 (the "1984
Bonds") and used the proceeds to finance the costs of certain eligible
projects and Company agreed to make payments to NationsBank of Texas,
National Association (successor to RepublicBank Dallas, National
Association), as Trustee (the "Prior Trustee") on behalf of the owners of
the 1984 Bonds under an Indenture of Trust with Issuer dated as of October
15, 1984 (the "1984 Indenture"), in amounts sufficient to pay the
principal of, premium, if any, and interest on and all other charges in
connection with the 1984 Bonds; and
WHEREAS, Issuer and Company have previously entered into an
Installment Sale Agreement dated as of July 1, 1985 (the "1985A
Agreement") pursuant to which Issuer issued its Matagorda County
Navigation District Number One Collateralized Pollution Control Revenue
Bonds (Central Power and Light Company Project) Series 1985A (the "1985A
Bonds") and used the proceeds to finance the costs of certain eligible
projects and Company agreed to make payments to the Prior Trustee on
behalf of the owners of the 1985A Bonds under an Indenture of Trust with
Issuer dated as of July 1, 1985 (the "1985A Indenture"), in amounts
sufficient to pay the principal of, premium, if any, and interest on and
all other charges in connection with the 1985A Bonds; and
WHEREAS, the 1984 Agreement and 1985A Agreement are sometimes
hereinafter referred to collectively as the Prior Agreements, the 1984
Bonds and the 1985A Bonds are sometimes hereinafter referred to
collectively as the Prior Bonds, and the 1984 Indenture and the 1985A
Indenture are sometimes hereinafter referred to as the Prior Indentures;
and
WHEREAS, pursuant to the terms of the Prior Agreements and the Prior
Indentures, Company is obligated to make installment payments, which
installment payments shall be made to the Prior Trustee in amounts which,
together with other moneys available therefor, will be sufficient to pay
the principal of, premium, if any, and interest on the Prior Bonds as the
same come due, with such installment payments to be made in funds which
will be immediately available on the date such principal, premium, if any,
and interest is due on the Prior Bonds; and
WHEREAS, Company has requested that Issuer issue its refunding bonds
for the purpose of refunding and retiring all of the Outstanding Prior
Bonds; and
WHEREAS, Company has agreed to make payments hereunder in lieu of
its obligations under the Prior Agreements relating to the refunded Prior
Bonds.
NOW, THEREFORE, for and in consideration of the covenants herein
made, and subject to the conditions herein set forth, the parties hereto
agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions. Unless a different meaning clearly
appears from the context, the following words and terms shall have the
following meanings, respectively:
Acts - Chapter 30, the Air Act and Art. 717q.
Agreement - this Installment Payment Agreement dated as of July 1,
1995, between Issuer and Company, as from time to time modified, altered,
amended, and supplemented.
Agreement to Issue Bonds - the resolution of the Board adopted on
March 2, 1974 taking "some other similar official action" toward the
issuance of the Bonds.
Air Act - the Clean Air Financing Act, Chapter 383, Texas Health and
Safety Code.
Art. 717q - Article 717q, Vernon's Annotated Texas Civil Statutes,
as amended.
Authorized Company Officer - the President, any Vice President or
the Treasurer of the Company and the Treasurer and Director, Finance of
Central and South West Corporation.
Authorized Company Representative - any person or persons designated
to act on behalf of Company in matters relating to this Agreement by
written certificate furnished to Issuer and Trustee containing the
specimen signature of any such person or persons and signed on behalf of
Company by the Chairman of the Board of Directors, the President, or any
Vice President of Company.
Board - the lawfully qualified Board of Navigation and Canal
Commissioners of Issuer.
Bonds - Matagorda County Navigation District Number One Pollution
Control Revenue Refunding Bonds (Central Power and Light Company Project)
Series 1995 issued in the aggregate principal amount of $100,635,000
pursuant to the Indenture.
Bond Counsel - an attorney or firm of attorneys of recognized
standing in the field of law relating to revenue bonds, selected by Issuer
and satisfactory to Trustee and Company.
Bond Fund - the fund by that name created and established in the
Indenture.
Bond Insurer - MBIA Insurance Corporation and its successors and
assigns.
Bond Resolution - each resolution of the Board authorizing the
issuance, execution, and delivery of the Bonds.
Bond Registrar - the registrar of Bonds named in the Indenture and
any successors or assigns.
Chapter 30 - the Regional Waste Disposal Act, Chapter 30, Texas
Water Code.
Closing Date - the date the Bonds are delivered to the original
purchaser or purchasers thereof and payment is made therefor.
Code - the Internal Revenue Code of 1986, as amended.
Company - Central Power and Light Company and its successors and
assigns as permitted by Sections 5.07 and 8.04.
Costs of Issuance - All costs and expenses incurred by Issuer or
Company in connection with the issuance and sale of the Bonds, including,
without limitation (i) fees and expenses of accountants, attorneys,
engineers, financial advisors and underwriters, (ii) materials, supplies
and printing and engraving costs, (iii) recording and filing fees, (iv)
rating agency fees, (v) initial fees and expenses of Trustee, (vi)
underwriter's discount and (vii) Issuer's administrative and overhead
expenses as provided in Section 4.04 of this Agreement.
Event of Default - any event of default specified in Section 6.01.
Facilities - the Facilities as defined in the Prior Agreements.
Indenture - the Indenture of Trust dated as of July 1, 1995,
between Issuer and Trustee, securing the Bonds, as from time to time
amended and supplemented in accordance with its terms.
Installment Payment - as defined in Section 3.01.
Issuer - Matagorda County Navigation District Number One, or its
lawful successors or assigns.
Issuer Expenses - all direct fees, costs, and reasonable expenses of
Issuer incurred in connection with the issuance of the Bonds and the
administration of this Agreement and the Indenture. Such fees, costs, and
expenses shall include those amounts specified in the Agreement to Issue
Bonds and the letter agreement between Issuer and Company, dated as of
September 5, 1984, and all direct payments of Issuer for reasonable fees
of accountants, attorneys, engineers, and fiscal agents and other direct
payments for services of third parties, and for materials and supplies.
1985A Bonds - the Matagorda County Navigation District Number One
Collateralized Pollution Control Revenue Bonds (Central Power and Light
Company Project) Series 1985A.
1985A Indenture - the Indenture of Trust dated as of July 1, 1985
between Prior Trustee and Issuer.
1984 Bonds - the Matagorda County Navigation District Number One
Adjustable Rate Pollution Control Revenue Bonds (Central Power and Light
Company Project) Series 1984.
1984 Indenture - the Indenture of Trust dated as of October 15, 1984
between Prior Trustee and Issuer.
1954 Code - the Internal Revenue Code of 1954, as amended prior to
enactment of the Tax Reform Act of 1986.
Outstanding under the Indenture or Outstanding thereunder or
Outstanding - when used with reference to Bonds, at any date as of which
the amount of Outstanding Bonds is to be determined, the aggregate of all
Bonds authorized, issued, authenticated, and delivered under the
Indenture, except:
(a) Bonds cancelled on or prior to such date, and Bonds for
which other Bonds have been issued in lieu of and in exchange or
substitution for other Bonds pursuant to the terms of Sections 2.07
and 2.10 of the Indenture; and
(b) Bonds which shall be deemed to have been paid and discharged
pursuant to the terms of Section 9.02 of the Indenture.
In determining whether the owners of the requisite aggregate
principal amount of Bonds Outstanding have consented under the
Indenture, Bonds which are owned by either Company or Issuer or any
person controlling, controlled by, or under common control with either
of them shall be disregarded and not deemed to be Outstanding for the
purpose of any such determination.
Plant - the South Texas Nuclear Generating Plant located in
Matagorda County, Texas and wholly within the boundaries of Issuer.
Pollution Control Facilities - the facilities acquired,
constructed, and improved at the Plant which either are certified to be
water pollution control facilities designed in furtherance of the purpose
of abating or controlling water pollution by the Nuclear Regulatory
Commission or other federal or state agency or agencies or constitute
"solid waste disposal facilities" within the meaning of Section
103(b)(4)(E) of the 1954 Code, and for which the Prior Bonds were issued.
Prior Agreements - collectively, the Installment Sale Agreement
dated as of October 15, 1984 between Issuer and Company, and the
Installment Sale Agreement dated as of July 1, 1985 between Issuer and
Company.
Prior Indentures - collectively, the 1984 Indenture and 1985A
Indenture.
Prior Trustee - NationsBank of Texas, National Association
(successor to RepublicBank Dallas, National Association), as trustee under
the Prior Indentures.
Qualifying Facilities - "air or water pollution control facilities"
or "solid waste disposal facilities" as such phrases are used in Section
103(b)(4)(E) and (F) of the 1954 Code and the regulations issued
thereunder.
Redemption Price - the principal of a Bond plus the applicable
premium, if any, payable upon redemption thereof pursuant to the Indenture
prior to the stated maturity date of the Bond.
Regulations - any regulations promulgated by the U.S. Department of
Treasury with respect to the provisions of the Code.
Trustee - The Bank of New York, a New York banking corporation, and
its successors as such trustee under the Indenture.
Trustee Expenses - the compensation and expenses payable to Trustee
and any paying agent pursuant to this Agreement or the Indenture.
Undertaking - the Rule 15c2-12 Undertakings dated as of July 1, 1995
and attached to this Agreement as Exhibit A.
Section 1.02. Certain Rules of Interpretation. Except where the
context otherwise requires, the definitions set forth in Section 1.01
shall be equally applicable to both the singular and plural forms of the
words and terms therein defined and shall cover all genders.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Agreement and not
solely to the particular Article, Section, or subdivision hereof in which
such word is used.
Reference herein to an Article number or a Section number shall be
construed to be a reference to the designated Article number or Section
number hereof unless the text or use clearly indicates another or
different meaning or intent.
In addition, unless the context clearly indicates to the contrary,
capitalized words and terms used herein and not otherwise defined shall
have the meaning given in the Indenture.
ARTICLE II
Representations
Section 2.01. Representations by Issuer. Issuer makes the
following representations as the basis for the undertakings on its part
herein contained:
(a) Issuer is a governmental agency, body politic and corporate of
the State of Texas, and a "district" within the definition set forth in
the Acts.
(b) 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) 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.
(d) Issuer is not in default under any of the provisions of the
laws of Texas which would impair, interfere with, or otherwise adversely
affect the ability of Issuer to make and perform the provisions of this
Agreement, the Indenture, or the Bonds.
(e) There is no litigation pending, or to the knowledge of Issuer
threatened, in any court, either state or federal, calling into question
the creation, organization or existence of Issuer, the validity or
enforceability of this Agreement or the authority of Issuer to refund the
Prior Bonds or to make or perform this Agreement or the Indenture or to
issue the Bonds or to adopt or perform the Bond Resolution.
(f) The execution and delivery of this Agreement, the Indenture and
the Bonds, the adoption of the Bond Resolution and the performance of the
transactions contemplated hereby and thereby, will not violate any
provision of law or regulation, or of any decree, writ, order or
injunction or the organic documents of Issuer, and will not contravene the
provisions of or constitute a default under any agreement, indenture, bond
resolution or other instrument to which Issuer is a party or by which
Issuer is bound.
(g) All consents, authorizations, and approvals of governmental
bodies or agencies, including the Attorney General of Texas, required in
connection with the execution and delivery of this Agreement, the
Indenture, and the Bonds or the adoption of the Bond Resolution or in
connection with the carrying out by Issuer of its obligations under this
Agreement, the Indenture, the Bonds, and the Bond Resolution will be duly
obtained or waived prior to the initial delivery of the Bonds to the
purchasers thereof.
(h) All requirements and conditions specified in the Acts and all
other laws and regulations applicable to the adoption of the Bond
Resolution, the execution and delivery of this Agreement, the Indenture,
and the issuance and delivery of the Bonds will be fulfilled prior to the
initial delivery of the Bonds to the purchasers thereof.
Section 2.02. Representations by Company. Company makes the
following representations as the basis for the undertakings on its part
herein contained:
(a) Company is a corporation duly organized and in good standing
under the laws of the State of Texas; Company is not in violation of any
provisions of the laws of the State of Texas in a manner which materially
impairs the Company's ability to perform its obligations hereunder;
Company is fully empowered to enter into and perform all agreements on its
part herein contained; Company has been authorized to enter into and
deliver this Agreement and perform all its obligations hereunder by all
necessary and proper corporate action; and the execution and delivery by
Company of this Agreement and the agreements herein contained do not
contravene any provision of its charter or by-laws or other requirements
of law or constitute a default under any existing agreement, indenture,
mortgage, loan agreement, commitment, or any other existing agreement of
any kind to which it is a party or by which it is or may be bound.
(b) Company has full legal right, power, and authority to execute
and deliver this Agreement and this Agreement is a legal, valid, and
binding obligation of Company 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).
(c) There is no litigation pending, or to the knowledge of Company
threatened, in any court, either state or federal, calling into question
the creation, organization or existence of Company, the validity or
enforceability of this Agreement or the authority of Company to refund the
Prior Bonds or to make or perform this Agreement.
(d) The execution and delivery of this Agreement and the
performance of the transactions contemplated hereby, will not violate any
provision of law or regulation, or of any decree, writ, order or
injunction or the organic documents of Company, and will not contravene
the provisions of or constitute a default under any agreement, indenture,
bond resolution or other instrument to which Company is a party or by
which Company is bound.
(e) Company has obtained or will obtain all necessary licenses and
permits to enter into and perform this Agreement and the other documents
executed by it in connection with the issuance of the Bonds and the
refunding of the Prior Bonds.
(f) The statements, information, descriptions, estimates, and
assumptions of Company contained in the Tax Letter of Representation are
true and correct in all material respects, and are based upon the best
information available to Company.
ARTICLE III
The Bonds and the Company's Payments
Section 3.01. Issuance of the Bonds. (a) In order to provide
funds to finance the refunding of all of the outstanding Prior Bonds,
Issuer agrees that it will issue under the Indenture, sell and cause to be
delivered, the Bonds, bearing interest, maturing on the date and subject
to redemption prior to maturity as set forth in the Indenture. In
consideration of the covenants and agreements set forth in this Agreement,
and to enable Issuer to issue the Bonds to carry out the intents and
purposes hereof, this Agreement is executed to assure the issuance of the
Bonds, and to provide for and guarantee the due and punctual payment by
Company to Issuer, or to the Trustee under the Indenture securing the
Bonds, of amounts not less than those required to pay, as and when due
(whether at stated maturity, upon redemption, acceleration of maturity, or
otherwise), all of the principal of, premium, if any, and interest on the
Bonds, and all other payments required in connection with such Bonds and
the Bond Resolution or Indenture. Each such payment is hereby designated
as an "Installment Payment", and collectively such payments are hereby
designated as "Installment Payments". 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, as provided in the
Bond Resolution and the Indenture.
(b) By execution and delivery of this Agreement by the Company, the
Bond Resolution and the Indenture are hereby approved by Company. It is
hereby agreed that such approval constitutes the acknowledgment and agree-
ment of Company that the Bonds, when issued, sold, and delivered as
provided in the Indenture, will be issued in accordance with and in
compliance with this Agreement. Any Bondholder is entitled to rely fully
and unconditionally on any such approval. All covenants and provisions in
the Bond Resolution and Indenture affecting, or purporting to bind,
Company shall, upon the delivery of the Bonds and Indenture, become
absolute, unconditional, valid and binding covenants and obligations of
Company so long as said Bonds and interest thereon are outstanding and
unpaid, and may be enforced as provided in the Bond Resolution and the
Indenture.
(c) Issuer shall cause to be deposited into a separate account
within the bond fund established pursuant to the 1984 Indenture proceeds
from the sale of the Bonds equal to $68,870,000, and Company shall cause
to be deposited into such separate account the amount of $5,552,643.75,
which together shall be sufficient to pay the redemption price of and
redeem $68,870,000 in aggregate principal amount of the 1984 Bonds on
October 15, 1995.
(d) Issuer shall cause to be deposited into a separate account
within the bond fund established pursuant to the 1985A Indenture proceeds
from the sale of the Bonds equal to $31,765,000, and Company shall cause
to be deposited into such separate account the amount of $1,443,322.19,
which together shall be sufficient to pay the redemption price of and
redeem $31,765,000 in aggregate principal amount of the 1985A Bonds on
August 28, 1995.
Section 3.02. Refunding of Bonds. After the issuance of the Bonds,
Issuer shall not refund the Bonds or change or modify the Bonds in any way
without the prior written approval of the Authorized Company
Representative; nor shall Issuer redeem the Bonds prior to their scheduled
maturities, or change or modify the Bond Resolution or the Indenture,
without the prior written approval of the Authorized Company
Representative, unless such redemption is required by the Bond Resolution
or the Indenture.
Section 3.03. Redemption of Bonds. Issuer, upon the written
request of Company (and provided that the Bonds are subject to redemption
or prepayment prior to maturity at the option of Issuer or Company, and
provided that, as provided in the Indenture, 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 or prepayment provisions
to effect such redemption or prepayment prior to maturity, as set forth in
Sections 4.05(a) or (b) of the Indenture. Issuer shall also take or cause
to be taken all action that may be necessary on its part to effect the
redemption of Bonds on a date on which such Bonds are subject to mandatory
redemption pursuant to the terms of Section 4.05(c) of the Indenture. In
its written request to Issuer, Company shall designate the redemption date
for the Bonds to be redeemed. The redemption or prepayment of any Bonds
prior to maturity at any time shall not relieve Company of its absolute
and unconditional obligation to pay, or cause to be paid, each remaining
Installment Payment, with respect to the Outstanding Bonds except as
provided in this Agreement and the Bond Resolution and Indenture.
Section 3.04. 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, 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 at the time payment of any
Installment Payment is due, such funds shall be applied to the Installment
Payments then due and the obligation of Company to make such Installment
Payment shall be reduced by the amount of the available funds so applied.
The Installment Payments, together with available funds held on deposit in
the Bond Fund, except funds held therein for payment of matured
installments of principal of, premium, if any, and interest on the Bonds
or interest payable thereon, shall be sufficient to pay when due all
principal of, premium, if any, and interest on the Bonds, and if at any
time that any payment of principal, premium or interest on the Bonds is
due (whether at maturity, upon acceleration or upon mandatory redemption)
the available amounts on deposit in the Bond Fund are insufficient to make
such payment in full, Company will immediately pay to the Trustee in
immediately available funds an amount equal to such deficiency. 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 Company requests redemption or
prepayment of the Bonds. Any such prepayment by the Company shall not
relieve it of liability for each remaining Installment Payment except as
provided in this Agreement and the Bond Resolution and Indenture.
Section 3.05. Issuer's Rights Assigned to Trustee. Company is
advised and recognizes that as security for the payment of the Bonds,
Issuer will assign to the Trustee, pursuant to the Indenture, Issuer's
rights under this Agreement, including the right to receive payments
hereunder (except the rights reserved to Issuer under Section 8.05
hereof), and hereby directs Company to make said payments directly to the
Trustee. 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 Company and Issuer or the Trustee. All rights against
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 Bond
Resolution or Indenture, and the Trustee, or the owners of the Bonds,
shall be entitled to bring any suit, action, or proceeding against
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 Issuer a party thereto.
ARTICLE IV
Other Payments
Section 4.01. Intentionally Omitted.
Section 4.02. Intentionally Omitted.
Section 4.03. Trustee Expenses. Company shall pay Trustee 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 provisions of the Indenture:
(a) the annual fees of Trustee for the ordinary services of
Trustee rendered and its ordinary expenses incurred, including
reasonable counsel fees;
(b) the reasonable fees and charges of Trustee, as Bond
Registrar and Paying Agent, as provided in the Indenture, as and when
the same become due; and
(c) the reasonable fees and charges of Trustee for necessary
extraordinary services rendered by it and extraordinary expenses
incurred by it under the Indenture; provided, that 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. Company shall pay the reasonable fees and charges of any
paying agent for the Bonds named pursuant to the terms of the
Indenture.
Section 4.04. Issuer Expenses. Company agrees to pay directly to
Issuer, all Issuer Expenses and to pay the amount of any extraordinary
expenses incurred by Issuer in the administration of this Agreement or the
Indenture as such expenses are agreed to by Issuer and Company. All such
extraordinary expenses shall be paid within a reasonable time after
receipt by Company of the bills with respect to each. Issuer shall bill
Company from time to time as convenient to Issuer and the bill will
contain reasonable itemization.
Section 4.05. Taxes and Other Governmental Charges and Utility
Charges. Company will pay, as the same respectively become due, all
taxes, assessments, whether general or special, and governmental charges
of any kind whatsoever that may at any time be lawfully assessed or levied
against or with respect to the Facilities or any machinery, equipment, or
other property installed or brought by Company therein or thereon, and all
utility and other charges incurred in the operation, maintenance, use,
occupancy, and upkeep of such Facilities; provided, however, that Company
may, at its expense and in its own name and behalf, or if permitted in
writing by Issuer, in the name and on behalf of Issuer, in good faith
contest the validity of any such taxes, assessments, and other charges,
and, in the event of any 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. Issuer will cooperate fully with
Company in any such contest.
Section 4.06. Payment to Special Rebate Fund. Company hereby
covenants and agrees to make the determinations and to pay any deficiency
in the Special Rebate Fund, at the times and as described in Section 5.09
of the Indenture. In any event, if the amount of cash held in the Special
Rebate Fund shall be insufficient to permit Trustee to make payment to the
United States of any amount due under Section 148 of the Code, Company
forthwith shall pay the amount of such insufficiency on such date to
Trustee in immediately available funds. The obligations of Company under
this Section 4.06 are direct obligations of Company, acting under the
authorization of, and on behalf of, Issuer and Issuer shall have no
further obligation or duty with respect to the Special Rebate Fund.
ARTICLE V
Special Covenants
Section 5.01. Compliance with Rule 15c2-12. Company hereby agrees
that it will comply with and perform its duties under the Undertaking.
Section 5.02. Intentionally Omitted.
Section 5.03. Indemnities. Company releases Issuer, its officers,
directors, employees, agents, and attorneys (collectively, the
"Indemnified Parties") from, and the Indemnified Parties shall not be
liable for, and 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 Facilities; (ii) any written
statements or representations made or given by Company, or any of its
officers or employees, to the Indemnified Parties, Trustee, or any
underwriters or purchasers of any of the Bonds, with respect to Issuer,
Company, the Facilities, 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 Facilities; and (iv) any loss or damage incurred by Issuer as a result
of violation by Company of the provisions of the Prior Agreements or
Section 5.12 or 5.13 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 Issuer or its officers, directors,
employees, agents, servants, or any other party acting for or on behalf of
Issuer in connection with the matters set forth in clauses (i) through
(iv) of said sentence. Company also agrees to indemnify and hold Trustee
harmless from any loss or damage incurred by Trustee as a result of a
violation by Company or Issuer of the provisions of Section 5.12 or 5.13
hereof, or the provisions of Section 5.08 or 9.02(b) of the Indenture.
Section 5.04. Facilities to be Used for Pollution Abatement. So
long as Company is operating the Pollution Control Facilities, or causing
them to be operated, Company will continue, or cause to be continued, the
operation of the Pollution Control Facilities for the purposes of
pollution control and solid waste disposal and Company will not
discontinue the operation of the Pollution Control Facilities so long as
the operation thereof is required to comply with applicable laws and
regulations relating to pollution control; however, this in no way
requires Company to operate the Pollution Control Facilities or any part
thereof for any period after the useful life thereof.
Section 5.05. Intentionally Omitted.
Section 5.06. Intentionally Omitted.
Section 5.07. Company to Maintain Corporate Existence; Conditions
Under Which Exceptions Permitted. 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 Company, irrevo-
cably and unconditionally assumes, in an instrument delivered to Issuer
and to Trustee, the due and punctual performance of the obligations of
Company under this Agreement. Upon the delivery of such instrument,
Company 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 Company under this Agreement with the same effect
as if such resulting or surviving corporation or transferee had been named
herein as Company. If consolidation, merger, or sale, or other transfer
is made as provided in this Section 5.07, the provisions of this Section
5.07 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 5.07.
Section 5.08. Qualification in Texas. Company warrants that it is
and throughout the term of this Agreement it will continue to be a
corporation duly qualified to do business in the State of Texas.
Section 5.09. Permits or Licenses. In the event it may be necessary
for the proper performance of this Agreement on the part of Issuer or
Company that any application or applications for any permit or license to
do or perform certain things be made to any governmental or other agency
by Company or Issuer, Company and Issuer shall execute promptly upon the
request of the other such application or applications.
Section 5.10. Preservation of Existence of Issuer; Obligations under
the Indenture. Issuer agrees that it will do or cause to be done all
things necessary within its powers to preserve and keep in full force and
effect its existence. Issuer hereby agrees to duly and punctually perform
and observe all of the covenants, terms, conditions, and agreements on its
part contained in the Bonds and the Indenture.
Section 5.11. No Personal Liability. No officer, employee,
representative, or agent of Issuer, and no officer, employee,
representative, or agent of Company shall be personally liable on this
Agreement.
Section 5.12. Tax Exempt Status of the Bonds. Company and Issuer (to
the extent reasonably within the control of Issuer) covenant to refrain
from any action which would adversely affect, or to take such action to
assure, the treatment of the Bonds as obligations described in Section 103
of the Code or Section 1313 of the Tax Reform Act of 1986, the interest on
which is not includable in the "gross income" of the owner or beneficial
owner (other than the income of a "substantial user" of the Facilities or
a "related person" within the meaning of Section 103(b)(13) of the 1954
Code) for purposes of federal income taxation. In particular, but not by
way of limitation thereof, Company covenants as follows:
(a) to use all of the proceeds of the Bonds for the payment of
principal on all of the outstanding Prior Bonds;
(b) 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;
(c) to refrain from using any portion of the proceeds of the
Bonds, directly or indirectly, to acquire investment property 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,
other than investment property acquired with --
(1) proceeds of the Bonds invested for a period the lesser of
90 days or 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(b) 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;
(d) to otherwise restrict the use 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) and Section 149(d) of the Code (relating to refundings);
(e) to pay to the United States of America at least once during
each five-year period (beginning on the date of delivery of the Bonds)
the amount, if any, deposited to the Special Rebate Fund as set forth
in Section 5.09 of the Indenture that is at least equal to 90 percent
of the "Excess Earnings," within the meaning of Section 148(f) of the
Code and to pay to the United States of America, not later than 60
days after the Bonds have been actually paid in full, 100 percent of
the amount, if any, then required to be paid as a result of Excess
Earnings under Section 148(f) of the Code;
(f) to maintain such records as will enable Company to fulfill
its responsibilities under this section and Section 148 of the Code
and to retain such records for at least six years following the actual
final payment of principal and interest on the Bonds; and
(g) to the extent required by regulations or rulings promulgated
by the U.S. Department of the Treasury relating to the Code, to use
any proceeds derived from the sale or other disposition of the Project
provided with the proceeds of the Prior Bonds to provide qualified
property or to redeem the Bonds.
It is the understanding of Issuer and Company that the covenants contained
herein are intended to assure compliance with the Code and any regulations
or rulings promulgated by the U.S. 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, Company will not be required to comply with any covenant
contained herein to the extent that such modification or expansion, in the
opinion of Bond Counsel, will cause noncompliance with such covenant to
not adversely affect the exemption from federal income taxation of
interest on the Bonds 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, Company agrees to comply
with the additional requirements to the extent necessary, in the opinion
of Bond Counsel, to preserve the exemption from federal income taxation of
interest on the Bonds under Section 103 of the Code.
Section 5.13. Arbitrage Covenants. Issuer and 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,
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 5.14. Annual Report. Company shall have an annual audit made
by its regular independent certified public accountants and promptly
furnish Trustee and Issuer either a copy of its audited financial
statements or a copy of Company's annual report to its shareholders if
such annual report shall contain financial statements of substantially
similar detail and similarly prepared and certified. Such financial
statements and reports shall be furnished to Trustee and Issuer by Company
at the same time as such financial statements are furnished to its
preferred shareholders.
ARTICLE VI
Events of Default and Remedies
Section 6.01. Event of Default. The following shall be "events of
default" under this Agreement and the terms "Event of Default" or
"default" shall mean, whenever they are used in this Agreement, any one or
more of the following events:
(a) Failure by Company to pay the Installment Payments at or
prior to the time at which payment is required to be made and which
failure, if with respect to the payment of interest on the Bonds,
shall continue for a period of sixty (60) days.
(b) Failure by Company to observe or perform or the breach by
Company of any representation, covenant, or agreement in this
Agreement on its part to be observed or performed, other than as re-
ferred to in paragraph (a) of this Section 6.01, for a period of
ninety (90) days after written notice, specifying such and requesting
that it be remedied, shall be given to Company by Issuer or Trustee,
unless Issuer and Trustee shall agree in writing to an
extension of such time prior to its expiration; provided, however, if
the failure stated in the notice can, in the reasonable judgment of
Company, be corrected, but not within the applicable period, such
failure shall not constitute an Event of Default or default if
corrective action is instituted by Company within the applicable
period and Company notifies Issuer and Trustee of such corrective
action and undertakes to diligently pursue and shall pursue the
corrective action until the failure is corrected.
(c) Dissolution or liquidation of Company. However, the term
"dissolution or liquidation of the Company", as used in this para-
graph, shall not be construed to include the cessation of the
corporate existence of Company resulting either from a merger or
consolidation of Company into or with another corporation or a
dissolution or liquidation of Company following a transfer of all or
substantially all of its assets as an entirety under the conditions
permitting such actions contained in Section 5.07.
(d) Company 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.
(e) An involuntary case or other proceeding shall be commenced
against Company 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.
The provisions of paragraph (b) 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 or military authority;
insurrections; riots; epidemics; landslides; lightning; earthquakes; tidal
waves; fires; hurricanes; tornadoes; blue northers; other storms; floods;
washouts; droughts; arrests; restraint 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 Company
(collectively, "events of force majeure"), Company is unable in whole or
in part to carry out the agreements on Company's part herein contained,
Company shall not be deemed in default during the continuance of such
inability. Company, however, will use its best efforts to remedy with all
reasonable dispatch the cause or causes preventing Company from carrying
out such agreements; provided, that the settlement of strikes, lockouts
and other industrial disturbances shall be entirely within the discretion
of Company, and 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 Company, unfavorable to Company. The occurrence of any event
of force majeure shall not suspend or otherwise abate, and Company shall
not be relieved from, any obligation under this Agreement to the extent
that the failure of 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
VIII of the Indenture, Trustee may waive such Event of Default and rescind
and annul any remedial step theretofore taken by it or by 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.
In the event that Trustee fails to receive any Installment Payments
when due under this Agreement, Trustee has agreed in the Indenture to give
immediate telephonic, facsimile or laserphonic notice, confirmed in
writing, to Issuer and Company specifying such failure.
Section 6.02. Remedies on Default. Whenever an Event of Default
hereunder shall have happened and be continuing the following remedial
steps may be taken:
(a) Trustee, as provided in the Indenture, may at its option
declare all amounts payable under Section 3.04 for the remainder of
the term of this Agreement to be immediately due and payable, and such
amounts shall thereupon become due and payable.
(b) Trustee or Issuer, subject to the provisions of Section
8.05, at the option of either, may take whatever action at law or in
equity may appear necessary or desirable to collect the payments then
due and thereafter to become due, or to enforce performance and
observance of any representation, agreement, or covenant of Company
under this Agreement.
In the event Company fails to make any of the payments required by
this Agreement, the item or installment so in default shall continue as an
obligation of Company until the amount in default shall have been fully
paid, and Company shall pay the same with interest thereon, to the extent
legally permissible, from the due date until paid at the highest rate
borne by any Outstanding Bonds.
Any amounts collected pursuant to action taken under this Section
6.02 shall be paid into the Bond Fund and applied in accordance with the
provisions of the Indenture.
Section 6.03. No Remedy Exclusive. No remedy conferred upon or
reserved to Issuer or Trustee by this Agreement is intended to be
exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other
remedy given under this Agreement or now or hereafter existing at law or
in equity or by statute. No delay or omission to exercise any right or
power accruing upon any default 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. To entitle Issuer or Trustee to exercise any remedy reserved
to it in this Article, it shall not be necessary to give any notice, other
than such notice as may be herein expressly required. Issuer acknowledges
that Company's obligations hereunder are not secured by any lien or other
interest whatsoever in the Facilities or Plant and hereby waives any such
lien or interest including, but not limited to, vendor's liens.
Section 6.04. Agreement to Pay Attorneys' Fees and Expenses. In
the event that Company should default under any of the provisions of this
Agreement, and as a consequence Issuer and/or Trustee should employ
attorneys or incur other expenses or charges, legal or otherwise, for the
collection of payments or the enforcement of performance or observance of
any obligation or agreement on the part of Company contained in this
Agreement, Company agrees that it will, on demand therefor, reimburse
Issuer and/or Trustee for such reasonable fees, charges, and other ex-
penses so incurred; provided, however, that Company, without creating a
default hereunder or under the Indenture, may contest in good faith the
necessity for and the reasonableness of any such expenses, charges, or
fees.
Section 6.05. No Additional Waiver Implied By One Waiver. In the
event an agreement contained in this Agreement is breached by either party
hereto and such breach is thereafter waived by the other party, such
waiver shall be limited to the particular breach so waived and shall not
be deemed as a waiver of any other breach hereunder.
Section 6.06. Notice to Bond Insurer. Company 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
Company does not intend or will be unable to make the corresponding
payment to the Trustee hereunder.
ARTICLE VII
Prepayments
Section 7.01. Prepayments. At the option of Company, the
Installment Payments shall be subject to prepayment, in whole or in part,
at any time, and such prepayments shall be deposited in the Bond Fund. At
Company's option such prepayments shall be used to redeem Bonds pursuant
to the optional redemption provisions of the Indenture or credited against
payments required under Section 3.04. Whenever Bonds are redeemable at
the option of Issuer in whole or in part, Issuer shall redeem the same
upon request of Company and not otherwise, and Company will pay the amount
required under Section 7.02. Whenever Bonds are subject to mandatory
redemption according to the provisions thereof, Issuer will redeem the
same upon notice from Trustee, and Company will pay the amount required
under Section 7.02.
Section 7.02. Amount of Prepayments when Bonds to be Redeemed. In
the event Company elects or is required to make prepayments of all or part
of the Installment Payments and Bonds are to be redeemed with such prepay-
ments in accordance with the terms of this Agreement and the Indenture,
the amount of such prepayments will be equal to the applicable Redemption
Price and interest to accrue on the Bonds in respect of which the
prepayments are made until the applicable redemption date. Such
prepayments shall not in any other way alter or suspend any obligations of
Company under the terms of this Agreement and Company shall continue to
perform and be responsible for its performance of all other terms and
provisions of this Agreement.
Section 7.03. Notice of Prepayment. In case Bonds are to be
redeemed prior to maturity at the option of Issuer (on request of
Company), Company shall give written notice to Issuer and Trustee at least
forty-five (45) days before the date of redemption. In the case of the
exercise of an option granted by Section 4.05(b) of the Indenture, Company
shall give written notice to Issuer and Trustee of the event authorizing
the exercise of the option within one hundred twenty (120) days after such
event, and shall specify therein the date of redemption, which date shall
be not less than forty-five (45) days nor more than one hundred twenty
(120) days from the date the notice is given. Upon the happening of an
event requiring the redemption of part or all of the Outstanding Bonds,
Trustee shall determine a date (not later than one hundred eighty (180)
days from the date of such event) for redemption. Trustee shall give
Issuer and Company not less than forty-five (45) days written notice of
such date. Trustee shall give notice of redemption as provided in the
Indenture.
Section 7.04. Time of Prepayments. In the event Company exercises
a prepayment option or is required to make prepayments, Company shall pay
to Trustee the amounts due and payable pursuant to Section 7.02, on or
before the date of redemption in funds which will be immediately available
on such redemption date except as otherwise may be required or permitted
by Article IX of the Indenture.
ARTICLE VIII
Miscellaneous
Section 8.01. Disposition of Bond Fund Upon Termination. It is
agreed by the parties hereto that any amounts remaining in the Bond Fund
upon expiration of this Agreement, after payment in full of the Bonds
(including interest and premium, if any, thereon), or provision for
payment thereof having been made in accordance with the provisions of the
Indenture, and payment of the Issuer Expenses and other payments required
to be made to Issuer hereunder, shall belong to and be paid to Company by
Trustee.
Section 8.02. Notices. All notices, certificates, requests, or
other communications hereunder shall be sufficiently given and shall be
deemed given when mailed by registered mail, postage prepaid, addressed as
follows: if to Issuer, Matagorda County Navigation District Number One,
209 Fifth Street, Palacios, Texas 77465, attention: Eli Mayfield, General
Counsel and Manager; if to Company, Central and South West Corporation as
agent for the Company, 1616 Woodall Rodgers Freeway, Dallas, Texas 75202,
attention: Director, Finance; and if to Trustee, The Bank of New York,
101 Barclay Street, 21st Floor, New York, New York 10286, attention:
Corporate Trust Trustee Administration. A duplicate copy of each notice,
certificate, request, or other communication given hereunder by or to
Issuer, Company, or Trustee shall also be given by the sender to the
others. Company, Issuer, and Trustee may, by written notice given
hereunder, designate any further or different addresses to which
subsequent notices, certificates, requests, or other communications shall
be sent.
Section 8.03. Unconditional Obligation. (a) The payment
obligations of Company under Sections 3.04, 4.03, 4.04, and 4.06 and
covenants of Company under Section 5.12 shall be deemed and construed to
be absolute and unconditional, and Company shall make the payments
required hereunder, free of any deductions, and without abatement or
set-off.
(b) All other obligations of Company under this Agreement shall
remain in full force and effect until the entire principal of, premium, if
any, and interest on the Bonds have been paid or provided for, and all
other payments to be made to Issuer and to Trustee have been paid or
provided for.
(c) Company further unconditionally agrees, subject to Company's
rights specified in Section 6.04, to pay all expenses and charges, legal
or otherwise (including court costs and attorneys' fees), paid or incurred
by Issuer and/or Trustee, their successors or assigns, in realizing upon
any of said payments to be made by Company or in enforcing the provisions
of this Agreement.
Section 8.04. Assignment of the Agreement by Company. This
Agreement may be assigned in whole or in part by Company without the
necessity of obtaining the consent of either Issuer or Trustee, subject,
however, to each of the following conditions:
(a) the assignees shall assume the obligations of Company
hereunder;
(b) no assignment (other than pursuant to Section 5.07) shall
relieve Company from primary liability for any of its obligations
hereunder, and in the event of any such assignment Company shall
continue to remain liable for the payments specified in Articles III
and IV hereof and for performance and observance of the other
agreements on its part herein provided; and
(c) Company shall, within thirty (30) days after the delivery
thereof, furnish or cause to be furnished to Issuer and Trustee a true
and complete copy of each such assignment.
Section 8.05. Assignment to Trustee by Issuer. All rights and
interests of Issuer in and to this Agreement (other than the rights of
Issuer under Sections 4.04, 5.03 and 6.04) are assigned to Trustee under
the terms of the Indenture. Although such assignment confers on Trustee
full right and authority to enforce all of the terms of this Agreement,
such assignment shall not preclude Issuer from bringing an action to
require Company to carry out its agreements hereunder or to recover any
damages incurred by Issuer as a result of Company's failure to perform
such agreements. As provided in the Indenture, prior to bringing any such
action to enforce this Agreement, Issuer will give reasonable notice to
Trustee and Trustee shall participate in and, if it so desires, control
such action. Company assents to such assignment, and Company's
obligations to make payments directly to Trustee under this Agreement
shall be absolute and shall not be subject to any defense or any right of
set-off, counterclaim, or recoupment arising out of any breach by Issuer
of any obligation to Company, whether singularly or collectively or
hereunder or otherwise, or out of any indebtedness or liability at any
time owing to Company by Issuer.
Section 8.06. Binding Effect. This Agreement shall inure to the
benefit of and shall be binding upon Issuer, Company, and its respective
successors or assigns, subject to the limitation that any obligations or
liabilities of Issuer created by or arising out of this Agreement shall
not be a general debt of Issuer, but shall be payable solely out of the
proceeds derived from this Agreement or the sale of the Bonds. This
Agreement shall not be deemed to create any right in any person who is not
a party (other than the permitted successors or assigns of a party) and
shall not be construed in any respect to be a contract in whole or in part
for the benefit of any third party (other than the permitted successors or
assigns of a party hereto), except in each case the owners from time to
time of the Bonds and Trustee.
Section 8.07. Amendments, Changes, Modifications, and Financed
Interest. Subsequent to the initial issuance of the Bonds and prior to
payment or provision for the payment of the Bonds in full (including
interest and premium, if any, thereon), in accordance with the provisions
of the Indenture, and payment or provision for the payment of Trustee
Expenses and Issuer Expenses, this Agreement may not be effectively
amended, changed, modified, or altered so as to reduce or postpone the
payments herein required to be made by Company to Issuer, and it shall not
otherwise be amended, changed, modified, or altered without the prior
written consent of Trustee.
Section 8.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered, shall be an original; but such counterparts shall together
constitute but one and the same Agreement.
Section 8.09. Severability. If any clause, provision, Section, or
Article of this Agreement is held illegal or invalid by any court, the
invalidity of such clause, provision, Section, or Article shall not affect
any of the remaining clauses, provisions, Sections, or Articles and this
Agreement shall be construed and enforced as if such illegal or invalid
clause, provision, Section, or Article had not been contained herein. In
case any agreement or obligation contained in this Agreement is held to be
in violation of law, then such agreement or obligation shall be deemed to
be the agreement or obligation of Issuer or Company, as the case may be,
to the full extent permitted by law.
Section 8.10. Laws Governing. The laws of the State of Texas shall
govern the construction of this Agreement. This Agreement is made and is
to be performed in Matagorda County, Texas.
Section 8.11. Section Headings. All section headings contained
herein are for convenience of reference and are not intended to define or
limit the scope of any provision of this Agreement.
Section 8.12. Entire Agreement. Any inconsistencies between the
provisions of this Agreement and any prior agreements between Issuer and
Company shall be controlled by this Agreement.
ARTICLE IX
Term of Agreement
Section 9.01. Term of Agreement. This Agreement shall remain in
full force and effect from the date hereof until such time as the
Indenture has been discharged in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this Installment
Payment Agreement to be duly executed as of the day and year first above
written.
MATAGORDA COUNTY NAVIGATION DISTRICT
NUMBER ONE
ATTEST: By__________________________________
Chairman, Board of Navigation
and Canal Commissioners
By _______________________________
Secretary
(SEAL)
CENTRAL POWER AND LIGHT COMPANY
ATTEST: By__________________________________
Vice President
By __________________________
Secretary
(SEAL)
EXHIBIT 2(a)
------------
INDENTURE OF TRUST
Between
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE
and
THE BANK OF NEW YORK
Trustee
____________________
Dated as of July 1, 1995
Relating to
Matagorda County Navigation District Number One
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
SERIES 1995
INDENTURE OF TRUST
TABLE OF CONTENTS
(The Table of Contents is not a part of the
Indenture of Trust
but for convenience of reference only)
Page
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I
Definition of Terms
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . 4
Section 1.02. Certain Rules of Interpretation . . . . . . . . . . 8
ARTICLE II
General Terms and Provisions of the Bonds
Section 2.01. Payment of Bonds. . . . . . . . . . . . . . . . . . 8
Section 2.02. (a) Lien, Parity, Designation of Series . . . . . . 8
(b) Title, Execution, and Effect of Certificate
of Trustee. . . . . . . . . . . . . . . . . . . . . 8
Section 2.03. Authentication and Delivery of Bonds After
Officers Signing the Bonds Cease to be Officers. . . 9
Section 2.04. The Text of the Bonds and Certificates . . . . . . . 9
Section 2.05. Required Certificate by State Comptroller . . . . 18
Section 2.06. Registrar . . . . . . . . . . . . . . . . . . . . .18
Section 2.07. Title and Negotiability of Bonds . . . . . . . . . .18
Section 2.08. Payment of Bonds.. . . . . . . . . . . . . . . . . .19
Section 2.09. Temporary Bonds. . . . . . . . . . . . . . . . . . .19
Section 2.10. Loss, Theft, Destruction, or Mutilation of Bonds . .19
Section 2.11. Cancellation and Destruction . . . . . . . . . . . .20
Section 2.12. Book-Entry Only System . . . . . . . . . . . . . . .20
Section 2.13. Successor Securities Depository; Transfers
Outside Book-Entry Only System . . . . . . . . . .21
Section 2.14. Payments to Cede & Co. . . . . . . . . . . . . . . .21
Section 2.15. CUSIP Numbers . . . . . . . . . . . . . . . . . . .22
ARTICLE III
Authorization and Issuance of Bonds
Section 3.01. Limitation on Issuance of Bonds . . . . . . . . . . .22
Section 3.02. Principal Amount, Interest Rate, Interest Payment
Dates, and Maturity Dates of the Bonds. . . . . . .22
Section 3.03. Interest Rate . . . . . . . . . . . . . . . . . . . .22
Section 3.04. Execution and Delivery of Bonds . . . . . . . . . . .23
Section 3.05. No Additional Bonds . . . . . . . . . . . . . . . . .23
Section 3.06. No Limitation on Issuer . . . . . . . . . . . . . . .23
Page
ARTICLE IV
Redemption of Bonds
Section 4.01. Redemption in Accordance with Indenture . . . . . . .23
Section 4.02. Selection by Lot . . . . . . . . . . . . . . . . . . 23
Section 4.03. Notice of Redemption . . . . . . . . . . . . . . . . 24
Section 4.04. Proceedings for Redemption. . . . . . . . . . . . . . 24
Section 4.05. Redemption of Bonds . . . . . . . . . . . . . . . . . 25
Section 4.06. Trustee to Call Bonds . . . . . . . . . . . . . . . . 28
ARTICLE V
Bond Fund
Section 5.01. The Bond Fund . . . . . . . . . . . . . . . . . . . .28
Section 5.02. Payment from Bond Fund . . . . . . . . . . . . . . . .28
Section 5.03. (a) Bond Fund Requirement . . . . . . . . . . . . . .28
(b) Disposition of Prepayments . . . . . . . . . . . .28
Section 5.04. (a) Funds Held in Trust . . . . . . . . . . . . . . .28
(b) Nonpresentment of Bonds . . . . . . . . . . . . .29
Section 5.05. Investment of Moneys in Certain Funds. . . . . . . . .29
Section 5.06. Moneys Secured . . . . . . . . . . . . . . . . . . . .30
Section 5.07. Bond Fund Balance. . . . . . . . . . . . . . . . . . .30
Section 5.08. Exemption from Federal Income Taxation . . . . . . . .30
Section 5.09. Special Rebate Fund . . . . . . . . . . . . . . . . .30
ARTICLE VI
Application of Proceeds
Section 6.01. Application of Original Proceeds of Bonds . . . . . .32
Section 6.02. Consideration for Refunding . . . . . . . . . . . . .32
ARTICLE VII
General Covenants
Section 7.01. Intentionally Omitted . . . . . . . . . . . . . . . .32
Section 7.02. Payment of Principal and Interest . . . . . . . . . .32
Section 7.03. Authority of Issuer and Preservation of Rights . . . .33
Section 7.04. Installment Payment Agreement . . . . . . . . . . . .33
Section 7.05. Further Assurances . . . . . . . . . . . . . . . . . .33
Section 7.06. Extension of Bonds . . . . . . . . . . . . . . . . . .33
Section 7.07. Reports . . . . . . . . . . . . . . . . . . . . . . .34
Section 7.08. Further Actions by Issuer and Trustee . . . . . . . .34
Section 7.09. Paying Agents . . . . . . . . . . . . . . . . . . . .34
Page
ARTICLE VIII
Defaults and Remedies
Section 8.01. Definition of "Event of Default" . . . . . . . . . . .34
Section 8.02. Declaration of Principal and Interest Due . . . . . .36
Section 8.03. Enforcement of Indenture and Bonds . . . . . . . . . .36
Section 8.04. Restoration . . . . . . . . . . . . . . . . . . . . .36
Section 8.05. Direction by Majority in Principal Amount
of Bondholders . . . . . . . . . . . . . . . . . . .36
Section 8.06. Rights by Owner . . . . . . . . . . . . . . . . . . .37
Section 8.07. Enforcement of Remedies without Possession of Bonds. .38
Section 8.08. Remedies Not Exclusive . . . . . . . . . . . . . . . .38
Section 8.09. Delay by Trustee . . . . . . . . . . . . . . . . . . .38
Section 8.10. Application of Moneys . . . . . . . . . . . . . . . .38
Section 8.11. Unlawful Grants of Power . . . . . . . . . . . . . . .39
Section 8.12. Payments under Municipal Bond Insurance Policy . . . .39
ARTICLE IX
Defeasance
Section 9.01. Release of Indenture. . . . . . . . . . . . . . . . .41
Section 9.02. (a) Satisfaction of Indenture . . . . . . . . . . . .41
(b) No Arbitrage. . . . . . . . . . . . . . . . . . .42
(c) Advance Funding and Defeasance. . . . . . . . . .42
Section 9.03. Reliance on Discharge . . . . . . . . . . . . . . . .43
Section 9.04. Defeasance . . . . . . . . . . . . . . . . . . . . .43
ARTICLE X
Concerning the Trustee
Section 10.01. Acceptance of Trusts and Conditions of Acceptance . .43
Section 10.02. Recitals Not Trustee's. . . . . . . . . . . . . . . .43
Section 10.03. Advice . . . . . . . . . . . . . . . . . . . . . . . .43
Section 10.04. Fees . . . . . . . . . . . . . . . . . . . . . . . . .44
Section 10.05. Insurance . . . . . . . . . . . . . . . . . . . . . .44
Section 10.06. Notice . . . . . . . . . . . . . . . . . . . . . . . .45
Section 10.07. Request; Indemnity . . . . . . . . . . . . . . . . . .45
Section 10.08. Reliance by Trustee . . . . . . . . . . . . . . . . .45
Section 10.09. Ownership of Bonds . . . . . . . . . . . . . . . . . .45
Section 10.10. Interest on Moneys Held . . . . . . . . . . . . . . .46
Section 10.11. Construction . . . . . . . . . . . . . . . . . . . . .46
Section 10.12. Resignation of Trustee . . . . . . . . . . . . . . . .46
Section 10.13. Removal of Trustee . . . . . . . . . . . . . . . . . .46
Section 10.14. Appointment of Successor Trustee . . . . . . . . . . .46
Section 10.15. Qualification of Successor Trustee . . . . . . . . . .47
Section 10.16. Court Appointment . . . . . . . . . . . . . . . . . .47
Section 10.17. Transfer to Successor Trustee . . . . . . . . . . . .47
Section 10.18. Merger or Consolidation of the Trustee . . . . . . . .47
Section 10.19. Prudent Man Rule . . . . . . . . . . . . . . . . . . .47
Page
ARTICLE X
Concerning the Trustee (cont'd)
Section 10.20. Notice of Default to Registered Owners . . . . . . . .48
Section 10.21. Judicial Proceedings . . . . . . . . . . . . . . . . .48
Section 10.22. Trustee's Performance. . . . . . . . . . . . . . . . .48
Section 10.23. Trustee to Record . . . . . . . . . . . . . . . . . .48
ARTICLE XI
Modification of This Indenture and
Supplemental Indenture
Section 11.01. Modification by Issuer and Trustee . . . . . . . . . .49
Section 11.02. Consent by Bondholders . . . . . . . . . . . . . . . .50
Section 11.03. Bond Insurer to be Deemed Bondowner; Rights of
Bond Insurer; Payments by Bond Insurer in
Advance of Scheduled Maturity Dates; Notices . . . .50
Section 11.04. Execution of Supplemental Indentures . . . . . . . . .52
ARTICLE XII
Miscellaneous
Section 12.01. Successors and Assigns. . . . . . . . . . . . . . . .52
Section 12.02. Parties, the Company and Bondholders Alone
Have Rights Under Indenture . . . . . . . . . . . .52
Section 12.03. Survival of Valid Bonds . . . . . . . . . . . . . .52
Section 12.04. Personal Liability. . . . . . . . . . . . . . . . . .53
Section 12.05. Notices . . . . . . . . . . . . . . . . . . . . . . .53
Section 12.06. Counterparts. . . . . . . . . . . . . . . . . . . . .53
Section 12.07. Construction. . . . . . . . . . . . . . . . . . . . .53
Section 12.08. Holidays. . . . . . . . . . . . . . . . . . . . . . .53
Section 12.09. Instruments by Bondholders and Proof of
Ownership of Bonds. . . . . . . . . . . . . . . . .53
Section 12.10. Alternative Notice to Bondholders . . . . . . . . . .54
Execution by Issuer. . . . . . . . . . . . . . . . . . . . . . . . . .55
Execution by Trustee . . . . . . . . . . . . . . . . . . . . . . . . .55
INDENTURE OF TRUST
THE STATE OF TEXAS :
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE :
THIS INDENTURE OF TRUST, dated as of July 1, 1995 made by and
between MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE ("Issuer"), a
governmental agency and body politic and corporate of the State of Texas
operating as a conservation and reclamation district pursuant to Article
XVI, Section 59, of the Texas Constitution and the general laws of the
State of Texas, and THE BANK OF NEW YORK, as Trustee ("Trustee"), a New
York banking corporation and having its principal corporate trust office
at 101 Barclay Street, Floor 21 West, New York, New York 10286.
W I T N E S S E T H:
WHEREAS, pursuant to the Regional Waste Disposal Act, as
amended (codified as Chapter 30, Texas Water Code, and hereinafter
referred to as "Chapter 30") and the Clean Air Financing Act (codified as
Chapter 383, Texas Health and Safety Code, and hereinafter referred to as
the "Air Act"), the Issuer is authorized to issue revenue bonds to finance
the acquisition, construction and improvement, enlargement, extension or
repair of "disposal systems" and "control facilities" as those terms are
defined and described in Chapter 30 and the Air Act, respectively
(hereinafter referred to as "eligible projects"); and
WHEREAS, Article 717q, V.A.T.C.S. (hereinafter referred to as
"Art. 717q"), together with Article 717k, V.A.T.C.S., authorizes the
Issuer to issue bonds to refund obligations issued by it to finance
eligible projects and to enter into agreements in relation thereto; and
WHEREAS, Issuer and Central Power and Light Company ("Company")
have previously entered into an Installment Sale Agreement dated as of
October 15, 1984 (the "1984 Agreement") pursuant to which Issuer issued
its Matagorda County Navigation District Number One Adjustable Rate
Pollution Control Revenue Bonds (Central Power and Light Company Project)
Series 1984 (the "1984 Bonds") and used the proceeds to finance the costs
of certain eligible projects and Company agreed to make payments to
NationsBank of Texas, National Association (successor to RepublicBank
Dallas, National Association), as Trustee on behalf of the owners of the
1984 Bonds under an Indenture of Trust with Issuer dated as of October 15,
1984 (the "1984 Indenture"), in amounts sufficient to pay the principal
of, premium, if any, and interest on and all other charges in connection
with the 1984 Bonds; and
WHEREAS, Issuer and Company have previously entered into an
Installment Sale Agreement dated as of July 1, 1985 (the "1985A
Agreement") pursuant to which Issuer issued its Matagorda County
Navigation District Number One Collateralized Pollution Control Revenue
Bonds (Central Power and Light Company Project) Series 1985A (the "1985A
Bonds") and used the proceeds to finance the costs of certain eligible
projects and Company agreed to make payments to NationsBank of Texas,
National Association (successor to RepublicBank Dallas, National
Association), as Trustee on behalf of the owners of the 1985A Bonds under
an Indenture of Trust with Issuer dated as of July 1, 1985 (the "1985A
Indenture"), in amounts sufficient to pay the principal of, premium, if
any, and interest on and all other charges in connection with the 1985A
Bonds; and
WHEREAS, the 1984 Agreement and 1985A Agreement are sometimes
hereinafter referred to collectively as the Prior Agreements, the 1984
Bonds and the 1985A Bonds are sometimes hereinafter referred to
collectively as the Prior Bonds, and the 1984 Indenture and the 1985A
Indenture are sometimes hereinafter referred to as the Prior Indentures;
and
WHEREAS, the Board of Navigation and Canal Commissioners of
Issuer duly adopted a "RESOLUTION AUTHORIZING MATAGORDA COUNTY NAVIGATION
DISTRICT NUMBER ONE POLLUTION CONTROL REVENUE REFUNDING BONDS (CENTRAL
POWER AND LIGHT COMPANY PROJECT) SERIES 1995; 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"); and
WHEREAS, Issuer desires to issue and sell its Bonds (as
hereinafter defined) in order to provide funds for the refunding of all of
the outstanding Prior Bonds; and
WHEREAS, the Bond Resolution authorized the issuance of
Matagorda County Navigation District Number One Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) Series 1995, in
the aggregate principal amount of $100,635,000 (hereinafter called the
"Bonds"); and
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 Company
pursuant to the Installment Payment Agreement dated as of July 1, 1995
(the "Agreement") between Issuer and Company in amounts sufficient to
provide for the payment of the principal of, premium, if any, and interest
on the Bonds, when due, and the fees and expenses of the Trustee and any
paying agent for the Bonds; and
WHEREAS, certified copies of the Bond Resolution have been duly
filed with the Trustee; and
WHEREAS, the Trustee has agreed to accept the trusts herein
created upon the terms and subject to the conditions 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 the Bonds
and a valid assignment of certain rights of the Issuer under the Agreement
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, THIS INDENTURE WITNESSETH:
That, in consideration of the premises, of the mutual covenants
herein contained, of the purchase and acceptance of Bonds by the owners
thereof, and of the sum of One Dollar ($1.00) to Issuer duly paid by
Trustee at or before the execution and delivery of this Indenture of
Trust, the receipt of which is hereby acknowledged, and for the purpose of
fixing and declaring the terms and conditions upon which the Bonds are to
be issued, authenticated, delivered, secured, and accepted by all persons
who shall from time to time be or become owners thereof, and in order to
secure the payment of the principal of, premium, if any, and interest on
all the Bonds at any time issued and outstanding under this Indenture of
Trust, according to their tenor, purport, and effect, and in order to
secure the performance and observance of all of the covenants, agreements,
and conditions in the Bonds and in this Indenture of Trust contained
Issuer has pledged, assigned, set over, and confirmed, and does hereby
pledge, assign, set over, and confirm unto Trustee all of the right,
title, and interest of Issuer in and to (i) the Agreement, together with
all moneys payable thereunder (other than the rights reserved to Issuer as
set forth in Section 8.05 of the Agreement) and (ii) all moneys which are
deposited or required to be deposited with Trustee pursuant thereto or
pursuant to this Indenture of Trust (other than any moneys deposited to
the Special Rebate Fund) (the "Trust Estate") for the payment of the
principal of, premium, if any, and interest on such Bonds, all subject to
the provisions and conditions hereof; provided, however, that no lien or
other interest whatsoever in the Facilities or the Plant arising under the
Agreement or otherwise shall be a part of the Trust Estate.
PROVIDED, FURTHER, that (a) although the foregoing assignment
shall confer on Trustee the full right and authority to enforce the rights
of Issuer under the Agreement assigned hereby, such assignment shall not
preclude Issuer from enforcing the Agreement in accordance with Section
8.05 thereof, and (b) if Issuer or its successors or assigns shall well
and truly pay or cause to be paid the principal of the Bonds, the premium,
if any, and the interest due or to become due thereon, at the times and in
the manner provided in the Bonds, according to the true intent and meaning
thereof, and shall well and truly keep, perform, and observe all the
covenants and conditions in this Indenture of Trust expressed to be kept,
performed, and observed by it, and shall pay to Trustee all sums of money
due or to become due to it in accordance with the terms and provisions
hereof, then this Indenture of Trust and the rights hereby granted shall
cease, terminate, and be void, and Trustee in such case, on demand of
Issuer, shall execute and deliver to Issuer such assignments, discharges,
or satisfactions as shall be requisite to discharge the lien hereof and
reconvey to or to revest in Issuer the rights hereby conveyed or intended
to be conveyed; otherwise, this Indenture of Trust shall be and remain in
full force and effect.
THIS INDENTURE OF TRUST FURTHER WITNESSETH, and it is expressly
declared, that all Bonds issued and secured hereunder are to be issued,
authenticated, and delivered and the Trust Estate hereby pledged is to be
dealt with and disposed of under, upon, and subject to the terms, condi-
tions, stipulations, covenants, agreements, trusts, uses, and purposes
hereinafter expressed; and Issuer has agreed and covenanted and does
hereby agree and covenant with Trustee and with the respective owners,
from time to time, of the Bonds or any part thereof, as follows:
ARTICLE I
Definitions of Terms
Section 1.01.Definitions. In each place throughout this
Indenture wherein the following terms, or any of them, are used, the same,
unless the context shall indicate another or different meaning or intent,
shall be construed and intended to have meanings as follows:
"Acts" - Chapter 30, the Air Act, Article 717k, Vernon's
Annotated Texas Civil Statutes, as amended, and Art. 717q.
"Agreement" - the Installment Payment Agreement dated as of
July 1, 1995, between Issuer and Company, as from time to time modified,
altered, amended, and supplemented.
"Agreement to Issue Bonds" - the resolution of the Board
adopted on March 2, 1974 taking "some other similar official action"
toward the issuance of the Bonds.
"Air Act" - the Clean Air Financing Act, Chapter 383, Texas
Health and Safety Code.
"Art. 717q" - Article 717q, Vernon's Annotated Texas Civil
Statutes, as amended.
"Authorized Company Officer" - the President, any Vice
President, or the Treasurer of the Company and the Treasurer and Director,
Finance of Central and South West Corporation.
"Authorized Company Representative" - any person or persons
designated to act on behalf of Company in matters relating to this
Indenture by written certificate furnished to Trustee containing the
specimen signature of any such person or persons and signed on behalf of
Company by the Chairman of the Board of Directors, the President, any Vice
President or any other authorized officer of Company.
"Board" - the lawfully qualified Board of Navigation and Canal
Commissioners of Issuer.
"Bonds" - Matagorda County Navigation District Number One
Pollution Control Revenue Refunding Bonds (Central Power and Light Company
Project) Series 1995 issued in the aggregate principal amount of
$100,635,000 pursuant to this Indenture.
"Bondholder or Bondholders or owner of the Bonds or owner or
registered owner" - the registered owner of any Bond as shown on the
registration books kept by Trustee as Bond Registrar.
"Bond Counsel" - an attorney or firm of attorneys of recognized
standing in the field of law relating to revenue bonds, selected by Issuer
and satisfactory to Trustee and Company.
"Bond Fund" - the fund by that name created in Section 5.01.
"Bond Insurer" - MBIA Insurance Corporation and its successors
and assigns.
"Bond Registrar" - the registrar of Bonds named herein and any
successors or assigns.
"Bond Resolution" - shall have the meaning given such term in
the recitals hereto.
"Business Day" - any day which is not a Sunday or a legal
holiday or a day (including Saturday) on which banking institutions either
in The City of New York, New York or in the state where the principal
corporate trust office of Trustee is located are authorized by law or
executive order to close.
"Chapter 30" - the Regional Waste Disposal Act, Chapter 30,
Texas Water Code.
"Closing Date" - the date on which the Bonds are delivered to
the original purchaser or purchasers thereof and payment is made therefor.
"Code" - the Internal Revenue Code of 1986, as amended.
"Company" - Central Power and Light Company and its successors
and assigns as permitted by Section 5.07 and 8.04 of the Agreement.
"DTC" - The Depository Trust Company.
"Eastern Time" - time as measured and used by banking
institutions in The City of New York, New York.
"Event of Default" - any event of default specified in Section
8.01.
"Facilities" - the Facilities as defined in the Prior
Agreements.
"Indenture" - this Indenture of Trust and any indenture
supplemental hereto or amendatory hereof.
"Interest Payment Date" - with respect to the Bonds, each
January 1 and July 1, commencing January 1, 1996.
"Issuer" - Matagorda County Navigation District Number One, or
its lawful successors or assigns.
"Issuer Expenses" - all direct fees, costs, and reasonable
expenses of Issuer incurred in connection with the issuance of the Bonds
and the administration of the Agreement and this Indenture. Such fees,
costs, and expenses shall include those amounts specified in the Agreement
to Issue Bonds and the letter agreement between Issuer and Company, dated
as of September 5, 1984, and all direct payments of Issuer for reasonable
fees of accountants, attorneys, engineers, and fiscal agents and other
direct payments for services of third parties, and for materials and
supplies.
"Municipal Bond Insurance Policy" means the financial guaranty
insurance policy issued by Bond Insurer insuring the payment when due of
the principal of and interest on the Bonds as provided therein.
1985A Bonds - the Matagorda County Navigation District Number
One Collateralized Pollution Control Revenue Bonds (Central Power and
Light Company Project) Series 1985A.
1985A Indenture - the Indenture of Trust dated as of July 1,
1985 between Prior Trustee and Issuer.
1984 Bonds - the Matagorda County Navigation District Number
One Adjustable Rate Pollution Control Revenue Bonds (Central Power and
Light Company Project) Series 1984.
1984 Indenture - the Indenture of Trust dated as of October 15,
1984 between Prior Trustee and Issuer.
1954 Code - the Internal Revenue Code of 1954, as amended prior
to the enactment of the Tax Reform Act of 1986.
"Officers' Certificate" - a certificate signed by the Chairman
or Vice Chairman and the Secretary or Treasurer of Issuer.
"Outstanding under this Indenture or Outstanding hereunder or
Outstanding" - when used with reference to Bonds, at any date as of which
the amount of Outstanding Bonds is to be determined, the aggregate of all
Bonds authorized, issued, authenticated, and delivered under this
Indenture, except:
(a) Bonds cancelled on or prior to such date, and Bonds
for which other Bonds have been issued in lieu of and in
exchange or substitution for other Bonds pursuant to the terms
of Section 2.07 and 2.10;
(b) Bonds which shall be deemed to have been paid and
discharged pursuant to the terms of Section 9.02.
In determining whether the owners of the requisite principal
amount of Bonds Outstanding have consented under the Indenture, Bonds
which are owned by Company or Issuer or any person controlling, controlled
by, or under common control with either of them shall be disregarded and
not deemed to be Outstanding for the purpose of any such determination.
"Paying Agent, Paying Agents" - any paying agent or paying
agents for the Bonds named by Issuer pursuant to Section 7.09.
"Plant" - the South Texas Nuclear Generating Plant located in
Matagorda County, Texas and wholly within the boundaries of Issuer.
"Pollution Control Facilities" - the facilities acquired,
constructed, and improved at the Plant which either are certified to be
water pollution control facilities designed in furtherance of the purpose
of abating or controlling water pollution by the Nuclear Regulatory
Commission or other federal or state agency or agencies or constitute
"solid waste disposal facilities" within the meaning of Section
103(b)(4)(E) of the 1954 Code, and for which the Prior Bonds were issued.
Prior Agreements - collectively, the Installment Sale Agreement
dated as of October 15, 1984 between Issuer and Company, and the
Installment Sale Agreement dated as of July 1, 1985 between Issuer and
Company.
"Prior Bonds" - the $68,870,000 in aggregate principal amount
of 1984 Bonds and $31,765,000 in aggregate principal amount of 1985A Bonds
to be refunded in connection with the issuance of the Bonds.
Prior Indentures - collectively, the 1984 Indenture and 1985A
Indenture.
Prior Trustee - NationsBank of Texas, National Association
(successor to RepublicBank Dallas, National Association), as trustee under
the Prior Indentures.
"Record Date" - with respect to the Bonds, the fifteenth day of
the calendar month next preceding each Interest Payment Date.
"Redemption Price" - the principal of a Bond plus the
applicable premium, if any, payable upon redemption thereof pursuant to
this Indenture prior to the stated maturity date of the Bond.
"Special Payment Date" - shall have the meaning given in
Section 2.07.
"Special Rebate Fund" - the fund by that name created in
Section 5.09.
"Special Record Date" - shall have the meaning given in Section
2.07.
"Trust Estate" - as defined in the granting clause hereof.
"Trustee" - The Bank of New York, a New York banking
corporation having its principal corporate trust office in New York, New
York, and its successors as Trustee hereunder.
"Trustee Expenses" - the compensation and expenses payable to
Trustee and any Paying Agent pursuant to this Indenture or the Agreement.
"Undertaking" - the Rule 15c2-12 Undertakings dated as of July
1, 1995 and attached to the Agreement as Exhibit A.
"Written Order" - an order signed in the name of Issuer by the
President or Secretary of the Board and delivered to Trustee.
Section 1.02. Certain Rules of Interpretation. Except where
the context otherwise requires, the definitions set forth in Section 1.01
shall be equally applicable to both the singular and plural forms of the
words and terms therein defined and shall cover all genders.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore",
"hereinafter" and other equivalent words refer to this Indenture and not
solely to the particular Article, Section, or subdivision hereof in which
such word is used.
Reference herein to an Article number or a Section number shall
be construed to be a reference to the designated Article number or Section
number hereof unless the context or use clearly indicates another or
different meaning or intent.
In addition, unless the context clearly indicates to the
contrary, capitalized words and terms used herein and not otherwise
defined shall have the meaning given such term in the Agreement.
ARTICLE II
General Terms and Provisions of the Bonds
Section 2.01. Payment of Bonds. The Bonds issued under this
Indenture shall be payable, with respect to principal, premium, if any,
and interest, in lawful money of the United States of America. The
principal of all Bonds shall be payable at the principal corporate trust
office of Trustee. The payment of interest on Bonds shall be made on each
Interest Payment Date by Trustee as herein provided to the registered
owner appearing on the registration books of Issuer on the Record Date by
check mailed to such registered owner at his address as it appears on such
registration books.
Section 2.02. (a) Lien, Parity, Designation of Series. This
Indenture shall be a continuing lien to secure the full payment of the
principal of, premium, if any, and interest on the Bonds executed, authen-
ticated, and delivered pursuant to the terms hereof, without priority as
to security afforded by this Indenture of any Bond over any other Bond by
reason of date of issue, date of maturity, date of delivery, or otherwise,
except as otherwise provided or permitted in this Indenture. The Bonds
shall have a first lien upon the Trust Estate. The forms of Bonds issued
hereunder, Trustee's certificate of authentication, and the registration
forms shall be substantially as herein set forth. The Bonds shall be
lettered "R" and numbered separately from one upward.
(b) Title, Execution, and Effect of Certificate of Trustee.
The Bonds issued under this Indenture shall be issued in one series and
shall be designated "Matagorda County Navigation District Number One
Pollution Control Revenue Refunding Bonds (Central Power and Light Company
Project) Series 1995"; shall be in fully registered form in the
denomination of $5,000 or any integral multiple thereof; shall be executed
on behalf of Issuer by the facsimile signature of the Chairman of the
Board under its corporate seal or a facsimile thereof and attested by the
facsimile signature of its Secretary; and shall be delivered to Trustee,
who shall deliver the same upon the Written Order of Issuer. Only such
Bonds as shall (i) be the Bonds initially delivered to the purchasers
thereof and have attached thereto a manually signed Comptroller's
Registration Certificate or (ii) be issued in exchange, transfer or
substitution for such initial Bonds and bear endorsed thereon a
certificate of authentication substantially in the form herein recited and
executed by Trustee shall be valid or obligatory for any purpose or be
secured by this Indenture or be entitled to any right or benefit
hereunder. Such registration by the Comptroller of Public Accounts of the
State of Texas or authentication by Trustee upon any such Bonds shall be
conclusive evidence (and the only evidence) that the Bond so registered or
authenticated has been duly issued hereunder and that the owner thereof is
entitled to the benefit of the trusts hereby created.
Section 2.03. Authentication and Delivery of Bonds After
Officers Signing the Bonds Cease to be Officers. In the event that any
person who shall have signed or signed and sealed any Bond issuable under
this Indenture as an officer of Issuer shall have ceased to be such
officer before the Bond so signed or signed and sealed shall have been
actually authenticated and delivered by Trustee, such Bond, nevertheless,
may be authenticated and delivered and issued as though the person who
signed or signed and sealed such Bond had not ceased to be such officer of
Issuer. Any Bonds issuable hereunder may be signed and sealed on behalf
of Issuer by such persons as at the actual date of the execution of such
Bonds shall be the proper officers of Issuer although at the date of such
Bonds any such person shall not have been an officer of Issuer. Issuer
may adopt or use the facsimile signature of any person who shall have been
an officer notwithstanding the fact that he may have ceased to be such
officer at the time when such Bonds shall have been actually authenticated
and delivered.
Section 2.04. The Text of the Bonds and Certificates. The
text of the Bonds, the certificate of Trustee for all Bonds, the
certificate of the Comptroller of Public Accounts of the State of Texas
which shall appear on the Bonds upon initial issue, and the form of
assignment (with such variations, omissions, or insertions as are required
or permitted hereby or as set forth in the Bond Resolution relating to the
Bonds) shall be substantially in the following forms, to-wit:
[The following legend shall appear so long as the Book-Entry
System described in Section 2.12 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.
NO. _______
$___________
UNITED STATES OF AMERICA
STATE OF TEXAS
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE
POLLUTION CONTROL REVENUE REFUNDING BONDS
(CENTRAL POWER AND LIGHT COMPANY PROJECT)
SERIES 1995
Maturity Date: Interest Rate: Bond Date: Cusip:
July 1, 2028 6.10% July 1,1995
Registered Owner:
Principal Amount: Dollars
ON THE MATURITY DATE SPECIFIED ABOVE, Matagorda County
Navigation District Number One ("Issuer"), a governmental agency and a
body politic and corporate of the State of Texas, for value received
hereby promises to pay to the Registered Owner set forth above, or to the
registered assigns (hereinafter called the registered owner), the
Principal Amount set forth above upon presentation and surrender of this
bond at the principal corporate trust office of The Bank of New York
("Trustee") or its successor trustee appointed under the Indenture (as
hereinafter defined), and to pay interest thereon at the Interest Rate set
forth above as herein provided to the registered owner, by check mailed to
the registered owner at his address as it appears on the bond registration
books of Issuer on the Record Date, on each January 1 and July 1,
commencing January 1, 1996 (the "Interest Payment Dates") to the Maturity
Date set forth above or the date of redemption prior to maturity, pursuant
to the Indenture of Trust between Issuer and Trustee dated as of July 1,
1995 (the "Indenture"). The Principal Amount hereof shall bear interest
(i) in the case of the initial bond or bonds delivered pursuant to the
Indenture, from July 1, 1995, and (ii) in the case of all other bonds
delivered thereafter, from the Interest Payment Date next preceding the
date of authentication (unless such date of authentication is after any
Record Date but on or before the next following Interest Payment Date in
which case the Principal Amount shall bear interest from such next
following Interest Payment Date, or if this bond shall be authenticated on
or prior to the Record Date for the January 1, 1996 Interest Payment Date,
it shall bear interest from July 1, 1995).
UNLESS SPECIFIED OTHERWISE, CAPITALIZED WORDS AND TERMS
APPEARING IN THIS BOND SHALL HAVE THE MEANINGS SET FORTH IN THE INDENTURE.
This bond is one of a series of bonds entitled Matagorda County
Navigation District Number One Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project) Series 1995 (the "bonds") issued
in the aggregate principal amount of $100,635,000, pursuant to a
resolution of the Board of Navigation and Canal Commissioners of Issuer
(the "Bond Resolution"), in accordance with the terms of the Indenture.
The bonds are issued by Issuer for the purpose of providing certain of the
funds for the refunding of all the outstanding Matagorda County Navigation
District Number One Adjustable Rate Pollution Control Revenue Bonds
(Central Power and Light Company Project) Series 1984 and Matagorda County
Navigation District Number One Collateralized Pollution Control Revenue
Bonds (Central Power and Light Company Project) Series 1985A.
This bond is one of the duly authorized bonds issued pursuant
to the Indenture as authorized by the Regional Waste Disposal Act, Chapter
30, Texas Water Code, the Clean Air Financing Act, Chapter 383, Texas
Health and Safety Code, and Articles 717k and 717q, V.A.T.C.S.
Said Indenture, including any amendment or modification thereof
or supplement thereto, pledges to the Trustee all of the right, title, and
interest of Issuer in and to the Installment Payment Agreement dated as of
July 1, 1995 (the "Agreement"), between Issuer and Central Power and Light
Company ("Company") together with all moneys payable thereunder (excluding
certain rights reserved to Issuer as set forth in Section 8.05 of the
Agreement), and all moneys which are deposited or required to be deposited
with Trustee pursuant thereto or pursuant to the Indenture. Company is
unconditionally obligated (subject only to the provisions of Sections 5.07
and 8.04 of the Agreement relating to merger, consolidation, transfer of
assets, and assignment) to Issuer and Trustee to make or pay, or cause to
be made or paid, to Trustee each Installment Payment, as defined in the
Agreement, for deposit into the Bond Fund created for the benefit of the
bonds in the Indenture, in aggregate amounts sufficient to pay, and
provide for the payment of the principal of, premium, if any, and interest
on the bonds, when due, subject to and as required by the provisions of
the Agreement, the Bond Resolution, and the Indenture.
The Indenture is on file with Trustee and reference is hereby
made to the Indenture and to all indentures supplemental thereto or
amendatory thereof for a full and complete statement of the provisions
with respect to the custody and application of the proceeds of the bonds,
the collection and disposition of pledged revenues, the nature and extent
of the security, and the rights of the owners of the bonds, the terms and
conditions on which, and the purposes for which, bonds are or may be
issued, and the rights, duties, and obligations of Issuer and Trustee
thereunder, to all of which the owner hereof, by acceptance of this bond,
assents.
Neither the credit nor the taxing power of the State of Texas
or the Matagorda County Navigation District Number One, or any other
political subdivision of the State of Texas is pledged for the payment of
the principal of, the interest on, or the premium, if any, on this bond;
nor shall this bond be deemed a general obligation of said State, Issuer,
or any other political subdivision of said State; nor shall said State,
Issuer, the Board of Navigation and Canal Commissioners of Issuer, or any
other political subdivision of said State be liable for the payment of the
principal of, the interest on, or the premium, if any, on this bond except
from those revenues to be derived by Issuer pursuant to the Agreement.
The owner of this bond shall never have the right to demand payment from
moneys derived by taxation or any revenues of Issuer except the funds
pledged to the payment of said bond.
The bonds are subject to redemption on July 1, 2000 or any date
thereafter, in whole or in part (and if in part as specified in the
Indenture) at the option of Issuer, to be exercised at the direction of
Company, upon acceleration of the payments by Company in accordance with
the Agreement, upon payment of the applicable redemption price, expressed
as a percentage of the principal amount of the bonds set forth in the
schedule below, together with unpaid interest accrued to date of
redemption, to-wit:
Redemption Date Redemption Price
--------------- ----------------
July 1, 2000 through June 30, 2001 102%
July 1, 2001 through June 30, 2002 101%
July 2, 2002 and thereafter 100%
The bonds are also subject to redemption prior to maturity at
the option of Issuer, to be exercised at the direction of Company, at any
time, in whole, on acceleration of the payments by Company in accordance
with the Agreement, at a redemption price equal to the principal amount of
the Outstanding bonds, plus accrued interest thereon to date of
redemption, without premium, upon the occurrence of any of the following
events:
(i) in the reasonable judgment of Company unreasonable burdens
or excessive liabilities shall have been imposed upon Issuer or
Company with respect to the Facilities (as defined in the Agreement)
or the Plant (as defined in the Agreement), including without
limitation (A) the imposition of any income or other taxes not being
imposed on July 1, 1995 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, 1995 upon similarly assessed property
within the same taxing jurisdiction);
(ii) the Facilities or the Plant shall have been damaged or
destroyed to such extent that, in the opinion of Company (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) Company will be thereby prevented from
carrying on its normal operations of the Facilities or the Plant for
a period of six 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 Facilities 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 Facilities
or the Plant shall have occurred, or technological, regulatory, or
other changes shall have occurred which, in the opinion of Company,
render the continued operation of the Facilities or the Plant
uneconomic;
(v) any court or administrative body shall enter a judgment,
order, or decree requiring 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 Company, it 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
(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
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.
The exercise of any such option shall be at the direction of Company which
shall give written notice to Issuer and Trustee within one hundred twenty
(120) days after the occurrence of any event described in clause (i),
(ii), (iii), (iv), (v) or (vi) above, which notice shall specify that, as
determined by Company, one or more of such events has occurred or one or
more of such conditions is continuing and also shall specify a date for
redemption not less than 45 nor more than 120 days after the date such
notice is given.
The bonds are subject to mandatory redemption in whole or in
part at any time (and if in part, as specified in the Indenture) 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 Company
participates to the extent it deems sufficient, or (ii) a final action by
the Internal Revenue Service, in proceedings in which Company 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 or the
1954 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 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 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 bondholder involved in such
proceeding or action (y) gives Company and Trustee prompt notice of the
commencement thereof and (z) if Company agrees to pay all expenses in
connection therewith and to indemnify such bondholder against all
liabilities in connection therewith, offers Company 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.
If any bonds or portions thereof shall be called for
redemption, notice thereof shall be given by mailing the same by first-
class mail, postage prepaid, addressed to each registered owner of bonds
at his address recorded on the registration books, unless waived by the
owners of all bonds called for redemption, such notice to be so mailed not
more than 60 nor less than 30 days prior to the date fixed for redemption;
provided, however, the failure so to give such notice or any defect
therein with respect to any particular bond will not affect the validity
of any call for redemption of any other bonds.
If such notice of redemption has been duly mailed to or waived
by the owners of all bonds called for redemption, then the bonds or
portions thereof called for redemption shall be due and payable on the
redemption date at the redemption price. Payment of the redemption price,
together with accrued interest, shall be made by Trustee to or upon the
order of the owners of the bonds called for redemption upon surrender of
such bonds. From and after the redemption date designated in such notice
or waiver, deposit of redemption moneys, or to the extent permitted in
Article IX of the Indenture, "Governmental Obligations", as defined
therein, having been made and notice given or waived as aforesaid, no
further interest shall accrue upon the principal of any of the bonds, or
portions thereof, so called for redemption. If the notice of redemption
has been made or waived, and if due provision for payment is made, all as
provided above, such bonds, or portions thereof, shall not be regarded as
being outstanding and shall cease to be entitled to any lien, benefit, or
security under the Indenture, and the owners thereof shall have no rights
in respect of such bonds, or portions thereof, except to receive payment
of the redemption price thereof and unpaid interest accrued to the date
fixed for redemption.
In case an "Event of Default", as defined in the Indenture,
shall occur, the principal of all bonds then outstanding under the
Indenture may be declared or become due and payable upon the conditions
and in the manner and with the effect provided in the Indenture. Upon the
curing of any default, Trustee, and, in certain cases, the owners of the
majority in principal amount of the bonds then outstanding, may waive such
default and its consequences as permitted by the terms of the Indenture,
and such waiver shall be binding upon Trustee and upon all owners of the
bonds.
The owner of this bond shall have no right to enforce the
provisions of the Indenture, or to institute action to enforce the
covenants therein, or to take any action with respect to any default under
the Indenture, or to institute, appear in, or defend any suit or other
proceeding with respect thereto, except as provided in the Indenture.
The bonds are issuable in fully registered form in the
denomination of $5,000 or any integral multiple thereof. Subject to the
conditions provided in the Indenture, any bonds, upon payment of the
charges specified in the Indenture and upon surrender at the principal
corporate trust office of Trustee, may be exchanged for an equal aggregate
principal amount of bonds in fully registered form of any authorized
denominations.
This bond shall be transferable on the books of Issuer to be
kept for that purpose at the principal corporate trust office of Trustee
upon surrender hereof at said office by the registered owner in person or
by duly authorized attorney for cancellation and upon presentation of a
written instrument of transfer duly executed, and thereupon Issuer shall
issue to the transferee and Trustee shall authenticate and deliver a new
bond or bonds in authorized form or forms and denomination or
denominations of like aggregate principal amount. Such transfers shall be
without expense to the owner hereof, but any taxes or other governmental
charges required to be paid with respect to the same shall be paid by the
owner requesting such transfer as a condition precedent to the exercise of
such privilege.
Whenever in this bond or the Indenture a duty or payment is
required to be performed or paid or a notice given on a given day of the
month, and such day is not a Business Day, the required duty, payment, or
notice shall be performed or paid, or notice given on the next succeeding
day which is a Business Day.
IT IS HEREBY CERTIFIED AND RECITED that all acts and things
required by the Constitution and laws of the State of Texas to happen,
exist, and be performed precedent to and in the issuance of this series of
bonds and in the execution and delivery of the Indenture, have happened,
exist, and have been performed as so required.
THIS BOND shall not be entitled to any benefit under the
Indenture, or any indenture supplemental thereto, or become valid or
obligatory for any purpose until (i) Trustee shall have manually signed
the certificate of authentication hereon or (ii) a manually signed
Comptroller's Registration Certificate is attached hereto.
IN WITNESS WHEREOF, Matagorda County Navigation District Number
One has caused this bond to be signed by the manual or facsimile signature
of the Chairman of the Board of Navigation and Canal Commissioners and
attested by the manual or facsimile signature of the Secretary of said
Board and the corporate seal of said Issuer to be duly impressed, printed,
or lithographed on this bond.
MATAGORDA COUNTY NAVIGATION DISTRICT
NUMBER ONE
____________________________________
Chairman, Board of Navigation
and Canal Commissioners
ATTEST:
_____________________________
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)
(FORM OF STATE COMPTROLLER'S CERTIFICATE
FOR ALL BONDS UPON INITIAL ISSUE)
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO. _____
I HEREBY CERTIFY that there is on file and of record in my
office a certificate of the Attorney General of the State of Texas to the
effect that this bond has been examined by him as required by law, and
that he finds that it has been issued in conformity with the Constitution
and laws of the State of Texas, and that it is a valid and binding special
obligation of Matagorda County Navigation District Number One and said
bond has this day been registered by me.
WITNESS my signature and seal this
__________________________________
Comptroller of Public Accounts of
the State of Texas
(SEAL)
FORM OF ASSIGNMENT:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned registered owner of this
bond or duly authorized representative or attorney thereof, hereby assigns
this bond to
______________________
|______________________| ___________________________________
(Assignee's Social (print or typewrite Assignee's name
Security or Taxpayer and address, including zip code)
Identification Number)
__________________________________________________________________________
and hereby irrevocably constitutes and appoints
__________________________________________________________________________
attorney to transfer the registration of this bond on the Bond
Registration Books with full power of substitution in the premises.
Dated: __________________
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.
Section 2.05. Required Certificate by State Comptroller.
Before the initial delivery of the Bonds, there shall be endorsed on each
of said Bonds a certificate of registration duly executed by or on behalf
of the Comptroller of Public Accounts of the State of Texas.
Section 2.06. Registrar. Issuer shall, at the expense of the
Company, keep or cause to be kept within the State of Texas books for the
registration and transfer of Bonds and Issuer hereby appoints Trustee as
Bond Registrar to keep such books within the State of Texas and make such
registrations and transfers under such reasonable regulations as Issuer or
the Bond Registrar may prescribe; and Bond Registrar will register or
transfer or cause to be registered or transferred therein, as hereinbefore
provided, any Bonds entitled to be so registered or transferred, upon
presentation thereof at such office.
Section 2.07. Title and Negotiability of Bonds. Bonds may be
transferred on the aforesaid registration books by the registered owner in
person or by his duly authorized attorney, by proper written instrument of
transfer in form, and with guaranty of signatures, satisfactory to Issuer
and Trustee. Bonds may, upon surrender thereof at the aforesaid office of
Trustee, be exchanged for a like aggregate principal amount of Bonds, in
any other authorized denomination or denominations, maturity and interest
rate, bearing interest from the last Interest Payment Date to which
interest has been paid in full on the Bonds so surrendered. Such
transfers of registration or exchanges of Bonds shall be without charge to
the owner of such Bonds, but any taxes or other governmental charges
required to be paid with respect to the same shall be paid by the Bond-
holder requesting such registration, transfer, or exchange as a condition
precedent to the exercise of such privilege.
Except as provided in Sections 2.09 and 2.10, every Bond shall
be dated the date of its registration and authentication and shall bear
interest (i) in the case of the initial Bond or Bonds delivered hereunder,
from July 1, 1995, and (ii) in the case of all other Bonds delivered
thereafter, from the Interest Payment Date next preceding the date of its
authentication (unless such date of authentication is after any Record
Date but on or before the next following Interest Payment Date in which
case it shall bear interest from such next following Interest Payment
Date, or if it shall be authenticated on or prior to the Record Date for
the first Interest Payment Date for such Bond, it shall bear interest from
the date prescribed for such Bond).
Each Bond delivered pursuant to any provision of this Indenture
in exchange or substitution for, or upon the transfer of the whole or any
part of, one or more other Bonds, shall carry all of the rights to
interest accrued and unpaid and to accrue which were carried by the whole
or such part, as the case may be, of such one or more other Bonds, and
notwithstanding anything contained in this Indenture, such Bonds shall be
so dated or bear such notation, that neither gain nor loss in interest
shall result from any such exchange, substitution, or transfer.
Every exchange or transfer of Bonds under the foregoing
provisions shall be effected in such manner as may be prescribed by Issuer
or pursuant to its authorization, with the approval of Trustee. Trustee
shall not be required to make exchanges or transfers of any Bond during
the period commencing with the close of business on any Record Date and
ending with the opening of business on the next following Interest Payment
Date or the maturity date of a series of Bonds, anything in the Indenture
or such Bond to the contrary notwithstanding.
In addition, in the event of a non-payment on a scheduled
Interest Payment Date, and for 60 days thereafter, a new Record Date for
such interest payment (a "Special Record Date") will be established by
Trustee, if and when funds for the payment of such interest or any portion
thereof have been received from Company. Notice of the Special Record
Date and of the scheduled payment date of the past due interest (the
"Special Payment Date"), which shall be 15 days after the Special Record
Date shall be sent at least five business days prior to the Special Record
Date by United States mail, first class, postage prepaid, to the address
of each registered owner of a Bond appearing on the bond registration
books at the close of business on the last Business Day next preceding the
date of mailing of such notice.
Section 2.08. Payment of Bonds. The person in whose name any
Bond shall be registered on the books of Issuer may be deemed and treated
as the absolute owner thereof for all purposes of this Indenture, whether
or not such Bond shall be overdue, and Issuer and Trustee and any Paying
Agent shall not be affected by any notice to the contrary; and payment of,
or on account of, the principal of, premium, if any, and interest on any
such Bond shall be made only to such registered owner thereof; but such
registration may be changed as provided herein. All such payments shall
be valid and effectual to satisfy and discharge the liability upon such
Bond to the extent of the sum or sums so paid.
Section 2.09. Temporary Bonds. Until Bonds in definitive form
are ready for delivery, Issuer may execute, and upon its request in
writing, Trustee shall authenticate and deliver in lieu of any thereof,
and subject to the same provisions, limitations, and conditions, one or
more printed, lithographed, or typewritten Bonds in temporary form,
substantially of the tenor of the Bonds hereinbefore described, without
coupons, and with appropriate omissions, variations, and insertions. Such
Bond or Bonds in temporary form may be for the principal amount of $5,000
or any integral multiple or multiples thereof, as Issuer may determine.
Until exchanged for Bonds in definitive form, such Bonds in temporary form
shall be entitled to the lien and benefit of this Indenture. Issuer
shall, without unreasonable delay, prepare, execute, and deliver to
Trustee, and thereupon, upon the presentation and surrender of the Bond or
Bonds in temporary form, Trustee shall authenticate and deliver, in
exchange therefor, a Bond or Bonds in definitive form in authorized
denominations of the same series, maturity, and interest rate for the same
aggregate principal amount as the Bond or Bonds in temporary form
surrendered. Such exchange shall be made by Issuer at its own expense and
without making any charge therefor. When and as interest is paid upon
Bonds in temporary form, the fact of such payment shall be noted thereon
by the owner. Any such temporary Bonds shall be numbered consecutively
upward from TR-1.
Section 2.10. Loss, Theft, Destruction, or Mutilation of
Bonds. Upon receipt by Issuer and Trustee of evidence satisfactory to
both of them that any outstanding Bond has been mutilated, destroyed,
lost, or stolen, and of indemnity satisfactory to both of them, Issuer, in
its discretion, may execute and thereupon Trustee shall authenticate and
deliver a new Bond of the same series, maturity and interest rate and of
like tenor, as the mutilated, destroyed, lost, or stolen Bond, in exchange
and substitution for, and upon surrender and cancellation of, the
mutilated Bond or in lieu of and in substitution for the Bonds so de-
stroyed, lost, or stolen. In the event any such Bond shall have matured,
instead of issuing a duplicate Bond, Trustee may pay the same from amounts
available for such purpose. Such replacement Bonds shall be issued in
accordance with law. Issuer and Trustee may charge the owner of the Bond
destroyed, lost, or stolen the expenses incurred in the issuance of the
replacement Bonds or payment thereof, and may require indemnification
satisfactory to both of them.
Section 2.11. Cancellation and Destruction. Upon the
surrender to Trustee of any temporary or mutilated Bonds, or Bonds
transferred or exchanged for other Bonds, or Bonds acquired, redeemed, or
received by Trustee through the operation of a sinking fund, if any, or
Bonds acquired or redeemed or paid at maturity by Issuer, the same shall
forthwith be cancelled by Trustee. Cancelled Bonds shall be delivered to
Issuer.
Section 2.12. Book-Entry Only System. The Bonds shall be
initially issued in the form of a single fully registered Bond. After
initial issuance, the ownership of the Bond shall be registered in the
name of Cede & Co., as nominee of DTC, and except as provided in Section
2.13 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, Issuer and Trustee shall have no responsibility or
obligation to any participant in DTC (a "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, Issuer and 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, Issuer and 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. 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 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 Issuer to make payments of principal, premium, if any, and
interest, pursuant to this Indenture. Upon delivery by DTC to 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 payment of interest to the registered owner at
the close of business on the Record Date, the word "Cede & Co." in this
Indenture shall refer to such new nominee of DTC.
Section 2.13. Successor Securities Depository; Transfers
Outside Book-Entry Only System. (a) In the event that Company determines
that DTC is incapable of discharging its responsibilities described herein
and in the representation letter of Issuer to DTC (the "DTC Letter") and
that it is in the best interest of the beneficial owners of the Bonds that
they be able to obtain certificated Bonds, Issuer, at the direction of the
Company, 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) Upon the written consent of 100% of the beneficial owners
of the Bonds, Trustee, in accordance with the DTC Letter, 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 2.14. 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 DTC Letter.
Section 2.15. CUSIP Numbers. The Issuer 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 of the Bonds; 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 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.
ARTICLE III
Authorization and Issuance of Bonds
Section 3.01. Limitation on Issuance of Bonds. No Bonds shall
be delivered under this Indenture except in accordance with the provisions
of this Article.
Section 3.02. Principal Amount, Interest Rate, Interest
Payment Dates, and Maturity Dates of the Bonds. There shall be delivered
under and secured by this Indenture, for the purpose of refunding all of
the outstanding Prior Bonds, an issue of Bonds in the aggregate principal
amount of $100,635,000. Bonds thus to be delivered shall be fully
registered Bonds without coupons, in the denomination of $5,000 or any
integral multiple thereof, numbered from R-1 upward, and entitled
"Matagorda County Navigation District Number One Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) Series 1995".
The Bonds shall mature on July 1, 2028, shall be dated July 1, 1995 and
the principal amount thereof shall bear interest (i) in the case of the
initial Bond or Bonds delivered pursuant to the Indenture, from July 1,
1995, and (ii) in the case of all other Bonds delivered thereafter, from
the Interest Payment Date next preceding the date of authentication
(unless such date of authentication is after any Record Date but on or
before the next following Interest Payment Date in which case such
principal amount shall bear interest from such next following Interest
Payment Date, or if any Bond shall be authenticated on or prior to the
Record Date for the January 1, 1996 Interest Payment Date, it shall bear
interest from July 1, 1995). Interest shall be paid by check to the
registered owner thereof as such owner appears on the Record Date next
preceding each Interest Payment Date on the registration books kept by
Trustee. Interest shall be payable semiannually on each January 1 and
July 1, beginning January 1, 1996. Payment of principal and premium, if
any, on all Bonds and accrued interest upon the redemption of any Bonds
shall be made upon the presentation and surrender of such Bonds at the
principal corporate trust office of Trustee as the same shall become due
and payable. Interest shall be calculated upon the basis of a 360-day
year consisting of twelve thirty day months.
Section 3.03. Interest Rate. (a) The Bonds shall bear
interest at the rate of six and one-tenth percent (6.10%) per annum from
July 1, 1995 to and including July 1, 2028 or the date of redemption prior
to maturity.
Section 3.04. Execution and Delivery of Bonds. The Bonds
shall be executed by Issuer and delivered to Trustee and thereupon shall
be delivered by Trustee to the initial purchasers thereof, but only upon
receipt by Trustee of:
(1) A copy of the Bond Resolution adopted by the Board and
certified by the Secretary of the Board, authorizing this Indenture,
the issuance of the Bonds, and the delivery of the Bonds;
(2) The purchase price of the Bonds delivered as stated in the
Bond Resolution;
(3) A certificate of the Chairman or Secretary of the Board of
Issuer stating that on the date of such delivery of such Bonds,
Issuer is not in default in the performance or observance of any of
the covenants, conditions, agreements, or provisions of this
Indenture; and
(4) A Written Order directing the delivery of the Bonds.
Section 3.05.No Additional Bonds. No Bonds other than the
Series 1995 Bonds authorized and issued hereunder shall be issued under
this Indenture.
Section 3.06. No Limitation on Issuer. No provision in this
Indenture shall in any way affect the statutory right of Issuer to issue
bonds supported wholly by ad valorem or other taxes or bonds secured by
revenues other than the revenues herein pledged, or bonds secured by taxes
and revenues other than the revenues herein pledged.
ARTICLE IV
Redemption of Bonds
Section 4.01. Redemption in Accordance with Indenture. Any
redemption of all or any part of the Bonds issued under the provisions of
this Indenture which are subject to redemption shall be made in the manner
provided in this Article.
Section 4.02. Selection by Lot. In case of the redemption of
less than all of the Bonds Outstanding, except as otherwise provided
herein, the particular Bonds or portions of Bonds to be redeemed shall be
selected from all the Outstanding Bonds by lot or other customary means by
Trustee in such manner as Trustee in its discretion may deem proper in
order to assure to each owner of Bonds a fair opportunity to have his Bond
or Bonds or portions thereof drawn; provided, however, Trustee shall treat
each such Bond of a denomination of more than $5,000 as representing that
number of Bonds of $5,000 denominations obtained by dividing the principal
amount of such Bonds by $5,000.
Section 4.03. Notice of Redemption. In case of any redemption,
Trustee shall cause notice of such redemption to be given by mailing by
first-class mail, postage prepaid, a copy of the redemption notice to the
registered owners of the Bonds designated for redemption in whole or in
part, at their addresses as the same shall last appear upon the
registration books, not more than 60 nor less than 30 days prior to the
redemption date. In addition, notice of redemption shall be sent by
certified or registered mail, return receipt requested, or by over night
delivery service (1) contemporaneously with such mailing: (A) to any
registered owner of $1,000,000 or more in principal amount of Bonds and
(B) to at least two or more information services of national recognition
that disseminate redemption information with respect to municipal bonds
and (2) to any securities depository registered as such pursuant to the
Securities Exchange Act of 1934, as amended, that is an owner of Bonds to
be redeemed so that such notice is received at least two days prior to
such mailing date. An additional notice of redemption shall be given by
certified mail, postage prepaid, mailed not less than 60 nor more than 90
days after the redemption date to any owner of Bonds selected for
redemption that has not surrendered the Bonds called for redemption, at
the address as the same shall appear upon the registration books.
All notices of redemption shall state:
(1) the redemption date,
(2) the redemption price,
(3) 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,
(4) 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,
(5) 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;
provided, however, that failure to give any such notice or any defect
therein with respect to any particular Bond will not affect the validity
of any call for the redemption of any other Bonds.
Section 4.04. Proceedings for Redemption. If notice of
redemption has been duly mailed to registered owners at their respective
addresses as the same may appear in the registry books, or duly waived by
the owners of all Bonds called for redemption, then the Bonds or portions
thereof called for redemption shall be due and payable on the redemption
date at the Redemption Price. Payment of the Redemption Price, together
with accrued interest, shall be made by Trustee to or upon the order of
the owners of the Bonds called for redemption upon surrender of such
Bonds. The Redemption Price of and the interest accrued on the Bonds b
being redeemed shall be paid out of the Bond Fund. If there shall be
called for redemption less than all of a Bond, Issuer shall execute and
deliver and Trustee shall authenticate, upon surrender of such Bond, and
without charge to the owner thereof, for the unredeemed balance of the
Bond so surrendered, Bonds of like maturity and interest payment dates.
From and after the redemption date designated in such notice or
waiver, deposit of redemption moneys, or to the extent permitted in
Article IX, "Governmental Obligations", as therein defined, having been
made and notice given or waived as aforesaid, notwithstanding that any
Bonds so called for redemption in whole or in part shall not have been
surrendered for cancellation, no further interest shall accrue upon the
principal of any of the Bonds or portions thereof so called for
redemption. If the notice of redemption has been made, and if due
provision for payment is made, all as provided above, such Bonds or
portions thereof shall not be regarded as being Outstanding and shall
cease to be entitled to any lien, benefit, or security under this
Indenture, and the owners thereof shall have no rights in respect of such
Bonds, or portions thereof, except to receive payment of the Redemption
Price thereof and unpaid interest accrued to the date fixed for
redemption.
Section 4.05. Redemption of Bonds. The Bonds shall be subject
to redemption prior to their scheduled maturity in accordance with the
following provisions and otherwise in the manner set forth in this
Indenture:
(a) Optional Redemption. At the option of Issuer, to be
exercised at the direction of Company, on July 1, 2000 or on any date
thereafter, in whole or in part (and if in part in the manner
specified in Section 4.02), upon acceleration of the payments by
Company in accordance with the Agreement for any purpose and from any
moneys available for such purpose other than for purposes or from
moneys described in (b) or (c) below, upon payment of the applicable
Redemption Price expressed as a percentage of the principal amount of
the Bonds to be redeemed set forth in the schedule below, together
with unpaid interest accrued to date of redemption, to wit:
Redemption Date Redemption Price
--------------- ----------------
July 1, 2000 through June 30, 2001 102%
July 1, 2001 through June 30, 2002 101%
July 1, 2002 and thereafter 100%
The Bonds shall be called for redemption by Trustee pursuant to
the foregoing paragraph (a) upon receipt by Trustee at least
forty-five days prior to the redemption date of written notice from
Company of the exercise of such option. Such notice shall specify
the redemption date, the principal amount of the Bonds so to be
called for redemption, and the applicable Redemption Price.
(b) Extraordinary Optional Redemption. At the option of
Issuer, to be exercised at the direction of Company, at any time, in
whole, on acceleration of the payments by Company in accordance with
the Agreement, at a redemption price equal to the principal amount of
the Outstanding Bonds, plus unpaid interest accrued to date of
redemption, upon occurrence of any of the following events:
(i) in the reasonable judgment of Company unreasonable
burdens or excessive liabilities shall have been imposed upon
Issuer or Company with respect to the Facilities or the Plant,
including without limitation (A) the imposition of any income
or other taxes not being imposed on July 1, 1995 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, 1995 upon similarly assessed property within the same taxing
jurisdiction);
(ii) the Facilities or the Plant shall have been damaged
or destroyed to such extent that, in the opinion of Company,
(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) Company will be
thereby prevented from carrying on its normal operations of the
Facilities or the Plant for a period of six 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 Facilities 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 Facilities or the Plant shall have occurred, or
technological, regulatory or other changes shall have occurred,
which, in the opinion of Company, render the continued
operation of the Facilities or the Plant uneconomic;
(v) any court or administrative body shall enter a
judgment, order or decree requiring 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 Company, it 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
(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 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.
The exercise of any such option shall be at the direction of Company
which shall give written notice to Issuer and Trustee within one
hundred twenty (120) days after the occurrence of an event described
in clause (i), (ii), (iii), (iv), (v), or (vi) above, which notice
shall specify that, as determined by Company, one or more of such
events has occurred or one or more of such conditions is continuing
and also shall specify a date for redemption not less than 45 nor
more than 120 days after the date such notice is given.
(c) Special Mandatory Redemption. The Bonds are subject to
mandatory redemption in whole or in part at any time (and if in part
in the manner specified in Section 4.02) 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 Company
participates to the extent it deems sufficient, or (ii) a final
action by the Internal Revenue Service, in proceedings in which
Company 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 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 the Company to observe or perform any
covenant, condition, or agreement on its part to be observed or
performed under the Agreement or the inaccuracy of any representation
by 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 Bondholder involved in such proceeding
or action (A) gives Company and Trustee prompt notice of the
commencement thereof and (B), if Company agrees to pay all expenses
in connection therewith and to indemnify such Bondholder against all
liabilities in connection therewith, offers Company 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 Company not less than forty-five days written
notice of such date.
Section 4.06.Trustee to Call Bonds. If Issuer exercises an
option to call Bonds prior to stated maturities under Section 4.05, or if
the Bonds are required to be redeemed prior to stated maturities, Trustee
shall give notice of such redemption in accordance with Section 4.03 after
receiving notice thereof in accordance with the provisions of Section 7.03
of the Agreement. Should the Trustee receive notice in writing from any
owner of Bonds of an event requiring redemption of the Bonds, notice
thereof shall be given to Company and Issuer.
ARTICLE V
Bond Fund
Section 5.01.The Bond Fund. There is hereby created the Bond
Fund, which shall be held by Trustee. Concurrently with the delivery of
Bonds to the purchasers thereof, there shall be paid to Trustee for
deposit in the Bond Fund, from the proceeds of the sale of Bonds, the
interest accrued on the Bonds to date of delivery to the initial
purchasers, and such other amounts as may be specified by the Bond
Resolution authorizing the issuance of such Bonds. Issuer hereby directs
payment to Trustee of any and all amounts payable to Issuer under the
Agreement (except certain payments for compensation and indemnification of
Issuer to be paid to Issuer pursuant to Sections 4.04, 5.03, and 6.04
thereof). Trustee shall deposit in the Bond Fund such payments and other
moneys required to be deposited therein pursuant to the provisions of the
Agreement or this Indenture.
Section 5.02.Payment from Bond Fund. Trustee shall pay from
the moneys in the Bond Fund the interest on the Bonds as the same shall
become due and the principal of the Bonds as the same shall mature or be
called for redemption prior to stated maturity together with any premium
due thereon at the time of redemption.
Section 5.03.(a) Bond Fund Requirement. In accordance with
the Agreement all payments made by Company are to be made to Trustee for
deposit to the credit of the Bond Fund. Such payments, together with
other moneys available therefor in the Bond Fund, are calculated to
include (i) all interest scheduled to accrue on all Outstanding Bonds as
the same comes due, and (ii) the payment of the principal and premium, if
any, of the Outstanding Bonds as they shall mature or be redeemed.
(b) Disposition of Prepayments. Any prepayments made by
Company in accordance with Article VII of the Agreement shall be applied,
as Company shall direct, in accordance with the provisions of Section 4.05
hereof or credited against payments required under Section 3.04 of the
Agreement.
Section 5.04.(a)Funds Held in Trust. All moneys from time to
time received by Trustee and held in the Bond Fund shall be held in trust
by Trustee for the benefit of the owners of the Bonds entitled to be paid
therefrom.
(b) Nonpresentment of Bonds. In the event any Bond shall not
be presented for payment when the principal thereof becomes due, either at
maturity, at the date fixed for redemption thereof, or otherwise, if funds
sufficient to pay such Bond shall have been made available to Trustee for
the benefit of the owner or owners thereof, all liability of Issuer to the
owner thereof for the payment of such Bond shall thereupon cease and be
completely discharged, and it shall be the duty of Trustee to hold such
funds, 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 his part under this Indenture
or on, or with respect to, said Bond; provided, that any funds which shall
be so held by Trustee, and which remain unclaimed by the owner of the Bond
not presented for payment for a period of two (2) years after the date on
which such Bond shall have become payable, shall upon request in writing
by Company be paid to Company and thereafter the owner of such Bond shall
look only to Company for payment and then only to the amount so received
without any interest thereon and Trustee shall have no responsibility with
respect to such moneys. To the extent applicable, Title 6 of the Texas
Property Code will apply to unclaimed moneys.
Section 5.05.Investment of Moneys in Certain Funds. Issuer
hereby gives its express written authority to Company to direct the
investment of the moneys in the Bond Fund by Trustee as hereinafter
provided. Issuer hereby finds and determines that the investment of any
money held as part of the Bond Fund in obligations hereinafter permitted
will yield the highest possible rate of return while providing necessary
protection of the principal consistent with the needs for such money under
this Indenture and the Agreement. Any money held as part of the Bond Fund
shall be invested or reinvested by Trustee upon the written direction of
Company acting through an Authorized Company Representative in:
(i) direct obligations of, or obligations guaranteed by, the
United States of America, and any bonds or other obligations of the
Federal National Mortgage Association (including Participation
Certificates), Government National Mortgage Association, Federal Farm
Credit System, Federal Home Loan Mortgage Corporation and Federal
Home Loan Bank System;
(ii) 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;
(iii) as otherwise permitted by law for such funds and approved
in writing by the Bond Insurer.
If not otherwise directed, Trustee shall invest cash balances in a money
market fund described in (ii) above. Trustee is specifically authorized
to implement its automated cash investment system to assure that cash on
hand is invested and to charge its normal cash management fees, which may
be deducted from income earned on investments.
In the event the laws of Texas are amended to allow investment
of these funds in other investments and securities, such additional
investments shall be authorized by this Section. The type, amount, and
maturity of all investments shall be as specified to Trustee upon the
direction of an Authorized Company Representative confirmed in writing.
The Trustee may make any and all such investments through its own
investment department or with any affiliate bank in each case acting in
its commercial banking capacity.
The securities purchased or investments made with the moneys in
the Bond Fund shall at all times be deemed a part of the Bond Fund. The
interest, including realized discount on securities purchased, received on
all such securities shall be deposited in or credited to the Bond Fund.
All such securities and investments shall be deposited with Trustee.
Trustee shall not be liable or responsible for any loss resulting from any
such investments or resulting from the redemption or sale of any such
investment as herein authorized. If at any time it shall become necessary
that some or all of the securities purchased with the moneys in the Bond
Fund be redeemed or sold in order to raise moneys necessary to comply with
the provisions of this Indenture, Trustee shall, without further
authorization than is herein contained, effect such redemption or sale.
Section 5.06.Moneys Secured. All moneys deposited with Trustee
and not invested in securities by Trustee pursuant to the provisions
hereof or to the extent not insured by the Federal Deposit Insurance
Corporation or other federal agency, shall continuously be secured, for
the benefit of Issuer and the owners of the Bonds, to the extent and as
required by law for security of Issuer's funds. Such securities shall be
deposited with Trustee.
Section 5.07.Bond Fund Balance. Except as provided in (b) of
Section 5.04, any amounts remaining in the Bond Fund, after all of the
Bonds shall be deemed to have been paid and discharged under the
provisions of this Indenture and the fees, charges, and expenses of Issuer
and the Trustee, and all other amounts required to be paid under this
Indenture shall have been paid, shall, upon the request of the Company, be
paid to Company, or to such person, body, or authority as may be entitled
to receive the same.
Section 5.08.Exemption from Federal Income Taxation. Issuer
will not knowingly take any action, or omit to take any action, 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 Company, as may rescind or otherwise negate such action or
omission.
Section 5.09.Special Rebate Fund. (a) A Special Rebate Fund
is hereby established by Issuer. Such Special 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 any
Bondholder. The Special Rebate Fund is established for the purpose of
complying with section 148 of the Code and the Regulations.
(b) On the fifth anniversary of the date of issuance of the
Bonds and on each fifth anniversary thereafter, Trustee shall receive from
Company a computation of the amount of Excess Earnings (as hereinafter
defined), if any, for the period beginning on the date of delivery of the
Bonds and ending at the close of each such fifth Bond Year (as hereinafter
defined) and transfer an amount equal to the difference, if any, between
the amount then in the Special 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. If, at the close of any Bond Year, the amount in the Special
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 Special Rebate Fund
and paid to Company to be used 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 terms 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) Trustee shall pay to the United States of America at least
once every five years 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.
Trustee shall pay to the United States of America not later than 60 days
after the Bonds have been paid in full 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 5.09 shall be determined by Company within thirty days
after each successive fifth anniversary date of the date of issuance of
the Bonds. By such date, Company shall also notify, in writing, Trustee
and Issuer of the determinations Company has made and the payment to be
made pursuant to the provisions of this section. Upon written request of
any registered owner of Bonds, Company 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) Trustee shall maintain a record of the periodic
determinations by Company 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.
(g) The provisions of this Section 5.09 shall not apply to
Bonds to the extent that such Bonds qualify for the exceptions to rebate
set forth in Section 148(f)(4)(B) of the Code.
ARTICLE VI
Application of Proceeds
Section 6.01.Application of Original Proceeds of Bonds. The
proceeds of the Bonds delivered to Trustee hereunder shall be applied on
the date of delivery of the Bonds by Trustee as follows:
(a) deposit in the Bond Fund, a sum equal to the accrued
interest, if any, paid by the initial purchasers of the Bonds.
(b) transfer to the Prior Trustee for the 1984 Bonds, for
deposit in a separate account of the bond fund established pursuant to
Article V of the 1984 Indenture, for the purpose of refunding all of the
outstanding 1984 Bonds, $68,870,000 of such proceeds.
(c) transfer to the Prior Trustee for the 1985A Bonds, for
deposit in a separate account of the bond fund established pursuant to
Article V of the 1985A Indenture, for the purpose of refunding all of the
outstanding 1985A Bonds, $31,765,000 of such proceeds.
Section 6.02.Consideration for Refunding. Issuer hereby finds
that the refunding of all of the outstanding 1984 Bonds and the
outstanding 1985A Bonds will result in substantial gross savings and
present value savings on debt service on the 1984 Bonds and 1985A Bonds.
ARTICLE VII
General Covenants
Section 7.01.Intentionally Omitted.
Section 7.02.Payment of Principal and Interest. Solely from
the source pledged to the payment of the Bonds, Issuer will duly and
punctually pay or cause to be paid the principal of, premium, if any, and
interest on every Bond, on the date and at the place and in the manner
specified in the Bonds according to the true intent and meaning thereof,
and Issuer will faithfully do and perform and at all times fully observe
any and all covenants, undertakings, and provisions contained herein or in
any Bond.
Section 7.03.Authority of Issuer and Preservation of Rights.
Issuer represents that it is a conservation and reclamation district, and
a governmental agency and body politic and corporate, duly created,
organized, and existing under the Constitution and laws of the State of
Texas and a "district" as such term is defined in the Acts, and has proper
authority to refund all or a portion of the Prior Bonds, to issue the
Bonds, and to pledge the revenues in the manner and form as herein done or
intended, and that all corporate action on its part to that end has been
duly and validly taken; and will use its best efforts to maintain,
preserve, and renew all the rights, powers, privileges, and franchises
owned by it. Issuer will at all times maintain a lawful Board, and at all
times function and act in the best interest of the Bondholders.
Section 7.04.Installment Payment Agreement. Issuer will comply
with, and take all reasonable and lawful measures to enforce, the terms of
the Agreement. So long as any Bond is Outstanding, Issuer will require
Company to pay, or cause to be paid, all of the payments and other costs
and charges payable by Company under the Agreement; Issuer will not enter
into any agreement with Company amending the Agreement or any agreements
supplemental thereto or constituting additional agreements which will
effect any reduction in the payments required to be paid to Issuer
thereunder; Issuer will require Company to observe faithfully all of its
covenants and agreements under the Agreement and all agreements
supplemental thereto, additional agreements, and agreements amending any
of the foregoing; and, in case Company shall fail to make such payments or
observe said covenants and agreements, Issuer will institute and prosecute
all such legal proceedings as may be appropriate for the protection of the
owners of the Bonds. Trustee shall have full right and authority to
enforce the rights of Issuer under the Agreement assigned by this
Indenture, and Issuer covenants that, prior to its bringing any action to
enforce such rights, Issuer will give Trustee reasonable notice and
Trustee shall have the right to participate in and, if it so desires,
control such action.
Section 7.05.Further Assurances. Issuer covenants that it will
from time to time execute and deliver such further instruments, will
perform all covenants, undertakings, stipulations, and provisions
contained in this Indenture and take such further action as may be
reasonable and as may be required to carry out the purpose of this Inden-
ture; provided, however, that no such instruments or action shall pledge
the credit or taxing power of the State of Texas, Issuer, or any political
subdivision of said State.
Section 7.06.Extension of Bonds. In order to prevent any
accumulation of claims for interest after maturity, Issuer will not
directly or indirectly extend or assent to the extension of the time of
payment of any claims for interest on any of the Bonds and will not
directly or indirectly be a party to or approve any such arrangement by
purchasing or funding such claims for interest or in any other manner. In
case any such claim for interest shall be extended or funded in violation
hereof, such claim for interest shall not be entitled, in case of any
default hereunder, to the benefit or security of this Indenture except
subject to the prior payment in full of the principal of all other Bonds
issued and Outstanding hereunder, and of all claims for interest which
shall not have been so extended or funded.
Section 7.07.Reports. Issuer shall cause Company to furnish to
Trustee a copy of its annual report to its preferred shareholders at the
same time it is made available to such shareholders.
Section 7.08.Further Actions by Issuer and Trustee. Issuer and
Trustee mutually covenant that they will, from time to time, each upon the
written request of the other, take such further action as may be
reasonable and as may be required by the other to carry out the purposes
of this Indenture; provided, however, that no such action shall impose any
personal liability on any director, officer, employee, agent, or
representative of Issuer, and provided further, that Trustee shall have no
obligation to take any action which, in the opinion of Trustee, would
impose any personal or corporate liability on Trustee or any officer,
employee, agent, or representative of Trustee.
Section 7.09.Paying Agents. Issuer hereby designates Trustee
as the original Paying Agent under this Indenture. It shall not be
necessary to name a Paying Agent or Paying Agents in addition to Trustee.
Issuer may at any time, from time to time, appoint a different Paying
Agent for the Bonds.
ARTICLE VIII
Defaults and Remedies
Section 8.01.Definition of "Event of Default". The following
shall be "events of default" under this Indenture and the term "Event of
Default" shall mean, whenever it is used in this Indenture, any one or
more of the following events:
(a) payment of the principal of and premium, if any, on any of
the Bonds shall not be made when the same shall become due and
payable at maturity, upon redemption or otherwise;
(b) payment of an installment of interest on any of the Bonds
shall not be made when the same shall become due and payable and such
failure shall continue for a period of sixty (60) days;
(c) there shall be an Event of Default as defined in the
Agreement; or
(d) Issuer shall default in the due and punctual performance of
any other of the covenants, conditions, agreements, and provisions
contained in the Bonds or in this Indenture on the part of Issuer to
be performed, and such default shall continue for ninety (90) days
after written notice specifying such default and requiring the same
to be remedied shall have been given to Issuer and Company by Trustee,
which may give such notice in its discretion and shall give such
notice at the written request of the owners of not less than 25% in
aggregate principal amount of the Bonds then Outstanding.
With regard to any Event of Default concerning which notice is
given to Issuer and Company under Section 8.01(d), Issuer hereby grants
Company full authority for the account of Issuer to the extent permitted
by law to cure such default; provided, however, if said default be such
that it cannot be corrected within the ninety (90) day period, it shall
not constitute an Event of Default under Section 8.01(d) if corrective
action is instituted by Issuer or Company within the ninety (90) day
period and diligently pursued until the default is corrected. With regard
to any Event of Default, Trustee shall immediately give telephonic notice
confirmed by writing to Issuer and Company specifying such Event of
Default.
Should any Event of Default occur and be continuing, then
Trustee may, and upon written request of the owners of not less than 25%
in aggregate principal amount of the Bonds then Outstanding shall,
provided that written notice of the default has been delivered to Issuer
and Company by Trustee, declare the principal of all Bonds then
Outstanding to be due and payable immediately, and upon such declaration
the said principal, together with interest accrued thereon, shall become
due and payable immediately at the place of payment provided therein
without any presentment, protest, demand, or other notice of any kind, all
of which are hereby waived by Issuer, anything in this Indenture or in
said Bonds to the contrary notwithstanding, and interest shall accrue at
the highest rate borne by any Outstanding Bonds to the extent permitted by
law, on the amount declared to be due and payable from the date of such
declaration until payment is made in full.
The above provisions, however, are subject to the condition
that if, after the principal of said Bonds shall have been so declared to
be due and payable, the principal of the Bonds and all arrears of interest
upon the Bonds (except the principal of, and interest on, the Bonds which
by such declaration shall have become due and payable), and interest on
overdue installments of principal and interest, to the extent legally
permissible, and all other sums payable under this Indenture shall have
been paid by or on behalf of Issuer and Company, and Issuer and Company
also shall have performed all other things in respect of which they may
have been in default hereunder or under the Agreement and shall have paid
or shall have caused to be paid the reasonable charges of Trustee and its
counsel and of the owners of said Bonds, including reasonable attorney's
fees paid or incurred, and all other Trustee Expenses shall have been
paid, then and in every such case, such default may, but is not obligated
to be waived and such declaration and its consequences rescinded and
annulled by Trustee by written notice to Issuer and Company, provided,
that if such declaration was requested by the owners of not less than
twenty-five per cent (25%) in aggregate principal amount of the
Outstanding Bonds, such waiver, rescission, and annulment shall have been
consented to by the owners of a majority in aggregate principal amount of
the Bonds then Outstanding, which consent shall be binding upon Trustee
and upon all owners of Bonds issued hereunder, but no such waiver,
rescission, and annulment shall extend to or affect any subsequent default
or impair any right or remedy consequent thereon.
Section 8.02.Declaration of Principal and Interest Due. In any
case in which under the provisions of Section 8.01 Trustee has the right
to declare the principal of all Bonds then Outstanding to be due and
payable immediately, Trustee, as the assignee and pledgee of all the
right, title, and interest of Issuer in and to the Agreement, may (a)
enforce each and every right granted to Issuer under the Agreement and (b)
pursue any other legal or equitable remedy as may, in the opinion of
Trustee, be most effectual to protect and enforce the rights of the
Bondholders and Trustee hereunder. In the event Trustee declares the
principal of all Bonds then Outstanding to be due and payable, Trustee
shall concurrently therewith declare all payments to be made under the
Agreement to be due and payable, provided, Trustee has the authority to do
so by virtue of the occurrence and continuance of an Event of Default
under the Agreement.
Section 8.03.Enforcement of Indenture and Bonds. Upon the
happening of any Event of Default then and in every such case Trustee in
its discretion may, and upon the written request of the owners of not less
than twenty-five per cent (25%) in aggregate principal amount of the Bonds
then Outstanding and upon receipt of indemnity to its satisfaction shall,
in its own right:
(a) by mandamus, or other suit, action, or proceeding at law or
in equity, enforce all rights of the Bondholders, and require Issuer
or Company to carry out any other agreements with or for the benefit
of the Bondholders and to perform its or their duties under the Act,
the Indenture and the Agreement;
(b) bring suit upon the Bonds;
(c) by action or suit at law or in equity require Issuer to
account as if it were the trustee of an express trust for the
Bondholders; or
(d) by action or suit at law or in equity enjoin any acts or
things which may be unlawful or in violation of the rights of the
Bondholders.
Section 8.04. Restoration. In case any proceeding taken by
Trustee on account of any default shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to
Trustee, then and in every case Issuer, Trustee, and the Bondholders shall
be restored to their former positions and rights hereunder, respectively,
and all rights, remedies, and powers of Trustee shall continue as though
no such proceeding had been taken.
Section 8.05. Direction by Majority in Principal Amount of
Bondholders. (a) Anything in this Indenture to the contrary
notwithstanding, the owners of a majority in aggregate principal amount of
the Bonds then Outstanding hereunder shall have the right, by an
instrument in writing executed and delivered to Trustee, to direct the
method and place of conducting all remedial proceedings to be taken by
Trustee hereunder. Such directive must be in accordance with law and this
Indenture.
(b) In the event Trustee shall receive conflicting or
inconsistent requests or indemnity from two or more groups of owners of
the Bonds, each representing less than a majority of the aggregate
principal amount of the Bonds then Outstanding, Trustee in its sole
discretion may determine what action, if any, shall be taken,
notwithstanding any other provision of this Indenture.
Section 8.06.Rights by Owner. (a) No owner of any of the
Bonds shall have any right to institute any suit, action, or proceeding in
equity or at law for the execution of any trust hereunder, or any other
remedy hereunder or on said Bonds, unless such owner previously shall have
given to Trustee written notice of an Event of Default as hereinabove
provided and unless also the owners of not less than twenty-five per cent
(25%) in aggregate principal amount of the Bonds then Outstanding shall
have made written request of Trustee, after the right to exercise such
powers or rights of action, as the case may be, shall have accrued, and
shall have afforded Trustee a reasonable opportunity either to proceed to
exercise the powers hereinabove granted, or to institute such action,
suit, or proceeding in its or their name; nor unless there also shall have
been offered to Trustee security and indemnity satisfactory to it against
the costs, expenses, fees, losses and liabilities to be incurred therein
or thereby, and Trustee shall have refused or neglected to comply with
such request within a reasonable time; and such notification, request, and
offer of indemnity are hereby declared in every such case, at the option
of Trustee, to be conditions precedent to the execution of the powers and
trusts of this Indenture or to any other remedy hereunder; it being
understood and intended that no one or more owners of the Bonds hereby
secured shall have any right in any manner whatever by his or their action
to affect, disturb, or prejudice the security of this Indenture, or to
enforce any right hereunder or under the Bonds, except in the manner
herein provided, and that all proceedings at law or in equity shall be
instituted, had, and maintained in the manner herein provided and for the
equal and ratable benefit of all owners of Outstanding Bonds. Nothing
contained in this Indenture shall, however, affect or impair the right of
any Bondholder to enforce the payment of the principal of, premium, if
any, and interest on any Bond at and after the maturity thereof, or the
obligation of Issuer to pay the principal of and any premium and interest
on each of the Bonds issued hereunder to the respective owners thereof at
the time and place, from the source, and in the manner in said Bonds
expressed.
(b) Notwithstanding any other provision of this Indenture to
the contrary, any beneficial owner of the Bonds shall have the right to
specifically enforce the obligation of Company to comply with Section 5.01
of the Agreement.
Section 8.07. Enforcement of Remedies without Possession of
Bonds. All rights of action under this Indenture or under any of the
Bonds secured hereby which are enforceable by Trustee may be enforced by
it without the possession of any of the Bonds or the production thereof on
the trial or other proceedings relative thereto, and any such suit,
action, or proceeding instituted by Trustee shall be brought in its name
for the equal and ratable benefit of the owners of the Bonds, subject to
the provisions of this Indenture.
Section 8.08.Remedies Not Exclusive. No remedy herein
conferred upon or reserved to Trustee or to the owners of the Bonds is
intended to be exclusive of any other remedy or remedies, and each such
remedy shall be cumulative, and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by
statutes, including the Acts.
Section 8.09.Delay by Trustee. No delay or omission of Trustee
or of any owner of the Bonds to exercise any right or power accruing upon
any Event of Default shall impair any such right or power or shall be
construed to be a waiver of any such Event of Default, or an acquiescence
therein; and every power and remedy given by this Article to Trustee and
to the owners of the Bonds, respectively, may be exercised from time to
time and as often as may be deemed expedient.
Section 8.10.Application of Moneys. Any moneys received by
Trustee or by any receiver pursuant to this Article shall be applied:
First: to the payment of the fees, counsel fees, and advances
and
expenses of 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.
Second: (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 rate borne by any Outstanding Bonds, and, if the amounts available
shall be insufficient to pay in full any particular installment, then such
payments to be made ratably according to the amounts due on such
installment 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 rate borne by any Outstanding Bonds, and, if
the amounts available shall not be sufficient to pay in full Bonds due on
any particular date together with such interest, then such payments,
respectively, to be made ratably according to the amount of principal due
on such date to the persons or parties entitled thereto, without
discrimination or preference.
Third: to the payment of 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.
Section 8.11.Unlawful Grants of Power. It is the purpose and
intention of this Article to provide rights and remedies to Trustee and
Bondholders which may be lawfully granted, but should any right or remedy
herein granted be held to be unlawful, Trustee and the Bondholders shall
be entitled, as above set forth, to every other right and remedy provided
in this Indenture.
Section 8.12.Payments under Municipal Bond Insurance Policy.
So long as the Municipal Bond Insurance Policy shall be in full force and
effect, Issuer and Trustee hereby agree to comply with the following
provisions:
(a) If 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 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) 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, 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, 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 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 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 Trustee from proceeds of the
Municipal Bond Insurance Policy shall not be considered to discharge
the obligation of Issuer or 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 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 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 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 IX
Defeasance
Section 9.01.Release of Indenture. When all of the Bonds shall
have been paid, or provided for, and discharged, and there shall have been
paid, or provision shall have been made for paying, all fees, expenses and
charges of Trustee, Issuer, and any Paying Agent due or to become due
through the date on which the last of the Bonds is retired, then this
Indenture shall cease, terminate, and become null and void, and thereupon
Trustee shall release this Indenture including the cancellation and
discharge of the lien hereof, and execute and deliver to Issuer such
instruments in writing as shall have been provided by the Issuer and be
requisite to satisfy and discharge the lien hereof and to enter on the
records such satisfaction and discharge as may be reasonably required by
Issuer, and Trustee shall reassign and transfer, assign, and deliver to
Issuer the Trust Estate at the time subject to the lien of this Indenture
which may then be in its possession, except such moneys and/or "Gov-
ernmental Obligations", hereinafter defined in Section 9.02, as are held
by Trustee for the payment of the principal of, the interest on, and the
premium, if any, due on the retirement of the Bonds. After such payment
and discharge, the Bonds shall not be entitled to any benefits of this
Indenture, except the right to be paid from the moneys and/or Governmental
Obligations so held by Trustee for the payment thereof. If such payment
and discharge, including the fees, expenses and charges indicated above,
or provision therefor, have been made with respect to all the Bonds, the
interest of Trustee hereunder shall cease in respect of such Bonds and
such Bonds shall not be entitled to any benefits of this Indenture, except
the right to be paid from the moneys and/or Governmental Obligations so
held by Trustee for the payment thereof.
Notwithstanding the satisfaction and discharge of this
Indenture, Trustee shall continue to be obligated to hold in trust any
moneys or investments then held by Trustee for the payment of the
principal of, premium, if any, and interest on the Bonds, to pay to the
owners of Bonds the funds so held by Trustee as and when such payment
becomes due, and to pay over to Company any amounts required to be paid to
Company in accordance with Sections 5.04(b), 5.07, 8.10, and 9.02.
Notwithstanding the satisfaction and discharge of this
Indenture, the provisions of Sections 2.07 and 2.08, and Article X hereof
shall remain in full force and effect and Trustee shall, so long as the
Bonds shall not have matured in accordance with their terms, upon
redemption, or otherwise (and thereafter with respect to rights and
liabilities accrued prior to such maturity), be entitled to exercise
rights and remedies under the Agreement for the benefit of owners of the
Bonds.
Section 9.02.(a) Satisfaction of Indenture. Bonds shall be
deemed to have been paid and discharged within the meaning of Section
9.01:
(1) if Trustee and any Paying Agent shall hold, in trust for
and irrevocably committed thereto, sufficient cash, and/or
(2) to the extent permitted by law, if Trustee shall hold, in
trust for and irrevocably committed thereto, Governmental
Obligations, as defined hereinafter in this Section, certified by an
independent public accounting firm of national reputation to be of
such maturities and interest payment dates and to bear such interest
as will, without further investment or reinvestment of either the
principal amount thereof or the interest earnings therefrom (likewise
to be held in trust and committed, except as hereinafter provided),
be sufficient together with any moneys referred to in subsection
(a)(1) above,
for the payment, at their maturity or redemption date, of the principal
thereof, together with the premium, if any, and interest accrued to the
date of maturity or redemption, as the case may be, or if default in such
payments shall have occurred on such date then to the date of the tender
of such payment; provided, that if any Bonds are to be redeemed prior to
the maturity thereof, notice of such redemption shall have been duly given
or provision satisfactory to Trustee shall have been duly made for the
giving of such notice. Any moneys held in accordance with the provisions
of this Section shall be invested, at the request and upon the written
direction of Issuer, after consultation with an Authorized Company
Representative, subject to the limitations of (b) below, only in
Governmental Obligations, as defined hereinafter in this Section, the
maturities or redemption dates of which, when Trustee becomes the owner
thereof, shall coincide as nearly as practicable with, but not later than,
the time or times at which said moneys will be required for the aforesaid
purposes.
(b) No Arbitrage. Issuer hereby covenants that no investment
will be made or accepted hereunder and no use will be made of any moneys
or such investments which would cause the Bonds to be classified as
arbitrage bonds within the meaning of Section 148 of the Code.
(c) Advance Funding and Defeasance. For the purposes of this
Article, the term "Governmental Obligations" shall mean direct general
obligations of, or obligations the payment of the principal and interest
of which are unconditionally guaranteed by, the United States of America
which are noncallable and which at the time of investment are legal
investments under the laws of Texas for the moneys proposed to be invested
therein.
Notwithstanding any provision of any other Article of this
Indenture which may be contrary to the provisions of this Article, all
moneys or Governmental Obligations set aside and held in trust pursuant to
the provisions of this Article for the payment of Bonds (including
interest and premium thereon, if any) shall be applied to and used solely
for the payment of the particular Bonds (including interest and premium
thereon, if any), or any Bonds exchanged pursuant to Section 2.07 or 2.10,
with respect to which such moneys and Governmental Obligations have been
so set aside in trust. When all the Bonds in respect of which such moneys
and Governmental Obligations have been deposited shall be deemed to have
been paid and discharged, all moneys and Governmental Obligations received
or held pursuant to the provisions of this Article which, in the opinion
of an independent public accounting firm of national reputation, are not
needed for the payment of any other obligation hereunder, shall be applied
in accordance with Section 5.07.
Section 9.03.Reliance on Discharge. Any discharge,
satisfaction, and release of this Indenture and the lien thereof by the
Trustee which recites it has been made pursuant to the provisions of this
Article shall be conclusive evidence thereof, shall be binding upon the
parties hereto and the owners of all Bonds then Outstanding hereunder, and
may be relied upon by any persons whomsoever, without the production of
the cancelled Bonds and without the necessity to inquire as to the power
or authority of the Trustee to give such discharge, satisfaction, and
release or to see the application of any moneys paid or deposited in
respect thereof.
Section 9.04.Defeasance. 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 and (ii) Bond Insurer and 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 Bond Insurer, and
(d) a copy of an opinion of bond counsel, addressed to Bond Insurer and
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 Issuer to the holders of such Bonds
have been discharged and satisfied.
ARTICLE X
Concerning the Trustee
Section 10.01. Acceptance of Trusts and Conditions of
Acceptance. Trustee accepts and agrees to execute the trusts hereby
created, but only upon the additional terms set forth in this Article, to
all of which the parties hereto and the respective owners of the Bonds
agree.
Section 10.02. Recitals Not Trustee's. The recitals,
statements, and representations in this Indenture or in the Bonds
contained, save only Trustee's authentication upon the Bonds, shall be
taken and construed as made by and on the part of Issuer, and not by
Trustee, and Trustee assumes and shall be under no responsibility or
obligation for the correctness of same.
Section 10.03. Advice. Trustee may execute any of the trusts
or powers hereof and perform the duties required of it by or through
attorneys, agents, receivers, or employees, and shall be entitled to
advice of counsel concerning all matters of trust hereof and its duty
hereunder, and Trustee shall not be answerable for the default or
misconduct of any such attorney, agent, or employee selected by it with
reasonable care. Trustee shall not be answerable for the exercise of any
discretion or power under this Indenture nor for anything whatsoever in
connection with the Trust Estate except only its own willful misconduct or
negligence.
Section 10.04. Fees. Issuer has agreed with Company in the
Agreement that Company is to pay to Trustee:
(i) an amount equal to the annual fee of Trustee, as trustee,
for the ordinary services of Trustee to be rendered and its ordinary
expenses to be incurred, under the Indenture during the next
succeeding twelve-month period;
(ii) the reasonable fees, expenses and charges of Trustee, as
Bond Registrar and Paying Agent, as provided in the Indenture during
each twelve-month period, including reasonable fees and expenses of
counsel of its selection; and
(iii) the reasonable fees, expenses and charges of Trustee,
including reasonable fees and expenses of counsel of its selection,
for necessary extraordinary services rendered by it and extraordinary
expenses incurred by it under this Indenture as and when the same
become due, including, without limitation, any fees, expenses or
charges due to any change from the book-entry only system described
in Sections 2.12 and 2.13 hereof; provided, that Company may, without
creating a default under the Agreement, contest in good faith the
necessity for any such extraordinary services and extraordinary
expenses and the reasonableness of any such fees, charges, or
expenses.
Therefore, all payments due Trustee for fees or services hereunder and for
expenses incurred shall be received from Company, and no such fees or
expenses shall be payable by Issuer. Notwithstanding anything to the
contrary contained herein; Trustee shall have a lien and security
interest, with right of payment prior to payment on the Bonds, upon the
Trust Estate for the payment of the Trustee Expenses and may, to the
extent the same have not been paid by Company, reimburse itself out of the
Trust Estate for the Trustee Expenses.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Article VIII, the
expenses (including the reasonable charges and expenses of its counsel)
and the compensation for the services are intended to constitute expenses
of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
The provisions of this Section shall survive the termination of
this Indenture.
Section 10.05. Insurance. Trustee shall be under no duty to
effect or to renew any policies of insurance, or to report or file claims
or proofs of loss for any loss or damage insured against or which may
occur; nor shall Trustee be liable as an insurer.
Section 10.06. Notice. Trustee shall not be required to take
notice, or in the absence of actual knowledge, be deemed to have notice of
any default under this Indenture, other than a default under Section
8.01(a) or (b), unless specifically notified in writing of such default by
the owners of at least twenty-five per cent (25%) in aggregate principal
amount of the Bonds then Outstanding, and in the absence of any such
notice, Trustee may conclusively assume there is no such default. Trustee
may, however, at any time, in its discretion, require of Issuer full
information and advice as to the performance of any of the covenants,
conditions, and agreements contained herein, and require of Company full
information and advice as to the performance of any of the covenants,
conditions, and agreements contained in the Agreement.
Section 10.07. Request; Indemnity. Trustee shall be under no
obligation to take any action in respect of any default or otherwise, or
toward the execution or enforcement of any of the trusts hereby created,
or to institute, appear in, or defend any suit or other proceeding in
connection therewith, unless requested in writing so to do by the owners
of at least twenty-five per cent (25%) in aggregate principal amount of
the Bonds then Outstanding and, if in its opinion such action may tend to
involve it in expense or liability, unless furnished, from time to time as
often as it may require, with security and indemnity satisfactory to it;
but the foregoing provisions are intended only for the protection of
Trustee, and shall not affect any discretion or power given by any
provisions of this Indenture to Trustee to take action in respect of any
default without such notice or request from the Bondholders, or without
such security or indemnity.
Section 10.08. Reliance by Trustee. Trustee shall be protected
and shall incur no liability in acting or proceeding in good faith upon
any resolution, notice, telegram, request, consent, waiver, certificate,
statement, affidavit, voucher, bond, requisition, or other paper or
document which it shall in good faith believe to be genuine and to have
been passed or signed by the proper board or person or to have been
prepared and furnished pursuant to any of the provisions of this
Indenture, and Trustee shall be under no duty to make any investigation or
inquiry as to any statements contained or matters referred to in any such
instrument, but may accept and rely upon the same as conclusive evidence
of the truth and accuracy of such statements. Trustee shall not be bound
to recognize any person as an owner of any Bond or to take any action at
his request unless such Bond shall be deposited with Trustee or
satisfactory evidence of the ownership of such Bond is furnished to
Trustee.
Section 10.09. Ownership of Bonds. Trustee may in good faith
buy, sell, own, hold, and deal in any of the Bonds issued hereunder and
secured by this Indenture, and may join in any action which any Bondholder
may be entitled to take with like effect as if Trustee were not a party to
this Indenture. Trustee, either as principal or agent, may also engage in
or be interested in any financial or other transaction with Issuer or
Company, and may act as depository, trustee, or agent for, any committee
or body of Bondholders secured hereby or other obligations of Issuer as
freely as if it were not Trustee hereunder.
Section 10.10. Interest on Moneys Held. Trustee may allow and
credit interest upon any moneys which it may at any time receive under any
of the provisions of this Indenture, at such rate, if any, as it
customarily allows upon similar funds of similar size and under similar
conditions. All interest allowed on any such moneys shall be credited as
provided in Article V with respect to interest on investments.
Section 10.11. Construction. Trustee may construe any of the
provisions of this Indenture insofar as the same may appear to be
ambiguous or inconsistent with any other provision hereof, and any
construction of any such provisions hereof by Trustee in good faith shall
be binding upon the Bondholders.
Section 10.12. Resignation of Trustee. Trustee may resign and
be discharged of the trusts created by this Indenture by executing an
instrument in writing resigning such trust and specifying the date when
such resignation shall take effect, and filing the same with the Secretary
of Issuer and with the Secretary of Company not less than sixty (60) days
before the date specified in such instrument when such resignation shall
take effect, and by giving notice to the registered owner of each of the
Outstanding Bonds of such resignation by first class mail, in a sealed
envelope, postpaid, addressed to each registered owner at his address
recorded on the bond registration books not less than three (3) weeks
prior to the date specified in such notice when such resignation shall
take effect. Such resignation shall take effect on the day specified in
such instrument and notice, unless previously a successor trustee shall be
appointed as hereinafter provided, in which event such resignation shall
take effect immediately on the appointment of such successor trustee.
Section 10.13. Removal of Trustee. Trustee or any trustee
hereafter appointed hereunder may be removed at any time by an instrument
in writing, appointing a successor trustee, filed with the trustee so
removed and executed by the owners of a majority in aggregate principal
amount of the Bonds then Outstanding.
Section 10.14. Appointment of Successor Trustee. In case at
any time Trustee, or any trustee hereafter appointed, shall resign, or
shall be removed, or shall be dissolved, or if its property or affairs
shall be taken under the control of any state or federal court or admin-
istrative body because of insolvency, or for any other reason, a vacancy
shall forthwith and ipso facto exist in the office of trustee, a successor
may be appointed by the owners of a majority in aggregate principal amount
of the Bonds then Outstanding, by an instrument or instruments in writing
filed with the Secretary of the Board of Issuer, signed by such
Bondholders or by their attorney-in-fact duly authorized. Copies of each
instrument shall be promptly delivered by Issuer to the predecessor
trustee and to the trustee so appointed.
Until a successor trustee shall be appointed by the Bondholders
as herein authorized, Issuer, by an instrument authorized by resolution of
its Board, may appoint a trustee to fill such vacancy. After any
appointment by Issuer or the Bondholders, Issuer shall cause notice of
such appointment to be immediately mailed to the registered owner of each
of the Outstanding Bonds by first class mail, in a sealed envelope,
postpaid, addressed to each registered owner at his address recorded on
the bond registration books. Any new trustee so appointed by Issuer shall
immediately and without further act be superseded by a trustee appointed
by the Bondholders in the manner above provided.
Section 10.15. Qualification of Successor Trustee. Every
successor in the trust appointed in pursuance of the foregoing provisions
of this Article shall be a trust company, a bank and trust company or a
national bank with trust powers, having a combined capital and surplus of
at least Two Hundred Fifty Million Dollars ($250,000,000) if there be such
a trust company, bank and trust company, or national bank willing and able
to accept the trust on reasonable and customary terms.
Section 10.16. Court Appointment. In case at any time Trustee
or any trustee hereafter appointed shall resign and no appointment of a
successor trustee shall be made pursuant to the foregoing provisions of
this Article prior to the date specified in the notice of resignation as
the date when such resignation shall take effect, the retiring trustee may
forthwith apply to a court of competent jurisdiction for the appointment
of a successor trustee. If, in a proper case, no appointment of a
successor trustee shall be made pursuant to the foregoing provisions of
this Article within two (2) months after a vacancy shall have occurred in
the office of Trustee, the retiring Trustee or any Bondholder may apply to
any court of competent jurisdiction to appoint a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper,
prescribe and appoint a successor trustee.
Section 10.17. Transfer to Successor Trustee. Any successor
trustee appointed hereunder shall execute, acknowledge, and deliver to
Issuer an instrument accepting such appointment hereunder, and thereupon
such successor trustee, without any further act, deed, or conveyance,
shall become duly vested with all the estates, property, rights, powers,
trusts, duties, and obligations of its predecessor in the trust hereunder,
with like effect as if originally named Trustee herein. Upon request of
such trustee, the trustee ceasing to act and Issuer shall execute and
deliver an instrument transferring to such successor trustee all the
estates, property, rights, powers, and trusts hereunder of the trustee so
ceasing to act; and the trustee so ceasing to act shall, after payment of
all fees and expenses due it, pay over to the successor trustee all moneys
and other assets at the time held by it hereunder.
Section 10.18. Merger or Consolidation of the Trustee. Any
corporation into which any trustee hereunder may be merged or with which
it may be consolidated, or any corporation resulting from any merger or
consolidation to which any trustee hereunder shall be a party, shall be
the successor trustee under this Indenture, without the execution or
filing of any paper or any further act on the part of the parties hereto,
anything to the contrary notwithstanding.
Section 10.19. Prudent Man Rule. Notwithstanding any other
provisions of this Article, Trustee shall, during the existence of an
Event of Default known to Trustee, exercise such of the rights and powers
vested in it by this Indenture and use the same degree of skill and care
in their exercise as a prudent man would use and exercise under the
circumstances in the conduct of his own affairs.
Section 10.20. Notice of Default to Registered Owners. Upon
the occurrence of an Event of Default hereunder (or an event which with
the passage of time or giving of notice or both would be an Event of
Default) to the knowledge of Trustee, Trustee shall within thirty (30)
days give written notice thereof by mail to each registered owner of Bonds
then Outstanding at his last address appearing upon the Bond registry
books of Issuer kept by Trustee, unless such Event of Default shall have
been cured before the giving of such notice.
Section 10.21. Judicial Proceedings. In any judicial
proceeding to which Issuer is party and which in the opinion of Trustee
and its counsel has a substantial bearing on the interests of the
Bondholders, Trustee, if permitted by the court having jurisdiction in the
premises, may, but shall not be obligated to, intervene on behalf of the
owners of the Bonds and shall, upon receipt of indemnity satisfactory to
it, do so if requested in writing by the owners of at least twenty-five
per cent (25%) in aggregate principal amount of Bonds then Outstanding.
Section 10.22. Trustee's Performance. The duties and
obligations of Trustee shall be determined solely by the express
provisions of this Indenture, and Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Indenture, and no implied covenants or obligations shall be
read into this Indenture against Trustee. Trustee is not a party to the
Agreement and notwithstanding any provision herein or therein, Trustee
shall have no duty or obligation to Company except as may be expressly set
forth in this Indenture.
Section 10.23. Trustee to Record. Trustee shall (1) at
closing, cause the Agreement, this Indenture, any additional security
instruments filed with Trustee as additional security for the Bonds, each
amendment and supplement to any such instrument, and a memorandum,
financing statement, or continuation statement with respect to such
instruments, amendments, or supplements to be filed, registered, and
recorded and to be refiled, reregistered, and rerecorded in such manner
and in such places as may be required by any present or future law in
order to publish notice of and fully to protect the lien of this Indenture
and to publish notice of and to protect the rights and security of the
owners of the Bonds and the rights of Trustee under the Agreement and this
Indenture and (2) perform or cause to be performed from time to time any
other act as required by law, and execute and file or cause to be executed
and filed any and all instruments of further assurance (including
financing statements with respect to any of such instruments) that may be
necessary for such publication and protection. Issuer shall, when so
requested by Trustee, execute all such instruments, memoranda, or
statements necessary to maintain, protect, or preserve the interests
assigned to Trustee under this Indenture. It is specifically agreed that
Trustee may rely upon opinions of counsel as to what, if any, filings are
necessary under this Section.
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 Trustee may reasonably require for the better assigning,
pledging, and confirming unto Trustee the Trust Estate assigned and the
revenues pledged hereunder.
ARTICLE XI
Modification of This Indenture and
Supplemental Indenture
Section 11.01. Modification by Issuer and Trustee. With
consent of Company, Issuer, when authorized by resolution of the Board,
and Trustee from time to time and at any time, subject to the conditions
and restrictions in this Indenture contained, may, without the consent of
the Bondholders, enter into an indenture or indentures supplemental
hereto, which thereafter shall form a part hereof, for any one or more of
the following purposes:
(a) To add to the covenants and agreements of Issuer contained
in this Indenture other covenants and agreements thereafter to be
observed, and to surrender any right or power herein reserved to or
conferred upon Issuer;
(b) To modify any of the provisions of this Indenture or
relieve Issuer from any of the obligations, conditions, or
restrictions herein contained; provided, that no such modification
shall be or become operative or effective which shall in any manner
impair any of the rights of the Bondholders or of Trustee; and
provided further, that Trustee may in its sole discretion decline to
enter into any such supplemental indenture which does not afford
adequate protection to Trustee when the same shall become operative;
(c) To cure any ambiguity or to cure, correct, or supplement
any defect or inconsistent provision contained in this Indenture or
in any supplemental indenture in a manner which, in the opinion of
Bond Counsel, is not adverse to the interests of the Bondowners;
(d) To make such provision in regard to matters or questions
arising under this Indenture as may be necessary or desirable and not
inconsistent with this Indenture and not, in the opinion of Bond
Counsel, adverse to the interests of the Bondholders; or
(e) To make any other change which, in the opinion of Bond
Counsel, does not materially adversely affect the rights of Issuer or
any Bondholder;
and Issuer hereby covenants that it will perform all the requirements of
any such supplemental indentures which may be in effect from time to time;
but no restriction or obligation imposed hereby or by any supplemental
indenture upon Issuer in respect of any of the Bonds then Outstanding
under this Indenture may, except as otherwise provided in Section 11.02,
be waived or modified by such supplemental indentures, or otherwise.
Nothing in this Article contained shall affect or limit the right or
obligation of Issuer to execute and deliver to Trustee any instrument of
further assurance or other instrument which elsewhere in this Indenture it
is provided shall be delivered to Trustee.
Section 11.02. Consent by Bondholders. Exclusive of the
purposes set forth in Section 11.01, from time to time the owners of not
less than a majority in aggregate principal amount of the Bonds affected
and at the time Outstanding, by an instrument or instruments in writing
signed by such owners and filed with Trustee, shall have power to assent
to and authorize any modification or alteration of any of the provisions
of this Indenture that shall be proposed by Issuer and consented to by
Trustee and Company; and any action herein authorized to be taken, with
the assent or authority given as aforesaid, shall be binding upon all of
the Bondholders hereby secured and upon Trustee as fully as though such
actions were specifically and expressly authorized by the terms of this
Indenture; provided that, without the consent of all Bondholders affected
and at the time Outstanding, no such modification or alteration shall
permit:
(a) the reduction of the percentage of Bonds, the consent of
the owners of which is required for any such modification or
alteration;
(b) the extension of the time or times of payment of the
principal of, premium, if any, or interest on any of the Bonds, or
the reduction in the principal amount thereof or in the rate of
interest or the amount of any premium thereon or any other
modification in the terms of payment of the principal thereof or
interest or premium thereon;
(c) the creation by Issuer of any lien ranking prior to or on a
parity with the lien of this Indenture;
(d) the giving of any preference of any Bond over any other
Bond; or
(e) the extension of any waiver of default to subsequent
defaults.
Any modification of the provisions of this Indenture so made as aforesaid
shall be set forth in a supplemental indenture between Trustee and Issuer
which shall, if deemed advisable by counsel, be recorded in the same
manner as this Indenture.
Section 11.03.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 10.07, 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, except amendments or supplements made
pursuant to Section 11.01 hereof. A copy of such amendment or supplement
shall be sent by 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 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, Trustee shall note Bond Insurer's rights as subrogee
on the registration books of Issuer maintained by 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) Trustee shall also notify Bond Insurer immediately upon
the resignation or removal of Trustee or the appointment of a successor
Trustee. 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.
Section 11.04. Execution of Supplemental Indentures. In
executing, or accepting the additional trust created by, any supplemental
indenture permitted by this Article or the modification thereby of the
trusts created by this Indenture, 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. Trustee may, but shall not be obligated to,
enter into any such supplemental indenture which affects Trustee's own
rights, duties or immunities under this Indenture or otherwise.
ARTICLE XII
Miscellaneous
Section 12.01. Successors and Assigns. In the event of the
dissolution of Issuer, all of the covenants, stipulations, promises, and
agreements in this Indenture contained, by or on behalf of, or for the
benefit of, Issuer, shall bind or inure to the benefit of the successors
of Issuer from time to time and any officer, board, commission, agency, or
instrumentality to whom or to which any power or duty of Issuer shall be
transferred.
Section 12.02. Parties, the Company and Bondholders Alone Have
Rights Under Indenture. Except as herein otherwise specifically provided,
nothing in this Indenture expressed or implied is intended or shall be
construed to confer upon any person, firm, or corporation other than the
parties hereto, the Company and the owners of the Bonds issued hereunder,
any right, remedy, or claim by reason of this Indenture, said Indenture
being intended to be for the sole and exclusive benefit of the parties
hereto, the Company and the owners of the Bonds issued hereunder.
Section 12.03. Survival of Valid Bonds. In case any one or
more of the provisions of this Indenture or of the Bonds issued hereunder
shall, for any reason, be held to be illegal or invalid, such illegality
or invalidity shall not affect any other provisions of this Indenture or
of said Bonds, but this Indenture and the Bonds shall be construed and
enforced as if such illegal or invalid provisions had not been contained
therein.
Section 12.04. Personal Liability. No covenant or agreement
contained in the Bonds or in this Indenture shall be deemed to be the
covenant or agreement of any member, agent, or employee of Issuer or
Trustee in his individual capacity, and neither the members of the Board
nor any official executing the Bonds shall be liable personally on the
Bonds or be subject to any personal liability or accountability by reason
of the issuance thereof.
Section 12.05. Notices. All notices, certificates, requests,
or other communications hereunder shall be sufficiently given and shall be
deemed given, unless otherwise required by this Indenture, when mailed by
first class mail, postage prepaid, addressed as follows: if to Issuer,
Matagorda County Navigation District Number One, 209 Fifth Street,
Palacios, Texas 77465, attention: General Manager; if to Company at the
address set forth in the Agreement; and if to Trustee, The Bank of New
York, 101 Barclay Street, 21st Floor, New York, New York 10286,
attention: Corporate Trust Trustee Administration.
A duplicate copy of each notice, certificate, request, or other
communication given hereunder to Issuer, Company, or Trustee shall also be
given to the others. Company, Issuer, and Trustee may, by written notice
given hereunder, designate any further or different addresses to which
subsequent notices, certificates, requests, or other communication shall
be sent.
Section 12.06. Counterparts. This Indenture may be executed in
any number of counterparts, each of which, when so executed and delivered,
shall be an original; but such counterparts shall together constitute but
one and the same instrument.
Section 12.07. Construction. The laws of the State of Texas
shall govern the construction of this Indenture and of all Bonds issued
hereunder except that the rights, duties and obligations of Trustee shall
be governed by the laws of the State of New York.
Section 12.08. Holidays. Whenever in this Indenture a duty or
payment is required to be performed or made or a notice given on a given
day of the month, and such day is not a Business Day, the required duty
shall be performed on the next succeeding day which is a Business Day.
Section 12.09. Instruments by Bondholders and Proof of
Ownership of Bonds. Any request, direction, consent, or other instrument
in writing required or permitted by this Indenture to be signed or
executed by Bondholders may be in any number of concurrent instruments of
similar tenor and may be signed or executed by such Bondholders in person
or by agent appointed by an instrument in writing. Proof of the execution
of any such instrument and of the ownership of Bonds shall be sufficient
for any purpose of this Indenture and shall be conclusive in favor of
Trustee with regard to any action taken by it under such instrument if
made in the following manner:
(a) The fact and date of the execution by any person of
any such instrument may be proved by the certificate of any
officer in any jurisdiction who, by the laws thereof, has power
to take acknowledgements within such jurisdiction, to the
effect that the person signing such instrument acknowledged
before him the execution thereof, or by an affidavit of a
witness to such execution.
(b) The fact of the holding of the Bonds hereunder by any
Bondholder and the amount and the numbers of such Bonds and the
date of his holding the same shall be proved by the
registration books kept under the provisions of Article II.
Nothing contained in this Article shall be construed as
limiting Trustee to such proof, it being intended that Trustee may accept
any other evidence of the matters herein stated which to it may seem
sufficient. Any request or consent of the owners of any Bond shall bind
every future owner of the same Bond in respect of anything done by Trustee
in pursuance of such request or consent.
Section 12.10. Alternative Notice to Bondholders. In case it
shall for any reason be impracticable to publish or mail any notice
required by any provision of this Indenture to be published or sent to
Bondholders, then such method of publication or notification as shall be
made with the approval of Trustee shall constitute sufficient notice.
IN WITNESS WHEREOF, MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER
ONE, acting through its Board of Navigation and Canal Commissioners, has
caused this Indenture to be executed in its name by its Chairman and
attested by its Secretary, and approved by its General Manager, and its
corporate seal hereto affixed and THE BANK OF NEW YORK, to evidence its
acceptance of the trusts hereby created and vested in it, has caused this
Indenture to be executed in its behalf by one of its Vice Presidents, all
as of the day and in the year first above written.
MATAGORDA COUNTY NAVIGATION DISTRICT
NUMBER ONE
By__________________________________
Chairman, Board of Navigation and
Canal Commissioners
(SEAL)
ATTEST:
By ____________________________
Secretary
APPROVED:
By ____________________________
General Manager
THE BANK OF NEW YORK
By:_______________________________
Title:____________________________
EXHIBIT 3(a)
------------
BOND PURCHASE AGREEMENT
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE
$100,635,000
6.10% Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
BOND PURCHASE AGREEMENT (this "Purchase Agreement") dated
July 13, 1995 between MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE, a
governmental agency and body politic and corporate of the State of Texas
(the "Issuer") and MORGAN STANLEY & CO. INCORPORATED, GOLDMAN, SACHS & CO.
and J.P. MORGAN SECURITIES INC. (the "Underwriters").
1. Background
(a) Subject to the terms and conditions herein set forth, the
Underwriters hereby agree to jointly and severally purchase from the
Issuer, and the Issuer hereby agrees to sell and deliver to the
Underwriters, the Pollution Control Revenue Refunding Bonds (Central Power
and Light Company Project) Series 1995 (the "Refunding Bonds") in the
principal amounts set forth in Schedule I hereto. The Refunding Bonds
shall be dated, shall mature and shall bear interest from time to time at
the rate per annum as set forth in Section 2 hereof and the Refunding
Bonds shall otherwise have such terms and provisions as set forth in the
Official Statement and the Indenture (as hereinafter defined).
(b) The Refunding Bonds will be issued pursuant to
resolutions adopted by the Board of Directors of the Issuer on June 1,
1995 (the "Resolution"), and under an Indenture of Trust dated as of July
1, 1995 (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 outstanding Matagorda
County Navigation District Number One 10-1/8% Pollution Control Revenue
Bonds (Central Power and Light Company Project) Series 1984 (the "Series
1984 Bonds") and all outstanding Matagorda County Navigation District
Number One 9-3/4% Collateralized Pollution Control Revenue Bonds (Central
Power and Light Company Project) Series 1985A (the "Series 1985A Bonds").
The Series 1984 Bonds and the Series 1985A Bonds were issued to provide
funds for the acquisition, construction and improvement of certain
pollution control and solid waste disposal facilities (the "Facilities")
at the South Texas Project Nuclear Generating Plant (the "Plant") located
in Matagorda County, Texas. The Company owns a 25.2% undivided interest
in the Plant. In connection with the issuance of the Refunding Bonds, the
Issuer and the Company have entered into an Installment Payment Agreement
dated as of July 1, 1995 (the "Installment Agreement"), which obligates
the Company 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 Company to the
Trustee pursuant to the Indenture.
(c) MBIA Insurance Corporation ("MBIA") has made a commitment
to issue a municipal bond insurance policy (the "Municipal Bond Insurance
Policy") relating to the Bonds effective as of the date issuance of the
Bonds. The Municipal Bond Insurance Policy will insure payment only as
principal or interest payments become due but are not paid.
(d) Concurrently with the execution and delivery of this
Purchase Agreement, the Company is delivering to the Issuer and the
Underwriters its Letter of Representation dated of even date herewith in
substantially the form of Appendix A hereto (the "Letter of
Representation") indicating its approval 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 jointly and
severally purchase the Refunding Bonds and make a public offering thereof
in reliance upon the representations, covenants and indemnities contained
in the Letter of Representation.
(e) 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 B 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").
(f) A Preliminary Official Statement dated May 31, 1995,
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."
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 Underwriter's name on Schedule I hereto at a purchase price equal to
100% of the principal amount thereof, plus accrued interest from July 1,
1995 through the day preceding the date of Closing (as herein defined).
The Refunding Bonds shall be dated July 1, 1995, shall mature on July 1,
2028 and shall bear interest from time to time at the rate of 6.10% per
annum. Payment 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 July 27, 1995 (the "Closing Date"), or at such other date,
time or place as may be agreed on by the Issuer, the Company and the
Underwriters. Refunding Bonds will be delivered to The Depository Trust
Company at least 24 hours before Closing; the Refunding Bonds will be
registered in the name of CEDE & Co. in the denomination of $100,635,000.
3. Issuer's Representations. The Issuer makes the
following representations and warranties, all of which shall survive
Closing:
(a) The information with respect to 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 to
make the statements in the Preliminary Official Statement and
the Official Statement relating to the Issuer, in the light of
the circumstances under which they were made, not misleading.
The copies of the Final Official Statement delivered to the
Underwriters on the date hereof have been duly signed and
delivered by the Issuer.
(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, 60 and 62, 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 part of outstanding bonds of
the Issuer.
(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, (ii) the execution and
delivery of the Official Statement by the Issuer and the
distribution of the Preliminary Official Statement and the
Official Statement and (iii) 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 special 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 the approval of the Attorney General of
the State of Texas with respect to the Refunding Bonds, the
registration of the Refunding Bonds by the Comptroller of
Public Accounts of the State of Texas and the order of the
Securities and Exchange Commission (the "Commission") under
the Public Utility Holding Company Act of 1935 (the "1935
Act") authorizing the Company's obligations with respect to
the Refunding Bonds and the Installment Agreement, which
approvals and orders shall be obtained on or prior to the
Closing Date, the receipt of which are expressly made a
condition to the Issuer's, the Underwriters' and the Company's
respective obligations to issue, sell and purchase 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 each of 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, in each case signed by or on behalf of the
Issuer by its Chairman 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 each
of the Underwriters, subject to such changes as the
Underwriters shall approve); the Issuer agrees that the
Company may at its expense furnish to each of the
Underwriters, without charge, as many copies of the Official
Statement and any amendment or supplement thereto as such
Underwriter may reasonably request.
(b) Before amending or supplementing the Official
Statement, furnish to each of the Underwriters two copies and
the Company 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 Company.
(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 any
Underwriter 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 Company 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.
(d) Cooperate in qualifying the Refunding Bonds for
offer and sale and in determining their eligibility for
investment under the laws of such jurisdictions as the
Underwriters may reasonably request, provided that the Issuer
shall not be required to qualify to do business or consent to
general service of process in any state or jurisdiction other
than the State of Texas.
(e) Apply the proceeds from the issuance and sale of the
Refunding Bonds in the manner set forth in the Official
Statement, and not take any action which will adversely affect
the exclusion from gross income for federal income tax
purposes of the interest on the Refunding Bonds.
(f) Promptly make or cause to be made under the Uniform
Commercial Code of the State of Texas, or under any other
applicable law, at such times as may be required, all filings,
if any, required in order to establish, maintain, protect or
preserve the interest of the Trustee in the rights assigned to
it under the Resolution, the Installment Agreement and the
Indenture.
(g) The Issuer will refrain from knowingly taking any
action with regard to which the Issuer may exercise control
that would result, or could reasonably be expected to result,
in the loss of the exclusion from gross income for federal
income tax purposes of the interest on the Refunding Bonds
referred to under the caption "Tax Matters" in the Official
Statement.
5. Survival of Representations, Warranties and Agreements.
The respective covenants, agreements, representations, warranties and
other statements of each of the Issuer and the Underwriters, as set forth
in this Purchase Agreement or made by them pursuant to this Purchase
Agreement, shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Issuer or any Underwriter or any
officer, director or controlling person thereof, and shall survive the
termination of this Purchase Agreement and the delivery of and payment for
the Refunding Bonds.
6. Conditions of 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 the Company of the obligations to be performed by it 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) The Company shall have executed and the Issuer shall have
accepted the Letter of Representation and the representations and
warranties of the Issuer herein and of the Company 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 the Company shall be in default in
the performance of any of their 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 Corporation of any securities
issued by the Company or of any bonds issued by the Issuer with respect to
the Facilities of the Company in Matagorda County or of the Refunding
Bonds;
(e) The Underwriters shall have received:
(i) The Final Official Statement signed on behalf of the
Issuer by its Chairman, together with any amendments or
supplements thereto to the Closing Date;
(ii) Opinions of McCall, Parkhurst & Horton L.L.P., Bond
Counsel ("Bond Counsel"), dated the Closing Date,
substantially in the forms attached hereto as Exhibit A-1 and
Exhibit A-2;
(iii) An opinion, dated the Closing Date, of Mayfield &
Mayfield ("Issuer's Counsel"), counsel for the Issuer,
substantially in the form attached hereto as Exhibit B;
(iv) An opinion, dated the Closing Date, of Milbank,
Tweed, Hadley & McCloy, special counsel for the Company,
substantially in the form attached hereto as Exhibit C;
(v) An opinion, dated the Closing Date, of Vinson &
Elkins L.L.P., special counsel for the Company, substantially
in the form attached hereto as Exhibit D;
(vi) An opinion, dated the Closing Date, of Sidley &
Austin, counsel for the Underwriters, substantially in the
form attached hereto as Exhibit E;
(vii) A letter, dated the Closing Date, from Arthur
Andersen LLP, independent certified public accountants of the
Company, in form and substance satisfactory to the
Underwriters and their counsel and covering the matters set
forth in Exhibit F hereto;
(viii) A certificate, dated the Closing Date, signed by
the Chairman 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;
(ix) A certificate, dated the Closing Date, signed by a
Vice President or the Treasurer of the Company to the effect
that, (A) the representations and warranties contained in the
Letter of Representation or in any certificate delivered by
the Company hereunder or thereunder is 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 the 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 the 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;
(x) 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;
(xi) Arbitrage certifications, satisfactory in form to
the Underwriters and Underwriters' counsel, by the Company and
the Issuer (which may be in the form of a single document);
(xii) Evidence, satisfactory to the Underwriters, of the
ratings on the Refunding Bonds;
(xiii) 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 the Company 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 1935
Act and the Trust Act;
(xiv) An opinion, dated the Closing Date, of a Vice
President and Assistant General Counsel of MBIA, substantially
in the form attached hereto as Exhibit G; and
(xv) A copy of the Municipal Bond Insurance Policy, as
issued by MBIA and delivered to the Trustee, substantially in
the form of Exhibit C 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 the Company or any adverse
development concerning the business or assets of the Company which would
result in a material adverse change in the prospective financial condition
or results of operations of the 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 Commission shall have issued an order under the 1935
Act, authorizing the Company's obligations with respect to the Refunding
Bonds and the Installment Agreement; 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; and the Refunding Bonds shall have been
registered by the Comptroller of Public Accounts of the State of Texas;
(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 the
Company and delivered at the Closing shall be a representation and
warranty by the Issuer or the Company, as the case may be, to the
Underwriters as to the statements made therein;
(i) The Underwriters shall have received from the Company
payment on the Closing Date by wire transfer of the Underwriters' fees
(.820% of the principal amount of the Refunding Bonds) as set forth in
Section 5 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 the letter required by subsection (e)(vii) 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 several 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 any 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 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 the Company
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 the Company 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 adverse 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
they shall have consulted with the Company with respect to the event or
condition at issue and (ii) so long as the Company 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, telegraphed or
delivered to:
The Underwriters:
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
Attention: Municipal Department
The Issuer:
Matagorda County
Navigation District Number One
209 Fifth Street
Palacios, Texas 77465
Attention: General Counsel and Manager
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 will inure to the
benefit of and be binding upon the parties and their respective
successors, and will not confer any rights upon any
[Remainder of page intentionally left blank.]
other person. The term "successor" shall not include any holder of any
Refunding Bonds merely by virtue of such holding.
MATAGORDA COUNTY NAVIGATION
DISTRICT NUMBER ONE
By:_________________________
Chairman
MORGAN STANLEY & CO. INCORPORATED
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
By: Morgan Stanley & Co. Incorporated
By:__________________________________
Francis J. Sweeney
Principal
SCHEDULE I
Principal Amount
Underwriters of Refunding Bonds
- ------------ ------------------
Morgan Stanley & Co. Incorporated. . . . . . 34,635,000
Goldman, Sachs & Co. . . . . . . . . . . . . 33,000,000
J.P. Morgan Securities Inc. . . . . . . . . . 33,000,000
Total ____________
$100,635,000
EXHIBIT A-1
-----------
July 27, 1995
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE
POLLUTION CONTROL REVENUE REFUNDING BONDS
(CENTRAL POWER AND LIGHT COMPANY PROJECT)
SERIES 1995
WE HAVE EXAMINED into the validity of the bonds described above
(the "Bonds"), issued by the Matagorda County Navigation District Number
One (the "Issuer"), initially dated as of July 1, 1995, in the aggregate
principal amount of $100,635,000, maturing July 1, 2028 (unless the Bonds
shall become due or shall be redeemed prior to their scheduled maturity in
accordance with the terms and conditions stated in the text of the Bonds),
and bearing interest from the dates specified therein until maturity or
redemption, at the rates and payable on the dates and in the manner
described in the text of the Bonds. The Bonds are in registered form in
denominations of $5,000 and integral multiples thereof.
WE HAVE ACTED AS BOND COUNSEL for the Issuer for the purpose of
rendering an opinion with respect to the authorization, issuance,
delivery, legality, and validity of the Bonds under the laws and
Constitution of the State of Texas, with respect to any exemption of the
interest on the Bonds from federal income taxes, and for the other limited
purposes set forth herein and in a supplemental opinion of even date
herewith. We have not been requested to examine, and have not
investigated or verified, any statements, records, material, or other
matters relating to the financial condition or capabilities of the
corporation hereinafter described, and we express no opinion with respect
thereto.
WE HAVE EXAMINED the Constitution and laws of the State of
Texas under which the Issuer was created and exists and pursuant to which
it has authorized and issued the Bonds; certified copies of the
proceedings of the governing body of said Issuer; certificates of Central
Power and Light Company, a Texas corporation (the "Company"); the
Installment Payment Agreement dated as of July 1, 1995 (the "Agreement"),
between the Issuer and the Company; the Indenture of Trust dated as of
July 1, 1995 (the "Indenture"), between the Issuer and The Bank of New
York (the "Trustee"); resolutions of the Issuer, including the resolution
authorizing the issuance of the Bonds, adopted June 1, 1995 (the "Bond
Resolution"); certificates, resolutions, and representations of the
Company and the Trustee, including certificates and representations with
respect to certain material facts which are solely within the knowledge of
the party rendering such certificates and representations; and the
opinions of Milbank, Tweed, Hadley & McCloy and Vinson & Elkins L.L.P.,
counsel to the Company, upon which certifications, representations, and
opinions we rely to the extent we consider appropriate; and other
instruments authorizing and relating to the issuance of the Bonds,
including one of the executed Bonds (Bond R-1).
THE BONDS are secured by the Indenture whereunder the Trustee,
or its successor as Trustee, is custodian of the Bond Fund created
therein, and is obligated to enforce the rights of the owners of the
Bonds, and to perform other duties, in the manner and under the conditions
stated in the Indenture.
BASED ON SAID EXAMINATION, it is our opinion that the Issuer is
a governmental agency and body politic and corporate of the State of
Texas, validly operating and existing as a conservation and reclamation
district and a navigation district under Texas law with full power and
authority to enter into and carry out the terms of the Agreement and the
Indenture.
IT IS FURTHER OUR OPINION that the Bond Resolution has been
duly and lawfully adopted and that the Bonds have been duly and validly
authorized, issued, executed, authenticated, and delivered in accordance
with law and the Indenture, and constitute valid, legal, binding, and
enforceable special obligations of the Issuer in accordance with their
terms and the terms of the Indenture, with the principal of, premium, if
any, and interest on the Bonds being payable from, and secured by a first
lien on and pledge of all of the right, title, and interest of the Issuer
in and to the Agreement, together with all moneys payable thereunder,
excluding certain rights relating to certain payments for expenses and
indemnification of the Issuer. Pursuant to the Agreement, the Company has
agreed to make payments to the Trustee for deposit into the Bond Fund
established by the Indenture in amounts sufficient to pay and redeem, or
provide for the payment and redemption of, the principal of, premium, if
any, and interest on the Bonds, when due as required by the Indenture.
THE RIGHTS OF THE ISSUER under the Agreement have been duly and
legally assigned in the Indenture to the Trustee and have been pledged to
the payment of the principal of, premium, if any, and interest on the
Bonds. It is our opinion that the Agreement has been duly and lawfully
authorized, executed, and delivered by the Issuer, and is a legal, valid,
binding, and enforceable obligation of the Issuer in accordance with its
terms and conditions. Milbank, Tweed, Hadley & McCloy and Vinson & Elkins
L.L.P., counsel for the Company, have rendered their respective opinions
of even date herewith to the effect that the Agreement has been duly and
lawfully authorized, executed, and delivered by the Company, and that it
is a legal, valid, binding, and enforceable obligation of the Company. We
note that said counsel each has stated that the enforceability of the
Agreement is subject to applicable bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to or affecting creditors'
rights generally.
IT IS FURTHER OUR OPINION that the Indenture has been duly and
lawfully authorized, executed, and delivered, that it is in full force and
effect, that it is legal, valid, binding, and enforceable in accordance
with its terms and conditions, and that it creates the valid pledge which
it purports to create.
THE ISSUER has reserved the right to amend the Indenture as
provided therein and subject to the restrictions therein stated.
THE OPINIONS HEREINABOVE expressed are qualified to the extent
that the obligations of the Company, the Trustee, and the Issuer, and the
enforceability thereof, with respect to the Bonds, the Agreement, the Bond
Resolution, and the Indenture are subject to applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar laws relating to
or affecting creditors' rights generally.
IN OUR OPINION, except as discussed below, the interest on the
Bonds will be excludable from the gross income of the owners of the Bonds
for federal income tax purposes under the statutes, regulations, published
rulings, and court decisions existing on the date of this opinion. The
exceptions are as follows:
(1) interest on the Bonds will be includable in the gross
income of the owner thereof during any period that such Bonds
are owned by either a "substantial user" of the facilities
financed with the proceeds of the Bonds or a "related person"
of such user, as provided in section 103(b)(13) of the Internal
Revenue Code of 1954, as amended;
(2) interest on the Bonds will be included in a
corporation's alternative minimum taxable income for purposes
of determining the alternative minimum tax and the
environmental tax imposed on corporations by sections 55 and
59A of the Internal Revenue Code of 1986, as amended (the
"Code");
(3) interest on the Bonds will be subject to the branch
profits tax imposed on foreign corporations by section 884 of
the Code; and
(4) interest on the Bonds will be subject to the tax
imposed by section 1375 of the Code on the excess net passive
income of certain S corporations that have Subchapter C
earnings and profits.
Section 57(a)(5) of the Code includes as an individual and
corporate alternative minimum tax preference item, the interest on certain
"private activity bonds," other than bonds issued after August 7, 1986, to
currently refund such bonds. In our opinion, the interest on the Bonds is
not an alternative minimum tax preference item under such section.
IN EXPRESSING THIS OPINION as to the exclusion from gross
income of interest, we have (a) relied upon information furnished by the
Company, and particularly written representations of officers of the
Company with respect to certain material facts which are solely within
their knowledge, relating to the Facilities, as defined in the Agreement,
and the use of the proceeds of the Bonds and the prior bonds, and (b)
assumed continuing compliance with covenants of the Company, the Issuer
and the Trustee with respect to certain matters, including arbitrage and
the application of Bond proceeds. Failure to comply with certain of these
representations and covenants may cause interest on the Bonds to become
includable in gross income retroactively to the date of their issuance.
EXCEPT AS STATED ABOVE, we express no opinion as to any other
federal, state or local tax consequences of acquiring, carrying, owning or
disposing of the Bonds. In particular, but not by way of limitation, we
express no opinion with respect to the federal, state or local tax
consequences arising from the enactment of any pending or future
legislation.
Respectfully,
EXHIBIT A-2
-----------
July 27, 1995
SUPPLEMENTAL OPINION
Central Power and Light Company Matagorda County Navigation
District
P. O. Box 2121 Number One
Corpus Christi, Texas 78403 209 Fifth Street
Palacios, Texas 77465
Morgan Stanley & Co. Incorporated The Bank of New York,
Goldman, Sachs & Co. as trustee
J. P. Morgan Securities Inc. 101 Barclay Street, 21st Floor
c/o Morgan Stanley & Co. Incorporated New York, New York 10286
1221 Avenue of the Americas
New York, New York 10020
Re: Matagorda County Navigation District Number One Pollution Control
Revenue Refunding Bonds (Central Power and Light Company Project)
Series 1995 (the "Bonds")
Gentlemen:
At your request, and in our capacity as Bond Counsel for the
Matagorda County Navigation District Number One (the "Issuer") in connection
with the issuance of the Bonds, we have examined, to the extent indicated
and
deemed necessary in order to render this opinion, the Installment Payment
Agreement, dated as of July 1, 1995 between the Issuer and Central Power and
Light Company (the "Company"), relating to the Bonds (the "Agreement"); the
resolution authorizing the Bonds adopted by the Issuer on June 1, 1995 (the
"Resolution"); the Indenture of Trust dated as of July 1, 1995 (the
Indenture"), between the Issuer and The Bank of New York, as Trustee (the
"Trustee"), relating to the Bonds; Section 103 of the Internal Revenue Code
of 1986, as amended (the "Code"); the Official Statement dated July 13, 1995
(the "Official Statement"), executed by the Issuer, exclusive of the
information contained in Appendix A thereto; the Bond Purchase Agreement
dated July 13, 1995, between the Issuer and the Underwriters referred to
therein relating to the Bonds (the "Bond Purchase Agreement"); an opinion
of even date herewith of Messrs. Milbank, Tweed, Hadley & McCloy, New York,
New York, Special Counsel to the Company; an opinion of even date herewith
of Vinson & Elkins L.L.P., Dallas, Texas, Special Texas Counsel to the
Company; Section 3(a)(2) of the Securities Act of 1933, as amended (the
"Securities Act"); and Section 304(a)(4)(B) of the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act").
Based on such information, it is our opinion that:
1. The Issuer has full legal right, power, and authority
to issue, sell, and deliver the Bonds to the Underwriters as
provided in the Bond Purchase Agreement, and to carry out and
consummate all other transactions to be carried out and
consummated by it as contemplated by the Bond Purchase Agreement,
and the Issuer has complied with all applicable provisions of
law, in all matters relating to such transactions.
2. The Issuer has duly authorized (A) the execution,
delivery, and due performance of the Bond Purchase Agreement, the
Agreement, and the Indenture, (B) the signing and delivery of the
Official Statement by the Issuer and the distribution of the
Preliminary Official Statement and the Official Statement, and
(C) 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 to be carried out and consummated by
the Issuer as contemplated by each of said instruments.
3. Each of the Bond Purchase Agreement, the Agreement, and
the Indenture has been duly authorized, executed and delivered
by the Issuer and constitutes the legal, valid, and binding
obligation of the Issuer.
4. No filing, registering, recording, or refiling or
rerecording of any document is required in order to establish,
protect, and preserve the interest of the Trustee in the rights
assigned to it under the Indenture or to perfect or maintain the
security interest created thereby.
5. All authorizations, consents, and approvals of, and
registrations or filings with, governmental bodies or agencies
(other than approvals that might be required under the securities
or Blue Sky laws of any jurisdiction) required in connection with
the execution and delivery of the Bonds, the Bond Purchase
Agreement, the Indenture, and the Agreement and the adoption of
the Resolution, or in connection with the carrying out by the
Issuer of its obligations thereunder, have been obtained or made
and are in full force and effect, including, without limitation,
the approval of the Bonds by the Attorney General of the State
of Texas and registration of the Bonds upon initial issuance by
the Comptroller of Public Accounts of the State of Texas.
6. Payments to the owners of the Bonds under the Indenture,
the Agreement, and the Bonds, and interest on the Bonds, are,
under current law, not subject to taxation in the State of Texas,
except for the possible applicability of ad valorem and
inheritance taxes.
7. It is not necessary in connection with the public
offering and sale of the Bonds to register the Bonds, the
Resolution, the Indenture or the Bond Purchase Agreement under
the Securities Act or to qualify the Indenture under the Trust
Indenture Act.
8. The statements contained in the Official Statement,
including any amendments or supplements thereto, under the
captions "The Bonds" (except for the subcaption "Book-Entry Only
System"),"The Agreement" and "The Indenture", insofar as such
statements summarize the provisions of the documents referred to
therein, accurately and fairly present the information purported
to be shown. The statements in the Official Statement, including
any amendments or supplements thereto, under the captions "The
Issuer" and "Tax Matters" are accurate statements or summaries
of the matters therein set forth and fairly present the
information purported to be shown.
The opinions herein expressed are (a) subject to applicable
bankruptcy, insolvency, and similar laws affecting creditors' rights
generally, and subject, as to enforceability, to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law); and (b) qualified to the extent the indemnification or
contribution provisions contained in the instruments covered by such
opinions may be limited by applicable securities laws and public policy.
In our capacity as Bond Counsel, we have rendered our opinion of
even date herewith as to the validity and enforceability of the Bonds and
the status of interest on the Bonds under federal income tax law. You are
authorized to rely on such opinion as if it were expressly addressed to you.
This opinion may be relied upon only by the addressees hereof and
by other persons to whom written permission to rely hereon is granted by us.
Respectfully,
EXHIBIT B
---------
Form of Opinion of Mayfield and Mayfield
[Letterhead of Mayfield and Mayfield]
July 27, 1995
Morgan Stanley & Co. Incorporated
Goldman, Sachs & Co.
J.P. Morgan Securities Inc.
c/o Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
The Bank of New York
101 Barclay Street
21st Floor
New York, New York 10286
Central Power and Light Company
P. O. Box 2121
Corpus Christi, Texas 78403
Re: Matagorda County Navigation District Number One Pollution
Control Revenue Refunding Bonds (Central Power and Light
Company Project) Series 1995 (the "Bonds")
Gentlemen:
At your request, and in our capacity as General Counsel for
the Matagorda County Navigation District Number One (the "Issuer") in
connection with the issuance of the Bonds, we have examined, to the extent
indicated and deemed necessary in order to render this opinion, the
Installment Payment Agreement, dated as of July 1, 1995 between the Issuer
and Central Power and Light Company (the "Company"), relating to the Bonds
(the "Agreement"); the resolutions authorizing the Bonds adopted by the
Issuer on March 2, 1974 and June 1, 1995 (collectively, the "Resolution");
the Indenture of Trust dated as of July 1, 1995, between the Issuer and
The Bank of New York, as Trustee, relating to the Bonds (the "Indenture");
the Preliminary Official Statement dated May 31, 1995 (the "Preliminary
Official Statement"); the Official Statement dated July 13, 1995 (the
"Official Statement"), issued by the Issuer, exclusive of the Appendices
thereto; the Bond Purchase Agreement dated July 13, 1995, between the
Issuer and the Underwriters referred to therein relating to the Bonds (the
"Bond Purchase Agreement"), including the Letter of Representation (the
"Letter of Representation") included as Appendix A thereto; an opinion of
even date of Messrs. Milbank, Tweed, Hadley & McCloy, New York, New York
and Vinson & Elkins L.L.P., Counsel to the Company; and the opinions of
even date of Messrs. McCall, Parkhurst & Horton L.L.P., Dallas, Texas,
Bond Counsel. Unless otherwise indicated herein, capitalized terms used
herein shall have the meanings given in the Bond Purchase Agreement.
IN OUR OPINION:
1. 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 to finance the Project, to
issue, sell and deliver the Bonds pursuant to the Bond Purchase Agreement
and the Indenture, to execute and deliver the Bond Purchase Agreement, the
Agreement and the Indenture, to sign and deliver the Official Statement
and to carry out and consummate all other transactions contemplated by
each of the aforesaid instruments, and the Issuer has taken all necessary
action and has complied with all applicable provisions of law required to
duly authorize and make the Bond Purchase Agreement, the Agreement, the
Indenture and the Bonds the valid and binding obligations they purport to
be, including, without limitation, due adoption of the Resolution.
2. The Agreement, the Indenture, the Bonds and the Bond
Purchase Agreement have been duly authorized, executed and delivered by
the Issuer and each constitutes a legal, valid and binding agreement of
the Issuer, enforceable in accordance with its terms. The signing of the
Official Statement and the acceptance of the Letter of Representation have
been duly authorized, and the Official Statement and the Letter of
Representation have been duly signed and delivered, by the Issuer.
3. To the best of our knowledge, none of the adoption of the
Resolution, the issuance and sale of the Bonds, the execution and delivery
by the Issuer of the Agreement, the Indenture, the Bond Purchase Agreement
or the Bonds, the acceptance of the Letter of Representation, the signing
and delivery of the Official Statement (and authorization of the
distribution of the Preliminary Official Statement and the Official
Statement), nor compliance with the provisions thereof or the consummation
of the transactions contemplated thereby by the Issuer conflicts with or
results in a breach of any provisions of, or constitutes a default 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 officers in
their respective capacities as such) is subject, or results in the
creation of any lien, charge or other security interest or incumbrance of
any nature whatsoever upon any of the property or assets of the Issuer,
except as provided by the Bonds and the Indenture.
4. There is no action, suit, proceeding or investigation, at
law or in equity, before or by any court, governmental agency or body or
arbitrator, pending or, to the best of our knowledge, threatened against
or affecting the Issuer, which in any way questions the validity of the
Enabling Legislation or the transactions contemplated by the Bond Purchase
Agreement, the Agreement, the Indenture or the Official Statement, or the
validity of any proceedings taken by the Issuer in connection with the
issuance and sale of the Bonds, or wherein an unfavorable decision, ruling
or finding would adversely affect the transactions contemplated by the
Bond Purchase Agreement, the Agreement, the Indenture or the Official
Statement, or which, in any way, would adversely affect the validity or
enforceability of the Bonds, the Agreement, the Indenture or the Bond
Purchase Agreement or any agreement or instrument to which the Issuer is a
party and which is used or contemplated for use in the consummation of the
transactions contemplated by any of the foregoing or the exemption from
taxation of the Bonds as set forth in the approving opinion of McCall,
Parkhurst & Horton L.L.P.
5. Nothing has come to our attention which leads us to
believe that the information set forth in the Preliminary Official
Statement or the Official Statement with respect to the Issuer and the
transactions of the Issuer contemplated thereby contains any untrue
statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
6. The Issuer has not granted a security interest in any
amounts payable to the Issuer under the Agreement, nor have any such
amounts been otherwise pledged or encumbered, to secure any outstanding
indebtedness of the Issuer other than the Bonds.
7. None of the proceedings or actions taken by the Issuer
with respect to any of the Bonds, the Resolution, the Indenture, the
Agreement, the Preliminary Official Statement, the Official Statement or
the Bond Purchase Agreement have been repealed, rescinded or revoked.
The opinions herein expressed are (A) subject to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights
generally, and subject, as to enforceability, to general principals of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), and (B) qualified to the extent that the indemnif-
ication and contribution provisions contained in the agreements covered by
such opinions may be limited by applicable securities laws and public
policy.
The opinions expressed herein may be relied upon by you, your
counsel and Milbank, Tweed, Hadley & McCloy, special counsel for the
Company.
Respectfully yours,
MAYFIELD AND MAYFIELD
EXHIBIT C
---------
[Letterhead of Milbank, Tweed, Hadley & McCloy]
July 28, 1995
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Re: Matagorda County Navigation District Number One (Texas)
__% Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
Dear Sirs:
We have acted as special counsel for Central Power and Light
Company (the "Company") in connection with the purchase by you from
Matagorda County Navigation District Number One (Texas) (the "Issuer")
pursuant to the Bond Purchase Agreement dated June __, 1995 (the "Purchase
Agreement"), of $100,635,000 aggregate principal amount of __% Pollution
Control Revenue Refunding Bonds (Central Power and Light Company Project)
Series 1995 (the "Bonds"), issued under and pursuant to an Indenture of
Trust, dated as of July 1, 1995 (the "Indenture"), between the Issuer and
The Bank of New York, as Trustee (the "Trustee"). Capitalized terms used
herein and not otherwise defined shall have the respective meanings
assigned to such terms in the Purchase Agreement.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of the Company, indentures,
agreements and other instruments, certificates of public officials,
certificates of officers and representatives of the Company and of the
Trustee and other documents as we have deemed it necessary to require as a
basis for the opinions hereinafter expressed. In such examination we have
assumed the genuineness of all signatures and the authenticity of all
documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies. As to various
questions of fact material to such opinions we have, when relevant facts
were not independently established, relied upon certifications by officers
of the Company and other appropriate persons and statements contained in
the Official Statement, including Appendix A thereto (the "Official
Statement").
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion that:
1. The Company is a corporation validly existing and in good
standing under the laws of the State of Texas.
2. The Installment Agreement has been duly and validly
authorized by all necessary corporate action of the Company, has
been duly and validly executed and delivered by the Company, and
is a valid and binding obligation of the Company, enforceable
against the Company 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.
3. The order dated June 15, 1995 of the Securities and Exchange
Commission (the "Commission") under the Public Utility Holding
Company Act of 1935, as amended (the "1935 Act"), granting and
permitting to become effective the Form U-1 Application-
Declaration, as amended, of the Company (File No. 70-8597) with
respect to the Bonds and the Installment Agreement has been
entered and to the best of our knowledge is in full force and
effect. No further consent, approval, authorization, or order
of, or registration or filing with, any Federal commission,
court, governmental or regulatory body or authority is necessary
with respect to the Company for the approval of the Resolution by
the Company, the execution, delivery and performance by the
Company of the Installment Agreement and the Letter of
Representation, the approval by the Company of the terms and
provisions of the Purchase Agreement or the consummation by the
Company of the transactions contemplated by the Installment
Agreement, the Letter of Representation, the Purchase Agreement
and the Official Statement.
4. The Company has duly approved the forms of the Resolution,
the Indenture and the Purchase Agreement; the Purchase Agreement
has been duly authorized and accepted by the Company and the
Letter of Representation has been duly authorized, executed and
delivered by the Company. The Company 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 Letter of
Representation and the Purchase Agreement.
5. The Official Statement and any amendment or supplement
thereto and each document relating to the Company incorporated by
reference in the Official Statement, as such document was
originally filed pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (except for the financial
statements and schedules and other financial and statistical data
included or incorporated by reference therein, as to which we
express no opinion), appear on their face to be appropriately
responsive in all material respects to the requirements of the
Exchange Act and the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations of the Commission
thereunder applicable to prospectuses contained in registration
statements on Form S-3 as if the Act, rules and regulations were
applicable to the Official Statement.
6. The offer, sale and delivery of the Bonds to the public are
not required to be registered under the Act and no qualification
of the Indenture is required under the Trust Indenture Act of
1939, as amended, in connection with such transactions.
7. Except as may be specifically set forth in the Official
Statement and except for the proceedings relating to the opinion
of the Attorney General of the State of Texas on the Bonds and to
the registration of the Bonds upon initial issuance by the
Comptroller of Public Accounts of the State of Texas, to the best
of our knowledge 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 the Company
or the Facilities, pending or threatened (i) which might
reasonably be expected to materially and adversely affect (x) the
condition (financial or otherwise), results of operations or
properties of the Company or (y) the operation, condition or
feasibility of the Facilities or (ii) wherein any unfavorable
decision, ruling or finding would materially and adversely affect
(x) the transactions contemplated to be performed by the Company
by the Letter of Representation, the Installment Agreement or the
Official Statement or (y) the validity or enforceability of the
Bonds, the Installment Agreement, the Indenture, the Purchase
Agreement or the Letter of Representation. We express no opinion
as to any proceeding to which the Issuer is a party and the
Company is not.
8. The approval of the Resolution, the Indenture, and the
Purchase Agreement, the execution and delivery of the Letter of
Representation and the Installment Agreement, and compliance with
the provisions thereof or consummation of the transactions
contemplated thereby by the Company will not result in a
violation of any of the terms or provisions of any indenture,
mortgage, deed of trust, commitment, agreement or other
instrument, of which we have knowledge, to which the Company is a
party or by which it is bound, or any existing order of which we
have knowledge of any court or any Federal regulatory body or
administrative agency or other Federal governmental body having
jurisdiction over the Company or any of its properties, nor will
such action result in any violation of the provisions of the
Restated Articles of Incorporation or By-laws of the Company or
any Federal laws of the United States or to the best of our
knowledge result in the creation or imposition of any lien,
charge or other security interest or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company
(except the lien, if any, created by the Installment Agreement).
As to the financial statements included in the Official
Statement, we have made no examination of the Company's books of account
and we therefore express no opinion. As to the statements under the
headings "The Bonds" (other than under the sub-heading "Book-Entry Only
System"), "The Agreement", and "The Indenture" (except for the financial
statements and schedules and other financial and statistical data included
or incorporated by reference therein, as to which we express no opinion),
we are of the opinion that the statements are accurate in all material
respects and do not omit any material fact necessary to make such
statements, in light of the circumstances under which they were made, not
misleading. As to other matters we have not undertaken to determine
independently the accuracy or completeness of the statements contained in
the Official Statement. We have, however, participated in the preparation
of the Official Statement and we have reviewed such of the corporate
records of the Company as we deemed advisable. None of the foregoing
disclosed to us any information which gave us reason to believe that the
Official Statement (except for the financial statements and other
financial and statistical data included or incorporated by reference
therein, as to which we express no opinion) contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
This opinion is subject to the interest on the Bonds being
excluded from gross income of holders thereof for Federal income tax
purposes, as to which you have received opinions of McCall, Parkhurst &
Horton L.L.P. and with respect to which we express no opinion.
In rendering the opinions hereinabove expressed, we have relied
upon the opinion of even date hereof, delivered to you concurrently
herewith, of Messrs. Vinson & Elkins L.L.P., Dallas, Texas, counsel for
the Company, as to all matters governed by Texas law, and as to such
matters, the opinions hereinabove expressed are subject to all
qualifications, limitations, assumptions and reliances, and other
considerations, therein set forth.
We do not express any opinion as to matters governed by any laws
other than the laws of the State of New York, the Federal laws of the
United States of America and, to the extent hereinabove stated, in
reliance on the opinion of counsel for the Company, the laws of the State
of Texas.
Very truly yours,
MILBANK, TWEED, HADLEY & MCCLOY
EXHIBIT D
---------
FORM OF VINSON & ELKINS L.L.P. OPINION
July 28, 1995
Morgan Stanley & Co. Incorporated
Goldman Sachs & Co.
J.P. Morgan Securities Inc.
c/o Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
Central Power and Light Company
539 North Carancahua Street
Corpus Christi, Texas 78401
McCall, Parkhurst & Horton L.L.P.
717 North Harwood
Ninth Floor
Dallas, Texas 75201
Ladies and Gentlemen:
We have acted as special Texas counsel for Central Power and
Light Company, a Texas corporation (the "Company"), in connection with the
issuance and sale by the Matagorda County Navigation District Number One
(the "Issuer") of its Pollution Control Revenue Refunding Bonds (Central
Power and Light Company Project) Series 1995 (the "Refunding Bonds") to be
issued and sold pursuant to the terms of the Bond Purchase Agreement dated
July 13, 1995 (the "Purchase Agreement") between the Issuer and Morgan
Stanley & Co. Incorporated, Goldman, Sachs & Co. and J.P. Morgan
Securities Inc. (the "Underwriters"). This opinion is being furnished to
you pursuant to Paragraph 6(e)(v) of the Purchase Agreement. Capitalized
terms used but not otherwise defined herein shall have the meanings
ascribed to them in the Purchase Agreement.
We have examined originals or certified copies of all such
corporate records of the Company, indentures, agreements and other
instruments, certificates of public officials, certificates of officers
and representatives of the Company and other documents that we considered
necessary and proper in order to render the opinions hereinafter
expressed. In our examination we have assumed the genuineness of all
signatures, the accuracy and completeness of all documents submitted to
us, the authenticity of all documents submitted to us as originals and the
conformity to original documents of all documents submitted to us as
certified or photostatic copies. As to factual matters material to the
opinions herein stated, we have relied to the extent we deem such reliance
proper upon certificates given or representations made by public officials
and duly authorized representatives of the Company.
Based upon the foregoing, and subject to the qualifications
hereinafter set forth, we are of the opinion that:
1. The Company is a corporation, duly incorporated, validly
existing and in good standing under the laws of the State of Texas.
2. The Company is a public utility (as defined in the Public
Utility Regulatory Act ("PURA") of the State of Texas), duly authorized by
its Restated Articles of Incorporation, filed with the Secretary of State
of the State of Texas (the "Texas Secretary of State") on January 30,
1990, as amended through the date hereof, to conduct the business of
generating and supplying gas, electric light and motor power to the
public. The Company is authorized under the laws of the State of Texas to
operate as an electric utility (as defined in PURA) in the areas of the
State of Texas in which it currently does so, except where the failure to
be so authorized could not reasonably be expected to result in a material
adverse change in the financial condition, results in operations or
business of the Company (a "Material Adverse Effect").
3. The Company has valid and subsisting municipal franchises,
licenses or permits authorizing it to operate as an electric utility in
all of the municipalities listed on Exhibit A hereto (which municipalities
the Company has certified to us are all the municipalities served by it
from which the Company derives a material amount of electric operating
revenues) wherein such a franchise, license or permit is required.
4. Except as set forth in the Official Statement, including
Appendix A thereto and the documents incorporated by reference in Appendix
A, there is no litigation or other legal proceedings applying the laws of
the State of Texas pending to which the Company is a party or to which the
property of the Company or the Facilities is subject that (i) could
reasonably be expected to result in a Material Adverse Effect or
(ii) wherein any unfavorable decision, ruling or finding might reasonably
be expected to (x) adversely affect the transactions contemplated to be
performed by the Company by the Letter of Representation, by the Purchase
Agreement, by the Installment Agreement or by the Official Statement or
(y) adversely affect the validity of the Refunding Bonds, the Installment
Agreement, the Indenture, the Resolution, the Purchase Agreement, or the
Letter of Representation, and, to the best of our knowledge, no such
litigation or proceedings have been threatened.
5. Each of the Installment Agreement and the Letter of
Representation has been duly authorized, executed and delivered by the
Company and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms.
6. The terms of the Purchase Agreement have been approved by
the Company.
7. No approval, authorization, consent, certificate or order of
any commission or regulatory authority of the State of Texas (other than
the opinion of the Attorney General of the State of Texas on the Refunding
Bonds, the registration of the Refunding Bonds upon initial issuance by
the Comptroller of Public Accounts of the State of Texas, the
certification of the appropriate governmental agencies that the Facilities
are in furtherance of the purpose of abating or controlling atmospheric
pollutants or contaminants or water pollution or in connection with the
"blue sky" or securities laws or regulations of the State of Texas) is
necessary with respect to the execution, delivery and performance by the
Company of the Letter of Representation, the Installment Agreement, or the
consummation by the Company of the transactions contemplated by the Letter
of Representation, the Installment Agreement, the Purchase Agreement or
the Official Statement.
Before rendering the opinions set forth herein, in our role as
special Texas counsel to the Company in connection with the offering of
the Refunding Bonds, we reviewed the Official Statement; however, we did
not participate in its preparation. Although we have not independently
verified, and do not warrant or pass upon the accuracy or completeness of
the statements contained in the Official Statement (relying, with respect
to materiality, to the extent we deem such reliance proper, upon the
opinions of officers and other representatives of the Company) no facts
have come to our attention as a result of the foregoing review which lead
us to believe that the Official Statement, as amended and supplemented
through the date hereof, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the
foregoing, we express no belief as to (a) the financial statements and
schedules and other financial and statistical data included in the
Official Statement or any amendment or supplement thereto or
(b) regulatory and other legal matters not governed by the laws of the
State of Texas.
With respect to the opinions contained in paragraph 1. above
regarding the valid existence of the Company, we have relied solely upon
(i) certificates provided by officials of the State of Texas or
(ii) telegraphic or oral confirmation therefrom where such certificates
were unavailable as of the date hereof.
With respect to the opinions contained in paragraph 4. above, we
have relied solely upon certificates of officers of the Company and
searches as of recent dates of our files, the Company's records and court
records of the following courts: The state district courts for Dallas
County, Travis County, Matagorda County and Nueces County, Texas; and the
federal district courts for the Southern District (Corpus Christi and
Galveston Divisions) and the Northern District (Dallas Division) of Texas.
The opinions contained in paragraph 5. above to the extent such
opinions relate to enforceability are limited by the following:
(i) principles of equity which may limit the availability of certain
equitable remedies; and (ii) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium, and other laws applicable to creditors'
rights or the collection of debtors' obligations generally.
We are licensed to practice law in the State of Texas and do not
hold ourselves out to be experts on the laws of any jurisdiction other
than the State of Texas. We express no opinion with regard to any matter
which may be governed by the laws of any state or other jurisdiction
(including the United States of America) other than the State of Texas.
This opinion is limited to the matters stated herein and no
opinion is implied or may be inferred beyond the matters herein expressly
stated.
Except as provided otherwise in a written consent signed by us,
the opinions expressed herein are for the sole benefit of, and may only be
relied upon by, you, your counsel and Milbank, Tweed, Hadley & McCloy,
special counsel for the Company, and the opinions herein expressed are not
to be used, circulated, quoted or otherwise referred to in any manner
other than as specifically provided in the Purchase Agreement and the
Indenture, or by or to any other person.
Very truly yours,
VINSON & ELKINS L.L.P. OPINION
EXHIBIT A
---------
MUNICIPALITIES
Alice
Bay City
Beeville
Corpus Christi
Del Rio
Eagle Pass
Edinburg
Harlingen
Ingleside
Kingsville
Laredo
McAllen
Mission
Pharr
Rockport
Uvalde
Victoria
Weslaco
EXHIBIT E
---------
Letterhead of Sidley & Austin
July 18, 1995
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J. P. Morgan Securities Inc.
Corporate Finance - 33rd Floor
60 Wall Street
New York, New York 10260
Re: Matagorda County Navigation District Number One
__% Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995 (the "Refunding Bonds")
Gentlemen:
We have acted as your counsel in connection with the Bond
Purchase Agreement dated June __, 1995 (the "Purchase Agreement") between
you, as underwriters, and Matagorda County Navigation District Number One
(the "Issuer"), your purchase pursuant thereto of $100,635,000 aggregate
principal amount of the Refunding Bonds and the Letter of Representation
dated June __, 1995 (the "Letter of Representation") between you and
Central Power and Light Company, a Texas corporation (the "Company").
Capitalized terms not defined herein have the meanings specified in the
Purchase Agreement.
As your counsel, we have, among other things, participated with
officers and representatives of the Company, including its counsel and
independent public accountants, and your representatives in the
preparation of the Official Statement dated July __, 1995 (the "Official
Statement") relating to the Refunding Bonds.
Pursuant to the requirement of Section 6(e)(vi) of the Purchase
Agreement, this will advise you that in our opinion:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Texas.
2. The terms of the Purchase Agreement have been approved by
the Company, and the Letter of Representation has been duly
authorized, executed and delivered by the Company.
3. The Installment Payment Agreement dated as of July _, 1995
(the "Installment Agreement") between the Company and the Issuer
has been duly authorized, executed and delivered by the Company,
and (assuming that the Installment Agreement has been duly
authorized, executed and delivered by, and constitutes a valid
and binding agreement of, the Issuer) constitutes a valid and
binding obligation of the Company enforceable against the
Company 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 effects of
general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law).
4. The Refunding Bonds are exempted securities under Section
3(a)(2) of the Securities Act of 1933, as amended (the "Act"),
to the extent provided in the Act, and the offer and sale
thereof do not require registration under the Act or
qualification of the Indenture under the Trust Indenture Act of
1939, as amended.
5. The statements in the Official Statement under the headings
"The Bonds" (other than under the subheading "The Bonds - Book-
Entry Only System"), "The Agreement" and "The Indenture," and
any other statements therein which purport to describe or
summarize the Refunding Bonds, the Indenture and the Installment
Agreement, (except for the financial statements and schedules
and other financial and statistical data included or
incorporated by reference therein, as to which we express no
belief), insofar as such statements constitute summaries of the
provisions of the documents or securities referred to therein,
are accurate in all material respects.
During the course of the preparation of the Official Statement,
we have participated in conferences with your representatives and officers
and representatives of the Company, including its counsel and independent
public accountants, during the course of which we discussed the affairs of
the Company and the contents of the Official Statement. We have also
reviewed the documents incorporated by reference in Appendix A to the
Official Statement. Except as stated in paragraph 5 above, we have not
independently checked the accuracy or completeness of, or otherwise
verified, and accordingly are not passing upon, and do not assume any
responsibility for, the accuracy, completeness or fairness of the
statements contained in the Official Statement; and we have relied as to
materiality, to a large extent, upon the judgment of officers and
representatives of the Company. However, as a result of such
participation and review, nothing has come to our attention which causes
us to believe that the Official Statement, including the aforementioned
documents incorporated therein by reference, (other than the financial
statements, financial data, statistical data and supporting schedules
included or incorporated by reference therein, as to which we express no
belief), includes any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
We have reviewed the opinions dated the date hereof pursuant to
the Purchase Agreement by Mayfield and Mayfield, counsel for the Issuer;
McCall, Parkhurst & Horton L.L.P., Bond Counsel; Milbank, Tweed, Hadley &
McCloy, special counsel for the Company; and Vinson & Elkins L.L.P.,
counsel for the Company in the State of Texas. We believe that you are
justified in relying on such opinions. We have also examined the letter
to you dated the date hereof from Arthur Andersen LLP relating to the
financial statements and schedules and certain other matters with respect
to the Company. We participated in discussions with representatives of
Arthur Andersen LLP and with your representatives relating to the form of
such letter, and we believe that the letter delivered to you is
substantially in the agreed form.
For the purpose of rendering the foregoing opinions, we have
relied, as to various questions of fact material to such opinions, upon
the representations made in the Purchase Agreement and in the Letter of
Representation and upon certificates of officers of the Company and the
Issuer. We also have examined originals, or copies of originals certified
to our satisfaction, of such agreements, documents, certificates and other
statements of government officials and other instruments, have examined
such questions of law and have satisfied ourselves as to such matters of
fact as we have considered relevant and necessary as a basis for this
opinion. We have assumed the authenticity of all documents submitted to
us as originals, the genuineness of all signatures, the legal capacity of
all natural persons and the conformity with the original documents of any
copies thereof submitted to us for our examination.
In rendering the opinions hereinabove expressed, we have relied
exclusively with your permission upon the aforesaid opinions of Mayfield &
Mayfield, Vinson & Elkins L.L.P. and McCall, Parkhurst & Horton L.L.P., as
to all matters governed by Texas law, and, as to all such matters, the
opinions hereinabove expressed are subject to all the qualifications,
limitations, assumptions, reliances and other considerations therein set
forth.
This opinion is limited to the laws of the United States of
America and the State of New York and, to the extent stated in the
preceding paragraph, is given in reliance on the opinions therein
mentioned.
This opinion assumes that interest on the Refunding Bonds is
excludable from gross income of holders thereof for federal income tax
purposes to the extent described in the Official Statement, as to which
you are receiving the opinion of McCall, Parkhurst & Horton L.L.P. and
with respect to which we express no opinion.
This opinion is being delivered solely for the benefit of the
persons to whom it is addressed; accordingly, it may not be quoted, filed
with any governmental authority or other regulatory agency or otherwise
circulated or utilized for any other purpose without our prior written
consent.
Very truly yours,
SIDLEY & AUSTIN
EXHIBIT F
---------
Form of letter of Arthur Andersen LLP,
independent public accountants to the Company.
The letter will confirm that with respect to the Company that
they are independent public accountants within the meaning of Rule 101 of
the Code of Professional Ethics of the American Institute of Certified
Public Accountants and as would be required under the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
thereunder were the Securities Act, rules and regulations applicable to
the Official Statement, and shall be to the effect that:
(i) in their opinion, the financial statements of the
Company examined by them and incorporated by reference in the
Official Statement comply as to form in all material respects
with the accounting requirements of the Securities Act, and the
published rules and regulations thereunder which would be
applicable if the issuance of the securities were subject to the
accounting requirements for registration statements on Form S-3
under the Securities Act;
(ii) on the basis of a reading of the 1995 minutes of the
meetings of the stockholder and the Board of Directors of the
Company as set forth in the minute books through a specified
date not more than five business days prior to the date of the
letter, a reading of the unaudited financial statements of the
Company included or incorporated by reference in the Official
Statement and also the latest available financial statements of
the Company, and inquiries of certain officials of the Company
who have responsibility for financial and accounting matters
(which procedures do not constitute an examination made in
accordance with generally accepted auditing standards), nothing
came to their attention that caused them to believe that:
(1) if any unaudited financial statements of the
Company are included by incorporation in the Official
Statement, that they do not comply as to form in all
material respects with the applicable accounting
requirements of the Securities Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and
the published rules, regulations and releases under such
acts or said financial statements are not fairly presented
in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included by incorporation in
the Official Statement,
(2) if any unaudited amounts of total operating
revenue and net income of the Company are set forth or
incorporated in the Official Statement, including amounts
set forth under "Selected Financial Information" or a
similar caption, that they have not been prepared in
conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited financial statements included by incorporation in
the Official Statement,
(3) there was any decrease, at the date of the latest
available financial statements, in the net assets of the
Company (other than decreases resulting from regular
dividends on preferred or common stock) as compared to the
net assets as shown on the December 31, 1994 balance sheet
included by incorporation in the Official Statement,
(4) there has been any decrease in operating revenues,
operating income or net income for common stock or ratio of
earnings to fixed charges for the twelve months ended on the
date of the latest available financial statements of the
Company, as compared with the audited amounts thereof and
such ratio for the twelve months ended December 31, 1994,
set forth in the income statement of the Company for the
twelve months ended that date identified elsewhere in such
letter, except in all instances as set forth or incorporated
in or contemplated by the Official Statement or, except as
disclosed in such letter, or
(5) there has been during the period from the date of
the latest available financial statements through a
specified date not more than five business days prior to the
date of their letter, (a) any decrease in the net assets of
the Company (other than decreases resulting from regular
dividends on preferred or common stock) or (b) any decrease
in operating revenues, operating income or net income for
common stock as compared with the same prior year period for
the Company, except in all instances as set forth or
incorporated in or contemplated by the Official Statement
or, except as disclosed in such letter; and
(iii) they have recalculated the ratios contained in
"Ratio of Earnings to Fixed Charges" and "Selected Financial
Information" or similar captions in the Official Statement from
dollar amounts derived directly from the general accounting
records of the Company or from schedules prepared by the Company
or derived directly form such records or schedules by analysis
or computation, and have found the calculation of such ratios to
be mathematically correct and such ratios to be in agreement,
except in both cases as otherwise stated in such letter.
EXHIBIT G
---------
[Letterhead of MBIA Insurance Corporation]
July 21, 1995
Matagorda County Navigation District Number One
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
$100,635,000
Matagorda County Navigation District Number One
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
Ladies and Gentlemen:
I am Assistant General Counsel of the MBIA Insurance Corporation, a New
York corporation (the "Corporation"), and have acted as counsel to the
Corporation in connection with the issuance of Financial Guaranty
Insurance Policy No. 19061 (the "Policy") relating to $100,635,000
Matagorda County Navigation District Number One, Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project), Series 1995.
In so acting, I have examined a copy of the Policy and such other relevant
documents as I have deemed necessary.
Based upon the foregoing, I am of the following opinion:
1. The Corporation is a stock insurance corporation, duly incorporated
and validly existing under the laws of the State of New York and is
licensed and authorized to issue the Policy under the laws of the State of
New York and the State of Texas.
2. The Policy has been duly executed and is a valid and binding
obligation of the Corporation enforceable in accordance with its terms
except that the enforcement of the Policy may be limited by laws relating
to bankruptcy, insolvency, reorganization, moratorium, receivership and
other similar laws affecting creditors' rights generally and by general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
Very truly yours,
Assistant General Counsel
[specimen]
EXHIBIT 4(a)
------------
APPENDIX A
CENTRAL POWER AND LIGHT COMPANY
LETTER OF REPRESENTATION
$100,635,000
Matagorda County Navigation District Number One
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
July 13, 1995
Matagorda County Navigation District Number One
209 Fifth Street
Palacios, Texas 77465
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
Corporate Finance-33rd Floor
60 Wall Street
New York, New York 10260
Dear Sirs:
1. Introduction and Background. Pursuant to a Bond Purchase
Agreement of even date herewith (the "Purchase Agreement") between
Matagorda County Navigation District Number One (the "Issuer") and Morgan
Stanley & Co. Incorporated, Goldman, Sachs & Co. and J.P. Morgan
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 Central Power and Light Company, a Texas
corporation (the "Company"), describing the definitive terms and
provisions of the Refunding Bonds and containing in Appendix A thereto
information concerning the Company, which Appendix A, 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 Company. Unless otherwise defined herein, all capitalized terms used
herein shall have the meanings assigned thereto in the Purchase Agreement.
The Company 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 the Company contained in this Letter of
Representation.
2. Representations by the Company. The Company 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 the Company 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 the
Company'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 the Company 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 the Company
and is a legal, valid and binding obligation of the Company 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). The Company has duly authorized the
taking of all action necessary to carry out and give effect to the
transactions contemplated to be performed by it by the Official Statement,
the Installment Agreement, the Purchase Agreement and this Letter of
Representation. The Commission has issued an order (the "Order") under
the 1935 Act authorizing the Company's obligations with respect to this
Letter of Representation, the Installment Agreement, the Refunding Bonds
and the Purchase Agreement, such order being subject, however, to the
condition, among others, that the Company comply with such supplemental
order, if any, as the Commission may enter thereunder. A copy of such
order heretofore entered by the Commission has been or will be delivered
to the Underwriters.
(c) That this Letter of Representation has been duly executed and
delivered by the Company.
(d) 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
the Company under its Restated Articles of Incorporation or By-laws, under
any indenture, commitment, agreement or other instrument to which the
Company is a party or by which it is bound or under any existing law,
rule, regulation, judgment, ordinance, order or decree to which the
Company 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 the Company (except the
lien, if any, created by the Installment Agreement).
(e) 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 the Company, the approval of the terms of the Purchase
Agreement, the valid execution, delivery and performance by the Company of
this Letter of Representation and the Installment Agreement or the
consummation by the Company 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 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 the Company 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 the Company to the Underwriters or McCall, Parkhurst & Horton
L.L.P., Bond Counsel, or Sidley & Austin, counsel to the Underwriters,
relating to the Company, 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 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 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 the Company or
the Facilities, pending or, to the best knowledge of the Company,
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 the Company 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 the Company 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 the Company 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 the Company, 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 the Company in connection with the transactions
contemplated hereby and by the Official Statement with respect to the
exclusion from gross income for federal income tax purposes of interest on
the Refunding Bonds is correct and complete.
(k) That all required certificates that the Facilities (other than
the solid waste disposal facilities that require no certifications), as
designed, are in furtherance of the purpose of abating or controlling air
or water pollution have been obtained from the Texas Air Control Board and
the Texas Department of Water Resources, respectively, and remain in full
force and effect.
(l) That the Company 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 the
Company's financial condition or any adverse development concerning the
Company'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 the Company 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, the Purchase Agreement or this Letter of
Representation has occurred and is continuing.
3. Covenants of the Company. The Company 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 Section 2(f) hereof 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 the Company incorporated by reference into the Official Statement and
all documents to which Section 3(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), the Company will,
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.
4. Indemnification; Contribution. (a) The Company 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 of the Underwriters 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 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.
(b) By acceptance hereof each of the Underwriters agrees to
indemnify and hold harmless the Issuer, its officers, directors, employees
and agents and the Company, its officers, directors and employees, and
each person, if any, who controls the 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" or the information 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 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 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 4 is
unavailable to or insufficient to hold harmless an Indemnified Party under
Subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then the
Company 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 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 the Company 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. The Company 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 Company if the Company is
not guilty of such fraudulent misrepresentation. The obligations of the
Company under this Subsection (d) shall be in addition to any liability
which the Company may have otherwise than under this Section 4.
5. 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; 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 Company; the
expenses, including the legal fees of Counsel to the Underwriters 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 Company. In addition, the Company 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
amount equal to .820% 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 5).
6. 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.
7. Notices. All notices, requests, demands and formal actions
hereunder will be in writing mailed, telegraphed or delivered to:
The Underwriters:
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
Attention: Municipal Department
The Issuer:
Matagorda County
Navigation District Number One
209 Fifth Street
Palacios, Texas 77465
Attention: General Counsel and Manager
The Company:
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
8. 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.
9. Survival of Agreements and Representations. The indemnity and
other agreements contained and the representations and warranties of the
Company 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 the
Underwriters or any person controlling the Underwriters or by or on behalf
of the Company, its directors or officers or any person controlling the
Company, and (iii) sale and delivery of the Refunding Bonds.
10. 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,
CENTRAL POWER AND LIGHT COMPANY
By:____________________________
Name:
Title:
Accepted:
MATAGORDA COUNTY NAVIGATION
DISTRICT NUMBER ONE
By:________________________
Name:
Chairman
Accepted:
MORGAN STANLEY & CO. INCORPORATED
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
By: Morgan Stanley & Co. Incorporated
By:___________________________________
Francis J. Sweeney
Principal
EXHIBIT 5(a)
------------
NEW ISSUE -- BOOK-ENTRY ONLY
$100,635,000
Matagorda County Navigation
District Number One (Texas)
6.10% Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
Dated: July 1, 1995 Due: July 1, 2028
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 from, and secured
by a pledge of, the revenues to be received by the Issuer under an
Installment Payment Agreement from
Central Power and Light Company
_______________
The Bonds will be issuable only as fully registered bonds without
coupons and when initially issued are expected to be registered in the
name of Cede & Co., as nominee of The Depository Trust Company, New York,
New York ("DTC"). DTC will act as securities depositary for the Bonds.
Purchases of beneficial ownership interests in the Bonds will be made in
book-entry form only in denominations of $5,000 or any integral multiple
thereof. Purchasers of beneficial ownership interests will not receive
certificates representing their interests in the Bonds. Principal of,
premium, if any, and interest on the Bonds (payable on January 1 and July
1, commencing January 1, 1996), will be paid in the manner described
herein. See "THE BONDS--Book-Entry Only System" herein. The Bonds are
subject to redemption prior to maturity as described herein.
__________________
MBIA
Payment of the principal and interest on the Bonds when due will
be insured by a municipal bond 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, 1995)
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".
_______________
_______________
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 delivery of the Bonds will
be made in New York, New York on or about July 27, 1995.
_______________
MORGAN STANLEY & CO. Incorporated
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
Dated: July 13, 1995
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.
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 Matagorda County Navigation District
Number One, 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 Matagorda County Navigation District
Number One 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
THE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
THE INDENTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
THE MBIA INSURANCE CORPORATION INSURANCE POLICY. . . . . . . . . . . . 15
TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . 20
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
CONTINUING DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . 21
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
APPENDIX A - CENTRAL POWER AND LIGHT COMPANY . . . . . . . . . . . . . A-1
APPENDIX B - FORM OF OPINION OF BOND COUNSEL . . . . . . . . . . . . . B-1
APPENDIX C - FORM OF MUNICIPAL BOND INSURANCE POLICY . . . . . . . . . C-1
$100,635,000
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE
POLLUTION CONTROL REVENUE REFUNDING BONDS
(Central Power and Light Company Project)
Series 1995
Due July 1, 2028
_______________
INTRODUCTION
This Official Statement is provided to furnish information
regarding the issuance by Matagorda County Navigation District Number One,
a governmental agency and body politic and corporate of the State of Texas
(the "Issuer"), of its Pollution Control Revenue Refunding Bonds (Central
Power and Light Company Project) Series 1995 (the "Bonds") in the
aggregate principal amount of up to $100,635,000.
The issuance and sale of the Bonds has been authorized by a
Resolution adopted by the Board of Navigation and Canal Commissioners of
the District on June 1, 1995 (the "Resolution") and will be issued
pursuant to an Indenture of Trust to be dated as of July 1, 1995 (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 all of the
outstanding (i) $68.87 million of the Issuer's outstanding 10-1/8%
Pollution Control Revenue Bonds (Central Power and Light Company Project)
Series 1984 (the "Series 1984 Bonds") and (ii) $31.765 million of the
Issuer's outstanding 9-3/4% Collateralized Pollution Control Revenue Bonds
(Central Power and Light Company Project) Series 1985A (the "Series 1985A
Bonds" and, together with the Series 1984 Bonds, the "Prior Bonds"), which
were issued to finance the cost of the acquisition, construction and
improvement of certain pollution control and solid waste disposal
facilities, as hereinafter described, at the South Texas Project Electric
Generating Station (the "Plant") located between Bay City, Texas and
Palacios, Texas. Central Power and Light Company, a Texas business
corporation (the "Company"), owns a 25.2% undivided interest in the Plant.
Except where the context otherwise indicates, the term "Facilities" herein
refers to the Company's portion of certain of the pollution control and
solid waste disposal facilities at the Plant.
Pursuant to an Installment Payment Agreement to be dated as of
July 1, 1995 (the "Agreement") between the Issuer and the Company, the
Company 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, and interest on, the Bonds. Neither the Facilities nor the Plant
constitutes 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
Special Rebate Fund), and the Company's absolute, irrevocable and
unconditional obligation to make payments thereunder.
There follows in this Official Statement brief descriptions of
the Issuer, the Facilities, the Use of Proceeds, the Bonds, the Agreement,
the Indenture and the MBIA Insurance Corporation Insurance Policy. Such
descriptions do not purport to be complete and are qualified in their
entirety by reference to each specific document so described. See
"MISCELLANEOUS" herein for information with respect to obtaining copies of
such documents. Terms not defined herein have the meanings set forth in
such documents. Appendix A to this Official Statement has been furnished
by, and contains information concerning, the Company, including certain
financial statements and other information incorporated therein by
reference.
THE ISSUER
Matagorda County Navigation District Number One 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 the State of Texas and by Chapters
60 and 62 of the Texas Water Code (the "Act"). The principal office of the
Issuer is in Palacios, Texas.
THE FACILITIES
The Facilities consist of various systems which are designed for
the abatement and control of pollution and the treatment and disposal of
sewage and solid waste resulting from the operation of the Plant. The
Plant is a nuclear generating station consisting of two units with the
capability of generating a total of 2500 megawatts of power. Unit 1 of
the Plant began commercial operation on August 25, 1988, and Unit 2 began
commercial operation on June 19, 1989.
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 debt service
funds with respect to the Prior Bonds maintained by NationsBank of Texas,
N.A., Dallas, Texas (successor to RepublicBank Dallas, National
Association) ("NationsBank"), pursuant to an Indenture of Trust dated as
of October 15, 1984 between the Issuer and NationsBank with regard to the
Series 1984 Bonds and pursuant to an Indenture of Trust dated as of July
1, 1985 between the Issuer and NationsBank with regard to the Series 1985A
Bonds. The Company will provide any additional funds required to refund
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, 1995. The Bonds will
mature on July 1, 2028 and will bear interest at the rate of 6.10% per
annum. 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 January 1 and July 1 of each
year, commencing January 1, 1996, and will be paid by check mailed to the
registered owners thereof of record as of the fifteenth day of the month
prior to such interest payment date. Each such payment date is
hereinafter referred to as an "Interest Payment Date".
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 expenses and indemnification). The Bonds
will not be secured by any lien or other interest in the Facilities or the
Plant. The Company is absolutely, irrevocably 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,
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. None of the State of Texas, the Issuer or any other political
subdivision of the State of Texas will 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 will 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 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 Company 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 will be subject to redemption
prior to maturity at the option of the Issuer, to be exercised at the
direction of the Company, on or after July 1, 2000, in whole or in part at
any time (and, if in part, in the manner specified in the Indenture) upon
prepayment by the Company of amounts due under the Agreement relating to
the Bonds for any purpose and from moneys available for such purpose at
the redemption prices (expressed as percentages of the principal amount of
the Bonds to be redeemed) set forth in the table below, plus, in each
case, accrued interest to the redemption date:
Redemption Date (dates inclusive) Redemption Price
--------------- ----------------
July 1, 2000 through June 30, 2001 102%
July 1, 2001 through June 30, 2002 101%
July 1, 2002 and thereafter 100%
The Bonds will be called for redemption by the Trustee upon
receipt by the Trustee at least 45 days prior to the redemption date of a
written notice from the Company exercising such optional redemption and
specifying the redemption date, the principal amount of the Bonds to be
called for redemption and the applicable redemption price.
Extraordinary Optional Redemption The Bonds are subject to
redemption, at the option of the Issuer, to be exercised at the direction
of the Company, at any time, in whole upon acceleration of the payments by
the Company relating to the Bonds in accordance with the Agreement, at the
principal amount thereof plus accrued interest to the redemption date and
without premium, upon the occurrence of any one or more of the following
events:
(a) in the reasonable judgment of the Company, unreasonable
burdens or excessive liabilities shall have been imposed upon the Issuer
or the Company 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, 1995 or (ii) the imposition of any ad valorem property
or other taxes (other than ad valorem property or other taxes imposed on
July 1, 1995 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 Company, (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 Company will be thereby prevented from carrying on its normal
operations of the Facilities or the Plant for a period of six 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
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 Company, render the
continued operation of the Facilities or the Plant uneconomic;
(e) any court or administrative body shall enter a judgment,
order or decree requiring the 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 Company, it 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 the Company under the
Agreement shall have become unenforceable or impossible of performance in
any material respect in accordance with the intent and purpose of the
parties as expressed in the Agreement as specified in the Indenture.
The Company must give written notice to the Issuer and the
Trustee of its direction to the Issuer to exercise an extraordinary option
to redeem within 120 days after the occurrence of an event specified above
giving rise to such option, which notice shall specify a date for
redemption not less than 45 nor more than 120 days after the date such
notice is given.
Special Mandatory Redemption The Bonds are subject to
mandatory redemption in whole or in part at any time, (and, if in part, in
the manner specified in the Indenture) if such partial redemption will
preserve the exclusion from gross income for federal income tax purposes
of interest on the remaining Bonds Outstanding, at a redemption price
equal to 100% of the principal amount thereof plus unpaid interest accrued
to the redemption date and without premium, if (a) a final decree or
judgment of any federal court, in which the Company participates to the
extent it deems sufficient, or (b) a final action by the Internal Revenue
Service, in proceedings in which the Company participates to the extent it
deems sufficient, determines that the interest paid or payable on any
Bonds to other than, as provided in the Internal Revenue Code of 1954, as
amended (the "1954 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, as a result of the failure by the
Company to observe or perform any covenant, condition or agreement on its
part to be observed or performed under the Agreement or the inaccuracy of
any representation by the Company under the Agreement; provided, however,
that no decree or judgment by any court or action by the Internal Revenue
Service shall be considered final unless the bondholder involved in such
proceeding or action (i) gives the Company and the Trustee prompt notice
of the commencement thereof and (ii) if the Company agrees to pay all
expenses in connection therewith and to indemnify such bondholder against
all liabilities in connection therewith, offers the Company the
opportunity to control the defense thereof. Any such redemption shall be
made not more than 180 days after the date of such final decree, judgment
or action.
Notice of Redemption If any Bonds or portions thereof are
called for redemption, notice thereof will be given by mailing the same by
first-class mail, postage prepaid, not more than 60 nor less than 30 days
prior to the date fixed for redemption to each registered holder thereof
at his address, as the same may appear on the registration books of the
Trustee, unless waived by the holders of all Bonds called for redemption;
however, the failure to mail such notice or any defect therein with
respect to any particular Bond will not affect the validity of any call
for the redemption of any other Bonds.
No further interest will accrue on the principal of any Bond, or
portion thereof, called for redemption after the redemption date if notice
of redemption has been duly given or waived and payment therefor has been
duly provided by the Company.
Legal Holidays
Whenever under the Bonds or the Indenture a duty, notice or
payment is required to be performed, given or paid on a given day of a
month and such day is not a Business Day, as defined in the Indenture, the
required duty, notice or payment will be performed, given or paid on the
next succeeding Business Day.
Book-Entry Only System
The Depository Trust Company ("DTC") will act as securities
depositary for the Bonds. The ownership of the Bonds will be registered
in the name of Cede & Co., as nominee for DTC. One fully-registered bond
certificate will be issued for the Bonds, in the aggregate principal
amount of the Bonds, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the laws
of the State of New York, 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 was created to hold securities of its participants (the "DTC
Participants") and to facilitate the clearance and settlement of
securities transactions among DTC Participants in such securities through
electronic book-entry changes in accounts of the DTC Participants,
eliminating the need of physical movement of securities certificates. DTC
Participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations, some of
whom own DTC. Access to the DTC system is also available to others such
as banks, brokers, dealers and trust companies that clear through or
maintain a custodian relationship with a DTC Participant, either directly
or indirectly (the "Indirect Participants").
The DTC Participants will receive a credit balance in the
records of DTC to evidence their ownership of the Bonds, if any. The
ownership interest of each actual purchaser of each Bond (a "Beneficial
Owner") will be recorded through the records of the DTC Participant.
Beneficial Owners are expected to receive a written confirmation of their
purchase from the DTC Participant providing details of the Bond acquired.
Transfers of ownership interests in the Bonds will be accomplished by book
entries made by DTC and, in turn, by the DTC Participants who act on
behalf of the Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interest in the Bonds.
So long as Cede & Co. is the registered owner of the Bonds, as
nominee of DTC, references herein to the holder or registered holder of
the Bonds means Cede & Co. and not the Beneficial Owners of the Bonds.
DTC may determine to discontinue providing its service with
respect to the Bonds at any time by giving notice to the Issuer and
discharging its responsibilities with respect thereto under applicable
law. Under such circumstances, Bond certificates are required to be
delivered as described in the Indenture. Each Beneficial Owner, upon
registration of certificates representing Bonds held in such Beneficial
Owner's name, will become the registered holder of such Bonds.
The Issuer may determine that continuation of the system of
book-entry transfers through DTC (or a successor securities depositary) is
no longer desirable. In such event, Bond certificates will be delivered
as described in the Indenture.
The Issuer and the Trustee will recognize DTC or its nominee as
the registered holder for all purposes, including notices and voting.
Conveyance of notices and other communications by DTC to DTC Participants,
by DTC Participants to Indirect Participants, and by DTC Participants and
Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory and regulatory
requirements as may be in effect from time to time.
Principal, premium, if any, and interest payments on the Bonds
will be made to DTC or its nominee, Cede & Co., as registered holder of
the Bonds. Upon receipt of moneys, DTC's current practice is to
immediately credit the accounts of the DTC Participants in accordance with
their respective holdings shown on the records of DTC. Payments by DTC
Participants and Indirect Participants to Beneficial Owners will be
governed by standing instructions and customary practices, as is now the
case with municipal securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility
of such DTC Participant or Indirect Participant and not of DTC, the
Underwriters, the Company, the Trustee or the Issuer, subject to any
statutory and regulatory requirements as may be in effect from time to
time.
The information above concerning DTC and the book-entry-only
system has been obtained from DTC and is not guaranteed as to accuracy or
completeness by and is not to be construed as a representation by the
Issuer, the Trustee, the Company or the Underwriters.
The Issuer makes no assurances that DTC, the DTC Participants,
the Indirect Participants or other nominees of the Beneficial Owners will
act in accordance with the procedures described above or in a timely
manner.
THE AGREEMENT
Installment Payments
Under the Agreement, the Company agrees to make installment
payments in immediately available funds directly to the Trustee for
deposit in the Bond Fund established under the Indenture on each day on
which any payment of principal of, premium, if any, or interest on the
Bonds ("Debt Service") shall become due (whether at maturity or upon
redemption or acceleration or otherwise) in an amount which, together with
other money held by the Trustee under the Indenture, will enable the
Trustee to make such payment of Debt Service in full when due.
All the obligations of the Company under the Agreement are
absolute, irrevocable and unconditional, and the Company will make the
payments required by the Agreement free of any
deductions and without abatement or setoff.
Prepayment of Installment Payments
The Company may prepay the installment payments in whole or in
part at any time and, in the circumstances requiring redemption of the
Bonds (see "THE BONDS -- Redemption"), must prepay the installment
payments in an amount sufficient to effect the redemption of the required
principal amount of the Bonds. Optional prepayments may, at the Company's
direction, be used to redeem the Bonds pursuant to the optional redemption
provisions of the Indenture or credited against required installment
payments for Debt Service.
Tax Covenants of the Company
The Company covenants to refrain from any action which would
adversely affect, or to take such action to assure, the treatment of the
Bonds as obligations described in Section 103 of the Internal Revenue Code
of 1986 (the "Code") or Section 1313 of the Tax Reform Act of 1986, the
interest on which is not includable in the gross income of the owner,
except to the extent that the Bonds are held by a substantial user of the
Facilities or a related person thereto, as those terms are used in Section
103(b)(13) of the 1954 Code, for purposes of federal income taxation.
The Company also covenants that it will restrict the use of the
proceeds of the Bonds and take other actions so that the Bonds will not
constitute "arbitrage bonds" under Section 148 of the Code. The Company
also agrees to remit to the Trustee any funds, to the extent not already
held by the Trustee, to be rebated to the United States pursuant to
Section 148 of the Code.
Defaults and Remedies under the Agreement
Any one or more of the following events will constitute an
"Event of Default" under the Agreement:
(a) failure by the Company to make the installment payments
required by the Agreement at or prior to the time when such payment is
required to be made and which failure, if with respect to the payment of
interest on the Bonds, shall continue for a period of 60 days;
(b) failure by the Company to observe or perform, or the
breach by the Company of, any representation, covenant or agreement in the
Agreement on its part to be observed or performed, other than as referred
to in subparagraph (a) above, for a period of 90 days after written notice
of such failure has been given to the Company 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, if such
failure can, in the reasonable judgment of the Company, be corrected, but
not within the 90 day period, such failure shall not constitute an Event
of Default if corrective action is instituted by the Company within the
applicable period and the Company notifies the Issuer and the Trustee of
such corrective action and undertakes to pursue and pursues the corrective
action until the failure is corrected; or
(c) certain events of dissolution, liquidation, insolvency,
bankruptcy or reorganization involving the Company.
The provisions of subparagraph (b) above are subject to the
limitation that if, by reason of force majeure described in the Agreement,
the Company is unable in whole or in part to carry out its obligations
under the Agreement, the Company will not be deemed in default during the
continuance of such inability. The Company, however, has agreed to use
its best efforts to remedy with all reasonable dispatch the cause or
causes preventing the Company from carrying out its agreements, provided
that the settlement of strikes, lockouts and other industrial disturbances
shall be entirely within the discretion of the Company. The occurrence of
any event of force majeure will not suspend or otherwise abate, and the
Company will not be relieved from, any obligation under the Agreement to
the extent that the Company's failure 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 holders thereof for federal income tax purposes. See "THE
INDENTURE--Defaults and Remedies under the Indenture" for information
regarding the curing of defaults by the Company with the consent of the
Trustee and, in certain instances, the holders of a majority in aggregate
principal amount of Outstanding Bonds.
Whenever an Event of Default under the Agreement shall have
occurred and be continuing, (i) the Trustee, as provided in the Indenture,
may declare all installment payments payable for the remainder of the term
of the Agreement to be immediately due and payable and (ii) the Trustee or
the Issuer (subject to certain limitations), at the option of either, may
take whatever action at law or in equity may appear necessary or desirable
to collect the payments then due and thereafter to become due or to
enforce performance and observance of any representation, agreement or
covenant of the Company under the Agreement. Any amounts collected
pursuant to action taken upon the happening of an Event of Default will be
paid into the Bond Fund created under the Indenture and applied in
accordance with the provisions of the Indenture. See "THE INDENTURE --
Defaults and Remedies under the Indenture."
Modifications and Amendments
Prior to payment or provision for payment of the Bonds and all
expenses of the Trustee and the Issuer, the Agreement cannot be amended so
as to reduce or postpone the payments required to be made by the Company
to the Trustee, and cannot otherwise be amended, except to reflect a
change in the Company's ownership percentage in the Facilities or any
additional Facilities, without the prior written consent of the Trustee.
Corporate Existence; Exceptions
The Company has agreed that, during the term of the Agreement,
(a) it (or its permitted successors or assigns) will continue to be a
corporation duly qualified to do business in the State of Texas and (b) it
will not dispose of all or substantially all of its assets as an entirety
(whether by liquidation, dissolution or otherwise) and will not merge into
or consolidate with any other corporation unless the resulting, surviving
or transferee corporation, if other than the Company, irrevocably and
unconditionally assumes the due and punctual performance of the Company's
obligations under the Agreement.
THE INDENTURE
Assignment and Pledge
For the purpose of securing the payment of the principal of,
premium, if any, and interest on the Bonds, the Issuer has pledged and
assigned to the Trustee all the right, title and interest of the Issuer in
the Agreement, together with all moneys payable thereunder, other than
certain rights of the Issuer relating to certain payments for expenses and
indemnification. See "THE BONDS -- Limited Obligations of the Issuer."
Bond Fund
In accordance with the Agreement, all payments made by the
Company thereunder will be made to the Trustee for deposit in the Bond
Fund established under the Indenture. All moneys from time to time
received by the Trustee and held in the Bond Fund will be held in trust by
the Trustee for the benefit of the holders of the Bonds entitled to be
paid therefrom.
Investment of Fund Moneys
Any moneys held as part of the Bond Fund will be invested or
reinvested by the Trustee, at the request and direction of the Company,
(i) in direct obligations of, or obligations guaranteed by, the United
States of America, and any bonds or other obligations of the Federal
National Mortgage Association (including Participation Certificates),
Government National Mortgage Association, Federal Farm Credit Banks,
Federal Intermediate Credit Banks, Federal Banks for Cooperatives, Federal
Land Banks, Federal Home Loan Mortgage Corporation and Federal Home Loan
Banks, (ii) in interest-bearing certificates of deposit secured by
obligations described in the foregoing clause (i) in a national or state
bank or a trust company (which may be the Trustee) which has a combined
capital and surplus aggregating not less than $250,000,000, (iii) in any
obligation secured by a pooling of one or more of the foregoing, (iv) in
any obligation described in Section 103(a) of the Code or (v) as otherwise
permitted by law.
The Company and the Issuer have agreed in the Agreement that the
proceeds of the Bonds and any investment thereof will not be used directly
or indirectly so as to cause all or any of the Bonds to be or become
"arbitrage bonds" within the meaning of Section 148 of the Code or any
regulations or rulings pertaining thereto.
Defaults and Remedies under the Indenture
Any one or more of the following events will constitute an
"Event of Default" under the Indenture:
(a) payment of the principal of and premium, if any, on any of
the Bonds shall not have been made when the same shall become due and
payable at maturity, upon redemption or otherwise;
(b) payment of an installment of interest on any of the Bonds
shall not have been made when the same shall become due and payable and
such failure shall continue for a period of 60 days;
(c) there shall be an "Event of Default" as defined in the
Agreement (see "THE AGREEMENT -- Defaults and Remedies under the
Agreement"); or
(d) the Issuer shall default in the due and punctual
performance of any other covenant, condition, agreement or provision
contained in the Bonds or in the Indenture on the part of the Issuer to be
performed, and such default shall continue for 90 days after written
notice specifying the default and requiring the same to be remedied shall
have been given to the Issuer and the Company by the Trustee. Such notice
may be given by the Trustee in its discretion and shall be given at the
written request of the holders of not less than 25 percent in aggregate
principal amount of the Bonds then Outstanding; provided, however, that if
said default cannot be corrected within 90 days, it shall not constitute
an Event of Default if corrective action is instituted by the Issuer or
the Company within 90 days and diligently pursued until the default is
corrected.
Upon the occurrence and continuation of any Event of Default,
the Trustee may, and upon the written request of the holders of not less
than 25 percent in aggregate principal amount of the Bonds then
Outstanding shall, provided that written notice of the Event of Default
has been delivered to the Issuer and the Company by the Trustee, declare
the principal of and accrued interest on all Outstanding Bonds immediately
due and payable.
However, if, after the principal of the Bonds has been declared
to be due and payable, the principal of the Bonds and all arrears of
interest thereon (except the principal of, and interest on, the Bonds
which by such declaration have become due and payable), and interest on
overdue installments of principal and interest, to the extent legally
permissible, and all other sums payable under the Indenture shall have
been paid by or on behalf of the Issuer and the Company, and the Issuer
and the Company shall have performed all other things in respect of which
they may have been in default under the Indenture or under the Agreement,
and have paid or caused to be paid the reasonable charges of the Trustee
and of the holders of Bonds, including reasonable attorneys' fees paid or
incurred and all other expenses of the Trustee, then and in every such
case, such default may, in the Trustee's discretion, be waived and such
declaration and its consequences rescinded and annulled by the Trustee by
written notice to the Issuer and the Company; provided, that, if such
declaration was requested by the holders of not less than 25 percent in
aggregate principal amount of the Bonds Outstanding, such waiver,
rescission and annulment shall have been consented to by the holders of a
majority in aggregate principal amount of the Bonds then Outstanding. No
such waiver, rescission and annulment will extend to or affect any
subsequent default or impair any right or remedy consequent thereon.
Upon the happening of any Event of Default, the Trustee may, and
upon the written request of the holders of not less than 25 percent in
aggregate principal amount of the Bonds then Outstanding and receipt of
indemnity to its satisfaction shall, in its own right, (i) by mandamus, or
other suit, action or proceeding at law or in equity, enforce all rights
of the holders of the Bonds and require the Issuer or the Company to carry
out any agreements with or for the benefit of the holders of the Bonds;
(ii) bring suit upon the Bonds; (iii) by action or suit at law or in
equity require the Issuer to account as if it were the trustee of an
express trust for the holders of the Bonds; or (iv) by action or suit at
law or in equity enjoin any acts or things which may be unlawful or in
violation of the rights of the holders of the Bonds.
All rights of action with respect to the Indenture shall be
exercised only by the Trustee, and no holder of a Bond shall have any
right to institute any suit, action or proceeding at law or in equity for
the execution of any trust or for any other remedy under the Indenture or
on the Bonds, unless: such suit, action, proceeding or remedy shall be
with respect to an Event of Default as to which the Trustee shall have
been given written notice by the holder of a Bond; the Trustee shall have
received the written request (after the power to exercise such powers or
rights of action, as the case may be, shall have accrued) of the holders
of not less than 25 percent in aggregate principal amount of the Bonds
then Outstanding to institute such suit, action, proceeding or remedy; the
Trustee shall have been afforded a reasonable opportunity either to
proceed to exercise its powers granted in an Event of Default or to
institute such action, suit, proceeding or remedy in the name of the
Trustee or of the holders of the Bonds; the Trustee shall have been
offered security and indemnity satisfactory to it; and the Trustee shall
have refused or neglected to comply with such request within a reasonable
time. However, each holder of a Bond shall have a right of action to
enforce the payment of the principal of, premium, if any, and interest on
any Bond held or owned by such holder at and after the maturity thereof,
or the obligation of the Issuer to pay the principal of and any premium
and interest on each such Bond at the time and place, from the source and
in the manner in said Bond expressed. The holders of a majority in
aggregate principal amount of the Bonds Outstanding shall have the right
to direct the method and place of conducting all remedial proceedings to
be taken by the Trustee under the Indenture.
MBIA Insurance Corporation Deemed to be a Bondholder
Notwithstanding any provision of the Indenture to the contrary,
MBIA Insurance Corporation (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
When all the Bonds shall have been paid, or their payment
provided for, and discharged, and there shall have been paid, or provision
shall have been made for paying, all fees and charges of the Trustee, the
Issuer and any other paying agents due or to become due through the date
on which the last of the Bonds is or is to be retired, then the Indenture
shall cease, terminate and become null and void; and thereupon the Trustee
shall release the Indenture and shall cancel and discharge the lien
thereof; and the Trustee shall reassign and deliver to the Issuer any part
of the Trust Estate which may then be in its possession and subject to the
lien of the Indenture, except such moneys and/or "Governmental
Obligations" as are held by the Trustee for the payment of the principal
of, premium, if any, and interest due on the retirement of the Bonds.
After such payment and discharge, including the fees and charges indicated
above, or provision therefor, have been made with respect to all the
Bonds, the interest of the Trustee under the Indenture shall cease in
respect of such Bonds, and such Bonds shall not be entitled to any
benefits of the Indenture, except the right to be paid from the moneys
and/or "Governmental Obligations" so held by the Trustee for the payment
thereof. Bonds shall be deemed to have been paid (a) if the Trustee and
any other paying agents shall hold, in trust, sufficient moneys or (b) if
the Trustee shall hold, in trust, "Governmental Obligations" of such
maturities and interest payment dates and bearing interest at such rates
as will, without further reinvestment of principal or the interest
thereon, be sufficient, together with any moneys referred to in (a) above,
for payment of the principal, premium, if any, and interest in respect of
such Bonds as they become due; provided, that, if any of such Bonds are to
be redeemed prior to maturity, notice of redemption in accordance with the
Indenture shall have been given or provision satisfactory to the Trustee
shall have been made for the giving of such notice. "Governmental
Obligations" shall mean any of the following which are noncallable and
which, at the time of investment, are legal investments under the laws of
the State of Texas for the moneys proposed to be invested therein: (i)
direct general obligations of, or obligations the payment of the principal
of and interest on which are unconditionally guaranteed by, the United
States of America; or (ii) bonds, debentures or notes issued by any of the
following federal agencies: Government National Mortgage Association,
Federal Banks for Cooperatives, Federal Farm Credit Banks, Federal Land
Banks, Federal Home Loan Banks, Federal Intermediate Credit Banks, Federal
Home Loan Mortgage Corporation or Federal National Mortgage Association
(including Participation Certificates).
The Trustee; Successors
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 and the Company and notice by first class mail to each registered
holder of Bonds, and may also be removed at any time by the holders of a
majority in aggregate principal amount of the Bonds then Outstanding. A
successor trustee may be appointed by the holders of a majority in
aggregate principal amount of the Bonds then Outstanding; provided, that
the Issuer may appoint a temporary trustee until the appointment of such
successor. Every successor trustee shall be a trust company, a bank and
trust company or a national bank with trust powers and having a combined
capital and surplus of at least $250,000,000, if there be such a trust
company, bank and trust company or national bank with trust powers willing
and able to accept the trust on reasonable and customary terms.
Supplemental Indentures
The Issuer and the Trustee, with the consent of the Company but
without the consent of the holders of the Bonds, may enter into
supplemental indentures, in respect of the Bonds, for any of the following
purposes:
(a) to add to the covenants and agreements of the Issuer in
the Indenture other covenants and agreements and to surrender any right or
power reserved to or conferred upon the Issuer therein;
(b) to modify any of the provisions of the Indenture or
relieve the Issuer from any of the obligations, conditions or restrictions
contained therein; provided, that no such modification shall be or become
operative or effective which shall in any manner impair any of the rights
of the holders of the Bonds or the Trustee;
(c) to cure any ambiguity, or to cure, correct or supplement
any defect or inconsistent provision contained in the Indenture or any
indenture supplemental thereto in a manner which, in the opinion of Bond
Counsel, is not adverse to the interests of the holders of the Bonds;
(d) to make such provision in regard to matters or questions
arising under the Indenture as may be necessary or desirable and not
inconsistent with the Indenture and not, in the opinion of Bond Counsel,
adverse to the interests of the holders of the Bonds; or
(e) to make any other change which, in the opinion of Bond
Counsel, does not materially adversely affect the rights of the Issuer or
any holder of Bonds.
Exclusive of the purposes described in subparagraphs (a) through
(e) above, written approval of the holders of not less than a majority in
aggregate principal amount of the Bonds then Outstanding and affected
shall be required for any supplemental indenture, except that no
modification or alteration of the Indenture may be made without the
consent of all the holders of the Bonds at the time Outstanding and
affected by such modification or alteration which permits (i) the
reduction of the percentage of the Bonds, the consent of the holders of
which is required for any such modification or alteration, (ii) the
extension of the time or times of payment of the principal of, premium, if
any, or interest on any of the Bonds, or the reduction in the principal
amount of any of the Bonds, or in the rate of interest or the amount of
any premium thereon or any other modification in the terms of payment of
the principal thereof or interest or premium thereon, (iii) the creation
by the Issuer of any lien ranking prior to or on a parity with the lien of
the Indenture, (iv) the giving of any preference of any Bond over any
other Bond or (v) the extension of any waiver of default to subsequent
defaults. The Indenture further provides that the holders of not less
than a majority in aggregate principal amount of the Bonds Outstanding
shall have the power to waive any rights specifically provided with
respect to the Bonds and to assent to any modification of any such right
which may be proposed by the Issuer and consented to by the Trustee,
subject, however, to the provisions of clauses (a)-(e) above.
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 C 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 Trustee 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: (a) optional or mandatory redemptions (other
than mandatory redemption upon the occurrence of a determination of
taxability); (b) any payments to be made on an accelerated basis (other
than as stated in (a) above); or (c) any Preference relating to (a)
through (b) 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 Trustee 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. ("State Street"), 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, State Street 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 March 31, 1995, the Bond Insurer had admitted assets of
$3.5 billion (unaudited), total liabilities of $2.4 billion (unaudited),
and total capital and surplus of $1.1 billion (unaudited) determined in
accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities. As of December 31, 1994, the Bond
Insurer had admitted assets of $3.4 billion (audited), total liabilities
of $2.3 billion (audited), and total capital and surplus of $1.1 billion
(audited) 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, 1994, 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, 1994 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". The Obligations are rated in the
highest rating category by Moody's.
Standard & Poor's Ratings Group, a division of The McGraw Hill
Companies, Inc. ("Standard & Poor's"), rates the claims paying ability of
the Bond Insurer "AAA". The Obligations are rated in the highest rating
category by Standard & Poor's.
The Moody's rating of the Bond Insurer should be evaluated
independently of the Standard & Poor's rating of the Bond Insurer. No
application has been made to any other rating agency in order to obtain
additional ratings on the Bonds. 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
either or both 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
reversed or withdrawn.
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
"private activity bonds" the interest on which would be included as an
alternative minimum tax preference item under Section 57(a)(5) of the
Internal Revenue Code of 1986 (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 B -- Form of Opinion of Bond Counsel.
In rendering its opinion, Bond Counsel will rely upon (a)
information furnished by the Company, and, particularly, written
representations of officers and agents of the Company 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 Company 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 Company 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, 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 and taxpayers who may be deemed to have
incurred or continued indebtedness to purchase tax-exempt obligations, who
are subject to special provisions of the Code.
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 Company, 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 exclusive of the
information contained under the captions "THE BONDS - Book-Entry Only
System" and "THE MBIA INSURANCE CORPORATION INSURANCE POLICY" and in
Appendix A. Certain legal matters are being passed upon for the Issuer by
the firm of Mayfield & Mayfield, counsel to the Issuer. Neither Bond
Counsel nor counsel to the Issuer has participated in the preparation of,
or examined (and they therefore will express no opinion on and assume no
responsibility for), the contents of Appendix A to this Official
Statement, and they have not considered it necessary to do so in order to
render their opinions.
Certain legal matters will be passed upon for the Company by its
counsel, Milbank, Tweed, Hadley & McCloy, New York, New York, and by its
special counsel, Vinson & Elkins L.L.P., and for the Underwriters by their
counsel, Sidley & Austin, Chicago, Illinois.
UNDERWRITING
Morgan Stanley & Co. Incorporated, Goldman, Sachs & Co. and J.P.
Morgan 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, 1995 to the date of
delivery. Under the terms of the Bond Purchase Agreement dated July 13,
1995 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 the Bonds if any such Bonds are
purchased. The Company has agreed to pay the Underwriters a commission
equal to .820% 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
The Company has made certain undertakings to provide annual
financial statements of the Company (commencing with the fiscal year of
the 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. The 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
the Company of the validity of the Rule and are valid and binding only to
the extent that the Rule is valid. The 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 Company
and its 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 Company and
the Underwriters during the initial offering period for the Bonds and
thereafter from the Trustee. Information concerning the Company is
contained or incorporated by reference in Appendix A to this Official
Statement. All the information contained under the heading "THE
FACILITIES" has been furnished by the Company, and the Issuer makes no
representations as to the accuracy or completeness of such information.
Under the Agreement, and otherwise, the Company is obligated to
make certain payments to the Issuer and has 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.
This Official Statement has been duly approved by the Board of
Navigation and Canal Commissioners of the Issuer.
MATAGORDA COUNTY NAVIGATION
DISTRICT NUMBER ONE
By: /s/ T.E. Holsworth
Chairman, Board of
Navigation and Canal
Commissioners
______________________
APPENDIX A
______________________
CENTRAL POWER AND LIGHT COMPANY
The information contained in this Appendix to the Official Statement has
been obtained from Central Power and Light Company.
THE COMPANY
The Company 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. The Company's Annual Report on Form 10-K for the year
ended December 31, 1994.
2. The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995.
3. The Company's Current Report on Form 8-K dated April 5,
1995.
All documents filed by the Company 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.
The Company 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 the Company 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 Company 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 75266, as agent for the Company. 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
1,969,000
Customers. . . . . . . . . . . . . . . . . . . . Approximately 603,000
Generating Fuels for 1994. . . . . . . . . . . . Gas 56%; Coal 24%;
Nuclear 20%
<TABLE>
SELECTED FINANCIAL INFORMATION
(in thousands, except percentages and ratios)
<CAPTION>
Twelve Months
Ended March 31, Year Ended December 31,
1995 1994 1993 1992
-------------- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Income Summary:
Electric Operating Revenues $1,082,032 $1,217,979 $1,223,528 $1,113,423
Operating Income 249,863 256,251 190,079 266,665
Net Income 196,816 205,439 172,425 218,511
Ratio of Earnings
to Fixed Charges* 2.70 3.24 2.69 3.23
______________________
* 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.
</TABLE>
Capitalization at
March 31, 1995
-----------------
(Unaudited)
Capitalization Summary:
Long Term Debt $1,468,001 46.9%
Preferred Stock 250,351 8.0
Common Equity 1,408,821 45.1
Total Capitalization $3,127,173 100.0%
CONSTRUCTION PROGRAM
The Company's capital expenditures for 1995-1997, including
allowance for funds used during construction ("AFUDC"), are estimated at
$111 million; $136 million and $110 million; respectively. The Company
anticipates that the majority of the funds required for its 1995-1997
capital expenditure program will be provided from internal sources. These
estimates are subject to change due to numerous factors, including load
growth, escalation of construction costs, changes in nuclear and
environmental regulation, delays from regulatory hearings, adequacy of rate
relief and the availability of necessary external capital.
EXPERTS
The audited financial statements and schedules of the Company
included in its Annual Report on Form 10-K for the year ended December 31,
1994, which has been incorporated herein by reference, have been examined
by Arthur Andersen LLP, independent public accountants, as indicated in
their report dated February 13, 1995 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 B
______________________
FORM OF OPINION OF BOND COUNSEL
July 27, 1995
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE
POLLUTION CONTROL REVENUE REFUNDING BONDS
(CENTRAL POWER AND LIGHT COMPANY PROJECT)
SERIES 1995
WE HAVE EXAMINED into the validity of the bonds described above
(the "Bonds"), issued by the Matagorda County Navigation District Number
One (the "Issuer"), initially dated as of July 1, 1995, in the aggregate
principal amount of $100,635,000, maturing July 1, 2028 (unless the Bonds
shall become due or shall be redeemed prior to their scheduled maturity in
accordance with the terms and conditions stated in the text of the Bonds),
and bearing interest from the dates specified therein until maturity or
redemption, at the rates and payable on the dates and in the manner
described in the text of the Bonds. The Bonds are in registered form in
denominations of $5,000 and integral multiples thereof.
WE HAVE ACTED AS BOND COUNSEL for the Issuer for the purpose of
rendering an opinion with respect to the authorization, issuance,
delivery, legality, and validity of the Bonds under the laws and
Constitution of the State of Texas, with respect to any exemption of the
interest on the Bonds from federal income taxes, and for the other limited
purposes set forth herein and in a supplemental opinion of even date
herewith. We have not been requested to examine, and have not
investigated or verified, any statements, records, material, or other
matters relating to the financial condition or capabilities of the
corporation hereinafter described, and we express no opinion with respect
thereto.
WE HAVE EXAMINED the Constitution and laws of the State of
Texas under which the Issuer was created and exists and pursuant to which
it has authorized and issued the Bonds; certified copies of the
proceedings of the governing body of said Issuer; certificates of Central
Power and Light Company, a Texas corporation (the "Company"); the
Installment Payment Agreement dated as of July 1, 1995 (the "Agreement"),
between the Issuer and the Company; the Indenture of Trust dated as of
July 1, 1995 (the "Indenture"), between the Issuer and The Bank of New
York (the "Trustee"); resolutions of the Issuer, including the resolution
authorizing the issuance of the Bonds, adopted June 1, 1995 (the "Bond
Resolution"); certificates, resolutions, and representations of the
Company and the Trustee, including certificates and representations with
respect to certain material facts which are solely within the knowledge of
the party rendering such certificates and representations; and the
opinions of Milbank, Tweed, Hadley & McCloy and Vinson & Elkins L.L.P.,
counsel to the Company, upon which certifications, representations, and
opinions we rely to the extent we consider appropriate; and other
instruments authorizing and relating to the issuance of the Bonds,
including one of the executed Bonds (Bond R-1).
THE BONDS are secured by the Indenture whereunder the Trustee,
or its successor as Trustee, is custodian of the Bond Fund created
therein, and is obligated to enforce the rights of the owners of the
Bonds, and to perform other duties, in the manner and under the conditions
stated in the Indenture.
BASED ON SAID EXAMINATION, it is our opinion that the Issuer is
a governmental agency and body politic and corporate of the State of
Texas, validly operating and existing as a conservation and reclamation
district and a navigation district under Texas law with full power and
authority to enter into and carry out the terms of the Agreement and the
Indenture.
IT IS FURTHER OUR OPINION that the Bond Resolution has been
duly and lawfully adopted and that the Bonds have been duly and validly
authorized, issued, executed, authenticated, and delivered in accordance
with law and the Indenture, and constitute valid, legal, binding, and
enforceable special obligations of the Issuer in accordance with their
terms and the terms of the Indenture, with the principal of, premium, if
any, and interest on the Bonds being payable from, and secured by a first
lien on and pledge of all of the right, title, and interest of the Issuer
in and to the Agreement, together with all moneys payable thereunder,
excluding certain rights relating to certain payments for expenses and
indemnification of the Issuer. Pursuant to the Agreement, the Company has
agreed to make payments to the Trustee for deposit into the Bond Fund
established by the Indenture in amounts sufficient to pay and redeem, or
provide for the payment and redemption of, the principal of, premium, if
any, and interest on the Bonds, when due as required by the Indenture.
THE RIGHTS OF THE ISSUER under the Agreement have been duly and
legally assigned in the Indenture to the Trustee and have been pledged to
the payment of the principal of, premium, if any, and interest on the
Bonds. It is our opinion that the Agreement has been duly and lawfully
authorized, executed, and delivered by the Issuer, and is a legal, valid,
binding, and enforceable obligation of the Issuer in accordance with its
terms and conditions. Milbank, Tweed, Hadley & McCloy and Vinson & Elkins
L.L.P., counsel for the Company, have rendered their respective opinions
of even date herewith to the effect that the Agreement has been duly and
lawfully authorized, executed, and delivered by the Company, and that it
is a legal, valid, binding, and enforceable obligation of the Company. We
note that said counsel each has stated that the enforceability of the
Agreement is subject to applicable bankruptcy, insolvency, reorganization,
moratorium, or other similar laws relating to or affecting creditors'
rights generally.
IT IS FURTHER OUR OPINION that the Indenture has been duly and
lawfully authorized, executed, and delivered, that it is in full force and
effect, that it is legal, valid, binding, and enforceable in accordance
with its terms and conditions, and that it creates the valid pledge which
it purports to create.
THE ISSUER has reserved the right to amend the Indenture as
provided therein and subject to the restrictions therein stated.
THE OPINIONS HEREINABOVE expressed are qualified to the extent
that the obligations of the Company, the Trustee, and the Issuer, and the
enforceability thereof, with respect to the Bonds, the Agreement, the Bond
Resolution, and the Indenture are subject to applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar laws relating to
or affecting creditors' rights generally.
IN OUR OPINION, except as discussed below, the interest on the
Bonds will be excludable from the gross income of the owners of the Bonds
for federal income tax purposes under the statutes, regulations, published
rulings, and court decisions existing on the date of this opinion. The
exceptions are as follows:
(1) interest on the Bonds will be includable in the gross
income of the owner thereof during any period that such Bonds
are owned by either a "substantial user" of the facilities
financed with the proceeds of the Bonds or a "related person"
of such user, as provided in section 103(b)(13) of the Internal
Revenue Code of 1954, as amended;
(2) interest on the Bonds will be included in a
corporation's alternative minimum taxable income for purposes
of determining the alternative minimum tax and the
environmental tax imposed on corporations by sections 55 and
59A of the Internal Revenue Code of 1986, as amended (the
"Code");
(3) interest on the Bonds will be subject to the branch
profits tax imposed on foreign corporations by section 884 of
the Code; and
(4) interest on the Bonds will be subject to the tax
imposed by section 1375 of the Code on the excess net passive
income of certain S corporations that have Subchapter C
earnings and profits.
Section 57(a)(5) of the Code includes as an individual and
corporate alternative minimum tax preference item, the interest on certain
"private activity bonds," other than bonds issued after August 7, 1986, to
currently refund such bonds. In our opinion, the interest on the Bonds is
not an alternative minimum tax preference item under such section.
IN EXPRESSING THIS OPINION as to the exclusion from gross
income of interest, we have (a) relied upon information furnished by the
Company, and particularly written representations of officers of the
Company with respect to certain material facts which are solely within
their knowledge, relating to the Facilities, as defined in the Agreement,
and the use of the proceeds of the Bonds and the prior bonds, and (b)
assumed continuing compliance with covenants of the Company, the Issuer
and the Trustee with respect to certain matters, including arbitrage and
the application of Bond proceeds. Failure to comply with certain of these
representations and covenants may cause interest on the Bonds to become
includable in gross income retroactively to the date of their issuance.
EXCEPT AS STATED ABOVE, we express no opinion as to any other
federal, state or local tax consequences of acquiring, carrying, owning or
disposing of the Bonds. In particular, but not by way of limitation, we
express no opinion with respect to the federal, state or local tax
consequences arising from the enactment of any pending or future
legislation.
Respectfully,
______________________
APPENDIX C
______________________
FORM OF MUNICIPAL BOND INSURANCE POLICY
MBIA
FINANCIAL GUARANTY INSURANCE POLICY
MBIA Insurance Corporation
Armonk, New York 10504
Policy No. [NUMBER]
MBIA Insurance Corporation (the "Insurer"), in consideration of the
payment of the premium and subject to the terms of this policy, hereby
unconditionally and irrevocably guarantees to any owner, as hereinafter
defined, of the following described obligations, the full and complete
payment required to be made by or on behalf of the Issuer to [PAYING
AGENT/TRUSTEE] or its successor (the "Paying Agent") of an amount equal to
(i) the principal of (either at the stated maturity or by any advancement
of maturity pursuant to a mandatory sinking fund payment) and interest on,
the Obligations (as that term is defined below) 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 any advancement of maturity pursuant to a mandatory sinking
fund payment, the payments guaranteed hereby 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 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. The amounts referred to in clauses (i) and
(ii) of the preceding sentence shall be referred to herein collectively as
the "Insured Amounts." "Obligations" shall mean:
[PAR]
[LEGAL NAME OF ISSUE]
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 Insurer from the
Paying Agent or any owner of an Obligation the payment of an Insured
Amount for which is then due, that such required payment has not been
made, the 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 Obligations or presentment of such other proof of
ownership of the Obligations, together with any appropriate instruments of
assignment to evidence the assignment of the Insured Amounts due on the
Obligations as are paid by the Insurer, and appropriate instruments to
effect the appointment of the Insurer as agent for such owners of the
Obligations in any legal proceeding related to payment of Insured Amounts
on the Obligations, 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 Obligations, less any amount held by the
Paying Agent for the payment of such Insured Amounts and legally available
therefor. This policy does not insure against loss of any prepayment
premium which may at any time be payable with respect to any Obligation.
As used herein, the term "owner" shall mean the registered owner of any
Obligation as indicated in the books maintained by the Paying Agent, the
Issuer, or any designee of the Issuer for such purpose. The term owner
shall not include the Issuer or any party whose agreement with the Issuer
constitutes the underlying security for the Obligations.
Any service of process on the Insurer may be made to the Insurer at its
offices located at 113 King Street, Armonk, New York 10504 and such
service of process shall be valid and binding.
This policy is non-cancellable for any reason. The premium on this policy
is not refundable for any reason including the payment prior to maturity
of the Obligations.
IN WITNESS WHEREOF, the Insurer has caused this policy to be executed in
facsimile on its behalf by its duly authorized officers, this [DAY] day of
[MONTH, YEAR].
COUNTERSIGNED: MBIA Insurance Corporation
_______________________ __________________________
Resident Licensed Agent President
_______________________ Attest: __________________________
City, State Assistant Secretary
DISCLOSURE OF GUARANTY FUND NONPARTICIPATION: In the event the Insurer is
unable to fulfill its contractual obligation under this 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.
[SPECIMEN]
MBIA
E N D O R S E M E N T
Attached to Policy No. [POLICY NUMBER] issued by MBIA Insurance
Corporation (the "Insurer"), to the Paying Agent, as defined in the
policy issued with respect to the Obligations.
It is further understood that this policy shall guarantee to the owner or
holder, as defined in the policy, the full and complete payments required
to be made by or on behalf of the Issuer if there occurs pursuant to the
terms of the Obligations an event which results in the loss of the tax
exempt status of the interest on the Obligations, including any principal,
interest or premium payments payable thereon, if any, as and when thereby
required.
This endorsement forms a part of the policy to which it is attached,
effective on the inception date of the policy.
IN WITNESS WHEREOF, the Insurer has caused this endorsement to be executed
in facsimile on its behalf by its President and its Assistant Secretary
this [DAY] of [MONTH, YEAR].
MBIA Insurance Corporation
__________________________
President
Attest: __________________________
Assistant Secretary
[SPECIMEN]
EXHIBIT 7(a)
---------
Milbank, Tweed, Hadley & McCloy
One Chase Manhattan Plaza
New York, New York 10005
July 28, 1995
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Re: Matagorda County Navigation District Number One (Texas)
6.10% Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
Dear Sirs:
We have acted as special counsel for Central Power and Light
Company (the "Company") in connection with the purchase by you from
Matagorda County Navigation District Number One (Texas) (the "Issuer")
pursuant to the Bond Purchase Agreement dated July 13, 1995 (the "Purchase
Agreement"), of $100,635,000 aggregate principal amount of 6.10% Pollution
Control Revenue Refunding Bonds (Central Power and Light Company Project)
Series 1995 (the "Bonds"), issued under and pursuant to an Indenture of
Trust, dated as of July 1, 1995 (the "Indenture"), between the Issuer and
The Bank of New York, as Trustee (the "Trustee"). Capitalized terms used
herein and not otherwise defined shall have the respective meanings
assigned to such terms in the Purchase Agreement.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of the Company, indentures,
agreements and other instruments, certificates of public officials,
certificates of officers and representatives of the Company and of the
Trustee and other documents as we have deemed it necessary to require as a
basis for the opinions hereinafter expressed. In such examination we have
assumed the genuineness of all signatures and the authenticity of all
documents submitted to us as originals and the conformity with the
originals of all documents submitted to us as copies. As to various
questions of fact material to such opinions we have, when relevant facts
were not independently established, relied upon certifications by officers
of the Company and other appropriate persons and statements contained in
the Official Statement, including Appendix A thereto (the "Official
Statement").
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion that:
1. The Company is a corporation validly existing and in good
standing under the laws of the State of Texas.
2. The Installment Agreement has been duly and validly
authorized by all necessary corporate action of the Company, has
been duly and validly executed and delivered by the Company, and
is a valid and binding obligation of the Company, enforceable
against the Company 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.
3. The order dated June 15, 1995 of the Securities and Exchange
Commission (the "Commission") under the Public Utility Holding
Company Act of 1935, as amended (the "1935 Act"), granting and
permitting to become effective the Form U-1 Application-
Declaration, as amended, of the Company (File No. 70-8597) with
respect to the Bonds and the Installment Agreement has been
entered and to the best of our knowledge is in full force and
effect. No further consent, approval, authorization, or order
of, or registration or filing with, any Federal commission,
court, governmental or regulatory body or authority is necessary
with respect to the Company for the approval of the Resolution by
the Company, the execution, delivery and performance by the
Company of the Installment Agreement and the Letter of
Representation, the approval by the Company of the terms and
provisions of the Purchase Agreement or the consummation by the
Company of the transactions contemplated by the Installment
Agreement, the Letter of Representation, the Purchase Agreement
and the Official Statement.
4. The Company has duly approved the forms of the Resolution,
the Indenture and the Purchase Agreement; the Purchase Agreement
has been duly authorized and accepted by the Company and the
Letter of Representation has been duly authorized, executed and
delivered by the Company. The Company 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 Letter of
Representation and the Purchase Agreement.
5. The Official Statement and any amendment or supplement
thereto and each document relating to the Company incorporated by
reference in the Official Statement, as such document was
originally filed pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (except for the financial
statements and schedules and other financial and statistical data
included or incorporated by reference therein, as to which we
express no opinion), appear on their face to be appropriately
responsive in all material respects to the requirements of the
Exchange Act and the Securities Act of 1933, as amended (the
"Act"), and the rules and regulations of the Commission
thereunder applicable to prospectuses contained in registration
statements on Form S-3 as if the Act, rules and regulations were
applicable to the Official Statement.
6. The offer, sale and delivery of the Bonds to the public are
not required to be registered under the Act and no qualification
of the Indenture is required under the Trust Indenture Act of
1939, as amended, in connection with such transactions.
7. Except as may be specifically set forth in the Official
Statement and except for the proceedings relating to the opinion
of the Attorney General of the State of Texas on the Bonds and to
the registration of the Bonds upon initial issuance by the
Comptroller of Public Accounts of the State of Texas, to the best
of our knowledge 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 the Company
or the Facilities, pending or threatened (i) which might
reasonably be expected to materially and adversely affect (x) the
condition (financial or otherwise), results of operations or
properties of the Company or (y) the operation, condition or
feasibility of the Facilities or (ii) wherein any unfavorable
decision, ruling or finding would materially and adversely affect
(x) the transactions contemplated to be performed by the Company
by the Letter of Representation, the Installment Agreement or the
Official Statement or (y) the validity or enforceability of the
Bonds, the Installment Agreement, the Indenture, the Purchase
Agreement or the Letter of Representation. We express no opinion
as to any proceeding to which the Issuer is a party and the
Company is not.
8. The approval of the Resolution, the Indenture, and the
Purchase Agreement, the execution and delivery of the Letter of
Representation and the Installment Agreement, and compliance with
the provisions thereof or consummation of the transactions
contemplated thereby by the Company will not result in a
violation of any of the terms or provisions of any indenture,
mortgage, deed of trust, commitment, agreement or other
instrument, of which we have knowledge, to which the Company is a
party or by which it is bound, or any existing order of which we
have knowledge of any court or any Federal regulatory body or
administrative agency or other Federal governmental body having
jurisdiction over the Company or any of its properties, nor will
such action result in any violation of the provisions of the
Restated Articles of Incorporation or By-laws of the Company or
any Federal laws of the United States or to the best of our
knowledge result in the creation or imposition of any lien,
charge or other security interest or encumbrance of any nature
whatsoever upon any of the properties or assets of the Company
(except the lien, if any, created by the Installment Agreement).
As to the financial statements included in the Official
Statement, we have made no examination of the Company's books of account
and we therefore express no opinion. As to the statements under the
headings "The Bonds" (other than under the sub-heading "Book-Entry Only
System"), "The Agreement", and "The Indenture" (except for the financial
statements and schedules and other financial and statistical data included
or incorporated by reference therein, as to which we express no opinion),
we are of the opinion that the statements are accurate in all material
respects and do not omit any material fact necessary to make such
statements, in light of the circumstances under which they were made, not
misleading. As to other matters we have not undertaken to determine
independently the accuracy or completeness of the statements contained in
the Official Statement. We have, however, participated in the preparation
of the Official Statement and we have reviewed such of the corporate
records of the Company as we deemed advisable. None of the foregoing
disclosed to us any information which gave us reason to believe that the
Official Statement (except for the financial statements and other
financial and statistical data included or incorporated by reference
therein, as to which we express no opinion) contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
This opinion is subject to the interest on the Bonds being
excluded from gross income of holders thereof for Federal income tax
purposes, as to which you have received opinions of McCall, Parkhurst &
Horton L.L.P. and with respect to which we express no opinion.
In rendering the opinions hereinabove expressed, we have relied
upon the opinion of even date hereof, delivered to you concurrently
herewith, of Messrs. Vinson & Elkins L.L.P., Dallas, Texas, counsel for
the Company, as to all matters governed by Texas law, and as to such
matters, the opinions hereinabove expressed are subject to all
qualifications, limitations, assumptions and reliances, and other
considerations, therein set forth.
We do not express any opinion as to matters governed by any laws
other than the laws of the State of New York, the Federal laws of the
United States of America and, to the extent hereinabove stated, in
reliance on the opinion of counsel for the Company, the laws of the State
of Texas.
Very truly yours,
/s/ MILBANK, TWEED, HADLEY & MCCLOY
Milbank, Tweed, Hadley & McCloy
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