<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________
:
In the Matter of :
:
CENTRAL POWER AND LIGHT COMPANY : CERTIFICATE
:
File No. 70-8677 : OF
:
(Public Utility Holding Company Act of 1935) : NOTIFICATION
:
_______________________________________________:
Central Power and Light Company (the "Company"), an
electric utility subsidiary of Central and South West Corporation
("CSW"), hereby certifies that:
1. On October 31, 1995, the Board of Directors of the
Company authorized the execution, delivery and performance by the
Company of (i) an Installment Payment Agreement between
Guadalupe-Blanco River Authority (Texas) (the "District") and the
Company, (ii) a Remarketing Agreement between Morgan Stanley &
Co. Incorporated (the "Remarketing Agent") and the Company, and
(iii) a Letter of Credit Agreement between ABN AMRO Bank N.V.
(the "Letter of Credit Bank") and the Company, and approved the
form and provisions of a Bond Purchase Agreement between the
District and Morgan Stanley & Co. Incorporated (the
"Underwriter").
2. On October 31, 1995, the Company approved the terms
of the Bond Purchase Agreement which provided for the purchase by
the Underwriter of $40,890,000 aggregate principal amount of the
District's Pollution Control Revenue Refunding Bonds (Central
Power and Light Company Project) Series 1995 (the "Refunding <PAGE>
Bonds") due
November 1, 2015. The Bond Purchase Agreement provided that the Underwriter
would pay the District 100% of the principal amount of the Refunding Bonds.
3. The Installment Payment Agreement dated as of
October 1, 1995, was executed by the parties thereto in the form
filed herewith as Exhibit 1(a). The Remarketing Agreement dated
November 2, 1995, was executed by the parties thereto in the form
filed herewith as Exhibit 12(a). The Letter of Credit Agreement
dated as of October 1, 1995, was executed by the parties thereto
in the form filed herewith as Exhibit 13(a).
4. On November 2, 1995, the District issued, sold and
delivered $40,890,000 aggregate principal amount of its Refunding
Bonds at 100% of their principal amount, being the price
specified in the Bond Purchase Agreement.
5. The above-described transactions have been carried
out in accordance with the terms and conditions of, and for the
purposes represented in, the Form U-1 Application-Declaration of
the Company, in File No. 70-8677, and in accordance with the
terms and conditions of the Commission's order dated October 13,
1995, permitting said Application-Declaration to become
effective.
<PAGE>
The following exhibits (in the final form thereof in
which executed, filed or used) are filed herewith:
Exhibit 1(a) - Installment Payment Agreement, dated as
of October 1, 1995, between the Company
and the District.
Exhibit 2(a) - Indenture of Trust, dated as of October
1, 1995, between the District and the
Trustee.
Exhibit 3(a) - Bond Purchase Agreement, dated November
2, 1995, between the District and the
Underwriter.
Exhibit 4(a) - Letter of Representation, dated
November 2, 1995, from the Company to
the Issuer and the Purchasers.
Exhibit 5(a) - Official Statement relating to the
Bonds, dated November 2, 1995.
Exhibit 7(a) - Final or "past tense" opinion of
Milbank, Tweed, Hadley & McCloy,
counsel to CSW and the Company.
Exhibit 12(a) - Remarketing Agreement, dated November
2, 1995, between the Remarketing Agent
and the Company.
Exhibit 13(a) - Letter of Credit Agreement, dated as of
October 1, 1995, between the Company
and the Letter of Credit Bank.
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: November 13, 1995
CENTRAL POWER AND LIGHT COMPANY
By: /s/SHIRLEY S. BRIONES
Shirley S. Briones
Treasurer
INDEX TO EXHIBITS
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1(a) Installment Payment Agreement, Electronic
dated as of October 1, 1995,
between the Company and the
District.
2(a) Indenture of Trust, dated as of Electronic
October 1, 1995, between the
District and the Trustee.
3(a) Bond Purchase Agreement, dated Electronic
November 2, 1995, between the
District and the Underwriter.
4(a) Letter of Representation, dated Electronic
November 2, 1995, from the Company
to the Issuer and the Purchasers.
5(a) Official Statement relating to Electronic
the Bonds, dated November 2, 1995.
7(a) Final or "past tense" opinion of Electronic
Milbank, Tweed, Hadley & McCloy,
counsel to CSW and the Company.
12(a) Remarketing Agreement, dated Electronic
November 2, 1995, between the
District and the Company.
13(a) Letter of Credit Agreement, Electronic
dated as of October 1, 1995,
between the Company and the
Letter of Credit Bank.
<PAGE>
EXHIBIT 1(a)
------------
INSTALLMENT PAYMENT AGREEMENT
between
GUADALUPE-BLANCO RIVER AUTHORITY
and
CENTRAL POWER AND LIGHT COMPANY
Dated as of
October 1, 1995
Relating to
Guadalupe-Blanco River Authority
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
<PAGE>
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 . . . . . . . . . . . . . . 3
Section 2.02. Representations by Company. . . . . . . . . . . . . . 4
ARTICLE III
The Projects
Section 3.01. Intentionally Omitted . . . . . . . . . . . . . . . . 6
Section 3.02. Intentionally Omitted . . . . . . . . . . . . . . . . 6
Section 3.03. Intentionally Omitted . . . . . . . . . . . . . . . . 6
Section 3.04. Maintenance and Repair . . . . . . . . . . . . . . . 6
Section 3.05. Right to Discontinue Operation of Projects . . . . . 6
Section 3.06. Insurance and Condemnation Awards . . . . . . . . . . 6
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 . . . . . . . . . . . . . . . . . . 7
Section 4.02. Bond Proceeds . . . . . . . . . . . . . . . . . . . . 7
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 . . . . . . 8
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. . . . . . . . . . . . . 9
Section 5.09. Company Option to Designate Interest Rate
Determination Methods . . . . . . . . . . . . . . . . 9
i<PAGE>
TABLE OF CONTENTS
CONTINUED
Section 5.10. Purchase of Bonds . . . . . . . . . . . . . . . . . . 10
Section 5.11. Usury . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.12. Letter of Credit. . . . . . . . . . . . . . . . . . . 10
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 . . . . 14
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 . . . . . . . . . . . . . . . . . . . . . 15
Section 7.04. Tax-Exempt Status of the Bonds. . . . . . . . . . . . 16
Section 7.05. Arbitrage Covenants . . . . . . . . . . . . . . . . . 17
Section 7.06. Payment to Rebate Fund. . . . . . . . . . . . . . . . 17
Section 7.07. Qualification in Texas . . . . . . . . . . . . . . . 17
Section 7.08. Recordation . . . . . . . . . . . . . . . . . . . . . 17
Section 7.09. No Personal Liability . . . . . . . . . . . . . . . . 17
Section 7.10 Compliance with Rule 15c2-12. . . . . . . . . . . . . 17
ARTICLE VII
General Provisions
Section 8.01. General Provisions. . . . . . . . . . . . . . . . . . 18
Section 8.02. Intentionally Omitted . . . . . . . . . . . . . . . . 18
Section 8.03. Amendment of Agreement. . . . . . . . . . . . . . . . 18
Section 8.04. Assignment. . . . . . . . . . . . . . . . . . . . . . 18
Section 8.05. Term of Agreement . . . . . . . . . . . . . . . . . . 19
Section 8.06. Notices . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.07. Severability. . . . . . . . . . . . . . . . . . . . . 19
Section 8.08. Execution of Counterparts . . . . . . . . . . . . . . 19
Section 8.09. Governing Law . . . . . . . . . . . . . . . . . . . . 19
Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
ii<PAGE>
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 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
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, from payment made or
caused to be made by the Company hereunder, or from any funds which otherwise
might be made available by the Company; and it is expressly agreed that the
Issuer shall have no financial liability, obligation, or responsibility with
respect to this Agreement or the 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 other-
wise might be made available to the Issuer for such purpose by the Company,
the cost of the Refunding of the Prior Bonds, to the full extent provided in
this Agreement and permitted by the Acts.
Section 4.02. BOND PROCEEDS. (a)The Issuer shall cause to be deposited
into a separate account within the bond fund established pursuant to the
Series 1974 Indenture proceeds from the sale of the Bonds equal to $7,425,000,
and the Company shall cause to be deposited into such separate account the
amount of $268,924.22, which together shall be sufficient to pay the scheduled
December 1, 1995 interest payment and to pay the redemption price of and
redeem $7,425,000 in aggregate principal amount of the Series 1974A Bonds on
December 4, 1995.
(b) The Issuer shall cause to be deposited into a separate account
within the debt service fund established pursuant to the Series 1977 Indenture
proceeds from the sale of the Bonds equal to $33,465,000, and the Company
shall cause to be deposited into such separate account the amount of
$184,057.50, which together shall be sufficient to pay the redemption price of
and redeem $33,465,000 in aggregate principal amount of the Series 1977 Bonds
on December 4, 1995.
(c) The Company agrees to pay all fees, charges and expenses of the
trustee banks for the Prior Bonds as required by the Prior Indentures.
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 simultaneously with
the issuance of the Bonds, the Issuer will assign to the Trustee under the
terms of the Indenture all of the Issuer's right, title, and interest in and
to the Installment Payments and certain other rights under this Agreement as
provided in the Indenture.
Section 4.04. BOND FUNDS. The Issuer has authorized and directed the
Trustee pursuant to the Indenture to transfer all of the proceeds from the
sale of the Bonds to the Prior 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.
<PAGE>
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 constitutes the
acknowledgement and agreement of the Company that the Bonds, when issued,
sold, and delivered as provided in the Bond Resolution and the Indenture, will
be issued in accordance with and in compliance with this Agreement,
notwithstanding any other provisions of this Agreement or any other contract
or agreement to the contrary. Any Bondholder is entitled to rely fully and
unconditionally on the foregoing approval. Notwithstanding any provisions of
this Agreement or any other contract or agreement to the contrary, the
Company's approval of the Bond Resolution and the Indenture shall be the
Company's agreement that all covenants and provisions in this Agreement and
the Indenture affecting the Company shall, upon the delivery of the Bonds and
the Indenture, become unconditional, valid, and binding covenants and
obligations of the Company so long as the Bonds and the interest thereon are
outstanding and unpaid. Particularly, the obligation of the Company to make,
promptly when due, all Installment Payments specified in this Agreement and
the Indenture shall be absolute and unconditional, 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. If the amount on deposit in any fund is insufficient on any Interest
Payment Date, redemption date or Purchase Date to make the payment due on such
date, the Company shall deposit sufficient moneys in such fund to enable such
payment to be made on such date.
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 installments so in default shall
continue as an obligation of the Company until the amount in default shall
have been fully paid.
Section 5.08. PAYMENT TO REMARKETING AGENT. The Company agrees to pay
to the Remarketing Agent the reasonable fees, costs and expenses set forth in
the Remarketing Agreement.
Section 5.09. COMPANY OPTION TO DESIGNATE INTEREST RATE DETERMINATION
METHODS. The Company is hereby granted the option to designate from time to
time changes in interest rate determination methods in the manner and to the
extent set forth in Section 2.02 of the Indenture. In the event the Company
elects to exercise any such option, the 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 reduced to the extent that funds are received
by the Trustee or the Paying Agent from the remarketing of the Bonds by the
Remarketing Agent or, in the event sufficient funds are not available from
such remarketing, from a draw on the Letter of Credit or, in the event
sufficient funds are not available from such sources, from the Company.
(b) The Issuer shall have no obligation or responsibility, financial
or otherwise, with respect to the purchase of Bonds or the making or
continuation of arrangements therefor other than as expressly set forth in
subsection (a) of this Section 5.10, except that the Issuer shall generally
cooperate with the Company and the Remarketing Agent as contemplated by the
Indenture.
Section 5.11. USURY. Anything herein to the contrary notwithstanding,
it is the intention of the parties hereto to conform strictly to the usury
laws in force that are applicable to this transaction. Accordingly, all
agreements among the parties hereto and beneficiaries hereof and their assigns
or any of them, whether now existing or hereafter arising, and whether written
or oral, are hereby limited so that in no contingency, whether by reason of
acceleration of amounts due hereunder or any part thereof or otherwise, shall
the interest (including all sums that are deemed to be interest) contracted
for, charged or received hereunder and/or with respect to the refinancing of
the Projects 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 or cause to be delivered 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 Letter of Credit. 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 reduced to the extent that payments are 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; 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 judgment 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) dissolution or liquidation of the Company. However, the term
"dissolution or liquidation of the Company", as used in this para-
graph, shall not be construed to include the cessation of the
corporate existence of the Company resulting either from a merger or
consolidation of the Company into or with another corporation or a
dissolution or liquidation of the Company following a transfer of all
or substantially all of its assets as an entirety under the conditions
permitting such actions contained in Section 7.02; or
(g) the Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization, or other relief with
respect to itself or its debts under any bankruptcy, insolvency, or
other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian, or other
similar official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of or taking
possession by any such official in an involuntary case or other
proceeding commenced against it, or shall make a general assignment
for the benefit of creditors, or shall fail generally to pay its debts
as they become due, or shall take any corporate action to authorize
any of the foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization, or other
relief with respect to it or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian, or
other similar official of it or any substantial part of its property,
and such involuntary case or other proceeding shall remain undismissed
and unstayed for a period of sixty (60) days; or
(i) the occurrence of an "Event of Default" under the Indenture.
The provisions of paragraph (d) of this Section 6.01 are subject to the
following limitations: if by reason of acts of God, strikes, lockouts or
other industrial disturbances; acts of public enemies; orders or regulations
of any kind of the government of the United States of America or of the State
of Texas or any of their departments, agencies, political subdivisions, or
officials, or any civil military authority; insurrections; riots; epidemics;
landslides; lightning; earthquakes; tidal waves; fires; hurricanes; tornadoes;
blue northers; other storms; floods; washouts; droughts; arrests; restraints
of government and people; civil disturbances; explosions; breakage or accident
to machinery, transmission pipes, transmission facilities or canals; partial
or entire failure of utilities; shortages of labor, material, supplies or
transportation; or any other cause or event not reasonably within the control
of the Company (collectively, "events of force majeure"), the Company is
unable in whole or in part to carry out the agreements on the Company's part
herein contained, the Company shall not be deemed in default during the
continuance of such inability. The Company, however, will use its best
efforts to remedy with all reasonable dispatch the cause or causes preventing
the Company from carrying out such agreements; provided, that the settlement
of strikes, lockouts and other industrial disturbances shall be entirely
within the discretion of the Company, and the Company shall not be required to
make settlement of strikes, lockouts, and other industrial disturbances by
acceding to the demands of the opposing party or parties when such course is,
in the judgment of the 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 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, howev-
er, 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 Indem-
nified 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.
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 103(b)(13) of the Internal Revenue Code of 1954 (the "1954 Code").
To that end, the Company and the Issuer (to the extent reasonably within the
control of the Issuer) covenant with each other, and with the Trustee for the
benefit of the Bondholders, to refrain from any action which would adversely
affect, and to take such action to assure, the treatment of the Bonds as
obligations described in Section 103 (a) of the Code, the interest on which is
not includable in the "gross income" of the holder (other than the income of a
"substantial user" of the Projects or a "related person" within the meaning of
Section 103(b)(13) of the 1954 Code) for purposes of federal income taxation.
Furthermore, the Company hereby covenants as follows:
(a) to use all of the proceeds of the Bonds for the payment of
principal on the Prior Bonds;
(b) to refrain from using the facilities constituting the Project
in a manner that would result in the Bonds not being "exempt facility
bonds" within the meaning of Section 103(b)(4) of the 1954 Code.
(c) to refrain from taking any action that would result in the
Bonds being "federally guaranteed" within the meaning of Section
149(b) of the Code;
(d) to refrain from using any portion of the proceeds of the
Bonds, directly or indirectly, to acquire or to replace funds which
were used, directly or indirectly, to acquire investment property (as
defined in Section 148(b)(2) of the Code) which produces a materially
higher Yield over the term of the Bonds than the Yield on the Bonds,
other than investment property acquired with --
(1) proceeds of the Bonds invested for a period of 90 days or
less until such proceeds are needed for the purpose for which the
Bonds are issued,
(2) amounts invested in a bona fide debt service fund, within
the meaning of Section 1.148-1 of the Regulations, and
(3) amounts deposited in any reasonably required reserve or
replacement fund to the extent such amounts do not exceed 10
percent of the proceeds of the Bonds and to the extent that at no
time during any bond year will the aggregate amount so invested
exceed 150 percent of debt service on the Bonds for such year;
(e) to otherwise restrict the use or investment of the proceeds of
the Bonds or amounts treated as proceeds of the Bonds, as may be
necessary, to satisfy the requirements of Section 148 of the Code
(relating to arbitrage);
(f) to provide to the Trustee, at such time as required by the
Trustee, all information required by the Trustee with respect to
Nonpurpose Investments not held in any fund under the Indenture; and
(g) to use no more than 2 percent of the gross proceeds of the
Bonds for the payment of costs of issuance.
The terms Nonpurpose Investments, Excess Earnings, and Yield shall
have the meanings 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 within
their respective control, which would result in a loss of the exemption from
federal income taxation of interest on the Bonds by virtue of the Bonds being
considered "arbitrage bonds" within the meaning of Section 148 of the Code.
Section 7.06. PAYMENT TO REBATE FUND. The Company hereby covenants and
agrees to make the determinations and to pay any deficiency in the Rebate
Fund, at the times and as described in Section 4.10 of the Indenture. In any
event, if the amount of cash held in the Rebate Fund shall be insufficient to
permit the Trustee to make payment to the United States of any amount due
under Section 148(f)(2) of the Code, the Company forthwith shall pay the
amount of such insufficiency on such date to the Trustee in immediately
available funds. The obligations of the Company under this Section 7.06 are
direct obligations of the Company, acting under the authorization of, and on
behalf of, the Issuer and the Issuer shall have no further obligation or duty
with respect to the Rebate Fund.
Section 7.07. QUALIFICATION IN TEXAS. The Company agrees that, so long
as it owns and operates the Projects, 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 November 2, 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
Sections 9.05 and 9.06 of the Indenture. A copy of any such amendment,
change, addition to, or waiver shall be provided to the Trustee.
Notwithstanding any of the foregoing or anything in the Indenture to the
contrary, it is covenanted and agreed, for the benefit of the holders of the
Bonds and the Trustee, that the provisions of this Agreement shall not be
amended, changed, added to, or waived in any way which would relieve, reduce
or abrogate the obligations of the Company to make or pay, or cause to be made
or paid, when due, any and all Installment Payments with respect to any then
Outstanding Bonds, in the manner and under the terms and conditions provided
herein and in the Bond Resolution or Indenture, or which would change or
affect Article II, Sections 5.01, 5.03, 5.04, 5.05, 5.06, 5.10, 6.01, 7.01,
7.02, 8.03, or 8.04 hereof or the provisions of this sentence unless, in the
judgment of the Trustee, such change or amendment would not materially
adversely affect the interests of the Bondholders.
Section 8.04. ASSIGNMENT. 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.
<PAGE>
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 Power and Light Company
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone No.: (214) 777-1205
Telecopy No.: (214) 777-1223
or the latest address specified by such other party in writing.
Section 8.07. SEVERABILITY. If any clause, provision or Section of
this Agreement should be held illegal or invalid by any court, the invalidity
of such clause, provision or Section shall not affect any of the remaining
clauses, provisions or Sections hereof and this Agreement shall be construed
and enforced as if such illegal or invalid clause, provision or Section had
not been contained herein. In case any agreement or obligation contained in
this Agreement should be held to be in violation of law, then such agreement
or obligation shall be deemed to be the agreement or obligation of the Company
or the Issuer, as the case may be, to the full extent permitted by law.
Section 8.08. EXECUTION OF COUNTERPARTS. This Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
Section 8.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
EXCLUSIVELY BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE
STATE OF TEXAS. VENUE FOR ANY ACTIONS BROUGHT HEREUNDER TO WHICH THE ISSUER
IS A PARTY SHALL LIE IN GUADALUPE COUNTY, TEXAS.
<PAGE>
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
<PAGE>
EXHIBIT A
<PAGE>
<PAGE>
EXHIBIT 2(a)
------------
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
<PAGE>
TABLE OF CONTENTS
Preamble. . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clauses. . . . . . . . . . . . . . . . . . . . 2
Article I
Definitions and Interpretation
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . 4
Section 1.02. Article and Section Headings. . . . . . . . . . . . . 11
Section 1.03. Interpretation. . . . . . . . . . . . . . . . . . . . 11
Article II
Authorization and Issuance of the Bonds
Section 2.01. Authorization of Bonds. . . . . . . . . . . . . . . . 12
Section 2.02. Interest. . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.03. Form of Bond. . . . . . . . . . . . . . . . . . . . . 24
Section 2.04. Execution; Limited Obligations. . . . . . . . . . . . 39
Section 2.05. Conditions Precedent to Delivery of Bonds;
Authentication. . . . . . . . . . . . . . . . . . . 40
Section 2.06. Redemption of Bonds. . . . . . . . . . . . . . . . . 40
Section 2.07. Notice of Redemption. . . . . . . . . . . . . . . . . 42
Section 2.08. Redemption Payments; Effect of Call for
Redemption. . . . . . . . . . . . . . . . . . . . . 43
Section 2.09. Partial Redemption. . . . . . . . . . . . . . . . . . 43
Section 2.10. Remarketing and Purchase. . . . . . . . . . . . . . . 43
Section 2.11. Mandatory Tenders for Purchase. . . . . . . . . . . . 46
Article III
General Provisions
Section 3.01. Authorization for Indenture; Indenture to
Constitute Contract . . . . . . . . . . . . . . . . 47
Section 3.02. Payment of Principal, Premium, if any, and
Interest. . . . . . . . . . . . . . . . . . . . . . 47
Section 3.03. Performance of Covenants; Issuer Warranties . . . . . 47
Section 3.04. Instruments of Further Assurance. . . . . . . . . . . 47
Section 3.05. Recordation . . . . . . . . . . . . . . . . . . . . . 47
Section 3.06. Registration of Bonds; Trustee Appointed Bond
Registrar; Persons Treated as Owners. . . . . . . . 48
Section 3.07. Book-Entry Only System. . . . . . . . . . . . . . . . 48
Section 3.08. Successor Securities Depository; Transfers
Outside Book-Entry Only System. . . . . . . . . . . 49
Section 3.09. Payments to Cede & Co.. . . . . . . . . . . . . . . . 49
Section 3.10. Cancellation. . . . . . . . . . . . . . . . . . . . . 49
Section 3.11. Non-presentment of Bonds. . . . . . . . . . . . . . . 49
Section 3.12. Rights under Agreement. . . . . . . . . . . . . . . . 50
Section 3.13. Legal Existence of Issuer . . . . . . . . . . . . . . 50
Section 3.14. Diminution of, or Encumbrance on, Trust Estate. . . . 50
Section 3.15. Books, Records and Accounts . . . . . . . . . . . . . 50
Section 3.16. Temporary Bonds . . . . . . . . . . . . . . . . . . . 50
Section 3.17. Mutilated, Lost, Stolen or Destroyed Bonds. . . . . . 50
Section 3.18. Intentionally Omitted . . . . . . . . . . . . . . . . 51
Section 3.19. Arbitrage Covenants . . . . . . . . . . . . . . . . . 51
i<PAGE>
Article IV
Use of Proceeds; Revenues and Funds
Section 4.01. Application of Original Proceeds of Bonds . . . . . . 52
Section 4.02. Creation of Bond Fund . . . . . . . . . . . . . . . . 52
Section 4.03. Payments into Bond Fund and Use of Moneys in
Bond Fund . . . . . . . . . . . . . . . . . . . . . 52
Section 4.04. Creation and Use of Bond Purchase Fund. . . . . . . . 53
Section 4.05. Investment of Moneys. . . . . . . . . . . . . . . . . 54
Section 4.06. Moneys to be Held in Trust. . . . . . . . . . . . . . 54
Section 4.07. Repayment to Company from Indenture Funds . . . . . . 54
Section 4.08. Custody of Funds and Accounts . . . . . . . . . . . . 54
Section 4.09. Exemption from Federal Income Taxation. . . . . . . . 54
Section 4.10. Covenants Regarding Rebate. . . . . . . . . . . . . . 54
Article V
Discharge
Section 5.01. Discharge . . . . . . . . . . . . . . . . . . . . . . 57
Article VI
Events of Default and Remedies
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . 58
Section 6.02. Acceleration. . . . . . . . . . . . . . . . . . . . . 58
Section 6.03. Other Remedies; Rights of Bond Owners . . . . . . . . 59
Section 6.04. Right of Bond Owners to Direct Proceedings. . . . . . 60
Section 6.05. Appointment of Receiver . . . . . . . . . . . . . . . 60
Section 6.06. Waiver of Certain Laws. . . . . . . . . . . . . . . . 60
Section 6.07. Application of Moneys . . . . . . . . . . . . . . . . 60
Section 6.08. Remedies Vested in Trustee. . . . . . . . . . . . . . 61
Section 6.09. Rights and Remedies of Bond Owners. . . . . . . . . . 61
Section 6.10. Termination of Proceedings. . . . . . . . . . . . . . 62
Section 6.11. Waivers of Events of Default. . . . . . . . . . . . . 62
Section 6.12. Notice of Default; Opportunity to Cure Defaults . . . 62
Article VII
The Trustee
Section 7.01. Acceptance of Trust . . . . . . . . . . . . . . . . . 63
Section 7.02. Fees, Charges and Expenses of Trustee . . . . . . . . 65
Section 7.03. Trustee to Provide Additional Notices . . . . . . . . 65
Section 7.04. Intervention by Trustee . . . . . . . . . . . . . . . 65
Section 7.05. Successor Trustee by Merger . . . . . . . . . . . . . 66
Section 7.06. Resignation by Trustee. . . . . . . . . . . . . . . . 66
Section 7.07. Removal of Trustee. . . . . . . . . . . . . . . . . . 66
Section 7.08. Appointment of Successor Trustee. . . . . . . . . . . 66
Section 7.09. Successor Trustee by Appointment. . . . . . . . . . . 66
Section 7.10. Appointment of Separate Trustee or Co-Trustee . . . . 66
Section 7.11. Qualifications. . . . . . . . . . . . . . . . . . . . 67
Section 7.12. Paying Agent. . . . . . . . . . . . . . . . . . . . . 67
ii<PAGE>
Article VIII
The Remarketing Agent
Section 8.01. The Remarketing Agent . . . . . . . . . . . . . . . . 68
Section 8.02. Qualifications of Remarketing Agent . . . . . . . . . 68
Article IX
Supplemental Indentures
Section 9.01. Supplemental Indentures Not Requiring Consent of
Bond Owners . . . . . . . . . . . . . . . . . . . . 69
Section 9.02. Supplemental Indentures Requiring Consent of
Bond Owners . . . . . . . . . . . . . . . . . . . . 69
Section 9.03. Limitation upon Amendments and Supplements. . . . . . 70
Section 9.04. Consent of Company Required . . . . . . . . . . . . . 70
Section 9.05. Amendments to Agreement . . . . . . . . . . . . . . . 70
Section 9.06. Consent of Bank . . . . . . . . . . . . . . . . . . . 70
Section 9.07. Opinion of Counsel. . . . . . . . . . . . . . . . . . 70
Article X
Letter of Credit
Section 10.01. Extension in Anticipation of Expiration. . . . . . . 71
Section 10.02. Replacement of the Letter of Credit . . . . . . . . . 71
Section 10.03. Notice to Holders . . . . . . . . . . . . . . . . . . 71
Section 10.04. Reduction . . . . . . . . . . . . . . . . . . . . . . 71
Section 10.05. Other Credit Enhancement; No Credit Enhancement . . . 72
Section 10.06. Amendment of Letter of Credit . . . . . . . . . . . . 72
Article XI
Miscellaneous
Section 11.01. Consents of Bond Owners . . . . . . . . . . . . . . . 73
Section 11.02. Limitation of Rights. . . . . . . . . . . . . . . . . 73
Section 11.03. Severability. . . . . . . . . . . . . . . . . . . . . 73
Section 11.04. Notices . . . . . . . . . . . . . . . . . . . . . . . 73
Section 11.05. Payments or Performance Due on Other Than
Business Days . . . . . . . . . . . . . . . . . . . 75
Section 11.06. Execution of Counterparts . . . . . . . . . . . . . . 75
Section 11.07. Applicable Law. . . . . . . . . . . . . . . . . . . . 75
Section 11.08. Disqualified Bonds. . . . . . . . . . . . . . . . . . 75
Section 11.09. No Personal Liability of Issuer or Trustee. . . . . . 75
Section 11.10. Notice of Change. . . . . . . . . . . . . . . . . . . 75
Section 11.11. References to Bank. . . . . . . . . . . . . . . . . . 75
Section 11.12. Notice to Company of Bank Failure to Honor
Letter of Credit. . . . . . . . . . . . . . . . . . 75
Execution . . . . . . . . . . . . . . . . . . . . . . 76
iii<PAGE>
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
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 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 Facilities) Series 1974, 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 and (iii) 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, 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 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, and Purchase Price of, the Bonds according to their tenor and effect, and
to secure the payment, performance and observance by the Issuer of all of the
covenants and obligations expressed or implied herein and in the Bonds, does
hereby irrevocably grant, alienate, bargain, sell, convey, transfer, assign
and pledge unto the Trustee (to the extent of its legal capacity to hold the
same for the purposes hereof), and the successors in trust and assigns of the
Trustee, forever.
GRANTING CLAUSE FIRST
All right, title, and interest of the Issuer in, to and under the
Agreement (except Unassigned Rights), and all extensions and renewals of the
term thereof, if any, and to do any and all other things which the Issuer is
or may become entitled to do under the Agreement; provided, however, that the
assignment made pursuant to this clause shall not impair or diminish any
obligation of the Issuer under the Agreement or alter the rights, duties and
obligations of the Trustee under the remaining terms of this Indenture;
GRANTING CLAUSE SECOND
All moneys, income, revenues, issues, profits, receipts and other
amounts payable to or receivable by the Issuer under or with respect to the
Agreement, including the Installment Payments (except Unassigned Rights);
GRANTING CLAUSE THIRD
All right, title, and interest of the Issuer in and to all moneys and
securities from time to time held by the Trustee under the terms of this
Indenture (except amounts held in the Rebate Fund and the Bond Purchase Fund);
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; and on a
subordinated basis to the interest of such owners of the Bonds, for the
benefit, security and protection of the Bank;
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 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 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 bank duly
organized under the laws of The Netherlands, 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 Health and Safety
Code, as amended.
Code - shall mean the Internal Revenue Code of 1986, as amended, and
the rulings and regulations (including temporary and proposed regulations)
promulgated thereunder or, to the extent applicable, under the Internal
Revenue Code of 1954, as amended.
Company - shall mean 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 Bond set
forth in Section 2.03 hereof.
Daily Rate - shall mean the rate of interest that is set on the Bonds
by the Remarketing Agent while they are in the Daily Mode.
Delivery Date - shall mean, with respect to a Bond tendered for
purchase, the Purchase Date or any subsequent Business Day on which such Bond
is delivered to the Paying Agent as provided in the form of Bond.
DTC - shall mean The Depository Trust Company, New York, New York, or
any successor securities depository.
DTC Participant - shall mean any securities broker dealer, bank, trust
company, clearing corporation or other organization with Bonds credited to an
account maintained on its behalf by DTC.
Effective Date - shall mean, with respect to a Bond 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.
Expiration Date - the Expiration Date as defined in the Letter of
Credit.
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 Bond set
forth in Section 2.03 hereof.
Flexible Rate - shall mean a rate of interest set by the Remarketing
Agent for periods from 1 to 270 days.
Government Obligations - shall mean (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 May 1 and November 1 for
Bonds in the Semiannual, Multiannual or Fixed Rate Mode, (ii) the first day
(which must be a Business Day) after an Interest Rate Period for Bonds in the
Flexible Mode; (iii) the first Business Day of each calendar month for Bonds
in the Daily, Weekly or Monthly Mode; (iv) each February 1, May 1, August 1
and November 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 twelve percent (12%) per annum.
Mode - shall mean the period for and the manner in which the interest
rates on the Bonds are set and includes the Daily Mode, the Flexible Mode, the
Weekly Mode, the Monthly Mode, the Quarterly Mode, the Semiannual Mode, the
Multiannual Mode and the Fixed Rate Mode.
Monthly Mode - shall mean the Mode in which the interest rate on the
Bonds is set at the Monthly Rate, all as set forth in the form of Bond set
forth in Section 2.03 hereof.
Monthly Rate - shall mean the rate of interest that is set on the
Bonds while they are in the Monthly Mode.
Moody's - shall mean Moody's Investors Service, Inc., or any successor
thereto maintaining a rating on the Bonds at the request of the Company.
Multiannual Mode - shall mean the Mode in which the interest rate on
the Bonds is fixed for periods of one year or multiples thereof designated by
the Remarketing Agent, after consultation with the Company, as described in
the form of Bond set forth in Section 2.03 hereof.
Multiannual Rate - shall mean the rate of interest that is set on
Bonds while they are in the Multiannual Mode.
Official Statement - shall mean the Official Statement relating to the
Bonds.
Outstanding, Bonds Outstanding or Bonds then Outstanding - shall mean
when used with reference to Bonds at any date as of which the amount of
Outstanding Bonds is to be determined, means all Bonds authenticated and
delivered under the Indenture, except:
(a) Bonds canceled or delivered for cancellation at or prior
to such date;
(b) Bonds deemed to be paid pursuant to the terms of this
Indenture;
(c) Bonds in lieu of which others have been authenticated and
delivered under this Indenture;
(d) Bonds registered in the name of the Issuer;
(e) On or after any Purchase Date for Bonds, all Bonds (or
portions of Bonds) which are tendered or deemed to have been tendered
for purchase on such date, provided that funds sufficient for such
purchase are on deposit with the Paying Agent; and
(f) For purposes of any consent, request, demand,
authorization, direction, notice, waiver or other action to be taken
by the holders of a specified percentage of outstanding Bonds
hereunder, all Bonds held by or for the account of the Issuer 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, collectively, 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 mean, with respect to a Bond on a Purchase
Date, a price equal to par plus accrued interest to the Purchase Date;
provided, that in the event that the Purchase Date is an Interest Payment Date
for such Bond and such Bond is not in the Flexible Mode, accrued interest will
be paid separately and not as a part of the Purchase Price on such Date.
Quarterly Mode - shall mean the Mode in which the interest rate on the
Bonds is set at the Quarterly Rate, all as set forth in Section 2.03 hereof.
Quarterly Rate - shall mean the rate of interest that is set on the
Bonds while they are in the Quarterly Mode.
Rating Agencies - shall mean S&P and/or Moody's, according to which of
such rating agencies then rates the Bonds; and provided that if neither of
such rating agencies then rates the Bonds, the term "Rating Agencies" shall
refer to any national rating agency (if any), mutually acceptable to the
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, Monthly, Quarterly or Semiannual Mode, the close
of business on the Business Day preceding an Interest Payment Date; and (iii)
with respect to Bonds in the Multiannual or Fixed Rate Mode, the 15th day of
the calendar month immediately preceding any Interest Payment Date, regardless
of whether such day is a Business Day or, in the case of an Interest Payment
Date which shall not be at least 15 days after the first day of a Quarterly,
Semiannual, Multiannual or Fixed Rate Period, the first day of such Quarterly,
Semiannual, Multiannual or Fixed Rate Period.
Refunding - shall mean the refunding of the Prior Bonds, as described
in the Agreement and this Indenture.
Registration Books - shall mean the registration records of the
Issuer, maintained by the Trustee, as registrar for the Bonds.
Regulations - shall mean the Income Tax Regulations promulgated
pursuant to the Code or under the 1954 Code.
Remarketing Account - shall mean the special account of that name
within the Bond Purchase Fund.
Remarketing Agent - shall mean the initial and any successor
remarketing agent appointed in accordance with Article VIII hereof. Principal
Office of the Remarketing Agent shall mean the office thereof designated in
writing to the Trustee.
Remarketing Agreement - means any remarketing agreement executed by
the Company and the Remarketing Agent pursuant to Article VIII hereof.
Remarketing Proceeds - shall mean proceeds from the sale of the Bonds
by the Remarketing Agent other than to the Issuer or the Company.
S&P - shall mean Standard & Poor's Rating Services, a division of
McGraw Hill, Inc., or any successor thereto maintaining a rating on the Bonds
at the request of the Company.
Semiannual Mode - shall mean the Mode in which the interest rate on
the Bonds is set at the Semiannual Rate, all as set forth in the form of
Bond set forth in Section 2.03 hereof.
Semiannual Rate - shall mean the rate of interest that is set on the
Bonds while they are in the Semiannual Mode.
Series 1974A Bonds - shall mean the Nueces County Navigation District
No. 1 Environmental Improvement Revenue Bonds (Central Power and Light Company
Facilities) Series 1974, Issue A .
Series 1974B Bonds - shall mean Nueces County Navigation District No.
1 Environmental Improvement Revenue Bonds (Central Power and Light Company
Facilities) Series 1974, Issue B.
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.
Series 1977A Bonds - shall mean the Guadalupe-Blanco River Authority
Pollution Control Revenue Bonds, 1977A Series (Central Power and Light Company
Project).
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 Bond set
forth in Section 2.03 hereof.
Weekly Rate - shall mean the rate of interest that is set on the Bonds
while they are in the Weekly Mode.
Section 1.02.Article and Section Headings. The headings or titles of
the several Articles and Sections of this Indenture, and the Table of Contents
appended hereto, are solely for convenience of reference and shall not affect
the meaning or construction of the provisions hereof.
Section 1.03.Interpretation. The singular form of any word used
herein shall include the plural, and vice versa, if applicable. The use of a
word of any gender shall include all genders, if applicable. This Indenture
and all of the terms and provisions hereof shall be construed so as to
effectuate the purposes contemplated hereby and to sustain the validity
hereof. All references to any person or entity defined in Section 1.01 shall
be deemed to include any person or entity succeeding to the rights, duties and
obligations of such person or entity. Unless otherwise specified herein, all
references to specific times shall be deemed to refer to New York City time.
<PAGE>
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 initially in the Mode set forth in the Approval Certificate and
thereafter as set forth in Section 2.02 and as provided in the form of the
Bond, until paid; and (iv) shall mature on the Maturity Date set forth in the
Approval Certificate.
The Bonds are subject to redemption prior to maturity as set forth in
Section 2.06 hereof.
The Bonds are issuable in the form of registered Bonds without coupons
in Authorized Denominations. The Bonds shall be numbered from 1 upwards,
provided that the number assigned to each definitive Bond shall be prefixed by
the letters "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 Bond. Such interest shall
be paid notwithstanding the cancellation of any Bonds upon any exchange or
registration of transfer thereof subsequent to the Record Date and prior to
such Interest Payment Date, except that, if and to the extent there shall be a
default in the payment of the interest due on such Interest Payment Date, such
defaulted interest shall be paid to the Bondholders in whose names any such
Bonds (or any Bond or Bonds issued upon registration of transfer or exchange
thereof) are registered at the close of business on the Business Day next
preceding the date of payment of such defaulted interest. Payment of
principal of, premium, if any, and interest on the Bonds shall be made in such
lawful money of the United States of America as, at the respective times of
payment, shall be legal tender for the payment of public and private debts.
The Bonds shall be dated as of 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, Monthly,
Quarterly or Semiannual Mode, on the Business Day before each Interest Payment
Date and for Bonds in the Multiannual and Fixed Rate Mode, on the fifteenth
day of the calendar month prior to each Interest Payment Date, the Trustee
shall calculate the amount of interest to be paid on the next succeeding
Interest Payment Date and shall, not later than 11:00 a.m., New York City
time, on such date the calculation is made, notify the Company and the Paying
Agent of the amount of interest to be paid. Any contest by the Company of the
amount calculated by the Trustee to be due on an Interest Payment Date shall
not relieve the 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 Flexible Rate for
Bonds in the Flexible Mode shall be the rate of interest
determined by the Remarketing Agent, for each Interest Rate
Period, to be the lowest rate which in its judgment, on the basis
of prevailing financial market conditions, is necessary on and as
of the Effective Date, to remarket each Bond having such Interest
Rate Period (as determined by the Remarketing Agent) in a
secondary market transaction at a price equal to the principal
amount thereof, but not in excess of the Maximum Rate. The
Remarketing Agent shall determine the initial Flexible Rate or
Rates and Interest Rate Period or Periods on or before the date of
conversion to the Flexible Mode. Thereafter, the Remarketing
Agent shall redetermine the Flexible Rate for each Interest Rate
Period and shall redetermine each Interest Rate Period. While any
Bonds are in the Flexible Mode, such Bonds may have successive
Interest Rate Periods and any Bond may bear interest at a rate and
for a period different from any other Bond. The interest rate and
the Interest Rate Period for each particular Bond in the Flexible
Mode will be determined by the Remarketing Agent and will remain
in effect from and including the Effective Date of the Interest
Rate Period selected for that Bond by the Remarketing Agent
through the last date thereof. The Remarketing Agent shall notify
the Paying Agent of the Flexible Rate and Interest Rate Period by
Electronic Notice not later than 1:00 p.m., New York City time, on
the Effective Date. The Paying Agent shall give written notice of
the Flexible Rate and Interest Rate Period to the Trustee and the
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. 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 Bond, so long as no Event of Default
hereunder exists as certified to the Trustee by the Company.
Written notice of a conversion of Bonds 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 proposed 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(K) and (L) 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 subject to
such failed conversion shall remain in the Flexible Mode with an
Interest Rate Period ending on the next succeeding day which is
immediately followed by a Business Day. In such event, such Bonds
shall remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3)Mandatory Tender for Purchase. Bonds in the Flexible Mode
are subject to mandatory tender for purchase as provided in the
form of Bond and in Section 2.11 hereof.
(B) Daily Mode.
(1)Determination of Daily Rates. The Daily Rate shall be the
rate of interest determined by the Remarketing Agent for each
Interest Rate Period, to be the lowest rate which in its judgment,
on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Daily Mode at par plus accrued
interest on and as of the Effective Date, but not in excess of the
Maximum Rate. The Remarketing Agent shall determine the initial
Daily Rate on or before the date of conversion to the Daily Mode.
Thereafter, the Remarketing Agent shall redetermine the Daily Rate
for each subsequent Interest Rate Period. When such Bond is in
the Daily Mode, the Daily Rate in effect for each Interest Rate
Period (the "Effective Rate" for such Period) shall be determined
not later than the Effective Date and shall be effective from the
Effective Date until the next succeeding Business Day. The
Remarketing Agent shall notify the Paying Agent of the Daily Rate
by Electronic Notice not later than 10:30 a.m., New York City
time, on such Business Day. The Paying Agent shall give written
notice of the Daily Rate to the Trustee and the 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 such date will be
the Daily Rate in effect on the day next preceding such date.
(2)Conversions from the Daily Mode. The Bonds in the Daily
Mode or any portion of such Bonds may be converted on any Interest
Payment Date at the election of the Company from the Daily Mode to
the Flexible, Weekly, Monthly, Quarterly, Semiannual, Multiannual
or Fixed Rate Mode as provided in the form of Bond, so long as no
Event of Default hereunder exists as certified to the Trustee by
the Company. Written notice of a conversion from the Daily 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 Daily Mode and the mandatory tender
of Bonds for purchase on such Conversion Date shall be given to
the owners of such Bonds as provided in Section 2.02(B)(4) hereof
and the form of Bond. Conversions to the Fixed Rate Mode shall
also be governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) and (L) 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 subject to such failed conversion to
immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided herein.
(3)Bondowners' Option to Tender Bonds in Daily Mode. Bonds in
the Daily Mode are subject to tender, at the election of the owner
thereof, in the manner and subject to the limitations described in
the form of Bond. The owners of Tendered Bonds shall receive on
the Delivery Date 100% of the principal amount of the Tendered
Bonds plus accrued interest to the Purchase Date, provided that if
the Purchase Date is an Interest Payment Date, accrued interest
shall be paid separately, and not as part of the Purchase Price on
such date. The purchase of Tendered Bonds shall not extinguish
the debt represented by such Bonds which shall remain Outstanding
and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bond and in
this subsection (3); provided, however, that the Paying Agent
shall not accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date the principal
of the Bonds shall have been accelerated pursuant to Section 6.02
hereof and such acceleration shall not have been annulled.
Notice of the Bondholder's option to tender Bonds in the Daily
Mode shall be given to the Paying Agent at the time and as
provided in the form of Bond. The Bondowners' Election Notice
delivered to the Paying Agent at the time and as provided in the
form of Bond shall be in substantially the form provided in the
form of Bond.
Promptly 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 Bond and in Section 2.11 hereof
(C) Weekly Mode.
(1)Determination of Weekly Rates. The Weekly Rate shall be
the rate of interest determined by the Remarketing Agent for each
Interest Rate Period, to be the lowest rate which in its judgment,
on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Weekly Mode at par plus
accrued interest on and as of the Effective Date, but not in
excess of the Maximum Rate. The Remarketing Agent shall determine
the initial Weekly Rate on or before the date of issue in or
conversion to the Weekly Mode. Thereafter, the Remarketing Agent
shall redetermine the Weekly Rate for each subsequent Interest
Rate Period. The Weekly Rate in effect for each Interest Rate
Period shall be determined not later than the Effective Date which
shall be a Wednesday unless the Effective Date is also a
Conversion Date, in which case the Conversion Date will be the
Effective Date. The Remarketing Agent shall notify the Paying
Agent of the Weekly Rate by Electronic Notice not later than 10:00
a.m., New York City time, on the Effective Date (or if the
Effective Date is not a Business Day, on the next preceding
Business Day). The Paying Agent shall give written notice of the
Weekly Rate to the Trustee and the 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 for any Bond or if for
any reason such manner of determination shall be determined to be
invalid or unenforceable, the Bond shall be deemed to be in a
Flexible Mode with an Interest Rate Period ending on the next
succeeding day which is immediately followed by a Business Day.
(2)Conversions from the Weekly Mode. The Bonds in the Weekly
Mode or any portion of such Bonds may be converted on any Interest
Payment Date at the election of the Company from the Weekly Mode
to the Daily, Monthly, Quarterly, Semiannual, Multiannual,
Flexible or Fixed Rate Mode as provided in the form of Bond, so
long as no Event of Default hereunder exists as certified to the
Trustee by the 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 Bond. Conversions to the Fixed
Rate Mode shall also be governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) and (L) 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 subject to such failed conversion to
immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted
to another Mode for any reason be deemed to be, in and of itself,
an Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3)Bondowners' Option to Tender Bonds in Weekly Mode. Bonds
in the Weekly Mode are subject to tender, at the election of the
owner thereof, in the manner and subject to the limitations
described in the form of Bond. The owners of Tendered Bonds
shall receive on the Delivery Date 100% of the principal amount of
the Tendered Bonds plus accrued interest to the Purchase Date,
provided that if the Purchase Date is an Interest Payment Date,
accrued interest shall be paid separately, and not as part of the
Purchase Price on such date. The purchase of Tendered Bonds shall
not extinguish the debt represented by such Bonds which shall
remain Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bond and in
this subsection (3); provided, however, that the Paying Agent
shall not accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date the principal
of the Bonds shall have been accelerated pursuant to Section 6.02
hereof and such acceleration shall not have been annulled.
Notice of the Bondholders' option to tender Bonds in the
Weekly Mode shall be given to the Paying Agent at the time and as
provided in the form of Bond. The Bondowners' Election Notice
delivered to the Paying Agent at the time and as provided in the
form of Bond shall be in substantially the form provided in the
form of Bond.
As soon as practicable after receiving notice of a tender of
Bonds under this Section, the Paying Agent shall notify the
Remarketing Agent, the 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 Bond and in Section 2.11 hereof.
(5)Interest Rate Periods for Bonds in Weekly Mode. The
Interest Rate Period for Bonds in a Weekly Rate Mode shall
commence on Wednesday of each week and end on the next following
Tuesday; except that (a) in the case of a Conversion of Bonds to a
Weekly Mode from a different Mode, the Interest Rate Period for
such Bonds shall commence on the last Interest Payment Date in
respect of the immediately preceding Interest Rate Period and end
on the next following Tuesday; and (b) in the case of a Conversion
of Bonds from a Weekly Mode to a different Mode, the last Interest
Rate Period for such Bonds prior to Conversion shall end on the
last day immediately preceding the Conversion.
(D) Monthly Mode.
(1)Determination of Monthly Rates. The Monthly Rate shall be
the rate of interest determined by the Remarketing Agent for each
Interest Rate Period, to be the lowest rate which in its judgment,
on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Monthly Mode at par plus
accrued interest on and as of the Effective Date, but not in
excess of the Maximum Rate. The Remarketing Agent shall determine
the initial Monthly Rate on or before the date of conversion to
the Monthly Mode, which Rate shall remain in effect as provided in
this Indenture. Thereafter, the Remarketing Agent shall
redetermine the Monthly Rate for each subsequent Interest Rate
Period. The Monthly Rate in effect for each Interest Rate
Period shall be determined not later than the Business Day next
preceding the Effective Date which shall be the first Business Day
of a month. Each Monthly Rate will remain in effect through the
day preceding the first Business Day of the succeeding month. The
Remarketing Agent shall notify the Paying Agent of the Monthly
Rate by Electronic Notice not later than 2:00 p.m., New York City
time, on the Business Day immediately preceding the Effective
Date. The Paying Agent shall give written notice of the Monthly
Rate to the Trustee and the 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 for any Bond or if for
any reason such manner of determination shall be determined to be
invalid or unenforceable, the Bond shall be deemed to be in a
Flexible Mode with an Interest Rate Period ending on the next
succeeding day which is immediately followed by a Business Day.
(2)Conversions from the Monthly Mode. The Bonds in the
Monthly Mode or any portion of such Bonds may be converted on any
Interest Payment Date at the election of the Company from the
Monthly Mode to the Daily, Flexible, Weekly, Quarterly,
Semiannual, Multiannual or Fixed Rate Mode as provided in the form
of Bond, so long as no Event of Default hereunder exists as
certified to the Trustee by the 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 Bond.
Conversions to the Fixed Rate Mode shall also be governed by
Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) and (L) 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 subject to such failed conversion to
immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3)Bondowners' Option to Tender Bonds in Monthly Mode. Bonds
in the Monthly Mode are subject to tender, at the election of the
owner thereof, in the manner and subject to the limitations
described in the form of Bond. The owners of Tendered Bonds shall
receive on the Delivery Date 100% of the principal amount of the
Tendered Bonds. Accrued interest shall be paid separately, and
not as part of the Purchase Price on such date. The purchase of
Tendered Bonds shall not extinguish the debt represented by such
Bonds which shall remain Outstanding and unpaid under this
Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bond and in
this subsection (3); provided, however, that the Paying Agent
shall not accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date the principal
of the Bonds shall have been accelerated pursuant to Section 6.02
hereof and such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the Paying Agent
at the time and as provided in the form of Bond shall be in
substantially the form provided in the form of Bond.
As soon as practicable after receiving notice of a tender of
Bonds under this Section, the Paying Agent shall notify the
Remarketing Agent, the 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 Bond and in Section 2.11 hereof.
(E) Quarterly Mode.
(1)Determination of Quarterly Rates. The Quarterly Rate shall
be the rate of interest determined by the Remarketing Agent for
each Interest Rate Period, to be the lowest rate which in its
judgment, on the basis of prevailing financial market conditions,
would permit the sale of the Bonds in the Quarterly Mode at par
plus accrued interest on and as of the Effective Date, but not in
excess of the Maximum Rate. The Remarketing Agent shall determine
the initial Quarterly Rate on or before the date of conversion to
the Quarterly Mode. Thereafter, the Remarketing Agent shall
redetermine the Quarterly Rate for each subsequent Interest Rate
Period. The Quarterly Rate in effect for each Interest Rate
Period shall be determined not later than the Business Day next
preceding the Effective Date. The Remarketing Agent shall notify
the Paying Agent of the Quarterly Rate by Electronic Notice not
later than 2:00 p.m., New York City time, on the Business Day
immediately preceding the Effective Date. The Paying Agent shall
give written notice of the Quarterly Rate to the Trustee and the
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 for any Bond or if for any reason such manner of
determination shall be determined to be invalid or unenforceable,
the Quarterly Rate Bond shall be deemed to be in a Flexible Mode
with an Interest Rate Period ending on the next succeeding day
which is immediately followed by a Business Day.
(2)Conversions from the Quarterly Mode. The Bonds in the
Quarterly Mode or any portion of such Bonds may be converted on
any Interest Payment Date at the election of the Company from the
Quarterly Mode to the Flexible, Daily, Weekly, Monthly,
Semiannual, Multiannual or Fixed Rate Mode as provided in the form
of Bond, so long as no Event of Default hereunder exists as
certified to the Trustee by the 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 Bond.
Conversions to the Fixed Rate Mode shall also be governed by
Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) and (L) 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 subject to such failed conversion to
immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3)Bondowners' Option to Tender Bonds in Quarterly Mode.
Bonds in the Quarterly Mode are subject to tender, at the election
of the owner thereof, in the manner and subject to the limitations
described in the form of Bond. The owners of Tendered Bonds shall
receive on the Delivery Date 100% of the principal amount of the
Tendered Bonds. Accrued interest shall be paid separately, and
not as part of the Purchase Price on such date. The purchase of
Tendered Bonds shall not extinguish the debt represented by such
Bonds which shall remain Outstanding and unpaid under this
Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bond and in
this subsection (3); provided, however, that the Paying Agent
shall not accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date the principal
of the Bonds shall have been accelerated pursuant to Section 6.02
hereof and such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the Paying Agent
at the time and as provided in the form of Bond shall be in
substantially the form provided in the form of Bond.
As soon as practicable after receiving notice of a tender of
Bonds under this Section, the Paying Agent shall notify the
Remarketing Agent, the 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 Bond and in Section 2.11 hereof.
(F) Semiannual Mode.
(1)Determination of Semiannual Rates. The Semiannual Rate
shall be the rate of interest determined by the Remarketing Agent,
for each Interest Rate Period, to be the lowest rate which in its
judgment, on the basis of prevailing financial market conditions,
would permit the sale of the Bonds in the Semiannual Mode at par
plus accrued interest on and as of the Effective Date, but not in
excess of the Maximum Rate. The Remarketing Agent shall determine
the initial Semiannual Rate on or before the date of conversion to
the Semiannual Mode. Thereafter, the Remarketing Agent shall
redetermine the Semiannual Rate for each subsequent Interest Rate
Period. The Semiannual Rate in effect for each Interest Rate
Period shall be determined not later than the Business Day next
preceding the Effective Date. The Remarketing Agent shall notify
the Paying Agent of the Semiannual Rate by Electronic Notice not
later than 2:00 p.m., New York City time, on the Business Day
immediately preceding the Effective Date. The Paying Agent shall
give written notice of the Semiannual Rate to the Trustee and the
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 for any Bond or if for any reason such manner of
determination shall be determined to be invalid or unenforceable,
the Bond shall be deemed to be in a Flexible Mode with an Interest
Rate Period ending on the next succeeding day which is immediately
followed by a Business Day.
(2)Conversions from the Semiannual Mode. The Bonds in the
Semiannual Mode or any portion of such Bonds may be converted on
any Interest Payment Date at the election of the Company from the
Semiannual Mode to the Flexible, Daily, Weekly, Monthly,
Quarterly, Multiannual or Fixed Rate Mode as provided in the form
of Bond, so long as no Event of Default hereunder exists as
certified to the Trustee by the 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 Bond.
Conversions to the Fixed Rate Mode shall also be governed by
Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) and (L) 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 Bond. The owners of Tendered
Bonds shall receive on the Delivery Date 100% of the principal
amount of the Tendered Bonds. Accrued interest shall be paid
separately, and not as part of the Purchase Price on such date.
The purchase of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain Outstanding and
unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bond and in
this subsection (3); provided, however, that the Paying Agent
shall not accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date the principal
of the Bonds shall have been accelerated pursuant to Section 6.02
hereof and such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the Paying Agent
at the time and as provided in the form of Bond shall be in
substantially the form provided in the form of Bond.
As soon as practicable after receiving notice of a tender of
Bonds under this Section, the Paying Agent shall notify the
Remarketing Agent, the 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 Bond and in Section 2.11 hereof.
(G) Multiannual Mode.
(1)Determination of Multiannual Rates. The Multiannual Rate
shall be the rate of interest determined by the Remarketing Agent
for each Interest Rate Period, to be the lowest rate which in its
judgment, on the basis of prevailing financial market conditions,
would permit the sale of the Bonds with the same Interest Rate
Period in a secondary market transaction on and as of the
Effective Date, at a price equal to the principal amount thereof
plus accrued interest, but not in excess of the Maximum Rate. The
Remarketing Agent shall determine the initial Multiannual Rate and
Interest Rate Period on or before the date of conversion to the
Multiannual Mode. Thereafter, the Remarketing Agent shall
redetermine the Multiannual Rate for each subsequent Interest Rate
Period as provided herein and shall redetermine each subsequent
Interest Rate Period. The Multiannual Rate in effect for each
Interest Rate Period and the duration of the Interest Rate Period
shall be determined not later than two (2) Business Days prior to
the Effective Date. The Effective Date shall be the first
Business Day of a month if the preceding Interest Rate Period is a
Flexible, Daily, Weekly, or Monthly Rate Period and shall be the
first day of a month if the preceding Interest Rate Period is a
Quarterly, Semiannual, or Multiannual Rate Period. The
Multiannual Rate will remain in effect until the first day of the
month following the whole number of years specified as the
duration of the Interest Rate Period for the Bonds in the
Multiannual Mode; provided that if the following Rate Period is a
Flexible, Daily, Weekly, or Monthly Rate Period, the Multiannual
Rate will remain in effect until the day preceding the first
Business Day of the month following the whole number of years
specified as the duration of the Multiannual Rate Period and if
the following Rate Period is a Quarterly, Semiannual, Multiannual
or Fixed Rate Period, the Effective Date will remain in effect
until the day preceding the first day of the month following the
whole number of years specified as the Multiannual Rate Period.
The Remarketing Agent shall notify the Paying Agent of the
Multiannual Rate and the Interest Rate Period by Electronic Notice
not later than 2:00 p.m., New York City time, two (2) Business
Days preceding the Effective Date. The Paying Agent shall give
written notice of the Multiannual Rate to the Trustee and the
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 Bonds shall be automatically
converted to the Flexible Mode with an Interest Rate Period ending
on the next succeeding day which is immediately followed by a
Business Day.
(2)Conversions from the Multiannual Mode. The Bonds in the
Multiannual Mode or any portion of such Bonds may be converted on
any Effective Date at the election of the 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 Interest Rate Period with the
same or a different length as provided in the form of Bond, so
long as no Event of Default hereunder exists as certified to the
Trustee by the 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(K) and (L) 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 Bond. The owners of Tendered
Bonds shall receive on the Delivery Date 100% of the principal
amount of the Tendered Bonds. Accrued interest shall be paid
separately, and not as part of the Purchase Price on such date.
The purchase of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain Outstanding and
unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bond and in
this subsection (3); provided, however, that the Paying Agent
shall not accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date the principal
of the Bonds shall have been accelerated pursuant to Section 6.02
hereof and such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the Paying Agent
at the time and as provided in the form of Bond shall be in
substantially the form provided in the form of Bond.
As soon as practicable after receiving notice of a tender of
Bonds under this Section, the Paying Agent shall notify the
Remarketing Agent, the 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 Bond
and Sections 2.02(A), (B), (C), (D), (E), (F) and (G) hereof.
Written notice of conversion to the Fixed Rate Mode shall be given
by the 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
Electronic Notice of the Fixed Rate. The Trustee shall promptly
notify the Issuer in writing of the Fixed Rate. The determination
of the Fixed Rate shall be conclusive and binding on the Issuer,
the Trustee, the Paying Agent, the Company and the Bondowners.
The first Interest Payment Date of Bonds converted to the Fixed
Rate shall be the next May 1 or November 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(K) and (L) 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)Consent of Bank. No partial conversion of the Bonds to a
new Multiannual Mode or Fixed Rate Mode shall be effective unless
the Trustee receives a written consent from the Bank to such
conversion.
(4)Amendments. The provisions of this Indenture may be
amended to permit or facilitate partial conversions of the Bonds
without Bondowner consent in accordance with Section 9.01 hereof.
(J) Notice to Registered Owners of Change in Mode. When a
change in Mode is to be made, or upon commencement of a new Interest
Rate Period in the Multiannual Mode, the Paying Agent will notify the
registered owners of the affected Bonds in the Daily Mode, Weekly
Mode, Monthly Mode, Quarterly Mode, 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 an Interest Rate Period of over one year, including for this
purpose the conversion to a new Interest Rate Period in the
Multiannual Mode, or (ii) conversion to 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 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 Bond. The Bonds, the Trustee's Certificate of
Authentication to be executed by the Trustee for all Bonds delivered hereunder
except those initially delivered hereunder, the Registration Certificate of
the Comptroller of Public Accounts of the State of Texas to be attached to or
endorsed upon the Bonds initially delivered hereunder, the provision for
registration and the form of assignment shall be in substantially the forms
hereinafter set forth, with such appropriate variations, omissions,
substitutions and insertions as are permitted or required hereby and may have
such letters, numbers or other marks of identification and such legends and
endorsements placed thereon as may be required to comply with any applicable
laws or rules or regulations, or as may, consistently herewith, be determined
by the officers executing such Bonds, as evidenced by their execution of the
Bonds.
FORM OF BOND
Dollars
No. ___ $__________
[The following legend shall appear so long as the Book-Entry
System described in Section 3.07 of the Indenture has not been
discontinued; provided that such legend shall not appear on the
Bond initially delivered under this Indenture.]
THE ISSUER HAS ESTABLISHED A BOOK ENTRY SYSTEM OF REGISTRATION FOR THIS BOND.
EXCEPT AS SPECIFICALLY PROVIDED OTHERWISE IN THE INDENTURE, CEDE & CO., AS
NOMINEE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), WILL
BE THE REGISTERED OWNER AND WILL HOLD THIS BOND ON BEHALF OF EACH BENEFICIAL
OWNER HEREOF. BY ACCEPTANCE OF A CONFIRMATION OF PURCHASE, DELIVERY OR
TRANSFER, EACH BENEFICIAL OWNER OF THIS BOND SHALL BE DEEMED TO HAVE AGREED TO
SUCH ARRANGEMENT. CEDE & CO., AS REGISTERED OWNER OF THIS BOND, MAY BE
TREATED AS THE OWNER OF IT FOR ALL PURPOSES.
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE
TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS BOND IS SUBJECT TO MANDATORY TENDER FOR PURCHASE AT THE TIME AND IN THE
MANNER HEREINAFTER DESCRIBED AND MUST BE SO TENDERED OR WILL BE DEEMED TO HAVE
BEEN SO TENDERED UNDER CERTAIN CIRCUMSTANCES AS DESCRIBED HEREIN.
ANY BONDHOLDER WHO FAILS TO DELIVER A BOND FOR PURCHASE AT THE TIMES AND AT
THE PLACE REQUIRED HEREIN SHALL HAVE NO FURTHER RIGHTS HEREUNDER EXCEPT THE
RIGHT TO RECEIVE THE PURCHASE PRICE HEREOF UPON DELIVERY OF THIS BOND TO THE
PAYING AGENT, AND SHALL HOLD THIS BOND AS AGENT FOR THE PAYING AGENT.
UNITED STATES OF AMERICA
STATE OF TEXAS
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, from the Issue Date, 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
Record Date (as described below) by check mailed on the Interest Payment Date,
provided that any Registered Owner of $1,000,000 or more in aggregate
principal amount of the Bonds may, upon written request given to the Paying
Agent at least five Business Days prior to an Interest Payment Date
designating an account in a domestic bank, be paid by wire transfer of
immediately available funds. All payments of interest on Bonds accruing
interest at Flexible, Daily, Weekly, Monthly, Quarterly, or Semiannual Rates
shall be paid to the Registered Owner hereof whose name appears in the Bond
Register kept by the Bond Registrar as of the close of business on the
applicable Record Date in immediately available funds by wire transfer to a
bank within the continental United States or deposited to a designated account
if such account is maintained with the Paying Agent as directed by the
Registered Owner in writing or as otherwise directed in writing by the
Registered Owner prior to the time of payment with respect to Bonds accruing
interest at a Flexible, Daily, Weekly, Monthly, Quarterly, or Semiannual Rate
or five Business Days prior to the Interest Payment Date with respect to Bonds
accruing interest at Daily or Weekly Rates. The Record Date for any Interest
Payment Date shall be the close of business on the Business Day immediately
preceding the Interest Payment Date, except that, (i) while this Bond bears
interest at the Flexible Rate (as described herein), the Record Date shall be
the time of payment on the Interest Payment Date and (ii) while this Bond
accrues interest at the Multiannual or Fixed Rates (as described herein), the
Record Date shall be the close of business on the 15th day (whether or not a
Business Day) of the calendar month immediately preceding such Interest
Payment Date. This Bond is registered as to both principal and interest in
the Bond Register kept by the Bond Registrar and may be transferred or
exchanged, subject to the further conditions specified in the Indenture, only
upon surrender hereof at the office of the Bond Registrar. This Bond is
payable solely from the sources hereinafter mentioned.
The principal of, premium, if any, and interest on, and Purchase Price
of, this Bond are payable in lawful money of the United States of America.
CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS
SPECIFIED THEREFOR IN THE INDENTURE.
THE BONDS SHALL BE DEEMED NOT TO CONSTITUTE A DEBT OF THE STATE OF
TEXAS, THE ISSUER, OR OF ANY OTHER POLITICAL CORPORATION, SUBDIVISION, OR
AGENCY OF THE STATE OR A PLEDGE OF THE FAITH AND CREDIT OF ANY OF THEM. NO
RECOURSE SHALL BE HAD FOR ANY CLAIM BASED ON THE AGREEMENT, THE INDENTURE, OR
THE BONDS AGAINST ANY MEMBER, OFFICER OR EMPLOYEE, PAST, PRESENT OR FUTURE, OF
THE ISSUER, OR OF ANY SUCCESSOR BODY THERETO, EITHER DIRECTLY OR THROUGH THE
ISSUER, OR ANY SUCH SUCCESSOR BODY, UNDER ANY CONSTITUTIONAL PROVISION,
STATUTE OR RULE OF LAW OR BY THE ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR
OTHERWISE. NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF
TEXAS, THE ISSUER, OR ANY OTHER POLITICAL CORPORATION, SUBDIVISION, OR AGENCY
IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, REDEMPTION PREMIUM, IF ANY, OR
INTEREST ON, OR PURCHASE PRICE OF, THE BONDS. THIS BOND IS A SPECIAL REVENUE
OBLIGATION OF THE ISSUER PAYABLE SOLELY FROM THE SOURCES DESCRIBED HEREIN AND
THE HOLDER HEREOF SHALL NEVER HAVE THE RIGHT TO DEMAND PAYMENT FROM MONEYS
DERIVED BY TAXATION OR ANY REVENUES OF THE ISSUER EXCEPT THE FUNDS PLEDGED TO
THE PAYMENT HEREOF.
This Bond is authorized and issued under and pursuant to authority
conferred by the Issuer Act, Chapter 30, Texas Water Code, as amended, Chapter
383, Texas Health and Safety Code, as amended, and Article 717q, Vernon's
Texas Civil Statutes, as amended (collectively, the "Acts"), a resolution
adopted by the Issuer (the "Bond Resolution") and the Indenture. This Bond is
one of a duly authorized issue of revenue bonds of the Issuer issued in the
aggregate principal amount of $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 Facilities) Series 1974, Issue A and (b)
$33,465,000 in aggregate principal amount of Guadalupe-Blanco River Authority
Pollution Control Revenue Bonds, 1977 Series (Central Power and Light Company
Project). The Indenture pledges substantially 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 185 days'
accrued interest on the Outstanding Bonds at 12% per annum (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 bank duly organized under the laws of The Netherlands, as issuer of
the Letter of Credit or the bank issuing any Alternate Letter of Credit. The
Letter of Credit expires on November 2, 2000, 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.
Interest on the Bonds in a Flexible Mode, Daily Mode, Weekly Mode or Monthly
Mode shall be payable on the applicable Interest Payment Date as herein
described, computed on the basis of a 365 or 366-day year, as applicable for
the number of days actually elapsed based on the calendar year in which such
Rate Period commences. The interest on the Bonds in a Fixed Rate Mode,
Multiannual Mode, Semiannual Mode or Quarterly Mode shall be payable on the
applicable Interest Payment Date as herein described, computed on the basis of
a 360-day year of twelve 30-day months. While there exists an Event of
Default under this Indenture, the interest rate on the Bonds will be the rate
on the Bonds on the day before the Event of Default occurred.
At the option of the 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 for Bonds in such
Mode is, respectively, one day, one week, one month, three months, six months
or one year or any multiple of one year, (b) may be converted or reconverted
from time to time to or from the Flexible Mode, and will have Interest Rate
Periods of from one to 270 days (or a lesser period determined by the Company,
but, unless the Company has elected not to provide a Letter of Credit for the
Bonds as permitted by the Indenture, the Interest Rate Period for Bonds in the
Flexible Mode shall not be greater than the maximum number of days' interest
coverage provided by the Letter of Credit minus five days) during the Flexible
Mode 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 herein.
Each determination and redetermination of interest rates and Interest
Rate Periods shall be made in accordance with the Indenture and shall be
conclusive and binding on the Issuer, the Trustee, the Paying Agent, the
Company, the 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 for such Bond 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.
"Purchase Price" means, with respect to a Bond on a Purchase date, a
price equal to par plus accrued interest to the Purchase Date; provided that
in the event that the Purchase Date is an Interest Payment Date for such Bond
and such Bond is not in the Flexible Mode, accrued interest will be paid
separately and not as a part of the Purchase Price on such date.
Flexible Rate
While the Bonds accrue interest at Flexible Rates, the Remarketing Agent
shall determine the Flexible Rate and the Flexible Rate Period for each Bond
and such Flexible Rate will remain in effect from and including the
commencement date of the Flexible Rate Period selected for that Bond by the
Remarketing Agent to, but not including, the last date thereof. While the
Bonds are in the Flexible Mode, Bonds may have successive Interest Rate
Periods of any duration up to the lesser of (a) 270 days each or (b) a period
equal to the maximum number of days' interest coverage provided by the Letter
of Credit minus five days and any Bond may accrue interest at a rate and for a
period different from any other Bond. No Interest Rate Period may be
established which exceeds such maximum Interest Rate Period or, if the
Remarketing Agent has given or received notice of any conversion to a
Multiannual or Fixed Rate, the remaining number of days prior to the
Conversion Date or, if the Remarketing Agent has given or received notice of
any conversion to a Daily, Weekly, Monthly, Quarterly or Semiannual Mode, the
length of each Interest Rate Period for each Bond in the Flexible Mode shall
be determined by the Remarketing Agent to be either (A) that length of period
that, as soon as possible, shall enable the Interest Rate Periods for all
Bonds to end on the day before the Conversion Date, or (B) that length of
period which, based on the Remarketing Agent's judgment, will best promote an
orderly transition to the next Interest Rate Period.
Daily Rate
While the Bonds accrue interest at a Daily Rate, the interest rate
established for the Bonds will be effective from day to day until changed by
the Remarketing Agent in accordance with the Indenture.
Weekly Rate
While the Bonds accrue interest at a Weekly Rate, the rate of interest
on the Bonds will be determined weekly by the Remarketing Agent in accordance
with the Indenture to be effective for a seven day period commencing on
Wednesday of the week of such determination. (The length of the period, the
day of commencement and the last day of the period may vary in the event of a
conversion to or from a Weekly Mode.)
Monthly Rate
While the Bonds accrue interest at a Monthly Rate, the rate of interest
on the Bonds will be determined monthly by the Remarketing Agent in accordance
with the Indenture to be effective from the first Business Day of a month
through the day preceding the first Business Day of the succeeding month.
(The length of the period, the day of commencement and the last day of the
period may vary in the event of a conversion to or from a Monthly Mode.)
Quarterly Rate
While the Bonds accrue interest at a Quarterly Rate, the rate of
interest on the Bonds will be determined quarterly by the Remarketing Agent in
accordance with the Indenture to be effective for a calendar quarter,
commencing on February 1, May 1, August 1 and November 1. (The length of the
period, the day of commencement and the last day of the period may vary in the
event of a conversion to or from a Quarterly Mode.)
Semiannual Rate
While the Bonds accrue interest at a Semiannual Rate, the rate of
interest on the Bonds will be determined semiannually by the Remarketing
Agent in accordance with the Indenture to be effective for a six month period,
commencing on May 1 or November 1. (The length of the period, the day of
commencement and the last day of the period may vary in the event of a
conversion to or from a Semiannual Mode.)
Multiannual Rate
While the Bonds accrue interest at a Multiannual Rate, the interest rate
will be determined by the Remarketing Agent in accordance with the Indenture
to remain in effect for a term of one year or any whole multiple of one year
selected by the Company provided that the initial Interest Rate Period may be
shorter than the applicable multiple of one year. The length of any such
Interest Rate Period established will remain in effect until changed by the
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
written or Electronic Notice to the Paying Agent on a Business Day not fewer
than seven days prior to the Purchase Date or (iii) during a Monthly,
Quarterly, Semiannual, or Multiannual Rate Period, on any Interest Payment
Date, which also must be an Effective Date of a Rate Period, upon written
notice to the Paying Agent not less than fifteen days before the Purchase
Date.
As long as the book-entry system is in effect, the Beneficial Owner of a
Bond may demand purchase of the Bond (or portion thereof) owned by it by
providing notice as provided above through the Beneficial Owner's DTC
Participant; provided such notice shall be given by 10:00 a.m., New York City
time, on the date such notice is required to be given. If the book-entry
system is not in effect, the registered owner of this Bond may demand purchase
of this Bond (or portion thereof in Authorized Denominations) by providing
notice to the Paying Agent as provided above and delivering this Bond to the
Paying Agent at its Principal Office.
If the Registered Owner of a Bond has elected to tender such Bond for
purchase, such Registered Owner shall be deemed to have agreed irrevocably to
sell such Bond to any purchaser determined in accordance with the provisions
of the Indenture on the date fixed for purchase at the Purchase Price and any
Bond not delivered shall be deemed tendered (an "Undelivered Bond") and shall
cease to be Outstanding under the Indenture and no further interest shall
accrue as of the Purchase Date. Notice of tender of a Bond is irrevocable.
All notices of tender of Bonds shall be made to the Paying Agent in writing or
by Electronic Notice at its Principal Office in substantially the form as
provided in the Form of Bondholder's Election Notice for Bonds Subject to
Optional Tender attached hereto or such other form of notice satisfactory to
the Paying Agent which sets forth the principal amount of Bonds to be
purchased, the purchase date on which such Bonds shall be purchased, the name,
address and taxpayer identification number of the Registered Owner and the
payment instructions for the Purchase Price. All deliveries of tendered
Bonds, including deliveries of Bonds subject to mandatory tender, shall be
made to the Paying Agent at its Principal Office.
Mandatory Tenders
While this Bond accrues interest at a Flexible Rate, this Bond is
subject to mandatory tender on each Effective Date applicable to this Bond at
the Purchase Price.
This Bond is subject to mandatory tender on the effective date of a
change from one Mode to a different Mode or a change from one Interest Rate
Period to an Interest Rate Period of different duration within the Multiannual
Mode at the Purchase Price.
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 and (ii) on any
Interest Payment Date on which a Letter of Credit is replaced with an
Alternate Letter of Credit pursuant to the Indenture, in each case, at the
Purchase Price.
BY ACCEPTANCE OF THIS BOND, THE REGISTERED OWNER HEREOF AGREES THAT THIS
BOND WILL BE PURCHASED, WHETHER OR NOT SURRENDERED, ON THE PURCHASE DATE AS
DESCRIBED ABOVE. IN SUCH EVENT, THE REGISTERED OWNER OF THIS BOND SHALL NOT
BE ENTITLED TO RECEIVE ANY FURTHER INTEREST HEREON, SHALL HAVE NO FURTHER
RIGHTS UNDER THIS BOND OR THE INDENTURE EXCEPT TO RECEIVE PAYMENT OF THE
PURCHASE PRICE HELD THEREFOR, AND SHALL THEREAFTER HOLD THIS BOND AS AGENT FOR
THE PAYING AGENT.
Payment of Purchase Price
The Purchase Price for Bonds (except Bonds in the Multiannual Mode,
which shall be in clearinghouse funds) is payable by wire or bank transfer
within the continental United States in immediately available funds from the
Paying Agent to the Registered Owner. If on any date this Bond is subject to
mandatory tender for purchase or is required to be purchased at the election
of the Registered Owner, payment of the Purchase Price of this Bond to such
Registered Owner shall be made on the Purchase Date if delivery of this Bond
is made prior to 11:00 a.m., New York City time, on the Purchase Date or on
such later Business Day upon which delivery of this Bond is made prior to
11:00 a.m., New York City time.
BY ACCEPTANCE OF THIS BOND, THE REGISTERED OWNER HEREOF AGREES THAT THIS
BOND WILL BE PURCHASED, WHETHER OR NOT SURRENDERED, ON THE PURCHASE DATE AS
DESCRIBED ABOVE. IN SUCH EVENT, THE REGISTERED OWNER OF THIS BOND SHALL NOT
BE ENTITLED TO RECEIVE ANY FURTHER INTEREST HEREON, SHALL HAVE NO FURTHER
RIGHTS UNDER THIS BOND OR THE INDENTURE EXCEPT TO RECEIVE PAYMENT OF THE
PURCHASE PRICE HELD THEREFOR, AND SHALL THEREAFTER HOLD THIS BOND AS AGENT FOR
THE PAYING AGENT.
The initial Remarketing Agent under the Indenture is Morgan Stanley &
Co., Incorporated. The Remarketing Agent may be changed at any time in
accordance with the Indenture.
Written Notice of Mode or Interest Rate Period Change
The Trustee shall give notice, by first class mail, to the Registered
Owners of all Bonds of the proposed conversion from one Mode to another Mode,
or the commencement of a new Interest Rate Period in the Multiannual Mode, at
least 15 days before the proposed Conversion Date while the Bonds accrue
interest at Flexible, Daily 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.
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 February 1, May 1, August 1
and November 1. While this Bond accrues interest at a Semiannual, Multiannual
or Fixed Rate, interest is payable on the first day of the immediately
succeeding May or November after Conversion to such Mode and thereafter on
each May 1 and November 1.
Optional Redemption
The Bonds are subject to optional redemption as follows:
(A) During any Daily, Flexible, Weekly, Monthly, Quarterly
or Semiannual Mode, the Bonds in such Mode shall be subject to
redemption prior to maturity at the option of the Issuer upon
written direction of the Company delivered to the Trustee in
whole or in part (and if in part in an Authorized Denomination) on
any Interest Payment Date, at a redemption price equal to the
principal amount thereof plus accrued interest thereon to the
redemption date.
(B) During any Multiannual or Fixed Rate Mode, the Bonds
in such Mode shall be subject to redemption prior to maturity at
the option of the Issuer upon written direction of the Company
delivered to the Trustee 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 102%, declining 1%
equal to 5 years commencement of per year to 100%
Interest Rate
Period
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.
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 the owner of any Bond which is subject
to mandatory tender on the date fixed for redemption.
If at the time of mailing of notice of any optional redemption in
connection with a refunding of the Bonds, the Company shall not have deposited
with the Trustee moneys sufficient to redeem all of the Bonds called for
redemption, such notice may state that it is conditional in that it is subject
to the deposit of the proceeds of refunding bonds with the Trustee not later
than the redemption date, and such notice shall be of no effect unless such
moneys are so deposited.
General Provisions
The Bonds are all issued under and entitled to the benefits of the
Indenture. Pursuant to the Indenture, the Issuer has pledged and assigned to
the Trustee the Trust Estate (as defined in the Indenture), which includes the
Installment Payments, as security for its obligation to pay the principal of,
premium, if any, and interest on, and Purchase Price of, the Bonds. Reference
is made to the Indenture for definitions of the terms used herein, for a
description of the Trust Estate and for the provisions thereof with respect to
the nature and extent of the security granted by the Issuer to the Trustee
thereunder, the rights, duties and obligations of the Issuer and the Trustee,
the rights of the Registered Owners of the Bonds, and the terms on which the
Bonds are issued and secured, to all of which provisions, and to all other
provisions of the Indenture, the Registered Owner hereof by the acceptance of
this Bond assents. The Registered Owner hereof shall never have the right to
demand payment out of any funds raised or to be raised by taxation or from any
source whatsoever except the Trust Estate. Except for the lien on and the
assignment and pledge of the Trust Estate, no property of the Issuer is
encumbered by any lien or security interest for the benefit of the Registered
Owner of this Bond.
The ownership of this Bond may be transferred (in Authorized
Denominations) only upon presentation and surrender of this Bond at the
Principal Office of the Trustee as Bond Registrar together with an assignment
duly executed by the Registered Owner hereof or his duly authorized
attorney-in-fact in such form as shall be satisfactory to the Trustee, and
subject to the provisions made therefor in the Indenture, provided that the
Trustee shall not be required to make any such transfer of any Bond during the
10 Business Days immediately preceding the mailing of a notice of Bonds
selected for redemption or, with respect to a Bond, after such Bond or any
portion thereof has been selected for redemption. Bonds may be exchanged at
the principal corporate trust office of the Trustee or at the offices of the
Trustee's Agent for other Bonds aggregating a like principal amount. Bonds
issued in exchange for other Bonds may be issued only in Authorized
Denominations. Any service charge made by the Trustee or the Trustee's Agent
for any such registration, transfer or exchange hereinbefore referred to shall
be paid by the Company. The Trustee, the Trustee's Agent, or the Issuer may
require payment by the Registered Owner of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith. The Issuer, the
Company, the 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 (with the written consent of
the Bank), and upon written request of the Registered Owners of a majority in
aggregate principal amount of the Bonds then Outstanding (with the written
consent of the Bank) 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.
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.
<PAGE>
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 CUSIPTendered for PurchaseBond NumbersPurchase Date
The undersigned hereby certifies that it is the Registered Owner or the
Beneficial Owner (as described below) of the Bonds described above (the
"Tendered Bonds"), all of which are in the _________________ Mode [insert Mode
of Tendered Bonds], and hereby agrees that the delivery of this instrument of
transfer to the Paying Agent by 10:00 A.M. New York City time on this Business
Day (for Daily Mode Bonds only) constitutes an irrevocable offer to sell the
Tendered Bonds to the Company or its designee on the Purchase Date, which
shall be a Business Day at least __________ (____) calendar days following
delivery of this instrument, at a purchase price equal to the unpaid principal
balance thereof plus accrued and unpaid interest thereon to the Purchase Date
(the "Purchase Price") provided that if the Purchase Date is an Interest
Payment Date, it is recognized that accrued interest will be paid separately
and not as part of the Purchase Price on such date. The undersigned
acknowledges and agrees that this election notice is irrevocable and that the
undersigned will have no further rights with respect to the Tendered Bonds,
except payment, upon presentation and surrender, of the Purchase Price by wire
or bank transfer within the continental United States from the Paying Agent,
at its address shown on the registration books of the Bond Registrar (i) on
the Purchase Date if the Tendered Bonds shall have been surrendered to the
Paying Agent prior to 11:00 A.M., New York City time, on the Purchase Date or
(ii) on any Delivery Date subsequent to the Purchase Date on which Tendered
Bonds are delivered to the Paying Agent by 11:00 A.M., New York City time.
<PAGE>
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
_____________________________________
<PAGE>
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
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;
(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
written direction of the Company delivered to the Trustee, in
whole or in part (and if in part in an Authorized Denomination) on
any Interest Payment Date applicable to the Bonds in such Mode, at
a redemption price equal to the principal amount thereof plus
accrued interest thereon to the redemption date.
(ii) During any Multiannual or Fixed Rate Mode, the Bonds
in such Mode shall be subject to redemption prior to maturity at
the option of the Issuer upon written direction of the Company
delivered to the Trustee, 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 102%, declining 1%
equal to 5 years commencement of per year to 100%
Interest Rate
Period
less than 5 years No call
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
Bond. After the Conversion Date succeeding the delivery of such alternative
schedule and Favorable Opinion during any Mode, the Bonds shall be subject to
redemption in accordance with the provisions of such alternative schedule.
(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 written 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 or caused to be
deposited by the Company with the Trustee, and the Trustee hereby is
authorized and directed to apply such funds to the payment of each Bond or
portion thereof called for redemption, together with accrued interest thereon
to the redemption date and any required premium. If at the time of mailing of
notice of any optional redemption in connection with a refunding of the Bonds
the Company shall not have deposited with the Trustee moneys sufficient to
redeem all of the Bonds called for redemption, such notice may state that it
is conditional in that it is subject to the deposit of the proceeds of
refunding bonds with the Trustee not later than the redemption date, and such
notice shall be of no effect unless such moneys are so deposited. On the date
so designated for redemption, notice having been given in the manner and under
the conditions hereinabove provided, any Bond or portion thereof so called for
redemption shall become and be due and payable at the redemption price
provided for herein; and if, in accordance with the provisions of Article V
hereof, sufficient moneys and/or Government Obligations, the principal of, and
interest on, which at maturity will provide sufficient moneys at the times
required for payment of the redemption price and accrued interest to the
redemption date are then held by the Trustee in trust for the Owners of every
Bond or portion thereof to be redeemed, interest on each such Bond or portion
so called for redemption shall cease to accrue and each such Bond or portion
thereof shall cease to be entitled to any benefit or security under this
Indenture, and the Owner of each such Bond or portion thereof shall have no
rights in respect thereof except to receive payment of the redemption price
thereof and accrued interest thereon to the redemption date from such moneys
and/or Government Obligations.
Section 2.09. Partial Redemption . If fewer than all of the Bonds
shall be called for redemption, the 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.
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 or
as to which a notice of redemption has been given by the Trustee unless the
Remarketing Agent has advised the person to whom the sale is made of the
conversion or redemption, as applicable. The Remarketing Agent shall not
remarket any Bonds pursuant to this Section if the Remarketing Agent has
received notice that an Event of Default shall have occurred and is continuing
hereunder with respect to the Bonds.
(b) Purchase of Tendered Bonds.
(i) Notice. At or before 3:00 p.m., New York City time, on the
Business Day immediately preceding the Purchase Date of tendered Bonds bearing
interest at Multiannual Rates (or 11:30 a.m., New York City time, on the
Purchase Date in the case of Bonds accruing interest at Daily, Weekly,
Flexible, Monthly, Quarterly or Semiannual Rates), the Remarketing Agent shall
give Electronic Notice to the Trustee of the principal amount of tendered
Bonds as to which the Remarketing Agent has received payment. Not later than
4:00 p.m. for Bonds bearing interest at Multiannual Rates (or 11:45 a.m., in
the case of Bonds accruing interest at Daily, Weekly, Flexible, Monthly,
Quarterly or Semiannual Rates ), New York City time, on the date of receipt of
such notice the Trustee shall give Electronic Notice to the Paying Agent, the
Bank and the Company, specifying the principal amount of tendered Bonds as to
which the Remarketing Agent has received payment (the "Deficiency Notice").
At or before 3:00 p.m., New York City time, on the Business Day prior to the
Purchase Date to the extent known to the Remarketing Agent, but in any event,
no later than 12:00 noon, New York City time, on the Purchase Date (or two
Business Days prior to the Purchase Date in the event tendered Bonds accrue
interest at Multiannual 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
thereof, such payments to be made in the manner and at the time specified in
subsection 2.10 (a) above. If the amounts specified in the Deficiency Notice
will not be sufficient to pay the Purchase Price on the Purchase Date, the
Paying Agent shall give notice to the Trustee to draw under the Letter of
Credit and the Trustee shall prior to 12:00 noon, 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 or the Remarketing Agent, as applicable,
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
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 written 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 the Purchase Price applicable to such Bond. The
Registered Owner of any Bond accruing interest at a Flexible Rate shall
provide the Paying Agent with written payment instructions for the Purchase
Price of its Bond on or before tender thereof to the Paying Agent.
(b) Conversions between Interest Rate Periods. Bonds to be converted
from one 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 the
Purchase Price applicable to such Bonds.
(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 written notice
that the Letter of Credit has been extended, and (ii) on any Interest Payment
Date on which the current Letter of Credit is replaced with an Alternate
Letter of Credit pursuant to Section 10.02, in each case at the Purchase Price
applicable to such Bonds.
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
any defect in or omission of such numbers.
(d) Notwithstanding any other provision of this Indenture or in the
forms of Bond, if the Bonds are on deposit at DTC in accordance with Section
3.07 hereof, presentation and surrender of the Bonds at the Principal Office
of the Trustee shall not be required other than at the maturity thereof.
Section 3.03. Performance of Covenants; Issuer 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 (and same Interest Rate Period
with respect to Bonds in the Flexible Mode or Multiannual Mode) aggregating a
like principal amount. Bonds issued in exchange for other Bonds may be issued
only in Authorized Denominations of the same Mode. All Bonds surrendered to
the Trustee for exchange pursuant to this Section 3.06 shall be canceled by
the Trustee and shall not be redelivered. Neither the Issuer nor the Trustee
shall be required to make any such transfer or exchange of any Bond during the
10 Business Days immediately preceding the mailing of a notice of Bonds
selected for redemption or, with respect to a Bond, after such Bond or any
portion thereof has been selected for redemption.
(c) Charges. In all cases of the transfer of a Bond, the Trustee
shall register at the earliest practicable time, on the Registration Books,
such Bond in accordance with the provisions of this Indenture. The Issuer or
the Trustee may make a charge to the Bond Owner for every transfer or exchange
of a Bond sufficient to reimburse it for any tax or other governmental charge
required to be paid with respect to such transfer or exchange, and may demand
that such charge be paid before any new Bond is delivered.
(d) Ownership. As to any Bond, the person in whose name the ownership
of such Bond shall be registered on the Registration Books shall be deemed and
regarded as the absolute owner thereof for all purposes, and payment of or on
account of the principal of any such Bond and the premium, if any, and
interest thereon shall be made only to or upon the order of the registered
Owner thereof or his legal representative. All such payments shall be valid
and effectual to satisfy and discharge the liability upon such Bond, including
the premium, if any, and interest thereon, to the extent of the sum or sums so
paid.
Section 3.07. Book-Entry Only System. The Bonds shall be initially
issued in the form of a single fully registered Bond. Upon initial issuance,
the ownership of each such Bond shall be registered in the name of Cede & Co.,
as nominee of DTC, and, except as provided in Section 3.08 hereof, all of the
outstanding Bonds shall be registered in the name of Cede & Co., as nominee of
DTC.
With respect to Bonds registered in the name of Cede & Co., as nominee
of DTC, the Issuer and the Trustee shall have no responsibility or obligation
to any DTC Participant or to any person on behalf of whom such a DTC
Participant holds an interest in the Bonds, except as provided in this
Indenture. Without limiting the immediately preceding sentence, the Issuer
and the Trustee shall have no responsibility or obligation with respect to (i)
the accuracy of the records of DTC, Cede & Co. or any DTC Participant with
respect to any ownership interest in the Bonds, (ii) the delivery to any DTC
Participant or any other person, other than a Bondholder, as shown on the
Registration Books, of any notice with respect to the Bonds, including any
notice of redemption, or (iii) the payment to any DTC Participant or any other
person, other than a Bondholder, as shown in the Registration Books of any
amount with respect to principal of, premium, if any, or interest on, the
Bonds. Notwithstanding any other provision of this Indenture to the contrary,
the Issuer and the Trustee shall be entitled to treat and consider the person
in whose name each Bond is registered in the Registration Books as the
absolute owner of such Bond for the purpose of payment of principal, premium,
if any, and interest with respect to such Bond, for the purpose of giving
notices of redemption and other matters with respect to such Bond, for the
purpose of registering transfers with respect to such Bond, and for all other
purposes whatsoever. The Trustee shall pay all principal of, premium, if
any, and interest on the Bonds only to or upon the order of the respective
owners, as shown in the Registration Books as provided in this Indenture, or
their respective attorneys duly authorized in writing, and all such payments
shall be valid and effective to fully satisfy and discharge the Issuer's
obligations with respect to payment of principal of, premium, if any, and
interest on, the Bonds to the extent of the sum or sums so paid. No person
other than an owner, as shown in the Registration Books, shall receive a Bond
certificate evidencing the obligation of the Issuer to make payments or
principal, premium, if any, and interest, pursuant to this Indenture. Upon
delivery by DTC to the Trustee of written notice to the effect that DTC has
determined to substitute a new nominee in place of Cede & Co., and subject to
the provisions in this Indenture with respect to interest checks or drafts
being mailed to the registered owner at the close of business on the Record
Date, the words "Cede & Co." in this Indenture shall refer to such new nominee
of DTC.
Section 3.08. Successor Securities Depository; Transfers Outside
Book-Entry Only System. (a) In the event that the Issuer, at the direction of
the Company, determines that DTC is incapable of discharging its
responsibilities described herein and in the representation letter of the
Issuer to DTC, the Issuer shall (i) appoint a successor securities depository,
qualified to act as such under Section 17(a) of the Securities Exchange Act
of 1934, as amended, notify DTC and DTC Participants, identified by DTC, of
the appointment of such successor securities depository and transfer one or
more separate Bonds to such successor securities depository or (ii) notify DTC
and DTC Participants, identified by DTC, of the availability through DTC of
Bonds and transfer one or more separate Bonds to DTC Participants, identified
by DTC, having Bonds credited to their DTC accounts. In such event, the Bonds
shall no longer be restricted to being registered in the Registration Books in
the name of Cede & Co., as nominee of DTC, but may be registered in the name
of the successor securities depository, or its nominee, or in whatever name or
names Bondholders transferring or exchanging Bonds shall designate, in
accordance with the provisions of this Indenture.
(b) In addition to (a) above, upon the written consent of 100% of the
beneficial owners of the Bonds, the Trustee shall withdraw the Bonds from DTC,
and authenticate and deliver Bonds fully registered to the assignees of DTC or
its nominee. If the request for such withdrawal is not the result of any
Issuer action or inaction, such withdrawal, authentication and delivery shall
be at the cost and expense (including costs of printing, preparing and
delivering such Bonds) of the persons requesting such withdrawal,
authentication and delivery.
Section 3.09. Payments to Cede & Co. Notwithstanding any other
provision of this Indenture to the contrary, so long as any Bond is registered
in the name of Cede & Co., as nominee of DTC, all payments with respect to
principal of, premium, if any, and interest on, such Bond and all notices with
respect to such Bond shall be made and given, respectively, in the manner
provided in the representation letter of the Issuer to DTC.
Section 3.10. Cancellation. All Bonds which have been paid at maturity
or redeemed prior to maturity shall not be reissued but shall be canceled by
the Trustee. All Bonds which are canceled by the Trustee shall be disposed of
by the Trustee, in accordance with its document retention policies, and a
certificate of cancellation shall be furnished promptly to the Issuer upon
request; provided, however, that if the Issuer shall so direct the Trustee,
the Trustee shall forward the canceled Bonds to the Issuer.
Section 3.11. Non-presentment of Bonds. If any check or draft
representing payment of interest, principal or premium on any Bond is returned
to the Trustee or is not presented for payment by the payee thereof, or any
Bond is not presented for payment of principal or premium at the maturity or
redemption date, if moneys and/or Government Obligations sufficient to pay
such interest, or such principal and premium, shall have been deposited with
and made available to the Trustee for the benefit of the Owner of the
applicable Bond, all liability of the Issuer to the Owner of such Bond for
such interest or such principal and premium shall forthwith cease, terminate
and be completely discharged, and thereupon it shall be the duty of the
Trustee to hold such moneys and/or Government Obligations, without investing
or reinvesting the same and without liability for interest thereon, for the
benefit of the Owner of such Bond, who shall thereafter be restricted
exclusively to such funds for any claim of whatever nature on such Owner's
part under this Indenture or on, or with respect to, such Bond, and such Bond
shall no longer be considered to be Outstanding. The Trustee's obligation to
hold such moneys and/or Government Obligations relating to the Bonds shall
continue for a period equal to two years following the date on which the
principal of all Bonds has become due, whether at maturity, or at the date
fixed for redemption or purchase thereof, or otherwise, at which time the
Trustee, upon payment of all fees and expenses due and owing to it and receipt
of indemnity satisfactory to it, shall surrender any remaining funds so held
to the Company. Following such surrender, any claim under this Indenture by
the Owner of any Bond of whatever nature shall be made only upon the Company.
The provisions of this Section 3.11 shall be subject to all applicable
escheat laws, including Title 6 of the Texas Property Code.
Section 3.12. Rights under Agreement. This Indenture, the Agreement
and the documents executed by the Company in connection therewith, duly
executed counterparts or originals of which have been filed with the Trustee,
set forth the covenants and the obligations of the Issuer, the Company and the
Trustee. Reference hereby is made to such documents for detailed statements
of the covenants and obligations set forth therein. The Issuer and the
Trustee agree that the Trustee, for and on behalf of the Bond Owners, in its
name or, to the extent permitted by law, in the name of the Issuer, may
enforce all rights of the Issuer (except for Unassigned Rights) and all
obligations of the Company under and pursuant to the Agreement and such
documents.
<PAGE>
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.
Section 3.17. Mutilated, Lost, Stolen or Destroyed Bonds. If any Bond
is mutilated, lost, stolen or destroyed, the Trustee, upon request, shall
authenticate a new Bond, dated as provided in Article II hereof, of the same
denomination and Mode and bearing interest at the same rate as the Bond
mutilated, lost, stolen or destroyed; provided, however, that, in the case of
any mutilated Bond, such mutilated Bond shall first be surrendered to the
Trustee, and, in the case of any lost, stolen or destroyed Bond, there shall
first be furnished to the Trustee evidence of such loss, theft or destruction
satisfactory to the Trustee, together with indemnity covering the Trustee, the
Company and the Issuer satisfactory to the Trustee. If any such Bond shall
have matured instead of issuing a duplicate Bond the Trustee may pay the same.
The Trustee and the Issuer may charge the Owner of such Bond with their
reasonable fees and expenses in connection with the issuance of any such
duplicate Bond.
Section 3.18.Intentionally Omitted.
Section 3.19. Arbitrage Covenants. The Issuer covenants and agrees,
for the benefit of the owners of the Bonds, that it will not knowingly take
any action or omit from taking nor instruct the Trustee to take or to omit
from taking any action, which would result in a loss of the exemption from
federal income taxation of interest on the Bonds by virtue of the Bonds being
considered "arbitrage bonds" within the meaning of section 148 of the Code.
ARTICLE IV
USE OF PROCEEDS; REVENUES AND FUNDS
Section 4.01. Application of Original Proceeds of Bonds. (a) The
proceeds of the sale of the Bonds, except accrued interest thereon, if any,
shall, on the Issue Date, be transferred by the Trustee 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 debt
service fund created under the Series 1977 Indenture.
(b) The Company, prior to or on the Issue Date, 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 interest on the Series 1974A Bonds coming due on the scheduled
December 1, 1995 interest payment date, plus 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.
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, and no
other moneys may be deposited into the Letter of Credit Debt Service Account.
(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-Held 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 properly presented and
conforming 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(c), the payment
when due of principal of, premium, if any, on and interest on the Bonds,
other than Company-Held 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) Prior to 4:00 p.m., New York City time, on the Business Day
immediately preceding 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 to be made in sufficient time
for the Trustee to receive the proceeds of such drawing at or before 11:00
a.m., New York City time, 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), and no other moneys may
be deposited into the Letter of Credit Purchase Account. 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-Held 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; provided that moneys in
the Letter of Credit Debt Service Account may be invested only in Government
Obligations. 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 a
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 Company recognizes
that it may obtain a broker confirmation or written statement containing
comparable information at no additional cost, the Company hereby agrees that
confirmations of investments made by the Trustee pursuant to this Section 4.05
are not required to be issued by the Trustee for each month in which a monthly
statement is rendered. No such statement need be rendered pursuant to the
provisions hereof if no activity occurred in the fund or account during such
preceding month. All funds held under this Indenture shall be secured to the
fullest extent required by Texas law. In the event of a loss on the sale of
such investments (after giving effect to any interest or other income thereon
except to the extent theretofore paid to the Company), the Trustee shall have
no responsibility in respect of such loss except that the Trustee shall notify
the 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. If the amount on deposit in any fund is insufficient on any
Interest Payment Date, redemption date or Purchase Date to make the payment
due on such date, the Company shall deposit sufficient moneys in such fund to
enable such payment to be made on such date.
Section 4.06. Moneys To Be Held in Trust. All moneys required to be
deposited with or paid to the Trustee for the account of any Fund under any
provisions of this Indenture shall be held by the Trustee in trust, and,
except for (i) moneys in the Bond Purchase Fund, and (ii) moneys deposited
with or paid to the Trustee for the redemption of Bonds, notice of the
redemption for which has been duly given, shall, while held by the Trustee,
constitute part of the Trust Estate and be subject to the security interest
created hereby.
Section 4.07. Repayment to Company from Indenture Funds. Subject to
Section 3.11 hereof, any amounts remaining in any Fund created under this
Indenture, after payment in full of the Bonds in accordance with Article V
hereof, the reasonable fees, charges and expenses of the Issuer, the Trustee
and any co-trustee appointed hereunder, and all other amounts required to be
paid hereunder or under the Agreement, and all amounts owed to the Bank under
the Letter of Credit Agreement and the Letter of Credit, shall be paid, upon
the expiration of, or upon the sooner termination of, the terms of this
Indenture, to the Company.
Section 4.08. Custody of Funds and Accounts. All Funds created
pursuant to this Indenture shall be in the custody of the Trustee but held in
trust, in the name of the Issuer, for the benefit of the Bondholders (other
than amounts held in the Bond Purchase Fund).
Section 4.09. Exemption from Federal Income Taxation. The Issuer will
not knowingly take any action, or omit to take any action within its control,
which action or omission will adversely affect the exclusion from gross income
for federal income tax purposes of interest on the Bonds, and in the event of
such action or omission will promptly, upon receiving knowledge thereof, take
all lawful actions, based on advice of counsel and at the expense of the
Company, as may rescind or otherwise negate such action or omission.
Section 4.10. Covenants Regarding Rebate.
(a) A special Rebate Fund is hereby established by the Issuer. The
Rebate Fund shall be for the sole benefit of the United States of America and
shall not be subject to the claim of any other person, including without
limitation the bondholders. The Rebate Fund is established for the purpose of
complying with section 148 of the Code and the Treasury Regulations
promulgated pursuant thereto. The money deposited in the Rebate Fund,
together with all investments thereof and investment income therefrom, shall
be held in trust and applied solely as provided in this section. The Rebate
Fund is not a portion of the Trust Estate and is not subject to the lien of
this Indenture. Notwithstanding the foregoing, the Trustee with respect to
the Rebate Fund is afforded all the rights, protections and immunities
otherwise accorded to it hereunder.
(b) Within ten days after the close of each fifth anniversary date of
the issuance of the Bonds, the Trustee shall receive from the 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
such excess for such purposes for which, or to be redeposited to such fund
from which, such amounts were originally derived.
(c) In general, "Excess Earnings" for any period of time means the sum
of
(i) the excess of --
(A) the aggregate amount earned during such period of time on
all "Nonpurpose Investments" (including gains on the disposition of
such Obligations) in which "Gross Proceeds" of the issue are
invested (other than amounts attributable to an excess described in
this subparagraph (c)(i), over
(B) the amount that would have been earned during such period
of time if the "Yield" on such Nonpurpose Investments (other than
amounts attributable to an excess described in this subparagraph
(c)(i)) had been equal to the yield on the issue, plus
(ii) any income during such period of time attributable to the
excess described in subparagraph (c)(i) above.
The term Nonpurpose Investments, Gross Proceeds, and Yield shall have
the meanings given to such terms in section 148 of the Code and the
Regulations promulgated pursuant to such section.
(d) The Trustee shall pay to the United States of American at least
once every five years, to the extent that funds are available in the Rebate
Fund or otherwise provided by the Company, an amount that ensures that at
least 90 percent of the Excess Earnings from the date of delivery of the Bonds
to the close of the period for which the payment is being made will have been
paid. The Trustee shall pay to the United States of America not later than 60
days after the Bonds have been paid in full, to the extent that funds are
available in the Rebate Fund or otherwise provided by the Company, 100 percent
of the amount then required to be paid under section 148(f) of the Code as a
result of Excess Earnings.
(e) The amounts to be computed, paid, deposited or disbursed under this
section shall be determined by the Company acting on behalf of the Issuer
within ten days after each fifth anniversary of the issuance of the 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 and
all obligations owing to the Bank under the Letter of Credit Agreement have
been paid in full and the Letter of Credit has been returned to the Bank for
cancellation, 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 (except those items described in clause (d) under the
definition of 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 and the
Rating Agencies, provide sufficient moneys to make such payment without
reinvestment (and there shall be no reinvestment); (ii) all necessary and
proper fees, compensation and expenses of the Trustee pertaining to the Bonds
shall have been paid or the payment thereof provided for to the satisfaction
of the Trustee; (iii)the Trustee shall have received in form satisfactory to
it irrevocable instructions from an Authorized Company Representative to
redeem such Bonds on the date next following on which such Bond is required to
be, or may at the option of the Owner be, tendered for purchase and either
evidence that all redemption notices required by this Indenture have been
given or irrevocable power authorizing the Trustee to give such redemption
notices has been given; and (iv) there shall be delivered to the Trustee, the
Rating Agencies 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 and an opinion of counsel rendered by nationally recognized bankruptcy
counsel acceptable to the Trustee to the effect that any deposit of cash or
securities and any deposit of investment earnings thereon to effect such
defeasance and subsequent payment to owners of the Bonds shall not constitute
a voidable preference in a case commenced under the United States Bankruptcy
Code (including paragraphs 544 and 547 thereof) or any applicable state
statute by or against the Issuer or the Company.
Notwithstanding the foregoing, upon the deposit of funds as described in
the first paragraph of this Section, the Purchase Price of Bonds tendered for
optional or mandatory purchase shall be made from the remarketing of such
Bonds under Section 2.10 hereof. If payment of such Purchase Price is not
made from such source, payment shall be made from funds on deposit pursuant to
this Section, in which case such Bonds shall be surrendered to the Trustee and
canceled.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.01. Events of Default. Each of the following events is
hereby defined as, and declared to constitute an "Event of Default" under this
Indenture:
(i) default in the due and punctual payment of the principal of or
premium, if any, on any Outstanding Bond, as the same shall become due
and payable, whether at the stated maturity thereof, upon any
proceedings for redemption, or upon the maturity thereof by declaration
of acceleration;
(ii) default in the due and punctual payment of the interest on
any Outstanding Bond, as the same shall become due and payable, and (i)
if such Bond bears interest at a Flexible, Daily, Weekly, Monthly,
Quarterly or Semiannual Rate, the continuation of such default for a
period of one Business Day or more or (ii) if such Bond bears interest
at a Multiannual or Fixed Rate, the continuation of such failure for a
period of sixty days or more;
(iii) default in the due and punctual payment of the Purchase
Price of any Outstanding Bond, as the same shall become due and payable
and the continuation of such default for a period of one Business Day or
more;
(iv) default by the Issuer in its performance or observance of any
of the other covenants, agreements or conditions contained in the
Indenture, and the continuation thereof without corrective action for
the period after notice specified in Section 6.12 hereof ;
(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 prior 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 (with the prior written consent of the Bank) 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.
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 (with the prior written
consent of the Bank) 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 and the Bank, the Issuer shall be entitled to reimbursement
for any of its expenses in connection with such proceeding from any available
funds in the Trust Estate.
If any Event of Default shall have occurred, and if requested to do so
in writing by the Owners of not less than 25% in aggregate principal amount of
the Bonds then Outstanding (and with the prior written consent of the Bank),
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 or the Bank shall have the right, at any time, by
an instrument or instruments in writing executed and delivered to the Trustee,
to direct the method and place of conducting all proceedings to be taken in
connection with the enforcement of the terms and conditions of this Indenture,
or for the appointment of a receiver or for any other proceedings hereunder,
other than for the payment of the principal of, premium, if any, and interest
on the Bonds or any part thereof; provided, however, that direction shall not
be otherwise than in accordance with the provisions of law and this Indenture
and shall be accompanied by an indemnity as provided in Section 7.01(1)
hereof.
Section 6.05. Appointment of Receiver. Upon the occurrence of an Event
of Default, and upon the filing of a suit or other commencement of judicial
proceedings to enforce the rights of the Trustee and the Bond Owners under
this Indenture, the Trustee shall be entitled, as a matter of right, to
request the appointment of a receiver or receivers of the Trust Estate and the
revenues, issues, earnings, income, products and profits thereof, pending such
proceedings, with such powers as the court making such appointment shall
confer.
Section 6.06. Waiver of Certain Laws. Upon the occurrence of an Event
of Default, to the extent that such rights may then lawfully be waived,
neither the Issuer, nor anyone claiming through or under it, shall claim or
seek to take advantage of any appraisement, valuation, stay, extension or
redemption laws now or hereafter in force in order to prevent or hinder the
enforcement of this Indenture. The Issuer, for itself and all who may claim
through or under it, hereby waives, to the extent that it lawfully may do so,
the benefit of all such laws.
Section 6.07. Application of Moneys. All moneys relating to the Bonds
received by the Trustee pursuant to any right given or action taken under the
provisions of this Article VI shall (after payment of the costs and expenses
of the proceedings resulting in the collection of such moneys and of the fees
and expenses, liabilities and advances of the Issuer and the Trustee, it being
understood that such payment shall not be made from any moneys already held
for the benefit of the Bondholders) be deposited in the Bond Fund, and all
moneys in the Bond Fund shall be applied as follows:
(i) Unless the principal of all the Bonds Outstanding shall have
become or been declared due and payable, all such moneys shall be
applied:
First: (a) in case the principal of the Bonds shall not have
become due, to the payment of the interest in default, in the order
of the maturity of the installments of such interest, with
interest, so far as the same may be legally enforceable, on the
overdue installments thereof at the highest rate borne by any
Outstanding Bonds, such payments to be made ratably to the persons
or parties entitled thereto, without discrimination or preference;
or
(b) in case the principal of any of the Bonds shall have
become due, by declaration or otherwise, first to the payment of
the interest in default, in the order of the maturity of the
installments of such interest, and thereafter to the payment of the
principal of, and premium, if any, on all Bonds then due with
interest, so far as the same may be legally enforceable, on the
overdue interest and principal (including premium) at the highest
rate borne by any Outstanding Bonds, such payments, respectively,
to be made ratably to the persons or parties entitled thereto,
without discrimination or preference.
Second: to the payment of the fees, counsel fees, and advances and
expenses of the Trustee and of the receiver, if any, and all costs
and disbursements allowed by the court if there be any court
action, and all other Trustee expenses accrued hereunder.
Third: to the payment of any amounts owing the Bank under the
Letter of Credit Agreement or Letter of Credit.
Fourth: to the payment of the Issuer's counsel fees and other
expenses, if any.
Fifth: 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; provided that the Trustee shall not be paid any moneys drawn
under the Letter of Credit, 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 (except for moneys
received pursuant to a draw on the Letter of Credit, in which case such moneys
shall be applied on the date of such draw) 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;
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 subparagraphs (i) through (vi) of Section 6.01 without the written
consent of the Bank and, in the case of a waiver of an Event of Default
described in subparagraph (vi) of Section 6.01, receipt by the Trustee of
written notice from the Bank that the Letter of Credit has been reinstated to
the full amount available under it immediately prior to such Event of Default
and any notice previously delivered to the Trustee pursuant to such
subparagraph (vi) has been rescinded.
Section 6.12. Notice of Default; Opportunity to Cure Defaults. (a)
Anything herein to the contrary notwithstanding, no default under Section
6.01(iv) hereof shall constitute an Event of Default hereunder until actual
notice of such default by registered or certified mail shall be given to the
Issuer and the 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.
(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 and at the expense of, the Company pursuant to Section
3.05 hereof.
(d) The Trustee shall not be accountable for the use of any Bonds
authenticated or delivered hereunder or for the use or application by the
Company of any moneys disbursed by the Trustee in accordance with the
provisions hereof. To the extent permitted by law, the Trustee may in good
faith buy, sell, own and hold any of the Bonds and may join in any action
which any Bond Owner may be entitled to take with like effect as if the
Trustee were not a party to this Indenture. The Trustee may also engage in or
be interested in financial or other transactions with the Issuer or the
Company; provided, however, that if the Trustee determines that any such
relationship is in conflict with its duties under this Indenture, it shall
eliminate the conflict or resign as Trustee. To the extent permitted by law,
the Trustee may also purchase Bonds with like effect as if it were not the
Trustee.
(e) The Trustee shall be protected in acting upon, and may conclusively
rely upon, any notice, request or other paper or document reasonably believed
to be genuine and correct, and reasonably believed to have been signed or sent
by the proper person or persons. Any action taken by the Trustee pursuant to
this Indenture upon the request, authority or consent of any person who at the
time of making such request or giving such authority or consent is the Owner
of any Bond, shall be conclusive and binding upon all future Owners of the
same Bond and any Bond issued in replacement therefor.
(f) As to the existence or nonexistence of any fact, or as to the
sufficiency or validity of any instrument, paper or proceeding, the Trustee
shall be entitled to rely upon a certificate signed by a duly authorized
representative of the Issuer or the Company as sufficient evidence of the
facts therein contained; and prior to the occurrence of a default of which the
Trustee has been notified as provided in subsection (h) of this Section 7.01,
or of which by said subsection (h) it is deemed to have notice, shall also be
at liberty to accept a similar certificate to the effect that any particular
dealing, transaction or action is necessary or expedient. The Trustee may at
its discretion secure such further evidence deemed necessary or advisable, but
shall in no case be bound to secure the same. The Trustee may accept a
certificate of an Authorized Issuer Representative to the effect that a
resolution in the form therein set forth has been adopted, and is in full
force and effect.
(g) The right of the Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty. The Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of its powers and duties under this Indenture.
(h) The Trustee shall not be required to take notice or be deemed to
have notice of any default or Event of Default hereunder, or in any other
document or instrument executed in connection with the execution and delivery
of the Bonds, except an Event of Default under Section 6.01(i), (ii) or (iii)
hereof or Section 6.01(a), (b), or (c) of the Agreement, unless the Trustee
shall be specifically notified in writing of such default or Event of Default
by the Issuer, the Company, the Bank 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 drawing on the Letter of Credit, making
payment on the Bonds when due, acceleration of the Bonds and payment of the
Bonds upon such acceleration), the Trustee may require that a satisfactory
indemnity bond be furnished for the reimbursement of all expenses which it may
incur and to protect it against all liability, except liability which is
adjudicated to have resulted from its negligence or willful misconduct, by
reason of any action so taken.
(m) All moneys received by the Trustee shall, until used, applied or
invested as herein provided, be held in trust for the purposes for which they
were received but need not be segregated from other funds, except to the
extent required by law or this Indenture. The Trustee shall be under no
liability for interest on any moneys received hereunder.
(n) Notwithstanding the effective date of this Indenture or anything to
the contrary in this Indenture, the Trustee shall have no liability or
responsibility for any act or event relating to this Indenture which occurs
prior to the date the Trustee formally executes this Indenture and commences
acting as Trustee hereunder.
(o) Upon the execution of this Indenture, the Trustee shall not be
liable for any action taken, suffered, or omitted to be taken by it in good
faith and reasonably believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Indenture.
(p) No provision of this Indenture shall be deemed to require the
Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of its rights or powers, if the Trustee shall have reasonable grounds
for believing that repayment of such funds or, in the alternative, adequate
indemnity against such risk or liability is not reasonably assured to it.
(q) The Trustee has no obligation or liability to the Bondholders for
the payment of interest or premium, if any, on or principal of the Bonds, but
rather the Trustee's sole obligations are to administer, for the benefit of
the Company and the Bondholders, the various Funds and Accounts established
hereunder.
(r) In the event the Trustee shall receive inconsistent or conflicting
requests and indemnity from two or more groups of Bondholders, each
representing less than a majority of the aggregate principal amount of the
Bonds then Outstanding, the Trustee shall not be required to take any action
hereunder.
(s) Except for information provided by the Trustee concerning the
Trustee, the Trustee shall have no responsibility with respect to any
information in any Official Statement or other disclosure material distributed
with respect to the Bonds. The Trustee shall have no responsibility for
compliance with securities laws in connection with issuance of the Bonds.
(t) The Trustee's immunities and protections from liability, and its
right to payment of compensation and indemnification in connection with
performance of its duties and obligations under the Indenture and the
Agreement, shall survive the Trustee's resignation or removal, or the final
payment of the Bonds.
(u) In acting or omitting to act pursuant to the provisions of the
Agreement, the Trustee shall be entitled to all of the rights, protections and
immunities accorded to the Trustee under the terms of this Indenture,
including but not limited to those set out in this Article VII.
Section 7.02. Fees, Charges and Expenses of Trustee. (a) The Issuer
has agreed with the Company in the Agreement that, as part of the Installment
Payments the Company shall pay to the Trustee its charges for performing the
duties of Trustee, Bond Registrar, and Paying Agent for the Bonds. It is
agreed by the Trustee that the Company may, without causing or creating a
default or Event of Default hereunder, contest in good faith (and withhold
payment of the contested amount until such contest is resolved) the
reasonableness of any of the foregoing charges for service. All payments due
the Trustee for such charges, fees, or expenses shall be paid by the Company
upon prompt presentation of an invoice therefor and no such charges, fees, or
expenses shall be charged against or be payable by the Issuer.
Notwithstanding anything herein to the contrary, no moneys drawn under the
Letter of Credit shall be used to pay any fees, charges or expenses of the
Trustee. Until the Trustee is paid in full pursuant to its final notice, the
rights of the Trustee under this Section 7.02 shall survive the payment in
full of the Bonds and the discharge of this Indenture.
(b) In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted
by it as a Trustee, a court in its discretion may require the filing by any
party litigant in the suit of an undertaking to pay the costs of the suit, and
the court in its discretion may assess reasonable costs, including reasonable
attorney's fees and expenses, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section does not apply to a suit by the Trustee or the
Issuer, a suit by an Owner pursuant to enforcement of the payment of the
principal of or interest hereunder or a suit by Owners of more than 10% in
principal amount of the then Outstanding Bonds.
Section 7.03. Trustee to Provide Additional Notices. (a) Upon written
request of any Owner of Bonds in an aggregate principal amount of at least
$1,000,000 (or any person or entity which provides written evidence acceptable
to the Trustee that such person or entity has a legal or beneficial interest
in Bonds in an aggregate principal amount of at least $1,000,000), the Trustee
shall give an additional copy of any notice to be given by the Trustee under
this Indenture by first-class mail to a second address specified by such Bond
Owner, person or entity. Any such additional notices shall be given
simultaneously with the original notices.
(b) Upon written request of any person or entity which provides
evidence acceptable to the Trustee that such person or entity has a legal or
beneficial interest in at least $1,000,000 in principal amount of the Bonds,
the Trustee shall for the calendar year in which such request is received
provide one or more of the following as requested to such person or entity:
(i) notices of redemption pursuant to Section 2.06; (ii) notices of default
pursuant to Section 6.12(b); (iii) copies of all notices to which such person
or entity is entitled under the Indenture to a specific second address
pursuant to Section 7.03(a); and (iv) outstanding balances by maturity,
redemption history, including redemption date, amount and sources of funds,
and distribution of the call to maturity.
Section 7.04. Intervention by Trustee. In any judicial proceeding to
which the Issuer or the Company is a party, and which in the opinion of the
Trustee and its counsel has a substantial bearing on the interests of Owners
of the Outstanding Bonds, the Trustee may intervene on behalf of the Owners of
the Bonds and shall do so if requested in writing by the Bank or Owners of at
least 25% in aggregate principal amount of the Bonds then Outstanding, and
when provided with sufficient indemnity pursuant to Section 7.01(1) hereof.
Section 7.05. Successor Trustee by Merger. Subject to Section 7.11
hereof, any corporation or association into which the Trustee may be converted
or merged, with which it may be consolidated, or to which it may sell or
transfer its trust business and assets as a whole or substantially as a whole,
or any corporation or association resulting from any such conversion, sale,
merger, consolidation or transfer to which it is a party, ipso facto, shall
(if it is qualified to be Trustee hereunder) be and become the Trustee
hereunder and vested with all of the title to the Trust Estate and all the
trusts, powers, discretions, immunities, privileges, responsibilities,
obligations and all other matters as was its predecessor, without the
execution or filing of any instrument or any further act, deed or conveyance
on the part of any of the parties hereto.
Section 7.06. Resignation by Trustee. The Trustee may resign from the
trusts hereby created by giving written notice to the Issuer, the 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 only upon the appointment of a successor
Trustee. If no successor Trustee is appointed pursuant to Section 7.08 hereof
within 30 days after the delivery of such notice, a temporary Trustee may be
appointed by the Issuer, pursuant to Section 7.08 hereof. If no successor
Trustee or temporary Trustee is appointed within 45 days after delivery of
such notice, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
Section 7.07. Removal of Trustee. The Trustee may be removed at any
time by an instrument or substantially concurrent instruments in writing
delivered to the Trustee and the Bond Owners and signed by the Issuer and the
Company. Such removal shall take effect only upon the appointment of a
successor Trustee.
Section 7.08. Appointment of Successor Trustee. In case the Trustee
shall resign, be removed, be dissolved, be in the course of dissolution or
liquidation or otherwise become incapable of acting or not qualified to act
hereunder, or in case the Trustee shall be taken under the control of any
public officer or officers or a receiver appointed by a court, a successor may
be appointed by the Issuer with the consent of the 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.
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, (v) shall not have
become incapable of acting or have been adjudged a bankrupt or an insolvent
nor have had a receiver appointed for itself or for any of its property, nor
have had a public officer take charge or control of it or its property or
affairs for the purpose of rehabilitation, conservation or liquidation and
(vi) must be an institution rated at least "Baa3" by Moody's (or Moody's shall
have provided written evidence that such successor Trustee is otherwise
acceptable to Moody's) if the Bonds are then rated by Moody's, and at least
"BBB-" or "A-3" by S&P (or S&P shall have provided written evidence that such
successor Trustee is otherwise acceptable to S&P) if the Bonds are then rated
by S&P.
(b) Should the Trustee or any separate trustee or co-trustee at any
time cease to be eligible, pursuant to this Section 7.11, to act as Trustee or
co-trustee (as the case may be), it shall promptly notify the Owners of all
Outstanding Bonds, the Issuer and the Company of such fact. Any such notice
shall set forth all the relevant facts known to the Trustee.
Section 7.12. Paying Agent. All provisions of this Article VII shall
apply with equal force and effect to the Paying Agent named hereunder, and, to
the extent applicable, the Paying Agent shall comply with the provisions of
this Article VII.
<PAGE>
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. Any successor
Remarketing Agent shall be an institution rated at least "Baa3" by Moody's (or
Moody's shall have provided written evidence that such successor Remarketing
Agent is otherwise acceptable to Moody's) if the Bonds are then rated by
Moody's, and at least "BBB-" or "A-3" by S&P (or S&P shall have provided
written evidence that such successor Remarketing Agent is otherwise acceptable
to S&P) if the Bonds are then rated by S&P, and authorized by law to perform
all the duties imposed upon it by this Indenture.
In the event of the resignation or removal of the Remarketing Agent, the
Remarketing Agent shall pay over, assign and deliver any moneys and Bonds held
by it in such capacity to its successor or, if there is no successor, to the
Trustee.
In the event that the 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.
(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
then Outstanding and affected (i) an extension of the maturity of the
principal of, or the time for payment of any redemption premium or interest
on, any Bond or a reduction in the principal amount of any Bond, or the rate
of interest or redemption premium thereon, or a reduction in the amount of, or
extension of the time of any payment required by, any Bond; (ii) a privilege
or priority of any Bond over any other Bond (except as herein provided); (iii)
a reduction in the aggregate principal amount of the Bonds required for
consent to such a supplemental indenture; (iv) the deprivation of the owner of
any Bond then outstanding of the lien created by the Indenture; or (v) the
amendment of this Section 9.03. With respect to any amendment or supplement
to be entered into pursuant to Sections 9.01 or 9.02 hereof, the Trustee shall
be entitled to receive a Favorable Opinion.
Section 9.04. Consent of 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.
ARTICLE X
LETTER OF CREDIT
Section 10.01. Extension 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
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.
If the Letter of Credit is so extended, 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, then the
notice of mandatory tender for purchase pursuant to 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).
Section 10.02. Replacement of the Letter of Credit. The Company may
provide for the delivery to the Trustee on any Interest Payment Date 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 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 the Bonds will be subject to mandatory tender for
purchase pursuant to Section 2.11(c) on such Interest Payment Date on which
such replacement occurs. 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. 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 Agencies 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. 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 then 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 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 Rate; 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, the Bank and the Owners
of the Bonds any legal or equitable right, remedy or claim under or with
respect to this Indenture or any covenants, conditions and provisions herein
contained. This Indenture and all of the covenants, conditions and provisions
hereof are intended to be, and are, for the sole and exclusive benefit of the
parties hereto, the Company, the Bank 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.
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 Power and Light Company
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone No.: (214) 777-1000
Telecopy No.: (214) 777-1223
If to the Bank:
ABN AMRO Bank N.V.
Houston Agency
Three Riverway
Suite 1700
Houston, Texas 77056
Attention: Loan Administration
Telephone No.: (713) 964-3360
Telecopy No.: (713) 629-7533
with a copy to:
ABN AMRO North America
135 South LaSalle Street
Suite 711
Chicago, Illinois 60603
Attention: Utilities Group
Telephone No.: (312) 904-2065
Telecopy No.: (312) 904-6387
If to the Remarketing Agent:
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
Attention: Janet Salem
Telephone No.: (212) 296-7614
Telecopy No.: (212) 296-7513
A duplicate copy of each notice given hereunder by any party shall be given to
each of the Issuer, the Trustee and the 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:
(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 Mode.
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 period that either no Letter of Credit is in
effect or during which the Bank has wrongfully failed to honor a properly
presented and conforming drawing 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.
Section 11.12. Notice to Company of Bank Failure to Honor Letter of
Credit. In the event the Bank has failed to honor a properly presented and
conforming drawing under the Letter of Credit, the Trustee shall give prompt
notice of such failure to the Company.
<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>
<PAGE>
EXHIBIT 3(a)
------------
BOND PURCHASE AGREEMENT
GUADALUPE-BLANCO RIVER AUTHORITY
$40,890,000
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
BOND PURCHASE AGREEMENT (this "Purchase Agreement") dated November
2, 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 the resolution
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 26, 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 as of October 1, 1995, shall mature on November
1, 2015, 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
9:00 a.m., Dallas time, on November 2, 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 limited obligations of the Issuer
in accordance with their terms and in conformity with the Enabling
Legislation and will be entitled to the benefit and security of the
Installment Agreement, the Resolution and the Indenture.
(h) No approval, permit, consent or authorization of any
governmental or public agency, authority or person not already obtained
(other than 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 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 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 October 1, 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;
(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 Chapman and
Cutler, 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 (.397% of the
principal amount of the Refunding Bonds) as set forth in Section 5 of the
Letter of Representation; and
(j) Subsequent to the dates as of which information is given in
the Official Statement, there shall not have been any change or decrease
specified in the letter required by subsection (e)(vii) which is, in the
judgment of the 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
The Company:
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
<PAGE>
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:
Name: Francis J. Sweeney
Title: Principal
<PAGE>
<PAGE>
EXHIBIT 4(a)
------------
APPENDIX A
CENTRAL POWER AND LIGHT COMPANY
LETTER OF REPRESENTATION
$40,890,000
Guadalupe-Blanco River Authority
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
November 2, 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.
<PAGE>
(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 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
.397% 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
<PAGE>
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.
<PAGE>
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:
Name: Francis J. Sweeney
Title: Principal
<PAGE>
<PAGE>
EXHIBIT 5(a)
------------
NEW ISSUE -- BOOK-ENTRY ONLY
$40,890,000
Guadalupe-Blanco River Authority (Texas)
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
Interest to Accrue from Date of Issuance Due: November 1, 2015
The Bonds are limited obligations of the Issuer and do not
constitute an indebtedness or a charge against the general credit or taxing
powers of the Issuer or the State of Texas. The Bonds are payable solely
from, and secured by a pledge of, the revenues to be received by the Issuer
under an Installment Payment Agreement from
Central Power and Light Company
Initially, the Bonds will bear interest in the Daily Mode. The Bonds
may subsequently be converted to the Weekly Mode for Rate Periods of seven
days, the Flexible Mode for Rate Periods of any duration up to 270 days, the
Monthly Mode for Rate Periods of 30 days, the Quarterly Mode for Rate Periods
of 90 days, the Semiannual Mode for Rate Periods of 180 days, the Multiannual
Mode for Rate Periods of one year or any integral multiple thereof or the
Fixed Rate Mode for a Rate Period from the date of conversion to the Maturity
Date of the Bonds. The Daily Mode, Weekly Mode, Monthly Mode, Quarterly Mode
and Semiannual Mode are referred to herein as the "Short Term Modes." Subject
to certain conditions described herein, the Bonds may be converted in whole or
in part, from time to time, from any Mode then in effect (other than a Fixed
Rate Mode) to any Flexible Mode, Short Term Mode, Multiannual Mode or Fixed
Rate Mode. THIS OFFICIAL STATEMENT DESCRIBES THE TERMS AND CONDITIONS OF THE
BONDS ONLY WHILE IN A FLEXIBLE MODE OR A SHORT TERM MODE.
Payment of the principal and interest on the Bonds when due, and
payment of the Purchase Price of the Bonds upon optional or mandatory tender,
are payable from moneys drawn by the Trustee on an irrevocable, direct pay
letter of credit issued by
ABN AMRO Bank N.V.
The Remarketing Agent for the Bonds will be Morgan Stanley & Co.
Incorporated.
The Bonds will be delivered as fully registered bonds without
coupons in denominations of $100,000 or any integral multiple of $1,000 in
excess thereof in the Flexible Mode, denominations of $100,000 or any integral
multiple thereof in the Daily Mode or the Weekly Mode and denominations of
$5,000 or any integral multiple thereof in the Monthly Mode, Quarterly Mode,
Semiannual Mode, Multiannual Mode or Fixed Rate Mode. Bonds will be initially
registered in the name of Cede & Co., as registered owner and nominee for The
Depository Trust Company, New York, New York ("DTC"). DTC will act as
securities depository for the Bonds. Bonds will be delivered only in book-
entry form and, except under the limited circumstances described herein,
beneficial owners of such Bonds will not receive certificates representing
their ownership interests. Principal of, premium, if any, interest on, and
the Purchase Price for, the Bonds, will be paid in the manner described
herein. So long as DTC or its nominee is the registered owner of the Bonds,
payments of principal, interest and premium, if any, and the Purchase Price,
will be made through DTC and its Participants and disbursements of such
payments to beneficial owners will be the responsibility of such Participants.
See "BOOK-ENTRY ONLY SYSTEM" herein.
The Bonds are subject to optional redemption and mandatory tender
prior to maturity, and while in a Short Term Mode to optional tender, all as
described herein.
------------------------
Price 100%
------------------------
In the opinion of Bond Counsel, interest on the Bonds will be
excludable from gross income for federal income tax purposes under existing
statutes, regulations, rulings and court decisions, except as explained under
"TAX MATTERS" herein, and will not be treated as a preference item in
calculating the alternative minimum tax imposed on individuals and
corporations. For further information, see "TAX MATTERS".
The Bonds are offered, subject to prior sale, when, as and if issued
by the Issuer and accepted by the Underwriter, subject to the approval of
legality by the Attorney General of the State of Texas and McCall, Parkhurst &
Horton L.L.P., Bond Counsel, the approval of certain other legal matters by
Sidley & Austin, counsel for the Underwriter, and certain other conditions.
It is expected that the Bonds will be available to DTC on or about November 2,
1995.
------------------------
MORGAN STANLEY & CO.
Incorporated
Dated: November 2, 1995
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS
OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
No dealer, salesman or any other person is authorized to give any
information or to make any representation not contained in this Official
Statement, and any information not contained herein must not be relied upon as
having been authorized by Guadalupe-Blanco River Authority, Central Power and
Light Company or the Underwriter. This Official Statement does not constitute
an offer to sell or the solicitation of an offer to buy, nor shall there be
any sale of the Bonds, by any person in any jurisdiction in which it is
unlawful for such person to make such offer, solicitation or sale.
Neither the delivery of this Official Statement nor any sale
hereunder shall under any circumstances create any implication that there has
been no change in the affairs of Guadalupe-Blanco River Authority, Central
Power and Light Company or ABN AMRO Bank N.V. since the date hereof.
------------------------
TABLE OF CONTENTS
Page
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
THE FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
THE BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
BOOK-ENTRY ONLY SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
THE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
THE INDENTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
THE LETTER OF CREDIT AND THE LETTER OF CREDIT AGREEMENT. . . . . . . . . . . 29
TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
CONTINUING DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
APPENDIX A - CENTRAL POWER AND LIGHT COMPANY . . . . . . . . . . . . . . . .A-1
APPENDIX B - ABN AMRO BANK N.V.. . . . . . . . . . . . . . . . . . . . . . .B-1
APPENDIX C - CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . .C-1
APPENDIX D - FORM OF OPINION OF BOND COUNSEL . . . . . . . . . . . . . . . .D-1
<PAGE>
$40,890,000
GUADALUPE-BLANCO RIVER AUTHORITY (TEXAS)
POLLUTION CONTROL REVENUE REFUNDING BONDS
(Central Power and Light Company Project)
Series 1995
Due November 1, 2015
------------------------
INTRODUCTION
This Official Statement is provided to furnish information regarding
the issuance by Guadalupe-Blanco River Authority, a governmental agency and
body politic and corporate of the State of Texas (the "Issuer"), of its
Pollution Control Revenue Refunding Bonds (Central Power and Light Company
Project) Series 1995 (the "Bonds") in the aggregate principal amount of up to
$40,890,000.
The issuance and sale of the Bonds has been authorized by a
Resolution adopted by the Issuer on October 18, 1995 (the "Resolution") and
will be issued pursuant to an Indenture of Trust to be dated as of October 1,
1995 (the "Indenture") between the Issuer and The Bank of New York, as trustee
(the "Trustee").
The proceeds of the Bonds will be used to refund (i) $33,465,000 of
the Issuer's outstanding 6% Pollution Control Revenue Bonds, 1977 Series
(Central Power and Light Company Project) (the "Series 1977 Bonds") and (ii)
$7,425,000 of the Port of Corpus Christi Authority of Nueces County, Texas
(formerly Nueces County Navigation District No. 1) (the "Port") outstanding 7-
1/8% Environmental Improvement Revenue Bonds (Central Power and Light Company
Facilities) Series 1974, Issue A (the "Series 1974A Bonds" and, together with
the Series 1977 Bonds, the "Prior Bonds"). The Series 1974A Bonds were
originally issued to provide funds for the acquisition, construction and
improvement of certain pollution control facilities (the "Davis Facilities")
at the Barney M. Davis Power Station (the "Davis Power Station") which is
owned and operated by Central Power and Light Company, a Texas business
corporation (the "Company"), and located in Corpus Christi, Texas. The Series
1977 Bonds were originally issued to provide funds for the acquisition,
construction and improvement of certain pollution control facilities (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") which is owned and operated by the
Company and located in Goliad County, Texas.
Pursuant to an Installment Payment Agreement dated as of October 1,
1995 (the "Agreement") between the Issuer and the Company, the Company will be
obligated to make payments at such times and in such amounts as shall be
required to pay, when due, the principal of, premium, if any, interest on, and
Purchase Price for, the Bonds. The payments will be made directly to the
Trustee. Neither the Facilities nor the Plants constitute security for the
Bonds, which will be secured only by the assignment and pledge of the
Agreement, the moneys deposited or required to be deposited under the
Indenture (other than moneys deposited to the Rebate Fund and the Bond
Purchase Fund), and the Company's absolute unconditional obligation to make
payments thereunder.
The Purchase Price and principal of and interest on the Bonds will
also be payable from moneys drawn by the Trustee on an irrevocable direct pay
letter of credit issued with respect to the Bonds (the "Letter of Credit") by
ABN AMRO Bank N.V. (the "Letter of Credit Bank"), in the initial aggregate
stated amount of $43,411,550, pursuant to the terms of the Letter of Credit
Agreement, dated as of October 1, 1995 (the "Letter of Credit Agreement") by
and between the Company and the Letter of Credit Bank.
The Bonds will mature on November 1, 2015. The Bonds will be dated
October 1, 1995, but will initially bear interest from the date of issuance
thereof at a Daily Rate, subject to conversion in certain circumstances as
described under "THE BONDS Conversion Between Modes." Interest on the Bonds
in the Flexible Mode or a Short Term Mode will be computed as described under
the caption "THE BONDSDetermination of Interest Rates."
Purchases of beneficial interests in the Bonds may be made, during a
Flexible Mode, only in the denominations of $100,000 or any integral multiple
of $1,000 in excess of $100,000, during a Daily or Weekly Mode, only in the
denominations of $100,000 or any integral multiple thereof; provided that if
the principal amount of the Bonds in the Daily Mode or Weekly Mode, as the
case may be, is not 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, and during a
Monthly, Quarterly or Semiannual Mode, only in the denominations of $5,000 or
any integral multiple thereof. The Bonds will be subject to optional and
mandatory redemption prior to maturity, as described under the caption "THE
BONDS Redemption Prior to Maturity."
There follows in this Official Statement brief descriptions of the
Issuer, the Facilities, the Use of Proceeds, the Bonds, the Agreement, the
Indenture and the Letter of Credit. This Official Statement describes the
Bonds only while they are in the Flexible Mode or a Short Term Mode (i.e., a
Daily, Weekly, Monthly, Quarterly or Semiannual Mode). The descriptions
herein of the Agreement, the Indenture, the Letter of Credit and the Letter of
Credit Agreement do not purport to be complete and are qualified in their
entirety by reference to such documents, and the descriptions herein of the
Bonds are qualified in their entirety by reference to the forms thereof and
the information with respect thereto included in the Indenture. See
"MISCELLANEOUS" herein for information with respect to obtaining copies of
such documents. Appendix A to this Official Statement has been furnished by,
and contains information concerning, the Company, including certain financial
statements and other information incorporated therein by reference. Appendix
B to this Official Statement has been furnished by, and contains information
concerning, the Letter of Credit Bank. Terms not defined herein have the
meanings set forth in the Agreement, the Indenture, the Letter of Credit, the
Letter of Credit Agreement, or in Appendix C to this Official Statement.
THE ISSUER
Guadalupe-Blanco River Authority is a political subdivision of the
State of Texas created under a series of acts formerly compiled as Article
8280-106, Vernon's Annotated Texas Civil Statutes, as amended, as a
conservation and reclamation district comprising all of Hays, Comal,
Guadalupe, Caldwell, Gonzales, De Witt, Victoria, Kendall, Refugio and Calhoun
Counties in the State of Texas.
The Issuer is authorized by the Acts to issue its revenue bonds to
finance the acquisition, construction, and improvement of water and air
pollution control facilities, to refund its own bonds, and 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.
THE FACILITIES
The Facilities consist of various systems which are designed for the
abatement and control of pollution and the treatment and disposal of sewage
and solid waste resulting from the operation of the Plants. The Davis
Facilities consist of a 1,100-acre cooling pond, a sewage treatment plant and
a 16-acre chemical waste evaporation pond. The Coleto Facilities consist of a
190 acre primary ash pond, a 10 acre secondary ash settling pond, a sewage
treatment plant, a precipitator or fly ash handling system and a 100 acre
chemical waste evaporation pond.
USE OF PROCEEDS
The Bonds are being issued by the Issuer for the purpose of
providing funds for the redemption of all outstanding Prior Bonds. The
proceeds to be received by the Issuer from the issuance and sale of the Bonds
will be (i) deposited into a separate account within the debt service fund
with respect to the Series 1974A Bonds maintained by NationsBank of Tennessee,
N.A. (successor to Commerce Union Bank, Nashville, Tennessee) ("NationsBank"),
pursuant to an Indenture of Trust dated as of June 1, 1974 between the Port
and NationsBank and (ii) deposited into a separate account within the debt
service fund with respect to the Series 1977 Bonds maintained by Texas
Commerce Bank National Association (successor to Corpus Christi National Bank)
("Texas Commerce Bank"), pursuant to an Indenture of Trust dated as of
November 1, 1977 between the Issuer and Texas Commerce Bank. The Company will
provide any additional funds required to redeem all of the Prior Bonds from
either internally generated funds or short-term borrowings. Contemporaneously
with the refunding of the Prior Bonds, but not with the proceeds of the
offering of the Bonds, the Company intends to redeem $770,000 of the Issuer's
outstanding 6% Pollution Control Revenue Bonds, 1977A Series (Central Power
and Light Company Project) and $1,000,000 of the Port's outstanding 7-1/8%
Environmental Improvement Revenue Bonds (Central Power and Light Company
Facilities) Series 1974, Issue B.
THE BONDS
General
Definitions used in the forepart of this Official Statement and not
defined herein shall have the meanings ascribed thereto in Appendix C hereto.
The Bonds are being issued in fully registered form only in the aggregate
amount set forth on the cover page hereof and will mature on November 1, 2015.
Interest on the Bonds will be payable on each Interest Payment Date at the
rates per annum determined as hereinafter described. Such interest rate may
not exceed the Maximum Rate (i.e., a "net effective interest rate" as defined
and calculated in accordance with the provisions of Article 717k-2, Vernon's
Texas Civil Statutes) of 12% per annum. Interest on the Bonds during a
Flexible Mode, Daily Mode, Weekly Mode or Monthly Mode will be 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 year commences; and
interest on Bonds in a Quarterly Mode or Semiannual Mode will be calculated on
the basis of a 360-day year comprised of twelve 30-day months.
The Bonds will initially be issued in the Daily Mode. With the
exception of Bonds in the Fixed Rate Mode, all or any portion of the Bonds may
be converted at the election of the Company to any authorized Mode or Modes
(i.e., a Daily Mode, a Weekly Mode, a Monthly Mode, a Quarterly Mode, a
Flexible Mode, a Semiannual Mode, a Multiannual Mode or a Fixed Rate Mode),
all as described below. IF ANY BONDS ARE CONVERTED TO A MODE OTHER THAN A
SHORT TERM MODE OR FLEXIBLE MODE, THE ISSUER AND THE COMPANY WILL PREPARE AN
OFFICIAL STATEMENT WITH RESPECT TO SUCH BONDS DESCRIBING SUCH MODE AT THE TIME
OF SUCH CONVERSION. THIS OFFICIAL STATEMENT DESCRIBES THE TERMS AND
CONDITIONS OF THE BONDS ONLY WHILE IN A FLEXIBLE MODE OR A SHORT TERM MODE.
Beneficial interests in the Bonds will initially be issued pursuant
to a Book-Entry Only System (the "Book-Entry Only System") maintained by The
Depository Trust Company, New York, New York ("DTC"), as described below under
the caption "BOOK-ENTRY ONLY SYSTEM." Under the Indenture, the Issuer may
appoint a successor securities depository to DTC. (DTC, together with any
such successor securities depository, is hereinafter referred to as the
"Securities Depository.") The holders of the Bonds have no right to a Book-
Entry Only System for the Bonds. The following information is subject in its
entirety to the provisions described below under the caption "BOOK-ENTRY ONLY
SYSTEM" while the Bonds are in the Book-Entry Only System.
Form and Denomination of Bonds; Payments on the Bonds
General
The Bonds will be issued only as fully registered bonds, without
coupons, in denominations of (i) $100,000 or any integral multiple of $1,000
in excess of $100,000 during a Flexible Mode, (ii) $100,000 or any integral
multiple thereof during a Daily or Weekly Mode, 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 and (iii) $5,000 or any integral
multiple thereof during a Monthly, Quarterly or Semiannual Mode (each, an
"Authorized Denomination", and collectively the "Authorized Denominations").
The Bank of New York, the Trustee under the Indenture, has been
appointed as Paying Agent (the "Paying Agent") under the Indenture. The
Principal Office of the Paying Agent is located at 101 Barclay Street, 21st
Floor, New York, New York 10286.
The Bonds 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 such Owner's attorney,
in such form as shall be satisfactory to the Trustee. Upon the due
presentation of any Bond for transfer and on request of the Trustee, the
Issuer will 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 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.
The Bonds may be exchanged for an equal aggregate principal amount
of Bonds of Authorized Denominations of the same Mode upon surrender of such
Bonds at the Principal Office of the Trustee, as Bond Registrar for the Bonds
located at 101 Barclay Street, 21st Floor, New York, New York 10286, together
with a written instrument of transfer executed by the Registered Owner or the
Owner's attorney in such form as shall be satisfactory to the Trustee.
Neither the Issuer nor the Trustee shall be required to make any
transfer or exchange of any Bond during the ten Business Days prior to 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.
Registration of transfers and exchanges shall be made without charge to the
Bondholders, except that any required taxes or other governmental charges
shall be paid by the Bondholder requesting registration of transfer or
exchange.
Principal and Interest Payments
The principal of and interest on the Bonds during a Flexible Mode is
payable when due by wire or bank transfer of immediately available funds
within the continental United States to the Registered Owner but only upon
presentation and surrender of the Bonds at the Principal Office of the Paying
Agent. The principal of the Bonds during a Short Term Mode is payable when
due by wire or bank transfer of immediately available funds within the
continental United States to the Registered Owner, but only upon presentation
and surrender of the Bonds at the Principal Office of the Paying Agent.
Interest on the Bonds during a Short Term Mode is payable when due in
immediately available funds by wire or bank transfer within the continental
United States from the Paying Agent to the Registered Owner, determined on the
Record Date (as described below), at its address as shown on the registration
books maintained by the Trustee as Bond Registrar.
Interest Payment Dates
The interest payment dates (the "Interest Payment Dates") for Bonds
during a Flexible Mode will be the first day (which must be a Business Day)
after an Interest Rate Period and the Maturity Date; for Bonds during a Daily,
Weekly, or Monthly Mode, the first Business Day of each calendar month and the
Maturity Date; for Bonds during a Quarterly Mode, each February 1, May 1,
August 1 and November 1 and the Maturity Date; and for Bonds during a
Semiannual Mode, each May 1 and November 1 and the Maturity Date.
The Record Date for a Bond during a Flexible Mode will be the time
of payment on the Interest Payment Date applicable to that Bond; for the
Daily, Weekly, Monthly, Quarterly, or Semiannual Modes, the close of business
of the Trustee on the Business Day preceding an Interest Payment Date
applicable to that Bond.
Interest Rate Modes
From and including the date of initial issuance and delivery, the
Bonds will bear interest at the rate determined as the Daily Rate until
converted in whole or in part to a different Mode permitted under the
Indenture. The permitted Modes for the Bonds are the "Flexible Mode" for
periods of from one to 180 days (unless the amount of interest coverage under
the Letter of Credit is increased to allow interest periods up to 270 days as
permitted by the Indenture), the "Daily Mode," the "Weekly Mode," the "Monthly
Mode," the "Quarterly Mode," the "Semiannual Mode" and the "Multiannual Mode"
for periods of one day, one week, one month, three months, six months or one
year or integral multiples thereof, respectively, and the "Fixed Rate Mode"
for the remaining term of the Bonds. The period during which a particular
Mode is in effect is referred to as a "Rate Period" or an "Interest Rate
Period." Except as otherwise provided in the Indenture, the interest rates in
each Mode and the Rate Periods will be determined by Morgan Stanley & Co.
Incorporated, appointed as the Remarketing Agent under the Indenture (the
"Remarketing Agent"). The interest rate on the Bonds may not exceed the
Maximum Rate. Except for Bonds bearing interest at a Fixed Rate, the Mode for
all or a portion of the Bonds is subject to conversion (a "Conversion") to a
different Mode from time to time at the election of the Company. Each
determination by the Remarketing Agent of the interest rate and Rate Period
applicable to the Bonds shall be conclusive and binding on the Issuer, the
Trustee, the Paying Agent, the Bond Registrar, the Company, the Letter of
Credit Bank and the Bondholders.
Until converted to a different Mode, the Bonds during a Daily Mode
will accrue interest at a Daily Rate from the first day of such Mode through
the day next preceding the first Interest Payment Date applicable thereto and,
thereafter, from an Interest Payment Date through the day next preceding the
next Interest Payment Date; during a Weekly Mode will accrue interest at a
Weekly Rate from the first day of such Mode through the day next preceding the
first Interest Payment Date applicable thereto and, thereafter, from an
Interest Payment Date through the day next preceding the next Interest Payment
Date; during a Monthly Mode will accrue interest at a Monthly Rate from the
first day of such Mode through the day next preceding the first Interest
Payment Date applicable thereto and, thereafter, from an Interest Payment Date
through the day next preceding the next Interest Payment Date; during a
Quarterly Mode will accrue interest at a Quarterly Rate from the first day of
such Mode through the next succeeding January 31st, April 30th, July 31st or
October 31st; during a Semiannual Mode will accrue interest from the first day
of such Mode through the next succeeding April 30th or October 31st; and Bonds
during a Flexible Mode will accrue interest at the Flexible Rate from the most
recent Interest Payment Date or the Effective Date, as applicable, until the
last day of the Flexible Rate Period.
Determination of Interest Rates
Flexible Mode
The Flexible Rate for Bonds in the Flexible Mode shall be the rate
of interest determined by the Remarketing Agent, for each Interest Rate
Period, to be the lowest rate which in its judgment, on the basis of
prevailing financial market conditions, is necessary on and as of the
Effective Date, to remarket each Bond having such Interest Rate Period (as
determined by the Remarketing Agent) in a secondary market transaction at a
price equal to the principal amount thereof, but not in excess of the Maximum
Rate. The Remarketing Agent shall determine the initial Flexible Rate or
Rates and Interest Rate Period or Periods on or before the date of conversion
to the Flexible Mode. Thereafter, the Remarketing Agent shall redetermine the
Flexible Rate for each Interest Rate Period and shall redetermine each
Interest Rate Period. While any Bonds are in the Flexible Mode, such Bonds
may have successive Interest Rate Periods and any Bond may bear interest at a
rate and for a period different from any other Bond. The interest rate and
the Interest Rate Period for each particular Bond in the Flexible Mode will be
determined by the Remarketing Agent and will remain in effect from and
including the Effective Date of the Interest Rate Period selected for that
Bond by the Remarketing Agent through the last date thereof. The Remarketing
Agent shall notify the Paying Agent of the Flexible Rate and Interest Rate
Period by Electronic Notice not later than 1:00 p.m., New York City time, on
the Effective Date.
If the Remarketing Agent fails for any reason to determine the
Flexible Rate or Rate Period for any Bond in the Flexible Mode, or if for any
reason such manner of determination shall be determined to be invalid or
unenforceable, such Bond will be deemed to be in a Rate Period ending on the
next day which is immediately succeeded by a Business Day and the Flexible
Rate will be equal to 100% of the rate for the Public Securities Association
Municipal Swap Index as published by Municipal Market Data for seven 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 will (i) not offer 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 (currently
180 days), (ii) not offer 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.
Daily Mode
The Daily Rate shall be the rate of interest determined by the
Remarketing Agent for each Interest Rate Period, to be the lowest rate which
in its judgment, on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Daily Mode at par plus accrued interest on
and as of the Effective Date, but not in excess of the Maximum Rate. The
Remarketing Agent shall determine the initial Daily Rate on or before the date
of conversion to the Daily Mode. Thereafter, the Remarketing Agent shall
redetermine the Daily Rate for each subsequent Interest Rate Period. When
such Bond is in the Daily Mode, the Daily Rate in effect for each Interest
Rate Period (the "Effective Rate" for such Period) shall be determined not
later than the Effective Date and shall be effective from the Effective Date
until the next succeeding Business Day. The Remarketing Agent shall notify
the Paying Agent of the Daily Rate by Electronic Notice not later than 10:30
a.m., New York City time, on such Business Day.
If the Remarketing Agent fails for any reason to determine the Daily
Rate for any Bond in the Daily Mode (including a failure to determine the
Daily Rate for a day that is not a Business Day), or if for any reason such
manner of determination shall be determined to be invalid or unenforceable,
the Daily Rate to take effect on such date will be the Daily Rate in effect on
the day next preceding such date.
Weekly Mode
The Weekly Rate shall be the rate of interest determined by the
Remarketing Agent for each Interest Rate Period, to be the lowest rate which
in its judgment, on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Weekly Mode at par plus accrued interest
on and as of the Effective Date, but not in excess of the Maximum Rate. The
Remarketing Agent shall determine the initial Weekly Rate on or before the
date of issue in or conversion to the Weekly Mode. Thereafter, the
Remarketing Agent shall redetermine the Weekly Rate for each subsequent
Interest Rate Period. The Weekly Rate in effect for each Interest Rate Period
shall be determined not later than the Effective Date which shall be a
Wednesday unless the Effective Date is also a Conversion Date, in which case
the Conversion Date will be the Effective Date. The Remarketing Agent shall
notify the Paying Agent of the Weekly Rate by Electronic Notice not later than
10:00 a.m., New York City time, on the Effective Date.
If the Remarketing Agent fails for any reason to determine the
Weekly Rate for any Bond in the Weekly Mode, or if for any reason such manner
of determination shall be determined to be invalid or unenforceable, such Bond
shall be deemed to be in a Flexible Mode with an Interest Rate Period ending
on the next succeeding day which is immediately followed by a Business Day.
Monthly Mode
The Monthly Rate shall be the rate of interest determined by the
Remarketing Agent for each Interest Rate Period, to be the lowest rate which
in its judgment, on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Monthly Mode at par plus accrued interest
on and as of the Effective Date, but not in excess of the Maximum Rate. The
Remarketing Agent shall determine the initial Monthly Rate on or before the
date of conversion to the Monthly Mode, which Rate shall remain in effect as
provided in the Indenture. Thereafter, the Remarketing Agent shall
redetermine the Monthly Rate for each subsequent Interest Rate Period. The
Monthly Rate in effect for each Interest Rate Period shall be determined not
later than the Business Day next preceding the Effective Date which shall be
the first Business Day of a month. Each Monthly Rate will remain in effect
through the day preceding the first Business Day of the succeeding month. The
Remarketing Agent shall notify the Paying Agent of the Monthly Rate by
Electronic Notice not later than 2:00 p.m., New York City time, on the
Business Day immediately preceding the Effective Date.
If the Remarketing Agent fails for any reason to determine the
Monthly Rate for any Bond in the Monthly Mode, or if for any reason such
manner of determination shall be determined to be invalid or unenforceable,
such Bond shall be deemed to be in a Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately followed by a
Business Day.
Quarterly Mode
The Quarterly Rate shall be the rate of interest determined by the
Remarketing Agent for each Interest Rate Period, to be the lowest rate which
in its judgment, on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Quarterly Mode at par plus accrued
interest on and as of the Effective Date, but not in excess of the Maximum
Rate. The Remarketing Agent shall determine the initial Quarterly Rate on or
before the date of conversion to the Quarterly Mode. Thereafter, the
Remarketing Agent shall redetermine the Quarterly Rate for each subsequent
Interest Rate Period. The Quarterly Rate in effect for each Interest Rate
Period shall be determined not later than the Business Day next preceding the
Effective Date. The Remarketing Agent shall notify the Paying Agent of the
Quarterly Rate by Electronic Notice not later than 2:00 p.m., New York City
time, on the Business Day immediately preceding the Effective Date.
If the Remarketing Agent fails for any reason to determine the
Quarterly Rate for any Bond in the Quarterly Mode, or if for any reason such
manner of determination is determined to be invalid or unenforceable, such
Bond shall be deemed to be in a Flexible Mode with an Interest Rate Period
ending on the next succeeding day which is immediately followed by a Business
Day.
Semiannual Mode
The Semiannual Rate shall be the rate of interest determined by the
Remarketing Agent, for each Interest Rate Period, to be the lowest rate which
in its judgment, on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Semiannual Mode at par plus accrued
interest on and as of the Effective Date, but not in excess of the Maximum
Rate. The Remarketing Agent shall determine the initial Semiannual Rate on or
before the date of conversion to the Semiannual Mode. Thereafter, the
Remarketing Agent shall redetermine the Semiannual Rate for each subsequent
Interest Rate Period. The Semiannual Rate in effect for each Interest Rate
Period shall be determined not later than the Business Day next preceding the
Effective Date. The Remarketing Agent shall notify the Paying Agent of the
Semiannual Rate by Electronic Notice not later than 2:00 p.m., New York City
time, on the Business Day immediately preceding the Effective Date.
If the Remarketing Agent fails for any reason to determine the
Semiannual Rate for any Bond in the Semiannual Mode, or if for any reason such
manner of determination shall be determined to be invalid or unenforceable,
such Bond shall be deemed to be in a Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately followed by a
Business Day.
Conversion Between Modes
So long as no Event of Default exists under the Indenture, the Mode
for all or any portion of the Bonds (other than Bonds bearing interest at a
Fixed Rate) is subject to Conversion at the election of the Company upon
notice given as provided in the Indenture to the Issuer, the Trustee, the
Paying Agent, the Remarketing Agent, the Rating Agencies and upon not less
than 15 days' notice to the Bondholders. All Conversions are subject to veto
by the Issuer, which veto may not be unreasonably exercised. Such Bonds will
be subject to mandatory tender on the proposed date of the Conversion, whether
or not the Conversion occurs. If only a portion of the Bonds is to be
converted to a new Mode and if Bonds are then in more than one Mode, the Mode
from which such Bonds are to be converted will be selected by the Company and,
within a Mode, the Bonds to be converted will be selected by the Paying Agent
by lot from all of the Bonds in that Mode. No partial conversion of the Bonds
to a new Mode shall be effective unless the Trustee receives a written consent
from the Letter of Credit Bank to such conversion.
Unless the Company has elected, after a mandatory tender of the
Bonds, not to provide a Letter of Credit or other credit enhancement for the
Bonds as permitted by the Indenture, no Conversion of Bonds to a new mode
other than the Multiannual Mode or 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 which will accrue on the
Bonds for 275 days (or such fewer number of days as may be permitted by the
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 a Conversion to a Semiannual Mode.
Conversion from a Flexible Mode
While a Bond is in the Flexible Mode, Conversion to any other Mode
may take place only on the Interest Payment Date for that Bond upon fifteen
(15) days prior written notice from the Trustee to the Registered Owner of the
Bond. Conversion of a Bond to another Mode is subject to certain conditions
set forth in the Indenture. In the event that the conditions for a proposed
Conversion to a new Mode are not met (i) such new Mode will not take effect on
the proposed Conversion Date, notwithstanding any prior notice to the
Bondholders of such Conversion and (ii) the Bond will remain in the Flexible
Mode with an Interest Rate Period ending on the next succeeding day which is
immediately followed by a Business Day.
Conversion from a Short Term Mode
While a Bond is in a Short Term Mode, Conversions to any other Mode
may take place only on an Interest Payment Date for that Bond upon fifteen
(15) days prior written notice, if such Bond is in a Daily or Weekly Mode, or
upon thirty (30) days prior written notice, if such Bond is in a Monthly,
Quarterly or Semiannual Mode, from the Trustee to the Registered Owner of the
Bond. Conversion of a Bond to another Mode is subject to certain conditions
set forth in the Indenture. In the event that the conditions for a proposed
Conversion to a new Mode are not met (i) such new Mode will not take effect on
the proposed Conversion Date, notwithstanding any prior notice to the
Bondowners of such Conversion; and (ii) the Bond will nonetheless
automatically convert to the Flexible Mode with an Interest Rate Period ending
on the next succeeding day which is immediately followed by a Business Day.
Purchases of Bonds
Mandatory Tender
Each Bond in the Flexible Mode will be subject to mandatory tender
for purchase on each Interest Payment Date for that Bond, at a Purchase Price
equal to the principal amount thereof, plus accrued interest to the date of
such purchase. Each Bond in the Short Term Mode will be subject to mandatory
tender for purchase on the date of Conversion or proposed Conversion from one
Mode to another Mode.
The Bonds are subject to mandatory tender for purchase on the
Interest Payment Date next preceding the Expiration Date of the current Letter
of Credit unless at least 25 days prior to such Interest Payment Date (or such
shorter period as shall be acceptable to the Trustee) the Trustee has received
written notice that the Letter of Credit has been extended and on any Interest
Payment Date on which a Letter of Credit is replaced with an Alternate Letter
of Credit pursuant to the Indenture, in each case at the Purchase Price.
Optional Tender
Each Owner of any Bond during a Short Term Mode may demand that its
Bond (or portion thereof in Authorized Denominations) be purchased by the
Paying Agent on any Purchase Date therefor, at a Purchase Price equal to the
principal amount thereof plus accrued interest, if any, to the Purchase Date.
To effect such purchase, an Owner must tender such Bond (i) during a Daily
Mode, on any Business Day upon written notice, telephonic notice or Electronic
Notice to the Paying Agent on the Purchase Date, (ii) during a Weekly Mode, on
any Business Day upon written notice 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 Mode, Quarterly Mode or a Semiannual Mode, 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. 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 to the Bond 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
Owner and the payment instructions for the Purchase Price.
As long as the book-entry system is in effect, the Beneficial Owner
of a Bond may demand purchase of the Bond by providing notice as provided
above through such Beneficial Owner's DTC Participant (as defined below);
provided such notice shall be given by 10:00 a.m., New York City time, on the
date such notice is required to be given. If the book-entry system is not in
effect, the Owner of the Bond may demand purchase of such Bond by providing
notice to the Paying Agent as provided above and delivering the Bond to the
Paying Agent at its Principal Office.
Bonds will not be purchased as described in the preceding paragraphs
if on the date fixed for purchase an acceleration of the principal of the
Bonds shall have occurred and not have been annulled in accordance with the
Indenture.
Purchase Price
The Purchase Price is to be paid on the Delivery Date, which will be
the Purchase Date or any subsequent Business Day on which a Bond is delivered
to the Paying Agent. The Purchase Price of Bonds will be paid only upon
surrender of the Bond to the Paying Agent as provided in the Indenture. The
Purchase Price of Bonds tendered for purchase is payable by wire or bank
transfer within the continental United States in immediately available funds
from the Paying Agent. If on any date the 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 the Bonds to such Registered Owner is
to be made on the Purchase Date if presentation and surrender of the 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 presentation and surrender of the Bond is made
prior to 11:00 A.M., New York City time.
The Purchase Price for Bonds during a Short Term Mode which are to
be purchased pursuant to an optional tender for purchase in accordance with
the Indenture shall include interest, if any, 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.
Bonds Deemed Tendered
All Bonds not delivered on the dates on which they are required to
be purchased will, nevertheless, be deemed to be tendered on such Purchase
Date. The Purchase Price of any Bond so purchased will be payable only upon
surrender of such Bond to the Paying Agent at its Principal Office. From and
after the Purchase Date each Bond tendered or so deemed to be tendered shall
cease to bear interest and the former Owner thereof shall have no rights with
respect thereto, other than the right to receive the Purchase Price thereof
upon surrender of such Bond to the Paying Agent.
Redemption Prior to Maturity
Optional Redemption
Bonds in the Flexible Mode or any Short Term Mode will be subject to
redemption prior to maturity at the option of the Issuer upon written
direction of the Company delivered to the Trustee, in whole or in part (and if
in part in an Authorized Denomination) on any Interest Payment Date applicable
to that Bond at a redemption price equal to the principal amount thereof plus
accrued interest thereon to the redemption date, without premium.
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:
(a) in the reasonable judgment of the Company, unreasonable burdens
or excessive liabilities shall have been imposed upon the Issuer or the
Company with respect to either of the Facilities or either of the Plants,
including, without limitation, (i) the imposition of any income or other taxes
not imposed on October 1, 1995 or (ii) the imposition of any ad valorem
property or other taxes (other than ad valorem property or other taxes imposed
on October 1, 1995 upon similarly assessed property within the same taxing
jurisdiction);
(b) either of the Facilities or either of the Plants shall have
been damaged or destroyed to such extent that, in the opinion of the Company,
(i) within a period of six consecutive months following such damage or
destruction, it is not practicable or desirable to rebuild, repair or restore
the same, (ii) the Company will be thereby prevented from carrying on its
normal operations of such Facility or such Plant for a period of six
consecutive months or (iii) the cost of restoration would exceed by $1,500,000
or more the net proceeds of insurance thereon;
(c) title to, or temporary use of, all or substantially all of
either of the Facilities or either of the Plants shall have been taken under
the exercise of the power of eminent domain;
(d) changes in the economic availability of materials, labor,
services, supplies (including fuel), equipment or other property, facilities
or things necessary for the operation of either of the Facilities 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 Facilities or either of the Plants
uneconomic;
(e) any court or administrative body shall enter a judgment, order
or decree requiring the Company to cease, or dispose of, all or any
substantial part of its operations of either of the Facilities 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 Facility
or such Plant for a period of six or more consecutive months; or
(f) as a result of any change in the Constitution of the State of
Texas or the Constitution of the United States of America or of any
legislative or administrative action (whether state or federal), or of any
final decree, judgment or order of any court or administrative body (whether
state or federal), the obligations of the Company under the Agreement shall
have become unenforceable or impossible of performance in any material respect
in accordance with the intent and purpose of the parties as expressed in the
Agreement (as specified in the Indenture).
Extraordinary Mandatory Redemption
The Bonds are subject to mandatory redemption in whole or in part at
any time if such partial redemption will preserve the exemption from federal
income taxation of interest on the remaining Bonds Outstanding, at a
redemption price equal to the principal amount thereof together with unpaid
interest accrued to the date fixed for redemption, and without premium, if (a)
a final decree or judgment of any federal court, in which the Company
participates to the extent it deems sufficient, or (b) a final action by the
Internal Revenue Service, in proceedings in which the Company participates to
the extent it deems sufficient, determines that the interest paid or payable
on any Bonds to other than, as provided in the Internal Revenue Code of 1986,
as amended (the "Code"), a "substantial user" of the Facilities or a "related
person" is or was includable in the gross income of the owner thereof for
federal income tax purposes under the Code, as a result of the failure by 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 (i) gives the Company and the Trustee prompt written
notice of the commencement thereof and (ii) 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 date of
such final decree, judgment or action. The Trustee shall give the Issuer and
the Company not less than 45 days written notice of such date.
Notice of Redemption
Not less than thirty (30) days or more than sixty (60) days prior to
any date fixed for redemption of Bonds, the Trustee shall give notice of any
redemption by sending such notice by (i) first-class mail to the Owner of each
Bond to be redeemed in whole or in part, (ii) by certified mail, return
receipt requested, to DTC (so long as it owns all the Bonds), and upon
request, to any person or entities which provide evidence acceptable to the
Trustee that such person has a legal or beneficial interest in at least
$1,000,000 in principal amount of the Bonds, and (iii) by certified mail,
return receipt requested, or by overnight delivery, received by the registered
depositories at least two (2) days prior to the general publication date for
such redemption notices and to be received by at least two (2) of the national
information services that disseminate bond redemption notices on or before the
general mailing date for such notices; provided, however, that the failure to
send, mail or receive such notice described above, or any defect therein or in
the sending or mailing thereof, with respect to any Bond shall not affect the
validity or effectiveness of the proceedings for the redemption of any other
Bond. In addition, within sixty (60) days after the redemption date an
additional redemption notice shall be sent to any Owner of the Bonds who has
not surrendered Bonds for redemption during the thirty (30) day period
following the redemption date and to any person or entities having legal or
beneficial ownership interest in at least $1,000,000 in principal amount of
such Bonds which have not been surrendered.
All notices of redemption shall state (i) the redemption date, (ii)
the redemption price, (iii) the identification, including complete designation
(including series) and issue date of the Bonds and the CUSIP number,
certificate number (and in the case of partial redemption, the respective
principal amounts), interest rates and maturity dates of the Bonds to be
redeemed, (iv) that on the redemption date the redemption price will become
due and payable upon each such Bond, and that interest thereon shall cease to
accrue from and after said date, and (v) the name and address of the Trustee
and any Paying Agent for such Bonds, including the place where such Bonds are
to be surrendered for payment of the redemption price therefor.
Partial Redemption
If fewer than all of the Bonds are 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 the Bonds then Outstanding in such Mode. 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.
Bonds representing any unredeemed balance of the principal amount of the Bonds
shall be issued to the Owner thereof without charge therefor.
Remarketing Agent
Morgan Stanley & Co. Incorporated has been appointed as Remarketing
Agent for the Bonds pursuant to a Remarketing Agreement dated as of October 1,
1995 (the "Remarketing Agreement"). The Remarketing Agreement may be
terminated at any time by the Company upon fifteen (15) days' prior written
notice to the Remarketing Agent. The Remarketing Agent may resign at any time
upon thirty (30) days' prior written notice to the Company. The Principal
Office of the Remarketing Agent is 1585 Broadway, New York, New York 10036.
BOOK-ENTRY ONLY SYSTEM
The Depository Trust Company ("DTC"), New York, New York, will act
as securities depository for the Bonds (the "Securities Depository"). The
Bonds will be issued as fully-registered securities registered in the name of
Cede & Co., as nominee for DTC. One fully-registered Bond certificate for
Bonds of each Mode will be issued in the aggregate principal amount of the
Bonds of that Mode and will be deposited with DTC.
<PAGE>
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC holds securities that its participants
deposit with DTC (such participants or the participants of any successor
Securities Depository are herein referred to as "Participants" or "DTC
Participants"). DTC also facilitates the settlement among DTC Participants of
securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in DTC
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
DTC is owned by a number of its Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to the DTC system is also available to
others such as securities brokers and dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and the Participants are on file with the Securities and Exchange Commission.
Purchases of beneficial ownership interests in the Bonds under the
DTC system must be made by or through Participants, which will receive a
credit for the Bonds on DTC's records. The ownership interest of each
Beneficial Owner of a Bond is in turn to be recorded on the Participant's and
Indirect Participants' records. Beneficial Owners will not receive written
communication from DTC of their purchase, but Beneficial Owners are expected
to receive written confirmations providing details of the transaction, as well
as periodic statements of their holdings, from the Participant or Indirect
Participant through which the Beneficial Owner entered into the transaction.
Transfers of ownership interests of the Bonds are to be accomplished by
entries made on the books of Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their
ownership interests in the Bonds, except in the event that use of the book-
entry system for the Bonds is discontinued as described under the caption
"Discontinuation of Book-Entry Only System."
To facilitate subsequent transfers, all Bonds deposited with DTC are
registered in the name of DTC's partnership nominee, Cede & Co. The deposit
of Bonds with DTC and their registration in the name of Cede & Co. effect no
change in beneficial ownership. DTC has no knowledge of the actual Beneficial
Owners of the Bonds. DTC's records reflect only the identity of the
Participants to whose accounts such Bonds are credited, which may or may not
be the Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to
Participants, by Participants to Indirect Participants, and by Participants
and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Notices of redemption of Bonds will be sent to Cede & Co. If less
than all of the Bonds of a particular Mode are being redeemed, DTC's practice
is to determine by lot the amount of the interest of each Participant in Bonds
of such Mode to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to
Bonds. Under its usual procedures, DTC mails an "Omnibus Proxy" to the Issuer
as soon as possible after the record date. The "Omnibus Proxy" assigns Cede &
Co.'s consenting or voting rights to those Participants to whose accounts the
Bonds are credited on the record date identified in a listing attached to the
"Omnibus Proxy."
Principal and interest payments on the Bonds will be made to DTC.
DTC's practice is to credit DTC Participants' accounts on a payment date in
accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on a payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices, as in the case with securities held for
the accounts of customers in bearer form or registered in "street name" and
will be the responsibility of such Participant and not of DTC, the Trustee,
the Issuer, the Company, or the Letter of Credit Bank, subject to any
statutory or regulatory requirements as may be in effect from time to time.
Payments of principal and interest to DTC is the responsibility of the
Trustee. Disbursement of such payments to Participants is the responsibility
of DTC and disbursement of such payments to the Beneficial Owners is the
responsibility of the Participants and Indirect Participants.
A Beneficial Owner must give notice to elect to have its Bonds
bearing interest during a Short Term Mode purchased through its Participant to
the Remarketing Agent, and must effect delivery of such Bonds by causing the
Participant to transfer the Participant's interest in the Bonds, on DTC's
records, to the Remarketing Agent. The requirement for physical delivery of
Bonds in connection with a demand for purchase or a mandatory purchase will be
deemed satisfied when the ownership rights in the Bonds are transferred by the
Participant on DTC's records.
DTC may discontinue providing its services as securities depository
with respect to the Bonds at any time by giving reasonable notice to the
Issuer. Under such circumstances, in the event that a successor securities
depository is not obtained, Bond certificates are required to be printed and
delivered as described herein under the caption "Discontinuation of Book-Entry
Only System."
The Issuer may decide to discontinue use of the system of book-entry
transfers through DTC or a successor securities depository. In that event,
Bond certificates will be printed and delivered as described herein under the
caption "Discontinuation of Book-Entry Only System."
THE INFORMATION PROVIDED IMMEDIATELY ABOVE UNDER THIS CAPTION HAS
BEEN PROVIDED BY DTC. NO REPRESENTATION IS MADE BY THE ISSUER, THE COMPANY,
THE LETTER OF CREDIT BANK OR THE UNDERWRITER AS TO THE ACCURACY OR ADEQUACY OF
SUCH INFORMATION PROVIDED BY DTC OR AS TO THE ABSENCE OF MATERIAL ADVERSE
CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF.
For so long as the Bonds are registered in the name of DTC or its
nominee, Cede & Co., the Issuer and the Trustee will recognize only DTC or its
nominee, Cede & Co., as the Registered Owner of the Bonds for all purposes,
including payments, notices (including notices of redemption or mandatory
tender) and voting.
<PAGE>
Under the Indenture, payments made by the Trustee to DTC or its
nominee shall satisfy the Issuer's obligations under the Indenture, the
Company's obligations under the Agreement and the Letter of Credit Bank's
obligation under the Letter of Credit to the extent of the payments so made.
Neither the Issuer, the Company, the Letter of Credit Bank nor the
Trustee shall have any responsibility or obligation with respect to:
(i) the accuracy of the records of DTC, its nominee or any
Participant or Indirect Participant with respect to any beneficial
ownership interest in any Bonds;
(ii) the delivery to any Participant or Indirect Participant
or any other person, other than an owner, as shown in the bond
register, of any notice with respect to any Bond including, without
limitation, any notice of redemption, tender, purchase or any event
which would or could give rise to a tender or purchase right or
option with respect to any Bond;
(iii) the payment to any Participant or Indirect Participant
or any other person, other than an owner, as shown in the bond
register, of any amount with respect to the principal of, premium,
if any, or interest on, or the Purchase Price of, any Bond; or
(iv) any consent given by DTC as Registered Owner.
Prior to any discontinuation of the Book-Entry Only System described
above, the Issuer and the Trustee may treat DTC as, and deem DTC to be, the
absolute owner of the Bonds for all purposes whatsoever, including, without
limitation:
(i) the payment of principal of, premium, if any, and interest
on the Bonds;
(ii) giving notices of redemption and other matters with
respect to the Bonds;
(iii) registering transfers with respect to the Bonds; and
(iv) the selection of Bonds for redemption.
While Bonds are in the Book-Entry Only System: (a) presentation of
tendered bonds to the Paying Agent shall be deemed made when the right to
exercise ownership rights in such tendered bonds through DTC or the
Participant is transferred by DTC on its books; (b) Beneficial Owners of Bonds
in a Short Term Mode must exercise their rights to optionally tender as
described under the caption "THE BONDS--Purchases of Bonds--Optional Tender"
by giving telephonic notice (confirmed in writing) or written notice to the
Remarketing Agent, in lieu of notice by DTC (or by a Participant or Indirect
Participant to DTC and, then, by DTC) to the Paying Agent. Further, the
requirement for physical delivery of Bonds will be deemed satisfied when the
right to exercise ownership rights in the Bonds through DTC is transferred by
DTC on its books. Payments for the Purchase Price of tendered bonds will be
made to DTC by wire transfer.
Discontinuation of Book-Entry Only System
In the event that the Issuer determines to remove the Securities
Depository, the Issuer will (i) appoint a successor Securities Depository and
transfer one or more separate Bond certificates to such successor or
(ii) notify the Participants of the Securities Depository of the availability
through the Securities Depository of Bond certificates and transfer one or
more separate Bond certificates to the Participants of the Securities
Depository having Bonds credited to their accounts with the Securities
Depository. In such event, the Bonds will no longer be restricted to being
registered in the bond register in the name of the Securities Depository, or
its nominee, but may be registered in the name of any successor Securities
Depository, or its nominee, or in whatever name or names the Participants of
the Securities Depository receiving Bonds shall designate, in accordance with
the provisions of the Indenture.
THE AGREEMENT
General
The following is a summary of certain provisions of the Agreement.
Reference is hereby made to the Agreement in its entirety for the detailed
provisions thereof.
Use of Bond Proceeds
The Issuer will issue the Bonds to provide funds to currently refund
the Prior Bonds. Upon the sale of the Bonds, the Issuer will transfer the
proceeds of the Bonds to the trustees for the Prior Bonds for deposit into the
respective bond funds created under the indentures for the Prior Bonds.
Installment Payments
The Company will make Installment Payments to fund payments on the
Bonds in such amounts which, together with other moneys available therefor in
the Bond Fund or the Bond Purchase Fund created under the Indenture, will be
sufficient to pay when due the principal of, premium, if any, and interest on
and Purchase Price of the Outstanding Bonds as they shall mature, be redeemed,
be purchased or deemed purchased or otherwise become due as provided in the
Indenture. The Company shall make such payments directly to the Trustee for
the account of the Issuer.
Installment Payment obligations of the Company under the Agreement
will be absolute and unconditional, and the Company will make such payments
free of any deductions and without abatement, diminution or setoff. In the
event that the Company fails to make any of such payments, the item or
installment so in default will continue as an obligation of the Company until
the amount in default has been fully paid.
Other Payments Under the Agreement
In addition to the Installment Payments, the Company agrees to pay
taxes, assessments and other charges of any kind whatsoever that may at any
time be lawfully levied or imposed with respect to the Facilities or the
Installment Payments under the Agreement and all costs and expenses of the
operation and maintenance of the Facilities. The Company also agrees to pay
certain costs and expenses of the Issuer and the Trustee in connection with
the Bonds and to indemnify such parties against certain liabilities arising in
connection with the sale of the Bonds and the execution and delivery of the
related bond documents.
Corporate Existence
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 the Agreement. Upon the
delivery of such an instrument, the Company shall thereupon be relieved of any
further obligation or liability under the Agreement or with respect to the
Bonds, and the resulting, surviving, or transferee corporation, as the case
may be, shall succeed to and be substituted for the Company under the
Agreement with the same effect as if such resulting or surviving corporation
or transferee had been a party to the Agreement.
Assignment
Under certain conditions, the Agreement may be assigned by the
Company, but such assignment will not relieve the Company from primary
liability for any of its obligations under the Agreement. No assignment will
be effective without a Favorable Opinion being furnished to the Issuer and the
Trustee, together with notice of such assignment.
Defaults and Remedies
The Agreement provides that the occurrence and continuation of any
one of the following shall constitute an "Event of Default" thereunder:
(a) failure by the Company to pay Installment Payments with
respect to principal of or premium on any Bond at the times
specified therein;
(b) failure by the Company to pay Installment Payments with
respect to interest on any Bond at the times specified therein and,
during a Flexible or Short Term Mode, the continuation of such
failure for a period of one Business Day or more, or, during a
Multiannual Mode or Fixed Rate Mode, the continuation of such
failure for a period of 60 days or more;
(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;
(d) failure by the Company to observe and perform any
covenant, condition or agreement on its part required to be observed
or performed in the Agreement, other than as referred to in (a), (b)
or (c) above, for a period of 90 days after receipt by the 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 judgment 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;
(e) if a Letter of Credit is in effect, receipt by the Trustee
of a written notice from the Letter of Credit Bank of the occurrence
and continuance of an "Event of Default" under the Letter of Credit
or the Letter of Credit Agreement;
(f) certain events of dissolution, liquidation, insolvency,
bankruptcy or reorganization involving the Company; or
(g) the occurrence of an "Event of Default" under the
Indenture.
The provisions of paragraph (d) above are subject to the following
limitations: if by reason of acts of God, strikes, lockouts or other
industrial disturbances; acts of public enemies; orders or regulations of any
kind of the government of the United States of America or of the State of
Texas or any of their departments, agencies, political subdivisions, or
officials, or any civil or military authority; insurrections; riots;
epidemics; landslides; lightning; earthquakes; tidal waves; fires; hurricanes;
tornadoes; blue northers; other storms; floods; washouts; droughts; arrests;
restraints of government and people; civil disturbances; explosions; breakage
or accident to machinery, transmission pipes, transmission facilities or
canals; partial or entire failure of utilities; shortages of labor, material,
supplies or transportation; or any other cause or event not reasonably within
the control of the 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, interest on, or the Purchase Price for, the Bonds or
would result in the interest on any Bonds becoming includable in the gross
income of the owners thereof for federal income tax purposes.
The above provisions, however, are subject to the conditions that,
after any such Event of Default, subject to and as provided in the Indenture,
the Trustee may waive such Event of Default and rescind and annul any remedial
step theretofore taken by it or by the Issuer with respect to such default and
its consequences; but no such waiver, rescission or annulment shall extend to
or affect any subsequent default or impair any right or remedy consequent
thereon.
Whenever any Event of Default under the Agreement shall have
occurred and is continuing, the Issuer, with the consent of the Trustee, or
the Trustee may take any one or more of the following remedial steps but only
if acceleration of the principal amount of the Bonds has been declared
pursuant to the Indenture:
(a) By notice in writing to the 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 Installment
Payments payable under the Agreement shall become and shall be
immediately due and payable in the amount equal to the principal of
and all accrued interest on the Bonds (without premium); provided,
however, that an Event of Default shall be deemed waived and a
declaration accelerating payment of unpaid Installment Payments
payable under the Agreement shall be deemed rescinded without
further action on the part of the Trustee or the Issuer upon any
rescission by the Trustee of the corresponding declaration of
acceleration of the Bonds under the Indenture.
(b) Whatever action at law or in equity may appear necessary
or desirable to collect the payment and other amounts then due or to
enforce performance and observance of any obligation, agreement or
covenant of the Company under the Agreement.
The Company has covenanted that, in case an Event of Default shall
occur with respect to the payment of any Installment Payment payable then,
upon demand of the Trustee, the Company will pay to the Trustee the whole
amount that then shall have become due and payable, with interest (to the
extent permitted by law) on such amount, at the rate of interest borne by the
Bonds at the time of such failure, from the due date thereof until paid.
In case the Company shall fail to pay such amounts upon such demand,
the Trustee shall be entitled and empowered to institute any action or
proceeding at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against 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.
Certain Covenants Regarding Arbitrage and Tax Exemption
The Issuer and the Company have agreed not to knowingly take any
action or omit to take any action, which would result in a loss of the
exemption from federal income taxation of interest on the Bonds by virtue of
the Bonds being considered "arbitrage bonds" within the meaning of Section 148
of the Code. The Issuer and the Company have agreed to refrain from any
action which would adversely affect, and to take such action to assure, the
treatment of the Bonds as obligations described in Section 103(a) of the Code,
the interest on which is not includable in the "gross income" of the holder
(other than the income of a "substantial user" of the Facilities or a "related
person" within the meaning of Section 147(a) of the Code) for purposes of
federal income taxation.
Amendment of Agreement
The Agreement may be amended by written agreement of the Issuer 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; provided, however,
that no amendment may be made which would (i) decrease the amounts payable
under the Agreement; (ii) change the date of payment or prepayment provisions
under the Agreement; or (iii) change the amendment provisions of the Agreement
without the consent of all of the Owners of the Bonds adversely affected
thereby; and provided further that the Agreement may be amended by written
agreement of the Issuer and the Company in order to make conforming changes
with respect to certain amendments made to the Indenture.
So long as a Letter of Credit is held by the Trustee, no supplement
or amendment shall be made to the Agreement without the prior written consent
of the Letter of Credit Bank.
THE INDENTURE
General
The following is a summary of certain provisions of the Indenture.
Reference is hereby made to the Indenture in its entirety for the detailed
provisions thereof.
Bond Fund
The Indenture creates and establishes with the Trustee a separate
trust fund designated the "Guadalupe-Blanco River Authority, Pollution Control
Revenue Refunding Bonds (Central Power and Light Company Project) Series 1995
Bond Fund" (the "Bond Fund"), which will be used solely for the payment of the
principal of, premium, if any, and interest on the Bonds. Two sub-accounts
will be created within the Bond Fund; the Company Debt Service Account and the
Letter of Credit Debt Service Account. All Installment Payments made by the
Company in connection with principal of, premium, if any, and interest on the
Bonds will be made to the Trustee for deposit in the Company Debt Service
Account. In accordance with the Letter of Credit, all payments made by the
Letter of Credit Bank with respect to principal of, premium, if any, and
interest on the Bonds will be made to the Trustee for deposit in the Letter of
Credit Debt Service Account.
Funds in the Letter of Credit Debt Service Account shall be applied
to the payment when due of principal of, premium, if any, on and interest on
the Bonds (other than Bonds held by the Letter of Credit Bank or the Company)
prior to use of any funds in the Company Debt Service Account. Funds in the
Company Debt Service Account shall be applied as follows: (i) if the Letter of
Credit Bank has not dishonored a properly presented and conforming draw under
the Letter of Credit, the reimbursement of the Letter of Credit Bank when due
for funds drawn under the Letter of Credit and deposited in the Letter of
Credit Debt Service Account, (ii) when insufficient funds have been received
upon a draw on the Letter of Credit for the payment when due of principal of,
premium, if any, on and interest on the Bonds (other than Bonds held by the
Letter of Credit Bank or the Company), the payment when due of principal of,
premium, if any, on and interest on the Bonds (other than Bonds held by the
Letter of Credit Bank or the Company), (iii) the payment when due of principal
of, premium, if any, on and interest on Bonds held by the Letter of Credit
Bank, and (iv) the payment when due of principal of, premium, if any, on and
interest on Bonds held by the Company.
Bond Purchase Fund
The Indenture creates and establishes with the Paying Agent a
separate fund designated the "Bond Purchase Fund." The Bond Purchase Fund
shall consist of three sub-accounts to be designated respectively the
"Remarketing Account", the "Letter of Credit Purchase Account" and the
"Company Purchase Account". Proceeds from the remarketing of tendered Bonds
will be deposited by the Paying Agent, when and as received from the
Remarketing Agent, into the Remarketing Account. Installment Payments with
respect to the Purchase Price of the Bonds are to be deposited by the Trustee
or the Paying Agent in the Company Purchase Account. All payments made by the
Letter of Credit Bank with respect to the Purchase Price of the Bonds will be
made to the Trustee for deposit in the Letter of Credit Purchase Account.
The Paying Agent shall disburse funds from the Remarketing Account
and from the Letter of Credit Purchase Account to pay the Purchase Price of
Bonds properly tendered for purchase upon surrender of such Bonds, provided,
however, that funds in the Letter of Credit Purchase Account shall not be
applied to purchase Bonds held by the Letter of Credit Bank or the Company.
The Paying Agent shall disburse funds 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 Letter of Credit
Bank for drawings under the Letter of Credit for such purpose.
Investment
Except as provided in the Indenture, any moneys held as part of the
Bond Fund shall be invested or reinvested by the Trustee as provided in
written instructions of the Company solely in Permitted Investments; provided
that moneys in the Letter of Credit Debt Service Account may be invested only
in Government Obligations. Moneys held as part of the Bond Purchase Fund are
to be held uninvested.
Moneys Held in Trust
All moneys required to be deposited with or paid to the Trustee for
the account of any fund under the Indenture shall be held by the Trustee in
trust and, except for (i) moneys in the Bond Purchase Fund, and (ii) moneys
deposited with or paid to the Trustee for the redemption of Bonds, notice of
the redemption for which has been duly given, shall, while held by the
Trustee, be part of the trust estate and be subject to the security interest
created by the Indenture.
Events of Default and Remedies
The Indenture provides that each of the following constitutes an
"Event of Default" thereunder:
(a) default in the due and punctual payment of the principal
of or premium, if any, on any Outstanding Bond, as the same shall
become due and payable, whether at the stated maturity thereof, upon
any proceedings for redemption, or upon the maturity thereof by
declaration of acceleration;
(b) default in the due and punctual payment of the interest on
any Outstanding Bond, as the same shall become due and payable, and,
during a Flexible or Short Term Mode, the continuation of such
default for a period of one Business Day or more, or, during a
Multiannual Mode or Fixed Rate Mode, the continuation of such
default for a period of 60 days or more;
(c) default in the due and punctual payment of the Purchase
Price of any Outstanding Bond, as the same shall become due and
payable and the continuation of such default for a period of one
Business Day or more;
(d) default by the Issuer in its performance or observance of
any of the other covenants, agreements or conditions contained in
the Indenture, and the continuation thereof without corrective
action for a period of 90 days after receipt by the Issuer and the
Company of notice given by the Trustee or the Owners of not less
than 25% in aggregate principal amount of all Bonds Outstanding as
specified in the Indenture;
(e) an Event of Default (as defined in the Agreement) has
occurred and is continuing under the Agreement; or
(f) receipt by the Trustee of a written notice from the Letter
of Credit 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.
If any Event of Default occurs and is continuing, the Trustee (with the prior
written consent of the Letter of Credit Bank) may, and upon request of the
Letter of Credit Bank or the owners of at least 25% in principal amount of all
Bonds (with the prior written consent of the Letter of Credit Bank) then
Outstanding, or with respect to an Event of Default under (f) above, shall, by
notice in writing to the Issuer, the Letter of Credit 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 such acceleration, the Trustee shall immediately declare all
Installment Payments to be due and payable immediately.
Upon any such declaration, the Trustee shall, on the date of such
declaration, immediately 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
Letter of Credit 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 all sums due on the Bonds, (i) interest on
the Bonds shall cease to accrue and (ii) the Letter of Credit 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 the
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 the Indenture, shall be assigned by the
Trustee to the Letter of Credit Bank.
If, after the principal of the Bonds has become due and payable, all
arrears of interest upon the Bonds are paid by the Issuer, and the Issuer also
performs all other things in respect to which it may have been in default
under the Indenture and pays the reasonable charges of the Trustee and the
Bondholders, including reasonable and necessary attorneys' fees, then, and in
every such case, the owners of a majority in principal amount of the Bonds
then Outstanding, by notice to the Issuer and to the Trustee, may annul such
acceleration and its consequences; provided, however, that there shall be no
annulment of any declaration resulting from (i) any Event of Default specified
in (f) above without the prior written consent of the Letter of Credit Bank or
(ii) any Event of Default which has resulted in a drawing under the Letter of
Credit unless the Trustee has received written notice from the Letter of
Credit Bank that the Letter of Credit has been fully reinstated or an
Alternate Letter of Credit has been provided pursuant to the Indenture. No
such annulment shall extend to or affect any subsequent default or impair any
right or remedy consequent thereon.
Upon the occurrence of an Event of Default, the Trustee (with the
prior written consent of the Letter of Credit Bank) may and upon written
request of the Owners of not less than 25% in aggregate principal amount of
the Bonds then Outstanding (with the prior written consent of the Letter of
Credit Bank), and if indemnified as provided in the Indenture, shall (unless
the Trustee shall determine, upon the advice of counsel, that to take such
action will prejudice the rights of a majority of Owners) pursue any available
remedy by suit at law or in equity to enforce the payment of the principal of,
premium, if any, and interest on the Bonds then Outstanding, and the
performance by the Issuer of its obligations under the Indenture, including,
without limitation, the following: (a) by mandamus, or other suit, action or
proceeding at law or in equity, enforce all rights of the Bondholders and
require the Issuer to carry out its agreements under the Indenture and the
Acts; (b) bring suit upon the Bonds; (c) by action, suit or proceeding at law
or in equity, require the Issuer to account as if it were the trustee of an
express trust for the Bondholders; or (d) by action, suit or proceeding at law
or in equity, enjoin any acts or things which may be unlawful or in violation
of the rights of the Bondholders.
Defeasance
Any Bond, other than a Bond in a Daily Mode or a Weekly Mode, shall
be deemed to have been paid and discharged when payment of the principal of
and premium, if any, on such Bond plus the interest thereon to the due date
thereof (whether such due date be by reason of maturity or upon redemption as
provided in the Indenture or otherwise) 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 a Bond is
required to be or may, at the Owner's option be tendered for purchase, either
(a) shall have been made in accordance with the terms of the Indenture or
(b) shall have been provided for by irrevocably depositing with the Trustee,
in trust solely for such payment, any combination of (1) sufficient moneys to
make such payment and/or (2) Government Obligations not subject to redemption
or prepayment and maturing as principal and interest in such amounts as in the
opinion of an independent certified public accountant delivered to the Trustee
are sufficient to make such payment without reinvestment and to pay all fees
and expenses in connection therewith.
Discharge of Lien
When all of the Bonds have been paid or deemed paid and the Issuer
is not in default under any of the covenants and promises contained in such
Bonds and the Indenture, and if the Issuer shall pay or cause to be paid to
the Trustee all sums of money due or to become due according to the Indenture
or of the Bonds and of the Agreement and all obligations owing to the Letter
of Credit Bank under the Letter of Credit Agreement have been paid in full and
the Letter of Credit has been returned to the Letter of Credit Bank for
cancellation, then the rights under the Indenture will become null and void;
provided, however, that the rights of the Trustee under the Indenture to
receive its fees, charges and expenses shall survive the discharge of the
Indenture until paid in full. See the caption "Defeasance" above for a
discussion of the conditions under which the Bonds will be deemed to have been
paid.
The Trustee; New York Paying Agent
To the extent permitted by law, the Trustee may invest in and treat
itself as any other holder of the Bonds. The Trustee may resign at any time
after notice to the Issuer, the Company and the Bondholders, such resignation
to take effect only upon the appointment of a successor Trustee. The Trustee
may be removed at any time by written notice signed by the Issuer and the
Company and delivered to the Trustee and the Bondholders. Such removal shall
take effect only upon the appointment of a successor Trustee. Every successor
trustee may be appointed by the Issuer with the consent of the Company and
shall be a bank or trust company which (i) is organized as a corporation or
banking association and doing business under the laws of the United States of
America or any state thereof, (ii) is authorized under such laws to exercise
corporate trust powers and to perform all the duties imposed upon it by the
Indenture and the Agreement, (iii) is subject to supervision or examination by
federal or state authority, (iv) has combined capital and surplus of at least
$50,000,000, (v) shall not have become incapable of acting or have been
adjudged a bankrupt or an insolvent or have had a receiver appointed for
itself or for any of its property or have had a public officer take charge or
control of it or its property or affairs for the purpose of rehabilitation,
conservation or liquidation and (vi) must be an institution rated at least
"Baa3" by Moody's (or Moody's shall have provided written evidence that such
successor Trustee is otherwise acceptable to Moody's) if the Bonds are then
rated by Moody's, and at least "BBB-" or "A-3" by S&P (or S&P shall have
provided written evidence that such successor Trustee is otherwise acceptable
to S&P) if the Bonds are then rated by S&P. Should the Trustee cease to be
eligible to act as trustee under the Indenture, it shall promptly notify the
Owners of all Bonds then Outstanding, the Issuer and the Company of such fact.
The Issuer may appoint a temporary trustee until the appointment of such
successor.
The Paying Agent is required to maintain an office, or have an agent
with an office, in New York City at all times that any Bonds are outstanding.
Additional Notices
Upon written request of any Owner of Bonds in an aggregate principal
amount of at least $1,000,000 (or any person or entity which provides written
evidence acceptable to the Trustee that such person or entity has a legal or
beneficial interest in Bonds in an aggregate principal amount of at least
$1,000,000), the Trustee shall give an additional copy of any notice to be
given by the Trustee under the Indenture by first-class mail to a second
address specified by such Owner, person or entity. Any such additional
notices shall be given simultaneously with the original notices.
Upon written request of any person or entity which provides evidence
acceptable to the Trustee that such person or entity has a legal or beneficial
interest in at least $1,000,000 in principal amount of the Bonds, the Trustee
shall, for the calendar year in which such request is received, provide one or
more of the following as requested to such person or entity: (i) notices of
redemption; (ii) notices of default; (iii) copies of all notices to which such
person or entity is entitled under the Indenture to a specific second address;
and (iv) outstanding balances by maturity, redemption history, including
redemption date, amount and source of funds and distribution of the call to
maturity.
Supplemental Indentures
The Issuer and the Trustee, with the written consent of the Company,
but without the consent of or notice to the Bondholders, may enter into an
indenture or indentures supplemental to the Indenture, for any of the
following purposes:
(a) to cure any ambiguity, formal defect or omission in the
Indenture or to make such other changes which shall not have a
material adverse effect upon the interests of the Bondholders;
(b) to grant to or confer upon the Trustee, for the benefit of
the Bondholders, any additional rights, remedies, powers or
authorities, or any additional security, that may lawfully be
granted to or conferred upon the Bondholders or the Trustee;
(c) to subject to the Indenture additional revenues,
properties or collateral;
(d) to modify, amend or supplement the Indenture, or any
indenture supplemental thereto, in such manner as to permit the
qualification thereof under the Trust Indenture Act of 1939, as
amended, or any similar federal statute hereafter in effect, or to
permit the qualification of the Bonds for sale under the securities
laws of any of the states of the United States and, if the Issuer so
determines, to add to the Indenture or any indenture supplemental
thereto such other terms, conditions and provisions as may be
permitted by the Trust Indenture Act of 1939, as amended, or any
similar federal statute;
<PAGE>
(e) to add to the covenants and agreements of the Issuer
contained in the Indenture other covenants and agreements thereafter
to be observed for the protection of the Bondholders or to surrender
or limit any right, power or authority therein reserved to or
conferred upon the Issuer;
(f) effective upon any Conversion Date to a new Mode, to make
any amendment affecting only the Bonds being converted, including
revision to Authorized Denominations;
(g) to add provisions relating to the partial conversion of
Bonds to a new Mode;
(h) to provide for an alternate Letter of Credit, or to
provide for any other credit enhancement or for no credit
enhancement in accordance with the terms of the Indenture;
(i) to conform the Indenture to the requirements of the Rating
Agencies; and
(j) to add provisions permitting a mandatory tender of Bonds in
lieu of redemption.
Exclusive of the purposes described in subparagraphs (a) through (j)
above, the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding will have the right, from time to time, to approve any
supplemental indenture deemed necessary and desirable by the Issuer for the
purposes of modifying, altering, amending, adding to or rescinding any of the
terms or provisions contained in the Indenture or any supplemental indenture.
If any proposed amendment or supplement affects only the Owners of Bonds in a
particular Mode or Modes, the Owners of not less than a majority in aggregate
principal amount of the Bonds Outstanding of such affected Mode or Modes shall
have the right, from time to time, to approve, such amendment or supplement.
No modification or alteration may be made without the consent of the holders
of all Bonds then Outstanding which permits (i) an extension of the maturity
of the principal of, or the time for payment of any redemption premium or
interest on, any Bond or a reduction in the principal amount of any Bond, or
the rate of interest or redemption premium thereon, or a reduction in the
amount of, or extension of the time of any payment required by, any Bond;
(ii) a privilege or priority of any Bond over any other Bond (except as
provided in the Indenture); (iii) a reduction in the aggregate principal
amount of the Bonds required for consent to such a supplemental indenture;
(iv) the deprivation of the Owner of any Bond then Outstanding of the lien
created by the Indenture; or (v) the amendment of the limitations described in
this paragraph.
So long as a Letter of Credit is held by the Trustee, no supplement
or amendment shall be made to the Indenture without the prior written consent
of the Letter of Credit Bank.
<PAGE>
THE LETTER OF CREDIT AND THE LETTER OF CREDIT AGREEMENT
General
The Letter of Credit will be issued pursuant to the Letter of Credit
Agreement. The following, in addition to information contained under the
caption "INTRODUCTION," summarizes certain provisions of the Letter of Credit
and the Letter of Credit Agreement, to which documents, in their entirety,
reference is made for the complete provisions thereof. The provisions of any
Alternate Letter of Credit and related Letter of Credit Agreement may be
different from those summarized below.
Letter of Credit
The initial Letter of Credit will be in all respects an irrevocable
obligation of ABN AMRO Bank N.V. The initial Letter of Credit will be issued
in an amount equal to the aggregate principal amount of the outstanding Bonds,
plus 185 days' interest thereon at the rate of 12% per annum (the "Cap
Interest Rate"). The Trustee, upon compliance with the terms of the initial
Letter of Credit, is authorized and directed to draw up to (a) an amount
sufficient (i) to pay principal of the Bonds (other than Bank Bonds or
Company-Held Bonds as each term is defined in the Indenture) when due, whether
at maturity or upon redemption or acceleration, and (ii) to pay the portion of
the purchase price of Bonds (other than Bank Bonds or Company-Held Bonds)
delivered for purchase pursuant to a demand for purchase by the owner thereof
or a mandatory tender for purchase and not remarketed (a "Liquidity Drawing")
equal to the principal amount of such Bonds, plus (b) an amount not to exceed
185 days of accrued interest on such Bonds at the Cap Interest Rate (i) to pay
interest on Bonds (other than Bank Bonds or Company-Held Bonds) when due, and
(ii) to pay the portion of the purchase price of Bonds (other than Bank Bonds
or Company-Held Bonds) delivered for purchase pursuant to a demand for
purchase by the owner thereof or a mandatory tender for purchase and not
remarketed, equal to the interest accrued, if any, on such Bonds.
The amount available under the initial Letter of Credit will be
reduced to the extent of any drawing thereunder, subject to reinstatement as
described below. With respect to a drawing by the Trustee solely to pay
interest on the Bonds on an interest payment date, the amount available under
the initial Letter of Credit will be automatically reinstated effective
immediately upon payment by the Letter of Credit Bank of such drawing. With
respect to a Liquidity Drawing, prior to the conversion of the Bonds to a
Fixed Rate Mode or Multiannual Mode (as each term is defined in the
Indenture), upon a remarketing of Bonds (or portion thereof) purchased with
the proceeds of such Liquidity Drawing, the amount available under the initial
Letter of Credit will be reinstated in an amount equal to the principal amount
of the Bonds purchased with the proceeds of such Liquidity Drawing, plus the
amount of accrued interest thereon paid with the proceeds of such Liquidity
Drawing, upon receipt by the Letter of Credit Bank of the amount of any
Liquidity Drawing relating to Bonds purchased with the proceeds of such
Liquidity Drawing plus all accrued interest thereon.
The initial Letter of Credit will terminate on the earliest of the
close of business of the Letter of Credit Bank on (a) the stated expiration
date (November 2, 2000, unless renewed or extended); (b) the date which is
fifteen (15) days following the conversion of the Bonds to a Fixed Rate Mode
or Multiannual Mode as specified in a notice from the Trustee to the Letter of
Credit Bank (or, if earlier, the date on which the Letter of Credit Bank
honors a drawing under the Letter of Credit after such a conversion); (c) the
date which is fifteen (15) days following the Letter of Credit Bank's receipt
of written notice from the Trustee that (i) all Bonds have been paid, (ii) all
drawings required to be made under the Indenture and available under the
Letter of Credit have been made and honored, (iii) a letter of credit has been
issued in substitution for the Letter of Credit in accordance with the terms
of the Indenture, or (iv) the Company has complied with the provisions of the
Indenture to provide other credit enhancement or no enhancement as security
for the Bonds; (d) the date on which an acceleration drawing is honored by the
Letter of Credit Bank; or (e) the date which is fifteen days following the
date the Trustee receives a written notice from the Letter of Credit Bank
specifying the occurrence of an event of default under the Letter of Credit
Agreement and directing the Trustee to accelerate the Bonds.
Letter of Credit Agreement
The Company will agree to certain affirmative and negative covenants
and to pay certain fees and expenses to the Letter of Credit Bank under the
Letter of Credit Agreement. If an event of default under the Letter of Credit
Agreement occurs and is continuing, the Letter of Credit Bank may, among other
things, (i) require that the Company immediately prepay to the Letter of
Credit Bank an amount equal to the amount then available under the Letter of
Credit, (ii) declare all amounts due under the Letter of Credit Agreement by
the Company immediately due and payable, (iii) give notice of the occurrence
of such event of default to the Trustee directing the Trustee to accelerate
the Bonds, thereby causing the Letter of Credit to expire 15 days thereafter,
(iv) pursue any rights or remedies the Letter of Credit Bank may have under
the Related Documents, or (v) pursue any other action available at law or in
equity.
"Events of Default" under the Letter of Credit Agreement include the
following:
(a) any material representation or warranty made by the Company in
the Letter of Credit Agreement (or incorporated therein by reference) or in
any of the Bond Documents or in any certificate, agreement, instrument, or
statement contemplated by, made or delivered pursuant to or in connection with
the Letter of Credit Agreement or with any of the other Bond Documents, shall
prove to have been false or incorrect in any material respect when made;
(b) any "event of default" shall have occurred under the Bond
Documents;
(c) failure to pay to the Letter of Credit Bank (i) any obligation
(other than any interest or any letter of credit fee) required to paid or
reimbursed under the Letter of Credit Agreement when and as due thereunder or
(ii) any interest or letter of credit fee within 5 days after the same is due;
(d) default in the due observance or performance of certain
covenants set forth in the Letter of Credit Agreement;
(e) default in the due observance or performance by the Company of
any other term, covenant or agreement set forth in the Letter of Credit
Agreement, and the continuance of such default for 30 days after receiving
notice from the Letter of Credit Bank;
(f) any material provision of the Letter of Credit Agreement or any
of the Bond Documents shall cease to be valid and binding on the Company, or
the Company shall contest any such provision, or the Company or any agent or
trustee on behalf of the Company shall deny that it has any or further
liability under the Letter of Credit Agreement or any of the Bond Documents;
(g) the occurrence of certain events of bankruptcy, insolvency, or
liquidation of the Company;
(h) any event or condition shall occur which results in the
acceleration of any indebtedness of the Company in an aggregate principal
amount exceeding $25,000,000;
(i) certain judgments or orders for the payment of money in an
aggregate amount in excess of $25,000,000 are entered or filed against the
Company and such judgments or orders shall continue unsatisfied and unstayed
for a period of 30 days;
(j) Central and South West Corporation at any time shall fail to
directly or indirectly own and control beneficially and of record 51% of the
outstanding voting stock of the Company; or
(k) the Trustee shall fail to have a valid and enforceable pledge
and assignment of the Trust Estate (as defined in the Indenture).
"Bond Documents" means, with respect to the Letter of Credit
Agreement, the Indenture, the Agreement and the Bonds.
TAX MATTERS
On the date of the initial delivery of the Bonds, McCall, Parkhurst
& Horton L.L.P., Dallas, Texas, Bond Counsel, will render its opinion that, in
accordance with statutes, regulations, published rulings and court decisions
existing on the date thereof, (1) interest on the Bonds will be excludable
from the "gross income" of the holders thereof, except for any holder who is
treated pursuant to Section 103(b)(13) of the Internal Revenue Code of 1954 as
a "substantial user" of the Facilities or a "related person" to such user and
(2) the Bonds will not be treated as "specified private activity bonds" the
interest on which would be included as an alternative minimum tax preference
item under Section 57(a)(5) of the Code. Except as stated above, Bond Counsel
will express no opinion as to any other federal, state or local tax
consequences of the purchase, ownership or disposition of the Bonds. See
Appendix D -- Form of Opinion of Bond Counsel.
In rendering its opinion, Bond Counsel will rely upon (a)
information furnished by the Company, and, particularly, written
representations of officers and agents of the Company with respect to certain
material facts that are solely within their knowledge relating to the use of
the proceeds of the Bonds and the Prior Bonds, and the construction and use of
the Facilities, and (b) covenants of the Issuer and the Company with respect
to arbitrage, the application of the proceeds to be received from the issuance
and sale of the Bonds and the Prior Bonds and certain other matters. Failure
of the Issuer or the Company to comply with these representations or covenants
could cause the interest on the Bonds to become includable in gross income
retroactively to the date of issuance of the Bonds.
The law upon which Bond Counsel has based its opinion is subject to
change by Congress and to subsequent judicial and administrative
interpretation by the courts and the Department of the Treasury. There can be
no assurance that such law or the interpretation thereof will not be changed
in a manner which would adversely affect the tax treatment of the purchase,
ownership or disposition of the Bonds.
Collateral Federal Income Tax Consequences
The following discussion is a summary of certain collateral federal
income tax consequences resulting from the purchase, ownership or disposition
of the Bonds. This discussion is based on existing statutes, regulations,
published rulings and court decisions, all of which are subject to change or
modification, retroactively.
The following discussion is applicable to investors, other than
those, such as financial institutions, property and casualty insurance
companies, life insurance companies, individual recipients of Social Security
or Railroad Retirement benefits, certain S corporations with Subchapter C
earnings and profits, taxpayers claiming an earned income tax credit and
taxpayers who may be deemed to have incurred or continued indebtedness to
purchase tax-exempt obligations, who are subject to special provisions of the
Code.
INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL PROVISIONS OF
THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE TAX TREATMENT WHICH
MAY BE ANTICIPATED TO RESULT FROM THE PURCHASE, OWNERSHIP AND DISPOSITION OF
TAX-EXEMPT OBLIGATIONS BEFORE DETERMINING WHETHER TO PURCHASE THE BONDS.
Interest on the Bonds will be includable as an adjustment for
"adjusted earnings and profits" to calculate the alternative minimum tax
imposed on corporations by Section 55 of the Code. Section 55 of the Code
imposes a tax equal to 20 percent of the taxpayer's "alternative minimum
taxable income" if the amount of such alternative minimum tax is greater than
the taxpayer's regular income tax for the taxable year.
Interest on the Bonds is includable in the "alternative minimum
taxable income" of a corporation (other than a regulated investment company or
a real estate investment trust) for purposes of determining the environmental
tax imposed by Section 59A of the Code. Section 59A of the Code imposes on a
corporation an environmental tax, in addition to any other income tax imposed
by the Code, equal to 0.12 percent of the excess of the modified alternative
minimum taxable income of such corporation for the taxable year over
$2,000,000.
Interest on the Bonds may be subject to the "branch profits tax"
imposed on the effectively-connected earnings and profits of a foreign
corporation doing business in the United States.
Under the Code, holders of tax-exempt obligations, such as the
Bonds, may be required to disclose interest received or accrued during each
taxable year on their returns of federal income taxation.
Section 1276 of the Code provides for ordinary income tax treatment
of gain recognized upon the disposition of a tax-exempt obligation, such as
the Bonds, if such obligation was acquired at a "market discount" and if the
fixed maturity of such obligations is equal to, or exceeds, one year from the
date of issue. Such treatment applies to "market discount bonds" to the
extent such gain does not exceed the accrued market discount of such bonds,
although for this purpose, a de minimis amount of market discount is ignored.
A "market discount bond" is one which is acquired by the holder at a purchase
price which is less than the stated redemption price at maturity. The
"accrued market discount" is the amount which bears the same ratio to the
market discount as the number of days during which the holder holds the
obligation bears to the number of days between the acquisition date and the
final maturity date.
State, Local and Foreign Taxes
Investors should consult their own tax advisors concerning the tax
implications of the purchase, ownership or disposition of the Bonds under
applicable state or local laws. Foreign investors should also consult their
own tax advisors regarding the tax consequences unique to investors who are
not United States persons.
LEGAL PROCEEDINGS
Legal matters incident to the authorization, issuance and sale of
the Bonds are subject to the unqualified approval of the Attorney General of
the State of Texas and of Bond Counsel. McCall, Parkhurst & Horton L.L.P. has
acted in the capacity as Bond Counsel for the purpose of rendering an opinion
with respect to the authorization, issuance, delivery, legality and validity
of the Bonds and for the purpose of rendering an opinion on the exclusion of
the interest on the Bonds from gross income for federal income tax purposes
and certain other tax matters. Such firm has not been requested to examine,
and has not investigated or verified, any statements, records, material or
matters relating to the financial condition or capabilities of the Company,
and has not assumed responsibility for the preparation of this Official
Statement, except that, in its capacity as Bond Counsel, such firm has
reviewed the information in this Official Statement exclusive of the
information contained under the captions "BOOK-ENTRY ONLY SYSTEM" and "THE
LETTER OF CREDIT AND THE LETTER OF CREDIT AGREEMENT" and in Appendices A and B
hereto. Certain legal matters are being passed upon for the Issuer by the
firm of McCall, Parkhurst & Horton L.L.P., as counsel to the Issuer. McCall,
Parkhurst & Horton L.L.P. has not participated in the preparation of, or
examined (and they therefore will express no opinion on and assume no
responsibility for), the contents of Appendices A and B to this Official
Statement, and it has not considered it necessary to do so in order to render
its opinions.
Certain legal matters will be passed upon for the Company by its
counsel, Milbank, Tweed, Hadley & McCloy, New York, New York, and by its
special counsel, Vinson & Elkins L.L.P., Dallas, Texas and for the Underwriter
by its counsel, Sidley & Austin, Chicago, Illinois. Sidley & Austin has
represented the Company, Central and South West Corporation ("CSW"), a
registered public utility holding company under the Public Utility Holding
Company Act of 1935 and owner of all of the issued and outstanding common
stock of the Company, and other affiliates of CSW from time to time in
connection with certain legal matters.
<PAGE>
UNDERWRITING
Morgan Stanley & Co. Incorporated (the "Underwriter") has agreed to
purchase the Bonds at a price equal to 100% of the principal amount thereof.
Under the terms of the Bond Purchase Agreement dated November 2, 1995 between
the Underwriter and the Issuer, the Underwriter has agreed, subject to the
approval of certain legal matters by counsel and to certain other conditions,
to purchase all of the Bonds if any such Bonds are purchased. The Company has
agreed to pay the Underwriter a commission equal to .397% of the principal
amount of the Bonds. The Bonds may be offered and sold to certain dealers
(including dealers depositing such Bonds into investment accounts) and others
at prices lower than the public offering price set forth on the cover page
hereof. After such Bonds are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
Underwriter.
The Company has agreed to indemnify the Underwriter against or to
contribute toward certain liabilities, including liabilities under federal
securities laws.
CONTINUING DISCLOSURE
The Company has made certain undertakings to provide annual
financial statements of the Company (commencing with the fiscal year of the
Company ended December 31, 1996) and notice of certain material events
relating to the Bonds to each nationally recognized municipal securities
information repository or, in certain cases, the Municipal Securities
Rulemaking Board, and the appropriate state information depository, if any, in
each case to the extent required by Rule 15c2-12 (the "Rule") promulgated by
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934, as amended. The Company has made such covenants solely for the
purpose of enabling the Underwriter to comply with the Rule and such covenants
do not constitute an acknowledgement by the Company of the validity of the
Rule and are valid and binding only to the extent that the Rule is valid. The
Company expressly reserves the right to contest the validity of all or any
portion of the Rule, including, without limitation, as a defense in any
action. The Company and its officers and directors shall have no liability in
respect of such covenants except to the extent required for such covenants to
satisfy the requirements imposed by the Rule.
MISCELLANEOUS
The foregoing summaries do not purport to be complete and are
expressly made subject to the exact provisions of the applicable documents
which are incorporated herein by reference. For details of all terms and
conditions with respect to the Bonds, reference is made to the Indenture, the
Agreement, the Letter of Credit and the Letter of Credit Agreement, copies of
which may be obtained from the Company and the Underwriter during the initial
offering period for the Bonds and thereafter from the Trustee. Information
concerning the Company is contained or incorporated by reference in Appendix A
to this Official Statement. Information concerning the Letter of Credit Bank
is contained or incorporated by reference in Appendix B to this Official
Statement. All the information contained under the heading "THE FACILITIES"
has been furnished by the Company, and the Issuer makes no representations as
to the accuracy or completeness of such information.
Under the Agreement, and otherwise, the Company is obligated to make
certain payments to the Issuer and has agreed to indemnify the Issuer against
certain liabilities, including liabilities under federal securities laws.
The Issuer does not assume any responsibility for the matters
contained in this Official Statement, except for the matters contained under
the heading "THE ISSUER." All findings and determinations by the Issuer
relating to the issuance of the Bonds, are, and have been, made by it for its
own internal uses and purposes in performing its duties under the laws of the
State of Texas.
This Official Statement has been duly approved by the Issuer.
GUADALUPE-BLANCO RIVER
AUTHORITY
By: /s/ William A. Blackwell
William A. Blackwell
Chairman, Board of Directors
<PAGE>
------------------------
APPENDIX A
------------------------
CENTRAL POWER AND LIGHT COMPANY
The information contained in this Appendix to the Official Statement has been
obtained from Central Power and Light Company.
<PAGE>
THE COMPANY
The Company is a public utility engaged in generating, purchasing,
transmitting, distributing and selling electricity in south Texas. It is a
wholly-owned subsidiary of Central and South West Corporation ("CSW"), a
registered public utility holding company under the Public Utility Holding
Company Act of 1935.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Exchange Act of 1934,
as amended (the "1934 Act"), are incorporated in this Official Statement by
reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1995 and June 30, 1995.
3. The Company's Current Reports on Form 8-K dated April 5, 1995,
September 27, 1995 and October 19, 1995.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the 1934 Act after the date of this Official Statement
and prior to the termination of this offering shall be deemed to be
incorporated by reference in this Appendix A from their respective dates of
filing.
The Company is subject to the informational requirements of the 1934
Act and the Public Utility Holding Company Act of 1935 and, in accordance
therewith, files reports and other information with the Commission. Such
reports and other information filed by the Company can be inspected and copied
at the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549; and at the Commission's Regional Offices
at Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois
60661-2511 and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of such material can also be obtained at prescribed rates from the
Public Reference Section of the Commission at its principal office at 450
Fifth Street, N.W., Washington, D.C. 20549.
The Company hereby undertakes to provide without charge to each
person to whom a copy of this Official Statement has been delivered, on the
written or oral request of any such person, a copy of any or all of the
documents referred to above which have been or may be incorporated in this
Appendix by reference, other than exhibits to such documents. Written
requests should be directed to Stephen D. Wise, Director, Finance, Central and
South West Corporation, 1616 Woodall Rogers Freeway, Dallas, Texas 75202, as
agent for the Company. The telephone number of CSW is (214) 777-1000.
<PAGE>
SUMMARY INFORMATION
Business. . . . . . . . . . . . . . . . . Electric Utility
Service Area. . . . . . . . . . . . . . . Approximately 44,000 square
miles in south Texas
Population of Service Area. . . . . . . . Approximately 1,969,000
Customers . . . . . . . . . . . . . . . . Approximately 603,000
Generating Fuels for 1994 . . . . . . . . Gas 56%; Coal 24%; Nuclear 20%
<TABLE>
<CAPTION>
Twelve Months
Ended September 30, Year Ended December 31,
1995 1994 1993 1992
------------------- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Income Summary:
Operating Revenues $1,068,134 $1,217,979 $1,223,528 $1,113,423
Operating Income 279,332 256,251 190,079 266,665
Net Income 209,350 205,439 172,425 218,511
Ratio of Earnings
to Fixed Charges* 2.63 3.24 2.69 3.23
</TABLE>
______________________
* For computation of the foregoing ratios (i) earnings consist of net
income plus fixed charges, federal and state income taxes, deferred
income taxes and investment tax credits and (ii) fixed charges consist
of interest on long-term debt, other interest charges, the interest
component of leases and amortization of debt discount, premium and
expense.
Capitalization at
September 30, 1995
------------------
(Unaudited)
Capitalization Summary:
Common Equity $1,459,699 45.2%
Preferred Stock 250,351 7.8
Common Equity 1,517,887 47.0
---------- -----
Total Capitalization $3,127,173 100.0%
<PAGE>
CONSTRUCTION PROGRAM
The Company's capital expenditures for 1995-1997, including
allowance for funds used during construction ("AFUDC"), are estimated at $111
million, $136 million and $110 million, respectively. The Company anticipates
that the majority of the funds required for its 1995-1997 capital expenditure
program will be provided from internal sources. These estimates are subject
to change due to numerous factors, including load growth, escalation of
construction costs, changes in nuclear and environmental regulation, delays
from regulatory hearings, adequacy of rate relief and the availability of
necessary external capital.
EXPERTS
The audited financial statements and schedules of the Company
included in its Annual Report on Form 10-K for the year ended December 31,
1994, which has been incorporated herein by reference, have been examined by
Arthur Andersen LLP, independent public accountants, as indicated in their
report dated February 13, 1995 with respect thereto, which has been incor-
porated herein by reference, in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
<PAGE>
------------------------
APPENDIX B
------------------------
ABN AMRO BANK N.V.
The information contained in this Appendix to the Official Statement has been
obtained from ABN AMRO Bank N.V.
<PAGE>
ABN AMRO BANK N.V.
The information set forth below has been obtained from ABN AMRO Bank
N.V. The Authority, the Company and the Underwriter make no representations
as to the accuracy or completeness of such information.
ABN AMRO Bank N.V. ("ABN AMRO") is engaged in all respects of retail
and wholesale commercial and investment banking and is the largest banking
organization in The Netherlands. As of June 30, 1995, ABN AMRO had 1,144
branches in The Netherlands and 548 establishments in 61 countries outside The
Netherlands. ABN AMRO ranks among the twenty largest banks doing business in
the United States, with a U.S. presence of more than US $45 billion in assets
and 9,000 employees. On the basis of worldwide assets, ABN AMRO is among the
top ten largest banks in Europe. On June 30, 1995, ABN AMRO had total
consolidated assets of NLG 535,804 million (US $345.68 billion*) and
consolidated group equity and subordinated loans of NLG 32,033 million (US
$20.666 billion*).
ABN AMRO is the sole direct subsidiary of ABN AMRO Holding N.V.
("Holding"), an international multi-bank holding company. The most recent
Annual Report for the ABN AMRO Group (Holding and its domestic and
international subsidiaries and affiliates) in the English language outlines
ABN AMRO Group and ABN AMRO's organization, management, banking operations
(international and domestic), capitalization and non-bank subsidiary
operations. Also included in the Annual Report for the ABN AMRO Group is the
audited financial information for Holding and ABN AMRO, including the
independent auditor's report covering such financial statement. The
applicable Netherlands generally accepted accounting principles followed in
preparing the financial statements for ABN AMRO Group differ in various
respects from generally accepted accounting principles applicable to U.S.
banks.
Upon written request, ABN AMRO will provide without charge to any
person to whom this Official Statement is delivered a copy of Holding's most
recent Annual Report. Written requests should be directed to ABN AMRO Bank
N.V., 135 South LaSalle Street, Chicago, Illinois 60603, Attention: Corporate
Communications Department.
________________________________
* Based on the rate of exchange on June 30, 1995 of US $1 to NLG 1.55.
<PAGE>
------------------------
APPENDIX C
------------------------
CERTAIN DEFINITIONS
<PAGE>
CERTAIN DEFINITIONS
Certain capitalized terms used in the forepart of this Official
Statement and not defined therein have the meanings set forth below:
Acts - shall mean, collectively, Chapter 30 of the Texas Water Code,
as amended, Chapter 383 of the Texas Health and Safety Code, as amended, and
Articles 8280-106 and 717q, Vernon's Texas Civil Statutes, as amended.
Beneficial Owner - shall mean the actual purchaser of a Bond.
Bond Counsel - shall mean McCall, Parkhurst & Horton L.L.P. or such
other firm of attorneys of nationally recognized standing in the field of law
relating to municipal bond law and the exemption from federal income taxation
of interest on state or local bonds, selected by the Issuer and acceptable to
the Trustee and the Company.
Bond Owner, Bondowner, Owner, owner, Bondholder, bondholder, holder,
Registered Owner or owner of the Bonds - when used with respect to a Bond,
shall mean the person or entity in whose name such Bond shall be registered.
Bond Registrar - shall mean the Trustee or any successor bond
registrar serving as such under the Indenture.
Business Day - shall mean any day on which commercial banks located
in all of the cities in which the Principal offices of the Trustee, the Paying
Agent, the Letter of Credit 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 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.
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.
The terms "substantial user" and "related person" shall have the
meanings given such terms in section 147(a) of the Code.
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).
Expiration Date - shall mean the expiration date of the current
Letter of Credit.
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 the Indenture and will not adversely affect the excludability of
interest on the Bonds from gross income of the Owners thereof for federal
income tax purposes (other than as held by a "substantial user" of the
Facilities or a "related person" within the meaning of the Code).
Government Obligations - shall mean (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.)
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 in the Indenture. Notwithstanding anything in the Indenture to the
contrary, the Interest Rate Period with respect to a 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.
Maximum Rate - shall mean a "net effective interest rate" (as
defined and calculated in accordance with the provisions of Article 717k-2,
Vernon's Texas Civil Statutes) of twelve percent (12%) per annum.
Mode - shall mean the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily Mode, the Flexible
Mode, the Weekly Mode, the Monthly Mode, the Quarterly Mode, the Semiannual
Mode, the Multiannual Mode and the Fixed Rate Mode.
Outstanding, Bonds Outstanding or Bonds then Outstanding - shall
mean when used with a reference to Bonds at any date as of which the amount of
Outstanding Bonds is to be determined, means all Bonds authenticated and
delivered under the Indenture, except:
(a) Bonds canceled or delivered for cancellation at or prior
to such date;
(b) Bonds deemed to be paid pursuant to the terms of the
Indenture;
(c) Bonds in lieu of which others have been authenticated and
delivered under the Indenture;
(d) Bonds registered in the name of the Issuer;
(e) On or after any Purchase Date for Bonds, all Bonds (or
portions of Bonds) which are tendered or deemed to have been
tendered for purchase on such date, provided that funds sufficient
for such purchase are on deposit with the Paying Agent; and
(f) For purposes of any consent, request, demand,
authorization, direction, notice, waiver or other action to be taken
by the holders of a specified percentage of outstanding Bonds, all
Bonds held by or for the account of the Issuer 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.
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.
Purchase Date - shall mean the date upon which Bonds are required to
be purchased pursuant to a mandatory or optional tender.
Purchase Price - shall mean, with respect to a Bond on a Purchase
Date, a price equal to par plus accrued interest to the Purchase Date;
provided that in the event that the Purchase Date is an Interest Payment Date
for such Bond and such Bonds is not in the Flexible Mode, accrued interest
will be paid separately and not as part of the Purchase Price on such date.
Rating Agencies - shall mean Standard & Poor's Ratings Services, a
division of McGraw-Hill, Inc. and/or Moody's Investor Service, Inc., according
to which of such rating agencies then rates the Bonds; and provided that if
neither of such rating agencies then rates the Bonds, the term "Rating
Agencies" shall refer to any national rating agency (if any), mutually
acceptable to the Company and the Remarketing Agent, which provides such
rating.
<PAGE>
------------------------
APPENDIX D
------------------------
FORM OF OPINION OF BOND COUNSEL
<PAGE>
November 2, 1995
GUADALUPE-BLANCO RIVER AUTHORITY
POLLUTION CONTROL REVENUE REFUNDING BONDS
(CENTRAL POWER AND LIGHT COMPANY PROJECT)
SERIES 1995
WE HAVE EXAMINED into the validity of the bonds described above (the
"Bonds"), issued by the Guadalupe-Blanco River Authority (the "Issuer"),
initially dated as of October 1, 1995, in the aggregate principal amount of
$40,890,000, maturing November 1, 2015 (unless the Bonds shall become due or
shall be redeemed prior to their scheduled maturity in accordance with the
terms and conditions stated in the text of the Bonds), and bearing interest
from the dates specified therein until maturity or redemption, at the rates
and payable on the dates and in the manner described in the text of the Bonds.
WE HAVE ACTED AS BOND COUNSEL for the Issuer for the purpose of
rendering an opinion with respect to the authorization, issuance, delivery,
legality, and validity of the Bonds under the laws and Constitution of the
State of Texas, with respect to any exemption of the interest on the Bonds
from federal income taxes, and for the other limited purposes set forth herein
and in a supplemental opinion of even date herewith. We have not been
requested to examine, and have not investigated or verified, any statements,
records, material, or other matters relating to the financial condition or
capabilities of the corporation hereinafter described, and we express no
opinion with respect thereto.
WE HAVE EXAMINED the Constitution and laws of the State of Texas
under which the Issuer was created and exists and pursuant to which it has
authorized and issued the Bonds; certified copies of the proceedings of the
governing body of said Issuer; certificates of Central Power and Light
Company, a Texas corporation (the "Company"); the Installment Payment
Agreement dated as of October 1, 1995 (the "Agreement"), between the Issuer
and the Company; the Indenture of Trust dated as of October 1, 1995 (the
"Indenture"), between the Issuer and The Bank of New York (the "Trustee");
resolutions of the Issuer, including the resolution authorizing the issuance
of the Bonds, adopted October 18, 1995 (the "Bond Resolution"); certificates,
resolutions, and representations of the Company and the Trustee, including
certificates and representations with respect to certain material facts which
are solely within the knowledge of the party rendering such certificates and
representations; and the opinions of Milbank, Tweed, Hadley & McCloy and
Vinson & Elkins L.L.P., counsel to the Company, upon which certifications,
representations, and opinions we rely to the extent we consider appropriate;
and other instruments authorizing and relating to the issuance of the Bonds,
including one of the executed Bonds (Bond TR-1).
THE BONDS are secured by the Indenture whereunder the Trustee, or
its successor as Trustee, is custodian of the Bond Fund created therein, and
is obligated to enforce the rights of the owners of the Bonds, and to perform
other duties, in the manner and under the conditions stated in the Indenture.
BASED ON SAID EXAMINATION, it is our opinion that the Issuer is a
governmental agency and body politic and corporate of the State of Texas,
validly operating and existing as a conservation and reclamation district and
a river authority under Texas law with full power and authority to enter into
and carry out the terms of the Agreement and the Indenture.
IT IS FURTHER OUR OPINION that the Bond Resolution has been duly and
lawfully adopted and that the Bonds have been duly and validly authorized,
issued, executed, authenticated, and delivered in accordance with law and the
Indenture, and constitute valid, legal, binding, and enforceable special
obligations of the Issuer in accordance with their terms and the terms of the
Indenture, with the principal of, premium, if any, and interest on the Bonds
being payable from, and secured by a first lien on and pledge of all of the
right, title, and interest of the Issuer in and to the Agreement, together
with all moneys payable thereunder, excluding certain rights relating to
certain payments for expenses and indemnification of the Issuer. Pursuant to
the Agreement, the Company has agreed to make payments to the Trustee for
deposit into the Bond Fund established by the Indenture in amounts sufficient
to pay and redeem, or provide for the payment and redemption of, the principal
of, premium, if any, and interest on the Bonds, when due as required by the
Indenture.
THE RIGHTS OF THE ISSUER under the Agreement have been duly and
legally assigned in the Indenture to the Trustee and have been pledged to the
payment of the principal of, premium, if any, and interest on the Bonds. It
is our opinion that the Agreement has been duly and lawfully authorized,
executed, and delivered by the Issuer, and is a legal, valid, binding, and
enforceable obligation of the Issuer in accordance with its terms and
conditions. Milbank, Tweed, Hadley & McCloy and Vinson & Elkins L.L.P.,
counsel for the Company, have rendered their respective opinions of even date
herewith to the effect that the Agreement has been duly and lawfully
authorized, executed, and delivered by the Company, and that it is a legal,
valid, binding, and enforceable obligation of the Company. We note that said
counsel each has stated that the enforceability of the Agreement is subject to
applicable bankruptcy, insolvency, reorganization, moratorium, or other
similar laws relating to or affecting creditors' rights generally.
IT IS FURTHER OUR OPINION that the Indenture has been duly and
lawfully authorized, executed, and delivered, that it is in full force and
effect, that it is legal, valid, binding, and enforceable in accordance with
its terms and conditions, and that it creates the valid pledge which it
purports to create.
THE ISSUER has reserved the right to amend the Indenture as provided
therein and subject to the restrictions therein stated.
<PAGE>
THE BONDS ARE ADDITIONALLY SECURED by an irrevocable direct pay
letter of credit (the "Letter of Credit") issued by ABN AMRO Bank N.V., a bank
duly organized under the laws of The Netherlands (the "Bank"). Counsel to the
Bank has rendered its opinion with respect to the validity and enforceability
of the Letter of Credit, as to which we render no opinion.
THE OPINIONS HEREINABOVE expressed are qualified to the extent that
the obligations of the Company, the Trustee, and the Issuer, and the
enforceability thereof, with respect to the Bonds, the Agreement, the Bond
Resolution, and the Indenture are subject to applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar laws relating to or
affecting creditors' rights generally.
IN OUR OPINION, except as discussed below, the interest on the Bonds
will be excludable from the gross income of the owners of the Bonds for
federal income tax purposes under the statutes, regulations, published
rulings, and court decisions existing on the date of this opinion. The
exceptions are as follows:
(1) interest on the Bonds will be includable in the gross
income of the owner thereof during any period that such Bonds are
owned by either a "substantial user" of the facilities financed with
the proceeds of the Bonds or a "related person" of such user, as
provided in section 103(b)(13) of the Internal Revenue Code of 1954,
as amended;
(2) interest on the Bonds will be included in a corporation's
alternative minimum taxable income for purposes of determining the
alternative minimum tax and the environmental tax imposed on
corporations by sections 55 and 59A of the Internal Revenue Code of
1986, as amended (the "Code");
(3) interest on the Bonds will be subject to the branch
profits tax imposed on foreign corporations by section 884 of the
Code; and
(4) interest on the Bonds will be subject to the tax imposed
by section 1375 of the Code on the excess net passive income of
certain S corporations that have Subchapter C earnings and profits.
Section 57(a)(5) of the Code includes as an individual and corporate
alternative minimum tax preference item, the interest on certain "private
activity bonds," other than bonds issued after August 7, 1986, to currently
refund such bonds. In our opinion, the interest on the Bonds is not an
alternative minimum tax preference item under such section.
IN EXPRESSING THIS OPINION as to the exclusion from gross income of
interest, we have (a) relied upon information furnished by the Company, and
particularly written representations of officers of the Company with respect
to certain material facts which are solely within their knowledge, relating to
the Facilities, as defined in the Agreement, and the use of the proceeds of
the Bonds and the prior bonds, and (b) assumed continuing compliance with <PAGE>
covenants of the Company, the Issuer and the Trustee with respect to certain
matters, including arbitrage and the application of Bond proceeds. Failure to
comply with certain of these representations and covenants may cause interest
on the Bonds to become includable in gross income retroactively to the date of
their issuance.
EXCEPT AS STATED ABOVE, we express no opinion as to any other
federal, state or local tax consequences of acquiring, carrying, owning or
disposing of the Bonds. In particular, but not by way of limitation, we
express no opinion with respect to the federal, state or local tax
consequences arising from the enactment of any pending or future legislation.
Respectfully,
<PAGE>
<PAGE>
EXHIBIT 7(a)
------------
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
November 13, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Central Power and Light Company
Certificate of Notification to Form U-1
Application-Declaration (File No. 70-8677)
Dear Sirs:
We refer to the Form U-1 Application-Declaration (File No. 70-8677)
(the "Application-Declaration") under the Public Utility Holding Company Act
of 1935, as amended (the "1935 Act"), and the Certificate of Notification
thereto, filed by Central Power and Light Company (the "Company"), a Texas
corporation and a wholly-owned electric utility subsidiary of Central and
South West Corporation ("CSW"), a Delaware corporation and a registered
holding company under the 1935 Act. The Certificate of Notification relates
to the issue and sale by Guadalupe-Blanco River Authority (the "Authority") of
$40,890,000 aggregate principal amount of its Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) Series 1995, due
November 1, 2015 (the "Bonds"). In connection with the issuance of the Bonds,
the Company entered into (i) an Installment Payment Agreement (the
"Installment Payment Agreement") with the District which obligated the Company
to pay amounts designed to be sufficient to pay the principal of, premium, if
any, and interest on the Bonds, (ii) a Remarketing Agreement (the "Remarketing
Agreement") providing for remarketing of the Bonds, and (iii) a Letter of
Credit Agreement (the "Letter of Credit Agreement") providing for the
principal of and interest on the Bonds, and the purchase price therefor, to be
payable from moneys drawn on a letter of credit issued with respect to the
Bonds. In connection with the Application-Declaration and the Certificate of
Notification, we have acted as special counsel for the Company and, as such
counsel, we are familiar with the corporate proceedings taken by the Company
in connection with the issuance and sale of the Bonds as described in the
Application-Declaration and Certificate of Notification.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that
(except, to the extent set forth in the opinions expressed below, as to the
Company): (i) such documents have been duly authorized by, have been duly
executed and delivered by, and constitute legal, valid, binding and
enforceable obligations of, all of the parties to such documents; (ii) all
signatories to such documents have been duly authorized; and (iii) all of the
parties to such documents are duly organized and validly existing and have the
power and authority (corporate or other) to execute, deliver and perform such
documents.
We have examined originals, or copies certified to our satisfaction,
of such corporate records of the Company, certificates of public officials,
certificates of officers and representatives of the Company and other
documents as we have deemed it necessary to require as a basis for the
opinions hereinafter expressed. In such examination we have assumed the
genuineness of all signatures and the authenticity of all documents submitted
to us as originals and the conformity with the originals of all documents
submitted to us as copies. As to various questions of fact material to such
opinions we have, when relevant facts were not independently established,
relied upon certificates by officers of the Company and other appropriate
persons and statements contained in the Application-Declaration and the
Certificate of Notification.
Based upon the foregoing, and having regard to legal considerations
which we deem relevant, we are of the opinion that:
1. The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Texas.
2. All state laws applicable to the execution of the Installment Payment
Agreement and the Letter of Credit Agreement by the Company have been
complied with.
3. The Installment Payment Agreement and the Letter of Credit Agreement
are valid and binding obligations of the Company enforceable in
accordance with their respective terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium or other similar laws
of general applicability relating to or affecting the enforcement of
creditors' rights generally and to the effects of general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law), including without limitation (a) the
possible unavailability of specific performance, injunctive relief or any
other equitable remedies and (b) concepts of materiality, reasonableness,
good faith and fair dealing.
4. The consummation of the transactions as described in the Application-
Declaration and Certificate of Notification did not violate the legal
rights of the holders of any securities issued by the Company or any
associate company of the Company.
In rendering the opinions hereinabove expressed, we have relied upon
opinions of other counsel to the Company who are qualified to practice in
jurisdictions pertaining to the transactions described above in which we are
not admitted to practice. We do not express any opinion as to matters
governed by any laws other than the Federal laws of the United States of
America, the laws of the State of New York and, to the extent hereinabove
stated, the laws of other jurisdictions pertaining to the transactions
described above in reliance upon said opinions of counsel to the Company.
<PAGE>
We hereby consent to the use of this opinion as an exhibit to the
Certificate of Notification.
Very truly yours,
/s/MILBANK,TWEED,HADLEY & MCCLOY
Milbank, Tweed, Hadley & McCloy
RBW/RMG
<PAGE>
<PAGE>
EXHIBIT 12(a)
-------------
$40,890,000
Guadalupe-Blanco River Authority
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
___________________________
REMARKETING AGREEMENT
___________________________
November 2, 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 1, 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 November 2,
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 1Company shall pay
the Remarketing Agent a fee equal to ten one-hundredths of one percent (0.10%)
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 November 1, 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
<PAGE>
(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, 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 an 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; 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. Upon receipt of notice from the Company to such
Indemnified Party of its election so to assume the defense of such action and
approval by the Indemnified Party of counsel, the Company will not be liable
to such Indemnified Party under this subparagraph 5(c) for any legal or other
expenses subsequently incurred by such Indemnified Party in connection with
the defense thereof unless (i) the Indemnified Party shall have employed
separate counsel in connection with the assertion of legal defenses in
accordance with the provision to the next preceding sentence (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), (ii) the Company shall not have employed counsel
satisfactory to the Indemnified Party to represent the Indemnified Party
within a reasonable time after notice of commencement of the action or (iii)
the Company has authorized the employment of counsel for the Indemnified Party
at the expense of the Company; and except that, if clause (i) or (iii) is
applicable, such liability shall be only in respect of the counsel referred to
in such clause (i) or (iii).
(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 termination or
resignation as provided herein. This Agreement may be terminated at any time
by the Company upon 15 days' prior written notice to the Remarketing Agent;
the Remarketing Agent may resign at any time upon 30 days' prior written
notice 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 or resignation 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.
<PAGE>
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:
<PAGE>
<PAGE>
EXHIBIT 13(a)
-------------
Letter of Credit Agreement
dated as of October 1, 1995
between
Central Power and Light Company
and
ABN AMRO Bank N.V.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS1
Section 1.1. Definitions 1
ARTICLE II
LETTER OF CREDIT
Section 2.1. Issuance of Letter of Credit 7
Section 2.2. Letter of Credit Drawings 8
Section 2.3. Reimbursement of Liquidity Drawings under
the Letter of Credit; Interest 8
Section 2.4. Reimbursement of Drawings Other than Liquidity
Drawings under the Letter of Credit 8
Section 2.5. Conversion and Continuation Options 8
Section 2.6. Interest Rates and Payment Dates 9
Section 2.7. Payments 9
Section 2.8. Fees 10
Section 2.9. Method of Payment 10
Section 2.10. Lending Offices and Funding 10
Section 2.11. Computation of Interest 11
Section 2.12. Payment Due on Non-Business Day to be made on
Next Business Day 11
Section 2.13. Late Payments 11
Section 2.14. Source of Funds 11
Section 2.15. Extension of Stated Expiration Date 11
Section 2.16. Funding Losses 12
Section 2.17. Basis for Determining Interest Rate
Unavailable 12
Section 2.18. Illegality 12
Section 2.19. Maximum Interest Rate 12
Section 2.20. Bank Rating 13
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1. Conditions Precedent to Issuance of Letter
of Credit 13
Section 3.2. Conditions Precedent to Liquidity Advances 14
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1. Company's Representations 15
i<PAGE>
TABLE OF CONTENTS
CONTINUED
Page
ARTICLE V
COVENANTS
Section 5.1. Information 18
Section 5.2. Payment of Obligations 19
Section 5.3. Maintenance of Property; Insurance 19
Section 5.4. Conduct of Business and Maintenance of
Existence 20
Section 5.5. Compliance with Laws 20
Section 5.6. Inspection of Property, Books and Records 20
Section 5.7. Use of Proceeds 21
Section 5.8. Negative Pledge 21
Section 5.9. Prohibition of Fundamental Changes 21
Section 5.10. Minimum Consolidated Net Worth 21
Section 5.11. Bond Documents 21
Section 5.12. Official Statement 21
Section 5.13. Optional Redemptions 21
ARTICLE VI
EVENTS OF DEFAULT
Section 6.1. Events of Default 22
Section 6.2. Remedies 23
ARTICLE VII
MISCELLANEOUS
Section 7.1. Taxes 24
Section 7.2. Increased Costs 25
Section 7.3. Right of Setoff; Other Collateral 27
Section 7.4. Indemnity, Costs and Expenses 28
Section 7.5. Obligations Absolute 28
Section 7.6. Liability of the Bank 28
Section 7.7. Participants, Etc 29
Section 7.8. Survival of this Agreement 30
Section 7.9. Modification of this Agreement 30
Section 7.10. Waiver of Rights by the Bank 30
Section 7.11. Severability 30
Section 7.12. Governing Law; Submission to Jurisdiction 30
Section 7.13. Notices 31
Section 7.14. Survival of Certain Obligations 32
Section 7.15. Taxes and Expenses 32
Section 7.16. Headings 32
Section 7.17. Counterparts 32
Section 7.18. Waiver of Jury Trial 32
ii<PAGE>
TABLE OF CONTENTS
CONTINUED
Page
Signature 33
Appendix I
iii<PAGE>
LETTER OF CREDIT AGREEMENT
Dated as of October 1, 1995
Central Power and Light Company
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Ladies and Gentlemen:
Central Power and Light Company (the "Company") desires to secure a
source of funds to be devoted exclusively to the payment by The Bank of New
York, as trustee (together with its successors in such capacity under the
Indenture, the "Trustee"), when and as due, of the principal of and certain
interest on the Bonds, and has applied to ABN AMRO Bank N.V., acting through
its Houston Agency (the "Bank"), for issuance by the Bank of the Letter of
Credit in an Original Stated Amount of $43,411,550. Furthermore, the Bank has
been requested by the Company to provide the Company with a liquidity facility
by extending credit to the Company in the form of Liquidity Drawings under the
Letter of Credit. The Bank has agreed to issue such Letter of Credit and to
provide such liquidity facility in the following manner and subject to the
following terms and conditions. Accordingly, the Company and the Bank hereby
agree as follows:
.c.ARTICLE I
DEFINITIONS
.c2.Section 1.1. Definitions;. As used in this Agreement:
"Acceleration Drawing" - means a drawing under the Letter of Credit resulting
from the presentation of a certificate in the form of "Exhibit F" to the
Letter of Credit.
"Agreement" - means this Letter of Credit Agreement, as amended or
supplemented from time to time.
"Available Amount" - shall have the same meaning herein as in the
Letter of Credit.
"Bank" - means ABN AMRO Bank N.V., a banking institution organized
and existing under the laws of The Netherlands, acting through its Houston
Agency, as issuer of the Letter of Credit.
"Bank Bonds" - shall have the same meaning herein as in the
Indenture.
"Base Rate" - means for any day the greater of:
(i)the rate of interest announced by the Bank from time to time as its prime
commercial rate for U.S. dollar loans as in effect on such day, with any
change in the Base Rate resulting from a change in said prime commercial rate
to be effective as of the date of the relevant change in said prime commercial
rate; or
<PAGE>
(ii) the sum of (x) the rate determined by the Bank to be the
average (rounded upwards, if necessary, to the next higher 1/100 of
1%) of the rates per annum quoted to the Bank at approximately 10:00
a.m. (Houston, Texas time) (or as soon thereafter as is practicable)
on such day (or, if such day is not a Business Day, on the
immediately preceding Business Day) by two or more Federal funds
brokers selected by the Bank for the sale to the Bank at face value
of Federal funds in an amount equal or comparable to the principal
amount owed to the Bank for which such rate is being determined,
plus (y) 1/2 of 1% (0.50%).
"Base Rate Loan" - means a Liquidity Advance which is accruing
interest based on the Base Rate.
"Bond Documents" - means the Indenture, the Installment Payment
Agreement and the Bonds.
"Bond Owner," "Bondowner," "Owner" and "Bondholder" - shall have the
same meaning herein as in the Indenture.
"Bonds" means the $40,890,000 aggregate principal amount of
Guadalupe-Blanco River Authority Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project) Series 1995.
"Business Day" - shall have the same meaning herein as in the Letter
of Credit and, if the applicable Business Day relates to the borrowing or
payment of a Eurodollar Loan, means any day on which banks are dealing in U.S.
dollar deposits in the interbank market in London, England.
"Cap Interest Rate" - means a rate per annum of 12% calculated on
the basis of a year of 360 days for the actual days elapsed.
"Code" - means the Internal Revenue Code of 1986, as amended, and
the regulations, rulings and proclamations promulgated and proposed thereunder
or under the predecessor Code.
"Commission" - means the Securities and Exchange Commission, or any
entity succeeding to its responsibilities under the Public Utility Holding
Company Act of 1935, as amended.
"Company" - means Central Power and Light Company, a public utility
and corporation duly organized and validly existing under the laws of the
State of Texas, and its lawful successors and assigns, to the extent permitted
by the Installment Payment Agreement and this Agreement.
"Company Held Bonds" - shall have the same meaning herein as in the
Indenture.
"Consolidated Net Worth" - means at any date the consolidated common
stock equity of the Company and its Consolidated Subsidiaries determined as of
such date.
<PAGE>
"Consolidated Subsidiary" - means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of the
Company in consolidated financial statements if such statements were prepared
as of such date.
"Controlled Group" - means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Company or any Subsidiary, are treated
as a single employer under Section 414 of the Code.
"Date of Issuance" - means the date on which all conditions
precedent under Article III hereof have been met or waived by the Bank and on
which the Letter of Credit is issued.
"Environmental Laws" - means any and all federal, state, local and
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, plans, injunctions, permits, concessions, grants,
franchises, licenses, agreements and other governmental restrictions relating
to the environment, the effect of the environment on human health or to
emissions, discharges or releases of pollutants, contaminants, Hazardous
Substances or wastes into the environment including, without limitation,
ambient air, surface water, ground water, or land, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof, in each case as in effect
and applicable to the Company and its Subsidiaries at the time the
representation in Section 4.1(m) is made or deemed made or compliance with
Section 5.5 is determined.
"ERISA" - shall mean the U.S. Employee Retirement Income Security
Act of 1974, as amended from time to time, and the rules and regulations
issued thereunder, as from time to time in effect.
"Eurodollar Loan" - means a Liquidity Advance which is accruing
interest based on LIBOR plus the LIBOR Margin.
"Event of Default" - shall have the meaning specified in Section
6.1.
"Governmental Body" - shall mean any government, foreign, or
domestic, any court or any foreign or domestic, federal, state, municipal or
other governmental department, commission, board, bureau, agency, public
authority or instrumentality.
"Hazardous Substances" - means any toxic, radioactive, caustic or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics.
"Indenture" - means that certain Indenture of Trust, dated as of
October 1, 1995, between the Issuer and the Trustee, relating to the Bonds, as
amended or supplemented in accordance with the terms hereof and thereof.
<PAGE>
"Installment Payment Agreement" - means the Installment Payment
Agreement, dated as of October 1, 1995, between the Issuer and the Company,
relating to the Bonds, as amended or supplemented in accordance with the terms
thereof.
"Interest Period" - means with respect to each Eurodollar Loan, the
period commencing on the date of such Eurodollar Loan and ending one, two,
three or six months thereafter, as selected by the Company provided, however,
that:
(i) any Interest Period which would otherwise end on a day
which is not a Business Day shall be extended to the next succeeding
Business Day unless with respect to a Eurodollar Loan such Business
Day falls in another calendar month, in which case such Interest
Period shall end on the next preceding Business Day; and
(ii) any Interest Period which begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.
"Issuer" - means the Guadalupe-Blanco River Authority, a
governmental agency and body politic and corporate organized and validly
existing under the laws of the State of Texas.
"Letter of Credit" - means the irrevocable transferable letter of
credit issued by the Bank for the account of the Company in favor of the
Trustee for the benefit of the owners from time to time of the Bonds pursuant
to this Agreement in the form of Appendix I with appropriate insertions, as
amended.
"Letter of Credit Fee" - means any fee payable by the Company under
Section 2.8.
"Level I Status" - means the S&P Rating is BBB+ or higher and the
Moody's Rating is Baa1 or higher.
"Level II Status" - means Level I Status does not exist, but the S&P
Rating is BBB or higher and the Moody's Rating is Baa2 or higher.
"Level III Status" - means neither Level I Status or Level II Status
exists, but the S&P Rating is BBB- or higher and the Moody's Rating is Baa3 or
higher.
"Level IV Status" - means none of Level I Status, Level II Status
and Level III Status exists.
"LIBOR" means, for an Interest Period for a Eurodollar Loan, the
rate of interest per annum, as determined by the Bank (rounded upwards, if
necessary, to the nearest whole multiple of 1/16 of 1%), at which deposits of
U.S. dollars in immediately available and freely transferable funds are
offered by the Bank at 11:00 a.m. (London, England time) two Business Days
before the commencement of such Interest Period to major banks in the London
interbank market for a period equal to such Interest Period and in an amount
equal or comparable to the principal amount of such Eurodollar Loan.
"LIBOR Margin" - means, for the first 3 months any Liquidity Advance
bears interest based on LIBOR, 0.375% per annum and thereafter 0.50% per
annum.
"Lien" - means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind, or any other
type of preferential arrangement that has the practical effect of creating a
security interest, in respect of such asset. For the purposes of this
Agreement, the Company or any Subsidiary shall be deemed to own subject to a
Lien any asset which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to such asset.
"Liquidity Advance" - shall have the meaning specified in Section
2.3.
"Liquidity Drawing" - means a drawing under the Letter of Credit
resulting from the presentation of a certificate in the form of "Exhibit E" to
the Letter of Credit.
"Material Adverse Effect" - means a material adverse effect on the
financial condition, business or operations of the Company.
"Material Subsidiary" - means any Subsidiary of the Company that has
assets that constitute more than 10% of the consolidated assets of the Company
and its Subsidiaries as shown on the most recent financial statements
delivered to the Bank pursuant to Section 5.1 hereof.
"Moody's Rating" - means the rating assigned by Moody's Investors
Service, Inc. and any successor thereto that is a nationally recognized rating
agency to the outstanding senior unsecured non-credit enhanced long-term
indebtedness of the Company (or if neither Moody's Investors Service, Inc. nor
any such successor shall be in the business of rating long-term indebtedness,
a nationally recognized rating agency in the U.S. as mutually agreed between
the Bank and the Company). Any reference in this Agreement to any specific
rating is a reference to such rating as currently defined by Moody's Investors
Service, Inc. (or such a successor) and shall be deemed to refer to the
equivalent rating if such rating system changes.
"Multiemployer Plan" - means a plan described in Section 4001(a)(3)
of ERISA to which the Company or any member of the Controlled Group
contributed or has contributed during the last five years of such plan.
"Obligations" - means the Liquidity Advances, fees relating to the Letter of
Credit, any and all obligations of the Company to reimburse the Bank for any
drawings under the Letter of Credit, and all other obligations of the Company
to the Bank arising under or in relation to this Agreement.
"Official Statement" - means the Official Statement relating to the
Bonds, dated November 2, 1995.
"Original Stated Amount" - shall have the meaning specified in
Section 2.1.
<PAGE>
"Outstanding," "Bonds Outstanding" or "Bonds then Outstanding" -
shall have the same meaning herein as in the Indenture.
"Parent" - means Central and South West Corporation, a Delaware
corporation.
"PBGC" - shall mean the Pension Benefit Guaranty Corporation or any
Governmental Body succeeding to the functions thereof.
"Person" - means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality thereof.
"Plan" - means, with respect to the Company and each Subsidiary
thereof at any time, an employee pension benefit plan which is covered by
Title IV of ERISA or subject to the minimum funding standards under Section
412 of the Code and either (i) is or has been maintained or contributed to by
a member of the Controlled Group for employees of any member of the Controlled
Group or (ii) has at any time within the preceding five years been maintained,
or contributed to, by any Person which was at such time a member of the
Controlled Group for employees of any Person which was at such time a member
of the Controlled Group.
"Potential Default" - means an event which but for the lapse of time
or the giving of notice, or both, would constitute an Event of Default.
"Projects" - shall have the meaning set forth in the Installment
Payment Agreement.
"Regulation U" - means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"Related Documents" - means the Bond Documents, this Agreement, the
Letter of Credit and any other agreement or instrument relating thereto.
"Remarketing Agent" - means Morgan Stanley & Co. Incorporated, as
remarketing agent under the Indenture, and any successor remarketing agent.
"Reportable Event" - means any of the events set forth in Section
4043(b) of ERISA.
"S&P Rating" - means the rating assigned by Standard & Poor's
Ratings Group, a division of The McGraw-Hill Companies, Inc. and any successor
thereto that is a nationally recognized rating agency to the outstanding
senior unsecured non-credit enhanced long-term indebtedness of the Company
(or, if neither such division nor any successor shall be in the business of
rating long-term indebtedness, a nationally recognized rating agency in the
U.S. as mutually agreed between the Bank and the Company). Any reference in
this Agreement to any specific rating is a reference to such rating as
currently defined by Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc. (or such a successor) and shall be deemed to refer
to the equivalent rating if such rating system changes.
"State" - means the State of Texas.
"Stated Expiration Date" - means November 2, 2000, or such later
date to which the Stated Expiration Date may be extended from time to time
pursuant to the Letter of Credit and Section 2.15.
"Subsidiary" shall mean any corporation organized under the laws of
one of the States of the United States of America of which more than 50% of
the voting stock (except directors qualifying shares) is owned or controlled,
directly or indirectly, by the Company and/or one or more of its Subsidiaries.
"Termination Date" - shall have the meaning set forth in the Letter
of Credit.
"U.S." - means the United States of America.
The foregoing definitions shall be equally applicable to both the singular and
plural forms of the defined terms. Any capitalized terms used herein which
are not specifically defined herein shall have the same meaning herein as in
the Indenture. All references in this Agreement to times of day shall be
references to Houston, Texas time unless otherwise expressly provided herein.
.c.ARTICLE II
LETTER OF CREDIT
.c2.Section 2.1. Issuance of Letter of Credit;. The Bank agrees to
issue on the Date of Issuance, upon the terms, subject to the conditions and
relying upon the representations and warranties set forth in this Agreement,
the Letter of Credit substantially in the form of Appendix I. The Letter of
Credit shall be in the Original Stated Amount of $43,411,550 (the "Original
Stated Amount"), which is the sum of (i) the principal amount of the Bonds on
the Date of Issuance, plus (ii) interest thereon at the Cap Interest Rate for
a period of One Hundred Eighty-Five (185) days.
.c2.Section 2.2. Letter of Credit Drawings;. The Trustee is
authorized to make drawings under the Letter of Credit in accordance with the
terms thereof. The Company hereby directs the Bank to make payments under the
Letter of Credit in the manner therein provided. The Company hereby
irrevocably approves reductions and reinstatements of the Available Amount as
provided in the Letter of Credit.
.c2.'Section 2.3. Reimbursement of Liquidity Drawings under the
Letter of Credit; Interest';. If the conditions precedent contained in
Section 3.2 are satisfied at the time of payment by the Bank of any Liquidity
Drawing, such Liquidity Drawing made under the Letter of Credit shall
constitute an advance ("Liquidity Advance") to the Company. The Company
promises to repay to the Bank each Liquidity Advance on the earliest of (i)
the Termination Date, (ii) the date on which the related Bank Bonds are
redeemed or canceled pursuant to the Indenture, (iii) the date on which the
related Bank Bonds are remarketed pursuant to the Indenture, (iv) the date on
which the Letter of Credit is replaced by an Alternate Letter of Credit in
accordance with the terms of the Indenture or otherwise terminated pursuant to
Section 10.05 of the Indenture, or (v) the date which is one year from the
date of payment by the Bank of the related Liquidity Drawing. The Company
also promises to pay to the Bank interest on the unpaid principal amount of
each Liquidity Advance from the date such Liquidity Advance is made until it
is paid in full as provided herein, at a rate per annum equal to the Base
Rate, except to the extent the Company has timely elected as provided in
Section 2.5 hereof. Notwithstanding anything herein to the contrary no
Liquidity Advance which has been outstanding longer than 6 months may be a
Eurodollar Loan. The Company may prepay Liquidity Advances at any time
without premium or penalty (but subject, in the case of Eurodollar Loans, to
Section 2.16 hereof).
.c2.Section 2.4. Reimbursement of Drawings Other than Liquidity
Drawings under the Letter of Credit;. The Company agrees to reimburse the
Bank for the full amount of any drawing made under the Letter of Credit, other
than a Liquidity Drawing creating a Liquidity Advance, on the date of each
such drawing. If the Company does not make such reimbursement on such date,
such reimbursement obligation shall bear interest at the rate per annum
specified in Section 2.13.
.c2.Section 2.5. Conversion and Continuation Options;. (a) Subject
to Section 2.16, the Company may elect to convert Eurodollar Loans to Base
Rate Loans at any time and from time to time by giving notice thereof to the
Bank. The Company may elect from time to time to convert Base Rate Loans to
Eurodollar Loans by giving the Bank at least three Business Days' prior
irrevocable notice of such election and specifying the applicable Interest
Period. All or any part of outstanding Eurodollar Loans and Base Rate Loans
may be converted as provided herein, provided that (i) no Base Rate Loan may
be converted into a Eurodollar Loan when any Potential Default or Event of
Default has occurred and is continuing and (ii) no Base Rate Loan may be
converted into a Eurodollar Loan after the date that is one month prior to the
Stated Expiration Date.
(b) Subject to the terms and conditions hereof, any Eurodollar Loan
may be continued as such upon the expiration of the then current Interest
Period with respect thereto by the Company giving the Bank at least three
Business Days' prior irrevocable notice of such election and specifying the
applicable Interest Period, provided that no Eurodollar Loan may be continued
as such (i) when any Potential Default or Event of Default has occurred and is
continuing or (ii) after the date that is one month prior to the Stated
Expiration Date and provided, further, that if the Company shall fail to give
such notice such Eurodollar Loans shall be automatically converted to Base
Rate Loans on the last day of such then expiring Interest Period.
(c) No Eurodollar Loan may be created or continued if the Liquidity
Advance relating thereto is less than $250,000.
.c2.Section 2.6. Interest Rates and Payment Dates;. (a) Each
Eurodollar Loan shall bear interest for each day during each Interest Period
with respect thereto at a rate per annum equal to LIBOR determined for such
day plus the LIBOR Margin payable on the last day of its Interest Period and,
if earlier, on the date the related Liquidity Advance is payable as provided
in Section 2.3 hereof.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus 2% payable in arrears on the last day of each
calendar quarter and, if earlier, on the date the related Liquidity Advance is
payable as provided in Section 2.3 hereof and on the date such Base Rate Loan
is converted to a Eurodollar Loan as provided in Section 2.5(a) hereof.
<PAGE>
.c2.Section 2.7. Payments;. (a)To the extent the Bank actually
receives payment in respect of principal or interest on any Bank Bond, the
Liquidity Advance made in connection with the purchase of such Bank Bond shall
be deemed to have been reduced pro tanto, with the Bank crediting any interest
payment on the Bank Bond received by it to the payment of interest on the
related Liquidity Advance (and, after payment of all interest accrued on the
related Liquidity Advance, to the payment of principal of the related
Liquidity Advance) and crediting any principal repayment received to the
principal thereof (and, after payment of all principal of the related
Liquidity Advance, to the payment of interest accrued on the related Liquidity
Advance). Prior to the occurrence of an Event of Default the Bank agrees that
any amount actually received by it in respect of principal or interest on such
Bank Bonds and not credited to the payment of principal of or interest on the
related Liquidity Advances as provided in the preceding sentence shall be paid
promptly to the Company. After the occurrence and during the continuance of
an Event of Default any such excess shall be held as collateral for the
Obligations pursuant to the terms of Section 6.2(a). Any such payment of a
Liquidity Advance will be subject, in the case of Eurodollar Loans, to Section
2.16 hereof.
(b) The Bank agrees that upon any payment of principal by the
Company on a Liquidity Advance (other than a payment deemed made pursuant to
Section 2.7(a) above) the Bank will promptly thereafter direct the Trustee to
transfer to the Company a corresponding amount of Bank Bonds provided that the
Bank shall only be obligated to transfer Bank Bonds in an amount equal to
Authorized Denominations.
.c2.Section 2.8. Fees;. The Company hereby agrees to pay, or cause
to be paid, to the Bank:
(a) on the Issuance Date a non-refundable up-front issuance fee as
set forth in the letter agreement dated November 2, 1995 between the Company
and the Bank.
(b) the Company shall pay to the Bank a letter of credit fee on the
average daily Available Amount at a rate of: (i) 0.325% per annum for any day
Level I Status exists; (ii) 0.45% per annum for any day Level II Status
exists; (iii) 0.55% per annum for any day Level III Status exists, and (iv)
0.85% per annum for any day Level IV Status exists. Such fee shall be payable
in arrears on the last day of each calendar quarter commencing December 31,
1995 and on the Termination Date, unless the Letter of Credit is terminated in
whole on any earlier date, in which event the letter of credit fee for the
period to the date of such termination shall be paid on the date of such
termination. If Moody's Investors Service, Inc. (or any successor thereto
that is a nationally recognized rating agency) or Standard & Poor's Ratings
Group, a division of The McGraw-Hill Companies, Inc. (or any successor thereto
that is a nationally recognized rating agency) shall cease to be in the
business of rating long-term indebtedness and the Company and the Bank shall
not agree on a successor rating agency in the manner specified in the
definition of "Moody's Rating" or "S&P Rating," as the case may be, the Letter
of Credit Fee payable under this Section 2.8(b), until the Company and the
Bank so agree on a successor rating agency, shall be determined by reference
to the rating provided by the remaining rating agency for the first four (4)
months after the date such rating agency ceases to be in the business of
rating long-term indebtedness and thereafter (until a successor rating agency
so chosen shall have in effect a rating on the senior, unsecured non-credit
enhanced long-term indebtedness of the Company) Level IV Status shall be
deemed to exist.
(c) on the date of each drawing under the Letter of Credit, a
drawing fee of $200.
(d) on the date of each transfer of the Letter of Credit to a
successor Trustee, a transfer fee in an amount equal to the Bank's then
standard out-of-pocket fee for transfers in effect on such date.
.c2.Section 2.9. Method of Payment;. All payments to be made by
the Company under this Agreement shall be made to the Bank at ABN AMRO Bank
N.V., New York, ABA No. 026009580 for further credit to ABN AMRO Bank N.V.,
Houston Agency Account No. 651-0-010715-41, not later than 2:00 p.m., Houston,
Texas time, on the date when due and shall be made in lawful money of the
United States of America (in freely transferable U.S. dollars) and in
immediately available funds.
.c2.Section 2. 10.Lending Offices and Funding;. The Bank may, at
its option, elect to fund its Liquidity Advances hereunder at the branch,
office or affiliate specified in Section 7.13 (each a "Lending Office") or at
such other of its branches, offices or affiliates as it may from time to time
elect and designate in a written notice to the Company. Notwithstanding any
other provision of this Agreement, the Bank shall be entitled to fund and
maintain its funding of all or any part of the Liquidity Advances in any
manner it sees fit, it being understood, however, that for the purposes of
this Agreement all determinations hereunder shall be made as if each Bank had
actually funded and maintained each Eurodollar Loan through the purchase of
deposits in the eurodollar interbank market having a maturity corresponding to
such Eurodollar Loan's Interest Period and bearing an interest rate equal to
LIBOR for such Interest Period.
.c2.Section 2.11. Computation of Interest;. All computations of
interest and fees payable by the Company under this Agreement shall be made on
the basis of a three hundred sixty (360) day year and actual days elapsed
except where interest is computed using the Base Rate in which case a year of
365 or 366 days and actual days elapsed shall be used. Interest shall accrue
during each period during which interest is computed from and including the
first day thereof to but excluding the last day thereof.
.c2.Section 2.12. Payment Due on Non-Business Day to be made on
Next Business Day;. If any sum becomes payable pursuant to this Agreement on
a day which is not a Business Day, the date for payment thereof shall be
extended, without penalty, to the next succeeding Business Day, and such
extended time shall be included in the computation of interest and fees. If
the date for any payment of principal is extended by operation of law or
otherwise, interest shall be payable for such extended time.
.c2.Section 2.13. Late Payments;. If the principal amount of any
Obligation is not paid when due, such Obligation shall bear interest (computed
on the basis of a 365 or 366 day year and actual days elapsed) from the due
date thereof until paid in full at a rate per annum equal to the Base Rate
from time to time in effect plus two percent (2%) payable on demand.
.c2.Section 2.14. Source of Funds;. All payments made by the Bank
pursuant to the Letter of Credit shall be made from funds of the Bank and not
from funds obtained from any other Person.
.c2.Section 2.15. Extension of Stated Expiration Date;. Within 90
days prior to each anniversary date of the Date of issuance (or at such other
times as the Bank and Company may mutually agree), the Company may request the
Bank to extend the then current Stated Expiration Date for a period of not
less than one additional year. If the Bank, in its sole discretion, elects to
extend the Stated Expiration Date then in effect, it shall deliver to the
Trustee a Notice of Amendment in the form of Exhibit K to the Letter of Credit
(herein referred to as a "Notice of Extension") designating the date to which
the Stated Expiration Date is being extended. Such extension of the Stated
Expiration Date shall be effective, after receipt of such notice, on the
Business Day following the date of delivery of such Notice of Extension, and
thereafter all references in this Agreement to the Stated Expiration Date
shall be deemed to be references to the date designated as such in the most
recent Notice of Extension delivered to the Trustee. Any date to which the
Stated Expiration Date has been extended in accordance with this Section 2.15
may be extended in like manner. Failure of the Bank to consent to such
extension request as herein provided within thirty (30) days of a request by
the Company to extend the then applicable Stated Expiration Date shall
constitute an election by the Bank not to extend the Stated Expiration Date.
No later than 120 days prior to the then current Stated Expiration Date the
Company shall notify the Bank as to whether it will provide the Trustee with
an Alternate Letter of Credit or no credit enhancement.
.c2.Section 2.16. Funding Losses;. If the Company makes any
payment or prepayment of principal with respect to any Eurodollar Loan on any
day other than the last day of an Interest Period applicable to such
Eurodollar Loan, or if the Company fails to borrow any Eurodollar Loan after
notice has been given to the Bank in accordance with Section 2.5, the Company
shall reimburse the Bank within fifteen (15) days after demand for any
resulting loss or expense incurred by it (or by any existing or prospective
participant in the related Eurodollar Loan) including (without limitation) any
loss incurred in obtaining, liquidating or employing deposits from third
parties, but excluding loss of margin for the period after such payment or
conversion or failure to borrow, convert or prepay, provided, however, that
the Bank shall have delivered to the Company a certificate as to the amount of
such loss or expense, which certificate shall be conclusive in the absence of
manifest error.
.c2.Section 2.17. Basis for Determining Interest Rate Unavailable;.
If on or prior to the first day of any Interest Period deposits in dollars (in
the applicable amounts) are not being offered to the Bank in the London
interbank market for such Interest Period, the Bank shall forthwith give
notice thereof to the Company, whereupon the obligation of the Bank to make a
Eurodollar Loan shall be suspended until the Bank notifies the Company that
the circumstances giving rise to such suspension no longer exist. The Bank
shall instead make such Liquidity Advance as a Base Rate Loan.
.c2.Section 2.18. Illegality;. If after the Date of Issuance the
adoption of any applicable law, rule or regulation, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation
or administration thereof, or compliance by the Bank with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency shall make it unlawful or impossible for the
Bank to make, maintain or fund its Eurodollar Loans, the Bank shall forthwith
so notify the Company, whereupon the Bank's obligation to make Eurodollar
Loans shall be suspended. If the Bank shall determine that it may not
lawfully continue to maintain and fund any of its outstanding Eurodollar Loans
to maturity and shall so specify in such notice, the Company shall immediately
prepay in full the then outstanding principal amount of each such Eurodollar
Loan, together with accrued interest thereon. Concurrently with prepaying
each such Eurodollar Loan, the Company may borrow a Base Rate Loan in an equal
principal amount for a period coincident with the remaining term of the
Interest Period applicable to such Eurodollar Loan, and the Bank shall make
such Base Rate Loan.
.c2.Section 2.19. Maximum Interest Rate;. Notwithstanding anything
in this Agreement to the contrary (including, without limitation, Sections 2.6
and 2.13), the maximum rate of interest payable by the Company under this
Agreement shall not exceed the Maximum Rate. For purposes hereof, "Maximum
Rate" means the maximum rate of nonusurious interest permitted from day to day
by applicable law, including as to Article 5069-1.04, Vernon's Texas Civil
Statutes (and as the same may be incorporated by reference in other Texas
statutes), but otherwise without limitation, that rate based upon the
"indicated rate ceiling" and calculated after taking into account any and all
relevant fees, payments, and other charges contracted for, charged or received
in connection with this Agreement which are deemed to be interest under
applicable law. On each day, if any, that the interest rate (the "Stated
Rate") called for under this Agreement exceeds the Maximum Rate, the rate at
which interest shall accrue shall automatically be fixed by operation of this
sentence at the Maximum Rate for that day, and shall remain fixed at the
Maximum Rate for each day thereafter until the total amount of interest
accrued equals the total amount of interest which would have accrued if there
were no such Maximum Rate imposed by this Section 2.19.
.c2.Section 2.20. Bank Rating;. The Bank agrees to use its best
efforts to notify the Company of any downgrade in the rating assigned to the
unsecured long-term indebtedness of the Bank by either Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies, Inc. promptly after the Bank has knowledge thereof,
provided that failure of the Bank to provide such notice shall not result in
any liability to the Bank.
.c.ARTICLE III
CONDITIONS PRECEDENT
.c2.Section 3.1. Conditions Precedent to Issuance of Letter of
Credit;. As conditions precedent to the obligation of the Bank to issue the
Letter of Credit (a) the Company shall provide to the Bank on or before the
Date of Issuance, in form and substance satisfactory to the Bank and its
counsel:
(i) a written opinion of counsel to the Company dated the Date
of Issuance, in form and substance satisfactory to the Bank's
counsel;
(ii) the written opinion or opinions of McCall, Parkhurst &
Horton L.L.P., bond counsel, dated the Date of Issuance, in form and
substance satisfactory to the Bank's counsel;
(iii) a certificate signed by an authorized officer of the
Company, dated the Date of Issuance and stating that:
(1)the representations and warranties of the Company contained in Article IV
are correct on and as of the Date of Issuance as though made on such date; and
(2)none of the Events of Default has occurred and is continuing, or would
result from the issuance of the Letter of Credit or the execution and delivery
of this Agreement, and no event has occurred and is continuing which would
constitute an Event of Default or a Potential Default;
(iv)a copy of resolutions of the board of directors (or a committee thereof)
of the Company certified as of the Date of Issuance by the Secretary or an
Assistant Secretary of the Company, authorizing, among other things, the
execution, delivery and performance by the Company of this Agreement and
authorizing the Company to obtain the issuance of the Letter of Credit;
(v)certified copies of the Company's by-laws and articles of incorporation;
(vi)a certificate of the Secretary or any Assistant Secretary of the Company
certifying the name and true signatures of the officers of the Company
authorized to sign this Agreement;
(vii) evidence of the status of the Company as a duly
organized and validly existing corporation under the laws of the
State of Texas;
(viii) evidence that the Remarketing Agent has acknowledged
and accepted in writing its appointment as Remarketing Agent under
the Indenture and its duties and obligations thereunder;
(ix) true and correct copies of the Related Documents;
(x) reliance letters with respect to the opinion delivered in
connection with (ii) above;
(xi) a copy of the order of the Commission referred to in
Section 4.1(b);
(xii) the receipt of such other documents, certificates and
opinions as the Bank or its counsel may reasonably request;
(b) no law, regulation or ruling of the United States or any
political subdivision or authority therein or thereof shall be in effect or
shall have occurred, the effect of which would be to prevent the Bank from
fulfilling its obligations under this Agreement; and
(c) all legal requirements provided herein incident to the
execution, delivery and performance of this Agreement and the Related
Documents and the transaction contemplated hereby and thereby, shall be
reasonably satisfactory to the Bank and its counsel.
<PAGE>
.c2.Section 3.2. Conditions Precedent to Liquidity Advances;. Upon
payment by the Bank of a Liquidity Drawing under the Letter of Credit, such
Liquidity Drawing shall constitute a Liquidity Advance to the Company only if
on the date of payment of such drawing by the Bank the following statements
shall be true:
(a) the representations and warranties of the Company contained in
Article IV are correct in all material respects on and as of the date of such
payment as though made on and as of such date; and
(b) no event has occurred and is continuing, or would result from
such payment, which constitutes a Potential Default or Event of Default.
Unless the Company shall have previously advised the Bank in writing that one
or both of the above statements is no longer true, the Company shall be deemed
to have represented and warranted on the date of such payment that both of the
above statements are true and correct.
.c.ARTICLE IV
REPRESENTATIONS AND WARRANTIES
.c2.Section 4.1. Company's Representations;. In order to induce
the Bank to enter into this Agreement, the Company represents and warrants as
of the Date of Issuance that:
(a) The Company is duly incorporated, validly existing and in good
standing under the laws of the State of Texas, has all requisite power and
authority to own its property and to carry on its business as now conducted,
and is in good standing and authorized to do business in each jurisdiction in
which the character of the property owned or leased by it therein or the
transaction of its business makes such qualification necessary and where
failure to so qualify would (either individually or in the aggregate) have a
Material Adverse Effect.
(b) The Company has full corporate power and authority to enter
into, execute, deliver and carry out its obligations under this Agreement and
the Related Documents to which the Company is a party, and to incur the
obligations provided for herein and therein, all of which have been duly
authorized by all proper and necessary corporate action and are in full
compliance with the Company's articles of incorporation and by-laws. The
Commission has issued an order under the Public Utility Holding Company Act of
1935, as amended, authorizing the Company, among other things, to enter into
this Agreement and each of the Related Documents to which the Company is a
party, and such order is in full force and effect in the form issued. No
other consent or approval of, or exemption by, or notice to or filing with any
Person is required in respect of the Company to authorize the execution,
delivery and performance of, or as a condition to the validity or
enforceability of, this Agreement, the Related Documents to which the Company
is a party or any other agreement of the Company delivered in connection
herewith or therewith, except those which have been obtained and except those
which are required under the securities or blue sky laws of any jurisdiction.
(c) The officer of the Company who has executed this Agreement, who
has requested the issuance of the Letter of Credit and who has executed or
will execute the Related Documents to which the Company is a party and all
other documents, instruments and agreements required to be delivered or
contemplated hereunder or thereunder was and is properly in office and was and
is duly authorized to execute the same.
(d) This Agreement and the Related Documents to which the Company
is a party each constitutes the valid and legally binding obligations of the
Company enforceable in accordance with their respective terms except that the
enforceability thereof may be limited by applicable bankruptcy, insolvency, or
other laws affecting the enforcement of creditors' rights generally and by
equitable principles.
(e) Except as disclosed in the Company's Annual Report on Form 10-K
for the year ended December 31, 1994 and the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, there are no actions, suits or
arbitration proceedings pending or, to the knowledge of the Company,
threatened against the Company, at law or in equity, before any Governmental
Body which individually or in the aggregate, if adversely determined, would
materially and adversely affect the financial condition of the Company or
materially impair the ability of the Company to perform its obligations under
this Agreement, the Related Documents to which the Company is a party, or any
other document, instrument or agreement required to be delivered or
contemplated hereunder or thereunder. There are no proceedings pending or, to
the knowledge of the Company, threatened against the Company which call into
question the validity or enforceability of this Agreement, the Related
Documents to which the Company is a party or any agreement of the Company
delivered in connection herewith or therewith.
(f) The execution, delivery and performance by the Company of this
Agreement and the Related Documents to which the Company is a party (i) do not
violate any provision of the articles of incorporation or by-laws of the
Company, (ii) do not violate any order, decree or judgment, or any provision
of any statute, rule or regulation applicable to or binding on the Company or
affecting any of its property, (iii) do not violate or conflict with, result
in a breach of or constitute (with notice or lapse of time, or both) a default
under any shareholder agreement or stock preference agreement or under any
material mortgage, indenture, contract or other agreement to which the Company
is a party or by which any of its property is bound and (iv) do not result in
the creation or imposition of any lien upon any material property of the
Company.
(g) The Company has filed all material United States tax returns
and all other material tax returns, if any, which are required to be filed by
the Company, and has paid all taxes due, if any, as shown on said returns, or
pursuant to any assessment received by the Company, except such taxes, if any,
as are being contested in good faith and by appropriate proceedings.
(h) The consolidated financial statements of the Company and its
consolidated subsidiaries as of December 31, 1993 and 1994 contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994 a
copy of which has been furnished to the Bank, present fairly the consolidated
financial position of the Company and its Consolidated Subsidiaries as of
December 31, 1993 and December 31 1994 and the results of their operations for
the two years ended December 31, 1994 in conformity with generally accepted
accounting principles consistently applied. The consolidated financial
statements contained in the Company's Quarterly Reports on Form 10-Q for the
quarter ended June 30, 1995, copies of which have been furnished to the Bank,
present fairly the consolidated financial position of the Company and its
Consolidated Subsidiaries as of the dates thereof and have been prepared in
conformity with generally accepted accounting principles applied on the basis
consistent with that used in the audited consolidated financial statements for
the year ended December 31, 1994 (subject to normal year-end and audit
adjustments). The Company has no contingent liabilities which are required by
generally accepted accounting principles to be shown on the financial
statements of the Company other than as indicated on said financial statements
and since December 31, 1994, there have been no material adverse changes in
the financial condition or operations of the Company.
(i) To the best knowledge of the Company, after appropriate
investigation, the Company is not in default with respect to any judgment,
order, writ, injunction, decree or decision of any Governmental Body which
default would have a Material Adverse Effect.
(j) The Company is not engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying any margin stock within the meaning of Regulation U.
No part of the proceeds of the Bonds or any Liquidity Advance will be used,
directly or indirectly, by the Company for a purpose which violates any law,
rule, or regulation of any Governmental Body, including, without limitation,
the provisions of Regulation U or X of the Board of Governors of the Federal
Reserve System, as amended.
(k) No Potential Default or Event of Default has occurred and is
continuing or would result from the obligations incurred by the Company
hereunder or by the actions contemplated hereby.
(l) The representations and warranties of the Company in the
Related Documents to which it is a party are true and correct in every
material respect, and the Company has furnished the Bank a true and correct
copy of all the Related Documents as in effect on the date hereof.
(m) In the ordinary course of its business, the Company conducts an
ongoing review of the effect of Environmental Laws on the business, operations
and properties of the Company and its Subsidiaries, in the course of which it
identifies and evaluates liabilities and costs arising under or imposed by
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up or closure of properties presently or
previously owned, any capital or operating expenditures required to achieve or
maintain compliance with environmental protection standards imposed by
Environmental Law, any related constraints on operating activities, including
any periodic or permanent shutdown of any facility or reduction in the level
of or change in the nature of operations conducted thereat, any costs or
liabilities in connection with off-site disposal of wastes or Hazardous
Substances, and any actual or potential liabilities to third parties,
including employees). On the basis of this review, the Company has no reason
to conclude that such liabilities and costs arising under, including the costs
of compliance with, Environmental Laws, are likely to have a Material Adverse
Effect.
(n) No Plan has been terminated nor have any proceedings been
instituted to terminate any Plan; the Company has not withdrawn from any
Multiemployer Plan in a complete or partial withdrawal nor has a condition
occurred which if continued would result in a complete or partial withdrawal;
the Company has not incurred any withdrawal liability under Section 4201 or
4204 of ERISA with respect to any Multiemployer Plan; the Company has not
incurred any liability to PBGC other than for required insurance premiums
which have been paid when due; no Reportable Event with respect to any Plan
has occurred; and no Plan has an accumulated funding deficiency under Section
302 of ERISA or Section 412 of the Code. Each employee benefit plan as
defined in Section 3(3) of ERISA maintained by the Company is in compliance
with ERISA; except where the failure so to comply would not have a Material
Adverse Effect.
.c.ARTICLE V
COVENANTS
The Company covenants and agrees with the Bank that it will do the
following so long as any amounts may be drawn under the Letter of Credit, and
thereafter, so long as any amounts remain outstanding or Obligations remain
unfulfilled under this Agreement, unless the Bank shall otherwise consent in
writing:
.c2.Section 5.1. Information;. The Company will deliver to the
Bank:
(a) as soon as available and in any event within 120 days after the
end of each fiscal year of the Company, the annual report of the Company and
its Subsidiaries filed with the Commission on Form 10-K for such year;
(b) as soon as available and in any event within 60 days after the
end of each of the first three quarters of each fiscal year of the Company,
the quarterly report of the Company and its Subsidiaries filed with the
Commission on Form 10-Q for such quarter;
(c) within five days after any officer of the Company obtains
knowledge of any Potential Default or Event of Default, if such Potential
Default or Event of Default is then continuing, a certificate of the treasurer
or the controller of the Company setting forth the details thereof and the
action which the Company is taking or proposes to take with respect thereto;
(d) promptly upon the mailing thereof to the preferred shareholders
of the Company, copies of all financial statements, reports and proxy
statements so mailed;
(e) promptly upon the filing thereof, copies of all registration
statements (other than the exhibits thereto and any registration statements on
Form S-8 or its equivalent) and reports on Form 8-K (or its equivalent) which
the Parent or Company shall have filed with the Commission;
(f) if and when any member of the Controlled Group (i) gives notice
to the PBGC of any "Reportable Event" with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given notice of any such
Reportable Event, a copy of the notice of such Reportable Event given to the
PBGC; (ii) receives notice of complete or partial withdrawal liability under
Section 4201 or 4204 of ERISA or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated under Section 4241, 4245
or 4041A of ERISA, a copy of such notice; (iii) receives notice from the PBGC
under Title IV of ERISA of an intent to terminate, impose liability (other
than for premiums under Section 4007 of ERISA) in respect of, or appoint a
trustee to administer any Plan, a copy of such notice; (iv) applies for a
waiver of the minimum funding standard under Section 412 of the Code, a copy
of such application; (v) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information filed
with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to
Section 4063 of ERISA, a copy of such notice; or (vii) fails to make any
payment or contribution to any Plan or Multiemployer Plan or makes any
amendment to any Plan which has resulted or which may reasonably be expected
to result in the imposition of a lien or the posting of a bond or other
security under Section 401(a)(29) or 412(n) of the Code, or Section 302(f) or
307 of ERISA, a certificate of the chief financial officer or the chief
accounting officer of the Company setting forth details as to such occurrence
and action, if any, which the Company or applicable member of the Controlled
Group is required or proposes to take;
(g) from time to time such additional information regarding the
financial position or business of the Company and its Subsidiaries as the Bank
may reasonably request.
(h) (i) copies of each of the notices, reports and certificates
which are required to be given to the Trustee by the Company under any of the
Bond Documents and (ii) upon request of the Bank, copies of each of the
notices, reports and certificates which are required to be given to the
holders of the Bonds by the Trustee under the Indenture to the extent (A)
received by the Company and (B) not delivered to the Bank by the Trustee; and
(i)as promptly as possible and in any event within ten Business Days after the
Company has knowledge thereof, notice of any downgrade in the S&P Rating or
the Moody's Rating.
.c2.Section 5.2. Payment of Obligations;. The Company will pay and
discharge, and will cause each Subsidiary to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, except
where the same may be contested in good faith by appropriate proceedings, and
will maintain, and will cause each Subsidiary to maintain, in accordance with
and to the extent required by generally accepted accounting principles,
appropriate reserves for the accrual of any of the same.
.c2.'Section 5.3.Maintenance of Property; Insurance';. (a) The
Company will keep, and will cause each of its Subsidiaries to keep, all
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted.
(b) The Company will, and will cause each of its Subsidiaries to,
maintain (either in the name of the Company or in such Subsidiary's own name)
with financially sound and responsible insurance companies, insurance on all
their respective properties in at least such amounts, against at least such
risks and with no greater than such risk retention as are customarily
maintained, insured against or retained, as the case may be, in the same
general area by companies of established repute engaged in the same or a
similar business; and will furnish to the Bank, upon reasonable request from
the Bank, information presented in reasonable detail as to the insurance so
carried.
.c2.Section 5.4. Conduct of Business and Maintenance of Existence;.
The Company will continue, and will cause each Material Subsidiary to
continue, to engage in business of the same general type as now conducted by
the Company and its Subsidiaries, and will preserve, renew and keep in full
force and effect, and will cause each Material Subsidiary to preserve, renew
and keep in full force and effect their respective corporate existence and
their respective rights, privileges and franchises necessary or desirable in
the normal conduct of business; provided that neither the Company not any
Material Subsidiary shall be required to preserve any such right, privilege or
franchise if the Company's or such Subsidiary's Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct
of the business of the Company or such Subsidiary; and provided further that
nothing in this Section 5.4 shall prohibit (i) any transaction expressly
permitted under Section 5.9, (ii) the merger of a Subsidiary into the Company
or the merger or consolidation of a Subsidiary with or into another Person if
the corporation surviving such consolidation or merger is a Subsidiary and if,
in each case, after giving effect thereto, no Event of Default shall have
occurred and be continuing, (iii) the transfer of assets, rights, privileges,
licenses, franchises or businesses from one Subsidiary to another Subsidiary
or (iv) the termination of the corporate existence of any Subsidiary if the
Company in good faith determines that such termination is in the best interest
of the Company and is not materially disadvantageous to the Bank.
.c2.Section 5.5. Compliance with Laws;. The Company will comply,
and cause each Subsidiary to comply, in all material respects with all
applicable laws, ordinances, rules, regulations, and requirements of
governmental authorities (including, without limitation, Environmental Laws
and ERISA and the rules and regulations thereunder) except where the necessity
or fact of compliance therewith is contested in good faith by appropriate
proceedings.
.c2.Section 5.6. Inspection of Property, Books and Records;. The
Company will keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries shall be made of
all dealings and transactions in relation to its business and activities; and
will permit, and will cause each Subsidiary to permit, representatives of the
Bank at the Bank's expense to visit and inspect any of their respective
properties, to examine and make abstracts from any of their respective books
and records and to discuss their respective affairs, finances and accounts
with their respective officers, employees and independent public accountants,
all at such reasonable times and as often as may reasonably be desired.
.c2.Section 5.7. Use of Proceeds;. None of the proceeds of any
drawing under the Letter of Credit will be used, directly or indirectly, by
the Company for the purpose, whether immediate, incidental or ultimate, of
buying or carrying any "margin stock" within the meaning of Regulation U.
.c2.Section 5.8. Negative Pledge;. The Company will not create,
assume or suffer to exist any Lien on any asset now owned or hereafter
acquired by it, except: (i) Liens in existence on the date hereof and (ii)
Liens that would not result in a default under the Indenture dated November 1,
1943 between the Company and The First National Bank of Chicago and R.D.
Manella, as successor trustees, as amended by the indentures supplemental
thereto through the date hereof.
.c2.Section 5.9. Prohibition of Fundamental Changes;. The Company
shall not:
(a) enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution); or
(b) convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or a substantial portion all of
its business or property.
Notwithstanding the foregoing provisions of this Section 5.11, the
Company may merge or consolidate with any other Person if the Company is the
surviving corporation or the surviving corporation assumes the liabilities of
the Company by operation of law or otherwise.
.c2.Section 5.10. Minimum Consolidated Net Worth;. The Company
shall not permit its Consolidated Net Worth to be less than $950,000,000 at
any time.
.c2.Section 5.11. Bond Documents;. The Company will perform and
comply in all material respects all terms, covenants and conditions of each of
the Related Documents to which it is a party.
.c2.Section 5.12. Official Statement;. The Company will not refer
to the Bank in any official statement or offering memorandum (other than the
Preliminary Official Statement relating to the Bonds dated October 26, 1995 or
the Official Statement) or make any changes in reference to the Bank in any
revision of the Official Statement.
.c2.Section 5.13. Optional Redemptions;. The Company will not
permit an optional redemption or purchase for purposes of cancellation of the
Bonds; provided, however, that if the Company has deposited with the Bank or
the Trustee an amount equal to the principal amount of the Bonds to be
redeemed or purchased, the Bank shall consent to such optional redemption or
purchase to the extent of such amounts.
Article VI
.c.Article VIEvents of Default
.c2.Section 6.1. Events of Default;. If any of the following
events shall occur and be continuing, each such event shall be an "Event of
Default":
(a) any material representation or warranty made by the Company in
this Agreement or the Bond Documents or in any certificate, agreement,
instrument or statement contemplated by or made or delivered pursuant to or in
connection herewith or therewith, shall prove to have been false or misleading
in any material respect when made;
(b) any "event of default" shall have occurred under any of the
Bond Documents (as defined respectively therein);
(c) default in payment by the Company of (i) any Obligations (other
than interest or any Letter of Credit Fee) required to be paid or reimbursed
under this Agreement to the Bank when and as the same shall become due and
payable as herein provided or (ii) any interest or Letter of Credit Fee within
5 days after the same is due;
(d) default in any material respect in the due observance or
performance by the Company of any covenant set forth in Section 5.8, 5.9, 5.10
or 5.13;
(e) default in any material respect in the due observance or
performance by the Company of any other term, covenant or agreement set forth
in this Agreement and such default has not been remedied within thirty (30)
days after receiving notice from the Bank;
(f) any material provision of this Agreement, or any of the Bond
Documents shall cease to be valid and binding, or the Company or any
governmental authority shall contest the validity or binding effect of any
such provision, or the Company, or any agent or trustee on behalf of the
Company, shall deny that the Company has any or further liability under this
Agreement or any of the Bond Documents;
(g) the Company makes an assignment for the benefit of creditors,
files a petition in bankruptcy, is unable generally to pay its debts as they
come due, is adjudicated insolvent or bankrupt or there is entered any order
or decree granting relief in any involuntary case commenced against the
Company under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect, or if the Company petitions or applies to any tribunal
for any receiver, trustee, liquidator, assignee or custodian or other similar
official of the Company, or commences any proceeding in a court of law for a
reorganization, arrangement, dissolution, liquidation or other similar
procedure under any bankruptcy law or laws for the relief of debtors, whether
now or hereafter in effect, or if there is commenced against the Company any
such proceeding in a court of law which remains undismissed or shall not be
discharged, vacated or stayed, or such jurisdiction shall not be relinquished,
within sixty (60) days after commencement, or the Company by any act,
indicates its consent to, approval of, or acquiescence in any such proceeding
in a court of law, or to an order for relief in an involuntary case commenced
against the Company under any such law, or the appointment of any receiver,
trustee, liquidator, assignee, custodian or other similar official for the
Company, or if the Company suffers any such receivership, trusteeship,
liquidation, assignment or custodianship or other similar procedure to
continue undischarged for a period of sixty (60) days after commencement or if
the Company takes any action for the purposes of effecting the foregoing;
(h) the maturity of any indebtedness of the Company under any
agreement or obligation in an aggregate principal amount exceeding $25,000,000
shall be accelerated;
(i) judgments or orders for the payment of money in excess of
$25,000,000 shall be rendered against the Company and such judgments or orders
shall continue unsatisfied and unstayed for a period of 30 days; or
(j) the Parent at any time shall fail to directly or indirectly own
and control beneficially and of record 51% of the outstanding voting stock of
the Company; or
<PAGE>
(k) the Trustee shall fail to have a valid and enforceable pledge
and assignment of the Trust Estate.
.c2.Section 6.2. Remedies;. Upon the occurrence of any Event of
Default the Bank may exercise any one or more of the following rights and
remedies in addition to any other remedies herein or by law provided:
(a) by written notice to the Company and the Trustee, require that
the Company immediately prepay to the Bank in immediately available funds an
amount equal to the Available Amount of the Letter of Credit (such amount to
be held by the Bank as collateral security for the Obligations and applied by
the Bank to reimburse the Bank for subsequent drawings with respect to the
Letter of Credit); provided, however, that in the case of an Event of Default
described in Section 6.1(g), such prepayment of Obligations shall
automatically become due and payable without any notice;
(b) declare the principal of and interest on the Obligations owing
hereunder immediately due and payable, notwithstanding the provisions of
Section 2.3 and such amounts shall thereupon become immediately due and
payable without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Company, provided, however, that upon the
occurrence of an Event of Default under Section 6.1(g) such acceleration shall
automatically occur;
(c) give notice of the occurrence of an Event of Default to the
Trustee and instruct the Trustee to accelerate the Bonds, thereby causing the
Letter of Credit to expire fifteen (15) days thereafter;
(d) pursue any rights and remedies it may have under the Related
Documents; or
(e) pursue any other remedy available at law or in equity.
.c.ARTICLE VII
MISCELLANEOUS
.c2.Section 7.1. Taxes;. (a) For the purposes of this Section 7.1,
the following terms have the following meanings:
"Taxes" - means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by
the Company pursuant to this Agreement and all penalties and interest with
respect thereto, excluding (i) taxes imposed on its income, and franchise or
similar taxes imposed on it, by a jurisdiction under the laws of which the
Bank is organized or in which its principal executive office is located, in
which its Lending Office is located or in which it would be subject to tax due
to some connection other than that created by this Agreement and (ii) any
United States withholding tax imposed on such payments but only to the extent
that the Bank is subject to United States withholding tax on the Date of
Issuance.
<PAGE>
"Other Taxes" - means any present or future stamp or documentary
taxes and any other excise or property taxes, or similar charges or levies and
all penalties and interest with respect thereto, which arise from the making
of any payment pursuant to this Agreement or from the execution or delivery of
this Agreement or the Letter of Credit.
(b) Any and all payments by the Company to or for the account of
the Bank hereunder shall be made without deduction for any Taxes or Other
Taxes; provided that, if the Company shall be required by law to deduct any
Taxes or Other Taxes from any such payments, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the Bank
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Company shall make such deductions, (iii) the
Company shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law and (iv) the Company
shall furnish to the Bank, the original or a certified copy of a receipt
evidencing payment thereof.
(c) The Company agrees to indemnify the Bank for the full amount of
Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
on amounts payable under this Section) paid by the Bank. This indemnification
shall be paid within 15 days after the Bank makes appropriate demand therefor.
(d) On or prior to the date of its execution and delivery of this
Agreement, and from time to time thereafter if requested in writing by the
Company (but only so long as the Bank remains lawfully able to do so), the
Bank shall provide the Company with Internal Revenue Service form 1001 or
4224, as appropriate, or any successor form prescribed by the Internal Revenue
Service, certifying that the Bank is entitled to benefits under an income tax
treaty to which the United States is a party which exempts the Bank from
United States withholding tax or reduces the rate of withholding tax on
payments of interest for the account of the Bank or certifying that the income
receivable pursuant to this Agreement is effectively connected with the
conduct of a trade or business in the United States.
(e) For any period with respect to which the Bank has failed to
provide the Company with the appropriate form pursuant to Section 7.1(d)
(unless such failure is due to a change in treaty, law or regulation occurring
subsequent to the date on which such form originally was required to be
provided), the Bank shall not be entitled to indemnification under Section
7.1(b) or (c) with respect to Taxes imposed by the United States; provided
that, if the Bank, which is otherwise exempt from or subject to a reduced rate
of withholding tax, becomes subject to Taxes because of its failure to deliver
a form required hereunder, the Company shall take such steps (at the expense
of the Bank) as the Bank shall reasonably request to assist the Bank to
recover such Taxes.
(f) If the Company is required to pay additional amounts to or for
the account of the Bank pursuant to this Section, then the Bank will change
the jurisdiction of its Lending Office if, in the judgment of the Bank, such
change (i) will eliminate or reduce any such additional payment which may
thereafter accrue and (ii) is nor otherwise disadvantageous to the Bank in its
sole judgment.
.c2.Section 7.2. Increased Costs;. (a)If after the Date of
Issuance any change in any applicable law, treaty, regulation, guideline or
directive (including, without limitation, regulations and guidelines with
respect to capital adequacy and Regulation D promulgated by the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect) or any new law, treaty, regulation, guideline or directive, or any
interpretation of any of the foregoing by any authority charged with the
administration or interpretation thereof or any central bank of other fiscal,
monetary or other authority having jurisdiction over the Bank or the
transactions contemplated by this Agreement (whether or not having the force
of law) (all of the foregoing being referred to as a "Regulatory Change")
shall:
(i) subject the Bank to any tax, deduction or withholding
with respect to the Bonds, the Letter of Credit or this
Agreement, or any amount paid or to be paid by the Bank as the
issuer of the Letter of Credit (other than any tax measured by
or based upon the overall net income of the Bank imposed by any
jurisdiction having control over the Bank);
(ii) impose, modify, require, make or deem applicable to
the Bank any reserve requirement (other than reserves against
"Eurocurrency liabilities" under paragraph (b) below, capital
requirement, special deposit requirement, insurance assessment
or similar requirement against any assets held by, deposits
with or for the account of, or loans, letters of credit or
commitments by, an office of the Bank;
(iii) change the basis of taxation of payments due the
Bank under this Agreement or the Bonds (other than by a change
in taxation of the overall net income of the Bank);
(iv) cause or deem letters of credit to be assets held by
the Bank and/or as deposits on its books; or
(v) impose upon the Bank any other condition with respect
to such amount paid or payable to or by the Bank or with
respect to this Agreement, the Letter of Credit or the Bonds;
and the result of any of the foregoing is to increase the cost to the Bank of
making any payment or maintaining the Letter of Credit, or to reduce the
amount of any payment (whether of principal, interest or otherwise) receivable
by the Bank, or to reduce the rate of return on the capital of the Bank
(taking into consideration the Bank's policies with respect to capital
adequacy) or to require the Bank to make any payment on or calculated by
reference to the gross amount of any sum received by it, or to increase the
cost to the Bank of making or maintaining any Eurodollar Loan, or to reduce
the amount of any sum received or receivable by the Bank under this Agreement
with respect thereto, in each case by an amount which the Bank in its
reasonable judgment deems material, then:
(1) the Bank shall promptly notify the Company in writing of the
happening of such event and will designate a different Lending Office if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the judgment of the Bank, be otherwise
disadvantageous to the Bank;
(2) the Bank shall promptly deliver to the Company a certificate
stating the change which has occurred or the reserve requirements or other
costs or conditions which have been imposed on the Bank or the request,
direction or requirement with which it has complied, together with the date
thereof, the amount of such increased cost, reduction or payment and a
reasonably detailed description of the way in which such amount has been
calculated, and the Bank's determination of such amounts, absent fraud or
manifest error, shall be conclusive (in determining such amount, the Bank may
use any reasonable averaging and attribution methods); and
(3) the Company shall pay to the Bank, from time to time as
specified by the Bank, such amount as will compensate the Bank for such
additional cost, reduction or payment.
The protection of this paragraph shall be available to the Bank
regardless of any possible contention of invalidity or inapplicability of the
law, regulation or condition which has been imposed; provided, however, that
if it shall later be determined by the Bank that any amount so paid by the
Company pursuant to this Section 7.1 is in excess of the amount payable under
the provisions hereof, the Bank shall refund such excess amount to the
Company.
Notwithstanding the foregoing Section 7.2(a), the Company shall only
be obligated to compensate the Bank for any amount arising or accruing during
(i) any time or period commencing not more than 90 days prior to the date on
which the Bank notifies the Company that it proposes to demand such
compensation and identifies to the Company the statute, regulation or other
basis upon which the claimed compensation is or will be based and (ii) any
time or period during which, because of the retroactive application of such
statute, regulation or other basis, the Bank did not know that such amount
would arise or accrue.
(b) Without limiting the effect of the foregoing, the Company shall
pay to the Bank on the last day of each Interest Period so long as the Bank is
maintaining reserves against "Eurocurrency liabilities" under Regulation D (or
so long as the Bank is, by reason of any Regulatory Change, maintaining
reserves against any other category of liabilities that includes deposits by
reference to which the interest rate on Eurodollar Loans is determined as
provided in this Agreement or against any category of extensions of credit or
other assets of the Bank that includes any Eurodollar Loans) an additional
amount (determined by the Bank and notified to the Company) equal to the
product of the following for each Eurodollar Loan for each day during such
Interest Period.
(i) the principal amount of such Eurodollar Loan
outstanding on such day; and
(ii) the remainder of (x) a fraction the numerator of
which is the rate (expressed as a decimal) at which interest
accrues on such Eurodollar Loan for such Interest Period as
provided in this Agreement (less the LIBOR Margin) and the
denominator of which is one minus the effective rate (expressed
as a decimal) at which such reserve requirements are imposed on
the Bank on such day minus (y) such numerator; and
(iii) 1/360.
.c2.'Section 7.3.Right of Setoff; Other Collateral';. (a) Upon the
occurrence and during the continuance of an Event of Default, the Bank is
hereby authorized at any time and from time to time without notice to the
Company (any such notice being expressly waived by the Company), and to the
fullest extent permitted by law, to setoff, to exercise any banker's lien or
any right of attachment and apply any and all balances, credits, deposits
(general or special, time or demand, provisional or final), accounts or monies
at any time held and other indebtedness at any time owing by the Bank to or
for the account of the Company (irrespective of the currency in which such
accounts, monies or indebtedness may be denominated and the Bank is authorized
to convert such accounts, monies and indebtedness into U.S. dollars) against
any and all of the Obligations of the Company, whether or not the Bank shall
have made any demand for any amount owing to the Bank by the Company.
(b)The rights of the Bank under this Section 7.3 are in addition to, in
augmentation of, and, except as specifically provided in this Section 7.3, do
not derogate from or impair other rights and remedies (including, without
limitation, other rights of setoff) which the Bank may have.
.c2.Section 7.4. Indemnity, Costs and Expenses;. (a) The Company
to indemnify the Bank, its affiliates and the respective directors, officers,
agents and employees of the foregoing (each and "Indemnitee") and hold each
Indemnitee harmless from and against any and all liabilities, losses, damages,
costs and expenses of any kind, including, without limitation, the reasonable
fees and disbursements of counsel, which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought
or threatened relating to this Agreement, the Letter of Credit, the Liquidity
Advances, any drawing under the Letter of Credit or any actual or proposed use
of proceeds of the drawings under the Letter of Credit; except, only if, and
to the extent that any such claim, damage, loss, liability, cost or expense
shall be caused by the willful misconduct or gross negligence of such
Indemnitee in performing or failing to perform its obligations under this
Agreement or in making payment against a drawing presented under the Letter of
Credit which does not comply with the terms thereof (it being understood and
agreed by the parties hereto that in making such payment the Bank's exclusive
reliance on the documents presented to the Bank in accordance with the terms
of the Letter of Credit as to any and all matters set forth therein, whether
or not any statement or any document presented pursuant to the Letter of
Credit proves to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein proves to be untrue or inaccurate in any respect
whatsoever shall not be deemed willful misconduct or gross negligence of the
Bank).
(b) The Company shall pay (i) all reasonable out-of-pocket expenses
of the Bank, including reasonable fees and disbursements of special counsel
for the Bank, in connection with any waiver or consent hereunder or any
amendment hereof or any Potential Default or Event of Default hereunder and
(ii) if an Event of Default occurs, all reasonable out-of-pocket expenses
incurred by the Bank, including (without duplication) the reasonable fees and
disbursements of outside counsel and the allocated cost of inside counsel, in
connection with such Event of Default and collection, bankruptcy, insolvency
and other enforcement proceedings resulting therefrom.
.c2.Section 7.5. Obligations Absolute;. The obligations of the
Company under this Agreement shall be absolute, unconditional and irrevocable,
and shall be paid strictly in accordance with the terms of this Agreement
under all circumstances whatsoever.
.c2.Section 7.6. Liability of the Bank;. The Company assumes all
risks of the acts or omissions of the Trustee, the Remarketing Agent, the
Paying Agent or any agent of the Trustee, the Remarketing Agent or the Paying
Agent and any transferee of the Letter of Credit with respect to their use of
the Letter of Credit. Neither the Bank nor any of its officers or directors
shall be liable or responsible for (a) the use of the Letter of Credit or for
any acts or omissions of the Trustee and any transferee in connection
therewith, (b) the validity or genuineness of documents, or of any endorsement
thereon, even if such documents should in fact prove to be in any or all
respects invalid, fraudulent or forged, (c) payment by the Bank against
presentation of documents which do not comply with the terms of the Letter of
Credit, including failure of any documents to bear any reference or adequate
reference to the Letter of Credit, or (d) any other circumstances whatsoever
in making or failing to make payment under the Letter of Credit; provided,
however, that the Company shall have a claim against the Bank, and the Bank
shall be liable to the Company, to the extent of any direct, as opposed to
consequential, damages suffered by the Company which the Company proves were
caused by (i) the Bank's willful misconduct or gross negligence in determining
whether documents presented under the Letter of Credit comply with the terms
of the Letter of Credit or (ii) the Bank's wrongful failure to make lawful
payment under the Letter of Credit after the presentation to the Bank by the
Trustee or a successor trustee under the Indenture of a draft and certificate
strictly complying with the terms and conditions of the Letter of Credit (it
being understood that in making such payment the Bank's exclusive reliance on
the documents presented to the Bank in accordance with the terms of the Letter
of Credit as to any and all matters set forth therein, whether or not any
statement or any document presented pursuant to the Letter of Credit proves to
forged, fraudulent, invalid or insufficient in any respect or any statement
whatsoever, shall not be deemed willful misconduct or gross negligence of the
Bank). The Bank is hereby expressly authorized and directed to honor any
demand for payment which is made under the Letter of Credit without regard to,
and without any duty on its part to inquire into the existence of, any
disputes or controversies between the Issuer, the Company, the Remarketing
Agent, the Trustee, the Paying Agent, or any other person or the respective
rights, duties or liabilities of any of them, or whether any facts or
occurrences represented in any of the documents presented under the Letter of
Credit are true and correct.
.c2.Section 7.7. Participants, Etc;. The Bank shall have the right
to grant participations in the Letter of Credit to one or more other
commercial banking institutions with the prior written consent of the Company
(which consent shall not be unreasonably withheld), and such participants
shall be entitled to the benefits of this Agreement, including, without
limitation, Sections 2.15, 7.1, 7.2, 7.3, 7.4 and 7.15 hereof, to the same
extent as if they were a direct party hereto; provided, however, that no such
participation by any such participant shall in any way affect the obligation
of the Bank under the Letter of Credit; and provided further that no such
participant shall be entitled to receive payment hereunder of any amount
greater than the amount which would have been payable had the Bank not granted
a participation to such participant. Except as expressly provided in this
Agreement, the Bank may not assign or otherwise transfer all or any part of
its rights or obligations under this Agreement, the Letter of Credit or the
other Related Documents without the prior written consent of the Company. Any
agreement pursuant to which the Bank may grant such a participating interest
shall provide that the Bank shall retain the sole right and responsibility to
take or refrain from taking any action hereunder or under the other Related
Documents or to enforce the obligations of the Company hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provision of this Agreement or any other Related Document; provided
that such participation agreement may provide that the Bank will not, without
the consent of the participating banks, agree to any modification, amendment
or waiver of this Agreement, which would (i) increase the Original Stated
Amount of the Letter of Credit (other than automatic reinstatements as
provided in the Letter of Credit), (ii) reduce the principal of or rate of
interest on any Obligation, (iii) postpone the date fixed for any payment of
principal of or interest on any Obligation, or (iv) extend the Stated
Expiration Date of the Letter of Credit; and provided further that such
participation agreement may provide that the Bank will not consent to any
other amendment to this Agreement without the consent of participating banks
then holding at least 51% of the risk incident to the Letter of Credit.
.c2.Section 7.8. Survival of this Agreement;. All covenants,
agreements, representations and warranties made in this Agreement shall
survive the issuance by the Bank of the Letter of Credit and shall continue in
full force and effect so long as the Letter of Credit shall be unexpired or
any sums drawn or due hereunder shall be outstanding and unpaid, regardless of
any investigation made by any person. Wherever in this Agreement the Bank is
referred to, such reference shall be deemed to include the successors and
assigns of the Bank and all covenants, promises and agreements by or on behalf
of the Company which are contained in this Agreement shall inure to the
benefit of the successors and assigns of the Bank. The rights and duties of
the Company, however, may not be assigned or transferred, except as
specifically provided in this Agreement or with the prior written consent of
the Bank, and all obligations of the Company hereunder shall continue in full
force and effect notwithstanding any assignment by the Company of any of its
rights or obligations under any of the Bond Documents or any entering into, or
consent by the Company, to any supplement or amendment to any of the Bond
Documents.
.c2.Section 7.9. Modification of this Agreement;. No amendment,
modification or waiver of any provision of this Agreement or the Letter of
Credit shall be effective unless the same shall be in writing and signed by
the Bank, and no consent to any departure by the Company therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Bank. Any such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on the
Company in any case shall entitle the Company to any other or further notice
or demand in the same, similar or other circumstances.
.c2.Section 7.10. Waiver of Rights by the Bank;. No course of
dealing or failure or delay on the part of the Bank in exercising any right,
power or privilege hereunder or under the Letter of Credit shall operate as a
waiver thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise, or the exercise of any other right or privilege.
The rights of the Bank under this Agreement and the Letter of Credit are
cumulative and not exclusive of any rights or remedies which the Bank would
otherwise have.
.c2.Section 7.11. Severability;. In case any one or more of the
provisions contained in this Agreement shall be held or deemed to be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not in any
way be affected or impaired thereby. The parties shall endeavor in good faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to
that of the invalid, illegal or unenforceable provisions.
.c2.'Section 7.12.Governing Law; Submission to Jurisdiction';. This
Agreement shall be governed by and construed in accordance with the laws of
the State of Texas. The Company hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
Texas and of any Texas State court sitting in Houston for purposes of all
legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Company irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
.c2.Section 7.13. Notices;. (a) Except as otherwise specified
herein, all notices hereunder shall be given by United States certified or
registered mail, by telegram or by other telecommunication device capable of
creating written record of such notice and its receipt. Notices hereunder
shall be effective when received and shall be addressed:
If to the Bank, to:
ABN AMRO Bank N.V.
Houston Agency
Three Riverway
Suite 1700
Houston, Texas 77056
Attention: Laurie Tuzo
Telephone: (713) 964-3360
Facsimile: (713) 629-7533
with a copy to:
ABN AMRO North America
135 South LaSalle Street
Suite 711
Chicago, Illinois 60603
Attention: Peter Gaw and Kevin McFadden,
Utilities Group
Telephone: (312) 904-2065
Facsimile: (312) 904-6387
<PAGE>
If to the Company, to:
Central Power and Light Company
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone: (214) 777-1000
Facsimile: (214) 777-1223
If to the Issuer, to:
Guadalupe-Blanco River Authority
933 East Court Street
Sequin, Texas 78155
Attention: Director of Finance
Telephone: (210) 379-5822
Facsimile: (210) 379-9718
If to the Remarketing Agent, to:
Morgan Stanley & Co. Incorporated
1221 Avenue of the Americas
New York, New York 10020
Attention: Janet Salem
Telephone: (212) 296-7614
Facsimile: (212) 296-7513
If to the Trustee, to:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telephone: (212) 815-5733
Facsimile: (212) 815-5915
Any party may change its address for purposes hereof by notice to
the other parties.
(b) The Bank agrees to give immediate notice, promptly confirmed in
writing, to the Remarketing Agent of any notice of an Event of Default given
to the Trustee by the Bank.
.c2.Section 7.14. Survival of Certain Obligations;. The obligation
of the Company to reimburse the Bank pursuant to Sections 7.1, 7.3 and 7.14
shall survive the payment of the Bonds and the termination of this Agreement.
.c2.Section 7.15. Taxes and Expenses;. Any transfer, stamp,
documentary or other similar taxes payable or ruled payable by any
Governmental Body in respect of this Agreement, the Letter of Credit or the
Bonds shall be paid by the Company, together with interest and penalties, if
any; provided, however, that the Company may reasonably contest any such taxes
with the prior written consent of the Bank which consent shall not be
unreasonably withheld.
.c2.Section 7.16. Headings;. The table of contents and captions in
this Agreement are for convenience of reference only and shall not define or
limit the provisions hereof.
.c2.Section 7.17. Counterparts;. This Agreement may be executed in
two or more counterparts, each of which shall constitute an original but both
or all of which, when taken together, shall constitute one instrument, and
shall become effective when copies hereof bearing the signatures of each of
the parties hereto shall be delivered to the Company and the Bank.
.c2.Section 7.18. Waiver of Jury Trial;. Each of the Company and
the Bank hereby irrevocably waives any and all right to trial by jury in any
legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
Please signify your agreement and acceptance of the foregoing by
executing this Letter of Credit Agreement in the space provided below.
.c4.Signature;Very truly yours,
ABN AMRO Bank N.V., acting
through its Houston Agency
By:__________________________
Title:_______________________
By:__________________________
Title:_______________________
Accepted and agreed to:
Central Power and Light Company
By:___________________________
Title:________________________
<PAGE>
APPENDIX I
IRREVOCABLE TRANSFERABLE LETTER OF CREDIT
November 2, 1995
**U.S. $43,411,550
No. S601662
The Bank of New York, as trustee (the "Trustee")
under the Indenture of Trust dated as of October 1,
1995 (the "Indenture"), between Guadalupe-Blanco
River Authority (the "Issuer"), and the Trustee
101 Barclay Street, 21st Floor
New York, New York 10286
Attention: Corporate Trust Department
Ladies and Gentlemen:
We hereby establish in your favor as Trustee for the benefit of the
holders of the Bonds (as hereinafter defined), our irrevocable transferable
Letter of Credit No. ________ for the account of Central Power and Light
Company (the "Company"), whereby we hereby irrevocably authorize you to draw
on us from time to time, from and after the date hereof to and including the
earliest to occur of our close of business on: (i) November 2, 2000 (as
extended from time to time, the "Stated Expiration Date"), (ii) the earlier of
(A) the date which is fifteen (15) days following the conversion of all of the
Bonds to either the Multiannual Mode or Fixed Rate Mode (as each term is
defined in the Indenture) as such date is specified in a certificate in the
form of Exhibit A hereto (the "Conversion Date") or (B) the date on which the
Bank honors a drawing under the Letter of Credit on or after the conversion of
all of the Bonds to either the Multiannual Mode or Fixed Rate Mode, (iii) the
date which is fifteen (15) days following receipt from you of a certificate in
the form set forth as Exhibit B hereto, (iv) the date on which an Acceleration
Drawing is honored by us, and (v) the date which is fifteen (15) days
following receipt by you of a written notice from us specifying the occurrence
of an Event of Default under the Letter of Credit Agreement dated as of
October 1, 1995, between the Company and us (the "Letter of Credit Agreement")
and directing you to accelerate the Bonds (the "Termination Date"), a maximum
aggregate amount not exceeding Forty Three Million Four Hundred Eleven
Thousand Five Hundred Fifty United States Dollars (U.S. $43,411,550 - the
"Original Stated Amount") to pay principal of and accrued interest on, or the
purchase price of, the $40,890,000 Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project) Series 1995 issued by the Issuer
(the "Bonds"), in accordance with the terms hereof (said $43,411,550 having
been calculated to be equal to $40,890,000, the original principal amount of
the Bonds, plus $2,521,550 which is at least 185 days' accrued interest on
said principal amount of the Bonds at the rate of twelve percent (12%) per
annum (the "Cap Interest Rate")). This credit is available to you against
presentation of the following documents (the "Payment Documents") presented to
ABN AMRO Bank N.V., acting through its Houston Agency (the "Bank"), as
described below:
A certificate (with all blanks appropriately completed)
(i) in the form attached as Exhibit C hereto to pay
accrued interest on the Bonds as provided for under
Section 4.03(e) of the Indenture (an "Interest Drawing"),
(ii) in the form attached as Exhibit D hereto to pay the
principal amount of and accrued interest on the Bonds in
respect of any redemption of the Bonds as provided for in
Section 4.03(e) of the Indenture (a "Redemption Drawing"),
provided that in the event the date of redemption or
purchase coincides with an Interest Payment Date (as
defined in the Indenture) the Redemption Drawing shall not
include any accrued interest on the Bonds (which interest
is payable pursuant to an Interest Drawing), (iii) in the
form attached as Exhibit E hereto, to allow The Bank of
New York, as Paying Agent (together with its permitted
successors and assigns, the "Paying Agent"), to pay the
purchase price of Bonds tendered for purchase as provided
for in Section 2.10(b)(ii) of the Indenture which have not
been successfully remarketed or for which the purchase
price has not been received by the Paying Agent by 10:00
a.m., Houston time, on the purchase date (a "Liquidity
Drawing"), provided that in the event the purchase date
coincides with an Interest Payment Date, the Liquidity
Drawing shall not include any accrued interest on the
Bonds (which interest is payable pursuant to an Interest
Drawing), (iv) in the form attached as Exhibit F hereto,
to pay the principal of and accrued interest in respect of
Bonds the payment of which has been accelerated pursuant
to Section 6.02 of the Indenture (an "Acceleration
Drawing"), or (v) in the form attached as Exhibit G hereto
to pay the principal amount of Bonds maturing on July 1,
2017 (a "Stated Maturity Drawing"), each certificate to
state therein that it is given by your duly authorized
officer and dated the date such certificate is presented
hereunder. No drawings shall be made under this Letter of
Credit for Company Held Bonds or Bank Bonds (as each term
is defined in the Indenture).
All drawings shall be made by presentation of each Payment Document
at our office at Three Riverway, Suite 1700, Houston, Texas 77056 as
aforesaid, by tested telex (at telex number 6868916 Answerback: ABN INTL HOU)
or by telecopier (at telecopier number (713) 629-7533), Attention: Trade
Services, without further need of documentation, including the original of
this Letter of Credit, it being understood that each Payment Document so
submitted is to be the sole operative instrument of drawing. You shall use
your best efforts to give telephonic notice of a drawing to the Bank at its
Houston Agency, ((713) 964-3341) on the Business Day preceding the day of such
drawing (but such notice shall not be a condition to drawing hereunder and you
shall have no liability for not doing so).
We agree to honor and pay the amount of any Interest, Redemption,
Liquidity, Acceleration or Stated Maturity Drawing if presented in compliance
with all of the terms of this Letter of Credit. If such drawing, other than a
Liquidity Drawing, is presented prior to 4:00 P.M., New York time, on a
Business Day, payment shall be made to the account number or address
designated by you of the amount specified, in immediately available funds, by
11:00 A.M., New York time, on the following Business Day. If any such
drawing, other than a Liquidity Drawing, is presented at or after 4:00 P.M.,
New York time, on a Business Day, payment shall be made to the account number
or address designated by you of the amount specified, in immediately available
funds, by 2:30 P.M., New York time, on the following Business Day. If a
Liquidity Drawing is presented prior to 12:00 Noon, New York time, on a
Business Day, payment shall be made to the account number or address
designated by you of the amount specified, in immediately available funds, by
3:00 P.M., New York time, on the same Business Day. If a Liquidity Drawing is
presented at or after 12:00 Noon, New York time, payment shall be made to the
account number or address designated by you of the amount specified, in
immediately available funds, by 11:00 A.M., New York time, on the following
Business Day. Payments made hereunder shall be made by wire transfer to you
or by deposit into your account with us in accordance with the instructions
specified by the Trustee in the drawing certificate relating to a particular
drawing hereunder. "Business Day" means any day other than a day on which
banking institutions in the city in which the principal corporate trust office
of the Trustee or the principal corporate trust office of the Paying Agent or
the principal office of the Remarketing Agent (as defined in the Indenture) is
located, or in the City of Houston, Texas, are required or authorized by law
or regulation to remain closed, or other than a day on which the New York
Stock Exchange is closed.
The Available Amount (as hereinafter defined) will be reduced
automatically by the amount of any drawing hereunder; provided, however, that
the amount of any Interest Drawing hereunder, less the amount of the reduction
in the Available Amount attributable to interest as specified in a certificate
in the form of Exhibit D or H hereto, shall be automatically reinstated
immediately upon payment by us of such drawing. After payment by us of a
Liquidity Drawing, the obligation of the Bank to honor drawings under this
Letter of Credit will be automatically reduced by an amount equal to the
Original Purchase Price of any Bonds (or portions thereof) purchased pursuant
to said drawing. In addition, prior to the conversion of all of the Bonds to
either the Multiannual Mode or Fixed Rate Mode, in the event of the
remarketing of the Bonds (or portions thereof) previously purchased with the
proceeds of a Liquidity Drawing, our obligation to honor drawings hereunder
will be automatically reinstated concurrently upon receipt by us, or the
Trustee or the Paying Agent on our behalf, of an amount equal to the Original
Purchase Price of such Bonds (or portion thereof); the amount of such
reinstatement shall be equal to the Original Purchase Price of such Bonds (or
portions thereof). "Original Purchase Price" shall mean the principal amount
of any Bond purchased with the proceeds of a Liquidity Drawing plus the amount
of accrued interest on such Bond paid with the proceeds of a Liquidity Drawing
(and not pursuant to an Interest Drawing) upon such purchase.
Upon receipt by us of a certificate of the Trustee in the form of
Exhibit D or H hereto, the Letter of Credit will automatically and permanently
reduce the amount available to be drawn hereunder by the amount specified in
such certificate. Such reduction shall be effective as of the next Business
Day following the date of delivery of such certificate.
<PAGE>
Upon any permanent reduction of the amounts available to be drawn
under this Letter of Credit, as provided herein, we may deliver to you a
substitute Letter of Credit in exchange for this Letter of Credit or an
amendment to this Letter of Credit substantially in the form of Exhibit I
hereto to reflect any such reduction. If we deliver to you such a substitute
Letter of Credit you shall simultaneously surrender to us for cancellation the
Letter of Credit then in your possession. The "Available Amount" shall mean
the Original Stated Amount (i) less the amount of all prior reductions
pursuant to Interest, Redemption, Liquidity, Acceleration or Stated Maturity
Drawings, (ii) less the amount of any reduction thereof pursuant to a
reduction certificate in the form of Exhibit D or H hereto to the extent such
reduction is not already accounted for by a reduction in the Available Amount
pursuant to (i) above, (iii) plus the amount of all reinstatements as above
provided.
Prior to the Termination Date, we may extend the Stated Expiration
Date from time to time at the request of the Company by delivering to you an
amendment to this Letter of Credit in the form of Exhibit K hereto designating
the date to which the Stated Expiration Date is being extended. Each such
extension of the Stated Expiration Date shall become effective on the Business
Day following delivery of such notice to you and thereafter all references in
this Letter of Credit to the Stated Expiration Date shall be deemed to be
references to the date designated as such in such notice. Any date to which
the Stated Expiration Date has been extended as herein provided may be
extended in a like manner.
Upon the Termination Date this Letter of Credit shall automatically
terminate and be delivered to the Bank for cancellation.
This Letter of Credit is transferable in whole only to your
successor as Trustee. Any such transfer (including any successive transfer)
shall be effective upon receipt by us (which receipt shall be subsequently
confirmed in writing to the transferor and the transferee by the Bank) of a
signed copy of the instrument effecting each such transfer signed by the
transferor and by the transferee in the form of Exhibit J hereto (which shall
be conclusive evidence of such transfer) and, in such case, the transferee
instead of the transferor shall, without the necessity of further action, be
entitled to all the benefits of and rights under this Letter of Credit in the
transferor's place; provided that, in such case, any certificates of the
Trustee to be provided hereunder shall be signed by one who states therein
that he is a duly authorized officer or agent of the transferee.
Communications with respect to this Letter of Credit shall be
addressed to us at ABN AMRO Bank N.V., Houston Agency, Three Riverway, Suite
1700, Houston, Texas 77056, Attention: Trade Services, specifically
referring to the number of this Letter of Credit.
To the extent not inconsistent with the express terms hereof, this
Letter of Credit shall be governed by, and construed in accordance with, the
terms of the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500 (the "Uniform
Customs"), except for Article 41 and Article 48(g) thereof. As to matters not
governed by the Uniform Customs, this Letter of Credit shall be governed by
and construed in accordance with the laws of the State of Texas, including
without limitation the Uniform Commercial Code as in effect in the State of
Texas.<PAGE>
All payments made by us hereunder shall be made from our funds
and not with the funds of any other person.
This Letter of Credit sets forth in full the terms of our
undertaking, and such undertaking shall not in any way be modified or amended
by reference to any other document whatsoever.
ABN AMRO Bank N.V., acting
through its Houston Agency
By:_______________________
Its
By:________________________
Its
<PAGE>
EXHIBIT A
to
ABN AMRO Bank N.V.
Letter of Credit
No. S601662
NOTICE OF CONVERSION DATE
ABN AMRO Bank N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Trade Services
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable
Letter of Credit No. S601662 dated November 2, 1995 (the "Letter of Credit"),
which has been established by you for the account of Central Power and Light
Company, in favor of the Trustee.
The undersigned hereby certifies and confirms that the conversion of
all of the Bonds to either the Multiannual Mode or Fixed Rate Mode has
occurred on [insert date], and, accordingly, the Letter of Credit shall
terminate 15 days after such conversion in accordance with its terms.
All defined terms used herein which are not otherwise defined herein
shall have the same meaning as in the Letter of Credit.
____________________________
as Trustee
By__________________________
[Title of Authorized
Representative]
<PAGE>
EXHIBIT B
to
ABN AMRO Bank N.V.
Letter of Credit
No. S601662
NOTICE OF TERMINATION
ABN AMRO Bank N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Trade Services
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable
Letter of Credit No. S601662 dated November 2, 1995 (the "Letter of Credit"),
which has been established by you for the account of Central Power and Light
Company in favor of the Trustee.
The undersigned hereby certifies and confirms that [(i) no Bonds (as
defined in the Letter of Credit) remain Outstanding within the meaning of the
Indenture, (ii) all drawings required to be made under the Indenture and
available under the Letter of Credit have been made and honored, or (iii) an
Alternate Letter of Credit has been issued to replace the Letter of Credit
pursuant to the Indenture and the Installment Payment Agreement dated as of
October 1, 1995, between the Issuer and the Company, or (iv) the Company has
complied with the provisions of Section 10.05 of the Indenture to provide
other credit enhancement or no credit enhancement as security for the Bonds]
[1] and, accordingly, the Letter of Credit shall be terminated in accordance
with its terms.
All defined terms used herein which are not otherwise defined shall
have the same meaning as in the Letter of Credit.
____________________________
as Trustee
By__________________________
[Title of Authorized
Representative]
_______________________
[1] Insert appropriate subsection.
<PAGE>
By Telecopy or Tested Telex
EXHIBIT C
to
ABN AMRO Bank N.V.
Letter of Credit
No. S601662
INTEREST DRAWING CERTIFICATE
ABN AMRO Bank N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Trade Services
The undersigned individual, a duly authorized representative of
__________________ (the "Beneficiary"), hereby Certifies on behalf of the
Beneficiary as follows with respect to (i) that certain Irrevocable
Transferable Letter of Credit No. S601662 dated November 2, 1995 (the "Letter
of Credit"), issued by ABN AMRO Bank N.V. (the "Bank") in favor of the
Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit);
and (iii) that certain Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee (as defined in the Letter of
Credit) under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount
of $_____________ under the Letter of Credit pursuant to the Indenture with
respect to the payment of interest due on all Bonds in the [Daily Mode]
[Weekly Mode] [Flexible Mode] [Monthly Mode] [Quarterly Mode] [Semiannual
Mode][1] outstanding on the Interest Payment Date (as defined in the
Indenture) occurring on [insert applicable date], other than Bank Bonds and
Company Held Bonds (as each term is defined in the Letter of Credit).
3. The amount of the drawing is equal to the amount required to be
drawn by the Trustee pursuant to Section 4.03(e) of the Indenture.
4. The amount of the drawing made by this Certificate was computed
in compliance with the terms of the Indenture and, when added to the amount of
any other drawing under the Letter of Credit made simultaneously herewith,
does not exceed the Available Amount (as defined in the Letter of Credit).
______________________
[1] Insert appropriate phrase.
<PAGE>
5. Payment by the Bank pursuant to this drawing shall be made to
______________________________, ABA Number ________________________, Account
Number ___________________, Attention: ___________________________________,
Re: _________________________.
In Witness Whereof, this Certificate has been executed this ____ day
of ____________________, ______.
____________________________
as Trustee
By__________________________
[Title of Authorized
Representative]
<PAGE>
By Telecopy or Tested Telex
EXHIBIT D
to
ABN AMRO Bank N.V.
Letter of Credit
No. S601662
REDEMPTION DRAWING AND REDUCTION CERTIFICATE
ABN AMRO Bank N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Trade Services
The undersigned individual, a duly authorized representative of
_____________ _____________________ (the "Beneficiary"), hereby Certifies on
behalf of the Beneficiary as follows with respect to (i) that certain
Irrevocable Transferable Letter of Credit No. S601662 dated November 2, 1995
(the "Letter of Credit"), issued by ABN AMRO Bank N.V. (the "Bank") in favor
of the Beneficiary; (ii) those certain Bonds (as defined in the Letter of
Credit); and (iii) that certain Indenture (as defined in the Letter of
Credit):
1. The Beneficiary is the Trustee (as defined in the Letter of
Credit) under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount
of $____________ under the Letter of Credit pursuant to Section 4.03(e) of the
Indenture.
3. (a) The amount of this drawing is equal to (i) the principal
amount of Bonds to be redeemed by the Issuer (as defined in the Letter of
Credit) pursuant to Section 2.06[(a)][(b)[(c)][1] of the Indenture on [insert
applicable date] (the "Redemption Date") other than Bank Bonds and Company
Held Bonds (as each term is defined in the Letter of Credit), plus (ii)
interest on such Bonds accrued from the immediately preceding Interest Payment
Date (as defined in the Indenture) to the Redemption Date, provided that in
the event the Redemption Date coincides with an Interest Payment Date this
drawing does not include any accrued interest on such Bonds.
(b) Of the amount stated in paragraph 2 above:
(i) $______________ is demanded in respect of the
principal amount of the Bonds referred to in subparagraph (a)
above; and
_________________
[1] Insert appropriate subsection.<PAGE>
(ii) $_____________ is
demanded in respect of accrued
interest on such Bonds.
4. Payment by the Bank pursuant to this drawing shall be made to
_________________________, ABA Number _____________________________, Account
Number ____________________________, Attention: _____________________________,
Re: _________________________________.
5. The amount of the drawing made by this Certificate was computed
in compliance with the terms and conditions of the Indenture and, when added
to the amount of any other drawing under the Letter of Credit made
simultaneously herewith, does not exceed the Available Amount (as defined in
the Letter of Credit).
6. Upon payment of the amount drawn hereunder, the Bank is hereby
directed to permanently reduce the Available Amount by $[insert amount of
reduction] and the Available Amount shall thereupon equal $[insert new
Available Amount]. The Available Amount has been reduced by an amount equal
to the principal of Bonds paid with this drawing and an amount equal to 185
days' interest thereon at the Cap Interest Rate (as defined in the Letter of
Credit).
7. Of the amount of the reduction stated in paragraph 6 above:
(i) $____________ is attributable to the principal amount
of Bonds redeemed; and
(ii) $___________ is attributable to interest on such
Bonds (i.e., 185 days' interest thereon at the Cap Interest
Rate).
8. The amount of the reduction in the Available Amount has been
computed in accordance with the provisions of the Letter of Credit.
9. Following the reduction, the Available Amount shall be at least
equal to the aggregate principal amount of the Bonds outstanding (to the
extent such Bonds are not Bank Bonds or Company Held Bonds (as each term is
defined in the Letter of Credit)) plus 185 days' interest thereon at the Cap
Interest Rate.
<PAGE>
In Witness Whereof, this Certificate has been executed this ______
day of _______________, ______.
____________________________
as Trustee
By__________________________
[Title of Authorized
Representative]
<PAGE>
By Telecopy or Tested Telex
EXHIBIT E
to
ABN AMRO Bank N.V.
Letter of Credit
No. S601662
LIQUIDITY DRAWING CERTIFICATE
ABN AMRO Bank N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Trade Services
The undersigned individual, a duly authorized representative of
___________ (the "Beneficiary") hereby Certifies as follows with respect to
(i) that certain Irrevocable Transferable Letter of Credit No. S601662 dated
November 2, 1995 (the "Letter of Credit"), issued by ABN AMRO Bank N.V. (the
"Bank") in favor of the Beneficiary; (ii) those certain Bonds (as defined in
the Letter of Credit); and (iii) that certain Indenture (as defined in the
Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. The Beneficiary is entitled to make this drawing under the
Letter of Credit in the amount of $_____________ with respect to the payment
of the purchase price of Bonds tendered for purchase in accordance with
Section 2.10(b)(ii) of the Indenture and to be purchased on [insert applicable
date] (the "Purchase Date") which Bonds have not been remarketed as provided
in the Indenture or the purchase price of which has not been received by the
Paying Agent (as defined in the Letter of Credit) by 10:00 a.m., Houston time,
on said Purchase Date.
3. (a) The amount of the drawing is equal to (i) the principal
amount of Bonds to be purchased pursuant to the Indenture on the Purchase Date
other than Bank Bonds and Company Held Bonds (as each term is defined in the
Letter of Credit), plus (ii) interest on such Bonds accrued from the
immediately preceding Interest Payment Date (as defined in the Indenture) (or
if none, the date of issuance of the Bonds) to the Purchase Date, provided
that in the event the Purchase Date coincides with an Interest Payment Date
this drawing does not include any accrued interest on such Bonds.
(b) Of the amount stated in paragraph (2) above:
(i) $_________________ is demanded in respect of the
principal portion of the purchase price of the Bonds referred
to in subparagraph (2) above; and
<PAGE>
(ii) $________________ is demanded in respect of payment
of the interest portion of the purchase price of such Bonds.
4. The amount of the drawing made by this Certificate was computed
in compliance with the terms and conditions of the Indenture and, when added
to the amount of any other drawing under the Letter of Credit made
simultaneously herewith, does not exceed the Available Amount (as defined in
the Letter of Credit).
5. Payment by the Bank pursuant to this drawing shall be made to
_________________________, ABA Number ___________________________, Account
Number _____________________, Attention: _______________________________, Re:
_____________________________.
In Witness Whereof, this Certificate has been executed this _____
day of _____________________, ______.
____________________________
as Trustee
By__________________________
[Title of Authorized
Representative]
<PAGE>
By Telecopy or Tested Telex
EXHIBIT F
to
ABN AMRO Bank N.V.
Letter of Credit
No. S601662
ACCELERATION DRAWING CERTIFICATE
ABN AMRO Bank N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Trade Services
The undersigned individual, a duly authorized representative of
_________________ (the "Beneficiary"), hereby Certifies on behalf of the
Beneficiary as follows with respect to (i) that certain Irrevocable
Transferable Letter of Credit No. S601662 dated November 2, 1995 (the "Letter
of Credit"), issued by ABN AMRO Bank N.V. (the "Bank") in favor of the
Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit);
and (iii) that certain Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. An Event of Default has occurred under subsection [insert
subsection] of Section 6.01 of the Indenture and the Trustee has declared the
principal of and accrued interest on all Bonds then outstanding immediately
due and payable. The Beneficiary is entitled to make this drawing in the
amount of $_____________ under the Letter of Credit pursuant to Section 6.02
of the Indenture in order to pay the principal of and interest accrued on the
Bonds due to an acceleration thereof in accordance with Section 6.02 of the
Indenture.
3. (a) The amount of this drawing is equal to (i) the principal
amount of Bonds outstanding on [insert date of acceleration] (the
"Acceleration Date") other than Bank Bonds and Company Held Bonds (as each
term is defined in the Letter of Credit), plus (ii) interest on such Bonds
accrued from the immediately preceding Interest Payment Date (as defined in
the Indenture) to the Acceleration Date.
(b) Of the amount stated in paragraph 2 above:
(i) $______________ is demanded in respect of the
principal portion of the Bonds referred to in subparagraph (a)
above; and
(ii) $______________ is demanded in respect of accrued
interest on such Bonds.
4. The amount of this drawing made by this Certificate was
computed in compliance with the terms and conditions of the Indenture and,
when added to the amount of any drawing under the Letter of Credit made
simultaneously herewith, does not exceed the Available Amount (as defined in
the Letter of Credit).
5. Payment by the Bank pursuant to this drawing shall be made to
_______________________, ABA Number ________________________, Account Number
_________________, Attention: ______________________, Re:
_____________________.
In Witness Whereof, this Certificate has been executed this ____ day
of ______________________, _____.
____________________________
as Trustee
By__________________________
[Title of Authorized
Representative]
<PAGE>
By Telecopy or Tested Telex
EXHIBIT G
to
ABN AMRO Bank N.V.
Letter of Credit
No. S601662
STATED MATURITY DRAWING CERTIFICATE
ABN AMRO Bank N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Trade Services
The undersigned individual, a duly authorized representative of
_______________ (the "Beneficiary"), hereby Certifies on behalf of the
Beneficiary as follows with respect to (i) that certain Irrevocable
Transferable Letter of Credit No. S601662 dated November 2, 1995 (the "Letter
of Credit"), issued by ABN AMRO Bank N.V. (the "Bank") in favor of the
Beneficiary; (ii) those certain Bonds (as defined in the Letter of Credit);
and (iii) that certain Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount
of $___________ under the Letter of Credit pursuant to Section 4.03(e) of the
Indenture.
3. The amount of this drawing is equal to the principal amount of
Bonds outstanding on July 1, 2017 the maturity date thereof as specified in
Section 2.01 of the Indenture, other than Bank Bonds and Company Held Bonds
(as each term is defined in the Letter of Credit).
4. The amount of this drawing made by this Certificate was
computed in compliance with the terms and conditions of the Indenture and,
when added to the amount of any other drawing under the Letter of Credit made
simultaneously herewith, does not exceed the Available Amount (as defined in
the Letter of Credit) .
5. Payment by the Bank pursuant to this drawing shall be made to
____________________, ABA Number __________________, Account Number
______________, Attention: __________________________, Re:
_____________________.
<PAGE>
In Witness Whereof, this Certificate has been executed this _____
day of ___________, _______.
____________________________
as Trustee
By__________________________
[Title of Authorized
Representative]
<PAGE>
EXHIBIT H
to
ABN AMRO Bank N.V.
Letter of Credit
No. S601662
REDUCTION CERTIFICATE
ABN AMRO Bank N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Trade Services
The undersigned hereby Certifies with respect to (i) that certain
Irrevocable Transferable Letter of Credit No. S601662 dated November 2, 1995
(the "Letter of Credit"), issued by ABN AMRO Bank N.V. (the "Bank") in favor
of the Beneficiary; (ii) those certain Bonds (as defined in the Letter of
Credit); and (iii) that certain Indenture (as defined in the Letter of
Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. Upon receipt by the Bank of this Certificate, the Available
Amount (as defined in the Letter of Credit) shall be reduced by $__________
and the Available Amount shall thereupon equal $______________.
$__________________ of the new Available Amount is attributable to interest.
3. The amount of the reduction in the Available Amount has been
computed in accordance with the provisions of the Letter of Credit.
4. Following the reduction, the Available Amount shall be at least
equal to the aggregate principal amount of the Bonds outstanding (other than
Bank Bonds and Company Held Bonds (as each term is defined in the Letter of
Credit)) plus 185 days' interest thereon at the Cap Interest Rate (as defined
in the Letter of Credit).
In Witness Whereof, this Certificate has been executed this ______
day of ___________________, _____.
____________________________
as Trustee
By__________________________
[Title of Authorized
Representative]<PAGE>
EXHIBIT I
to
ABN AMRO Bank N.V.
Letter of Credit
No. S601662
NOTICE OF AMENDMENT
[Trustee]
________________________
________________________
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable
Letter of Credit No. S601662 dated November 2, 1995 (the "Letter of Credit"),
established by us in your favor as Beneficiary. We hereby notify you that, in
accordance with the terms of the Letter of Credit and that certain Letter of
Credit Agreement dated as of October 1, 1995, between Central Power and Light
Company and us, the Available Amount (as defined in the Letter of Credit) has
been reduced to $_____________.
This letter should be attached to the Letter of Credit and made a
part thereof.
ABN AMRO Bank N.V.
By_________________________
Its_______________________
By_________________________
Its_______________________
<PAGE>
EXHIBIT J
to
ABN AMRO Bank N.V.
Letter of Credit
No. S601662
TRANSFER CERTIFICATE
ABN AMRO Bank N.V.
Three Riverway, Suite 1700
Houston, Texas 77056
Attention: Trade Services
Ladies and Gentlemen:
Reference is made to that certain Irrevocable Transferable Letter of
Credit No. S601662 dated November 2, 1995 (the "Letter of Credit"), which has
been established by the Bank in favor of ______________________________.
The undersigned, a duly authorized officer or agent of [Name of
Transferor], has transferred and assigned (and hereby confirms to you said
transfer and assignment) all of its rights in and under said Letter of Credit
to [Name of Transferee] and confirms that [Name of Transferor] no longer has
any rights under or interest in said Letter of Credit.
Transferor and Transferee have indicated on the face of said Letter
of Credit that it has been transferred and assigned to Transferee.
<PAGE>
The undersigned, a duly authorized officer or agent of the
Transferee, hereby certifies that the Transferee is a duly authorized
Transferee under the terms of said Letter of Credit and is accordingly
entitled, upon presentation of the documents called for therein, to receive
payment thereunder.
_____________________________
Name of Transferor
By____________________________
[Title of Authorized Officer
of Transferor]
______________________________
Name of Transferee
By____________________________
[Title of Authorized Officer
of Transferor]
<PAGE>
EXHIBIT K
to
ABN AMRO Bank N.V.
Letter of Credit
No. S601662
NOTICE OF EXTENSION
[Trustee]
_____________________
_____________________
Attention:
Ladies and Gentlemen:
Reference is hereby made to that certain Irrevocable Transferable
Letter of Credit No. S601662 dated November 2, 1995 (the "Letter of Credit"),
established by us in your favor as Beneficiary. We hereby notify you that, in
accordance with the terms of the Letter of Credit and that certain Letter of
Credit Agreement dated as of October 1, 1995, between Central Power and Light
Company and us, the Stated Expiration Date (as defined in the Letter of
Credit) has been extended to ___________, ______.
This letter should be attached to the Letter of Credit and made a
part thereof.
ABN AMRO Bank N.V.
By_________________________
Its_______________________
By_________________________
Its_______________________
<PAGE>
