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File No. 70-8677
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 3 TO
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
_________________________
CENTRAL POWER AND LIGHT COMPANY
539 North Carancahua Street
Corpus Christi, Texas 78401
(Name of company filing this statement and address
of principal executive office)
_________________________
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
_________________________
Shirley S. Briones, Treasurer
Central Power and Light Company
539 North Carancahua Street
Corpus Christi, Texas 78401
Stephen J. McDonnell, Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75266-0164
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
Central Power and Light Company (the "Company"), a Texas corporation
and a wholly-owned electric public utility subsidiary of Central and South
West Corporation ("CSW"), a Delaware corporation and a registered holding
company under the Public Utility Holding Company Act of 1935, as amended
(the "Act"), hereby files this Amendment No. 3 to the Form U-1 Application-
Declaration in File No. 70-8677 in order to amend the Application-Declaration
in the manner described below. Except as provided in this Amendment No. 3,
the Application-Declaration as previously filed and amended will remain the
same.
The third paragraph of Item 1 is hereby amended and restated in its
entirety as follows:
As discussed below under the heading "Managing Interest Rates", the
Company also seeks authorization to manage interest rate risk or lower its
interest rate costs on any variable rate New Bonds through the use of caps and
collars during the life of the New Bonds.
The sixth paragraph under the heading "Old Bonds" in Item 1 is hereby
amended and restated in its entirety as follows:
The Series 1974A Bonds and the Series 1977 Bonds are subject to
sinking fund provisions. The Company looses the tax-exempt financing on the
amount of the sinking funds each year. To date, the Company has lost an
aggregate $2,840,000 in tax-exempt financing due to the sinking fund
requirements imposed on the Series 1974A Bonds and the Series 1977 Bonds:
Original Sinking Fund Current
Principal Payments Other Principal
Series Amount to date Redemptions Amount
------ ----------- ------------ ----------- ------------
1974A 8,825,000 1,400,000 0 7,425,000
1974B 1,000,000 0 0 1,000,000
1977 36,600,000 1,440,000 1,695,000 33,465,000
1977A 1,000,000 0 230,000 770,000
----------- ----------- ----------- -----------
$47,425,000 $ 2,840,000 $ 1,925,000 $42,660,000
By refunding the Old bonds, the Company will preserve tax-exempt financing on
the $40,890,000 aggregate principal amount of the Series 1974A Bonds and the
Series 1977 Bonds.
Item 1 is further amended to include the following additional
information after the sixth paragraph under the heading "Managing Interest
Rates" and prior to the section headed "Conclusion":
Additional Terms of the Initial Series of New Bonds
The Company has determined to refund the Series 1974A Bonds and the
Series 1977 Bonds with a series of floating rate, multi-modal bonds to be
designated Guadalupe-Blanco River Authority (Texas) Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) Series 1995 (the
"Series 1995 Bonds") in the aggregate principal amount of $40,890,000. The
Series 1995 Bonds are expected to be sold to the public at 100% of their
principal amount.
The Series 1995 Bonds will initially bear interest at a daily
adjustable rate until converted in whole or in part to a different interest
rate "Mode" permitted under the Indenture. The permitted Modes for the Series
1995 Bonds are the "Flexible Mode" for interest rate periods of from one to
270 days, the "Daily Mode," the "Weekly Mode," the "Monthly Mode," the
"Quarterly Mode," the "Semiannual Mode" and the "Multiannual Mode" for
interest rate periods of one day, one week, one month, three months, six
months or one year (and integral multiples of one year), respectively, and the
"Fixed Rate Mode" for the remaining term of the Bonds. Except for Series 1995
Bonds bearing interest at a fixed rate, the Mode for all or a portion of the
Series 1995 Bonds is subject to conversion to a different Mode from time to
time at the election of the Company. The interest rates in each Mode and the
rate periods will be determined by Morgan Stanley & Co. Incorporated,
appointed as remarketing agent under the Indenture. The interest rate on the
Series 1995 Bonds may not exceed a maximum rate of 12%.
Under certain circumstance and at specific times, the Series 1995
Bonds are subject to mandatory tender or to optional tender at the direction
of the bondholders. The Company intends to remarket any Series 1995 Bonds so
tendered through Morgan Stanley & Co. Incorporated, as remarketing agent,
pursuant to a Remarketing Agreement, the form of which is attached hereto as
Exhibit 12. If the remarketing agent is unsuccessful in its attempts to
remarket any Series 1995 Bonds so tendered, the Company may be obligated to
purchase some or all of such Series 1995 Bonds.
Series 1995 Bonds in the Flexible, Daily, Weekly, Monthly, Quarterly
or Semiannual Modes will be subject to redemption prior to maturity at the
option of the Issuer, upon direction of the Company, in whole or in part, on
any interest payment date applicable to the Series 1995 Bonds to be redeemed,
at a redemption price equal to the principal amount thereof plus interest
thereon to the redemption date, without premium. Series 1995 Bonds in the
Multiannual Mode or Fixed Rate Mode will be subject to redemption prior to
maturity at the option of the Issuer, upon direction of the Company, in whole
on any business day, or in part on any interest payment date applicable to the
Series 1995 Bonds to be redeemed, as follows:
Length of
Interest No-Call Redemption
Rate Period Period Prices
Greater than 5 years from 102%, declining
or equal to commencement 1% per year to
5 years of Interest 100%
Rate Period
Less than No call
5 years
The Company will obtain credit enhancement in the form of an
irrevocable direct pay letter of credit issued with respect to the Series 1995
Bonds (the "Letter of Credit") by ABN AMRO Bank N.V. After any mandatory
purchase of all of the outstanding Series 1995 Bonds, the Company shall have
the right, subject to satisfaction of certain conditions, to provide other
credit enhancement (such as a letter of credit not meeting the requirements of
the Indenture, any standby bond purchase agreement or bond insurance) or no
credit enhancement as security for the Series 1995 Bonds. In connection with
the Letter of Credit or other forms of credit enhancement, the Company shall
enter into a letter of credit agreement or reimbursment agreement
substantially in the form of Exhibit 13 hereto.
It is not possible to predict precisely the interest rate which may
be obtained in connection with the original issuance of the Series 1995 Bonds.
However, the Company has been advised that the interest rate on obligations,
interest on which is excludable from gross income, historically has been, and
can be expected at the time of issuance of the Series 1995 Bonds to be,
between 3% and 5%. In any event, Series 1995 Bonds will not be issued at
rates in excess of those generally obtained at the time of pricing for
substantially similar tax-exempt bonds (having the same maturity, issued by
entities of comparable credit quality and having similar terms, conditions and
features).
The Company will not agree, without further order of the Commission,
to the issuance of any Series 1995 Bonds by the Issuer (i) if the stated
maturity of any Series 1995 Bonds shall be more than forty (40) years, (ii) if
the discount from the initial public offering price of any Series 1995 Bonds
shall exceed 5% of the principal amount thereof, or (iii) if the initial
public offering price shall be less than 95% of the principal amount thereof.
The transactions described herein will be consummated no later than
December 31, 1996. The Company hereby requests that an Order be issued by
this Commission releasing jurisdiction with respect to the pricing of the
Series 1995 Bonds.
The first sentence of the second paragraph of Item 4 is hereby
amended to delete the phrase "caps, collars, floors or related instruments,"
and substitute therefor the phrase "caps and collars."
The second sentence of the second paragraph of Item 4 is hereby
amended to delete the word "hedging" after the phrase "prior to entry into any
such," and to delete the word "product" after the phrase "provide information
on such" and substitute therefor the word "products".
Item 1. Description of Proposed Transaction.
Item 1 is hereby amended in its entirety to read as follows:
The Company is seeking authority through December 31, 1998, to incur
obligations in connection with the proposed issuance by Nueces County
Navigation District No. 1 ("Nueces") and/or Guadalupe - Blanco River Authority
(Texas) ("Guadalupe") in one or more series of up to $95,000,000 aggregate
principal amount of Pollution Control Revenue Bonds of which (i) up to
$45,000,000 aggregate principal amount may be Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) (the "Refunding
Bonds"), and (ii) up to $50,000,000 aggregate principal amount may be new
money Revenue Bonds (Central Power and Light Company Project) (the "New Money
Bonds" and, together with the Refunding Bonds, the "New Bonds"). The issuance
of New Money Bonds may be combined with the issuance of Refunding Bonds.
Guadalupe and Nueces are each referred to herein as an "Issuer" and, together
as the "Issuers".
The purpose of the issuance of the Refunding Bonds is to reacquire
all or a portion of (i) Nueces' $7,425,000 of outstanding 7-1/8% Environmental
Improvement Revenue Bonds (Central Power and Light Company Facilities) Series
1974, Issue A (the "Series 1974A Bonds"), (ii) Nueces' $1,000,000 of
outstanding 7-1/8% Environmental Improvement Revenue Bonds (Central Power and
Light Company Facilities) Series 1974, Issue B (the "Series 1974B Bonds"),
(iii) Guadalupe's $33,465,000 of outstanding 6% Pollution Control Revenue
Bonds (Central Power and Light Company Project) Series 1977 (the "Series 1977
Bonds") and (iv) Guadalupe's $770,000 of outstanding 6% Pollution Control
Revenue Bonds (Central Power and Light Company Project) Series 1977A (the
"Series 1977A Bonds" and, together with the Series 1974A Bonds, Series 1974B
Bonds and Series 1977 Bonds, the "Old Bonds"). The purpose of the issuance of
the New Money Bonds is to reimburse the Company's treasury for any
expenditures made that qualify for tax-exempt financing or to provide for
current solid waste expenditures. See "Use of Proceeds" below.
As discussed below under the heading "Managing Interest Rates", the
Company also seeks authorization to manage interest rate risk or lower its
interest rate costs on any variable rate New Bonds through the use of caps and
collars during the life of the New Bonds.
The Old Bonds
In July 1974, Nueces issued the Series 1974A Bonds and the Series
1974B Bonds pursuant to the Indenture of Trust between Nueces and NationsBank
of Texas, N.A., Dallas, Texas (successor to Commerce Union Bank, Nashville,
Tennessee), as Trustee. In November 1977, Guadalupe issued the Series 1977
Bonds and the Series 1977A Bonds pursuant to the Indenture of Trust between
Guadalupe and Texas Commerce Bank - Dallas, N.A. (successor to Corpus Christi
National Bank), as Trustee. The Indentures of Trust for the Old Bonds are
referred to collectively herein as the "Indentures". NationsBank of Texas,
N.A., Dallas, Texas and Texas Commerce Bank - Dallas, N.A. are referred to
collectively herein as the "Trustees".
Certain terms of the Indentures include the following:
Interest
Series Rate Maturity Date First Redemption Date (1)
(per annum)
1974A 7-1/8% June 1, 2004 June 1, 1984
1974B 7-1/8% June 1, 2004 June 1, 1984
1977 6% November 1, 2007 November 1, 1987
1977A 6% November 1, 2007 November 1, 1987
____________________________
(1) The Indentures provide that the bonds of each series may not be redeemed
prior to its First Redemption Date and thereafter may be redeemed at the then
applicable redemption price plus accrued interest to the redemption date. The
Old Bonds are currently callable at par.
The Company and the Issuers entered into Installment Sale Agreements
(the "Sale Agreements") between the Issuers and the Company to provide for the
issuance of the Old Bonds. In connection with the issuance of the New Bonds,
the Company will (i) amend the Sale Agreements, (ii) enter into agreements
with substantially the same terms as the Sale Agreements and/or (iii) enter
into new installment sale agreements (each, an "Amended Sale Agreement").
The Series 1974A Bonds and the Series 1974B Bonds were originally
issued to provide funds for the acquisition, construction and improvement of
air and water pollution control facilities (the "Davis Facilities") at the
Barney M. Davis Power Station (the "Davis Power Station") which is operated by
the Company and located in Nueces County, Texas.
The Series 1977 Bonds and the Series 1977A Bonds were originally
issued to provide funds for the acquisition, construction and improvement of
certain facilities designed to abate or control air and water pollution (the
"Coleto Facilities", and together with the Davis Facilities, the "Facilities")
at the Coleto Creek generating plant (the "Coleto Plant", and together with
the Davis Power Station, the "Plants") of the Company located in Goliad
County, Texas.
The Series 1974A Bonds and the Series 1977 Bonds are subject to
sinking fund provisions. The Company looses the tax-exempt financing on the
amount of the sinking funds each year. To date, the Company has lost an
aggregate $2,840,000 in tax-exempt financing due to the sinking fund
requirements imposed on the Series 1974A Bonds and the Series 1977 Bonds:
Original Sinking Fund Current
Principal Payments Other Principal
Series Amount to date Redemptions Amount
------ ----------- ------------ ----------- ------------
1974A 8,825,000 1,400,000 0 7,425,000
1974B 1,000,000 0 0 1,000,000
1977 36,600,000 1,440,000 1,695,000 33,465,000
1977A 1,000,000 0 230,000 770,000
----------- ----------- ----------- -----------
$47,425,000 $ 2,840,000 $ 1,925,000 $42,660,000
By refunding the Old bonds, the Company will preserve tax-exempt financing on
the $40,890,000 aggregate principal amount of the Series 1974A Bonds and the
Series 1977 Bonds.
Terms of the New Bonds
The New Bonds will bear interest at a fixed or floating rate, may or
may not be secured with First Mortgage Bonds and will mature in not more than
forty years. The interest rate, redemption provisions and other terms and
conditions applicable to the New Bonds will be determined by negotiations
between the Company and one or more investment banking firms or other entities
that will purchase or underwrite the New Bonds (the "Purchasers"). It is
anticipated that (i) the New Bonds will be redeemable at any time in whole at
the option of the Company at the principal amount thereof plus accrued
interest, upon the occurrence of various extraordinary events specified in the
Amended Sale Agreements, as supplemented, or similar documents utilized in
connection with the issuance of the New Bonds, and the Indentures as amended
by one or more supplements (each a "Supplemental Indenture"), or a new
indenture (the "New Indenture"), relating generally to (a) destruction or
condemnation of the Facilities or the Plants, (b) conditions rendering
operation of the Facilities or the Plants infeasible, (c) the imposition on
the Company or the Issuers of unreasonable burdens or excessive liabilities
with respect to the Facilities or the Plants, or (d) if a constitutional
amendment or legislative, administrative or judicial action causes the
obligations of the Company under the Sale Agreements to become unenforceable
or impossible of performance in any material respect with the expressed
intention of the parties; (ii) the New Bonds will be subject to optional
redemption in whole or in part at times and with premiums to be determined by
negotiations between the Company and the Purchaser(s); and (iii) the New Bonds
will be subject to special mandatory redemption, in whole or in part, at the
principal amount thereof plus accrued interest, in the event the interest on
the New Bonds becomes subject to federal income tax.
Pursuant to the Sale Agreements, the Company transferred the Davis
Facilities and the Coleto Facilities to Nueces and Guadalupe, respectively,
which financed the acquisitions and related costs thereof with the proceeds of
the Old Bonds. The Sale Agreements contain commitments by the Company to pay
to the Issuers at specified times amounts sufficient to enable the Issuers to
pay debt service on the Old Bonds, including principal, interest and
redemption premium, if any.
The Company may obtain credit enhancement for the New Bonds, which
could include bond insurance, a letter of credit or a liquidity facility. Due
to heightened credit sensitivity in the short-term tax-exempt market, the
Company anticipates it may be required to provide credit enhancement if it
were to issue floating rate bonds, whereas credit enhancement would be a
purely economic decision for the Company if it were to issue fixed rate bonds.
The Company anticipates that even though it would be required to pay a premium
or fee to obtain the credit enhancement, it would realize a net benefit
through a reduced interest rate on the New Bonds. The Company would obtain
credit enhancement only if it determines it would be economically beneficial
to do so.
If bond insurance is obtained, the Company may be required to enter
into an agreement with the insurer and an escrow agent pursuant to which the
Company would be obligated to make payments of certain amounts into an escrow
fund upon the Company's failure to maintain certain financial ratios and on
the occurrence of certain other events. Amounts held in such an escrow fund
would be payable to the insurer as an indemnity for any amounts paid by the
insurer with respect to principal or interest on the New Bonds. The New Bonds
may also contain other terms and conditions deemed necessary or desirable to
take maximum advantage of the then current market conditions.
The Company also requests authority to issue First Mortgage Bonds as
security for the payment of the New Bonds, at its option, depending upon
market conditions at the time of issuance of the New Bonds. The Company will
issue First Mortgage Bonds, subject to applicable indenture restrictions upon
the issuance thereof, by executing a Supplemental Indenture to its Mortgage
Indenture dated November 1, 1943 to the First National Bank of Chicago and
A.H. Bohm (the "Mortgage Indenture"). Such First Mortgage Bonds will be
issued to the Trustee for the New Bonds pursuant to the Mortgage Indenture.
The First Mortgage Bonds will be held by the Trustee solely for the benefit of
the holders of the New Bonds and will not be transferable except to a
successor Trustee. The First Mortgage Bonds will be issued in the exact
amount and have substantially the same terms as the New Bonds. To the extent
payments in respect of the New Bonds are made in accordance with their terms,
corresponding payment obligations under the First Mortgage Bonds will be
deemed satisfied.
As applied to any First Mortgage Bonds that may be issued as
collateral for the New Bonds, the optional redemption provisions described
herein may deviate from the Securities and Exchange Commission's (the
"Commission") Statement of Policy Regarding First Mortgage Bonds Subject to
the Public Utility Holding Company Act of 1935, Release No. 35-13105, 21 Fed.
Reg. 1286 (1956), as supplemented by Commission Release No. 35-16369, 34 Fed.
Reg. 9553 (1969) (together, the "Statement of Policy"), in that the First
Mortgage Bonds may be subject to a redemption limitation of up to fifteen
years while the Statement of Policy requires that first mortgage bonds be
subject to redemption at any time upon reasonable notice and with reasonable
redemption premiums, if any. The Company has been advised by several
investment banks that purchasers of fixed-rate, tax-exempt bonds generally
expect a ten year redemption limitation and that failure to include such a
limitation may cause the New Bonds to be unmarketable to a large pool of such
purchasers, and may result in an increase in the effective interest cost to
the Company. In consideration of current and future market expectations with
regard to redemption limitations, the Company hereby requests that the
Commission approve the above-described deviation from the Statement of Policy
so that the First Mortgage Bonds, and therefore the New Bonds, may contain up
to a 15 year optional redemption limitation.
As applied to the First Mortgage Bonds, any sinking fund provisions
may also deviate from the Statement of Policy, in that the First Mortgage
Bonds will not have sinking fund provisions unless the New Bonds have sinking
fund provisions. The Statement of Policy requires the Company to deposit
annually with the trustee for the First Mortgage Bonds an amount of cash equal
to not less than one percent of the aggregate principal amount of Bonds of all
series authenticated under the First Mortgage Bond indenture. The Company has
been advised by several investment bankers that purchasers of private activity
bonds generally do not expect sinking fund provisions. In light of market
expectations, and the Company's desire to retain 'permanent' tax-exempt
financing (see "The Old Bonds" above), the Company hereby requests that the
Commission approve the above-described deviation from the Statement of Policy
so that the First Mortgage Bonds, and therefore the New Bonds, may omit
sinking fund provisions.
The Company also requests a waiver from the requirement in the
Statement of Policy for a limitation on dividends. The Company believes that
dividend limitations, if any, are a matter best left to the financial
marketplace and the state regulatory commissions. The limitation on dividends
provision in the Statement of Policy was adopted when accounting standards and
ratemaking practices were very different from today. For example, ratemaking
disallowances on grounds of alleged lack of prudence or alleged excess
capacity have become more prevalent today. Under today's accounting
requirements, disallowances might result in charges to the income statement
and current retained earnings, which could preclude the payment of dividends
on common stock.
All of the Company's bonds of Series AA and prior contain dividend
restrictions in the supplemental indentures which will continue to limit the
Company's dividend payments until all such bonds mature or are retired. In
light of these dividend restrictions and provisions in the Company's Articles
of Incorporation restricting the payment of dividends to a percentage of net
income available for dividends on common stock if the Company's common stock
equity is not maintained at a certain percentage of total capitalization, the
Company believes that the omission of the limitation on dividends as
contemplated by the Statement of Policy will not materially and adversely
affect the holders of the New Bonds. The terms and provisions of the First
Mortgage Bonds will not otherwise materially deviate from the Statement of
Policy.
Messrs. McCall, Parkhurst & Horton, who are anticipated to act as
Bond Counsel, have informed the Company that they will be prepared to give a
legal opinion that interest on the New Bonds will be excluded from gross
income for federal income tax purposes.
The Company anticipates that the New Bonds will be sold by the
Issuer(s) pursuant to a Bond Purchase Agreement (the "Purchase Agreement")
between the Issuer(s) and one or more Purchasers. The Company may or may not
be a party to the Purchase Agreement, but if it is not a party, the Purchase
Agreement will be subject to approval by the Company and the Company will
enter into a letter of representation with the Purchasers, containing various
warranties, representations and indemnities upon which the Purchasers will
rely in entering into the Purchase Agreement.
The Company requests authority to enter into negotiations with
Purchasers with respect to the interest rate, redemption provisions and other
terms and conditions applicable to the New Bonds and to set the terms of the
New Bonds subject to the receipt of an order under the Act if an order has not
been issued when the Company enters into the Purchase Agreement.
Use of Proceeds
The proceeds of the offering of the New Bonds will be used to (i)
redeem the Old Bonds pursuant to the terms of the Indentures (the
"Redemption") and (ii) reimburse the Company's treasury for any expenditures
made that qualify for tax-exempt financing or to provide for current solid
waste expenditures. The proceeds of any offering may also be used to
reimburse the Company's treasury for Old Bonds previously acquired.
The Company may be required to deposit the proceeds of the New Bonds
with the Trustees in connection with the Redemption of the Old Bonds. Any
additional funds required to pay for the Redemption of Old Bonds and the costs
of issuance of the New Bonds will be provided by the Company from internally
generated funds and short-term borrowings pursuant to orders of the Commission
dated March 31, 1993 (HCAR No. 35-25777), September 28, 1993 (HCAR No. 35-
25897), March 18, 1994 (HCAR No. 35-26007), June 15, 1994 (HCAR No. 35-26066)
and March 21, 1995 (HCAR No. 35-26254), or subsequent orders (the "Short-Term
Borrowing Orders").
The Company believes that the Redemption of the Old Bonds and the
issuance of floating rate Refunding Bonds could result in substantial savings
to the Company and benefit the Company's ratepayers. Based on the average of
the last 10 years J.J. Kenny Index, it is estimated that the Issuer(s) could
issue floating rate Refunding Bonds at an interest rate of approximately
4.42%. As set forth in Exhibit 11 hereto, the acquisition of the Old Bonds
and the issuance of the floating rate Refunding Bonds based upon the J.J.
Kenny 10 year average would result in an estimated annual aggregate reduction
in interest costs to the Company of $768,809, if all of the Old Bonds were
reacquired. Total interest savings to the Company over the remaining life of
the Old Bonds would aggregate $8,542,020.
In any case, whether or not net present value savings are available,
the Company proposes to refund the Series 1974A Bonds and the Series 1977
Bonds to eliminate the sinking fund requirement so that the current amount of
tax-exempt bonds outstanding will be maintained. To the extent that Series
1974A Bonds and Series 1977 Bonds are retired through the sinking fund, the
Company would otherwise be required to fund such retired bonds on a taxable
basis, which is a more expensive funding source. For example, currently a
taxable 30 year, no-call ten-year structure is approximately 160 basis points
higher than on a tax-exempt basis. The company proposes to refund the Series
1974B Bonds and the Series 1977A Bonds in conjunction with the refunding of
the Series 1974A Bonds and the Series 1977 Bonds to achieve the administrative
benefits and associated cost savings resulting from consolidating several
series of bonds into one or two series. In addition, if the Series 1974B
Bonds and the Series 1977A Bonds are not refunded along with the Series 1974A
Bonds and the Series 1977 Bonds, then the Company will likely not be able to
refund the Series 1974B Bonds and the Series 1977A Bonds when such bonds
mature, thus loosing the benefit of the tax-exempt financing, because the size
of such an offering would be too small to market.
None of the proceeds from the sale of New Bonds will be used by CSW
or any subsidiary thereof for the direct or indirect acquisition of an
interest in an exempt wholesale generator ("EWG") or a foreign utility company
("FUCO"). Rule 54 promulgated under the Act states that in determining
whether to approve the issue or sale of a security by a registered holding
company for purposes other than the acquisition of an EWG or a FUCO, or other
transactions by such registered holding company or its subsidiaries other than
with respect to EWGs or FUCOs, the Commission shall not consider the effect of
the capitalization or earnings of any subsidiary which is an EWG or a FUCO
upon the registered holding company system if Rule 53(a), (b) and (c) are
satisfied. As set forth below, all applicable conditions set forth in Rule
53(a) are, and, assuming the consummation of the transactions proposed herein,
will be, satisfied and none of the conditions set forth in Rule 53(b) exist or
will exist as a result of the transactions proposed herein.
CSW Northwest GP, Inc. and CSW Northwest LP, Inc. (collectively, "CSW
Northwest"), each an indirect subsidiary of CSW, are the only EWGs, as defined
in Section 32 of the Act, in which CSW has equity interests. CSW, through its
subsidiary, CSW Energy, Inc., has invested less than 1% of $1,811,750,000, the
average of CSW's consolidated retained earnings for the four consecutive
quarters ended June 30, 1995, thus satisfying Rule 53(a)(1). CSW will
maintain and make available the books and records required by Rule 53(a)(2).
No more than 2% of the employees of CSW's operating subsidiaries will, at any
one time, directly or indirectly, render services to an EWG or FUCO in which
CSW directly or indirectly owns an interest, satisfying Rule 53(a)(3). And
lastly, CSW will submit a copy of Item 9 and Exhibits G and H of CSW's Form
U5S to each of the public service commissions having jurisdiction over the
retail rates of CSW's operating utility subsidiaries, satisfying Rule
53(a)(4).
None of the conditions described in Rule 53(b) exist with respect to
CSW or any of its subsidiaries, thereby satisfying such rule and making Rule
53(c) inapplicable.
Managing Interest Rates
The Company proposes to manage interest rate risk through the use of
interest rate caps ("Caps") and interest rate collars ("Collars") if it issues
variable rate New Bonds. The Company therefore requests authority from time
to time during the life of the New Bonds to purchase Caps and Collars in
respect of outstanding New Bonds. Caps and Collars are designed to mitigate
and/or transfer interest rate risk and, from the Company's perspective, are
not for speculation purposes. The Company may elect to purchase a Cap to
limit its exposure to rising interest rates. The Company may also elect to
enter into a Collar, which consists of purchasing a Cap together with the sale
of an interest rate floor ("Floor"). The Company will only sell a Floor if it
is part of a Collar.
The parties to a Cap agree upon a set interest rate, or "strike rate"
that will apply to a series of New Bonds. If the interest rate on the capped
bonds exceeds the strike rate during the term of the Cap, the Cap provider
pays to the Company the difference between the strike rate and the actual
interest rate of the New Bonds. The Company, however, continues to make
interest payments on the New Bonds at the actual interest rate.
A Floor is essentially the opposite of a Cap. As with a Cap, the
parties to a Floor agree on a strike rate. When the actual interest rate on
the New Bonds subject to a Floor falls below the Floor strike rate, the
Company must pay to the Floor provider the difference between the actual
interest rate and the Floor strike rate. The Company continues to make
interest payments on the bonds at the actual interest rate.
Caps and Collars are purchased from a Cap or Collar "provider", at a
purchase price based on a percentage of the aggregate principal amount of the
bonds to be capped or collared. The cost of a Cap or a Collar is determined
by reference to prevailing interest rates, the proposed duration of the Cap or
Collar and the proposed Cap and Floor strike rates. The longer the duration
of a Cap or Collar, the higher the price. The lower the Cap strike rate, the
more expensive the Cap is and the higher the Floor strike rate, the greater
the offset from the Cap price. The maximum the Company would spend on a ten
year Cap would be 10% of the aggregate principal amount of the New Bonds then
outstanding, and the actual cost would be expected to be less than 10%.
Caps and Collars are designed to mitigate interest rate risk and do
not expose the Company to financial or other risks. If the actual interest
rate on the New Bonds does not exceed the Cap strike rate at any time during
the term of the Cap, then the Company will neither benefit from or be exposed
to risk by the Cap or Collar; the Company will only risk the initial cost of
the Cap or Collar. If the actual interest rate falls below and remains below
the Floor strike rate, the Company will be required to pay interest at the
Floor strike rate. Also, the Company is subject to the credit risk on the Cap
provider's ability to make payments on the Cap.
While Caps and Collars purchased for the New Bonds may technically
exist when the underlying bonds are retired, the Company proposes to terminate
any Caps or Collars upon retirement of the New Bonds. If the Company wishes
to terminate a Cap or Collar when interest rates on the New Bonds are between
the Floor strike rate and the Cap strike rate, it would receive a portion of
the original cost of the Cap or Collar in return, or receive nothing,
depending on interest rates and the remaining term of the Cap or Collar. If
the Company seeks to terminate a Collar when the actual interest rate is below
the Floor strike rate, the Company may be required to pay a termination fee
based upon the value of the Collar to the other party at the time.
Additional Terms of the Initial Series of New Bonds
The Company has determined to refund the Series 1974A Bonds and
Series 1977 Bonds with a series of floating rate, multi-modal bonds to be
designated Guadalupe-Blanco River Authority (Texas) Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) Series 1995 (the
"Series 1995 Bonds") in the aggregate principal amount of $40,890,000. The
Series 1995 Bonds are expected to be sold to the public at 100% of their
principal amount.
The Series 1995 Bonds will initially bear interest at a daily
adjustable rate until converted in whole or in part to a different interest
rate "Mode" permitted under the Indenture. The permitted Modes for the Series
1995 Bonds are the "Flexible Mode" for interest rate periods of from one to
270 days, the "Daily Mode," the "Weekly Mode," the "Monthly Mode," the
"Quarterly Mode," the "Semiannual Mode" and the "Multiannual Mode" for
interest rate periods of one day, one week, one month, three months, six
months or one year (and integral multiples of one year), respectively, and the
"Fixed Rate Mode" for the remaining term of the Bonds. Except for Series 1995
Bonds bearing interest at a fixed rate, the Mode for all or a portion of the
Series 1995 Bonds is subject to conversion to a different Mode from time to
time at the election of the Company. The interest rates in each Mode and the
rate periods will be determined by Morgan Stanley & Co. Incorporated,
appointed as remarketing agent under the Indenture. The interest rate on the
Series 1995 Bonds may not exceed a maximum rate of 12%.
Under certain circumstance and at specific times, the Series 1995
Bonds are subject to mandatory tender or to optional tender at the direction
of the bondholders. The Company intends to remarket any Series 1995 Bonds so
tendered through Morgan Stanley & Co. Incorporated, as remarketing agent,
pursuant to a Remarketing Agreement, the form of which is attached hereto as
Exhibit 12. If the remarketing agent is unsuccessful in its attempts to
remarket any Series 1995 Bonds so tendered, the Company may be obligated to
purchase some or all of such Series 1995 Bonds.
Series 1995 Bonds in the Flexible, Daily, Weekly, Monthly, Quarterly
or Semiannual Modes will be subject to redemption prior to maturity at the
option of the Issuer, upon direction of the Company, in whole or in part, on
any interest payment date applicable to the Series 1995 Bonds to be redeemed,
at a redemption price equal to the principal amount thereof plus interest
thereon to the redemption date, without premium. Series 1995 Bonds in the
Multiannual Mode or Fixed Rate Mode will be subject to redemption prior to
maturity at the option of the Issuer, upon direction of the Company, in whole
on any business day, or in part on any interest payment date applicable to the
Series 1995 Bonds to be redeemed, as follows:
Length of
Interest No-Call Redemption
Rate Period Period Prices
Greater than 5 years from 102%, declining
or equal to commencement 1% per year to
5 years of Interest 100%
Rate Period
Less than No call
5 years
The Company will obtain credit enhancement in the form of an
irrevocable direct pay letter of credit issued with respect to the Series 1995
Bonds (the "Letter of Credit") by ABN AMRO Bank N.V. After any mandatory
purchase of all of the outstanding Series 1995 Bonds, the Company shall have
the right, subject to satisfaction of certain conditions, to provide other
credit enhancement (such as a letter of credit not meeting the requirements of
the Indenture, any standby bond purchase agreement or bond insurance) or no
credit enhancement as security for the Series 1995 Bonds. In connection with
the Letter of Credit or other forms of credit enhancement, the Company shall
enter into a letter of credit agreement or reimbursment agreement
substantially in the form of Exhibit 13 hereto.
It is not possible to predict precisely the interest rate which may
be obtained in connection with the original issuance of the Series 1995 Bonds.
However, the Company has been advised that the interest rate on obligations,
interest on which is excludable from gross income, historically has been, and
can be expected at the time of issuance of the Series 1995 Bonds to be,
between 3% and 5%. In any event, Series 1995 Bonds will not be issued at
rates in excess of those generally obtained at the time of pricing for
substantially similar tax-exempt bonds (having the same maturity, issued by
entities of comparable credit quality and having similar terms, conditions and
features).
The Company will not agree, without further order of the Commission,
to the issuance of any Series 1995 Bonds by the Issuer (i) if the stated
maturity of any Series 1995 Bonds shall be more than forty (40) years, (ii) if
the discount from the initial public offering price of any Series 1995 Bonds
shall exceed 5% of the principal amount thereof, or (iii) if the initial
public offering price shall be less than 95% of the principal amount thereof.
The transactions described herein will be consummated no later than
December 31, 1996. The Company hereby requests that an Order be issued by
this Commission releasing jurisdiction with respect to the pricing of the
Series 1995 Bonds.
Conclusion
The Company believes that the consummation of the transactions
proposed herein will be in the best interests of its consumers and investors
and consistent with sound and prudent financial policy.
Item 4. Regulatory Approval.
Item 4 is hereby amended in its entirety to read as follows:
No state regulatory authority and no federal regulatory authority,
other than the Commission under the Act, has jurisdiction over the proposed
transaction.
The Company believes (based on a review of applicable state laws)
that no state approvals are required in connection with the entering into by
the Company of caps and collars to effectively lower the Company's interest
cost on one or more series of New Bonds. The Company will, however, prior to
entry into any such instruments, provide information on such products to
members of the staff of the Public Utility Commission of Texas.
Item 6. Exhibits and Financial Statements.
Item 6 is hereby amended to file the following exhibits:
Exhibit 1 - Form of Installment Sale Agreement between the Company
and the District.
Exhibit 2 - Form of Indenture of Trust between the District and the
Trustee.
Exhibit 3 - Form of Bond Purchase Agreement between the District and
the Underwriters.
Exhibit 4 - Form of Letter of Representation from the Company to the
Purchasers.
Item 6 is hereby further amended to include and/or file the following
additional Exhibits:
Exhibit 12 - Form of Remarketing Agreement between the District and
the Company.
Exhibit 13 - Form of Letter of Credit Agreement between the Company
and the Letter of Credit bank (to be filed by
amendment).
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: September 29, 1995
CENTRAL POWER AND LIGHT COMPANY
By:/s/SHIRLEY S. BRIONES
Shirley S. Briones
Treasurer
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
- ------- -------- ------------
1 Form of Installment Sale Agreement Electronic
between the Company and the District.
2 Form of Indenture of Trust between the Electronic
District and the Trustee.
3 Form of Bond Purchase Agreement between Electronic
the District and the Underwriters.
4 Form of Letter of Representation from Electronic
the Company to the Purchasers.
12 Form of Remarketing Agreement between Electronic
the District and the Company.
13 Form of Letter of Credit Agreement ---
between the Company and the Letter of
Credit bank (to be filed by amendment).
<PAGE>
EXHIBIT 1
---------
INSTALLMENT PAYMENT AGREEMENT
between
GUADALUPE-BLANCO RIVER AUTHORITY
and
CENTRAL POWER AND LIGHT COMPANY
Relating to
Guadalupe-Blanco River Authority
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
TABLE OF CONTENTS
General Recitals and Findings. . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
Representations
Section 2.01.
Representations by Issuer . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.02.
Representations by Company . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
The Projects
Section 3.01.Intentionally Omitted . . . . . . . . . . . . . . . . . . 5
Section 3.02.Intentionally Omitted . . . . . . . . . . . . . . . . . . 5
Section 3.03.Intentionally Omitted . . . . . . . . . . . . . . . . . . 5
Section 3.04.
Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.05.
Right to Discontinue Operation of Projects . . . . . . . . . . . . . 5
Section 3.06.
Insurance and Condemnation Awards . . . . . . . . . . . . . . . . . . 5
Section 3.07.
Taxation of Projects . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.08.
Issuer's Limited Liability . . . . . . . . . . . . . . . . . . . . . 6
Section 3.09.
Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV
Issuance of Bonds; Refunding the Prior Bonds;
Payments; Disbursements
Section 4.01.Issuance of Bonds . . . . . . . . . . . . . . . . . . . 6
Section 4.02.Bond Proceeds. . . . . . . . . . . . . . . . . . . . . . 6
Section 4.03.Security for the Bonds . . . . . . . . . . . . . . . . . 7
Section 4.04.Bond Funds . . . . . . . . . . . . . . . . . . . . . . . 7
Section 4.05.Company Required to Pay in Event Monies Held Pursuant
to the Prior Indentures are Insufficient . . . . . . . 7
ARTICLE V
The Company's Payments
Section 5.01.
Company Approval of Issuance of the Bonds . . . . . . . . . . . . . . . 7
Section 5.02.Refunding of Bonds . . . . . . . . . . . . . . . . . . . . 8
Section 5.03.
Payment Upon Redemption of Bonds . . . . . . . . . . . . . . . . . . . 8
Section 5.04.
Installment Payments . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.05.
Payments to Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.06.
Issuer's Rights Assigned to Trustee . . . . . . . . . . . . . . . . . . 9
Section 5.07.
Payments to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.08.
Payment to Remarketing Agent . . . . . . . . . . . . . . . . . . . . . 10
Section 5.09.
Company Option to Designate Interest Rate Determination . . . . . . . 10
Section 5.10.
Purchase of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.11.
Usury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.12.
Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI
Defaults and Remedies
Section 6.01.
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.02.
Remedies of Default . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.03.
Agreement to Pay Attorneys' Fees and Expenses . . . . . . . . . . . . 15
ARTICLE VII
Special Covenants
Section 7.01.
No Defense or Set-Off; Unconditional Obligation . . . . . . . . . . . 15
Section 7.02.
Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.03.
Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.04.
Tax-Exempt Status of the Bonds . . . . . . . . . . . . . . . . . . . . 16
Section 7.05.
Arbitrage Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.06.
Payment to Rebate Fund . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.07.
Qualification in Texas . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.08.
Recordation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.09
No Personal Liability . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.10.
Compliance with Rule 15c2-12. . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII
General Provisions
Section 8.01.
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.02.
Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.03.
Amendment of Agreement . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.04.
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.05.
Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.06.
Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 8.07.
Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Section 8.08.
Execution of Counterparts . . . . . . . . . . . . . . . . . . . . . . .21
Section 8.09.
Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A1
INSTALLMENT PAYMENT AGREEMENT
between
GUADALUPE-BLANCO RIVER AUTHORITY
and
CENTRAL POWER AND LIGHT COMPANY
This Installment Payment Agreement dated as of October 1, 1995 (the
"Agreement"), by and between GUADALUPE-BLANCO RIVER AUTHORITY (the
"Issuer"),
and CENTRAL POWER AND LIGHT COMPANY (the "Company"):
W I T N E S S E T H:
GENERAL RECITALS AND FINDINGS
(a) The terms used in these recitals shall have the meanings assigned
to such terms in the Indenture of Trust dated as of October 1, 1995,
entered into by and between the Issuer and The Bank of New York, as
trustee.
(b) The Issuer is a governmental agency and body politic and corporate
of the State of Texas, created and existing as a conservation and
reclamation district and political subdivision of the State of Texas
pursuant to Article XVI, Section 59 of the Texas Constitution, and the
laws of the State of Texas, particularly the Issuer Act; and the Company
is a corporation organized and existing under and by virtue of the laws
of the State of Texas; and
(c) Pursuant to law, and particularly the Issuer Act, Article 717k,
Article 717q, Chapter 383, and Chapter 30, the Issuer, being a "river
authority" as defined in Chapter 383 and Chapter 30 and being an "issuer"
as defined in Article 717k and Article 717q, is empowered to acquire,
construct, and improve various air and water pollution control
facilities, and to issue revenue bonds for such purpose and for the
purpose of refunding any such bonds or obligations issued for such
purposes; and
(d) The Port and the Company and the Issuer and the Company have
previously entered into the Prior Agreements pursuant to which the Prior
Bonds were issued; and
(e) The Port and the Issuer entered into the Prior Indentures to
secure the Prior Bonds; and
(f) Pursuant to the terms of the Prior Agreements, the Company is
obligated to pay certain installment sale payments with respect to the
Projects, which payments shall be made in amounts which, together with
other moneys available therefor will be sufficient to pay the principal
of, redemption premium, if any, and interest on the respective Prior
Bonds as the same come due, with such payments to be made in funds which
will be immediately available on the date such principal of, redemption
premium, if any, and interest is due on such Prior Bonds; and
(g) The Company has requested that the Issuer issue its revenue bonds
for the purpose of refunding and retiring all of the outstanding Prior
Bonds; and
(h) The Company has agreed to make payments hereunder in lieu of its
obligations under the Prior Agreements; and
(i) This Agreement is authorized and executed pursuant to applicable
laws, including the Acts; and
(j) The Issuer and the Company have taken all action and have complied
with all provisions of law with respect to the execution, delivery and
performance of this Agreement and the due authorization of the
consummation of the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the covenants and agreements
herein made, and subject to the conditions herein set forth, the Issuer
and the Company contract and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. CAPITALIZED TERMS USED BUT NOT OTHERWISE
DEFINED HEREIN SHALL HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN THE
INDENTURE OF TRUST DATED AS OF OCTOBER 1, 1995, ENTERED INTO BY AND
BETWEEN THE ISSUER AND THE BANK OF NEW YORK, AS TRUSTEE (THE
"INDENTURE").
References in the singular number in this Agreement shall be
considered to include the plural, if and when appropriate. Any times
referred to herein shall be deemed to be references to New York City
time. Any accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles.
ARTICLE II
REPRESENTATIONS
Section 2.01. REPRESENTATIONS BY ISSUER. The Issuer makes the
following representations as the basis for the undertakings on its part
herein contained:
(a) The Issuer is a governmental agency, body politic and corporate
of the State of Texas, existing as a conservation and reclamation
district pursuant to the Issuer Act, and a "river authority" and an
"issuer" within the definitions set forth in the Acts.
(b) The Issuer has the legal power under the Acts to enter into the
transactions contemplated by this Agreement, the Indenture and the Bond
Resolution and to carry out its obligations hereunder and thereunder,
including the issuance and delivery of the Bonds, and to adopt and
perform the Bond Resolution; and each such instrument is a legal, valid
and binding obligation of the Issuer enforceable in accordance with its
terms, except to the extent that the enforcement thereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium, or other laws
now or hereafter in effect relating to or affecting creditors' rights
generally, and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity). The
Issuer has been duly authorized to execute, deliver and perform its
obligations under this Agreement and the Indenture, and to adopt and
perform the Bond Resolution by proper action of the Board.
(c) The Issuer officially finds and determines that each Project
constitutes "control facilities" within the meaning of Chapter 383 and
"disposal systems" within the meaning of Chapter 30 and a "public
utility" within the meaning of Article 717q.
(d) The Issuer, by carrying out the purposes of the Acts as provided
in this Agreement, will be performing an essential public function under
the Texas Constitution.
(e) The Issuer is not in default under any of the provisions of the
laws of the State which would impair, interfere with, or otherwise
adversely affect the ability of the Issuer to make and perform the
provisions of this Agreement, the Indenture, or the Bonds.
(f) There are no actions, suits, proceedings, inquiries or
investigations pending or to the knowledge of the Issuer threatened,
against or affecting the Issuer in any court or before any governmental
authority or arbitration board or tribunal, which involve the possibility
of materially and adversely affecting the transactions contemplated by
this Agreement or the Indenture or which, in any way, would adversely
affect the validity or enforceability of the Bonds, the Indenture or this
Agreement or the ability of the Issuer to perform its obligations under
the Indenture or this Agreement.
(g) The adoption of the Bond Resolution, the issuance and sale of the
Bonds and the execution and delivery by the Issuer of this Agreement and
the Indenture, and the compliance by the Issuer with all of the
provisions of each thereof and of the Bonds (i) are within the powers and
authority of the Issuer, (ii) have been done in full compliance with the
provisions of the Acts, are legal and will not conflict with or
constitute on the part of the Issuer a violation of or a breach of or
default under, or result in the creation of any lien, charge or
encumbrance upon any property of the Issuer (other than as contemplated
by this Agreement and the Indenture) under the provisions of, any charter
instrument, by-law, indenture, mortgage, deed of trust, note agreement or
other agreement or instrument to which the Issuer is a party or by which
the Issuer is bound, or any license, judgment, decree, law, statute,
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Issuer or any of its activities or
properties, and (iii) have been duly authorized by all necessary action
on the part of the Issuer.
(h) Neither the nature of the Issuer nor any of its activities or
properties, nor any relationship between the Issuer and any other person,
nor any circumstance in connection with the offer, issue, sale or
delivery of any of the Bonds is such as to require the consent, approval
or authorization of, or the filing, registration or qualification with,
any governmental authority on the part of the Issuer in connection with
the execution, delivery and performance of this Agreement and the
Indenture or the offer, issue, sale or delivery of the Bonds, other than
those already obtained as of the date of issue of the Bonds; provided,
however, no representation is made herein as to compliance with the
securities or "blue sky" laws of any jurisdiction.
(i) No event has occurred and no condition exists with respect to the
Issuer which would constitute an "Event of Default" under this Agreement
or under the Indenture or which, with the lapse of time or with the
giving of notice or both, would become an "Event of Default" under this
Agreement or under the Indenture.
(j) Neither this Agreement nor the security for the Bonds has been
pledged or hypothecated in any manner or for any purpose other than as
provided in the Indenture as security for the payment of the Bonds.
(k) The Series 1977 Project is located within the boundaries of the
San Antonio River Authority, but is also located within the river basin
of the Issuer and the Series 1974A Project is located within the
boundaries of the Nueces River Authority.
(l) Pursuant to Chapter 30, the Issuer has obtained (i) the consent of
the San Antonio River Authority to the issuance of the Series 1977 Bonds
and the financing of the Series 1977 Project and (ii) the consent of the
Nueces River Authority to the refunding of the Series 1974A Bonds, which
were issued to finance the Series 1974A Project.
Section 2.02. REPRESENTATIONS BY COMPANY. The Company makes the
following representations as the basis for the undertakings on its part
herein contained:
(a) The Company (i) is a corporation duly incorporated and in good
standing in the State of Texas, (ii) is not in violation of any provision
of its restated articles of incorporation or its by-laws, (iii) has full
corporate power to own its properties and conduct its business, (iv) has
full legal right, power and authority to enter into this Agreement and
consummate all transactions contemplated by this Agreement and (v) by
proper corporate action has duly authorized the execution and delivery of
this Agreement.
(b) Neither the execution and delivery by the Company of this
Agreement nor the consummation by the Company of the transactions
contemplated by this Agreement conflicts with, will result in a breach of
or default under or will result in the imposition of any prohibited lien
on any property of the Company pursuant to the restated articles of
incorporation or by-laws of the Company or the terms, conditions or
provisions of any statute, order, rule, regulation, agreement or
instrument to which the Company is a party or by which it is bound.
(c) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes the legal, valid and binding obligation of
the 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 or affecting creditors' rights generally, and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(d) There is no material litigation or proceeding pending, or to the
knowledge of the Company threatened, against the Company which could
reasonably be expected to have a material adverse effect on the validity
of this Agreement or the ability of the Company to comply with its
obligations under this Agreement.
(e) The Company has requested the Issuer to refund the Prior Bonds.
(f) All statements of facts or other information furnished by the
Company to Bond Counsel in connection with Bond Counsel's opinion
relating to the Bonds, including particularly the Tax Letter of
Representation, were true and correct in all material respects when made
and nothing has come to the Company's attention that would change the
truth or correctness of such statements of facts or other information
furnished to Bond Counsel. Moreover, to the extent that such
representations and statements relate to future events, the Company
agrees, at all times while the Bonds are Outstanding, to take such action
to prevent, or to refrain from any action which would result in, such
representations and statements becoming false, inaccurate or incorrect.
(g) The representations of the Company stated in the Prior Agreements
were true and correct when made and nothing has come to the Company's
attention to make such representations untrue as of the date hereof.
ARTICLE III
THE PROJECTS
Section 3.01. INTENTIONALLY OMITTED.
Section 3.02. INTENTIONALLY OMITTED.
Section 3.03. INTENTIONALLY OMITTED.
Section 3.04. MAINTENANCE AND REPAIR. All costs of operating and
maintaining the Projects shall be paid by the Company, and the Issuer
shall have no obligation or liability in this regard. It is understood
and agreed that the Issuer shall have no duties or responsibilities
whatsoever with respect to the operation or maintenance of the Projects,
or the performance of the Projects for their designed purposes.
Section 3.05. RIGHT TO DISCONTINUE OPERATION OF PROJECTS. Although the
Company intends to operate, or cause to be operated, each Project for its
designed purposes until the date on which no Bonds are Outstanding, the
Company is not required by this Agreement to operate, or cause to be
operated, any portion of either Project after the Company shall deem in
its discretion that such continued operation is not advisable and in such
event it is not prohibited by this Agreement from selling, leasing or
retiring all or any such portion of such Project; provided, however,
that, prior to any such sale, lease, or retirement, the Company shall
have provided to the Issuer and the Trustee a Favorable Opinion. The net
proceeds from such sale, lease or other disposition, if any, shall belong
to, and may be used for any lawful purpose by, the Company.
Section 3.06. INSURANCE AND CONDEMNATION AWARDS. The net proceeds of
any insurance or condemnation award as a result of the destruction or
condemnation of any Project or any portion thereof shall belong to, and
may be used for any lawful purpose by, the Company.
Section 3.07. TAXATION OF PROJECTS. During the term of this Agreement,
the Company will promptly remit when due all taxes, including
specifically all sales taxes and ad valorem taxes, levied in respect of
the Projects or the Installment Payments payable hereunder to the
appropriate taxing body. The Company may, at its own expense and in its
own name, in good faith contest any such taxes, assessments and other
charges and, in the event of such contest, may permit the taxes,
assessments or other charges so contested to remain unpaid during the
period of such contest and any appeal therefrom. All taxes, assessments
and other charges levied or imposed with respect to the Projects shall be
the obligation of the Company, and the Issuer shall have no obligation or
liability in this regard.
Section 3.08. ISSUER'S LIMITED LIABILITY. It is recognized that the
Issuer's only source of funds with which to carry out its commitments
under this Agreement will be from the proceeds from the sale of the Bonds
or from any available income or earnings derived therefrom, or from any
funds which otherwise might be made available by the Company; and it is
expressly agreed that the Issuer shall have no financial liability,
obligation, or responsibility with respect to this Agreement or the
Projects except to the extent of funds available from such sources.
Section 3.09. GOVERNMENTAL REGULATION. The Company recognizes and
agrees that this Agreement and the issuance of the Bonds pursuant hereto
will not diminish or limit the authority of the United States
Environmental Protection Agency, the Texas Natural Resources Conservation
Commission, the Texas Water Development Board, or any other State agency
or local governments in performing any of the powers, functions and
duties vested in such entities by federal and state laws, and that all
applicable laws shall be enforced without regard to ownership of the
Projects; and that the Company will not be relieved of any responsibility
under any applicable federal or state laws or regulations pertaining to
pollution control, either now, or during, or after the acquisition,
construction and improvement of either of the Projects, and the Issuer
shall have no responsibility or obligation to take any action to comply
with such laws or regulations with respect to either of the Projects.
ARTICLE IV
ISSUANCE OF BONDS; REFUNDING THE PRIOR BONDS;
PAYMENTS; DISBURSEMENTS
Section 4.01. ISSUANCE OF BONDS. In order to provide funds for the
refunding of the Prior Bonds, the Issuer, concurrently with the execution
of this Agreement, will sell, issue and deliver to the initial purchasers
thereof the Bonds, all in accordance with the Indenture. The Issuer
agrees to pay, from the proceeds from the sale and delivery of the Bonds,
or from any available income or earnings derived therefrom, or from any
funds which otherwise might be made available to the Issuer for such
purpose by the Company, the cost of the Refunding of the Prior Bonds, to
the full extent provided in this Agreement and permitted by the Acts.
Section 4.02. BOND PROCEEDS. The Issuer shall, on the Issue Date,
cause to be deposited into the bond funds created pursuant to the Prior
Indentures for the Prior Bonds all proceeds from the sale of the Bonds as
set forth in Section 4.01 of the Indenture.
Section 4.03. SECURITY FOR THE BONDS. The obligations of the Company
under this Agreement, including specifically the obligation to make
Installment Payments as provided in Sections 5.01, 5.03 and 5.04 hereof,
shall be direct general obligations of the Company. Prior to or simulta-
neously with the issuance of the Bonds, the Issuer will assign to the
Trustee under the terms of the Indenture all of the Issuer's right,
title, and interest in and to the Installment Payments and certain other
rights under this Agreement as provided in the Indenture.
Section 4.04. BOND FUNDS. The Issuer has authorized and directed the
Trustee pursuant to the Indenture to transfer all of the proceeds from
the sale of the Bonds to the Prior Trustees, each as trustee and paying
agent for the respective series of the Prior Bonds. The Company agrees
(i) to direct the Prior Trustees to invest such proceeds, together with
amounts provided by the Company pursuant to Section 4.05 hereof, only in
direct obligations of the United States of America, including obligations
the principal of and interest on which are unconditionally guaranteed by
the United States of America, which may be in book-entry form, and which
mature on or before the redemption date for the Prior Bonds and (ii) that
any such funds which cannot be so invested shall remain uninvested.
Section 4.05. COMPANY REQUIRED TO PAY IN EVENT MONIES HELD PURSUANT TO
THE PRIOR INDENTURES ARE INSUFFICIENT. The Company shall, on the Issue
Date, cause to be deposited in the bond funds for the Prior Bonds held by
the Prior Trustees monies sufficient, together with the Bond proceeds so
transferred on the Issue Date, to pay the total redemption price of the
Prior Bonds on their redemption date, plus any fees and charges due the
Prior Trustees. In the event that monies held pursuant to either or both
of the Prior Indentures are not sufficient to accomplish the Refunding on
the redemption date for each series of Prior Bonds, the Company shall at
its own expense and without any right of reimbursement in respect thereof
immediately pay that portion of such costs as may be in excess of said
monies.
ARTICLE V
THE COMPANY'S PAYMENTS
Section 5.01. COMPANY APPROVAL OF ISSUANCE OF BONDS. (a)
Simultaneously with the authorization of this Agreement by the Board of
Directors of the Issuer, such Board has adopted the Bond Resolution. In
consideration of the covenants and agreements set forth in this
Agreement, and to enable the Issuer to issue the Bonds to carry out the
intents and purposes hereof, this Agreement is executed to assure the
issuance of such Bonds, and to provide for the due and punctual payment
by the Company to the Issuer, or to the Trustee under the Indenture, of
amounts not less than those required to pay, as and when due (whether at
stated maturity, upon redemption, acceleration of maturity, tender,
deemed tender, or otherwise), all of the principal of, redemption
premium, if any, and interest on, and Purchase Price of, the Bonds, and
all other payments required in connection with such Bonds, the Agreement,
or the Indenture. Each such payment is hereby designated as an
"Installment Payment", and collectively such payments are hereby
designated as "Installment Payments". The Company hereby agrees to make,
or cause to be made, each Installment Payment, as and when due, for the
benefit of the owners of the Bonds into the Bond Fund, or, in the case of
an Installment Payment in respect of Purchase Price, into the Bond
Purchase Fund, all as provided in the Indenture.
(b) By execution and delivery of this Agreement, the Company hereby
approves the Bond Resolution and the Indenture. It is hereby agreed that
the foregoing approval of the Bond Resolution and the Indenture consti-
tutes the acknowledgement and agreement of the Company that the Bonds,
when issued, sold, and delivered as provided in the Bond Resolution and
the Indenture, will be issued in accordance with and in compliance with
this Agreement, notwithstanding any other provisions of this Agreement or
any other contract or agreement to the contrary. Any Bondholder is
entitled to rely fully and unconditionally on the foregoing approval.
Notwithstanding any provisions of this Agreement or any other contract or
agreement to the contrary, the Company's approval of the Bond Resolution
and the Indenture shall be the Company's agreement that all covenants and
provisions in this Agreement and the Indenture affecting the Company
shall, upon the delivery of the Bonds and the Indenture, become uncondi-
tional, valid, and binding covenants and obligations of the Company so
long as the Bonds and the interest thereon are outstanding and unpaid.
Particularly, the obligation of the Company to make, promptly when due,
all Installment Payments specified in this Agreement and the Indenture
shall be absolute and unconditional, and said obligation may be enforced
as provided in this Agreement and the Indenture.
Section 5.02. REFUNDING OF BONDS. After the issuance of any Bonds, the
Issuer shall not refund any of the Bonds or change or modify the Bonds in
any way, except as provided for in the Indenture, without the prior
written approval of the Authorized Company Representative; nor shall the
Issuer redeem any Bonds prior to their scheduled maturities except upon
the request of the Authorized Company Representative, unless such
redemption is required by the Indenture.
Section 5.03. PAYMENT UPON REDEMPTION OF BONDS. The Issuer, upon the
written request of the Company (and provided that the affected Bonds are
subject to redemption or prepayment prior to maturity at the option of
the Issuer, or the Company, and provided that such request is received in
sufficient time prior to the date upon which such redemption or
prepayment is proposed), forthwith shall take or cause to be taken all
action that may be necessary under the applicable redemption provisions
of the Indenture to effect such redemption prior to maturity, to the full
extent of funds either made available for such purpose by the Company or
already on deposit under the Indenture and available for such purpose.
The redemption of any outstanding Bonds prior to maturity at any time
shall not relieve the Company of its absolute and unconditional
obligation to pay each remaining Installment Payment with respect to any
Outstanding Bonds, as specified in the Indenture. If a redemption of
Bonds is required pursuant to the provisions of the Indenture, the
Company agrees as provided herein to forthwith make Installment Payments
sufficient to pay the principal of, premium, if any, and interest on the
Bonds.
Section 5.04. INSTALLMENT PAYMENTS. Payment of all Installment
Payments shall be made and deposited so as to fund payment on the Bonds
as required by the Indenture, including all such payments which may come
due because of the acceleration of the maturity or maturities of the
Bonds upon default, call for redemption, purchase or deemed purchase, or
otherwise, under the provisions of the Indenture. If any available funds
in excess of current requirements are held on deposit in the Bond Fund or
the Bond Purchase Fund, as the case may be, at the time payment of any
Installment Payment is due, such payment of Installment Payment shall be
reduced by the amount of the available funds so held on deposit, to the
benefit of the Company. The Installment Payments, together with
available funds held on deposit in the Bond Fund or the Bond Purchase
Fund, as the case may be, except funds held therein for payment of
matured installments of principal on the Bonds or interest payable
thereon, shall be sufficient to pay when due all principal of, redemption
premium, if any, and interest on, and Purchase Price of, the Bonds. The
Company shall have the right to prepay or cause to be prepaid all or a
portion of each Installment Payment at any time, and shall be obligated
to do so in a timely manner if and to the extent the 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 with respect to the Outstanding Bonds except as provided in this
Agreement and the Indenture. In the event the Company should fail to
make any of the payments required in this Section 5.04, the amount so in
default shall continue as an obligation of the Company until such amount
in default shall have been fully paid.
Section 5.05. PAYMENTS TO ISSUER. Out of funds provided by the
Company, there shall be paid all of the Issuer's reasonable actual out-
of-pocket expenses and Costs of Issuance in connection with the Bonds.
Also the Company agrees to pay directly to the Issuer on the Issue Date
an amount equal to 1/2 of 1% of the aggregate principal amount of the
Bonds. In addition, while any of the Bonds are outstanding, the Company
shall pay to the Issuer an amount sufficient to pay and reimburse the
Issuer for any of its actual costs reasonably and necessarily incurred in
connection with the Bonds and the Projects during the prior twelve month
period within 60 days of receiving a written bill or statement therefor.
Section 5.06. ISSUER'S RIGHTS ASSIGNED TO TRUSTEE. The Company is
advised and recognizes that as security for the payment of the Bonds, the
Issuer will assign to the Trustee the Issuer's rights under this
Agreement, including the right to receive payments hereunder (except the
right to receive payments, if any, under Section 5.05, 6.03, and 7.03
hereof), and hereby directs the Company to make said payments directly to
the Trustee. The Company herewith assents to such assignment and will
make such payments directly to the Trustee without defense or set-off by
reason of any dispute between the Company and the Issuer or the Trustee.
All rights against the Company arising under this Agreement or the Bond
Resolution or Indenture and assigned to the Trustee under the Indenture
may be enforced by the Trustee, or the owners of the Bonds, to the extent
provided in the Indenture, and the Trustee, or the owners of the Bonds,
shall be entitled to bring any suit, action, or proceeding against the
Company, to the extent provided in the Bond Resolution or Indenture, for
the enforcement of this Agreement, and it shall not be necessary in any
such suit, action, or proceeding to make the Issuer a party thereto.
Section 5.07. PAYMENTS TO TRUSTEE. The Company agrees to pay (1) the
initial acceptance fee of the Trustee and reasonable costs and expenses,
including reasonable attorneys fees, incurred by the Trustee in entering
into and executing the Indenture and the issuance of the Bonds and (2)
until the principal of, premium, if any, and interest on the Bonds shall
have been fully paid or provision for the payment thereof shall have been
made in accordance with the provisions of the Indenture, (i) the
reasonable annual fee of the Trustee for the ordinary services of the
Trustee, as trustee, rendered and its reasonable ordinary expenses
incurred under the Indenture, including reasonable attorneys fees, as and
when the same become due, (ii) the reasonable fees, charges and expenses
of the Trustee, as Bond Registrar and as Paying Agent, and any other Bond
Registrar or Paying Agent on the Bonds, as and when the same become due,
(iii) the reasonable fees, charges and expenses of the Trustee for the
necessary extraordinary services rendered by it and extraordinary
expenses incurred by it under the Indenture or this Agreement, as and
when the same become due, including reasonable attorneys fees; provided,
that the Company may, without creating a default hereunder, contest in
good faith the necessity for any such extraordinary services and
extraordinary expenses and the reasonableness of any such fees, charges,
or expenses, and (iv) the cost of printing any Bonds required to be
furnished by the Issuer. In the event the Company should fail to make
any of the payments required in this Section 5.07, the item or install-
ments so in default shall continue as an obligation of the Company until
the amount in default shall have been fully paid.
Section 5.08. PAYMENT TO REMARKETING AGENT. The Company agrees to pay
to the Remarketing Agent the reasonable fees, costs and expenses set
forth in the Remarketing Agreement.
Section 5.09. COMPANY OPTION TO DESIGNATE INTEREST RATE DETERMINATION
METHODS. The Company is hereby granted the option to designate from time
to time changes in interest rate determination methods in the manner and
to the extent set forth in Section 2.02 of the Indenture. In the event
the Company elects to exercise any such option, the Company agrees that
it shall cause notices of changes in interest rate determination methods
to be given to the Issuer, the Trustee, the Paying Agent, and the
Remarketing Agent in accordance with Section 2.02 of the Indenture.
Section 5.10. PURCHASE OF BONDS. (a) In consideration of the issuance
of the Bonds by the Issuer, but for the benefit of the owners of the
Bonds, the Company has agreed, and does hereby covenant, to cause the
necessary arrangements to be made and to be thereafter continued whereby
owners from time to time of the Bonds may deliver Bonds for purchase and
whereby such Bonds shall be so purchased. In furtherance of the
foregoing covenant of the Company, the Issuer, at the direction of the
Company, has set forth in Section 2.10 of the Indenture the terms and
conditions relating to the delivery of Bonds by the registered holders
thereof to the Remarketing Agent for purchase and has set forth in the
Indenture or the Remarketing Agreement the duties and responsibilities of
the Remarketing Agent with respect to the purchase and remarketing of
Bonds. The Company hereby authorizes and directs the Remarketing Agent
to purchase, offer, sell, and deliver Bonds in accordance with the
provisions of Section 2.10 of the Indenture.
Without limiting the generality of the foregoing covenant of the
Company or the other provisions of this Article V, the Company covenants,
for the benefit of the owners of the Bonds, to pay, or cause to be paid,
to the Trustee such amounts as shall be necessary to enable the Trustee
to pay the Purchase Price of the Bonds delivered to it for purchase or
deemed delivered for purchase, all as more particularly described in the
Indenture; provided, however, that the obligation of the Company to make,
or cause to be made, any such payment hereunder shall be satisfied only
by funds received by the Trustee or the Paying Agent from the remarketing
of the Bonds by the Remarketing Agent or, in the event sufficient funds
are not available from such remarketing, from the Company.
(b) The Issuer shall have no obligation or responsibility, financial
or otherwise, with respect to the purchase of Bonds or the making or
continuation of arrangements therefor other than as expressly set forth
in subsection (a) of this Section 5.10, except that the Issuer shall
generally cooperate with the Company and the Remarketing Agent as
contemplated by the Indenture.
Section 5.11. USURY. Anything herein to the contrary notwithstanding,
it is the intention of the parties hereto to conform strictly to the
usury laws in force that are applicable to this transaction.
Accordingly, all agreements among the parties hereto and beneficiaries
hereof and their assigns or any of them, whether now existing or
hereafter arising, and whether written or oral, are hereby limited so
that in no contingency, whether by reason of acceleration of amounts due
hereunder or any part thereof or otherwise, shall the interest (including
all sums that are deemed to be interest) contracted for, charged or
received hereunder and/or with respect to the purchase of the Project
exceed the maximum amount permissible under applicable law. The parties
hereto agree that to the extent interest is payable by the Company under
this Agreement, Article 5069-1.04, Vernon's Texas Civil Statutes, as
amended, shall apply, and, to the extent Article 5069-1.04 is applicable
to this Agreement, the indicated rate ceiling thereunder shall apply.
Section 5.12. LETTER OF CREDIT. (a) In order to further secure the
payment of principal of and interest on, and Purchase Price of, the
Bonds, when due, prior to the initial delivery of the Bonds the Company
shall secure and deliver to the Trustee, for the benefit of the owners of
the Bonds, the Letter of Credit. The Letter of Credit shall be in an
original aggregate amount specified in the Indenture, and the Letter of
Credit and any Alternate Letter of Credit shall conform to the
requirements set forth in the Indenture. After the initial delivery of
the Letter of Credit, and at all times thereafter while any of the Bonds
are Outstanding, except during any Multiannual or Fixed Rate Period, the
Company shall continuously secure the Bonds by either extensions of the
Letter of Credit or by the securing and delivery of an Alternate Letter
of Credit unless the Company has determined, pursuant to Section 10.05 of
the Indenture, not to secure payment of principal of and interest on, and
Purchase Price of, the Bonds with the Letter of Credit or an Alternate
Credit Facility. The Company hereby authorizes the Trustee to seek
payment under any Letter of Credit in accordance with its terms and the
terms of the Indenture. As long as the Letter of Credit is in effect and
the Bank is not in default thereunder, the Company's obligation to make
Installment Payments sufficient hereunder to pay principal of, premium,
if any, or interest on the Bonds or to pay Purchase Price of the Bonds
shall be satisfied solely from payments made by the Bank pursuant to the
Letter of Credit. Amounts drawn by the Trustee under any Letter of
Credit shall be credited against the obligation of the Company to make
Installment Payments hereunder.
(b) The Company shall notify the Trustee in writing at least forty-
five days prior to the expiration of an existing Letter of Credit whether
or not the Bank intends to extend such Letter of Credit or whether a
binding obligation to secure an Alternate Letter of Credit has been
entered into.
(c) The Company, the Trustee, and the Bank, with the written consent
of the Issuer, may, without the consent of the Bondholders, amend,
change, or modify any Letter of Credit (i) to cure any ambiguity, formal
defect, inconsistency, or minor omission, (ii) to conform to the
requirements of the Indenture or the Rating Agencies, or (iii) if such
amendment, change or modification is not prejudicial to the Bondholders
in any material respect and the Trustee receives a Favorable Opinion to
such effect..
(d) The Company shall pay all costs incurred by the Trustee and the
Issuer in connection with any reissuance, extension or substitution of
any Alternate Letter of Credit.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. EVENTS OF DEFAULT. The occurrence and continuation of
any one of the following shall constitute an "Event of Default" under
this Agreement (an "Event of Default"):
(a) failure by the Company to pay Installment Payments with
respect to principal of or premium on any Bond at the times specified
therein; or
(b) failure by the Company to pay Installment Payments with
respect to interest on any Bond at the times specified therein and (i)
if such Bond bears interest at a Flexible, Daily, Weekly, Monthly,
Quarterly or Semiannual Rate, the continuation of such failure for a
period of one Business Day or more or (ii) if such Bond bears interest
at a Multiannual or Fixed Rate, the continuation of such failure for a
period of sixty days or more; or
(c) failure by the Company to pay Installment Payments with
respect to the Purchase Price of any Bond at the times specified
therein and the continuation of such failure for a period of one
Business Day or more after notice thereof shall have been given by the
Trustee to the Company and the Issuer; or
(d) failure by the Company to observe and perform any covenant,
condition or agreement on its part required to be observed or
performed in this Agreement, other than as referred to in (a), (b) or
(c) above, for a period of 90 days after receipt by the Company of
written notice specifying such failure and requesting that it be
remedied, 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, that if the
failure stated in the notice can, in the reasonable judgement of the
Company, be corrected, but cannot be corrected within the applicable
period, the Issuer and the Trustee will not unreasonably withhold
their consent to an extension of
such time if corrective action is instituted within the applicable
period and diligently pursued until the default is corrected; or
(e) if a Letter of Credit is in effect, receipt by the Trustee of
a written notice from the Bank of the occurrence and continuance of
an "Event of Default" (as defined in the Letter of Credit or Letter of
Credit Agreement); or
(f) the occurrence of an "Event of Default" under the Indenture.
The provisions of paragraph (d) of this Section 6.01 are subject to the
following limitations: if by reason of acts or God, strikes, lockouts or
other industrial disturbances; acts of public enemies; orders or
regulations of any kind of the government of the United States of America
or of the State of Texas or any of their departments, agencies, political
subdivisions, or officials, or any civil military authority;
insurrections; riots; epidemics; landslides; lightning; earthquakes;
tidal waves; fires; hurricanes; tornadoes; blue northers; other storms;
floods; washouts; droughts; arrests; restraints of government and people;
civil disturbances; explosions; breakage or accident to machinery,
transmission pipes, transmission facilities or canals; partial or entire
failure of utilities; shortages of labor, material, supplies or
transportation; or any other cause or event not reasonably within the
control of the Company (collectively, "events of force majeure"), the
Company is unable in whole or in part to carry out the agreements on the
Company's part herein contained, the Company shall not be deemed in
default during the continuance of such inability. The Company, however,
will use its best efforts to remedy with all reasonable dispatch the
cause or causes preventing the Company from carrying out such agreements;
provided, that the settlement of strikes, lockouts and other industrial
disturbances shall be entirely within the discretion of the Company, and
the Company shall not be required to make settlement of strikes,
lockouts, and other industrial disturbances by acceding to the demands of
the opposing party or parties when such course is, in the judgment of the
Company, unfavorable to the Company. The occurrence of any event of
force majeure shall not suspend or otherwise abate, and the Company shall
not be relieved from, any obligation under this Agreement to the extent
that the failure of the Company to observe or perform any such obligation
would result in the failure to pay when due the principal of, premium, if
any, and interest on the Bonds or would result in the interest on any
Bonds becoming includable in the gross income of the owners thereof for
federal income tax purposes.
The above provisions, however, are subject to the condition that,
after any such Event of Default, subject to and as provided in Article VI
of the Indenture, the Trustee may waive such Event of Default and rescind
and annul any remedial step theretofore taken by it or by the Issuer with
respect to such default and its consequences; but no such waiver,
rescission or annulment shall extend to or affect any subsequent default
or impair any right or remedy consequent thereon.
Section 6.02. REMEDIES ON DEFAULT. Whenever any Event of Default shall
have occurred and is continuing, the Issuer, with the consent of the
Trustee, or the Trustee may take any one or more of the following
remedial steps, but only if acceleration of the principal amount of the
Bonds has been declared pursuant to Section 6.02 of the Indenture:
(a) By notice in writing to the Company, declare the unpaid
Installment Payments to be due and payable immediately, if
concurrently with or prior to such notice the unpaid principal amount
of the Bonds has been declared to be due and payable under the
Indenture, and upon any such declaration the amounts payable under
Sections 5.01 and 5.04 hereof shall become and shall be immediately
due and payable in the amount set forth in Section 6.02 of the
Indenture; provided, however, that an Event of Default shall be deemed
waived and a declaration accelerating payment of unpaid Installment
Payments payable under this Agreement shall be deemed rescinded
without further action on the part of the Trustee or the Issuer upon
any rescission by the Trustee of the corresponding declaration of
acceleration of the Bonds under Section 6.02 of the Indenture.
(b) Whatever action at law or in equity may appear necessary or
desirable to collect the payment and other amounts then due or to
enforce performance and observance of any obligation, agreement or
covenant of the Company under this Agreement.
In case the Issuer, with the consent of the Trustee, or the Trustee
shall have proceeded to enforce its rights under this Agreement and such
proceedings shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Issuer and/or the Trustee,
then and in every such case the Issuer, the Company and the Trustee shall
be restored respectively to their several positions and rights hereunder,
and all rights, remedies and powers of the Issuer, the Company and the
Trustee shall continue as though no such proceeding had been taken.
The Company covenants that, in case an Event of Default shall occur
with respect to the payment of any Installment Payment payable under
Sections 5.01 and 5.04 hereof, then, upon demand of the Trustee, the
Company will pay to the Trustee the whole amount that then shall have
become due and payable under said Sections 5.01 and 5.04, with interest
(to the extent permitted by law) on such amount at the rate of interest
borne by the Bonds at the time of such failure from the due date thereof
until paid.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee shall be entitled and empowered to institute any
action or proceeding at law or in equity for the collection of the sums
so due and unpaid, and may prosecute any such action or proceeding to
judgment or final decree, and may enforce any such judgment or final
decree against the Company and collect in the manner provided by law out
of the property of the Company, the moneys adjudged or decreed to be
payable.
The remedies for any "Event of Default" under the Indenture shall be
as specified in Article VI of the Indenture and are in addition to any
remedies hereunder.
In acting or omitting to act pursuant to the provisions of this
Agreement, the Trustee shall be entitled to all of the rights,
protections and immunities accorded to the Trustee under the terms of the
Indenture, including but not limited to those set out in Article VII
thereof.
Section 6.03. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In the
event the Company defaults under any of the provisions of this Agreement
and the Issuer or the Trustee employs attorneys or incurs other expenses
for the collection of the payments due under this Agreement or the
enforcement of performance or observance of any obligation or agreement
on the part of the Company herein contained, the Company agrees that it
will on demand therefor, and upon presentation of an itemized bill, pay
to the Issuer or the Trustee the reasonable fees of such attorneys and
such other expenses so incurred by the Issuer or the Trustee; provided,
however, the Company, without creating a default hereunder or under the
Indenture, may contest in good faith the necessity for and the
reasonableness of any such fees and expenses of the Trustee.
ARTICLE VII
SPECIAL COVENANTS
Section 7.01. NO DEFENSE OR SET-OFF; UNCONDITIONAL OBLIGATION. The
obligations of the Company to make the payments required by this
Agreement and to perform and observe the other agreements on its part
contained herein shall be absolute and unconditional, irrespective of
any defense or any rights of set-off, recoupment or counterclaim it might
otherwise have against the Issuer or any other person, and the Company
shall pay during the term of this Agreement the payments to be made as
prescribed in Sections 5.01, 5.03, 5.04, 5.05 or 5.10 and all other
payments required hereunder free of any deductions and without abatement,
diminution or set-off; and until such time as the principal of, premium,
if any, and interest on the Bonds shall have been fully paid, or
provision for the payment thereof shall have been made in accordance with
the Indenture, the Company: (i) will not suspend or discontinue any
payments provided for in Sections 5.01, 5.03, 5.04, 5.05 or 5.10 hereof;
(ii) will perform and observe all of its other agreements contained in
this Agreement; and (iii) except as permitted herein, will not terminate
this Agreement for any cause, including, without limiting the generality
of the foregoing, failure of the Company to approve, receive, accept or
use the Projects, destruction of or damage to the Projects, commercial
frustration of purpose, any change in the tax laws of the United States
of America or of the State or any political subdivision of either of
these, or any failure of the Issuer or the Trustee to perform and observe
any agreement, whether express or implied, or any duty, liability or
obligation arising out of or connected with this Agreement or the
Indenture, except to the extent permitted by this Agreement. Nothing
contained in this Section shall be construed to relieve the Issuer or the
Trustee from the performance of any agreements on their respective parts
contained herein and the Company shall be entitled to institute such
action against the Issuer or the Trustee as the Company shall deem
appropriate to compel performance of any such agreement, duty or
obligation; provided, however, that the Issuer shall not be required to
carry out any such agreement, duty or obligation unless it is reimbursed
for its costs and expenses.
Section 7.02. CORPORATE EXISTENCE. The 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 the Company,
irrevocably and unconditionally assumes, in an instrument delivered to
the Issuer and to the Trustee, the due and punctual performance of the
obligations of the Company under this Agreement. Upon the delivery of
such instrument, the 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 the Company under
this Agreement with the same effect as if such resulting or surviving
corporation or transferee had been named herein as the Company. If
consolidation, merger, or sale, or other transfer is made as provided in
this Section 7.02, the provisions of this Section 7.02 shall continue in
full force and effect and no further consolidation, merger, or sale or
other transfer shall be made except in compliance with the provisions of
this Section 7.02.
Section 7.03. INDEMNITIES. The Company releases the Issuer, its
officers, directors, employees, agents, and attorneys (collectively, the
"Indemnified Parties") from, and the Indemnified Parties shall not be
liable for, and the Company agrees, and shall be liable to protect,
indemnify, defend, and hold the Indemnified Parties harmless from any and
all liability, cost, expense, damage, or loss of whatever nature
(including, but not limited to, attorneys' fees, litigation and court
costs, amounts paid in settlement, and amounts paid to discharge
judgments) directly or indirectly resulting from, arising out of, in
connection with, or related to (i) the issuance, offering, sale or
delivery of the Bonds, the Indenture, this Agreement, and the obligations
imposed on Issuer hereby and thereby; or the design, construction,
installation, operation, use, occupancy, maintenance, or ownership of the
Projects; (ii) any written statements or representations made or given by
the Company, or any of its officers or employees, to the Indemnified
Parties, the Trustee, or any underwriters or purchasers of any of the
Bonds, with respect to the Issuer, the Company, the Projects, 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 Projects; and (iv) any loss or
damage incurred by the Issuer as a result of violation by the Company of
the provisions of the Prior Agreements or Section 7.04 or 7.05 hereof.
The provisions of the preceding sentence shall remain and be in full
force and effect even if any such liability, cost, expense, damage, or
loss or claim therefor by any person, directly or indirectly results
from, arises out of, or relates to or is asserted to have resulted from,
arisen out of, or related to, in whole or in part, one or more negligent
acts or omissions of the Issuer or its officers, directors, employees,
agents, servants, or any other party acting for or on behalf of the
Issuer in connection with the matters set forth in clauses (i) through
(iv) of said sentence. The Company also agrees to indemnify and hold the
Trustee harmless from any loss or damage incurred by the Trustee as a
result of a violation by the Company or the Issuer of the provisions of
Section 7.04 or 7.05 hereof, or the provisions of Section 3.19, 4.09 or
4.10 of the Indenture.
Section 7.04. TAX-EXEMPT STATUS OF THE BONDS. It is the intention of
the Company and the Issuer that the interest on the Bonds be excludable
from the gross income of the holders thereof for federal income tax
purposes, except for any Bond for any period that such Bond is owned by a
person who is a "substantial user" of the Projects or a "related person"
within the meaning of Section 147(a) of the Code. To that end, the
Company and the Issuer (to the extent reasonably within the control of
the Issuer) covenant with each other, and with the Trustee for the
benefit of the Bondholders, to refrain from any action which would
adversely affect, and to take such action to assure, the treatment of the
Bonds as obligations described in Section 103 (a) of the Code, the
interest on which is not includable in the "gross income" of the holder
(other than the income of a "substantial user" of the Projects or a
"related person" within the meaning of Section 147(a) of the Code) for
purposes of federal income taxation. Furthermore, the Company hereby
covenants as follows:
(a) to use all of the proceeds of the Bonds for the payment of
principal on the Prior Bonds;
(b) to refrain from 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 or to replace funds which
were used, directly or indirectly, to acquire investment property (as
defined in Section 148(b)(2) of the Code) which produces a materially
higher Yield over the term of the Bonds than the Yield on the Bonds,
other than investment property acquired with --
(1)proceeds of the Bonds invested for a period of 90 days or
less until such proceeds are needed for the purpose for which the
Bonds are issued,
(2)amounts invested in a bona fide debt service fund, within
the meaning of Section 1.103-13(b)(12) 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 or investment of the proceeds of
the Bonds or amounts treated as proceeds of the Bonds, as may be
necessary, to satisfy the requirements of Section 148 of the Code
(relating to arbitrage);
(e) to pay to the United State of America (to the extent not paid
by the Trustee pursuant to the Indenture) at least once during each
five-year period (beginning on the date of delivery of the Bonds) an
amount that is at least equal to 90 percent of the Excess Earnings,
and to 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 as a result of Excess Earnings under Section
148(f) of the Code, unless the Bonds qualify for the exception to
rebate set forth in Section 148(f)(4)(B) of the Code;
(f) to remit immediately to the Trustee for deposit in the Rebate
Fund any deficiency as required by Section 4.10 of the Indenture; and
(g) to provide to the Trustee, at such time as required by the
Trustee, all information required by the Trustee with respect to
Nonpurpose Investments not held in any fund under the Indenture.
The terms Nonpurpose Investments, Excess Earnings, and Yield shall
have the meanings give to such terms in section 148 of the Code and the
Regulations promulgated pursuant to such section.
It is the understanding of the Issuer and the Company that the
covenants contained herein are intended to assure compliance with the
Code and any regulations or rulings promulgated by the United States
Department of the Treasury pursuant thereto. In the event that
regulations or rulings are hereafter promulgated which modify or expand
provisions of the Code, as applicable to the Bonds, the Issuer and the
Company will not be required to comply with any covenant contained herein
to the extent that such failure to comply, in the opinion of Bond Counsel
delivered to the Issuer, the Company, and the Trustee, will not adversely
affect the exclusion of interest on the Bonds from the gross income of
the owners of the Bonds for federal income tax purposes under Section 103
of the Code. In the event that regulations or rulings are hereafter
promulgated which impose additional requirements which are applicable to
the Bonds, the Company and the Issuer agree to comply with the additional
requirements to the extent necessary, in the opinion of Bond Counsel
delivered to the Issuer, the Company, and the Trustee, to preserve the
exclusion of interest on the Bonds from the gross income of the owners of
the Bonds for federal income tax purposes under Section 103 of the Code.
In furtherance of such intention, the Issuer hereby authorizes and
directs its General Manager or its Director of Finance to execute any
documents, certificates or reports required by the Code and to make such
elections, on behalf of the Issuer, which may be permitted by the Code as
are consistent with the purpose for the issuance of the Bonds.
Section 7.05. ARBITRAGE COVENANTS. The Issuer and the Company covenant
and agree, for the benefit of the Trustee and the owners of the Bonds,
that they will not knowingly take any action or omit from taking any
action, which would result in a loss of the exemption from federal income
taxation of interest on the Bonds by virtue of the Bonds being considered
"arbitrage bonds" within the meaning of Section 148 of the Code.
Section 7.06. PAYMENT TO REBATE FUND. The Company hereby covenants and
agrees to make the determinations and to pay any deficiency in the Rebate
Fund, at the times and as described in Section 4.10 of the Indenture. In
any event, if the amount of cash held in the Rebate Fund shall be
insufficient to permit Trustee to make payment to the United States of
any amount due under Section 148(f)(2) of the Code, the Company forthwith
shall pay the amount of such insufficiency on such date to Trustee in
immediately available funds. The obligations of the Company under this
Section 7.06 are direct obligations of the Company, acting under the
authorization of, and on behalf of, the Issuer and the Issuer shall have
no further obligation or duty with respect to the Rebate Fund.
Section 7.07. QUALIFICATION IN TEXAS. The Company agrees that, so long
as it owns and operates the Project, it will be incorporated under the
laws of the State or will be qualified to do business in the State.
Section 7.08. RECORDATION. The Company agrees that it will record and
file any of the financing statements and all supplements thereto, and
such other instruments as may be required from time to time to be
recorded or filed, in such manner and in such places as from time to time
may be required by law in order fully to preserve and protect the
securities of the Owners of the Bonds and the rights of the Trustee
hereunder and under the Indenture.
Section 7.09. NO PERSONAL LIABILITY. No officer, employee,
representative, or agent of the Issuer or the Company shall be personally
liable on this Agreement.
Section 7.10. COMPLIANCE WITH RULE 15C2-12. The Company hereby agrees
that it will comply with and perform its duties under the Rule 15c2-12
Undertakings dated as of October __, 1995 and attached to this Agreement
as Exhibit A and that the Issuer shall have no responsibility or
obligation with respect to compliance with Rule 15c2-12.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. GENERAL PROVISIONS. (a) The terms of this Agreement may
be enforced as to one or more breaches either separately or cumulatively.
(b) No remedy conferred upon or reserved to the Issuer, the Company,
the Trustee, or the owners of the Bonds in this Agreement is intended to
be exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to every
other remedy now or hereafter existing at law or in equity or by statute.
No delay or omission to exercise any right or power accruing upon any
default, omission, or failure of performance hereunder shall impair any
such right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as
may be deemed expedient. In the event any provision contained in this
Agreement should be breached by the Issuer or the Company and thereafter
duly waived, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach of this
Agreement. No waiver by either party of any breach by the other party of
any of the provisions of this Agreement shall be construed as a waiver of
any subsequent breach, whether of the same or of a different provision of
this Agreement.
(c) Headings of the Sections of this Agreement have been inserted for
convenience of reference only and in no way shall they affect the
interpretation of any of the provisions of this Agreement.
(d) This Agreement is made for the exclusive benefit of the Issuer,
the Trustee, the owners of the Bonds and the Company, and their
respective successors and assigns herein permitted, and not for any third
party or parties; and nothing in this Agreement, expressed or implied, is
intended to confer upon any party or parties other than the Issuer, the
Trustee, the owners of the Bonds and the Company, and their respective
successors and assigns herein permitted, any rights or remedies under or
by reason of this Agreement. In particular, but not by way of
limitation, the Trustee shall be a third-party beneficiary for purposes
of enforcing its rights and the Company's obligations under Sections 5.07
and 7.03 of this Agreement as fully as if the Trustee had been a party in
privity of contract with the Company hereunder.
Section 8.02. INTENTIONALLY OMITTED.
Section 8.03. AMENDMENT OF AGREEMENT. No amendment, change, addition
to, or waiver of any of the provisions of this Agreement shall be binding
upon the parties hereto unless in writing signed by the Authorized
Company Representative and the Authorized Issuer Representative and in
compliance with Section 9.05 of the Indenture. A copy of any such
amendment, change, addition to, or waiver shall be provided to the
Trustee. Notwithstanding any of the foregoing or anything in the
Indenture to the contrary, it is covenanted and agreed, for the benefit
of the holders of the Bonds and the Trustee, that the provisions of this
Agreement shall not be amended, changed, added to, or waived in any way
which would relieve, reduce or abrogate the obligations of the Company to
make or pay, or cause to be made or paid, when due, any and all Install-
ment Payments with respect to any then Outstanding Bonds, in the manner
and under the terms and conditions provided herein and in the Bond
Resolution or Indenture, or which would change or affect Article II,
Sections 5.01, 5.03, 5.04, 5.05, 5.06, 5.10, 6.01, 7.01, 7.02, 8.03, or
8.04 hereof or the provisions of this sentence unless, in the judgment of
the Trustee, such change or amendment would not materially adversely
affect the interests of the Bondholders.
Section 8.04. ASSIGNMENT. The Company may assign its interest in this
Agreement in whole or in part, provided, however, no such assignment
shall relieve the Company from primary liability for any of its
obligations hereunder, and without limiting the generality of the
foregoing, in the event of any such assignment, the Company shall
continue to remain primarily liable for its payments specified herein and
for performance and observance of the other covenants and agreements on
its part herein provided. In addition, the Company may also assign its
interest in this Agreement in connection with a consolidation with or
merger into another domestic corporation, or the sale or transfer of all
or substantially all of its assets as an entirety to another domestic
corporation, if such transaction complies with the requirements of
Section 7.02 hereof. Anything in this Agreement notwithstanding, no
assignment of the Company's interest in this Agreement shall be effective
unless the Company shall, on or prior to the effective date of any such
assignment, furnish or cause to be furnished to the Issuer and the
Trustee notice of such assignment, together with a Favorable Opinion.
Section 8.05. TERM OF AGREEMENT. The term of this Agreement shall be
from the date hereof until all payments and indemnities required to be
made by the Company pursuant hereto shall have been made.
Section 8.06. NOTICES. Any notice, request or other communication
under this Agreement shall be given in writing and shall be deemed to
have been given by either party to the other party at the addresses shown
below upon any of the following dates:
(a) The date of notice by Electronic Notice;
(b) Three Business Days after the date of the mailing thereof, as
shown by the post office receipt if mailed to the other party hereto
by registered or certified mail;
(c) The date of the receipt thereof by such other party if not
given pursuant to (a) or (b) above.
The address for notice for each of the parties shall be as
follows:
Guadalupe-Blanco River Authority
933 East Court Street
Seguin, Texas 78155
Attention: Director of Finance
Telephone No.: (210) 379-5822
Telecopy No.: (210) 379-9718
Central and South West Corporation as agent for:
Central Power and Light Company
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone No.: (214) 777-1205
Telecopy No.: (214) 777-1223
or the latest address specified by such other party in writing.
Section 8.07. SEVERABILITY. If any clause, provision or Section of
this Agreement should be held illegal or invalid by any court, the
invalidity of such clause, provision or Section shall not affect any of
the remaining clauses, provisions or Sections hereof and this Agreement
shall be construed and enforced as if such illegal or invalid clause,
provision or Section had not been contained herein. In case any
agreement or obligation contained in this Agreement should be held to be
in violation of law, then such agreement or obligation shall be deemed to
be the agreement or obligation of the Company or the Issuer, as the case
may be, to the full extent permitted by law.
Section 8.08. EXECUTION OF COUNTERPARTS. This Agreement may be
simultaneously executed in several counterparts, each of which shall be
an original and all of which shall constitute but one and the same
instrument.
Section 8.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
EXCLUSIVELY BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF
THE STATE OF TEXAS. VENUE FOR ANY ACTIONS BROUGHT HEREUNDER TO WHICH THE
ISSUER IS A PARTY SHALL LIE IN GUADALUPE COUNTY, TEXAS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed in multiple counterparts, each of which shall be considered an
original for all purposes, as of the day and year first set out above.
GUADALUPE-BLANCO RIVER AUTHORITY
By:____________________________
Chairman
ATTEST:
_____________________________
Secretary
(SEAL)
CENTRAL POWER AND LIGHT COMPANY
By:____________________________
Vice President
ATTEST:
_________________________________
Secretary
EXHIBIT A
<PAGE>
EXHIBIT 2
---------
Indenture of Trust
by and between
Guadalupe-Blanco River Authority
and
The Bank of New York,
as Trustee
Dated as of October 1, 1995
Guadalupe-Blanco River Authority
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
GLOBAL:
Series 1974 - Series 1974A
TABLE OF CONTENTS
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clauses . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Article I
Definitions and Interpretation
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . 5
Section 1.02. Article and Section Headings . . . . . . . . . . . . 15
Section 1.03. Interpretation . . . . . . . . . . . . . . . . . . 15
Article II
Authorization and Issuance of the Bonds
Section 2.01. Authorization of Bonds . . . . . . . . . . . . . . 15
Section 2.02. Interest . . . . . . . . . . . . . . . . . . . . . 17
Section 2.03. Form of Bonds . . . . . . . . . . . . . . . . . . 31
Section 2.04. Execution; Limited Obligations . . . . . . . . . 51
Section 2.05. Conditions Precedent to Delivery of Bonds;
Authentication . . . . . . . . . . . . . . . . . 52
Section 2.06. Redemption of Bonds . . . . . . . . . . . . . . 53
Section 2.07. Notice of Redemption . . . . . . . . . . . . . . 56
Section 2.08. Redemption Payments; Effect of Call for Redemption . 56
Section 2.09. Partial Redemption . . . . . . . . . . . . . . . . 57
Section 2.10 Remarketing and Purchase . . . . . . . . . . . . 58
Section 2.11. Mandatory Tender for Purchase . . . . . . . . . . 61
Article III
General Provisions
Section 3.01. Authorization for Indenture; Indenture to
Constitute Contract . . . . . . . . . . . . . . 62
Section 3.02. Payment of Principal, Premium, if any, and Interest 62
Section 3.03. Performance of Covenants; Issuer Warranties . . 63
Section 3.04. Instruments of Further Assurance . . . . . . . . 63
Section 3.05. Recordation . . . . . . . . . . . . . . . . . . . 63
Section 3.06. Registration of Bonds; Trustee Appointed Bond
Registrar; Persons Treated as Owners . . . . . 63
Section 3.07. Book-Entry Only System . . . . . . . . . . . . . 64
Section 3.08. Successor Securities Depository; Transfers Outside
Book-Entry Only System . . . . . . . . . . . . . 65
Section 3.09. Payments to Cede & Co. . . . . . . . . . . . . . 66
Section 3.10. Cancellation . . . . . . . . . . . . . . . . . . . 66
Section 3.11. Non-presentment of Bonds . . . . . . . . . . . . 66
Section 3.12. Rights under Agreement . . . . . . . . . . . . . 66
Section 3.13. Legal Existence of Issuer . . . . . . . . . . . . 67
Section 3.14. Diminution of, or Encumbrance on, Trust Estate . 67
Section 3.15. Books, Records and Accounts . . . . . . . . . . . 67
Section 3.16. Temporary Bonds . . . . . . . . . . . . . . . . . 67
Section 3.17. Mutilated, Lost, Stolen or Destroyed Bonds . . 68
Section 3.18. Notices to Rating Agencies . . . . . . . . . . . 68
Section 3.19. Arbitrage Covenants . . . . . . . . . . . . . . 68
Article IV
Revenues and Funds
Section 4.01. Application of Original Proceeds of Bonds . . . . 68
Section 4.02. Creation of Bond Fund . . . . . . . . . . . . . . . 69
Section 4.03. Payments into Bond Fund and Use of Moneys in Bond
Fund . . . . . . . . . . . . . . . . . . . . . . . 69
Section 4.04. Creation and Use of Bond Purchase Fund . . . . . . 70
Section 4.05. Investment of Moneys . . . . . . . . . . . . . . . 71
Section 4.06. Moneys to be Held in Trust . . . . . . . . . . . . 72
Section 4.07. Repayment to Company from Indenture Funds . . . . 72
Section 4.08. Custody of Funds and Accounts . . . . . . . . . . 72
Section 4.09. Exemption from Federal Income Taxation . . . . . . 72
Section 4.10. Covenants Regarding Rebate . . . . . . . . . . . . 72
Article V
Discharge
Section 5.01. Discharge . . . . . . . . . . . . . . . . . . . . .74
Article VI
Events of Default and Remedies
Section 6.01. Events of Default . . . . . . . . . . . . . . . . .75
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . .76
Section 6.03. Other Remedies; Rights of Bond Owners . . . . . . 77
Section 6.04. Right of Bond Owners to Direct Proceedings . . . 78
Section 6.05. Appointment of Receiver . . . . . . . . . . . . . .78
Section 6.06. Waiver of Certain Laws . . . . . . . . . . . . . . 78
Section 6.07. Application of Moneys . . . . . . . . . . . . . . .79
Section 6.08. Remedies Vested in Trustee . . . . . . . . . . . . 80
Section 6.09. Rights and Remedies of Bond Owners . . . . . . . .80
Section 6.10. Termination of Proceedings . . . . . . . . . . . . 81
Section 6.11. Waivers of Events of Default . . . . . . . . . . .81
Section 6.12. Notice of Default; Opportunity to Cure Defaults .81
Article VII
The Trustee
Section 7.01. Acceptance of Trust . . . . . . . . . . . . . . . .82
Section 7.02. Fees, Charges and Expenses of Trustee . . . . . . 85
Section 7.03. Trustee to Provide Additional Notices . . . . . . 86
Section 7.04. Intervention by Trustee . . . . . . . . . . . . . .86
Section 7.05. Successor Trustee by Merger . . . . . . . . . . . .86
Section 7.06. Resignation by Trustee . . . . . . . . . . . . . . 87
Section 7.07. Removal of Trustee . . . . . . . . . . . . . . . . 87
Section 7.08. Appointment of Successor Trustee . . . . . . . . .87
Section 7.09. Successor Trustee by Appointment . . . . . . . . .87
Section 7.10. Appointment of Separate Trustee or Co-Trustee . 88
Section 7.11. Qualifications . . . . . . . . . . . . . . . . . . 88
Article VIII
The Remarketing Agent
Section 8.01. The Remarketing Agent . . . . . . . . . . . . . . .89
Section 8.02. Qualifications of Remarketing Agent . . . . . . . 89
Article IX
Supplemental Indentures
Section 9.01. Supplemental Indentures Not Requiring Consent of
Bond Owners . . . . . . . . . . . . . . . . . . . 90
Section 9.02. Supplemental Indentures Requiring Consent of Bond
Owners . . . . . . . . . . . . . . . . . . . . . . 90
Section 9.03. Limitation upon Amendments and Supplements . . . 91
Section 9.04. Consent of Company Required . . . . . . . . . . . 92
Section 9.05. Amendments to Agreement . . . . . . . . . . . . . 92
Section 9.06. Consent of Bank . . . . . . . . . . . . . . . . . .92
Section 9.07. Opinion of Counsel . . . . . . . . . . . . . . . . 92
Article X
Letter of Credit
Section 10.01. Extension or Replacement in Anticipation of
Expiration . . . . . . . . . . . . . . . . . . . 93
Section 10.02. Other Replacement . . . . . . . . . . . . . . . . 94
Section 10.03. Notice to Holders . . . . . . . . . . . . . . . . 95
Section 10.04. Reduction . . . . . . . . . . . . . . . . . . . . .95
Section 10.05. Other Credit Enhancement; No Credit Enhancement .95
Section 10.06. Amendment of Letter of Credit . . . . . . . . . . 95
Article XI
Miscellaneous
Section 11.01. Consents of Bond Owners . . . . . . . . . . . . . .96
Section 11.02. Limitation of Rights . . . . . . . . . . . . . . . 96
Section 11.03. Severability . . . . . . . . . . . . . . . . . . . 96
Section 11.04. Notices . . . . . . . . . . . . . . . . . . . . . 96
Section 11.05. Payments or Performance Due on Other Than Business
Days . . . . . . . . . . . . . . . . . . . . . . 98
Section 11.06. Execution of Counterparts . . . . . . . . . . . . 98
Section 11.07. Applicable Law . . . . . . . . . . . . . . . . . . 98
Section 11.08. Disqualified Bonds . . . . . . . . . . . . . . . . 98
Section 11.09. No Personal Liability of Issuer or Trustee . . . 98
Section 11.10. Notice of Change . . . . . . . . . . . . . . . . . 99
Section 11.11. References to Bank . . . . . . . . . . . . . . . . 99
Execution . . . . . . . . . . . . . . . . . . . . . . . . . . 100
INDENTURE OF TRUST
This Indenture of Trust, made and entered into as of October 1,
1995, by and between Guadalupe-Blanco River Authority, a governmental
agency and body politic and corporate of the State of Texas (herein
called the "Issuer") created and existing as a conservation and
reclamation district and political subdivision of the State of Texas
pursuant to Article XVI, Section 59 of the Texas Constitution and the
laws of the State of Texas, particularly Article 8280-106, Vernon's Texas
Civil Statutes, as amended (the "Issuer Act"), and The Bank of New York,
a New York banking corporation, having a principal corporate trust office
in The City of New York, New York, and being qualified to accept and
administer the trusts hereby created acting as trustee (herein called the
"Trustee")
WITNESSETH:
WHEREAS, pursuant to law, and particularly the Issuer Act, Article
717k, Vernon's Texas Civil Statutes, as amended, ("Article 717k"),
Article 717q, Vernon's Texas Civil Statutes, as amended ("Article 717q"),
the Clean Air Financing Act, Chapter 383, Texas Health and Safety Code,
as amended, ("Chapter 383"), and the Regional Waste Disposal Act, Chapter
30 of the Texas Water Code, as amended ("Chapter 30"), the Issuer, being
a "river authority" as defined in Chapter 383 and Chapter 30 and being an
"issuer" as defined in Article 717k and Article 717q, is empowered to
acquire, construct and improve various pollution control facilities, and
to issue bonds to refund and retire bonds previously issued for such
purpose;
WHEREAS, the Acts also authorize the Issuer to issue revenue bonds
to finance such projects, payable solely from the revenues derived from
payments to the Issuer by the user of the project for the purpose of
defraying the cost of financing, acquiring, constructing or improving any
project;
WHEREAS, Port of Corpus Christi Authority of Nueces County, Texas
(formerly Nueces County Navigation District No. 1) (the "Port") has
previously issued its Environmental Improvement Revenue Bonds (Central
Power and Light Company Project) Series 1974A, Issue A (the "Series 1974A
Bonds") in the original principal amount of $8,825,000, which were issued
for the purpose of paying a portion of the costs of acquiring,
constructing, and improving certain pollution control facilities (the
"1974 Project") at the Barney M. Davis Station of Central Power and Light
Company (the "Company") in Nueces County, Texas;
WHEREAS, the Issuer has previously issued its Pollution Control
Revenue Bonds, 1977 Series (Central Power and Light Company Project)
(the "Series 1977 Bonds") in the original principal amount of
$36,600,000, which were issued for the purpose of paying a portion of the
costs of acquiring, constructing and improving certain pollution control
facilities (the "1977 Project") at the Coleto Creek Power Station of the
Company in Goliad County, Texas;
WHEREAS, the Issuer is authorized (i) by Chapter 30, to issue its
revenue bonds to finance the acquisition, construction, and improvement
of water pollution control facilities, (ii) by Chapter 383, to issue its
revenue bonds to finance the acquisition, construction and improvement of
air pollution control facilities, (iii) by Article 717k to refund its own
bonds, and (iv) by Article 717q to issue bonds to refund any obligations
issued in connection with an "eligible project", which is defined to
include the carrying out of any purpose or function for which the Issuer
may issue bonds;
WHEREAS, the Company has requested that the Issuer issue its revenue
bonds to refund and retire all of the outstanding Series 1974A Bonds and
Series 1977 Bonds (collectively, the "Prior Bonds");
WHEREAS, an Installment Payment Agreement, dated as of October 1,
1995 (hereinafter the "Agreement"), relating to the below defined Bonds
has been duly executed between the Issuer and the Company;
WHEREAS, the recitals and provisions of the Agreement are
incorporated herein as if set forth in its entirety, and the capitalized
terms of this Indenture shall have the same meanings, and shall be
defined, as set forth in the Agreement and the Bond Resolution
(hereinafter defined);
WHEREAS, pursuant to the Agreement, the Board of Directors of the
Issuer duly adopted a Resolution authorizing Guadalupe-Blanco River
Authority 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");
WHEREAS, the Bond Resolution authorized the issuance of Guadalupe-
Blanco River Authority Pollution Control Revenue Refunding Bonds (Central
Power and Light Company Project) Series 1995 (hereinafter called the
"Bonds") for the purpose of paying a portion of the costs of refunding
the Prior Bonds, all as authorized by the Issuer Act, Chapter 383,
Chapter 30, Article 717k, and Article 717q;
WHEREAS, the Bonds, and the interest thereon, are and shall be
payable from and secured by a first and superior lien on and pledge of
the payments designated as "Installment Payments" to be made by the
Company pursuant to the Agreement in amounts sufficient to pay and
redeem, and provide for the payment of the principal of, premium, if any,
and interest on, and Purchase Price (hereinafter defined) of, the Bonds,
when due, and the fees and expenses of the Trustee and any paying agent
for the Bonds, all as required by the Bond Resolution;
WHEREAS, certified copies of the Bond Resolution have been duly
filed with the Trustee;
WHEREAS, pursuant to Section 5.12 of the Agreement, the Company has
caused to be delivered to the Trustee an irrevocable letter of credit
(the "Letter of Credit") issued by ABN AMRO Bank N.V. (the "Bank");
WHEREAS, the Trustee has agreed to accept the trusts herein created
upon the terms herein set forth; and
WHEREAS, all things necessary to make the Bonds, when issued as
provided in this Indenture, the valid, binding and legal special
obligations of the Issuer according to the import thereof, and to
constitute this Indenture a valid assignment of the amounts pledged to
the payment of the principal of, premium, if any, and interest on, and
Purchase Price of, the Bonds have been done and performed, and the
creation, execution and delivery of this Indenture and the execution and
issuance of the Bonds, subject to the terms hereof, in all respects have
been duly authorized;
NOW, THEREFORE, the Issuer, in consideration of the premises and the
acceptance by the Trustee of the trusts hereby created, and for other
good and valuable consideration, the receipt of which is hereby
acknowledged, and in order to secure the payment of the principal of,
premium, if any, and interest on the Bonds according to their tenor and
effect, and to secure the payment, performance and observance by the
Issuer of all of the covenants and obligations expressed or implied
herein and in the Bonds, does hereby irrevocably grant, alienate,
bargain, sell, convey, transfer, assign and pledge unto the Trustee (to
the extent of its legal capacity to hold the same for the purposes
hereof), and the successors in trust and assigns of the Trustee, forever.
GRANTING CLAUSE FIRST
All right, title, and interest of the Issuer in, to and under the
Agreement (except Unassigned Rights), and all extensions and renewals of
the term thereof, if any, and to do any and all other things which the
Issuer is or may become entitled to do under the Agreement; provided,
however, that the assignment made pursuant to this clause shall not
impair or diminish any obligation of the Issuer under the Agreement or
alter the rights, duties and obligations of the Trustee under the
remaining terms of this Indenture;
GRANTING CLAUSE SECOND
All moneys, income, revenues, issues, profits, receipts and other
amounts payable to or receivable by the Issuer under or with respect to
the Agreement, including the Installment Payments (except Unassigned
Rights);
GRANTING CLAUSE THIRD
All right, title, and interest of the Issuer in and to all moneys
and securities from time to time held by the Trustee under the terms of
this Indenture (except amounts held in the Rebate Fund and the Bond
Purchase Fund);
GRANTING CLAUSE FOURTH
All right, title and interest of the Issuer in and to any and all
moneys paid to the Trustee pursuant to the Letter of Credit; and
GRANTING CLAUSE FIFTH
All right, title and interest of the Issuer in and to any and all
property, rights, and interest of every kind or description which, from
time to time hereafter, may be sold, transferred, conveyed, assigned,
pledged, mortgaged or delivered to the Trustee as additional security
hereunder. TO HAVE AND TO HOLD all and singular the Trust Estate
(as hereinafter defined), whether now owned or hereafter acquired,
irrevocably unto the Trustee and its successors in trust and assigns
forever;
IN TRUST, NEVERTHELESS, upon the terms and trusts herein set forth
for the equal and proportionate benefit, security and protection of all
present and future owners of the Bonds from time to time issued under and
secured by this Indenture without privilege, priority, or distinction as
to the lien or otherwise of any of the Bonds over any of the other Bonds;
PROVIDED, HOWEVER, that if the Issuer, its successors or assigns,
shall well and truly pay, or cause to be paid, the principal of, premium,
if any, and interest on the Bonds due or to become due thereon at the
times and in the manner mentioned in the Bonds according to the true
intent and meaning thereof, and shall cause the payments to be made on
the Bonds as required under Article IV hereof or shall provide, as
permitted hereby, for the payment thereof by depositing with the Trustee
the entire amount due or to become due thereon (or Governmental
Obligations sufficient for that purpose as provided in Article V hereof),
and shall pay or cause to be paid to the Trustee all sums of money due or
to become due to it in accordance with the terms and provisions hereof,
then upon the final payment thereof or provisions therefor this Indenture
and the rights hereby granted shall cease, determine, and be void;
otherwise this Indenture shall remain in full force and effect;
THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared,
that all Bonds issued and secured hereunder are to be issued,
authenticated and delivered, and all said property, rights and interest,
including, without limitation, the amounts hereby assigned, are to be
dealt with and disposed of under, upon and subject to the terms,
conditions, stipulations, covenants, agreements, trusts, uses and
purposes hereinafter expressed, and that the Issuer has agreed and
covenanted, and hereby does agree and covenant, with the Trustee and with
the Owners, from time to time, of the Bonds, as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions. Each of the following terms shall have
the meaning assigned to it in this Section 1.01 whenever used in this
Indenture, unless the context in which such term is used clearly requires
otherwise:
Acts - shall mean, collectively, the Issuer Act, Chapter 30,
Chapter 383, Article 717k and Article 717q.
Agreement - shall mean the Installment Payment Agreement, dated as
of October 1, 1995, by and between the Issuer and the Company, including
all amendments thereof or supplements thereto.
Alternate Letter of Credit - shall mean an irrevocable Letter of
Credit authorizing drawings thereunder by the Trustee, issued by a
national banking association, a bank, a trust company, or other financial
institutions such as the Bank, and satisfying the requirements of Article
X of this Indenture.
Approval Certificate - shall mean the certificate of the Chairman of
the Issuer approving certain terms of the Bonds.
Article 717k - shall mean Article 717k, Vernon's Texas Civil
Statutes, as amended.
Article 717q - shall mean Article 717q, Vernon's Texas Civil
Statutes, as amended.
Authorized Company Representative - shall mean such person at the
time and from time to time designated by written certificate furnished to
the Issuer and the Trustee containing the specimen signature of such
person and signed on behalf of the Company by the Chairman of the Board
of Directors, the President, any Vice President, Treasurer or Assistant
Treasurer of the Company to act on behalf of the Company. Such
certificate may designate an alternate or alternates.
Authorized Denominations - shall mean (i) for Bonds in the Daily or
Weekly Mode, $100,000 or any integral multiple thereof; provided that if
the principal amount of Bonds in the Daily or Weekly Mode, as the case
may be, is not evenly divisible by $100,000, then the remainder of such
principal amount shall be added to another Bond in the same Mode that is
in a principal amount of $100,000 or any integral multiple thereof, (ii)
for Bonds in the Flexible Mode, $100,000 or any integral multiple of
$1,000 in excess of $100,000, and (iii) for Bonds in the Monthly,
Quarterly, Semiannual, Multiannual or Fixed Rate Mode, $5,000 or any
integral multiple thereof.
Authorized Issuer Representative - shall mean such person at the
time and from time to time designated by written certificate furnished to
the Company and the Trustee containing the specimen signature of such
person and signed on behalf of the Issuer by its Chairman or Secretary.
Such certificate may designate an alternate or alternates.
Bank - shall mean initially, ABN AMRO Bank N.V., a Dutch bank, as
issuer of the Letter of Credit, and its successors and assigns in that
capacity and, in the event an Alternate Letter of Credit is outstanding,
the issuer of the Alternate Letter of Credit. Principal Office of the
Bank shall mean the office designated in the Letter of Credit.
Bank Bonds - shall have the meaning assigned to such term in Section
2.10(b)(v) hereof.
Beneficial Owner - shall mean the actual purchaser of a Bond.
Board - shall mean the lawfully qualified Board of Directors of the
Issuer.
Bond Counsel - shall mean McCall, Parkhurst & Horton L.L.P. or such
other firm of attorneys of nationally recognized standing in the field of
law relating to municipal bond law and the exemption from federal income
taxation of interest on state or local bonds, selected by the Issuer and
acceptable to the Trustee and the Company.
Bond Fund - shall mean the fund by that name established by Section
4.02 of this Indenture.
Bond Owner, Bondowner, Owner, Bondholder, bondholder, holder,
Registered Owner or owner of the Bonds -when used with respect to a Bond,
shall mean the person or entity in whose name such Bond shall be
registered.
Bond Purchase Agreement - shall mean the Bond Purchase Agreement
dated the date of its execution between the Issuer and the Underwriter.
Bond Purchase Fund - shall mean the fund by that name established by
Section 4.04 of this Indenture.
Bond Registrar - shall mean the Trustee or any successor bond
registrar serving as such under this Indenture. Principal Office of the
Bond Registrar shall mean the office thereof designated in writing to the
Trustee.
Bond Resolution or Resolution - shall mean the Resolution of the
Board of Directors authorizing the issuance of the Bonds (including the
Indenture prescribed and authorized to be executed in the Bond
Resolution) together with any supplemental resolutions or amendments to
the Resolution or such Indenture.
Bonds - shall mean the Guadalupe-Blanco River Authority Pollution
Control Revenue Refunding Bonds (Central Power and Light Company Project)
Series 1995, executed and delivered pursuant hereto.
Business Day - shall mean any day on which commercial banks located
in all of the cities in which the Principal Offices of the Trustee, the
Paying Agent, the Bank and the Remarketing Agent are located are not
required or authorized by law or regulation to remain closed and on which
the New York Stock Exchange is not closed.
Chapter 30 - shall mean Chapter 30 of the Texas Water Code, as
amended.
Chapter 383 - shall mean Chapter 383 of the Texas Water Code, as
amended.
Code - shall mean the Internal Revenue Code of 1986, as amended and
the rulings and regulations (including temporary and proposed
regulations) promulgated thereunder or, to the extent applicable, under
the Internal Revenue Code of 1954, as amended.
Company - shall mean Central Power and Light Company and any
successors and assigns as permitted by Section 7.02 of the Agreement.
Company Debt Service Account - shall mean the special account of
that name within the Bond Fund.
Company-Held Bonds - shall mean Bonds owned by or held in the name
of the Company or its designee or held by the Trustee for the account of
the Company or its designee as described in Section 2.10(b) hereof.
Conversion or conversion - shall mean a change from one Mode to
another with respect to a Bond, and with respect to a Bond in the
Multiannual Mode, a change from one Interest Rate Period to another.
Conversion Date - shall mean the date on which a new Mode becomes
effective with respect to a Bond, and with respect to a Bond in the
Multiannual Mode, the date on which a new Interest Rate Period becomes
effective.
Costs of Issuance - shall mean all costs and expenses incurred by
the Issuer or the Company in connection with the issuance and sale of the
Bonds, including without limitation (i) reasonable fees and expenses of
accountants, attorneys, engineers, and financial advisors, (ii)
materials, supplies, and printing and engraving costs, (iii) recording
and filing fees, (iv) rating agency fees, and (v) the Issuer's
administrative expenses as provided in Section 5.05 of the Agreement.
Daily Mode - shall mean the Mode in which the interest rate on the
Bonds is set at the Daily Rate, all as set forth in the form of Daily
Bond set forth in Section 2.03 hereof.
Daily Rate - shall mean the rate of interest that is set on the
Bonds by the Remarketing Agent while they are in the Daily Mode.
Delivery Date - shall mean, with respect to a Bond tendered for
purchase, the Purchase Date or any subsequent Business Day on which such
Bond is delivered to the Paying Agent as provided in the forms of the
Bonds.
DTC - shall mean The Depository Trust Company, New York, New York,
or any successor securities depository.
DTC Participant - shall mean any securities broker dealer, bank,
trust company, clearing corporation or other organization with Bonds
credited to an account maintained on its behalf by DTC.
Effective Date - shall mean, with respect to a Bond in the Daily,
Flexible, Weekly, Monthly, Quarterly, Semiannual and Multiannual Modes,
the date on which a new Interest Rate Period for that Bond takes effect.
Electronic Notice - shall mean notice transmitted through a time-
sharing terminal, by facsimile transmission or by telephone (promptly
confirmed in writing or by facsimile transmission).
Event of Default - used with respect to this Indenture, shall mean
any event specified in Section 6.01 of this Indenture.
Favorable Opinion - shall mean an opinion of Bond Counsel addressed
to the Issuer, the Company and the Trustee to the effect that the action
proposed to be taken is authorized or permitted by, to the extent
applicable, the Acts and this Indenture and will not adversely affect the
excludability of interest on the Bonds from gross income of the owners
thereof for federal income tax purposes (other than as held by a
"substantial user" of the Projects or a "related person" within the
meaning of the Code).
Fixed Rate - shall mean a rate of interest on a Bond that is fixed
for the remaining term of the Bond.
Fixed Rate Conversion Date - shall mean with respect to a Bond, the
date upon which the Fixed Rate first becomes effective for the Bond, and
shall mean the Issue Date if the Bonds are initially delivered bearing
interest at a Fixed Rate.
Fixed Rate Mode - shall mean the Mode in which the interest rate on
the Bonds is fixed from the Fixed Rate Conversion Date until the Maturity
Date.
Flexible Mode - shall mean the Mode in which the interest rate on
the Bonds is set at the Flexible Rate, all as set forth in the form of
Flexible Bonds set forth in Section 2.03 hereof.
Flexible Rate - shall mean a rate of interest set by the Remarketing
Agent for periods from 1 to 270 days.
Government Obligations - shall mean (a) direct obligations of the
United States of America (including obligations issued or held in
book-entry form on the books of the Department of the Treasury of the
United States of America); (b) obligations the timely payment of the
principal of and interest on which are fully guaranteed by the United
States of America; (c) evidences of ownership of proportionate interest
in future interest or principal payments of obligations described in
clause (a) or (b) (investments in such proportionate interests must be
limited to circumstances wherein (x) a bank or trust company acts as
custodian and holds the underlying Government Obligations; (y) the owner
of the investment is the real party in interest and has the right to
proceed directly and individually against the obligor of the underlying
Government Obligations; and (z) the underlying Government Obligations are
held in a special subaccount, segregated from the custodian's general
assets, and are not available to satisfy any claim of the custodian, any
person claiming through the custodian, or any person to whom the
custodian may be obligated); or (d) obligations issued or fully
guaranteed by the following instrumentalities or agencies of the United
States of America:
(i) Federal Home Loan Bank System;
(ii) Export-Import Bank of the United States;
(iii) Federal Financing Bank;
(iv) Government National Mortgage Association;
(v) Farmers Home Administration;
(vi) Federal Home Loan Mortgage Company;
(vii) Federal Housing Administration;
(viii) Federal National Mortgage Association; and
(ix) Resolution Funding Corporation (stripped interest
obligations only).
Indenture - shall mean this Indenture of Trust, as originally
executed and as amended, modified or supplemented thereafter in
accordance with the terms hereof.
Installment Payment - shall mean each payment required to pay
amounts due and owing on the Bonds issued pursuant to the Agreement, as
defined in Section 5.01 thereof and as provided for in this Indenture,
including the principal of, redemption premium, if any, and interest on,
and Purchase Price of, such Bonds.
Interest Accrual Date - shall mean the first day of any Interest
Rate Period and thereafter, each Interest Payment Date in respect
thereof, other than the last such Interest Payment Date.
Interest Payment Date - shall mean (i) each April 1 and October 1
for Bonds in the Semiannual, Multiannual or Fixed Rate Mode, (ii) the
first day (which must be a Business Day) after an Interest Rate Period
for Bonds in the Flexible Mode; (iii) the first Business Day of each
calendar month for Bonds in the Daily, Weekly or Monthly Mode, commencing
November 1, 1995, if the Bonds are issued in the Daily, Weekly or Monthly
Mode; (iv) each January 1, April 1, July 1 and October 1 for Bonds in the
Quarterly Mode; and (v) the Maturity Date.
Interest Rate Period or Rate Period - shall mean, when used with
respect to any particular rate of interest for a Bond, the period during
which such rate of interest determined for such Bond will remain in
effect as described herein. Notwithstanding anything in this Indenture
to the contrary, the Interest Rate Period with respect to each Bond in
the Flexible Mode shall end on a day which is immediately followed by a
Business Day, and, in any event, not later than the day next preceding
the Maturity Date.
Issue Date - shall mean the date on which the Bonds are first
authenticated and delivered to the initial purchasers against payment
therefor.
Issuer - shall mean Guadalupe-Blanco River Authority, a conservation
and reclamation district and a governmental agency and body politic and
corporate of the State of Texas.
Issuer Act - shall mean Article 8280-106, Vernon's Texas Civil
Statutes, as amended.
Letter of Credit - shall mean the irrevocable letter of credit
issued by the Bank to the Trustee on the Issue Date, any extensions
thereof and any Alternate Letter of Credit delivered pursuant to Article
X hereof.
Letter of Credit Agreement - shall mean the Letter of Credit
Agreement between the Company and the Bank relating to the Letter of
Credit, any Alternate Letter of Credit, and the Bonds, as such agreement
may be amended, supplemented or replaced from time to time.
Letter of Credit Debt Service Account - shall mean the special
account of that name within the Bond Fund.
Letter of Credit Purchase Account - shall mean the special account
of that name within the Bond Purchase Fund.
Maturity Date - shall mean the date or dates designated as such in
the Approval Certificate.
Maximum Rate - shall mean a "net effective interest rate" (as
defined and calculated in accordance with the provisions of Article
717k-2, Vernon's Texas Civil Statutes) of fifteen percent (12%) per annum.
Mode - shall mean the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily Mode, the
Flexible Mode, the Weekly Mode, the Monthly Mode, the Quarterly Mode, the
Semiannual Mode, the Multiannual Mode and the Fixed Rate Mode.
Monthly Mode - shall mean the Mode in which the interest rate on the
Bonds is set at the Monthly Rate, all as set forth in the form of Monthly
Bonds set forth in Section 2.03 hereof.
Monthly Rate - shall mean the rate of interest that is set on the
Bonds while they are in the Monthly Mode.
Moody's - shall mean Moody's Investors Service, or any successor
thereto maintaining a rating on the Bonds.
Multiannual Mode - shall mean the Mode in which the interest rate on
the Bonds is fixed for periods of one year or multiples thereof
designated by the Remarketing Agent, after consultation with the Company,
as described in the form of Multiannual Bonds set forth in Section 2.03
hereof.
Multiannual Rate - shall mean the rate of interest that is set on
Bonds while they are in the Multiannual Mode.
Official Statement - shall mean the Official Statement relating to
the Bonds.
Outstanding, Bonds Outstanding or Bonds then Outstanding - shall
mean when used with reference to Bonds at any date as of which the amount
of Outstanding Bonds is to be determined, means all Bonds authenticated
and delivered under the Indenture, except:
(a) Bonds canceled or delivered for cancellation at or prior to
such date;
(b) Bonds deemed tendered or deemed to be paid pursuant to the
terms of the Indenture;
(c) Bonds in lieu of which others have been authenticated and
delivered under the Indenture; and
(d) Bonds registered in the name of the Issuer;
(e) On or after any Purchase Date for Bonds, all Bonds (or
portions of Bonds) which are tendered or deemed to have been
tendered for purchase on such date, provided that funds sufficient
for such purchase are on deposit with the Paying Agent; and
(f) For purposes of any consent, request, demand,
authorization, direction, notice, waiver or other action to be taken
by the holders of a specified percentage of outstanding Bonds
hereunder, all Bonds held by or for the account of the Issuer or the
Company, except that for purposes of any such consent, request,
demand, authorization, direction, notice, waiver or action the
Trustee shall be obligated to consider as not being outstanding only
Bonds known by the Trustee by actual notice thereof to be so held.
In determining whether the owners of a requisite aggregate principal
amount of Bonds outstanding have concurred in any request, demand,
authorization, direction, notice, consent or waiver under the provisions
hereof, Bonds which are held by or on behalf of the Company or any
affiliates thereof (unless all of the Outstanding Bonds are then owned by
said parties) and Bonds which are held by or on behalf of the Bank
(unless all of the Outstanding Bonds are then held by or on behalf of the
Bank) shall be disregarded for the purpose of any such determination.
Notwithstanding the foregoing, Bonds so owned which have been pledged in
good faith shall not be disregarded as aforesaid if the pledgee has
established to the satisfaction of the Bond Registrar the pledgee's right
so to act with respect to such Bonds and that the pledgee is not the
Company or an affiliate thereof.
Paying Agent - shall mean the Trustee or any successor paying agent
or co-paying agent serving as such under this Indenture. Principal
Office of the Paying Agent shall mean the office thereof designated in
writing to the Trustee. So long as any Bond is Outstanding hereunder,
the Paying Agent shall maintain an office or have an agent with an office
in New York City.
Permitted Investments - shall mean any of the following obligations
or securities, to the extent permitted by law, on which the Issuer is not
the obligor:
(a) Government Obligations;
(b) obligations issued or guaranteed by any state of the United
States of America or the District of Columbia or any political
subdivision thereof;
(c) general or revenue obligations issued by any state of the
United States of America or the District of Columbia or any
political subdivision thereof;
(d) commercial or finance company paper;
(e) certificates of deposit of, and bankers acceptances drawn
on and accepted by, any bank organized and doing business under the
laws of the United States of America, including the Trustee in its
commercial banking capacity, or any state of the United States of
America;
(f) repurchase agreements collateralized by Government
Obligations with (i) a registered broker dealer or a registered
government bond "primary dealer" in either case which is subject to
the jurisdiction of the Securities Investors' Protection
Corporation, or (ii) any bank including the Trustee, which is a
member of the Federal Deposit Insurance Corporation and which has
combined capital, surplus and undivided profits of not less than $50
million;
(g) shares in money market funds, including money market funds
managed by the Trustee;
(h) investment contracts or funding arrangements with any
insurance company, financial institution or bank; and
(i) any other investment or security to the extent permitted by
Texas law.
Plants - shall mean the Barney M. Davis Station of the Company in
Nueces County, Texas, and the Coleto Creek Power Station in Goliad
County, Texas.
Principal Office - is defined in the definitions of Trustee, Paying
Agent, Bank, Bond Registrar and Remarketing Agent, herein.
Prior Agreements - shall mean the Installment Sale Agreement, dated
as of June 1, 1974 between the Port and the Company (the "Series 1974A
Agreement") and the Installment Sale Agreement, dated as of April 1, 1977
between the Issuer and the Company (the "Series 1977 Agreement") .
Prior Bonds - shall mean the Series 1974A Bonds and the Series 1977
Bonds.
Prior Indentures - shall mean the Indenture of Trust, dated as of
June 1, 1974 between the Port and the Series 1974A Trustee (the "Series
1974A Indenture"), and the Trust Indenture, dated as of April 1, 1977
between the Issuer and the Series 1977 Trustee (the "Series 1977
Indenture").
Projects - shall mean the facilities, as described more fully in
each Exhibit A to the Prior Agreements.
Purchase Date - shall mean the date upon which Bonds are required to
be purchased pursuant to a mandatory or optional tender in accordance
with the provisions in the forms of Bonds set forth in Section 2.03
hereof.
Purchase Price - shall have the meaning set forth in the forms of
Daily, Flexible, Weekly, Monthly, Quarterly, Semiannual and Multiannual
Bonds set forth in Section 2.03 hereof.
Quarterly Mode - shall mean the Mode in which the interest rate on
the Bonds is set at the Quarterly Rate, all as set forth in Section 2.03
hereof.
Quarterly Rate - shall mean the rate of interest that is set on the
Bonds while they are in the Quarterly Mode.
Rating Agencies - shall mean Standard & Poor's Rating Group, a
division of McGraw-Hill, Inc. and/or Moody's Investors Service, according
to which of such rating agencies then rates the Bonds; and provided that
if neither of such rating agencies then rates the Bonds, the term "Rating
Agencies" shall refer to any national rating agency (if any), mutually
acceptable to the Company and the Remarketing Agent, which provides such
rating.
Rebate Fund - shall mean the fund by that name established in
Section 4.10 hereof.
Record Date - shall mean (i) with respect to Bonds in the Flexible
Mode, the time of payment on the Interest Payment Date; (ii) with respect
to Bonds in the Daily, Weekly or Monthly Mode, the close of business on
the Business Day preceding an Interest Payment Date; and (iii) with
respect to Bonds in the Quarterly, Semiannual, Multiannual or Fixed Rate
Mode, the 15th day of the calendar month immediately preceding any
Interest Payment Date, regardless of whether such day is a Business Day
or, in the case of an Interest Payment Date which shall not be at least
15 days after the first day of a Quarterly, Semiannual, Multiannual or
Fixed Rate Period, the first day of such Quarterly, Semiannual,
Multiannual or Fixed Rate Period.
Refunding - shall mean the refunding of the Prior Bonds, as
described in the Agreement and this Indenture.
Registration Books - shall mean the registration records of the
Issuer, maintained by the Trustee, as registrar for the Bonds.
Regulations - shall mean the Income Tax Regulations promulgated
pursuant to the Code or under the 1954 Code.
Remarketing Account - shall mean the special account of that name
within the Bond Purchase Fund.
Remarketing Agent - shall mean the initial and any successor
remarketing agent appointed in accordance with Article VIII hereof.
Principal Office of the Remarketing Agent shall mean the office thereof
designated in writing to the Trustee.
Remarketing Agreement - means any remarketing agreement executed by
the Company and the Remarketing Agent pursuant to Article VIII hereof.
Remarketing Proceeds - shall mean proceeds from the sale of the
Bonds by the Remarketing Agent other than to the Issuer or the Company.
S&P - shall mean Standard & Poor's Corporation, or any successor
thereto maintaining a rating on the Bonds.
Semiannual Mode - shall mean the Mode in which the interest rate on
the Bonds is set at the Semiannual Rate, all as set forth in the form of
Semiannual Bond set forth in Section 2.03 hereof.
Semiannual Rate - shall mean the rate of interest that is set on the
Bonds while they are in the Semiannual Mode.
Series 1974A Bonds - shall mean the Nueces County Navigation
District No. 1 Environmental Improvement Revenue Bonds (Central Power and
Light Company Project) Series 1974A, Issue A .
Series 1974A Trustee - shall mean NationsBank of Tennessee, N.A., as
successor to Commerce Union Bank.
Series 1977 Bonds - shall mean the Guadalupe-Blanco River Authority
Pollution Control Revenue Bonds, 1977 Series (Central Power and Light
Company Project).
Series 1977 Trustee - shall mean Texas Commerce Bank National
Association, as successor to Corpus Christi National Bank.
State - shall mean the State of Texas.
Tax Letter of Representation - shall mean the letter of
representation regarding the use of the proceeds of the Bonds and the
Prior Bonds and other facts that are within the Company's knowledge,
furnished by the Company to Bond Counsel in connection with the issuance
of the Bonds.
Tendered Bond - shall mean any Bond tendered or deemed tendered for
purchase pursuant to Sections 2.02(A)(3), 2.02(B)(3) or (4), 2.02(C)(3)
or (4), 2.02(D)(3) or (4), 2.02(E)(3) or (4), 2.02(F)(3) or (4) or
2.02(G)(3) or (4) hereof.
Trustee - shall mean The Bank of New York, or any successor trustee
or co-trustee serving as such under this Indenture. Principal Office of
the Trustee shall mean the business address designated in writing to the
Issuer and the Remarketing Agent as its principal office for its duties
hereunder.
Trustee's Prime Rate - shall mean, on any day, the lesser of (a) the
corporate base rate for that day as announced by the Trustee in its
commercial banking capacity and (b) the highest nonusurious interest rate
("Ceiling Rate") permitted for each such day by whichever of Texas or
federal laws permit the higher nonusurious rate, stated as a rate per
annum.
Trust Estate - shall mean the property conveyed to the Trustee
pursuant to the Granting Clauses of this Indenture.
Unassigned Rights - shall mean the rights of the Issuer under
Sections 5.05, 6.03 and 7.03(a) of the Agreement and the right to receive
notices thereunder.
Undelivered Bonds - shall mean Bonds which are deemed to have been
tendered as provided in the forms of the Bonds for the Daily Mode,
Flexible Mode, Weekly Mode, Monthly Mode, Quarterly Mode, Semiannual Mode
and Multiannual Mode set forth in Section 2.03 hereof.
Underwriter - shall mean the initial underwriter of the Bonds,
Morgan Stanley & Co. Incorporated.
Weekly Mode - shall mean the Mode in which the interest rate on the
Bonds is set at the Weekly Rate, all as set forth in the form of the
Bonds set forth in Section 2.03 hereof.
Weekly Rate - shall mean the rate of interest that is set on the
Bonds while they are in the Weekly Mode.
Section 1.02. Article and Section Headings. The headings or titles
of the several Articles and Sections of this Indenture, and the Table of
Contents appended hereto, are solely for convenience of reference and
shall not affect the meaning or construction of the provisions hereof.
Section 1.03. Interpretation. The singular form of any word used
herein shall include the plural, and vice versa, if applicable. The use
of a word of any gender shall include all genders, if applicable. This
Indenture and all of the terms and provisions hereof shall be construed
so as to effectuate the purposes contemplated hereby and to sustain the
validity hereof. All references to any person or entity defined in
Section 1.01 shall be deemed to include any person or entity succeeding
to the rights, duties and obligations of such person or entity. Unless
otherwise specified herein, all references to specific times shall be
deemed to refer to New York time.
ARTICLE II
AUTHORIZATION AND ISSUANCE OF THE BONDS
Section 2.01. Authorization of Bonds. (a) The Bonds are hereby
authorized to be issued in one series, designated "Guadalupe-Blanco River
Authority Pollution Control Revenue Refunding Bonds (Central Power and
Light Company Project) Series 1995". The Bonds shall be issued for the
purpose of accomplishing the Refunding as provided herein and in the
Agreement. No Bonds may be issued pursuant to this Indenture in addition
to those authorized by this Section 2.01, except Bonds issued upon
transfer or exchange pursuant to Section 3.06 hereof, temporary Bonds
issued pursuant to Section 3.16 hereof, replacement Bonds issued pursuant
to Section 3.17 hereof and Bonds issued pursuant to Section 2.09 hereof.
(b) The Bonds (i) shall be dated as provided in the paragraph next
preceding the last paragraph of this Section, (ii) shall be in the
aggregate principal amount set forth in the Approval Certificate, (iii)
shall bear interest as set forth in Section 2.02 and as provided in the
form of the Bonds, until paid; and (iv) shall mature on the Maturity Date
set forth in the Approval Certificate.
The Bonds are subject to redemption prior to maturity as set forth
in Section 2.06 hereof.
The Bonds are issuable in the form of registered Bonds without
coupons in Authorized Denominations. The Bonds shall be numbered from 1
upwards, provided that the number assigned to each definitive Bond shall
be prefixed by the letters "AR." Temporary Bonds shall be prefixed by
the letters "TR."
Subject to the provisions related to the book-entry only system of
Section 3.07 hereof, principal of, and premium, if any, on the Bonds
shall be payable to the Bondholders upon presentation and surrender of
the Bonds as the same become due at the Principal Office of the Paying
Agent. Interest on the Bonds shall be paid as provided in the form of
the Bonds. Such interest shall be paid notwithstanding the cancellation
of any Bonds upon any exchange or registration of transfer thereof
subsequent to the Record Date and prior to such Interest Payment Date,
except that, if and to the extent there shall be a default in the payment
of the interest due on such Interest Payment Date, such defaulted
interest shall be paid to the Bondholders in whose names any such Bonds
(or any Bond or Bonds issued upon registration of transfer or exchange
thereof) are registered at the close of business on the Business Day next
preceding the date of payment of such defaulted interest. Payment of
principal of, premium, if any, and interest on the Bonds shall be made in
such lawful money of the United States of America as, at the respective
times of payment, shall be legal tender for the payment of public and
private debts.
The Bonds shall be dated October 1, 1995, and shall initially bear
interest from the Issue Date unless initially issued bearing interest at
a Fixed Rate, in which case, the Bonds shall initially bear interest from
October 1, 1995. Thereafter, the Bonds shall bear interest from the
Interest Payment Date to which interest has been paid or duly provided
for, or unless no interest has been paid or duly provided for on the
Bonds, in which case from the Issue Date until paid, in each case at the
rates set forth in Section 2.02 hereof and as provided in the Bonds. If,
as shown by the records of the Trustee, interest on the Bonds is in
default, Bonds issued in exchange for Bonds surrendered for registration
of transfer or exchange shall note such default and shall bear interest
from the date to which interest has been paid in full on the Bonds, or,
if no interest has been paid on the Bonds, from the Issue Date. Each
Bond shall bear interest on overdue principal and, to the extent
permitted by law, on overdue interest at the applicable rate in effect on
the date which such principal and interest became due and payable.
With respect to Bonds in the Daily, Flexible, Weekly and Monthly
Mode, on the Business Day before each Interest Payment Date and for Bonds
in the Quarterly, Semiannual, Multiannual and Fixed Rate Mode, on the
fifteenth day of the calendar month prior to each Interest Payment Date,
the Trustee shall calculate the amount of interest to be paid on the next
succeeding Interest Payment Date and shall, not later than 11:00 a.m.,
New York City time, on such date the calculation is made, notify the
Company and the Paying Agent of the amount of interest to be paid. Any
contest by the Company of the amount calculated by the Trustee to be due
on an Interest Payment Date shall not relieve the Issuer or the Company
of its obligation to pay such amount to enable the Trustee to pay the
interest payable on the Bonds on such Interest Payment Date.
Section 2.02. Interest. The interest rate on the Bonds, as
provided in the Bonds, will be the lesser of (i) the Maximum Rate or (ii)
the rate determined as provided in this Section 2.02. In no event shall
the Interest Rate exceed the Maximum Rate. Initially, the Bonds shall
bear interest at the interest rate set forth in the Approval Certificate
determined by the Underwriter in accordance with the Mode set forth in
the Approval Certificate. Interest on the Bonds in a Flexible Mode,
Daily Mode, Weekly Mode or Monthly Mode shall be payable on the
applicable Interest Payment Date as herein described, computed on the
basis of a 365 or 366-day year, as applicable for the number of days
actually elapsed based on the calendar year in which such Rate Period
commences. The interest on the Bonds in a Fixed Rate Mode, Multiannual
Mode, Semiannual Mode or Quarterly Mode shall be payable on the
applicable Interest Payment Date as herein described, computed on the
basis of a 360-day year of twelve 30-day months. While there exists an
Event of Default under this Indenture, the interest rate on the Bonds
will be the rate on the Bonds on the day before the Event of Default
occurred.
(A) Flexible Mode.
(1) Determination of Flexible Rates. The Remarketing
Agent shall determine the Flexible Rate and Interest Rate Period
with respect to each Bond in a Flexible Mode as provided in the
form of Flexible Bonds set forth in Section 2.03 hereof and
shall notify the Paying Agent by Electronic Notice not later
than 1:00 p.m., New York City time, on the Effective Date. The
Paying Agent shall give written notice of the Flexible Rate and
Interest Rate Period to the Trustee and the Company. Each
determination and redetermination of the Flexible Rate shall be
conclusive and binding on the Issuer, the Trustee, the Paying
Agent, the Bond Registrar, the Company, the Bank and the
Bondowners. If the Remarketing Agent fails for any reason to
determine the Flexible Rate or Interest Rate Period for any Bond
while in the Flexible Mode, or if for any reason such manner of
determination shall be determined to be invalid or
unenforceable, the Bond shall be deemed to be in an Interest
Rate Period ending on the next succeeding day which is
immediately followed by a Business Day and the Flexible Rate
shall be equal to 100% of the rate for the Public Securities
Association Municipal Swap Index as published by Municipal
Market Data for 7 day high-grade tax-exempt variable rate demand
obligations on the day on which such rate is determined or, if
such rate is not published on that day, the most recent
publication of such rate.
In determining the Flexible Rate and remarketing Bonds in
the Flexible Mode, the Remarketing Agent shall (i) not offer
Interest Rate Periods greater than the lesser of 270 days or a
period equal to the maximum number of days' interest coverage
provided by the Letter of Credit minus five days, (ii) not offer
Interest Rate Periods applicable to Bonds to be converted
extending beyond the day preceding any scheduled conversion of
the Bonds to another Mode or the final maturity of the Bonds,
and (iii) follow any written directions of the Company not
inconsistent with the preceding clauses (i) and (ii) as to the
Interest Rate Periods to be made available. The Company, the
Trustee, the Paying Agent and the Remarketing Agent shall
cooperate to ensure compliance with this requirement.
(2) Conversions from the Flexible Mode. The Bonds in the
Flexible Mode or any portion of such Bonds may be converted at
the election of the Company from the Flexible Mode to the Daily,
Weekly, Monthly, Quarterly, Semiannual, Multiannual or Fixed
Rate Mode as provided in the form of the Flexible Bonds, so long
as no Event of Default hereunder exists as certified to the
Trustee by the Company. Written notice of a conversion from the
Flexible Mode shall be given by the Company to the Issuer, the
Trustee, the Paying Agent, the Remarketing Agent and the Rating
Agencies not fewer than 30 days before the Conversion Date,
which date shall be specified by the Company in such notice and
shall not be earlier than the day following the expiration of
the Interest Rate Period with the longest remaining term then in
effect for the Bonds to be converted. Prior to the proposed
Conversion Date, the Remarketing Agent shall not offer Interest
Rate Periods for the Bonds to be converted extending beyond the
proposed Conversion Date. Conversions to the Fixed Rate Mode
shall also be governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to a new Mode established by the preceding paragraph
and Section 2.02(J) are not met by 10:30 a.m., New York City
time, on the Conversion Date, the Paying Agent shall deem the
proposed conversion to have failed and shall immediately notify
the Trustee and the Remarketing Agent and the Bonds shall remain
in the Flexible Mode with an Interest Rate Period ending on the
next succeeding day which is immediately followed by a Business
Day. In such event, such Bonds shall remain subject to
mandatory tender pursuant to Section 2.11 hereof. In no event
shall the failure of Bonds to be converted to another Mode for
any reason be deemed to be, in and of itself, an Event of
Default under this Indenture, so long as the Purchase Price of
all Bonds required to be purchased is made available as provided
above.
(3) Mandatory Tender for Purchase. Bonds in the Flexible
Mode are subject to mandatory tender for purchase as provided in
the form of Bonds and in Section 2.11 hereof.
(B) Daily Mode.
(1) Determination of Daily Rates. With respect to Bonds
in a Daily Mode, the Remarketing Agent shall determine the Daily
Rate for any day as provided in the form of Daily Bonds set
forth in Section 2.03 hereof and shall notify the Paying Agent
thereof by Electronic Notice not later than 10:30 a.m., New
York City time, on such Business Day. The Paying Agent shall
give written notice of the Daily Rate to the Trustee and the
Company. Each determination and redetermination of the Daily
Rate shall be conclusive and binding on the Issuer, the Trustee,
the Paying Agent, the Company, the Bank and the Bondowners. If
for any reason the Remarketing Agent fails to determine the
Daily Rate (including, but not limited to, a failure to
determine the Daily Rate for a day that is not a Business Day)
or if for any reason such manner of determination shall be
determined to be invalid or unenforceable, the Daily Rate to
take effect on the Effective Date shall be the Daily Rate in
effect on the day preceding
such date.
(2) Conversions from the Daily Mode. The Bonds in the Daily
Mode or any portion of such Bonds may be converted on any
Interest Payment Date at the election of the Company from the
Daily Mode to the Flexible, Weekly, Monthly, Quarterly,
Semiannual, Multiannual or Fixed Rate Mode as provided in the
form of the Bonds, so long as no Event of Default hereunder
exists as certified to the Trustee by the Company. Written
Notice of a conversion from the Daily Mode shall be given by the
Company to the Issuer, the Trustee, the Paying Agent, prior to
the proposed Conversion Date, which date shall be specified by
the Company in such notice. Notice of a conversion of Bonds
from the Daily Mode and the mandatory tender of Bonds for
purchase on such Conversion Date shall be given to the owners of
such Bonds as provided in Section 2.02(B)(4) hereof and the form
of Bonds. Conversions to the Fixed Rate Mode shall also be
governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding
paragraph and Section 2.02(J) are not met by 10:30 a.m.,
New York City time, on the Conversion Date, the Paying
Agent shall deem the proposed conversion to have failed and
shall immediately notify the Trustee and the Remarketing
Agent, and the Bonds shall be subject to mandatory tender
as provided in Section 2.02(B)(4) hereof. In addition, the
failed conversion shall cause the interest rate on the
Bonds to immediately convert to the Flexible Mode with an
Interest Rate Period ending on the next succeeding day
which is immediately followed by a Business Day. In such
event, such Bonds shall remain subject to mandatory tender
pursuant to Section 2.11 hereof. In no event shall the
failure of Bonds to be converted to another Mode for any
reason be deemed to be, in and of itself, an Event of
Default under this Indenture, so long as the Purchase Price
of all Bonds required to be purchased is made available as
provided herein.
(3) Bondowners' Option to Tender Bonds in Daily Mode.
Bonds in the Daily Mode are subject to tender, at the election
of the owner thereof, in the manner and subject to the
limitations described in the form of Bonds. The owners of
Tendered Bonds shall receive on the Delivery Date 100% of the
principal amount of the Tendered Bonds plus accrued interest to
the Purchase Date, provided that if the Purchase Date is an
Interest Payment Date, accrued interest shall be paid
separately, and not as part of the Purchase Price on such date.
The purchase of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain Outstanding and
unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bonds and
in this subsection (3); provided, however, that the Paying Agent
shall not accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date the principal
of the Bonds shall have been accelerated pursuant to Section
6.02 hereof and such acceleration shall not have been annulled.
Notice of the Bondholder's option to tender Bonds in the
Daily Mode shall be given to the Paying Agent at the time and as
provided in the form of Bonds. The Bondowners' Election Notice
delivered to the Paying Agent at the time and as provided in the
form of Bonds shall be in substantially the form provided in the
form of Bonds.
As soon as practicable after receiving notice of a tender
of Bonds under this Section, the Paying Agent shall notify the
Remarketing Agent, the Company, the Bank and the Trustee by
telephone promptly confirmed in writing of the amount of
Tendered Bonds and the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be signed by the
Beneficial Owner or his attorney, duly authorized in writing.
The Remarketing Agent and the Paying Agent shall be entitled to
rely on the accuracy of any Bondowners' Election Notice
delivered to the Paying Agent.
(4) Mandatory Tender of Bonds. Bonds in the Daily Mode
are subject to mandatory tender for purchase as provided in the
form of Bonds and in Section 2.11 hereof
(C) Weekly Mode.
(1) Determination of Weekly Rates. With respect to Bonds
in a Weekly Mode, the Remarketing Agent shall determine the
Weekly Rate as provided in the form of Weekly Bonds set forth in
Section 2.03 hereof and shall notify the Paying Agent thereof by
Electronic Notice not later than 10:00 a.m., New York City time,
on the Effective Date (or if the Effective Date is not a
Business Day, on the next preceding Business Day). The Paying
Agent shall give written notice of the Weekly Rate to the
Trustee and the Company. Each determination and redetermination
of the Weekly Rate shall be conclusive and binding on the
Issuer, the Trustee, the Paying Agent, the Company, the Bank and
the Bondowners. If for any reason the Remarketing Agent fails
to determine the Weekly Rate or if for any reason such manner of
determination shall be determined to be invalid or
unenforceable, the Weekly Rate to take effect on the Effective
Date shall be the Weekly Rate in effect on the day preceding
such date.
(2) Conversions from the Weekly Mode. The Bonds in the
Weekly Mode or any portion of such Bonds may be converted on any
Interest Payment Date at the election of the Company from the
Weekly Mode to the Daily, Monthly, Quarterly, Semiannual,
Multiannual, Flexible or Fixed Rate Mode as provided in the form
of the Bonds, so long as no Event of Default hereunder exists as
certified to the Trustee by the Company. Written notice of a
conversion from the Weekly Mode shall be given by the Company to
the Issuer, the Trustee, the Paying Agent, the Remarketing Agent
and the Rating Agencies not fewer than 30 days prior to the
proposed Conversion Date, which date shall be specified by the
Company in such notice. Notice of a conversion of Bonds from
the Weekly Mode and the mandatory tender of Bonds for purchase
on such Conversion Date shall be given to the owners of such
Bonds as provided in Section 2.02(C)(4) hereof and the form of
Bonds. Conversions to the Fixed Rate Mode shall also be
governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding
paragraph and Section 2.02(J) are not met by 10:30 a.m., New
York City time, on the Conversion Date, the Paying Agent shall
deem the proposed conversion to have failed and shall
immediately notify the Trustee and the Remarketing Agent, and
the Bonds shall be subject to mandatory tender as provided in
Section 2.02(C)(4) hereof. In addition, the failed conversion
shall cause the interest rate on the Bonds to immediately
convert to the Flexible Mode with an Interest Rate Period ending
on the next succeeding day which is immediately followed by a
Business Day. In such event, such Bonds shall remain subject to
mandatory tender pursuant to Section 2.11 hereof. In no event
shall the failure of Bonds to be converted to another Mode for
any reason be deemed to be, in and of itself, an Event of
Default under this Indenture, so long as the Purchase Price of
all Bonds required to be purchased is made available as provided
above.
(3) Bondowners' Option to Tender Bonds in Weekly Mode.
Bonds in the Weekly Mode are subject to tender, at the election
of the owner thereof, in the manner and subject to the
limitations described in the form of Bonds. The owners of
Tendered Bonds shall receive on the Delivery Date 100% of the
principal amount of the Tendered Bonds plus accrued interest to
the Purchase Date, provided that if the Purchase Date is an
Interest Payment Date, accrued interest shall be paid
separately, and not as part of the Purchase Price on such date.
The purchase of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain Outstanding and
unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bonds and
in this subsection (3); provided, however, that the Paying Agent
shall not accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date the principal
of the Bonds shall have been accelerated pursuant to Section
6.02 hereof and such acceleration shall not have been annulled.
Notice of the Bondholders' option to tender Bonds in the
Weekly Mode shall be given to the Paying Agent at the time and
as provided in the form of Bonds. The Bondowners' Election
Notice delivered to the Paying Agent at the time and as provided
in the form of Bonds shall be in substantially the form provided
in the form of Bonds.
As soon as practicable after receiving notice of a tender
of Bonds under this Section, the Paying Agent shall notify the
Remarketing Agent, the Company, the Bank and the Trustee by
telephone promptly confirmed in writing of the amount of
Tendered Bonds and the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be signed by the
Beneficial Owner or his attorney, duly authorized in writing.
The Remarketing Agent and the Paying Agent shall be entitled to
rely on the accuracy of any Bondowners' Election Notice
delivered to the Paying Agent.
(4) Mandatory Tender of Bonds. Bonds in the Weekly Mode
are subject to mandatory tender for purchase as provided in the
form of Bonds and in Section 2.11 hereof.
(5) Interest Rate Periods for Bonds in Weekly Mode. The
Interest Rate Period for Bonds in a Weekly Rate Mode shall
commence on Wednesday of each week and end on the next following
Tuesday; except that (a) in the case of a Conversion of Bonds to
a Weekly Mode from a different Mode, the Interest Rate Period
for such Bonds shall commence on the last Interest Payment Date
in respect of the immediately preceding Interest Rate Period and
end on the next following Tuesday; and (b) in the case of a
Conversion of Bonds from a Weekly Mode to a different Mode, the
last Interest Rate Period for such Bonds prior to Conversion
shall end on the last day immediately preceding the Conversion.
(D) Monthly Mode.
(1) Determination of Monthly Rates. With respect to Bonds
in a Monthly Mode, the Remarketing Agent shall determine the
Monthly Rate as provided in the form of Monthly Bonds set forth
in Section 2.03 hereof and shall notify the Paying Agent thereof
by Electronic Notice not later than 4:00 p.m., New York City
time, on the Business Day immediately preceding the Effective
Date. The Paying Agent shall give written notice of the Monthly
Rate to the Trustee and the Company. Each determination and
redetermination of the Monthly Rate shall be conclusive and
binding on the Issuer, the Trustee, the Paying Agent, the
Company, the Bank and the Bondowners. If for any reason the
Remarketing Agent fails to determine the Monthly Rate or if for
any reason such manner of determination shall be determined to
be invalid or unenforceable, the Monthly Rate to take effect on
the Effective Date shall be the Monthly Rate in effect on the
day preceding such date.
(2) Conversions from the Monthly Mode. The Bonds in the
Monthly Mode or any portion of such Bonds may be converted on
any Interest Payment Date at the election of the Company from
the Monthly Mode to the Daily, Flexible, Weekly, Quarterly,
Semiannual, Multiannual or Fixed Rate Mode as provided in the
form of the Bonds, so long as no Event of Default hereunder
exists as certified to the Trustee by the Company. Written
notice of a conversion from the Monthly Mode shall be given by
the Company to the Issuer, the Trustee, the Paying Agent, the
Remarketing Agent and the Rating Agencies not fewer than 45 days
prior to the proposed Conversion Date, which date shall be
specified by the Company in such notice. Notice of a conversion
of Bonds from the Monthly Mode and the mandatory tender of Bonds
for purchase on such Conversion Date shall
be given to the owners of such Bonds as provided in Section
2.02(D)(4) hereof and the form of Bonds. Conversions to the
Fixed Rate Mode shall also be governed by Section 2.02(H)
hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding
paragraph and Section 2.02(J) are not met by 10:30 a.m., New
York City time, on the Conversion Date, the Paying Agent shall
deem the proposed conversion to have failed and shall
immediately notify the Trustee and the Remarketing Agent, and
the Bonds shall be subject to mandatory tender as provided in
Section 2.02(D)(4) hereof. In addition, the failed conversion
shall cause the interest rate on the Bonds to immediately
convert to the Flexible Mode with an Interest Rate Period ending
on the next succeeding day which is immediately followed by a
Business Day. In such event, such Bonds shall remain subject to
mandatory tender pursuant to Section 2.11 hereof. In no event
shall the failure of Bonds to be converted to another Mode for
any reason be deemed to be, in and of itself, an Event of
Default under this Indenture, so long as the Purchase Price of
all Bonds required to be purchased is made available as provided
above.
(3) Bondowners' Option to Tender Bonds in Monthly Mode.
Bonds in the Monthly Mode are subject to tender, at the election
of the owner thereof, in the manner and subject to the
limitations described in the form of Bonds. The owners of
Tendered Bonds shall receive on the Delivery Date 100% of the
principal amount of the Tendered Bonds. Accrued interest shall
be paid separately, and not as part of the Purchase Price on
such date. The purchase of Tendered Bonds shall not extinguish
the debt represented by such Bonds which shall remain
Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bonds and
in this subsection (3); provided, however, that the Paying Agent
shall not accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date the principal
of the Bonds shall have been accelerated pursuant to Section
6.02 hereof and such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the Paying
Agent at the time and as provided in the form of Bonds shall be
in substantially the form provided in the form of Bonds.
As soon as practicable after receiving notice of a tender
of Bonds under this Section, the Paying Agent shall notify the
Remarketing Agent, the Company, the Bank and the Trustee by
telephone promptly confirmed in writing of the amount of
Tendered Bonds and the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be signed by the
Beneficial Owner or his attorney, duly authorized in writing.
The Paying Agent shall be entitled to rely on the accuracy of
any Bondowners' Election Notice delivered to the Paying Agent.
(4) Mandatory Tender of Bonds. Bonds in the Monthly Mode
are subject to mandatory tender for purchase as provided in the
form of Bonds and in Section 2.11 hereof.
(E) Quarterly Mode.
(1) Determination of Quarterly Rates. With respect to
Bonds in a Quarterly Mode, the Remarketing Agent shall determine
the Quarterly Rate as provided in the form of Bonds set forth in
Section 2.03 hereof and shall notify the Paying Agent thereof by
Electronic Notice not later than 4:00 p.m., New York City time,
on the Business Day immediately preceding the Effective Date.
The Paying Agent shall give written notice of the Quarterly Rate
to the Trustee and the Company. Each determination and
redetermination of the Quarterly Rate shall be conclusive and
binding on the Issuer, the Trustee, the Paying Agent, the
Company, the Bank and the Bondowners. If for any reason the
Remarketing Agent fails to determine the Quarterly Rate or if
for any reason such manner of determination shall be determined
to be invalid or unenforceable, the Quarterly Rate to take
effect on the Effective Date shall be the Quarterly Rate in
effect on the day preceding such date.
(2) Conversions from the Quarterly Mode. The Bonds in the
Quarterly Mode or any portion of such Bonds may be converted on
any Interest Payment Date at the election of the Company from
the Quarterly Mode to the Flexible, Daily, Weekly, Monthly,
Semiannual, Multiannual or Fixed Rate Mode as provided in the
form of the Bonds, so long as no Event of Default hereunder
exists as certified to the Trustee by the Company. Written
notice of a conversion from the Quarterly Mode shall be given by
the Company to the Issuer, the Trustee, the Paying Agent, the
Remarketing Agent and the Rating Agencies not fewer than 45 days
prior to the proposed Conversion Date, which date shall be
specified by the Company in such notice. Notice of a conversion
of Bonds from the Quarterly Mode and the mandatory tender of
Bonds for purchase on such Conversion Date shall be given to the
owners of such Bonds as provided in Section 2.02(E)(4) hereof
and the form of Bonds. Conversions to the Fixed Rate Mode shall
also be governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding
paragraph and Section 2.02(J) are not met by 10:30 a.m., New
York City time, on the Conversion Date, the Paying Agent shall
deem the proposed conversion to have failed and shall
immediately notify the Trustee and the Remarketing Agent, and
the Bonds shall be subject to mandatory tender as provided in
Section 2.02(E)(4) hereof. In addition, the failed conversion
shall cause the interest rate on the Bonds to immediately
convert to the Flexible Mode with an Interest Rate Period ending
on the next succeeding day which is immediately followed by a
Business Day. In such event, such Bonds shall remain subject to
mandatory tender pursuant to Section 2.11 hereof. In no event
shall the failure of Bonds to be converted to another Mode for
any reason be deemed to be, in and of itself, an Event of
Default under this Indenture, so long as the Purchase Price of
all Bonds required to be purchased is made available as provided
above.
(3) Bondowners' Option to Tender Bonds in Quarterly Mode.
Bonds in the Quarterly Mode are subject to tender, at the
election of the owner thereof, in the manner and subject to the
limitations described in the form of Bonds. The owners of
Tendered Bonds shall receive on the Delivery Date 100% of the
principal amount of the Tendered Bonds. Accrued interest shall
be paid separately, and not as part of the Purchase Price on
such date. The purchase of Tendered Bonds shall not extinguish
the debt represented by such Bonds which shall remain
Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bonds and
in this subsection (3); provided, however, that the Paying Agent
shall not accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date the principal
of the Bonds shall have been accelerated pursuant to Section
6.02 hereof and such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the Paying
Agent at the time and as provided in the form of Bonds shall be
in substantially the form provided in the form of Bonds.
As soon as practicable after receiving notice of a tender
of Bonds under this Section, the Paying Agent shall notify the
Remarketing Agent, the Company, the Bank and the Trustee by
telephone promptly confirmed in writing of the amount of
Tendered Bonds and the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be signed by the
Beneficial Owner or his attorney, duly authorized in writing.
The Paying Agent shall be entitled to rely on the accuracy of
any Bondowners' Election Notice delivered to the Paying Agent.
(4) Mandatory Tender of Bonds. Bonds in the Quarterly
Mode are subject to mandatory tender for purchase as provided in
the form of Bonds and in Section 2.11 hereof.
(F) Semiannual Mode.
(1) Determination of Semiannual Rates. With respect to
Bonds in the Semiannual Mode, the Remarketing Agent shall
determine the Semiannual Rate as provided in the form of Bonds
set forth in Section 2.03 hereof and shall notify the Paying
Agent thereof by Electronic Notice not later than 4:00 p.m.,
New York City time, on the Business Day immediately preceding
the Effective Date. The Paying Agent shall give written notice
of the Semiannual Rate to the Trustee and the Company. Each
determination and redetermination of the Semiannual Rate shall
be conclusive and binding on the Issuer, the Trustee, the Paying
Agent, the Company, the Bank and the Bondowners. If for any
reason the Remarketing Agent fails to determine the Semiannual
Rate or if for any reason such manner of determination shall be
determined to be invalid or unenforceable, the Semiannual Rate
to take effect on the Effective Date shall be the
Semiannual Rate in effect on the day preceding such
date.
(2) Conversions from the Semiannual Mode. The Bonds in the
Semiannual Mode or any portion of such Bonds may be converted on any
Interest Payment Date at the election of the Company from the Semiannual
Mode to the Flexible, Daily, Weekly, Monthly, Quarterly, Multiannual or
Fixed Rate Mode as provided in the form of the Bonds, so long as no
Event of Default hereunder exists as certified to the Trustee by the
Company. Written notice of a conversion from the Semiannual Mode shall
be given by the Company to the Issuer, the Trustee, the Paying Agent, the
Remarketing Agent and the Rating Agencies not fewer than 45 days prior to
the proposed Conversion Date, which date shall be specified by the
Company in such notice. Notice of a conversion of Bonds from the
Semiannual Mode and the mandatory tender of Bonds for purchase on such
Conversion Date shall be given to the owners of such Bonds as provided in
Section 2.02(F)(4) hereof and the form of Semiannual Bonds. Conversions
to the Fixed Rate Mode shall also be governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding
paragraph and Section 2.02(J) are not met by 10:30 a.m., New
York City time, on the Conversion Date, the Paying Agent shall
deem the proposed conversion to have failed and shall
immediately notify the Trustee and the Remarketing Agent, and
the Bonds shall be subject to mandatory tender as provided in
Section 2.02(F)(4) hereof. In addition, the failed conversion
shall cause the interest rate on the Bonds to immediately
convert to the Flexible Mode with an Interest Rate Period ending
on the next succeeding day which is immediately followed by a
Business Day. In such event, such Bonds shall remain subject to
mandatory tender pursuant to Section 2.11 hereof. In no event
shall the failure of Bonds to be converted to another Mode for
any reason be deemed to be, in and of itself, an Event of
Default under this Indenture, so long as the Purchase Price of
all Bonds required to be purchased is made available as provided
above.
(3) Bondowners' Option to Tender Bonds in Semiannual Mode.
Bonds in the Semiannual Mode are subject to tender, at the
election of the owner thereof, in the manner and subject to the
limitations described in the form of Bonds. The owners of
Tendered Bonds shall receive on the Delivery Date 100% of the
principal amount of the Tendered Bonds. Accrued interest shall
be paid separately, and not as part of the Purchase Price on
such date. The purchase of Tendered Bonds shall not extinguish
the debt represented by such Bonds which shall remain
Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bonds and
in this subsection (3); provided, however, that the Paying Agent
shall not accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date the principal
of the Bonds shall have been accelerated pursuant to Section
6.02 hereof and such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the Paying
Agent at the time and as provided in the form of Bonds shall be
in substantially the form provided in the form of Bonds.
As soon as practicable after receiving notice of a tender
of Bonds under this Section, the Paying Agent shall notify the
Remarketing Agent, the Company, the Bank and the Trustee by
telephone promptly confirmed in writing of the amount of
Tendered Bonds and the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be signed by the
Beneficial Owner or his attorney, duly authorized in writing.
The Paying Agent shall be entitled to rely on the accuracy of
any Bondowners' Election Notice delivered to the Paying Agent.
(4) Mandatory Tender of Bonds. Bonds in the Semiannual
Mode are subject to mandatory tender for purchase as provided in
the form of Bonds and in Section 2.11 hereof.
(G) Multiannual Mode.
(1) Determination of Multiannual Rates. With respect to
Bonds in the Multiannual Mode, the Remarketing Agent shall
determine the Multiannual Rate and Interest Rate Period as
provided in the form of Bonds set forth in Section 2.03 hereof
and shall notify the Paying Agent by Electronic Notice not later
than 2:00 p.m., New York City time, on the Business Day
immediately preceding the Effective Date. The Paying Agent
shall give written notice of the Multiannual Rate to the Trustee
and the Company. Each determination and redetermination of the
Multiannual Rate shall be conclusive and binding on the Issuer,
the Trustee, the Paying Agent, the Company, the Bank and the
Bondowners. If the Remarketing Agent fails to make such
determination or fails to announce the Multiannual Rate as
required with respect to any Bonds in the Multiannual Mode, or
if for any reason such manner of determination shall be
determined to be invalid or unenforceable, the rate to take
effect on any Effective Date shall be automatically converted to
the Flexible Mode with an Interest Rate Period ending on the
next succeeding day which is immediately followed by a Business
Day.
(2) Conversions from the Multiannual Mode. The Bonds in
the Multiannual Mode or any portion of the such Bonds may be
converted on any Effective Date at the election of the Company
from the Multiannual Mode to the Daily, Weekly, Flexible,
Monthly, Quarterly, Semiannual or Fixed Rate Mode and may be
converted within the Multiannual Mode to a new Rate Period with
the same or a different length as provided in the form of the
Bonds, so long as no Event of Default hereunder exists as
certified to the Trustee by the Company. Written notice of a
change in Mode or Interest Rate Period within the Multiannual
Mode shall be given by the Company to the Issuer, the Trustee,
the Paying Agent, the Remarketing Agent and the Rating Agencies
not fewer than 45 days prior to the proposed Conversion Date.
Conversions to the Fixed Rate Mode shall also be governed by
Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding
paragraph and Section 2.02(J) are not met by 10:30 a.m., New
York City time, on the Conversion Date, the Paying Agent shall
deem the proposed conversion to have failed and shall
immediately notify the Trustee and the Remarketing Agent and the
Bonds shall automatically convert to a Flexible Mode with an
Interest Rate Period ending on the next succeeding day which is
immediately followed by a Business Day. In such event, such
Bonds shall remain subject to mandatory tender pursuant to
Section 2.11 hereof. In no event shall the failure of Bonds to
be converted to another Mode or Interest Rate Period for any
reason be deemed to be, in and of itself, an Event of Default
under this Indenture, so long as the Purchase Price of all Bonds
required to be purchased is made available as provided above.
(3) Bondowners' Option to Tender Bonds in Multiannual
Mode. Bonds in the Multiannual Mode are subject to tender, at
the election of the owner thereof, in the manner and subject to
the limitations described in the form of Bonds. The owners of
Tendered Bonds shall receive on the Delivery Date 100% of the
principal amount of the Tendered Bonds. Accrued interest shall
be paid separately, and not as part of the Purchase Price on
such date. The purchase of Tendered Bonds shall not extinguish
the debt represented by such Bonds which shall remain
Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bonds and
in this subsection (3); provided, however, that the Paying Agent
shall not accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date the principal
of the Bonds shall have been accelerated pursuant to Section
6.02 hereof and such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the Paying
Agent at the time and as provided in the form of Bonds shall be
in substantially the form provided in the form of Bonds.
As soon as practicable after receiving notice of a tender
of Bonds under this Section, the Paying Agent shall notify the
Remarketing Agent, the Company, the Bank and the Trustee by
telephone promptly confirmed in writing of the amount of
Tendered Bonds and the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be signed by the
Beneficial Owner or his attorney, duly authorized in writing.
The Paying Agent shall be entitled to rely on the accuracy of
any Bondowners' Election Notice delivered to the Paying Agent.
(4) Mandatory Tender for Purchase. Bonds in the
Multiannual Mode are subject to mandatory tender for purchase as
provided in the form of Bond and in Section 2.11 hereof.
(H) Fixed Rate Mode.
Determination of Fixed Rate and Conversion to Fixed Rate
Mode. If initially issued in a Mode other than the Fixed Rate
Mode, the interest rate on all or any portion of the Bonds may
be converted by the Company to the Fixed Rate as provided in the
form of the Daily, Flexible, Weekly, Monthly, Quarterly,
Semiannual and Multiannual Bonds and Sections 2.02(A), (B), (C),
(D), (E), (F) and (G) hereof. Written notice of conversion to
the Fixed Rate Mode shall be given by the Company to the Issuer,
the Trustee, the Paying Agent, the Remarketing Agent, the Bank
and the Rating Agencies not fewer than 30 days prior to the
proposed Conversion Date. Upon receipt of the notice of
conversion to the Fixed Rate Mode from the Company, the
Remarketing Agent shall determine the Fixed Rate not later than
12:00 noon, New York City time, on the Business Day immediately
preceding the Conversion Date. The Fixed Rate shall be the
lowest rate which in the judgment of the Remarketing Agent, on
the basis of prevailing financial market conditions, would
permit the sale of the Bonds being so converted at par plus
accrued interest as of the Conversion Date on the basis of their
terms as converted. The Fixed Rate will be in effect until the
Maturity Date and no conversions to another Mode may be
effected.
On the date of determination thereof, the Remarketing Agent
shall notify the Paying Agent, the Company and the Trustee by
telephone confirmed in writing of the Fixed Rate. The Trustee
shall promptly notify the Issuer in writing of the Fixed Rate.
The determination of the Fixed Rate shall be conclusive and
binding on the Issuer, the Trustee, the Paying Agent, the
Company and the Bondowners. The first Interest Payment Date of
Bonds converted to the Fixed Rate shall be the next April 1 or
October 1 after the Conversion Date. The Fixed Rate shall
become effective on the Conversion Date and shall remain in
effect for the remaining term of the Bonds so converted.
Notwithstanding the foregoing, if the preconditions to
conversion to the Fixed Rate Mode established by this subsection
and Section 2.02(J) are not met by 10:30 a.m., New York City
time, on the Conversion Date, the Paying Agent shall immediately
notify the Trustee by telephone promptly confirmed in writing.
Upon such notice, the Trustee shall deem the proposed conversion
to have failed and shall proceed as such under Sections
2.02(A)(2), 2.02(B)(2), 2.02(C)(2), 2.02(D)(2), 2.02(E)(2),
2.02(F)(2) or 2.02(G)(2) hereof, whichever is applicable.
(I) Partial Conversions.
(1) General. The Bonds may be converted in whole or in
part to the Daily Mode, the Flexible Mode, the Weekly Mode, the
Monthly Mode, the Quarterly Mode, the Semiannual Mode, any
Interest Rate Period in the Multiannual Mode or the Fixed Rate
Mode upon compliance with the conditions set forth in this
Indenture. In the event the Bonds are in (or are to be
converted to) more than one Mode, the provisions
herein relating to Bonds in a particular Mode (or to be
converted to a particular Mode) shall apply only to the Bonds in
(or to be converted to) such Mode and, where necessary or
appropriate, any reference in this Indenture to the Bonds shall
be construed to mean the Bonds in (or to be converted to) such
Mode.
(2) Selection. In the event of any partial conversion of
the Bonds to a new Mode, the Bonds to be converted shall be
selected by the Paying Agent from the Bonds in the Mode selected
by the Company. The particular Bonds (or portions thereof) to
be converted shall be selected by lot by the Paying Agent from
all the Bonds in the Mode (or in the case of Bonds in the
Multiannual Mode, the Interest Rate Period) from which Bonds are
to be converted. The principal amount of Bonds to be converted
shall be determined so that all of the Bonds shall be in
Authorized Denominations. Bonds (or portions thereof) in the
Daily Mode, Weekly Mode, Monthly Mode, Quarterly Mode and
Semiannual Mode shall be selected by lot and the selection of
the Bonds to be converted shall occur prior to the date notice
of mandatory tender is sent by the Paying Agent to the
Bondowners pursuant to Sections 2.02(B)(4), 2.02(C)(4),
2.02(D)(4), 2.02(E)(4) and 2.02(F)(4).
(3) Amendments. The provisions of this Indenture may be
amended to permit or facilitate partial conversions of the Bonds
without Bondowner consent in accordance with Section 9.01
hereof.
(J) Notice to Registered Owners of Change in Mode. When a
change in the Mode is to be made, or upon commencement of a new
Interest Rate Period in the Multiannual Mode, the Paying Agent will
notify the registered owners of Bonds in the Daily Mode, Weekly
Mode, Monthly Mode, Quarterly Mode, Semiannual Mode and Multiannual
Mode at least 15 days before the effective date of the change. The
notice will state:
(1) that the Mode will be changed or that a new Interest
Rate Period in the Multiannual Mode, will commence,
(2) the effective date or dates of the new rate or a new
Interest Rate Period, as applicable, and
(3) that a mandatory tender will result on the Effective
Date of the change as provided in the Indenture.
(K) Change In Interest Rate Mode - Opinion of Counsel; Issuer
Veto Right. No (i) conversion of Bonds to or from a Multiannual
Mode with a Rate Period of over one year, including for this purpose
the conversion to a new Interest Rate Period in the Multiannual
Mode, or (ii) conversion to the Fixed Rate Mode shall be effective
unless on or prior to the Conversion Date the Company shall provide
the Issuer, the Paying Agent, and the Trustee with a Favorable
Opinion. Furthermore, all Conversions are subject to veto by the
Issuer, which veto may not be unreasonably exercised and must be
exercised by the Authorized Issuer Representative within one hour
after the receipt of notice from the Company of such change in
interest rate determination method by the sending of a telephonic
notice to the Company, the Trustee, and the Remarketing Agent.
(L) Further Conditions to Conversion. Unless the Company
has exercised its option under Section 10.05 hereof, no conversion
of Bonds to a new mode other than the Multiannual Rate Mode or the
Fixed Rate Mode will become effective unless a Letter of Credit will
be held by the Trustee after the Conversion Date which will cover
the principal of and interest (computed in accordance with the
provisions hereof) which will accrue on the Outstanding Bonds for
275 days (or such fewer number of days as may be permitted by this
Indenture as may be determined by the Company) in the case of a
conversion to a Flexible Mode, 35 days in the case of a conversion
to a Daily Mode, Weekly Mode or Monthly Mode, 95 days in the case of
a conversion to a Quarterly Mode, and 185 days in the case of
conversion to a Semiannual Mode.
Section 2.03. Form of Bonds. The Bonds, the Trustee's Certificate
of Authentication to be executed by the Trustee for all Bonds delivered
hereunder except those initially delivered hereunder, the Registration
Certificate of the Comptroller of Public Accounts of the State of Texas
to be attached to or endorsed upon the Bonds initially delivered
hereunder, the provision for registration and the form of assignment
shall be in substantially the forms hereinafter set forth, with such
appropriate variations, omissions, substitutions and insertions as are
permitted or required hereby and may have such letters, numbers or other
marks of identification and such legends and endorsements placed thereon
as may be required to comply with any applicable laws or rules or
regulations, or as may, consistently herewith, be determined by the
officers executing such Bonds, as evidenced by their execution of the
Bonds.
FORM OF BOND
Dollars
No. ___ $__________
[The following legend shall appear so long as the Book-Entry
System described in Section 3.07 of the Indenture has not
been discontinued; provided that such legend shall not appear
on the Bond initially delivered under this Indenture.]
THE ISSUER HAS ESTABLISHED A BOOK ENTRY SYSTEM OF REGISTRATION FOR THIS
BOND. EXCEPT AS SPECIFICALLY PROVIDED OTHERWISE IN THE INDENTURE, CEDE &
CO., AS NOMINEE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), WILL BE THE REGISTERED OWNER AND WILL HOLD THIS BOND ON BEHALF
OF EACH BENEFICIAL OWNER HEREOF. BY ACCEPTANCE OF A CONFIRMATION OF
PURCHASE, DELIVERY OR TRANSFER, EACH BENEFICIAL OWNER OF THIS BOND SHALL
BE DEEMED TO HAVE AGREED TO SUCH ARRANGEMENT. CEDE & CO., AS REGISTERED
OWNER OF THIS BOND, MAY BE TREATED AS THE OWNER OF IT FOR ALL PURPOSES.
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO
THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS BOND IS SUBJECT TO MANDATORY TENDER FOR PURCHASE AT THE TIME AND IN
THE MANNER HEREINAFTER DESCRIBED AND MUST BE SO TENDERED OR WILL BE
DEEMED TO HAVE BEEN SO TENDERED UNDER CERTAIN CIRCUMSTANCES AS DESCRIBED
HEREIN.
ANY BONDHOLDER WHO FAILS TO DELIVER A BOND FOR PURCHASE AT THE TIMES AND
AT THE PLACE REQUIRED HEREIN SHALL HAVE NO FURTHER RIGHTS HEREUNDER
EXCEPT THE RIGHT TO RECEIVE THE PURCHASE PRICE HEREOF UPON DELIVERY FOR
THIS BOND TO THE PAYING AGENT, AND SHALL HOLD THIS BOND AS AGENT FOR THE
PAYING AGENT.
UNITED STATES OF AMERICA
STATE OF TEXAS
GUADALUPE-BLANCO RIVER AUTHORITY
POLLUTION CONTROL REVENUE REFUNDING BONDS
(CENTRAL POWER AND LIGHT COMPANY PROJECT)
SERIES 1995
Maturity Date: ________________ CUSIP _______________
Dated Date: October 1, 1995
Issue Date: ____________, 1995
Registered Owner:
Principal Amount: $__________
Mode:
Last Day of Flexible Rate Period* ______________ Interest Rate* ___________
Number of Days in Period* _________ Interest Due at End of Period*
_____________
_______________________
* Complete only for Bonds accruing interest at Flexible Rates
Guadalupe-Blanco River Authority (the "Issuer"), a governmental agency
and body politic and corporate created and operating as a conservation and
reclamation district and political subdivision of the State of Texas pursuant
to Article XVI, Section 59 of the Texas Constitution and the laws of the State
of Texas, particularly Article 8280-106, Vernon's Texas Civil Statutes (the
"Issuer Act"), for value received, hereby promises to pay (but only out of the
sources hereinafter mentioned) to the Registered Owner set forth above, or
registered assigns, on the Maturity Date specified above, unless this Bond
shall have been called for redemption in whole or in part, upon surrender
hereof, the Principal Amount set forth above and to pay (but only out of the
sources hereinafter mentioned) to the Registered Owner, or registered assigns,
interest thereon at the rate determined as herein provided from the most
recent Interest Payment Date (hereinafter defined) to which interest has been
paid or duly provided for, or if no interest has been paid or duly provided
for, such payments of interest to be made on each Interest Payment Date until
the principal or redemption price hereof has been paid or duly provided for as
aforesaid. The principal or redemption price of this Bond (or of a portion of
this Bond, in the case of a partial redemption) is payable to the Registered
Owner hereof in immediately available funds upon presentation and surrender
hereof at the Principal Office of the Trustee or its successor, as paying
agent (the "Paying Agent"), under the Indenture of Trust, dated as of
October 1, 1995 (the "Indenture") by and between the Issuer and The Bank of
New York, or its successor, as trustee (the "Trustee") securing the series of
Bonds of which this Bond is one. All payments of interest on Bonds accruing
interest at Multiannual or Fixed Rates shall be paid to the Registered Owner
hereof whose name appears in the Bond Register kept by the Bond Registrar as
of the close of business on the applicable Regular Record Date (as described
below) by check mailed on the Interest Payment Date, provided that any
Registered Owner of $1,000,000 or more in aggregate principal amount of the
Bonds may, upon written request given to the Paying Agent at least five
Business Days prior to an Interest Payment Date designating an account in a
domestic bank, be paid by wire transfer of immediately available funds. All
payments of interest on Bonds accruing interest at Flexible, Daily, Weekly,
Monthly, Quarterly, or Semiannual Rates shall be paid to the Registered Owner
hereof whose name appears in the Bond Register kept by the Bond Registrar as
of the close of business on the applicable Regular or Record Date in
immediately available funds by wire transfer to a bank within the continental
United States or deposited to a designated account if such account is
maintained with the Paying Agent as directed by the Registered Owner in
writing or as otherwise directed in writing by the Registered Owner prior to
the time of payment with respect to Bonds accruing interest at a Flexible,
Daily, Weekly, Monthly, Quarterly, or Semiannual Rate or five Business Days
prior to the Interest Payment Date with respect to Bonds accruing interest at
Daily or Weekly Rates. The Regular Record Date for any Interest Payment Date
shall be the close of business on the day (whether or not a Business Day)
immediately preceding the Interest Payment Date, except that, while this Bond
accrues interest at the Multiannual or Fixed Rates (as described herein), the
Regular Record Date shall be the close of business on the 15th day (whether or
not a Business Day) of the calendar month immediately preceding such Interest
Payment Date. This Bond is registered as to both principal and interest in
the Bond Register kept by the Bond Registrar and may be transferred or
exchanged, subject to the further conditions specified in the Indenture, only
upon surrender hereof at the office of the Bond Registrar. This Bond is
payable solely from the sources hereinafter mentioned.
The principal of, premium, if any, and interest on, and Purchase Price
of, this Bond are payable in lawful money of the United States of America.
CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS
SPECIFIED THEREFOR IN THE INDENTURE.
THE BONDS SHALL BE DEEMED NOT TO CONSTITUTE A DEBT OF THE STATE OF
TEXAS, THE ISSUER, OR OF ANY OTHER POLITICAL CORPORATION, SUBDIVISION, OR
AGENCY OF THE STATE OR A PLEDGE OF THE FAITH AND CREDIT OF ANY OF THEM. NO
RECOURSE SHALL BE HAD FOR ANY CLAIM BASED ON THE AGREEMENT, THE INDENTURE, OR
THE BONDS AGAINST ANY MEMBER, OFFICER OR EMPLOYEE, PAST, PRESENT OR FUTURE, OF
THE ISSUER, OR OF ANY SUCCESSOR BODY THERETO, EITHER DIRECTLY OR THROUGH THE
ISSUER, OR ANY SUCH SUCCESSOR BODY, UNDER ANY CONSTITUTIONAL PROVISION,
STATUTE OR RULE OF LAW OR BY THE ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR
OTHERWISE. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF
TEXAS, THE ISSUER, OR ANY OTHER POLITICAL CORPORATION, SUBDIVISION, OR AGENCY
IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY, OR
INTEREST ON, OR PURCHASE PRICE OF, THE BONDS. THIS BOND IS A SPECIAL REVENUE
OBLIGATION OF THE ISSUER PAYABLE SOLELY FROM THE SOURCES DESCRIBED HEREIN AND
THE HOLDER HEREOF SHALL NEVER HAVE THE RIGHT TO DEMAND PAYMENT FROM MONEYS
DERIVED BY TAXATION OR ANY REVENUES OF THE ISSUER EXCEPT THE FUNDS PLEDGED TO
THE PAYMENT HEREOF.
This Bond is authorized and issued under and pursuant to authority
conferred by the Issuer Act, Chapter 30, Texas Water Code, as amended, Chapter
383, Texas Health and Safety Code, as amended, and Articles 717k and 717q,
Vernon's Texas Civil Statutes, as amended (collectively, the "Acts"), a
resolution adopted by the Issuer (the "Bond Resolution") and the Indenture.
This Bond is one of a duly authorized issue of revenue bonds of the Issuer
issued in the aggregate principal amount of $40,890,000 designated "Guadalupe-
Blanco River Authority Pollution Control Revenue Refunding Bonds (Central
Power and Light Company Project) Series 1995" (the "Bonds") issued under the
Indenture. The Bonds are being issued by the Issuer for the purpose of paying
a portion of the costs of refunding (a) $7,425,000 in aggregate principal
amount of Nueces County Navigation District No. 1 Environmental Improvement
Revenue Bonds (Central Power and Light Company Project) Series 1974A, Issue A
and (b) $33,465,000 in aggregate principal amount of Guadalupe-Blanco River
Authority Pollution Central Revenue Bonds, 1977 Series (Central Power and
Light Company Project). The Indenture pledges all right, title and interest
of the Issuer, in and to the Installment Payment Agreement, dated as of
October 1, 1995 (the "Agreement"), between the Issuer and the Company,
together with all moneys payable thereunder including "Installment Payments"
to be made by the Company in amounts equal to the principal of, premium, if
any, and interest on and Purchase Price of, the Bonds, when due, but excluding
certain payments to the Issuer for fees, expenses, and indemnification.
FOR SO LONG AS THIS BOND IS HELD IN BOOK-ENTRY FORM REGISTERED IN THE
NAME OF CEDE & CO. ON THE REGISTRATION BOOKS OF THE ISSUER KEPT BY THE
TRUSTEE, AS BOND REGISTRAR, THIS BOND, IF CALLED FOR PARTIAL REDEMPTION IN
ACCORDANCE WITH THE INDENTURE, SHALL BECOME DUE AND PAYABLE ON THE REDEMPTION
DATE DESIGNATED IN THE NOTICE OF REDEMPTION GIVEN IN ACCORDANCE WITH THE
INDENTURE AT, AND ONLY TO THE EXTENT OF, THE REDEMPTION PRICE, PLUS ACCRUED
INTEREST TO THE SPECIFIED REDEMPTION DATE; AND THIS BOND SHALL BE PAID, TO THE
EXTENT SO REDEEMED, (i) UPON PRESENTATION AND SURRENDER THEREOF AT THE OFFICE
SPECIFIED IN SUCH NOTICE OR (ii) AT THE WRITTEN REQUEST OF CEDE & CO., BY
CHECK OR DRAFT MAILED TO CEDE & CO. BY THE TRUSTEE OR BY WIRE TRANSFER TO
CEDE & CO. BY THE TRUSTEE IF CEDE & CO. AS BONDOWNER SO ELECTS. IF, ON THE
REDEMPTION DATE, MONEYS FOR THE REDEMPTION OF BONDS TO BE REDEEMED, TOGETHER
WITH INTEREST TO THE REDEMPTION DATE, SHALL BE HELD BY THE TRUSTEE SO AS TO BE
AVAILABLE THEREFOR ON SUCH DATE, AND AFTER NOTICE OF REDEMPTION SHALL HAVE
BEEN GIVEN IN ACCORDANCE WITH THE INDENTURE, THEN, FROM AND AFTER THE
REDEMPTION DATE, THE AGGREGATE PRINCIPAL AMOUNT OF THIS BOND SHALL BE
IMMEDIATELY REDUCED BY AN AMOUNT EQUAL TO THE AGGREGATE PRINCIPAL AMOUNT
THEREOF SO REDEEMED, NOTWITHSTANDING WHETHER THIS BOND HAS BEEN SURRENDERED TO
THE TRUSTEE FOR CANCELLATION.
The Company has caused to be issued and delivered to the Trustee by ABN
AMRO Bank N.V., an irrevocable letter of credit pursuant to which the Trustee
is authorized, subject to the terms and conditions thereof, to draw up to (a)
an amount equal to the principal amount of the Bonds (i) to enable the Trustee
to pay the principal amount of the Bonds when due at maturity or upon
redemption or acceleration and (ii) to enable the Trustee to pay the portion
of the purchase price of Bonds tendered to it and not remarketed corresponding
to the principal amount of such Bonds, plus (b) an amount equal to 35 days'
accrued interest to the Outstanding Bonds at 12% per annum while the bonds
bear interest at the Daily, Weekly or Monthly Rate, 275 days' (or such fewer
number of days as may be determined by the Company) accrued interest to the
Outstanding Bonds at 12% per annum while the Bonds bear interest the Flexible
Rate, 95 days' accrued interest to the Outstanding Bonds at 12% per annum
while the Bonds bear interest at the Quarterly Rate, or 185 days' accrued
interest to the Outstanding Bonds at 12% per annum while the Bonds bear
interest at the Semiannual or Multiannual Rate (i) to enable the Trustee to
pay interest on the Bonds when due and (ii) to enable the Trustee to pay the
portion of the purchase price of Bonds tendered to it and not remarketed
corresponding to the accrued interest on such Bonds. Such irrevocable letter
of credit or any alternate letter of credit delivered to the Trustee in
accordance with the terms of the Indenture is herein called the "Letter of
Credit". As used herein, the term "Bank" shall mean ABN AMRO Bank N.V., a
Dutch bank, as issuer of the Letter of Credit or the bank issuing any
Alternate Letter of Credit. The Letter of Credit expires on
_______________________, unless terminated earlier pursuant to its terms or
extended. Subject to the provisions of the Indenture, the Company may, but is
not required to, cause the Letter of Credit to be extended or replaced with an
Alternate Letter of Credit having substantially the same terms. The Bank is
under no obligation to extend the Letter of Credit. Unless the Letter of
Credit is extended or replaced in accordance with the terms of the Indenture,
this Bond will become subject to mandatory tender for purchase, as described
below. The Letter of Credit is being issued pursuant to a Letter of Credit
Agreement (as the same may be amended or replaced, including any agreement
pursuant to which an Alternate Letter of Credit may be issued, the "Letter of
Credit Agreement") between the Bank and the Company. The Company is
obligated, among other things, to reimburse the Bank for all drawings under
the Letter of Credit.
If an Event of Default occurs, the principal of all Bonds issued under
the Indenture may become due and payable upon the conditions and in the manner
and with the effect provided in the Indenture.
No recourse shall be had for the payment of the principal, Purchase
Price or redemption price of, premium, if any, or interest on, this Bond, or
for any claim based hereon or on the Indenture, against any member, officer or
employee, past, present or future, of the Issuer or of any successor body, as
such, either directly or through the Issuer or any such successor body, under
any constitutional provision, statute or rule of law, or by the enforcement of
any assessment or by any legal or equitable proceeding or otherwise.
Interest on the Bonds
The Bonds shall accrue interest at interest rates and for Interest Rate
Periods as determined in accordance with the applicable provisions of the
Indenture. The Bonds will be subject to conversion as herein provided. The
amount of interest so payable on any Interest Payment Date shall be computed
(i) on the basis of a 365- or 366-day year for the number of days actually
elapsed based on the calendar year in which the Flexible Rate Period, Daily
Rate Period, Weekly Rate Period, or Monthly Rate Period commences, during
Flexible Rate Periods, Daily Rate Periods, Weekly Rate Periods and Monthly
Rate Periods and (iii) on the basis of a 360-day year of twelve 30-day months
during Quarterly, Semiannual, Multiannual or Fixed Rate Periods.
At the option of the Company and subject to certain conditions provided
for in the Indenture, including being subject to veto by the Issuer, which
veto may not be unreasonably exercised, all or a portion of the Bonds (a) may
be converted or reconverted from time to time to or from the Daily Mode, the
Weekly Mode, the Monthly Mode, the Quarterly Mode, the Semiannual Mode or the
Multiannual Mode, which means that the Interest Rate Period is, respectively,
one day, one week, one month, three months, six months or one year or any
multiple of one year, (b) may be converted or reconverted from time to time to
or from the Flexible Mode, and will have Interest Rate Periods of from one to
270 days as provided herein, or (c) may be converted to the Fixed Rate Mode;
provided, however, that in the Multiannual Mode the first Interest Rate Period
occurring after conversion to such Mode may be shorter than the applicable
multiple of one year as provided in the Indenture.
Each determination and redetermination of interest rates and Interest
Rate Periods shall be conclusive and binding on the Issuer, the Trustee, the
Paying Agent, the Company, the Bank and the Bondowners. Any Bondowner may
ascertain the rate of interest on its Bond or Bonds, at any time by contacting
the Paying Agent or the Remarketing Agent.
Unless otherwise defined herein, capitalized terms used in this Bond
shall have the meaning given them in the Indenture. As used herein, "premium"
shall mean, with respect to any amount payable on the Bonds, the amount, if
any, by which the redemption price thereof (exclusive of interest) exceeds the
principal amount thereof at the time such amount is payable. The following
terms are defined as follows:
"Business Day" means any day on which commercial banks located in all of
the cities in which the Principal Offices of the Trustee, the Paying Agent,
the Bank and the Remarketing Agent are located are not required or authorized
by law or regulation to remain closed and on which the New York Stock Exchange
is not closed.
"Conversion Date" means the date on which a new Mode becomes effective
with respect to a Bond, and with respect to a Bond in the Multiannual Mode,
the date on which a new Interest Rate Period becomes effective.
"Effective Date" means, with respect to a Bond in the Daily, Flexible,
Weekly, Monthly, Quarterly, Semiannual and Multiannual Modes, the date on
which a new Interest Rate Period for that Bond takes effect.
"Electronic Notice" means notice transmitted through a time-sharing
terminal, by facsimile transmission or by telephone (promptly confirmed in
writing or by facsimile transmission)
"Interest Rate Period" or " Rate Period" means, when used with respect
to any particular rate of interest for a Bond in the Daily, Flexible, Weekly,
Monthly, Quarterly, Semiannual or Multiannual Mode, the period during which
such rate of interest determined for such Bond will remain in effect as
described herein.
"Mode" means the period for and the manner in which the interest rates
on the Bonds are set and includes the Daily Mode, the Flexible Mode, the
Weekly Mode, the Monthly Mode, the Quarterly Mode, the Semiannual Mode, the
Multiannual Mode and the Fixed Rate Mode.
"Principal Office" means the business address designated as a principal
office pursuant to the Indenture. In the case of the initial Trustee and
Paying Agent, "Principal Office" refers to its principal corporate trust
office in New York, New York.
"Purchase Date" means the date on which this Bond shall be required to
be purchased pursuant to a mandatory or optional tender in accordance with the
provisions hereof.
Flexible Rate
While the Bonds accrue interest at Flexible Rates, the Remarketing Agent
shall determine the Flexible Rate and the Flexible Rate Period for each Bond
and such Flexible Rate will remain in effect from and including the
commencement date of the Flexible Rate Period selected for that Bond by the
Remarketing Agent to, but not including, the last date thereof. While the
Bonds are in the Flexible Rate Mode, Bonds may have successive Interest Rate
Periods of any duration up to 270 days each and any Bond may accrue interest
at a rate and for a period different from any other Bond. No Interest Rate
Period may be established which exceeds 270 days or, if the Remarketing Agent
has given or received notice of any conversion to a Multiannual or Fixed Rate,
the remaining number of days prior to the Conversion Date or, if the
Remarketing Agent has given or received notice of any conversion to a Daily,
Weekly, Monthly, Quarterly or Semiannual Rate Period, the length of each
Flexible Rate Period for each Bond shall be determined by the Remarketing
Agent to be either (A) that length of period that, as soon as possible, shall
enable the Interest Rate Periods for all Bonds to end on the day before the
Conversion Date, or (B) that length of period which, based on the Remarketing
Agent's judgment, will best promote an orderly transition to the next Interest
Rate Period.
Daily Rate
While the Bonds accrue interest at a Daily Rate, the interest rate
established for the Bonds will be effective from day to day until changed by
the Remarketing Agent in accordance with the Indenture.
Weekly Rate
While the Bonds accrue interest at a Weekly Rate, the rate of interest
on the Bonds will be determined weekly by the Remarketing Agent in accordance
with the Indenture to be effective for a seven day period commencing on
Wednesday of the week of such determination. (The length of the period, the
day of commencement and the last day of the period may vary in the event of a
conversion to or from a Weekly Rate.)
Monthly Rate
While the Bonds accrue interest at a Monthly Rate, the rate of interest
on the Bonds will be determined monthly by the Remarketing Agent in accordance
with the Indenture to be effective from the first Business Day of a month
through the day preceding the first Business Day of the succeeding month.
(The length of the period, the day of commencement and the last day of the
period may vary in the event of a conversion to or from a Monthly Rate.)
<PAGE>
Quarterly Rate
While the Bonds accrue interest at a Quarterly Rate, the rate of
interest on the Bonds will be determined quarterly by the Remarketing Agent in
accordance with the Indenture to be effective for a calendar quarter,
commencing on January 1, April, July 1 or October 1. (The length of the
period, the day of commencement and the last day of the period may vary in the
event of a conversion to or from a Quarterly Rate.)
Semiannual Rate
While the Bonds accrue interest at a Semiannual Rate, the rate of
interest on the Bonds will be determined semiannually by the Remarketing
Agent in accordance with the Indenture to be effective for a calendar,
commencing on April 1 or October 1. (The length of the period, the day of
commencement and the last day of the period may vary in the event of a
conversion to or from a Semiannual Rate.)
Multiannual Rate
While the Bonds accrue interest at a Multiannual Rate, the interest rate
will be determined by the Remarketing Agent in accordance with the Indenture
to remain in effect for a term of one year or any whole multiple of one year
selected by the Company. The Rate Period established will remain in effect
until changed by the Company, in accordance with the Indenture.
Fixed Rate
If initially issued at a Fixed Rate, or upon conversion to a Fixed Rate,
the Bonds shall bear interest to the Maturity Date set forth above at a fixed
rate of interest determined by the Remarketing Agent in accordance with the
Indenture.
Authorized Denominations
Bonds which accrue interest at a Flexible Rate will be issued in
denominations of $100,000 and any integral multiples of $1,000 in excess
thereof. Bonds which accrue interest at a Daily or Weekly Rate will be
issued in denominations of $100,000 and whole multiples thereof; provided that
if the principal amount of Bonds in the Daily or Weekly Mode, as the case may
be, is not evenly divisible by $100,000, then the remainder of such amount
shall be added to another Bond in the same mode that is in a principal amount
of $100,000 or any integral multiples thereof. Bonds which accrue interest at
a Monthly, Quarterly, Semiannual, Multiannual or Fixed Rate will be issued in
the denomination of $5,000 and whole multiples thereof.
Optional Tenders
While this Bond accrues interest at a Daily, Weekly, Monthly, Quarterly,
Semiannual or Multiannual Rate, the Registered Owner of this Bond has the
right to tender this Bond for purchase at the principal amount hereof plus
accrued interest as follows: (i) during a Daily Rate Period on any Business
Day upon written notice, telephonic notice, or Electronic Notice to the Paying
Agent on the Purchase Date, (ii) during a Weekly Mode on any Business Day upon
<PAGE>
written or Electronic Notice to the Paying Agent on a Business Day not fewer
than seven days prior to the Purchase Date or (iii) during a Monthly,
Quarterly, Semiannual, or Multiannual Rate Period, on any Interest Payment
Date, which also must be an Effective Date of a Rate Period, upon written
notice to the Paying Agent not less than fifteen days before the Purchase
Date.
As long as the book-entry system is in effect, the Beneficial Owner of a
Bond may demand purchase of the Bond (or portion thereof) owned by it by
providing notice as provided above through the Beneficial Owner's DTC
Participant; provided such notice shall be given by 11:00 a.m., New York City
time, on the date such notice is required to be given. If the book-entry
system is not in effect, the registered owner of this Bond may demand purchase
of this Bond (or portion thereof in Authorized Denominations) by providing
notice to the Paying Agent as provided above and delivering this Bond to the
Paying Agent at its Principal Office.
If the Registered Owner of a Bond has elected to tender such Bond for
purchase, such Registered Owner shall be deemed to have agreed irrevocably to
sell such Bond to any purchaser determined in accordance with the provisions
of the Indenture on the date fixed for purchase at the Purchase Price and any
Bond not delivered shall be deemed tendered (an "Undelivered Bond") and shall
cease to be Outstanding under the Indenture and not further interest shall
accrue as of the Purchase Date. Notice of tender of a Bond is irrevocable.
All notices of tender of Bonds shall be made to the Paying Agent in writing or
by Electronic Notice at its Principal Office in substantially the form as
provided in the Form of Bondholder's Election Notice for Bonds Subject to
Optional Tender attached hereto or such other form of notice satisfactory to
the Paying Agent which sets forth the principal amount of Bonds to be
purchased, the purchase date on which such Bonds shall be purchased, the name,
address and taxpayer identification number of the Registered Owner and the
payment instructions for the Purchase Price. All deliveries of tendered
Bonds, including deliveries of Bonds subject to mandatory tender, shall be
made to the Paying Agent at its Principal Office.
Mandatory Tenders
While this Bond accrues interest at a Flexible Rate, this Bond is
subject to mandatory tender on each Effective Date applicable to this Bond at
a Purchase Price equal to 100% of the principal amount thereof plus interest
accrued during the Flexible Mode.
This Bond is subject to mandatory tender on the effective date of a
change from one Mode to a different Mode or a change from one Interest Rate
Period to an Interest Rate Period of different duration within the Multiannual
Mode at a Purchase Price equal to the principal amount thereof plus accrued
interest; provided that the Purchase Price for Bonds converted from a
Multiannual Rate Period on a date when such Bonds are also subject to
optional redemption at a premium shall include an amount equal to the premium
that would be payable if such Bonds were redeemed on such date.
<PAGE>
The Bonds are subject to mandatory tender for purchase (i) on the
Interest Payment Date next preceding the Expiration Date of the current Letter
of Credit unless at least 25 days (or such shorter period as shall be
acceptable to the Trustee) prior to such Interest Payment Date the Trustee has
received notice that the Letter of Credit has been extended or, if the Bonds
bear interest at Daily, Weekly, Flexible, Monthly, Quarterly or Semiannual
Rates, replaced with an Alternate Letter of Credit pursuant to the Indenture,
and (ii) on any Interest Payment Date for Bonds bearing interest at a
Multiannual Rate on which the current Letter of Credit is replaced with an
Alternate Letter of Credit pursuant to the Indenture, in each case at a
Purchase Price equal to 100% of the principal amount thereof plus accrued
interest, plus the premium, if any, which would be payable if the Bonds were
redeemed on the mandatory tender date.
BY ACCEPTANCE OF THIS BOND, THE REGISTERED OWNER HEREOF AGREES THAT THIS
BOND WILL BE PURCHASED, WHETHER OR NOT SURRENDERED, ON THE PURCHASE DATE AS
DESCRIBED ABOVE. IN SUCH EVENT, THE REGISTERED OWNER OF THIS BOND SHALL NOT
BE ENTITLED TO RECEIVE ANY FURTHER INTEREST HEREON, SHALL HAVE NO FURTHER
RIGHTS UNDER THIS BOND OR THE INDENTURE EXCEPT TO RECEIVE PAYMENT OF THE
PURCHASE PRICE HELD THEREFOR, AND SHALL THEREAFTER HOLD THIS BOND AS AGENT FOR
THE PAYING AGENT.
Payment of Purchase Price
The Purchase Price for Bonds is payable by wire or bank transfer within
the continental United States in immediately available funds from the Paying
Agent to the Registered Owner. If on any date this Bond is subject to
mandatory tender for purchase or is required to be purchased at the election
of the Registered Owner, payment of the Purchase Price of this Bond to such
Registered Owner shall be made on the Purchase Date if delivery of this Bond
is made prior to 11:00 a.m., New York City time, on the Purchase Date or on
such later Business Day upon which delivery of this Bond is made prior to
11:00 a.m., New York City time.
BY ACCEPTANCE OF THIS BOND, THE REGISTERED OWNER HEREOF AGREES THAT THIS
BOND WILL BE PURCHASED, WHETHER OR NOT SURRENDERED, ON THE PURCHASE DATE AS
DESCRIBED ABOVE. IN SUCH EVENT, THE REGISTERED OWNER OF THIS BOND SHALL NOT
BE ENTITLED TO RECEIVE ANY FURTHER INTEREST HEREON, SHALL HAVE NO FURTHER
RIGHTS UNDER THIS BOND OR THE INDENTURE EXCEPT TO RECEIVE PAYMENT OF THE
PURCHASE PRICE HELD THEREFOR, AND SHALL THEREAFTER HOLD THIS BOND AS AGENT FOR
THE PAYING AGENT.
The initial Remarketing Agent under the Indenture is Morgan Stanley &
Co., Incorporated. The Remarketing Agent may be changed at any time in
accordance with the Indenture.
Written Notice of Mode or Interest Rate Period Change
The Trustee shall give notice, by first class mail, to the Registered
Owners of all Bonds of the proposed conversion from one Mode to another Mode,
or the commencement of a new Interest Rate Period in the Multiannual Mode, at
least 15 days before the proposed Conversion Date while the Bonds accrue
interest at Flexible, Daily or Weekly Rates, and at least 30 days before the
Effective Date of such change while the Bonds accrue interest at a Monthly,
Quarterly, Semiannual or Multiannual Rate.<PAGE>
Interest Payment Dates
While this Bond accrues interest at a Flexible Rate, interest is payable
on the first Business Day after the last day of each Interest Rate Period.
While this Bond accrues interest at Daily, Weekly or Monthly Rates, interest
is payable on the first Business Day of each calendar month following a month
in which interest at such rate has accrued. While this Bond accrues interest
at a Quarterly Rate, interest is payable on each January 1, April 1, July 1
and October 1. While this Bond accrues interest at a Semiannual, Multiannual
or Fixed Rate, interest is payable on the first day of the immediately
succeeding April or October after Conversion to such Mode and thereafter on
April 1 and October 1.
Optional Redemption
The Bonds are subject to optional redemption as follows:
(A) During any Daily, Flexible, Weekly, Monthly, Quarterly
or Semiannual Mode, the Bonds in such Mode shall be subject to
redemption prior to maturity at the option of the Issuer upon
direction of the Company in whole or in part (and if in part in
an Authorized Denomination) on any Interest Payment Date, at a
redemption price equal to the principal amount thereof plus
accrued interest thereon to the redemption date.
(B) During any Multiannual or Fixed Rate Mode, the Bonds
in such Mode shall be subject to redemption prior to maturity at
the option of the Issuer upon direction of the Company in whole
on any Business Day or in part (and if in part in an Authorized
Denomination) on any Interest Payment Date after the No-Call
Period described below, at the following redemption prices
(expressed as percentages of the principal amount of the Bonds
called for redemption) plus accrued interest to the date fixed for
redemption:
LENGTH OF
INTEREST
RATE PERIOD NO-CALL PERIOD REDEMPTION PRICES
greater than or 5 years from the commencement 102%, declining
equal to 5 years of Interest Rate Period 1% per year to
100%
less than 5 years No call
The optional redemption dates and redemption prices set forth above may
be changed as provided in the Indenture, provided that any alternate
redemption schedule shall be accompanied by a Favorable Opinion.
If a Letter of Credit is then in effect and the redemption price
includes any premium, the right of the Company to direct an optional
redemption is subject to the condition that the Trustee has received, prior to
the date on which notice of redemption is required to be given to Registered
Owners, written confirmation from the Bank that it can draw under the Letter
of Credit on the proposed redemption date in an aggregate amount sufficient to
cover the principal of and premium and interest due on the redemption date.
Extraordinary Optional Redemption
The Bonds are subject to redemption in whole on the next available
Interest Payment Date for which notice of redemption can be given, at a
redemption price equal to the aggregate principal amount of the Bonds
Outstanding plus accrued interest thereon to the redemption date, without
premium, upon receipt by the Trustee of a written notice from the Company
stating that any of the following events has occurred within the preceding 270
days and that it intends to exercise its option to effect the redemption of
the Bonds as a whole:
(i) In the reasonable judgment of the Company unreasonable
burdens or excessive liabilities shall have been imposed upon the
Issuer or the Company with respect to either of the Projects or
either of the Plants, including without limitation (A) the
imposition of any income or other taxes not being imposed on
October 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 October 1, 1995 upon similarly assessed property
within the same taxing jurisdiction);
(ii) Either of the Projects or either of the Plants shall
have been damaged or destroyed to such extent that, in the opinion
of the 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) the Company
will be thereby prevented from carrying on its normal operations
of such Project or such 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 either of the Projects or either of the Plants 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
either of the Projects or either of the Plants shall have
occurred, or technological, regulatory or other changes shall have
occurred, which, in the opinion of the Company, render the
continued operation of either of the Projects or either of the
Plants uneconomic;
(v) Any court or administrative body shall enter a
judgment, order or decree requiring the Company to cease, or
dispose of, all or any substantial part of its operations of
either of the Projects or either of the Plants to such extent
that, in the opinion of the Company, it is or will be thereby
prevented from carrying on its normal operations of such Project
or such Plant for a period of six or more consecutive months; or
(vi) As a result of any change in the Constitution of the
State of Texas or the Constitution of the United States of America
or of any legislative or administrative action (whether state or
federal) or of any final decree, judgment, or order of any court
or administrative body (whether state or federal), the obligations
of the Company under the Agreement shall have become unenforceable
or impossible of performance in any material respect in accordance
with the intent and purpose of the parties as expressed in the
Agreement.
Extraordinary Mandatory Redemption
The Bonds are subject to mandatory redemption in whole or in part at any
time if such partial redemption will preserve the exemption from federal
income taxation of interest on the remaining Bonds Outstanding, at a
redemption price equal to the principal amount thereof together with unpaid
interest accrued to the date fixed for redemption, and without premium, if (i)
a final decree or judgment of any federal court, in which the Company
participates to the extent it deems sufficient, or (ii) 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 such Bonds to other than, as provided in the Code, a "substantial
user" of the Projects 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 the Company under the
Agreement; provided, however, that no decree or judgment by any court or
action by the Internal Revenue Service shall be considered final unless the
Registered Owner involved in such proceeding or action (A) gives the Company
and the Trustee prompt notice of the commencement thereof and (B), if the
Company agrees to pay all expenses in connection therewith and to indemnify
such Registered Owner against all liabilities in connection therewith, offers
the 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 the Company not less than forty-five days written
notice of such date.
Not less than 30 nor more than 60 days prior to any redemption date, the
Trustee shall cause notice of the call for redemption, identifying each Bond
or portion thereof to be redeemed, given in the name of the Issuer, to be sent
by first class mail (except when DTC is the Registered Owner of all of the
Bonds and except for persons or entities owning or providing evidence of
ownership satisfactory to the Trustee of a legal or beneficial ownership in at
least $1,000,000 in principal amount of Bonds, in which cases, certified mail)
to the Registered Owner of each Bond to be redeemed at the address shown on
the books kept by the Trustee as Bond Registrar; should any Bond called for
redemption not be presented for payment within 30 days of the redemption date
therefor, the Trustee shall cause a second notice of the call for redemption
to be given by certified mail within 60 days after the redemption date.
Failure to give such notice or any defect therein shall not affect the
sufficiency or validity of any proceedings for the redemption of any other
Bond. By the date fixed for any such redemption, due provision shall be made
with the Trustee for the payment of the redemption price of, and interest on,
the Bonds to be redeemed on the date of redemption. If notice of redemption
is given and if due provision for payment of the redemption price and interest
is made, all as provided in the Indenture, the Bonds or portions thereof which
are to be redeemed shall not bear interest after the date fixed for
redemption, and shall not be entitled to any benefit or security under the
Indenture, except for the right of the Registered Owner to receive the
redemption price thereof and accrued interest thereon out of the funds
provided for such payment.
Notwithstanding the provisions of the foregoing paragraph, no notice of
redemption is required to be given to he owner of any Bond which is subject to
mandatory tender on the date fixed for redemption.
If at the time of mailing of notice of any optional redemption in
connection with a refunding of the Bonds, the Company shall not have deposited
with the Trustee moneys sufficient to redeem all of the Bonds called for
redemption, such notice may state that it is conditional in that it is subject
to the deposit of the proceeds of refunding bonds with the Trustee not later
than the redemption date, and such notice shall be of no effect unless such
moneys are so deposited.
General Provisions
The Bonds are all issued under and entitled to the benefits of the
Indenture. Pursuant to the Indenture, the Issuer has pledged and assigned to
the Trustee the Trust Estate (as defined in the Indenture), which includes the
Installment Payments, as security for its obligation to pay the principal of,
premium, if any, and interest on, and Purchase Price of, the Bonds. Reference
is made to the Indenture for definitions of the terms used herein, for a
description of the Trust Estate and for the provisions thereof with respect to
the nature and extent of the security granted by the Issuer to the Trustee
thereunder, the rights, duties and obligations of the Issuer and the Trustee,
the rights of the Registered Owners of the Bonds, and the terms on which the
Bonds are issued and secured, to all of which provisions, and to all other
provisions of the Indenture, the Registered Owner hereof by the acceptance of
this Bond assents. The Registered Owner hereof shall never have the right to
demand payment out of any funds raised or to be raised by taxation or from any
source whatsoever except the Trust Estate. Except for the lien on and the
assignment and pledge of the Trust Estate, no property of the Issuer is
encumbered by any lien or security interest for the benefit of the Registered
Owner of this Bond.
The ownership of this Bond may be transferred (in Authorized
Denominations) only upon presentation and surrender of this Bond at the
Principal Office of the Trustee as Bond Registrar together with an assignment
duly executed by the Registered Owner hereof or his duly authorized
attorney-in-fact in such form as shall be satisfactory to the Trustee, and
subject to the provisions made therefor in the Indenture, provided that the
Trustee shall not be required to make any such transfer of any Bond during the
10 Business Days immediately preceding the mailing of a notice of Bonds
selected for redemption or, with respect to a Bond, after such Bond or any
portion thereof has been selected for redemption. Bonds may be exchanged at
the principal corporate trust office of the Trustee or at the offices of the
Trustee's Agent for other Bonds aggregating a like principal amount. Bonds
issued in exchange for other Bonds may be issued only in Authorized
Denominations. Any service charge made by the Trustee or the Trustee's Agent
for any such registration, transfer or exchange hereinbefore referred to shall
be paid by the Company. The Trustee, the Trustee's Agent, or the Issuer may
require payment by the Registered Owner of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. The Issuer, the
Company, the Trustee and the Trustee's Agent may treat the person in whose
name this Bond is registered as the absolute owner hereof for any purpose,
whether or not this Bond would be overdue, and neither the Issuer, the
Company, the Trustee, nor the Trustee's Agent shall be affected by notice to
the contrary.
Provisions may be made for the payment of amounts represented by the
Bonds as provided in the Indenture, in which event all liability of the Issuer
to the Registered Owners of the applicable Bonds for the payment of such Bonds
shall forthwith cease, terminate and be completely discharged, and thereupon
it shall be the duty of the Trustee to hold such funds (but only for the
period specified and as provided in the Indenture), without liability for
interest thereon, for the benefit of the Registered Owners of such Bonds, who
shall thereafter be restricted exclusively to such funds for any claims of
whatever nature under the Indenture or on, or with respect to, said Bonds.
The Bonds are secured by the Indenture, whereunder the Trustee
undertakes to enforce the rights of the Registered Owners of the Bonds and to
perform other duties to the extent and under the conditions stated in the
Indenture. In case an Event of Default shall occur, the principal of the
Bonds then Outstanding may, and, under certain circumstances, shall, be
declared to be due and payable immediately upon the conditions and in the
manner provided in the Indenture. Failure to pay interest on any Bond when
due does not constitute an Event of Default until such failure has continued
for a period of one Business Day or more. Under the circumstances provided in
the Indenture, the Trustee may in its discretion, and upon written request of
the Registered Owners of a majority in aggregate principal amount of the Bonds
then Outstanding shall, waive any Event of Default and its consequences;
provided, however, that default in the payment of the principal of, premium,
if any, or interest on, or Purchase Price of, the Bonds may not be so waived.
The Registered Owners of the Bonds shall have no right to institute any
action, suit or proceeding at law or in equity to enforce the Indenture,
except as provided in the Indenture; provided, however, that nothing in the
Indenture shall affect or impair the right of the Registered Owner of any Bond
to enforce the payment of the principal of, premium, if any, and interest on
such Bond from the source and in the manner herein expressed. Reference is
hereby made to the Indenture and the Agreement for additional provisions with
respect to the nature and extent of the security, the rights, duties, and
obligations of the Company, the Issuer, the Trustee, and the owners of the
Bonds, the terms upon which the Bonds are issued and secured, and the
modification of any of the foregoing.
The Issuer has reserved the right to amend the Indenture. Under some
(but not all) circumstances amendments thereto must also be approved by (a)
the Registered Owners of at least a majority in aggregate principal amount of
the Outstanding Bonds or (b) if less than all of the Bonds are in a particular
Mode and the amendment affects only the Owners of Bonds in that Mode, the
Owners of at least a majority in aggregate principal amount of the Outstanding
Bonds in such Mode.
<PAGE>
No recourse shall be had for the payment of the principal, Purchase
Price or redemption price of, premium, if any, or interest on, this Bond, or
for any claim based hereon or on the Indenture, against any member, officer or
employee, past, present or future, of the Issuer or of any successor body, as
such, either directly or through the Issuer or any such successor body, under
any conditional provision, statute or rule of law, or by the enforcement of
any assessment of by any legal or equitable proceeding or otherwise.
This Bonds shall not be valid or become obligatory for any purpose or be
entitled to any security or benefit under the Indenture until either (i) the
Certificate of Authentication hereon shall have been signed by the Trustee as
Bond Registrar, or any successor, or (ii) a manually signed Comptroller's
Registration Certificate has been attached hereto or endorsed hereon.
It is hereby certified, recited and declared that all acts, conditions
and things required to exist, happen and be performed precedent to and in the
execution and delivery of the Indenture and the issuance of this Bond do
exist, have happened and have been performed in due time, form and manner as
required by law; and that the issuance of this Bond and the issue of which it
forms a part, together with all other obligations of the Issuer, does not
exceed or violate any constitutional or statutory limitation.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be executed in
its name by the manual or facsimile signature of its Chairman and attested by
the manual or facsimile signature of its Secretary, all as of the date first
above written.
GUADALUPE-BLANCO RIVER AUTHORITY
By:_____________________________
Chairman
ATTEST:
By:_____________________________
Secretary
(SEAL)
<PAGE>
(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
(FORM OF BONDOWNERS' ELECTION NOTICE FOR BONDS
SUBJECT TO OPTIONAL TENDER)
(to be used only in connection with Bonds
subject to optional tender)
Guadalupe-Blanco River Authority
Pollution Control Revenue Refunding Bond
(Central Power and Light Company Project) Series 1995
Principal Principal Amount
Amount CUSIP Tendered for Purchase Bond Numbers Purchase Date
The undersigned hereby certifies that it is the Registered Owner or the
Beneficial Owner (as described below) of the Bonds described above (the
"Tendered Bonds"), all of which are in the _________________ Mode [insert Mode
of Tendered Bonds], and hereby agrees that the delivery of this instrument of
transfer to the Paying Agent by 11:00 A.M. New York City time on this Business
Day (for Daily Mode Bonds only) constitutes an irrevocable offer to sell the
Tendered Bonds to the Company or its designee on the Purchase Date, which
shall be a Business Day at least __________ (____) calendar days following
delivery of this instrument[1], at a purchase price equal to the unpaid
principal balance thereof plus accrued and unpaid interest thereon to the
Purchase Date (the "Purchase Price") provided that if the Purchase Date is an
Interest Payment Date, it is recognized that accrued interest will be paid
separately and not as part of the Purchase Price on such date. The
undersigned acknowledges and agrees that this election notice is irrevocable
and that the undersigned will have no further rights with respect to the
Tendered Bonds, except payment, upon presentation and surrender, of the
Purchase Price by wire or bank transfer within the continental United States
from the Paying Agent, at its address shown on the registration books of the
Bond Registrar (i) on the Purchase Date if the Tendered Bonds shall have been
surrendered to the Paying Agent prior to 11:00 A.M., New York City time, on
the Purchase Date or (ii) on any Delivery Date subsequent to the Purchase Date
on which Tendered Bonds are delivered to the Paying Agent by 11:00 A.M., New
York City time.
____________________
[1] In the case of Tendered Bonds that were in the Daily Mode, the words "on
the Purchase Date, which shall be a Business Day at least ___________
(____) calendar days following delivery of this instrument" shall be
replaced by the words "on this Business Day." Except as otherwise
indicated herein and unless the context otherwise requires, the terms
used herein shall have the meanings set forth in the Indenture of Trust
dated as of October 1, 1995 between the Guadalupe-Blanco River Authority
and The Bank of New York, as Trustee, relating to the Bonds.
Date: ______________________________
Signature(s)
_________________________________
_________________________________
_________________________________
(Street City State Zip)
IMPORTANT: The above signature(s) must correspond with the name(s) as set
forth on the face of the Tendered Bond(s) with respect to which this
Bondowner's Election Notice is being delivered without any change whatsoever.
If this notice is signed by a person other than the Registered Owner of any
Tendered Bond(s), the Tendered Bond(s) must be either endorsed on the
Assignment appearing on each Bond or accompanied by appropriate Bond powers,
in each case signed exactly as the name or names of the Registered Owner or
owners appear on the Bond Register. The method of presenting this notice to
the Paying Agent is the choice of the person making such presentation. If it
is made by mail, it should be by registered mail with return receipt
requested.
Notwithstanding the foregoing, during the time the Bonds are issued in
book-entry-only form, this Bondowner's Election Notice must be signed by the
Beneficial Owner of the Bonds or by a duly authorized attorney and must be
accompanied by an affidavit in the form attached hereto.
AFFIDAVIT
State of ______________________
Parish/County of _______________
Before Me, the undersigned authority, duly commissioned and qualified
within and for the State and Parish/County aforesaid, personally came and
appeared
_____________________________________
who being by me first duly sworn, deposed and said that he/she is the owner of
the following Guadalupe-Blanco River Authority Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) Series 1995.
Principal Amount CUSIP Maturity Date
Sworn to and subscribed before me this _______ day of
____________________, ______.
______________________________________
Notary Public
<PAGE>
[FORM OF ASSIGNMENT]
ASSIGNMENT
THIS ASSIGNMENT IS SUBJECT TO THE RESTRICTIONS ON
TRANSFERABILITY SET FORTH ON THE FACE OF THE BOND
The following abbreviations, when used in the inscription on the face of
this Bond, shall be construed as though they were written out in full
according to applicable laws or regulations:
UNIF GIFT MIN ACT--
TEN COM -- as tenants in common ____ Custodian ____
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right under Uniform Gifts to
of survivorship and not as Minors Act _________
tenants in common
(State)
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned sells, assigns and transfers unto
Please Insert Social Security or
Other Identifying Number of Assignee
/___________________________________/
____________________________________________________________
(Name and Address of Assignee)
the within Bond and does hereby irrevocably constitute and appoint
_________________________ to transfer said Bond on the books kept for
registration thereof with full power of substitution in the premises.
Date: _____________________
____________________________________
Signature Guaranteed: ____________________________________
NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Bond in every particular, without
alteration or enlargement or any change whatever; and
NOTICE: Signature(s) must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Trustee, which requirements
include membership or participation in STAMP or such other "signature guaranty
program" as may be determined by the Trustee in addition to or in substitution
for STAMP, all in accordance with the Securities Exchange Act of 1934, as
amended.
<PAGE>
[FORM OF REGISTRATION INFORMATION]
REGISTRATION INFORMATION
Under the terms of the Indenture, the Trustee will register a Bond in
the name of a transferee only if the owner of such Bond (or his duly
authorized representative) provides as much of the information requested below
as is applicable to such owner prior to submitting this Bond for transfer.
Name:
_________________________________________________________
Address:
_________________________________________________________
Social Security or Employer
Identification Number:
_________________________________________________________
If a Trust, Name and Address of
Trustee(s) and Date of Trust:
_________________________________________________________
[FORM OF REGISTRATION CERTIFICATE
(to be attached to initial bonds only)]
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this bond has been examined, certified as to
validity, and approved by the Attorney General of the State of Texas, and that
this bond has been registered by the Comptroller of Public Accounts of the
State of Texas.
Witness my signature and seal this
________________________________
Comptroller of Public Accounts
of the State of Texas
Section 2.04. Execution; Limited Obligations. The Bonds shall be
executed on behalf of the Issuer with the manual or facsimile signature of the
Chairman of the Issuer, and attested, under a manual or facsimile impression
of the seal of the Issuer, with the manual or facsimile signature of the
Secretary of the Issuer. All authorized facsimile signatures shall have the
same force and effect as manual signatures. A facsimile impression of the
Issuer's seal shall have the same force and effect as a manual impression. In
case any officer of the Issuer whose signature or a facsimile thereof appears
on a Bond shall cease to be such officer before the delivery of such Bond,
such signature or such facsimile shall nevertheless be valid and sufficient
for all purposes, the same as if such officer had remained in office until
delivery.
<PAGE>
The Bonds are not and never shall become general obligations of the
Issuer, but are limited obligations payable by the Issuer solely and only from
the payments received under or with respect to the documents executed by the
Company (except to the extent paid out of moneys attributable to the proceeds
derived from the sale of the Bonds or income from the temporary investment of
such funds or other funds held hereunder), which amounts, together with any
other security provided herein, are hereby specifically assigned and pledged
to such purposes, in the manner and to the extent provided herein. The Bonds
shall be deemed not to constitute a debt of the State of Texas, the Issuer, or
of any other political corporation, subdivision, or agency of the State or a
pledge of the faith and credit of any of them. No recourse shall be had for
any claim based on the Agreement, the Indenture, or the Bonds against any
member, officer or employee, past, present or future, of the Issuer, or of any
successor body thereto, either directly or through the Issuer, or any such
successor body, under any constitutional provision, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise. Neither the
State of Texas nor any political corporation, subdivision, or agent or the
State of Texas shall be obligated to pay the Bonds and neither the faith and
credit nor the taxing power of the State of Texas or any other political
corporation, subdivision, or agency is pledged to the payment of the principal
of, redemption premium, if any, or interest on, or Purchase Price of, the
Bonds. This Bond is a special revenue obligation of the Issuer payable solely
from the sources described herein and the holder hereof shall never have the
right to demand payment from moneys derived by taxation or any revenues of the
Issuer except the funds pledged to the payment hereof.
Section 2.05. Conditions Precedent to Delivery of Bonds;
Authentication. The Issuer shall execute and deliver the Bonds to the
Trustee, and the Trustee shall, upon receipt by the Trustee of the purchase
price for the Bonds, deliver the Bonds to the initial purchasers thereof.
Prior to and as a condition precedent to the delivery of the Bonds there shall
be filed with and delivered to the Trustee:
(i) a certified copy of the Bond Resolution;
(ii) original executed counterparts of this Indenture, the
Approval Certificate, and the Agreement;
(iii) the executed Letter of Credit;
(iv) a written order of the Issuer, directed to the Trustee,
instructing the Trustee to deliver the Bonds to the initial purchasers
thereof upon payment to the Trustee for the account of the Issuer of the
sum specified in such written order; and
(v) an opinion of Bond Counsel substantially to the effect that
(A) the Bonds constitute legal, valid and binding limited obligations of
the Issuer, enforceable in accordance with their terms, subject to
bankruptcy, insolvency, moratorium, reorganization and other similar
laws affecting the rights of creditors and to the exercise of judicial
discretion in accordance with general principles of equity and (B) the
interest on the Bonds is excludable from gross income for Federal income
tax purposes under existing statutes, regulations, published rulings and
judicial decisions, except for interest on any Bond for any period <PAGE>
during which such Bond is held by a "substantial user" of any
facilities financed with the proceeds of the Bonds or a "related
person," as such terms are used in Section 147(a) of the Code, and
other customary exclusions.
No Bond shall be valid or obligatory for any purpose or entitled to any
security or benefit under this Indenture unless and until either (i) a
certificate of authentication on such Bond shall have been duly executed by
the Trustee or (ii) a Comptroller's Registration Certificate attached to or
endorsed on such Bond has been duly executed. Such executed certificate of
the Trustee or Comptroller's Registration Certificate upon any such Bond shall
be conclusive evidence that such Bond has been authenticated or registered and
delivered under this Indenture. The certificate of authentication on any Bond
shall be deemed to have been executed by the Trustee if signed by an
authorized officer or signatory of the Trustee, but it shall not be necessary
that the same officer or signatory sign the certificates of authentication on
all Bonds issued hereunder.
Section 2.06. Redemption of Bonds. The Bonds shall be subject to
redemption by the Issuer prior to maturity only as follows:
(a) Extraordinary Optional Redemption of Bonds. The Bonds are
subject to redemption in whole on the next available Interest Payment
Date for which notice of redemption can be given, at a redemption price
equal to the aggregate principal amount of the Bonds outstanding plus
accrued interest thereon to the redemption date, without premium, upon
receipt by the Trustee of a written notice from the Company stating that
any of the following events has occurred within the preceding 270 days
and that it therefore intends to exercise its option to effect the
redemption of Bonds in whole:
(i) In the reasonable judgment of the Company unreasonable
burdens or excessive liabilities shall have been imposed upon the
Issuer or the Company with respect to either of the Projects or
either of the Plants, including without limitation (A) the
imposition of any income or other taxes not being imposed on
October 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 October 1, 1995 upon similarly assessed property
within the same taxing jurisdiction);
(ii) Either of the Projects or either of the Plants shall
have been damaged or destroyed to such extent that, in the opinion
of the 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) the Company
will be thereby prevented from carrying on its normal operations
of such Project or such 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 either of the Projects or either of the Plants shall have
been taken under the exercise of the power of eminent domain;
<PAGE>
(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
either of the Projects or either of the Plants shall have
occurred, or technological, regulatory or other changes shall have
occurred, which, in the opinion of the Company, render the
continued operation of either of the Projects or either of the
Plants uneconomic;
(v) Any court or administrative body shall enter a
judgment, order or decree requiring the Company to cease, or
dispose of, all or any substantial part of its operations of
either of the Projects or either of the Plants to such extent
that, in the opinion of the Company, it is or will be thereby
prevented from carrying on its normal operations of such Project
or such Plant for a period of six or more consecutive months; or
(vi) As a result of any change in the Constitution of the
State of Texas or the Constitution of the United States of America
or of any legislative or administrative action (whether state or
federal) or of any final decree, judgment, or order of any court
or administrative body (whether state or federal), the obligations
of the Company under the Agreement shall have become unenforceable
or impossible of performance in any material respect in accordance
with the intent and purpose of the parties as expressed in the
Agreement.
(b) Optional Redemption. The Bonds are subject to optional
redemption as follows:
(i) During any Daily, Flexible, Weekly, Monthly, Quarterly
or Semiannual Mode, the Bonds in such Mode shall be subject to
redemption prior to maturity at the option of the Issuer upon
direction of the Company, in whole or in part (and if in part in
an Authorized Denomination) on any Interest Payment Date
applicable to the Bonds in such Mode, at a redemption price equal
to the principal amount thereof plus accrued interest thereon to
the redemption date.
(ii) During any Multiannual or Fixed Rate Mode, the Bonds
in such Mode shall be subject to redemption prior to maturity at
the option of the Issuer upon direction of the Company, in whole
on any Business Day or in part (and if in part in an Authorized
Denomination) on any Interest Payment Date after the No-Call
Period described below, at the following redemption prices
(expressed as percentages of the principal amount of the Bonds
called for redemption) plus accrued interest to the date fixed for
redemption:
<PAGE>
LENGTH OF
INTEREST
RATE PERIOD NO-CALL PERIOD REDEMPTION PRICES
greater than or 5 years from the commencement 102%, declining
equal to 5 years of Interest Rate Period 1% per year to
100%
less than 5 years No call
Notwithstanding the foregoing, if the Bonds initially bear interest at a
Multiannual Rate or a Fixed Rate, the redemption schedule shall be as set
forth in the Approval Certificate. In connection with a Conversion with
respect to Bonds to bear interest at the Multiannual or Fixed Interest Rate,
the Remarketing Agent, upon the request of the Company (which request shall
not unreasonably be refused) and in order to achieve the lowest rate which,
in the judgment of the Remarketing Agent, on the basis of prevailing financial
market conditions, would permit the sale of the Bonds so converted at par plus
accrued interest as of the Conversion Date, may deliver to the Issuer and the
Trustee an alternative redemption schedule to that shown above, provided that
the Company delivers to the Issuer, the Remarketing Agent and the Trustee a
Favorable Opinion with respect to the alternative schedule of redemption.
Prior to such Conversion, the Trustee shall determine the optional redemption
provisions applicable to the Bonds in such Modes, and such provisions shall be
inserted in the form of Bonds. After the Conversion Date succeeding the
delivery of such alternative schedule and Favorable Opinion during any Mode,
the Bonds shall be subject to redemption in accordance with the provisions of
such alternative schedule.
(c) Extraordinary Mandatory Redemption. The Bonds are subject
to mandatory redemption in whole or in part at any time if such partial
redemption will preserve the exemption from federal income taxation of
interest on the remaining Bonds Outstanding, at a redemption price equal
to the principal amount thereof together with unpaid interest accrued to
the date fixed for redemption, and without premium, if (i) a final
decree or judgment of any federal court, in which the Company
participates to the extent it deems sufficient, or (ii) 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 such Bonds to other than, as provided in
the Code, a "substantial user" of the Projects 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 the Company under the Agreement;
provided, however, that no decree or judgment by any court or action by
the Internal Revenue Service shall be considered final unless the
Registered Owner involved in such proceeding or action (A) gives the
Company and the Trustee prompt notice of the commencement thereof and
(B), if the Company agrees to pay all expenses in connection therewith
and to indemnify such Registered Owner against all liabilities in
connection therewith, offers the 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 the Company not less than forty-five days written notice
of such date.
Section 2.07. Notice of Redemption. Not less than thirty (30) days or
more than sixty (60) days prior to any date fixed for redemption of Bonds, the
Trustee shall give notice of any redemption by sending such notice by (i)
first-class mail to the Owner of each Bond to be redeemed in whole or in part
at the address shown on the Registration Books, (ii) by certified mail, return
receipt requested, to DTC (so long as it owns all the Bonds), and upon
request, to any person or entities which provide evidence acceptable to the
Trustee that such person has a legal or beneficial interest in at least
$1,000,000 in principal amount of the Bonds, and (iii) by certified mail,
return receipt requested, or by overnight delivery, received by the registered
depositories at least two (2) days prior to the general publication date for
such redemption notices and to be received by at least two (2) of the national
information services that disseminate bond redemption notices on or before the
general mailing date for such notices; provided, however, that the failure to
send, mail, or receive such notice described above, or any defect therein or
in the sending or mailing thereof, with respect to any Bond shall not affect
the validity or effectiveness of the proceedings for the redemption of any
other Bond. In addition, within sixty (60) days after the redemption date an
additional redemption notice shall be sent to any Owner of the Bonds who has
not surrendered Bonds for redemption during the thirty (30) day period
following the redemption date and to any person or entities having legal or
beneficial ownership interest in at least $1,000,000 in principal amount of
such Bonds which have not been surrendered.
All notices of redemption shall state: (i) the redemption date, (ii)
the redemption price, (iii) the identification, including complete designation
(including series) and issue date of the Bonds and the CUSIP number,
certificate number (and in the case of partial redemption, the respective
principal amounts), interest rates and maturity dates of the Bonds to be
redeemed, (iv) that on the redemption date the redemption price will become
due and payable upon each such Bond, and that interest thereon shall cease to
accrue from and after said date, and (v) the name and address of Trustee and
any Paying Agent for such Bonds, including the place where such Bonds are to
be surrendered for payment of the redemption price therefor.
Upon written request of any Owner, or of any person or entity which
provides evidence acceptable to the Trustee that such person or entity has a
legal or beneficial interest in Bonds in an aggregate principal amount of at
least $1,000,000, the Trustee shall send an additional copy of any notice to
be given to such Owner, person or entity by the Trustee under the Indenture by
first-class mail to a second address specified by such Owner, person or
entity. Any such additional notices shall be given simultaneously with the
original notices.
Section 2.08. Redemption Payments; Effect of Call for Redemption. On
the date fixed for redemption of any Bond, funds for the payment thereof shall
be on deposit in the Bond Fund representing moneys deposited by the Company
with the Trustee, and the Trustee hereby is authorized and directed to apply <PAGE>
such funds to the payment of each Bond or portion thereof called for
redemption, together with accrued interest thereon to the redemption date and
any required premium. If at the time of mailing of notice of any optional
redemption in connection with a refunding of the Bonds the Company shall not
have deposited with the Trustee moneys sufficient to redeem all of the Bonds
called for redemption, such notice may state that it is conditional in that it
is subject to the deposit of the proceeds of refunding bonds with the Trustee
not later than the redemption date, and such notice shall be of no effect
unless such moneys are so deposited. On the date so designated for
redemption, notice having been given in the manner and under the conditions
hereinabove provided, any Bond or portion thereof so called for redemption
shall become and be due and payable at the redemption price provided for
herein; and if, in accordance with the provisions of Article V hereof,
sufficient moneys and/or Government Obligations, the principal of, and
interest on, which at maturity will provide sufficient moneys at the times
required for payment of the redemption price and accrued interest to the
redemption date are then held by the Trustee in trust for the Owners of every
Bond or portion thereof to be redeemed, interest on each such Bond or portion
so called for redemption shall cease to accrue and each such Bond or portion
thereof shall cease to be entitled to any benefit or security under this
Indenture, and the Owner of each such Bond or portion thereof shall have no
rights in respect thereof except to receive payment of the redemption price
thereof and accrued interest thereon to the redemption date from such moneys
and/or Government Obligations.
Section 2.09. Partial Redemption . If fewer than all of the Bonds
shall be called for redemption, the Company may designate the principal amount
of Bonds in each Mode to be redeemed, and the Bonds to be redeemed in each
Mode shall be selected by lot by the Trustee from among all Outstanding Bonds
in such Mode for this purpose, each minimum increment of Authorized
Denominations represented by any Bond shall be considered a separate Bond for
purposes of selecting the Bonds to be redeemed. If it is determined that one
or more, but not all, of the minimum increments of Authorized Denominations
represented by any Bond is to be called for redemption, then, upon notice of
intention to redeem such minimum increments of Authorized Denominations of
such Bond, the Owner of such Bond, upon surrender of such Bond to the Trustee
for payment to such Owner of the redemption price or the principal amount of
such Bond called for redemption, shall be entitled to receive a new Bond or
Bonds in the aggregate principal amount of the unredeemed balance of the
principal amount of such Bond. New Bonds representing the unredeemed balance
of the principal amount of such Bonds shall be issued to the Owner thereof
without a charge therefor.
If the owner of any Bond of a denomination greater than the minimum
increment of Authorized Denominations shall fail to present such Bond to the
Trustee for payment and exchange as aforesaid, such Bond shall, nevertheless,
become due and payable on the date fixed for redemption to the extent of the
minimum increments of Authorized Denominations called for redemption (and to
that extent only), and, after the date fixed for redemption, interest shall
cease to accrue on such principal amount called for redemption.
<PAGE>
Section 2.10. Remarketing and Purchase.
(a) Remarketing of Tendered Bonds. Unless otherwise instructed by the
Company, the Remarketing Agent shall offer for sale and use its best efforts
to find purchasers for all Bonds or portions thereof for which notice of
tender has been received pursuant hereto or which are subject to mandatory
tender. While the Bonds are in book-entry only form, the Remarketing Agent
will make payment for the Purchase Price for tendered Bonds in accordance with
the procedures established by DTC. If the book-entry only system is not in
effect, the terms of any sale by the Remarketing Agent shall provide for the
payment of the Purchase Price for tendered Bonds by the Remarketing Agent to
the Paying Agent (i) in immediately available funds at or before 3:00 p.m.,
New York City time, on the Purchase Date, in the case of Bonds accruing
interest at Flexible Rates, (ii) in immediately available funds at or before
4:00 p.m., New York City time, on the Purchase Date, in the case of Bonds
accruing interest at Daily Rates, Weekly Rates, Monthly Rates, Quarterly Rates
or Semiannual Rates, and (iii) in clearinghouse funds at or before 12:00 noon,
New York City time, on the Purchase Date, in the case of bonds accruing
interest at Multiannual Rates. The Remarketing Agent shall not sell any Bond
as to which a notice of conversion from one type of Rate Period to another has
been given by the Trustee unless the Remarketing Agent has advised the person
to whom the sale is made of the conversion. The Remarketing Agent shall not
remarket any Bonds pursuant to this Section if the Remarketing Agent has
received notice that an Event of Default shall have occurred and is continuing
hereunder with respect to the Bonds.
(b) Purchase of Tendered Bonds.
(i) Notice. At or before 3:00 p.m., New York City time, on the
Business Day immediately preceding the Purchase Date of tendered Bonds bearing
interest at Multiannual Rates (or 12:30 p.m., New York City time, on the
Purchase Date in the case of Bonds accruing interest at Daily, Weekly,
Flexible, Monthly, Quarterly or Semiannual Rates), the Remarketing Agent shall
give electronic notice to the Trustee of the principal amount of tendered
Bonds which were remarketed. Not later than 4:00 p.m. for Bonds bearing
interest at Multiannual Rates (or 12:45 p.m., in the case of Bonds accruing
interest at Daily, Weekly or Multiannual Rates), New York City time, on the
date of receipt of such notice the Trustee shall give Electronic Notice to the
Paying Agent, the Bank and the Company, specifying the principal amount of
tendered Bonds as to which the Remarketing Agent has not found a purchaser at
that time. At or before 3:00 p.m., New York City time, on the Business Day
prior to the Purchase Date to the extent known to the Remarketing Agent, but
in any event, no later than 1:00 p.m., New York City time, on the Purchase
Date (or two Business Days prior to the Purchase Date in the event tendered
Bonds accrue interest at Multiannual Rates), the Remarketing Agent shall give
notice to the Paying Agent by Electronic Notice of the names, addresses and
taxpayer identification numbers of the purchasers, the denominations of Bonds
to be delivered to each purchaser and, if available, payment instructions for
regularly scheduled interest payments, or of any changes in any such
information previously communicated.
(ii) Sources of Payments; Drawings on the Letter of Credit. The
Remarketing Agent shall cause to be paid to the Paying Agent on the Purchase
Date of tendered Bonds, all amounts representing proceeds of the remarketing
of such Bonds to persons other than the Issuer, the Company or an affiliate<PAGE>
thereof, such payments to be made in the manner and at the time specified in
subsection 2.10 (a) above. If such amounts will not be sufficient to pay the
Purchase Price on the Purchase Date, the Paying Agent shall give notice to the
Trustee to draw under the Letter of Credit and the Trustee shall by 1:00 p.m.,
New York City time, on the Purchase Date draw under the Letter of Credit then
held by the Trustee in accordance with its terms in a manner so as to furnish
immediately available funds by 3:00 p.m., New York City time on such Purchase
Date, in an amount sufficient, together with the remarketing proceeds
available for such purchase, to enable the Paying Agent to pay the Purchase
Price of Bonds to be purchased on such Purchase Date. If no Letter of Credit
is then held by the Trustee, the Company shall deliver or cause to be
delivered such amounts at such times so that there will be delivered to the
Paying Agent (A) immediately available funds in an amount equal to such
deficiency prior to 2:30 p.m., New York City time, on the Purchase Date of
tendered Bonds accruing interest at Daily Rates (3:00 p.m., New York City
time, in the case of Flexible Rate Bonds), (B) immediately available funds in
an amount equal to such deficiency prior to 1:15 p.m., New York City time, on
the Purchase Date of tendered Bonds accruing interest at Weekly, Monthly,
Quarterly or Semiannual Rates, and (C) clearinghouse funds in an amount equal
to such deficiency prior to 12:15 p.m., New York City time, on the Purchase
Date of tendered Bonds accruing interest at Multiannual Rates (the obligation
of the Company to deliver such moneys not being conditioned on receipt by the
Company of the foregoing notice from the Trustee). All moneys received by
the Paying Agent as remarketing proceeds or from drawings by the Trustee on
the Letter of Credit and additional amounts, if any, received from the
Company, as the case may be, shall be deposited by the Paying Agent in the
appropriate account of the Bond Purchase Fund to be used solely for the
payment of the Purchase Price of tendered Bonds and shall not be commingled
with other funds held by the Paying Agent and shall not be invested.
(iii) Payments by the Paying Agent. At or before 4:30 p.m., New York
City time, on the Purchase Date for tendered Bonds and upon receipt by the
Paying Agent of 100% of the aggregate Purchase Price of the tendered Bonds,
the Paying Agent shall pay or receipt the Purchase Price of such Bonds to the
Registered Owners thereof. Such payments shall be made in immediately
available funds (or by wire transfer), unless the Bonds to be purchased accrue
interest at Multiannual Rates, in which event such payments shall be made in
clearinghouse funds. The Paying Agent shall make payment of the Purchase
Price by applying in order of priority (A) first, moneys paid to it by the
Remarketing Agent as proceeds of the remarketing of such Bonds by the
Remarketing Agent, (B) second, proceeds of a drawing on the Letter of Credit,
and (C) third, other moneys made available by the Company.
(iv) Registration and Delivery of Tendered or Purchased Bonds. On the
date of purchase, the Paying Agent shall register and deliver (or hold) or
cancel all Bonds purchased on any Purchase Date as follows: (A) Bonds
purchased or remarketed by the Remarketing Agent shall be registered and made
available to the Remarketing Agent by 2:15 p.m., New York City time, in
accordance with the instructions of the Remarketing Agent, (B) Bonds purchased
with proceeds of a drawing on the Letter of Credit shall be held as Bank Bonds
in accordance with subparagraph (v) below, and (C) Bonds purchased with
amounts provided by the Company shall be registered in the name of the Company
and shall be delivered to the Trustee to be held in trust by the Trustee on
behalf of the Company and shall not be released from such trust unless the <PAGE>
Trustee shall have received written instructions from the Company.
Notwithstanding anything herein to the contrary, so long as the Bonds are held
under the book-entry only system in accordance with Section 3.07 hereof, Bonds
will not be delivered as set forth above; rather, transfers of beneficial
ownership of the Bonds to the person indicated above will be effected on the
registration books of DTC pursuant to its rules and procedures.
(v) Bank Bonds. Bonds purchased with proceeds of a drawing on the
Letter of Credit pursuant to this Section shall be acquired for the benefit of
the Bank. The Bank shall be the beneficial owner of such Bonds, which shall
constitute "Bank Bonds," and shall be held by the Trustee as agent for the
Bank (and shall be shown as Bank Bonds on the Bond Register maintained by the
Trustee) unless and until (A) the Trustee has confirmation from the Bank to
the extent contemplated by the terms of the Letter of Credit that the Letter
of Credit has been reinstated with respect to such drawing and (B) the Bank
has notified the Trustee by telephone (thereafter promptly confirmed in
writing) that such Bonds have been conveyed pursuant to the Letter of Credit
Agreement to the Company and are no longer Bank Bonds. Pending reinstatement
of the Letter of Credit and conveyance of the Bank Bonds to the Company, the
Bank shall be entitled to receive all payments of principal of and interest on
Bank Bonds and such Bonds shall not be transferable or deliverable to any
party (including the Company) except the Bank. Notwithstanding the foregoing,
if the Letter of Credit is not reinstated in an amount equal to the unpaid
principal of the outstanding Bonds, including any Bank Bonds, but excluding
any Company Bonds, and, subject to the limitations set forth in the Letter of
Credit, accrued interest thereon, no Letter of Credit funds shall be used to
make the principal and interest payments on the Bank Bonds. The Remarketing
Agent shall, at the request of the Bank, continue to use its best efforts to
arrange for the sale of any Bank Bonds, subject to full reinstatement of the
Letter of Credit with respect to the drawings with which such Bonds were
purchased and the prior conveyance of the Bank Bonds to the Company, at a
price equal to the principal amount thereof plus accrued interest.
Notwithstanding anything to the contrary in this subsection, if and for
so long as the Bonds are to be registered in accordance with Section 3.07
hereof, the registration requirements under this subsection (v) shall be
deemed satisfied if Bank Bonds are (1) registered in the name of the DTC or
its nominee in accordance with Section 3.07 hereof, (2) credited on the books
of the DTC to the account of the Trustee (or its nominee) and (3) further
credited on the books of the Trustee (or such nominee) to the account of the
Bank (or its designee).
(vi) Resale of Bonds Purchased by the Company. In the event that any
Bonds are registered to the Company pursuant to subparagraph (iv) above, to
the extent requested by the Company, the Remarketing Agent shall offer for
sale and use its best efforts to sell such Bonds at a price equal to the
principal amount thereof plus accrued interest.
(vii) Delivery of Tendered Bonds; Effect of Failure to Surrender Bonds.
All Bonds to be purchased on any date shall be required to be delivered to the
principal office of the Paying Agent at or before 11:00 a.m., New York City
time, on the Purchase Date. If the Owner of any Bond (or portion thereof) in
certificated form that is subject to optional or mandatory purchase pursuant
to this Article fails to deliver such Bond to the Trustee for purchase on the
Purchase Date, and if the Paying Agent is in receipt of the Purchase Price
therefor, such Bond (or portion thereof) shall nevertheless be deemed
purchased on the Purchase Date thereof and ownership of such Bond (or portion
thereof) shall be transferred to the purchaser thereof as provided in
subsection (ii) above. Any Owner who fails to deliver such Bond for purchase
shall have no further rights thereunder except the right to receive the
Purchase Price thereof upon presentation and surrender of said Bond to the
Paying Agent. The Paying Agent shall, as to any tendered Bonds which have not
been delivered to it (1) promptly notify the Remarketing Agent of such
nondelivery, and (2) place or cause to be placed a stop transfer against an
appropriate amount of Bonds registered in the name of such Registered Owner(s)
on the bond registration books. The Paying Agent shall place or cause to be
placed such stop(s) commencing with the lowest serial number Bond registered
in the name of such Registered Owner(s) until stop transfers have been placed
against an appropriate amount of Bonds until the appropriate tendered Bonds
are delivered to the Paying Agent. Upon such delivery, the Paying Agent shall
make or cause the Bond Registrar to make any necessary adjustments to the bond
registration books. Notwithstanding anything herein to the contrary, so long
as the Bonds are held under the book-entry only system in accordance with
Section 3.07 hereof, Bonds will not be delivered as set forth above; rather,
transfers of beneficial ownership of the Bonds to the person indicated above
will be effected on the registration books of the DTC pursuant to its rules
and procedures.
Section 2.11. Mandatory Tenders for Purchase.
(a) Flexible. Each Bond accruing interest at a Flexible Rate shall be
subject to mandatory tender for purchase on each Interest Payment Date
applicable to such Bond, at a Purchase Price equal to 100% of the principal
amount thereof, plus interest accrued during such Flexible Rate Period. The
Registered Owner of any Bond accruing interest at a Flexible Rate shall
provide the Paying Agent with written payment instructions for the Purchase
Price of its Bond on or before tender thereof to the Paying Agent.
(b) Conversions between Interest Rate Periods. Bonds to be converted
from one Interest Rate Period to a different Interest Rate Period or from a
Multiannual Rate Period to a Multiannual Rate Period of different duration,
are subject to mandatory tender for purchase on the Conversion Date at a
Purchase Price equal to 100% of the principal amount thereof plus accrued
interest.
(c) Prior to Expiration or Replacement of Letter of Credit. The Bonds
are subject to mandatory tender for purchase (i) on the Interest Payment Date
next preceding the Expiration Date of the current Letter of Credit unless at
least 25 days (or such shorter period as shall be acceptable to the Trustee)
prior to such Interest Payment Date the Trustee has received notice that the
Letter of Credit has been extended or, if the Bonds bear interest at Daily,
Weekly, Flexible, Monthly, Quarterly or Semiannual Rates, replaced with an
Alternate Letter of Credit pursuant to Section 9.01, and (ii) on any Interest
Payment Date for Bonds bearing interest at a Multiannual Rate on which the
current Letter of Credit is replaced with an Alternate Letter of Credit
pursuant to Section 9.02, in each case at a Purchase Price equal to 100% of
the principal amount thereof plus accrued interest, plus the premium, if any,
which would be payable if the Bonds were redeemed on the mandatory tender
date.<PAGE>
The Paying Agent shall give notice of such mandatory tender for
purchase other than pursuant to Section 2.11(a) to the Registered Owners of
Bonds by first class mail, not less than 15 days before the mandatory tender
date. If the Bonds are in certificated form, such notice shall include
information with respect to required delivery of Bond certificates and
payment of the Purchase Price.
ARTICLE III
GENERAL PROVISIONS
Section 3.01. Authorization for Indenture; Indenture to Constitute
Contract. This Indenture is entered into pursuant to the Acts. In
consideration of the purchase of the Bonds by the Bond Owners, the provisions
of this Indenture shall be part of the contract of the Issuer with the Owners
of the Bonds, and shall be deemed to be and shall constitute a contract among
the Issuer, the Trustee and the Bond Owners. The provisions hereof are
covenants and agreements with such Bond Owners, which the Issuer hereby
determines to be necessary and desirable for the security and payment of the
Bonds.
Section 3.02. Payment of Principal, Premium, if any, and Interest. (a)
The Issuer covenants that it will duly and punctually pay or cause to be paid
the principal of, premium, if any, and interest on the Bonds issued under this
Indenture at the place, on the dates and in the manner provided herein and
therein according to the true intent and meaning thereof, but solely from the
payments, revenues and receipts specifically assigned herein for such purposes
as set forth in Section 4.03 of this Indenture.
(b) The Trustee is appointed as the paying agent for the Bonds. The
principal of, premium, if any, and interest on the Bonds shall be payable,
without exchange or collection charges, in lawful money of the United States
of America. During any period in which the Bonds are on deposit at DTC, in
accordance with Section 3.07 hereof, payment of principal of, together with
any premium and interest on, the Bonds shall be paid to DTC in immediately
available or next day funds on each payment date, and shall be payable as
directed in writing by DTC.
(c) The Company in issuing the Bonds may use "CUSIP" numbers (if then
generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Bonds or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed on the Bonds, and any such redemption shall not be affected by
an defect in or omission of such numbers.
(d) Notwithstanding any other provision of this Indenture or in the
forms of Bond, if the Bonds are on deposit at DTC in accordance with Section
3.07 hereof, presentation and surrender of the Bonds at the Principal Office
of the Trustee shall not be required other than at the maturity thereof.
<PAGE>
Section 3.03. Performance of Covenants; Issuer Warranties. The Issuer
covenants that it will faithfully comply with the stipulations and provisions
required to be performed by it and contained in this Indenture, or in any of
its proceedings pertaining hereto. The Issuer warrants that it is duly
authorized under the laws of the State, including particularly and without
limitation the Acts, to issue the Bonds authorized hereby and to execute this
Indenture and to assign its rights under or with respect to the Agreement and
all amounts payable thereunder or with respect thereto, which hereby are
assigned in the manner and to the extent herein set forth; that all actions on
its part for the issuance of the Bonds and the execution and delivery of this
Indenture have been duly and effectively taken; and that the Bonds are and
will be valid and binding limited obligations of the Issuer enforceable in
accordance with the terms thereof and hereof, except as enforcement thereof
may be limited by bankruptcy, insolvency, moratorium, reorganization and other
similar laws affecting the rights of creditors and by the application of
general principles of equity, if such remedies are pursued.
Section 3.04. Instruments of Further Assurance. The Issuer covenants
that it will do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, such indentures supplemental hereto and
such further acts, instruments and transfers as reasonably may be required for
the better and more effectual assignment to the Trustee of all payments,
revenues and other amounts payable under or with respect to the Agreement and
any other income and other moneys assigned hereby to the payment of the
principal of, premium, if any, and interest on the Bonds. The Issuer further
covenants that it will not create or suffer to be created any lien,
encumbrance or charge upon its interest in the revenues and other amounts
payable under or with respect to the Trust Estate, except the lien and charge
granted hereby.
Section 3.05. Recordation. The Trustee agrees that it will cooperate
with the Company, at the direction and expense of the Company, to record and
file any financing statements and all supplements thereto, and such other
instruments as may be directed by the Company from time to time to be recorded
or filed, in such manner and in such places as from time to time may be
directed by the Company.
Section 3.06. Registration of Bonds; Trustee Appointed Bond Registrar;
Persons Treated as Owners.
(a) Registration. The Trustee is hereby appointed as Bond Registrar of
the Bonds and as such shall maintain the Registration Books in the State of
Texas as provided by this Indenture. The Registration Books shall reflect the
information required to be provided by Bond Owners in connection with the
transfer of Bonds. At reasonable times and under reasonable regulations
established by the Trustee, the Registration Books may be inspected and copied
by the Company, the Issuer or the Owners (or designated representatives
thereof) of at least 25% in aggregate principal amount of Bonds then
Outstanding.
(b) Transfer and Exchange. The ownership of a Bond may be transferred
(in Authorized Denominations) only upon surrender thereof at the Principal
Office of the Trustee, accompanied by an assignment, duly executed by the
Owner of such Bond or his duly authorized attorney-in-fact, in such form as
shall be satisfactory to the Trustee, along with the address and social
security number or federal employer identification number of such transferee
(or, if registration is to be made in the name of multiple individuals, of all
such transferees) and, if such transferee is a trust, the name and address of
the trustee(s) and the date of the trust of the proposed transferee. Upon the
due presentation of any Bond for transfer and on request of the Trustee, the
Issuer shall execute in the name of the transferee, and the Trustee shall
authenticate and deliver, a new fully registered Bond or Bonds of the same
Mode, in any denomination permitted by this Indenture, in an aggregate
principal amount equal to the unmatured and unredeemed aggregate principal
amount of such transferred fully registered Bond, and bearing interest at the
same rate, and maturing on the same date, as such transferred Bond.
Bonds may be exchanged at the Principal Office of the Trustee or the
Paying Agent for other Bonds of the same Mode aggregating a like principal
amount. Bonds issued in exchange for other Bonds may be issued only in
Authorized Denominations of the same Mode. All Bonds surrendered to the
Trustee for exchange pursuant to this Section 3.06 shall be canceled by the
Trustee and shall not be redelivered. Neither the Issuer nor the Trustee
shall be required to make any such transfer or exchange of any Bond during the
10 Business Days immediately preceding the mailing of a notice of Bonds
selected for redemption or, with respect to a Bond, after such Bond or any
portion thereof has been selected for redemption.
(c) Charges. In all cases of the transfer of a Bond, the Trustee shall
register at the earliest practicable time, on the Registration Books, such
Bond in accordance with the provisions of this Indenture. The Issuer or the
Trustee may make a charge to the Bond Owner for every transfer or exchange of
a Bond sufficient to reimburse it for any tax or other governmental charge
required to be paid with respect to such transfer or exchange, and may demand
that such charge be paid before any new Bond is delivered.
(d) Ownership. As to any Bond, the person in whose name the ownership
of such Bond shall be registered on the Registration Books shall be deemed and
regarded as the absolute owner thereof for all purposes, and payment of or on
account of the principal of any such Bond and the premium, if any, and
interest thereon shall be made only to or upon the order of the registered
Owner thereof or his legal representative. All such payments shall be valid
and effectual to satisfy and discharge the liability upon such Bond, including
the premium, if any, and interest thereon, to the extent of the sum or sums so
paid.
Section 3.07. Book-Entry Only System. The Bonds shall be initially
issued in the form of a single fully registered Bond. Upon initial issuance,
the ownership of each such Bond shall be registered in the name of Cede & Co.,
as nominee of DTC, and, except as provided in Section 3.08 hereof, all of the
outstanding Bonds shall be registered in the name of Cede & Co., as nominee of
DTC.
With respect to Bonds registered in the name of Cede & Co., as nominee
of DTC, the Issuer and the Trustee shall have no responsibility or obligation
to any DTC Participant or to any person on behalf of whom such a DTC
Participant holds an interest in the Bonds, except as provided in this
Indenture. Without limiting the immediately preceding sentence, the Issuer
and the Trustee shall have no responsibility or obligation with respect to
(i) the accuracy of the records of DTC, Cede & Co. or any DTC Participant with
respect to any ownership interest in the Bonds, (ii) the delivery to any DTC
Participant or any other person, other than a Bondholder, as shown on the
Registration Books, of any notice with respect to the Bonds, including any
notice of redemption, or (iii) the payment to any DTC Participant or any other
person, other than a Bondholder, as shown in the Registration Books of any
amount with respect to principal of, premium, if any, or interest on, the
Bonds. Notwithstanding any other provision of this Indenture to the contrary,
the Issuer and the Trustee shall be entitled to treat and consider the person
in whose name each Bond is registered in the Registration Books as the
absolute owner of such Bond for the purpose of payment of principal, premium,
if any, and interest with respect to such Bond, for the purpose of giving
notices of redemption and other matters with respect to such Bond, for the
purpose of registering transfers with respect to such Bond, and for all other
purposes whatsoever. The Trustee shall pay all principal of, premium, if
any, and interest on the Bonds only to or upon the order of the respective
owners, as shown in the Registration Books as provided in this Indenture, or
their respective attorneys duly authorized in writing, and all such payments
shall be valid and effective to fully satisfy and discharge the Issuer's
obligations with respect to payment of principal of, premium, if any, and
interest on, the Bonds to the extent of the sum or sums so paid. No person
other than an owner, as shown in the Registration Books, shall receive a Bond
certificate evidencing the obligation of the Issuer to make payments or
principal, premium, if any, and interest, pursuant to this Indenture. Upon
delivery by DTC to the Trustee of written notice to the effect that DTC has
determined to substitute a new nominee in place of Cede & Co., and subject to
the provisions in this Indenture with respect to interest checks or drafts
being mailed to the registered owner at the close of business on the Record
Date, the words "Cede & Co." in this Indenture shall refer to such new nominee
of DTC.
Section 3.08. Successor Securities Depository; Transfers Outside
Book-Entry Only System. (a) In the event that the Issuer, at the direction of
the Company, determines that DTC is incapable of discharging its
responsibilities described herein and in the representation letter of the
Issuer to DTC, the Issuer shall (i) appoint a successor securities depository,
qualified to act as such under Section 17(a) of the Securities and 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 not longer be restricted to being registered in the
Registration Books in the name of Cede & Co., as nominee of DTC, but may be
registered in the name of the successor securities depository, or its nominee,
or in whatever name or names Bondholders transferring or exchanging Bonds
shall designate, in accordance with the provisions of this Indenture.
(b) In addition to (a) above, upon the written consent of 100% of the
beneficial owners of the Bonds, the Trustee shall withdraw the Bonds from DTC,
and authenticate and deliver Bonds fully registered to the assignees of DTC or
its nominee. If the request for such withdrawal is not the result of any
Issuer action or inaction, such withdrawal, authentication and delivery shall
be at the cost and expense (including costs of printing, preparing and
delivering such Bonds) of the persons requesting such withdrawal,
authentication and delivery.
Section 3.09. Payments to Cede & Co. Notwithstanding any other
provision of this Indenture to the contrary, so long as any Bond is registered
in the name of Cede & Co., as nominee of DTC, all payments with respect to
principal of, premium, if any, and interest on, such Bond and all notices with
respect to such Bond shall be made and given, respectively, in the manner
provided in the representation letter of the Issuer to DTC.
Section 3.10. Cancellation. All Bonds which have been paid at maturity
or redeemed prior to maturity shall not be reissued but shall be canceled by
the Trustee. All Bonds which are canceled by the Trustee shall be disposed of
by the Trustee, in accordance with its document retention policies, and a
certificate of cancellation shall be furnished promptly to the Issuer upon
request; provided, however, that if the Issuer shall so direct the Trustee,
the Trustee shall forward the canceled Bonds to the Issuer.
Section 3.11. Non-presentment of Bonds. If any check or draft
representing payment of interest, principal or premium on any Bond is returned
to the Trustee or is not presented for payment by the payee thereof, or any
Bond is not presented for payment of principal or premium at the maturity or
redemption date, if moneys and/or Government Obligations sufficient to pay
such interest, or such principal and premium, shall have been deposited with
and made available to the Trustee for the benefit of the Owner of the
applicable Bond, all liability of the Issuer to the Owner of such Bond for
such interest or such principal and premium shall forthwith cease, terminate
and be completely discharged, and thereupon it shall be the duty of the
Trustee to hold such moneys and/or Government Obligations, without investing
or reinvesting the same and without liability for interest thereon, for the
benefit of the Owner of such Bond, who shall thereafter be restricted
exclusively to such funds for any claim of whatever nature on such Owner's
part under this Indenture or on, or with respect to, such Bond, and such Bond
shall no longer be considered to be Outstanding. The Trustee's obligation to
hold such moneys and/or Government Obligations relating to the Bonds shall
continue for a period equal to two years following the date on which the
principal of all Bonds has become due, whether at maturity, or at the date
fixed for redemption or purchase thereof, or otherwise, at which time the
Trustee, upon payment of all fees and expenses due and owing to it and receipt
of indemnity satisfactory to it, shall surrender any remaining funds so held
to the Company. Following such surrender, any claim under this Indenture by
the Owner of any Bond of whatever nature shall be made only upon the Company.
The provisions of this Section 3.11 shall be subject to all applicable
escheat laws, including Title 6 of the Texas Property Code.
Section 3.12. Rights under Agreement. This Indenture, the Agreement
and the documents executed by the Company in connection therewith, duly
executed counterparts or originals of which have been filed with the Trustee,
set forth the covenants and the obligations of the Issuer, the Company and the
Trustee. Reference hereby is made to such documents for detailed statements
of the covenants and obligations set forth therein. The Issuer and the
Trustee agree that the Trustee, for and on behalf of the Bond Owners, in its
name or, to the extent permitted by law, in the name of the Issuer, may
enforce all rights of the Issuer (except for Unassigned Rights) and all
obligations of the Company under and pursuant to the Agreement and such
documents.
Section 3.13. Legal Existence of Issuer. The Issuer covenants that it
will at all times maintain its legal existence and will duly procure any
necessary renewals and extensions thereof; will use its best efforts to
maintain, preserve and renew all the rights, powers, privileges and franchises
owned by it; and will comply with all valid acts, rules, regulations and
orders of any legislative, executive, judicial or administrative body
applicable to the Issuer in connection with the Bonds.
Section 3.14. Diminution of, or Encumbrance on, Trust Estate. The
Issuer covenants not to sell, transfer, assign, pledge, release, encumber or
otherwise diminish or dispose of, directly or indirectly, by merger or
otherwise, or cause or suffer the same to occur, or create or allow to be
created or to exist any lien upon, all or any part of its interests in the
Trust Estate, except as expressly permitted by this Indenture.
Section 3.15. Books, Records and Accounts. The Issuer covenants to
cause the Trustee to keep, and the Trustee agrees to keep, proper books for
the registration of, and transfer of ownership of, each Bond, and proper
books, records and accounts in which complete and correct entries shall be
made of all transactions relating to the receipt, disbursement, investment,
allocation and application of the proceeds received from the sale of the
Bonds, the revenues received from the Agreement, the documents executed by the
Company in connection therewith, the funds and accounts created pursuant to
this Indenture, and all other moneys held by the Trustee hereunder. The
Trustee shall, during regular business hours and upon reasonable prior notice,
make such books, records and accounts available for inspection by the Issuer
and the Company.
Section 3.16. Temporary Bonds. Until definitive Bonds are ready for
delivery, there may be executed, and, upon written request of the Issuer, the
Trustee shall authenticate and deliver, in lieu of definitive Bonds, but
subject to the same limitations and conditions, temporary printed, engraved,
lithographed or typewritten registered Bonds (without coupons), in the minimum
denomination permitted for definitive Bonds or any integral multiple thereof,
substantially of the tenor hereinabove set forth for definitive Bonds, and
with such omissions, insertions and variations as may be appropriate. If
temporary Bonds shall be issued, the Issuer shall cause the definitive Bonds
to be prepared and to be executed and deposited with the Trustee, without
undue delay, and the Trustee, upon presentation to it at its Principal Office
of any temporary Bond, shall cancel the same and authenticate and deliver in
exchange therefor at the required location, without charge to the Owner
thereof, a definitive Bond or Bonds of an equal aggregate principal amount and
bearing interest at the same rate as the temporary Bond or Bonds so
surrendered. Until so exchanged the temporary Bonds shall be entitled in all
respects to the same benefit and security of this Indenture as the definitive
Bonds to be issued and authenticated hereunder.
<PAGE>
Section 3.17. Mutilated, Lost, Stolen or Destroyed Bonds. If any Bond
is mutilated, lost, stolen or destroyed, the Trustee, upon request, shall
authenticate a new Bond, dated as provided in Article II hereof, of the same
denomination and Mode and bearing interest at the same rate as the Bond
mutilated, lost, stolen or destroyed; provided, however, that, in the case of
any mutilated Bond, such mutilated Bond shall first be surrendered to the
Trustee, and, in the case of any lost, stolen or destroyed Bond, there shall
first be furnished to the Trustee evidence of such loss, theft or destruction
satisfactory to the Trustee, together with indemnity covering the Trustee, the
Company and the Issuer satisfactory to the Trustee. If any such Bond shall
have matured instead of issuing a duplicate Bond the Trustee may pay the same.
The Trustee and the Issuer may charge the Owner of such Bond with their
reasonable fees and expenses in connection with the issuance of any such
duplicate Bond.
Section 3.18. Notices to Rating Agencies. The Trustee shall provide
any Rating Agency with prompt written notice, following the effective date, of
(i) the appointment of any successor Trustee, (ii) any amendments to this
Indenture, the Agreement or the Letter of Credit, or (iii) the payment in
full of all of the Bonds. Each notice to the Rating Agencies hereunder shall
be directed to the respective addresses provided by the Rating Agencies.
Section 3.19. Arbitrage Covenants. The Issuer covenants and agrees,
for the benefit of the owners of the Bonds, that it will not knowingly take
any action or omit from taking nor instruct the Trustee to take or to omit
from taking any action, which would result in a loss of the exemption from
federal income taxation of interest on the Bonds by virtue of the Bonds being
considered "arbitrage bonds" within the meaning of section 148 of the Code.
ARTICLE IV
USE OF PROCEEDS; REVENUES AND FUNDS
Section 4.01. Application of Original Proceeds of Bonds. (a) The
proceeds of the sale of the Bonds, except accrued interest thereon, if any,
shall, on the Issue Date, be transferred by the Trustee as follows: (i)
$7,425,000 shall be transferred to the Series 1974A Trustee for deposit into
the bond fund created under the Series 1974A Indenture and (ii) $33,465,000
shall be transferred to the Series 1977 Trustee for deposit into the bond fund
created under the Series 1977 Indenture.
(b) The Company, prior to or simultaneously with the deposit by the
Issuer of the proceeds from the sale of the Bonds, exclusive of accrued
interest as described in subsection (a) above, will (i) deposit or cause to be
deposited into the bond fund relating to the Series 1974A Bonds an amount
which, together with the Bond proceeds described in (a)(i) above, will equal
the principal of and interest on the Series 1974A Bonds due on the date fixed
for their redemption and (ii) deposit or cause to be deposited into the bond
fund relating to the Series 1977 Bonds an amount which, together with the
proceeds described in (a)(ii) above, will equal the principal of and interest
on the Series 1977 Bonds due on the date fixed for their redemption..
<PAGE>
Section 4.02. Creation of Bond Fund. There is hereby created by the
Issuer and ordered established with the Trustee a trust fund to be designated
the "Guadalupe-Blanco River Authority Pollution Control Revenue Refunding
Bonds (Central Power and Light Company Project) Series 1995 Bond Fund" (the
"Bond Fund"), within which there is hereby established a Company Debt Service
Account and a Letter of Credit Debt Service Account.
Section 4.03. Payments into Bond Fund and Use of Moneys in Bond Fund.
The Trustee shall maintain the Bond Fund as follows:
(a) The Trustee shall deposit into the Company Debt Service Account
all Installment Payments and all other amounts received by the Trustee from
the Company or for the account of the Company pursuant to the Agreement and
all payments under and pursuant to the provisions of this Indenture or any of
the provisions of the Agreement, when accompanied by directions from the
person depositing such moneys that such moneys are to be paid into the Company
Debt Service Account of the Bond Fund.
(b) The Trustee shall deposit into the Letter of Credit Debt Service
Account all moneys received by the Trustee from drawings under the Letter of
Credit to pay principal of, premium, if any, and interest on the Bonds.
(c) Moneys in the Letter of Credit Debt Service Account shall be
applied to the payment when due of principal of, premium, if any, and interest
on the Bonds (other than Company Bonds and Bank Bonds) prior to the payment
of any moneys under subsection 4.03(d).
(d) Moneys in the Company Debt Service Account shall be applied to the
following in the order of priority indicated:
(i) if the Bank has not dishonored a draw under the Letter of
Credit, the reimbursement of the Bank when due for moneys drawn under
the Letter of Credit and deposited in the Letter of Credit Debt Service
Account for payment of principal of, premium, if any, on and interest on
the Bonds;
(ii) when insufficient moneys have been received under the Letter
of Credit for application pursuant to subsection 4.03(d)(iii), the
payment when due of principal of, premium, if any, on and interest on
the Bonds, other than Company Bonds or Bank Bonds;
(iii) the payment when due of principal of, premium, if any, on
and interest on Bank Bonds; and
(iv) the payment when due of principal of, premium, if any, on
and interest on Company Bonds, provided that if the Trustee shall have
received written notice from the Bank that any amounts are due and owing
to the Bank under the Letter of Credit Agreement, such payments shall be
made to the Bank for the account of the Company.
(e) By 11:00 a.m., New York City time, on each Interest Payment Date,
each redemption date and the Maturity Date of the Bonds, the Trustee shall
present the requisite draft and certificate for a drawing on the Letter of
Credit so as to comply with the provisions of the Letter of Credit for payment
<PAGE>
to be made in sufficient time for the Trustee to receive the proceeds of such
drawing at or before 1:00 p.m. on such Interest Payment Date, redemption date
or Maturity Date, as the case may be, to pay principal of, premium, if any,
and interest on the Bonds due on such date. In addition, the Trustee shall
draw on the Letter of Credit pursuant to its terms in accordance with and in
order to satisfy the requirements of Section 6.02. Promptly upon presenting
the requisite documents for a drawing on the Letter of Credit, the Trustee
shall give notice to the Company by Electronic Notice, of the amount so drawn.
The Trustee shall promptly notify the Company by Electronic Notice if the Bank
fails to transfer funds in accordance with the Letter of Credit upon the
presentment of the requisite draft and certificate. In calculating the amount
to be drawn on the Letter of Credit for the payment of principal of, premium,
if any, and interest on the Bonds, whether on an Interest Payment Date, at
maturity or upon redemption or acceleration, the Trustee shall not take into
account the potential receipt of funds from the Company under the Agreement on
such Interest Payment Date, or the existence of any other moneys in the Bond
Fund, but shall draw on the Letter of Credit for the full amount of principal
of, premium, if any, and interest coming due on the Bonds.
Section 4.04. Creation and Use of Bond Purchase Fund. There is hereby
created with the Paying Agent a segregated trust fund to be designated the
"Bond Purchase Fund". The Bond Purchase Fund shall consist of the sub-
accounts to be designated respectively the "Remarketing Account", the "Letter
of Credit Purchase Account" and the "Company Purchase Account".
The Paying Agent shall deposit or cause to be deposited into the
Remarketing Account, when and as received, all moneys delivered to the Paying
Agent as and for the Purchase Price of remarketed Bonds by or on behalf of the
Remarketing Agent. The Paying Agent shall disburse moneys from the
Remarketing Account to pay the Purchase Price of Bonds properly tendered for
purchase upon surrender of such Bonds.
The Trustee shall deposit or cause to be deposited into the Letter of
Credit Purchase Account, when and as received, all proceeds from a drawing on
the Letter of Credit pursuant to Section 2.10(b)(ii). The Paying Agent shall
disburse moneys from the Letter of Credit Purchase Account to pay the Purchase
Price of Bonds properly tendered for purchase upon surrender of such Bonds;
provided that such proceeds shall not be applied to purchase Bank Bonds or
Company Bonds.
The Trustee or Paying Agent, as the case may be, shall deposit or cause
to be deposited into the Company Purchase Account, when and as received, all
moneys delivered to the Trustee or the Paying Agent, as the case may be, by or
for the account of the Company pursuant to Section 5.10 of the Agreement. The
Paying Agent shall disburse moneys from the Company Purchase Account to pay
the Purchase Price of Bonds properly tendered for purchase by or on behalf of
the Company upon surrender of such Bonds or to reimburse the Bank for drawing
under the Letter of Credit for such purpose.
The funds held by the Paying Agent in the Bond Purchase Fund shall not
constitute part of the Trust Estate which is subject to the lien of this
Indenture. The moneys in the Bond Purchase Fund shall be used solely to pay
the Purchase Price of Bonds as aforesaid (or to reimburse the Bank for
drawings under the Letter of Credit for such purpose) and may not be used for
any other purposes. It shall be the duty of the Paying Agent to hold the
moneys in the Bond Purchase Fund, without liability for interest thereon, for
the benefit of the Registered Owners of Bonds which have been properly
tendered for purchase or deemed tendered on the Purchase Date, and if
sufficient funds to pay the Purchase Price for such tendered Bonds shall be
held by the Paying Agent in the Bond Purchase Fund for the benefit of the
Registered Owners thereof, each such Registered Owner shall thereafter be
restricted exclusively to the Bond Purchase Fund for any claim of whatever
nature on such Registered Owner's part under this Indenture or on, or with
respect to, such tendered Bond. Funds held in the Bond Purchase Fund for the
benefit of Registered Owners of untendered Bonds shall be held in trust and
not invested. The provisions of Section 3.11 hereof shall govern any funds
held in the Bond Purchase Fund for such Registered Owners of the Bonds which
remain unclaimed for a period of two years after the applicable Purchase Date.
Section 4.05. Investment of Moneys. Subject to the restrictions
hereinafter set forth in this Section 4.05 and in Section 4.08, any moneys
held in the Bond Fund shall be invested and reinvested by the Trustee upon the
written instructions of the Company solely in Permitted Investments, maturing
no later than the date on which it is estimated by the Company that such
moneys will be required to be paid out hereunder. All investment instructions
hereunder shall be provided to the Trustee no later than one Business Day
prior to the making of the investment directed therein. The Trustee may make
any and all such investments through its own investment department and may
trade with itself in the purchase and sale of securities for such investment
when authorized to do so by the Company. The Trustee shall be entitled to
rely on all written investment instructions provided by the Company hereunder.
The Trustee shall not be responsible or liable for the performance of any such
investments or for keeping the moneys held by it hereunder fully invested at
all times. Any moneys for which the Trustee has received no investment
instructions shall be automatically reinvested into The Bank of New York
Deposit Reserve or other permitted money market fund as may be authorized by
the Company. Any obligations acquired by the Trustee as a result of such
investment or reinvestment shall be held by or under the control of the
Trustee (except for such investments held in book entry form) and shall be
deemed to constitute a part of the Fund from which the moneys used for its
purchase were taken. All investment income shall be retained in the Fund to
which the investment is credited from which such income is derived. Although
the Issuer recognizes that it may obtain a broker confirmation or written
statement containing comparable information at no additional cost, the Issuer
hereby agrees that confirmations of investments made by the Trustee pursuant
to this Section 4.05 are not required to be issued by the Trustee for each
month in which a monthly statement is rendered. No such statement need be
rendered pursuant to the provisions hereof if no activity occurred in the fund
or account during such preceding month. All funds held under this Indenture
shall be secured to the fullest extent required by Texas law. In the event of
a loss on the sale of such investments (after giving effect to any interest or
other income thereon except to the extent theretofore paid to the Company),
the Trustee shall have no responsibility in respect of such loss except that
the Trustee shall notify the Company of the amount of such loss and the
Company shall promptly pay such amount to the Trustee to be credited as part
of the moneys originally invested.
<PAGE>
Section 4.06. Moneys To Be Held in Trust. All moneys required to be
deposited with or paid to the Trustee for the account of any Fund under any
provisions of this Indenture shall be held by the Trustee in trust, and,
except for (i) moneys in the Bond Purchase Fund, and (ii) moneys deposited
with or paid to the Trustee for the redemption of Bonds, notice of the
redemption for which has been duly given, shall, while held by the Trustee,
constitute part of the Trust Estate and be subject to the security interest
created hereby.
Section 4.07. Repayment to Company from Indenture Funds. Subject to
Section 3.11 hereof, any amounts remaining in any Fund created under this
Indenture, after payment in full of the Bonds in accordance with Article V
hereof, the reasonable fees, charges and expenses of the Issuer, the Trustee
and any co-trustee appointed hereunder, and all other amounts required to be
paid hereunder or under the Agreement, shall be paid, upon the expiration of,
or upon the sooner termination of, the terms of this Indenture, to the
Company.
Section 4.08. Custody of Funds and Accounts. All Funds created
pursuant to this Indenture shall be in the custody of the Trustee but held in
trust, in the name of the Issuer, for the benefit of the Bondholders (other
than amounts held in the Bond Purchase Fund).
Section 4.09. Exemption from Federal Income Taxation. The Issuer will
not knowingly take any action, or omit to take any action, which action or
omission will adversely affect the exclusion from gross income for federal
income tax purposes of interest on the Bonds, and in the event of such action
or omission will promptly, upon receiving knowledge thereof, take all lawful
actions, based on advice of counsel and at the expense of the Company, as may
rescind or otherwise negate such action or omission.
Section 4.10. Covenants Regarding Rebate.
(a) A special Rebate Fund is hereby established by the Issuer. The
Rebate Fund shall be for the sole benefit of the United States of America and
shall not be subject to the claim of any other person, including without
limitation the bondholders. The Rebate Fund is established for the purpose of
complying with section 148 of the Code and the Treasury Regulations
promulgated pursuant thereto. The money deposited in the Rebate Fund,
together with all investments thereof and investment income therefrom, shall
be held in trust and applied solely as provided in this section. The Rebate
Fund is not a portion of the Trust Estate and is not subject to the lien of
this Indenture. Notwithstanding the foregoing, the Trustee with respect to
the Rebate Fund is afforded all the rights, protections and immunities
otherwise accorded to it hereunder.
(b) Within ten days after the close of each fifth anniversary date of
the issuance of the Bonds, the Trustee shall receive from the Company a
computation in the form of a certificate of an authorized officer of the
Company of the amount of "Excess Earnings," if any, for the period beginning
on the date of delivery of the Bonds and ending at the close of such "Bond
Year" and the Company shall pay to the Trustee for deposit into the Rebate
Fund an amount equal to the difference, if any, between the amount then in the
Rebate Fund and the Excess Earnings so computed. The term "Bond Year" means
with respect to the Bonds each one-year period ending on the anniversary of
the date of delivery of the Bonds or such other period as may be elected by
the Issuer in accordance with the Regulations and notice of which election has
been given to the Trustee. If, at the close of any Bond Year, the amount in
the Rebate Fund exceeds the amount that would be required to be paid to the
United States of America under paragraph (d) below if the Bonds had been paid
in full, such excess may be transferred from the Rebate Fund and paid to the
Company at the written instructions of the Company, and the Company shall use
for such purposes for which, or to be redeposited to such fund from which,
such amounts were originally derived.
(c) In general, "Excess Earnings" for any period of time means the sum
of
(i) the excess of --
(A) the aggregate amount earned during such period of time
on all "Nonpurpose Investments" (including gains on the
disposition of such Obligations) in which "Gross Proceeds" of the
issue are invested (other than amounts attributable to an excess
described in this subparagraph (c)(i), over
(B) the amount that would have been earned during such
period of time if the "Yield" on such Nonpurpose Investments
(other than amounts attributable to an excess described in this
subparagraph (c)(i)) had been equal to the yield on the issue,
plus
(ii) any income during such period of time attributable to the
excess described in subparagraph (c)(i) above.
The term Nonpurpose Investments, Gross Proceeds, and Yield shall have
the meanings given to such terms in section 148 of the Code and the
Regulations promulgated pursuant to such section.
(d) The Trustee shall pay to the United States of American at least
once every five years, to the extent that funds are available in the Rebate
Fund or otherwise provided by the Company, an amount that ensures that at
least 90 percent of the Excess Earnings from the date of delivery of the Bonds
to the close of the period for which the payment is being made will have been
paid. The Trustee shall pay to the United States of America not later than 60
days after the Bonds have been paid in full, to the extent that funds are
available in the Rebate Fund or otherwise provided by the Company, 100 percent
of the amount then required to be paid under section 148(f) of the Code as a
result of Excess Earnings.
(e) The amounts to be computed, paid, deposited or disbursed under
this section shall be determined by the Company acting on behalf of the Issuer
within ten days after each fifth anniversary of the issuance of the Bonds
after the date of issuance of each issue or series of Bonds. By such date,
the Company shall also notify, in writing, the Trustee and the Issuer of the
determinations the 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, the 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) The Trustee shall maintain a record of the periodic determinations
by the 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. Such records shall state each such
anniversary date and summarize the manner in which the Excess Earnings, if
any, was determined.
(g) If the Trustee shall declare the principal of the Bonds and the
interest accrued thereon immediately due and payable as the result of an Event
of Default specified in the Indenture, or if the Bonds are optionally or
mandatorily prepaid or redeemed prior to maturity as a whole in accordance
with their terms, any amount remaining in any of the funds shall be
transferred to the Rebate Fund at the written instructions of the Company, to
the extent that the amount therein is less than the Excess Earnings computed
by the Company as of the date of such acceleration or redemption, and the
balance of such amount shall be used immediately by the Trustee for the
purpose of paying principal of, redemption premium, if any, and interest on
the Bonds when due. In furtherance of such intention, the Issuer hereby
authorizes and directs its Chairman to execute any documents, certificates or
reports required by the Code and to make such elections, on behalf of the
Issuer, which may be permitted by the Code as are consistent with the purpose
for the issuance of the Bonds.
(h) The requirements contained in this Section relating to the
computation and payment of Excess Earnings shall not be applicable if all
Gross Proceeds of the Bonds are expended within 180 days of the Issue Date.
ARTICLE V
DISCHARGE OF INDENTURE
Section 5.01. Discharge. If the Issuer shall pay or cause to be paid,
or there shall be otherwise paid, or provision shall be made to or for the
Owners of all Bonds for the payment of, the principal, premium, if any, and
interest due or to become due on the Bonds at the times and in the manner
stipulated therein, and if the Issuer shall not then be in default under any
of the other covenants and promises in such Bonds and this Indenture to be
kept, performed and observed by it or on its part, and if the Issuer shall pay
or cause to be paid to the Trustee all sums of money due or to become due
according to the provisions hereof or of the Bonds and of the Agreement, then,
except for the rights, protections and immunities of the Trustee under Article
VII hereof, these presents and the interest in the Trust Estate and rights
hereby granted shall cease, determine and be void, and the Trustee shall take
such actions as may be necessary to evidence the cancellation and discharge of
the lien of this Indenture. Any Bond, other than a Bond in the Daily or the
Weekly Mode, shall be deemed to be paid within the meaning of this Article V
and for all purposes of this Indenture when (i) payment of the principal of,
and applicable premium, if any, on such Bond plus the interest thereon to the
due date thereof (whether such due date be by reason of maturity or upon
redemption as provided in this Indenture or otherwise), or, in the case of a
Bond in the Flexible Mode, the Monthly Mode, the Quarterly Mode, the
Semiannual Mode or the Multiannual Mode, to the date next following on which
such Bond is required to be, or may at the option of the Owner be, tendered
for purchase, shall have been provided to the Trustee by irrevocably
depositing with the Trustee, in trust, and the Trustee shall have irrevocably
set aside exclusively for such payment, any combination of (1) moneys provided
by the Company sufficient to make such payment and/or (2) Government
Obligations (acquired with moneys provided by the Company) not subject to
redemption or prepayment and maturing as to principal and interest in such
amounts and at such times as will, in the opinion of an independent certified
public accountant delivered to the Trustee, provide sufficient moneys to make
such payment without reinvestment (and there shall be no reinvestment); (ii)
all necessary and proper fees, compensation and expenses of the Trustee
pertaining to the Bonds shall have been paid or the payment thereof provided
for to the satisfaction of the Trustee; (iii) if any Bonds are to be redeemed
on any date prior to their maturity, the Trustee shall have received in form
satisfactory to it irrevocable instructions from an Authorized Company
Representative to redeem such Bonds on such date and either evidence that all
redemption notices required by this Indenture have been given or irrevocable
power authorizing the Trustee to give such redemption notices has been given;
and (iv) there shall be delivered to the Trustee and the Issuer an opinion of
Bond Counsel to the effect that the deposit of such moneys will not adversely
affect the excludability from gross income for purposes of federal income
taxation of interest on any of the Bonds.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.01. Events of Default. Each of the following events is
hereby defined as, and declared to constitute an "Event of Default" under this
Indenture:
(i) default in the due and punctual payment of the principal of
or premium, if any, on any Outstanding Bond, as the same shall become
due and payable, whether at the stated maturity thereof, upon any
proceedings for redemption, or upon the maturity thereof by declaration
of acceleration;
(ii) default in the due and punctual payment of the interest on
any Outstanding Bond, as the same shall become due and payable, and (i)
if such Bond bears interest at a Flexible, Daily, Weekly, Monthly,
Quarterly or Semiannual Rate, the continuation of such default for a
period of one Business Day or more or (ii) if such Bond bears interest
at a Multiannual or Fixed Rate, the continuation of such failure for a
period of sixty days or more;
(iii) default in the due and punctual payment of the Purchase
Price of any Outstanding Bond, as the same shall become due and payable;
<PAGE>
(iv) default by the Issuer in its performance or observance of
any of the other covenants, agreements or conditions contained in the
Indenture, and the continuation thereof without corrective action for
the period after notice specified in Section 6.12 hereof ;
(v) an Event of Default (as defined in the Agreement) has
occurred and is continuing under the Agreement; or
(vi) receipt by the Trustee of a written notice from the Bank
stating that an Event of Default has occurred under the Letter of Credit
Agreement and directing the Trustee to declare the principal of the
outstanding Bonds immediately due and payable.
Section 6.02. Acceleration. If any Event of Default occurs and is
continuing, the Trustee (with the written consent of the Bank) may, and upon
request of the Bank or the owners of at least 25% in principal amount of all
Bonds then Outstanding, or with respect to an Event of Default under
subsection 6.01(vi) hereof, shall, by notice in writing to the Issuer, the
Bank and the Company, declare the principal of all Bonds then Outstanding to
be immediately due and payable; and upon such declaration the said principal,
together with interest accrued thereon to the date of acceleration, shall
become due and payable immediately at the place of payment provided therein,
anything in the Indenture or in the Bonds to the contrary notwithstanding.
Upon the occurrence of any acceleration hereunder, the Trustee shall
immediately declare all payments under the Agreement pursuant to Section 5.04
thereof to be due and payable immediately.
Immediately after any acceleration hereunder, the Trustee, to the extent
it has not already done so, shall notify in writing the Issuer, the Company,
the Paying Agent, the Bank and the Remarketing Agent of the occurrence of such
acceleration. Upon the occurrence of any acceleration hereunder, the Trustee
shall notify by first class mail, postage prepaid, the owners of all Bonds
Outstanding of the occurrence of such acceleration.
Upon any such declaration hereunder, the Trustee shall immediately, on
the date of such declaration, draw upon the Letter of Credit to the full
extent permitted by the terms thereof (such drawing to include amounts in
respect of interest accruing on the Bonds through the date payment of such
drawing by the Bank is due). Upon receipt by the Trustee of payment of the
full amount drawn on the Letter of Credit and provided sufficient moneys are
available in the Bond Fund to pay pursuant to Section 4.03 all sums due on the
Bonds, (i) interest on the Bonds shall cease to accrue and (ii) the Bank shall
succeed to and be subrogated to the right, title and interest of the Trustee
and the Registered Owners in and to the Agreement, all funds held under this
Indenture (except any funds held in the Bond Fund or the Bond Purchase Fund
which are identified for the payment of the Bonds or of the Purchase Price of
undelivered Bonds) and any other security held for the payment of the Bonds,
all of which, upon payment of any fees and expenses due and payable to the
Trustee pursuant to the Agreement or this Indenture, shall be assigned by the
Trustee to the Bank.
<PAGE>
If, after the principal of the Bonds has become due and payable, all
arrears of interest upon the Bonds are paid by the Issuer, and the Issuer also
performs all other things in respect to which it may have been in default
hereunder and pays the reasonable charges of the Trustee and the Bondholders,
including reasonable and necessary attorneys' fees, then, and in every such
case, the owners of a majority in principal amount of the Bonds then
Outstanding, by notice to the Issuer and to the Trustee, may annul such
acceleration and its consequences, and such annulment shall be binding upon
the Trustee and upon all owners of Bonds issued hereunder; provided that there
shall be no annulment of any declaration resulting from (A) any Event of
Default specified in subsection 6.01(vi) without the prior written consent of
the Bank or (B) any Event of Default which has resulted in a drawing under the
Letter of Credit unless the Trustee has received written notice from the Bank
that the Letter of Credit has been fully reinstated or an Alternate Letter of
Credit has been provided pursuant to Article X hereof. No such annulment
shall extend to or affect any subsequent default or impair any right or remedy
consequent thereon. The Trustee shall forward a copy of any notice from
Bondholders received by it pursuant to this paragraph to the Company. Immedi-
ately upon such annulment, the Trustee shall cancel, by notice to the Company,
any demand for prepayment of all amounts due under the Agreement made by the
Trustee pursuant to this Section. The Trustee shall promptly give written
notice of such annulment to the Issuer, the Bank, the Company, the Paying
Agent, the Remarketing Agent, and, if notice of the acceleration of the Bonds
shall have been given to the Bondholders, shall give notice thereof to the
Bondholders.
Section 6.03. Other Remedies; Rights of Bond Owners. Upon the
occurrence of any Event of Default, the Trustee may pursue any available
remedy by suit at law or in equity to enforce the payment of the principal of,
premium, if any, and interest on the Bonds then outstanding, and the
performance by the Issuer of its obligations hereunder, including, without
limitation, the following:
(i) by mandamus, or other suit, action or proceeding at law or
in equity, enforce all rights of the Bondholders and require the Issuer
to carry out its obligations under this Indenture and the Acts;
(ii) bring suit upon the Bonds;
(iii) by action, suit or proceeding at law or in equity, require
the Issuer to account as if it were the trustee of an express trust for
the Bondholders; and
(iv) by action, suit or proceeding at law or in equity, enjoin
any acts or things which may be unlawful or in violation of the rights
of the Bondholders.
Any judgment against the Issuer shall be enforceable only against the Trust
Estate. There shall not be authorized any deficiency judgment against any
assets of, or the general credit of, the Issuer. Subject to the prior rights
of the Bond Owners, the Issuer shall be entitled to reimbursement for any of
its expenses in connection with such proceeding from any available funds in
the Trust Estate.
<PAGE>
If any Event of Default shall have occurred, and if requested to do so
in writing by the Owners of not less than 25% in aggregate principal amount of
the Bonds then Outstanding, and if indemnified as provided in Section 7.01(l)
hereof, the Trustee shall be obligated to exercise one or more of the rights
and powers conferred by this Section 6.03, or by Section 6.02 hereof as the
Trustee, being advised by counsel, shall deem most expedient in the interests
of the Bond Owners, unless the Trustee shall determine, upon the advice of
counsel, that to take such action will prejudice the rights of the majority of
the Bond Owners.
No remedy conferred upon or reserved to the Trustee or the Bond Owners
by the terms of this Indenture is intended to be exclusive of any other
remedy, but each and every such remedy shall be cumulative and in addition to
any other remedy given to the Trustee or the Bond Owners hereunder or now or
hereafter existing at law or in equity. No delay or omission to exercise any
right or power accruing upon any default or Event of Default shall impair any
such right or power, or shall be construed to be a waiver of any such default
or Event of Default or an acquiescence therein; and every such right and power
may be exercised from time to time as often as may be deemed expedient. No
waiver of any default or Event of Default hereunder, whether by the Trustee or
the Bond Owners, shall extend to or affect any subsequent default or Event of
Default, or impair any right or remedy consequent thereon.
Section 6.04. Right of Bond Owners to Direct Proceedings. Anything in
this Indenture to the contrary notwithstanding, upon the occurrence of an
Event of Default, the Owners of a majority in aggregate principal amount of
the Bonds then Outstanding shall have the right, at any time, by an instrument
or instruments in writing executed and delivered to the Trustee, to direct the
method and place of conducting all proceedings to be taken in connection with
the enforcement of the terms and conditions of this Indenture, or for the
appointment of a receiver or for any other proceedings hereunder, other than
for the payment of the principal of, premium, if any, and interest on the
Bonds or any part thereof; provided, however, that direction shall not be
otherwise than in accordance with the provisions of law and this Indenture and
shall be accompanied by an indemnity as provided in Section 7.01(1) hereof.
Section 6.05. Appointment of Receiver. Upon the occurrence of an Event
of Default, and upon the filing of a suit or other commencement of judicial
proceedings to enforce the rights of the Trustee and the Bond Owners under
this Indenture, the Trustee shall be entitled, as a matter of right, to
request the appointment of a receiver or receivers of the Trust Estate and the
revenues, issues, earnings, income, products and profits thereof, pending such
proceedings, with such powers as the court making such appointment shall
confer.
Section 6.06. Waiver of Certain Laws. Upon the occurrence of an Event
of Default, to the extent that such rights may then lawfully be waived,
neither the Issuer, nor anyone claiming through or under it, shall claim or
seek to take advantage of any appraisement, valuation, stay, extension or
redemption laws now or hereafter in force in order to prevent or hinder the
enforcement of this Indenture. The Issuer, for itself and all who May claim
through or under it, hereby waives, to the extent that it lawfully May do so,
the benefit of all such laws.
<PAGE>
Section 6.07. Application of Moneys. All moneys relating to the Bonds
received by the Trustee pursuant to any right given or action taken under the
provisions of this Article VI shall (after payment of the costs and expenses
of the proceedings resulting in the collection of such moneys and of the fees
and expenses, liabilities and advances of the Issuer and the Trustee, it being
understood that such payment shall not be made from any moneys already held
for the benefit of the Bondholders) be deposited in the Bond Fund, and all
moneys in the Bond Fund shall be applied as follows:
(i) Unless the principal of all the Bonds Outstanding shall have
become or been declared due and payable, all such moneys shall be
applied:
First: to the payment of the fees, counsel fees, and advances and
expenses of the Trustee and of the receiver, if any, and all costs
and disbursements allowed by the court if there be any court
action, and all other Trustee expenses accrued hereunder.
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 highest rate borne by any
Outstanding Bonds, such payments to be made ratably to the persons
or parties entitled thereto, without discrimination or preference;
or
(b) in case the principal of any of the Bonds shall have
become due, by declaration or otherwise, first to the payment of
the interest in default, in the order of the maturity of the
installments of such interest, and thereafter to the payment of
the principal of, and premium, if any, on all Bonds then due with
interest, so far as the same may be legally enforceable, on the
overdue interest and principal (including premium) at the highest
rate borne by any Outstanding Bonds, such payments, respectively,
to be made ratably to the persons or parties entitled thereto,
without discrimination or preference.
Third: to the payment of the Issuer's counsel fees and other
expenses, if any.
Fourth: to the payment of the surplus, if any, to whomever is
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
(ii) If the principal of all the Outstanding Bonds shall have
become due or shall have been declared due and payable, all such moneys
shall be applied first to the payment of any amounts owed to the Trustee
and second to the payment of the principal, premium, if any, and
interest then due on such Bonds, without preference or priority of
principal and premium over interest or of interest over principal and
premium, or of any installment or interest over any other installment of
interest, or of any Bond over any other Bond, ratably, according to the
amounts due respectively for principal, premium, if any, and interest,
to the persons entitled thereto, without any discrimination or
privilege.
(iii) If the principal of all the Outstanding Bonds shall have
been declared due and payable by acceleration, and if such declaration
shall thereafter have been rescinded and annulled under the provisions
of this Article VI, then the moneys shall be applied in accordance with
the provisions of subsection (i) above; provided, however, that in the
event that the principal of all the Bonds shall later become due or be
declared due and payable by acceleration, the moneys shall be applied in
accordance with the provisions of subsection (ii) of this Section 6.07.
Whenever moneys are to be applied pursuant to the provisions of this
Section 6.07, such moneys shall be applied at such times, and from time to
time, as the Trustee shall determine is appropriate upon due consideration of
the amount of such moneys available for application and the likelihood of
additional moneys becoming available for such application in the future.
Whenever the Trustee shall apply such funds it shall fix the date of
application, which shall be an Interest Payment Date unless it shall deem, in
the reasonable exercise of its discretion, another date more suitable. The
Trustee shall give such notice as it may deem appropriate of the deposit with
it of any such moneys and of the fixing of any such date.
Section 6.08. Remedies Vested in Trustee. All rights of action
(including the right to file proofs of claim) under this Indenture and the
Bonds may be enforced by the Trustee without the possession of any Bond or the
production thereof in any trial or proceedings related thereto, and any such
suit or proceeding instituted by the Trustee shall be brought in its name as
Trustee without the necessity of joining as plaintiff or defendant the Owner
of any Bond.
Section 6.09. Rights and Remedies of Bond Owners. No Owner of any Bond
shall have any right to institute any suit, action or proceeding in equity or
at law for the enforcement of this Indenture or for the execution of any trust
hereof or for the appointment of a receiver or any other remedy hereunder,
unless:
(i) an Event of Default has occurred of which the Trustee has
been notified as provided in Section 7.01(h) hereof, or of which by said
Section 7.01(h) the Trustee is deemed to have notice;
(ii) the Owners of not less than 25% in aggregate principal
amount of the Bonds then Outstanding shall have made written request to
the Trustee and shall have offered it reasonable opportunity either to
proceed to exercise the powers hereinabove granted or to institute such
action, suit or proceeding in the name or names of such Owners, and
shall have offered to the Trustee indemnity as provided in Section
7.01(1) hereof; and
(iii) the Trustee shall thereafter fail or refuse to exercise the
powers hereinbefore granted, or to institute such action, suit or
proceeding in its own name within 60 days;
<PAGE>
and such notification, request and offer of indemnity are hereby declared in
every case, at the option of the Trustee, to be conditions precedent to the
execution of the powers and trusts of this Indenture, and to any action or
cause of action for the enforcement of this Indenture, or for the appointment
of a receiver or for any other remedy hereunder. No one or more Owners of the
Bonds shall have any right in any manner whatsoever to affect, disturb or
prejudice the lien of this Indenture by such Owners' action, and all
proceedings at law or in equity shall be instituted, had and maintained in the
manner herein provided and (except as herein otherwise provided) for the equal
and ratable benefit of the Owners of all Bonds then Outstanding. Nothing in
this Indenture, however, shall affect or impair the right of any Owner to
enforce the payment of the principal of, premium, if any, and interest on any
Bond owned by such Owner at and after the maturity thereof, or the obligation
of the Issuer to pay the principal of, premium, if any, and interest on any
Bond to the owner thereof at the time and place, from the source, and in the
manner expressed in such Bond. Nothing contained herein shall be construed as
permitting or affording any Owner a right or cause of action against the
Trustee or in respect of the Bonds where a default has been waived under
Section 6.11 hereof or cured under Section 6.12 hereof.
Section 6.10. Termination of Proceedings. In case the Trustee shall
have proceeded to enforce any right under this Indenture by the appointment of
a receiver or otherwise, and such proceedings shall have been discontinued or
abandoned for any reason, or shall have been determined adversely to the
Trustee, then and in every such case the Issuer, the Trustee and the Owners
shall be restored to their former positions and rights hereunder, and all
rights, remedies and powers of the Trustee shall continue as if no such
proceedings had been taken.
Section 6.11. Waivers of Events of Default. The Trustee may waive any
default or Event of Default hereunder and its consequences and shall do so
upon the written request of the Owners of a majority in aggregate principal
amount of the Bonds then Outstanding, provided, however, that the Trustee may
not waive an Event of Default described in subparagraphs (i), (ii) or (iii) of
Section 6.01 hereof without the written consent of the Owners of all of the
Bonds or in subparagraph (vi) of Section 6.01 without the written consent of
the Bank.
Section 6.12. Notice of Default; Opportunity to Cure Defaults. (a)
Anything herein to the contrary notwithstanding, no default under Section
6.01(iv) hereof or under Section 6.01(d) of the Agreement shall constitute an
Event of Default hereunder until actual notice of such default by registered
or certified mail shall be given to the Issuer and the Company by the Trustee
or the Owners of not less than 25% in aggregate principal amount of all Bonds
Outstanding, and the Issuer and the Company shall have had 90 days after
receipt of such notice, at their option, to correct said default or to cause
said default to be corrected, and shall not have corrected said default or
caused said default to be corrected within the applicable period; provided,
however, that if said default be such that it can be corrected, but cannot be
corrected within the applicable period, it shall not constitute an Event of
Default if corrective action is instituted by the Issuer and the Company, or
either of them, within the applicable period and diligently pursued until the
default is corrected.
<PAGE>
(b) Upon the occurrence of an Event of Default or upon the giving of
written notice to the Issuer and the Company of a default, the Trustee shall
give notice thereof by first-class mail to the Owners of all Bonds then
Outstanding and, subject to Section 7.03 hereof, to persons or entities which
provide evidence acceptable to the Trustee that such person or entity has
legal or beneficial interest in at least $1,000,000 in principal amount of
Bonds.
(c) With regard to any default concerning which notice is given under
the provisions of this Section 6.12, the Issuer, to the full extent permitted
by law, hereby grants the Company full authority to perform and observe for
the account of the Issuer any covenants or obligation alleged in said notice
not to have been performed or observed in the name and stead of the Issuer
with full power to do any and all things and acts to the same extent that the
Issuer could do and perform any such things and acts, with power of
substitution. The Trustee hereby consents to such grant of authority.
ARTICLE VII
THE TRUSTEE
Section 7.01. Acceptance of Trust. The Trustee hereby accepts the
trusts imposed upon it by this Indenture, and agrees to perform said trusts,
but only upon and subject to the following express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of Default and
after the curing or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Indenture and no implied covenants or obligations shall be read
into this Indenture against the Trustee. Subject to the limitation on the
liability of the Trustee contained in Section 7.01(g), in case an Event of
Default has occurred of which the Trustee is deemed hereunder to have
knowledge (which has not been cured or waived), the Trustee shall exercise
such of the rights and powers vested in it by this Indenture, and use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(b) The Trustee may execute any of the trusts or powers hereof and
perform any of its duties by or through attorneys, agents, receivers or
employees, but shall not be answerable for the conduct of the same if chosen
with due care. The Trustee shall be entitled to advice of counsel of its
selection concerning all matters of trust hereof and the duties hereunder, and
in all cases may pay such reasonable compensation and expenses to all such
attorneys, agents, receivers and employees as may reasonably be employed in
connection with the trust hereof. The Trustee may act upon the opinion or
advice of any attorneys approved by the Trustee in the exercise of reasonable
care. The Trustee shall not be responsible for any loss or damage resulting
from any action or non-action exercised in good faith in reliance upon such
opinion or advice.
(c) The Trustee shall not be responsible for any recital herein or in
the Bonds (other than the certificate of authentication thereon), the
legality, sufficiency or validity of this Indenture, the Agreement, the Bonds
or any document or instrument relating thereto; the recording or filing of any
instrument required by this Indenture to secure the Bonds; insuring the
Projects or collecting any insurance proceeds; the validity of the execution
by the Issuer of this Indenture or of any supplement hereto or of any
instrument of further assurance; or the validity, priority, perfection or
sufficiency of the security for the Bonds issued hereunder or intended to be
secured hereby, or otherwise as to the maintenance of the security hereof,
except for the filing of Uniform Commercial Code continuation statements as
directed in writing by the Company pursuant to Section 3.05 hereof.
(d) The Trustee shall not be accountable for the use of any Bonds
authenticated or delivered hereunder or for the use or application by the
Company of any moneys disbursed by the Trustee in accordance with the
provisions hereof. To the extent permitted by law, the Trustee may in good
faith buy, sell, own and hold any of the Bonds and may join in any action
which any Bond Owner may be entitled to take with like effect as if the
Trustee were not a party to this Indenture. The Trustee may also engage in or
be interested in financial or other transactions with the Issuer or the
Company; provided, however, that if the Trustee determines that any such
relationship is in conflict with its duties under this Indenture, it shall
eliminate the conflict or resign as Trustee. To the extent permitted by law,
the Trustee may also purchase Bonds with like effect as if it were not the
Trustee.
(e) The Trustee shall be protected in acting upon, and may
conclusively rely upon, any notice, request or other paper or document
reasonably believed to be genuine and correct, and reasonably believed to have
been signed or sent by the proper person or persons. Any action taken by the
Trustee pursuant to this Indenture upon the request, authority or consent of
any person who at the time of making such request or giving such authority or
consent is the Owner of any Bond, shall be conclusive and binding upon all
future Owners of the same Bond and any Bond issued in replacement therefor.
(f) As to the existence or nonexistence of any fact, or as to the
sufficiency or validity of any instrument, paper or proceeding, the Trustee
shall be entitled to rely upon a certificate signed by a duly authorized
representative of the Issuer or the Company as sufficient evidence of the
facts therein contained; and prior to the occurrence of a default of which the
Trustee has been notified as provided in subsection (h) of this Section 7.01,
or of which by said subsection (h) it is deemed to have notice, shall also be
at liberty to accept a similar certificate to the effect that any particular
dealing, transaction or action is necessary or expedient. The Trustee may at
its discretion secure such further evidence deemed necessary or advisable, but
shall in no case be bound to secure the same. The Trustee may accept a
certificate of an Authorized Issuer Representative to the effect that a
resolution in the form therein set forth has been adopted, and is in full
force and effect.
(g) The right of the Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty. The Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of its powers and duties under this Indenture.
<PAGE>
(h) The Trustee shall not be required to take notice or be deemed to
have notice of any default or Event of Default hereunder, or in any other
document or instrument executed in connection with the execution and delivery
of the Bonds, except an Event of Default under Section 6.01(i), (ii) or (iii)
hereof or Section 6.01(a), (b), or (c) of the Agreement, unless the Trustee
shall be specifically notified in writing of such default or Event of Default
by the Issuer, the Company or the Owners of at least 25% in aggregate
principal amount of the Bonds then Outstanding. All notices or other
instruments required by this Indenture to be delivered to the Trustee shall be
delivered at the principal corporate trust office of the Trustee, and, in the
absence of such notice so delivered, the Trustee may conclusively assume there
is no default except as aforesaid.
(i) At any and all reasonable times, the Trustee and its duly
authorized agents, attorneys, experts, engineers, accountants and
representatives shall have the right to inspect fully all books, papers and
records of the Issuer pertaining to the Agreement and the Bonds, and to take
such photocopies and memoranda therefrom and in regard thereto as may be
desired.
(j) The Trustee shall not be required to give any bond or surety in
respect of the execution of the trust created hereby or the powers granted
hereunder.
(k) Notwithstanding anything contained elsewhere in this Indenture,
the Trustee shall have the right, but not the obligation, to demand, in
respect of the withdrawal of any amount, the release of any property, or the
taking of any action whatsoever within the purview of this Indenture, any
showing, certificate, opinion, appraisal or other information, or corporate
action or evidence thereof, in addition to that required by the terms hereof
as a condition of such action by the Trustee, as deemed desirable for the
purposes of establishing the right of the Issuer or the Company to the
withdrawal of any amount, the release of any property or the taking of any
other action by the Trustee.
(l) Before taking any action referred to in Article VI or Section 7.04
hereof (except with respect to acceleration of the Bonds and payment of the
Bonds upon such acceleration), the Trustee may require that a satisfactory
indemnity bond be furnished for the reimbursement of all expenses which it may
incur and to protect it against all liability, except liability which is
adjudicated to have resulted from its negligence or willful misconduct, by
reason of any action so taken.
(m) All moneys received by the Trustee shall, until used, applied or
invested as herein provided, be held in trust for the purposes for which they
were received but need not be segregated from other funds, except to the
extent required by law or this Indenture. The Trustee shall be under no
liability for interest on any moneys received hereunder.
(n) Notwithstanding the effective date of this Indenture or anything
to the contrary in this Indenture, the Trustee shall have no liability or
responsibility for any act or event relating to this Indenture which occurs
prior to the date the Trustee formally executes this Indenture and commences
acting as Trustee hereunder.
<PAGE>
(o) Upon the execution of this Indenture, the Trustee shall not be
liable for any action taken, suffered, or omitted to be taken by it in good
faith and reasonably believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Indenture.
(p) No provision of this Indenture shall be deemed to require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of its rights or powers, if the Trustee shall have reasonable grounds
for believing that repayment of such funds or, in the alternative, adequate
indemnity against such risk or liability is not reasonably assured to it.
(q) The Trustee has no obligation or liability to the Bondholders for
the payment of interest or premium, if any, on or principal of the Bonds, but
rather the Trustee's sole obligations are to administer, for the benefit of
the Company and the Bondholders, the various Funds and Accounts established
hereunder.
(r) In the event the Trustee shall receive inconsistent or conflicting
requests and indemnity from two or more groups of Bondholders, each
representing less than a majority of the aggregate principal amount of the
Bonds then Outstanding, the Trustee may determine what action, if any, shall
be taken.
(s) Except for information provided by the Trustee concerning the
Trustee, the Trustee shall have no responsibility with respect to any
information in any Official Statement or other disclosure material distributed
with respect to the Bonds. The Trustee shall have no responsibility for
compliance with securities laws in connection with issuance of the Bonds.
(t) The Trustee's immunities and protections from liability, and its
right to payment of compensation and indemnification in connection with
performance of its duties and obligations under the Indenture and the
Agreement, shall survive the Trustee's resignation or removal, or the final
payment of the Bonds.
(u) In acting or omitting to act pursuant to the provisions of the
Agreement, the Trustee shall be entitled to all of the rights, protections and
immunities accorded to the Trustee under the terms of this Indenture,
including but not limited to those set out in this Article VII.
Section 7.02. Fees, Charges and Expenses of Trustee. (a) The Issuer
has agreed with the Company in the Agreement that, as part of the Installment
Payments the Company shall pay to the Trustee its charges for performing the
duties of Trustee, Bond Registrar, and Paying Agent for the Bonds. It is
agreed by the Trustee that the Company may, without causing or creating a
default or Event of Default hereunder, contest in good faith (and withhold
payment of the contested amount until such contest is resolved) the
reasonableness of any of the foregoing charges for service. All payments due
the Trustee for such charges, fees, or expenses shall be paid by the Company
upon prompt presentation of an invoice therefor and no such charges, fees, or
expenses shall be charged against or be payable by the Issuer. Until the
Trustee is paid in full pursuant to its final notice, the rights of the
Trustee under this Section 7.02 shall survive the payment in full of the Bonds
and the discharge of this Indenture.<PAGE>
(b) In any suit for the
enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as a Trustee, a
court in its discretion may require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorney's fees
and expenses, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party
litigant. This Section does not apply to a suit by the Trustee, a suit
by an Owner pursuant to enforcement of the payment of the principal of or
interest hereunder or a suit by Owners of more than 10% in principal amount of
the then Outstanding Bonds.
Section 7.03. Trustee to Provide Additional Notices. (a) Upon written
request of any Owner of Bonds in an aggregate principal amount of at least
$1,000,000 (or any person or entity which provides written evidence acceptable
to the Trustee that such person or entity has a legal or beneficial interest
in Bonds in an aggregate principal amount of at least $1,000,000), the Trustee
shall give an additional copy of any notice to be given by the Trustee under
this Indenture by first-class mail to a second address specified by such Bond
Owner, person or entity. Any such additional notices shall be given
simultaneously with the original notices.
(b) Upon written request of any person or entity which provides
evidence acceptable to the Trustee that such person or entity has a legal or
beneficial interest in at least $1,000,000 in principal amount of the Bonds,
the Trustee shall for the calendar year in which such request is received
provide one or more of the following as requested to such person or entity:
(i) notices of redemption pursuant to Section 2.06; (ii) notices of default
pursuant to Section 6.12(b); (iii) copies of all notices to which such person
or entity is entitled under the Indenture to a specific second address
pursuant to Section 7.03(a); and (iv) outstanding balances by maturity,
redemption history, including redemption date, amount and sources of funds,
and distribution of the call to maturity.
Section 7.04. Intervention by Trustee. In any judicial proceeding to
which the Issuer or the Company is a party, and which in the opinion of the
Trustee and its counsel has a substantial bearing on the interests of Owners
of the Outstanding Bonds, the Trustee may intervene on behalf of the Owners of
the Bonds and shall do so if requested in writing by the Owners of at least
25% in aggregate principal amount of the Bonds then Outstanding, and when
provided with sufficient indemnity pursuant to Section 7.01(1) hereof.
Section 7.05. Successor Trustee by Merger. Subject to Section 7.11
hereof, any corporation or association into which the Trustee may be converted
or merged, with which it may be consolidated, or to which it may sell or
transfer its trust business and assets as a whole or substantially as a whole,
or any corporation or association resulting from any such conversion, sale,
merger, consolidation or transfer to which it is a party, ipso facto, shall
(if it is qualified to be Trustee hereunder) be and become the Trustee
hereunder and vested with all of the title to the Trust Estate and all the
trusts, powers, discretions, immunities, privileges, responsibilities,
obligations and all other matters as was its predecessor, without the
execution or filing of any instrument or any further act, deed or conveyance
on the part of any of the parties hereto.
<PAGE>
Section 7.06. Resignation by Trustee. The Trustee may resign from the
trusts hereby created by giving written notice to the Issuer, the Company and
the Owners of the Bonds then Outstanding, and shall so resign whenever it
ceases to be qualified to act as Trustee hereunder. Such notice may be sent
by first class mail, postage prepaid, to the Owners of the Bonds, and by
certified mail, postage prepaid, to the Issuer and the Company. Such
resignation shall take effect upon the appointment of a successor Trustee. If
no successor Trustee is appointed pursuant to Section 7.08 hereof within 30
days after the delivery of such notice, a temporary Trustee may be appointed
by the Issuer, pursuant to Section 7.08 hereof. If no successor Trustee or
temporary Trustee is appointed within 45 days after delivery of such notice,
the resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
Section 7.07. Removal of Trustee. The Trustee may be removed at any
time by an instrument or substantially concurrent instruments in writing
delivered to the Trustee and the Bond Owners and signed by the Issuer and the
Company. Such removal shall take effect upon the appointment of a successor
Trustee.
Section 7.08. Appointment of Successor Trustee. In case the Trustee
shall resign, be removed, be dissolved, be in the course of dissolution or
liquidation or otherwise become incapable of acting or not qualified to act
hereunder, or in case the Trustee shall be taken under the control of any
public officer or officers or a receiver appointed by a court, a successor may
be appointed by the Issuer with the consent of the Company.
Section 7.09. Successor Trustee by Appointment. Every successor
Trustee appointed hereunder shall execute, acknowledge and deliver to its
predecessor, the Company and the Issuer an instrument in writing accepting
such appointment hereunder, and thereupon such successor, without any further
act, deed or conveyance, shall become fully vested with the title to the Trust
Estate and all of the trust powers, discretions, immunities, privileges,
responsibilities, obligations and all other matters of its predecessor; but
such predecessor shall, nevertheless, on the written request of the Issuer, or
of its successor Trustee, execute and deliver an instrument transferring to
such successor Trustee all the estates, properties, rights, powers and trusts
of such predecessor hereunder; and every predecessor Trustee shall deliver all
securities and moneys held by it hereunder to its successor. Should any
instrument in writing from the Issuer be required by any successor Trustee for
more fully and certainly vesting in such successor the estates, rights, powers
and duties hereby vested or intended to be vested in the predecessor, any and
all such instruments in writing shall, on request, be executed, acknowledged
and delivered by the Issuer. The resignation of any Trustee and the
instrument or instruments removing any Trustee and appointing a successor
hereunder, together with all other instruments provided for in this Article
VII, shall be filed and/or recorded by the successor Trustee in each recording
office where this Indenture shall have been filed and/or recorded. No
appointment of a successor Trustee hereunder shall become effective unless
such successor meets the qualifications set forth in Section 7.11.
<PAGE>
Section 7.10. Appointment of Separate Trustee or Co-Trustee. It is the
intent of the parties to this Indenture that there shall be no violations of
any law of any jurisdiction (including particularly the laws of the State)
denying or restricting the rights of banking corporations or associations to
transact business as a trustee in such jurisdiction. It is recognized that
in case of litigation under this Indenture, and in particular in the case of
enforcement of this Indenture on default, or in case the Trustee deems that by
reason of any present or future law of any jurisdiction it may not exercise
any of the powers, rights or remedies herein granted to the Trustee, or hold
title to the properties, in trust, as herein granted, or take any other action
which may be desirable or necessary in connection therewith, it may be
necessary that, subject to the qualifications set forth in Section 7.11
hereof, the Trustee appoint an additional institution as a separate trustee or
co-trustee. The following provisions of this Section 7.10 are adapted to
these ends.
If the Trustee appoints an additional institution as a separate trustee
or co-trustee, each and every remedy, power, right, claim, demand, cause of
action, immunity, estate, duty, obligation, title, interest and lien expressed
or intended by this Indenture to be exercised by, vested in or conveyed by the
Trustee with respect thereto shall be exercisable by, vested in and conveyed
to such separate trustee or co-trustee, but only to the extent necessary to
enable such separate trustee or co-trustee to exercise such powers, rights and
remedies, and every covenant and obligation necessary for the exercise thereby
by such separate trustee or co-trustee shall run to and be enforceable by
either of them.
Should any instrument in writing from the Issuer be required by the
separate trustee or co-trustee so appointed by the Trustee for more fully
vesting in and confirming to them such properties, rights, powers, trusts,
duties and obligations, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Issuer. If any
separate trustee or co-trustee, or a successor to either, shall die, become
incapable of acting or not qualified to act, resign or be removed, all the
estates, properties, rights, powers, trusts, duties and obligations of such
separate trustee or co-trustee, so far as permitted by law, shall vest in and
be exercised by the Trustee until the appointment of a successor to such
separate trustee or co-trustee.
The appointment of any separate trustee or co-trustee shall be subject
to written approval of the Company so long as no Event of Default has occurred
and is continuing under this Indenture.
Section 7.11. Qualifications. (a) Each successor to the Trustee
pursuant to Sections 7.05 and 7.09 hereof and each separate trustee or
co-trustee (if any) pursuant to Section 7.10 shall at all times be a bank or
trust company which (i) is organized as a corporation or banking association
and doing business under the laws of the United States or any state thereof,
(ii) is authorized under such laws to exercise corporate trust powers and to
perform all the duties imposed upon it by this Indenture and the Agreement,
(iii) is subject to supervision or examination by federal or state authority,
(iv) has combined capital and surplus (as set forth in its most recent
published report of condition) of at least $50,000,000, and (v) shall not have
become incapable of acting or have been adjudged a bankrupt or an insolvent
nor have had a receiver appointed for itself or for any of its property, nor
have had a public officer take charge or control of it or its property or
affairs for the purpose of rehabilitation, conservation or liquidation.
(b) Should the Trustee or any separate trustee or co-trustee at any
time cease to be eligible, pursuant to this Section 7.11, to act as Trustee or
co-trustee (as the case may be), it shall promptly notify the Owners of all
Outstanding Bonds, the Issuer and the Company of such fact. Any such notice
shall set forth all the relevant facts known to the Trustee.
ARTICLE VIII
THE REMARKETING AGENT
Section 8.01. The Remarketing Agent. At the direction of the Company,
Morgan Stanley & Co. Incorporated is hereby appointed by the Issuer as
Remarketing Agent for the Bonds. The Remarketing Agent shall act as
remarketing agent as provided in this Indenture, and, in accordance with the
agreement between the Remarketing Agent and the Company shall remarket Bonds
required to be purchased pursuant to Sections 2.10 and 2.11 hereof. The
Issuer shall, at the direction of the Company, appoint any successor
Remarketing Agent for the Bonds, subject to the conditions set forth in
Section 8.02 hereof. The Remarketing Agent shall designate its principal
office to the Trustee and signify its acceptance of the duties and obligations
imposed upon it hereunder by a written instrument of acceptance delivered to
the Issuer and the Trustee under which the Remarketing Agent will agree,
particularly, to:
(a) determine the Flexible Rates, Daily Rates, Weekly Rates, Monthly
Rates, Quarterly Rates, Semiannual Rates, Multiannual Rates and Fixed Rates
and give notice of such rates in accordance with Section 2.02 and the form of
Bond set forth in Section 2.03 hereof;
(b) keep such books and records with respect to its duties as
remarketing agent as shall be consistent with prudent industry practice; and
(c) remarket Bonds in accordance with this Indenture and the
Remarketing Agreement.
Section 8.02. Qualifications of Remarketing Agent. The Remarketing
Agent shall be authorized by law to perform all the duties imposed upon it by
this Indenture. The Remarketing Agent may resign and be discharged of the
duties and obligations created by this Indenture or may be removed, at the
times and in the manner set forth in the Remarketing Agreement.
In the event of the resignation or removal of the Remarketing Agent, the
Remarketing Agent shall pay over, assign and deliver any moneys and Bonds held
by it in such capacity to its successor or, if there is no successor, to the
Trustee.
In the event that the Company should fail to direct the Issuer to
appoint a Remarketing Agent hereunder, or in the event that the Remarketing
Agent shall resign or be removed, or be dissolved, or if the property or
affairs of the Remarketing Agent shall be taken under the control of any state
or federal court or administrative body because of bankruptcy or insolvency or
for any other reason, and the Company shall not have appointed its successor
as Remarketing Agent, the Trustee, notwithstanding the provisions of the first
paragraph of this Section 8.02 shall ipso facto be deemed to be the
Remarketing Agent for all purposes of this Indenture until the appointment by
the Company of the Remarketing Agent or successor Remarketing Agent, as the
case may be; provided, however, that the Trustee, in its capacity as
Remarketing Agent, shall not be required to sell Bonds or determine the
interest rates on the Bonds or to perform the duties set forth in Sections
2.02 and 2.03 hereof.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Not Requiring Consent of Bond
Owners. Subject to the terms and provisions of Sections 9.03 and 9.04 of this
Indenture, the Issuer and the Trustee may, but shall not be obligated to,
without the consent of, or notice to, any of the Bond Owners, enter into an
indenture or indentures supplemental to this Indenture, for any one or more
of the following purposes: (i) to cure any ambiguity, formal defect or
omission in this Indenture or to make such other changes which shall not have
a material adverse effect upon the interests of the Bond Owners; (ii) to grant
to or confer upon the Trustee, for the benefit of the Bond Owners, any
additional rights, remedies, powers or authorities, or any additional
security, that may lawfully be granted to or conferred upon the Owners or the
Trustee; (iii) to subject to this Indenture additional revenues, properties or
collateral; (iv) to modify, amend or supplement this Indenture, or any
indenture supplemental hereto, in such manner as to permit the qualification
hereof and thereof under the Trust Indenture Act of 1939, as amended, or any
similar federal statute hereafter in effect, or to permit the qualification of
the Bonds for sale under the securities laws of any of the states of the
United States, and if the Issuer so determines, to add to this Indenture or
any indenture supplemental hereto such other terms, conditions and provisions
as may be permitted by the Trust Indenture Act of 1939, as amended, or any
similar federal statute; (v) to add to the covenants and agreements of the
Issuer contained in this Indenture other covenants and agreements thereafter
to be observed for the protection of the Owners or to surrender or limit any
right, power or authority herein reserved to or conferred upon the Issuer;
(vi) effective upon any Conversion Date to a new Mode, to make any amendment
affecting only the Bonds being converted, including revision to Authorized
Denominations; (vii) to add provisions relating to the partial conversion of
Bonds to a new Mode; (viii) to provide for an Alternate Letter of Credit, or
to provide for any other credit enhancement or for no credit enhancement in
accordance with Section 10.05 of this Indenture, (ix) to conform to the
requirements of any Rating Agency and (x) to add provisions permitting a
mandatory tender of Bonds in lieu of redemption.
Section 9.02. Supplemental Indentures Requiring Consent of Bond Owners.
(a) Exclusive of supplemental indentures covered by Section 9.01 hereof, this
Indenture may be amended or supplemented only as provided in this Section
9.02.
<PAGE>
(b) Subject to the terms and provisions contained in Sections 9.03 and
9.04 of this Indenture, the Owners of a majority in aggregate principal amount
of the Bonds then Outstanding shall have the right, from time to time, to
approve the execution by the Issuer and the Trustee of such indenture or
indentures supplemental hereto as shall be deemed necessary and desirable by
the Issuer for the purposes of modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or provisions contained in
this Indenture or in any supplemental indenture.
(c) Subject to the terms and provisions contained in Sections 9.03 and
9.04 of this Indenture, if any proposed amendment or supplement affects only
the Owners of Bonds in a particular Mode or Modes, the Owners of a majority in
aggregate principal amount of the Bonds then Outstanding in such affected Mode
or Modes shall have the right, from time to time, to approve the execution by
the Issuer and the Trustee of such amendment or supplement.
(d) If at any time the Issuer shall request the Trustee to enter into
any such supplemental indenture for any of the purposes of this Section, the
Trustee shall, upon being satisfactorily indemnified with respect to expenses,
cause notice of the proposed execution of such supplemental indenture to be
mailed by first class mail to each of the Bond Owners at the addresses of such
Bond Owners indicated on the Registration Books. Such notice shall briefly
set forth the nature of the proposed supplemental indenture and shall state
that copies thereof are on file at the principal corporate trust office of the
Trustee for inspection by all Bond Owners. If, within 90 days, or such longer
period as shall be prescribed by the Issuer, following the mailing of such
notice, the owners of the percentage required by this Section 9.02 or Section
9.03 hereof, as applicable, in aggregate principal amount of the Bonds
Outstanding (or, as provided in subsection (c) above, of the Bonds Outstanding
in a particular Mode or Modes) at the time of the execution of such
supplemental indenture shall have consented to and approved the execution
thereof as herein provided, no Owner of any Bond shall have any right to
object to any of the terms and provisions contained therein or the operation
thereof, or in any manner to question the propriety of the execution thereof,
or to enjoin or restrain the Trustee or the Issuer (subject to Section 9.04)
from executing the same or from taking any action pursuant to the provisions
thereof. Upon the execution of any such supplemental indenture as in this
Section and Section 9.04 permitted and provided, this Indenture shall be and
be deemed to be modified and amended in accordance therewith.
(e) The Company may, but shall not be obligated to, fix a record date
for the purpose of determining the Owners entitled to consent to any indenture
supplemental hereto. If a record date is fixed, the Owners on such record
date, or their duly designated proxies, and only such Owners, shall be
entitled to consent to such supplemental indenture, whether or not such Owners
remain Owners after such record date; provided, that unless such consent shall
have become effective by virtue of the requisite percentage having been
obtained prior to the date which is 90 days after such record date, any such
consent previously given shall automatically and without further action by any
Owner be cancelled and of no further effect.
Section 9.03. Limitation upon Amendments and Supplements. Nothing
contained in Sections 9.01 and 9.02 hereof shall permit, or be construed as
permitting, without the consent and approval of the Owners of all of the Bonds
<PAGE>
then Outstanding (i) an extension of the maturity of the principal of, or the
time for payment of any redemption premium or interest on, any Bond or a
reduction in the principal amount of any Bond, or the rate of interest or
redemption premium thereon, or a reduction in the amount of, or extension of
the time of any payment required by, any Bond; (ii) a privilege or priority of
any Bond over any other Bond (except as herein provided); (iii) a reduction in
the aggregate principal amount of the Bonds required for consent to such a
supplemental indenture; (iv) the deprivation of the owner of any Bond then
outstanding of the lien created by the Indenture; or (v) the amendment of this
Section 9.03. With respect to any amendment or supplement to be entered into
pursuant to Sections 9.01 or 9.02 hereof, the Trustee shall be entitled to
receive a Favorable Opinion.
Section 9.04. Consent of Company Required. Anything herein to the
contrary notwithstanding, an amendment or supplemental indenture under this
Article IX shall not become effective unless and until the Company shall have
consented in writing to the execution and delivery thereof.
Section 9.05. Amendments to Agreement. The Agreement may be amended by
written agreement of the Issuer and the Company, provided that no amendment
may be made which would adversely affect the rights of the Owners of any of
the Outstanding Bonds without the consent of the Owners of a majority in
aggregate principal amount of the Bonds then Outstanding of each Mode that
would be so affected; and no amendment may be made which would (i) decrease
the amounts payable under the Agreement; (ii) change the date of payment or
prepayment provisions under the Agreement; or (iii) change the amendment
provisions of the Agreement without the consent of all of the Owners of the
Bonds adversely affected thereby, and provided further that the Agreement may
be amended by written agreement of the Issuer and the Company in order to make
conforming changes with respect to amendments made to this Indenture pursuant
to Section 9.01 hereof.
Section 9.06. Consent of Bank. Notwithstanding anything herein
contained, so long as a Letter of Credit is held by the Trustee, no supplement
or amendment shall be made to the Indenture or the Agreement without the prior
written consent of the Bank.
Section 9.07. Opinion of Counsel. In executing, or accepting any
additional trusts created by any supplemental indenture permitted by this
Article or the modification thereby of the trusts created by this Indenture,
the Trustee shall be entitled to receive, and shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or immunities under
this Indenture or otherwise.
<PAGE>
ARTICLE X
LETTER OF CREDIT
Section 10.01. Extension or Replacement in Anticipation of Expiration.
At least 25 days (or such shorter period as shall be acceptable to the
Trustee) prior to the Interest Payment Date next preceding the Expiration Date
of the current Letter of Credit, the Company may provide for the delivery to
the Trustee of (i) an amendment to the Letter of Credit which extends the
Expiration Date to a date that is not earlier than one year from its then
current Expiration Date or (ii) in the case of Bonds bearing interest at
Daily, Weekly, Flexible, Monthly, Quarterly or Semiannual Rates, an Alternate
Letter of Credit issued by a national banking association, a bank, a trust
company or other financial institution or credit provider, which shall have
terms which are the same in all material respects (except Expiration Date and
except any changes pursuant to this Indenture with respect to interest or
premium coverage in connection with a concurrent interest rate reset or
conversion) as the current Letter of Credit, which shall provide for automatic
reinstatement of interest coverage and which shall have an Expiration Date
that is not earlier than one year from the Expiration Date of the Letter of
Credit then in effect. The institution issuing the Alternate Letter of
Credit must be such as to maintain a rating on the Bonds equal to or higher
than the then current rating on the Bonds given by the Rating Agencies, and
the Trustee shall have received, on or before the date of delivery of the
Alternate Letter of Credit, written notice from the Rating Agencies that the
issuance of the Alternate Letter of Credit and substitution thereof for the
then current Letter of Credit will result in a rating on the Bonds equal to or
higher than the then current rating on the Bonds. The Trustee shall not
accept an Alternate Letter of Credit under this Section unless there shall
have been delivered to the Trustee (A) a written notice from the Rating
Agencies as provided in the immediately preceding sentence, (B) an opinion of
counsel to the Bank satisfactory to the Trustee with respect to the validity,
binding effect and enforceability of such Alternate Letter of Credit and (C) a
Favorable Opinion. If the Letter of Credit is so extended or, in the case of
Bonds bearing interest at Daily, Weekly, Flexible, Monthly, Quarterly or
Semiannual Rates, if an Alternate Letter of Credit complying with the
requirements of this Section is so provided, the mandatory tender for purchase
pursuant to clause (c) of Section 2.11 shall not occur. Unless all of the
conditions of this Section which are required to be met 25 days (or such
shorter period as shall be acceptable to the Trustee) preceding the Interest
Payment Date next preceding the Expiration Date of the Letter of Credit have
been satisfied, the Trustee shall direct the Paying Agent to take all action
necessary to call the Bonds for mandatory tender for purchase pursuant to
clause (c) of Section 2.11 on the Interest Payment Date next preceding such
Expiration Date; provided that if the Company shall have notified the Trustee
in writing 25 days (or such shorter period as shall be acceptable to the
Trustee) preceding the Interest Payment Date next preceding the Expiration
Date of the Letter of Credit, that it expects to meet all the conditions for
the delivery of an amendment extending the existing Letter of Credit, or the
delivery of an Alternate Letter of Credit from a bank identified in such
notice, meeting all of the requirements of this Section on or before the
Interest Payment Date next preceding the Expiration Date of the existing
Letter of Credit, then the notice of mandatory tender for purchase pursuant to
the clause (c) of Section 2.11 shall state that it is subject to rescission,
and the Paying Agent, at the direction of the Trustee, shall rescind such
notice, if such conditions are so met by 12:00 noon, New York City time, on
the third day prior to such Interest Payment Date (in which case such
mandatory purchase shall not occur). The provisions of this Section with
respect to the substitution of an Alternate Letter of Credit in the event that
the Expiration Date of the Letter of Credit is not extended shall apply
equally to the substitution of another Alternate Letter of Credit in the event
that the Expiration Date of an existing Alternate Letter of Credit is not
extended.
Section 10.02. Other Replacement. The delivery of an Alternate Letter
of Credit in anticipation of the expiration of the current Letter of Credit
shall be governed by Section 10.01. Otherwise, the Company may provide for
the delivery to the Trustee on any Interest Payment Date on which the Bonds
are callable for optional redemption pursuant to Section 2.06(b), of (i) an
Alternate Letter of Credit which shall have terms which are the same in all
material respects (except as to Expiration Date and except any changes
pursuant to this Indenture with respect to interest or premium coverage in
connection with a concurrent interest rate reset or conversion) as the current
Letter of Credit, which shall have an Expiration Date that is not less than
one year from the date of its delivery and not sooner than the Expiration Date
of the current Letter of Credit then in effect and which shall be issued by a
national banking association, a bank, a trust company or other financial
institution or credit provider, (ii) an opinion of counsel to the Bank
satisfactory to the Trustee with respect to the validity, binding effect and
enforceability of such Alternate Letter of Credit, and (iii) a Favorable
Opinion; provided that Bonds bearing interest at a Multiannual Rate will be
subject to mandatory tender for purchase pursuant to Section 2.11(c) on the
date of any such replacement; and provided further that if the Purchase Price
payable upon such mandatory tender for purchase includes any premium, the
Trustee will not accept the Alternate Letter of Credit unless it has received
written confirmation from the Bank which issued the Letter of Credit then in
effect that it can draw under such Letter of Credit on the proposed
replacement date in an aggregate amount sufficient to cover the entire
Purchase Price, including premium. The institution issuing the Alternate
Letter of Credit must be such as to maintain a rating on the Bonds equal to or
higher than the then current rating on the Bonds given by the Rating Service.
The replacement of the Letter of Credit by the Alternate Letter of Credit must
not, by itself, adversely affect the current rating or ratings on the Bonds,
and the absence of such an adverse effect shall be evidenced in writing by the
Rating Service to the Trustee at or prior to such replacement. If the
requirements set forth in this Section are met, then the Trustee shall accept
such Alternate Letter of Credit on the Interest Payment Date on which the
replacement is to occur and promptly surrender for cancellation the previously
held Letter of Credit to the issuer thereof in accordance with the terms of
such Letter of Credit. In the case of Bonds bearing interest at a Multiannual
Rate, the Alternate Letter of Credit and the opinions described above must be
delivered to the Trustee at least 25 days (or such shorter period as shall be
acceptable to the Trustee) prior to the proposed replacement date; provided
that if such items have not been delivered to the Trustee, but the Company
shall have notified the Trustee in writing 25 days (or such shorter period as
shall be acceptable to the Trustee) prior to the proposed replacement date,
that it expects to meet all of such conditions for the delivery of an
Alternate Letter of Credit from a bank identified in such notice on or before
the proposed replacement date, then the notice of mandatory tender for
purchase shall state that it is subject to rescission, and the Trustee shall
rescind such notice if such conditions are not so met by 12:00 noon, New York
City time, on the third day prior to such replacement date (in which case the
current Letter of Credit shall remain in effect).
Section 10.03. Notice to Holders. The Trustee shall give notice to the
Registered Owners, in the name of the Issuer, of the proposed replacement of
the current Letter of Credit with an Alternate Letter of Credit and, in the
case of Multiannual Rate Bonds, of the related mandatory tender for purchase,
by first class mail, postage prepaid, not less than 15 days prior to the
Interest Payment Date next preceding the proposed replacement date.
Section 10.04. Reduction. In each case that Bonds are redeemed or
deemed to have been paid pursuant to Article V, the Trustee shall take such
action as may be permitted under the Letter of Credit to reduce the amount
available thereunder to an amount equal to the principal amount of the
outstanding Bonds, plus interest for 35 days at 12% per annum if the Bonds
bear interest at a Daily, Weekly or Monthly Rate, 275 days (or such fewer
number of days as may be determined by the Company) at 12% per annum if the
Bonds bear interest at a Flexible Rate, 95 days at 12% per annum if the Bonds
bear interest at a Quarterly Rate or 185 days at 12% per annum if the Bonds
bear interest at a Semiannual or Multiannual Rate and premium, if applicable;
provided that such action by the Trustee shall not be required if the Letter
of Credit so reduces automatically pursuant to its terms. Upon reduction of
the amount available under the Letter of Credit pursuant to the terms of the
Letter of Credit and this Section as a result of redemption of Bonds, the Bank
shall have the right, at its option, to require the Trustee to promptly
surrender the outstanding Letter of Credit to the Bank and to accept in
substitution therefor a substitute Letter of Credit in the same form, dated
the date of such substitution, for an amount equal to the amount available
under the Letter of Credit as so reduced, but otherwise having terms identical
to the then outstanding Letter of Credit.
Section 10.05. Other Credit Enhancement; No Credit Enhancement. After
any mandatory purchase of all of the Outstanding Bonds pursuant to Section
2.11, nothing in this Article X shall limit the Company's right to provide
other credit enhancement (such as a letter of credit not meeting the
requirement of this Article X, any standby bond purchase agreement or bond
insurance) or no credit enhancement as security for the Bonds; provided that
(a) any credit enhancement shall have administrative provisions reasonably
satisfactory to the Trustee, (b) the Company shall have furnished to the
Trustee a Favorable Opinion and (c) this Indenture shall be suitably
supplemented and amended in accordance with Section 9.01(viii) hereof.
Section 10.06. Amendment of Letter of Credit. The Trustee shall notify
the Registered Owners of a proposed amendment of the Letter of Credit which
would adversely affect the interests of the Registered Owners and may consent
thereto with the consent of the owners of at least a majority in aggregate
principal amount of the Bonds then Outstanding which would be affected by the
action proposed to be taken; provided, that the Trustee shall not, without the
unanimous consent of the owners of all Bonds then Outstanding, consent to any
amendment which would (i) decrease the amount payable under the Letter of
Credit or (ii) reduce the term of the Letter of Credit. Before the Trustee
shall consent to any amendment to the Letter of Credit, there shall have been
delivered to the Trustee a Favorable Opinion.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Consents of Bond Owners. Any consent, request,
direction, approval, objection or other instrument required by this Indenture
to be signed and executed by a Bond Owner may be in any number of concurrent
writings of similar tenor, and may be signed or executed by such Bond Owner in
person or by his or her agent appointed in writing. The fact and date of the
execution by any person of any such consent, request, direction, approval,
objection or other instrument, or of the writing appointing any such agent,
and of the ownership of a Bond, may be proved in any jurisdiction by the
certificate of any officer who by law has power to take acknowledgment within
such jurisdiction that the person signing such writing acknowledged before him
the execution thereof, or by an affidavit of any witness to such execution,
and, if made in such manner, shall be sufficient for any of the purposes of
this Indenture, and shall be conclusive in favor of the Trustee with regard to
any action taken by it under such request or other instrument.
Section 11.02. Limitation of Rights. With the exception of rights
herein expressly conferred, nothing expressed or mentioned in or to be implied
from this Indenture or the Bonds is intended or shall be construed to give to
any person other than the parties hereto, the Company and the Owners of the
Bonds any legal or equitable right, remedy or claim under or with respect to
this Indenture or any covenants, conditions and provisions herein contained.
This Indenture and all of the covenants, conditions and provisions hereof are
intended to be, and are, for the sole and exclusive benefit of the parties
hereto, the Company and the Owners of the Bonds as herein provided.
Section 11.03. Severability. If any provisions of this Indenture shall
be held or deemed to be, or shall in fact be, invalid, inoperative or
unenforceable, the same shall not affect any other provision herein contained
or render the same invalid, inoperative or unenforceable to any extent
whatever.
Section 11.04. Notices. Except as otherwise provided in this
Indenture, any notice, request or other communication under this Indenture
shall be given in writing and shall be deemed to have been given by either
party to the other party at the addresses shown below upon any of the
following dates:
(a) The date of notice by telefax, telecopy, or similar
telecommunications, which is confirmed promptly in writing;
(b) Three Business Days after the date of the mailing thereof, as
shown by the post office receipt if mailed to the other party hereto by
registered or certified mail;
(c) The date of the receipt thereof by such other party if not given
pursuant to (a) or (b) above.
<PAGE>
The address for notice for each of the parties shall be as follows:
If to the Issuer:
Guadalupe-Blanco River Authority
933 East Court Street
Seguin, Texas 78155
Attention: Director of Finance
Telephone No.: (210) 379-5822
Telecopy No.: (210) 379-9718
If to the Trustee:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telephone No.: (212) 815-5733
Telecopy No.: (212) 815-5915
If to the Company:
Central and South West Corporation as agent for:
Central Power and Light Company
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone No.: (214) 777-1000
Telecopy No.: (214) 777-1223
If to the Bank:
______________________________
______________________________
______________________________
Attention:______________________
Telephone No.:__________________
Telecopy No.:___________________
If to the Remarketing Agent:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention:______________________
Telephone No.: (212) 761-0446
Telecopy No.: (212) 761-4000
<PAGE>
A duplicate copy of each notice given hereunder by any party shall be given to
each of the Issuer, the Trustee and the Company. Any person or entity listed
above may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates or other communications
shall be sent.
Section 11.05. Payments or Performance Due on Other Than Business Days.
If the last day for making any payment or taking any action, including,
without limitation, exercising any remedy, under this Indenture falls on a day
other than a Business Day, such payment may be made, or such action may be
taken, on the next succeeding Business Day, and, if so made or taken, shall
have the same effect as if made or taken on the date required by this
Indenture. The amount of any payment due under this Indenture shall not be
affected because payment is made on a date other than the date specified in
this Indenture pursuant to this Section 11.05.
Section 11.06. Execution of Counterparts. This Indenture may be
executed in several counterparts, each of which shall be an original and all
of which shall constitute but one and the same instrument.
Section 11.07. Applicable Law. THIS INDENTURE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE; PROVIDED, HOWEVER, THAT
THE RIGHTS, DUTIES, IMMUNITIES AND STANDARDS OF CARE RELATING TO THE TRUSTEE
SHALL BE GOVERNED BY THE LAW OF THE JURISDICTION IN WHICH ITS PRINCIPAL
CORPORATE TRUST OFFICE IS LOCATED.
Section 11.08. Disqualified Bonds. In determining whether the Owners
of the requisite aggregate principal amount of Bonds have concurred with any
demand, request, direction, consent or waiver under this Indenture, Bonds
which are owned or held by or for the account of the Company or the Issuer, or
by any person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, the Company or the Issuer, shall be
disregarded and deemed not to be Outstanding for purposes of any such
determination.
Section 11.09. No Personal Liability of Issuer or Trustee. No covenant
or agreement contained in the Bonds or in this Indenture, shall be deemed to
be the covenant or agreement of any officer, director, agent or employee of
the Issuer or the Trustee in such person's individual capacity, and no such
person of the Issuer or the Trustee executing or authenticating the Bonds
shall be liable personally on the Bonds or subject to any personal liability
or accountability by reason of the issuance thereof.
Section 11.10. Notice of Change. The Trustee shall, upon written
instructions to do so by the Company, give notice to Moody's (if the Bonds are
then rated by Moody's) at 99 Church Street, New York, NY 10007, Attention:
Structured Transactions Group, Corporate Department, and S&P (if the Bonds are
then rated by S&P) at 25 Broadway, New York, New York 10004, of any of the
following events:
<PAGE>
(i) a change in the Trustee or Paying Agent;
(ii) a change in the Remarketing Agent;
(iii) an amendment to the Indenture or the Agreement;
(iv) payment or provision therefor of all the Bonds;
(v) expiration, termination or extension of the Letter of
Credit; and
(vi) conversion to a Multiannual or Fixed Rate Period.
Section 11.11. References to Bank. All provisions hereof regarding
consents, approvals, directions, appointments or requests by, of or to the
Bank shall be deemed not to require or permit such consents, approvals,
directions, appointments or requests and shall be read as if the Bank were not
mentioned herein during any time that either no Letter of Credit is in effect
or during which the Bank is in default in its obligations to make payments
under the Letter of Credit; provided, however, that this Section shall not
affect the rights of the Bank to collect any amounts owed to it.
<PAGE>
IN WITNESS WHEREOF, the Board of the Issuer has caused these presents to
be signed in its name and on its behalf by its Chairman and by its Secretary,
and the Trustee, to evidence its acceptance of the trusts hereby created, has
caused these presents to be signed in its name and on its behalf by its duly
authorized officer, all as of the day and year first above written.
GUADALUPE-BLANCO RIVER AUTHORITY
By:____________________________
Chairman
(SEAL)
ATTEST:
_________________________________
Secretary
THE BANK OF NEW YORK,
as Trustee
By:_____________________________
Vice President
<PAGE>
EXHIBIT 3
---------
BOND PURCHASE AGREEMENT
GUADALUPE-BLANCO RIVER AUTHORITY (TEXAS)
$40,890,000
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
BOND PURCHASE AGREEMENT (this "Purchase Agreement") dated October __,
1995 between GUADALUPE-BLANCO RIVER AUTHORITY, a governmental agency and body
politic and corporate of the State of Texas (the "Issuer") and MORGAN STANLEY
& CO. INCORPORATED (the "Underwriter").
1. Background
(a) Subject to the terms and conditions herein set forth, the
Underwriter hereby agrees to purchase from the Issuer, and the Issuer hereby
agrees to sell and deliver to the Underwriter, the Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) Series 1995 (the
"Refunding Bonds") in the principal amount of $40,890,000. The Refunding
Bonds shall be dated, shall mature and shall bear interest from time to time
at adjustable or fixed rates as set forth in Section 2 hereof and shall
otherwise have such terms and provisions as set forth in the Refunding Bonds,
the Official Statement and the Indenture (as hereinafter defined).
(b) The Refunding Bonds will be issued pursuant to resolutions
adopted by the Board of Directors of the Issuer on October 18, 1995 (the
"Resolution"), and under an Indenture of Trust dated as of October 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 Guadalupe-Blanco River
Authority (Texas) 6% Pollution Control Revenue Bonds (Central Power and Light
Company Project) Series 1977 (the "Series 1977 Bonds") and all outstanding
Port of Corpus Christi Authority of Nueces County, Texas (formerly Nueces
County Navigation District No. 1) 7 1/8% Environmental Improvement Revenue
Bonds (Central Power and Light Company Facilities) Series 1974, Issue A (the
"Series 1974A Bonds"). The Series 1977 Bonds were originally issued to
provide funds for the acquisition, construction and improvement of certain
facilities designed to abate or control air and water pollution (the "Coleto
Facilities") at the Coleto Creek generating plant of Central Power and Light
Company (the "Company") located in Goliad County, Texas. The Series 1974A
Bonds were originally issued to provide funds for the acquisition,
construction and improvement of air and water pollution control facilities
(the "Davis Facilities", and together with the Coleto Facilities, the
"Facilities") at the Barney M. Davis Power Station which is operated by the
Company and located in Nueces County, Texas. In connection with the issuance
of the Refunding Bonds, the Issuer and the Company have entered into an
Installment Payment Agreement dated as of October 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) ABN AMRO Bank N.V. (the "Bank") has made a commitment to issue an
irrevocable, direct pay letter of credit (the "Letter of Credit") with respect
to the Refunding Bonds and effective as of the date of issuance of the
Refunding Bonds.
(d) Concurrently with the execution and delivery of this Purchase
Agreement, the Company is delivering to the Issuer and the Underwriter 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 Underwriter and the
Underwriter will purchase the Refunding Bonds and make a public offering
thereof in reliance upon the representations, covenants and indemnities
contained in the Letter of Representation.
(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 Underwriter 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 October __, 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 Underwriter. The Final Official Statement, as
it may be amended or supplemented with the consent of the Issuer, the
Underwriter 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 Underwriter agrees to purchase from the Issuer, and the
Issuer agrees to sell to the Underwriter, the Refunding Bonds at a purchase
price equal to 100% of the principal amount thereof. The Refunding Bonds
shall be dated [October 1], 1995, shall mature on ____, and shall bear
interest at the Flexible Rate, the Daily Rate, the Weekly Rate, the Monthly
Rate, the Quarterly Rate, the Semiannual Rate, the Multiannual Rate or the
Fixed Rate (all as defined and more fully described in the Indenture).
Payment for the Refunding Bonds shall be made in immediately available Federal
funds payable to the order of the Trustee for the account of the Issuer.
Closing (the "Closing") will be at the offices of McCall, Parkhurst and Horton
L.L.P., 717 North Harwood, 9th Floor, Dallas, Texas at 10:00 a.m., Dallas
time, on [October 26], 1995 (the "Closing Date"), or at such other date, time
or place as may be agreed on by the Issuer, the Company and the Underwriter.
Refunding Bonds will be delivered to The Depository Trust Company ("DTC") at
least 24 hours before Closing; the Refunding Bond will be registered in the
name of CEDE & Co., as nominee for DTC, in the denomination of $40,890,000.
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
Underwriter 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 and 383, Texas Water Code (the "Enabling Legislation"), to execute and
deliver this Purchase Agreement, the Installment Agreement and the
Indenture, to sign and deliver the Official Statement, to carry out and
consummate the transactions contemplated by each of the foregoing and all
other agreements relating thereto, and to issue, sell and deliver the
Refunding Bonds for the purpose of refunding all or any part of
outstanding Series 1977 Bonds and Series 1974A Bonds.
(c) The Issuer has full legal right, power and authority and has
taken all necessary action and has complied with all applicable
provisions of law required (i) to adopt the Resolution, (ii) to execute
and deliver this Purchase Agreement, the Installment Agreement, the
Refunding Bonds and the Indenture, (iii) to issue and sell the Refunding
Bonds to the Underwriter 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 Underwriter, (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 Underwriter 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, as amended (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 Underwriter's and the
<PAGE>
Company's respective obligations to issue, purchase and sell the
Refunding Bonds hereunder and under the Letter of Representation; and
other than any approvals that might be required under the Blue Sky or
securities laws of any jurisdiction) is required in connection with the
issuance and sale of the Refunding Bonds, the adoption of the Resolution
or the execution and delivery by the Issuer of the Refunding Bonds, the
Installment Agreement, the Indenture or this Purchase Agreement or the
performance of its obligations under any of such instruments.
(i) The adoption of the Resolution, the issuance and sale of the
Refunding Bonds, the acceptance of the Letter of Representation, the
execution and delivery by the Issuer of this Purchase Agreement, the
Installment Agreement, the Refunding Bonds and the Indenture, the
execution and delivery by the Issuer of the Official Statement and
compliance with the provisions hereof and thereof, will not conflict
with, violate or result in a breach of any provision of, or constitute a
default (or an event which with notice or passage of time, or both, would
constitute a default) on the part of the Issuer under, any indenture,
commitment, agreement or other instrument to which the Issuer is a party
or by which it is bound, or under any provision of the Texas Constitution
or any existing law, rule, regulation, judgment, ordinance, order or
decree to which the Issuer (or any of its directors or officers in their
respective capacities as such) is subject, or result in the creation or
imposition of any lien, charge or other security interest or encumbrance
of any nature whatsoever upon any of the property, assets or revenues of
the Issuer, except as provided in the Refunding Bonds and the Indenture.
(j) The Issuer is solvent and since its creation, the Issuer has not
been in default in the payment of principal of, premium, if any, or
interest on, or otherwise been in default with respect to, any of its
bonds, notes or other securities or any legally authorized obligation
issued or guaranteed by it; and no bankruptcy or insolvency proceedings
have been taken by or against the Issuer.
(k) Payments under the Installment Agreement, the Indenture, the
Resolution and the Refunding Bonds, and the interest on the Refunding
Bonds, are not subject to taxation in the State of Texas. No
legislation, ordinance, rule or regulation has been enacted by, or is
currently pending before, any governmental body, department or agency of
the State of Texas, nor has any decision been rendered by any court of
competent jurisdiction of the State of Texas, which would adversely
affect the exemption from all taxation in the State of Texas of (i) any
payments under the Installment Agreement, the Indenture, the Resolution
or the Refunding Bonds and the interest on the Refunding Bonds or (ii)
all bonds and obligations of the general character of the Refunding
Bonds. There are no stamp, documentary, transfer or like taxes in the
State of Texas which would be applicable to the original issuance or
subsequent transfers of the Refunding Bonds.
(l) There is no action, suit, proceeding, inquiry or investigation,
at law or in equity, before or by any court, public board, governmental
agency or body or arbitrator, pending or, to the best of the knowledge of
the Issuer, threatened (nor to the best of the knowledge of the Issuer is
there any basis therefor), which in any way questions the validity of the
<PAGE>
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 Underwriter that it will:
(a) Furnish or cause to be furnished to the Underwriter (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 the Underwriter, subject to such changes as the Underwriter
shall approve); the Issuer agrees that the Company may at its expense
furnish to the Underwriter, without charge, as many copies of the
Official Statement and any amendment or supplement thereto as the
Underwriter may reasonably request.
(b) Before amending or supplementing the Official Statement, furnish
to the Underwriter 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
Underwriter or the Company.
(c) During such period as the Underwriter believes delivery of the
Official Statement is necessary or desirable in connection with sales of
the Refunding Bonds by the 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 Underwriter and the
Company of such event and cooperate at the request of the Underwriter in
the preparation of amendments or supplements to the Official Statement
which in the judgment of the Underwriter 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.
<PAGE>
(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 Underwriter 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 Underwriter, 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 the Underwriter or any officer, director or
controlling person thereof, and shall survive the termination of this Purchase
Agreement and the delivery of and payment for the Refunding Bonds.
6. Conditions of Underwriter's Obligations. The Underwriter's
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, the
Installment Agreement, the Letter of Credit, the Letter of Credit Agreement
between the Company and the Bank, dated as of ___, 1995 and relating to the
Refunding Bonds (the "Letter of Credit Agreement") and the Remarketing
Agreement between the Company and the Remarketing Agent dated the Closing Date
relating to the Refunding Bonds (the "Remarketing 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;
<PAGE>
(b) Each of the Indenture, the Installment Agreement, the Letter of
Credit, the Remarketing Agreement and the Letter of Credit 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 Underwriter;
(c) Neither the Issuer nor the Company shall be in default in the
performance of any of its covenants and agreements herein or in the Letter of
Representation, respectively;
(d) Subsequent to the execution of this Purchase Agreement, there
shall not have been any downgrading of any rating by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group of any securities issued by
the Company or of any bonds issued by the Issuer with respect to the
Facilities or of the Refunding Bonds;
(e) The Underwriter 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 McCall, Parkhurst &
Horton L.L.P. ("Issuer's Counsel"), counsel for the Issuer, substantially
in the form attached hereto as Exhibit B;
(iv) An opinion, dated the Closing Date, of Milbank, Tweed,
Hadley & McCloy, special counsel for the 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 Underwriter, 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 Underwriter and its 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
Underwriter, 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
and the Remarketing Agreement or in any certificate delivered by the
Company hereunder or thereunder are true and correct in all material
respects on and as of the Closing Date as if made on and as of the
Closing Date, (B) all agreements to be complied with and obligations to
be performed by the Company pursuant to the Letter of Representation, the
Remarketing Agreement and the Letter of Credit Agreement or as
contemplated by the Letter of Representation, the Remarketing Agreement,
the Letter of Credit Agreement, 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
Underwriter, 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
Underwriter and Underwriter's counsel, by the Company and the Issuer
(which may be in the form of a single document);
(xii) Evidence, satisfactory to the Underwriter, of the ratings
on the Refunding Bonds;
(xiii) Such additional certificates (including appropriate no
litigation certificates), instruments or other documents as the
Underwriter or Underwriter's 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 Remarketing Agreement, the
Letter of Credit Agreement, 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;
<PAGE>
(xiv) An opinion, dated the Closing Date, of ____, counsel
for the Bank, with respect to the enforceability of the Letter of
Credit and certain matters contained in the Official Statement,
substantially in the form attached hereto as Exhibit G;
(xv) A copy of the Letter of Credit, duly executed by the
Bank and delivered to the Trustee, satisfactory in form and substance
to the Underwriter; and
(xvi) A certificate, satisfactory in form and substance to the
Underwriter, of one or more duly authorized officers of the Bank, to the
effect that the information with respect to the Bank (including Appendix
B) 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.
(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 Underwriter, 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, the
Installment Agreement, the Remarketing Agreement and the Letter of Credit
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 Remarketing Agreement, the Letter of Credit Agreement, the
Letter of Credit, 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 Underwriter 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 Underwriter as to the statements made therein;
(i) The Underwriter shall have received from the Company payment on
the Closing Date by wire transfer of the Underwriter's fees (___% of the
principal amount of the Refunding Bonds) as set forth in Section 5 of the
Letter of Representation; and
<PAGE>
(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
Underwriter, 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 Underwriter to Terminate. The Underwriter
may terminate its obligations to purchase the Refunding Bonds at any time
before Closing if any of the following occurs:
(a) A legislative, executive or regulatory action (including the
introduction or proposal for adoption of legislation, executive orders or
regulations) or a court decision which, in the sole judgment of the
Underwriter, 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 Underwriter, (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 Underwriter, 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 Underwriter, 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 Underwriter, makes it inadvisable to proceed with the
sale of the Refunding Bonds; provided, however, that the Underwriter shall not
exercise the termination right provided in this subparagraph (d) (i) until the
Underwriter shall have consulted with the Company with respect to the event or
condition at issue and (ii) so long as the Company and the Underwriter 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 Underwriter:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Municipal Department
The Issuer:
Guadalupe-Blanco River Authority
933 East Court Street
Seguin, Texas 78155
Attention: Director of Finance
<PAGE>
The Company:
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
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
other person. The term "successor" shall not include any holder of any
Refunding Bonds merely by virtue of such holding.
GUADALUPE-BLANCO RIVER AUTHORITY
By:_____________________________
Name:
Title:
MORGAN STANLEY & CO. INCORPORATED
By:______________________________
Francis J. Sweeney
Principal
<PAGE>
EXHIBIT 4
---------
APPENDIX A
CENTRAL POWER AND LIGHT COMPANY
LETTER OF REPRESENTATION
$40,890,000
Guadalupe-Blanco River Authority (Texas)
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
___________, 1995
Guadalupe-Blanco River Authority
933 East Court Street
Seguin, Texas 78155
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Ladies and Gentlemen:
1. Introduction and Background. Pursuant to a Bond Purchase
Agreement of even date herewith (the "Purchase Agreement") between Guadalupe-
Blanco River Authority (the "Issuer") and Morgan Stanley & Co. Incorporated
(the "Underwriter"), the Issuer has agreed to sell to the Underwriter, and the
Underwriter has 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 Underwriter, 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 Underwriter 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
Underwriter.
(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, the
Installment Agreement, the Remarketing Agreement and the Letter of Credit
Agreement.
(b) That the Company has duly approved the forms of the Resolution,
the Indenture and the Purchase Agreement. Each of the Installment Agreement,
the Remarketing Agreement and the Letter of Credit 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 Remarketing Agreement,
the Letter of Credit 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 Remarketing Agreement, the
Letter of Credit 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 Underwriter.
(c) That this Letter of Representation has been duly executed and
delivered by the Company.
(d) That the approval of the Resolution, the Indenture and the
Purchase Agreement, the execution and delivery of this Letter of
Representation, the Installment Agreement, the Remarketing Agreement and the
Letter of Credit 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 and the
Letter of Credit Agreement).
(e) That no consent, approval, authorization or order of any court
or governmental agency or body is required in respect of the approval of the
Resolution by 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, the Installment Agreement, the Remarketing
Agreement and the Letter of Credit Agreement or the consummation by the
Company of the transactions contemplated by the Purchase Agreement, this
Letter of Representation, the Installment Agreement, the Remarketing
Agreement, the Letter of Credit 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", "The Letter of
Credit", "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 Underwriter 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 Underwriter or McCall, Parkhurst & Horton
L.L.P., Bond Counsel, or Sidley & Austin, counsel to the Underwriter, 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 approving opinion of
the Attorney General of the State of Texas on the Refunding Bonds and to the
registration of the Refunding Bonds upon initial issuance by the Comptroller
of Public Accounts of the State of Texas, there is no action, suit, proceeding
or investigation, at law or in equity, before or by any court, governmental
agency or body or arbitrator, involving 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, by the Remarketing
Agreement, by the Letter of Credit Agreement or by the Official Statement or
(y) adversely affect the validity or enforceability of the Refunding Bonds,
the Installment Agreement, the Remarketing Agreement, the Letter of Credit
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 Remarketing Agreement, the Letter of Credit
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 Underwriter 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 Underwriter 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 Underwriter to satisfy requests for
such information, and enable the Underwriter to make such documents available
for inspection, as described in the Official Statement.
(d) During the period commencing on the date hereof and ending upon
completion of the distribution of the Refunding Bonds (but in no event later
than 90 days after the date of the Closing), promptly after filing any
document with the Commission pursuant to Section 13, 14 or 15(d) of the
Exchange Act, furnish a copy thereof to the Underwriter 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 the Underwriter, its respective officers,
directors, officials, employees and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively, "Indemnified Parties") from and
against any and all losses, claims, damages or liabilities to which such
Indemnified Party may become subject under the Securities Act, the Exchange
Act or the common law or otherwise, and to reimburse each such Indemnified
Party for any reasonable legal or other expenses (including reasonable counsel
fees) incurred by it or them in connection with defending against any such
losses, claims, damages or liabilities, arising out of or in connection with
the offering and sale of the Refunding Bonds (i) on the ground that the
Preliminary Official Statement or the Final Official Statement (except with
respect to the Issuer for the information relating to the Issuer under the
caption "The Issuer" and with respect to the Underwriter for information under
the caption "Underwriting" and any information furnished in writing by the
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 its acceptance hereof, the Underwriter 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 the 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 the 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 Underwriter 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 Underwriter 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 Remarketing Agreement, the
Letter of Credit Agreement, the Letter of Credit, 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 Underwriter
incurred in connection with qualifying the Refunding Bonds for sale under the
securities laws of various jurisdictions and preparing Blue Sky memoranda)
shall be paid by the Company. In addition, the Company shall pay to the
Underwriter on the Closing Date by wire transfer the fees of the Underwriter
in connection with the offering of the Refunding Bonds in an amount equal to
___% of the principal amount of the Refunding Bonds. The 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 Underwriter:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Municipal Department
The Issuer:
Guadalupe-Blanco River Authority
933 East Court Street
Seguin, Texas 78155
Attention: Director of Finance
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 Underwriter or
any person controlling the Underwriter 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:
GUADALUPE-BLANCO RIVER AUTHORITY
By:_____________________________
Name:
Title:
Accepted:
MORGAN STANLEY & CO. INCORPORATED
By:______________________________
Francis J. Sweeney
Principal
<PAGE>
EXHIBIT 12
----------
$40,890,000
Guadalupe-Blanco River Authority (Texas)
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
___________________________
REMARKETING AGREEMENT
___________________________
October __, 1995
Central Power and Light Company
539 N. Carancahua Street
Corpus Christi, Texas 78401
Ladies and Gentlemen:
This letter (this "Agreement") will confirm the agreement between
Central Power and Light Company (the "Company") and Morgan Stanley & Co.
Incorporated (the "Remarketing Agent") whereby the Remarketing Agent will act
as Remarketing Agent under the Indenture (hereinafter defined) in connection
with the remarketing by the Remarketing Agent of the Guadalupe-Blanco River
Authority (Texas) Pollution Control Revenue Refunding Bonds (Central Power and
Light Company Project) Series 1995, while such Bonds bear interest at the
Flexible Rate, the Daily Rate, the Weekly Rate, the Monthly Rate, the
Quarterly Rate, the Semiannual Rate and the Multiannual Rate (as defined in
the Indenture) (the "Bonds"). The Bonds were issued by Guadalupe-Blanco River
Authority of Texas (the "Authority") for the benefit of the Company pursuant
to a Resolution of the Authority (the "Resolution"), dated October 18, 1995,
and an Indenture of Trust dated as of October 1, 1995 (the "Indenture"),
between the Authority and The Bank of New York, as trustee (the "Trustee").
Pursuant to the Indenture, certain of the Authority's rights under
the Installment Payment Agreement dated as of October 1, 1995 relating to the
Bonds (the "Installment Agreement") between the Authority and the Company have
been assigned to the Trustee as security for the payment of the principal of,
premium, if any, and interest on the Bonds. In addition, the Company has
caused an irrevocable, direct pay letter of credit, dated the date hereof (the
"Letter of Credit"), issued by ABN AMRO Bank N.V. (the "Bank"), to be
delivered to the Trustee, providing for the Bank to make certain payments to
the Paying Agent (as defined in the Indenture) under the Indenture for the
benefit of the owners of the Bonds. The Bank will be entitled to
reimbursement for payments made under the Letter of Credit pursuant to the
terms of the Letter of Credit Agreement relating to the Bonds, dated as of
October __, 1995 between the Company and the Bank (the "Letter of Credit
Agreement").
Upon optional or mandatory tender for purchase in accordance with
their terms, the Bonds will be remarketed from time to time by the Remarketing
Agent in accordance with provisions contained herein and in the Indenture.
The Company understands that this Agreement does not constitute a commitment
or obligation, expressed or implied, on the part of the Remarketing Agent to
purchase any Bonds. The Remarketing Agent understands that this Agreement
does not constitute a commitment by the Company to remarket the Bonds through
the Remarketing Agent except to the extent provided herein. Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed
thereto in the Indenture.
1. The Company hereby appoints the Remarketing Agent as the
Remarketing Agent for the Bonds and the Remarketing Agent hereby confirms that
it satisfies the requirements for remarketing agents set forth in Section 8.02
of the Indenture, agrees to use its best efforts to remarket the Bonds,
subject to the terms and conditions contained herein and in the Indenture, and
accepts and agrees to perform the duties imposed on it as Remarketing Agent
under the Indenture. This Agreement provides for the remarketing of Bonds
tendered to the Paying Agent on any Purchase Date with respect to Bonds in the
Flexible, Daily, Weekly, Monthly, Quarterly, Semiannual or Multiannual Mode.
2. The Company hereby represents and warrants that:
(a) The Official Statement (as defined in the Bond Purchase
Agreement between the Authority and the Underwriter named therein, dated
October __, 1995 (the "Bond Purchase Agreement")) has been prepared by or on
behalf of the Company in form and substance satisfactory to the Company and
the Remarketing Agent for use in connection with the remarketing of the Bonds.
The Official Statement as of its date of issue did not, and the Official
Statement as of the date hereof does not, include any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, provided that no representation is made with
respect to (i) any information contained in Appendix B to the Official
Statement or (ii) any information furnished by the Remarketing Agent in
writing specifically for use in the Official Statement. The Company confirms
that it has consented to the use by the Remarketing Agent of the Official
Statement in connection with the remarketing of the Bonds. The Company
further represents and warrants that the consummation of the transactions
contemplated in this Agreement and the fulfillment of the terms hereof and of
the Installment Agreement and the Letter of Credit Agreement will not conflict
with, violate or result in a breach of any of the terms or provisions 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, any
indenture, commitment, agreement or other instrument to which the Company is a
party or by which it is bound or to which any of its property is subject, or
under any existing law, rule, regulation, judgment, ordinance, order or decree
to which the Company is subject.
(b) The information supplied by the Company with respect to the
Facilities and the use of proceeds from the issuance and sale of the Bonds as
described in the Installment Agreement, the Indenture and in the Official
Statement is true, correct and complete in all material respects for the
purposes for which it was supplied.
(c) Since the respective dates as of which information is given in
the Official Statement, except as may otherwise be stated or contemplated
therein, (i) there has been no material adverse change in the financial
condition of the Company or any adverse development concerning the Company's
business or assets which would reasonably be expected to result in a material
adverse change in the Company's prospective financial condition or results of
operations and (ii) there have been no material transactions entered into by
the Company other than those in the ordinary course of business.
(d) Each of this Agreement, the Installment Agreement and the Letter
of Credit Agreement have 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.
3. As compensation for its services hereunder, the Company shall
pay the Remarketing Agent a fee equal to [___-_____________ percent(____%)]
per annum of the weighted average principal amount of Bonds in the Flexible,
Daily, Weekly, Monthly, Quarterly, Semiannual or Multiannual Mode outstanding
during each three-month period, or such amount as may be agreed upon from time
to time by the Company and the Remarketing Agent, payable quarterly in arrears
on each April 1, July 1, October 1 and January 1, commencing January 1, 1996.
The Remarketing Agent will not be entitled to compensation pursuant to this
Agreement for any period after conversion of the interest rate on all of the
bonds to a Fixed Rate or after this Agreement shall be terminated (whichever
is earlier) except for a pro rata portion of the fee for the quarter in which
such conversion or termination occurs with respect to Bonds outstanding in the
Flexible, Daily, Weekly, Monthly, Quarterly, Semiannual or Multiannual Mode
for any period during such quarter. The Trustee shall have no responsibility,
obligation or liability with respect to any such payment.
4. The obligations of the Remarketing Agent to remarket the Bonds
under this Agreement shall be subject to (i) the accuracy of the
representations of the Company contained in this Agreement on each Purchase
Date with respect to the Bonds, (ii) the compliance and performance by the
Company of its obligations set forth in its Rule 15c2-12 Undertakings attached
hereto as Exhibit 1, which is hereby incorporated by reference herein, and
(iii) to the following further conditions:
(a) on the date hereof, the Indenture, the Installment Agreement,
the Letter of Representation, dated October __, 1995, between the Company and
the Underwriter, the Letter of Credit and the Letter of Credit Agreement shall
be in full force and effect as valid and binding agreements between or among
the various parties thereto and shall not have been amended, modified or
supplemented except as may have been agreed to in writing by the Remarketing
Agent, and the Resolution shall be in full force and effect;
(b) at or prior to the date hereof, the Trustee shall have received
the Letter of Credit duly executed by the Bank, or a replacement therefor duly
executed by the issuer thereof, and the Remarketing Agent and the Paying Agent
shall have each received a copy thereof, satisfactory in form and substance to
each of them; and
(c) at or prior to the date hereof, the Remarketing Agent shall have
received the applicable opinions described in Section 6(e) of the Bond
Purchase Agreement and the opinion of Sidley & Austin, counsel for the
Remarketing Agent, addressing certain matters relating to the use of funds to
make payments to the owners of the Bonds under the Indenture while the Letter
of Credit is in effect.
If the conditions to the Remarketing Agent's obligations contained in
this Agreement are not satisfied or if the Remarketing Agent's obligations
shall be terminated for any reason permitted by this Agreement, this Agreement
shall terminate.
5. (a)The Company will provide the Remarketing Agent with as many
copies of the Official Statement as the Remarketing Agent may reasonably
request, from time to time, to use in connection with the remarketing of the
Bonds.
(b) The Company agrees to furnish promptly to the Remarketing Agent
copies of all reports filed with the Securities and Exchange Commission, all
documents filed with any stock exchange, all documents mailed to the Company's
public securityholders and such other publicly distributed documents as the
Remarketing Agent may reasonably request for distribution to purchasers of
Bonds. The Company agrees to notify the Remarketing Agent immediately upon
the occurrence of: (1) any Event of Default under the Indenture or the Letter
of Credit Agreement or (2) any notice to the Company from the Trustee or the
Paying Agent under the Indenture that either intends to resign.
(c) (i)If at any time any event or other development occurs as a
result of which the Official Statement includes an untrue statement of
material fact or omits to state any material fact necessary in order to make
the statements contained therein, in the light of the circumstances under
which they were made, not misleading, the Company will promptly notify the
Remarketing Agent thereof, and the Remarketing Agent will not thereafter use
the Official Statement or remarket such Bonds until an appropriately revised
Official Statement is available. The Company shall prepare and deliver
promptly, and at the Company's expense, as many copies of such a revised
Official Statement as the Remarketing Agent may reasonably request. Each
remarketing of a Bond for the Company by the Remarketing Agent involving the
use of the Official Statement shall constitute a representation by the Company
that the Official Statement (including any documents incorporated by reference
therein) at the time of such remarketing does not include an untrue statement
of a material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(ii)The Company agrees to indemnify and hold harmless the Remarketing
Agent, its officers, directors, officials, employees and each person, if any,
who controls the Remarketing Agent within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, the
"Indemnified Parties") from and against any and all losses, claims, damages
and 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 remarketing of any Bonds
pursuant to this Agreement on the ground that the Official Statement used in
connection therewith included any untrue statement or an alleged untrue
statement of material fact or any omission or an alleged omission to state any
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided,
however, that this indemnity agreement shall not apply to any such losses,
claims, damages, liabilities, expenses or actions arising out of, or based
upon, any such untrue statement or alleged untrue statement, or any such
omission or alleged omission, if such statement or omission was made in
reliance upon information furnished in writing to the Company by the
Remarketing Agent expressly for use in connection with the preparation of the
Official Statement or any amendment or supplement thereto.
(iii)The Remarketing Agent agrees that, upon the receipt of notice of
the commencement of any action against it or any other Indemnified Party, in
respect of which indemnity may be sought on account of the indemnity agreement
contained herein, it will promptly give written notice of the commencement
thereof to the Company, but the omission so to notify the Company of any such
action shall not relieve the Company from any liability which it has to the
Indemnified Party otherwise than on account of such indemnity agreement. In
case such notice of any such action shall be so given, the Company shall be
entitled to participate at its own expense in the defense or, if it so elects
by written notice to the Indemnified Party, to assume the defense of such
action (thereby conceding that the action in question is subject to
indemnification hereunder), in which event such defense shall be conducted by
counsel chosen by the Company and satisfactory to the Indemnified Party or
Parties who shall be defendant or defendants in such action, and such
defendant or defendants shall bear the fees and expenses of any additional
counsel retained by them; but if the Company shall elect not to assume the
defense of such action, the Company will reimburse such Indemnified Party or
Parties for the reasonable fees and expenses of any counsel retained by them;
provided, however, that if the defendants in any such action include both an
Indemnified Party and the Company and the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest involved in the
representation by such counsel of both the Company and such Indemnified Party
and/or other Indemnified Parties, the Indemnified Party or Parties shall have
the right to select separate counsel, satisfactory to the Company, to
participate in the defense of such action on behalf of such Indemnified Party
or Parties (it being understood, however, that the Company shall not be liable
for the expenses of more than one separate counsel representing the
Indemnified Parties who are parties to such action).
(iv)If the indemnification provided for in subparagraph 5(c)(ii)
above shall be unenforceable under applicable law by an Indemnified Party, the
Company agrees to contribute to such Indemnified Party with respect to any and
all losses, claims, damages, liabilities and expenses for which such
indemnification provided for in subparagraph 5(c)(ii) above shall be
unenforceable, in such proportion as shall be 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 which have resulted in
such losses, claims, damages, liabilities and expenses, as well as any other
relevant equitable considerations; provided, however, that 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, provided that the Company is not guilty of such fraudulent
misrepresentation. 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 or the Indemnified Party and the Company's
and each such Indemnified Party's relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The Company and the Remarketing Agent agree that it would not be
just and equitable if contribution pursuant to this subparagraph 5(c)(iv) were
to be determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above.
The obligations of the Company under this subparagraph 5(c)(iv) shall be in
addition to any obligation or liability which the Company may have otherwise
than on account of the indemnity agreement in subparagraph 5(c)(ii).
6. The Company will not permit the amendment of the Indenture
without first informing the Remarketing Agent and will promptly furnish to the
Remarketing Agent a copy of any amendment to the Indenture.
7. The Company will cooperate with the Remarketing Agent in
obtaining the qualification of the Bonds for resale pursuant to this Agreement
under the laws of such jurisdictions as the Remarketing Agent designates, and
will use its best efforts to continue such qualifications in effect so long as
required for the resale of the Bonds, provided that the Company shall not be
required to qualify to do business as a foreign corporation or file a general
consent to service of process in any state or jurisdiction other than Texas.
The Company also agrees to reimburse the Remarketing Agent for any reasonable
fees or costs incurred in so qualifying the Bonds.
8. (a)This Agreement will continue in effect until terminated as
provided herein. This Agreement may be terminated by the Company by giving 30
days' written notice of its election to do so to the Remarketing Agent; or by
the Remarketing Agent by giving not less than 30 days' written notice of its
election to do so to the Company; provided, however, that the provisions of
paragraph 5(c) hereof and the last sentence of paragraph 7 hereof will
continue in effect subsequent to any such termination for a period of three
years after the last date of any remarketing of Bonds pursuant to this
Agreement.
(b) Notwithstanding anything contained in the preceding paragraph,
the Remarketing Agent may cease to remarket the Bonds pursuant to this
Agreement and terminate or suspend this Agreement with immediate effect, if
(i) the Company fails to provide the Remarketing Agent with the Official
Statements requested pursuant to paragraph 5(a) or 5(c) hereof or (ii) any
Official Statement so provided, in the reasonable judgment of the Remarketing
Agent, includes an untrue statement of a material fact or an omission to state
any material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. Each
party will pay the other any amounts owing at the time of termination.
9. The Remarketing Agent, in its individual capacity, either as
principal or agent, may buy, sell, own, hold and deal in any of the Bonds, and
may join in any action which any owner of Bonds may be entitled to take with
like effect as if it did not act in any capacity hereunder. The Remarketing
Agent, in its individual capacity, either as principal or agent, may also
engage in or be interested in any financial or other transaction with the
Company and may act as depository, trustee, or agent for any committee or body
of owners of Bonds or other obligations of the Company as freely as if it did
not act in any capacity hereunder.
10. It is the express intention of the parties hereto that no
remarketing, sale or transfer of any Bonds, as provided herein, shall
constitute or be construed to be the extinguishment of any Bond or the
refunding of any indebtedness represented thereby.
11. This Agreement may not be amended except by a writing signed by
each of the parties hereto, may not be assigned without the mutual consent of
the parties hereto, and, except as otherwise expressly provided herein, will
not confer any rights upon any other person or any holders of Bonds in their
capacities as such. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
12. This Agreement shall be binding upon and inure solely to the
benefit of the Remarketing Agent and the Company and, to the extent set forth
herein, persons controlling the Remarketing Agent and the Company, and their
personal representatives, successors and assigns, and no other person or firm
shall acquire or have any right under or by virtue of this Agreement.
13. This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original and shall be binding upon the
parties, their successors and assigns.
If the foregoing is in accordance with your understanding please
confirm the same by signing and returning a copy hereof.
Yours very truly,
MORGAN STANLEY & CO. INCORPORATED
By:______________________________
Name:
Title:
Confirmed as of the above date:
CENTRAL POWER AND LIGHT COMPANY
By:____________________________
Name:
Title:
