SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________________________________________
:
In the Matter of :
:
CENTRAL POWER AND LIGHT COMPANY : CERTIFICATE
:
File No. 70-8597 : 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 July 25, 1996, the Board of Directors of the
Company authorized the execution, delivery and performance by the
Company of (i) an Installment Payment Agreement between Matagorda
County Navigation District Number One (Texas) (the "District")
and the Company, and approved the form and provisions of a Bond
Purchase Agreement between the District and Goldman, Sachs & Co.
and Morgan Stanley & Co. Incorporated (the "Underwriters").
2. On August 30, 1996, the Company approved the terms
of the Bond Purchase Agreement which provided for the purchase by
the Underwriters of $60,000,000 aggregate principal amount of the
District's Pollution Control Revenue Refunding Bonds (Central
Power and Light Company Project) Series 1996 (the "Refunding
Bonds") due May 1, 2030. The Bond Purchase Agreement provided
that the Underwriter would pay the District 99.5% of the
principal amount of the Refunding Bonds.
3. The Installment Payment Agreement dated as of
August 15, 1996, was executed by the parties thereto in the form
filed herewith as Exhibit 1(b).
4. On September 25, 1996, the District issued, sold
and delivered $60,000,000 aggregate principal amount of its
Refunding Bonds at 99.5% of their principal amount, being the
price specified in the Bond Purchase Agreement.
5. The above-described transactions have been carried
out in accordance with the terms and conditions of, and for the
purposes represented in, the Form U-1 Application-Declaration of
the Company, in File No. 70-8597, and in accordance with the
terms and conditions of the Commission's order[s] dated July 26,
1995, August 28, 1996 and June 15, 1995, permitting said
Application-Declaration to become effective.
The following exhibits (in the final form thereof in
which executed, filed or used) are filed herewith:
Exhibit 1(b) - Installment Payment Agreement, dated as
of August 15, 1996, between the Company
and the District.
Exhibit 2(b) - Indenture of Trust, dated as of August
15, 1996, between the District and the
Trustee.
Exhibit 3(b) - Bond Purchase Agreement, dated August
27, 1996, between the District and the
Underwriters.
Exhibit 4(b) - Letter of Representation, dated August
27, 1996, from the Company to the
Issuer and the Purchasers.
Exhibit 5(b) - Official Statement relating to the
Bonds, dated August 27, 1996 as amended
September 6, 1996.
Exhibit 7(b) - Final or "past tense" opinion of
Milbank, Tweed, Hadley & McCloy,
counsel to CSW and the Company.
S I G N A T U R E
- - - - - - - - -
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, as amended, the undersigned company has duly
caused this document to be signed on its behalf by the
undersigned thereunto duly authorized.
DATED: September 27, 1996
CENTRAL POWER AND LIGHT COMPANY
By:/s/SHIRLEY S. BRIONES
Shirley S. Briones
Treasurer
INDEX TO EXHIBITS
Exhibit Transmission
Number Exhibit Method
- ------- ------- -----------
1(b) Installment Payment Agreement, Electronic
dated as of August 15, 1996,
between the Company and the
District.
2(b) Indenture of Trust, dated as of Electronic
August 15, 1996, between the
District and the Trustee.
3(b) Bond Purchase Agreement, dated Electronic
August 27, 1996, between the
District and the Underwriters.
4(b) Letter of Representation, dated Electronic
August 27, 1996, from the Company
to the Issuer and the Purchasers.
5(b) Official Statement relating to Electronic
the Bonds, dated August 27, 1996
as amended September 6, 1996.
7(b) Final or "past tense" opinion of Electronic
Milbank, Tweed, Hadley & McCloy,
counsel to CSW and the Company.
EXHIBIT 1
INSTALLMENT PAYMENT AGREEMENT
between
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE
and
CENTRAL POWER AND LIGHT COMPANY
Dated as of
August 15, 1996
Relating to
Matagorda County Navigation District Number One
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1996
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. . . . . . . . . . . . . . . . 3
ARTICLE III
The Project
Section 3.01.Intentionally Omitted . . . . . . . . . . . . . . . . . . 5
Section 3.02.Intentionally Omitted . . . . . . . . . . . . . . . . . . 5
Section 3.03.Intentionally Omitted . . . . . . . . . . . . . . . . . . 5
Section 3.04.Maintenance and Repair . . . . . . . . . . . . . . . . . 5
Section 3.05.Right to Discontinue Operation of Project . . . . . . . . 5
Section 3.06.Insurance and Condemnation Awards . . . . . . . . . . . . 5
Section 3.07.Taxation of Project . . . . . . . . . . . . . . . . . . . 5
Section 3.08.Issuer's Limited Liability . . . . . . . . . . . . . . . 5
Section 3.09.Governmental Regulation . . . . . . . . . . . . . . . . . 5
ARTICLE IV
Issuance of Bonds; Refunding the Prior Bonds;
Payments; Disbursements
Section 4.01.Issuance of Bonds . . . . . . . . . . . . . . . . . . . . 6
Section 4.02.Bond Proceeds . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.03.Security for the Bonds . . . . . . . . . . . . . . . . . 6
Section 4.04.Bond Funds . . . . . . . . . . . . . . . . . . . . . . . 6
Section 4.05.Company Required to Pay in Event Monies Held
Pursuant to the Prior Indenture are
Insufficient. . . . . . . . . . . . . . . . . . . . .
Section 4.06.Notice to Bond Insurer6
ARTICLE V
The Company's Payments
Section 5.01. Company Approval of Issuance of the Bonds.. . . . . . . 7
Section 5.02.Refunding of Bonds . . . . . . . . . . . . . . . . . . . 7
Section 5.03.Payment Upon Redemption of Bonds . . . . . . . . . . . . 7
Section 5.04.Installment Payments . . . . . . . . . . . . . . . . . . 7
Section 5.05.Payments to Issuer. . . . . . . . . . . . . . . . . . . . 8
Section 5.06.Issuer's Rights Assigned to Trustee . . . . . . . . . . . 8
Section 5.07.Payments to Trustee . . . . . . . . . . . . . . . . . . . 8
Section 5.08.Payment to Remarketing Agent. . . . . . . . . . . . . . . 8
Section 5.09.Company Option to Designate Interest Rate
Determination Methods . . . . . . . . . . . . . . . . . 9
Section 5.10.Purchase of Bonds . . . . . . . . . . . . . . . . . . . . 9
Section 5.11.Usury . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VI
Defaults and Remedies
Section 6.01.Events of Default . . . . . . . . . . . . . . . . . . . .10
Section 6.02.Remedies of Default . . . . . . . . . . . . . . . . . . .11
Section 6.03.Agreement to Pay Attorneys' Fees and Expenses . . . . . .12
ARTICLE VII
Special Covenants
Section 7.01.No Defense or Set-Off; Unconditional Obligation . . . . .13
Section 7.02.Corporate Existence . . . . . . . . . . . . . . . . . . .13
Section 7.03.Indemnities . . . . . . . . . . . . . . . . . . . . . . .13
Section 7.04.Tax-Exempt Status of the Bonds. . . . . . . . . . . . . .14
Section 7.05.Arbitrage Covenants . . . . . . . . . . . . . . . . . . .15
Section 7.06.Payment to Rebate Fund. . . . . . . . . . . . . . . . . .15
Section 7.07.Qualification in Texas. . . . . . . . . . . . . . . . . .15
Section 7.08.Recordation . . . . . . . . . . . . . . . . . . . . . . .15
Section 7.09.No Personal Liability . . . . . . . . . . . . . . . . . .15
Section 7.10 Compliance with Rule 15c2-1215
ARTICLE VII
General Provisions
Section 8.01.General Provisions. . . . . . . . . . . . . . . . . . . .16
Section 8.02.Intentionally Omitted . . . . . . . . . . . . . . . . . .16
Section 8.03.Amendment of Agreement. . . . . . . . . . . . . . . . . .16
Section 8.04.Assignment . . . . . . . . . . . . . . . . . . . . . . . 16
Section 8.05.Term of Agreement. . . . . . . . . . . . . . . . . . . . 17
Section 8.06.Notices. . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 8.07.Severability . . . . . . . . . . . . . . . . . . . . . . 17
Section 8.08.Execution of Counterparts. . . . . . . . . . . . . . . . 17
Section 8.09.Governing Law. . . . . . . . . . . . . . . . . . . . . . 17
Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
INSTALLMENT PAYMENT AGREEMENT
between
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE
and
CENTRAL POWER AND LIGHT COMPANY
This Installment Payment Agreement dated as of August
15, 1996 (the "Agreement"), by and between MATAGORDA COUNTY
NAVIGATION DISTRICT NUMBER ONE (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 August 15, 1996, entered into
by and between the Issuer and The Bank of New York, as trustee.
(b) The Issuer is a governmental agency and body politic and corporate of
the State of Texas, created and existing as a conservation and reclamation
district and political subdivision of the State of Texas pursuant to Article
XVI, Section 59 of the Texas Constitution, and the laws of the State of Texas,
particularly the Issuer Act; and the Company is a corporation organized and
existing under and by virtue of the laws of the State of Texas; and
(c) Pursuant to law, and particularly the Issuer Act, Article 717k, Article
717q, Chapter 383, and Chapter 30, the Issuer, being a "district" as defined in
Chapter 383 and Chapter 30 and being an "issuer" as defined in Article 717k and
Article 717q, is empowered to acquire, construct, and improve various air and
water pollution control facilities, and to issue revenue bonds for such purpose
and for the purpose of refunding any such bonds or obligations issued for such
purposes; and
(d) The Issuer and the Company have previously entered into the Prior
Agreement pursuant to which the Prior Bonds were issued; and
(e)The Issuer entered into the Prior Indenture to secure the Prior Bonds;
and
(f)Pursuant to the terms of the Prior Agreement, the Company is obligated
to pay certain installment sale payments with respect to the Project, which
payments shall be made in amounts which, together with other moneys available
therefor will be sufficient to pay the principal of, redemption premium, if any,
and interest on the Prior Bonds as the same come due, with such payments to be
made in funds which will be immediately available on the date such principal of,
redemption premium, if any, and interest is due on such Prior Bonds; and
(g) The Company has requested that the Issuer issue its revenue bonds for
the purpose of refunding and retiring all of the outstanding Prior Bonds; and
(h) The Company has agreed to make payments hereunder in lieu of its
obligations under the Prior Agreement; and
(i) This Agreement is authorized and executed pursuant to applicable laws,
including the Acts; and
(j)The Issuer and the Company have taken all action and have complied with
all provisions of law with respect to the execution, delivery and performance of
this Agreement and the due authorization of the consummation of the transactions
contemplated hereby.
NOW, THEREFORE, in consideration of the covenants and
agreements herein made, and subject to the conditions herein set
forth, the Issuer and the Company contract and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. CAPITALIZED TERMS USED
BUT NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS ASSIGNED
TO SUCH TERMS IN THE INDENTURE OF TRUST DATED AS OF AUGUST 15,
1996, ENTERED INTO BY AND BETWEEN THE ISSUER AND THE BANK OF NEW
YORK, AS TRUSTEE (THE "INDENTURE").
References in the singular number in this Agreement
shall be considered to include the plural, if and when
appropriate. Any times referred to herein shall be deemed to be
references to New York City time. Any accounting term not
otherwise defined has the meaning assigned to it in accordance
with generally accepted accounting principles.
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 "district" 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
the 1986 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, in-
quiries or investigations pending or to the knowledge of the
Issuer threatened, against or affecting the Issuer in any court
or before any governmental authority or arbitration board or
tribunal, which involve the possibility of materially and
adversely affecting the transactions contemplated by this
Agreement or the Indenture or which, in any way, would adversely
affect the validity or enforceability of the Bonds, the Indenture
or this Agreement or the ability of the Issuer to perform its
obligations under the Indenture or this Agreement.
(g) The adoption of the Bond Resolution, the issuance
and sale of the Bonds and the execution and delivery by the
Issuer of this Agreement and the Indenture, and the compliance by
the Issuer with all of the provisions of each thereof and of the
Bonds (i) are within the powers and authority of the Issuer, (ii)
have been done in full compliance with the provisions of the
Acts, are legal and will not conflict with or constitute on the
part of the Issuer a violation of or a breach of or default
under, or result in the creation of any lien, charge or
encumbrance upon any property of the Issuer (other than as
contemplated by this Agreement and the Indenture) under the
provisions of, any charter instrument, by-law, indenture,
mortgage, deed of trust, note agreement or other agreement or
instrument to which the Issuer is a party or by which the Issuer
is bound, or any license, judgment, decree, law, statute, order,
rule or regulation of any court or governmental agency or body
having jurisdiction over the Issuer or any of its activities or
properties, and (iii) have been duly authorized by all necessary
action on the part of the Issuer.
(h) Neither the nature of the Issuer nor any of its
activities or properties, nor any relationship between the Issuer
and any other person, nor any circumstance in connection with the
offer, issue, sale or delivery of any of the Bonds is such as to
require the consent, approval or authorization of, or the filing,
registration or qualification with, any governmental authority on
the part of the Issuer in connection with the execution, delivery
and performance of this Agreement and the Indenture or the offer,
issue, sale or delivery of the Bonds, other than those already
obtained as of the date of issue of the Bonds; provided, however,
no representation is made herein as to compliance with the
securities or "blue sky" laws of any jurisdiction.
(i) No event has occurred and no condition exists
with respect to the Issuer which would constitute an "Event of
Default" under this Agreement or under the Indenture or which,
with the lapse of time or with the giving of notice or both,
would become an "Event of Default" under this Agreement or under
the Indenture.
(j) Neither this Agreement nor the security for the
Bonds has been pledged or hypothecated in any manner or for any
purpose other than as provided in the Indenture as security for
the payment of the Bonds.
Section 2.02. REPRESENTATIONS BY COMPANY. 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 to
or affecting creditors' rights generally, and (ii) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(d) There is no material litigation or proceeding
pending, or to the knowledge of 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)The Project constitutes "control facilities" within the meaning
of Chapter 383 and "disposal systems" within the meaning of Chapter
30 and a "public utility" within the meaning of Article 717q.
(g) All statements of facts or other information
furnished by the Company to Bond Counsel in connection with Bond
Counsel's opinion relating to the Bonds, including particularly
the Tax Letter of Representation, were true and correct in all
material respects when made and nothing has come to the Company's
attention that would change the truth or correctness of such
statements of facts or other information furnished to Bond
Counsel. Moreover, to the extent that such representations and
statements relate to future events, the Company agrees, at all
times while the Bonds are Outstanding, to take such action to
prevent, or to refrain from any action which would result in,
such representations and statements becoming false, inaccurate or
incorrect.
(h) The representations of the Company stated in the
Prior Agreement were true and correct when made and nothing has
come to the Company's attention to make such representations
untrue as of the date hereof.
ARTICLE III
THE PROJECT
Section 3.01.. . . . . . . . . . . . . . . . . . .INTENTIONALLY OMITTED.
Section 3.02.. . . . . . . . . . . . . . . . . . .INTENTIONALLY OMITTED.
Section 3.03.. . . . . . . . . . . . . . . . . . .INTENTIONALLY OMITTED.
Section 3.04.MAINTENANCE AND REPAIR. All costs of operating and
maintaining the Project shall be paid by the Company, and the Issuer shall have
no obligation or liability in this regard. It is understood and
agreed that the Issuer shall have no duties or responsibilities
whatsoever with respect to the operation or maintenance of the
Project, or the performance of the Project for its designed
purposes.
Section 3.05.RIGHT TO DISCONTINUE OPERATION OF PROJECT. Although
the Company intends to operate, or cause to be operated, the Project for its
designed purposes until the date on which no Bonds are Outstanding, the
Company is not required by this Agreement to operate, or cause to
be operated, any portion of the Project after the Company shall
deem in its discretion that such continued operation is not
advisable and in such event it is not prohibited by this
Agreement from selling, leasing or retiring all or any such
portion of the Project; provided, however, that, prior to any
such sale, lease, or retirement, the Company shall have provided
to the Issuer and the Trustee a Favorable Opinion. The net
proceeds from such sale, lease or other disposition, if any,
shall belong to, and may be used for any lawful purpose by, the
Company.
Section 3.06.INSURANCE AND CONDEMNATION AWARDS. The net proceeds of
any insurance or condemnation award as a result of the destruction or
condemnation of the Project or any portion thereof shall belong to, and may be
used for any lawful purpose by, the Company.
Section 3.07. TAXATION OF PROJECT. During the term
of this Agreement, the Company will promptly remit when due all
taxes, including specifically all sales taxes and ad valorem
taxes, levied in respect of the Project or the Installment
Payments payable hereunder to the appropriate taxing body. The
Company may, at its own expense and in its own name, in good
faith contest any such taxes, assessments and other charges and,
in the event of such contest, may permit the taxes, assessments
or other charges so contested to remain unpaid during the period
of such contest and any appeal therefrom. All taxes, assessments
and other charges levied or imposed with respect to the Project
shall be the obligation of the Company, and the Issuer shall have
no obligation or liability in this regard.
Section 3.08. ISSUER'S LIMITED LIABILITY. It is
recognized that the Issuer's only source of funds with which to
carry out its commitments under this Agreement will be from the
proceeds from the sale of the Bonds or from any available income
or earnings derived therefrom, from payment made or caused to be
made by the Company hereunder, or from any funds which otherwise
might be made available by the Company; and it is expressly
agreed that the Issuer shall have no financial liability,
obligation, or responsibility with respect to this Agreement or
the Project except to the extent of funds available from such
sources.
Section 3.09. GOVERNMENTAL REGULATION. The Company
recognizes and agrees that this Agreement and the issuance of the
Bonds pursuant hereto will not diminish or limit the authority of
the United States Environmental Protection Agency, the Texas
Natural Resources Conservation Commission, the Texas Water
Development Board, or any other State agency or local governments
in performing any of the powers, functions and duties vested in
such entities by federal and state laws, and that all applicable
laws shall be enforced without regard to ownership of the
Project; and that the Company will not be relieved of any
responsibility under any applicable federal or state laws or
regulations pertaining to pollution control, either now, or
during, or after the acquisition, construction and improvement of
the Project, and the Issuer shall have no responsibility or
obligation to take any action to comply with such laws or
regulations with respect to the Project.
ARTICLE IV
ISSUANCE OF BONDS; REFUNDING THE PRIOR BONDS;
PAYMENTS; DISBURSEMENTS
Section 4.01. ISSUANCE OF BONDS. In order to provide funds for
the refunding of the Prior Bonds, the Issuer, concurrently with
the execution of this Agreement, will sell, issue and deliver to
the initial purchasers thereof the Bonds, all in accordance with
the Indenture. The Issuer agrees to pay, from the proceeds from
the sale and delivery of the Bonds, or from any available income
or earnings derived therefrom, or from any funds which otherwise
might be made available to the Issuer for such purpose by the
Company, the cost of the Refunding of the Prior Bonds, to the
full extent provided in this Agreement and permitted by the Acts.
Section 4.02.BOND PROCEEDS. (a) The Issuer shall cause to be
deposited into a separate account within the bond fund
established pursuant to the Prior Indenture proceeds from the
sale of the Bonds equal to $59,700,000, and the Company shall
cause to be deposited into such separate account the amount of
$3,862,500, which together shall be sufficient to pay the
redemption price of and redeem all of the Prior Bonds on December
1, 1996.
(b) The Company agrees to pay all fees, charges and
expenses of the Prior Trustee as required by the Prior Indenture.
Section 4.03.SECURITY FOR THE BONDS. The obligations
of the Company under this Agreement, including specifically the
obligation to make Installment Payments as provided in Sections
5.01, 5.03 and 5.04 hereof, shall be direct general obligations
of the Company. Prior to or simultaneously with the issuance of
the Bonds, the Issuer will assign to the Trustee under the terms
of the Indenture all of the Issuer's right, title, and interest
in and to the Installment Payments and certain other rights under
this Agreement as provided in the Indenture.
Section 4.04. BOND FUNDS. The Issuer has authorized
and directed the Trustee pursuant to the Indenture to transfer
all of the proceeds from the sale of the Bonds to the Prior
Trustee, as trustee and paying agent for the Prior Bonds. The
Company agrees (i) to direct the Prior Trustee to invest such
proceeds, together with amounts provided by the Company pursuant
to Section 4.05 hereof, only in direct obligations of the United
States of America, including obligations the principal of and
interest on which are unconditionally guaranteed by the United
States of America, which may be in book-entry form, and which
mature on or before the redemption date for the Prior Bonds and
(ii) that any such funds which cannot be so invested shall
remain uninvested.
Section 4.05. COMPANY REQUIRED TO PAY IN EVENT MONIES
HELD PURSUANT TO THE PRIOR INDENTURE ARE INSUFFICIENT. The
Company shall, on the Issue Date, cause to be deposited in the
bond fund for the Prior Bonds held by the Prior Trustee monies
sufficient, together with the Bond proceeds so transferred on the
Issue Date, to pay the total redemption price of the Prior Bonds
on their redemption date, plus any fees and charges due the Prior
Trustee. In the event that monies held pursuant to the Prior
Indenture are not sufficient to accomplish the Refunding on the
redemption date for the Prior Bonds, the Company shall at its own
expense and without any right of reimbursement in respect thereof
immediately pay that portion of such costs as may be in excess of
said monies.
Section 4.06. NOTICE TO BOND INSURER. The Company
agrees to give written notice to Bond Insurer not less than two
days prior to any regularly scheduled payment date for principal
of or interest on the Bonds if the Company does not intend or
will be unable to make the corresponding payment to the Trustee
hereunder.
ARTICLE V
THE COMPANY'S PAYMENTS
Section 5.01. COMPANY APPROVAL OF ISSUANCE OF BONDS.
(a) Simultaneously with the authorization of this Agreement by
the Board of Directors of the Issuer, such Board has adopted the
Bond Resolution. In consideration of the covenants and
agreements set forth in this Agreement, and to enable the Issuer
to issue the Bonds to carry out the intents and purposes hereof,
this Agreement is executed to assure the issuance of such Bonds,
and to provide for the due and punctual payment by the Company to
the Issuer, or to the Trustee under the Indenture, of amounts not
less than those required to pay, as and when due (whether at
stated maturity, upon redemption, acceleration of maturity,
tender, deemed tender, or otherwise), all of the principal of,
redemption premium, if any, and interest on, and Purchase Price
of, the Bonds, and all other payments required in connection with
such Bonds, the Agreement, or the Indenture. Each such payment
is hereby designated as an "Installment Payment", and
collectively such payments are hereby designated as "Installment
Payments". The Company hereby agrees to make, or cause to be
made, each Installment Payment, as and when due, for the benefit
of the owners of the Bonds into the Bond Fund, or, in the case of
an Installment Payment in respect of Purchase Price, into the
Bond Purchase Fund, all as provided in the Indenture.
(b) By execution and delivery of this Agreement, the
Company hereby approves the Bond Resolution and the Indenture.
It is hereby agreed that the foregoing approval of the Bond Reso-
lution and the Indenture constitutes the acknowledgement and
agreement of the Company that the Bonds, when issued, sold, and
delivered as provided in the Bond Resolution and the Indenture,
will be issued in accordance with and in compliance with this
Agreement, notwithstanding any other provisions of this Agreement
or any other contract or agreement to the contrary. Any
Bondholder is entitled to rely fully and unconditionally on the
foregoing approval. Notwithstanding any provisions of this
Agreement or any other contract or agreement to the contrary, the
Company's approval of the Bond Resolution and the Indenture shall
be the Company's agreement that all covenants and provisions in
this Agreement and the Indenture affecting the Company shall,
upon the delivery of the Bonds and the Indenture, become uncondi-
tional, valid, and binding covenants and obligations of the
Company so long as the Bonds and the interest thereon are
outstanding and unpaid. Particularly, the obligation of the
Company to make, promptly when due, all Installment Payments
specified in this Agreement and the Indenture shall be absolute
and unconditional, and said obligation may be enforced as pro-
vided 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 princi-
pal on the Bonds or interest payable thereon, shall be sufficient
to pay when due all principal of, redemption premium, if any, and
interest on, and Purchase Price of, the Bonds. The Company shall
have the right to prepay or cause to be prepaid all or a portion
of each Installment Payment at any time, and shall be obligated
to do so in a timely manner if and to the extent the 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 timely payment due on
such date, the Company shall deposit sufficient moneys in such
fund to enable timely payment to be made on such date.
Section 5.05. PAYMENTS TO ISSUER. The Company agrees
to pay directly to the Issuer, all the Issuer Expenses and to pay
the amount of any extraordinary expenses incurred by the Issuer
in the administration of this Agreement or the Indenture as such
expenses are agreed to by the Issuer and the Company. All such
extraordinary expenses shall be paid within a reasonable time
after receipt by the Company of the bills with respect to each.
The Issuer shall bill the Company from time to time as convenient
to the Issuer and the bill will contain reasonable itemization.
"Issuer Expenses" shall mean all direct fees, costs, and
reasonable expenses of the Issuer incurred in connection with the
issuance of the Bonds and the administration of this Agreement
and the Indenture. Such fees, costs, and expenses shall include
those amounts specified in the Agreement to Issue Bonds and the
letter agreement between the Issuer and the Company, dated as of
September 5, 1984, and all direct payments of the Issuer for
reasonable fees of accountants, attorneys, engineers, and fiscal
agents and other direct payments for services of third parties,
and for materials and supplies.
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 the Company.
(b)The Issuer shall have no obligation or responsibility, financial
or otherwise, with respect to the purchase of Bonds or the making or
continuation of arrangements therefor other than as expressly set
forth in subsection (a) of this Section 5.10, except that the
Issuer shall generally cooperate with the Company and the
Remarketing Agent as contemplated by the Indenture.
Section 5.11. USURY. Anything herein to the contrary
notwithstanding, it is the intention of the parties hereto to
conform strictly to the usury laws in force that are applicable
to this transaction. Accordingly, all agreements among the
parties hereto and beneficiaries hereof and their assigns or any
of them, whether now existing or hereafter arising, and whether
written or oral, are hereby limited so that in no contingency,
whether by reason of acceleration of amounts due hereunder or any
part thereof or otherwise, shall the interest (including all sums
that are deemed to be interest) contracted for, charged or
received hereunder and/or with respect to the refinancing of the
Project exceed the maximum amount permissible under applicable
law. The parties hereto agree that to the extent interest is
payable by the Company under this Agreement, Article 5069-1.04,
Vernon's Texas Civil Statutes, as amended, shall apply, and, to
the extent Article 5069-1.04 is applicable to this Agreement, the
indicated rate ceiling thereunder shall apply.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. EVENTS OF DEFAULT. The occurrence and
continuation of any one of the following shall constitute an
"Event of Default" under this Agreement (an "Event of Default"):
(a) failure by 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) dissolution or liquidation of the Company. How-
ever, the term "dissolution or liquidation of the
Company", as used in this paragraph, 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 orsubstantially all of its
assets as an entirety under the conditions permitting such actions
contained in Section 7.02; or
(f) 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
(g) 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, custo-
dian, or other similar official of it or any substan-
tial part of its property, and such involuntary case
or other proceeding shall remain undismissed and
unstayed for a period of sixty (60) days; or
(h) the occurrence of an "Event of Default" under the
Indenture.
The provisions of paragraph (d) of this Section 6.01 are subject
to the following limitations: if by reason of acts of God,
strikes, lockouts or other industrial disturbances; acts of
public enemies; orders or regulations of any kind of the
government of the United States of America or of the State of
Texas or any of their departments, agencies, political
subdivisions, or officials, or any civil military authority;
insurrections; riots; epidemics; landslides; lightning;
earthquakes; tidal waves; fires; hurricanes; tornadoes; blue
northers; other storms; floods; washouts; droughts; arrests;
restraints of government and people; civil disturbances;
explosions; breakage or accident to machinery, transmission
pipes, transmission facilities or canals; partial or entire
failure of utilities; shortages of labor, material, supplies or
transportation; or any other cause or event not reasonably within
the control of the Company (collectively, "events of force
majeure"), the Company is unable in whole or in part to carry out
the agreements on the Company's part herein contained, the
Company shall not be deemed in default during the continuance of
such inability. The Company, however, will use its best efforts
to remedy with all reasonable dispatch the cause or causes
preventing the Company from carrying out such agreements;
provided, that the settlement of strikes, lockouts and other
industrial disturbances shall be entirely within the discretion
of the Company, and the Company shall not be required to make
settlement of strikes, lockouts, and other industrial
disturbances by acceding to the demands of the opposing party or
parties when such course is, in the judgment of the 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
Project, destruction of or damage to the Project, commercial
frustration of purpose, any change in the tax laws of the United
States of America or of the State or any political subdivision
of either of these, or any failure of the Issuer or the Trustee
to perform and observe any agreement, whether express or implied,
or any duty, liability or obligation arising out of or connected
with this Agreement or the Indenture, except to the extent
permitted by this Agreement. Nothing contained in this Section
shall be construed to relieve the Issuer or the Trustee from the
performance of any agreements on their respective parts contained
herein and the Company shall be entitled to institute such action
against the Issuer or the Trustee as the Company shall deem
appropriate to compel performance of any such agreement, duty or
obligation; provided, however, that the Issuer shall not be
required to carry out any such agreement, duty or obligation
unless it is reimbursed for its costs and expenses and no
agreement, duty or obligation of the Issuer shall arise out of
this Agreement other than as specifically set forth herein.
Section 7.02. CORPORATE EXISTENCE. 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 Project; (ii) any written
statements or representations made or given by the Company, or
any of its officers or employees, to the Indemnified Parties, the
Trustee, or any underwriters or purchasers of any of the Bonds,
with respect to the Issuer, the Company, the Project, or the
Bonds, including, but not limited to, statements or
representations of facts, financial information, or corporate
affairs; (iii) damage to property or any injury to or death of
any person that may be occasioned by any cause whatsoever
pertaining to the Project; and (iv) any loss or damage incurred
by the Issuer as a result of violation by the Company of the
provisions of the Prior Agreement or Section 7.04 or 7.05
hereof. The provisions of the preceding sentence shall remain
and be in full force and effect even if any such liability, cost,
expense, damage, or loss or claim therefor by any person,
directly or indirectly results from, arises out of, or relates to
or is asserted to have resulted from, arisen out of, or related
to, in whole or in part, one or more negligent acts or omissions
of the Issuer or its officers, directors, employees, agents,
servants, or any other party acting for or on behalf of the
Issuer in connection with the matters set forth in clauses (i)
through (iv) of said sentence.
Section 7.04. TAX-EXEMPT STATUS OF THE BONDS. It is
the intention of the Company and the Issuer that the interest on
the Bonds be excludable from the gross income of the holders
thereof for federal income tax purposes, except for any Bond for
any period that such Bond is owned by a person who is a
"substantial user" of the Project or a "related person" within
the meaning of Section 103(b)(13) of the Internal Revenue Code of
1954 (the "1954 Code"). To that end, the Company and the Issuer
(to the extent reasonably within the control of the Issuer)
covenant with each other, and with the Trustee for the benefit of
the Bondholders, to refrain from any action which would adversely
affect, and to take such action to assure, the treatment of the
Bonds as obligations described in Section 103 (a) of the Code,
the interest on which is not includable in the "gross income" of
the holder (other than the income of a "substantial user" of the
Project or a "related person" within the meaning of Section
103(b)(13) of the 1954 Code) for purposes of federal income
taxation. Furthermore, the Company hereby covenants as follows:
(a) to use all of the proceeds of the Bonds for the
payment of principal on the Prior Bonds;
(b) to refrain from using the facilities constituting
the Project in a manner that would result in the Bonds
not being "exempt facility bonds" within the meaning
of Section 103(b)(4) of the 1954 Code.
(c) to refrain from taking any action that would
result in the Bonds being "federally guaranteed"
within the meaning of Section 149(b) of the Code;
(d) to refrain from using any portion of the proceeds
of the Bonds, directly or indirectly, to acquire or to
replace funds which were used, directly or indirectly,
to acquire investment property (as defined in Section
148(b)(2) of the Code) which produces a materially
higher Yield over the term of the Bonds than the Yield
on the Bonds, other than investment property acquired
with --
(1) proceeds of the Bonds invested for a period of 90
days or less until such proceeds are needed for the purpose for
which the Bonds are issued,
(2) amounts invested in a bona fide debt service
fund, within the meaning of Section 1.148-1 of the Regulations,
and
(3) amounts deposited in any reasonably required
reserve or replacement fund to the extent such amounts do not
exceed 10 percent of the proceeds of the Bonds and to the extent
that at no time during any bond year will the aggregate amount so
invested exceed 150 percent of debt service on the Bonds for such
year;
(e) to otherwise restrict the use or investment of
the proceeds of the Bonds or amounts treated as proceeds of the
Bonds, as may be necessary, to satisfy the requirements of
Section 148 of the Code (relating to arbitrage);
(f) to provide to the Trustee, at such time as
required by the Trustee, all information required by the Trustee
with respect to Nonpurpose Investments not held in any fund under
the Indenture; and
(g) to use no more than 2 percent of the
grossproceeds of the Bonds for the payment of costs of issuance.
The terms Nonpurpose Investments, Excess Earnings, and
Yield shall have the meanings given to such terms in section 148
of the Code and the Regulations promulgated pursuant to such
section.
It is the understanding of the Issuer and the Company
that the covenants contained herein are intended to assure
compliance with the Code and any regulations or rulings
promulgated by the United States Department of the Treasury
pursuant thereto. In the event that regulations or rulings are
hereafter promulgated which modify or expand provisions of the
Code, as applicable to the Bonds, the Issuer and the Company will
not be required to comply with any covenant contained herein to
the extent that such failure to comply, in the opinion of Bond
Counsel delivered to the Issuer, the Company, and the Trustee,
will not adversely affect the exclusion of interest on the Bonds
from the gross income of the owners of the Bonds for federal
income tax purposes under Section 103 of the Code. In the event
that regulations or rulings are hereafter promulgated which
impose additional requirements which are applicable to the Bonds,
the Company and the Issuer agree to comply with the additional
requirements to the extent necessary, in the opinion of Bond
Counsel delivered to the Issuer, the Company, and the Trustee, to
preserve the exclusion of interest on the Bonds from the gross
income of the owners of the Bonds for federal income tax purposes
under Section 103 of the Code. In furtherance of such intention,
the Issuer hereby authorizes and directs its 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.
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 Project, it will
be incorporated under the laws of the State or will be qualified
to do business in the State.
Section 7.08. RECORDATION. The Company agrees that
it will record and file any of the financing statements and all
supplements thereto, and such other instruments as may be
required from time to time to be recorded or filed, in such
manner and in such places as from time to time may be required by
law in order fully to preserve and protect the securities of the
Owners of the Bonds and the rights of the Trustee hereunder and
under the Indenture.
Section 7.09. NO PERSONAL LIABILITY. No officer,
employee, representative, or agent of the Issuer or the Company
shall be personally liable on this Agreement.
Section 7.10. COMPLIANCE WITH RULE 15C2-12. The
Company hereby agrees that it will comply with and perform its
duties under the Rule 15c2-12 Undertakings dated the date of
delivery of the Bonds and attached to this Agreement as Exhibit A
and that the Issuer shall have no responsibility or obligation
with respect to compliance with Rule 15c2-12.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. GENERAL PROVISIONS. (a) The terms of
this Agreement may be enforced as to one or more breaches either
separately or cumulatively.
(b) No remedy conferred upon or reserved to the
Issuer, the Company, the Trustee, or the owners of the Bonds in
this Agreement is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy now or
hereafter existing at law or in equity or by statute. No delay
or omission to exercise any right or power accruing upon any
default, omission, or failure of performance hereunder shall
impair any such right or power or shall be construed to be a
waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In
the event any provision contained in this Agreement should be
breached by the Issuer or the Company and thereafter duly waived,
such waiver shall be limited to the particular breach so waived
and shall not be deemed to waive any other breach of this
Agreement. No waiver by either party of any breach by the other
party of any of the provisions of this Agreement shall be
construed as a waiver of any subsequent breach, whether of the
same or of a different provision of this Agreement.
(c) Headings of the Sections of this Agreement have
been inserted for convenience of reference only and in no way
shall they affect the interpretation of any of the provisions of
this Agreement.
(d) This Agreement is made for the exclusive benefit
of the Issuer, the Bond Insurer, the Trustee, the owners of the
Bonds and the Company, and their respective successors and
assigns herein permitted, and not for any third party or parties;
and nothing in this Agreement, expressed or implied, is intended
to confer upon any party or parties other than the Issuer, the
Bond Insurer, the Trustee, the owners of the Bonds 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.
The address for notice for each of the parties shall be as follows:
Matagorda County Navigation District Number One
209 Fifth Street
Palacios, Texas 77465
Attention: General Manager
Telephone No.: (512) 972-2567
Telecopy No.: (512) 972-6153
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.
Any notice given hereunder shall also be given to the Bond Insurer
at its address set forth in Section 9.07(g) of the Indenture.
Section 8.07. SEVERABILITY. If any clause, provision or Section of this
Agreement should be held illegal or invalid by any court, the invalidity of such
clause, provision or Section shall not affect any of the remaining clauses,
provisions or Sections hereof and this Agreement shall be construed and enforced
as if such illegal or invalid clause, provision or Section had not been
contained herein. In case any agreement or obligation contained in this
Agreement should be held to be in violation of law, then such agreement or
obligation shall be deemed to be the agreement or obligation of the Company or
the Issuer, as the case may be, to the full extent permitted by law.
Section 8.08. EXECUTION OF COUNTERPARTS. This Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
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.
MATAGORDA COUNTY NAVIGATION DISTRICT
NUMBER ONE
By:_______________________________________
Chairman
ATTEST:
_____________________________________
Secretary
(SEAL)
CENTRAL POWER AND LIGHT COMPANY
By:_________________________________________
Authorized Agent
EXHIBIT 2
INDENTURE OF TRUST
This Indenture of Trust, made and entered into as of August
15, 1996, by and between Matagorda County Navigation District
Number One, 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 Chapters 60 and 62, Texas Water Code, as amended (the
"Issuer Act"), and The Bank of New York, a New York banking
corporation, having a principal corporate trust office in The City
of New York, New York, and being qualified to accept and
administer the trusts hereby created acting as trustee (herein
called the "Trustee")
WITNESSETH:
WHEREAS, pursuant to law, and particularly the Issuer Act,
Article 717k, Vernon's Texas Civil Statutes, as amended ("Article
717k"), Article 717q, Vernon's Texas Civil Statutes, as amended
("Article 717q"), the Clean Air Financing Act, Chapter 383, Texas
Health and Safety Code, as amended, ("Chapter 383"), and the
Regional Waste Disposal Act, Chapter 30 of the Texas Water Code, as
amended ("Chapter 30"), the Issuer, being a "district" as defined
in Chapter 383 and Chapter 30 and being an "issuer" as defined in
Article 717k and Article 717q, is empowered to acquire, construct
and improve various pollution control facilities, and to issue
bonds to refund and retire bonds previously issued for such
purpose;
WHEREAS, the Acts also authorize the Issuer to issue revenue
bonds to finance such projects, payable solely from the revenues
derived from payments to the Issuer by the user of the project for
the purpose of defraying the cost of financing, acquiring,
constructing or improving any project;
WHEREAS, the Issuer has previously issued its Pollution
Control Revenue Bonds (Central Power and Light Company Project)
Series 1986 (the "Prior Bonds") in the original principal amount of
$60,000,000, which were issued for the purpose of paying a portion
of the costs of acquiring, constructing and improving certain air
and water pollution control, solid waste disposal and sewage
facilities (the "1986 Project") for Central Power and Light
Company (the "Company") at the South Texas Project Electric
Generating Station - Units 1 and 2 in Matagorda County, Texas;
WHEREAS, the Acts empower the Issuer to issue refunding bonds
to refund all or any part of its outstanding bonds;
WHEREAS, the Company has requested that the Issuer issue its
revenue bonds to refund and retire all of the outstanding Prior
Bonds;
WHEREAS, an Installment Payment Agreement, dated as of August
15, 1996 (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 Matagorda County Navigation District Number
One Pollution Control Revenue Refunding Bonds (Central Power and
Light Company Project) Series 1996; the execution of an Indenture
of Trust, an Installment Payment Agreement, and a Bond Purchase
Agreement; approval of an Official Statement; and other matters in
connection therewith (together with any amendment or supplement to
such resolution as authorized therein, hereinafter called the "Bond
Resolution");
WHEREAS, the Bond Resolution authorized the issuance of
Matagorda County Navigation District Number One Pollution Control
Revenue Refunding Bonds (Central Power and Light Company Project)
Series 1996 (hereinafter called the "Bonds") for the purpose of
paying a portion of the costs of refunding the Prior Bonds, all as
authorized by the Issuer Act, Chapter 383, Chapter 30, Article 717k
and Article 717q;
WHEREAS, the Bonds, and the interest thereon, are and shall be
payable from and secured by a first and superior lien on and pledge
of the payments designated as "Installment Payments" to be made by
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, the Trustee has agreed to accept the trusts herein
created upon the terms herein set forth; and
WHEREAS, all things necessary to make the Bonds, when issued
as provided in this Indenture, the valid, binding and legal special
obligations of the Issuer according to the import thereof, and to
constitute this Indenture a valid assignment of the amounts pledged
to the payment of the principal of, premium, if any, and interest
on, and Purchase Price of, the Bonds have been done and performed,
and the creation, execution and delivery of this Indenture and the
execution and issuance of the Bonds, subject to the terms hereof,
in all respects have been duly authorized;
NOW, THEREFORE, the Issuer, in consideration of the premises
and the acceptance by the Trustee of the trusts hereby created, and
for other good and valuable consideration, the receipt of which is
hereby acknowledged, and in order to secure the payment of the
principal of, premium, if any, and interest on, and Purchase Price
of, the Bonds according to their tenor and effect, and to secure
the payment, performance and observance by the Issuer of all of the
covenants and obligations expressed or implied herein and in the
Bonds, does hereby irrevocably grant, alienate, bargain, sell,
convey, transfer, assign and pledge unto the Trustee (to the extent
of its legal capacity to hold the same for the purposes hereof),
and the successors in trust and assigns of the Trustee, forever.
GRANTING CLAUSE FIRST
All right, title, and interest of the Issuer in, to and under
the Agreement (except Unassigned Rights), and all extensions and
renewals of the term thereof, if any, and to do any and all other
things which the Issuer is or may become entitled to do under the
Agreement; provided, however, that the assignment made pursuant to
this clause shall not impair or diminish any obligation of the
Issuer under the Agreement or alter the rights, duties and
obligations of the Trustee under the remaining terms of this
Indenture;
GRANTING CLAUSE SECOND
All moneys, income, revenues, issues, profits, receipts and
other amounts payable to or receivable by the Issuer under or with
respect to the Agreement, including the Installment Payments
(except Unassigned Rights);
GRANTING CLAUSE THIRD
All right, title, and interest of the Issuer in and to all
moneys and securities from time to time held by the Trustee under
the terms of this Indenture (except amounts held in the Rebate Fund
and the Bond Purchase Fund); and
GRANTING CLAUSE FOURTH
All right, title and interest of the Issuer in and to any and
all property, rights, and interest of every kind or description
which, from time to time hereafter, may be sold, transferred,
conveyed, assigned, pledged, mortgaged or delivered to the Trustee
as additional security hereunder.
TO HAVE AND TO HOLD all and singular the Trust Estate (as
hereinafter defined), whether now owned or hereafter acquired,
irrevocably unto the Trustee and its successors in trust and
assigns forever;
IN TRUST, NEVERTHELESS, upon the terms and trusts herein set
forth for the equal and proportionate benefit, security and
protection of all present and future owners of the Bonds from time
to time issued under and secured by this Indenture without
privilege, priority, or distinction as to the lien or otherwise of
any of the Bonds over any of the other Bonds;
PROVIDED, HOWEVER, that if the Issuer, its successors or
assigns, shall well and truly pay, or cause to be paid, but only
from the payments made pursuant to the Agreement, the principal
of, premium, if any, and interest on the Bonds due or to become due
thereon at the times and in the manner mentioned in the Bonds
according to the true intent and meaning thereof, and shall cause
the payments to be made on the Bonds as required under Article IV
hereof or shall provide, as permitted hereby, for the payment
thereof by depositing with the Trustee the entire amount due or to
become due thereon (or Governmental Obligations sufficient for that
purpose as provided in Article V hereof), and shall pay or cause to
be paid to the Trustee all sums of money due or to become due to it
in accordance with the terms and provisions hereof, then upon the
final payment thereof or provisions therefor this Indenture and the
rights hereby granted shall cease, determine, and be void;
otherwise this Indenture shall remain in full force and effect.
THIS INDENTURE FURTHER WITNESSETH, and it is expressly
declared, that all Bonds issued and secured hereunder are to be
issued, authenticated and delivered, and all said property, rights
and interest, including, without limitation, the amounts hereby
assigned, are to be dealt with and disposed of under, upon and
subject to the terms, conditions, stipulations, covenants,
agreements, trusts, uses and purposes hereinafter expressed, and
that the Issuer has agreed and covenanted, and hereby does agree
and covenant, with the Trustee and with the Owners, from time to
time, of the Bonds, as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01. Definitions. Each of the following terms shall
have the meaning assigned to it in this Section 1.01 whenever used
in this Indenture, unless the context in which such term is used
clearly requires otherwise:
Acts - shall mean, collectively, the Issuer Act, Chapter 30,
Chapter 383, Article 717k and Article 717q.
Agreement - shall mean the Installment Payment Agreement,
dated as of August 15, 1996, by and between the Issuer and the
Company, including all amendments thereof or supplements thereto.
Approval Certificate - shall mean the certificate of the
Chairman of the Issuer approving certain terms of the Bonds.
Article 717k - shall mean Article 717k, Vernon's Texas Civil
Statutes, as amended.
Article 717q - shall mean Article 717q, Vernon's Texas Civil
Statutes, as amended.
Authorized Company Representative - shall mean such person at
the time and from time to time designated by written certificate
furnished to the Issuer and the Trustee containing the specimen
signature of such person and signed on behalf of the Company by the
Chairman of the Board of Directors, the President, any Vice
President, Treasurer or Assistant Treasurer of the Company to act
on behalf of the Company. Such certificate may designate an
alternate or alternates.
Authorized Denominations - shall mean (i) for Bonds in the
Daily or Weekly Mode, $100,000 or any integral multiple thereof;
provided that if the principal amount of Bonds in the Daily or
Weekly Mode, as the case may be, is not evenly divisible by
$100,000, then the remainder of such principal amount shall be
added to another Bond in the same Mode that is in a principal
amount of $100,000 or any integral multiple thereof, (ii) for Bonds
in the Flexible Mode, $100,000 or any integral multiple of $1,000
in excess of $100,000, and (iii) for Bonds in the Monthly,
Quarterly, Semiannual, Multiannual or Fixed Rate Mode, $5,000 or
any integral multiple thereof.
Authorized Issuer Representative - shall mean such person at
the time and from time to time designated by written certificate
furnished to the Company and the Trustee containing the specimen
signature of such person and signed on behalf of the Issuer by its
Chairman or Secretary. Such certificate may designate an alternate
or alternates.
Beneficial Owner - shall mean the actual purchaser of a Bond.
Board - shall mean the lawfully qualified Board of Navigation
and Canal Commissioners 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 Insurer - shall mean MBIA Insurance Corporation and its
successors and assigns.
Bond Owner, Bondowner, Owner, Bondholder, bondholder, holder,
Registered Owner or owner of the Bonds -when used with respect to
a Bond, shall mean the person or entity in whose name such Bond
shall be registered.
Bond Purchase Agreement - shall mean the Bond Purchase
Agreement dated the date of its execution between the Issuer and
the Underwriter.
Bond Purchase Fund - shall mean the fund by that name
established by Section 4.04 of this Indenture.
Bond Registrar - shall mean the Trustee or any successor bond
registrar serving as such under this Indenture. Principal Office
of the Bond Registrar shall mean the office thereof designated in
writing to the Trustee.
Bond Resolution or Resolution - shall mean the Resolution of
the Board of Directors authorizing the issuance of the Bonds
(including the Indenture prescribed and authorized to be executed
in the Bond Resolution) together with any supplemental resolutions
or amendments to the Resolution or such Indenture.
Bonds - shall mean the Matagorda County Navigation District
Number One Pollution Control Revenue Refunding Bonds (Central Power
and Light Company Project) Series 1996, executed and delivered
pursuant hereto.
Business Day - shall mean any day on which commercial banks
located in all of the cities in which the Principal Offices of the
Trustee, the Paying Agent and the Remarketing Agent are located are
not required or authorized by law or regulation to remain closed
and on which the New York Stock Exchange is not closed.
Chapter 30 - shall mean Chapter 30 of the Texas Water Code, as
amended.
Chapter 383 - shall mean Chapter 383 of the Texas Health and
Safety Code, as amended.
Code - shall mean the Internal Revenue Code of 1986, as
amended, and the rulings and regulations (including temporary and
proposed regulations) promulgated thereunder or, to the extent
applicable, under the Internal Revenue Code of 1954, as amended.
Company - shall mean Central Power and Light Company and any
successors and assigns as permitted by Section 7.02 of the
Agreement.
Company-Held Bonds - shall mean Bonds owned by or held in the
name of the Company or its designee or held by the Trustee for the
account of the Company or its designee as described in Section
2.10(b) hereof.
Conversion or conversion - shall mean a change from one Mode
to another with respect to a Bond, and with respect to a Bond in
the Multiannual Mode, a change from one Interest Rate Period to
another.
Conversion Date - shall mean the date on which a new Mode
becomes effective with respect to a Bond, and with respect to a
Bond in the Multiannual Mode, the date on which a new Interest Rate
Period becomes effective.
Costs of Issuance - shall mean all costs and expenses incurred
by the Issuer or the Company in connection with the issuance and
sale of the Bonds, including without limitation (i) reasonable fees
and expenses of accountants, attorneys, engineers, and financial
advisors, (ii) materials, supplies, and printing and engraving
costs, (iii) recording and filing fees, (iv) rating agency fees,
and (v) the Issuer's administrative expenses as provided in Section
5.05 of the Agreement.
Daily Mode - shall mean the Mode in which the interest rate on
the Bonds is set at the Daily Rate, all as set forth in the form of
Bond set forth in Section 2.03 hereof.
Daily Rate - shall mean the rate of interest that is set on
the Bonds by the Remarketing Agent while they are in the Daily
Mode.
Delivery Date - shall mean, with respect to a Bond tendered
for purchase, the Purchase Date or any subsequent Business Day on
which such Bond is delivered to the Paying Agent as provided in the
form of Bond.
DTC - shall mean The Depository Trust Company, New York, New
York, or any successor securities depository.
DTC Participant - shall mean any securities broker dealer,
bank, trust company, clearing corporation or other organization
with Bonds credited to an account maintained on its behalf by DTC.
Effective Date - shall mean with respect to a Bond (a) in the
Daily, Flexible, Weekly, Monthly, Quarterly, Semiannual and
Multiannual Modes, the date on which a new Interest Rate Period for
that Bond takes effect and (b) in the Multiannual or Fixed Rate
Mode, any date on which such Bond is subject to optional redemption
pursuant to Section 2.06(b)(ii) hereof.
Electronic Notice - shall mean notice transmitted through a
time-sharing terminal, by facsimile transmission or by telephone
(promptly confirmed in writing or by facsimile transmission).
Event of Default - used with respect to this Indenture, shall
mean any event specified in Section 6.01 of this Indenture.
Favorable Opinion - shall mean an opinion of Bond Counsel
addressed to the Issuer, the Company, the Bond Insurer and the
Trustee to the effect that the action proposed to be taken is
authorized or permitted by, to the extent applicable, the Acts and
this Indenture and will not adversely affect the excludability of
interest on the Bonds from gross income of the owners thereof for
federal income tax purposes (other than as held by a "substantial
user" of the Project or a "related person" within the meaning of
the Code).
Fixed Rate - shall mean a rate of interest on a Bond that is
fixed for the remaining term of the Bond or until such Bond is
converted to a different Mode.
Fixed Rate Conversion Date - shall mean with respect to a
Bond, the date upon which the Fixed Rate first becomes effective
for the Bond, and shall mean the Issue Date if the Bonds are
initially delivered bearing interest at a Fixed Rate.
Fixed Rate Mode - shall mean the Mode in which the interest
rate on the Bonds is set at the Fixed Rate Conversion Date until
the Maturity Date or until such Bond is converted to a different
Mode.
Flexible Mode - shall mean the Mode in which the interest rate
on the Bonds is set at the Flexible Rate, all as set forth in the
form of Bond set forth in Section 2.03 hereof.
Flexible Rate - shall mean a rate of interest set by the
Remarketing Agent for periods from 1 to 270 days.
Government Obligations - shall mean direct obligations of, or
obligations the timely payment of principal of and interest on
which is fully and unconditionally guaranteed by, the United States
of America.
Indenture - shall mean this Indenture of Trust, as originally
executed and as amended, modified or supplemented thereafter in
accordance with the terms hereof.
Installment Payment - shall mean each payment required to pay
amounts due and owing on the Bonds issued pursuant to the
Agreement, as defined in Section 5.01 thereof and as provided for
in this Indenture, including the principal of, redemption premium,
if any, and interest on, and Purchase Price of, such Bonds.
Interest Accrual Date - shall mean the first day of any
Interest Rate Period and thereafter, each Interest Payment Date in
respect thereof, other than the last such Interest Payment Date.
Interest Payment Date - shall mean (i) each 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 Matagorda County Navigation District
Number One, a conservation and reclamation district and a
governmental agency and body politic and corporate of the State of
Texas.
Issuer Act - shall mean Chapters 60 and 62, Texas Water Code,
as amended.
Maturity Date - shall mean the Maturity Date as set forth in
the Approval Certificate.
Maximum Rate - shall mean a "net effective interest rate" (as
defined and calculated in accordance with the provisions of Article
717k-2, Vernon's Texas Civil Statutes) of twelve percent (12%) per
annum.
Mode - shall mean the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily Mode,
the Flexible Mode, the Weekly Mode, the Monthly Mode, the Quarterly
Mode, the Semiannual Mode, the Multiannual Mode and the Fixed Rate
Mode.
Monthly Mode - shall mean the Mode in which the interest rate
on the Bonds is set at the Monthly Rate, all as set forth in the
form of Bond set forth in Section 2.03 hereof.
Monthly Rate - shall mean the rate of interest that is set on
the Bonds while they are in the Monthly Mode.
Moody's - shall mean Moody's Investors Service, Inc., or any
successor thereto maintaining a rating on the Bonds at the request
of the Company.
Multiannual Mode - shall mean the Mode in which the interest
rate on the Bonds is fixed for periods of one year or multiples
thereof designated by the Remarketing Agent, after consultation
with the 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.
Municipal Bond Insurance Policy - shall mean the financial
guaranty insurance policy issued by the Bond Insurer insuring the
payment when due of the principal of and interest on the Bonds as
provided therein.
Official Statement - shall mean the Official Statement
relating to the Bonds.
Outstanding, Bonds Outstanding or Bonds then Outstanding -
shall mean when used with reference to Bonds at any date as of
which the amount of Outstanding Bonds is to be determined, means
all Bonds authenticated and delivered under the Indenture, except:
(a) Bonds canceled or delivered for cancellation at or
prior to such date;
(b) Bonds deemed to be paid pursuant to the terms of this
Indenture;
(c) Bonds in lieu of which others have been authenticated and
delivered under this Indenture;
(d) Bonds registered in the name of the Issuer;
(e) On or after any Purchase Date for Bonds, all Bonds (or
portions of Bonds) which are tendered or deemed to have been
tendered for purchase on such date, provided that funds sufficient
for such purchase are on deposit with the Paying Agent; and
(f) For purposes of any consent, request, demand,
authorization, direction, notice, waiver or other action to be
taken by the holders of a specified percentage of outstanding Bonds
hereunder, all Bonds held by or for the account of the Issuer or
the Company, except that for purposes of any such consent, request,
demand, authorization, direction, notice, waiver or action the
Trustee shall be obligated to consider as not being outstanding
only Bonds known by the Trustee by actual notice thereof to be so
held.
In determining whether the owners of a requisite aggregate
principal amount of Bonds outstanding have concurred in any
request, demand, authorization, direction, notice, consent or
waiver under the provisions hereof, Bonds which are held by or on
behalf of the Company or any affiliates thereof (unless all of the
Outstanding Bonds are then owned by said parties) shall be
disregarded for the purpose of any such determination.
Notwithstanding the foregoing, Bonds so owned which have been
pledged in good faith shall not be disregarded as aforesaid if the
pledgee has established to the satisfaction of the Bond Registrar
the pledgee's right so to act with respect to such Bonds and that
the pledgee is not the Company or an affiliate thereof.
Paying Agent - shall mean the Trustee or any successor paying
agent or co-paying agent serving as such under this Indenture.
Principal Office of the Paying Agent shall mean the office thereof
designated in writing to the Trustee. So long as any Bond is
Outstanding hereunder, the Paying Agent shall maintain an office or
have an agent with an office in New York City.
Permitted Investments - shall mean any of the following
obligations or securities, to the extent permitted by law, on which
the Issuer is not the obligor:
(a) Government Obligations;
(b) money market funds registered under the Investment
Company Act of 1940, whose shares are registered under the
Securities Act of 1933, and having a rating by S&P of AAAm-G; AAAm;
or AAm; and
(c) obligations or securities approved in writing by the Bond
Insurer.
Plant - shall mean the South Texas Project Electric Generating
Station located in Matagorda County, Texas.
Principal Office - is defined in the definitions of Trustee,
Paying Agent, Bank, Bond Registrar and Remarketing Agent, herein.
Prior Agreement - shall mean the Installment Sale Agreement,
dated as of November 15, 1986, between the Issuer and the Company.
Prior Bonds - shall mean Matagorda County Navigation District
Number One Pollution Control Revenue Bonds (Central Power and Light
Company Facilities) Series 1986.
Prior Indenture - shall mean the Indenture of Trust, dated as
of November 15, 1986, between the Issuer and the Prior Trustee.
Prior Trustee - shall mean The Bank of New York.
Project - shall mean, collectively, the facilities, as
described more fully in Exhibit A to the Prior Agreement.
Purchase Date - shall mean the date upon which Bonds are
required to be purchased pursuant to a mandatory or optional tender
in accordance with the provisions in the forms of Bonds set forth
in Section 2.03 hereof.
Purchase Price - shall mean, with respect to a Bond on a
Purchase Date, a price equal to par plus accrued interest to the
Purchase Date; provided, that in the event that the Purchase Date
is an Interest Payment Date for such Bond and such Bond is not in
the Flexible Mode, accrued interest will be paid separately and not
as a part of the Purchase Price on such Date; and further provided
that in the event such Bond bears interest at a Multiannual or
Fixed Rate and is subject to mandatory tender on a date on which
the Bond is subject to optional redemption, Purchase Price shall
include any premium that would be payable on the Purchase Date if
such Bond were redeemed on the Purchase Date.
Quarterly Mode - shall mean the Mode in which the interest
rate on the Bonds is set at the Quarterly Rate, all as set forth in
Section 2.03 hereof.
Quarterly Rate - shall mean the rate of interest that is set
on the Bonds while they are in the Quarterly Mode.
Rating Agencies - shall mean S&P and/or Moody's, according to
which of such rating agencies then rates the Bonds; and provided
that if neither of such rating agencies then rates the Bonds, the
term "Rating Agencies" shall refer to any national rating agency
(if any), mutually acceptable to the 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.
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), 2.02(G)(3) or (4) or 2.02(H)(3) hereof.
Trustee - shall mean The Bank of New York, or any successor
trustee or co-trustee serving as such under this Indenture.
Principal Office of the Trustee shall mean the business address
designated in writing to the Issuer and the Remarketing Agent as
its principal office for its duties hereunder.
Trustee's Prime Rate - shall mean, on any day, the lesser of
(a) the corporate base rate for that day as announced by the
Trustee in its commercial banking capacity and (b) the highest
nonusurious interest rate ("Ceiling Rate") permitted for each such
day by whichever of Texas or federal laws permit the higher
nonusurious rate, stated as a rate per annum.
Trust Estate - shall mean the property conveyed to the Trustee
pursuant to the Granting Clauses of this Indenture.
Unassigned Rights - shall mean the rights of the Issuer under
Sections 5.05, 6.03 and 7.03(a) of the Agreement and the right to
receive notices thereunder.
Undelivered Bonds - shall mean Bonds which are deemed to have
been tendered as provided in the forms of the Bonds for the Daily
Mode, Flexible Mode, Weekly Mode, Monthly Mode, Quarterly Mode,
Semiannual Mode, Multiannual Mode and Fixed Rate Mode set forth in
Section 2.03 hereof.
Underwriter - shall mean, collectively, the initial
underwriters of the Bonds, Goldman, Sachs & Co. and 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.
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 "Matagorda
County Navigation District Number One Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) Series
1996". The Bonds shall be issued for the purpose of accomplishing
the Refunding as provided herein and in the Agreement. No Bonds
may be issued pursuant to this Indenture in addition to those
authorized by this Section 2.01, except Bonds issued upon transfer
or exchange pursuant to Section 3.06 hereof, temporary Bonds issued
pursuant to Section 3.16 hereof, replacement Bonds issued pursuant
to Section 3.17 hereof and Bonds issued pursuant to Section 2.09
hereof.
(b) The Bonds (i) shall be dated as provided in the paragraph
next preceding the last paragraph of this Section, (ii) shall be in
the aggregate principal amount set forth in the Approval
Certificate, (iii) shall bear interest initially in the Mode set
forth in the Approval Certificate and thereafter as set forth in
Section 2.02 and as provided in the form of the Bond, until paid;
and (iv) shall mature on the Maturity Date set forth in the
Approval Certificate.
The Bonds are subject to redemption prior to maturity as set
forth in Section 2.06 hereof.
The Bonds are issuable in the form of registered Bonds without
coupons in Authorized Denominations. The Bonds shall be numbered
from 1 upwards, provided that the number assigned to each
definitive Bond shall be prefixed by the letters "R." Temporary
Bonds shall be prefixed by the letters "TR."
Subject to the provisions related to the book-entry only
system of Section 3.07 hereof, principal of, and premium, if any,
on the Bonds shall be payable to the Bondholders upon presentation
and surrender of the Bonds as the same become due at the Principal
Office of the Paying Agent. Interest on the Bonds shall be paid as
provided in the form of the Bond. Such interest shall be paid
notwithstanding the cancellation of any Bonds upon any exchange or
registration of transfer thereof subsequent to the Record Date and
prior to such Interest Payment Date, except that, if and to the
extent there shall be a default in the payment of the interest due
on such Interest Payment Date, such defaulted interest shall be
paid to the Bondholders in whose names any such Bonds (or any Bond
or Bonds issued upon registration of transfer or exchange thereof)
are registered at the close of business on the Business Day next
preceding the date of payment of such defaulted interest. Payment
of principal of, premium, if any, and interest on the Bonds shall
be made in such lawful money of the United States of America as, at
the respective times of payment, shall be legal tender for the
payment of public and private debts.
The Bonds shall be dated as of August 15, 1996, and shall
initially bear interest from the Issue Date unless initially issued
bearing interest at a Fixed Rate, in which case, the Bonds shall
initially bear interest from August 15, 1996. Thereafter, the
Bonds shall bear interest from the Interest Payment Date to which
interest has been paid or duly provided for, or unless no interest
has been paid or duly provided for on the Bonds, in which case from
the Issue Date until paid, in each case at the rates set forth in
Section 2.02 hereof and as provided in the Bonds. If, as shown by
the records of the Trustee, interest on the Bonds is in default,
Bonds issued in exchange for Bonds surrendered for registration of
transfer or exchange shall note such default and shall bear
interest from the date to which interest has been paid in full on
the Bonds, or, if no interest has been paid on the Bonds, from the
Issue Date. Each Bond shall bear interest on overdue principal
and, to the extent permitted by law, on overdue interest at the
applicable rate in effect on the date which such principal and
interest became due and payable.
With respect to Bonds in the Daily, Flexible, Weekly, Monthly,
Quarterly or Semiannual Mode, on the Business Day before each
Interest Payment Date and for Bonds in the Multiannual and Fixed
Rate Mode, on the fifteenth day of the calendar month prior to each
Interest Payment Date, the Trustee shall calculate the amount of
interest to be paid on the next succeeding Interest Payment Date
and shall, not later than 11:00 a.m., New York City time, on such
date the calculation is made, notify the Company and the Paying
Agent of the amount of interest to be paid. Any contest by the
Company of the amount calculated by the Trustee to be due on an
Interest Payment Date shall not relieve the Company of its
obligation to pay such amount to enable the Trustee to pay the
interest payable on the Bonds on such Interest Payment Date.
Section 2.02. Interest. The interest rate on the Bonds, as
provided in the Bonds, will be the lesser of (i) the Maximum Rate
or (ii) the rate determined as provided in this Section 2.02. In
no event shall the Interest Rate exceed the Maximum Rate.
Initially, the Bonds shall bear interest at the interest rate set
forth in the Approval Certificate determined by the Underwriter in
accordance with the Mode set forth in the Approval Certificate.
Interest on the Bonds in a Flexible Mode, Daily Mode, Weekly Mode
or Monthly Mode shall be payable on the applicable Interest Payment
Date as herein described, computed on the basis of a 365 or 366-day
year, as applicable for the number of days actually elapsed based
on the calendar year in which such Rate Period commences. The
interest on the Bonds in a Fixed Rate Mode, Multiannual Mode,
Semiannual Mode or Quarterly Mode shall be payable on the
applicable Interest Payment Date as herein described, computed on
the basis of a 360-day year of twelve 30-day months. While there
exists an Event of Default under this Indenture, the interest rate
on the Bonds will be the rate on the Bonds on the day before the
Event of Default occurred.
(A) Flexible Mode.
(1) Determination of Flexible Rates. The Flexible Rate for
Bonds in the Flexible Mode shall be the rate of interest determined
by the Remarketing Agent, for each Interest Rate Period, to be the
lowest rate which in its judgment, on the basis of prevailing
financial market conditions, is necessary on and as of the
Effective Date, to remarket each Bond having such Interest Rate
Period (as determined by the Remarketing Agent) in a secondary
market transaction at a price equal to the principal amount
thereof, but not in excess of the Maximum Rate. The Remarketing
Agent shall determine the initial Flexible Rate or Rates and
Interest Rate Period or Periods on or before the date of conversion
to the Flexible Mode. Thereafter, the Remarketing Agent shall
redetermine the Flexible Rate for each Interest Rate Period and
shall redetermine each Interest Rate Period. While any Bonds are
in the Flexible Mode, such Bonds may have successive Interest Rate
Periods and any Bond may bear interest at a rate and for a period
different from any other Bond. The interest rate and the Interest
Rate Period for each particular Bond in the Flexible Mode will be
determined by the Remarketing Agent and will remain in effect from
and including the Effective Date of the Interest Rate Period
selected for that Bond by the Remarketing Agent through the last
date thereof. The Remarketing Agent shall notify the Paying Agent
of the Flexible Rate and Interest Rate Period by Electronic Notice
not later than 1:00 p.m., New York City time, on the Effective
Date. The Paying Agent shall give written notice of the Flexible
Rate and Interest Rate Period to the Trustee and the 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 and the Bondowners. If the
Remarketing Agent fails for any reason to determine the Flexible
Rate or Interest Rate Period for any Bond while in the Flexible
Mode, or if for any reason such manner of determination shall be
determined to be invalid or unenforceable, the Bond shall be deemed
to be in an Interest Rate Period ending on the next succeeding day
which is immediately followed by a Business Day and the Flexible
Rate shall be equal to 100% of the rate for the Public Securities
Association Municipal Swap Index as published by Municipal Market
Data for 7 day high-grade tax-exempt variable rate demand
obligations on the day on which such rate is determined or, if such
rate is not published on that day, the most recent publication of
such rate.
In determining the Flexible Rate and remarketing Bonds in
the Flexible Mode, the Remarketing Agent shall (i) not offer
Interest Rate Periods greater than 270 days, (ii) not offer
Interest Rate Periods applicable to Bonds to be converted
extending beyond the day preceding any scheduled conversion of
the Bonds to another Mode or the final maturity of the Bonds,
and (iii) follow any written directions of the 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) are not met by 10:30 a.m., New York City time, on
the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the Trustee,
the Company 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 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) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the Trustee,
the Company and the Remarketing Agent, and the Bonds shall be
subject to mandatory tender as provided in Section 2.02(B)(4)
hereof. In addition, the failed conversion shall cause the
interest rate on the Bonds subject to such failed conversion to
immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall remain
subject to mandatory tender pursuant to Section 2.11 hereof. In no
event shall the failure of Bonds to be converted to another Mode
for any reason be deemed to be, in and of itself, an Event of
Default under this Indenture, so long as the Purchase Price of all
Bonds required to be purchased is made available as provided
herein.
(3) Bondowners' Option to Tender Bonds in Daily Mode. Bonds
in the Daily Mode are subject to tender, at the election of the
owner thereof, in the manner and subject to the limitations
described in the form of Bond. The owners of Tendered Bonds shall
receive on the Delivery Date 100% of the principal amount of the
Tendered Bonds plus accrued interest to the Purchase Date, provided
that if the Purchase Date is an Interest Payment Date, accrued
interest shall be paid separately, and not as part of the Purchase
Price on such date. The purchase of Tendered Bonds shall not
extinguish the debt represented by such Bonds which shall remain
Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly
tendered to it for purchase as provided in the form of Bond and in
this subsection (3); provided, however, that the Paying Agent shall
not accept any Tendered Bonds and the Purchase Price therefor shall
not be paid if on the Purchase Date the principal of the Bonds
shall have been accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
Notice of the Bondholder's option to tender Bonds in the Daily
Mode shall be given to the Paying Agent at the time and as provided
in the form of Bond. The Bondowners' Election Notice delivered to
the Paying Agent at the time and as provided in the form of Bond
shall be in substantially the form provided in the form of Bond.
As soon as practicable after receiving notice of a tender of
Bonds under this Section, the Paying Agent shall notify the
Remarketing Agent, the Company and the Trustee by telephone
promptly confirmed in writing of the amount of Tendered Bonds and
the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be given by the
Beneficial Owner in accordance with the procedures of DTC or its
successor. The Remarketing Agent and the Paying Agent shall be
entitled to rely on the accuracy of any Bondowners' Election Notice
delivered to the Paying Agent.
(4) Mandatory Tender of Bonds. Bonds in the Daily Mode are
subject to mandatory tender for purchase as provided in the form of
Bond and in Section 2.11 hereof
(C) Weekly Mode.
(1) Determination of Weekly Rates. The Weekly Rate shall be
the rate of interest determined by the Remarketing Agent for each
Interest Rate Period, to be the lowest rate which in its judgment,
on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Weekly Mode at par plus accrued
interest on and as of the Effective Date, but not in excess of the
Maximum Rate. The Remarketing Agent shall determine the initial
Weekly Rate on or before the date of issue in or conversion to the
Weekly Mode. Thereafter, the Remarketing Agent shall redetermine
the Weekly Rate for each subsequent Interest Rate Period. The
Weekly Rate in effect for each Interest Rate Period shall be
determined not later than the Effective Date which shall be a
Wednesday unless the Effective Date is also a Conversion Date, in
which case the Conversion Date will be the Effective Date. The
Remarketing Agent shall notify the Paying Agent of the Weekly Rate
by Electronic Notice not later than 10:00 a.m., New York City time,
on the Effective Date (or if the Effective Date is not a Business
Day, on the next preceding Business Day). The Paying Agent shall
give written notice of the Weekly Rate to the Trustee and the
Company. Each determination and redetermination of the Weekly Rate
shall be conclusive and binding on the Issuer, the Trustee, the
Paying Agent, the Company 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) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the Trustee,
the Company 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 and the Trustee by telephone
promptly confirmed in writing of the amount of Tendered Bonds and
the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be given by the
Beneficial Owner in accordance with the procedures of DTC or its
successor. The Remarketing Agent and the Paying Agent shall be
entitled to rely on the accuracy of any Bondowners' Election Notice
delivered to the Paying Agent.
(4) Mandatory Tender of Bonds. Bonds in the Weekly Mode are
subject to mandatory tender for purchase as provided in the form of
Bond and in Section 2.11 hereof.
(5) Interest Rate Periods for Bonds in Weekly Mode. The
Interest Rate Period for Bonds in a Weekly Rate Mode shall commence
on Wednesday of each week and end on the next following Tuesday;
except that (a) in the case of a Conversion of Bonds to a Weekly
Mode from a different Mode, the Interest Rate Period for such Bonds
shall commence on the last Interest Payment Date in respect of the
immediately preceding Interest Rate Period and end on the next
following Tuesday; and (b) in the case of a Conversion of Bonds
from a Weekly Mode to a different Mode, the last Interest Rate
Period for such Bonds prior to Conversion shall end on the last day
immediately preceding the Conversion.
(D) Monthly Mode.
(1) Determination of Monthly Rates. The Monthly Rate shall
be the rate of interest determined by the Remarketing Agent for
each Interest Rate Period, to be the lowest rate which in its
judgment, on the basis of prevailing financial market conditions,
would permit the sale of the Bonds in the Monthly Mode at par plus
accrued interest on and as of the Effective Date, but not in excess
of the Maximum Rate. The Remarketing Agent shall determine the
initial Monthly Rate on or before the date of conversion to the
Monthly Mode, which Rate shall remain in effect as provided in this
Indenture. Thereafter, the Remarketing Agent shall redetermine the
Monthly Rate for each subsequent Interest Rate Period. The
Monthly Rate in effect for each Interest Rate Period shall be
determined not later than the Business Day next preceding the
Effective Date which shall be the first Business Day of a month.
Each Monthly Rate will remain in effect through the day preceding
the first Business Day of the succeeding month. The Remarketing
Agent shall notify the Paying Agent of the Monthly Rate by
Electronic Notice not later than 2:00 p.m., New York City time, on
the Business Day immediately preceding the Effective Date. The
Paying Agent shall give written notice of the Monthly Rate to the
Trustee and the Company. Each determination and redetermination of
the Monthly Rate shall be conclusive and binding on the Issuer, the
Trustee, the Paying Agent, the Company 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) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the Trustee,
the Company 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 and the Trustee by telephone
promptly confirmed in writing of the amount of Tendered Bonds and
the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be given by the
Beneficial Owner in accordance with the procedures of DTC or its
successor. The Paying Agent shall be entitled to rely on the
accuracy of any Bondowners' Election Notice delivered to the Paying
Agent.
(4) Mandatory Tender of Bonds. Bonds in the Monthly Mode are
subject to mandatory tender for purchase as provided in the form
of Bond and in Section 2.11 hereof.
(E) Quarterly Mode.
(1) Determination of Quarterly Rates. The Quarterly Rate
shall be the rate of interest determined by the Remarketing Agent
for each Interest Rate Period, to be the lowest rate which in its
judgment, on the basis of prevailing financial market conditions,
would permit the sale of the Bonds in the Quarterly Mode at par
plus accrued interest on and as of the Effective Date, but not in
excess of the Maximum Rate. The Remarketing Agent shall determine
the initial Quarterly Rate on or before the date of conversion to
the Quarterly Mode. Thereafter, the Remarketing Agent shall
redetermine the Quarterly Rate for each subsequent Interest Rate
Period. The Quarterly Rate in effect for each Interest Rate
Period shall be determined not later than the Business Day next
preceding the Effective Date. The Remarketing Agent shall notify
the Paying Agent of the Quarterly Rate by Electronic Notice not
later than 2:00 p.m., New York City time, on the Business Day
immediately preceding the Effective Date. The Paying Agent shall
give written notice of the Quarterly Rate to the Trustee and the
Company. Each determination and redetermination of the Quarterly
Rate shall be conclusive and binding on the Issuer, the Trustee,
the Paying Agent, the Company 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) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the Trustee,
the Company 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 and the Trustee by telephone
promptly confirmed in writing of the amount of Tendered Bonds and
the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be given by the
Beneficial Owner in accordance with the procedures of DTC or its
successor. The Paying Agent shall be entitled to rely on the
accuracy of any Bondowners' Election Notice delivered to the Paying
Agent.
(4) Mandatory Tender of Bonds. Bonds in the Quarterly Mode
are subject to mandatory tender for purchase as provided in the
form of Bond and in Section 2.11 hereof.
(F) Semiannual Mode.
(1) Determination of Semiannual Rates. The Semiannual Rate
shall be the rate of interest determined by the Remarketing Agent,
for each Interest Rate Period, to be the lowest rate which in its
judgment, on the basis of prevailing financial market conditions,
would permit the sale of the Bonds in the Semiannual Mode at par
plus accrued interest on and as of the Effective Date, but not in
excess of the Maximum Rate. The Remarketing Agent shall determine
the initial Semiannual Rate on or before the date of conversion to
the Semiannual Mode. Thereafter, the Remarketing Agent shall
redetermine the Semiannual Rate for each subsequent Interest Rate
Period. The Semiannual Rate in effect for each Interest Rate
Period shall be determined not later than the Business Day next
preceding the Effective Date. The Remarketing Agent shall notify
the Paying Agent of the Semiannual Rate by Electronic Notice not
later than 2:00 p.m., New York City time, on the Business Day
immediately preceding the Effective Date. The Paying Agent shall
give written notice of the Semiannual Rate to the Trustee and the
Company. Each determination and redetermination of the Semiannual
Rate shall be conclusive and binding on the Issuer, the Trustee,
the Paying Agent, the Company 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) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the Trustee,
the Company 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 and the Trustee by telephone
promptly confirmed in writing of the amount of Tendered Bonds and
the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be given by the
Beneficial Owner in accordance with the procedures of DTC or its
successor. The Paying Agent shall be entitled to rely on the
accuracy of any Bondowners' Election Notice delivered to the Paying
Agent.
(4) Mandatory Tender of Bonds. Bonds in the Semiannual Mode
are subject to mandatory tender for purchase as provided in the
form of Bond and in Section 2.11 hereof.
(G) Multiannual Mode.
(1) Determination of Multiannual Rates. The Multiannual Rate
shall be the rate of interest determined by the Remarketing Agent
for each Interest Rate Period, to be the lowest rate which in its
judgment, on the basis of prevailing financial market conditions,
would permit the sale of the Bonds with the same Interest Rate
Period in a secondary market transaction on and as of the Effective
Date, at a price equal to the principal amount thereof plus accrued
interest, but not in excess of the Maximum Rate. The Remarketing
Agent shall determine the initial Multiannual Rate and Interest
Rate Period on or before the date of conversion to the Multiannual
Mode. Thereafter, the Remarketing Agent shall redetermine the
Multiannual Rate for each subsequent Interest Rate Period as
provided herein and shall redetermine each subsequent Interest Rate
Period. The Multiannual Rate in effect for each Interest Rate
Period and the duration of the Interest Rate Period shall be
determined not later than two (2) Business Days prior to the
Effective Date. The Effective Date shall be the first Business Day
of a month if the preceding Interest Rate Period is a Flexible,
Daily, Weekly, or Monthly Rate Period and shall be the first day of
a month if the preceding Interest Rate Period is a Quarterly,
Semiannual, or Multiannual Rate Period. The Multiannual Rate will
remain in effect until the first day of the month following the
whole number of years specified as the duration of the Interest
Rate Period for the Bonds in the Multiannual Mode; provided that if
the following Rate Period is a Flexible, Daily, Weekly, or Monthly
Rate Period, the Multiannual Rate will remain in effect until the
day preceding the first Business Day of the month following the
whole number of years specified as the duration of the Multiannual
Rate Period and if the following Rate Period is a Quarterly,
Semiannual, Multiannual or Fixed Rate Period, the Effective Date
will remain in effect until the day preceding the first day of the
month following the whole number of years specified as the
Multiannual Rate Period. The Remarketing Agent shall notify the
Paying Agent of the Multiannual Rate and the Interest Rate Period
by Electronic Notice not later than 2:00 p.m., New York City time,
two (2) Business Days preceding the Effective Date. The Paying
Agent shall give written notice of the Multiannual Rate to the
Trustee and the Company. Each determination and redetermination of
the Multiannual Rate shall be conclusive and binding on the Issuer,
the Trustee, the Paying Agent, the Company 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) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the Trustee,
the Company 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 and the Trustee by telephone
promptly confirmed in writing of the amount of Tendered Bonds and
the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be given by the
Beneficial Owner in accordance with the procedures of DTC or its
successor. The Paying Agent shall be entitled to rely on the
accuracy of any Bondowners' Election Notice delivered to the Paying
Agent.
(4) Mandatory Tender for Purchase. Bonds in the Multiannual
Mode are subject to mandatory tender for purchase as provided in
the form of Bond and in Section 2.11 hereof.
(H) Fixed Rate Mode.
(1) Determination of Fixed Rate and Conversion to Fixed Rate
Mode. The interest rate on all or any portion of the Bonds may be
converted by the 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 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.
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.
Notwithstanding the foregoing, if the preconditions to
conversion to the Fixed Rate Mode established by this subsection
and Section 2.02(K) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall immediately notify
the Trustee and the Company by telephone promptly confirmed in
writing. Upon such notice, the Trustee shall deem the proposed
conversion to have failed and shall proceed as such under Sections
2.02(A)(2), 2.02(B)(2), 2.02(C)(2), 2.02(D)(2), 2.02(E)(2),
2.02(F)(2), 2.02(G)(2) or 2.02(H)(2) hereof, whichever is
applicable.
(2) Conversions from the Fixed Rate Mode. The Bonds in the
Fixed Rate Mode or any portion of such Bonds may be converted on
any Effective Date at the election of the Company from the Fixed
Rate Mode to the Daily, Weekly, Flexible, Monthly, Quarterly,
Semiannual, Multiannual or Fixed Rate Mode, so long as no Event of
Default hereunder exists as certified to the Trustee by the
Company. Written notice of a change in 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)(1) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the Trustee,
the Company and the Remarketing Agent and the Bonds shall
automatically convert to a Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall remain
subject to mandatory tender pursuant to Section 2.11 hereof. In no
event shall the failure of Bonds to be converted to another Mode
for any reason be deemed to be, in and of itself, an Event of
Default under this Indenture, so long as the Purchase Price of all
Bonds required to be purchased is made available as provided above.
(3) Mandatory Tender of Bonds. Bonds in the Fixed Rate Mode
are subject to mandatory tender for purchase as provided in the
form of Bond and in Section 2.11 hereof.
(I) Partial Conversions.
(1) General. The Bonds may be converted in whole or in part
to the Daily Mode, the Flexible Mode, the Weekly Mode, the Monthly
Mode, the Quarterly Mode, the Semiannual Mode, any Interest Rate
Period in the Multiannual Mode or the Fixed Rate Mode upon
compliance with the conditions set forth in this Indenture. In the
event the Bonds are in (or are to be converted to) more than one
Mode, the provisions herein relating to Bonds in a particular Mode
(or to be converted to a particular Mode) shall apply only to the
Bonds in (or to be converted to) such Mode and, where necessary or
appropriate, any reference in this Indenture to the Bonds shall be
construed to mean the Bonds in (or to be converted to) such Mode.
(2) Selection. In the event of any partial conversion of the
Bonds to a new Mode, the Bonds to be converted shall be selected by
the Paying Agent from the Bonds in the Mode selected by the
Company. The particular Bonds (or portions thereof) to be
converted shall be selected by lot by the Paying Agent from all the
Bonds in the Mode (or in the case of Bonds in the Multiannual Mode,
the Interest Rate Period) from which Bonds are to be converted.
The principal amount of Bonds to be converted shall be determined
so that all of the Bonds shall be in Authorized Denominations.
Bonds (or portions thereof) in the Daily Mode, Weekly Mode, Monthly
Mode, Quarterly Mode and Semiannual Mode shall be selected by lot
and the selection of the Bonds to be converted shall occur prior to
the date notice of mandatory tender is sent by the Paying Agent to
the Bondowners pursuant to Sections 2.02(B)(4), 2.02(C)(4),
2.02(D)(4), 2.02(E)(4) and 2.02(F)(4).
(3) Amendments. The provisions of this Indenture may be
amended to permit or facilitate partial conversions of the Bonds
without Bondowner consent in accordance with Section 9.01 hereof.
(J) Notice to Registered Owners of Change in Mode. When a change
in Mode is to be made, or upon commencement of a new Interest Rate
Period in the Multiannual Mode, the Paying Agent will notify the
registered owners of the affected Bonds in the Daily Mode, Weekly
Mode, Monthly Mode, Quarterly Mode and Semiannual Mode at least 15
days, and will notify the registered owners of the affected Bonds
in the Multiannual Mode and Fixed Rate Mode at least 30 days,
before the effective date of the change. The notice will state:
(1) that the Mode will be changed or that a new Interest Rate
Period in the Multiannual Mode, will commence,
(2) the effective date or dates of the new rate or a new
Interest Rate Period, as applicable, and
(3) that a mandatory tender will result on the Effective Date
of the change as provided in the Indenture.
(K) Change In Interest Rate Mode - Opinion of Counsel; Issuer
Veto Right. No (i) conversion of Bonds to or from a Multiannual
Mode with an Interest Rate Period of over one year, including for
this purpose the conversion to a new Interest Rate Period in the
Multiannual Mode, or (ii) conversion to or from the Fixed Rate Mode
shall be effective unless on or prior to the Conversion Date the
Company shall provide the Issuer, the Paying Agent, the Bond
Insurer and the Trustee with a Favorable Opinion. Furthermore, all
Conversions are subject to veto by the Issuer, which veto may not
be unreasonably exercised and must be exercised by the Authorized
Issuer Representative within one hour after the receipt of notice
from the Company of such change in interest rate determination
method by the sending of a telephonic notice, confirmed in writing,
to the Company, the Trustee, and the Remarketing Agent.
Section 2.03. Form of Bond. The Bonds, the Trustee's
Certificate of Authentication to be executed by the Trustee for all
Bonds delivered hereunder except those initially delivered
hereunder, the Registration Certificate of the Comptroller of
Public Accounts of the State of Texas to be attached to or endorsed
upon the Bonds initially delivered hereunder, the provision for
registration and the form of assignment shall be in substantially
the forms hereinafter set forth, with such appropriate variations,
omissions, substitutions and insertions as are permitted or
required hereby and may have such letters, numbers or other marks
of identification and such legends and endorsements placed thereon
as may be required to comply with any applicable laws or rules or
regulations, or as may, consistently herewith, be determined by the
officers executing such Bonds, as evidenced by their execution of
the Bonds.
FORM OF BOND
Dollars
No. ___
$__________
[The following legend shall appear so long as the Book-Entry
System described in Section 3.07 of the Indenture has not been
discontinued; provided that such legend shall not appear on the
Bond initially delivered under this Indenture.]
THE ISSUER HAS ESTABLISHED A BOOK ENTRY SYSTEM OF REGISTRATION FOR
THIS BOND. EXCEPT AS SPECIFICALLY PROVIDED OTHERWISE IN THE
INDENTURE, CEDE & CO., AS NOMINEE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION ("DTC"), WILL BE THE REGISTERED OWNER AND
WILL HOLD THIS BOND ON BEHALF OF EACH BENEFICIAL OWNER HEREOF. BY
ACCEPTANCE OF A CONFIRMATION OF PURCHASE, DELIVERY OR TRANSFER,
EACH BENEFICIAL OWNER OF THIS BOND SHALL BE DEEMED TO HAVE AGREED
TO SUCH ARRANGEMENT. CEDE & CO., AS REGISTERED OWNER OF THIS BOND,
MAY BE TREATED AS THE OWNER OF IT FOR ALL PURPOSES.
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS BOND IS SUBJECT TO MANDATORY TENDER FOR PURCHASE AT THE TIME
AND IN THE MANNER HEREINAFTER DESCRIBED AND MUST BE SO TENDERED OR
WILL BE DEEMED TO HAVE BEEN SO TENDERED UNDER CERTAIN CIRCUMSTANCES
AS DESCRIBED HEREIN.
ANY BONDHOLDER WHO FAILS TO DELIVER A BOND FOR PURCHASE AT THE
TIMES AND AT THE PLACE REQUIRED HEREIN SHALL HAVE NO FURTHER RIGHTS
HEREUNDER EXCEPT THE RIGHT TO RECEIVE THE PURCHASE PRICE HEREOF
UPON DELIVERY OF THIS BOND TO THE PAYING AGENT, AND SHALL HOLD THIS
BOND AS AGENT FOR THE PAYING AGENT.
UNITED STATES OF AMERICA
STATE OF TEXAS
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE
POLLUTION CONTROL REVENUE REFUNDING BONDS
(CENTRAL POWER AND LIGHT COMPANY PROJECT)
SERIES 1996
Maturity Date: ________________ CUSIP
_______________
Dated Date: August 15, 1996
Issue Date:
Interest Rate:**_________________
Registered Owner:
Principal Amount: $__________
Mode:
Last Day of Flexible Rate Period* ______________ Interest Rate*
___________
Number of Days in Period* _________ Interest Due at End of
Period* _____________
_______________________
* Complete only for Bonds accruing interest at Flexible Rates
**Complete only for Bonds accruing interest at the Fixed Rate
Matagorda County Navigation District Number One (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 Chapters 60 and 62, Texas Water Code (the
"Issuer Act"), for value received, hereby promises to pay (but only
out of the sources hereinafter mentioned) to the Registered Owner
set forth above, or registered assigns, on the Maturity Date
specified above, unless this Bond shall have been called for
redemption in whole or in part, upon surrender hereof, the
Principal Amount set forth above and to pay (but only out of the
sources hereinafter mentioned) to the Registered Owner, or
registered assigns, interest thereon at the rate determined as
herein provided from the most recent Interest Payment Date
(hereinafter defined) to which interest has been paid or duly
provided for, or if no interest has been paid or duly provided for,
from the Issue Date (unless this Bond initially bears interest at
the Fixed Rate, in which case from August 15, 1996), such payments
of interest to be made on each Interest Payment Date until the
principal or redemption price hereof has been paid or duly provided
for as aforesaid. The principal or redemption price of this Bond
(or of a portion of this Bond, in the case of a partial redemption)
is payable to the Registered Owner hereof in immediately available
funds upon presentation and surrender hereof at the Principal
Office of the Trustee or its successor, as paying agent (the
"Paying Agent"), under the Indenture of Trust, dated as of August
15, 1996 (the "Indenture") by and between the Issuer and The Bank
of New York, or its successor, as trustee (the "Trustee") securing
the series of Bonds of which this Bond is one. All payments of
interest on Bonds accruing interest at Multiannual or Fixed Rates
shall be paid to the Registered Owner hereof whose name appears in
the Bond Register kept by the Bond Registrar as of the close of
business on the applicable Record Date (as described below) by
check mailed on the Interest Payment Date, provided that any
Registered Owner of $1,000,000 or more in aggregate principal
amount of the Bonds may, upon written request given to the Paying
Agent at least five Business Days prior to an Interest Payment Date
designating an account in a domestic bank, be paid by wire transfer
of immediately available funds. All payments of interest on Bonds
accruing interest at Flexible, Daily, Weekly, Monthly, Quarterly,
or Semiannual Rates shall be paid to the Registered Owner hereof
whose name appears in the Bond Register kept by the Bond Registrar
as of the close of business on the applicable Record Date in
immediately available funds by wire transfer to a bank within the
continental United States or deposited to a designated account if
such account is maintained with the Paying Agent as directed by the
Registered Owner in writing or as otherwise directed in writing by
the Registered Owner prior to the time of payment with respect to
Bonds accruing interest at a Flexible, Daily, Weekly, Monthly,
Quarterly, or Semiannual Rate or five Business Days prior to the
Interest Payment Date with respect to Bonds accruing interest at
Daily or Weekly Rates. The Record Date for any Interest Payment
Date shall be the close of business on the Business Day immediately
preceding the Interest Payment Date, except that, (i) while this
Bond bears interest at the Flexible Rate (as described herein), the
Record Date shall be the time of payment on the Interest Payment
Date and (ii) while this Bond accrues interest at the Multiannual
or Fixed Rates (as described herein), the Record Date shall be the
close of business on the 15th day (whether or not a Business Day)
of the calendar month immediately preceding such Interest Payment
Date. This Bond is registered as to both principal and interest in
the Bond Register kept by the Bond Registrar and may be transferred
or exchanged, subject to the further conditions specified in the
Indenture, only upon surrender hereof at the office of the Bond
Registrar. This Bond is payable solely from the sources
hereinafter mentioned.
The principal of, premium, if any, and interest on, and
Purchase Price of, this Bond are payable in lawful money of the
United States of America.
CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE
MEANINGS SPECIFIED THEREFOR IN THE INDENTURE.
THE BONDS SHALL BE DEEMED NOT TO CONSTITUTE A DEBT OF THE
STATE OF TEXAS, THE ISSUER, OR OF ANY OTHER POLITICAL CORPORATION,
SUBDIVISION, OR AGENCY OF THE STATE OR A PLEDGE OF THE FAITH AND
CREDIT OF ANY OF THEM. NO RECOURSE SHALL BE HAD FOR ANY CLAIM
BASED ON THE AGREEMENT, THE INDENTURE, OR THE BONDS AGAINST ANY
MEMBER, OFFICER OR EMPLOYEE, PAST, PRESENT OR FUTURE, OF THE
ISSUER, OR OF ANY SUCCESSOR BODY THERETO, EITHER DIRECTLY OR
THROUGH THE ISSUER, OR ANY SUCH SUCCESSOR BODY, UNDER ANY
CONSTITUTIONAL PROVISION, STATUTE OR RULE OF LAW OR BY THE
ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR OTHERWISE. NEITHER THE
FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF TEXAS, THE
ISSUER, OR ANY OTHER POLITICAL CORPORATION, SUBDIVISION, OR AGENCY
IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, REDEMPTION PREMIUM,
IF ANY, OR INTEREST ON, OR PURCHASE PRICE OF, THE BONDS. THIS BOND
IS A SPECIAL REVENUE OBLIGATION OF THE ISSUER PAYABLE SOLELY FROM
THE SOURCES DESCRIBED HEREIN AND THE HOLDER HEREOF SHALL NEVER HAVE
THE RIGHT TO DEMAND PAYMENT FROM MONEYS DERIVED BY TAXATION OR ANY
REVENUES OF THE ISSUER EXCEPT THE FUNDS PLEDGED TO THE PAYMENT
HEREOF.
This Bond is authorized and issued under and pursuant to
authority conferred by the Issuer Act, Chapter 30, Texas Water
Code, as amended, Chapter 383, Texas Health and Safety Code, as
amended, Article 717k, Vernon's Texas Civil Statutes, as amended,
and Article 717q, Vernon's Texas Civil Statutes, as amended
(collectively, the "Acts"), a resolution adopted by the Issuer (the
"Bond Resolution") and the Indenture. This Bond is one of a duly
authorized issue of revenue bonds of the Issuer issued in the
aggregate principal amount of $60,000,000 designated "Matagorda
County Navigation District Number One Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) Series
1996" (the "Bonds") issued under the Indenture. The Bonds are
being issued by the Issuer for the purpose of paying a portion of
the costs of refunding $60,000,000 in aggregate principal amount
of Matagorda County Navigation District Number One Pollution
Control Revenue Bonds (Central Power and Light Company Facilities)
Series 1986. The Indenture pledges substantially all right, title
and interest of the Issuer, in and to the Installment Payment
Agreement, dated as of August 15, 1996 (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.
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 during the Flexible Mode as provided herein, or (c) may
be converted to or from the Fixed Rate Mode; provided, however,
that in the Multiannual Mode the first Interest Rate Period
occurring after conversion to such Mode may be shorter than the
applicable multiple of one year as provided herein.
Each determination and redetermination of interest rates and
Interest Rate Periods shall be made in accordance with the
Indenture and shall be conclusive and binding on the Issuer, the
Trustee, the Paying Agent, the Company and the Bondowners. Any
Bondowner may ascertain the rate of interest on its Bond or Bonds,
at any time by contacting the Paying Agent or the Remarketing
Agent.
Unless otherwise defined herein, capitalized terms used in
this Bond shall have the meaning given them in the Indenture. As
used herein, "premium" shall mean, with respect to any amount
payable on the Bonds, the amount, if any, by which the redemption
price thereof (exclusive of interest) exceeds the principal amount
thereof at the time such amount is payable. The following terms
are defined as follows:
"Business Day" means any day on which commercial banks located
in all of the cities in which the Principal Offices of the Trustee,
the Paying Agent and the Remarketing Agent are located are not
required or authorized by law or regulation to remain closed and on
which the New York Stock Exchange is not closed.
"Conversion Date" means the date on which a new Mode becomes
effective with respect to a Bond, and with respect to a Bond in the
Multiannual Mode, the date on which a new Interest Rate Period for
such Bond becomes effective.
"Effective Date" means, with respect to a Bond (a) in the
Daily, Flexible, Weekly, Monthly, Quarterly, Semiannual and
Multiannual Modes, the date on which a new Interest Rate Period for
that Bond takes effect and (b) in the Multiannual or Fixed Rate
Mode, any date on which such Bond is subject to optional
redemption.
"Electronic Notice" means notice transmitted through a time-
sharing terminal, by facsimile transmission or by telephone
(promptly confirmed in writing or by facsimile transmission).
"Interest Rate Period" or " Rate Period" means, when used with
respect to any particular rate of interest for a Bond in the Daily,
Flexible, Weekly, Monthly, Quarterly, Semiannual or Multiannual
Mode, the period during which such rate of interest determined for
such Bond will remain in effect as described herein.
"Mode" means the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily Mode,
the Flexible Mode, the Weekly Mode, the Monthly Mode, the Quarterly
Mode, the Semiannual Mode, the Multiannual Mode and the Fixed Rate
Mode.
"Principal Office" means the business address designated as a
principal office pursuant to the Indenture. In the case of the
initial Trustee and Paying Agent, "Principal Office" refers to its
principal corporate trust office in New York, New York.
"Purchase Date" means the date on which this Bond shall be
required to be purchased pursuant to a mandatory or optional tender
in accordance with the provisions hereof.
"Purchase Price" means, with respect to a Bond on a Purchase
date, a price equal to par plus accrued interest to the Purchase
Date; provided that in the event that the Purchase Date is an
Interest Payment Date for such Bond and such Bond is not in the
Flexible Mode, accrued interest will be paid separately and not as
a part of the Purchase Price on such date; and further provided
that in the event such Bond bears interest at a Multiannual or
Fixed Rate and is subject to mandatory tender on a date on which
the Bond is subject to optional redemption, Purchase Price shall
include any premium that would be payable on the Purchase Date if
such Bond were redeemed on the Purchase Date..
Flexible Rate
While the Bonds accrue interest at Flexible Rates, the
Remarketing Agent shall determine the Flexible Rate and the
Flexible Rate Period for each Bond and such Flexible Rate will
remain in effect from and including the commencement date of the
Flexible Rate Period selected for that Bond by the Remarketing
Agent to, but not including, the last date thereof. While the
Bonds are in the Flexible Mode, Bonds may have successive Interest
Rate Periods of any duration up to 270 days each and any Bond may
accrue interest at a rate and for a period different from any other
Bond. No Interest Rate Period may be established which exceeds
such maximum Interest Rate Period or, if the Remarketing Agent has
given or received notice of any conversion to a Multiannual or
Fixed Rate, the remaining number of days prior to the Conversion
Date or, if the Remarketing Agent has given or received notice of
any conversion to a Daily, Weekly, Monthly, Quarterly or
Semiannual Mode, the length of each Interest Rate Period for each
Bond in the Flexible Mode shall be determined by the Remarketing
Agent to be either (A) that length of period that, as soon as
possible, shall enable the Interest Rate Periods for all Bonds to
end on the day before the Conversion Date, or (B) that length of
period which, based on the Remarketing Agent's judgment, will best
promote an orderly transition to the next Interest Rate Period.
Daily Rate
While the Bonds accrue interest at a Daily Rate, the interest
rate established for the Bonds will be effective from day to day
until changed by the Remarketing Agent in accordance with the
Indenture.
Weekly Rate
While the Bonds accrue interest at a Weekly Rate, the rate of
interest on the Bonds will be determined weekly by the Remarketing
Agent in accordance with the Indenture to be effective for a seven
day period commencing on Wednesday of the week of such
determination. (The length of the period, the day of commencement
and the last day of the period may vary in the event of a
conversion to or from a Weekly Mode.)
Monthly Rate
While the Bonds accrue interest at a Monthly Rate, the rate of
interest on the Bonds will be determined monthly by the Remarketing
Agent in accordance with the Indenture to be effective from the
first Business Day of a month through the day preceding the first
Business Day of the succeeding month. (The length of the period,
the day of commencement and the last day of the period may vary in
the event of a conversion to or from a Monthly Mode.)
Quarterly Rate
While the Bonds accrue interest at a Quarterly Rate, the rate
of interest on the Bonds will be determined quarterly by the
Remarketing Agent in accordance with the Indenture to be effective
for a calendar quarter, commencing on 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
Upon conversion to a Fixed Rate, the Bonds shall bear interest
to the Maturity Date set forth above or until converted to a
different Mode at a fixed rate of interest determined by the
Remarketing Agent in accordance with the Indenture. If initially
issued at a Fixed Rate, the Bonds shall bear interest to the
Maturity Date set forth above or until converted to a different
Mode at the Interest Rate set forth above.
Authorized Denominations
Bonds which accrue interest at a Flexible Rate will be issued
in denominations of $100,000 and any integral multiples of $1,000
in excess thereof. Bonds which accrue interest at a Daily or
Weekly Rate will be issued in denominations of $100,000 and whole
multiples thereof; provided that if the principal amount of Bonds
in the Daily or Weekly Mode, as the case may be, is not evenly
divisible by $100,000, then the remainder of such amount shall be
added to another Bond in the same Mode that is in a principal
amount of $100,000 or any integral multiples thereof. Bonds which
accrue interest at a Monthly, Quarterly, Semiannual, Multiannual or
Fixed Rate will be issued in the denomination of $5,000 and whole
multiples thereof.
Optional Tenders
While this Bond accrues interest at a Daily, Weekly, Monthly,
Quarterly, Semiannual or Multiannual Rate, the Registered Owner of
this Bond has the right to tender this Bond for purchase at the
principal amount hereof plus accrued interest as follows: (i)
during a Daily Rate Period on any Business Day upon written notice,
telephonic notice, or Electronic Notice to the Paying Agent on the
Purchase Date, (ii) during a Weekly Mode on any Business Day upon
written or Electronic Notice to the Paying Agent on a Business Day
not fewer than seven days prior to the Purchase Date or (iii)
during a Monthly, Quarterly, Semiannual, or Multiannual Rate
Period, on any Interest Payment Date, which also must be an
Effective Date of a Rate Period, upon written notice to the Paying
Agent not less than fifteen days before the Purchase Date.
As long as the book-entry system is in effect, the Beneficial
Owner of a Bond may demand purchase of the Bond (or portion
thereof) owned by it by providing notice as provided above through
the Beneficial Owner's DTC Participant; provided such notice shall
be given by 10:00 a.m., New York City time, on the date such notice
is required to be given. If the book-entry system is not in
effect, the registered owner of this Bond may demand purchase of
this Bond (or portion thereof in Authorized Denominations) by
providing notice to the Paying Agent as provided above and
delivering this Bond to the Paying Agent at its Principal Office.
If the Registered Owner of a Bond has elected to tender such
Bond for purchase, such Registered Owner shall be deemed to have
agreed irrevocably to sell such Bond to any purchaser determined in
accordance with the provisions of the Indenture on the date fixed
for purchase at the Purchase Price and any Bond not delivered shall
be deemed tendered (an "Undelivered Bond") and shall cease to be
Outstanding under the Indenture and no further interest shall
accrue as of the Purchase Date. Notice of tender of a Bond is
irrevocable. All notices of tender of Bonds bearing interest at a
Weekly, Monthly, Quarterly, Semiannual or Multiannual Rate shall be
made to the Paying Agent in writing or by Electronic Notice (or
such other notice as may be specified by the procedures of The
Depository Trust Company or its successor so long as this Bond is
held in book-entry form) at its Principal Office in substantially
the form as provided in the Form of Bondholder's Election Notice
for Bonds Subject to Optional Tender attached hereto or such other
form of notice satisfactory to the Paying Agent which sets forth
the principal amount of Bonds to be purchased, the purchase date on
which such Bonds shall be purchased, the name, address and taxpayer
identification number of the Registered Owner and the payment
instructions for the Purchase Price. All deliveries of tendered
Bonds, including deliveries of Bonds subject to mandatory tender,
shall be made to the Paying Agent at its Principal Office.
Mandatory Tenders
While this Bond accrues interest at a Flexible Rate, this Bond
is subject to mandatory tender on each Effective Date applicable to
this Bond at the Purchase Price.
This Bond is subject to mandatory tender on the effective date
of a change from one Mode to a different Mode (other than from a
Daily Mode to a Weekly Mode or a Weekly Mode to a Daily Mode) or a
change from one Interest Rate Period to an Interest Rate Period of
different duration within the Multiannual Mode at the Purchase
Price.
BY ACCEPTANCE OF THIS BOND, THE REGISTERED OWNER HEREOF AGREES
THAT THIS BOND WILL BE PURCHASED, WHETHER OR NOT SURRENDERED, ON
THE PURCHASE DATE AS DESCRIBED ABOVE. IN SUCH EVENT, THE REGIS-
TERED 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 REGIS-
TERED 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 Goldman,
Sachs & Co. The Remarketing Agent may be changed at any time in
accordance with the Indenture.
Written Notice of Mode or Interest Rate Period Change
The Trustee shall give notice, by first class mail, to the
Registered Owners of all Bonds of the proposed conversion from one
Mode to another Mode, or the commencement of a new Interest Rate
Period in the Multiannual Mode, at least 15 days before the
proposed Conversion Date while the Bonds accrue interest at
Flexible, Daily, Weekly, Monthly, Quarterly or Semiannual Rates and
at least 30 days before the proposed Conversion Date while the
Bonds accrue interest at Multiannual or Fixed Rates.
Interest Payment Dates
While this Bond accrues interest at a Flexible Rate, interest
is payable on the first Business Day after the last day of each
Interest Rate Period. While this Bond accrues interest at Daily,
Weekly or Monthly Rates, interest is payable on the first Business
Day of each calendar month following a month in which interest at
such rate has accrued. While this Bond accrues interest at a
Quarterly Rate, interest is payable on each 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 April or October 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 other than
the initial Fixed Rate Mode, the Bonds in such Mode shall be
subject to redemption prior to maturity at the option of the Issuer
upon written direction of the Company delivered to the Trustee in
whole or in part (and if in part in an Authorized Denomination) on
any Business Day after the No-Call Period described below, at the
following redemption prices (expressed as percentages of the
principal amount of the Bonds called for redemption) plus accrued
interest to the date fixed for redemption:
LENGTH OF
INTEREST NO-CALL PERIOD REDEMPTION PRICES
RATE PERIOD
greater than or equal to 10 years from the 102%,declining 1% per
11 years commencement of year to 100%
Interest
Rate Period
less than 11 years No call
The optional redemption dates and redemption prices set forth
above may be changed as provided in the Indenture, provided that
any alternate redemption schedule shall be accompanied by a
Favorable Opinion.
[Insert Redemption Provisions for Initial Fixed Rate Mode
Interest Period from Approval Certificate].
So long as any Bond is in the Multiannual or Fixed Rate Mode,
such Bond is subject to mandatory tender for purchase at the
Purchase Price in lieu of optional redemption at the election of
the Company.
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 the Project
or the Plant, including without limitation (A) the imposition of
any income or other taxes not being imposed on August 15, 1996 or
(B) the imposition of any ad valorem property or other taxes (other
than ad valorem property or other taxes being imposed on August 15,
1996 upon similarly assessed property within the same taxing juris-
diction);
(ii) The Project or the Plant shall have been damaged or
destroyed to such extent that, in the opinion of the 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 the Project or the Plant for
a period of six or more consecutive months or (C) the cost of
restoration would exceed by $1,500,000 or more the net proceeds of
insurance thereon;
(iii) Title to, or temporary use of, all or
substantially all of the Project or the Plant shall have been taken
under the exercise of the power of eminent domain;
(iv) Changes in the economic availability of materials,
labor, services, supplies (including fuel), equipment or other
property, facilities or things necessary for the operation of the
Project or the Plant shall have occurred, or technological,
regulatory or other changes shall have occurred, which, in the
opinion of the Company, render the continued operation of the
Project or the Plant uneconomic;
(v) Any court or administrative body shall enter a
judgment, order or decree requiring the Company to cease, or
dispose of, all or any substantial part of its operations of the
Project or the Plant to such extent that, in the opinion of the
Company, it is or will be thereby prevented from carrying on its
normal operations of the Project or the Plant for a period of six
or more consecutive months; or
(vi) As a result of any change in the Constitution of the
State of Texas or the Constitution of the United States of America
or of any legislative or administrative action (whether state or
federal) or of any final decree, judgment, or order of any court or
administrative body (whether state or federal), the obligations of
the Company under the Agreement shall have become unenforceable or
impossible of performance in any material respect in accordance
with the intent and purpose of the parties as expressed in the
Agreement.
Extraordinary Mandatory Redemption
The Bonds are subject to mandatory redemption in whole or in
part at any time if such partial redemption will preserve the
exemption from federal income taxation of interest on the remaining
Bonds Outstanding, at a redemption price equal to the principal
amount thereof together with unpaid interest accrued to the date
fixed for redemption, and without premium, if (i) a final decree or
judgment of any federal court, in which the 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 Project or a
"related person" is or was includable in the gross income of the
owner thereof for federal income tax purposes under the Code, as a
result of the failure by 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, except while
the Bonds bear interest at a Multiannual Rate or the Fixed Rate, in
which case until such failure has continued for a period of sixty
days or more. Under the circumstances provided in the Indenture,
the Trustee may in its discretion and upon written request of the
Registered Owners of a majority in aggregate principal amount of
the Bonds then Outstanding shall, waive any Event of Default and
its consequences; provided, however, that default in the payment of
the principal of, premium, if any, or interest on, or Purchase
Price of, the Bonds may not be so waived. The Registered Owners of
the Bonds shall have no right to institute any action, suit or
proceeding at law or in equity to enforce the Indenture, except as
provided in the Indenture; provided, however, that nothing in the
Indenture shall affect or impair the right of the Registered Owner
of any Bond to enforce the payment of the principal of, premium, if
any, and interest on such Bond from the source and in the manner
herein expressed. Reference is hereby made to the Indenture and
the Agreement for additional provisions with respect to the nature
and extent of the security, the rights, duties, and obligations of
the Company, the Issuer, the Trustee, and the owners of the Bonds,
the terms upon which the Bonds are issued and secured, and the
modification of any of the foregoing.
The Issuer has reserved the right to amend the Indenture.
Under some (but not all) circumstances amendments thereto must also
be approved by (a) the Registered Owners of at least a majority in
aggregate principal amount of the Outstanding Bonds or (b) if less
than all of the Bonds are in a particular Mode and the amendment
affects only the Owners of Bonds in that Mode, the Owners of at
least a majority in aggregate principal amount of the Outstanding
Bonds in such Mode.
No recourse shall be had for the payment of the principal,
Purchase Price or redemption price of, premium, if any, or interest
on, this Bond, or for any claim based hereon or on the Indenture,
against any member, officer or employee, past, present or future,
of the Issuer or of any successor body, as such, either directly or
through the Issuer or any such successor body, under any
conditional provision, statute or rule of law, or by the
enforcement of any assessment of by any legal or equitable
proceeding or otherwise.
This Bonds shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the
Indenture until either (i) the Certificate of Authentication hereon
shall have been signed by the Trustee as Bond Registrar, or any
successor, or (ii) a manually signed Comptroller's Registration
Certificate has been attached hereto or endorsed hereon.
It is hereby certified, recited and declared that all acts,
conditions and things required to exist, happen and be performed
precedent to and in the execution and delivery of the Indenture and
the issuance of this Bond do exist, have happened and have been
performed in due time, form and manner as required by law; and that
the issuance of this Bond and the issue of which it forms a part,
together with all other obligations of the Issuer, does not exceed
or violate any constitutional or statutory limitation.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be
executed in its name by the manual or facsimile signature of its
Chairman and attested by the manual or facsimile signature of its
Secretary, all as of the date first above written.
MATAGORDA COUNTY NAVIGATION DISTRICT
NUMBER ONE
By:__________________________
Chairman
ATTEST:
By:______________________________
Secretary
(SEAL)
(FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE FOR BONDS)
TRUSTEE'S CERTIFICATE
DATE: __________
This bond is one of the bonds described in the within
mentioned Indenture of Trust.
THE BANK OF NEW YORK, Trustee
__________________________________
Authorized Signatory
(INSERT APPROPRIATE BOND INSURANCE LEGEND, IF ANY)
(FORM OF BONDOWNERS' ELECTION NOTICE FOR BONDS
SUBJECT TO OPTIONAL TENDER)
(to be used only in connection with Bonds
subject to optional tender)
Matagorda County Navigation District Number One
Pollution Control Revenue Refunding Bond
(Central Power and Light Company Project) Series 1996
Principal Principal Amount
Amount CUSIP Tendered for Purchase Bond Numbers Purchase
Date
The undersigned hereby certifies that it is the Registered
Owner or the Beneficial Owner (as described below) of the Bonds
described above (the "Tendered Bonds"), all of which are in the
_________________ Mode [insert Mode of Tendered Bonds], and hereby
agrees that the delivery of this instrument of transfer to the
Paying Agent by 10:00 A.M. New York City time on this Business Day
(for Daily Mode Bonds only) constitutes an irrevocable offer to
sell the Tendered Bonds to the Company or its designee on the
Purchase Date, which shall be a Business Day at least __________
(____) calendar days following delivery of this instrument (Foot Note), at
a purchase price equal to the unpaid principal balance thereof plus
accrued and unpaid interest thereon to the Purchase Date (the
"Purchase Price") provided that if the Purchase Date is an Interest
Payment Date, it is recognized that accrued interest will be paid
separately and not as part of the Purchase Price on such date. The
undersigned acknowledges and agrees that this election notice is
irrevocable and that the undersigned will have no further rights
with respect to the Tendered Bonds, except payment, upon
presentation and surrender, of the Purchase Price by wire or bank
transfer within the continental United States from the Paying
Agent, at its address shown on the registration books of the Bond
Registrar (i) on the Purchase Date if the Tendered Bonds shall have
been surrendered to the Paying Agent prior to 11:00 A.M., New York
City time, on the Purchase Date or (ii) on any Delivery Date
subsequent to the Purchase Date on which Tendered Bonds are
delivered to the Paying Agent by 11:00 A.M., New York City time.
Except as otherwise indicated herein and unless the context
otherwise requires, the terms used herein shall have the meanings
set forth in the Indenture of Trust dated as of August 15, 1996
between the Matagorda County Navigation District Number One and The
Bank of New York, as Trustee, relating to the Bonds.
Date: ______________________________
Signature(s)
__________________________
__________________________
__________________________
(Street City State Zip)
(Foot Note)
IMPORTANT: The above signature(s) must correspond with the name(s)
as set forth on the face of the Tendered Bond(s) with respect to
which this Bondowner's Election Notice is being delivered without
any change whatsoever. If this notice is signed by a person other
than the Registered Owner of any Tendered Bond(s), the Tendered
Bond(s) must be either endorsed on the Assignment appearing on each
Bond or accompanied by appropriate Bond powers, in each case signed
exactly as the name or names of the Registered Owner or owners
appear on the Bond Register. The method of presenting this notice
to the Paying Agent is the choice of the person making such
presentation. If it is made by mail, it should be by registered
mail with return receipt requested.
Notwithstanding the foregoing, during the time the Bonds are
issued in book-entry-only form, this Bondowner's Election Notice
must be signed by the Beneficial Owner of the Bonds or by a duly
authorized attorney and must be accompanied by an affidavit in the
form attached hereto.
AFFIDAVIT
State of ______________________
Parish/County of _______________
Before Me, the undersigned authority, duly commissioned and
qualified within and for the State and Parish/County aforesaid,
personally came and appeared
_____________________________________
who being by me first duly sworn, deposed and said that he/she is
the owner of the following Matagorda County Navigation District
Number One Pollution Control Revenue Refunding Bonds (Central Power
and Light Company Project) Series 1996.
Principal Amount CUSIP Maturity Date
Sworn to and subscribed before me this ___ day
of______________,____.
___________________________
Notary Public
[FORM OF ASSIGNMENT]
ASSIGNMENT
THIS ASSIGNMENT IS SUBJECT TO THE RESTRICTIONS ON
TRANSFERABILITY SET FORTH ON THE FACE OF THE BOND
The following abbreviations, when used in the inscription on
the face of this Bond, shall be construed as though they were
written out in full according to applicable laws or regulations:
UNIF GIFT MIN ACT--
TEN COM --as tenants in common ____ Custodian ____
TEN ENT --as tenants by the entireties (Cust) (Minor)
JT TEN --as joint tenants with right under Uniform Gifts to
of survivorship and not as Minors Act _________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto
Please Insert Social Security or
Other Identifying Number of Assignee
/___________________________________/
____________________________________________________________
(Name and Address of Assignee)
the within Bond and does hereby irrevocably constitute and appoint
_________________________ to transfer said Bond on the books kept
for registration thereof with full power of substitution in the
premises.
Date: _____________________
____________________________________
Signature Guaranteed: ____________________________________
NOTICE: The signature to this assignment must correspond with the
name as it appears upon the face of the within Bond in every
particular, without alteration or enlargement or any change
whatever; and
NOTICE: Signature(s) must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Trustee, which
requirements include membership or participation in STAMP or such
other "signature guaranty program" as may be determined by the
Trustee in addition to or in substitution for STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
[FORM OF REGISTRATION INFORMATION]
REGISTRATION INFORMATION
Under the terms of the Indenture, the Trustee will register a
Bond in the name of a transferee only if the owner of such Bond (or
his duly authorized representative) provides as much of the
information requested below as is applicable to such owner prior to
submitting this Bond for transfer.
Name: __________________________________________
Address:________________________________________
Social Security or Employer
Identification Number:__________________________
If a Trust, Name and Address of
Trustee(s) and Date of
Trust:__________________________________________
[FORM OF REGISTRATION CERTIFICATE
(to be attached to initial bonds only)]
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this bond has been examined, certified
as to validity, and approved by the Attorney General of the State
of Texas, and that this bond has been registered by the Comptroller
of Public Accounts of the State of Texas.
Witness my signature and seal this
________________________________
Comptroller of Public Accounts
of the State of Texas
Section 2.04. Execution; Limited Obligations. The Bonds
shall be executed on behalf of the Issuer with the manual or
facsimile signature of the 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.
The Bonds are not and never shall become general obligations
of the Issuer, but are limited obligations payable by the Issuer
solely and only from the payments received under or with respect to
the documents executed by the Company (except to the extent paid
out of moneys attributable to the proceeds derived from the sale of
the Bonds or income from the temporary investment of such funds or
other funds held hereunder), which amounts, together with any other
security provided herein, are hereby specifically assigned and
pledged to such purposes, in the manner and to the extent provided
herein. The Bonds shall be deemed not to constitute a debt of the
State of Texas, the Issuer, or of any other political corporation,
subdivision, or agency of the State or a pledge of the faith and
credit of any of them. No recourse shall be had for any claim
based on the Agreement, the Indenture, or the Bonds against any
member, officer or employee, past, present or future, of the
Issuer, or of any successor body thereto, either directly or
through the Issuer, or any such successor body, under any
constitutional provision, statute or rule of law or by the
enforcement of any assessment or penalty or otherwise. Neither the
State of Texas nor any political corporation, subdivision, or agent
or the State of Texas shall be obligated to pay the Bonds and
neither the faith and credit nor the taxing power of the State of
Texas or any other political corporation, subdivision, or agency is
pledged to the payment of the principal of, redemption premium, if
any, or interest on, or Purchase Price of, the Bonds. This Bond is
a special revenue obligation of the Issuer payable solely from the
sources described herein and the holder hereof shall never have the
right to demand payment from moneys derived by taxation or any
revenues of the Issuer except the funds pledged to the payment
hereof.
Section 2.05. Conditions Precedent to Delivery of Bonds;
Authentication. The Issuer shall execute and deliver the Bonds to
the Trustee, and the Trustee shall, upon receipt by the Trustee of
the purchase price for the Bonds, deliver the Bonds to the initial
purchasers thereof. Prior to and as a condition precedent to the
delivery of the Bonds there shall be filed with and delivered to
the Trustee:
(i) a certified copy of the Bond Resolution;
(ii) original executed counterparts of this Indenture, the
Approval Certificate, and the Agreement;
(iii) a written order of the Issuer, directed to the
Trustee, instructing the Trustee to deliver the Bonds to the
initial purchasers thereof upon payment to the Trustee for the
account of the Issuer of the sum specified in such written order;
and
(iv) an opinion of Bond Counsel substantially to the effect
that (A) the Bonds constitute legal, valid and binding limited
obligations of the Issuer, enforceable in accordance with their
terms, subject to bankruptcy, insolvency, moratorium,
reorganization and other similar laws affecting the rights of
creditors and to the exercise of judicial discretion in accordance
with general principles of equity and (B) the interest on the Bonds
is excludable from gross income for Federal income tax purposes
under existing statutes, regulations, published rulings and
judicial decisions, except for interest on any Bond for any period
during which such Bond is held by a "substantial user" of any
facilities financed with the proceeds of the Bonds or a "related
person," as such terms are used in Section 147(a) of the Code, and
other customary exclusions.
No Bond shall be valid or obligatory for any purpose or
entitled to any security or benefit under this Indenture unless and
until either (i) a certificate of authentication on such Bond shall
have been duly executed by the Trustee or (ii) a Comptroller's
Registration Certificate attached to or endorsed on such Bond has
been duly executed. Such executed certificate of the Trustee or
Comptroller's Registration Certificate upon any such Bond shall be
conclusive evidence that such Bond has been authenticated or
registered and delivered under this Indenture. The certificate of
authentication on any Bond shall be deemed to have been executed by
the Trustee if signed by an authorized officer or signatory of the
Trustee, but it shall not be necessary that the same officer or
signatory sign the certificates of authentication on all Bonds
issued hereunder.
Section 2.06. Redemption of Bonds. The Bonds shall be
subject to redemption by the Issuer prior to maturity only as
follows:
(a) Extraordinary Optional Redemption of Bonds. The Bonds
are subject to redemption in whole on the next available Interest
Payment Date for which notice of redemption can be given, at a
redemption price equal to the aggregate principal amount of the
Bonds outstanding plus accrued interest thereon to the redemption
date, without premium, upon receipt by the Trustee of a written
notice from the 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 the Project
or the Plant, including without limitation (A) the imposition of
any income or other taxes not being imposed on August 15, 1996 or
(B) the imposition of any ad valorem property or other taxes (other
than ad valorem property or other taxes being imposed on August 15,
1996 upon similarly assessed property within the same taxing juris-
diction);
(ii) The Project or the Plant shall have been damaged or
destroyed to such extent that, in the opinion of the 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 the Project or the Plant for
a period of six or more consecutive months or (C) the cost of
restoration would exceed by $1,500,000 or more the net proceeds of
insurance thereon;
(iii) Title to, or temporary use of, all or
substantially all of the Project or the Plant shall have been taken
under the exercise of the power of eminent domain;
(iv) Changes in the economic availability of materials,
labor, services, supplies (including fuel), equipment or other
property, facilities or things necessary for the operation of the
Project or the Plant shall have occurred, or technological,
regulatory or other changes shall have occurred, which, in the
opinion of the Company, render the continued operation of the
Project or the Plants uneconomic;
(v) Any court or administrative body shall enter a
judgment, order or decree requiring the Company to cease, or
dispose of, all or any substantial part of its operations of the
Project or the Plant to such extent that, in the opinion of the
Company, it is or will be thereby prevented from carrying on its
normal operations of the Project or the Plant for a period of six
or more consecutive months; or
(vi) As a result of any change in the Constitution of the
State of Texas or the Constitution of the United States of America
or of any legislative or administrative action (whether state or
federal) or of any final decree, judgment, or order of any court or
administrative body (whether state or federal), the obligations of
the Company under the Agreement shall have become unenforceable or
impossible of performance in any material respect in accordance
with the intent and purpose of the parties as expressed in the
Agreement.
(b) Optional Redemption. The Bonds are subject to optional
redemption as follows:
(i) During any Daily, Flexible, Weekly, Monthly,
Quarterly or Semiannual Mode, the Bonds in such Mode shall be
subject to redemption prior to maturity at the option of the Issuer
upon written direction of the 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 other than
the initial Fixed Rate Mode, the Bonds in such Mode shall be
subject to redemption prior to maturity at the option of the Issuer
upon written direction of the Company delivered to the Trustee, in
whole or in part (and if in part in an Authorized Denomination) on
any Business Day after the No-Call Period described below, at the
following redemption prices (expressed as percentages of the
principal amount of the Bonds called for redemption) plus accrued
interest to the date fixed for redemption:
LENGTH OF NO-CALL
INTEREST less than 11 years PERIOD
RATE PERIOD
greater than or equal 10 years from the
to 11 years commencement of Interest
Rate Period
REDEMPTION PRICES
No call
102%, declining 1%
per year to 100%
Notwithstanding the foregoing, if the Bonds initially bear
interest at a Multiannual Rate or a Fixed Rate, the redemption
schedule shall be as set forth in the Approval Certificate. In
connection with a Conversion with respect to Bonds to bear interest
at the Multiannual or Fixed Interest Rate, the Remarketing Agent,
upon the request of the 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.
So long as any Bond is in the Multiannual or Fixed Rate Mode,
such Bond is subject to mandatory tender for purchase at the
Purchase Price in lieu of optional redemption at the election of
the Company as provided in Section 2.11 hereof.
(c) Extraordinary Mandatory Redemption. The Bonds are
subject to mandatory redemption in whole or in part at any time if
such partial redemption will preserve the exemption from federal
income taxation of interest on the remaining Bonds Outstanding, at
a redemption price equal to the principal amount thereof together
with unpaid interest accrued to the date fixed for redemption, and
without premium, if (i) a final decree or judgment of any federal
court, in which the 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 Project or a "related person" is or was
includable in the gross income of the owner thereof for federal
income tax purposes under the Code, as a result of the failure by
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 or Fixed Rates. The Remarketing Agent shall not
sell any Bond as to which a notice of conversion from one type of
Rate Period to another or as to which a notice of redemption has
been given by the Trustee unless the Remarketing Agent has advised
the person to whom the sale is made of the conversion or
redemption, as applicable. The Remarketing Agent shall not
remarket any Bonds pursuant to this Section if the Remarketing
Agent has received notice that an Event of Default shall have
occurred and is continuing hereunder with respect to the Bonds.
(b) Purchase of Tendered Bonds.
(i) Notice. At or before 3:00 p.m., New York City time,
on the Business Day immediately preceding the Purchase Date of
tendered Bonds bearing interest at Multiannual or Fixed Rates (or
11:30 a.m., New York City time, on the Purchase Date in the case of
Bonds accruing interest at Daily, Weekly, Flexible, Monthly,
Quarterly or Semiannual Rates), the Remarketing Agent shall give
Electronic Notice to the Trustee of the principal amount of
tendered Bonds as to which the Remarketing Agent has found
purchasers. Not later than 4:00 p.m. for Bonds bearing interest at
Multiannual or Fixed Rates (or 11:45 a.m., in the case of Bonds
accruing interest at Daily, Weekly, Flexible, Monthly, Quarterly or
Semiannual Rates ), New York City time, on the date of receipt of
such notice the Trustee shall give Electronic Notice to the Paying
Agent and the Company, specifying the principal amount of tendered
Bonds as to which the Remarketing Agent has found purchasers (the
"Deficiency Notice"). At or before 3:00 p.m., New York City time,
on the Business Day prior to the Purchase Date to the extent known
to the Remarketing Agent, but in any event, no later than 12:00
noon, New York City time, on the Purchase Date (or two Business
Days prior to the Purchase Date in the event tendered Bonds accrue
interest at Multiannual or Fixed Rates), the Remarketing Agent
shall give notice to the Paying Agent by Electronic Notice of the
names, addresses and taxpayer identification numbers of the
purchasers, the denominations of Bonds to be delivered to each
purchaser and, if available, payment instructions for regularly
scheduled interest payments, or of any changes in any such
information previously communicated.
(ii) Sources of Payments. The Remarketing Agent shall
cause to be paid to the Paying Agent on the Purchase Date of
tendered Bonds, all amounts representing proceeds of the
remarketing of such Bonds to persons other than the Issuer, the
Company or an affiliate thereof, such payments to be made in the
manner and at the time specified in subsection 2.10 (a) above. If
the amounts specified in the Deficiency Notice will not be
sufficient to pay the Purchase Price on the Purchase Date, the
Company shall deliver or cause to be delivered such amounts at such
times so that there will be delivered to the Paying Agent (A)
immediately available funds in an amount equal to such deficiency
prior to 2:30 p.m., New York City time, on the Purchase Date of
tendered Bonds accruing interest at Daily Rates (3:00 p.m., New
York City time, in the case of Flexible Rate Bonds), (B)
immediately available funds in an amount equal to such deficiency
prior to 1:15 p.m., New York City time, on the Purchase Date of
tendered Bonds accruing interest at Weekly, Monthly, Quarterly or
Semiannual Rates, and (C) clearinghouse funds in an amount equal to
such deficiency prior to 12:15 p.m., New York City time, on the
Purchase Date of tendered Bonds accruing interest at Multiannual or
Fixed Rates (the obligation of the Company to deliver such moneys
not being conditioned on receipt by the Company of the foregoing
notice from the Trustee). All moneys received by the Paying Agent
as remarketing proceeds and additional amounts, if any, received
from the Company, as the case may be, shall be deposited by the
Paying Agent in the appropriate account of the Bond Purchase Fund
to be used solely for the payment of the Purchase Price of tendered
Bonds and shall not be commingled with other funds held by the
Paying Agent and shall not be invested.
(iii) Payments by the Paying Agent. At or before
4:30 p.m., New York City time, on the Purchase Date for tendered
Bonds and upon receipt by the Paying Agent of 100% of the aggregate
Purchase Price of the tendered Bonds, the Paying Agent shall pay or
receipt the Purchase Price of such Bonds to the Registered Owners
thereof. Such payments shall be made in immediately available
funds (or by wire transfer), unless the Bonds to be purchased
accrue interest at Multiannual or Fixed Rates, in which event such
payments shall be made in clearinghouse funds. The Paying Agent
shall make payment of the Purchase Price by applying in order of
priority (A) first, moneys paid to it by the Remarketing Agent as
proceeds of the remarketing of such Bonds by the Remarketing Agent,
and (B) second, other moneys made available by the Company.
(iv) Registration and Delivery of Tendered or Purchased
Bonds. On the date of purchase, the Paying Agent shall register
and deliver (or hold) or cancel all Bonds purchased on any Purchase
Date as follows: (A) Bonds purchased or remarketed by the
Remarketing Agent shall be registered and made available to the
Remarketing Agent by 2:15 p.m., New York City time, in accordance
with the instructions of the Remarketing Agent, and (B) Bonds
purchased with amounts provided by the Company shall be registered
in the name of the Company and shall be delivered to the Trustee to
be held in trust by the Trustee on behalf of the Company and shall
not be released from such trust unless the Trustee shall have
received written instructions from the Company. Notwithstanding
anything herein to the contrary, so long as the Bonds are held
under the book-entry only system in accordance with Section 3.07
hereof, Bonds will not be delivered as set forth above; rather,
transfers of beneficial ownership of the Bonds to the person
indicated above will be effected on the registration books of DTC
pursuant to its rules and procedures.
(v) (Intentionally Omitted).
(vi) Resale of Bonds Purchased by the Company. In the
event that any Bonds are registered to the Company pursuant to
subparagraph (iv) above, to the extent requested by the 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 Mode to a different Mode (other than from a
Daily Mode to a Weekly Mode or from a Weekly Mode to a Daily Mode)
or a change from one Interest Rate Period to an Interest Rate
Period of different duration within the Multiannual Mode are
subject to mandatory tender for purchase on the Conversion Date at
the Purchase Price applicable to such Bonds. The Paying Agent
shall give notice of such mandatory tender for purchase to the
Registered Owners of Bonds by first class mail, not less than 15
days before the mandatory tender date. If the Bonds are in
certificated form, such notice shall include information with
respect to required delivery of Bond certificates and payment of
the Purchase Price.
(c) Mandatory Tender in lieu of Optional Redemption. For any
Bond in the Multiannual or Fixed Rate Mode, the Company may elect
to convert from the Multiannual or Fixed Rate Mode to a different
Mode or change from one Interest Rate Period to an Interest Rate
Period of different duration within the Multiannual Mode on any
optional redemption date for such Bond. The Company shall make
such election in accordance with Section 2.02 hereof and upon such
election such Bond shall be subject to mandatory tender for
purchase on the Conversion Date in lieu of optional redemption at
the Purchase Price applicable to such Bonds. The Paying Agent
shall give notice of such mandatory tender for purchase to the
Registered Owners of Bonds by first class mail, not less than 30
days before the mandatory tender date. If the Bonds are in
certificated form, such notice shall include information with
respect to required delivery of Bond certificates and payment of
the Purchase Price.
Section 2.12. Special Conditions to Conversions from
Multiannual or Fixed Rate Mode. Notwithstanding any other
provision contained herein, no conversion from the Multiannual or
Fixed Rate Mode to a different Mode or change from one Interest
Rate Period to an Interest Rate Period of different duration within
the Multiannual Mode on any optional redemption date for a Bond
shall take place unless there is delivered to the Trustee at least
45 days prior to the proposed Conversion Date (a) written evidence
that the Bonds will qualify for a short-term credit rating from a
Rating Agency and (b) written consent of the Bond Insurer to the
conversion of such Bond, which consent shall not be unreasonably
withheld.
ARTICLE III
GENERAL PROVISIONS
Section 3.01. Authorization for Indenture; Indenture to
Constitute Contract. This Indenture is entered into pursuant to
the Acts. In consideration of the purchase of the Bonds by the
Bond Owners, the provisions of this Indenture shall be part of the
contract of the Issuer with the Owners of the Bonds, and shall be
deemed to be and shall constitute a contract among the Issuer, the
Trustee and the Bond Owners. The provisions hereof are covenants
and agreements with such Bond Owners, which the Issuer hereby
determines to be necessary and desirable for the security and
payment of the Bonds.
Section 3.02. Payment of Principal, Premium, if any, and
Interest. (a) The Issuer covenants that it will duly and
punctually pay or cause to be paid the principal of, premium, if
any, and interest on the Bonds issued under this Indenture at the
place, on the dates and in the manner provided herein and therein
according to the true intent and meaning thereof, but solely from
the payments, revenues and receipts specifically assigned herein
for such purposes as set forth in Section 4.03 of this Indenture.
(b) The Trustee is appointed as the Paying Agent for the
Bonds. The principal of, premium, if any, and interest on the
Bonds shall be payable, without exchange or collection charges, in
lawful money of the United States of America. During any period in
which the Bonds are on deposit at DTC, in accordance with Section
3.07 hereof, payment of principal of, together with any premium and
interest on, the Bonds shall be paid to DTC in immediately
available or next day funds on each payment date, and shall be
payable as directed in writing by DTC.
(c) The Company in issuing the Bonds may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either
as printed on the Bonds or as contained in any notice of a
redemption and that reliance may be placed only on the other
identification numbers printed on the Bonds, and any such
redemption shall not be affected by any defect in or omission of
such numbers.
(d) Notwithstanding any other provision of this Indenture or
in the forms of Bond, if the Bonds are on deposit at DTC in
accordance with Section 3.07 hereof, presentation and surrender of
the Bonds at the Principal Office of the Trustee shall not be
required other than at the maturity thereof.
Section 3.03. Performance of Covenants; Issuer Immunity.
(a) The Issuer covenants that it will faithfully comply with
the stipulations and provisions required to be performed by it and
contained in this Indenture, or in any of its proceedings
pertaining hereto.
(b) Upon execution of this Indenture, the Issuer shall not be
liable for any action taken, suffered or omitted to be taken by it
in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture. The Issuer's immunity and protection from liability
hereunder shall survive the final payment of the Bonds.
Section 3.04. Instruments of Further Assurance. The Issuer
covenants that it will do, execute, acknowledge and deliver, or
cause to be done, executed, acknowledged and delivered, such
indentures supplemental hereto and such further acts, instruments
and transfers as reasonably may be required for the better and more
effectual assignment to the Trustee of all payments, revenues and
other amounts payable under or with respect to the Agreement and
any other income and other moneys assigned hereby to the payment of
the principal of, premium, if any, and interest on the Bonds. The
Issuer further covenants that it will not create or suffer to be
created any lien, encumbrance or charge upon its interest in the
revenues and other amounts payable under or with respect to the
Trust Estate, except the lien and charge granted hereby.
Section 3.05. Recordation. The Trustee agrees that it will
cooperate with the Company, at the direction and expense of the
Company, to record and file any financing statements and all
supplements thereto, and such other instruments as may be directed
by the Company from time to time to be recorded or filed, in such
manner and in such places as from time to time may be directed by
the Company.
Section 3.06. Registration of Bonds; Trustee Appointed Bond
Registrar; Persons Treated as Owners.
(a) Registration. The Trustee is hereby appointed as Bond
Registrar of the Bonds and as such shall maintain the Registration
Books in the State of Texas as provided by this Indenture. The
Registration Books shall reflect the information required to be
provided by Bond Owners in connection with the transfer of Bonds.
At reasonable times and under reasonable regulations established by
the Trustee, the Registration Books may be inspected and copied by
the Company, the Issuer or the Owners (or designated
representatives thereof) of at least 25% in aggregate principal
amount of Bonds then Outstanding.
(b) Transfer and Exchange. The ownership of a Bond may be
transferred (in Authorized Denominations) only upon surrender
thereof at the Principal Office of the Trustee, accompanied by an
assignment, duly executed by the Owner of such Bond or his duly
authorized attorney-in-fact, in such form as shall be satisfactory
to the Trustee, along with the address and social security number
or federal employer identification number of such transferee (or,
if registration is to be made in the name of multiple individuals,
of all such transferees) and, if such transferee is a trust, the
name and address of the trustee(s) and the date of the trust of the
proposed transferee. Upon the due presentation of any Bond for
transfer and on request of the Trustee, the Issuer shall execute in
the name of the transferee, and the Trustee shall authenticate and
deliver, a new fully registered Bond or Bonds of the same Mode, in
any denomination permitted by this Indenture, in an aggregate
principal amount equal to the unmatured and unredeemed aggregate
principal amount of such transferred fully registered Bond, and
bearing interest at the same rate, and maturing on the same date,
as such transferred Bond.
Bonds may be exchanged at the Principal Office of the Trustee
or the Paying Agent for other Bonds of the same Mode (and same
Interest Rate Period with respect to Bonds in the Flexible Mode or
Multiannual Mode) aggregating a like principal amount. Bonds
issued in exchange for other Bonds may be issued only in Authorized
Denominations of the same Mode. All Bonds surrendered to the
Trustee for exchange pursuant to this Section 3.06 shall be
canceled by the Trustee and shall not be redelivered. Neither the
Issuer nor the Trustee shall be required to make any such transfer
or exchange of any Bond during the 10 Business Days immediately
preceding the mailing of a notice of Bonds selected for redemption
or, with respect to a Bond, after such Bond or any portion thereof
has been selected for redemption.
(c) Charges. In all cases of the transfer of a Bond, the
Trustee shall register at the earliest practicable time, on the
Registration Books, such Bond in accordance with the provisions of
this Indenture. The Issuer or the Trustee may make a charge to the
Bond Owner for every transfer or exchange of a Bond sufficient to
reimburse it for any tax or other governmental charge required to
be paid with respect to such transfer or exchange, and may demand
that such charge be paid before any new Bond is delivered.
(d) Ownership. As to any Bond, the person in whose name the
ownership of such Bond shall be registered on the Registration
Books shall be deemed and regarded as the absolute owner thereof
for all purposes, and payment of or on account of the principal of
any such Bond and the premium, if any, and interest thereon shall
be made only to or upon the order of the registered Owner thereof
or his legal representative. All such payments shall be valid and
effectual to satisfy and discharge the liability upon such Bond,
including the premium, if any, and interest thereon, to the extent
of the sum or sums so paid.
Section 3.07. Book-Entry Only System. The Bonds shall be
initially issued in the form of a single fully registered Bond.
Upon initial issuance, the ownership of each such Bond shall be
registered in the name of Cede & Co., as nominee of DTC, and,
except as provided in Section 3.08 hereof, all of the outstanding
Bonds shall be registered in the name of Cede & Co., as nominee of
DTC.
With respect to Bonds registered in the name of Cede & Co., as
nominee of DTC, the Issuer and the Trustee shall have no
responsibility or obligation to any DTC Participant or to any
person on behalf of whom such a DTC Participant holds an interest
in the Bonds, except as provided in this Indenture. Without
limiting the immediately preceding sentence, the Issuer and the
Trustee shall have no responsibility or obligation with respect to
(i) the accuracy of the records of DTC, Cede & Co. or any DTC
Participant with respect to any ownership interest in the Bonds,
(ii) the delivery to any DTC Participant or any other person, other
than a Bondholder, as shown on the Registration Books, of any
notice with respect to the Bonds, including any notice of
redemption, or (iii) the payment to any DTC Participant or any
other person, other than a Bondholder, as shown in the Registration
Books of any amount with respect to principal of, premium, if any,
or interest on, the Bonds. Notwithstanding any other provision of
this Indenture to the contrary, the Issuer and the Trustee shall be
entitled to treat and consider the person in whose name each Bond
is registered in the Registration Books as the absolute owner of
such Bond for the purpose of payment of principal, premium, if any,
and interest with respect to such Bond, for the purpose of giving
notices of redemption and other matters with respect to such Bond,
for the purpose of registering transfers with respect to such Bond,
and for all other purposes whatsoever. The Trustee shall pay all
principal of, premium, if any, and interest on the Bonds only to or
upon the order of the respective owners, as shown in the
Registration Books as provided in this Indenture, or their
respective attorneys duly authorized in writing, and all such
payments shall be valid and effective to fully satisfy and
discharge the Issuer's obligations with respect to payment of
principal of, premium, if any, and interest on, the Bonds to the
extent of the sum or sums so paid. No person other than an owner,
as shown in the Registration Books, shall receive a Bond
certificate evidencing the obligation of the Issuer to make
payments or principal, premium, if any, and interest, pursuant to
this Indenture. Upon delivery by DTC to the Trustee of written
notice to the effect that DTC has determined to substitute a new
nominee in place of Cede & Co., and subject to the provisions in
this Indenture with respect to interest checks or drafts being
mailed to the registered owner at the close of business on the
Record Date, the words "Cede & Co." in this Indenture shall refer
to such new nominee of DTC.
Section 3.08. Successor Securities Depository; Transfers
Outside Book-Entry Only System. (a) In the event that the Issuer,
at the direction of the Company, determines that DTC is incapable
of discharging its responsibilities described herein and in the
representation letter of the Issuer to DTC, the Issuer shall (i)
appoint a successor securities depository, qualified to act as such
under Section 17(a) of the Securities Exchange Act of 1934, as
amended, notify DTC and DTC Participants, identified by DTC, of the
appointment of such successor securities depository and transfer
one or more separate Bonds to such successor securities depository
or (ii) notify DTC and DTC Participants, identified by DTC, of the
availability through DTC of Bonds and transfer one or more separate
Bonds to DTC Participants, identified by DTC, having Bonds credited
to their DTC accounts. In such event, the Bonds shall no longer be
restricted to being registered in the Registration Books in the
name of Cede & Co., as nominee of DTC, but may be registered in the
name of the successor securities depository, or its nominee, or in
whatever name or names Bondholders transferring or exchanging Bonds
shall designate, in accordance with the provisions of this
Indenture.
(b) In addition to (a) above, upon the written consent of
100% of the beneficial owners of the Bonds, the Trustee shall
withdraw the Bonds from DTC, and authenticate and deliver Bonds
fully registered to the assignees of DTC or its nominee. If the
request for such withdrawal is not the result of any Issuer action
or inaction, such withdrawal, authentication and delivery shall be
at the cost and expense (including costs of printing, preparing and
delivering such Bonds) of the persons requesting such withdrawal,
authentication and delivery.
Section 3.09. Payments to Cede & Co. Notwithstanding any
other provision of this Indenture to the contrary, so long as any
Bond is registered in the name of Cede & Co., as nominee of DTC,
all payments with respect to principal of, premium, if any, and
interest on, such Bond and all notices with respect to such Bond
shall be made and given, respectively, in the manner provided in
the representation letter of the Issuer to DTC.
Section 3.10. Cancellation. All Bonds which have been paid
at maturity or redeemed prior to maturity shall not be reissued but
shall be canceled by the Trustee. All Bonds which are canceled by
the Trustee shall be disposed of by the Trustee, in accordance with
its document retention policies, and a certificate of cancellation
shall be furnished promptly to the Issuer upon request; provided,
however, that if the Issuer shall so direct the Trustee, the
Trustee shall forward the canceled Bonds to the Issuer.
Section 3.11. Non-presentment of Bonds. If any check or
draft representing payment of interest, principal or premium on any
Bond is returned to the Trustee or is not presented for payment by
the payee thereof, or any Bond is not presented for payment of
principal or premium at the maturity or redemption date, if moneys
and/or Government Obligations sufficient to pay such interest, or
such principal and premium, shall have been deposited with and made
available to the Trustee for the benefit of the Owner of the
applicable Bond, all liability of the Issuer to the Owner of such
Bond for such interest or such principal and premium shall
forthwith cease, terminate and be completely discharged, and
thereupon it shall be the duty of the Trustee to hold such moneys
and/or Government Obligations, without investing or reinvesting the
same and without liability for interest thereon, for the benefit of
the Owner of such Bond, who shall thereafter be restricted
exclusively to such funds for any claim of whatever nature on such
Owner's part under this Indenture or on, or with respect to, such
Bond, and such Bond shall no longer be considered to be
Outstanding. The Trustee's obligation to hold such moneys and/or
Government Obligations relating to the Bonds shall continue for a
period equal to two years following the date on which the principal
of all Bonds has become due, whether at maturity, or at the date
fixed for redemption or purchase thereof, or otherwise, at which
time the Trustee, upon payment of all fees and expenses due and
owing to it and receipt of indemnity satisfactory to it, shall
surrender any remaining funds so held to the Company. Following
such surrender, any claim under this Indenture by the Owner of any
Bond of whatever nature shall be made only upon the Company.
The provisions of this Section 3.11 shall be subject to all
applicable escheat laws, including Title 6 of the Texas Property
Code.
Section 3.12. Rights under Agreement. This Indenture, the
Agreement and the documents executed by the Company in connection
therewith, duly executed counterparts or originals of which have
been filed with the Trustee, set forth the covenants and the
obligations of the Issuer, the Company and the Trustee. Reference
hereby is made to such documents for detailed statements of the
covenants and obligations set forth therein. The Issuer and the
Trustee agree that the Trustee, for and on behalf of the Bond
Owners, in its name or, to the extent permitted by law, in the name
of the Issuer, may enforce all rights of the Issuer (except for
Unassigned Rights) and all obligations of the Company under and
pursuant to the Agreement and such documents.
Section 3.13. Legal Existence of Issuer. The Issuer
covenants that it will take any action within its control to
maintain its legal existence and will duly procure any necessary
renewals and extensions thereof; will use its best efforts to
maintain, preserve and renew all the rights, powers, privileges and
franchises owned by it; and will comply with all valid acts, rules,
regulations and orders of any legislative, executive, judicial or
administrative body applicable to the Issuer in connection with the
Bonds.
Section 3.14. Diminution of, or Encumbrance on, Trust Estate.
The Issuer covenants not to sell, transfer, assign, pledge,
release, encumber or otherwise diminish or dispose of, directly or
indirectly, by merger or otherwise, or cause or suffer the same to
occur, or create or allow to be created or to exist any lien upon,
all or any part of its interests in the Trust Estate, except as
expressly permitted by this Indenture.
Section 3.15. Books, Records and Accounts. The Trustee shall
keep proper books for the registration of, and transfer of
ownership of, each Bond, and proper books, records and accounts in
which complete and correct entries shall be made of all
transactions relating to the receipt, disbursement, investment,
allocation and application of the proceeds received from the sale
of the Bonds, the revenues received from the Agreement, the
documents executed by the Company in connection therewith, the
funds and accounts created pursuant to this Indenture, and all
other moneys held by the Trustee hereunder. The Trustee shall,
during regular business hours and upon reasonable prior notice,
make such books, records and accounts available for inspection by
the Issuer and the Company.
Section 3.16. Temporary Bonds. Until definitive Bonds are
ready for delivery, there may be executed, and, upon written
request of the Issuer, the Trustee shall authenticate and deliver,
in lieu of definitive Bonds, but subject to the same limitations
and conditions, temporary printed, engraved, lithographed or
typewritten registered Bonds (without coupons), in the minimum
denomination permitted for definitive Bonds or any integral
multiple thereof, substantially of the tenor hereinabove set forth
for definitive Bonds, and with such omissions, insertions and
variations as may be appropriate. If temporary Bonds shall be
issued, the Issuer shall cause the definitive Bonds to be prepared
and to be executed and deposited with the Trustee, without undue
delay, and the Trustee, upon presentation to it at its Principal
Office of any temporary Bond, shall cancel the same and
authenticate and deliver in exchange therefor at the required
location, without charge to the Owner thereof, a definitive Bond or
Bonds of an equal aggregate principal amount and bearing interest
at the same rate as the temporary Bond or Bonds so surrendered.
Until so exchanged the temporary Bonds shall be entitled in all
respects to the same benefit and security of this Indenture as the
definitive Bonds to be issued and authenticated hereunder.
Section 3.17. Mutilated, Lost, Stolen or Destroyed Bonds. If
any Bond is mutilated, lost, stolen or destroyed, the Trustee, upon
request, shall authenticate a new Bond, dated as provided in
Article II hereof, of the same denomination and Mode and bearing
interest at the same rate as the Bond mutilated, lost, stolen or
destroyed; provided, however, that, in the case of any mutilated
Bond, such mutilated Bond shall first be surrendered to the
Trustee, and, in the case of any lost, stolen or destroyed Bond,
there shall first be furnished to the Trustee evidence of such
loss, theft or destruction satisfactory to the Trustee, together
with indemnity covering the Trustee, the Company and the Issuer
satisfactory to the Trustee. If any such Bond shall have matured
instead of issuing a duplicate Bond the Trustee may pay the same.
The Trustee and the Issuer may charge the Owner of such Bond with
their reasonable fees and expenses in connection with the issuance
of any such duplicate Bond.
Section 3.18. Intentionally Omitted.
Section 3.19. Arbitrage Covenants. The Issuer covenants and
agrees, for the benefit of the owners of the Bonds, that it will
not knowingly take any action or omit from taking nor instruct the
Trustee to take or to omit from taking any action, which would
result in a loss of the exemption from federal income taxation of
interest on the Bonds by virtue of the Bonds being considered
"arbitrage bonds" within the meaning of section 148 of the Code.
ARTICLE IV
USE OF PROCEEDS; REVENUES AND FUNDS
Section 4.01. Application of Original Proceeds of Bonds.
(a) The proceeds of the sale of the Bonds, except accrued interest
thereon, if any, shall, on the Issue Date, be transferred by the
Trustee to the Prior Trustee for deposit into the bond fund created
under the Prior Indenture.
(b) The Company, prior to or on the Issue Date, will deposit
or cause to be deposited into the bond fund relating to the Prior
Bonds an amount which, together with the Bond proceeds described in
(a) above, will equal the principal of, premium and interest on
the Prior Bonds due on the date fixed for their redemption.
Section 4.02. Creation of Bond Fund. There is hereby created
by the Issuer and ordered established with the Trustee a trust fund
to be designated the "Matagorda County Navigation District Number
One Pollution Control Revenue Refunding Bonds (Central Power and
Light Company Project) Series 1996 Bond Fund" (the "Bond Fund").
Section 4.03. Payments into Bond Fund and Use of Moneys in
Bond Fund. (a) There shall be deposited into the Bond Fund, when
received: (i) accrued interest, if any, on the Bonds from the date
thereof to the date of delivery to the initial purchaser thereof;
(ii) all payments specified in the Agreement (except for certain
payments of fees, expenses, and indemnification arising out of the
Issuer's Unassigned Rights); (iii) all moneys required to be so
deposited in connection with any redemption of Bonds; (iv) any
amounts directed to be transferred into the Bond Fund pursuant to
any provision of this Indenture; and (v) all other moneys when
received by the Trustee which are required to be deposited into the
Bond Fund or which are accompanied by directions that such moneys
are to be paid into the Bond Fund.
(b) Moneys held in the Bond Fund shall be used solely for the
payment of the principal of, premium, if any, and interest on the
Bonds on the dates due for the payment or redemption thereof. The
Issuer hereby authorizes and directs the Trustee to withdraw
sufficient funds from the Bond Fund to pay the principal of,
premium, if any, and interest on the Bonds as the same become due
and payable, which authorization and direction the Trustee hereby
accepts.
Section 4.04. Creation and Use of Bond Purchase Fund. There
is hereby created and established a Bond Purchase Fund with respect
to the Bonds to be held as a separate escrow fund, in trust and
administered and distributed by the Trustee as provided in this
Section. All moneys deposited in the Bond Purchase Fund shall be
used solely for the purposes set forth herein.
The Trustee shall deposit into the Bond Purchase Fund (i) all
Remarketing Proceeds received by the Trustee from the Remarketing
Agent; and (ii) funds paid by the Company pursuant to Section 5.10
of the Agreement. The Trustee shall apply moneys on deposit in
the Bond Purchase Fund to pay the Purchase Price of Bonds purchased
hereunder; provided, however, that any amounts received by the
Trustee from the Remarketing Agent that are not needed to pay the
Purchase Price of Bonds because such Bonds have been accelerated or
called for redemption shall be returned to the Remarketing Agent.
The funds held by the Paying Agent in the Bond Purchase Fund
shall not constitute part of the Trust Estate which is subject to
the lien of this Indenture. The moneys in the Bond Purchase Fund
shall be used solely to pay the Purchase Price of Bonds as
aforesaid and may not be used for any other purposes. It shall be
the duty of the Paying Agent to hold the moneys in the Bond
Purchase Fund, without liability for interest thereon, for the
benefit of the Registered Owners of Bonds which have been properly
tendered for purchase or deemed tendered on the Purchase Date, and
if sufficient funds to pay the Purchase Price for such tendered
Bonds shall be held by the Paying Agent in the Bond Purchase Fund
for the benefit of the Registered Owners thereof, each such
Registered Owner shall thereafter be restricted exclusively to the
Bond Purchase Fund for any claim of whatever nature on such
Registered Owner's part under this Indenture or on, or with respect
to, such tendered Bond. Funds held in the Bond Purchase Fund for
the benefit of Registered Owners of untendered Bonds shall be held
in trust and not invested. The provisions of Section 3.11 hereof
shall govern any funds held in the Bond Purchase Fund for such
Registered Owners of the Bonds which remain unclaimed for a period
of two years after the applicable Purchase Date.
Section 4.05. Investment of Moneys. Subject to the
restrictions hereinafter set forth in this Section 4.05 and in
Section 4.08, any moneys held in the Bond Fund shall be invested
and reinvested by the Trustee upon the written instructions of the
Company solely in Permitted Investments, maturing no later than the
date on which it is estimated by the Company that such moneys will
be required to be paid out hereunder. All investment instructions
hereunder shall be provided to the Trustee no later than one
Business Day prior to the making of the investment directed
therein. The Trustee may make any and all such investments through
its own investment department and may trade with itself in the
purchase and sale of securities for such investment when authorized
to do so by the Company. The Trustee shall be entitled to rely on
all written investment instructions provided by the Company
hereunder. The Trustee shall not be responsible or liable for the
performance of any such investments or for keeping the moneys held
by it hereunder fully invested at all times. Any moneys for which
the Trustee has received no investment instructions shall be
automatically reinvested into The Bank of New York Deposit Reserve
or 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 timely payment due
on such date, the Company shall deposit sufficient moneys in such
fund to enable such timely payment to be made on such date.
Section 4.06. Moneys To Be Held in Trust. All moneys
required to be deposited with or paid to the Trustee for the
account of any Fund under any provisions of this Indenture shall be
held by the Trustee in trust, and, except for (i) moneys in the
Bond Purchase Fund, and (ii) moneys deposited with or paid to the
Trustee for the redemption of Bonds, notice of the redemption for
which has been duly given, shall, while held by the Trustee,
constitute part of the Trust Estate and be subject to the security
interest created hereby.
Section 4.07. Repayment to Company from Indenture Funds.
Subject to Section 3.11 hereof, any amounts remaining in any Fund
created under this Indenture, after payment in full of the Bonds in
accordance with Article V hereof, the reasonable fees, charges and
expenses of the Issuer, the Trustee and any co-trustee appointed
hereunder, and all other amounts required to be paid hereunder or
under the Agreement, shall be paid, upon the expiration of, or upon
the sooner termination of, the terms of this Indenture, to the
Company.
Section 4.08. Custody of Funds and Accounts. All Funds
created pursuant to this Indenture shall be in the custody of the
Trustee but held in trust, in the name of the Issuer, for the
benefit of the Bondholders (other than amounts held in the Bond
Purchase Fund).
Section 4.09. Exemption from Federal Income Taxation. The
Issuer will not knowingly take any action, or omit to take any
action within its control, which action or omission will adversely
affect the exclusion from gross income for federal income tax
purposes of interest on the Bonds, and in the event of such action
or omission will promptly, upon receiving knowledge thereof, take
all lawful actions, based on advice of counsel and at the expense
of the Company, as may rescind or otherwise negate such action or
omission.
Section 4.10. Covenants Regarding Rebate.
(a) A special Rebate Fund is hereby established by the
Issuer. The Rebate Fund shall be for the sole benefit of the
United States of America and shall not be subject to the claim of
any other person, including without limitation the Bondholders.
The Rebate Fund is established for the purpose of complying with
section 148 of the Code and the Treasury Regulations promulgated
pursuant thereto. The money deposited in the Rebate Fund, together
with all investments thereof and investment income therefrom, shall
be held in trust and applied solely as provided in this Section.
The Rebate Fund is not a portion of the Trust Estate and is not
subject to the lien of this Indenture. Notwithstanding the
foregoing, the Trustee with respect to the Rebate Fund is afforded
all the rights, protections and immunities otherwise accorded to it
hereunder.
(b) Within ten days after the close of each fifth anniversary
date of the issuance of the Bonds, the Trustee shall receive from
the 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 America at
least once every five years, to the extent that funds are available
in the Rebate Fund or otherwise provided by the Company, an amount
that ensures that at least 90 percent of the Excess Earnings from
the date of delivery of the Bonds to the close of the period for
which the payment is being made will have been paid. The Trustee
shall pay to the United States of America not later than 60 days
after the Bonds have been paid in full, to the extent that funds
are available in the Rebate Fund or otherwise provided by the
Company, 100 percent of the amount then required to be paid under
section 148(f) of the Code as a result of Excess Earnings.
(e) The amounts to be computed, paid, deposited or disbursed
under this Section shall be determined by the 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, then, except for the rights, protections and
immunities of the Trustee under Article VII hereof, these presents
and the interest in the Trust Estate and rights hereby granted
shall cease, determine and be void, and the Trustee shall take such
actions as may be necessary to evidence the cancellation and
discharge of the lien of this Indenture. Any Bond, other than a
Bond in the Daily or the Weekly Mode, shall be deemed to be paid
within the meaning of this Article V and for all purposes of this
Indenture when (i) payment of the principal of, and applicable
premium, if any, on such Bond plus the interest thereon to the due
date thereof (whether such due date be by reason of maturity or
upon redemption as provided in this Indenture or otherwise), or, in
the case of a Bond in the Flexible Mode, the Monthly Mode, the
Quarterly Mode, the Semiannual Mode or the Multiannual Mode, to the
date next following on which such Bond is required to be, or may at
the option of the Owner be, tendered for purchase, shall have been
provided to the Trustee by irrevocably depositing with the Trustee,
in trust, and the Trustee shall have irrevocably set aside
exclusively for such payment, any combination of (1) moneys
provided by the Company sufficient to make such payment and/or (2)
Government Obligations acquired with moneys provided by the
Company, not subject to redemption or prepayment and maturing as to
principal and interest in such amounts and at such times as will,
in the opinion of an independent certified public accountant
delivered to the Trustee, provide sufficient moneys to make such
payment without reinvestment (and there shall be no reinvestment);
(ii) all necessary and proper fees, compensation and expenses of
the Trustee pertaining to the Bonds shall have been paid or the
payment thereof provided for to the satisfaction of the Trustee;
(iii) the Trustee shall have received in form satisfactory to it
irrevocable instructions from an Authorized 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
instructions to the Trustee to give such redemption notices has
been given; and (iv) there shall be delivered to the Trustee and
the Issuer an opinion of Bond Counsel to the effect that the
deposit of such moneys will not adversely affect the excludability
from gross income for purposes of federal income taxation of
interest on any of the Bonds.
Notwithstanding the foregoing, upon the deposit of funds as
described in the first paragraph of this Section, the Purchase
Price of Bonds tendered for optional or mandatory purchase shall be
made from the remarketing of such Bonds under Section 2.10 hereof.
If payment of such Purchase Price is not made from such source,
payment shall be made from funds on deposit pursuant to this
Section, in which case such Bonds shall be surrendered to the
Trustee and canceled.
Section 5.02. Defeasance. So long as the Municipal Bond
Insurance Policy shall be in full force and effect, prior to any
defeasance becoming effective under this Indenture, (i) the amounts
required to be deposited pursuant to this Indenture and any escrow
deposit agreement shall be invested only in Government Obligations,
(ii) the Bond Insurer and the Trustee shall have received (a) any
final official statement that may be delivered in connection with
any refunding obligations, (b) a copy of the accountants'
verification report, (c) a copy of an escrow deposit agreement, if
any, in form and substance acceptable to the Bond Insurer, and (d)
a copy of an opinion of bond counsel, addressed to the Bond Insurer
and the Trustee, to the effect that such Bonds have been paid
within the meaning and with the effect expressed in this Indenture,
and that the covenants, agreements and other obligations of the
Issuer to the holders of such Bonds have been discharged and
satisfied and (iii) the Trustee shall have received the written
consent of the Bond Insurer to such defeasance, which consent shall
not be unreasonably withheld.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.01. Events of Default. Each of the following
events is hereby defined as, and declared to constitute an "Event
of Default" under this Indenture:
(i) default in the due and punctual payment of the principal
of or premium, if any, on any Outstanding Bond, as the same shall
become due and payable, whether at the stated maturity thereof,
upon any proceedings for redemption, or upon the maturity thereof
by declaration of acceleration;
(ii) default in the due and punctual payment of the interest
on any Outstanding Bond, as the same shall become due and payable,
and (i) if such Bond bears interest at a Flexible, Daily, Weekly,
Monthly, Quarterly or Semiannual Rate, the continuation of such
default for a period of one Business Day or more or (ii) if such
Bond bears interest at a Multiannual or Fixed Rate, the
continuation of such failure for a period of sixty days or more;
(iii) default in the due and punctual payment of the
Purchase Price of any Outstanding Bond, as the same shall become
due and payable and the continuation of such default for a period
of one Business Day or more;
(iv) default by the Issuer in its performance or observance of
any of the other covenants, agreements or conditions contained in
the Indenture, and the continuation thereof without corrective
action for the period after notice specified in Section 6.12 hereof
; or
(v) an Event of Default (as defined in the Agreement) has
occurred and is continuing under the Agreement.
Section 6.02. Acceleration. If any Event of Default occurs
and is continuing, the Trustee may, and upon request of the owners
of at least 25% in principal amount of all Bonds then Outstanding,
shall, by notice in writing to the Issuer and the 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 and the Remarketing Agent of
the occurrence of such acceleration. Upon the occurrence of any
acceleration hereunder, the Trustee shall notify by first class
mail, postage prepaid, the owners of all Bonds Outstanding of the
occurrence of such acceleration.
If, after the principal of the Bonds has become due and
payable, all arrears of interest upon the Bonds are paid by the
Issuer, and the Issuer also performs all other things in respect to
which it may have been in default hereunder and pays the reasonable
charges of the Trustee and the Bondholders, including reasonable
and necessary attorneys' fees, then, and in every such case, the
owners of a majority in principal amount of the Bonds then
Outstanding, by notice to the Issuer and to the Trustee, may annul
such acceleration and its consequences, and such annulment shall be
binding upon the Trustee and upon all owners of Bonds issued
hereunder. No such annulment shall extend to or affect any
subsequent default or impair any right or remedy consequent
thereon. The Trustee shall forward a copy of any notice from
Bondholders received by it pursuant to this paragraph to the
Company. Immediately 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 Company, the Paying Agent, the
Remarketing Agent, and, if notice of the acceleration of the Bonds
shall have been given to the Bondholders, shall give notice thereof
to the Bondholders.
Section 6.03. Other Remedies; Rights of Bond Owners. Upon
the occurrence of any Event of Default, the Trustee may pursue any
available remedy by suit at law or in equity to enforce the payment
of the principal of, premium, if any, and interest on the Bonds
then outstanding, and the performance by the Issuer of its
obligations hereunder, including, without limitation, the
following:
(i) by mandamus, or other suit, action or proceeding at law
or in equity, enforce all rights of the Bondholders and require the
Issuer to carry out its obligations under this Indenture and the
Acts;
(ii) bring suit upon the Bonds;
(iii) by action, suit or proceeding at law or in equity,
require the Issuer to account as if it were the trustee of an
express trust for the Bondholders; and
(iv) by action, suit or proceeding at law or in equity, enjoin
any acts or things which may be unlawful or in violation of the
rights of the Bondholders.
Any judgment against the Issuer shall be enforceable only against
the Trust Estate. There shall not be authorized any deficiency
judgment against any assets of, or the general credit of, the
Issuer. Subject to the prior rights of the Bond Owners, the Issuer
shall be entitled to reimbursement for any of its expenses in
connection with such proceeding from any available funds in the
Trust Estate.
If any Event of Default shall have occurred, and if requested
to do so in writing by the Owners of not less than 25% in aggregate
principal amount of the Bonds then Outstanding and if indemnified
as provided in Section 7.01(l) hereof, the Trustee shall be
obligated to exercise one or more of the rights and powers
conferred by this Section 6.03, or by Section 6.02 hereof as the
Trustee, being advised by counsel, shall deem most expedient in the
interests of the Bond Owners, unless the Trustee shall determine,
upon the advice of counsel, that to take such action will prejudice
the rights of the majority of the Bond Owners.
No remedy conferred upon or reserved to the Trustee or the
Bond Owners by the terms of this Indenture is intended to be
exclusive of any other remedy, but each and every such remedy shall
be cumulative and in addition to any other remedy given to the
Trustee or the Bond Owners hereunder or now or hereafter existing
at law or in equity. No delay or omission to exercise any right or
power accruing upon any default or Event of Default shall impair
any such right or power, or shall be construed to be a waiver of
any such default or Event of Default or an acquiescence therein;
and every such right and power may be exercised from time to time
as often as may be deemed expedient. No waiver of any default or
Event of Default hereunder, whether by the Trustee or the Bond
Owners, shall extend to or affect any subsequent default or Event
of Default, or impair any right or remedy consequent thereon.
Section 6.04. Right of Bond Owners to Direct Proceedings.
Anything in this Indenture to the contrary notwithstanding, upon
the occurrence of an Event of Default, the Owners of a majority in
aggregate principal amount of the Bonds then Outstanding shall have
the right, at any time, by an instrument or instruments in writing
executed and delivered to the Trustee, to direct the method and
place of conducting all proceedings to be taken in connection with
the enforcement of the terms and conditions of this Indenture, or
for the appointment of a receiver or for any other proceedings
hereunder, other than for the payment of the principal of, premium,
if any, and interest on the Bonds or any part thereof; provided,
however, that direction shall not be otherwise than in accordance
with the provisions of law and this Indenture and shall be
accompanied by an indemnity as provided in Section 7.01(1) hereof.
Section 6.05. Appointment of Receiver. Upon the occurrence
of an Event of Default, and upon the filing of a suit or other
commencement of judicial proceedings to enforce the rights of the
Trustee and the Bond Owners under this Indenture, the Trustee shall
be entitled, as a matter of right, to request the appointment of a
receiver or receivers of the Trust Estate and the revenues, issues,
earnings, income, products and profits thereof, pending such
proceedings, with such powers as the court making such appointment
shall confer.
Section 6.06. Waiver of Certain Laws. Upon the occurrence of
an Event of Default, to the extent that such rights may then
lawfully be waived, neither the Issuer, nor anyone claiming through
or under it, shall claim or seek to take advantage of any
appraisement, valuation, stay, extension or redemption laws now or
hereafter in force in order to prevent or hinder the enforcement of
this Indenture. The Issuer, for itself and all who may claim
through or under it, hereby waives, to the extent that it lawfully
may do so, the benefit of all such laws.
Section 6.07. Application of Moneys. All moneys relating to
the Bonds received by the Trustee pursuant to any right given or
action taken under the provisions of this Article VI shall (after
payment of the costs and expenses of the proceedings resulting in
the collection of such moneys and of the fees and expenses,
liabilities and advances of the Issuer and the Trustee, it being
understood that such payment shall not be made from any moneys
already held for the benefit of the Bondholders) be deposited in
the Bond Fund, and all moneys in the Bond Fund shall be applied as
follows:
(i) Unless the principal of all the Bonds Outstanding shall
have become or been declared due and payable, all such moneys shall
be applied:
First: (a) in case the principal of the Bonds shall not
have become due, to the payment of the interest in default, in the
order of the maturity of the installments of such interest, with
interest, so far as the same may be legally enforceable, on the
overdue installments thereof at the highest rate borne by any
Outstanding Bonds, such payments to be made ratably to the persons
or parties entitled thereto, without discrimination or preference;
or
(b) in case the principal of any of the Bonds shall have
become due, by declaration or otherwise, first to the payment of
the interest in default, in the order of the maturity of the
installments of such interest, and thereafter to the payment of the
principal of, and premium, if any, on all Bonds then due with
interest, so far as the same may be legally enforceable, on the
overdue interest and principal (including premium) at the highest
rate borne by any Outstanding Bonds, such payments, respectively,
to be made ratably to the persons or parties entitled thereto,
without discrimination or preference.
Second: to the payment of the fees, counsel fees, and
advances and expenses of the Trustee and of the receiver, if any,
and all costs and disbursements allowed by the court if there be
any court action, and all other Trustee expenses accrued hereunder.
Third: to the payment of the Issuer's counsel fees and other
expenses, if any.
Fourth: to the payment of the surplus, if any, to
whomever is lawfully entitled to receive the same or as
a court of competent jurisdiction may direct.
(ii) If the principal of all the Outstanding Bonds shall have
become due or shall have been declared due and payable, all such
moneys shall be applied first to the payment of any amounts owed to
the Trustee; and second to the payment of the principal, premium,
if any, and interest then due on such Bonds, without preference or
priority of principal and premium over interest or of interest over
principal and premium, or of any installment or interest over any
other installment of interest, or of any Bond over any other Bond,
ratably, according to the amounts due respectively for principal,
premium, if any, and interest, to the persons entitled thereto,
without any discrimination or privilege.
(iii) If the principal of all the Outstanding Bonds shall
have been declared due and payable by acceleration, and if such
declaration shall thereafter have been rescinded and annulled under
the provisions of this Article VI, then the moneys shall be applied
in accordance with the provisions of subsection (i) above;
provided, however, that in the event that the principal of all the
Bonds shall later become due or be declared due and payable by
acceleration, the moneys shall be applied in accordance with the
provisions of subsection (ii) of this Section 6.07.
Whenever the Trustee shall apply such funds it shall fix the
date of application, which shall be an Interest Payment Date unless
it shall deem another date more suitable. The Trustee shall give
such notice of the deposit with it of any such moneys and of the
fixing of any such date.
Section 6.08. Remedies Vested in Trustee. All rights of
action (including the right to file proofs of claim) under this
Indenture and the Bonds may be enforced by the Trustee without the
possession of any Bond or the production thereof in any trial or
proceedings related thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its name as Trustee
without the necessity of joining as plaintiff or defendant the
Owner of any Bond.
Section 6.09. Rights and Remedies of Bond Owners. No Owner
of any Bond shall have any right to institute any suit, action or
proceeding in equity or at law for the enforcement of this
Indenture or for the execution of any trust hereof or for the
appointment of a receiver or any other remedy hereunder, unless:
(i) an Event of Default has occurred of which the Trustee has
been notified as provided in Section 7.01(h) hereof, or of which by
said Section 7.01(h) the Trustee is deemed to have notice;
(ii) the Owners of not less than 25% in aggregate principal
amount of the Bonds then Outstanding shall have made written
request to the Trustee and shall have offered it reasonable
opportunity either to proceed to exercise the powers hereinabove
granted or to institute such action, suit or proceeding in the name
or names of such Owners, and shall have offered to the Trustee
indemnity as provided in Section 7.01(1) hereof; and
(iii) the Trustee shall thereafter fail or refuse to
exercise the powers hereinbefore granted, or to institute such
action, suit or proceeding in its own name within 60 days;
and such notification, request and offer of indemnity are hereby
declared in every case, at the option of the Trustee, to be
conditions precedent to the execution of the powers and trusts of
this Indenture, and to any action or cause of action for the
enforcement of this Indenture, or for the appointment of a receiver
or for any other remedy hereunder. No one or more Owners of the
Bonds shall have any right in any manner whatsoever to affect,
disturb or prejudice the lien of this Indenture by such Owners'
action, and all proceedings at law or in equity shall be
instituted, had and maintained in the manner herein provided and
(except as herein otherwise provided) for the equal and ratable
benefit of the Owners of all Bonds then Outstanding. Nothing in
this Indenture, however, shall affect or impair the right of any
Owner to enforce the payment of the principal of, premium, if any,
and interest on any Bond owned by such Owner at and after the
maturity thereof, or the obligation of the Issuer to pay the
principal of, premium, if any, and interest on any Bond to the
owner thereof at the time and place, from the source, and in the
manner expressed in such Bond. Nothing contained herein shall be
construed as permitting or affording any Owner a right or cause of
action against the Trustee or in respect of the Bonds where a
default has been waived under Section 6.11 hereof or cured under
Section 6.12 hereof.
Section 6.10. Termination of Proceedings. In case the
Trustee shall have proceeded to enforce any right under this
Indenture by the appointment of a receiver or otherwise, and such
proceedings shall have been discontinued or abandoned for any
reason, or shall have been determined adversely to the Trustee,
then and in every such case the Issuer, the Trustee and the Owners
shall be restored to their former positions and rights hereunder,
and all rights, remedies and powers of the Trustee shall continue
as if no such proceedings had been taken.
Section 6.11. Waivers of Events of Default. The Trustee may
waive any default or Event of Default hereunder and its
consequences and shall do so upon the written request of the Owners
of a majority in aggregate principal amount of the Bonds then
Outstanding, provided, however, that the Trustee may not waive an
Event of Default described in subparagraphs (i), (ii) or (iii) of
Section 6.01 hereof without the written consent of the Owners of
all of the Bonds.
Section 6.12. Notice of Default; Opportunity to Cure
Defaults. (a) Anything herein to the contrary notwithstanding, no
default under Section 6.01(iv) hereof shall constitute an Event of
Default hereunder until actual notice of such default by registered
or certified mail shall be given to the Issuer and the 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.
Section 6.13. Payments under Municipal Bond Insurance Policy.
So long as the Municipal Bond Insurance Policy shall be in full
force and effect, the Issuer and the Trustee hereby agree to comply
with the following provisions:
(a) If the Trustee has notice that any owner of the Bonds has
been required to disgorge payments of principal or interest on the
Bonds to a trustee in bankruptcy or creditors or others pursuant to
a final judgment by a court of competent jurisdiction that such
payment constitutes a voidable preference to such owner of Bonds
within the meaning of any applicable bankruptcy laws, then the
Trustee shall notify Bond Insurer or its designee of such fact by
telephone, facsimile, telecopy or telegraphic notice, confirmed in
writing by registered or certified mail.
(b) the Trustee is hereby irrevocably designated, appointed,
directed and authorized to act as attorney-in-fact for owners of
the Bonds as follows:
(i) If and to the extent there is a deficiency in amounts
required to pay interest on the Bonds, the Trustee shall (A)
execute and deliver to State Street Bank and Trust Company, N.A.,
or its successors under the Municipal Bond Insurance Policy (the
"Insurance Paying Agent"), in form satisfactory to the Insurance
Paying Agent, an instrument appointing Bond Insurer as agent for
such owners in any legal proceeding related to the payment of such
interest and an assignment to Bond Insurer of the claims for
interest to which such deficiency relates and which are paid by
Bond Insurer, (B) receive as designee of the respective owners (and
not as Trustee) in accordance with the tenor of the Municipal Bond
Insurance Policy payment from the Insurance Paying Agent with
respect to the claims for interest so assigned, and (C) disburse
the same to such respective owners; and
(ii) If and to the extent of a deficiency in amounts required
to pay principal of the Bonds, the Trustee shall (A) execute and
deliver to the Insurance Paying Agent in form satisfactory to the
Insurance Paying Agent an instrument appointing Bond Insurer as
agent for such owner in any legal proceeding relating to the
payment of such principal and an assignment to Bond Insurer of any
of the Bonds surrendered to the Insurance Paying Agent of so much
of the principal amount thereof as has not previously been paid or
for which moneys are not held by the Trustee and available for such
payment (but such assignment shall be delivered only if payment
from the Insurance Paying Agent is received), (B) receive as
designee of the respective owners (and not as the Trustee) in
accordance with the tenor of the Municipal Bond Insurance Policy
payment therefor from the Insurance Paying Agent, and (C) disburse
the same to such owners.
(c) Payments with respect to claims for interest on and
principal of Bonds disbursed by the Trustee from proceeds of the
Municipal Bond Insurance Policy shall not be considered to
discharge the obligation of the Issuer or the Company with respect
to such Bonds, and Bond Insurer shall become the owner of such
unpaid Bonds and claims for the interest in accordance with the
tenor of the assignment made to it under the provisions of this
subsection or otherwise.
(d) Irrespective of whether any such assignment is executed
and delivered, Issuer and the Trustee hereby agree for the benefit
of Bond Insurer that:
(i) To the extent Bond Insurer makes payments, directly or
indirectly (as by paying through the Trustee), on account of
principal of or interest on the Bonds, Bond Insurer will be
subrogated to the rights of such owners to receive the amount of
such principal and interest from the Issuer, with interest thereon
as provided and solely from the sources stated in this Indenture
and the Bonds; and
(ii) They will accordingly pay Bond Insurer the amounts of
such principal and interest (including principal and interest
recovered under subparagraph (ii) of the first paragraph of the
Municipal Bond Insurance Policy, which principal and interest shall
be deemed past due and not have been paid), with interest thereon
as provided in this Indenture and the Bonds, but only from the
sources and in the manner provided herein for the payment of
principal of and interest on the Bonds to owners, and will
otherwise treat Bond Insurer as the owner of such rights to the
amount of such principal and interest.
ARTICLE VII
THE TRUSTEE
Section 7.01. Acceptance of Trust. The Trustee hereby
accepts the trusts imposed upon it by this Indenture, and agrees to
perform said trusts, but only upon and subject to the following
express terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of
Default and after the curing or waiver of all Events of Default
which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee. Subject to the limitation on the liability of
the Trustee contained in Section 7.01(g), in case an Event of
Default has occurred of which the Trustee is deemed hereunder to
have knowledge (which has not been cured or waived), the Trustee
shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) The Trustee may execute any of the trusts or powers
hereof and perform any of its duties by or through attorneys,
agents, receivers or employees, but shall not be answerable for the
conduct of the same if chosen with due care. The Trustee shall be
entitled to advice of counsel of its selection concerning all
matters of trust hereof and the duties hereunder, and in all cases
may pay such reasonable compensation and expenses to all such
attorneys, agents, receivers and employees as may reasonably be
employed in connection with the trust hereof. The Trustee may act
upon the opinion or advice of any attorneys approved by the Trustee
in the exercise of reasonable care. The Trustee shall not be
responsible for any loss or damage resulting from any action or
non-action exercised in good faith in reliance upon such opinion or
advice.
(c) The Trustee shall not be responsible for any recital
herein or in the Bonds (other than the certificate of
authentication thereon), the legality, sufficiency or validity of
this Indenture, the Agreement, the Bonds or any document or
instrument relating thereto; the recording or filing of any
instrument required by this Indenture to secure the Bonds; insuring
the Project or collecting any insurance proceeds; the validity of
the execution by the Issuer of this Indenture or of any supplement
hereto or of any instrument of further assurance; or the validity,
priority, perfection or sufficiency of the security for the Bonds
issued hereunder or intended to be secured hereby, or otherwise as
to the maintenance of the security hereof, except for the filing of
Uniform Commercial Code continuation statements as directed in
writing by and at the expense of, the Company pursuant to Section
3.05 hereof.
(d) The Trustee shall not be accountable for the use of any
Bonds authenticated or delivered hereunder or for the use or
application by the Company of any moneys disbursed by the Trustee
in accordance with the provisions hereof. To the extent permitted
by law, the Trustee may in good faith buy, sell, own and hold any
of the Bonds and may join in any action which any Bond Owner may be
entitled to take with like effect as if the Trustee were not a
party to this Indenture. The Trustee may also engage in or be
interested in financial or other transactions with the Issuer or
the Company; provided, however, that if the Trustee determines that
any such relationship is in conflict with its duties under this
Indenture, it shall eliminate the conflict or resign as Trustee.
To the extent permitted by law, the Trustee may also purchase Bonds
with like effect as if it were not the Trustee.
(e) The Trustee shall be protected in acting upon, and may
conclusively rely upon, any notice, request or other paper or
document reasonably believed to be genuine and correct, and
reasonably believed to have been signed or sent by the proper
person or persons. Any action taken by the Trustee pursuant to
this Indenture upon the request, authority or consent of any person
who at the time of making such request or giving such authority or
consent is the Owner of any Bond, shall be conclusive and binding
upon all future Owners of the same Bond and any Bond issued in
replacement therefor.
(f) As to the existence or nonexistence of any fact, or as to
the sufficiency or validity of any instrument, paper or proceeding,
the Trustee shall be entitled to rely upon a certificate signed by
a duly authorized representative of the Issuer or the Company as
sufficient evidence of the facts therein contained; and prior to
the occurrence of a default of which the Trustee has been notified
as provided in subsection (h) of this Section 7.01, or of which by
said subsection (h) it is deemed to have notice, shall also be at
liberty to accept a similar certificate to the effect that any
particular dealing, transaction or action is necessary or
expedient. The Trustee may at its discretion secure such further
evidence deemed necessary or advisable, but shall in no case be
bound to secure the same. The Trustee may accept a certificate of
an Authorized Issuer Representative to the effect that a resolution
in the form therein set forth has been adopted, and is in full
force and effect.
(g) The right of the Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty. The
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of its powers and duties
under this Indenture.
(h) The Trustee shall not be required to take notice or be
deemed to have notice of any default or Event of Default hereunder,
or in any other document or instrument executed in connection with
the execution and delivery of the Bonds, except an Event of Default
under Section 6.01(i), (ii) or (iii) hereof or Section 6.01(a),
(b), or (c) of the Agreement, unless the Trustee shall be
specifically notified in writing of such default or Event of
Default by the Issuer, the Company or the Owners of at least 25% in
aggregate principal amount of the Bonds then Outstanding. All
notices or other instruments required by this Indenture to be
delivered to the Trustee shall be delivered at the principal
corporate trust office of the Trustee, and, in the absence of such
notice so delivered, the Trustee may conclusively assume there is
no default except as aforesaid.
(i) At any and all reasonable times, the Trustee and its duly
authorized agents, attorneys, experts, engineers, accountants and
representatives shall have the right to inspect fully all books,
papers and records of the Issuer pertaining to the Agreement and
the Bonds, and to take such photocopies and memoranda therefrom and
in regard thereto as may be desired.
(j) The Trustee shall not be required to give any bond or
surety in respect of the execution of the trust created hereby or
the powers granted hereunder.
(k) Notwithstanding anything contained elsewhere in this
Indenture, the Trustee shall have the right, but not the
obligation, to demand, in respect of the withdrawal of any amount,
the release of any property, or the taking of any action whatsoever
within the purview of this Indenture, any showing, certificate,
opinion, appraisal or other information, or corporate action or
evidence thereof, in addition to that required by the terms hereof
as a condition of such action by the Trustee, as deemed desirable
for the purposes of establishing the right of the Issuer or the
Company to the withdrawal of any amount, the release of any
property or the taking of any other action by the Trustee.
(l) Before taking any action referred to in Article VI or
Section 7.04 hereof (except with respect to making payment on the
Bonds when due, acceleration of the Bonds and payment of the Bonds
upon such acceleration), the Trustee may require that a
satisfactory indemnity bond be furnished for the reimbursement of
all expenses which it may incur and to protect it against all
liability, except liability which is adjudicated to have resulted
from its negligence or willful misconduct, by reason of any action
so taken.
(m) All moneys received by the Trustee shall, until used,
applied or invested as herein provided, be held in trust for the
purposes for which they were received but need not be segregated
from other funds, except to the extent required by law or this
Indenture. The Trustee shall be under no liability for interest on
any moneys received hereunder.
(n) Notwithstanding the effective date of this Indenture or
anything to the contrary in this Indenture, the Trustee shall have
no liability or responsibility for any act or event relating to
this Indenture which occurs prior to the date the Trustee formally
executes this Indenture and commences acting as Trustee hereunder.
(o) Upon the execution of this Indenture, the Trustee shall
not be liable for any action taken, suffered, or omitted to be
taken by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Indenture.
(p) No provision of this Indenture shall be deemed to require
the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of its rights or powers, if the
Trustee shall have reasonable grounds for believing that repayment
of such funds or, in the alternative, adequate indemnity against
such risk or liability is not reasonably assured to it.
(q) The Trustee has no obligation or liability to the
Bondholders for the payment of interest or premium, if any, on or
principal of the Bonds, but rather the Trustee's sole obligations
are to administer, for the benefit of the Company and the
Bondholders, the various Funds and Accounts established hereunder.
(r) In the event the Trustee shall receive inconsistent or
conflicting requests and indemnity from two or more groups of
Bondholders, each representing less than a majority of the
aggregate principal amount of the Bonds then Outstanding, the
Trustee shall not be required to take any action hereunder.
(s) Except for information provided by the Trustee concerning
the Trustee, the Trustee shall have no responsibility with respect
to any information in any Official Statement or other disclosure
material distributed with respect to the Bonds. The Trustee shall
have no responsibility for compliance with securities laws in
connection with issuance of the Bonds.
(t) The Trustee's immunities and protections from liability,
and its right to payment of compensation and indemnification in
connection with performance of its duties and obligations under the
Indenture and the Agreement, shall survive the Trustee's
resignation or removal, or the final payment of the Bonds.
(u) In acting or omitting to act pursuant to the provisions
of the Agreement, the Trustee shall be entitled to all of the
rights, protections and immunities accorded to the Trustee under
the terms of this Indenture, including but not limited to those set
out in this Article VII.
Section 7.02. Fees, Charges and Expenses of Trustee.
(a) The Issuer has agreed with the Company in the Agreement
that, as part of the Installment Payments the Company shall pay to
the Trustee its charges for performing the duties of Trustee, Bond
Registrar, and Paying Agent for the Bonds. It is agreed by the
Trustee that the Company may, without causing or creating a
default or Event of Default hereunder, contest in good faith (and
withhold payment of the contested amount until such contest is
resolved) the reasonableness of any of the foregoing charges for
service. All payments due the Trustee for such charges, fees, or
expenses shall be paid by the Company upon prompt presentation of
an invoice therefor and no such charges, fees, or expenses shall be
charged against or be payable by the Issuer. Until the Trustee is
paid in full pursuant to its final notice, the rights of the
Trustee under this Section 7.02 shall survive the payment in full
of the Bonds and the discharge of this Indenture.
(b) In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the suit
of an undertaking to pay the costs of the suit, and the court in
its discretion may assess reasonable costs, including reasonable
attorney's fees and expenses, against any party litigant in the
suit, having due regard to the merits and good faith of the claims
or defenses made by the party litigant. This Section does not
apply to a suit by the Trustee or the Issuer, a suit by an Owner
pursuant to enforcement of the payment of the principal of or
interest hereunder or a suit by Owners of more than 10% in
principal amount of the then Outstanding Bonds.
Section 7.03. Trustee to Provide Additional Notices.
(a) Upon written request of any Owner of Bonds in an
aggregate principal amount of at least $1,000,000 (or any person or
entity which provides written evidence acceptable to the Trustee
that such person or entity has a legal or beneficial interest in
Bonds in an aggregate principal amount of at least $1,000,000), the
Trustee shall give an additional copy of any notice to be given by
the Trustee under this Indenture by first-class mail to a second
address specified by such Bond Owner, person or entity. Any such
additional notices shall be given simultaneously with the original
notices.
(b) Upon written request of any person or entity which
provides evidence acceptable to the Trustee that such person or
entity has a legal or beneficial interest in at least $1,000,000 in
principal amount of the Bonds, the Trustee shall for the calendar
year in which such request is received provide one or more of the
following as requested to such person or entity: (i) notices of
redemption pursuant to Section 2.06; (ii) notices of default
pursuant to Section 6.12(b); (iii) copies of all notices to which
such person or entity is entitled under the Indenture to a specific
second address pursuant to Section 7.03(a); and (iv) outstanding
balances by maturity, redemption history, including redemption
date, amount and sources of funds, and distribution of the call to
maturity.
Section 7.04. Intervention by Trustee. In any judicial
proceeding to which the Issuer or the Company is a party, and which
in the opinion of the Trustee and its counsel has a substantial
bearing on the interests of Owners of the Outstanding Bonds, the
Trustee may intervene on behalf of the Owners of the Bonds and
shall do so if requested in writing by the Owners of at least 25%
in aggregate principal amount of the Bonds then Outstanding, and
when provided with sufficient indemnity pursuant to Section 7.01(1)
hereof.
Section 7.05. Successor Trustee by Merger. Subject to
Section 7.11 hereof, any corporation or association into which the
Trustee may be converted or merged, with which it may be
consolidated, or to which it may sell or transfer its trust
business and assets as a whole or substantially as a whole, or any
corporation or association resulting from any such conversion,
sale, merger, consolidation or transfer to which it is a party,
ipso facto, shall (if it is qualified to be Trustee hereunder) be
and become the Trustee hereunder and vested with all of the title
to the Trust Estate and all the trusts, powers, discretions,
immunities, privileges, responsibilities, obligations and all other
matters as was its predecessor, without the execution or filing of
any instrument or any further act, deed or conveyance on the part
of any of the parties hereto.
Section 7.06. Resignation by Trustee. The Trustee may resign
from the trusts hereby created by giving written notice to the
Issuer, the 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.
ARTICLE VIII
THE REMARKETING AGENT
Section 8.01. The Remarketing Agent. At the direction of the
Company, Goldman, Sachs & Co. 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, 9.04 and 9.07 of this Indenture, the Issuer and the Trustee
may, but shall not be obligated to, without the consent of, or
notice to, any of the Bond Owners, enter into an indenture or
indentures supplemental to this Indenture, for any one or more of
the following purposes: (i) to cure any ambiguity, formal defect
or omission in this Indenture or to make such other changes which
shall not have a material adverse effect upon the interests of the
Bond Owners; (ii) to grant to or confer upon the Trustee, for the
benefit of the Bond Owners, any additional rights, remedies, powers
or authorities, or any additional security, that may lawfully be
granted to or conferred upon the Owners or the Trustee; (iii) to
subject to this Indenture additional revenues, properties or
collateral; (iv) to modify, amend or supplement this Indenture, or
any indenture supplemental hereto, in such manner as to permit the
qualification hereof and thereof under the Trust Indenture Act of
1939, as amended, or any similar federal statute hereafter in
effect, or to permit the qualification of the Bonds for sale under
the securities laws of any of the states of the United States, and
if the Issuer so determines, to add to this Indenture or any
indenture supplemental hereto such other terms, conditions and
provisions as may be permitted by the Trust Indenture Act of 1939,
as amended, or any similar federal statute; (v) to add to the
covenants and agreements of the Issuer contained in this Indenture
other covenants and agreements thereafter to be observed for the
protection of the Owners or to surrender or limit any right, power
or authority herein reserved to or conferred upon the Issuer; (vi)
effective upon any Conversion Date to a new Mode, to make any
amendment affecting only the Bonds being converted, including
revision to Authorized Denominations; (vii) to add provisions
relating to the partial conversion of Bonds to a new Mode; (viii)
to conform to the requirements of any Rating Agency, (ix) to add or
modify provisions permitting a mandatory tender of Bonds in lieu of
redemption and (x) to add provisions permitting the addition of a
credit facility or a liquidity facility.
Section 9.02. Supplemental Indentures Requiring Consent of
Bond Owners. (a) Exclusive of supplemental indentures covered by
Section 9.01 hereof, this Indenture may be amended or supplemented
only as provided in this Section 9.02.
(b) Subject to the terms and provisions contained in Sections
9.03 and 9.04 of this Indenture, the Owners of a majority in
aggregate principal amount of the Bonds then Outstanding shall have
the right, from time to time, to approve the execution by the
Issuer and the Trustee of such indenture or indentures supplemental
hereto as shall be deemed necessary and desirable by the Issuer for
the purposes of modifying, altering, amending, adding to or
rescinding, in any particular, any of the terms or provisions
contained in this Indenture or in any supplemental indenture.
(c) Subject to the terms and provisions contained in Sections
9.03 and 9.04 of this Indenture, if any proposed amendment or
supplement affects only the Owners of Bonds in a particular Mode or
Modes, the Owners of a majority in aggregate principal amount of
the Bonds then Outstanding in such affected Mode or Modes shall
have the right, from time to time, to approve the execution by the
Issuer and the Trustee of such amendment or supplement.
(d) If at any time the Issuer shall request the Trustee to
enter into any such supplemental indenture for any of the purposes
of this Section, the Trustee shall, upon being satisfactorily
indemnified with respect to expenses, cause notice of the proposed
execution of such supplemental indenture to be mailed by first
class mail to each of the Bond Owners at the addresses of such Bond
Owners indicated on the Registration Books. Such notice shall
briefly set forth the nature of the proposed supplemental indenture
and shall state that copies thereof are on file at the principal
corporate trust office of the Trustee for inspection by all Bond
Owners. If, within 90 days, or such longer period as shall be
prescribed by the Issuer, following the mailing of such notice, the
owners of the percentage required by this Section 9.02 or Section
9.03 hereof, as applicable, in aggregate principal amount of the
Bonds Outstanding (or, as provided in subsection (c) above, of the
Bonds Outstanding in a particular Mode or Modes) at the time of the
execution of such supplemental indenture shall have consented to
and approved the execution thereof as herein provided, no Owner of
any Bond shall have any right to object to any of the terms and
provisions contained therein or the operation thereof, or in any
manner to question the propriety of the execution thereof, or to
enjoin or restrain the Trustee or the Issuer (subject to Section
9.04) from executing the same or from taking any action pursuant to
the provisions thereof. Upon the execution of any such
supplemental indenture as in this Section and Section 9.04
permitted and provided, this Indenture shall be and be deemed to be
modified and amended in accordance therewith.
(e) The 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 materially
adversely affect the rights of the Owners of any of the Outstanding
Bonds without the consent of the Owners of a majority in aggregate
principal amount of the Bonds then Outstanding of each Mode that
would be so affected; and no amendment may be made which would (i)
decrease the amounts payable under the Agreement; (ii) change the
date of payment or prepayment provisions under the Agreement; or
(iii) change the amendment provisions of the Agreement without the
consent of all of the Owners of the Bonds adversely affected
thereby, and provided further that the Agreement may be amended by
written agreement of the Issuer and the Company in order to make
conforming changes with respect to amendments made to this
Indenture pursuant to Section 9.01 hereof.
Section 9.06. Opinion of Counsel. In executing, or accepting
any additional trusts created by any supplemental indenture
permitted by this Article or the modification thereby of the trusts
created by this Indenture, the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The
Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights,
duties or immunities under this Indenture or otherwise.
Section 9.07. Bond Insurer to be Deemed Bondowner; Rights of
Bond Insurer; Payments by Bond Insurer in Advance of Scheduled
Maturity Dates; Notices. (a) Notwithstanding any provision of this
Indenture to the contrary, Bond Insurer shall at all times be
deemed the exclusive owner of all Bonds for the purposes of all
approvals, consents, waivers, institution of any action, and the
direction of all remedies. No acceleration of the Bonds shall be
permitted, and no Event of Default relating to the Bonds shall be
waived, without Bond Insurer's consent. Subject to Section
7.01(l), Bond Insurer shall have the right to direct all remedies
pursuant to this Indenture.
(b) No amendment or supplement shall be made to this
Indenture or to the Agreement without the prior written consent of
Bond Insurer to such amendment or supplement. A copy of such
amendment or supplement shall be sent by the Trustee to Standard &
Poor's Corporation, 25 Broadway, 21st Floor, New York, New York
10004.
(c) To the extent that Bond Insurer makes payment of the
principal of or interest on the Bonds, it shall become the owner of
such Bonds, appurtenant coupons or right to payment of such
principal of or interest on such Bonds and shall be fully
subrogated to all of the registered owners' rights to payment
thereof. To evidence such subrogation (i) in the case of
subrogation as to claims for past due interest, the Trustee shall
note Bond Insurer's rights as subrogee on the registration books of
Issuer maintained by the Trustee upon receipt of proof from Bond
Insurer as to payment of interest thereon to the registered owners
of the Bonds, and (ii) in the case of subrogation as to claims for
past due principal, the Trustee shall note Bond Insurer's rights as
subrogee on the registration books of the Issuer maintained by the
Trustee upon surrender of the Bonds by the registered owners
thereof to the Insurance Paying Agent.
(d) In the event that the principal of and/or interest on the
Bonds shall be paid by Bond Insurer pursuant to the terms of the
Municipal Bond Insurance Policy, (i) such Bonds shall continue to
be Outstanding under this Bond Indenture, (ii) the assignment and
pledge of the Trust Estate and all covenants, agreements and other
obligations of Issuer to the registered owners shall continue to
exist, and Bond Insurer shall be fully subrogated to all of the
rights of such registered owners in accordance with the terms and
conditions of subparagraph (c) above and the Municipal Bond
Insurance Policy, and (iii) the Company shall reimburse Bond
Insurer for the amounts paid by Bond Insurer under the policy.
Amounts paid to Bond Insurer as bond owner and subrogee shall, to
the extent of such payment, be credited against the amounts to be
paid to Bond Insurer pursuant to clause (iii).
(e) In the event that Bond Insurer shall make any payments of
principal of, and/or interest on, any of the Bonds pursuant to the
terms of the Municipal Bond Insurance Policy, and the Bonds are
accelerated, Bond Insurer may, at any time and at its sole option,
pay to the owners of the Bonds all or any portion of amounts due
under the Bonds prior to the stated maturity dates thereof.
(f) Bond Insurer shall be notified (i) in advance of the
execution of any supplemental indenture and of any amendment,
change or modifications of the Agreement in the event consent of
the owners of Bonds is not required, (ii) immediately upon the
occurrence of any Event of Default or of any event that with notice
and/or with the lapse of time could become an Event of Default, and
(iii) of any redemption of Bonds at the same time that the owners
of the Bonds to be redeemed are notified. In addition, all
notices, reports, certificates and opinions to be delivered to or
by Bond Trustee or to the owners of Bonds or available at the
request of the owners of the Bonds shall also be delivered to Bond
Insurer or made available at Bond Insurer's request, as the case
may be.
(g) The Trustee shall also notify Bond Insurer immediately
(a) upon the resignation or removal of the Trustee or the
appointment of a successor Trustee and (b) upon receiving any
notice from the Company pursuant to Section 4.06 of the Agreement.
Any notice that is required to be given to the owners of the Bonds
or to the Trustee pursuant to this Indenture, any supplemental
indenture and the Agreement shall also be provided to Bond Insurer.
All notices required to be given to Bond Insurer under this
Indenture shall be in writing and shall be sent by registered or
certified mail or by overnight delivery, addressed to Manager,
Surveillance Department, MBIA Insurance Corporation, 113 King
Street, Armonk, New York 10504.
(h) Notwithstanding the foregoing, the provisions of this
Section 9.07 shall apply only so long as the Municipal Bond
Insurance Policy is in full force and effect but shall have no
impact on any subrogation rights of the Bond Insurer.
ARTICLE X
MISCELLANEOUS
Section 10.01. Consents of Bond Owners. Any consent, request,
direction, approval, objection or other instrument required by this
Indenture to be signed and executed by a Bond Owner may be in any
number of concurrent writings of similar tenor, and may be signed
or executed by such Bond Owner in person or by his or her agent
appointed in writing. The fact and date of the execution by any
person of any such consent, request, direction, approval, objection
or other instrument, or of the writing appointing any such agent,
and of the ownership of a Bond, may be proved in any jurisdiction
by the certificate of any officer who by law has power to take
acknowledgment within such jurisdiction that the person signing
such writing acknowledged before him the execution thereof, or by
an affidavit of any witness to such execution, and, if made in such
manner, shall be sufficient for any of the purposes of this
Indenture, and shall be conclusive in favor of the Trustee with
regard to any action taken by it under such request or other
instrument.
Section 10.02. Limitation of Rights. With the exception of
rights herein expressly conferred, nothing expressed or mentioned
in or to be implied from this Indenture or the Bonds is intended or
shall be construed to give to any person other than the parties
hereto, the Company and the Owners of the Bonds any legal or
equitable right, remedy or claim under or with respect to this
Indenture or any covenants, conditions and provisions herein
contained. This Indenture and all of the covenants, conditions and
provisions hereof are intended to be, and are, for the sole and
exclusive benefit of the parties hereto, the Company, the Bond
Insurer and the Owners of the Bonds as herein provided.
Section 10.03. Severability. If any provisions of this
Indenture shall be held or deemed to be, or shall in fact be,
invalid, inoperative or unenforceable, the same shall not affect
any other provision herein contained or render the same invalid,
inoperative or unenforceable to any extent whatever.
Section 10.04. Notices. Except as otherwise provided in this
Indenture, any notice, request or other communication under this
Indenture shall be given in writing and shall be deemed to have
been given by either party to the other party at the addresses
shown below upon any of the following dates:
(a) The date of notice by telefax, telecopy, or similar
telecommunications, which is confirmed promptly in writing;
(b) Three Business Days after the date of the mailing
thereof, as shown by the post office receipt if mailed to the other
party hereto by registered or certified mail;
(c) The date of the receipt thereof by such other party if
not given pursuant to (a) or (b) above.
The address for notice for each of the parties shall be as follows:
If to the Issuer:
Matagorda County Navigation District Number One
209 Fifth Street
Palacios, Texas 77465
Attention: Chairman
Telephone No.: (512) 972-2567
Telecopy No.: (512) 972-6153
If to the Trustee:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telephone No.: (212) 815-5733
Telecopy No.: (212) 815-7185
If to the Company:
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
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 10.05. Payments or Performance Due on Other Than
Business Days. If the last day for making any payment or taking
any action, including, without limitation, exercising any remedy,
under this Indenture falls on a day other than a Business Day, such
payment may be made, or such action may be taken, on the next
succeeding Business Day, and, if so made or taken, shall have the
same effect as if made or taken on the date required by this
Indenture. The amount of any payment due under this Indenture
shall not be affected because payment is made on a date other than
the date specified in this Indenture pursuant to this Section
10.05.
Section 10.06. Execution of Counterparts. This Indenture may
be executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same
instrument.
Section 10.07. Applicable Law. THIS INDENTURE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE;
PROVIDED, HOWEVER, THAT THE RIGHTS, DUTIES, IMMUNITIES AND
STANDARDS OF CARE RELATING TO THE TRUSTEE SHALL BE GOVERNED BY THE
LAW OF THE JURISDICTION IN WHICH ITS PRINCIPAL CORPORATE TRUST
OFFICE IS LOCATED.
Section 10.08. Disqualified Bonds. In determining whether the
Owners of the requisite aggregate principal amount of Bonds have
concurred with any demand, request, direction, consent or waiver
under this Indenture, Bonds which are owned or held by or for the
account of the Company or the Issuer, or by any person directly or
indirectly controlling or controlled by, or under direct or
indirect common control with, the Company or the Issuer, shall be
disregarded and deemed not to be Outstanding for purposes of any
such determination.
Section 10.09. No Personal Liability of Issuer or Trustee. No
covenant or agreement contained in the Bonds or in this Indenture,
shall be deemed to be the covenant or agreement of any officer,
director, agent or employee of the Issuer or the Trustee in such
person's individual capacity, and no such person of the Issuer or
the Trustee executing or authenticating the Bonds shall be liable
personally on the Bonds or subject to any personal liability or
accountability by reason of the issuance thereof.
Section 10.10. Notice of Change. The Trustee shall, upon
written instructions to do so by the Company, give notice to
Moody's (if the Bonds are then rated by Moody's) at 99 Church
Street, New York, NY 10007, and S&P (if the Bonds are then rated by
S&P) at 25 Broadway, New York, New York 10004, of any of the
following events:
(i) a change in the Trustee or Paying Agent;
(ii) a change in the Remarketing Agent;
(iii) an amendment to the Indenture or the Agreement;
(iv) payment or provision therefor of all the Bonds;
(v) conversion to a Multiannual or Fixed Rate Mode; and
(vi) conversion from a Multiannual or Fixed Rate Mode to a
different Mode.
IN WITNESS WHEREOF, the Board of the Issuer has caused these
presents to be signed in its name and on its behalf by its 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.
MATAGORDA COUNTY NAVIGATION DISTRICT
NUMBER ONE
By:____________________________
Chairman
(SEAL)
ATTEST:
______________________________________
Secretary
THE BANK OF NEW YORK, as Trustee
(SEAL) By: ___________________
Vice President
Indenture of Trust
by and between
Matagorda County Navigation District Number One
and
The Bank of New York,
as Trustee
Dated as of August 15, 1996
Matagorda County Navigation District Number One
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1996
TABLE OF CONTENTS
Section Heading Page
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clauses . . . . . . . . . . . . . . . . . . . . . . . . 2
Article I
Definitions and Interpretation
Section 1.01. Definitions . . . . . . . . . . . . . . . . 4
Section 1.02. Article and Section Headings. . . . . . . . 10
Section 1.03. Interpretation. . . . . . . . . . . . . . . 10
Article II
Authorization and Issuance of the Bonds
Section 2.01. Authorization of Bonds. . . . . . . . . . . 11
Section 2.02. Interest. . . . . . . . . . . . . . . . . . 11
Section 2.03. Form of Bond. . . . . . . . . . . . . . . . 23
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. . . . . . . 45
Section 2.12. Special Conditions to Conversions from
Multiannual or Fixed Rate Mode. . . . . . . 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 Immunity.. 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
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 . . . . . 52
Section 4.05. Investment of Moneys . . . . . . . . . . . . . . 52
Section 4.06. Moneys to be Held in Trust . . . . . . . . . . . 53
Section 4.07. Repayment to Company from Indenture Funds. . . . 53
Section 4.08. Custody of Funds and Accounts. . . . . . . . . . 53
Section 4.09. Exemption from Federal Income Taxation . . . . . 53
Section 4.10. Covenants Regarding Rebate . . . . . . . . . . . 53
Article V
Discharge
Section 5.01. Discharge. . . . . . . . . . . . . . . . . . . . 56
Section 5.02. Defeasance . . . . . . . . . . . . . . . . . . . 56
Article VI
Events of Default and Remedies
Section 6.01. Events of Default. . . . . . . . . . . . . . . . 57
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . 57
Section 6.03. Other Remedies; Rights of Bond Owners. . . . . . 57
Section 6.04. Right of Bond Owners to Direct Proceedings . . . 58
Section 6.05. Appointment of Receiver. . . . . . . . . . . . . 58
Section 6.06. Waiver of Certain Laws . . . . . . . . . . . . . 58
Section 6.07. Application of Moneys. . . . . . . . . . . . . . 59
Section 6.08. Remedies Vested in Trustee . . . . . . . . . . . 59
Section 6.09. Rights and Remedies of Bond Owners . . . . . . . 60
Section 6.10. Termination of Proceedings . . . . . . . . . . . 60
Section 6.11. Waivers of Events of Default . . . . . . . . . . 60
Section 6.12. Notice of Default; Opportunity to Cure Defaults. 60
Section 6.13. Payments Under Municipal Bond Insurance Policy . 61
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. . . . . . . . . . . . . 66
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
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. Opinion of Counsel . . . . . . . . . . . . . . . 70
Section 9.07. Bond Insurer to be Deemed Bondowner; Rights
of Bond Insurer; Payments by Bond Insurer
in Advance of Scheduled Maturity Dates; Notices. 70
Article X
Miscellaneous
Section 10.01. Consents of Bond Owners. . . . . . . . . . . . . 72
Section 10.02. Limitation of Rights . . . . . . . . . . . . . . 72
Section 10.03. Severability . . . . . . . . . . . . . . . . . . 72
Section 10.04. Notices. . . . . . . . . . . . . . . . . . . . . 72
Section 10.05. Payments or Performance Due on Other
Than Business Days . . . . . . . . . . . . . . . 73
Section 10.06. Execution of Counterparts. . . . . . . . . . . . 73
Section 10.07. Applicable Law . . . . . . . . . . . . . . . . . 73
Section 10.08. Disqualified Bonds . . . . . . . . . . . . . . . 73
Section 10.09. No Personal Liability of Issuer or Trustee . . . 73
Section 10.10. Notice of Change . . . . . . . . . . . . . . . . 73
Execution . . . . . . . . . . . . . . . . . . . . . . . . 75
EXHIBIT 3
BOND PURCHASE AGREEMENT
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE
$ 60,000,000
6 1/8% Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1996
BOND PURCHASE AGREEMENT (this "Purchase Agreement") dated
August 27, 1996 between MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER
ONE, a governmental agency and body politic and corporate of the
State of Texas (the "Issuer") and GOLDMAN, SACHS & CO. and MORGAN
STANLEY & CO. INCORPORATED (the "Underwriters").
1. Background
(a) Subject to the terms and conditions herein set
forth, the Underwriters hereby agree to jointly and severally
purchase from the Issuer, and the Issuer hereby agrees to sell and
deliver to the Underwriters, the Issuer's Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) Series
1996 (the "Refunding Bonds") in the principal amounts set forth in
Schedule I hereto. The Refunding Bonds shall be dated, shall
mature and shall bear interest from time to time at 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 a
resolution adopted by the Board of Directors of the Issuer on
August 26, 1996 (the "Resolution"), and under an Indenture of Trust
dated as of August 15, 1996 (the "Indenture") between the Issuer
and The Bank of New York, as trustee (the "Trustee"). The
Refunding Bonds are to be issued to provide funds for the
redemption and cancellation of $60,000,000 of the Issuer's
outstanding 7-7/8% Pollution Control Revenue Bonds (Central Power
and Light Company Project) Series 1986 (the "Prior Bonds"). The
Prior Bonds were issued to provide funds for the acquisition,
construction and improvement of certain pollution control and solid
waste disposal facilities (the "Facilities") at the South Texas
Project Electric Generating Station (the "Plant") located in
Matagorda County, Texas. The Company owns a 25.2% undivided
interest in the Plant. In connection with the issuance of the
Refunding Bonds, the Issuer and the Company have entered into an
Installment Payment Agreement dated as of August 15, 1996 (the
"Installment Agreement"), which obligates the Company to pay
amounts designed to be sufficient to pay the principal of, premium,
if any, and interest on the Refunding Bonds. The Issuer has
assigned the right to receive such payments from the Company to the
Trustee pursuant to the Indenture.
(c) MBIA Insurance Corporation ("MBIA") has made a
commitment to issue a municipal bond insurance policy (the
"Municipal Bond Insurance Policy") relating to the Bonds effective
as of the date of issuance of the Bonds. The Municipal Bond
Insurance Policy will insure payment only as principal or interest
payments become due but are not paid.
(d) Concurrently with the execution and delivery of this
Purchase Agreement, the Company is delivering to the Issuer and the
Underwriters its Letter of Representation dated of even date
herewith in substantially the form of Appendix A hereto (the
"Letter of Representation") indicating its approval of the terms
and provisions of this Purchase Agreement and acknowledging that
the Issuer will sell the Refunding Bonds to the Underwriters and
the Underwriters will jointly and severally purchase the Refunding
Bonds and make a public offering thereof in reliance upon the
representations, covenants and indemnities contained in the Letter
of Representation.
(e) The Facilities constitute solid waste disposal
facilities or air or water pollution control facilities for
purposes of Section 103(b)(4)(E) or (F) of the Internal Revenue
Code of 1954, as amended. The Refunding Bonds will be obligations
described in Section 1313 of the Tax Reform Act of 1986 so that
interest on the Refunding Bonds will not be includible in gross
income for federal tax purposes (except as noted in the opinion of
Bond Counsel included as Appendix B to the Official Statement) and
the Underwriters may offer the Refunding Bonds for sale without
registration under the Securities Act of 1933, as amended (the
"Securities Act"), or qualification of the Indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Act").
(f) A Preliminary Official Statement dated August 21,
1996, including all Appendices thereto and all documents
incorporated therein by reference (the "Preliminary Official
Statement"), has been prepared for use in the offering of the
Refunding Bonds, and a final Official Statement dated as of the
date hereof, including all Appendices thereto and all documents
incorporated therein by reference (the "Final Official Statement"),
has been delivered by the Issuer to the Underwriters. The Final
Official Statement, as it may be amended or supplemented with the
consent of the Issuer, the Underwriters and the Company, is
hereinafter referred to as the "Official Statement."
2. Purchase, Sale and Closing. Subject to the terms
and conditions herein set forth, the Underwriters agree jointly and
severally to purchase from the Issuer, and the Issuer agrees to
sell to the Underwriters, Refunding Bonds in the principal amount
set forth opposite each Underwriter's name on Schedule I hereto at
a purchase price equal to 99.50% of the principal amount thereof,
plus accrued interest from August 15, 1996 through the day
preceding the date of Closing (as herein defined). The Refunding
Bonds shall be dated August 15, 1996, shall mature on May 1, 2030
and shall initially bear interest at the rate of 6.125% per annum.
Payment for the Refunding Bonds shall be made in immediately
available Federal funds payable to the order of the Trustee for the
account of the Issuer. Closing (the "Closing") will be at the
offices of Milbank, Tweed, Hadley & McCloy, 1 Chase Manhattan
Plaza, New York, New York at 10:00 A.M., New York time, on
September 25, 1996 (the "Closing Date"), or at such other date,
time or place as may be agreed on by the Issuer, the Company and
the Underwriters. Refunding Bonds will be delivered to The
Depository Trust Company ("DTC") at least 24 hours before Closing;
the Refunding Bonds will be registered in the name of CEDE & Co.,
as nominee for DTC, in the denomination of $60,000,000.
3. Issuer's Representations. The Issuer makes the
following representations and warranties, all of which shall
survive Closing:
(a) The information with respect to the Issuer contained
in the Preliminary Official Statement and in the Final
Official Statement is, and, as such information may be amended
or supplemented as of the Closing Date will be, true and
correct in all material respects, and such information does
not, and as it may be amended or supplemented as of the
Closing Date will not, include any untrue statement of a
material fact or omit to state a material fact necessary to
make the statements in the Preliminary Official Statement and
the Official Statement relating to the Issuer, in the light of
the circumstances under which they were made, not misleading.
The copies of the Final Official Statement delivered to the
Underwriters on the date hereof have been duly signed and
delivered by the Issuer.
(b) The Issuer is a duly constituted and validly
existing governmental agency and body politic and corporate of
the State of Texas, with full legal right, power and authority
under and pursuant to Chapters 30, 60 and 62, Texas Water Code
(the "Enabling Legislation"), to execute and deliver this
Purchase Agreement, the Installment Agreement and the
Indenture, to sign and deliver the Official Statement, to
carry out and consummate the transactions contemplated by each
of the foregoing and all other agreements relating thereto,
and to issue, sell and deliver the Refunding Bonds for the
purpose of refunding all or any part of outstanding bonds of
the Issuer.
(c) The Issuer has full legal right, power and authority
and has taken all necessary action and has complied with all
applicable provisions of law required (i) to adopt the
Resolution, (ii) to execute and deliver this Purchase
Agreement, the Installment Agreement, the Refunding Bonds and
the Indenture, (iii) to issue and sell the Refunding Bonds to
the Underwriters pursuant hereto and to the Indenture and (iv)
to carry out and consummate all other transactions
contemplated by each of such documents, and the Issuer has
complied with all applicable provisions of law in all matters
relating to such transactions.
(d) The Issuer has duly authorized (i) the delivery and
due performance of the Resolution and the execution, delivery
and due performance of this Purchase Agreement, the
Installment Agreement, the Refunding Bonds and the Indenture,
including, without limitation, the issuance and sale of the
Refunding Bonds to the Underwriters, (ii) the execution and
delivery of the Official Statement by the Issuer and the
distribution of the Preliminary Official Statement and the
Official Statement and (iii) the taking of any and all such
action as may be required on the part of the Issuer to carry
out, give effect to and consummate the transactions
contemplated by each of the foregoing. None of the
proceedings or actions taken by the Issuer with respect to any
of the Refunding Bonds, the Indenture, the Installment
Agreement, the Preliminary Official Statement, the Official
Statement or this Purchase Agreement have been repealed,
rescinded or revoked. The Official Statement is deemed final
by the Issuer for purposes of Rule 15c2-12 ("Rule 15c2-12")
under the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
(e) The Issuer has not been notified of any listing or
proposed listing by the Internal Revenue Service to the effect
that the Issuer is a bond issuer whose arbitrage
certifications may not be relied upon.
(f) The Resolution has been duly adopted by the Issuer,
is in full force and effect and constitutes the legal, valid
and binding act of the Issuer. This Purchase Agreement has
been duly executed and delivered by the Issuer and constitutes
the legal, valid and binding obligation of the Issuer
enforceable against the Issuer in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to
or affecting the enforcement of creditors' rights generally
and to the effect of general principles of equity (regardless
of whether enforceability is considered in a proceeding in
equity or at law). The Installment Agreement and the
Indenture each will be duly executed by the Issuer and, when
delivered, each will constitute the legal, valid and binding
obligation of the Issuer enforceable against the Issuer in
accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the enforcement of
creditors' rights generally and to the effect of general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).
(g) When delivered to and paid for by the Underwriters
at Closing in accordance with the provisions of this Purchase
Agreement, the Refunding Bonds initially delivered will have
been duly approved by the Attorney General of the State of
Texas and registered by the Comptroller of Public Accounts of
the State of Texas, and the Refunding Bonds will be duly
authorized, executed, issued and delivered and will constitute
legal, valid, binding and enforceable special obligations of
the Issuer in accordance with their terms and in conformity
with the Enabling Legislation and will be entitled to the
benefit and security of the Installment Agreement, the
Resolution and the Indenture.
(h) No approval, permit, consent or authorization of any
governmental or public agency, authority or person not already
obtained (other than the approval of the Attorney General of
the State of Texas with respect to the Refunding Bonds, the
registration of the Refunding Bonds by the Comptroller of
Public Accounts of the State of Texas and the order of the
Securities and Exchange Commission (the "Commission"),
including any supplemental order issued pursuant thereto,
under the Public Utility Holding Company Act of 1935 (the
"1935 Act") authorizing the Company's obligations with respect
to the Refunding Bonds and the Installment Agreement, which
approvals and orders shall be obtained on or prior to the
Closing Date, the receipt of which are expressly made a
condition to the Issuer's, the Underwriters' and the Company's
respective obligations to issue, sell and purchase the
Refunding Bonds hereunder and under the Letter of
Representation; and other than any approvals that might be
required under the Blue Sky or securities laws of any
jurisdiction) is required in connection with the issuance and
sale of the Refunding Bonds, the adoption of the Resolution or
the execution and delivery by the Issuer of the Refunding
Bonds, the Installment Agreement, the Indenture or this
Purchase Agreement or the performance of its obligations under
any of such instruments.
(i) The adoption of the Resolution, the issuance and
sale of the Refunding Bonds, the acceptance of the Letter of
Representation, the execution and delivery by the Issuer of
this Purchase Agreement, the Installment Agreement, the
Refunding Bonds and the Indenture, the execution and delivery
by the Issuer of the Official Statement and compliance with
the provisions hereof and thereof, will not conflict with,
violate or result in a breach of any provision of, or
constitute a default (or an event which with notice or passage
of time, or both, would constitute a default) on the part of
the Issuer under, any indenture, commitment, agreement or
other instrument to which the Issuer is a party or by which it
is bound, or under any provision of the Texas Constitution or
any existing law, rule, regulation, judgment, ordinance, order
or decree to which the Issuer (or any of its directors or
officers in their respective capacities as such) is subject,
or result in the creation or imposition of any lien, charge or
other security interest or encumbrance of any nature
whatsoever upon any of the property, assets or revenues of the
Issuer, except as provided in the Refunding Bonds and the
Indenture.
(j) The Issuer is solvent and since its creation, the
Issuer has not been in default in the payment of principal of,
premium, if any, or interest on, or otherwise been in default
with respect to, any of its bonds, notes or other securities
or any legally authorized obligation issued or guaranteed by
it; and no bankruptcy or insolvency proceedings have been
taken by or against the Issuer.
(k) Payments under the Installment Agreement, the
Indenture, the Resolution and the Refunding Bonds, and the
interest on the Refunding Bonds, are not subject to taxation
in the State of Texas. No legislation, ordinance, rule or
regulation has been enacted by, or is currently pending
before, any governmental body, department or agency of the
State of Texas, nor has any decision been rendered by any
court of competent jurisdiction of the State of Texas, which
would adversely affect the exemption from all taxation in the
State of Texas of (i) any payments under the Installment
Agreement, the Indenture, the Resolution or the Refunding
Bonds and the interest on the Refunding Bonds or (ii) all
bonds and obligations of the general character of the
Refunding Bonds. There are no stamp, documentary, transfer or
like taxes in the State of Texas which would be applicable to
the original issuance or subsequent transfers of the Refunding
Bonds.
(l) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court,
public board, governmental agency or body or arbitrator,
pending or, to the best of the knowledge of the Issuer,
threatened (nor to the best of the knowledge of the Issuer is
there any basis therefor), which in any way questions the
validity of the Enabling Legislation, the powers of the Issuer
referred to in paragraphs (b) and (c) of this Section 3 above,
or the validity of any proceedings taken by the Issuer in
connection with the issuance and sale of the Refunding Bonds,
or wherein an unfavorable decision, ruling or finding might
adversely affect the transactions contemplated hereby or by
the Installment Agreement, the Indenture or the Official
Statement or which, in any way, might adversely affect the
validity or enforceability of the Refunding Bonds, the
Resolution, the Installment Agreement, the Indenture or this
Purchase Agreement (or of any other instrument required or
contemplated for use in consummating the transactions
contemplated thereby or hereby) or the exclusion from gross
income for federal income tax purposes of interest on the
Refunding Bonds.
4. Covenants and Agreements of the Issuer. The Issuer
covenants and agrees with the Underwriters that it will:
(a) Furnish or cause to be furnished to the Underwriters
(i) on the date of the execution of this Purchase Agreement,
two copies of the Final Official Statement and, on the date of
any amendment or supplement thereto, two copies of such
amendment or supplement, prepared in a manner consistent with
(b) below, in each case signed by or on behalf of the Issuer
by its Chairman and (ii) on or prior to the Closing Date, two
specimens of the form of Refunding Bond, two certified copies
of the Resolution and two executed copies of the Indenture and
of the Installment Agreement (which documents shall be in the
forms previously delivered to the Underwriters, subject to
such changes as the Underwriters shall approve); the Issuer
agrees that the Company may at its expense furnish to the
Underwriters, without charge, as many copies of the Official
Statement and any amendment or supplement thereto as the
Underwriters may reasonably request.
(b) Before amending or supplementing the Official
Statement, furnish or cause to be furnished to the
Underwriters two copies and to the Company two copies of each
proposed amendment or supplement. No amendment or supplement
to the Official Statement will contain material information
with respect to the Issuer different from that contained in
the Final Official Statement which is reasonably
unsatisfactory to the Underwriters or the Company.
(c) During such period as the Underwriters believe
delivery of the Official Statement is necessary or desirable
in connection with sales of the Refunding Bonds by the
Underwriters or a dealer, if any event shall occur as a result
of which it may be necessary to amend or supplement the
Official Statement in order to make the statements therein
with respect to the issuer, in the light of the circumstances
when the Official Statement is delivered to a purchaser, not
misleading, immediately notify the Underwriters and the
Company of such event and cooperate at the request of the
Underwriters in the preparation of amendments or supplements
to the Official Statement which in the judgment of the
Underwriters are necessary so that the statements with respect
to the Issuer in the Official Statement as so amended or
supplemented will not, in light of the circumstances when the
Official Statement is delivered to a purchaser, be misleading.
(d) Cooperate in qualifying the Refunding Bonds for
offer and sale and in determining their eligibility for
investment under the laws of such jurisdictions as the
Underwriters may reasonably request, provided that the Issuer
shall not be required to qualify to do business or consent to
general service of process in any state or jurisdiction other
than the State of Texas.
(e) Apply the proceeds from the issuance and sale of the
Refunding Bonds in the manner set forth in the Official
Statement, and not take any action which will adversely affect
the exclusion from gross income for federal income tax
purposes of the interest on the Refunding Bonds.
(f) Promptly make or cause to be made under the Uniform
Commercial Code of the State of Texas, or under any other
applicable law, at such times as may be required, all filings,
if any, required in order to establish, maintain, protect or
preserve the interest of the Trustee in the rights assigned to
it under the Resolution, the Installment Agreement and the
Indenture.
(g) The Issuer will refrain from knowingly taking any
action with regard to which the Issuer may exercise control
that would result, or could reasonably be expected to result,
in the loss of the exclusion from gross income for federal
income tax purposes of the interest on the Refunding Bonds
referred to under the caption "Tax Matters" in the Official
Statement.
5. Survival of Representations, Warranties and
Agreements. The respective covenants, agreements, representations,
warranties and other statements of each of the Issuer and the
Underwriters, as set forth in this Purchase Agreement or made by
them pursuant to this Purchase Agreement, shall remain in full
force and effect, regardless of any investigation made by or on
behalf of the Issuer or any Underwriter or any officer, director or
controlling person thereof, and shall survive the termination of
this Purchase Agreement and the delivery of and payment for the
Refunding Bonds.
6. Conditions of Underwriters' Obligations. The
Underwriters' obligation to purchase and pay for the Refunding
Bonds at Closing is subject to the performance by the Issuer of its
obligations and agreements to be performed hereunder and under the
Installment Agreement, the Resolution and the Indenture at or prior
to Closing and the performance by the Company of the obligations to
be performed by it under the Letter of Representation and the
Installment Agreement at or prior to Closing and to the fulfillment
of the following conditions at or prior to Closing:
(a) The Company shall have executed and the Issuer shall
have accepted the Letter of Representation and the representations
and warranties of the Issuer herein and of the Company in the
Letter of Representation shall be true and correct on and as of the
Closing Date;
(b) Each of the Indenture and the Installment Agreement
shall have been duly authorized, executed and delivered by the
respective parties thereto and shall be in full force and effect,
and each shall not have been amended, modified or supplemented
since the date hereof except as may have been agreed to by the
Underwriters;
(c) Neither the Issuer nor the Company shall be in
default in the performance of any of 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 of the Company
or of the Refunding Bonds;
(e) The Underwriters shall have received:
(i) The Final Official Statement signed on behalf
of, and deemed in final form for purposes of Rule 15c2-12 of
the Exchange Act by, the Issuer, together with any amendments
or supplements thereto to the Closing Date;
(ii) Opinions of McCall, Parkhurst & Horton L.L.P.,
Bond Counsel ("Bond Counsel"), dated the Closing Date,
substantially in the forms attached hereto as Exhibit A-1 and
Exhibit A-2;
(iii) An opinion, dated the Closing Date, of Mayfield
& Mayfield ("Issuer's Counsel"), counsel for the Issuer,
substantially in the form attached hereto as Exhibit B;
(iv) An opinion, dated the Closing Date, of Milbank,
Tweed, Hadley & McCloy, special counsel for the Company,
substantially in the form attached hereto as Exhibit C;
(v) An opinion, dated the Closing Date, of Vinson
& Elkins L.L.P., special counsel for the Company,
substantially in the form attached hereto as Exhibit D;
(vi) An opinion, dated the Closing Date, of Sidley
& Austin, counsel for the Underwriters, substantially in the
form attached hereto as Exhibit E;
(vii) A letter, dated the Closing Date, from Arthur
Andersen LLP, independent certified public accountants of the
Company, in form and substance satisfactory to the
Underwriters and their counsel and covering the matters set
forth in Exhibit F hereto;
(viii) A certificate, dated the Closing Date, signed
by the Chairman of the Issuer or other appropriate official
satisfactory to the Underwriters, to the effect that each of
the representations and warranties of the Issuer set forth in
this Purchase Agreement is true and correct on and as of the
Closing Date as if made on and as of the Closing Date and that
all agreements to be complied with and obligations to be
performed by the Issuer hereunder and under the Installment
Agreement, the Resolution and the Indenture on or prior to the
Closing Date or as contemplated hereby or thereby have been
complied with and performed;
(ix) A certificate, dated the Closing Date, signed
by the President, Treasurer or General Manager of the Company
to the effect that, (A) the representations and warranties
contained in the Letter of Representation or in any
certificate delivered by the Company hereunder or thereunder
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, or as
contemplated by the Letter of Representation, the Resolution,
the Installment Agreement or the Indenture on or prior to the
Closing Date have been complied with and performed and (C)
there has been no material adverse change in the Company's
financial condition or any adverse development concerning its
business or assets which would result in a material adverse
change in its prospective financial condition or results of
operations from that described in or contemplated by the
Official Statement or, if such change has occurred, full
information with respect thereto;
(x) A certificate, satisfactory in form and
substance to the Underwriters, of one or more duly authorized
officers of the Trustee, dated the Closing Date, as to the due
authentication and delivery of the Refunding Bonds by the
Trustee under the Indenture;
(xi) Arbitrage certifications, satisfactory in form
to the Underwriters and Underwriters' counsel, by the Company
and the Issuer (which may be in the form of a single
document);
(xii) Evidence, satisfactory to the Underwriters, of
the ratings on the Refunding Bonds;
(xiii) Such additional certificates (including
appropriate no litigation certificates), instruments or other
documents as the Underwriters or Underwriters' counsel may
reasonably request to evidence compliance with applicable law,
the authority of the Trustee to act under the Indenture, and
the due performance and satisfaction by the Company at or
prior to such date of all agreements then to be performed and
all conditions then to be satisfied by it, in connection with
this Purchase Agreement, the Letter of Representation, the
Installment Agreement, the Resolution and the Indenture, and
to evidence that the interest on the Refunding Bonds is
excludable from the gross income of the owners thereof for
federal income tax purposes under the statutes, regulations,
published rulings and court decisions on the Closing Date, and
the status of the offering under the Securities Act, the 1935
Act and the Trust Act;
(xiv) An opinion, dated the Closing Date, of a
Vice President and Assistant General Counsel of MBIA,
substantially in the form attached hereto as Exhibit G;
and
(xv) A copy of the Municipal Bond Insurance
Policy, as issued by MBIA and delivered to the Trustee,
substantially in the form of Exhibit D to the Official
Statement, together with evidence satisfactory to the
Underwriters that all general and special conditions to
the effectiveness of the Municipal Bond Insurance Policy
have been satisfied.
(f) At Closing there shall not have been any material
adverse change in the financial condition of the Company or any
adverse development concerning the business or assets of the
Company which would result in a material adverse change in the
prospective financial condition or results of operations of the
Company from that described in the Official Statement which, in the
sole judgment of the Underwriters, makes it inadvisable to proceed
with the sale of the Refunding Bonds;
(g) The Commission shall have issued an order under the
1935 Act and any supplemental order required pursuant thereto,
authorizing the Company's obligations with respect to the Refunding
Bonds, the Installment Agreement, and the Municipal Bond Insurance
Policy, which order shall be in full force and effect; the Attorney
General of the State of Texas shall have examined the Refunding
Bonds and the records relating to their issuance, shall have
certified as to their validity and shall have approved the
Refunding Bonds; and the Refunding Bonds shall have been registered
by the Comptroller of Public Accounts of the State of Texas;
(h) All matters relating to this Purchase Agreement, the
Official Statement, the Refunding Bonds and the sale thereof, the
Installment Agreement, the Indenture, the Resolution, the Letter of
Representation, and the consummation of the transactions
contemplated hereby or thereby shall be satisfactory to and
approved by the Underwriters as of the Closing, which approval
shall not be unreasonably withheld. Any certificate signed by or
on behalf of the Issuer or the Company and delivered at the Closing
shall be a representation and warranty by the Issuer or the
Company, as the case may be, to the Underwriters as to the
statements made therein;
(i) The Underwriters shall have received from the
Company payment on the Closing Date by wire transfer of the
Underwriters' fees (.728% of the principal amount of the Refunding
Bonds) as set forth in Section 5 of the Letter of Representation;
and
(j) Subsequent to the dates as of which information is
given in the Official Statement, there shall not have been any
change or decrease specified in the letter required by subsection
(e)(vii) which is, in the judgment of the Underwriters, so material
and adverse as to make it impractical or inadvisable to proceed
with the offering or delivery of the Refunding Bonds as
contemplated in the Official Statement.
7. Events Permitting the Underwriters to Terminate.
The Underwriters may terminate their joint and several obligations
to purchase the Refunding Bonds at any time before Closing if any
of the following occurs:
(a) A legislative, executive or regulatory action
(including the introduction or proposal for adoption of
legislation, executive orders or regulations) or a court decision
which, in the sole judgment of the Underwriters, casts sufficient
doubt on the legality of, or the tax-free status of interest on,
obligations of the general kind and character as the Refunding
Bonds so as to materially impair the marketability or materially
lower the market price thereof or would make it impractical to
market the Refunding Bonds on the terms and in the manner
contemplated in the Official Statement;
(b) Any action by the Commission, any other governmental
agency, or a court which, directly or indirectly, would require, in
the reasonable judgment of the Underwriters, (i) registration of
the Refunding Bonds under the Securities Act or (ii) qualification
of an indenture in respect of the Refunding Bonds under the Trust
Act, or any such action or legislative, executive or regulatory
action with the purpose or effect of otherwise prohibiting the
issuance, offering or sale of the Refunding Bonds as contemplated
hereby or by the Official Statement or of obligations of the
general character of the Refunding Bonds;
(c) (i) Any general suspension or material limitation on
trading in securities on the New York Stock Exchange or by the
Commission or by any federal or state agency or by the decision of
any court, any limitation on prices for such trading or any
restrictions on the distribution of securities, (ii) trading in any
securities of the Company shall have been suspended by the
Commission or a national securities exchange, (iii) a general
banking moratorium on commercial banking activities in New York
shall have been declared either by federal or New York State
authorities, (iv) the rating assigned by any nationally recognized
securities rating agency to any securities of the Company as of the
date of this Purchase Agreement shall have been lowered since that
date or (v) there shall have occurred any outbreak or material
escalation of hostilities or other calamity or crisis, the effect
of which on the financial markets of the United States is such as
to make it, in the judgment of the Underwriters, impracticable to
market the Refunding Bonds; or
(d) Any event or condition not expressly contemplated in
the Official Statement which, in the sole judgment of the
Underwriters, renders untrue or incorrect, in any material respect
as of the time to which the same purports to relate, the
information, including the financial statements, contained in the
Official Statement, including Appendices thereto and documents
incorporated therein by reference, or which requires that
information not reflected in such Official Statement should be
reflected therein in order to make the statements and information
contained therein not misleading in any material respect at such
time, which, in either event, in the sole judgment of the
Underwriters, makes it inadvisable to proceed with the sale of the
Refunding Bonds; provided, however, that the Underwriters shall not
exercise the termination right provided in this subparagraph (d)
(i) until the Underwriters shall have consulted with the Company
with respect to the event or condition at issue and (ii) so long as
the Company and the Underwriters shall reasonably believe that such
event or condition can be eliminated or cured prior to the Closing
Date.
8. Execution in Counterparts. This Purchase Agreement
may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of
the parties hereto may execute this Purchase Agreement by signing
any such counterpart.
9. Notices and Other Actions. All notices, requests,
demands and formal actions hereunder will be in writing mailed,
telegraphed or delivered to:
The Underwriters:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Tax-Exempt Finance Department
Telephone No. (212) 902-1000
Telecopier No. (212) 902-2860
The Issuer:
Matagorda County
Navigation District Number One
209 Fifth Street
Palacios, Texas 77465
Attention: General Counsel and Manager
Telephone No. (512) 972-6153
Telecopier No. (512) 972-2567
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.
MATAGORDA COUNTY NAVIGATION
DISTRICT NUMBER ONE
By:
Chairman
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO. INCORPORATED
By:
GOLDMAN, SACHS & CO.
SCHEDULE I
Principal Amount
Underwriters of Refunding Bonds
Goldman, Sachs & Co. . . . . . . . . . . . . $36,000,000
Morgan Stanley & Co. Incorporated . . . . . . $24,000,000
Total $60,000,000
EXHIBIT 4
APPENDIX A
CENTRAL POWER AND LIGHT COMPANY
LETTER OF REPRESENTATION
$60,000,000
Matagorda County Navigation District Number One
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1996
August 27, 1996
Matagorda County Navigation District Number One
209 Fifth Street
Palacios, Texas 77465
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
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 Matagorda County Navigation District Number One (the
"Issuer") and Goldman, Sachs & Co. and Morgan Stanley & Co.
Incorporated (the "Underwriters"), the Issuer has agreed to sell to
the Underwriters, and the Underwriters have jointly and severally
agreed to purchase from the Issuer and to offer for sale the bonds
described above (the "Refunding Bonds"), by means of the Final
Official Statement of even date herewith, as it may be amended or
supplemented with the consent of the Underwriters, the Issuer and
Central Power and Light Company, a Texas corporation (the
"Company"), describing the definitive terms and provisions of the
Refunding Bonds and containing in Appendix A thereto information
concerning the Company, which Appendix A, including all documents
incorporated therein by reference, shall for all purposes hereof be
deemed to be a part of the Official Statement, all on terms
approved by the Company. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings assigned
thereto in the Purchase Agreement.
The Company hereby (i) approves the terms and provisions
of the Purchase Agreement and of the Refunding Bonds, (ii) requests
the Issuer to issue and sell the Refunding Bonds and (iii)
acknowledges that the Issuer and the Underwriters are entering into
the Purchase Agreement and agreeing to sell and purchase the
Refunding Bonds on the terms and subject to the conditions therein
set forth, in reliance on the representations, covenants and
agreements of the Company contained in this Letter of
Representation.
2. Representations by the Company. The Company makes
the following representations and warranties, all of which shall
survive the termination of the Purchase Agreement and the sale and
delivery of the Refunding Bonds to the Underwriters.
(a) That the Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Texas, with full corporate power and authority to engage in the
business and activities conducted by it as described in the
Official Statement and, subject to the opinion of the Attorney
General of the State of Texas approving the Refunding Bonds and the
registration of the Refunding Bonds upon initial issue by the
Comptroller of Public Accounts of the State of Texas, the receipt
of which are expressly made a condition to the Company's
obligations under the Installment Agreement, has full power and
authority to execute and deliver and to carry out and perform its
obligations under this Letter of Representation and the Installment
Agreement.
(b) That the Company has duly approved the forms of the
Resolution, the Indenture and the Purchase Agreement. The
Installment Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding
obligation of the Company enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and to the effect of general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law). The Company has
duly authorized the taking of all action necessary to carry out and
give effect to the transactions contemplated to be performed by it
by the Official Statement, the Installment Agreement, the Municipal
Bond Insurance Policy, the Purchase Agreement and this Letter of
Representation. The Commission has issued an order, and any
supplemental order required pursuant thereto (collectively referred
to herein as the "Order"), under the 1935 Act authorizing the
Company's obligations with respect to this Letter of
Representation, the Installment Agreement, the Municipal Bond
Insurance Policy, the Refunding Bonds and the Purchase Agreement,
such order being subject, however, to the condition, among others,
that the Company comply with such supplemental order, if any, as
the Commission may enter thereunder. A copy of such order
heretofore entered by the Commission has been or will be delivered
to the Underwriters.
(c) That this Letter of Representation has been duly
executed and delivered by the Company.
(d) That the approval of the Resolution, the Indenture
and the Purchase Agreement, the execution and delivery of this
Letter of Representation and the Installment Agreement and
compliance with the provisions of such instruments and consummation
of the transactions contemplated hereby and thereby, do not and
will not conflict with, violate or result in a breach of any
provision of or constitute a default (or an event which with notice
or passage of time, or both, would constitute a default) on the
part of the Company under its Restated Articles of Incorporation or
By-laws, under any indenture, commitment, agreement or other
instrument to which the Company is a party or by which it is bound
or under any existing law, rule, regulation, judgment, ordinance,
order or decree to which the Company is subject; nor will such
approval, execution, delivery, compliance or consummation result in
the creation or imposition of any lien, charge or other security
interest or encumbrance of any nature whatsoever upon any of the
property or assets of the Company (except the lien, if any, created
by the Installment Agreement).
(e) 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 and the
Installment Agreement or the consummation by the Company of the
transactions contemplated by the Purchase Agreement, this Letter of
Representation, the Installment Agreement and the Official
Statement, except (i) the Order, (ii) the approving opinion of the
Attorney General of the State of Texas relating to the Refunding
Bonds, (iii) the registration of the Refunding Bonds upon initial
issuance by the Comptroller of Public Accounts of the State of
Texas and (iv) such as may be required under securities or Blue Sky
laws of any jurisdiction in connection with the offering and sale
of the Refunding Bonds.
(f) That the information with respect to it (including
Appendix A) and the Facilities and the use of the proceeds from the
issuance and sale of the Refunding Bonds included in the Indenture,
the Resolution, the Purchase Agreement and the Refunding Bonds and
the information (other than under the captions "The Issuer", "The
Bonds - Book-Entry Only System", "Tax Matters" and "Underwriting")
contained or incorporated by reference in the Official Statement
(including any amendments or supplements thereto) is true and
correct in all material respects and does not include, and the
Preliminary Official Statement as of its date did not include, any
untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein not
misleading in light of the circumstances under which they were
made; that it has approved the Official Statement and consents to
the use thereof by the Underwriters in connection with the offering
of the Refunding Bonds; that the Official Statement is deemed final
by the Company for purposes of Rule 15c2-12 under the Exchange Act;
and that the financial statements relating to it included or
incorporated by reference in the Official Statement (including
Appendix A thereto) and the Preliminary Official Statement
(including Appendix A thereto) have been prepared in accordance
with generally accepted accounting principles applied on a
consistent basis (except as otherwise disclosed in the notes to
such financial statements) and fairly present its financial
condition and the results of its operations at the dates and for
the respective periods indicated therein.
(g) That any document, certificate or other written
statement furnished by the Company to the Underwriters or McCall,
Parkhurst & Horton L.L.P., Bond Counsel, or Sidley & Austin,
counsel to the Underwriters, relating to the Company, the
Facilities or the Refunding Bonds is true and correct in all
material respects and does not or will not, as the case may be,
include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein not misleading in light of the
circumstances under which they were made.
(h) Except as may be specifically set forth in the
Official Statement and except for the proceedings relating to the
approving opinion of the Attorney General of the State of Texas on
the Refunding Bonds and to the registration of the Refunding Bonds
upon initial issuance by the Comptroller of Public Accounts of the
State of Texas, there is no action, suit, proceeding or
investigation, at law or in equity, before or by any court,
governmental agency or body or arbitrator, involving the Company or
the Facilities, pending or, to the best knowledge of the Company,
threatened (i) which might reasonably be expected to (x) materially
and adversely affect the condition (financial or otherwise),
results of operations, business or properties of the Company or (y)
materially and adversely affect the operation, condition or
feasibility of the Facilities or (ii) wherein any unfavorable
decision, ruling or finding might reasonably be expected to (x)
adversely affect the transactions contemplated to be performed by
the Company hereby, by the Purchase Agreement, by the Installment
Agreement or by the Official Statement or (y) adversely affect the
validity or enforceability of the Refunding Bonds, the Installment
Agreement, the Indenture, the Resolution, the Purchase Agreement or
this Letter of Representation or any agreement or instrument to
which the Company is a party and which is used or contemplated for
use in the consummation of the transactions contemplated hereby or
thereby.
(i) Arthur Andersen LLP, are independent public
accountants with respect to the Company, as would be required under
the Securities Act and the rules and regulations thereunder if the
Securities Act and the rules and regulations thereunder were
applicable to the Official Statement.
(j) That (i) the Facilities consist of either land or
property of a character subject to depreciation for federal income
tax purposes and will be used to abate or control air and water
pollution or contamination by removing, altering, disposing or
storing pollutants, contaminants, wastes or heat or to collect,
store or treat sewage or solid wastes prior to final disposal
thereof; (ii) the Facilities will not result in an increase in
production or capacity, production efficiencies, the production of
a by-product, the extension of the useful life of any manufacturing
or production facility or any part thereof at the Plant or other
property which is not part of the Plant, which would jeopardize the
exclusion of the interest on the Refunding Bonds from the gross
income of the recipients thereof for federal income tax purposes,
and none of the Facilities would have been installed but for the
purpose of disposing of sewage or solid waste or controlling
pollution; and (iii) all other information supplied by the Company
in connection with the transactions contemplated hereby and by the
Official Statement with respect to the exclusion from gross income
for federal income tax purposes of interest on the Refunding Bonds
is correct and complete.
(k) That all required certificates that the Facilities
(other than the solid waste disposal facilities that require no
certifications), as designed, are in furtherance of the purpose of
abating or controlling air or water pollution have been obtained
from the Texas Air Control Board and the Texas Department of Water
Resources, respectively, and remain in full force and effect.
(l) That the Company is eligible as an issuer to file
registration statements on Form S-3 under the Securities Act, and
each document filed by it under the Exchange Act and incorporated
(or to be incorporated) in the Preliminary Official Statement or
the Official Statement by reference complied when so filed (or will
comply when so filed) in all material respects with the act under
which it was so filed, and, during the period that an Official
Statement is required to be delivered, no such document hereafter
so filed will include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(m) That there has been no material adverse change in
the Company's financial condition or any adverse development
concerning the Company's business and assets which would reasonably
be expected to result in a material adverse change in its
prospective financial condition or results of operations from that
shown in the Official Statement.
(n) That no event of default or event which, with notice
or passage of time, or both, would constitute an event of default
or a default under any agreement or instrument to which the Company
is a party or by which it is or may be bound or to which any of its
property or assets is or may be subject and which would materially
and adversely affect the transactions contemplated by the
Installment Agreement, the Official Statement or this Letter of
Representation has occurred and is continuing.
(o) That the Company is not currently in default in the
payment of the principal of, or interest on, any security or other
legally authorized obligation issued by the Company.
3. Covenants of the Company. The Company will:
(a) Notify the Underwriters of any material adverse
change in its business, properties or financial condition occurring
before Closing or within three months thereafter which would
require revision of the information in the Official Statement in
order to make the representations set forth in Section 2(f) hereof
true and correct.
(b) Refrain from taking any action, or from permitting
any action, with regard to which it may exercise control, to be
taken, that (i) would in any way cause the proceeds from the sale
of the Refunding Bonds to be applied in a manner other than as
provided in the Resolution, the Installment Agreement, the
Indenture and discussed in the Official Statement, (ii) would
result in the loss of the exclusion from gross income for federal
income tax purposes of interest on the Refunding Bonds, or (iii) it
has reason to believe will adversely jeopardize the continued
validity and effectiveness of such exemption.
(c) Deliver to the Underwriters upon request copies of
documents of the Company incorporated by reference into the
Official Statement and all documents to which Section 3(d) hereof
refers at such times and in such quantities as are necessary to
enable the Underwriters to satisfy requests for such information,
and enable the Underwriters to make such documents available for
inspection, as described in the Official Statement.
(d) During the period commencing on the date hereof and
ending upon completion of the distribution of the Refunding Bonds
(but in no event later than 90 days after the date of the Closing),
promptly after filing any document with the Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act, furnish a copy thereof
to the Underwriters and the Issuer.
(e) Comply with and perform its obligations set forth in
its Rule 15c2-12 Undertakings attached hereto as Exhibit 1, which
is hereby incorporated by reference herein.
(f) Before amending or supplementing the Official
Statement, furnish to the Underwriters two copies and to the Issuer
two copies of each proposed amendment or supplement. No amendment
or supplement to the Official Statement will contain material
information different from that contained in the Final Official
Statement which is reasonably unsatisfactory to the Underwriters or
the Issuer.
(g) During such period as the Underwriters believe
delivery of the Official Statement is necessary or desirable in
connection with sales of the Refunding Bonds by the Underwriters or
a dealer, but in no case for a period of greater than 180 days
after the Closing Date, if any event shall occur as a result of
which it may be necessary to amend or supplement the Official
Statement in order to make the statements therein, in the light of
the circumstances when the Official Statement is delivered to a
purchaser, not misleading, immediately notify the Underwriters and
the Issuer of such event and cooperate at the request of the
Underwriters in the preparation of amendments or supplements to the
Official Statement which in the judgment of the Underwriters are
necessary so that the statements in the Official Statement as so
amended or supplemented will not, in light of the circumstances
when the Official Statement is delivered to a purchaser, be
misleading.
4. Indemnification; Contribution. (a) The Company
agrees to indemnify and hold harmless the Issuer, its officials,
directors, members, officers, employees and agents and each of the
Underwriters, their respective officers, directors, officials,
employees and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively, "Indemnified
Parties") from and against any and all losses, claims, damages or
liabilities to which such Indemnified Party may become subject
under the Securities Act, the Exchange Act or the common law or
otherwise, and to reimburse each such Indemnified Party for any
reasonable legal or other expenses (including reasonable counsel
fees) incurred by it or them in connection with defending against
any such losses, claims, damages or liabilities, arising out of or
in connection with the offering and sale of the Refunding Bonds (i)
on the ground that the Preliminary Official Statement or the Final
Official Statement (except with respect to the Issuer for the
information relating to the Issuer under the caption "The Issuer"
and with respect to any such Underwriter for information under the
caption "Underwriting" and any information furnished in writing by
such Underwriter specifically for use therein) includes any untrue
statement or an alleged untrue statement of material fact or any
omission or an alleged omission to state a material fact necessary
in order to make the statements therein not misleading in light of
the circumstances under which they were made, or (ii) arising by
virtue of the failure to register the Refunding Bonds under the
Securities Act or to qualify the Indenture under the Trust Act.
(b) By its acceptance hereof, each of the Underwriters
severally and not jointly 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" furnished by such Underwriter in writing
specifically for use in the Preliminary Official Statement or the
Final Official Statement includes any untrue statement or alleged
untrue statement of a material fact or an omission or an alleged
omission to state a material fact necessary in order to make the
statements therein not misleading in light of the circumstances
under which they were made.
(c) Promptly after the commencement of any action
against an Indemnified Party hereunder in respect of which
indemnity is to be sought against the Company or any Underwriter,
as the case may be (the "Indemnifying Party"), such Indemnified
Party will notify the Indemnifying Party in writing of such action
and the Indemnifying Party may participate in, and, to the extent
that it may wish, jointly with any other Indemnifying Party
similarly notified, assume the defense thereof, including the
employment of counsel and the payment of all expenses; but the
omission so to notify the Indemnifying Party will not relieve the
Indemnifying Party from any liability which it may have to any
Indemnified Party otherwise than hereunder. The Indemnifying Party
shall not be liable for any settlement of any such action effected
without its consent, but if settled with the consent of the
Indemnifying Party or if there is a final judgment for the
plaintiff in any such action, the Indemnifying Party will indemnify
and hold harmless any Indemnified Party from and against any loss
or liability by reason of such settlement or judgment. The
indemnity agreements contained herein shall include reimbursement
for expenses reasonably incurred by an Indemnified Party in
investigating the claim and in defending it if the Indemnifying
Party declines to assume the defense and shall survive termination
of the Purchase Agreement, this Letter of Representation and the
delivery of the Refunding Bonds.
(d) If the indemnification provided for in this Section
4 is unavailable to or insufficient to hold harmless an Indemnified
Party under Subsection (a) above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to
therein, then the Company shall contribute to the amount paid or
payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and the Indemnified Party on the other
in connection with the statements or omissions or other matters
which resulted in such losses, claims, damages and liabilities (or
actions in respect thereof), as well as any other relevant
equitable considerations. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied
by the Company on the one hand or the Indemnified Party on the
other and each such party's relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue
statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this
Subsection (d) were determined solely by pro rata allocation or by
any other method of allocation which does not take account of the
equitable considerations referred to above in this Subsection (d).
The amount paid or payable by an Indemnified Party as a result of
the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this Subsection (d) shall be deemed
to include any legal or other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any
such action or claim. No Indemnified Party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from the Company
if the Company is not guilty of such fraudulent misrepresentation.
The obligations of the Company under this Subsection (d) shall be
in addition to any liability which the Company may have otherwise
than under this Section 4.
5. Payment of Costs and Expenses. All expenses and
costs of the authorization, issuance, sale and delivery of the
Refunding Bonds (including, without limitation: the preparation
and furnishing to the Underwriters of the Preliminary Official
Statement and the Official Statement and any amendments or
supplements thereto, and the preparation and execution of the
Indenture, the Refunding Bonds, the Installment Agreement, the
Resolution, the Letter of Representation and the Purchase
Agreement; fees and expenses relating to the Municipal Bond
Insurance Policy, if any, rating agency fees, the issuance and
closing fees of the Issuer, the fees and disbursements of Bond
Counsel, Counsel to the Issuer, the financial advisor to the Issuer
and Counsel to the Company; the expenses, including the legal fees
of Counsel to the Underwriters incurred in connection with
qualifying the Refunding Bonds for sale under the securities laws
of various jurisdictions and preparing Blue Sky memoranda) shall be
paid by the Company. In addition, the Company shall pay to the
Underwriters on the Closing Date by wire transfer the fees of the
Underwriters in connection with the offering of the Refunding Bonds
in an amount equal to .728% of the principal amount of the
Refunding Bonds. Each Underwriter will pay its own costs and
expenses, including advertising and legal expenses (except as noted
in this Section 5).
6. Execution in Counterparts. This Letter of
Representation may be executed and accepted in any number of
counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute and
accept this Letter of Representation by signing any such
counterpart.
7. Notices. All notices, requests, demands and formal
actions hereunder will be in writing mailed, telecopied or
delivered to:
The Underwriters:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Tax-Exempt Finance Dept.
Telephone No. (212) 902-1000
Telecopier No. (212) 902-2860
The Issuer:
Matagorda County
Navigation District Number One
209 Fifth Street
Palacios, Texas 77465
Attention: General Counsel and Manager
Telephone No. (512) 972-6153
Telecopier No. (512) 972-2567
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
Telecopier No. (214) 777-1223
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 any Underwriter or any
person controlling any Underwriter or by or on behalf of the
Company, its directors or officers or any person controlling the
Company, and (iii) sale and delivery of the Refunding Bonds.
10. Governing Law. This Letter of Representation shall
be governed by and construed in accordance with the laws of the
State of New York, except that the rights, privileges, duties and
immunities of the Issuer shall be governed by the laws of the State
of Texas.
Very truly yours,
CENTRAL POWER AND LIGHT COMPANY
By:
Name:
Title:
Accepted:
MATAGORDA COUNTY NAVIGATION
DISTRICT NUMBER ONE
By:
Chairman
Accepted:
GOLDMAN, SACHS & CO.
MORGAN STANLEY & CO. INCORPORATED
By:
GOLDMAN, SACHS & CO.
CENTRAL POWER AND LIGHT
$60,000,000
Matagorda County Navigation District Number One
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1996
August 27, 1996
RULE 15C2-12 UNDERTAKINGS
(1) The agreements of Central Power and Light Company
(the "Company") contained herein (a) are made solely for the
purpose of enabling the Underwriters (as defined below) of the
Matagorda County Navigation District Number One Pollution Control
Revenue Refunding Bonds (Central Power and Light Company Project)
Series 1996 (the "Refunding Bonds") to comply with the requirements
of Rule 15c2-12(b)(5) (the "Rule") promulgated by the Securities
and Exchange Commission ("Commission") pursuant to the Securities
Exchange Act of 1934, as amended, (b) are not intended to impose
obligations on the Company that are not required by the Rule, (c)
do not constitute an acknowledgment by the Company of the validity
of the Rule and (d) 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 by reason of any
act taken or not taken by reason of the undertakings herein except
to the extent required for the agreements contained herein to
satisfy the requirements of the Rule. Unless otherwise defined
herein, all capitalized terms used herein shall have the meanings
assigned thereto in the Bond Purchase Agreement between Matagorda
County Navigation District Number One (the "Issuer") and Goldman,
Sachs & Co. and Morgan Stanley & Co. Incorporated (the
"Underwriters") pursuant to which the Issuer has agreed to sell the
Refunding Bonds to the Underwriters.
(2) The Company agrees to provide, either directly or
indirectly through the Trustee, to each nationally recognized
municipal securities information repository ("NRMSIR") and to the
appropriate state information depository, if any, for the State of
Texas ("SID"), in each case as designated by the Commission in
accordance with the Rule, a copy of its (a) annual financial
information with respect to the fiscal year of the Company ended
December 31, 1996, and each fiscal year of the Company ending
thereafter, on or before the date 10 days following the date that
the Company is required to file its Annual Report on Form 10-K (or
any successor form) ("Form 10-K") with the Commission for such
fiscal year (or if the Company is no longer required to file its
Form 10-K with the Commission, on or before the date 100 days
following the last day of each fiscal year of the Company,
commencing with the fiscal year ending December 31, 1996) and (b)
to the extent that audited financial statements of the Company are
not submitted as part of the annual financial information, audited
financial statements of the Company, when and if available.
(3) The Company agrees to provide, either directly or
indirectly through the Trustee, to each NRMSIR or to the Municipal
Securities Rulemaking Board (the "MSRB") and to a SID, in a timely
manner, notice of any of the following events with respect to the
Refunding Bonds, if such event is material to the Company:
(a) principal and interest payment delinquencies;
(b) non-payment related defaults;
(c) unscheduled draws on debt service reserves
reflecting financial difficulties;
(d) unscheduled draws on credit enhancements reflecting
financial difficulties;
(e) substitution of credit or liquidity providers,
or their failure to perform;
(f) adverse tax opinions or events affecting the
tax-exempt status of the Refunding Bonds;
(g) modifications to rights of the holders of the
Refunding Bonds;
(h) Refunding Bond calls;
(i) defeasances;
(j) release, substitution, or sale of property securing
repayment of the Refunding Bonds; and
(k) rating changes.
(4) The Company agrees to provide, either directly or
indirectly through the Trustee, to each NRMSIR or to the MSRB and
to the SID, in a timely manner, notice of any failure of the
Company to provide the information specified in paragraph 2 on or
before the date specified in paragraph 2.
(5) Information contained in any filing by the Company
with the Commission may be filed with each NRMSIR, the MSRB and the
SID by specific cross-reference to such filing with the Commission,
to the extent consistent with the requirements of the Rule.
(6) All obligations of the Company to provide
information pursuant to paragraph 2 and notices pursuant to
paragraphs 3 and 4 shall terminate if and when the Company is no
longer an obligated person with respect to the Refunding Bonds
within the meaning of the Rule.
(7) The Company agrees that the agreements contained
herein are for the benefit of the beneficial owners from time to
time of the Refunding Bonds and shall be enforceable by the Trustee
on behalf of such beneficial owners in accordance with the
provisions of the Indenture as well as by the beneficial owners
individually through a suit for specific performance.
(8) The Company's Form 10-K will be the financial
information and operating data required to be provided. The
financial statements will be prepared in accordance with the
accounting principles applicable to the Company's financial
information contained in its Form 10-K.
(9) Until such time as it shall be definitively
established to the contrary, the Company may assume for purposes of
the agreements contained herein:
(a) that its Form 10-K contains all of the annual
financial information and operating data required by the Rule
and the audited financial information set forth therein
constitutes all the audited financial statements required by
the Rule;
(b) the phrase "adverse tax opinions or events
affecting the tax-exempt status" as used in the Rule refers to
opinions of Bond Counsel rendered to the Company and the words
"events affecting" means events transpiring in the operation
of the Company or its service area;
(c) that its Form 10-K filed hereunder need not
include exhibits thereto or documents incorporated by
reference therein;
(d) the term "defaults" as used in the Rule means
Events of Default as such term is defined in the Indenture;
(e) the term "timely" as used in the Rule means the
taking of action or giving of notice within ten business days
of any event; and
(f) there are no "debt services reserves," "credit
enhancements," or "credit or liquidity providers" as such
terms are used in the Rule, except the Municipal Bond
Insurance Policy.
(10) The Company reserves the right to modify from time
to time the information to be provided to each NRMSIR, the MSRB and
to SID and the format of the presentation of such information,
provided that the modified information or format is consistent with
the requirements of the Rule. If the Rule is amended to reduce the
undertakings required to be obtained from "obligated persons,"
within the meaning of the Rule, from those set forth herein, the
requirements contained herein shall be deemed to be amended to like
extent. Any amendment of the requirements contained herein must
satisfy the following conditions:
(a) The amendment may only be made in connection
with a change in circumstances that arises from a change in
legal requirements, change in law, or change in the identity,
nature, or status of the obligated person, or type of business
conducted;
(b) Any undertaking, as amended, would have
complied with the requirements of the Rule at the time of the
primary offering, after taking into account any amendments or
interpretations of the Rule, as well as any change in
circumstances; and
(c) The amendment does not materially impair the
interests of beneficial owners of the Refunding Bonds, as
determined either by the Trustee or Bond Counsel, or by
approving vote of the holders of the Refunding Bonds pursuant
to the terms of the Indenture.
Additionally, any annual financial information containing
amended operating data or financial information must explain, in
narrative form, the reasons for the amendment and the impact of the
change in the type of operating data or financial information being
provided.
EXHIBIT 5
NEW ISSUE
In the opinion of Bond Counsel, interest on the Bonds will be
excludable from gross income for federal income tax purposesunderexisting
statutes, regulations, rulings and
court decisions, except as explained under "TAX MATTERS" herein,
and will be an item of tax preference for purposes of determining
the alternative minimum tax imposed on individuals and
corporations. For further information, see "TAX MATTERS".
$60,000,000
Matagorda County Navigation
District Number One (Texas)
6 1/8% Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1996
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
Dated: August 15, 1996 Due: May 1, 2030
The Bonds will be delivered as fully registered bonds without
coupons and when initially issued are expected to be registered in
the name of Cede & Co., as registered owner and nominee of The
Depository Trust Company, New York, New York ("DTC"). DTC will act
as securities depository for the Bonds. Bonds will be delivered
only in book-entry form in denominations of $5,000 or any integral
multiple thereof and, except under the limited circumstances
described herein, beneficial owners of the Bonds will not receive
certificates representing their ownership interests. Principal of
and premium, if any, and interest on the Bonds (payable on May 1
and November 1, commencing November 1, 1996), will be paid in the
manner described herein. So long as DTC or its nominee is the
registered owner of the Bonds, payments of principal, interest and
premium, if any, will be made through DTC and its Participants and
disbursements of such payments to beneficial owners will be the
responsibility of such Participants. See "BOOK-ENTRY ONLY SYSTEM"
herein.
The Bonds are subject to redemption prior to maturity as
described herein. Subject to certain conditions described herein,
the Bonds will be subject to mandatory tender for purchase and the
Company may elect to convert the Bonds, in whole or in part, on any
optional redemption date, to a different interest rate Mode as
described herein. The Purchase Price for tendered Bonds will
include any applicable premium that would be payable if the Bonds
were redeemed on the Purchase Date. See "THE BONDS" herein.
Payment of the principal and interest on the Bonds when due
will be insured by a financial guaranty insurance policy to be
issued by MBIA Insurance Corporation simultaneously with the
delivery of the Bonds. See "The MBIA Insurance Corporation
Insurance Policy" herein.
MBIA
________________________
Price 99.50%
(Plus accrued interest from August 15, 1996)
_______________________
The Bonds are offered, subject to prior sale, when, as and if
issued by the Issuer and accepted by the Underwriters, subject to
the approval of legality by the Attorney General of the State of
Texas and McCall, Parkhurst & Horton L.L.P., Bond Counsel, the
approval of certain other legal matters by Sidley & Austin,counsel
for the Underwriters, and certain other conditions. It is expected
that the Bonds will be available for delivery to DTC on or about
September 25, 1996.
GOLDMAN, SACHS & CO. MORGAN STANLEY & CO.
Incorporated
Dated: September 6, 1996
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No dealer, salesman or any other person is authorized to give any
information or to make any representation not contained in this
Official Statement, and any information not contained herein must
not be relied upon as having been authorized by Matagorda County
Navigation District Number One, Central Power and Light Company or
any Underwriter. This Official Statement does not constitute an
offer to sell or the solicitation of an offer to buy, nor shall
there be any sale of the Bonds, by any person in any jurisdiction
in which it is unlawful for such person to make such offer,
solicitation or sale. Matagorda County Navigation District Number
One neither has nor assumes any responsibility as to the accuracy
or completeness of the information in this Official Statement, all
of which has been furnished by others, other than information under
the caption "The Issuer."
Neither the delivery of this Official Statement nor any sale
hereunder shall under any circumstances create any implication that
there has been no change in the affairs of Matagorda County
Navigation District Number One or Central Power and Light Company
since the date hereof.
_____________________
TABLE OF CONTENTS
Page
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
THE FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
THE BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
BOOK-ENTRY ONLY SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
THE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
THE INDENTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
THE MBIA INSURANCE CORPORATION INSURANCE POLICY. . . . . . . . . . . . . . . 21
TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
CONTINUING DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
APPENDIX A - CENTRAL POWER AND LIGHT COMPANY . . . . . . . . . . . . . . . A-1
APPENDIX B - CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . .B-1
APPENDIX C - FORM OF OPINION OF BOND COUNSEL . . . . . . . . . . . . . . . .C-1
APPENDIX D - FORM OF MUNICIPAL BOND INSURANCE POLICY . . . . . . . . . . . .D-1
$60,000,000
MATAGORDA COUNTY NAVIGATION DISTRICT NUMBER ONE
6 1/8% POLLUTION CONTROL REVENUE REFUNDING BONDS
(Central Power and Light Company Project)
Series 1996
Due May 1, 2030
_______________
INTRODUCTION
This Official Statement is provided to furnish information
regarding the issuance by Matagorda County Navigation District
Number One, a governmental agency and body politic and corporate of
the State of Texas (the "Issuer"), of its Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) Series
1996 (the "Bonds") in the aggregate principal amount of
$60,000,000. The Issuer neither has nor assumes any responsibility
as to the accuracy or completeness of the information in this
Official Statement, all of which has been furnished by others,
other than the information pertaining to the Issuer under the
caption "The Issuer."
The issuance and sale of the Bonds is expected to be
authorized by a Resolution adopted by the Issuer on August 26,
1996 (the "Resolution"). The Bonds will be issued pursuant to an
Indenture of Trust to be dated as of August 15, 1996 (the
"Indenture") between the Issuer and The Bank of New York, as
trustee (the "Trustee").
The proceeds of the Bonds will be used to refund $60,000,000
of the Issuer's outstanding 7-7/8% Pollution Control Revenue
Refunding Bonds, Series 1986 (Central Power and Light Company
Project) (the "Prior Bonds"). The Prior Bonds were originally
issued to finance the cost of the acquisition, construction and
improvement of certain pollution control and solid waste disposal
facilities, as hereinafter described, at the South Texas Project
Electric Generating Station (the "Plant") located between Bay City,
Texas and Palacios, Texas. Central Power and Light Company, a
Texas business corporation (the "Company"), owns a 25.2% undivided
interest in the Plant. Except where the context otherwise
indicates, the term "Facilities" herein refers to the Company's
portion of certain of the pollution control and solid waste
disposal facilities at the Plant.
Pursuant to an Installment Payment Agreement dated as of
August 15, 1996 (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 Plant constitute security for the
Bonds, which will be secured only by the assignment and pledge of
the Agreement, the moneys deposited or required to be deposited
under the Indenture (other than moneys deposited to the Rebate Fund
and the Bond Purchase Fund), and the Company's absolute
unconditional obligation to make payments thereunder.
There follows in this Official Statement brief descriptions of
the Issuer, the Facilities, the Use of Proceeds, the Bonds, the
Agreement and the Indenture. The descriptions herein of the
Agreement and the Indenture do not purport to be complete and are
qualified in their entirety by reference to such documents, and the
descriptions herein of the Bonds are qualified in their entirety by
reference to the forms thereof and the information with respect
thereto included in the Indenture. See "MISCELLANEOUS" herein for
information with respect to obtaining copies of such documents.
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. Terms not defined herein have the meanings set forth in
the Agreement, the Indenture, or in Appendix B to this Official
Statement.
THE ISSUER
Matagorda County Navigation District Number One is a
governmental agency and body politic and corporate of the State of
Texas created as a conservation and reclamation district pursuant
to Article XVI, Section 59, of the Constitution of the State of
Texas and by Chapters 60 and 62 of the Texas Water Code (the
"Act"). The principal office of the Issuer is in Palacios, Texas.
THE FACILITIES
The Facilities consist of various systems which are designed
for the abatement and control of pollution and the treatment and
disposal of sewage and solid waste resulting from the operation of
the Plant. The Plant is a nuclear generating station consisting of
two units with the capability of generating a total of 2,500
megawatts of power. Unit 1 of the Plant began commercial operation
on August 25, 1988, and Unit 2 began commercial operation on June
19, 1989.
USE OF PROCEEDS
The Bonds are being issued by the Issuer for the purpose of
providing funds for the redemption of all outstanding Prior Bonds.
The proceeds to be received by the Issuer from the issuance and
sale of the Bonds will be deposited into a separate account within
the bond fund with respect to the Prior Bonds maintained by The
Bank of New York (the "Prior Trustee") pursuant to an Indenture of
Trust dated as of December 1, 1986 between the Issuer and the Prior
Trustee. The Company will provide any additional funds required to
redeem all of the Prior Bonds from either internally generated
funds or short-term borrowings.
THE BONDS
The Bonds will be issuable only as fully registered bonds
without coupons in denominations of $5,000 or any integral multiple
thereof. Bonds may be transferred or exchanged without cost,
except for any tax or other governmental charge.
The Bonds initially will be dated August 15, 1996. The Bonds
will mature on May 1, 2030 and will bear interest at the rate of
6.125% per annum until maturity, unless converted in lieu of
optional redemption as described under the caption "Redemption -
Mandatory Tender and Conversion in Lieu of Optional Redemption."
Principal of and premium, if any, on the Bonds will be payable at
the corporate trust office of the Trustee in New York, New York.
Interest on the Bonds will be payable semi-annually on May 1 and
November 1 of each year, commencing November 1, 1996, and will be
paid by check mailed on the Interest Payment Date to the registered
owners thereof of record as of the 15th day (whether or not a
Business Day) of the calendar month immediately preceding an
Interest Payment Date, provided that any Registered Owner of
$1,000,000 or more in aggregate principal amount of the Bonds may,
upon written request given to the Paying Agent at least five
Business Days prior to an Interest Payment Date designating an
account in a domestic bank, be paid by wire transfer of immediately
available funds. Each such payment date is hereinafter referred to
as an "Interest Payment Date."
The Bank of New York, the Trustee under the Indenture, has
been appointed as Paying Agent (the "Paying Agent") under the
Indenture. The Principal Office of the Paying Agent is located at
101 Barclay Street, New York, New York 10286.
Limited Obligations of the Issuer
The Bonds will be limited obligations of the Issuer, payable
solely from, and secured equally and ratably by, a first lien on
and pledge of all the right, title and interest of the Issuer in
and to the Agreement, including all moneys payable thereunder
(except for certain rights of the Issuer relating to the payment of
expenses and indemnification). The Company is absolutely and
unconditionally obligated under the Agreement to pay to the
Trustee, for the account of the Issuer, an amount sufficient to
pay, or provide for the payment of, the principal of, premium, if
any, and interest on the Bonds when due (whether upon maturity,
redemption or otherwise), and to pay certain other charges.
Neither the credit nor the taxing power of the State of Texas, the
Issuer or any other political subdivision of the State of Texas is
pledged for the payment of the principal of, premium, if any, or
interest on the Bonds; the Bonds shall not be deemed a general
obligation of the State of Texas, the Issuer or any other political
subdivision of the state of Texas; and none of the State of Texas,
the Issuer or any other political subdivision of the State of Texas
shall be liable for the payment of the principal of, premium, if
any, or interest on the Bonds, except from those revenues to be
derived by the Issuer pursuant to the Agreement and pledged to such
payment. No holder of a Bond shall have the right to demand
payment from moneys derived by taxation or any revenues of the
Issuer, except the funds pledged to the payment of the Bonds.
Notwithstanding its authorization of the Bonds and its
approval of the distribution of this Official Statement, the Issuer
does not endorse, or in any manner guarantee or promise, directly
or indirectly, to pay any obligations on the Bonds from any source
of funds other than as described herein, nor does the Issuer
guarantee, warrant or endorse the creditworthiness or credit
standing of the Company or in any manner guarantee, warrant or
endorse the investment quality or value of the Bonds.
Redemption
The Bonds are subject to redemption prior to maturity as
follows:
Optional Redemption
The Bonds are 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 on May 1, 2006 and on
any Business Day thereafter at the following redemption prices
(expressed as percentages of the principal amount of the Bonds
called for redemption) plus accrued interest to the date fixed for
redemption:
Redemption Date (dates inclusive) Redemption
Price
May 1, 2006 through April 30, 2007 102%
May 1, 2007 through April 30, 2008 101%
May 1, 2008 and thereafter 100%
Extraordinary Optional Redemption
The Bonds are subject to redemption in whole on the next
available Interest Payment Date for which notice of redemption can
be given, at a redemption price equal to the aggregate principal
amount of the Bonds Outstanding plus accrued interest thereon to
the redemption date, without premium, upon receipt by the Trustee
of a written notice from the 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 the
Facilities or the Plant, including, without limitation, (i) the
imposition of any income or other taxes not imposed on August 15,
1996 or (ii) the imposition of any ad valorem property or other
taxes (other than ad valorem property or other taxes imposed on
August 15, 1996 upon similarly assessed property within the same
taxing jurisdiction);
(b) the Facilities or the Plant shall have been damaged
or destroyed to such extent that, in the opinion of the Company,
(i) within a period of six consecutive months following such damage
or destruction, it is not practicable or desirable to rebuild,
repair or restore the same, (ii) the Company will be thereby
prevented from carrying on its normal operations of the Facilities
or the Plant for a period of six or more consecutive months or
(iii) the cost of restoration would exceed by $1,500,000 or more
the net proceeds of insurance thereon;
(c) title to, or temporary use of, all or substantially
all of the Facilities or the Plant shall have been taken under the
exercise of the power of eminent domain;
(d) changes in the economic availability of materials,
labor, services, supplies (including fuel), equipment or other
property, facilities or things necessary for the operation of the
Facilities or the Plant shall have occurred, or technological,
regulatory or other changes shall have occurred, which, in the
opinion of the Company, render the continued operation of the
Facilities or the Plant uneconomic;
(e) any court or administrative body shall enter a
judgment, order or decree requiring the Company to cease, or
dispose of, all or any substantial part of its operations of the
Facilities or the Plant to such extent that, in the opinion of the
Company, it is or will be thereby prevented from carrying on its
normal operations of the Facilities or the Plant for a period of
six or more consecutive months; or
(f) as a result of any change in the Constitution of the
State of Texas or the Constitution of the United States of America
or of any legislative or administrative action (whether state or
federal), or of any final decree, judgment or order of any court or
administrative body (whether state or federal), the obligations of
the Company under the Agreement shall have become unenforceable or
impossible of performance in any material respect in accordance
with the intent and purpose of the parties as expressed in the
Agreement (as specified in the Indenture).
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.
Mandatory Tender and Conversion in Lieu of Optional Redemption
So long as no Event of Default exists under the Indenture, the
Company may elect, on any optional redemption date for the Bonds,
beginning May 1, 2006, to convert all or any part of the Bonds to
a different interest rate Mode. The Company shall make such
election as specified in the Indenture and upon such election such
Bonds shall be subject to mandatory tender for purchase on such
mandatory tender date, in lieu of optional redemption, at the
applicable Purchase Price. The Paying Agent shall give notice of
such mandatory tender for purchase to the Registered Owners of
Bonds by first class mail, not less than thirty (30) days before
the mandatory tender date. Mandatory tender and conversion in lieu
of optional redemption is subject to certain conditions relating to
rating the Bonds and obtaining consent from MBIA Insurance
Corporation (the "Bond Insurer").
The Bonds will initially be issued in the "Fixed Rate Mode."
Other than the Fixed Rate Mode, the permitted Modes for the Bonds
are "Flexible Mode," for periods of from one to 270 days, and
"Daily Mode," "Weekly Mode," "Monthly Mode," "Quarterly Mode,"
"Semiannual Mode" and "Multiannual Mode," for periods of one day,
one week, one month, three months, six months, one year or integral
multiples thereof, respectively. Except as otherwise provided in
the Indenture, the interest rates in each Mode and the period
during which a particular Mode is in effect will be determined by
a remarketing agent to be appointed under the Indenture. The Mode
for all or a portion of the Bonds after conversion as described
above is subject to subsequent conversion to a different Mode from
time to time at the election of the Company as provided in the
Indenture. Purchasers of Bonds after conversion will receive an
offering document describing the alternative Modes and other
features of the Bonds.
BOOK-ENTRY ONLY SYSTEM
The Depository Trust Company ("DTC"), New York, New York, will
act as securities depository for the Bonds (the "Securities
Depository"). The Bonds will be issued as fully-registered
securities registered in the name of Cede & Co., as nominee for
DTC. One fully-registered Bond certificate for Bonds of each Mode
will be issued in the aggregate principal amount of the Bonds of
that Mode and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning
of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York
Uniform Commercial Code, and a "clearing agency" registered
pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC holds securities that its
participants deposit with DTC (such participants or the
participants of any successor Securities Depository are herein
referred to as "Participants" or "DTC Participants"). DTC also
facilitates the settlement among DTC Participants of securities
transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in
DTC Participants' accounts, thereby eliminating the need for
physical movement of securities certificates. Participants include
securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a
number of its Participants and by the New York Stock Exchange,
Inc., the American Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. Access to the DTC system
is also available to others such as securities brokers and dealers,
banks and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC
and the Participants are on file with the Securities and Exchange
Commission.
Purchases of beneficial ownership interests in the Bonds under
the DTC system must be made by or through Participants, which will
receive a credit for the Bonds on DTC's records. The ownership
interest of each Beneficial Owner of a Bond is in turn to be
recorded on the Participant's and Indirect Participants' records.
Beneficial Owners will not receive written communication from DTC
of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well
as periodic statements of their holdings, from the Participant or
Indirect Participant through which the Beneficial Owner entered
into the transaction. Transfers of ownership interests of the
Bonds are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial
Owners will not receive certificates representing their ownership
interests in the Bonds, except in the event that use of the book-
entry system for the Bonds is discontinued as described under the
caption "Discontinuation of Book-Entry Only System."
To facilitate subsequent transfers, all Bonds deposited with
DTC are registered in the name of DTC's partnership nominee, Cede
& Co. The deposit of Bonds with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC
has no knowledge of the actual Beneficial Owners of the Bonds.
DTC's records reflect only the identity of the Participants to
whose accounts such Bonds are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to
Participants, by Participants to Indirect Participants, and by
Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Notices of redemption of Bonds will be sent to Cede & Co. If
less than all of the Bonds of a particular Mode are being redeemed,
DTC's practice is to determine by lot the amount of the interest of
each Participant in Bonds of such Mode to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect
to Bonds. Under its usual procedures, DTC mails an "Omnibus Proxy"
to the Issuer as soon as possible after the record date. The
"Omnibus Proxy" assigns Cede & Co.'s consenting or voting rights to
those Participants to whose accounts the Bonds are credited on the
record date identified in a listing attached to the "Omnibus
Proxy."
Principal and interest payments on the Bonds will be made to
DTC. DTC's practice is to credit DTC Participants' accounts on a
payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not
receive payment on a payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and
customary practices, as in the case with securities held for the
accounts of customers in bearer form or registered in "street name"
and will be the responsibility of such Participant and not of DTC,
the Trustee, the Issuer or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Payments of principal and interest to DTC is the responsibility of
the Trustee. Disbursement of such payments to Participants is the
responsibility of DTC and disbursement of such payments to the
Beneficial Owners is the responsibility of the Participants and
Indirect Participants.
DTC may discontinue providing its services as securities
depository with respect to the Bonds at any time by giving
reasonable notice to the Issuer. Under such circumstances, in the
event that a successor securities depository is not obtained, Bond
certificates are required to be printed and delivered as described
herein under the caption "Discontinuation of Book-Entry Only
System."
The Issuer may decide to discontinue use of the system of
book-entry transfers through DTC or a successor securities
depository. In that event, Bond certificates will be printed and
delivered as described herein under the caption "Discontinuation of
Book-Entry Only System."
THE INFORMATION PROVIDED IMMEDIATELY ABOVE UNDER THIS CAPTION
HAS BEEN PROVIDED BY DTC. NO REPRESENTATION IS MADE BY THE ISSUER,
THE COMPANY OR THE UNDERWRITERS AS TO THE ACCURACY OR ADEQUACY OF
SUCH INFORMATION PROVIDED BY DTC OR AS TO THE ABSENCE OF MATERIAL
ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF.
For so long as the Bonds are registered in the name of DTC or
its nominee, Cede & Co., the Issuer, the Bond Insurer and the
Trustee will recognize only DTC or its nominee, Cede & Co., as the
Registered Owner of the Bonds for all purposes, including payments,
notices (including notices of redemption or mandatory tender) and
voting.
Under the Indenture, payments made by the Trustee to DTC or
its nominee shall satisfy the Issuer's obligations under the
Indenture and the Company's obligations under the Agreement to the
extent of the payments so made.
Neither the Issuer, the Company nor the Trustee shall have any
responsibility or obligation with respect to:
(i) the accuracy of the records of DTC, its nominee or
any Participant or Indirect Participant with respect to any
beneficial ownership interest in any Bonds;
(ii) the delivery to any Participant or Indirect
Participant or any other person, other than an owner, as shown
in the bond register, of any notice with respect to any Bond
including, without limitation, any notice of redemption,
tender, purchase or any event which would or could give rise
to a tender or purchase right or option with respect to any
Bond;
(iii) the payment to any Participant or Indirect
Participant or any other person, other than an owner, as shown
in the bond register, of any amount with respect to the
principal of, premium, if any, or interest on, or the Purchase
Price of, any Bond; or
(iv) any consent given by DTC as Registered Owner.
Prior to any discontinuation of the Book-Entry Only System
described above, the Issuer, the Bond Insurer and the Trustee may
treat DTC as, and deem DTC to be, the absolute owner of the Bonds
for all purposes whatsoever, including, without limitation:
(i) the payment of principal of, premium, if any, and
interest on the Bonds;
(ii) giving notices of redemption and other matters with
respect to the Bonds;
(iii) registering transfers with respect to the
Bonds; and
(iv) the selection of Bonds for redemption.
Discontinuation of Book-Entry Only System
In the event that the Issuer determines to remove the
Securities Depository, the Issuer will (i) appoint a successor
Securities Depository and transfer one or more separate Bond
certificates to such successor or (ii) notify the Participants of
the Securities Depository of the availability through the
Securities Depository of Bond certificates and transfer one or more
separate Bond certificates to the Participants of the Securities
Depository having Bonds credited to their accounts with the
Securities Depository. In such event, the Bonds will no longer be
restricted to being registered in the bond register in the name of
the Securities Depository, or its nominee, but may be registered in
the name of any successor Securities Depository, or its nominee, or
in whatever name or names the Participants of the Securities
Depository receiving Bonds shall designate, in accordance with the
provisions of the Indenture.
THE AGREEMENT
General
The following is a summary of certain provisions of the
Agreement. Reference is hereby made to the Agreement in its
entirety for the detailed provisions thereof.
Use of Bond Proceeds
The Issuer will issue the Bonds to provide funds to currently
refund the Prior Bonds. Upon the sale of the Bonds, the Issuer
will transfer the proceeds of the Bonds to the trustee for the
Prior Bonds for deposit into the bond fund created under the
indenture for the Prior Bonds.
Installment Payments
The 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 created under the Indenture,
will be sufficient to pay when due the principal of, premium, if
any, and interest on the Outstanding Bonds as they shall mature, be
redeemed, be purchased or deemed purchased or otherwise become due
as provided in the Indenture. The 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 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) certain events of dissolution, liquidation,
insolvency, bankruptcy or reorganization involving the
Company; or
(f) the occurrence of an "Event of Default" under the
Indenture.
The provisions of paragraph (d) above are subject to the
following limitations: if by reason of acts of God, strikes,
lockouts or other industrial disturbances; acts of public enemies;
orders or regulations of any kind of the government of the United
States of America or of the State of Texas or any of their
departments, agencies, political subdivisions, or officials, or any
civil or military authority; insurrections; riots; epidemics;
landslides; lightning; earthquakes; tidal waves; fires; hurricanes;
tornadoes; blue northers; other storms; floods; washouts; droughts;
arrests; restraints of government and people; civil disturbances;
explosions; breakage or accident to machinery, transmission pipes,
transmission facilities or canals; partial or entire failure of
utilities; shortages of labor, material, supplies or
transportation; or any other cause or event not reasonably within
the control of the 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, the Company and the Bond Insurer, provided that no
amendment may be made which would adversely affect the rights of
the Owners of any of the Outstanding Bonds without the consent of
the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding; provided, however, that no amendment may be made
which would (i) decrease the amounts payable under the Agreement;
(ii) change the date of payment or prepayment provisions under the
Agreement; or (iii) change the amendment provisions of the
Agreement without the consent of all of the Owners of the Bonds
adversely affected thereby; and provided further that the Agreement
may be amended by written agreement of the Issuer and the Company
in order to make conforming changes with respect to certain
amendments made to the Indenture.
THE INDENTURE
General
The following is a summary of certain provisions of the
Indenture. Reference is hereby made to the Indenture in its
entirety for the detailed provisions thereof.
Bond Fund
The Indenture creates and establishes with the Trustee a
separate trust fund designated the "Matagorda County Navigation
District Number One, Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project) Series 1996 Bond Fund"
(the "Bond Fund"), which will be used solely for the payment of the
principal of, premium, if any, and interest on the Bonds. All
Installment Payments made by the Company in connection with
principal of, premium, if any, and interest on the Bonds will be
made to the Trustee for deposit in the Bond Fund. There shall be
deposited into the Bond Fund, when received: (i) accrued interest,
if any, on the Bonds from the date thereof to the date of delivery
to the initial purchaser thereof; (ii) all payments specified in
the Agreement (except for certain payments of fees, expenses, and
indemnification arising out of the Issuer's Unassigned Rights);
(iii) all moneys required to be so deposited in connection with any
redemption of Bonds; (iv) any amounts directed to be transferred
into the Bond Fund pursuant to any provision of the Indenture, and
(v) all other moneys when received by the Trustee which are
required to be deposited into the Bond Fund or which are
accompanied by directions that such moneys are to be paid into the
Bond Fund.
Moneys held in the Bond Fund shall be used solely for the
payment of the principal of, premium, if any, and interest on the
Bonds on the dates due for the payment or redemption thereof. The
Issuer has authorized and directed the Trustee to withdraw
sufficient funds from the Bond Fund to pay the principal of,
premium, if any, and interest on the Bonds as the same become due
and payable, which authorization and direction the Trustee has
accepted.
Investment
Except as provided in the Indenture, any moneys held as part
of the Bond Fund shall be invested or reinvested by the Trustee as
provided in written instructions of the Company solely in Permitted
Investments.
Moneys Held in Trust
All moneys required to be deposited with or paid to the
Trustee for the account of any fund under the Indenture shall be
held by the Trustee in trust and, except for (i) moneys in the Bond
Purchase Fund and the Rebate Fund, and (ii) moneys deposited with
or paid to the Trustee for the redemption of Bonds, notice of the
redemption for which has been duly given, shall, while held by the
Trustee, be part of the trust estate and be subject to the security
interest created by the Indenture.
Events of Default and Remedies
The Indenture provides that each of the following constitutes
an "Event of Default" thereunder:
(a) default in the due and punctual payment of the
principal of or premium, if any, on any Outstanding Bond, as
the same shall become due and payable, whether at the stated
maturity thereof, upon any proceedings for redemption, or upon
the maturity thereof by declaration of acceleration;
(b) default in the due and punctual payment of the
interest on any Outstanding Bond, as the same shall become due
and payable, and the continuation of such default for a period
of 60 days or more;
(c) default in the due and punctual payment of the
Purchase Price of any Outstanding Bond, as the same shall
become due and payable and the continuation of such default
for a period of one Business Day or more;
(d) default by the Issuer in its performance or
observance of any of the other covenants, agreements or
conditions contained in the Indenture, and the continuation
thereof without corrective action for a period of 90 days
after receipt by the Issuer and the 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; or
(e) an Event of Default (as defined in the Agreement)
has occurred and is continuing under the Agreement.
If any Event of Default occurs and is continuing, the Trustee may,
and upon request of the owners of at least 25% in principal amount
of all Bonds then Outstanding shall, by notice in writing to the
Issuer and the 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.
If, after the principal of the Bonds has become due and
payable, all arrears of interest upon the Bonds are paid by the
Issuer, and the Issuer also performs all other things in respect to
which it may have been in default under the Indenture and pays the
reasonable charges of the Trustee and the Bondholders, including
reasonable and necessary attorneys' fees, then, and in every such
case, the owners of a majority in principal amount of the Bonds
then Outstanding, by notice to the Issuer and to the Trustee, may
annul such acceleration and its consequences. No such annulment
shall extend to or affect any subsequent default or impair any
right or remedy consequent thereon.
Upon the occurrence of an Event of Default, the Trustee may
pursue any available remedy by suit at law or in equity to enforce
the payment of the principal of, premium, if any, and interest on
the Bonds then Outstanding, and the performance by the Issuer of
its obligations under the Indenture, including, without limitation,
the following: (a) by mandamus, or other suit, action or
proceeding at law or in equity, enforce all rights of the
Bondholders and require the Issuer to carry out its agreements
under the Indenture and the Acts; (b) bring suit upon the Bonds;
(c) by action, suit or proceeding at law or in equity, require the
Issuer to account as if it were the trustee of an express trust for
the Bondholders; or (d) by action, suit or proceeding at law or in
equity, enjoin any acts or things which may be unlawful or in
violation of the rights of the Bondholders.
MBIA Insurance Corporation Deemed to be a Bondholder
Notwithstanding any provision of the Indenture to the
contrary, the Bond Insurer shall at all times be deemed the
exclusive owner of all Bonds for the purposes of all approvals,
consents, waivers, institution of any action, and the direction of
all remedies. No acceleration shall be permitted, and no Event of
Default shall be waived, without the Bond Insurer's consent. The
Bond Insurer shall have the right to direct all remedies pursuant
to the Indenture.
Defeasance
Subject to consent of the Bond Insurer, any Bond shall be
deemed to have been paid and discharged when payment of the
principal of and premium, if any, on such Bond plus the interest
thereon to the due date thereof (whether such due date be by reason
of maturity or upon redemption as provided in the Indenture or
otherwise) either (a) shall have been made in accordance with the
terms of the Indenture or (b) shall have been provided for by
irrevocably depositing with the Trustee, in trust solely for such
payment, any combination of (1) sufficient moneys to make such
payment and/or
(2) Government Obligations not subject to redemption or prepayment
and maturing as principal and interest in such amounts as in the
opinion of an independent certified public accountant delivered to
the Trustee are sufficient to make such payment without
reinvestment and to pay all fees and expenses in connection
therewith.
Discharge of Lien
When all of the Bonds have been paid or deemed paid and the
Issuer is not in default under any of the covenants and promises
contained in such Bonds and the Indenture, and if the Issuer shall
pay or cause to be paid to the Trustee all sums of money due or to
become due according to the Indenture or of the Bonds and of the
Agreement, then the rights under the Indenture will become null and
void; provided, however, that the rights of the Trustee under the
Indenture to receive its fees, charges and expenses shall survive
the discharge of the Indenture until paid in full. See the caption
"Defeasance" above for a discussion of the conditions under which
the Bonds will be deemed to have been paid.
The Trustee; New York Paying Agent
To the extent permitted by law, the Trustee may invest in and
treat itself as any other holder of the Bonds. The Trustee may
resign at any time after notice to the Issuer, the 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 and the Bond Insurer, but without the consent of or notice
to the Bondholders, may enter into an indenture or indentures
supplemental to the Indenture, for any of the following purposes:
(a) to cure any ambiguity, formal defect or omission in
the Indenture or to make such other changes which shall not
have a material adverse effect upon the interests of the
Bondholders;
(b) to grant to or confer upon the Trustee, for the
benefit of the Bondholders, any additional rights, remedies,
powers or authorities, or any additional security, that may
lawfully be granted to or conferred upon the Bondholders or
the Trustee;
(c) to subject to the Indenture additional revenues,
properties or collateral;
(d) to modify, amend or supplement the Indenture, or any
indenture supplemental thereto, in such manner as to permit
the qualification thereof under the Trust Indenture Act of
1939, as amended, or any similar federal statute hereafter in
effect, or to permit the qualification of the Bonds for sale
under the securities laws of any of the states of the United
States and, if the Issuer so determines, to add to the
Indenture or any indenture supplemental thereto such other
terms, conditions and provisions as may be permitted by the
Trust Indenture Act of 1939, as amended, or any similar
federal statute;
(e) to add to the covenants and agreements of the Issuer
contained in the Indenture other covenants and agreements
thereafter to be observed for the protection of the
Bondholders or to surrender or limit any right, power or
authority therein reserved to or conferred upon the Issuer;
(f) effective upon any Conversion Date to a new Mode, to
make any amendment affecting only the Bonds being converted,
including revision to Authorized Denominations;
(g) to add provisions relating to the partial conversion
of Bonds to a new Mode;
(h) to conform the Indenture to the requirements of the
Rating Agencies;
(i) to add or modify provisions permitting a mandatory
tender of Bonds in lieu of redemption; and
(j) to add provisions permitting the addition of a
credit facility or a liquidity facility.
Exclusive of the purposes described in subparagraphs (a)
through (j) above, the Owners of a majority in aggregate principal
amount of the Bonds then Outstanding will have the right, from time
to time, to approve any supplemental indenture deemed necessary and
desirable by the Issuer for the purposes of modifying, altering,
amending, adding to or rescinding any of the terms or provisions
contained in the Indenture or any supplemental indenture. No
modification or alteration may be made without the consent of the
holders of all Bonds then Outstanding which permits (i) an
extension of the maturity of the principal of, or the time for
payment of any redemption premium or interest on, any Bond or a
reduction in the principal amount of any Bond, or the rate of
interest or redemption premium thereon, or a reduction in the
amount of, or extension of the time of any payment required by, any
Bond; (ii) a privilege or priority of any Bond over any other Bond
(except as provided in the Indenture); (iii) a reduction in the
aggregate principal amount of the Bonds required for consent to
such a supplemental indenture; (iv) the deprivation of the Owner of
any Bond then Outstanding of the lien created by the Indenture; or
(v) the amendment of the limitations described in this paragraph.
THE MBIA INSURANCE CORPORATION INSURANCE POLICY
The following information has been furnished by the Bond
Insurer for use in this Official Statement. Reference is made to
Appendix D to this Official Statement for a specimen of the Bond
Insurer's policy.
The Bond Insurer's policy unconditionally and irrevocably
guarantees the full and complete payment required to be made by or
on behalf of the Issuer to the Paying Agent or its successor of an
amount equal to (i) the principal of (either at the stated maturity
or by a mandatory redemption upon the occurrence of a determination
of taxability) and interest on, the Bonds as such payments shall
become due but shall not be so paid (except that in the event of
any acceleration of the due date of such principal by reason of
mandatory or optional redemption or acceleration resulting from
default or otherwise, other than a mandatory redemption upon the
occurrence of a determination of taxability, the payments
guaranteed by the Bond Insurer's policy shall be made in such
amounts and at such times as such payments of principal would have
been due had there not been any such acceleration); and (ii) the
reimbursement of any such payment which is subsequently recovered
from any owner of the Bonds pursuant to a final judgment by a court
of competent jurisdiction that such payment constitutes an
avoidable preference to such owner within the meaning of any
applicable bankruptcy law (a "Preference").
The Bond Insurer's policy does not insure against loss of any
prepayment premium which may at any time be payable with respect to
any Bond. The Bond Insurer's policy does not, under any
circumstance, insure against loss relating to: (i) optional or
mandatory redemptions (other than a mandatory redemption upon the
occurrence of a determination of taxability); (ii) any payments to
be made on an accelerated basis; (iii) payments of the purchase
price of Bonds upon tender by an owner thereof; or (iv) any
Preference relating to (i) through (iii) above. The Bond Insurer's
policy also does not insure against nonpayment of principal of or
interest on the Bonds resulting from the insolvency, negligence or
any other act or omission of the Paying Agent or any other paying
agent for the Bonds.
Upon receipt of telephonic or telegraphic notice, such notice
subsequently confirmed in writing by registered or certified mail,
or upon receipt of written notice by registered or certified mail,
by the Bond Insurer from the Paying Agent or any owner of a Bond
the payment of an insured amount for which is then due, that such
required payment has not been made, the Bond Insurer on the due
date of such payment or within one business day after receipt of
notice of such nonpayment, whichever is later, will make a deposit
of funds, in an account with State Street Bank and Trust Company,
N.A., in New York, New York, or its successor, sufficient for the
payment of any such insured amounts which are then due. Upon
presentment and surrender of such Bonds or presentment of such
other proof of ownership of the Bonds, together with any
appropriate instruments of assignment to evidence the assignment of
the insured amounts due on the Bonds as are paid by the Bond
Insurer, and appropriate instruments to effect the appointment of
the Bond Insurer as agent for such owners of the Bonds in any legal
proceeding related to payment of insured amounts on the Bonds, such
instruments being in a form satisfactory to State Street Bank and
Trust Company, N.A., State Street Bank and Trust Company, N.A.
shall disburse to such owners or the Paying Agent payment of the
insured amounts due on such Bonds, less any amount held by the
Paying Agent for the payment of such insured amounts and legally
available therefor.
The Bond Insurer, formerly known as Municipal Bond Investors
Assurance Corporation, is the principal operating subsidiary of
MBIA Inc., a New York Stock Exchange listed company. MBIA Inc. is
not obligated to pay the debts of or claims against the Bond
Insurer. The Bond Insurer is domiciled in the State of New York
and licensed to do business in all 50 states, the District of
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, the Virgin Islands of the United States
and the Territory of Guam. The Bond Insurer has one European
branch in the Republic of France.
As of December 31, 1995 the Bond Insurer had admitted assets
of $3.8 billion (audited), total liabilities of $2.5 billion
(audited), and total capital and surplus of $1.3 billion (audited)
determined in accordance with statutory accounting practices
prescribed or permitted by insurance regulatory authorities. As of
June 30, 1996, the Bond Insurer had admitted assets of $4.2 billion
(unaudited), total liabilities of $2.8 billion (unaudited), and
total capital and surplus of $1.4 billion (unaudited) determined in
accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities. All information
regarding the Bond Insurer, a wholly owned subsidiary of MBIA Inc.,
including the financial statements of the Bond Insurer for the year
ended December 31, 1995, prepared in accordance with generally
accepted accounting principles, included in the Annual Report on
Form 10-K of MBIA Inc. for the year ended December 31, 1995 is
hereby incorporated by reference into this Official Statement and
shall be deemed to be a part hereof. Any statement contained in a
document incorporated by reference herein shall be modified or
superseded for purposes of this Official Statement to the extent
that a statement contained herein or in any other subsequently
filed document which also is incorporated by reference herein
modifies or supersedes such statement. Any statement so modified
or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Official Statement.
Furthermore, copies of the Bond Insurer's year end financial
statements prepared in accordance with statutory accounting
practices are available from the Bond Insurer. A copy of the
Annual Report on Form 10-K of MBIA Inc. is available from the Bond
Insurer or the Securities and Exchange Commission. The address of
the Bond Insurer is 113 King Street, Armonk, New York 10504.
Moody's Investors Service ("Moody's") rates the claims paying
ability of the Bond Insurer "Aaa".
Standard & Poor's Ratings Services, a division of The McGraw-
Hill Companies, Inc. ("Standard & Poor's"), rates the claims paying
ability of the Bond Insurer "AAA".
Fitch Investors Service, L.P., rates the claims paying ability
of the Bond Insurer "AAA".
Each rating of the Bond Insurer should be evaluated
independently. The ratings reflect the respective rating agency's
current assessment of the creditworthiness of the Bond Insurer and
its ability to pay claims on its policies of insurance. Any
further explanation as to the significance of the above ratings may
be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold
the Bonds, and such ratings may be subject to revision or
withdrawal at any time by the rating agencies. Any downward
revision or withdrawal of any of the above ratings may have an
adverse effect on the market price of the Bonds. The Bond Insurer
does not guaranty the market price of the Bonds nor does it
guaranty that the ratings on the Bonds will not be revised or
withdrawn.
Disclosure of Guaranty Fund Non Participation
In the event the Bond Insurer is unable to fulfill its
contractual obligation under the policy or contract or application
or certificate or evidence of coverage, the policyholder or
certificateholder is not protected by an insurance guaranty fund or
other solvency protection arrangement.
TAX MATTERS
On the date of the initial delivery of the Bonds, McCall,
Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel, will render
its opinion that, in accordance with statutes, regulations,
published rulings and court decisions existing on the date thereof,
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. Interest on the Bonds is an item of tax preference, as
defined in section 57(a)(5) of the Code, for purposes of
determining the alternative minimum tax imposed on individuals and
corporations by section 55 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 C -- 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.
Federal Income Tax Accounting Treatment of Original Issue Discount
The initial public offering price of the Bonds stated on the
cover of this Official Statement (the "Original Issue Discount
Bonds") is less than the principal amount of the Bonds. The
difference between (i) the amount payable at maturity of each
Original Issue Discount Bond and (ii) the initial offering price to
the public of such Original Issue Discount Bond constitutes
original issue discount with respect to such Original Issue
Discount Bond in the hands of any owner who has purchased such
Original Issue Discount Bond in the initial public offering of the
Bonds. Under existing law, such initial owner is entitled to
exclude from gross income (as defined in section 61 of the Code) an
amount of income with respect to such Original Issue Discount Bond
equal to that portion of the amount of such original issue discount
allocable to the period that such Original Issue Discount Bond
continues to be owned by such owner. For a discussion of certain
collateral federal tax consequences, see the discussion set forth
below.
In the event of the redemption, sale or other taxable
disposition of such Original Issue Discount Bond prior to stated
maturity, however, the amount realized by such owner in excess of
the basis of such Original Issue Discount Bond in the hands of such
owner (adjusted upward by the portion of the original issue
discount allocable to the period for which such Original Issue
Discount Bond was held by such initial owner) is includable in
gross income.
Under existing law, the original issue discount on each
Original Issue Discount Bond is accrued daily to the stated
maturity thereof (in amounts calculated as described below for each
six-month period ending on the date before the semiannual
anniversary dates of the date of the Bonds and ratably within each
such six-month period) and the accrued amount is added to an
initial owner's basis for such Original Issue Discount Bond for
purposes of determining the amount of gain or loss recognized by
such owner upon the redemption, sale or other disposition thereof.
The amount to be added to basis for each accrual period is equal to
(a) the sum of the issue price and the amount of original issue
discount accrued in prior period multiplied by the yield to stated
maturity (determined on the basis of compounding at the close of
each accrual period and properly adjusted for the length of the
accrual period) less (b) the amounts payable as current interest
during such accrual period on such Original Issue Discount Bond.
The federal income tax consequences of the purchase,
ownership, redemption, sale or other disposition of Original Issue
Discount Bonds which are not purchased in the initial offering at
the original offering price may be determined according to rules
which differ from those described above. All owners of Original
Issue Discount Bonds should consult their own tax advisors with
respect to the determination for federal, state and local income
tax purposes of the treatment of interest accrued upon redemption,
sale or other disposition of such Original Issue Discount Bonds and
with respect to the federal, state, local and foreign tax
consequences of the purchase, ownership, redemption, sale or other
disposition of such Original Issue Discount Bonds.
Collateral Federal Income Tax Consequences
The following discussion is a summary of certain collateral
federal income tax consequences resulting from the purchase,
ownership or disposition of the Bonds. This discussion is based on
existing statutes, regulations, published rulings and court
decisions, all of which are subject to change or modification,
retroactively.
The following discussion is applicable to investors, other
than those who are subject to special provisions of the Code, such
as financial institutions, property and casualty insurance
companies, life insurance companies, individual recipients of
Social Security or Railroad Retirement benefits, certain S
corporations with Subchapter C earnings and profits, taxpayers
claiming an earned income tax credit and taxpayers who may be
deemed to have incurred or continued indebtedness to purchase tax-
exempt obligations.
INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL
PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO
THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE
PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS
BEFORE DETERMINING WHETHER TO PURCHASE THE BONDS.
Interest on the Bonds is an item of tax preference, as defined
in section 57(a)(5) of the Code, for purposes of determining the
alternative minimum tax imposed on individuals and corporations by
section 55 of the Code.
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 under the
captions "The Issuer," "The Bonds," "The Agreement," "The
Indenture" and "Tax Matters." Certain legal matters are being
passed upon for the Issuer by the firm of Mayfield & Mayfield, as
counsel to the Issuer. McCall, Parkhurst & Horton L.L.P. has not
participated in the preparation of, or examined (and they therefore
will express no opinion on and assume no responsibility for), the
contents of this Official Statement, other than as described above,
and it has not considered it necessary to do so in order to render
its opinions.
Certain legal matters will be passed upon for the 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 Underwriters by their 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.
UNDERWRITING
Goldman, Sachs & Co. and Morgan Stanley & Co. Incorporated
(the "Underwriters") have jointly and severally agreed to purchase
the Bonds at a price equal to 99.50% of the principal amount
thereof plus accrued interest from August 15, 1996 to the date of
delivery. Under the terms of the Bond Purchase Agreement dated
August 27, 1996 between the Underwriters and the Issuer, the
Underwriters have agreed, subject to the approval of certain legal
matters by counsel and to certain other conditions, to purchase all
of the Bonds if any such Bonds are purchased. The Company has
agreed to pay the Underwriters a fee equal to .728% of the
principal amount of the Bonds. The Bonds may be offered and sold
to certain dealers (including dealers depositing such Bonds into
investment accounts) and others at prices lower than the public
offering price set forth on the cover page hereof. After such
Bonds are released for sale to the public, the offering price and
other selling terms may from time to time be varied by the
Underwriters.
The Company has agreed to indemnify the Underwriters against
or to contribute toward certain liabilities, including liabilities
under federal securities laws.
CONTINUING DISCLOSURE
The Company has made certain undertakings to provide annual
financial statements of the Company (commencing with the fiscal
year of the Company ended December 31, 1996) and notice of certain
material events relating to the Bonds to each nationally recognized
municipal securities information repository or, in certain cases,
the Municipal Securities Rulemaking Board, and the appropriate
state information depository, if any, in each case to the extent
required by Rule 15c2-12 (the "Rule") promulgated by the Securities
and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended. The Company has made such covenants solely for
the purpose of enabling the Underwriters to comply with the Rule
and such covenants do not constitute an acknowledgement by the
Company of the validity of the Rule and are valid and binding only
to the extent that the Rule is valid. The Company expressly
reserves the right to contest the validity of all or any portion of
the Rule, including, without limitation, as a defense in any
action. The Company and its officers and directors shall have no
liability in respect of such covenants except to the extent
required for such covenants to satisfy the requirements imposed by
the Rule.
MISCELLANEOUS
The foregoing summaries do not purport to be complete and are
expressly made subject to the exact provisions of the applicable
documents which are incorporated herein by reference. For details
of all terms and conditions with respect to the Bonds, reference is
made to the Indenture and the Agreement, copies of which may be
obtained from the Company and the Underwriters during the initial
offering period for the Bonds and thereafter from the Trustee.
Information concerning the Company is contained or incorporated by
reference in Appendix A to this Official Statement. All the
information contained under the heading "THE FACILITIES" has been
furnished by the Company, and the Issuer makes no representations
as to the accuracy or completeness of such information.
Under the Agreement, and otherwise, the Company is obligated
to make certain payments to the Issuer and has agreed to indemnify
the Issuer against certain liabilities, including liabilities under
federal securities laws.
The Issuer does not assume any responsibility for the matters
contained in this Official Statement, except for the matters
contained under the heading "THE ISSUER." All findings and
determinations by the Issuer relating to the issuance of the Bonds,
are, and have been, made by it for its own internal uses and
purposes in performing its duties under the laws of the State of
Texas.
This Official Statement has been duly approved by the Board of
Navigation and Canal Commissioners of the Issuer.
MATAGORDA COUNTY NAVIGATION
DISTRICT NUMBER ONE
By: /s/ Thomas Holsworth
Chairman, Board of
Navigation and Canal
Commissioners
APPENDIX A
CENTRAL POWER AND LIGHT COMPANY
The information contained in this Appendix to the Official
Statement has been obtained from Central Power and Light Company.
THE COMPANY
The Company is a public utility engaged in generating,
purchasing, transmitting, distributing and selling electricity in
south Texas. It is a wholly-owned subsidiary of Central and South
West Corporation ("CSW"), a registered public utility holding
company under the Public Utility Holding Company Act of 1935.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), are incorporated
in this Official Statement by reference:
1. The Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
2. The Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1996 and June 30, 1996.
3. The Company's Current Reports on Form 8-K dated
February 13, 1996 and June 24, 1996.
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 Commission maintains a Web site
(http://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants who file
electronically with the Commission.
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.
SUMMARY INFORMATION
Business. . . . . . . . . . . .. . . . . .Electric Utility
Service Area . . . . . . . . . . . . . . .Approximately 44,000 square
miles in south Texas
Population of Service Area . . . . . . . .Approximately 2,065,000
Customers. . . . . . . . . . . . . . . . .Approximately 614,000
Generating Fuels for 1995. . . . . . . . .Gas 55%; Coal 21%; Nuclear 24%
SELECTED FINANCIAL INFORMATION
(in thousands, except percentages and ratios)
Twelve Months
Ended June 30, Year Ended December 31,
1996 1995 1994 1993
(Unaudited)
Income Summary:
Operating Revenues $1,237,115 $1,073,469 $1,217,979 $1,223,528
Operating Income $283,388 $282,184 $256,251 $190,079
Net Income $165,868 $206,447 $205,439 $172,425
Ratio of Earnings
to Fixed Charges* 2.88 2.63 3.24 2.69
______________________
* For computation of the foregoing ratios (i) earnings consist of net
income plus fixed charges, federal 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
June 30, 1996
(Unaudited)
Capitalization Summary:
Common Equity. . . . . . . . . . . . . . . . . . .$1,431,962 44.7%
Preferred Stock. . . . . . . . . . . . . . . . . . . 250,351 7.8
Long-term Debt . . . . . . . . . . . . . . . . . . 1,521,481 47.5
Total Capitalization . . . . . . . . . . . . . . . . . .$3,203,794 100.0%
CONSTRUCTION PROGRAM
The Company's capital expenditures for 1996-1998, including allowance
for funds used during construction ("AFUDC"), are estimated at $137 million,
$157 million and $137 million, respectively. The Company anticipates that the
majority of the funds required for its 1996-1998 capital expenditure program
will be provided from internal sources. These estimates are subject to change
due to numerous factors, including load growth, escalation of construction
costs, changes in nuclear and environmental regulation, delays from regulatory
hearings, adequacy of rate relief and the availability of necessary external
capital.
EXPERTS
The audited financial statements and schedules of the Company included
in its Annual Report on Form 10-K for the year ended December 31, 1995, which
has been incorporated herein by reference, have been examined by Arthur
Andersen LLP, independent public accountants, as indicated in their report
dated February 28, 1996 with respect thereto, which has been incorporated
herein by reference, in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
APPENDIX B
CERTAIN DEFINITIONS
CERTAIN DEFINITIONS
Certain capitalized terms used in the forepart of this Official
Statement and not defined therein have the meanings set forth below:
Acts - shall mean, collectively, Chapters 30, 60 and 62 of the Texas
Water Code, as amended, Chapter 383 of the Texas Health and Safety Code, as
amended, and Articles 717k and 717q, Vernon's Texas Civil Statutes, as
amended.
Beneficial Owner - shall mean the actual purchaser of a Bond.
Bond Counsel - shall mean McCall, Parkhurst & Horton L.L.P. or such
other firm of attorneys of nationally recognized standing in the field of law
relating to municipal bond law and the exemption from federal income taxation
of interest on state or local bonds, selected by the Issuer and acceptable to
the Trustee and the 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 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.
Code - shall mean the Internal Revenue Code of 1986, as amended.
Conversion Date - shall mean the date on which a new Mode becomes
effective with respect to a Bond, and with respect to a Bond in the
Multiannual Mode, the date on which a new Interest Rate Period becomes
effective.
The terms "substantial user" and "related person" shall have the
meanings given such terms in section 147(a) of the Code.
Favorable Opinion - shall mean an opinion of Bond Counsel addressed to
the Issuer, the Company, the Bond Insurer and the Trustee to the effect that
the action proposed to be taken is authorized or permitted by, to the extent
applicable, the Acts and the Indenture and will not adversely affect the
excludability of interest on the Bonds from gross income of the Owners thereof
for federal income tax purposes (other than as held by a "substantial user" of
the Facilities or a "related person" within the meaning of the Code).
Government Obligations - shall mean direct obligations of, or
obligations the timely payment of principal of and interest on which is fully
and unconditionally guaranteed by, the United States of America.
Mode - shall mean the period for and the manner in which the interest
rates on the Bonds are set and includes the Daily Mode, the Flexible Mode, the
Weekly Mode, the Monthly Mode, the Quarterly Mode, the Semiannual Mode, the
Multiannual Mode and the Fixed Rate Mode.
Outstanding, Bonds Outstanding or Bonds then Outstanding - shall mean
when used with a reference to Bonds at any date as of which the amount of
Outstanding Bonds is to be determined, means all Bonds authenticated and
delivered under the Indenture, except:
(a) Bonds canceled or delivered for cancellation at or prior to
such date;
(b) Bonds deemed to be paid pursuant to the terms of the
Indenture;
(c) Bonds in lieu of which others have been authenticated and
delivered under the Indenture;
(d) Bonds registered in the name of the Issuer;
(e) On or after any Purchase Date for Bonds, all Bonds (or
portions of Bonds) which are tendered or deemed to have been tendered
for purchase on such date, provided that funds sufficient for such
purchase are on deposit with the Paying Agent; and
(f) For purposes of any consent, request, demand, authorization,
direction, notice, waiver or other action to be taken by the holders of
a specified percentage of outstanding Bonds, all Bonds held by or for
the account of the Issuer 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) money market funds registered under the Investment Company
Act of 1940, whose shares are registered under the Securities Act of
1933, and having a rating by S&P of AAAm-G; AAAm; or AAm; and
(c) obligations or securities approved in writing by the Bond
Insurer.
Purchase Date - shall mean the date upon which Bonds are required to be
purchased pursuant to a mandatory or optional tender.
Purchase Price - shall mean, with respect to a Bond on a Purchase Date,
a price equal to par plus accrued interest to the Purchase Date; provided that
in the event that the Purchase Date is an Interest Payment Date for such Bond
and such Bond is not in the Flexible Mode, accrued interest will be paid
separately and not as part of the Purchase Price on such date; and further
provided that in the event such Bond is in the Multiannual or Fixed Rate Mode
and is subject to mandatory tender on a date on which the Bond is subject to
optional redemption, the Purchase Price shall include any premium that would
be payable on the Purchase Date if such Bond were redeemed on the Purchase
Date.
Rating Agencies - shall mean Standard & Poor's Ratings Services, a
division of McGraw-Hill, Inc. and/or Moody's Investor Service, Inc., according
to which of such rating agencies then rates the Bonds; and provided that if
neither of such rating agencies then rates the Bonds, the term "Rating
Agencies" shall refer to any national rating agency (if any), mutually
acceptable to the Company and the Remarketing Agent, and approved by the Bond
Insurer, which provides such rating.
APPENDIX C
FORM OF OPINION OF BOND COUNSEL
APPENDIX D
FORM OF MUNICIPAL BOND INSURANCE POLICY
September 27, 1996
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. 70-8597)
Dear Sirs:
We refer to the Form U-1 Application-Declaration (File
No. 70-8597) (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 Matagorda County
Navigation District Number One (the "District") of $60,000,000
aggregate principal amount of its Pollution Control Revenue
Refunding Bonds (Central Power and Light Company Project) Series
1996, due May 1, 2030 (the "Bonds"). In connection with the
issuance of the Bonds, the Company entered into 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. 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 by the Company have been complied
with.
3. The Installment Payment Agreement is a 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 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.
We hereby consent to the use of this opinion as an
exhibit to the Certificate of Notification.
Very truly yours,
RBW/DBB
