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Registration No. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
____________
TEXAS UTILITIES ELECTRIC COMPANY
(Exact Name of Registrant as Specified in Its Charter)
TEXAS 75-1837355
(State or Other Jurisdiction (I.R.S.Employer Identification Number)
of Incorporation or Organization)
ENERGY PLAZA
1601 BRYAN STREET
DALLAS, TEXAS 75201
(214) 812-4600
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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ROBERT A. WOOLDRIDGE, ESQ. PETER B. TINKHAM ROBERT J. REGER, JR., ESQ.
WORSHAM, FORSYTHE & SECRETARY REID & PRIEST LLP
WOOLDRIDGE, L.L.P. TEXAS UTILITIES ELECTRIC COMPANY 40 WEST 57TH STREET
ENERGY PLAZA, 1601 BRYAN STREET ENERGY PLAZA, 1601 BRYAN STREET NEW YORK, NEW YORK 10019
DALLAS, TEXAS 75201 DALLAS, TEXAS 75201 (212) 603-2000
(214) 979-3000 (214) 812-4600
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(Names, Addresses, Including Zip Codes, and Telephone Numbers, Including Area
Codes, of Agents For Service)
_______________
IT IS RESPECTFULLY REQUESTED THAT THE COMMISSION SEND COPIES OF ALL NOTICES,
ORDERS AND COMMUNICATIONS TO:
STEPHEN K. WAITE, ESQ.
WINTHROP, STIMSON, PUTNAM & ROBERTS
ONE BATTERY PARK PLAZA
NEW YORK, NEW YORK 10004
(212) 858-1000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of each Amount maximum maximum Amount of
class of securities to be offering price aggregate registration
to be registered registered per unit (1) offering price (1) fee
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Secured Facility Bonds............ $81,595,000 100% $81,595,000 $28,136.40
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(1) Estimated solely for the purpose of calculating the registration fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of any such
jurisdiction.
PROSPECTUS SUBJECT TO COMPLETION, DATED AUGUST 18, 1995
$81,595,000
SECURED FACILITY BONDS
The Secured Facility Bonds (Bonds) will be secured, as described herein, by a
lien on and security interest in the Permian Basin Facility and the DeCordova
Facility (Facilities) and rights under the Lease described herein relating to
the Facilities and will be payable from basic rentals and certain other amounts
to be paid under such Lease by
TEXAS UTILITIES ELECTRIC COMPANY
The Bonds will be issued by Shawmut Bank Connecticut, National Association
(formerly known as Connecticut National Bank), not individually but solely as
owner trustee (Lessor) under a Trust Agreement dated as of December 1, 1988, as
supplemented (Trust Agreement), in order to refinance the initial series of
Secured Facility Bonds issued by the Lessor on December 6, 1989. Texas Utilities
Electric Company (TU Electric) will be unconditionally obligated to make basic
rental and certain other payments in amounts which will be at least sufficient
to pay in full, when due, all scheduled payments of principal of, premium, if
any, and interest on the Bonds, although the Bonds will not be direct
obligations of or guaranteed by TU Electric.
For Bonds for which this Prospectus is being delivered (Offered Bonds), the
aggregate principal amount of the issue, interest rates, maturities, redemption
terms and other special terms of the Offered Bonds will be set forth in an
accompanying Prospectus Supplement (Prospectus Supplement).
The Bonds will be secured by a lien on and security interest in the Facilities,
and subject to certain exceptions, the rights of the Lessor under the Lease,
including the right to receive basic rentals and certain other amounts payable
by TU Electric thereunder. (See SECURITY AND SOURCE OF PAYMENT FOR THE BONDS,
DESCRIPTION OF THE BONDS, DESCRIPTION OF THE INDENTURE and DESCRIPTION OF THE
LEASE.)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY 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.
The Offered Bonds will be offered subject to prior sale, when, as and if
accepted by the Underwriters named herein, and subject to approval of certain
legal matters by Winthrop, Stimson, Putnam & Roberts, counsel for the
Underwriters, and certain other conditions. The net proceeds from the sale of
the Offered Bonds, and any applicable commissions, will be set forth in the
Prospectus Supplement.
SALOMON BROTHERS INC MORGAN STANLEY & CO.
INCORPORATED
The date of this Prospectus is , 1995.
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AVAILABLE INFORMATION
TU Electric is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (1934 Act), and in accordance therewith files
reports and other information with the Securities and Exchange Commission
(Commission). Such reports and other information filed by TU Electric can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Chicago
Regional Office, 500 West Madison, 14th Floor, Chicago, Illinois and New York
Regional Office, 7 World Trade Center, 13th Floor, New York, New York. Copies of
such material can also be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. Certain Depositary Shares representing shares of cumulative
preferred stock of TU Electric are listed on the New York Stock Exchange, where
reports and other information concerning TU Electric may be inspected.
Securityholders of TU Electric may obtain, upon request, copies of an
Annual Report on Form 10-K containing financial statements as of the end of the
most recent fiscal year audited and reported upon (with an opinion expressed) by
independent auditors.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by TU Electric with the
Commission pursuant to the 1934 Act, are incorporated herein by reference:
1. Annual Report on Form 10-K for the year ended December 31, 1994 (1994
10-K).
2. Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995
and June 30, 1995.
All documents subsequently filed by TU Electric pursuant to Section 13(a),
13(c), 14 or 15(d) of the 1934 Act and prior to the termination of the offering
hereunder shall be deemed to be incorporated by reference in this Prospectus and
to be a part hereof from the date of filing of such documents. The documents
which are incorporated by reference or deemed to be incorporated by reference in
this Prospectus are sometimes hereinafter referred to as the "Incorporated
Documents."
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
TU ELECTRIC HEREBY UNDERTAKES TO PROVIDE WITHOUT CHARGE TO EACH PERSON,
INCLUDING ANY BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN
DELIVERED, UPON WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY OR ALL
OF THE INCORPORATED DOCUMENTS REFERRED TO ABOVE, OTHER THAN EXHIBITS TO SUCH
DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO
SUCH DOCUMENTS. REQUESTS FOR SUCH COPIES SHOULD BE DIRECTED TO PETER B. TINKHAM,
SECRETARY, TEXAS UTILITIES ELECTRIC COMPANY, ENERGY PLAZA, 1601 BRYAN STREET,
DALLAS, TEXAS 75201, TELEPHONE NUMBER (214) 812-4600.
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TU ELECTRIC
TU Electric was incorporated under the laws of the State of Texas in 1982
and has perpetual existence under the provisions of the Texas Business
Corporation Act. TU Electric is an electric utility engaged in the generation,
purchase, transmission, distribution and sale of electric energy wholly within
the State of Texas. The principal executive offices of TU Electric are located
at Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201; the telephone number is
(214) 812-4600.
TU Electric is the principal subsidiary of Texas Utilities Company (Texas
Utilities). The other electric utility subsidiary of Texas Utilities is
Southwestern Electric Service Company, which is engaged in the purchase,
transmission, distribution and sale of electric energy in ten counties in the
eastern and central parts of Texas with a population estimated at 125,000. Texas
Utilities also has five other subsidiaries which perform specialized functions
within the Texas Utilities Company System: Texas Utilities Fuel Company owns a
natural gas pipeline system, acquires, stores and delivers fuel gas and provides
other fuel services at cost for the generation of electric energy by TU
Electric; Texas Utilities Mining Company owns, leases and operates fuel
production facilities for the surface mining and recovery of lignite at cost for
the generation of electric energy by TU Electric; Texas Utilities Properties
Inc. owns, leases and manages real and personal properties; Texas Utilities
Communications Inc. was organized to provide access to advanced
telecommunications technology, primarily for the System Companies' expected
expanding energy services business in the future; and Texas Utilities Services
Inc. provides financial, accounting, information technology, personnel,
procurement and other administrative services at cost.
TU Electric's service area covers the north central, eastern and western
parts of Texas, with a population estimated at 5,730,000 - about one-third of
the population of Texas. Electric service is provided in 91 counties and 372
incorporated municipalities, including Dallas, Fort Worth, Arlington, Irving,
Plano, Waco, Mesquite, Grand Prairie, Wichita Falls, Odessa, Midland,
Carrollton, Tyler, Richardson and Killeen. The area is a diversified commercial
and industrial center with substantial banking, insurance, communications,
electronics, aerospace, petrochemical and specialized steel manufacturing, and
automotive and aircraft assembly. The territory served includes major portions
of the oil and gas fields in the Permian Basin and East Texas, as well as
substantial farming and ranching sections of the State. It also includes the
Dallas-Fort Worth International Airport and the Alliance Airport.
USE OF PROCEEDS
The proceeds from the issuance of the Bonds will be used by the Lessor to
refund, in one or more series, $81,595,000 principal amount of Secured Facility
Bonds, Initial Series, 10.35% due January 1, 2018 (Refunded Bonds). The
redemption premium payable upon redemption of the Refunded Bonds and the
expenses and underwriting commission with respect to the issuance of the Bonds
will be paid by TU Electric and not from the proceeds from the issuance of the
Bonds.
OWNERSHIP AND LEASE OF THE FACILITIES
The Lessor purchased and holds the Permian Basin Facility located in Ward
County near Monahans, Texas (Permian Basin Facility) and the DeCordova Facility
located in Hood County near Granbury, Texas (DeCordova Facility) (together with
the Permian Basin Facility, the "Facilities") in trust for the benefit of the
settlor and beneficiary under the Trust Agreement (Owner Participant). TU
Electric has leased the Facilities pursuant to a Lease Agreement dated as of
December 1, 1989, as amended and supplemented (Lease), for a term expiring June
30, 2018 on a net lease basis. The Facilities and interests in the land
underlying the Facilities, which TU Electric has leased to the Lessor pursuant
to an Assignment, Amendment and Restatement of the Permian Basin Ground Lease
and an Assignment,
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Amendment and Restatement of the DeCordova Ground Lease, each dated as of
December 1, 1989 (Ground Leases), are sometimes referred to herein collectively
as the "Leased Assets." The Permian Basin Facility is composed of two gas-fired
combustion turbine peaking units. The Permian Basin Facility relies on existing
common facilities at the site. The DeCordova Facility is composed of four gas-
fired combustion turbine peaking units together with certain common facilities.
Both the Permian Basin Facility and the DeCordova Facility are connected to TU
Electric's transmission system. The Permian Basin Facility was placed in service
for tax purposes in October 1989 and has a nominal rating of 130 MW. The
DeCordova Facility was placed in service for tax purposes in November 1989 and
has a nominal rating of 260 MW.
The Bonds will be issued pursuant to the Trust Indenture, Security
Agreement and Mortgage, dated as of December 1, 1989, as amended and
supplemented (Indenture), from the Lessor to American National Bank and Trust
Company of Chicago, as indenture trustee (Trustee). Pursuant to the Indenture,
the Trustee, for the benefit of the holders of all the bonds, including the
Bonds, issued under the Indenture, obtained a lien on and a security interest in
the Facilities and the Lessor's rights to receive basic rentals and certain
other amounts payable by TU Electric.
The basic documents underlying the sale and lease transactions are
sometimes referred to herein as the "Operative Documents." In addition to the
Trust Agreement, the Lease, the Ground Leases and the Indenture, the Operative
Documents consist of the Participation Agreement dated as of December 1, 1988,
as amended and restated pursuant to an Amended and Restated Participation
Agreement, dated as of November 28, 1989 (Participation Agreement) (which sets
forth the obligations of the parties to the sale and lease transactions), the
Deed and Bill of Sale relating to the Permian Basin Facility and the Deed and
Bill of Sale relating to the DeCordova Facility, the Bonds, the Tax Indemnity
Agreement dated as of December 1, 1989 (Tax Indemnity Agreement) (whereby TU
Electric indemnifies the Owner Participant with respect to certain tax
liabilities), the Facility Agreement dated as of December 1, 1989 with respect
to the Permian Basin Facility and the Facility Agreement dated as of December 1,
1989 with respect to the DeCordova Facility (Facility Agreements) (whereby TU
Electric agrees to provide certain facilities and services for the operation of
the Facilities after the termination of the Lease).
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FLOW OF FUNDS FOR DEBT SERVICE PAYMENTS ON THE BONDS
[A FLOWCHART DESCRIBING THE FLOW OF FUNDS FOR DEBT
SERVICE PAYMENTS ON THE BONDS APPEARS HERE]
SECURITY AND SOURCE OF PAYMENT FOR THE BONDS
The Bonds, which will be without recourse to the general credit of the
Lessor or the Owner Participant and will not be direct obligations of, or
guaranteed by, TU Electric, will be payable from and secured by, among other
things, a lien on and security interest in the Leased Assets, and, subject to
certain exceptions, the rights of the Lessor under the Lease, including the
right to receive basic rentals and certain other amounts thereunder. The Lease
requires that payments of basic rent and certain other amounts be made by TU
Electric in such amounts as will be sufficient to provide for the payment, when
due, of the scheduled payments of principal of, premium, if any, and interest on
all of the Bonds. In addition, the Lease requires that basic rent payments
together with payments of Casualty Value (as specified in the Lease),
Termination Value (as specified in the Lease) and certain other amounts be made
in such amounts and at such times as will be sufficient for the payment, when
due, of the mandatory prepayments of principal of, premium, if any, and interest
on all of the Bonds as described under DESCRIPTION OF THE INDENTURE. The Lease
is a net lease pursuant to which TU Electric is unconditionally obligated to
make all payments thereunder without any right of counterclaim, setoff,
deduction or defense. See DESCRIPTION OF THE INDENTURE - "Security and Source of
Payment for the Bonds" and DESCRIPTION OF THE LEASE - "Net Lease/Maintenance."
If a Lease Default (as defined herein) shall have occurred and be continuing,
remedies may be exercised as described under DESCRIPTION OF THE LEASE - "Lease
Default; Lessor's Remedies" and DESCRIPTION OF THE INDENTURE.
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If an Indenture Default (as defined herein) shall have occurred and be
continuing at a time when there shall not have occurred and be continuing a
Lease Default, remedies may be exercised as described under DESCRIPTION OF THE
INDENTURE. In such a case, the exercise of such remedies will not disturb TU
Electric's quiet use and enjoyment of the Facilities or require prepayment of
basic rent, Casualty Value or Termination Value.
In certain instances, upon its purchase of the Facilities or other
termination of the Lease, TU Electric may elect to assume the Bonds, in which
event the Bonds will continue to be secured by the Facilities and will become
the unconditional obligations of TU Electric. See DESCRIPTION OF THE LEASE -
"Purchase Options and Termination Options" and -"Events of Loss."
Under certain conditions, additional bonds (Additional Bonds) may be issued
under the Indenture (i) for the purpose of redeeming any series of bonds,
including the Bonds, previously issued under the Indenture and (ii) to provide
funds for all or a portion of certain alterations, modifications, additions or
improvements to the Facilities, subject to certain limitations. See DESCRIPTION
OF THE INDENTURE -"Additional Bonds."
DESCRIPTION OF THE BONDS
The statements under this caption are summaries and do not purport to be
complete. The summaries are qualified in their entirety by reference to the
Indenture, a copy of which has been included as an exhibit to the registration
statement of which this Prospectus is a part (Registration Statement).
GENERAL
The Bonds will be issued under the Indenture. Although the Bonds will not
be direct obligations of or guaranteed by TU Electric, TU Electric will be the
"issuer" of the Bonds for purposes of the 1933 Act and the 1934 Act.
The Bonds will be issued in registered form in original principal
denominations of $1,000 or any integral multiples thereof. Since the principal
of each Bond will be subject to payment from time to time without surrender of,
or notation on, the Bond, the unpaid principal amount of each Bond as reflected
on the bond register maintained by the Trustee shall be controlling and binding
on each holder with respect to the actual unpaid principal amount of a Bond as
of any date. Bonds may be surrendered for registration of transfer or exchange
for Bonds of the same series and maturity in Chicago, Illinois at the office of
The First National Bank of Chicago, the initial bond registrar or in the City of
New York, at the office of The First Chicago Trust Company of New York, agent of
the initial bond registrar. No service charge will be required in respect of
transfers or exchanges, but payment may be required of taxes or other
governmental charges that may be imposed in connection therewith.
PRINCIPAL AMOUNTS, INTEREST RATES AND PAYMENT
The Offered Bonds will bear interest on the unpaid principal amount thereof
from the date of their initial authentication at the rate per annum shown on the
cover page of the Prospectus Supplement relating to such Offered Bonds for each
stated maturity, payable semiannually on January 1 and July 1 in each year.
Interest and principal installments will be paid to the persons in whose names
such Offered Bonds are registered at the close of business on the 15th day of
the calendar month next preceding each Installment Payment Date or interest
payment date, as the case may be. If a scheduled Installment Payment Date or
interest payment date is not a Business Day (as defined in the Indenture),
payment will be made on the next Business Day with the same effect as though
made on the scheduled date. Interest on any overdue principal, premium, if any,
and (to the
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extent permitted by applicable law) any overdue interest will be payable, on
demand, from the due date thereof at the rate per annum equal to the stated
interest rate of such Offered Bonds of such stated maturity as shown on the
cover page of the Prospectus Supplement relating to such Offered Bonds of such
stated maturity for the actual period during which any such principal, premium
or interest shall be overdue. All interest will be computed on the basis of a
360-day year consisting of twelve, 30-day months.
The principal of the Bonds at stated maturity or upon mandatory redemption
will be payable, upon presentment of the Bonds, in Chicago, Illinois at the
office of The First National Bank of Chicago, the initial paying agent or in the
City of New York, at the office of The First Chicago Trust Company of New York,
agent of the initial paying agent. Interest and installments of principal will
be paid by checks mailed on each interest payment date and Installment Payment
Date, to the address of the person entitled thereto as shown on the bond
register.
PRINCIPAL INSTALLMENT PAYMENTS
With respect to each Installment Payment Date, the holder of an Offered
Bond of a stated maturity will receive a payment of principal equal to such
holder's pro rata share of the Installment Payment Amount for such installment
payment date as described in the Prospectus Supplement relating to such Offered
Bonds.
In the event that there shall have been any partial redemption of the Bonds
(other than pursuant to principal installment payments), the amount of each
Installment Payment Amount subsequent to such redemption shall be reduced by an
amount equal to the amount obtained by multiplying the amount of such
Installment Payment Amount as in effect prior to such redemption by a fraction
of which the numerator shall be the aggregate principal amount of the Bonds of
such stated maturity redeemed pursuant to such partial redemption, and the
denominator shall be the aggregate principal amount of the Bonds of such stated
maturity outstanding immediately prior to such redemption.
The Outstanding Balance Factor as of any Installment Payment Date is the
quotient (rounded to the seventh decimal place) computed by dividing (i) the
aggregate principal amount of Offered Bonds of a stated maturity remaining
unpaid after the payment of the principal installment due on such Installment
Payment Date, by (ii) the aggregate original principal amount of Offered Bonds
of such stated maturity. The Outstanding Balance Factor for Offered Bonds of
each stated maturity will initially be 1.000000; thereafter, the Outstanding
Balance Factor for Offered Bonds of each stated maturity will decline as
described in the Prospectus Supplement relating to such Offered Bonds to reflect
installment payments, except in the event of any partial redemption due to a
partial casualty or a default. The unpaid principal amount of a holder's Offered
Bond can be determined by multiplying the original principal amount of such
Offered Bond by the Outstanding Balance Factor for Offered Bonds of such stated
maturity as of the applicable Installment Payment Date.
MANDATORY REDEMPTION
The Bonds of each maturity shall be subject to mandatory redemption, at
100% of the unpaid principal amount thereof, together with interest accrued to
the Redemption Date (as specified in the Indenture) upon the receipt by the
Trustee from TU Electric of payment of the applicable Casualty Value under the
Lease resulting from an Event of Loss (as hereinafter defined) under the Lease
(unless, in connection with an Event of Loss described in clause (v) below, TU
Electric assumes the Bonds then outstanding and all of the obligations of the
Lessor under the Indenture and the Bonds and the Lessor shall transfer the
Facilities to TU Electric), in the principal amount equal to the product of (a)
the aggregate unpaid principal amount of the Bonds of such stated maturity then
outstanding and (b) a fraction the numerator of which is the purchase price of
the Facility to which such Event of Loss
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pertains and the denominator of which is the aggregate purchase price of the
Facilities then subject to the lien of the Indenture. Events of Loss under the
Lease consist of:
(i) the loss of either Facility, in its entirety or substantially in
its entirety, due to theft, disappearance, destruction or, in the good faith and
reasonable opinion of TU Electric, damage beyond economic repair and or the loss
of use of either Facility for a period reasonably anticipated to extend for at
least 30 months (or such longer period not exceeding 60 months as may be
required to repair or restore such Facility to use) for any such reasons;
(ii) the receipt of insurance proceeds based upon an actual or
constructive total loss with respect to either Facility;
(iii) certain events of condemnation, confiscation or seizure or loss of
title to either Facility or the ground interest relating thereto;
(iv) shutdown of either Facility as a result of any laws, regulations or
governmental orders for a period exceeding the lesser of (a) the remaining
portion of the term of the Lease and (b) 60 months;
(v) the Lessor or the Owner Participant, solely by reason of its
participation in the sale and lease transactions, shall be deemed by any
governmental authority to be, or shall become subject to regulation as, a Texas
Public Utility, an "electric utility", a "public utility" or a "public utility
holding company" or an affiliate of any of the foregoing and shall have sent
written notice to TU Electric and the parties to the Participation Agreement
that such person deems such regulation to be materially burdensome; or
(vi) the permanent shutdown of either Facility.
The Offered Bonds shall be subject to redemption in whole but not in part,
on or after the date set forth in the Prospectus Supplement relating to such
Offered Bonds, at 100% of the unpaid principal amount thereof, together with
interest accrued to the Redemption Date, upon the receipt by the Trustee of the
applicable purchase price or Termination Value (either of which shall be in an
amount sufficient to pay the Bonds) under the Lease as a result of an early
termination of the Lease upon a determination by TU Electric that the Facilities
are obsolete, surplus or uneconomic for TU Electric's purposes and will no
longer be used by TU Electric, all as described in the Prospectus Supplement
relating to such Offered Bonds.
OPTIONAL REDEMPTION
The Offered Bonds are not subject to optional redemption at any time prior
to their respective stated maturity dates.
PRO RATA PAYMENT
If less than all of the unpaid principal amount of Bonds of a stated
maturity are to be redeemed, the principal amount of Bonds to be redeemed shall
be allocated among the holders thereof pro rata, in proportion, as nearly as
practicable, to the respective unpaid principal amounts of Bonds of such stated
maturity held by such holders. Each Installment Payment Amount shall be applied
pro rata to Bonds of a stated maturity, in proportion, as nearly as practicable,
to the respective unpaid principal amounts of Bonds of such stated maturity held
by such holders.
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NOTICE OF REDEMPTION
Notice of redemption of the Bonds shall be given by first-class mail,
mailed not less than 30 days prior to the Redemption Date, to each holder of the
Bonds to be redeemed, at the holder's address appearing on the bond register.
DESCRIPTION OF THE INDENTURE
The statements under this caption are summaries and do not purport to be
complete. The summaries are qualified in their entirety by reference to the
Indenture, a copy of which has been filed as an exhibit to the Registration
Statement.
SECURITY AND SOURCE OF PAYMENT FOR THE BONDS
The Bonds will be issued without recourse to the general credit of the
Lessor or the Owner Participant and will be secured under the Indenture on a
parity with other bonds which may be issued thereunder in the future. Such
security will consist of, among other things, a lien on and security interest
in: (i) the Leased Assets, (ii) the Lessor's rights under the Lease, including
the right to receive basic rent and certain other amounts payable thereunder
other than certain amounts payable to the Lessor which are not assigned as
security, and (iii) with certain exclusions, the Lessor's rights under the
Operative Documents.
The Lease is a net lease under which TU Electric is unconditionally
obligated to pay basic rent and certain other amounts which are at least
sufficient to pay in full, when due, all scheduled payments of the principal of,
premium, if any, and interest on all Bonds outstanding under the Indenture,
without notice, demand, counterclaim, setoff, deduction or defense on the part
of TU Electric.
Under certain conditions, Additional Bonds are permitted to be issued by
the Lessor under the Indenture (i) for the purpose of redeeming any previously
issued series of bonds and (ii) to provide funds to finance a portion of the
cost of any nonseverable alterations, modifications, additions and improvements
to the Facilities. See DESCRIPTION OF THE INDENTURE - "Additional Bonds."
EVENTS OF DEFAULT, NOTICE AND WAIVER
Events of default under the Indenture (Indenture Defaults) include: (i)
default in the payment of any principal of, premium, if any, or interest on, any
Bond when it becomes due and payable, and continuance of such default for a
period of ten days; (ii) default in the performance, or breach of any covenant
of TU Electric contained in the Indenture or of the Lessor or the Owner
Participant contained in any Operative Document and continuance of such default
or breach for a period of 30 days after notice thereof; provided, however, that
such failure to perform or observe any such other covenant, condition or
agreement shall not give rise to an Indenture Default if such failure is other
than in the payment of money, and shall not materially adversely affect any
material rights or interests of the holders of the Bonds or the Trustee in, to
or under the Indenture or the Bonds and curative action shall have been
instituted within such 30-day period and diligently pursued to completion; (iii)
the occurrence and continuation of an "event of default" under the Lease (Lease
Default), unless the Lease Default results from nonpayment of certain payments
not assigned to the Trustee and the Lessor has not consented to the declaration
of an Indenture Default in respect of such nonpayment; and (iv) certain events
of bankruptcy, insolvency and reorganization relating to the Lessor.
The Trustee, within 90 days after it shall know of the occurrence of a
default under the Indenture, is required to mail to the holders of the Bonds
notice thereof, unless such default shall have been cured or waived before the
giving of such notice, provided that, except in the case of a default
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in the payment of principal of, premium, if any, or interest on, any Bond or in
the payment of any installment with respect to the Bonds, the Trustee shall be
protected in withholding such notice if, in good faith, it determines that the
withholding of such notice is in the interests of the holders of the Bonds, and
provided further, that in the case of a default specified in clause (ii) above,
no such notice to holders shall be given until at least 30 days after the
occurrence of such default. For all purposes of the Indenture, in the absence of
actual knowledge of a responsible officer of the Trustee, the Trustee shall not
be deemed to have knowledge of an Indenture Default (except the failure of TU
Electric to pay any installment of basic rent when due) unless notified in
writing by any holder of a Bond, the Owner Participant, the Lessor or TU
Electric.
During the continuance of any Indenture Default, either the Trustee or the
holders of not less than 25% in aggregate unpaid principal amount of the Bonds
outstanding, by written notice to the Lessor, the Owner Participant and TU
Electric (and to the Trustee if given by the holders), may declare the unpaid
principal amount of all of the Bonds outstanding and the interest accrued
thereon to be immediately due and payable, but no such declaration will be made
in the case of an Indenture Default which resulted directly from a failure by TU
Electric to make a payment or to perform or observe any covenant under the Lease
until such time as the Lessor has been given an opportunity to exercise its
rights to cure such default under the Lease. See DESCRIPTION OF THE INDENTURE -
"Rights of Lessor to Cure and Purchase Bonds."
No holder of any Bond will have any right to institute any suit, action or
proceeding at law or in equity or otherwise for the foreclosure of the
Indenture, for the appointment of a receiver or for the enforcement of any
remedy under the Indenture unless the Trustee has been given written notice of a
continuing Indenture Default, the holders of not less than 25% in aggregate
unpaid principal amount of the Bonds outstanding have made a written request to
the Trustee and have offered indemnity as provided in the Indenture, the Trustee
has failed to act for 60 days thereafter and no inconsistent direction has been
given to the Trustee by the holders of a majority in aggregate unpaid principal
amount of the Bonds outstanding during such 60-day period. Nothing contained in
the Indenture, however, impairs or affects the rights of any holder of a Bond to
enforce the payment of the unpaid principal of, premium, if any, and interest
on, any Bond on or after the respective due dates thereof (or, in the case of
redemption, on the Redemption Date).
If an Indenture Default has occurred and is continuing, the holders of a
majority in aggregate unpaid principal amount of the Bonds outstanding may,
subject to certain conditions specified in the Indenture, direct the Trustee to
institute any proceeding relating to the Bonds, but the Trustee may decline if
it in good faith determines that the action directed would involve the Trustee
in personal liability or expense.
The holders of a majority in aggregate unpaid principal amount of the Bonds
outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee, subject to certain limitations
specified in the Indenture.
The holders of a majority in aggregate unpaid principal amount of the Bonds
outstanding may waive any past default under the Indenture and its consequences,
except a default (i) in the payment of the principal of, premium, if any, or
interest on, any Bonds or (ii) in respect of a covenant or provision of the
Indenture which under the Indenture cannot be modified or amended without the
consent of the holder of each outstanding Bond affected.
TU Electric is required to deliver to the Trustee annually a written
statement that all of its obligations under the Indenture during such year have
been fulfilled, or in the event of any default in the fulfillment of such
obligations, specifying each such default and the nature and status thereof.
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RESCISSION OF ACCELERATION
If, after the Bonds have become due and payable due to declaration of
acceleration by the Trustee or the holders of not less than 25% in aggregate
unpaid principal amount of the Bonds outstanding and before any sale of the
property subject to the lien of the Indenture, (i) there has been paid to or
deposited with the Trustee a sum sufficient to pay (a) all overdue installments
of interest on all of the Bonds, and, to the extent lawful, interest thereon,
(b) the principal of and premium, if any, on any Bonds which have become due
otherwise than by such acceleration and interest thereon, and (c) all sums paid
or advanced by the Trustee and the reasonable compensation, expenses,
disbursements and advancements of the Trustee, its agents and counsel, the
paying agent and the bond registrar, and (ii) all other Indenture Defaults other
than the nonpayment of the unpaid principal of the Bonds which have become due
solely by such acceleration, have been cured or waived, the holders of a
majority in aggregate unpaid principal amount of the Bonds outstanding, by
written notice to the Lessor, the Owner Participant, TU Electric and the
Trustee, may rescind and annul such declaration and its consequences; but no
such rescission will affect any subsequent default or impair any right
consequent thereon.
REMEDIES
If an Indenture Default has occurred and is continuing, the Trustee may,
and upon the written request of, and the proffering of satisfactory indemnity
by, the holders of a majority in aggregate unpaid principal amount of the Bonds
outstanding, shall, subject to the Lessor's rights of cure, exercise the rights
and remedies available to it under the Indenture and applicable law, including
(i) the institution of judicial proceedings, either at law or in equity or
otherwise, to protect its rights under the Indenture or for foreclosure
thereunder; and (ii) the sale in whole or in part of the property subject to the
lien of the Indenture. As a condition to exercising any of its rights and
remedies under the Indenture in connection with an Indenture Default while an
Indenture Default occasioned by a Lease Default has occurred and is continuing,
the Trustee is required, to the extent that it may do so under the Indenture,
the Lease and applicable law, to exercise one or more of its rights and remedies
under the Lease (at least one of which remedies must involve the payment of
Termination Value, an amount measured by Termination Value or an amount in
excess of Termination Value specified in the Lease). If no Lease Default shall
have occurred and be continuing, the Trustee's rights and remedies shall be
subject to TU Electric's rights under the Lease.
All payments received and amounts held or realized by the Trustee after (i)
an Indenture Default has occurred and is continuing and (ii) the Trustee has
declared (as assignee from the Lessor) the Lease to be in default or the Bonds
have become due and payable, will be distributed: first, to reimburse the
Trustee for its expenses and to pay the reasonable remuneration of the Trustee;
second, to pay the unpaid principal amount of all of the Bonds outstanding,
together with premium, if any, plus accrued but unpaid interest (as well as
interest on overdue principal and, to the extent permitted by law, on overdue
interest) to the date of distribution on the Bonds, or, ratably, if the amount
distributed shall be insufficient to pay all such Bonds in full; third, to pay,
in full, or ratably if necessary, to the present or former holders of the Bonds,
any amounts payable to them as indemnitees in accordance with the provisions of
the Indenture; and fourth, to pay any other indebtedness at the time due and
owing to the Trustee or the holders of the Bonds which the Indenture secures.
The balance, if any, will be paid to the Lessor.
After the Trustee has knowledge of a default or an Indenture Default and
while such default or Indenture Default shall be continuing, all payments which
it receives and amounts which it realizes (except for payments which are
specifically excluded from the trust estate, which at all times will be paid to
the person entitled to receive such payment) which would otherwise be payable to
the Lessor will be held by the Trustee, provided that the Trustee must
distribute such amounts to the Lessor
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within 90 days of the Trustee's receipt thereof unless an Indenture Default is
declared and the Trustee is diligently pursuing any remedies available under the
Indenture.
POSSIBLE REJECTION OF LEASE BY A TRUSTEE IN BANKRUPTCY
If TU Electric were to enter into bankruptcy or reorganization proceedings,
TU Electric or its bankruptcy trustee could reject the Lease. In such event,
there could be no assurance that the amount of the claim for damages for
rejection of the Lease would be sufficient to repay the Bonds. Under Section
502(b)(6) of the United States Bankruptcy Code, as amended, a claim by a lessor
for damages resulting from the rejection of a lease of real property in
connection with bankruptcy proceedings affecting the lessee may be limited to an
amount equal to the rent reserved under the lease, without acceleration, for the
greater of 1 year or 15 percent (but not more than 3 years) of the remaining
term of the lease, plus rent already due but unpaid. Although the Lease covers
property considered to be personal property, there can be no assurance that a
bankruptcy court could not find such property to be real estate, in whole or in
part. If the property covered by the Lease were held to constitute personal
property, such limitation would not apply. In any case, rejection of the Lease
by TU Electric or its bankruptcy trustee would not deprive the Trustee of its
lien on and security interest in the Facilities. It should be noted that
rejection of the Lease would deprive TU Electric of the use of the Facilities
and any revenues which could be derived from the sale of the output thereof.
In the event of a bankruptcy of the Owner Participant, it is possible that,
notwithstanding that the Facilities are owned by the Lessor in trust, the
Facilities, the Lease, the Lessor and the Bonds might become subject to the
bankruptcy proceedings. In such event, payments under the Lease or on the Bonds
might be interrupted and the ability of the Trustee to exercise its remedies
under the Indenture might be restricted, although the Trustee would retain its
status as a secured creditor in respect of the Lease and the Facilities.
RIGHTS OF LESSOR TO CURE AND PURCHASE BONDS
An Indenture Default is deemed cured (i) if it results from a nonpayment of
basic or supplemental rent under the Lease, if the Lessor has paid all of such
defaulted rent to the extent required to enable the Trustee to make all payments
of principal and interest then due and unpaid on all outstanding Bonds, within
30 days after receipt by the Lessor of notice of such nonpayment or (ii) if such
Indenture Default results from the failure of TU Electric to perform or observe
any of its covenants, conditions or agreements under the Operative Documents
(other than to pay basic rent), and the Lessor has observed or performed any
such covenant, condition or agreement on behalf of TU Electric within 30 days
after its receipt of notice of the occurrence of such failure, unless in the
case of clause (i) above, TU Electric fails to make all payments of basic rent
(a) on more than four consecutive basic rent payment dates or (b) on more than
eight basic rent payment dates during the term of the Lease.
If an Indenture Default has occurred and (i) the Bonds have been
accelerated and such acceleration has not been rescinded, (ii) no Indenture
Default arising out of a failure by the Lessor or the Owner Participant to
perform or observe any of its covenants, conditions or agreements contained in
the Operative Documents has occurred and is continuing, and (iii) the Lessor,
within 45 days after receiving notice from the Trustee of such acceleration, has
given written notice to the Trustee and the holders of the Bonds of its
intention to purchase all such Bonds on a specified purchase date, then, upon
payment by the Lessor on or before such purchase date of an amount equal to the
aggregate unpaid principal amount of all outstanding Bonds together with accrued
but unpaid interest thereon to the date of such payment (such interest to be
accrued after notice of intention to purchase is given at the rate provided for
prior to the applicable default under the Indenture) plus all other amounts
which holders of the Bonds would be entitled to be paid under the Indenture
before any payments were to
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be made to the Lessor, each holder will be deemed to have sold its Bonds to the
Lessor; provided, that no such sale shall be deemed to have occurred unless all
outstanding Bonds are simultaneously to be so purchased and such transfer or
conveyance is not in violation of any applicable law or rule. If a Bond is not
tendered, it will be deemed to be purchased, and on the purchase date, interest
thereon will cease to accrue to the former holder thereof, and the former holder
will have no rights or interest in such Bond except the right to receive payment
of the principal of and accrued interest on such Bond to the purchase date.
Bonds tendered to the Trustee after the date fixed for purchase will be
purchased from moneys deposited for the purchase thereof.
ADDITIONAL BONDS
Additional Bonds may be issued by the Lessor under and secured by the
Indenture, at any time or from time to time, for the purpose of refunding, in
whole or in part, any previously issued series of bonds, including the Bonds, or
to provide funds to finance a portion of the cost of any nonseverable
alterations, modifications, additions and improvements (Alterations) to either
Facility (excluding original, substitute or replacement components). The terms,
conditions and designations of Additional Bonds must be set forth in a
supplemental indenture executed by the Lessor, TU Electric and the Trustee. In
addition, rentals and other amounts payable by TU Electric under the Lease will
be adjusted to the extent necessary to provide debt service for the Additional
Bonds. Additional Bonds cannot be issued to finance the cost of Alterations at
any time that senior secured long-term debt securities of TU Electric do not
have an investment grade credit rating. All bonds issued and outstanding under
the Indenture, including the Bonds, will be equally and ratably secured
thereunder, without preference, priority or distinction of any thereof over any
other by reason of difference in time of issuance, maturity or otherwise.
SUPPLEMENTAL INDENTURES
The Lessor, TU Electric and the Trustee may enter into indentures
supplemental to the Indenture, without the consent of the holders of any
outstanding Bonds, for any one or more of the following purposes: (i) to
evidence the succession of another corporation to TU Electric and the assumption
by any such successor of the covenants of TU Electric in the Indenture or to
evidence the succession of another corporation to the Lessor and the assumption
by any such successor of the covenants of the Lessor in the Indenture and in the
Bonds; (ii) to add to the covenants of TU Electric or the Lessor, for the
benefit of the holders of the Bonds, or to surrender any right or power
conferred in the Indenture upon TU Electric or the Lessor; (iii) to convey,
transfer and assign to the Trustee, and to subject to the lien of the Indenture,
additional properties, and to correct or amplify the description of any property
at any time subject to the lien of the Indenture or to assure, convey and
confirm to the Trustee any property subject or required to be subject to the
lien of the Indenture; (iv) to modify, eliminate or add to the provisions of the
Indenture to the extent necessary to qualify or continue qualification of the
Indenture and any supplemental indentures under the Trust Indenture Act of 1939;
(v) to cure any ambiguity in, or to correct or supplement any defective or
inconsistent provision of the Indenture; (vi) to establish the form or terms of
any additional series of the Bonds; (vii) to effect an assumption by TU Electric
of the obligations on the Bonds; (viii) to change or amend any provision of the
Indenture provided that such change or amendment will not be applicable to any
Bonds outstanding prior to the date thereof; (ix) to evidence the succession of
a new Trustee under the Indenture or the addition of a co-trustee; or (x) to
make any other provisions with respect to matters or questions arising under the
Indenture, so long as such action does not adversely affect the interests of the
holders of the outstanding Bonds.
Notwithstanding the foregoing, no supplemental indenture shall become
effective except with the consent of the holders of all Bonds then outstanding
if as a result thereof the amounts payable to the Lessor under the Lease (other
than payments which are specifically excluded from the trust estate)
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and assigned to the Trustee under the Indenture shall not be sufficient to pay
when due the principal of, premium, if any, and interest on, the Bonds.
The holders of not less than a majority in aggregate unpaid principal
amount of the Bonds outstanding must consent to and approve the substance of any
supplemental indenture which adds to or changes the rights and obligations of
the holders of the Bonds and of TU Electric and the Lessor under the Indenture.
However, without the consent of the holder of each outstanding Bond affected
thereby, no such supplemental indenture may effect (i) a change in the stated
maturity or any interest payment date or Installment Payment Date of any Bond,
or a reduction in the principal amount thereof or the interest thereon or any
amount payable at maturity, on any Installment Payment Date or upon the
redemption thereof, or a change in the circumstances for redemption or in the
place of payment where, or the coin or currency in which, any Bond or the
interest thereon is payable, or an impairment of the right to institute suit for
the enforcement of any such payment of principal of or interest on or after the
maturity thereof (or, in the case of redemption, on or after the Redemption
Date) or a change in the dates or the amounts of any installment payments to be
made in respect of a Bond of any series, (ii) the creation of any lien prior to
or on a parity with the lien of the Indenture or the termination of the lien of
the Indenture or the deprivation of the holder of any Bond of the security
afforded by the lien of the Indenture, (iii) the termination of the Lease, a
reduction of the amounts payable under the Lease assigned to the Trustee or a
change in the time for the payment thereof so that such payments are less than
the amounts necessary to pay when due the scheduled payments of principal of and
interest on the Bonds, (iv) a reduction in the percentage in principal amount of
outstanding Bonds required for consent to such supplemental indenture or the
consent of whose holders is required for any waiver provided for in the
Indenture, or (v) a modification of the above provisions or the provisions of
the Indenture dealing with waivers of past defaults, except to increase any such
percentage or provide that certain other provisions of the Indenture cannot be
modified or waived without the consent of the holder of each Bond affected
thereby.
LIMITATIONS ON AMENDMENT OF DOCUMENTS
Without the consent of the holders of any Bonds outstanding, the parties to
the Operative Documents may modify, amend or supplement any of such documents
(other than the Indenture and its supplements), or may give any consent, waiver
or authorization thereunder, or may in good faith determine compliance with any
provision thereof provided that substantial compliance therewith would exist
regardless of such determination; provided, however, that no such modification,
amendment, supplement, consent, waiver, authorization or determination shall:
(i) without the consent of the holder of each Bond affected thereby,
modify, amend or supplement, or waive any provision of, the Lease in such way
(a) as to terminate the Lease, reduce the amounts payable by TU Electric under
the Lease assigned to the Trustee or change the time for the payment thereof
such that such payments are less than the amounts necessary to pay the principal
of, premium, if any, and interest on, the outstanding Bonds when due, (b) as to
consent to any assignment of the Lease or give any consent, waiver,
authorization or determination which would release TU Electric from its
obligation in respect of payment of basic rent, Casualty Value specified in the
Lease, or any other amounts payable upon the occurrence of an Event of Loss (as
specified in the Lease) or any other amount payable under the Lease and intended
to be used to pay the principal of or interest on the Bonds, in any way
inconsistent with clause (a) above except as provided in the Lease, or (c) as to
change the Lease Defaults (except to add Lease Defaults, to delete the
requirement for notice or to reduce any grace period); or
(ii) without the consent of the holders of a majority in aggregate unpaid
principal amount of the Bonds outstanding modify, amend or supplement or waive
any provision of (a) certain portions of the Operative Documents pertaining,
among other things, to the restrictions on TU Electric's consolidation,
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merger or transfer of substantially all of its assets, operation and maintenance
of the Leased Assets, treatment of the Facilities as personal property,
insurance coverage on the Facilities and any sublease, assignment or other
transfer of the Lessor's interests in the Leased Assets, or (b) the Facility
Agreements or the Ground Leases in a manner which would materially impair the
lien and security interest created by the Indenture.
CERTAIN RIGHTS OF THE LESSOR AND THE OWNER PARTICIPANT
The Lessor has the right at all times, together with the Trustee, to
receive from TU Electric all notices, certificates, reports, filings, opinions
of counsel and other documents pursuant to any Operative Document and to
exercise its consent rights to any amendment to any Operative Document.
In addition, so long as no Indenture Default shall have occurred and be
continuing, the Lessor shall have the right (i) to the exclusion of the Trustee,
(a) to exercise the rights, elections and options of the Lessor to make any
decision or determination and to adjust basic rent, Casualty Value and
Termination Value, and enter into amendments to the Lease effecting such
adjustments, and (b) to exercise all rights of the Lessor with respect to
certain solicitations of bids and (ii) but not to the exclusion of the Trustee
(which shall also have the right), (a) to grant such consents as may be
requested under the Lease, (b) to exercise certain inspection rights under the
Lease, (c) to consent to and approve any sublessees under the Lease, (d) to
approve any other accountants, engineers or counsel to render certain services
pursuant to the Operative Documents, (e) to give notice to TU Electric of any
misrepresentation and (f) to amend any Operative Document to which the Lessor is
a party; provided that in the event an Indenture Default shall have occurred and
be continuing, the Trustee shall have all rights of the Lessor under the Lease
to modify, amend or supplement the Lease or give any consent, waiver,
authorization or approval thereunder; provided, further, that without the prior
written consent of the Lessor and the Owner Participant, and whether or not an
Indenture Default shall have occurred and be continuing, no such exercise of
rights, elections or options and no such amendment or supplement shall directly
or indirectly (1) modify any indemnities in favor of the Lessor or the Owner
Participant, (2) extend the term of the Lease or alter the amount or extend the
time of payment of basic rent, Casualty Value or Termination Value or alter or
amend certain purchase option, maintenance and insurance sections of the Lease,
(3) modify the Lease releasing TU Electric from its obligations in respect of
the payment of basic rent, Casualty Value or Termination Value or (4) modify the
meaning of any defined term in any Operative Document if the result thereof is
contrary to (1), (2) or (3) above.
The Lessor also has the right to seek specific performance of certain
insurance and maintenance covenants of TU Electric under the Lease and each of
the Lessor and the Owner Participant (to the exclusion of the Trustee) has the
right to enforce the payment of Excepted Payments (as defined in the Indenture)
due and payable to it.
RELEASES
The Trustee shall release from the lien of the Indenture (i) property taken
by eminent domain by, or by right of purchase of, any governmental subdivision,
body, or agency, which taking does not constitute an Event of Loss, upon receipt
of the consideration therefor, or (ii) components in respect of the Leased
Assets the removal of which will not materially impair or reduce the operating
capacity, cost efficiency, utility or value of the Leased Assets. In addition,
components in respect of the Facilities which have become worn out, destroyed,
obsolete or damaged beyond repair may be removed by the Lessor without the
release of the Trustee. All replacement components shall become subject to the
lien of the Indenture.
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DISCHARGE OF LIEN
The Indenture will cease to be in effect with respect to the Bonds of a
particular stated maturity, if at any time (i) the principal of and interest on,
all Bonds of such stated maturity have been paid, (ii) all Bonds of such stated
maturity theretofore authenticated and delivered have been delivered to the
Trustee for cancellation or (iii) there has been irrevocably deposited with the
Trustee as trust funds the entire amount in cash necessary to pay, or direct
obligations of the United States of America maturing in such amounts and at such
times as will ensure the availability of cash sufficient to pay, at stated
maturity, and including all payment dates or upon redemption, the principal of
and interest on, all such Bonds and, in any such case, all other sums payable
with respect to the Bonds of such stated maturity have been paid. In such event,
the holders of the Bonds of such stated maturity will no longer be entitled to
the benefits of the Indenture.
THE TRUSTEE
The Indenture provides that upon the occurrence of an Indenture Default,
the Trustee will exercise such of the rights and powers vested in it by the
Indenture, and will use the same degree of care and skill, as a prudent person
would exercise under the circumstances in the conduct of his or her own affairs.
The Trustee will not be liable for any error of judgment made in good faith,
unless the Trustee was negligent in ascertaining the pertinent facts, or for any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the holders of a majority in aggregate principal amount of the
Bonds outstanding. Subject to such provisions, the Trustee will be under no
obligation to exercise any of its rights and powers under the Indenture at the
request of any holder of Bonds then outstanding unless such holder has offered
to the Trustee reasonable security or indemnity. The Indenture provides that the
Trustee may acquire and hold the Bonds and, subject to certain conditions, may
otherwise deal with the Lessor and TU Electric with the same rights it would
have if it were not the Trustee.
In the absence of actual knowledge of an officer of the Trustee, the
Trustee shall not be deemed to have knowledge of an Indenture Default (except
the failure of TU Electric to pay any installment of basic rent when the same
shall become due) unless notified in writing by any holder of a Bond, the Owner
Participant, the Lessor or TU Electric.
The First National Bank of Chicago (First Chicago), which is an affiliate
of the Trustee, has a commitment to lend up to $70,000,000 to Texas Utilities
and TU Electric under a credit agreement. Texas Utilities and TU Electric also
maintain various banking and investment management relationships with First
Chicago and the Trustee.
DESCRIPTION OF THE LEASE
The statements under this caption are summaries and do not purport to be
complete. The summaries are qualified in their entirety by reference to the
Lease, a copy of which has been included as an exhibit to the Registration
Statement.
TERMS AND RENTALS
The Lessor acquired the Leased Assets on December 6, 1989 and leased them
to TU Electric for a term expiring on June 30, 2018, unless earlier terminated
or extended as described below. Basic rent, the payment of which commenced
January 1, 1991, is required to be paid by TU Electric under the Lease in
immediately available funds on each January 1 and July 1. If the scheduled due
date is not a Business Day, such rent is required to be paid in immediately
available funds on the next succeeding Business Day. The basic rent payable on
each scheduled payment date is required to be
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in an amount that is at least equal to the aggregate amount of principal and
accrued interest due and payable on the outstanding Bonds on such date. During
such time as the Indenture is in effect, each payment of basic rent and all
other payments (except those that are not subject to the lien of the Indenture)
to be made by TU Electric under the Lease must be made to the Trustee and
applied, first, to the payment of interest (as well as interest on overdue
principal and interest to the extent permitted by law) then due and unpaid on
the outstanding Bonds, and, second, to the payment of principal then due and
unpaid on the Bonds. The balance of any such payments will be paid by the
Trustee to the Lessor or as the Lessor may direct. (See FLOW OF FUNDS FOR DEBT
SERVICE PAYMENTS ON THE BONDS). For a description of the application of payments
upon the occurrence of an Indenture Default, see DESCRIPTION OF THE INDENTURE -
"Remedies."
NET LEASE/MAINTENANCE
The Lease is a net lease. Payments of basic rent and certain other amounts
under the Lease by TU Electric must be made without notice, demand,
counterclaim, setoff, deduction or defense and without abatement, suspension,
deferment, diminution or reduction, except that TU Electric may offset certain
amounts so long as no such offset would reduce basic rent to an amount
insufficient to pay in full, when due, the scheduled payments of principal,
premium, if any, and interest on the outstanding Bonds. TU Electric is required
to use its best efforts, without cost or expense to the Lessor, to (i) maintain
the Facilities in accordance with prudent utility practice, (ii) operate,
service, maintain and repair all necessary or useful components of the
Facilities in accordance with prudent utility practice and the terms of any
insurance policy in effect with respect thereto so as not to violate the
conditions of any material contractor's or manufacturer's warranties, (iii)
comply with laws, regulations and governmental orders affecting the Facilities,
and (iv) keep and maintain proper books and records relating to the operation,
maintenance, repairs and replacement of the Facilities.
ALTERATIONS AND IMPROVEMENTS
TU Electric is required to make any alterations to the Facilities specified
in the Lease required by applicable laws, regulations and governmental orders or
by applicable insurance. The costs of all severable alterations will be paid by
TU Electric. The costs of nonseverable alterations may be financed through
additional non-recourse borrowings by the Lessor. The Owner Participant,
however, may elect to make an additional equity investment with respect to the
cost of any nonseverable alteration in such amount as, in its sole discretion,
it shall determine. In the event of the issuance of such additional non-recourse
debt or such investment by the Owner Participant, the basic rent under the Lease
will be adjusted to cover the additional debt service. TU Electric will retain
title to all severable alterations. At the end of the term of the Lease, the
Lessor will have the option to purchase or lease any such severable alteration
from TU Electric provided that TU Electric has not exercised its option to
purchase the Facility to which it relates. Title to all nonseverable alterations
shall vest in the Lessor.
SUBLEASE AND ASSIGNMENT
TU Electric is not permitted to assign, transfer or encumber its rights
under the Lease without the prior written consent of the Lessor, the Owner
Participant and the Trustee. However, TU Electric has the right, provided there
is no Lease Default, to sublease or assign the Leased Assets, in whole or in
part, without such consents if: (i) the assignment or sublease does not extend
beyond the basic term of the Lease; (ii) a copy of the sublease or assignment is
delivered to the Lessor, the Owner Participant and the Trustee within 30 days of
its execution; (iii) the sublease or assignment does not impair or diminish the
obligations or liabilities of TU Electric under the Lease or the other Operative
Documents, or result, in the reasonable opinion of the Owner Participant, in
adverse tax consequences to the Owner Participant; (iv) the sublease or
assignment is expressly subject and subordinate to the provisions of the Lease
and the other Operative Documents; (v) the sublessee or assignee has all
necessary legal and
17
<PAGE>
regulatory authority to discharge TU Electric's obligations and liabilities with
respect to the Facilities under the Lease and the other Operative Documents;
(vi) any assignee, other than an affiliate of TU Electric, shall have
established its creditworthiness to the reasonable satisfaction of the Owner
Participant; (vii) such sublease or assignment shall not render the Owner
Participant's investment in the Facilities illegal or subject it to burdensome
regulation; and (viii) for any sublease or assignment within two years of the
end of the term of the Lease, TU Electric shall be the operator of the
Facilities unless otherwise consented to by the Owner Participant.
INSURANCE
TU Electric is required, at its own cost and expense, to carry and maintain
or cause to be carried and maintained with insurers of recognized responsibility
(provided that such insurance is commercially available at a reasonable cost),
insurance covering physical loss or damage to the Facilities against such risks
and perils and in such form and in such amounts as is consistent with prudent
utility practice for similar companies operating like properties. The Lessor,
the Owner Participant and the Trustee are to be included as insureds. Any
insurance proceeds during a Lease Default and, at other times, proceeds in
excess of $3,000,000 are to be paid to the Trustee to be used to pay for repairs
and restoration.
TU Electric also is required, at its own cost and expense, to carry and
maintain with insurers of recognized responsibility public liability insurance
covering personal injury and bodily injury and property damage liability
covering claims arising out of the ownership, operation, maintenance, condition
or use of the Facilities (provided such insurance is commercially available at a
reasonable cost) in an amount not less than $25,000,000 per occurrence and
annual aggregate occurrences, subject to a deductible of up to $5,000,000 or
such other amount as may be approved from time to time by the Lessor. The
Lessor, the Owner Participant and the Trustee are to be included as insureds.
RENEWAL OPTIONS
If no Lease Default has occurred and is continuing, TU Electric has several
options, upon prior written notice to the Lessor, the Owner Participant and the
Trustee, to renew the Lease with respect to either Facility or both Facilities
upon its expiration on June 30, 2018, and upon the expiration of any renewal
term.
PURCHASE OPTIONS AND TERMINATION OPTIONS
TU Electric has the option to purchase either Facility or both Facilities
from the Lessor (except in the case of clause (iii) below, TU Electric only has
the option to purchase both Facilities) (i) at the expiration of the basic term
of the Lease for a purchase price equal to the lesser of (a) the fair market
sale value on such date of the Facility or Facilities to be purchased as
determined by the Owner Participant and the Lessee or as set forth in an
appraisal relating to such Facility or Facilities and (b) the sum of the
estimated fair market value of the Facility or Facilities to be purchased as of
such date and the estimated fair market value as of such date of any
nonseverable alterations to such Facility or Facilities which are to be
purchased or completed after the date of the appraisal and financed by
additional investments by the Owner Participant, (ii) at the expiration of a
renewal term for a purchase price equal to the fair market sale value of the
Facility or Facilities which were leased for such term, and (iii)(a) in the
event of certain consolidations, mergers or asset sales of TU Electric or (b)
upon an increase in TU Electric's tax indemnity obligations with respect to
certain Texas state income taxes in any year in an amount that exceeds $42,000
and exceeds 5% of basic rent payable under the Lease for such year; in each case
for a purchase price equal to the greater of (1) the sum of the Termination
Value on such date, the premium, if any, then payable upon the redemption of the
outstanding bonds issued under the Indenture, and the basic rent due on such
date, and (2) the sum of the fair market sale
18
<PAGE>
value of the Facilities on such date, the premium, if any, then payable upon the
redemption of the outstanding bonds issued under the Indenture, and the basic
rent due on such date; provided, that in the case of clause (iii), if TU
Electric should elect to assume the Bonds and all of the obligations of the
Lessor under the Indenture and the Bonds, TU Electric may credit against such
purchase price the principal of and accrued and unpaid interest to the date of
purchase on the outstanding Bonds. The foregoing notwithstanding, the Bonds are
not subject to optional redemption and, if TU Electric exercises its option to
purchase the Facilities in the case of clause (3) above, it must, subject to the
satisfaction of certain conditions, assume the Bonds and all of the obligations
of Lessor under the Indenture and the Bonds.
TU Electric has the option to terminate the Lease on or after July 1, 1997,
if TU Electric's Board of Directors determines that the Facilities are obsolete,
surplus or uneconomic for TU Electric's purposes and will no longer be used by
TU Electric. Following notice of such termination given to the Lessor and the
Trustee, TU Electric shall act as agent for the Lessor in arranging for the sale
of the Facilities to a non-affiliate of TU Electric. If no acceptable purchaser
can be found or if TU Electric intends to purchase the Facilities itself, the
Lease will terminate and TU Electric shall pay to the Lessor the greater of (a)
the fair market sale value of the Facilities and (b) the Termination Value in
effect on the termination date, provided, that TU Electric shall not directly or
indirectly use or operate the Facilities for its own account for a period of
five years from such termination date, except upon the prior payment of
$25,000,000 to the Owner Participant. If TU Electric does not elect to purchase
the Facilities itself, the Lessor may elect to retain the Facilities. As a
condition to the Lessor's right to retain the Facilities, the Lessor shall pay
to the Trustee an amount equal to the principal of, premium, if any, and unpaid
interest on the Bonds outstanding or deposit with the Trustee sufficient funds
and securities to discharge the lien of the Indenture (see DESCRIPTION OF THE
INDENTURE - "Discharge of Lien"). If the Lessor elects to retain the Facilities,
(i) TU Electric shall pay to the Lessor on the termination date any rent due on
such date and any premium payable on any outstanding Bond but shall not be
required to pay the Casualty Value, and (ii) the Lease shall terminate.
EVENTS OF LOSS
If an Event of Loss shall occur with respect to a Facility, TU Electric
shall pay to the Trustee the Casualty Value for such Facility. From the date of
the Event of Loss to and including the date of payment of such Casualty Value,
all rent shall continue to be paid when due. TU Electric is also required to
pay, simultaneously with the payment of such Casualty Value, all other sums due
and owing from TU Electric to the Lessor under the Operative Documents. Upon
such payment, the Lease shall terminate with respect to the Facility suffering
such Event of Loss, the obligations of TU Electric under the Lease with respect
to the Facility suffering such Event of Loss, subject to certain exceptions set
forth in the Lease, shall terminate and the Lessor shall transfer the Facility
with respect to which the Event of Loss has occurred to TU Electric or as TU
Electric shall direct, free and clear of the lien created by the Indenture.
Notwithstanding the foregoing, in the case of an Event of Loss resulting
from a determination by any governmental authority that the Lessor, the Trustee
or the Owner Participant, solely by reason of its participation in the sale and
lease transactions, is deemed to be, or is subject to regulation as, a Texas
Public Utility (as defined in the Lease), an "electric utility" or a "public
utility" or a "public utility holding company" or an affiliate of any of the
foregoing and such person shall have sent written notice to TU Electric and the
parties to the Participation Agreement that such person deems such regulation to
be materially burdensome, if TU Electric has duly executed and delivered an
assumption agreement in accordance with the Indenture, the obligation of TU
Electric to pay the Casualty Value shall be reduced by the principal amount of
the outstanding Bonds so assumed and not otherwise due on the date of such
payment.
19
<PAGE>
LEASE DEFAULT; LESSOR'S REMEDIES
Lease Defaults include: (i) failure by TU Electric to pay basic rent or
Casualty Value within ten days after it becomes due, or supplemental rent or
other amounts payable under the Lease within 15 days after notice; (ii) failure
by TU Electric to maintain insurance as required by the Lease; (iii) failure by
TU Electric to perform or observe any other covenant or agreement to be
performed or observed by it under the Lease or any Operative Document and such
failure shall continue for a period of 30 days after notice; provided, however,
that the continuance of such failure for 30 days after such notice shall not
constitute a default if (a) it is curable but cannot be cured within 30 days,
(b) TU Electric is diligently pursuing such cure and (c) such default does not
materially impair the rights of the Owner Participant or the Lessor in the
Leased Assets or under the Operative Documents or the security interest of the
Trustee under the Indenture; (iv) any representation or warranty made by TU
Electric in any Operative Document (other than the Tax Indemnity Agreement)
proves to be incorrect in any material respect when made and remains material
and uncured for a period of 30 days after notice; provided, however, that the
continuation of such misrepresentation shall not constitute a default if the
conditions of the proviso to clause (iii) above are met; and (v) certain
insolvency and bankruptcy events with respect to TU Electric.
If a Lease Default has occurred and is continuing and the Lessor has
declared the Lease to be in default, the Lessor may exercise one or more of the
remedies provided in the Lease, which include the right to terminate the Lease,
to take possession of the Leased Assets, and to hold, lease or sell the Leased
Assets free and clear of the rights of TU Electric. The Lessor may require TU
Electric to pay as liquidated damages any unpaid rent due under the Lease
through the payment date specified in such notice, plus one of the following
amounts as selected by the Lessor (together with interest on such amount from
the date specified in the notice to the date of actual payment):
(1) an amount equal to the excess, if any, of (i) the Termination Value
over (ii) the fair market rental value of the Facilities during the remaining
term of the Lease after discounting such rental value semiannually to present
value;
(2) an amount equal to the excess, if any, of the Termination Value over
the fair market sale value of the Facilities as of such payment date;
(3) an amount equal to the highest of (i) such Termination Value, (ii)
such discounted fair market rental value and (iii) such fair market sale value
and, in this event, upon full payment by TU Electric of all sums due under the
Lease, the Lessor shall exercise its best efforts to promptly sell the
Facilities and pay over to TU Electric the net proceeds of such sale up to the
amount set forth in clause (i), (ii) or (iii) above paid by TU Electric; or
(4) an amount equal to the excess of (i) the present value of all
installments of basic rent from the date of such notice to the end of the basic
term of the Lease, over (ii) the present value as of such payment date of the
fair market rental value of the Facilities for the remainder of such basic term
of the Lease.
If the Lessor shall have sold the Facilities, the Lessor, in lieu of exercising
its right to require the payment as liquidated damages of the amounts specified
above, may require TU Electric to pay as liquidated damages, on the date of such
sale, any unpaid rent due and attributable to the use of the Facilities by TU
Electric through such payment date, plus the amount of any deficiency between
the Termination Value and the net proceeds of such sale, together with interest
from the date of such sale until the date of actual payment. For so long as any
Bonds shall be outstanding, the rights of the Lessor described in this section
have been assigned to the Trustee.
20
<PAGE>
CERTAIN TERMS OF THE PARTICIPATION AGREEMENT
The statements under this caption summarize certain provisions of the
Participation Agreement and do not purport to be complete. The summaries are
qualified in their entirety by reference to the Participation Agreement, a copy
of which has been included as an exhibit to the Registration Statement.
MERGER; CONSOLIDATION; MAINTENANCE OF CORPORATE EXISTENCE
Pursuant to the Participation Agreement, TU Electric has agreed that it
will at all times maintain its existence as a corporation under Texas law and
use its best efforts to maintain its status as an electric public utility and
will not consolidate with or merge with or into any other corporation or convey,
transfer or lease all or substantially all of its assets to any person unless:
(i) such successor corporation (if other than TU Electric) assumes the due and
punctual performance of each covenant and condition of the Operative Documents
to be performed or complied with by TU Electric; (ii) such successor is a
corporation organized under the laws of a state of the United States of America
or under Federal laws; (iii) such consolidation, merger or transfer will not
violate any provision of, or create a relationship which would be a material
violation of any law, regulation or governmental order; (iv) if such successor
corporation is other than TU Electric, TU Electric shall have delivered (a) an
opinion of counsel confirming the validity and enforceability of the agreement
referred to in (i) above, and as to compliance with clauses (ii) and (iii)
above, and (b) an officer's certificate stating that such consolidation, merger,
conveyance, transfer or lease and the agreement referred to in clause (i) above
complies with the Participation Agreement and all conditions precedent contained
therein; and (v) Owner Participant shall not have determined in good faith that
upon such consolidation, merger, transfer or lease such person would not have
any outstanding senior secured long-term debt securities rated investment grade
and (unless the Owner Participant consents thereto) there shall not have been a
public announcement that such rating is under review for a possible reduction.
Upon the consummation of any such transaction, the successor corporation
shall succeed to, and be substituted for, and may exercise every right and power
of, TU Electric under the Operative Documents with the same effect as if such
successor had been named therein. No such conveyance, transfer or lease of all
or substantially all of the assets of TU Electric shall have the effect of
releasing TU Electric or any successor corporation from its liability under the
Operative Documents without the prior written consent of the Lessor, the Owner
Participant and the Trustee.
TRANSFER OF OWNER PARTICIPANT'S INTEREST
The Owner Participant may at any time assign, convey or otherwise transfer
all or a part of its right, title and interest in and to the trust estate
(whether or not the same shall then have been pledged or mortgaged under the
Indenture, but subject to the lien of the Indenture) and in and to the Operative
Documents, but, only if: (i) the transferee is a permitted transferee of the
Owner Participant's interest under the Trust Agreement and TU Electric and the
Trustee shall have received advance notice of the transfer; (ii) the transferee
has entered into an agreement whereby the transferee confirms that it has the
requisite power and authority to enter into and to carry out the transactions
contemplated by each Operative Document to which the Owner Participant is or
will be a party, and that it will be deemed a party to each of such Operative
Documents and will agree to be bound by all of the terms of, and to undertake
all the obligations of the transferor contained in, each Operative Document with
respect to the interest being conveyed; (iii) the transfer will not violate any
provision of, or create a relationship which in any material respect would be in
violation of, any law, regulation or governmental order and shall not involve,
either directly or indirectly, the assets of any pension plan; (iv) an opinion
of counsel has been delivered as to the due authorization, execution, delivery,
validity and enforceability of the agreement referred to in (ii) above and as to
compliance with (iii) above; (v) the transferee will be (a) an
21
<PAGE>
affiliate of the Owner Participant, (b) a person with a net worth at the time of
such conveyance of not less than $50,000,000 and, unless TU Electric shall have
consented thereto, which is not an electric utility company or an affiliate
thereof or (c) such other person or persons as to which TU Electric shall have
consented; and (vi) after giving effect to such transfer, there will not be more
than three Owner Participants. Upon any such transfer by the Owner Participant,
the transferee shall be deemed an "Owner Participant" for all purposes of the
Operative Documents.
PLAN OF DISTRIBUTION
TU Electric will cause the Lessor to sell the Offered Bonds to each of the
Underwriters named on the front cover of this Prospectus, in the principal
amounts to be set forth in the Prospectus Supplement relating to such Offered
Bonds.
The Prospectus Supplement with respect to the Offered Bonds will set forth
the terms of the offering of such Offered Bonds and the proceeds to Lessor from
such sale, any underwriting discounts and other items constituting Underwriters'
compensation, any initial public offering price and any discounts or concessions
allowed or reallowed or paid to dealers. Any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
The Offered Bonds will be acquired by the Underwriters for their own
account and may be resold from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. TU Electric will agree to
indemnify the several Underwriters against certain liabilities, including
liabilities under the 1933 Act. Any underwriting agreement will provide that the
obligations of the Underwriters are subject to certain conditions precedent and
that the Underwriters will be obligated to purchase all the Offered Bonds if any
are purchased.
EXPERTS AND LEGALITY
The financial statements and financial statement schedule included in the
1994 10-K have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report included in the 1994 10-K, which is incorporated herein
by reference.
With respect to the unaudited interim financial information included in TU
Electric's Quarterly Reports on Form 10-Q incorporated herein by reference,
Deloitte & Touche LLP have applied limited procedures in accordance with
professional standards for reviews of such information. However, as stated in
any of their reports that are included in TU Electric's Quarterly Reports on
Form 10-Q, incorporated herein by reference, they did not audit and they do not
express an opinion on that interim financial information. Deloitte & Touche LLP
is not subject to the liability provisions of Section 11 of the 1933 Act for any
of its reports on such unaudited interim financial information because those
reports are not "reports" or a "part" of the Registration Statement filed under
the 1933 Act with respect to the Bonds prepared or certified by an accountant
within the meaning of Sections 7 and 11 of the 1933 Act.
The statements made as to matters of law and legal conclusions in any
accompanying Prospectus Supplement under the heading "Rate Proceedings" and in
the 1994 10-K under Part I, Item 1 - Business-Regulation and Rates and
Environmental Matters, incorporated herein by reference, have been reviewed by
Worsham, Forsythe & Wooldridge, L.L.P., Dallas, Texas, General Counsel for TU
Electric. All of such statements are set forth or incorporated by reference
herein in reliance upon the opinion of that firm given upon their authority as
experts. At June 30, 1995, members of the firm
22
<PAGE>
of Worsham, Forsythe & Wooldridge, L.L.P. owned approximately 47,000 shares of
the common stock of Texas Utilities.
The legality of the Offered Bonds will be passed upon for TU Electric by
Worsham, Forsythe & Wooldridge, L.L.P., and by Reid & Priest LLP, New York, New
York, of counsel to TU Electric, and for the Underwriters by Winthrop, Stimson,
Putnam & Roberts, New York, New York. However, all matters pertaining to
incorporation, titles to properties, franchises, licenses and permits, the lien
of the Indenture on property located in Texas and all other matters of Texas law
will be passed upon only by Worsham, Forsythe & Wooldridge, L.L.P.
23
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Filing fee -- Securities and Exchange Commission.......................... $ 28,136
*Fees of TU Electric's counsel:
Worsham, Forsythe & Wooldridge, L.L.P................................. 100,000
Reid & Priest LLP..................................................... 100,000
*Fees of the Lessor and the Trustee, including counsel..................... 100,000
*Auditors' fees............................................................ 25,000
*Rating agencies' fees..................................................... 50,000
*Printing including Registration Statement, prospectuses, exhibits, etc.... 30,000
*Miscellaneous expenses.................................................... 41,864
---------
*Total expenses........................................................ $475,000
=========
</TABLE>
--------------
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article IX of the Restated Articles of Incorporation of the Company provides
as follows:
"The Corporation shall reimburse or indemnify any former, present or
future director, officer or employee of the Corporation, or any person who
may have served at its request as a director, officer or employee of another
corporation, or any former, present or future director, officer or employee
of the Corporation who shall have served or shall be serving as an
administrator, agent or fiduciary for the Corporation or for another
corporation at the request of the Corporation (and his heirs, executors and
administrators) from and against all expenses and liabilities incurred by
him or them, or imposed on him or them, including, but not limited to,
judgments, settlements, court costs and attorneys' fees, in connection with,
or arising out of, the defense of any action, suit or proceeding in which he
may be involved by reason of his being or having been such director, officer
or employee, except with respect to matters as to which he shall be adjudged
in such action, suit or proceeding to be liable because he did not act in
good faith, or because of dishonesty or conflict of interest in the
performance of his duty.
"No former, present or future director, officer or employee of the
Corporation (or his heirs, executors and administrators) shall be liable for
any act, omission, step or conduct taken or had in good faith, which is
required, authorized or approved by any order or orders issued pursuant to
the Public Utility Holding Company Act of 1935, the Federal Power Act, or
any other federal or state statute regulating the Corporation or its
subsidiaries, or any amendments to any thereof. In any action, suit or
proceeding based on any act, omission, step or conduct, as in this paragraph
described, the provisions hereof shall be brought to the attention of the
court. In the event that the foregoing provisions of this paragraph are
found by the court not to constitute a valid defense, each such director,
officer or employee (and his heirs, executors and administrators) shall be
reimbursed for, or indemnified against, all expenses and liabilities
incurred by him or them, or imposed on him or them, including, but not
limited to, judgments, settlements, court costs and attorneys' fees, in
connection with, or arising out of, any such action, suit or proceeding
based on any act, omission, step or conduct taken or had in good faith as in
this paragraph described.
"The foregoing rights shall not be exclusive of other rights to which
any such director, officer or employee (or his heirs, executors and
administrators) may otherwise be entitled under any bylaw, agreement, vote
of shareholders or otherwise, and shall be available whether or not the
director, officer or employee continues to be a director, officer or
employee at the time of incurring such expenses and liabilities. In
furtherance, and not in limitation of the foregoing provisions of this
Article IX, the Corporation may indemnify and insure any such persons to the
fullest extent permitted by the Texas Business Corporation Act, as amended
from time to time, or the laws of the State of Texas, as in effect from time
to time."
II-1
<PAGE>
Article 2.02-1 of the Texas Business Corporation Act permits the Company,
in certain circumstances, to indemnify any present or former director, officer,
employee or agent of the Company against judgments, penalties, fines,
settlements and reasonable expenses incurred in connection with a proceeding in
which any such person was, is or is threatened to be, made a party by reason of
holding such office or position, but only to a limited extent for obligations
resulting from a proceeding in which the person is found liable on the basis
that a personal benefit was improperly received or in circumstances in which the
person is found liable in a derivative suit brought on behalf of the Company.
Article X of the Restated Articles of Incorporation of the Company provides
as follows:
"A director of the Corporation shall not be liable to the Corporation
or its shareholders for monetary damages for any act or omission in the
director's capacity as a director, except that this provision does not
eliminate or limit the liability of a director for:
(a) a breach of a director's duty of loyalty to the Corporation
or its shareholders;
(b) an act or omission not in good faith that constitutes a
breach of duty of a director to the Corporation or an act or omission
that involved intentional misconduct or a knowing violation of the law;
(c) a transaction from which a director received an improper
benefit, whether or not the benefit resulted from an action taken within
the scope of the director's office; or
(d) an act or omission for which the liability of a director is
expressly provided for by statute.
If the laws of the State of Texas are amended to authorize action further
eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited
to the fullest extent permitted by such laws as so amended. Any repeal or
modification of this Article X shall not adversely affect any right of
protection of a director of the Corporation existing at the time of such
repeal or modification."
Section 18 of the Company's Bylaws provides as follows:
"Section 18. Insurance, Indemnification and Other Arrangements.
Without further specific approval of the shareholders of the Corporation,
the Corporation may purchase, enter into, maintain or provide insurance,
indemnification or other arrangements for the benefit of any person who is
or was a director, officer, employee or agent of the Corporation or is or
was serving another entity at the request of the Corporation as a director,
officer, employee, agent or otherwise, to the fullest extent permitted by
the laws of the State of Texas, including without limitation Art. 2.02-1 of
the Texas Business Corporation Act or any successor provision, against any
liability asserted against or incurred by any such person in any such
capacity or arising out of such person's service in such capacity whether
or not the Corporation would otherwise have the power to indemnify against
any such liability under the Texas Business Corporation Act. If the laws of
the State of Texas are amended to authorize the purchase, entering into,
maintaining or providing of insurance, indemnification or other
arrangements in the nature of those permitted hereby to a greater extent
than presently permitted, then the Corporation shall have the power and
authority to purchase, enter into, maintain and provide any additional
arrangements in such regard as shall be permitted from time to time by the
laws of the State of Texas without further approval of the shareholders of
the Corporation. No repeal or modification of such laws or this Section 18
shall adversely affect any such arrangement or right to indemnification
existing at the time of such repeal or modification."
The Company has entered into agreements with its officers and directors
which provide, among other things, for their indemnification by the Company to
the fullest extent permitted by Texas law, unless a final adjudication
establishes that the indemnitee's acts were committed in bad faith, were the
result of active and deliberate dishonesty or that the indemnitee personally
gained a financial profit to which the indemnitee was not legally entitled.
These agreements further provide, under certain circumstances, for the
advancement of expenses and the implementation of other arrangements for the
benefit of the indemnitee.
The Company has insurance covering its expenditures which might arise in
connection with its lawful indemnification of its directors and officers for
their liabilities and expenses. Directors and officers of the Company also have
insurance which insures them against certain other liabilities and expenses.
II-2
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
PREVIOUSLY FILED*
---------------------------
WITH
FILE AS
EXHIBIT NUMBER EXHIBIT
------- ------ -------
<S> <C> <C> <C>
1 - Form of Underwriting Agreement.
4(a)(i) - Trust Indenture, Security Agreement and Mortgage, dated as of December 1,
1989, among the Owner Trustee, TU Electric and the Indenture Trustee,
including form of Secured Facility Bond, Initial Series.
4(a)(ii) - Form of Supplement No. 1 to Trust Indenture, Security Agreement and Mortgage.
4(b)(i) - Lease Agreement, dated as of December 1, 1989, between Lessor and TU Electric.
- Lease Supplement No. 1, dated December 31, 1990.
4(b)(iii) - Form of Lease Agreement Supplement No. 2.
4(c)(i) - Amended and Restated Participation Agreement, dated as of November 28, 1989, among
the Owner Trustee, The First National Bank of Chicago, as Original Indenture
Trustee, the Indenture Trustee, the Owner Participant, Mesquite Power Corporation
and TU Electric.
4(c)(ii) - Form of Participation Agreement Supplement No. 1.
5(a) - Opinion of Reid & Priest LLP.
5(b) - Opinion of Worsham, Forsythe & Wooldridge, L.L.P.
5(c) - Opinion of Shipman & Goodwin.
12 - Computation of Ratio of Earnings to Fixed Charges.
15 - Letter of Deloitte & Touche LLP regarding interim unaudited financial information.
23(a) - Independent Auditors' Consent.
23(b) - Consents of Worsham, Forsythe & Wooldridge, L.L.P., Reid & Priest LLP and Shipman &
Goodwin are contained in Exhibits 5(a), 5(b) and 5(c), respectively.
24 - Power of Attorney (see Page II-5).
25 - Statement of Eligibility and Qualification of American National Bank and Trust
Company of Chicago, as Indenture Trustee, on Form T-1.
99(a) - Permian Basin Deed and Bill of Sale, dated as of December 6, 1989, between
the Lessor and Mesquite Power.
99(b) - Assignment, Amendment and Restatement of Permian Basin Ground Lease dated as of
December 1, 1989, among Lessor, Mesquite Power and TU Electric.
99(c) - Permian Basin Facility Agreement, dated as of December 1, 1989, between
TU Electric and the Lessor.
99(d) - DeCordova Deed and Bill of Sale, dated as of December 6, 1989, between the
Lessor and Mesquite Power.
99(e) - Assignment, Amendment and Restatement of DeCordova Ground Lease, dated as of
December 1, 1989, among Lessor, Mesquite Power and TU Electric.
99(f) - DeCordova Facility Agreement, dated as of December 1, 1989, between TU Electric
and the Lessor.
99(g) 33-31893 28(g) - Trust Agreement, dated as of December 1, 1988, as amended by Trust Agreement
Supplement No.1 dated as of November 28, 1989, between Owner Participant and
the Lessor.
</TABLE>
_________
*Incorporated herein by reference.
II-3
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that the registrant need not file a post-effective
amendment to include the information required to be included by subsection
(i) or (ii) if such information is contained in periodic reports filed by
the registrant pursuant to Sections 13 or 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the registrant's Annual Report
pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 15
above, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
II-4
<PAGE>
POWER OF ATTORNEY
EACH DIRECTOR AND/OR OFFICER OF THE REGISTRANT WHOSE SIGNATURE
APPEARS BELOW HEREBY APPOINTS THE AGENTS FOR SERVICE NAMED IN THIS REGISTRATION
STATEMENT, AND EACH OF THEM SEVERALLY, AS HIS ATTORNEY-IN-FACT TO SIGN IN HIS
NAME AND BEHALF, IN ANY AND ALL CAPACITIES STATED BELOW, AND TO FILE WITH THE
SECURITIES AND EXCHANGE COMMISSION, ANY AND ALL AMENDMENTS, INCLUDING POST-
EFFECTIVE AMENDMENTS, TO THIS REGISTRATION STATEMENT, AND THE REGISTRANT HEREBY
ALSO APPOINTS EACH SUCH AGENT FOR SERVICE AS ITS ATTORNEY-IN-FACT WITH LIKE
AUTHORITY TO SIGN AND FILE ANY SUCH AMENDMENTS IN ITS NAME AND BEHALF.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL
OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF DALLAS, AND STATE OF TEXAS, ON THE 17TH DAY OF
AUGUST, 1995.
TEXAS UTILITIES ELECTRIC COMPANY
BY /S/ ERLE NYE
-------------------------------
(ERLE NYE, CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ERLE NYE PRINCIPAL EXECUTIVE
----------------------------------------------------- OFFICER AND DIRECTOR
(ERLE NYE, CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE)
/s/ H. DAN FARELL PRINCIPAL FINANCIAL
----------------------------------------------------- OFFICER
(H. DAN FARELL, SENIOR VICE PRESIDENT)
/s/ MARC D. MOSELEY PRINCIPAL ACCOUNTING
----------------------------------------------------- OFFICER
(MARC D. MOSELEY, CONTROLLER)
/s/ J.S. FARRINGTON DIRECTOR
-----------------------------------------------------
(J.S. FARRINGTON) AUGUST 17 , 1995
/s/ T.L. BAKER DIRECTOR
-----------------------------------------------------
(T.L. BAKER)
/s/ H. JARRELL GIBBS DIRECTOR
-----------------------------------------------------
(H. JARRELL GIBBS)
/s/ JOHN U. MARTIN DIRECTOR
-----------------------------------------------------
(JOHN U. MARTIN)
/s/ MICHAEL D. SPENCE DIRECTOR
-----------------------------------------------------
(MICHAEL D. SPENCE)
/s/ W.M. TAYLOR DIRECTOR
-----------------------------------------------------
(W.M. TAYLOR)
/s/ E.L. WATSON DIRECTOR
-----------------------------------------------------
(E.L. WATSON)
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
PREVIOUSLY FILED*
-----------------------
WITH SEQUENTIALLY
FILE AS NUMBERED
EXHIBIT NUMBER EXHIBIT PAGE
------- ------ ------- ------------
<S> <C> <C> <C>
1 - Form of Underwriting Agreement.
4(a)(i) - Trust Indenture, Security Agreement and Mortgage, dated as of December 1,
1989, among the Owner Trustee, TU Electric and the Indenture Trustee,
including form of Secured Facility Bond, Initial Series.
4(a)(ii) - Form of Supplement No. 1 to Trust Indenture, Security Agreement and Mortgage.
4(b)(i) - Lease Agreement, dated as of December 1, 1989, between Lessor and TU Electric.
4(b)(ii) - Lease Supplement No. 1, dated December 31, 1990.
4(b)(iii) - Form of Lease Agreement Supplement No. 2.
4(c)(i) - Amended and Restated Participation Agreement, dated as of November 28, 1989, among
the Owner Trustee, The First National Bank of Chicago, as Original Indenture
Trustee, the Indenture Trustee, the Owner Participant, Mesquite Power Corporation
and TU Electric.
4(c)(ii) - Form of Participation Agreement Supplement No. 1.
5(a) - Opinion of Reid & Priest LLP.
5(b) - Opinion of Worsham, Forsythe & Wooldridge, L.L.P.
5(c) - Opinion of Shipman & Goodwin.
12 - Computation of Ratio of Earnings to Fixed Charges.
15 - Letter of Deloitte & Touche LLP regarding interim unaudited financial information.
23(a) - Independent Auditors' Consent.
23(b) - Consents of Worsham, Forsythe & Wooldridge, L.L.P., Reid & Priest LLP and Shipman &
Goodwin are contained in Exhibits 5(a), 5(b) and 5(c), respectively.
24 - Power of Attorney (see Page II-5).
25 - Statement of Eligibility and Qualification of American National Bank and Trust
Company of Chicago, as Indenture Trustee, on Form T-1.
99(a) - Permian Basin Deed and Bill of Sale, dated as of December 6, 1989, between
the Lessor and Mesquite Power.
99(b) - Assignment, Amendment and Restatement of Permian Basin Ground Lease dated as of
December 1, 1989, among Lessor, Mesquite Power and TU Electric.
99(c) - Permian Basin Facility Agreement, dated as of December 1, 1989, between
TU Electric and the Lessor.
99(d) - DeCordova Deed and Bill of Sale, dated as of December 6, 1989, between the
Lessor and Mesquite Power.
99(e) - Assignment, Amendment and Restatement of DeCordova Ground Lease, dated as of
December 1, 1989, among Lessor, Mesquite Power and TU Electric.
99(f) - DeCordova Facility Agreement, dated as of December 1, 1989, between TU Electric
and the Lessor.
99(g) 33-31893 28(g) - Trust Agreement, dated as of December 1, 1988, as amended by Trust Agreement
Supplement No.1 dated as of November 28, 1989, between Owner Participant and
the Lessor.
</TABLE>
_________
*Incorporated herein by reference.
<PAGE>
EXHIBIT 1
SECURED FACILITY BONDS
----------------------
TEXAS UTILITIES ELECTRIC COMPANY
Secured Facility Bonds, % Series due ,
Secured Facility Bonds, % Series due ,
UNDERWRITING AGREEMENT
----------------------
__________, 1995
Ladies and Gentlemen:
1. Introduction. Texas Utilities Electric Company (the "Company")
------------
proposes to cause Shawmut Bank Connecticut, National Association ("Shawmut"), a
national banking association, not individually but solely as owner trustee (the
"Owner Trustee") under that certain trust agreement dated as of December 1,
1988, as amended by Trust Agreement Supplement No. 1 thereto, dated as of
November 28, 1989 (the "Trust Agreement"), to issue and sell jointly and
severally to you (the "Underwriters") an aggregate of $ principal
amount of Secured Facility Bonds of two stated maturities, an aggregate
of $ principal amount of Secured Facility Bonds, _____% Series,
due , (the " Bonds") and an aggregate of $ principal
amount of Secured Facility Bonds, _____% Series, due , (the "
Bonds") (collectively, the Bonds and the Bonds are hereinafter
referred to as the "Bonds").
<PAGE>
-2-
2. Description of Bonds. The Bonds are to be issued under a Trust
--------------------
Indenture, Security Agreement and Mortgage (the "Trust Indenture") dated as of
December 1, 1989, among the Owner Trustee, the Company and American National
Bank and Trust Company of Chicago, as indenture trustee (the "Indenture
Trustee"), and as it is to be amended and supplemented by a Trust Indenture,
Security Agreement and Mortgage Supplement No. 1 (the "Supplemental Indenture")
to be dated as of __________, 1995, in substantially the form heretofore
delivered to you, said Trust Indenture, as it is to be so amended and
supplemented, being hereinafter referred to as the "Indenture". All capitalized
terms used without definition herein shall have the meanings ascribed to such
terms in the Indenture.
3. Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to each Underwriter that:
(a) It has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3, including a prospectus
on __________, 1995 (Registration No. 33-_____) for the registration of
$_________ aggregate principal amount of Secured Facility Bonds under the
Securities Act of 1933, as amended (the "Securities Act"), and such
registration statement was declared effective by the Commission at _______,
Eastern Standard Time, on __________, 1995. References herein to the term
"Registration Statement" as of any date shall be deemed to refer to such
registration statement as amended or supplemented to such date, including
all documents incorporated by reference therein as of such date pursuant to
Item 12 of Form S-3 ("Incorporated Documents"). References herein to the
term "Prospectus" as of any date shall be deemed to refer to the prospectus
forming a part of registration statement No. 33-_____, as amended and
supplemented as of such date (other than by amendments and supplements
relating to Secured Facility Bonds other than the Bonds), including all
Incorporated Documents as of such date. References herein to the term
"Effective Date" shall be deemed to refer to the later of the time and date
registration statement No. 33-_____ was declared effective or the time and
date of the filing thereafter of the Company's most recent Annual Report on
Form 10-K if such filing is made prior to the Closing Date, as hereinafter
defined. The Company will not file after the date of this Agreement and
prior to the Closing Date, as hereinafter defined, any amendment to the
Registration Statement or supplement to the Prospectus without prior notice
to the Underwriters, or to which Winthrop, Stimson, Putnam & Roberts
("Counsel for the Underwriters") shall reasonably object in writing. For
the purposes of this Agreement, any
<PAGE>
-3-
Incorporated Document filed with the Commission on a date prior to the
Closing Date, shall be deemed an amendment or supplement to the
Registration Statement and the Prospectus.
(b) On the Effective Date the Registration Statement and the
Prospectus fully complied and at the Closing Date the Registration
Statement and the Prospectus and the Indenture will fully comply in all
material respects with the applicable provisions of the Securities Act, the
Trust Indenture Act of 1939, as amended ("Trust Indenture Act"), and the
applicable rules and regulations of the Commission thereunder; on the
Effective Date the Registration Statement did not, and at the Closing Date
the Registration Statement will not, contain an 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; on the
Effective Date, the Prospectus did not, and at the Closing Date, and on the
date it is filed with, or transmitted for filing to, the Commission
pursuant to Rule 424(b) of the General Rules and Regulations of the
Securities Act ("Rule 424"), the Prospectus will not, contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; and on said dates the
Incorporated Documents, taken together as a whole, fully complied or will
comply in all material respects with the applicable provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the
applicable rules and regulations of the Commission thereunder, and, when
read together with the Prospectus on said dates, did not and will not
contain an 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; provided that the foregoing representations and
warranties in this paragraph (b) shall not apply to statements or omissions
made in reliance upon information furnished in writing to the Company by,
or on behalf of, any Underwriter for use in connection with the preparation
of the Registration Statement or the Prospectus or to any statements in or
omission from the Statement of Eligibility and Qualification under the
Trust Indenture Act, or amendments thereto, of the Indenture Trustee under
the Indenture.
(c) The consummation of the transactions herein contemplated and the
fulfillment of the terms hereof will not result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed
<PAGE>
-4-
of trust or other agreement or instrument to which the Company is now a
party.
(d) The representations and warranties of the Company set forth in
subsection 9.1 of the Participation Agreement are repeated herein in full
to each Underwriter and are true as of the date hereof as if made the date
hereof, except, (i) to the extent that such representations and warranties
relate solely to an earlier date, in which case such representations and
warranties shall have been true and accurate on and as of such earlier
date, (ii) paragraph 9.1.6 thereof shall not apply to such actions the
Company has taken or will take in connection with the transactions
contemplated by this Agreement or by the Underwriting Agreement, dated
November 28, 1989, among the Owner Trustee, the Company and the
underwriters named therein (the "1989 Agreement") and (iii), with respect
to paragraphs 9.1.4. and 9.1.10 thereof, any reference to "Funding Date"
shall be deemed a reference to the date of this Agreement.
4. Purchase and Sale. On the basis of the representations and
-----------------
warranties herein contained, and subject to the terms and conditions herein set
forth, the Company shall cause the Owner Trustee to sell to each of the
Underwriters, and each Underwriter shall purchase from the Owner Trustee, at the
time and place herein specified, jointly and severally, the principal
amounts of the Bonds and the Bonds set forth opposite the name of such
Underwriter in Schedule I attached hereto at % of the principal amount of the
Bonds and at % of the principal amount of the Bonds, respectively. As
compensation for the services of the Underwriters as contemplated by this
Agreement (excluding the reimbursement of the cost of providing payment in
federal funds required by Section 5 hereof), the Company shall pay, or shall pay
to the Owner Trustee and shall cause the Owner Trustee to pay the Underwriters
an amount equal to $ (the "Underwriting Commission").
5. Time and Place of Closing. Delivery of the Bonds and payment
-------------------------
therefor by certified or official bank check or checks payable to the Owner
Trustee or its order in federal funds shall be made at the office of Reid &
Priest LLP, 40 West 57th Street, New York, New York, at 10:00 A.M., New York
Time, on __________, 1995, or at such other place, time and date as shall be
agreed upon in writing by the Company and you or established in accordance with
the following paragraph. The hour and date of such delivery and payment are
herein called the "Closing Date". The Bonds shall be delivered to you for your
respective accounts in fully registered form in such denominations of $1,000 or
any multiple thereof and registered in such names as you shall reasonably
request in writing not later than the close of
<PAGE>
-5-
business on the fourth business day prior to the Closing Date, or, to the extent
not so requested, registered in the names of the respective Underwriters in such
authorized denominations as the Company shall determine. The Company agrees to
cause the Bonds to be made available to you for checking purposes not later than
10:00 A.M., New York Time, on the second to last business day preceding the
Closing Date at the office of the Indenture Trustee in Chicago, Illinois or at
the office of its agent, The First Chicago Trust Company of New York, New York,
New York.
6. Covenants of the Company. The Company agrees that:
------------------------
(a) It will promptly deliver to each of you a signed copy of the
Registration Statement as originally filed or, to the extent a signed copy
is not available, a conformed copy, certified by an officer of the Company
to be in the form as originally filed, including all Incorporated Documents
and exhibits and all amendments thereto.
(b) It will deliver to the Underwriters, as soon as practicable after
the issue date of the Prospectus, as many copies of the Prospectus as you
may reasonably request.
(c) It will cause the Prospectus to be filed with, or transmitted for
filing to, the Commission pursuant to Rule 424 as soon as practicable and
advise you of the issuance of any stop order under the Securities Act with
respect to the Registration Statement or the institution of any proceedings
therefor of which the Company shall have received notice. The Company will
use its best efforts to prevent the issuance of any such stop order and to
secure the prompt removal thereof if issued.
(d) If, during such period of time (not exceeding nine months) after
the Prospectus has been filed with, or transmitted for filing to, the
Commission pursuant to Rule 424 as in the opinion of your counsel a
prospectus covering the Bonds is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event relating to or
affecting the Company or of which the Company shall be advised in writing
by you shall occur which in the Company's reasonable opinion should be set
forth in a supplement to, or an amendment of, the Prospectus in order to
make the Prospectus not misleading in the light of the circumstances when
it is delivered to a purchaser, the Company will, at its expense, amend or
supplement the Prospectus by either (i) preparing and furnishing to you at
the Company's expense a reasonable number of copies of a supplement or
supplements or an amendment or amendments to the Prospectus or (ii) making
an appropriate filing pursuant to Section 13 of the
<PAGE>
-6-
Exchange Act, which will supplement or amend the Prospectus so that, as
supplemented or amended, it will not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances when the
Prospectus is delivered to a purchaser, not misleading; provided that
should such event relate solely to the activities of any of the
Underwriters, then such Underwriter shall assume the expense of preparing
and furnishing any such amendment or supplement. In case any Underwriter is
required to deliver a prospectus after the expiration of nine months from
the date the Prospectus is filed with, or transmitted for filing to, the
Commission pursuant to Rule 424, the Company, upon your request, will
furnish to such Underwriter, at the expense of such Underwriter, a
reasonable quantity of a supplemental prospectus or supplements to the
Prospectus complying with Section 10(a) of the Securities Act.
(e) It will make generally available to its security holders, as soon
as practicable, an earning statement (which need not be audited) covering a
period of at least twelve months beginning not earlier than the first day
of the month next succeeding the month in which occurred the effective date
of the Registration Statement as defined in Rule 158 under the Securities
Act.
(f) It will and will cause the Owner Trustee to furnish such proper
information as may be lawfully required and otherwise cooperate in
qualifying the Bonds for offer and sale under the blue-sky laws of such
jurisdictions as you may designate, provided that neither the Owner Trustee
nor the Company shall be required to qualify as a foreign corporation or
dealer in securities, to file any consents to service of process under the
laws of any jurisdiction, or to meet any other requirements deemed by it to
be unduly burdensome.
(g) It will, except as herein provided, pay all expenses and taxes
(except transfer taxes) in connection with (i) the preparation and filing
by it of the Registration Statement, (ii) the issuance and delivery of the
Bonds as provided in Section 5 hereof, (iii) the preparation, execution and
filing by it of the Supplemental Indenture, (iv) the qualification of the
Bonds under blue-sky laws (including counsel fees not to exceed $______),
and (v) the printing and delivery to the Underwriters of reasonable
quantities of the Registration Statement and, except as provided in Section
6(d) hereof, of the Prospectus. The Company shall not, however, be
required
<PAGE>
-7-
to pay any amount for any expenses of either Underwriter, except that, if
this Agreement shall be terminated in accordance with the provisions of
Section 7, 8 or 10 hereof, the Company will reimburse you for the fees and
disbursements of Counsel for the Underwriters, whose fees and disbursements
the Underwriters agree to pay in any other event, and will reimburse the
Underwriters for their reasonable out-of-pocket expenses, in an aggregate
amount not exceeding $______, incurred in contemplation of the performance
of this Agreement. The Company shall not in any event be liable to any
Underwriter for damages on account of loss of anticipated profits.
7. Conditions of Underwriters' Obligations. The obligations of the
---------------------------------------
Underwriters to purchase and pay for the Bonds shall be subject to the accuracy
of the representations and warranties made herein on the part of the Company and
in the Owner Trustee's certificate attached hereto as Exhibit A on the part of
the Owner Trustee, to the performance by the Company of its obligations to be
performed hereunder prior to the Closing Date, and to the following conditions:
(a) The Prospectus shall have been filed with, or transmitted for
filing to, the Commission pursuant to Rule 424 prior to 6:00 P.M., New York
Time, on the second business day after the date of this Agreement, or such
other time and date as may be approved by you.
(b) No stop order suspending the effectiveness of the Registration
Statement shall be in effect, and no proceedings for that purpose shall be
pending before, or threatened by, the Commission on the Closing Date; and
you shall have received a certificate, dated the Closing Date and signed by
an officer of the Company, to the effect that no such stop order is in
effect and that no proceedings for such purpose are pending before, or to
the knowledge of the Company threatened by, the Commission.
(c) On the Closing Date, you shall have received from Worsham,
Forsythe & Wooldridge, L.L.P., General Counsel for the Company, an opinion
to the effect that:
(i) the Company is a validly organized and existing
corporation under the laws of the State of Texas;
(ii) the Company is a public utility corporation duly
authorized by its Articles of Incorporation, as amended, to conduct
the business which it is now conducting, is subject, as to rates and
services, to
<PAGE>
-8-
the jurisdiction of certain authorities, as set forth in the
Prospectus, as it may be amended or supplemented, and holds valid and
subsisting franchises, licenses, and permits authorizing it to carry
on the utility business in which it is engaged;
(iii) the Indenture and each Operative Document have been duly
and validly authorized by all necessary corporate action on the part
of the Company, have been duly and validly executed and delivered by
the Company, and are valid, binding and enforceable instruments of the
Company in accordance with their terms, except as limited by
bankruptcy, insolvency or other laws affecting the enforcement of
mortgagees' and other creditors' rights and general principles of
equity;
(iv) the Bonds conform as to legal matters with the statements
concerning them in the Prospectus, and are entitled to the security
afforded by the Indenture;
(v) this Agreement has been duly authorized, executed and
delivered by the Company;
(vi) other than as stated in the Registration Statement and
Prospectus, there are no material pending legal proceedings to which
the Company is a party or to which property of the Company is the
subject which depart from the ordinary routine litigation incident to
the kind of business conducted by the Company, and to the best of such
counsel's knowledge, no such proceedings are contemplated;
(vii) the portions of the information contained in the
Prospectus which are stated therein to have been made on such
counsel's authority have been reviewed by such counsel and, as to
matters of law and legal conclusions, are correct;
(viii) the Registration Statement, at the Effective Date, and the
Prospectus, at the time it was filed with or transmitted for filing
to, the Commission pursuant to Rule 424 (except as to the financial
statements and other financial and statistical data contained therein,
upon which such counsel need not pass), complied as to form in all
material respects with the applicable requirements of the Securities
Act and the Trust Indenture Act, and the applicable instructions,
rules and regulations of the Commission thereunder, and the documents
or portions thereof filed with the Commission pursuant to the Exchange
Act, and incorporated by
<PAGE>
-9-
reference in the Registration Statement and the Prospectus pursuant to
Item 12 of Form S-3, (except as to the financial statements and other
financial and statistical data contained or incorporated by reference
therein, upon which such counsel need not pass), at the time they were
filed with the Commission, complied as to form in all material
respects with the requirements of the Exchange Act and the applicable
instructions, rules and regulations of the Commission thereunder. In
passing upon the form of the Registration Statement and the form of
the Prospectus such counsel may necessarily assume the correctness and
completeness of the statements made to such counsel or included in the
Registration Statement and the Prospectus by the Company and take no
responsibility therefor, except insofar as such statements relate to
such counsel and as set forth in paragraph (iv) above. Nothing has
come to such counsel's attention that would lead such counsel to
believe that, at the Effective Date, the Registration Statement
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, at the time
it was filed with (or transmitted for filing to) the Commission
pursuant to Rule 424 or at the Closing Date, contained or contains an
untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; the Registration Statement has become and is effective
under the Securities Act; and to such counsel's best knowledge, no
proceedings for a stop order with respect thereto are pending or
threatened under Section 8 of the Securities Act. Such counsel need
not express any opinion or belief as to the financial statements or
other financial or statistical data contained in the Registration
Statement or Prospectus;
(ix) the Indenture is duly qualified under the Trust Indenture
Act; and
(x) no other approval, authorization, consent or order of any
public board or body (other than in connection or in compliance with
the blue-sky laws of any jurisdiction) is legally required for the
authorization of the issue and sale of the Bonds under this Agreement.
Such counsel has reviewed with officers and employees of the Company
the circumstances
<PAGE>
-10-
under which the Company conducts its electric operations and is of the
opinion that neither the Company nor the Owner Trustee is a "public
utility" within the meaning of the Federal Power Act and that
authorization by the Federal Energy Regulatory Commission of the issue
of Bonds is not required.
In rendering such opinion, such counsel may rely upon the opinion of Reid &
Priest LLP, referred to in paragraph (d) below, as to all matters governed
by New York law and the opinion of Shipman & Goodwin, referred to in
paragraph (f) below, as to all matters governed by Connecticut law and
federal banking law.
(d) On the Closing Date, you shall have received from Reid & Priest
LLP, special counsel for the Company, an opinion covering the matters in
paragraphs (iii)-(v) and (viii)-(x) in paragraph (c) above, and, in
addition, to the effect that the statements contained in the Prospectus
under the captions "Security and Source of Payment for the Bonds",
"Description of the Bonds", "Description of the Indenture", "Description of
the Lease", and "Certain Terms of the Participation Agreement", insofar as
such statements constitute summaries of documents referred to therein,
fairly present the information called for with respect to such documents or
matters. In giving such opinion, such counsel may rely upon the opinion of
Worsham, Forsythe & Wooldridge, L.L.P., referred to in paragraph (c) above,
as to all matters governed by Texas law and the opinion of Shipman &
Goodwin, referred to in paragraph (f) below, as to all matters governed by
Connecticut law and federal banking law.
(e) On the date of this Agreement and on the Closing Date you shall
have received from Deloitte & Touche LLP a letter to the effect that (i)
they are independent certified public accountants with respect to the
Company, within the meaning of the Securities Act and the applicable
published rules and regulations thereunder, (ii) in their opinion, the
financial statements audited by them and included or incorporated by
reference in the Prospectus comply as to form in all material respects with
the applicable accounting requirements of the Exchange Act and the
published rules and regulations thereunder, (iii) on the basis of a reading
of the unaudited amounts of operating revenues and net income included or
incorporated by reference in the Prospectus and the related financial
statements from which these amounts were derived, the latest available
unaudited financial statements of the Company, the minute books of the
Company, and inquiries of officers of the Company who have
<PAGE>
-11-
responsibility for financial and accounting matters (it being understood
that the foregoing procedures do not constitute an audit made in accordance
with generally accepted auditing standards and would not necessarily reveal
matters of significance with respect to the comments made in such letter,
and accordingly that Deloitte & Touche LLP makes no representation as to
the sufficiency of such procedures for the several Underwriters' purposes),
nothing has come to their attention which caused them to believe that (A)
the unaudited financial statements incorporated by reference in the
Prospectus were not determined in accordance with generally accepted
accounting principles applied on a basis substantially consistent with that
of the corresponding amounts in the latest available audited financial
statements, (B) the unaudited amounts of operating revenues and net income
of the Company included or incorporated by reference in the Prospectus were
not determined on a basis substantially consistent with that of the
corresponding amounts in the audited statements of income incorporated by
reference in the Prospectus, (C) for the twelve months ended as of the date
of the latest available financial statements of the Company, there were any
decreases in operating revenues or net income as compared with the
comparable period of the preceding year, and (D) at a specified date not
more than five days prior to the date of such letter, there was any change
in the capital stock of the Company, short-term bank loans, commercial
paper, notes payable to Texas Utilities Company or long-term debt of the
Company or decrease in its net assets, in each case as compared with
amounts shown in the most recent balance sheet incorporated by reference in
the Prospectus, except in all instances for changes or decreases that the
Prospectus discloses have occurred or may occur, or which are occasioned by
the declaration of a regular quarterly dividend or the acquisition of long-
term debt for sinking fund purposes, or which are described in such letter,
and (iv) they have compared the dollar amounts (or percentages or ratios
derived from such dollar amounts) and other financial information included
or incorporated by reference in the Registration Statement and the
Prospectus as reasonably requested by the Underwriters (in each case to the
extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the Company
subject to the internal controls of the Company's accounting system or are
derived indirectly from such records by analysis or computation) with the
results obtained from inquiries, a reading of such general accounting
records and other procedures specified in such letter, and have found such
dollar amounts, percentages
<PAGE>
-12-
and other financial information to be in agreement with such results,
except as otherwise specified in such letter.
(f) On the Closing Date, you shall have received (i) an officer's
certificate of Owner Trustee in the form attached hereto as Exhibit A and
(ii) the opinion of Shipman & Goodwin, counsel for the Owner Trustee, to
the effect that:
(i) Shawmut is a national banking association validly existing
in good standing under the banking laws of the United States of
America, and has the corporate power and authority to enter into and
perform its obligations under this Agreement, the Indenture and each
Operative Document to which the Owner Trustee is a party and to issue,
execute and deliver the Bonds;
(ii) neither the execution, delivery and performance by the
Owner Trustee of this Agreement, the Indenture and each Operative
Document to which the Owner Trustee is a party nor the issuance of the
Bonds by the Owner Trustee, did at any relevant time or will require
Shawmut or the Owner Trustee, as the case may be, to obtain any
consent to or approval of, give notice to, register with, obtain an
exemption from, or take any other action with respect to, any federal
or Connecticut governmental authority or agency governing the trust
powers of Shawmut or the Owner Trustee, as the case may be, other than
approvals that may be required under state securities law;
(iii) to the best of such counsel's knowledge, there are no
pending or threatened actions, proceedings or governmental
investigations before any court, arbitrator or administrative agency
governing the trust powers of Shawmut to which Shawmut is a party
that, if adversely determined to Shawmut, would materially adversely
affect the ability of the Owner Trustee to perform its respective
obligations under this Agreement, the Indenture, or each Operative
Document to which the Owner Trustee is a party;
(iv) the Bonds have been duly authorized, and, when executed
and authenticated by the Indenture Trustee in accordance with the
provisions of the Indenture and delivered to and paid for by the
Underwriters in accordance with the terms of this Agreement, will be
valid and binding obligations of the Owner Trustee and will be
entitled to the benefits of the Indenture;
<PAGE>
-13-
(v) the Indenture and each Operative Document to which the
Owner Trustee is a party have been duly authorized, executed and
delivered by the Owner Trustee and are valid and binding agreements of
Owner Trustee; neither the execution, delivery and performance by the
Owner Trustee of this Agreement, the Indenture and each Operative
Document to which the Owner Trustee is a party nor the issuance of the
Bonds by the Owner Trustee will contravene any provision of applicable
law or Shawmut's charter or by-laws or any law, rule or regulation
governing the trust powers of Shawmut or any agreement or other
instrument and no consent, approval or authorization of any federal or
Connecticut governmental body or agency governing the trust powers of
Shawmut is required for the performance of this Agreement, the
Indenture and each Operative Document to which the Owner Trustee is a
party by the Owner Trustee, except such as are specified and have been
obtained; and
(vi) to the best of such counsel's knowledge, there exist no
mortgages, security interests, liens or other encumbrances affecting
or which may affect the rights, title and interest of the Owner
Trustee in or to the Indenture Estate resulting from claims against
Shawmut, in its individual capacity, unrelated to the Owner Trustee's
ownership of the Facilities and leasehold interest in the Ground
Interests or the administration of the trust established by the Trust
Agreement.
(g) On the Closing Date, you shall have received from Winthrop,
Stimson, Putnam & Roberts, Counsel for the Underwriters, an opinion
covering the matters in paragraphs (iii)-(v) and (viii)-(x) in paragraph
(c) above. In rendering such opinion, such counsel may rely as to all
matters of Texas law upon the opinion referred to in paragraph (c) above.
(h) Since the most recent date as of which information is given in
the Registration Statement or the Prospectus, there shall not have been any
material adverse change in the business, property or financial condition of
the Company and, since such dates, there shall not have been any material
transaction entered into by the Company, in each case other than
transactions in the ordinary course of business and transactions
contemplated by the Registration Statement or Prospectus, as they may be
amended or supplemented, and at the Closing Date you shall have received a
certificate to such effect dated the Closing Date and signed by an officer
of the Company.
<PAGE>
-14-
(i) The conditions precedent to a refunding of the Secured Facility
Bonds, Initial Series, as set forth in Section ___ of Supplement No. 1 to
the Participation Agreement dated as of __________, 1995 among the Owner
Trustee, the Indenture Trustee, the Owner Participant and the Company (the
"Participation Agreement Supplement"), shall have been met on or prior to
the Closing Date.
(j) On the Closing Date, you shall have received a copy of each
opinion delivered pursuant to subsection ___ of the Participation Agreement
Supplement and a copy of each opinion delivered by __________, special
counsel for the Owner Participant, the Law Department of American National
Bank and Trust Company of Chicago, counsel for the Indenture Trustee,
Worsham, Forsythe & Wooldridge, L.L.P., General Counsel for the Company,
Reid & Priest LLP, special counsel for the Company, and Shipman & Goodwin,
counsel for the Owner Trustee, pursuant to paragraph 11.1.8 of the
Participation Agreement, in each case together with a letter addressed to
you advising you that you are entitled to rely upon the opinion attached
thereto as fully as if such opinion were addressed to you.
(k) On the Closing Date, the Company shall deliver, or shall have
delivered to the Owner Trustee and caused the Owner Trustee to have
delivered to the Underwriters a wire transfer or transfers payable in
federal funds or a certified or official bank check or checks payable in
New York Clearing House funds in an amount equal to the Underwriting
Commission plus an amount sufficient to reimburse the Underwriters for the
cost of providing payment in federal funds required by Section 5 hereof.
(l) All legal proceedings to be taken in connection with the issuance
and sale of the Bonds shall have been satisfactory in form and substance to
Counsel for the Underwriters.
In case any of the conditions specified above in this Section 7 shall
not have been fulfilled, this Agreement may be terminated by the Underwriters
which have agreed to purchase in the aggregate 50% or more of the principal
amount of Bonds upon notice thereof to the Company. Any such termination shall
be without liability of any party to any other party except as otherwise
provided in Sections 6(g) and 9 hereof.
<PAGE>
-15-
8. Conditions of the Owner Trustee's Obligations. The obligation of
---------------------------------------------
the Owner Trustee to deliver the Bonds shall be subject to the conditions that
the Prospectus shall have been filed with, or transmitted for filing to the
Commission pursuant to Rule 424 prior to 6:00 P.M., New York Time, on the second
business day after the date of this Agreement or such other time and date as may
be approved by the Company, and no stop order suspending the effectiveness of
the Registration Statement shall be in effect at the Closing Date and no
proceedings for that purpose shall be pending before, or threatened by, the
Commission at the Closing Date. In case these conditions shall not have been
fulfilled, this Agreement may be terminated by the Company upon notice thereof
to you. Any such termination shall be without liability of any party to any
other party except as otherwise provided in Sections 6(g) and 9 hereof.
9. Indemnification. (a) The Company shall indemnify, defend and
---------------
hold harmless each Underwriter and each person who controls any Underwriter
within the meaning of Section 15 of the Securities Act from and against any and
all losses, claims, damages or liabilities, joint or several, to which they or
any of them may become subject under the Securities Act or any other statute or
common law and shall reimburse each such Underwriter and controlling person for
any legal or other expenses (including, to the extent hereinafter provided,
reasonable counsel fees) incurred by them in connection with investigating any
such losses, claims, damages or liabilities or in connection with defending any
actions, insofar as such losses, claims, damages, liabilities, expenses or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus prior to
the Effective Date of the Registration Statement, or in the Registration
Statement or the Prospectus or the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading; provided, however, that the indemnity agreement contained in
this Section 9 shall not apply to any such losses, claims, damages, liabilities,
expenses or actions arising out of, or based upon, any such untrue statement or
alleged untrue statement, or any such omission or alleged omission, if such
statement or omission was made in reliance upon information furnished in writing
to the Company by either Underwriter, through you or otherwise, for use in
connection with the preparation of the Registration Statement or the Prospectus
or any amendment or supplement to either thereof, or arising out of, or based
upon, statements in or omissions from that part of the Registration Statement
which shall constitute the Statement of Eligibility under the Trust Indenture
Act of the Indenture Trustee under the Indenture; and provided further, that the
<PAGE>
-16-
indemnity agreement contained in this Section 9 shall not inure to the benefit
of either Underwriter (or of any person controlling such Underwriter) on account
of any such losses, claims, damages, liabilities, expenses or actions arising
from the sale of the Bonds to any person if a copy of the Prospectus (exclusive
of the Incorporated Documents) shall not have been given or sent to such person
by or on behalf of such Underwriter with or prior to the written confirmation of
the sale involved unless, with respect to the delivery of any amendment or
supplement to the Prospectus, the alleged omission or alleged untrue statement
was not corrected in such amendment or supplement at the time of such written
confirmation. The indemnity agreement of the Company contained in this Section 9
and the representations and warranties of the Company contained in Section 3
hereof shall remain operative and in full force and effect regardless of any
termination of this Agreement or of any investigation made by or on behalf of
either Underwriter or any such controlling person, and shall survive the
delivery of the Bonds.
(b) Each Underwriter shall indemnify, defend and hold harmless the
Company, its officers and directors, the other Underwriters, and each person who
controls any thereof within the meaning of Section 15 of the Securities Act,
from and against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Securities
Act or any other statute or common law and shall reimburse each of them for any
legal or other expenses (including, to the extent hereinafter provided,
reasonable counsel fees) incurred by them in connection with investigating any
such losses, claims, damages or liabilities or in connection with defending any
actions, insofar as such losses, claims, damages, liabilities, expenses or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or the
Prospectus, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if such statement or omission was made in reliance upon information
furnished in writing to the Company by or on behalf of such Underwriter, through
you or otherwise, for use in connection with the preparation of the Registration
Statement or the Prospectus or any amendment or supplement to either thereof.
Each Underwriter hereby furnishes to the Company in writing expressly for use in
the Prospectus (i) the statements relating to offerings by the Underwriters on
the cover page, (ii) the statements in the _____ paragraph of page ____
concerning stabilization by the Underwriters, and (iii) under "Underwriting"
statements concerning the offering of the Bonds, and concerning market making
for the Bonds. The indemnity agreement of the respective
<PAGE>
-17-
Underwriters contained in this Section shall remain operative and in full force
and effect regardless of any termination of this Agreement or of any
investigation made by or on behalf of the Company, its directors or its
officers, either such Underwriter, or any such controlling person, and shall
survive the delivery of the Bonds.
(c) The Company and the several Underwriters each shall, upon the
receipt of notice of the commencement of any action against it, or any person
controlling it as aforesaid, in respect of which indemnity may be sought on
account of any indemnity agreement contained herein, promptly give written
notice of the commencement thereof to the party or parties against whom
indemnity shall be sought hereunder, but the omission so to notify such
indemnifying party or parties of any such action shall not relieve such
indemnifying party or parties from any liability which it or they may have to
the indemnified party otherwise than on account of such indemnity agreement. In
case such notice of any such action shall be so given, such indemnifying party
shall be entitled to participate at its own expense in the defense or, if it so
elects, to assume (in conjunction with any other indemnifying parties) the
defense of such action, in which event such defense shall be conducted by
counsel chosen by such indemnifying party or parties and satisfactory to the
indemnified party or parties who shall be defendant or defendants in such
action, and such defendant or defendants shall bear the fees and expenses of any
additional counsel retained by them; but if the indemnifying party shall elect
not to assume the defense of such action, such indemnifying party will reimburse
such indemnified party or parties for the reasonable fees and expenses of any
counsel retained by them; provided, however, if the defendants in any such
action include both the indemnified party and the indemnifying party and counsel
for the indemnifying party shall have reasonably concluded that there may be a
conflict of interest involved in the representation by such counsel of both the
indemnifying party and the indemnified parties, the indemnified party or parties
shall have the right to select separate counsel, satisfactory to the
indemnifying party, to participate in the defense of such action on behalf of
such indemnified party or parties (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel representing the indemnified parties who are parties to such
action).
(d) If the indemnification provided for in sub paragraph (a) or (b)
above shall be unenforceable under applicable law by an indemnified party, each
indemnifying party agrees to contribute to such indemnified party with respect
to any and all losses, claims, damages, liabilities and expenses for
<PAGE>
-18-
which each such indemnification provided for in subparagraph (a) or (b) above
shall be unenforceable, in such proportion as shall be appropriate to reflect
the relative fault of each indemnifying party on the one hand and the
indemnified party on the other in connection with the statements or omissions
which have resulted in such losses, claims, damages, liabilities and expenses,
as well as any other relevant equitable considerations; provided, however, that
no indemnified party guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any indemnifying party not guilty of such fraudulent misrepresentation. Relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such
indemnifying party or the indemnified party 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 each of the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subparagraph (d) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above.
10. Termination. This Agreement may be terminated, at any time prior
-----------
to the Closing Date, by the Underwriters which have agreed to purchase in the
aggregate 50% or more of the aggregate principal amount of the Bonds if (a)
after the date hereof and at or prior to the Closing Date there shall have
occurred any general suspension of trading in securities on the New York Stock
Exchange or there shall have been established by the New York Stock Exchange or
by the Commission or by any federal or state agency or by the decision of any
court, any general limitation on prices for such trading or any general
restrictions on the distribution of securities, or a general banking moratorium
declared by New York or federal authorities, or (b) there shall have occurred
any new material (i) outbreak of hostilities or (ii) other national or
international calamity or crisis, including, but not limited to, an escalation
of hostilities which existed prior to the date of this Agreement, and the effect
of any such event specified in clause (a) or (b) above on the financial markets
of the United States shall be such as to make it impracticable, in the
reasonable judgment of the Underwriters, for the Underwriters to enforce
contracts for the sale of the Bonds. This Agreement may also be terminated at
any time prior to the Closing Date by the Underwriters which have agreed to
purchase in the aggregate 50% or more of the principal amount of the Bonds, if,
in such Underwriters' reasonable judgment, the subject matter of any amendment
or supplement to
<PAGE>
-19-
the Registration Statement or the Prospectus (other than an amendment or
supplement relating solely to the activity of either Underwriter) prepared and
issued by the Company after the effectiveness of this Agreement shall have
disclosed a material adverse change in the business property or financial
condition of the Company which has materially impaired the marketability of the
Bonds. Any termination hereof pursuant to this Section 10 shall be without
liability of any party to any other party except as otherwise provided in
Section 6(g) and 9 hereof.
11. Miscellaneous. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT
-------------
SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement
shall inure to the benefit of the Company, the Underwriters and, with respect to
the provisions of Section 9 hereof, each director, officer and controlling
person referred to in said Section 9, and their respective successors. Nothing
herein is intended or shall be construed to give to any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
any provision in this Agreement. The term "successor" as used herein shall not
include any purchaser, as such purchaser, of any of the Bonds from either
Underwriter.
12. Notices. All communications hereunder shall be in writing, and,
-------
if to the Underwriters, shall be mailed or delivered to ________________ at the
applicable address on the first page of this Agreement, attention:
_______________, and to _______________ at the applicable address on the first
page of this Agreement, attention: _______________, or, if to the Company, shall
be mailed or delivered to it at Energy Plaza, 1601 Bryan Street, Dallas, Texas
75201, Attention: Treasurer.
<PAGE>
-20-
If the foregoing is in accordance with your understanding of our
agreement, please indicate your acceptance thereof in the space provided below
for that purpose, whereupon this letter and your acceptance shall constitute a
binding agreement between the Company and the Underwriters in accordance with
its terms.
Very truly yours,
TEXAS UTILITIES ELECTRIC COMPANY
By: ____________________________
Accepted and delivered as of
the date first above written
By:__________________________
Name:
Title:
By: _________________________
Name:
Title:
<PAGE>
SCHEDULE I
----------
$
Texas Utilities Electric Company
___________________
$ Secured Facility Bonds,
% Series, due ,
$ Secured Facility Bonds,
% Series, due ,
<TABLE>
<CAPTION>
PRINCIPAL PRINCIPAL
AMOUNT OF AMOUNT OF
NAME BONDS BONDS
---- --------- ---------
<S> <C> <C>
Total
</TABLE>
<PAGE>
Exhibit A
OWNER TRUSTEE CERTIFICATE
The undersigned, __________, Vice President of Shawmut Bank
Connecticut, National Association ("Shawmut"), a national banking association,
not individually but solely as owner trustee (the "Owner Trustee") under that
certain trust agreement dated as of December 1, 1988, as amended and
supplemented, and pursuant to Section 7(f) of that certain underwriting
agreement, dated __________, 1995, between Texas Utilities Electric Company and
the Underwriters named therein (the "Underwriting Agreement"), hereby certifies
as follows:
(a) The Owner Trustee has the corporate power and authority to issue,
execute and deliver the Bonds.
(b) The execution, delivery and performance by the Owner Trustee of
the Indenture and each Operative Document to which the Owner Trustee is a
party and the issuance, execution and delivery of the Bonds have been duly
authorized by all necessary corporate action on the part of the Owner
Trustee, and neither the execution and delivery thereof, nor the
consummation of the transactions contemplated by the Underwriting
Agreement, nor compliance by the Owner Trustee with any of the terms and
provisions thereof did or will (i) require any approval of stockholders of,
or approval or consent of any trustee or holders of any indebtedness or
obligations of Shawmut, except for such approvals and consents as have been
duly obtained and are in full force and effect, (ii) contravene any law of
the United States of America, or any rule and regulation thereunder, in
each case governing the trust powers of Shawmut, or any order of judgment
applicable to or binding on Shawmut, (iii) contravene or result in any
breach of or constitute any default under, or result in the creation of any
Lien upon any of its property (other than Permitted Interest Liens) under,
its charter or by-laws or any indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, bank loan or credit agreement, or
other agreement or instrument to which it is a party or by which it or its
properties may be bound or affected or (iv) require the consent or approval
or, the giving of notice to, the registration with, the recording or filing
of any document with, or the taking of any other action in respect of, any
federal or Connecticut governmental authority governing Shawmut's trust
powers except such as have been obtained, made or taken.
(c) Assuming that all actions that are required to be taken in
respect of the Bonds under the Securities Act, the
<PAGE>
-2-
Exchange Act and the Trust Indenture Act have been taken and are in effect,
the Bonds have been duly and validly authorized, and, when executed and
authenticated by the Indenture Trustee in accordance with the Indenture and
delivered to and paid for by the Underwriters will constitute legal, valid
and binding obligations of the Owner Trustee enforceable in accordance with
their terms and will be entitled to the lien of and benefits and security
provided by the Indenture.
(d) The representations and warranties of the Owner Trustee set forth
in subsection 6.1 of the Participation Agreement are repeated herein in
full to each Underwriter and are true as of the date hereof as if made the
date hereof, except, (i) to the extent that such representations and
warranties relate solely to an earlier date, in which case such
representations and warranties shall have been true and accurate on and as
of such earlier date and (ii) paragraph 6.1.7 thereof shall not apply to
such actions the Owner Trustee has taken or will take in connection with
the transactions contemplated by the Underwriting Agreement or by the 1989
Agreement.
Capitalized terms used herein without definition shall have the
meaning set forth in the Underwriting Agreement.
SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, not in
its individual capacity
but solely as Owner Trustee
By:___________________________
_________
Vice President
Dated: __________, 1995
<PAGE>
EXHIBIT 4(a)(i)
================================================================================
TRUST INDENTURE, SECURITY AGREEMENT AND MORTGAGE
Dated as of December 1, 1989
Among
THE CONNECTICUT NATIONAL BANK,
Not in its individual capacity,
except as expressly provided herein, but
solely as Owner Trustee
TEXAS UTILITIES ELECTRIC COMPANY
and
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
as Indenture Trustee
The Permian Basin Facility (which includes two combustion
turbine units with a total generating capacity of 130 MW)
Located in Ward County, Texas
- and -
The De Cordova Facility (which includes four combustion
turbine units with a total generating capacity of 260 MW)
Located in Hood County, Texas
================================================================================
MASTER FORM RECORDED BY AMERICAN
NATIONAL BANK AND TRUST COMPANY
OF CHICAGO, AS INDENTURE TRUSTEE.
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS.................................................................. 1
GRANTING CLAUSE........................................................... 1
ARTICLE ONE PROVISIONS OF GENERAL APPLICATION........................... 4
SECTION 1.01. Definitions................................................. 4
SECTION 1.02. Compliance Certificates and Opinions........................ 5
SECTION 1.04. Acts of Holders............................................. 6
SECTION 1.05. Requests, etc. to Indenture Trustee,
TU Electric, Owner Trustee and Owner
Participant ................................................ 7
SECTION 1.06. Notices to Holders; Waiver.................................. 8
SECTION 1.08. Effect of Heading and Table of Contents..................... 9
SECTION 1.09. Successors and Assigns...................................... 9
SECTION 1.10. Separability Clause......................................... 9
SECTION 1.11. Benefits of Indenture....................................... 9
SECTION 1.12. Governing Law............................................... 9
SECTION 1.13. Legal Holidays.............................................. 9
ARTICLE TWO THE BONDS................................................... 10
SECTION 2.01. Issuable in Series; Designations............................ 10
SECTION 2.02. Form and Denomination....................................... 10
SECTION 2.03. Equally and Ratably Secured Bonds........................... 10
SECTION 2.04. Execution of Bonds.......................................... 11
SECTION 2.05. Acknowledgment of Assignment................................ 11
SECTION 2.06. Temporary Bonds............................................. 11
SECTION 2.07. Registration, Transfer and Exchange......................... 12
SECTION 2.08. Mutilated, Destroyed, Lost and Stolen Bonds................. 13
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 2.09. Payment of Interest......................................... 13
SECTION 2.10. Persons Deemed Owners....................................... 15
SECTION 2.11. Cancellation................................................ 15
SECTION 2.12. Authentication, Execution, Delivery and
Dating of Bonds............................................. 15
SECTION 2.13. Source of Payments; Rights and Liabilities of
Owner Participant and Owner Trustee......................... 16
SECTION 2.14. Initial Series Bonds........................................ 17
SECTION 2.15. Additional Series of Bonds.................................. 17
SECTION 2.16. Assumption of Obligations by TU Electric.................... 19
ARTICLE THREE SATISFACTION AND DISCHARGE.................................. 20
SECTION 3.01. Satisfaction and Discharge of Indenture..................... 20
SECTION 3.02. Application of Deposited Money.............................. 22
ARTICLE FOUR RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME AND PROCEEDS FROM THE INDENTURE ESTATE............... 22
SECTION 4.01. Basic Rent, Interest on Overdue Installments
of Basic Rent and Prepayment of Interest.................... 22
SECTION 4.02. Amounts Received as Result of Event of Loss
or Early Termination........................................ 24
SECTION 4.03. Amounts Received After, or Held at Time of,
Indenture Event of Default under Article
Eight....................................................... 24
SECTION 4.05. Amounts Received for Which No Provision Is
Made........................................................ 26
SECTION 4.06. Certain Amounts to be Held in Case of
Indenture Event of Default.................................. 26
SECTION 4.07. Excepted Payments........................................... 27
ARTICLE FIVE COVENANTS................................................... 27
SECTION 5.01. Payment of Principal, Premium (if any) and
Interest.................................................... 27
SECTION 5.02. Discharge of Liens; Etc..................................... 27
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C>
SECTION 5.03. Money for Bond Payments to be Held in Trust................. 28
SECTION 5.04. Maintenance of Office or Agency............................. 28
SECTION 5.05. Title; Further Assurances; Recording........................ 29
SECTION 5.06. Opinions as to Indenture Estate............................. 30
SECTION 5.07. Performance of Obligations.................................. 31
SECTION 5.08. Amendments, Waivers, Etc. of Other Documents................ 31
SECTION 5.09. Annual Statement as to Compliance........................... 32
SECTION 5.10. Certain Rights of Owner Trustee and Owner
Participant.................................................. 32
ARTICLE SIX REDEMPTION OF BONDS......................................... 34
SECTION 6.01. Applicability of Article.................................... 34
SECTION 6.02. Redemption of the Initial Series Bonds...................... 34
SECTION 6.03. Notice to Indenture Trustee of Redemption................... 36
SECTION 6.04. Selection by Indenture Trustee of Bonds to be
Redeemed.................................................... 36
SECTION 6.05. Notice of Redemption........................................ 37
SECTION 6.06. Deposit of Redemption Price; Credit with
Respect to Surrender of Bonds............................... 38
SECTION 6.07. Bonds Payable on Redemption Date............................ 39
SECTION 6.08. Bonds Redeemed in Part...................................... 39
ARTICLE SEVEN SINKING FUND................................................ 40
SECTION 7.01. Sinking Fund Amounts and Dates.............................. 40
SECTION 7.02. Sinking Fund for Bonds...................................... 41
SECTION 7.03. Selection by Indenture Trustee of Bonds to be
Redeemed Through Operation
of Sinking Fund............................................. 42
ARTICLE EIGHT INDENTURE EVENTS OF DEFAULT; REMEDIES....................... 43
SECTION 8.01. Indenture Events of Default................................. 43
SECTION 8.02. Acceleration Upon Notice; Rescission........................ 45
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C>
SECTION 8.03. Suit; Possession; Title; Sale of Indenture
Estate...................................................... 46
SECTION 8.05. Actions for Ratable Benefit of Bondholders.................. 49
SECTION 8.06. Bondholders May Demand Enforcement of Rights
by Indenture Trustee........................................ 50
SECTION 8.08. Waiver of Past Defaults..................................... 51
SECTION 8.09. Right to Pay Rent; Bond Purchase; Substitute
Lease....................................................... 51
SECTION 8.10. Bondholder May Not Bring Suit Except under
Certain Conditions.......................................... 54
SECTION 8.11. Undertaking to Pay Court Costs.............................. 55
SECTION 8.12. Right of Bondholders to Receive Payment Not
to be Impaired.............................................. 55
SECTION 8.13. Waiver of Appraisal, Valuation, Stay, Right
to Marshalling.............................................. 55
SECTION 8.14. Remedies Cumulative; Delay or Omission Not a
Waiver...................................................... 56
ARTICLE NINE THE INDENTURE TRUSTEE....................................... 56
SECTION 9.01. Certain Duties and Responsibilities......................... 56
SECTION 9.02. Notice of Defaults.......................................... 58
SECTION 9.03. Certain Rights of Indenture Trustee......................... 58
SECTION 9.04. Not Responsible for Recitals or Issuance of
Bonds....................................................... 60
SECTION 9.05. Indenture Trustee and Authorized Agents May
Hold Bonds.................................................. 60
SECTION 9.06. Funds May Be Held by Indenture Trustee or
Paying Agent; Investments................................... 60
SECTION 9.07. Compensation and Reimbursement.............................. 61
SECTION 9.08. Disqualification; Conflicting Interests..................... 62
SECTION 9.09. Corporate Indenture Trustee Required;
Eligibility................................................. 67
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SECTION 9.10. Resignation and Removal; Appointment of
Successor.................................................. 68
SECTION 9.11. Acceptance of Appointment by Successor..................... 69
SECTION 9.12. Merger, Conversion, Consolidation or
Succession to Business..................................... 70
SECTION 9.13. Preferential Collection of Claims against any
Obligor.................................................... 70
SECTION 9.14. Maintenance of Agencies.................................... 75
SECTION 9.15. Co-Indenture Trustee or Separate Trustee................... 76
ARTICLE TEN BONDHOLDERS' LISTS AND REPORTS BY INDENTURE
TRUSTEE AND TU ELECTRIC.................................... 79
SECTION 10.01. TU Electric to Furnish Indenture Trustee
Names and Addresses of Bondholders......................... 79
SECTION 10.02. Preservation of Information; Communications
to Bondholders............................................. 79
SECTION 10.03. Reports by Indenture Trustee............................... 81
SECTION 10.04. Reports by TU Electric..................................... 83
ARTICLE ELEVEN SUPPLEMENTAL INDENTURES.................................... 84
SECTION 11.01. Supplemental Indentures Without Consent of
Bondholders................................................ 84
SECTION 11.02. Supplemental Indenture With Consent of
Bondholders................................................ 85
SECTION 11.03. Documents Affecting Immunity or Indemnity.................. 87
SECTION 11.04. Execution of Supplemental Indentures....................... 87
SECTION 11.05. Effect of Supplemental Indentures.......................... 87
SECTION 11.06. Conformity with Trust Indenture Act........................ 87
SECTION 11.07. Reference in Bonds to Supplemental
Indentures................................................. 87
ARTICLE TWELVE RELEASE OF PROPERTY........................................ 88
SECTION 12.01. Release of Property in the Event of
Condemnation............................................... 88
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
SECTION 12.02. Release of Security Interest in Components
for Reasons Other Than Condemnation........................ 88
SECTION 12.03. Removal of Components Without Release...................... 90
SECTION 12.04. Purchasers Not Bound to Inquire............................ 91
SECTION 12.05. Releases If Certain Defaults Exist......................... 91
SECTION 12.06. Indenture Trustee Appointed Attorney-in-Fact............... 91
ARTICLE THIRTEEN SUNDRY PROVISIONS........................................ 91
</TABLE>
APPENDIX A - Definitions
ATTACHMENT A - Form of Initial Series Bond
Schedule PBF - Permian Basin Facility
Schedule PBS - Permian Basin Site
Schedule DCF - De Cordova Facility
Schedule DCS - De Cordova Site
-vi-
<PAGE>
Reconciliation and Tie between Trust Indenture,
Security Agreement and Mortgage
dated as of December 1, 1989
among The Connecticut National Bank, as Owner Trustee,
Texas Utilities Electric Company and
American National Bank and Trust Company of Chicago,
as Indenture Trustee
and
Trust Indenture Act of 1939
<TABLE>
<CAPTION>
Section of
Section of Act Indenture
-------------- ---------
<S> <C>
310(a)(1) 9.09
(2) 9.09
(3) 9.15
(4) Not applicable
(b) 9.08 and 9.10
(c) Not applicable
311(a) 9.13(a)
(b) 9.13(b)
(c) Not applicable
312(a) 10.01
10.02(a)
(b) 10.02(b)
(c) 10.02(c)
313(a) 10.03(a)
(b) 10.03(b)
(c) 10.03(c)
(d) 10.03(d)
314(a) 10.04
(b) 5.06
(c)(1) 1.02
(2) 1.02
(3) Not applicable
(d) 12.01 and 12.02
(e) 1.02
315(a)(1) 9.01(a)(1)
(2) 9.01(a)(2)
315(a)(last clause) 9.01(a)(2)
(b) 9.02
(c) 9.01(b)
(d)(1) 9.01(c)(1)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Section of
Section of Act Indenture
-------------- ---------
<S> <C>
(2) 9.01(c)(2)
(3) 9.01(c)(3)
(e) 8.11
316(a)(1)(A) 8.07
(B) 8.08
(2) Not applicable
(a)(last sentence) 1.01
Appendix A
("Outstanding")
(b) 8.12
317(a)(1) 8.04(a)
(2) 8.04(b
(b) 5.03
9.14(c)(1)
9.14(c)(2)
318(a) 1.07
</TABLE>
--------------------
Note: This reconciliation and tie shall not, for any purpose,
be deemed to be part of the Trust Indenture, Security
Agreement and Mortgage.
<PAGE>
THIS TRUST INDENTURE, SECURITY AGREEMENT AND MORTGAGE dated as of
December 1, 1989 (the "Indenture"), among THE CONNECTICUT NATIONAL BANK, a
national banking association (not in its individual capacity except to the
extent set forth herein but as trustee under the Trust Agreement dated as of
December 1, 1988 (the "Trust Agreement"), between PHILIP MORRIS CREDIT
CORPORATION as Owner Participant (the "Owner Participant") and THE CONNECTICUT
NATIONAL BANK as Owner Trustee (the "Owner Trustee")), and TEXAS UTILITIES
ELECTRIC COMPANY ("TU Electric"), and AMERICAN NATIONAL BANK AND TRUST COMPANY
OF CHICAGO, a national banking association, as trustee for the benefit of the
Holders of the Bonds (the "Indenture Trustee").
RECITALS:
--------
A. The Owner Participant and the Owner Trustee have entered into the
Trust Agreement whereby, among other things, the Owner Trustee has declared a
certain trust for the use and benefit of the Owner Participant, subject,
however, to the lien of this Indenture, and the Owner Trustee is authorized and
directed to execute and deliver this Indenture.
B. The Owner Trustee desires by this Indenture, among other things,
(i) to provide for the issue by Owner Trustee from time to time of Bonds, and
(ii) to provide for the deposit, mortgage and pledge by Owner Trustee with
Indenture Trustee, as part of the Indenture Estate, of among other things, all
of Owner Trustee's right, title and interest in and to the Leased Assets, the
Lease, and the other Operative Documents and all payments and other amounts
(other than Excepted Payments) received under this Indenture, the Lease or any
of the other Operative Documents in accordance with the terms of this Indenture
as security for Owner Trustee's obligations to the Holders from time to time of
the Bonds and for the benefit and security of such Holders.
NOW, THEREFORE, THIS INDENTURE WITNESSETH that, in consideration of
the premises and other good and valuable consideration the receipt of which is
hereby acknowledged, in order to secure (a) the prompt payment when and as due
of the principal of and premium, if any, interest on, and all other amounts due
with respect to, the Bonds and of all other amounts secured hereby, and (b) the
performance and observance by the Owner Trustee for the benefit of the Holders
from time to time of the Bonds and the Indenture Trustee of all the covenants,
agreements and provisions contained herein, in the Participation Agreement and
in the Bonds, in each case for the uses and purposes and subject to the terms
and provisions hereof:
GRANTING CLAUSE:
---------------
The Owner Trustee hereby grants, conveys, assigns, transfers,
mortgages and pledges to the Indenture Trustee and its
<PAGE>
successors and assigns, and creates a security interest in favor of and
confirmed to the Indenture Trustee and its successors and assigns in trust
hereunder, the following described property, rights and privileges, whether
now owned or held or hereafter acquired (herein called the "Indenture Estate"),
----------------
to wit:
(1) All the right, title and interest now held or hereafter acquired
by Owner Trustee in and to the Leased Assets including, without limitation,
the Permian Basin Facility more specifically described on Schedule PBF
hereto, the De Cordova Facility more specifically described on Schedule DCF
hereto, and the Permian Basin Ground Interest more specifically described
on Schedule PBS hereto and the De Cordova Ground Interest more specifically
described on Schedule DCS hereto and the Bills of Sale;
(2) All the estate, right, title and interest now held or hereafter
acquired by the Owner Trustee in, to and under the Lease, including,
without limitation, (a) all the estate, right, title and interest of the
Owner Trustee therein, thereunder or in respect thereof, (b) all rights of
the Owner Trustee to exercise any election or option or to make any
decision or determination or to give any notice, consent, waiver or
approval or to take any other action under or with respect to the Lease or
to accept any surrender or redelivery of the Leased Assets or any part
thereof, as well as all rights, powers and remedies on the part of the
Owner Trustee, whether acting under the Lease or by statute or at law or in
equity, or otherwise, arising out of any Lease Default or Lease Event of
Default (including, without limitation, declaring the Lease to be in
default), and (c) all estate, right, title and interest of the Owner
Trustee as a secured party or lienholder thereunder to the extent, if any,
a security interest or lien may be deemed to be created by the Lease;
(3) All the estate, right, title and interest now held or hereafter
acquired by the Owner Trustee in, to and under the Support Agreements,
including all of the leasehold rights, title and interest of the Owner
Trustee in and to the real estate described on Schedule PBS and Schedule
DCS hereto;
(4) All the estate, right, title and interest now held or hereafter
acquired by the Owner Trustee in and to all the tolls, rents, issues,
profits, products, revenues and other income, and in and to all proceeds
and payments from or on account of the property, rights and privileges
subjected or required to be subjected to the lien of this Indenture;
(5) All the estate, right, title and interest now held or hereafter
acquired by the Owner Trustee in and to any
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<PAGE>
right to restitution from the Lessee in respect of any determination of
invalidity of any Operative Document;
(6) All moneys and securities now or hereafter paid or deposited or
required to be paid or deposited to or with the Indenture Trustee pursuant
to any term of this Indenture or any other Operative Document and held or
required to be held by the Indenture Trustee hereunder;
(7) All other property of every kind and description, real, personal
and mixed, and all interests therein, now held or hereafter acquired by the
Owner Trustee pursuant to the provisions of the Operative Documents,
whether located on the Sites or elsewhere without the necessity of
indentures supplemental hereto, and the Indenture Trustee is hereby
authorized to receive any such property and to hold and apply any and all
such property subject to and in accordance with the terms of this Indenture
as then supplemented; and
(8) All proceeds of the foregoing.
BUT EXCLUDING from the property, rights and privileges subject to this
Granting Clause all Excepted Payments;
THE OWNER TRUSTEE FURTHER GRANTS, conveys, assigns and transfers to
the Indenture Trustee and its successors and assigns in trust absolutely and
unconditionally, not as collateral but in consideration of the agreements and
promises of the Indenture Trustee herein and in the Participation Agreement,
including without limitation the acquisition of the Bonds from the Owner
Trustee, all amounts of Rent, insurance proceeds, condemnation, requisition and
other awards and payments and all other moneys payable or receivable under the
Lease that are not Excepted Payments, whether payable as rents, the purchase
price for any property or otherwise; provided, however, that such assignment,
-------- -------
conveyance, grant and transfer to the Indenture Trustee shall be subject to the
rights of the Owner Trustee under Article Four and Section 8.09 hereof; and
provided, further, that if the principal of and premium, if any, and interest on
-------- -------
the Bonds, and all other amounts payable hereunder shall have been paid pursuant
to Section 3.01 or otherwise and the Owner Trustee shall have performed and
complied with all the covenants, agreements, terms and provisions hereof, then
all such rights to receive Rent and any other moneys payable or receivable under
the Lease shall automatically and completely revert to Owner Trustee. As
provided in Section 15.2 of the Lease, so long as any Bond remains Outstanding,
Lessee is obligated to make all payments of Basic Rent, and all other amounts
payable under the Lease to the Owner Trustee, as Lessor, other than Excepted
Payments, directly to the Indenture Trustee. Upon receipt of any such amount by
the
-3-
<PAGE>
Indenture Trustee that is not an Excepted Payment, such amount shall be a part
of the Indenture Estate;
AND PROVIDED, HOWEVER, that so long as no Lease Event of Default shall
have occurred and be continuing, the Lessee shall be entitled to quiet enjoyment
of the Leased Assets as contemplated by the Operative Documents without
hindrance or disturbance by the Indenture Trustee;
TO HAVE AND TO HOLD all and singular the aforesaid property, rights
and privileges unto the Indenture Trustee, its successors and assigns, in trust
for the benefit and security of the holders from time to time of the Bonds and
for the uses and purposes, and subject to the terms and provisions, set forth in
this Indenture.
PROVIDED, HOWEVER, that if the principal of and premium, if any, and
interest on the Bonds, and all other amounts payable hereunder shall have been
paid pursuant to Section 3.01 or otherwise and the Owner Trustee shall have
performed and complied with all the covenants, agreements, terms and provisions
hereof, then this Indenture and the rights hereby granted and assigned shall
terminate and cease.
IT IS HEREBY COVENANTED AND AGREED that all the Bonds are to be issued
and delivered, and that all property, rights and privileges subject or to become
subject hereto, are to be held subject to the further covenants, conditions,
uses and trusts hereinafter set forth, and the Owner Trustee, for itself and its
successors and assigns, and TU Electric for itself, its successors and assigns,
each hereby covenants and agrees with the Indenture Trustee, for the equal and
proportionate benefit and security of the Holders of the Bonds and for the
benefit and security of the Indenture Trustee, and the Indenture Trustee agrees
to accept the trusts and duties herein set forth, as follows:
ARTICLE ONE
PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. Definitions.
-----------
Unless the context shall otherwise require:
(a) capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned thereto in Appendix A hereto for all purposes
hereof (such definitions to be equally applicable to both the singular and
plural forms of the terms defined); provided, that the term "Officers'
--------
Certificate"
-4-
<PAGE>
as used herein shall mean for all purposes hereof an Officers' Certificate of
TU Electric; and provided, further, that references in Appendix A hereto to
-------- -------
Schedules PBF, PBS, DCF and DCS to the Participation Agreement shall be deemed
to refer, respectively, to Schedules PBF, PBS, DCF and DCS to this Indenture;
(b) all terms used herein which are defined in the Trust Indenture
Act, either directly or by reference therein, have the meanings assigned to them
therein; and
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP and practices in use at the
time by companies operating like properties or, at the option of TU Electric,
from time to time, in accordance with generally accepted accounting principles
and practices in use at the date of this Indenture.
References in this Indenture to Sections, subsections and paragraphs
are to Sections, subsections and paragraphs in this Indenture unless otherwise
indicated.
SECTION 1.02. Compliance Certificates and Opinions.
------------------------------------
Each certificate or opinion which is specifically required by the
provisions of this Indenture to be delivered to the Indenture Trustee with
respect to compliance with a condition or covenant herein contained shall
include (1) a statement that the person making such certificate or opinion has
read such covenant or condition; (2) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; (3) a statement that, in the
opinion of such person, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and (4) a statement as to whether
or not in the opinion of such person such condition or covenant has been
complied with.
Every request or application by the Owner Trustee or TU Electric for
action by the Indenture Trustee shall be accompanied by an Owner Trustee
Certificate or an Officers' Certificate, respectively, and an Opinion of Counsel
stating in each case that in the opinion of the person making such certificate
or opinion the conditions precedent, if any, to such action, provided for in
this Indenture (including any covenants compliance with which constitutes a
condition precedent), have been complied with.
-5-
<PAGE>
SECTION 1.03. Form of Documents Delivered to Indenture Trustee.
------------------------------------------------
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified person, it is not necessary that all
such matters be certified by, or covered by only one document, but one such
Person may certify or give an opinion with respect to some matters and one or
more other such Persons as to other matters, and any such Person may certify or
give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Owner Trustee or TU
Electric may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which his
certificate or opinion is based are erroneous. Any such certificate or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Owner Trustee or TU Electric, as the case may be, stating that the information
with respect to such factual matters is in possession of the Owner Trustee or TU
Electric, respectively, unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Any Opinion of Counsel stated to be based on the opinion of other
counsel shall be accompanied by a copy of such other opinion.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 1.04. Acts of Holders.
---------------
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor, signed by such Holders in person or by an agent
duly appointed in writing; and, except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee and, where it is hereby expressly required,
to the Owner Trustee and TU Electric. Such instrument or instruments (and the
action embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Holders signing such instrument
---
-6-
<PAGE>
or instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 9.01) conclusive in favor of the Indenture Trustee, the
Owner Trustee and TU Electric, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved (1) by the certificate of any notary public
or other officer of any jurisdiction authorized to take acknowledgments of deeds
or administer oaths that the Person executing such instrument acknowledged to
him the execution thereof, or (2) by a notarized affidavit of a witness to such
execution, (3) by having the signature guaranteed by a bank or trust company or
a registered dealer in securities, and where such execution is by an officer of
a corporation or association or a member of a partnership, on behalf of such
corporation, association or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority. The fact and date of the
execution of any such instrument or writing, or the authority of the Person
executing the same, may also be proved in any such manner which the Indenture
Trustee deems sufficient.
(c) The ownership of Bonds shall be proved by the Bond Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Bond shall bind the Holder of every
Bond issued upon the transfer thereof or in exchange therefor or in lieu
thereof, whether or not notation of such action is made upon such Bond.
SECTION 1.05. Requests, etc. to Indenture Trustee, TU Electric, Owner
-------------------------------------------------------
Trustee and Owner Participant.
-----------------------------
Any request, demand, authorization, direction, notice, consent, waiver
or Act of Holders or other document provided or permitted by this Indenture to
be made upon, given or furnished to, or filed with the following, shall be
sufficient if in writing and delivered in person or by courier or mailed,
first-class postage prepaid (in the absence of a mail strike or other disruption
of the mail) or transmitted by means of telex, telecopy or other wire
transmission (with request for assurance of receipt in a manner typical with
respect to communications of that type) to:
(1) the Indenture Trustee at the Indenture Trustee Office, Attention:
Corporate Trust Department; or
(2) the Owner Trustee, at 777 Main Street, Hartford, CT 06115,
Attention: Corporate Trust Administration; or
-7-
<PAGE>
(3) TU Electric, Attention: Principal Financial Officer, at 2001
Bryan Tower, Dallas, Texas; or
(4) the Owner Participant, at 120 Park Avenue, New York, New York
10017, Attention: Michael J. Kinney;
or to any of the above Persons at any other address subsequently furnished in
writing by it to each of the other Persons listed above.
Whenever TU Electric shall send to the Owner Trustee, or whenever the
Owner Trustee shall send to TU Electric, any notice, report, certificate,
opinion or other document required by the Lease, TU Electric or the Owner
Trustee, as the case may be, shall simultaneously mail a copy thereof to the
Indenture Trustee and the Owner Participant.
Whenever the Indenture Trustee shall receive any notice, report,
certificate, opinion or other document from the Owner Trustee or TU Electric it
shall immediately send a copy thereof to the other party and whenever the
Indenture Trustee shall send any notice, report, certificate, opinion or other
document to, the Owner Trustee, TU Electric or all Holders of Outstanding Bonds,
it shall simultaneously send a copy thereof to TU Electric or the Owner Trustee,
or both, as the case may be and to the Owner Participant.
SECTION 1.06. Notices to Holders; Waiver.
--------------------------
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed first-class postage prepaid, to each Holder, at his
address as it appears in the Bond Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such notice.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Indenture Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders, and any notice which is mailed in the manner
herein provided shall be conclusively presumed to have been duly given.
-8-
<PAGE>
SECTION 1.07. Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Indenture by any of
the provisions of the TIA, such required provision shall control.
SECTION 1.08. Effect of Heading and Table of Contents.
---------------------------------------
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.09. Successors and Assigns.
----------------------
All covenants, agreements, representations and warranties in this
Indenture by the Indenture Trustee, TU Electric and the Owner Trustee shall bind
and, to the extent permitted hereby, shall inure to the benefit of and be
enforceable by their respective successors and assigns, whether so expressed or
not.
SECTION 1.10. Separability Clause.
-------------------
In case any provision in this Indenture or in the Bonds shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 1.11. Benefits of Indenture.
---------------------
Nothing in this Indenture or in the Bonds, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder, and the Holders of Bonds, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
SECTION 1.12. GOVERNING LAW.
-------------
THIS INDENTURE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER
JURISDICTION ARE MANDATORILY APPLICABLE THERETO.
SECTION 1.13. Legal Holidays.
--------------
Unless otherwise provided with respect to a specific series of Bonds
in any case where any Interest Payment Date or Redemption Date or the Stated
Maturity of any Bond, or any date on which any Defaulted Interest is proposed to
be paid, shall not be a Business Day, then (notwithstanding any other provision
of this Indenture) payment of interest or principal (and premium, if
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any) need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on the Interest Payment
Date or Redemption Date or at the Stated Maturity of such Bond, or on the date
on which the Defaulted Interest is proposed to be paid, and no interest shall
accrue for the period from and after such Interest Payment Date, Redemption Date
or Stated Maturity, or date for the payment of Defaulted Interest, as the case
may be, to and including such next succeeding Business Day.
ARTICLE TWO
THE BONDS
SECTION 2.01. Issuable in Series; Designations.
--------------------------------
The Bonds shall be issuable hereunder in one or more series and with
such designations as are specified herein or in an Owner Trustee Certificate or
in an indenture supplemental hereto.
SECTION 2.02. Form and Denomination.
---------------------
The Initial Series Bonds shall be substantially in the form attached
hereto as Attachment A. The form of the Bonds of any other series shall be
established by or pursuant to the authority granted in the supplemental
indenture creating such series. The Bonds of any series shall be numbered,
lettered or otherwise distinguished in such manner or in accordance with such
plans as the officers of the Owner Trustee executing the same may determine with
the approval of the Indenture Trustee.
Any Bonds of any series may be issued with appropriate insertions,
omissions, substitutions or variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Bonds of such series are admitted to trading, or to conform to general
usage.
The Bonds of each series shall be issued only in registered form in
the denomination of $1,000 or integral multiples thereof unless, in the case of
Bonds other than the Initial Series Bonds, otherwise provided in the
supplemental indenture creating such series.
SECTION 2.03. Equally and Ratably Secured Bonds.
---------------------------------
All Bonds Outstanding shall be equally and ratably secured by this
Indenture, without preference, priority or
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distinction on account of the date or dates or the actual time or times of the
issue or maturity of such Bonds, so that all Bonds Outstanding shall have the
same right, lien and preference under and by virtue of this Indenture.
SECTION 2.04. Execution of Bonds.
------------------
The Bonds shall be executed on behalf of the Owner Trustee by any of
its authorized officers and attested by any of its authorized officers but the
same officer shall not execute and attest the same Bond. The signature of any
of such authorized officers on the Bonds may be manual or facsimile.
Bonds bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Owner Trustee shall bind the Owner
Trustee, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Bonds or did
not hold such offices at the date of execution of this Indenture.
SECTION 2.05. Acknowledgment of Assignment.
----------------------------
TU Electric acknowledges the assignment of the Lease and the other
Operative Documents to which Owner Trustee is a party and the subjection of the
Owner Trustee's rights thereunder to the Lien of this Indenture.
SECTION 2.06. Temporary Bonds.
---------------
Pending the preparation of definitive Bonds, the Owner Trustee may
execute, and upon the written order of the Owner Trustee signed by a Responsible
Officer, the Indenture Trustee shall authenticate and deliver temporary Bonds
which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any denomination, substantially of the tenor of the definitive
Bonds in lieu of which they are issued and with such appropriate insertions,
omissions, substitutions and other variations as may be appropriate for
temporary Bonds, all as may be determined by the officers executing such Bonds
with the concurrence of the Indenture Trustee.
If temporary Bonds of any series are issued, definitive Bonds of such
series will be prepared without unreasonable delay. After the preparation of
definitive Bonds the temporary Bonds shall be exchangeable for definitive Bonds
upon surrender of the temporary Bonds at any office or agency to be maintained
for the purpose pursuant to Section 9.14, without charge to the Holder. Upon
surrender or cancellation of any one or more temporary Bonds, the Owner Trustee
shall execute and the Indenture Trustee shall authenticate and deliver in
exchange therefor a like principal amount of definitive Bonds of the same series
with the same Stated Maturity of principal in authorized denominations.
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Until so exchanged the temporary Bonds shall in all respects be entitled to the
same security and benefits under this Indenture as definitive Bonds.
SECTION 2.07. Registration, Transfer and Exchange.
-----------------------------------
The Owner Trustee shall cause to be kept at the designated office of
the Bond Registrar a register in which, subject to such reasonable regulations
as the Indenture Trustee may prescribe, the Owner Trustee shall provide for the
registration of Bonds and of transfers and exchanges of Bonds. This register
and, if there shall be more than one Bond Registrar, the combined registers
maintained by all such Bond Registrars, are herein sometimes referred to as the
"Bond Register".
-------------
Upon surrender for transfer of any Bond at the designated office of
the Bond Registrar, or at any office or agency maintained for such purpose
pursuant to Section 9.14(a) hereof, the Owner Trustee shall execute, and the
Indenture Trustee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Bonds of the same series with the
same Stated Maturity of principal for a like aggregate principal amount in
authorized denominations and bearing numbers not contemporaneously outstanding.
At the option of any Holder, Bonds may be exchanged for an equal
aggregate principal amount of Bonds of the same series with the same Stated
Maturity of principal in authorized denominations, upon surrender of the Bonds
to be exchanged at such designated office, or at any other office or agency
maintained for such purpose pursuant to Section 9.14(a) hereof. Whenever any
Bonds are so surrendered for exchange, the Owner Trustee shall execute, and the
Indenture Trustee shall authenticate and deliver, the Bonds which the Bondholder
making the exchange is entitled to receive.
All Bonds issued upon any transfer or exchange of Bonds shall be the
valid obligations of the Owner Trustee, evidencing the same debt, and entitled
to the same security and benefits under this Indenture, as the Bonds surrendered
upon such transfer or exchange.
Every Bond presented or surrendered for transfer or exchange shall be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Bond Registrar duly executed, by the Holder thereof or his
attorney duly authorized in writing.
Unless otherwise provided as a term of a series of Bonds, no service
charge shall be required of any Bondholders participating in any transfer or
exchange of Bonds in respect of
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such transfer or exchange, but the Bond Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Bonds, other than exchanges pursuant
to Section 2.06, 6.08 or 11.07 not involving any transfer.
The Bond Registrar shall not be required (i) to issue, register the
transfer of or exchange any Bond of any series during a period beginning at the
opening of business 15 days before the date of the first mailing of the notice
of redemption of Bonds for redemption and ending at the close of business on the
day of first mailing notice of redemption, or (ii) to transfer or exchange any
Bond so selected for redemption in whole or in part except the unredeemed
portion of any Bond selected for redemption in part.
SECTION 2.08. Mutilated, Destroyed, Lost and Stolen Bonds.
-------------------------------------------
Upon receipt by the Owner Trustee, TU Electric, and the Indenture
Trustee of evidence satisfactory to them of the theft, loss, destruction or
mutilation of any Bond outstanding hereunder, and of indemnity satisfactory to
them, and upon payment, if the Owner Trustee, TU Electric, or the Indenture
Trustee shall require it, of a reasonable charge and upon reimbursement to the
Owner Trustee, TU Electric, and the Indenture Trustee of all reasonable expenses
incident thereto, and upon surrender and cancellation of such Bond, if
mutilated, the Owner Trustee may execute, and the Indenture Trustee shall
thereupon authenticate and deliver, a new Bond of like tenor and of the same
series with the same interest rate and Stated Maturity in lieu of such stolen,
lost, destroyed or mutilated Bond, or if any such Bond shall have matured or be
about to mature, instead of issuing a substituted Bond the Owner Trustee may pay
the same without surrender thereof. Any indemnity bond shall name as obligees
the Owner Trustee, TU Electric, the Indenture Trustee, and if requested by TU
Electric, any paying agent.
SECTION 2.09. Payment of Interest.
-------------------
The Person in whose name any Bond is registered at the close of
business on any Record Date (as hereinafter defined) with respect to any
Interest Payment Date with respect to such Bond shall be entitled to receive the
interest, if any, payable on such Interest Payment Date notwithstanding any
registration of transfer or exchange of such Bond subsequent to the Record Date
and prior to such Interest Payment Date, except if and to the extent the Owner
Trustee shall default in the payment of the interest due on such Interest
Payment Date, in which case such defaulted interest (the "Defaulted Interest")
------------------
shall be paid to the Persons in whose names Outstanding Bonds of the applicable
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series are registered at the close of business on a subsequent Record Date
(which shall be not less than ten Business Days prior to the date of payment of
such Defaulted Interest) established by notice given by mail by the Indenture
Trustee to the Holders of Bonds of such series not less than 15 days preceding
such subsequent Record Date after receipt of an amount of money at least equal
to the aggregate amount proposed to be paid in respect of such Defaulted
Interest or arrangements satisfactory to the Indenture Trustee have been made
for such payment. The term "Record Date" as used with respect to any Interest
-----------
Payment Date (except a date for payment of Defaulted Interest) shall mean, with
respect to the Initial Series Bonds, the June 15 or December 15 (whether or not
a Business Day), as the case may be, next preceding such Interest Payment Date
and shall mean, with respect to any other series of Bonds, the date specified as
such in the supplemental indenture providing for the creation of such other
series.
Principal of and premium, if any, on Bonds shall be payable to the
Holders of such Bonds upon presentation and surrender of such Bonds at the
office or agency for the payment of Bonds maintained pursuant to Section 9.14.
Unless otherwise provided as a term of a series of Bonds, interest on Bonds
shall be paid by check drawn upon the Paying Agent and mailed to the registered
addresses of the Holders of such Bonds as they shall appear on the Bond
Register. Payment as aforesaid shall be made in such coin or currency 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.
Notwithstanding the provisions of the previous paragraph, the Owner
Trustee may make, or cause to be made, payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Bonds in respect of which interest is in default may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Owner Trustee to the Indenture Trustee of the proposed
payment pursuant to this paragraph, such payment shall be deemed practicable by
the Indenture Trustee.
Subject to the foregoing provisions of this Section, each Bond
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Bond shall carry the rights to interest accrued and unpaid, and to
accrue interest, which were carried by such other Bond, and each such Bond shall
bear interest from whatever date shall be necessary so that neither gain nor
loss in interest shall result from such transfer, exchange or replacement.
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SECTION 2.10. Persons Deemed Owners.
---------------------
Prior to due presentment for transfer, the Person in whose name any
Bond is registered shall be deemed to be the owner of such Bond for the purpose
of receiving payment of principal of, and premium (if any), and (subject to
Section 2.09) interest on such Bond and for all other purposes whatsoever,
whether or not such Bond be overdue, regardless of any notice to anyone to the
contrary.
SECTION 2.11. Cancellation.
------------
All Bonds surrendered for payment, redemption, credit against any
Sinking Fund payment or redemption payment, transfer or exchange shall, if
surrendered to any Person other than the Indenture Trustee, be delivered to the
Indenture Trustee for cancellation. The Owner Trustee may at any time deliver
to the Indenture Trustee for cancellation any Bonds previously authenticated and
delivered hereunder which the Owner Trustee may have acquired in any manner
whatsoever, and all Bonds so delivered shall be promptly cancelled by the
Indenture Trustee. No Bonds shall be authenticated in lieu of or in exchange
for any Bonds cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Bonds held by the Indenture Trustee
shall be destroyed and certification of their destruction delivered to the Owner
Trustee unless, by Owner Trustee Request, the Owner Trustee otherwise directs.
SECTION 2.12. Authentication, Execution, Delivery and Dating of
-------------------------------------------------
Bonds.
-----
Upon the execution and delivery of this Indenture and from time to
time thereafter, Initial Series Bonds may be executed by the Owner Trustee and
delivered to the Indenture Trustee for authentication, and the Indenture Trustee
shall thereupon authenticate and deliver such Bonds to, or upon the written
order of, the Owner Trustee signed by a Responsible Officer. From time to time
after the execution and delivery of this Indenture, additional series of Bonds
may be issued pursuant to Section 2.15.
Unless otherwise specifically provided with respect to a series of
Bonds, fully registered Bonds shall be dated as of the date of authentication.
The coupon Bonds of each series of Bonds issued hereunder shall be dated as of
such date as may be determined by the Owner Trustee.
No Bond shall be secured by or entitled to any benefit under this
Indenture or be valid or obligatory for any purpose unless there appears on such
Bond a certificate of authentication, in the form provided for in the form of
Initial Series Bond attached hereto, or, with respect to Bonds of any
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other series, in the form provided for in the supplemental indenture creating
Bonds of such series, executed by the Indenture Trustee by the manual signature
of one of its authorized officers, and such certificate upon any Bond shall be
conclusive evidence, and the only evidence, that such Bond has been duly
authenticated and delivered hereunder.
SECTION 2.13. Source of Payments; Rights and Liabilities of Owner
---------------------------------------------------
Participant and Owner Trustee.
-----------------------------
All payments of principal of, premium (if any) and interest on, the
Bonds shall be made only from assets subject to or intended to be subject to the
Lien of this Indenture or the income and proceeds received by the Indenture
Trustee therefrom, and all payments of principal, premium (if any) and interest
shall be made in accordance with the terms of Section 2.09 and Article Four
hereof. The Indenture Trustee and each Holder, by its acceptance of a Bond,
agrees (i) that, except as expressly provided above, it will look solely to the
assets subject to or intended to be subject to the Lien of this Indenture or the
income and proceeds received by the Indenture Trustee therefrom to the extent
available for distribution to such Holder as herein provided and (ii) that
neither the Owner Participant nor, except as otherwise expressly provided
herein, the Owner Trustee in its individual capacity is liable to any Holder or
to the Indenture Trustee for any amounts payable under any Bond or this
Indenture.
Anything herein to the contrary notwithstanding, all and each of the
representations, warranties, covenants and agreements herein made on the part of
the Owner Trustee are made and intended not as personal representations,
warranties, covenants and agreements by the Owner Trustee in its individual
capacity or for the purpose or with the intention of binding it personally but
are made and intended for the purpose of binding only the Indenture Estate, and
this Indenture is executed and delivered by the Owner Trustee solely in the
exercise of the powers expressly conferred upon it as trustee under the Trust
Agreement; and no personal liability or responsibility is assumed hereunder by
or shall at any time be enforceable against the Owner Trustee in its individual
capacity or the Owner Participant on account of any representation, warranty,
covenant or agreement hereunder of the Owner Trustee, either express or implied,
all such personal liability, if any, being expressly waived by the Holders and
by all Persons claiming by, through or under the Holders; provided, however,
-------- -------
that the Owner Trustee in its individual capacity shall be liable hereunder (i)
for the performance of its agreements under Section 5.02 hereof, (ii) in the
case of the inaccuracy of any representation or warranty on the part of the
Owner Trustee in its individual capacity contained in Section 5.05(a) hereof and
(iii) for its own willful misconduct or gross negligence. If a successor Owner
Trustee is
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appointed in accordance with the terms of the Trust Agreement, such successor
Owner Trustee shall, without any further act, succeed to all the rights, duties,
immunities and obligations hereunder, and its predecessor Owner Trustee and the
Owner Trustee in its individual capacity shall be released from all further
duties and obligations hereunder, without prejudice to any claims against the
Owner Trustee in its individual capacity or the Owner Trustee for any default by
the Owner Trustee in its individual capacity or the Owner Trustee, respectively,
in the performance of its obligations hereunder prior to such appointment or for
any inaccuracies in warranties or willful misconduct or gross negligence during
their terms.
SECTION 2.14. Initial Series Bonds.
--------------------
There is hereby created a series of Bonds designated "Secured Facility
Bonds, Initial Series" (the "Initial Series Bonds"). Initial Series Bonds in
the aggregate amount of $118,575,000 may forthwith be executed by the Owner
Trustee and delivered to the Indenture Trustee in accordance with the provisions
of Section 2.12 in the following principal amounts for the Stated Maturities and
at the interest rates indicated:
<TABLE>
<CAPTION>
Principal
Stated Maturity Interest Rate Amount
--------------- ------------- ------
<S> <C> <C>
January 1, 2005 9.45% $36,980,000
January 1, 2018 10.35 81,595,000
</TABLE>
The Initial Series Bonds shall be payable, bear interest and have and
be subject to such other terms as provided in the form of Initial Series Bond
attached as Attachment A hereto and shall have and be subject to such other
terms as are provided in this Indenture. The term "Record Date" as used with
respect to any Interest Payment Date (except a date for payment of Defaulted
Interest) shall mean, with respect to the Initial Series Bonds, the June 15 or
December 15 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. The Initial Series Bonds shall be subject to
redemption as provided in Article Six hereof and shall be subject to a sinking
fund as provided in Article Seven hereof.
SECTION 2.15. Additional Series of Bonds.
--------------------------
Subject to Sections 17 and 18 of the Participation Agreement and
subsection 11.6(c) of the Lease, the Owner Trustee may from time to time issue
Bonds (in addition to the Initial Series Bonds) in an aggregate principal amount
equal to (a) all or, to the extent allowed by Section 18(f) of the Participation
Agreement, a portion of the principal of Bonds of any series theretofore
authenticated and delivered hereunder which are to be redeemed out of the
proceeds of such Bonds or (b) all or a
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portion of the Nonseverable Alteration Cost of any Nonseverable Alterations.
The terms, conditions and designations of such additional Bonds (to the extent
not inconsistent with this Indenture) shall be set forth in an indenture
supplemental to this Indenture executed by the Owner Trustee, TU Electric and
the Indenture Trustee. The Indenture Trustee shall authenticate and deliver
Bonds in accordance with the provisions of such supplemental indenture upon
receipt by the Indenture Trustee of the following documents:
(i) a copy of such supplemental indenture together with an Owner
Trustee Request requesting that the Indenture Trustee execute such
supplemental indenture;
(ii) an Owner Trustee Certificate stating that the Owner Trustee
is entitled to the issuance of such Bonds under this Indenture, together
with, in the case of clause (b) above, an Engineer's Certificate stating
that the Fair Market Sale Value of the Nonseverable Alteration is at least
118% of the aggregate principal amount of the additional Bonds to be
issued;
(iii) an Officers' Certificate stating that no Lease Default or
Lease Event of Default has occurred and is continuing;
(iv) an Owner Trustee Certificate stating that, to the best of its
knowledge, no Indenture Event of Default has occurred and is continuing;
(v) an Officers' Certificate and an Owner Trustee Certificate
stating that the requirements of the Participation Agreement and the Lease
for the issuance of such additional Bonds are met, after taking into
account the issuance of such additional Bonds and any redemption out of the
proceeds thereof of Bonds previously authenticated and delivered hereunder;
(vi) an Officers' Certificate and an Opinion of Counsel stating
that all conditions precedent to the issuance of such additional Bonds
under this Indenture have been complied with; and
(vii) such additional documents, certificates and opinions as shall
be reasonably required by such supplemental indenture, TU Electric, the
Owner Trustee or the Indenture Trustee.
If, in the opinion of the Indenture Trustee, the terms of any proposed
series of additional Bonds adversely affects the rights of the Indenture
Trustee, the Indenture Trustee shall not
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be required to authenticate and deliver Bonds in accordance therewith.
SECTION 2.16. Assumption of Obligations by TU Electric.
----------------------------------------
Unless an Indenture Default or an Indenture Event of Default shall
have occurred and be continuing, the obligations of the Owner Trustee under the
Bonds and this Indenture may be assumed in whole by TU Electric (and upon any
such assumption the Owner Trustee shall be released and discharged from its
liability hereunder and on the Bonds in respect of obligations to be performed
on or after the date of such assumption) (i) upon the occurrence of an Event of
Loss referred to in clause (e) of the definition thereof provided that
--------
simultaneously with such assumption, the Owner Trustee is making a Transfer to
Lessee of the Facilities pursuant to subsection 12.2 of the Lease or (ii) upon a
purchase of the Facilities by TU Electric pursuant to subsection 6.1 of the
Lease; provided, however, that such assumption shall be subject to, and
-------- -------
permitted only upon the fulfillment and satisfaction of, the following terms and
conditions: (a) any agreement evidencing such assumption shall be in substance
and form reasonably satisfactory to the Indenture Trustee and shall, inter alia,
----- ----
include modifications and amendments to this Indenture making the obligations
hereunder fully recourse to TU Electric, deleting Section 2.13 hereof, and
incorporating into this Indenture provisions relating to Lessee's obligations
which are contained in the Lease, the Participation Agreement and the other
Operative Documents which are applicable to the transaction and the Leased
Assets after such assumption by TU Electric but are not expressly provided in
this Indenture; and (b) the Indenture Trustee shall have received (i) an
executed counterpart of each such agreement of assumption, (ii) evidence
satisfactory to the Indenture Trustee and the Owner Trustee that all necessary
Governmental Actions relating to such assumption have been duly obtained and are
in full force and effect, (iii) evidence satisfactory to the Indenture Trustee
that the valid first mortgage Lien and first priority perfected security
interest intended to be created by this Indenture is not in any material way
adversely affected or impaired by any of the agreements or transactions relating
to such assumption and (iv) an Opinion of Counsel for TU Electric, reasonably
satisfactory in substance, scope and form to the Indenture Trustee and the Owner
Trustee, to the effect that (A) the agreement evidencing such assumption and any
necessary supplemental indenture have been duly authorized, executed and
delivered by TU Electric, (B) the execution and delivery by TU Electric of such
agreement and supplemental indenture and the consummation of the transactions
contemplated thereby do not contravene any provision of law or any Governmental
Rule applicable to TU Electric or any provision of TU Electric's charter
documents or by-laws and do not contravene any provision of, or constitute a
default under, or
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result in the creation or imposition of any Lien (other than the Lien of this
Indenture and the subordinate Lien of the Existing Mortgages) upon any of TU
Electric's properties or assets under any indenture, mortgage, contract or other
agreement to which TU Electric is a party or by which TU Electric or any of its
properties may be bound or affected, (C) all necessary Governmental Actions
relating to such assumption have been duly obtained and are in full force and
effect and (D) such agreement and supplemental indenture constitute the legal,
valid and binding obligations of TU Electric, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws at the time in effect affecting the rights of creditors generally.
ARTICLE THREE
SATISFACTION AND DISCHARGE
SECTION 3.01. Satisfaction and Discharge of Indenture.
---------------------------------------
With respect to Bonds of any series of a particular Stated Maturity,
if at any time (a) the principal of and premium (if any) and interest on all of
the Bonds of such series with such Stated Maturity Outstanding hereunder shall
have been paid or (b) all of the Bonds of such series with such Stated Maturity
theretofore authenticated (other than any such Bonds which shall have been
destroyed, lost or stolen and which shall have been replaced or paid as provided
in Section 2.08 hereof) shall have been delivered to the Indenture Trustee for
cancellation or (c) there shall have been irrevocably deposited with the
Indenture Trustee as trust funds the entire amount in cash (other than moneys
repaid by the Indenture Trustee or any Paying Agent to the Owner Trustee in
accordance with Section 5.03 hereof) necessary to pay, or direct obligations of
the United States of America, backed by its full faith and credit, maturing as
to principal and premium (if any) and interest in such amounts and at such times
as will ensure the availability of cash sufficient to pay, at the Stated
Maturity and all mandatory Sinking Fund payment dates, if any, of principal of,
premium (if any) and interest on all such Bonds or upon redemption of all such
Bonds (the Owner Trustee hereby agreeing that it will deliver to the Indenture
Trustee, at the time such cash or obligations are deposited, an Owner Trustee
Certificate irrevocably specifying any such Redemption Date or Dates) not
theretofore delivered to the Indenture Trustee for cancellation, the principal
of, premium (if any) and interest due or to become due to such Stated Maturity
dates or Redemption Date or Redemption Dates, as the case may be (provided that,
--------
with respect to the deposit specified in (c), there shall be delivered to the
Indenture Trustee an Opinion of Counsel satisfactory in form to the Indenture
Trustee, to the effect that the Holders of
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such Bonds will not recognize income, gain or loss for Federal income tax
purposes as a result of such deposit of certain obligations and such defeasance
and will be subject to Federal income tax of the same amount and in the same
manner and at the same times, as would have been the case if such deposit and
defeasance had not occurred), and if, in any such case, all other sums payable
hereunder with respect to such Bonds shall have been paid, then this Indenture
shall cease to be of further effect with respect to such Bonds (except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Bonds, (iii) rights of Holders to receive payments of
principal thereof and premium (if any) and interest thereon upon the Stated
Maturity thereof or such Redemption Date or Redemption Dates, as the case may be
(but not upon acceleration), (iv) rights, obligations and immunities of the
Indenture Trustee hereunder, (v) rights of such Bondholders under this Article
Three and (vi) the right, in the case of such Bonds for which a Redemption Date
has not been specified, of the Owner Trustee to optionally redeem such Bonds
pursuant to Article Six), and the Indenture Trustee, on demand of and at the
cost and expense of the Owner Trustee and upon delivery to the Indenture Trustee
of an Owner Trustee Certificate and an Opinion of Counsel for the Owner Trustee,
each containing the statements provided for in Section 1.02 and stating that all
conditions precedent to the satisfaction and discharge of this Indenture have
been complied with, with respect to such Bonds, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture and the Lien
hereof (except as provided in this Article Three) with respect to such Bonds
except as aforesaid.
If this Indenture is satisfied and discharged with respect to the
Bonds of any series of a particular Stated Maturity and such Bonds will not
become due and payable at Maturity or upon redemption (pursuant to a notice of
redemption duly given to the Holders of such Bonds) within 60 days from the date
of deposit pursuant to Section 3.01 hereof, the Indenture Trustee shall, as soon
as practicable after the date of such deposit and not more than 60 days or less
than 30 days before each date of Maturity or Redemption Date, mail notice by
first-class mail, postage prepaid, to the Holders of such Bonds at their last
addresses as they shall appear upon the Bond Register, stating that the deposit
required by Section 3.01 hereof has been made with the Indenture Trustee and
that such Bonds are no longer entitled to the benefits of and security provided
by this Indenture except as provided above and with respect to the cash and
direct obligations deposited with the Indenture Trustee and stating the Maturity
or Redemption Date or Dates upon which moneys are to be available for the
payment of the principal of, premium (if any) and interest on such Bonds and
stating that such Bond is no longer otherwise mandatorily redeemable and stating
that, in the case of such Bonds for which
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a Redemption Date has not been specified, such Bonds remain optionally
redeemable.
SECTION 3.02. Application of Deposited Money.
------------------------------
All moneys and obligations deposited with the Indenture Trustee
pursuant to Section 3.01 hereof shall be held in trust and applied by it, in
accordance with the provisions of this Indenture, to the payment to the Holders
of the particular Bonds for the payment or redemption of which such moneys and
obligations have been deposited with the Indenture Trustee of all sums due or to
become due thereon for principal and premium (if any) and interest; provided,
--------
however, that, in the case of Bonds for which a Redemption Date was not
-------
specified at the time of deposit of moneys and obligations and which are
subsequently called for redemption pursuant to Article Six, upon payment by the
Owner Trustee to the Paying Agent of an amount of money sufficient to pay the
Redemption Price of all the Bonds which are to be redeemed on that date, the
moneys and obligations originally deposited with the Indenture Trustee in
respect of such Bonds shall be released to the Owner Trustee.
ARTICLE FOUR
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME AND PROCEEDS FROM THE INDENTURE
ESTATE
SECTION 4.01. Basic Rent, Interest on Overdue Installments of Basic
------------------------------- ---------------------
Rent and Prepayment of Interest.
-------- ----------------------
(a) Except as otherwise provided in Section 4.02, 4.03, 4.06 or 4.07
of this Article, each payment of Basic Rent, as well as any payment of
Supplemental Rent representing interest on overdue installments of Basic Rent,
received by the Indenture Trustee at any time under the Lease, shall be
distributed by the Indenture Trustee in the following order of priority:
FIRST, so much of such payment as shall be required to pay in full the
aggregate amount of the payment or payments of interest (as well as
interest on overdue principal and interest, to the extent permitted by law)
then due and unpaid on all Bonds Outstanding shall be distributed to the
Holders of the Bonds ratably, without priority of one over the other, in
the proportion that the aggregate amount of such payment or payments then
due and unpaid on all Bonds held by each such Holder on such date bears to
the aggregate amount of such payment or payments then due and unpaid on all
Bonds Outstanding on such date;
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SECOND, so much of such payment as shall be required to pay in full
the aggregate amount of the payment of principal then due and unpaid on all
Bonds Outstanding shall be distributed to the Holders of such Bonds
ratably, without priority of one over the other, in the proportion that the
aggregate amount of such payment or payments then due and unpaid on all
Bonds held by such Holder on such date bears to the aggregate amount of
such payment or payments then due and unpaid on all such Bonds Outstanding
on such date; and
THIRD, the balance, if any, of such payment remaining thereafter shall
be distributed, concurrently with any distribution pursuant to clauses
FIRST and SECOND hereof, to the Owner Trustee or as the Owner Trustee may
direct.
If there shall not otherwise have been distributed on any date (or
within any applicable period of grace), pursuant to this Section 4.01, the full
amount then distributable pursuant to clauses FIRST and SECOND of this Section
4.01, the Indenture Trustee shall distribute other payments of the character
referred to in Sections 4.04, 4.05 and 4.06 then held by it or thereafter
received by it, except as otherwise provided in Section 4.03, to the Holders of
all Bonds to the extent necessary to enable it to make all the distributions
then due pursuant to such clauses FIRST and SECOND; provided that to the extent
--------
any distribution is made from amounts held pursuant to Section 4.04 hereof in
accordance with this sentence and the payment of Basic Rent or Supplemental Rent
in respect of which such distribution was made shall subsequently be paid, such
portion of the payment of Basic Rent or Supplemental Rent which does not exceed
the amount of such distribution, shall be applied to the purpose for which such
amount held pursuant to Section 4.04 had been held, subject, in all cases, to
the terms of Section 4.04.
(b) Any payment received by the Indenture Trustee pursuant to Section
8.09 hereof as a result of payment by the Owner Trustee of principal, premium
(if any) and/or interest (as well as any interest on overdue principal and, to
the extent permitted by law, interest) then due on all Bonds shall be
distributed to the Holders of the Bonds in the priority and manner provided in
clauses FIRST and SECOND of subsection (a) of this Section 4.01; and the Owner
Trustee shall (to the extent of such payment made by it) be subrogated to the
rights of the Holders of the Bonds under this Section 4.01 to receive the
payment of Basic Rent or Supplemental Rent with respect to which its payment
under Section 8.09 hereof relates, and the payment of interest on account of
such Basic Rent or Supplemental Rent being overdue, to the extent provided in
and subject to the provisions of Section 8.09 hereof. Amounts distributed by
the Indenture Trustee pursuant to this Section 4.01 shall be distributed as soon
as practicable after such amounts are actually received by the Indenture
Trustee.
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SECTION 4.02. Amounts Received as Result of Event of Loss or Early
----------------------------------------------------
Termination.
-----------
(a) If (i) an Event of Loss shall occur under the Lease (and in the
case of an Event of Loss specified in clause (e) of the definition thereof, if
TU Electric shall not assume the Bonds then Outstanding in accordance with
subsection 12.2 of the Lease and Section 2.16 hereof), (ii) TU Electric shall
declare the Facilities obsolete, surplus or uneconomic to its requirements and
exercise its option to terminate the Lease under Section 7 thereof or (iii) TU
Electric shall purchase the Facilities in accordance with subsection 6.1(c) of
the Lease (if TU Electric shall not assume the Bonds then Outstanding in
accordance with subsection 6.3 of the Lease and Section 2.16 hereof), then in
any such case Bonds shall be prepaid from the payments received by the Indenture
Trustee under Section 6.2, 7 or 12 of the Lease, as provided in Article Six
hereof or, for any series of Bonds other than the Initial Series Bonds, in the
supplemental indenture creating such series.
(b) The Owner Trustee shall provide the Indenture Trustee and the
Indenture Trustee shall provide the Holder of each Bond with notice of such
prepayment, in accordance with Sections 6.03 and 6.05 hereof, respectively,
which notice shall specify the date fixed for such prepayment, the principal
amount of Bonds to be prepaid on such date, and the premium, if any, to be paid
thereon.
(c) Except as otherwise provided in Section 4.03 or 4.07 hereof, any
payments received and amounts realized by the Indenture Trustee pursuant to
Section 7 or 12 of the Lease as a result of the occurrence of an Event of Loss
or TU Electric's declaration that the Facilities are obsolete, surplus or
uneconomic to its requirements and its termination of the Lease, shall in each
case be held by the Indenture Trustee and shall be paid on the date fixed for
prepayment.
SECTION 4.03. Amounts Received After, or Held at Time of, Indenture
-----------------------------------------------------
Event of Default under Article Eight.
------------------------------------
All payments received and amounts held or realized by the Indenture
Trustee in respect of the Indenture Estate (including any amounts realized by
the Indenture Trustee from the exercise of any remedies pursuant to the Lease or
Article Eight of this Indenture) after (1) an Indenture Event of Default shall
have occurred and be continuing and (2) the Indenture Trustee shall have
declared (as assignee from the Owner Trustee) the Lease to be in default or the
Bonds shall have become due and payable, as well as all payments thereafter
received or amounts then held by the Indenture Trustee as part of the Indenture
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Estate, shall be distributed by the Indenture Trustee in the following order of
priority:
FIRST, so much of such payments or amounts as shall be required to
reimburse the Indenture Trustee for any of the Indenture Trustee's expenses
(to the extent not previously reimbursed) and to pay the reasonable
remuneration of the Indenture Trustee, shall be applied by the Indenture
Trustee to such reimbursement and payment;
SECOND, so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid principal amount of all Bonds
Outstanding, together with premium (if any) plus the accrued but unpaid
interest (as well as interest on overdue principal and, to the extent
permitted by law, on overdue interest) thereon to the date of distribution,
shall be distributed to the Holders of such Bonds and in case the aggregate
amount so to be distributed shall be insufficient to pay all such Bonds in
full as aforesaid, then ratably, without priority of one over the other, in
the proportion that the aggregate unpaid principal amount of all such Bonds
held by each such Holder, together with premium, if any, plus the accrued
but unpaid interest thereon to the date of distribution bears to the
aggregate unpaid principal amount of all Bonds, together with premium, if
any, plus the accrued but unpaid interest thereon to the date of
distribution;
THIRD, so much of such payments or amounts remaining as shall be
required to pay the present or former Holders of the Bonds the amounts
payable to them as Indemnitees (to the extent not previously reimbursed)
shall be distributed to such Holders; and in case the aggregate amount so
to be paid to all such Holders in accordance with this clause third shall
be insufficient to pay all such amounts as aforesaid, then ratably, without
priority of one over the other, in the proportion the amount of such
indemnity or other payments to which such Person is entitled bears to the
aggregate amount of such indemnity or other payments to which all such
Persons are entitled;
FOURTH, the balance, if any, of such payments or amounts remaining
shall be applied to the payment of any other indebtedness at the time due
and owing to the Indenture Trustee or the Holders of the Bonds which this
Indenture by its terms secures; and
FIFTH, the balance, if any, of such payments or amounts remaining
thereafter shall be distributed to the Owner Trustee.
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SECTION 4.04. Amounts Received for Which Provision Is Made in an
--------------------------------------------------
Operative Document.
------------------
Except as otherwise provided in Section 4.01, 4.03, 4.06, or 4.07
hereof, any payments received by the Indenture Trustee in respect of the
Indenture Estate for which provision as to the application thereof is made in an
Operative Document shall be applied to the purpose for which such payment was
made in accordance with the terms of such Operative Document.
SECTION 4.05. Amounts Received for Which No Provision Is Made.
-----------------------------------------------
Any payments received and any amounts realized by the Indenture
Trustee in respect of the Indenture Estate:
(a) for which no provision as to the application thereof is made in an
Operative Document or elsewhere in Article Four shall be held by the
Indenture Trustee as part of the Indenture Estate, and
(b) under the Lease or any other Operative Document or otherwise with
respect to the Leased Assets to the extent received or realized at any time
after payment in full of the principal of and premium, if any, and interest
on all the Bonds, as well as any other amounts remaining as part of the
Indenture Estate after payment in full of the principal of and premium, if
any, and interest on all the Bonds
shall be distributed by the Indenture Trustee in the following order of
priority: first, in the manner provided in clause FIRST of Section 4.03 hereof;
second, in the manner provided in clause THIRD of Section 4.03 hereof; third, in
the manner provided in clause FOURTH of Section 4.03 hereof; and fourth, in the
manner provided in clause FIFTH of Section 4.03 hereof.
SECTION 4.06. Certain Amounts to be Held in Case of Indenture Event
-----------------------------------------------------
of Default.
----------
Anything in this Article Four to the contrary notwithstanding, but
subject nevertheless to Section 4.07 hereof, after the Indenture Trustee shall
have knowledge of an Indenture Default or an Indenture Event of Default pursuant
to the provisions of Section 8.01 hereof, all payments received and amounts
realized by the Indenture Trustee in respect of the Indenture Estate which, but
for the provisions of this Section 4.06 hereof, would otherwise be distributable
to the Owner Trustee, shall be held by the Indenture Trustee as part of the
Indenture Estate and, if such Indenture Default or Indenture Event of Default
shall cease to be continuing prior to the time such amounts may become
distributable pursuant to Section 4.01 or 4.03 hereof, then such amounts shall
be distributable as
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elsewhere in this Article Four provided; provided that such amounts must be
--------
returned to the Owner Trustee within 90 days from the receipt thereof by the
Indenture Trustee unless an Indenture Event of Default is declared and the
Indenture Trustee is diligently pursuing any remedies available under Article
Eight hereof.
SECTION 4.07. Excepted Payments.
-----------------
Anything in this Article Four or elsewhere in this Indenture to the
contrary notwithstanding, any Excepted Payment received at any time by the
Indenture Trustee shall be distributed immediately to the Person entitled to
receive such Payment.
ARTICLE FIVE
COVENANTS
SECTION 5.01. Payment of Principal, Premium (if any) and Interest.
---------------------------------------------------
Subject to Section 2.13 hereof, the Owner Trustee will duly and
punctually pay the principal of and premium (if any) and interest on the Bonds
in accordance with, and subject to, the terms of the Bonds and this Indenture.
SECTION 5.02. Discharge of Liens; Etc.
------------------------
(a) The Owner Trustee, in its individual capacity and as Owner
Trustee, agrees that it will not directly or indirectly create, incur, assume or
suffer to exist any Lessor's Liens resulting from any act or claim against it,
and will, at its own cost and expense, promptly take such action as may be
necessary duly to discharge any such Lessor's Liens.
(b) Except with the consent of the Indenture Trustee, and except as
permitted by the terms of the Operative Documents (including Section 11 of the
Lease), the Owner Trustee will not contract for, create, incur, assume or suffer
to exist any debt, and will not guarantee (directly or indirectly or by an
instrument having the effect of assuring another's payment or performance on any
obligation or capability of so doing, or otherwise), endorse or otherwise be or
become contingently liable, directly or indirectly, in connection with the debt
of any other Person.
(c) The Owner Trustee will not enter into any business or other
activity other than the business of owning the Leased Assets, the leasing
thereof to the Lessee and the carrying out of the transactions contemplated by
the Operative Documents.
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SECTION 5.03. Money for Bond Payments to be Held in Trust.
-------------------------------------------
All moneys deposited with the Indenture Trustee or with any Paying
Agent for the purpose of paying the principal of or premium or interest on Bonds
shall be deposited and held in trust for the benefit of the Holders of the Bonds
entitled to such principal, premium or interest, subject to the provisions of
this Section. Moneys so deposited and held in trust shall not be a part of the
Indenture Estate but shall constitute a separate trust fund for the benefit of
the Holders of the relevant Bonds.
The Owner Trustee may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
direct any Paying Agent to pay, to the Indenture Trustee all sums held in trust
by such Paying Agent, such sums to be held by the Indenture Trustee upon the
same trusts as those upon which such sums were held by such Paying Agent, and,
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Any money deposited with the Indenture Trustee or any Paying Agent in
trust for the payment of the principal of (and premium, if any) or interest on
any Bond and remaining unclaimed for three years (or such lesser period as may
be required by law to give effect to this provision) after such principal (and
premium, if any) or interest has become due and payable shall be paid to the
Owner Trustee on Owner Trustee Request (to the extent such moneys shall have
been deposited by the Owner Trustee) or to any other Person on its request (to
the extent such moneys shall have been deposited by such other Person); and the
Holder of such Bond shall thereafter, as an unsecured general creditor, look
only to the Owner Trustee or such other Person, to the extent such moneys shall
have been paid to the Owner Trustee or such other Person, as the case may be,
for payment thereof, and all liability of the Indenture Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; provided, however,
-------- -------
that the Indenture Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Owner Trustee or, to the extent
such moneys are to be paid to another Person, such other Person may cause to be
mailed to each such Holder notice that such money remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such mailing, any unclaimed balance of such money then remaining will be
repaid to the Owner Trustee or such other Person.
SECTION 5.04. Maintenance of Office or Agency.
-------------------------------
The Owner Trustee will maintain an office or agency where Bonds may be
presented or surrendered for payment, where
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Bonds may be surrendered for transfer or exchange and where notices and demands
to or upon the Owner Trustee in respect of Bonds and this Indenture may be
served. The Owner Trustee will give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of each such office
or agency. If at any time the Owner Trustee shall fail to maintain any such
office or agency or the Owner Trustee shall fail to furnish the Indenture
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Indenture Trustee Office, and the Owner
Trustee hereby appoints the Indenture Trustee its agent to receive all such
presentations, surrenders, notices and demands.
SECTION 5.05. Title; Further Assurances; Recording.
------------------------------------
(a) NEITHER THE OWNER TRUSTEE, IN ITS INDIVIDUAL CAPACITY OR AS OWNER
TRUSTEE, NOR THE OWNER PARTICIPANT MAKES (i) ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, DESIGN, OPERATION, MERCHANTABILITY, FREEDOM FROM PATENT OR TRADEMARK
INFRINGEMENT OR FITNESS FOR USE OF THE LEASED ASSETS (OR ANY PART THEREOF) OR
ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE LEASED ASSETS (OR ANY PART THEREOF), except that the Owner
Trustee hereby represents and warrants that on each Funding Date the Owner
Trustee shall have received whatever title to the Facility pertaining thereto
was conveyed to it by the Bill of Sale for such Facility, or (ii) any
representation or warranty as to the validity, sufficiency, legality or
enforceability of any Operative Document, or as to the correctness of any
statement contained therein except to the extent that any such statement in this
Indenture, the Lease or the Participation Agreement was or is expressly made by
the Owner Trustee in its individual capacity, except that the Owner Trustee, in
its individual capacity and as Owner Trustee, as and to the extent that such
documents are executed by it, hereby represent and warrant that they have the
requisite corporate power and authority to execute and deliver the Operative
Documents and that the Operative Documents have been, and the Bonds, upon
execution and delivery, will have been, duly executed and delivered by one or
more of the Responsible Officers of the Owner Trustee.
(b) Neither the Owner Participant nor any Holder shall have legal
title to any part of the Indenture Estate. No transfer, by operation of law or
otherwise, of any Bond or other right, title or interest of the Owner
Participant or of any Holder in and to the Indenture Estate or hereunder shall
operate to terminate this Indenture or the trusts hereunder or entitle any
successor or transferee of the Owner Participant or of such Holder to any
accounting or to the transfer to it of legal title to any part of the Indenture
Estate.
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(c) TU Electric will cause to be done, executed, filed, recorded,
acknowledged and delivered each such further act, conveyance, filing, recording,
mortgage and assurance as the Indenture Trustee or the Owner Trustee shall
reasonably require in accordance with the laws of the United States of America
or any state thereof for accomplishing the purposes of the Operative Documents,
provided, however, that the foregoing shall not be construed as implying any
-------- -------
guaranty by TU Electric of the Bonds.
(d) Promptly after the execution and delivery of this Indenture, (i) a
Uniform Commercial Code financing statement or statements covering the security
interests created by or pursuant to the Granting Clause of this Indenture shall
be executed and delivered by the appropriate parties, and TU Electric shall file
or cause to be filed such financing statement or statements in all appropriate
places within the State of Texas and in all other places within the United
States of America as the Owner Trustee or the Indenture Trustee shall reasonably
request and (ii) this Indenture shall be filed or recorded by TU Electric in
such place or places, if any, as shall be requested by the Indenture Trustee or
the Owner Trustee as being necessary or appropriate to make effective and
preserve the lien intended to be created hereby.
SECTION 5.06. Opinions as to Indenture Estate.
-------------------------------
(a) Promptly after the execution and delivery of this Indenture, TU
Electric shall furnish to the Indenture Trustee and the Owner Trustee an Opinion
of Counsel addressed to the Owner Trustee and the Indenture Trustee stating that
in the opinion of such counsel all filings, recordings or other actions
necessary or appropriate to perfect the security interest and to make effective
the mortgage lien created by this Indenture have been filed, recorded or taken,
and reciting the details of such action.
(b) TU Electric covenants and agrees to furnish to the Indenture
Trustee and the Owner Trustee, within 105 days after the end of each year
commencing with the end of 1990 until satisfaction and discharge of this
Indenture, an Opinion of Counsel (i) either stating that in the opinion of such
counsel such action has been taken with respect to the recording, filing, re-
recording and refiling of this Indenture as is necessary to maintain and perfect
the lien of this Indenture, and reciting the details of such action, or stating
that in the opinion of such counsel no such action is necessary to maintain and
perfect such lien and (ii) stating whether or not any continuation statements
need be filed to keep effective Uniform Commercial Code financing statements
referred to in Section 5.05(d) hereof.
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SECTION 5.07. Performance of Obligations.
--------------------------
The Owner Trustee will not take any action or permit any action to be
taken by others which would release any Person from any of such Person's
covenants or obligations under any instrument included in the Indenture Estate,
or which would result in the amendment, hypothecation, subordination,
termination or discharge of, or impair the validity or effectiveness of any such
instrument, except as expressly provided in this Indenture.
SECTION 5.08. Amendments, Waivers, Etc. of Other Documents.
--------------------------------------------
Without the consent of the Holders of any Outstanding Bonds, the
respective parties to the Operative Documents may modify, amend or supplement
any of said Operative Documents (other than this Indenture or any supplemental
indenture hereto) for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions thereof or modifying in any manner
the rights of the respective parties thereunder or may give any consent, waiver
or authorization thereunder, or may in good faith determine compliance with any
such provision provided that substantial compliance therewith would exist
regardless of such determination; provided, however, that no such modification,
-------- -------
amendment, supplement, consent, waiver, authorization or determination shall:
(a) without the consent of the Holder of each Outstanding Bond
affected thereby, modify, amend or supplement, or waive any provision of, the
Lease in such way (i) as to terminate the Lease, reduce the amounts payable by
TU Electric under the Lease assigned to the Indenture Trustee or change the time
for the payment thereof such that such payments are less than the amounts
necessary to pay the principal of, premium, if any, and interest on the
Outstanding Bonds when due (whether at Maturity, upon acceleration or
otherwise), (ii) as to, or consent to any assignment of the Lease or give any
consent, waiver, authorization or determination which would, release TU Electric
from its obligation in respect of payment of Basic Rent, Casualty Value (or any
other amounts payable upon the occurrence of an Event of Loss) or any other
amount payable under the Lease and intended to be used to pay the principal of
or interest on the Bonds, in any manner inconsistent with clause (i) above,
except as provided in the Lease as originally executed or (iii) as to change the
Lease Events of Default (except to add additional Lease Events of Default or
delete the requirement for notice or reduce any grace period); or
(b) without the consent of the Holders of a majority in principal
amount of Outstanding Bonds, by Act of said Holders delivered to the Indenture
Trustee, modify, amend or supplement,
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or waive any provision so as to decrease TU Electric's obligations under: (i)
paragraph 9.2.4 of the Participation Agreement, (ii) subsection 11.11, 13.2,
13.3 and 15.2 of the Lease or (iii) the Facilities Agreements or the Ground
Leases in a manner which would materially impair the security interest of the
Indenture Estate.
Without the consent of each Indemnitee affected thereby, no
modification, amendment, supplement or consent to, or waiver of any provision
of, the Lease shall adversely affect any right of any Indemnitee pursuant to
Section 14 of the Lease or paragraph 9.2.5 of the Participation Agreement.
SECTION 5.09. Annual Statement as to Compliance.
---------------------------------
(a) TU Electric will deliver to the Indenture Trustee, on or before
120 days after the end of each of TU Electric's fiscal years, a written
statement (which need not comply with Section 1.02) signed by TU Electric's
President, one of its Vice Presidents, its Treasurer or an Assistant Treasurer
stating that
(1) a review of the activities of TU Electric required during such
year of TU Electric under this Indenture has been made under his
supervision; and
(2) to the best of his knowledge, based on such review, TU Electric
has fulfilled all its obligations under this Indenture throughout such year
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and
status thereof.
(b) The Owner Trustee will deliver to the Indenture Trustee, promptly,
but in no event later than five days after a Responsible Officer has obtained
actual knowledge thereof, written notice of any event which with the giving of
notice or lapse of time, or both, would become an Indenture Event of Default.
SECTION 5.10. Certain Rights of Owner Trustee and Owner Participant.
-----------------------------------------------------
Notwithstanding any other provisions of this Indenture, including the
Granting Clause, the following rights shall be reserved to the Owner Trustee or
Owner Participant, as the case may be (as separate and independent rights), to
the extent described herein:
(a) at all times the Owner Trustee shall have the right, together with
the Indenture Trustee (i) to receive from the Lessee all notices, certificates,
reports, filings, opinions of counsel and other documents and all information
which any
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thereof is permitted or required to give or furnish to the Owner Trustee or the
Lessor pursuant to any Operative Document and (ii) to consent to any amendment
to any Operative Document as provided therein;
(b) so long as no Indenture Event of Default shall have occurred and
be continuing, the Owner Trustee shall have the right (i) to the exclusion of
the Indenture Trustee, (A) to exercise the rights, elections and options of the
Lessor to make any decision or determination and to adjust Basic Rent, Casualty
Value and Termination Value, and enter into amendments to the Lease effecting
such adjustments, to the extent provided in Section 4 of the Lease subject,
however, in each case, to compliance with all of the terms of Section 4 of the
Lease or with respect to consent, waiver or approval of renewal or purchase
options and (B) to exercise all rights of the Lessor with respect to
solicitations of bids pursuant to Section 17.1 of the Lease and (ii) but not to
the exclusion of the Indenture Trustee (which shall also have the right), (A) to
grant such consents as may be requested under the Lease, (B) to exercise
inspection rights pursuant to Section 11.2 of the Lease, (C) to consent to and
approve any sublessees pursuant to Section 15 of the Lease, (D) to approve as
satisfactory any other accountants, engineers or counsel to render services for
or issue opinions to the Owner Trustee pursuant to express provisions of the
Operative Documents, (E) to give notice to the Lessee of any misrepresentation
pursuant to Section 16(d) of the Lease and (F) to amend any Operative Document
to which Owner Trustee is a party; provided that in the event an Indenture Event
--------
of Default shall have occurred and be continuing, the Indenture Trustee shall
have all rights of the Owner Trustee as "Lessor" under the Lease to modify,
amend or supplement the Lease or give any consent, waiver, authorization or
approval thereunder, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the "Lessor" thereunder; provided, further, that without
-------- -------
the prior written consent of Owner Trustee and Owner Participant, and whether or
not an Indenture Event of Default shall have occurred and be continuing, no such
exercise of rights, elections or options and no such amendment or supplement
shall directly or indirectly (1) alter, modify or amend any indemnities in favor
of Owner Trustee or Owner Participant, (2) extend the term of the Lease or alter
the amount or extend the time of payment of Basic Rent, Casualty Value or
Termination Value as set forth in the Lease or alter or amend Section 6, 11 or
13 of the Lease or (3) modify, amend or supplement the Lease releasing Lessee
from its obligations in respect of the payment of Basic Rent, Casualty Value or
Termination Value for the Facilities or changing the absolute and unconditional
character of such obligations as set forth in Section 3.5 of the Lease or (4)
modify the meaning of any defined term in any Operative Document, including
without limitation the terms defined in
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Appendix A to the Participation Agreement, if any such modification of a
definition contained therein would result in a modification of the Lease not
permitted by this proviso);
(c) the Owner Trustee shall have the right, as Lessor, to seek
specific performance of the covenants of the Lessee under the Lease relating to
the protection, insurance and maintenance of the Facilities and to maintain
separate insurance with respect to the Facilities pursuant to Section 13.5 of
the Lease and to provide pursuant to Section 13 of the Lease such insurance as
the Lessee shall have failed to maintain; and
(d) at all times each of the Owner Trustee (as Owner Trustee and as
Lessor) and the Owner Participant shall have the right, to the exclusion of the
Indenture Trustee, to demand, collect, sue for or otherwise receive and enforce
the payment of Excepted Payments due and payable to it.
ARTICLE SIX
REDEMPTION OF BONDS
SECTION 6.01. Applicability of Article.
------------------------
Redemption of Bonds, as required by any provision of this Indenture,
shall be made in accordance with such provision, this Article Six and Article
Seven. Redemption of additional series of Bonds other than Initial Series Bonds
shall be made only to the extent permitted by the supplemental indenture
providing for the issuance of such Bonds and not inconsistent with the
provisions hereof.
SECTION 6.02. Redemption of the Initial Series Bonds.
--------------------------------------
(a) Optional Redemption.
-------------------
(i) Initial Series Bonds with a Stated Maturity of January 1,
---------------------------------------------------------
2005. The Initial Series Bonds with a Stated Maturity of January 1, 2005 shall
----
not be redeemable prior to Maturity at the option of Owner Trustee.
(ii) Initial Series Bonds with a Stated Maturity of January 1,
---------------------------------------------------------
2018. The Initial Series Bonds with a Stated Maturity of January 1, 2018 shall
----
be redeemable prior to Maturity at the option of Owner Trustee, as a whole at
any time and in part from time to time, at the following times and Redemption
Prices (expressed as a percentage of principal amount), together with interest
accrued to the Redemption Date:
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<PAGE>
<TABLE>
<CAPTION>
Twelve Twelve
Month Month
Period Period
Beginning Redemption Beginning Redemption
January 1 Price January 1 Price
--------- ---------- --------- ----------
<S> <C> <C> <C>
1995........... 107.47% 2002........... 103.45%
1996........... 106.90 2003........... 102.87
1997........... 166.32 2004........... 102.30
1998........... 105.75 2005........... 101.72
1999........... 105.17 2006........... 101.15
2000........... 104.60 2007........... 100.57
2001........... 104.02
</TABLE>
and thereafter at the principal amount thereof, together with interest accrued
to the Redemption Date; provided, however, that no such redemption shall be made
-------- -------
prior to January 1, 1995.
(b) Mandatory Redemption.
--------------------
(i) Mandatory Redemption - Purchase or Obsolescence. The
-----------------------------------------------
Initial Series Bonds of each Stated Maturity shall be subject to redemption in
whole but not in part, at 100% of the principal amount thereof, together with
interest accrued to the Redemption Date, upon the receipt of payment of the
applicable purchase price or Termination Value resulting from a termination of
the Lease pursuant to Section 7 thereof.
(ii) Mandatory Redemption - Event of Loss. The Initial Series
------------------------------------
Bonds of each Stated Maturity shall be subject to redemption, at 100% of the
principal amount thereof, together with interest accrued to the Redemption Date,
upon the receipt of the applicable payment of Casualty Value resulting from an
Event of Loss under the Lease (unless, in connection with an Event of Loss
described in clause (e) of the definition thereof, TU Electric assumes the
Initial Series Bonds then Outstanding pursuant to Section 2.16 hereof), in the
principal amount equal to the product of (i) the aggregate principal amount of
Initial Series Bonds of such Stated Maturity then Outstanding and (ii) a
fraction the numerator of which is the Purchase Price of the Facility to which
such Event of Loss pertains and the denominator of which is the aggregate
Purchase Price of the Facilities then subject to the Lien of the Indenture.
(iii) Special Mandatory Redemption. The Initial Series Bonds
----------------------------
of each Stated Maturity shall be subject to special mandatory redemption, in
whole but not in part, at the redemption prices set forth in the immediately
succeeding paragraph with respect to the Initial Series Bonds with a Stated
Maturity of January 1, 2005 and at the applicable redemption prices set forth
under Section 6.02(a) hereof with respect to the Initial Series Bonds with a
Stated Maturity of January 1, 2018, upon the receipt
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<PAGE>
of payment of the applicable purchase price upon the exercise by TU Electric of
its option to purchase the Facilities under subsection 6.1(c)(i) or (ii) of the
Lease, unless, in either case, TU Electric shall assume the Initial Series Bonds
then Outstanding pursuant to Section 2.16 hereof; provided, however, that, if
-------- -------
TU Electric exercises its option to purchase the Facilities under Subsection
6.1(c)(i) or (ii) of the Lease at a time prior to the first date on which the
Initial Series Bonds with a Stated Maturity of January 1, 2018 are redeemable
under Section 6.02(a) hereof, the redemption price shall be the redemption price
which would be applicable on such first date.
The Initial Series Bonds with a Stated Maturity of January 1, 2005
shall be subject to special mandatory redemption at 104.73% of the principal
amount thereof, together with interest accrued to the Redemption Date, if
redeemed on or before December 31, 1995, and if redeemed thereafter, at the
following times and Special Mandatory Redemption Prices (expressed as a
percentage of principal amount), together with interest accrued to the
Redemption Date:
<TABLE>
<CAPTION>
Twelve Month Period Special Mandatory
Beginning January 1, Redemption Price
-------------------- -----------------
<S> <C>
1996............... 103.78%
1997............... 102.84
1998............... 101.89
1999............... 100.95
</TABLE>
and thereafter at the principal amount thereof, together with interest accrued
to the Redemption Date.
SECTION 6.03. Notice to Indenture Trustee of Redemption.
-----------------------------------------
In case of any redemption or prepayment of Bonds, other than through
the operation of the Sinking Fund, if any, with respect to any series, the Owner
Trustee shall, at least 45 days prior to the scheduled Redemption Date (unless a
shorter notice shall be satisfactory to the Indenture Trustee), notify the
Indenture Trustee in writing of such Redemption Date and of the principal amount
and Stated Maturity of Bonds to be redeemed.
SECTION 6.04. Selection by Indenture Trustee of Bonds to be Redeemed.
------------------------------------------------------
If less than all the Bonds of any series of a particular Stated
Maturity are to be redeemed, other than through the operation of a Sinking Fund,
the particular Bonds of such series and such Stated Maturity to be redeemed
shall be selected following receipt by the Indenture Trustee of the notice
required by Section 6.03, by the Indenture Trustee, from the Outstanding
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<PAGE>
Bonds of such series of such particular Stated Maturity not previously called
for redemption, by such method as the Indenture Trustee shall deem fair and
appropriate and which may provide for the selection for redemption of portions
of the principal of Bonds of a denomination larger than the minimum authorized
denomination for such Bonds. If Bonds are to be selected for any redemption
pursuant to this Section, the Indenture Trustee shall make such adjustments as
it shall deem necessary so that the principal amount of Bonds redeemed shall be
$1,000 or an integral multiple thereof, such adjustments to be made by the
Indenture Trustee in such manner as the Indenture Trustee in its sole discretion
deems appropriate.
The Indenture Trustee shall promptly notify the Owner Trustee, the
Bond Registrar and the Paying Agent in writing of the Bonds selected for
redemption and, in the case of any Bonds selected for partial redemption, the
principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Bonds shall relate, in
the case of any Bond redeemed or to be redeemed only in part, to the portion of
the principal of such Bond which has been or is to be redeemed.
SECTION 6.05. Notice of Redemption.
--------------------
Unless otherwise provided as to a particular series of Bonds, notice
of redemption of Bonds (including redemption through the operation of the
Sinking Fund, if any, with respect to any series) shall be given by first-class
mail, postage prepaid, mailed not less than 30 days prior to the Redemption
Date, to each Holder of Bonds to be redeemed, at his address appearing on the
Bond Register.
Unless otherwise provided as to a particular series of Bonds, all
notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) if less than all Outstanding Bonds of a series are to be
redeemed, the identification (and, in the case of partial redemption, the
respective principal amounts) of the particular Bonds, including the Stated
Maturity of the Bonds of such series to be redeemed,
(4) any condition to such redemption,
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<PAGE>
(5) that on the Redemption Date, and upon the satisfaction of
each such condition, the Bonds or portions thereof to be redeemed shall
cease to bear interest,
(6) the place where such Bonds are to be surrendered for payment
of the Redemption Price, and
(7) that the redemption is through the operation of the Sinking
Fund, if such is the case.
Notice of redemption of Bonds to be redeemed shall be given by the
Indenture Trustee in the name of the Owner Trustee.
SECTION 6.06. Deposit of Redemption Price; Credit with Respect to
---------------------------------------------------
Surrender of Bonds.
------------------
(a) Except as provided in paragraphs (b) and (c) of this Section, on
or prior to any Redemption Date, the Owner Trustee shall deposit, or cause to be
deposited, with the Indenture Trustee an amount of money sufficient to pay the
Redemption Price of all the Bonds which are to be redeemed on that date.
(b) In satisfaction of all or any part of any Sinking Fund payment,
the Owner Trustee may elect, by including a statement to that effect in an Owner
Trustee Request delivered to the Indenture Trustee not less than 60 days prior
to the scheduled Redemption Date (unless a shorter notice shall be satisfactory
to the Indenture Trustee), that there be applied as a credit against such
Sinking Fund payment in lieu of payment in cash, Bonds acquired (other than
through operation of such Sinking Fund and other than upon redemption thereof
pursuant to this Article Six) by the Owner Trustee, at any time and from time to
time, and delivered (but not delivered earlier than six months prior to the
Redemption Date specified in such Owner Trustee Request) to the Indenture
Trustee for cancellation prior to or concurrently with the delivery of such
Owner Trustee Request and not theretofore applied as a credit against such
Sinking Fund payment or against a redemption payment pursuant to this Article
Six, and upon such election and application of Bonds as a credit against any
Sinking Fund or redemption payment, the aggregate principal amount of Bonds to
be redeemed shall be reduced by the aggregate principal amount of the Bonds
being so applied as a credit; provided, however, that Bonds of a particular
-------- -------
series and Stated Maturity may only be applied as a credit pursuant to this
Section against Bonds of the same series and Stated Maturity to be redeemed on
the Redemption Date specified in such Owner Trustee Request; and provided,
--------
further, that no such credit with respect to Bonds of a particular Stated
-------
Maturity shall exceed the aggregate principal amount of Bonds of such series and
Stated Maturity to be redeemed on such Redemption Date.
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<PAGE>
(c) Except as otherwise provided as a term of a series of Bonds, with
respect to any notice of optional redemption of Bonds, unless, upon the giving
of such notice, such Bonds shall be deemed to have been paid pursuant to Section
3.01, such notice shall state that such redemption shall be conditional upon the
receipt by the Paying Agent on or prior to the date fixed for such redemption of
moneys in immediately available funds sufficient to pay the principal of and
premium, if any, and interest on such Bonds to be redeemed or prepaid, and that
if such moneys shall not have been so received said notice shall be of no force
and effect and the Owner Trustee shall not be required to redeem or prepay such
Bonds. In the event that such notice of redemption or prepayment contains such
a condition and such moneys are not so received, the redemption or prepayment
shall not be made and the Indenture Trustee shall within a reasonable time
thereafter give notice, in the manner in which the notice of redemption or
prepayment was given, that such moneys were not so received.
SECTION 6.07. Bonds Payable on Redemption Date.
--------------------------------
Notice of redemption having been given as aforesaid, the Bonds so to
be redeemed shall, on the Redemption Date, except as provided in Section
6.06(c), become due and payable at the corporate trust office of the Paying
Agent at the Redemption Price therein specified and from and after such date
(unless there shall be a default in the payment of the Redemption Price) such
Bonds shall cease to bear interest. Upon surrender of such Bonds for redemption
in accordance with said notice, such Bonds shall be paid at the Redemption
Price, exclusive, however, of installments of interest maturing on or prior to
the Redemption Date payment of which shall have been made or duly provided for
to the Holders of such Bonds registered as such on the relevant Record Dates, or
otherwise, according to the terms and the provisions of Section 2.07.
Except as provided in Section 6.06(c), if any Bond called for
redemption shall not be so paid upon surrender thereof for redemption because
the Indenture Trustee shall not have received pursuant to Section 6.06 an amount
of money sufficient to pay the Redemption Price for such Bond, the principal
(and premium, if any) shall, until paid, continue to bear interest from the
Redemption Date at the rate borne by the Bond in respect of overdue payments.
SECTION 6.08. Bonds Redeemed in Part.
----------------------
Any Bond which is to be redeemed only in part shall be surrendered at
the corporate trust office of the Paying Agent (with due endorsement by, or a
written instrument of transfer in form satisfactory to the Bond Registrar duly
executed by, the Holder thereof or his attorney duly authorized in writing) and
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<PAGE>
the Owner Trustee shall execute and the Indenture Trustee shall authenticate and
deliver to the Paying Agent for delivery to the Holder of such Bond a new Bond
or Bonds of the same series and Stated Maturity of principal amount and
authorized denomination as requested by such Holder in an aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Bond so surrendered.
ARTICLE SEVEN
SINKING FUND
SECTION 7.01. Sinking Fund Amounts and Dates.
------------------------------
The Initial Series Bonds of each Stated Maturity shall be redeemed
through operation of a sinking fund. The amount of each sinking fund payment
(subject to adjustment as provided in Sections 6.06 and 7.02) and each
Redemption Date applicable to a Stated Maturity o(Pounds) the Initial Series
Bonds are as set forth below:
<TABLE>
<CAPTION>
Stated Maturity
---------------
Redemption Date January 1, 2005 January 1, 2018
--------------- --------------- ---------------
<S> <C> <C>
January 1, 1991 $4,419,0000 0
July 1, 1991 0 0
January 1, 1992 293,000 0
July 1, 1992 0 0
January 1, 1993 321,000 0
July 1, 1993 0 0
January 1, 1994 351,000 0
July 1, 1994 0 0
January 1, 1995 385,000 0
July 1, 1995 0 0
January 1, 1996 421,000 0
July 1, 1996 0 0
January 1, 1997 462,000 0
July 1, 1997 0 0
January 1, 1998 506,000 0
July 1, 1998 0 0
January 1, 1999 3,126,000 0
July 1, 1999 0 0
January 1, 2000 3,500,000 0
July 1, 2000 0 0
January 1, 2001 3,834,000 0
July 1, 2001 0 0
January 1, 2002 4,200,000 0
July 1, 2002 0 0
January 1, 2003 4,601,000 0
July 1, 2003 0 0
January 1, 2004 5,040,000 0
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Stated Maturity
---------------
Redemption Date January 1, 2005 January 1, 2018
--------------- --------------- ---------------
<S> <C> <C>
July 1, 2004 0 0
January 1, 2005 5,521,000 0
July 1, 2005 - 0
January 1, 2006 - 1,550,000
July 1, 2006 - 0
January 1, 2007 - 3,637,000
July 1, 2007 - 0
January 1, 2008 - 4,808,000
July 1, 2008 - 0
January 1, 2009 - 4,699,000
July 1, 2009 - 0
January 1, 2010 - 4,965,000
July 1, 2010 - 0
January 1, 2011 - 5,301,000
July 1, 2011 - 0
January 1, 2012 - 5,661,000
July 1, 2012 - 0
January 1, 2013 - 6,047,000
July 1, 2013 - 0
January 1, 2014 - 6,530,000
July 1, 2014 - 0
January 1, 2015 - 10,557,000
July 1, 2015 - 0
January 1, 2016 - 11,659,000
July 1, 2016 - 0
January 1, 2017 - 12,877,000
July 1, 2017 - 756,000
January 1, 2018 - 2,548,000
</TABLE>
SECTION 7.02. Sinking Fund for Bonds.
----------------------
Except as otherwise provided in respect of a particular series of
Bonds, the provisions of this Article shall be applicable to the Initial Series
Bonds and any series of Bonds for which a Sinking Fund is established by the
supplemental indenture creating such series. On or before each Sinking Fund
payment date specified herein or therein, an amount in immediately available
funds will be deposited by the Owner Trustee with the Indenture Trustee or the
Paying Agent sufficient to redeem on such date the principal amount of Bonds
required to be redeemed on such date as set forth herein or in such supplemental
indenture, at 100% of the principal amount thereof together with accrued
interest to the Redemption Date (exclusive of installments of interest maturing
on or prior to such date payment of which shall have been made or duly provided
for to the Holders of such Bonds on relevant Record Dates, or otherwise as
provided in Section 2.07); provided, however, that such aggregate principal
-------- -------
amount of Bonds to be redeemed pursuant to the Sinking Fund on any such date
shall be reduced by the aggregate principal
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<PAGE>
amount, if any, of Bonds being applied as a credit to such redemption payment
pursuant to Section 6.06(b).
In the event that there shall have been any partial redemption of
Bonds of any series of a particular Stated Maturity (other than pursuant to the
Sinking Fund), the amount of each Sinking Fund payment subsequent to such
redemption shall be reduced by an amount equal to the amount obtained by (i)
multiplying the amount of such Sinking Fund payment as in effect prior to such
redemption by a fraction of which the numerator shall be the aggregate principal
amount of Bonds of such Stated Maturity of such series redeemed pursuant to such
partial redemption, and the denominator shall be the aggregate principal amount
of Bonds of such Stated Maturity of such series Outstanding immediately prior to
such redemption, and (ii) rounding the amount indicated in (i) to the nearest
$1,000, subject to necessary adjustment so that the total amount of such
reduction is equal to the total principal amount of Bonds redeemed pursuant to
such partial redemption, such adjustment to be made by the Indenture Trustee in
such manner as the Indenture Trustee in its sole discretion deems appropriate.
SECTION 7.03. Selection by Indenture Trustee of Bonds to be Redeemed
------------------------------------------------------
Through Operation of Sinking Fund.
---------------------------------
(a) In the case of Bonds of any series of a particular Stated Maturity
to be redeemed through operation of the Sinking Fund, the particular Bonds to be
redeemed shall be selected by such method as the Indenture Trustee deems fair
and appropriate not less than 30 nor more than 60 days prior to the Redemption
Date by the Indenture Trustee from the Outstanding Bonds of such series and such
Stated Maturity not previously called for redemption. The Indenture Trustee in
its discretion may determine the particular Bonds registered in the name of any
Holder which are to be redeemed, in whole or in part.
(b) On or before the 45th day next preceding each Sinking Fund payment
date for the Bonds of any series and Stated Maturity, the Owner Trustee may
deliver to the Indenture Trustee an Owner Trustee Certificate (i) specifying the
portion of the Sinking Fund payment to be satisfied by payment of cash and the
portion to be satisfied by credit of Bonds of such series and Stated Maturity
and (ii) stating that none of such Bonds have theretofore been so credited. Any
Bonds of such series to be so credited shall be delivered to the Indenture
Trustee with such Owner Trustee Certificate or at such later time as shall be
satisfactory to the Indenture Trustee. The Owner Trustee Certificate shall be
irrevocable upon delivery to the Indenture Trustee. Failure by the Owner
Trustee on or before such 45th day to deliver such Owner Trustee Certificate
shall constitute an
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<PAGE>
irrevocable election by the Owner Trustee that the next succeeding Sinking Fund
payment shall be paid entirely in cash.
(c) Subject to Article Three hereof, the Indenture Trustee shall not
redeem or cause to be redeemed any Bonds with Sinking Fund moneys or mail any
notice of redemption of Bonds by operation of the Sinking Fund during the
continuance of a default in payment of the principal of or premium (if any) or
interest on the Bonds except that, where the mailing of notice of redemption of
any Bonds shall theretofore have been made, the Indenture Trustee shall redeem
or cause to be redeemed such Bonds, provided that it shall have received a sum
sufficient for such redemption, including payment of accrued interest. Except
as aforesaid, any Sinking Fund payments at the time when any such default shall
occur, and any Sinking Fund payments thereafter made shall, during the
continuance of such default, be deemed to have been collected under Article
Eight and held for the payment of all the Bonds. In case such Event of Default
shall have been waived as provided in Section 8.08 hereof or the default cured
on or before the 45th day preceding any Sinking Fund payment date, such moneys
shall thereafter be applied on the next succeeding Sinking Fund payment date in
accordance with this Section to the redemption of Bonds.
ARTICLE EIGHT
INDENTURE EVENTS OF DEFAULT; REMEDIES
SECTION 8.01. Indenture Events of Default.
---------------------------
"Indenture Events of Default", whenever used herein, means any one of
the following events (whatever the reason for such Indenture Event of Default
and whether it shall be voluntary or involuntary or be effected by operation of
law pursuant to a judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Bond when it
becomes due and payable, and continuance of such default for a period of
ten (10) days;
(2) default in the payment of the principal of (or premium, if any,
on) any Bond at its Maturity, and continuance of such default for a period
of ten (10) days;
(3) default in the performance, or breach, of any covenant of the
Owner Participant or the Owner Trustee contained in an Operative Document
or of TU Electric contained in this Indenture and continuance of such
default or breach for a period of 30 days after there has been given, by
registered or certified mail, to TU Electric, the
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<PAGE>
Owner Trustee and the Owner Participant by the Indenture Trustee, or to
TU Electric, the Owner Trustee, the Owner Participant and the Indenture
Trustee by the Holders of at least 25% in principal amount of Outstanding
Bonds, a written notice specifying such failure and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;
provided, however, that such failure to perform or observe any such other
-------- -------
covenant, condition or agreement shall not give rise to an Indenture
Event of Default if such failure is other than in the payment of money,
shall not materially adversely affect the Indenture Estate (including,
without limitation, the flow of moneys to the Indenture Trustee), the
enforceability or priority of the lien of this Indenture or the
enforceability or priority of the indebtedness evidenced by the Bonds, or
materially adversely affect any other material rights or interests of
the Holders of the Bonds or the Indenture Trustee in, to or under this
Indenture or the Bonds, but only so long as the Owner Trustee, the Owner
Participant or TU Electric, as the case may be, institutes curative
action within such 30 day period and diligently pursues such action to
completion; or
(4) a Lease Event of Default shall have occurred and be continuing; or
(5) a court or other governmental authority having jurisdiction in the
premises shall enter a decree or order adjudging the Owner Trustee a
bankrupt or insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjustment or composition of or in respect of
it under the Federal Bankruptcy Code, or under any other law, or any order
for relief shall be entered, or appointing a receiver, liquidator,
assignee, trustee or sequestrator (or other similar official) of it or of
any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and such decree or order shall continue
unstayed and in effect for a period of 90 days; or
(6) the Owner Trustee shall institute proceedings to have itself be
adjudicated a bankrupt or insolvent, or shall consent to the institution of
bankruptcy or insolvency proceedings against it, or shall file a petition
or answer or consent seeking reorganization, arrangement or other relief
under the Federal Bankruptcy Code, or under any other law, or shall consent
to the filing of any such petition against it or to the appointment of a
receiver, liquidator, assignee, trustee or sequestrator (or other similar
official) of it or any substantial part of its property, or shall make an
assignment for the benefit of its creditors, or shall admit in writing its
inability to pay its debts
-44-
<PAGE>
generally as they become due, or shall take corporate action in furtherance
of any such action.
Anything herein to the contrary notwithstanding, (x) for purposes of
this Indenture, a Lease Event of Default resulting from a default in the payment
of Supplemental Rent which is an Excepted Payment or is not payable to the Owner
Trustee thereunder, shall not constitute an Event of Default hereunder without
the written consent of the Owner Trustee, which shall be expressed in an Owner
Trustee Certificate delivered to the Indenture Trustee, and (y) if TU Electric
shall fail to pay any Excepted Payment due to any Person (other than the
Indenture Trustee), such Person (or the Owner Trustee on behalf of such Person)
shall have the right, to the exclusion of the Indenture Trustee, to enforce
performance by TU Electric of any covenant of TU Electric to pay any such amount
directly to such Person or to recover damages for the breach of the applicable
indemnity provision of the Lease or otherwise; provided, however, that neither
-------- -------
such Person nor the Owner Trustee on behalf of such Person shall have any remedy
against the Indenture Estate or the right to exercise any remedy under Section
17 of the Lease (except the remedy of specific performance or a suit to recover
damages at law).
SECTION 8.02. Acceleration Upon Notice; Rescission.
------------------------------------
(a) During the continuance of any Indenture Event of Default, either
the Indenture Trustee in its discretion or the Holders of not less than 25% in
aggregate principal amount of the Outstanding Bonds, by notice in writing to the
Owner Trustee, the Owner Participant and to TU Electric (and to the Indenture
Trustee if given by the Holders), may, subject to Section 8.09 hereof, declare
the principal of all the Bonds then Outstanding and the interest accrued thereon
to be due and payable immediately, and thereupon the same shall become
immediately due and payable.
(b) At any time after such a declaration of acceleration has been made
and before any sale of the Indenture Estate, or any part thereof, shall have
been made pursuant to any power of sale as hereinafter in this Article provided,
the Holders of a majority in principal amount of the Bonds Outstanding, by
written notice to the Owner Trustee, the Owner Participant, TU Electric and
the Indenture Trustee, may rescind and annul such declaration and its
consequences if
(1) there shall have been paid to or deposited with the Indenture
Trustee a sum sufficient to pay
(A) all overdue installments of interest on all Bonds,
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<PAGE>
(B) the principal of, and premium (if any) on any Bonds
which have become due otherwise than by such declaration of
acceleration and interest thereon at the respective rates
provided in the Bonds for late payments of principal or premium,
(C) to the extent that payment of such interest is lawful,
interest upon overdue installments of interest at the respective
rates provided in the Bonds for late payments of interest, and
(D) all sums paid or advanced by the Indenture Trustee
hereunder and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee, its agents
and counsel; and
(2) all Indenture Events of Default other than the non-payment of
the principal of Bonds which have become due solely by such
acceleration, have been cured or waived as provided in Section 8.08.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 8.03. Suit; Possession; Title; Sale of Indenture Estate.
-------------------------------- ----------------
(a) If an Indenture Event of Default has occurred and is continuing,
the Indenture Trustee may, and is empowered to, in its discretion, subject to
Section 8.09 hereof (i) proceed to protect and enforce the rights vested in it
by this Indenture by such appropriate judicial proceedings as the Indenture
Trustee shall deem most effective to protect and enforce any of such rights,
either at law or in equity or in bankruptcy or otherwise, whether for specific
enforcement of any covenant or agreement contained in the Bonds or this
Indenture, or in aid of the exercise of any power therein or herein granted, or
for any foreclosure hereunder and sale under a judgment or decree in any
judicial proceeding, or to enforce any other legal or equitable right vested in
the Indenture Trustee by this Indenture or by law; or (ii) cause any action at
law or suit in equity or other proceeding to be instituted and prosecuted to
collect or enforce any obligations included in the Indenture Estate, or to
foreclose or enforce any other agreement or other instrument by or under or
pursuant to which such obligations are issued or secured, subject in each case
to the provisions and requirements thereof; or (iii) sell (by one sale or by
several sales), in all events subject to any mandatory requirements of Texas law
and other law applicable thereto, at its election, and, except as provided in
the last sentence of this Section 8.03(a), without further demand or
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<PAGE>
notice of any kind which are hereby expressly waived by the Owner Trustee, the
Indenture Estate (as an entirety or, to the extent permitted by law, any part
thereof, in one or more parcels) and all right, title and interest, claim and
demand therein, free of any right of redemption thereof to the extent permitted
by law, such sale or sales to be made in such manner at such place or places and
upon such terms as the Indenture Trustee may fix or determine in accordance with
Section 51.002 of the Texas Property Code, as amended, or successor statute
thereto to the extent applicable, or as may be required by other applicable law;
the Owner Trustee, to the extent permitted by law, hereby expressly waiving and
releasing any or all equity or right of redemption (and TU Electric hereby
acknowledging that it has no such equity or right of redemption); and on any
such sale or sales, the Indenture Trustee is hereby appointed the true and
lawful attorney-in-fact of the Owner Trustee (which appointment is irrevocable
and coupled with an interest in the Bonds), in its name and stead or in the name
of the Indenture Trustee, to execute all deeds, bills of sale and instruments of
assignment and transfer, and to make all necessary conveyances, assignments,
transfers and deliveries; and the receipt of the Indenture Trustee for the
purchase money paid at any such sale shall be a sufficient discharge therefor to
any purchaser of the Indenture Estate or any part thereof; or (iv) exercise any
and all other rights and powers conferred upon the Indenture Trustee or
Bondholders by this Indenture or the Bonds or hereafter existing at law or in
equity or by statute. The Indenture Trustee agrees to give the Owner
Participant and TU Electric 10 Business Days' notice of the time, date and
location of any proposed sale pursuant to clause (iii) of this paragraph (a) at
the address provided by the Owner Trustee, but failure to give such notice will
not invalidate any sale pursuant to clause (iii) of this paragraph (a). The
parties intend that this instrument shall constitute a deed of trust thereby
conferring a power of sale as set forth herein.
(b) In case the Indenture Trustee shall rightfully demand title or
possession of any part or all of the Leased Assets in pursuance of this
Indenture, the Owner Trustee and (in respect to possession only) TU Electric
shall, at the request of the Indenture Trustee, promptly execute and deliver to
the Indenture Trustee such instruments of title and other documents as the
Indenture Trustee may deem necessary or advisable to enable the Indenture
Trustee to obtain title to, or to enable the Indenture Trustee or an agent or
representative designated by the Indenture Trustee, at such time or times and
place or places as the Indenture Trustee may specify, to obtain possession of,
the whole or any part of the Leased Assets to whose possession the Indenture
Trustee shall at the time be entitled hereunder. If the Owner Trustee or TU
Electric shall for any reason fail to execute and deliver such instruments and
documents after such request by the Indenture Trustee, the Indenture Trustee may
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obtain a judgment conferring on the Indenture Trustee the right to immediate
possession and requiring the Owner Trustee and TU Electric to execute and
deliver such instruments and documents to the Indenture Trustee, to the entry of
which judgment the Owner Trustee and TU Electric hereby specifically consent.
(c) As a condition to exercising any of its rights and remedies
hereunder in connection with an Indenture Event of Default hereunder while an
Indenture Event of Default under Section 8.01(4) hereof has occurred and is
continuing, the Indenture Trustee shall simultaneously with or prior to exercise
of any other such right or remedy hereunder, exercise and diligently pursue one
or more of its rights and remedies under the Lease (at least one of which
remedies exercised and pursued by the Indenture Trustee shall involve the
payment of Termination Value, an amount measured by Termination Value or an
amount in excess of Termination Value) to the extent that it is then entitled to
do so hereunder and under the Lease.
(d) Notwithstanding any provision contained in this Indenture, if and
for so long as no Lease Event of Default shall have occurred and be continuing,
the Indenture Trustee's rights and exercise of remedies hereunder shall be
subject to TU Electric's rights under the Lease.
SECTION 8.04. Suit Upon Lease; Claim in Bankruptcy.
------------------------------------
(a) If there shall be any default in any payment of Rent payable to
the Owner Trustee under the Lease and assigned to the Indenture Trustee for a
period of 20 days after such payment shall have become due and payable, then the
Indenture Trustee as assignee of the Lease hereunder, in its own name and as
trustee of any express trust, subject to Section 8.09, 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 under the Lease, and may prosecute any
such action or proceeding to judgment or final decree and may enforce any such
judgment or final decree against TU Electric or any obligor and collect in the
manner provided by law out of property of TU Electric subject to the liens of
any other mortgages then existing on such property or such obligor, wherever
situated, the moneys adjudged or determined to be payable. Any moneys so
collected by the Indenture Trustee shall be applied as provided in Article Four.
(b) In case there shall be pending proceedings relative to TU Electric
or any other obligor upon the Bonds under Title 11 of the United States Code or
any other applicable Federal or State bankruptcy, insolvency or other similar
law, or in case a receiver, assignee, trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of TU Electric or its property or such other obligor, or in
case of any other
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comparable judicial proceedings relative to TU Electric or such obligor, or to
the creditors or property of TU Electric or such obligor, the Indenture Trustee
as assignee of the Lease hereunder, irrespective of whether the principal of the
Bonds shall then be due and payable as herein or therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand or declaration pursuant to the provisions of this Section
8.04, shall be entitled and empowered, by intervention in such proceedings or
otherwise, subject to the liens of any other mortgages then existing on such
property, (i) to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Indenture Trustee
(including any claim for reasonable compensation, expenses, disbursements,
liabilities and advances of the Indenture Trustee, its agents, attorneys and
counsel) and of the Holders allowed in such proceedings, and (ii) to collect and
receive any moneys or other property payable or deliverable on any such claims,
and to distribute the same; and any receiver, assignee, trustee, liquidator,
custodian or sequestrator (or other similar official) in any such judicial
proceeding is hereby authorized by each of the Holders to make such payments to
the Indenture Trustee, and, in the event that the Indenture Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Indenture Trustee such amount as shall be sufficient to cover the reasonable
compensation, expenses, disbursements, liabilities and advances of the Indenture
Trustee, its agents, attorneys and counsel and any other amounts due the
Indenture Trustee under Section 7 of the Lease.
SECTION 8.05. Actions for Ratable Benefit of Bondholders.
------------------------------------------
All rights of action and all rights to assert claims under this
Indenture, or under any of the Bonds, may be enforced by the Indenture Trustee
without the possession of any of the Bonds or the production thereof in any
trial or other proceedings relative thereto, and any such action or proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment shall, after provision for the
payment or reimbursement of the proper charges, expenses or advances of the
Indenture Trustee, be for the ratable benefit of the Holders of the Bonds in
respect of which such judgment has been recovered. In any proceedings brought
by the Indenture Trustee (and also any proceedings involving the interpretation
of any provision of this Indenture to which the Indenture Trustee shall be a
party) the Indenture Trustee shall be held to represent all the Holders, and it
shall not be necessary to make any Holders party to such proceedings. The
foregoing shall not be deemed to constitute a covenant or an acknowledgment by
the Indenture Trustee that the Holders would necessarily be bound by the results
of any proceedings involving
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the interpretation of any provision hereof without being appropriately joined
(by means of a class action or otherwise) in such proceedings.
SECTION 8.06. Bondholders May Demand Enforcement of Rights by
-----------------------------------------------
Indenture Trustee.
-----------------
If an Indenture Event of Default shall have occurred and shall be
continuing, the Indenture Trustee shall, upon the written request of the Holders
of a majority in aggregate principal amount of the Bonds of all series of Bonds
then Outstanding and upon the offering of indemnity as provided in Section
9.03(e), proceed to institute one or more suits, actions or proceedings at law,
in equity or otherwise, or take any other appropriate remedy, to enforce payment
of the principal of, or premium, if any, or interest on, the Bonds or to
foreclose this Indenture or to sell the Indenture Estate under a judgment or
decree of a court or courts of competent jurisdiction or under the power of sale
herein granted, or take such other appropriate legal, equitable or other remedy,
as the Indenture Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights or powers of the Indenture Trustee or the
Bondholders, or, in case such Bondholders shall have requested a specific method
of enforcement permitted hereunder, in the manner requested, provided that such
action shall not be otherwise than in accordance with law and the provisions of
this Indenture, and the Indenture Trustee, subject to such indemnity provisions,
shall have the right to decline to follow any such request if the Indenture
Trustee in good faith shall determine that the suit, proceeding or exercise of
other remedy so requested would involve the Indenture Trustee in personal
liability or expense.
SECTION 8.07. Control by Bondholders.
----------------------
The Holders of a majority in principal amount of the Outstanding Bonds
of all series shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Indenture Trustee or
exercising any trust or power conferred on the Indenture Trustee, provided that
--------
(1) such direction shall not be in conflict with any rule of law or
with the rights of TU Electric under this Indenture, and
(2) the Indenture Trustee may take any other action deemed proper by
the Indenture Trustee which is not inconsistent with such direction.
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SECTION 8.08. Waiver of Past Defaults.
-----------------------
The Holders of not less than a majority in principal amount of the
Outstanding Bonds of all series may on behalf of the Holders of all the Bonds of
all series waive any past default hereunder and its consequences, except a
default
(1) in the payment of the principal of, or premium (if any) or
interest on, any Bonds, or
(2) in respect of a covenant or provision hereof which under Article
Eleven cannot be modified or amended without the consent of the Holder of
each Outstanding Bond affected.
Upon any such waiver, such default shall cease to exist, and any
Indenture Event of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 8.09. Right to Pay Rent; Bond Purchase; Substitute Lease.
--------------------------------------------------
(a) Anything in this Article Eight to the contrary notwithstanding, an
Indenture Event of Default shall be deemed cured:
(i) if such Indenture Event of Default results from non-payment of
Basic Rent under the Lease, if the Owner Trustee shall have paid all of
such defaulted Basic Rent to the extent required to enable the Indenture
Trustee to make all payments contemplated in clauses FIRST and SECOND of
Section 4.01 (plus interest on such amount as required by the Lease) within
30 days after the receipt by the Owner Trustee of notice of such
non-payment, such receipt to be evidenced by, among other things, any
notice thereof either given to the Owner Trustee in accordance with the
notice provisions of the Participation Agreement, or
(ii) if such Indenture Event of Default results from non-payment of a
specific item of Supplemental Rent under the Lease due on demand or on the
date or dates specified in the Lease, and the Owner Trustee shall have paid
so much of such defaulted Supplemental Rent as shall not constitute an
Excepted Payment (plus interest on such amount as required by the Lease)
within 30 days after the receipt by the Owner Trustee of notice of such
non-payment, such receipt to be evidenced by, among other things, any
notice thereof given to the Owner Trustee in accordance with the notice
provisions of the Participation Agreement, or
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(iii) if such Indenture Event of Default results from a failure of
TU Electric to perform or observe any covenant, condition or agreement to
be performed or observed by TU Electric under the Indenture, the Lease or
the other Operating Documents to which it is a party other than the
covenants or agreements to pay Basic Rent, and the Owner Trustee shall have
performed or observed any such covenant, condition or agreement on behalf
of TU Electric within 30 days after receipt by the Owner Trustee and
TU Electric of notice of the occurrence of such failure, such receipt to be
evidenced by, among other things, any notice thereof given to the Owner
Trustee in accordance with the notice provisions of the Participation
Agreement,
unless TU Electric shall fail to make all payments (A) in the case of (i) above,
of Basic Rent due and payable and unpaid by TU Electric on more than four
consecutive Basic Rent Payment Dates or (B) in the case of (i) above, of any
Basic Rent on more than eight Basic Rent Payment Dates during the Lease Term.
(b) The Owner Trustee, upon exercising cure rights under this Section,
shall not obtain any Lien on any part of the Indenture Estate or on account of
such payment or performance for the costs and expenses incurred in connection
therewith nor, except as expressly provided in the immediately succeeding
sentence, shall any claims of the Owner Trustee against TU Electric or any other
Person for the repayment thereof impair the prior right and security interest of
the Indenture Trustee in and to the Indenture Estate. Upon any payment by the
Owner Trustee pursuant to this Section 8.09, the Owner Trustee shall (to the
extent of the payment made by it) be subrogated to the rights of the Holders of
the Bonds to receive the payment of Rent with respect to which the Owner Trustee
made such payment and interest on account of such Rent payment being overdue in
the manner set forth in the next sentence. If the Indenture Trustee shall
thereafter receive such payment of Rent and such interest, the Indenture Trustee
shall, notwithstanding the requirements of Section 4.01, on the date such
payment is received by the Indenture Trustee, remit such payment of Rent (to the
extent of the payment made by the Owner Trustee pursuant to this Section 8.09)
and such interest to the Owner Trustee in reimbursement for the funds so
advanced by it, provided that if (x) any Indenture Event of Default hereunder
--------
shall have occurred and be continuing or (y) any payment of Rent or of principal
or interest on any Bond then shall be overdue, such payment shall not be
remitted to the Owner Trustee but shall be held by the Indenture Trustee as
security for the obligations secured hereby and distributed in accordance with
Section 4.01 or 4.06 hereof, as appropriate, and provided, further, that if the
-------- -------
principal of and interest on the Bonds shall have become due and payable
pursuant to Section 8.02 hereof, such Rent and interest thereon shall be
distributed by
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the Indenture Trustee in the order of priority set forth in Section 4.03 hereof.
(c) Each Holder of Bonds, by acceptance thereof agrees to sell such
Bonds to the Owner Trustee in accordance with this paragraph, if (I) the Bonds
have been accelerated pursuant to Section 8.02 hereof and such acceleration has
not theretofore been rescinded, (II) no Indenture Event of Default under Section
8.01(3) arising out of any failure by the Owner Trustee or Owner Participant to
perform or observe any covenant, condition or agreement to be performed or
observed by it under this Indenture shall have occurred and be continuing, (III)
the Owner Trustee, within 45 days after receiving notice from the Indenture
Trustee pursuant to Section 8.02 hereof, shall give written notice to the
Indenture Trustee and each Holder of Bonds at the time Outstanding of the Owner
Trustee's intention to purchase all of the Bonds in accordance with this
paragraph, which notice shall specify the date fixed for such purchase (the
"Purchase Date"), and (IV) on or prior to the Purchase Date specified in such
notice of intention to purchase, the Owner Trustee shall pay to the Indenture
Trustee an amount equal to the sum of (x) the aggregate unpaid principal amount
of all Bonds Outstanding together with accrued but unpaid interest thereon to
the date of such payment (interest after notice of intention to purchase is
given to be accrued at the rate provided for prior to the applicable Indenture
Default), plus (y) the aggregate amount, if any, of all sums which, if Section
4.03 were then applicable, such Holder would be entitled to be paid before any
payments were to be made to the Owner Trustee. Upon payment to the Indenture
Trustee of the amounts payable on the Bonds pursuant to this paragraph, each
Holder shall be deemed to sell, assign, transfer and convey to the Owner Trustee
(without recourse or warranty of any kind other than of title to the Bonds so
conveyed) all of the right, title and interest of such Holder in and to the
Indenture Estate, this Indenture, all Bonds held by such Holder and the
Participation Agreement, and the Owner Trustee shall thereupon assume all such
Holder's rights and obligations in such documents; provided, that no such Holder
--------
shall be deemed so to convey unless (1) all other Bonds issued by the Owner
Trustee at the time Outstanding are simultaneously to be purchased by the Owner
Trustee pursuant to this paragraph and (2) such conveyance is not in violation
of any applicable law or governmental rule or regulation. From and after the
Purchase Date, if a Bond is tendered to the Indenture Trustee, it shall be
deemed tendered for purchase rather than payment, and such Bond shall be
purchased rather than redeemed from moneys deposited for the purchase thereof
pursuant to this paragraph (c). If a Bond is not tendered, said Bonds shall be,
and shall be deemed to be purchased, and on the Purchase Date interest thereon
shall cease to accrue to the former Holder of the Bond and said former Holder
shall have no further rights or interest in such Bond except that said former
Holder shall be entitled to payment of the principal
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of and accrued interest on such Bond to the Purchase Date. On and after the
Purchase Date, the Indenture Trustee shall no longer treat the former Holder of
such Bond as the Holder, except for purposes of such Holder's right to receive
payment of such Bond as set forth in this paragraph. On the Purchase Date, the
Bond Registrar shall transfer ownership of the Bonds into the name of the Owner
Trustee. All charges and expenses required to be paid in connection with the
issuance of any new Bonds pursuant to this paragraph shall be borne by the Owner
Trustee.
SECTION 8.10. Bondholder May Not Bring Suit Except under Certain
--------------------------------------------------
Conditions.
----------
A Bondholder shall not have the right to institute any suit, action or
proceeding at law or in equity or otherwise for the foreclosure of this
Indenture, for the appointment of a receiver or for the enforcement of any other
remedy under or upon this Indenture, unless:
------
(1) such Bondholder previously shall have given written notice to the
Indenture Trustee of a continuing Indenture Event of Default;
(2) the Holders of at least 25% in aggregate principal amount of the
Bonds of all series then Outstanding shall have requested the Indenture
Trustee in writing to institute such action, suit or proceeding and shall
have offered to the Indenture Trustee indemnity as provided in Section
9.03(e);
(3) the Indenture Trustee shall have refused or neglected to institute
any such action, suit or proceeding for 60 days after receipt of such
notice, request and offer of indemnity; and
(4) no direction inconsistent with such written request has been given
to the Indenture Trustee during such 60-day period by the Holders of a
majority in principal amount of Outstanding Bonds of all series.
It is understood and intended that no one or more of the Bondholders
shall have any right in any manner whatever hereunder or under the Bonds to (i)
surrender, impair, waive, affect, disturb or prejudice the Lien of this
Indenture on any property subject thereto or the rights of the Holders of any
other Bonds, (ii) obtain or seek to obtain priority over or preference to any
other such Holder or (iii) enforce any right under this Indenture, except in the
manner herein provided and for the equal, ratable and common benefit of all the
Bondholders of all series subject to the provisions of this Indenture.
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SECTION 8.11. Undertaking to Pay Court Costs.
------------------------------
All parties to this Indenture, and each Bondholder by his acceptance
of a Bond of any series, shall be deemed to have agreed that any court may in
its discretion require, in any suit, action or proceeding for the enforcement of
any right or remedy under this Indenture, or in any suit, action or proceeding
against the Indenture Trustee for any action taken or omitted by it as Indenture
Trustee hereunder, the filing by any party litigant in such suit, action or
proceeding of an undertaking to pay the costs of such suit, action or
proceeding, and that such court may, in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
action or proceeding, having due regard to the merits and good faith of the
claims or defenses made by such party litigant; provided, however, that the
-------- -------
provisions of this Section shall not apply to (a) any suit, action or proceeding
instituted by the Indenture Trustee other than at the direction of Bondholders,
(b) any suit, action or proceeding instituted by any Bondholder or group of
Bondholders holding in the aggregate more than 10% in aggregate principal amount
of the Bonds of all series then Outstanding or (c) any suit, action or
proceeding instituted by any Bondholder for the enforcement of the payment of
the principal of, or premium, if any, or interest on, any of the Bonds, on or
after the respective due dates expressed therein.
SECTION 8.12. Right of Bondholders to Receive Payment Not to be
-------------------------------------------------
Impaired.
--------
Anything in this Indenture to the contrary notwithstanding, the right
of any Holder of any Bond to receive payment of the principal of, and premium,
if any, and interest on, such Bond, on or after the respective due dates
expressed in such Bond (or, in case of redemption, on the Redemption Date fixed
for such Bond), or to institute suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 8.13. Waiver of Appraisal, Valuation, Stay, Right to
----------------------------------------------
Marshalling.
-----------
To the extent it may lawfully do so, each of TU Electric and the Owner
Trustee, for itself and for any Person who may claim through or under it,
hereby:
(1) agrees that neither it nor any such Person will set up, plead,
claim or in any manner whatsoever take advantage of, any appraisal,
valuation, stay, extension or redemption laws, now or hereafter in force in
any jurisdiction, which may delay, prevent or otherwise hinder (i) the
performance or enforcement or foreclosure of this Indenture, (ii) the sale
of any of the Indenture Estate, or
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(iii) the putting of the purchaser or purchasers thereof into possession of
such property immediately after the sale thereof;
(2) waives all benefit or advantage of any such laws;
(3) waives and releases all rights to have the Indenture Estate
marshalled upon any foreclosure, sale or other enforcement of this
Indenture; and
(4) consents and agrees that all the Indenture Estate may at any such
sale be sold by the Indenture Trustee as an entirety.
SECTION 8.14. Remedies Cumulative; Delay or Omission Not a Waiver.
---------------------------------------------------
Every remedy given hereunder to the Indenture Trustee or to any of the
Bondholders shall not be exclusive of any other remedy or remedies, and every
such remedy shall be cumulative and in addition to every other remedy given
hereunder or now or hereafter given by statute, law, or equity or otherwise, in
its absolute discretion. No course of dealing between TU Electric or the Owner
Trustee and the Indenture Trustee or the Bondholders or any delay or omission of
the Indenture Trustee or of any Bondholder to exercise any right, remedy or
power accruing upon any Indenture Event of Default shall impair any right,
remedy or power or shall be construed to be a waiver of any such Indenture Event
of Default or of any right of the Indenture Trustee or of the Bondholders or
acquiescence therein, and, subject to the provisions of Section 8.07 and 8.10,
every right, remedy and power given by this Article to the Indenture Trustee or
to the Bondholders may be exercised from time to time and as often as may be
deemed expedient by the Indenture Trustee or by the Bondholders.
ARTICLE NINE
THE INDENTURE TRUSTEE
SECTION 9.01. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of an Indenture Event of Default:
(1) the Indenture Trustee 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
Indenture Trustee; and
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(2) in the absence of bad faith on its part, the Indenture Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Indenture Trustee and conforming to the requirements of this Indenture;
but in the case of any such certificates or opinions which by any
provisions hereof are specifically required to be furnished to the
Indenture Trustee, the Indenture Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements of
this Indenture.
(b) In case an Indenture Event of Default has occurred and is
continuing, the Indenture 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.
(c) No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that
(1) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(2) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Indenture
Trustee, unless it shall be proved that the Indenture Trustee was negligent
in ascertaining the pertinent facts;
(3) the Indenture Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority in principal amount of the
Outstanding Bonds of all series relating to the time, method and place of
conducting any proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred upon the Indenture
Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Indenture 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
any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
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(d) The Indenture Trustee shall withhold such amount of any payment to
Bondholders required to be withheld, and shall account for the same, in
accordance with applicable law.
(e) Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Indenture Trustee shall be subject to the provisions
of this Section.
SECTION 9.02. Notice of Defaults.
------------------
The Indenture Trustee shall transmit by mail to all Bondholders, as
their names and addresses appear in the Bond Register, as promptly as
practicable after and in any event within 90 days after the occurrence of any
default hereunder, notice of any defaults known to the Indenture Trustee, unless
such default shall have been cured or waived before the giving of such notice;
provided, however, that, except in the case of a default in the payment of the
-------- -------
principal of, premium, if any, or interest on any Bond or in the payment of any
Sinking Fund installment with respect to any series, the Indenture Trustee shall
be protected in withholding such notice if and so long as the board of
directors, the executive committee or a trust committee of directors and/or
Responsible Officers of the Indenture Trustee in good faith determine that the
withholding of such notice is in the interests of the Bondholders; and provided,
--------
further, that in the case of any default of the character specified in Section
-------
8.01(3) no such notice to Bondholders shall be given until at least 30 days
after the occurrence thereof. For the purpose of this Section, the term
"default" means any event which is, or after notice or lapse of time or both
would become, an Indenture Event of Default.
SECTION 9.03. Certain Rights of Indenture Trustee.
-----------------------------------
Except as otherwise provided in Section 9.01:
(a) the Indenture Trustee may rely and shall be protected in acting or
refraining from acting in reliance upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Owner Trustee mentioned herein
shall be sufficiently evidenced by an Owner Trustee Request or Owner
Trustee Certificate and any request of TU Electric shall be sufficiently
evidenced by a TU Electric Request;
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(c) whenever in the administration of this Indenture the Indenture
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Indenture
Trustee (unless other evidence be herein specifically prescribed) may, in
the absence of bad faith on its part, rely upon an Officers' Certificate or
an Owner Trustee Certificate, as the case may be;
(d) the Indenture Trustee may consult with counsel and the advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Indenture Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request or
direction of any of the Bondholders pursuant to this Indenture, unless such
Bondholders shall have offered to the Indenture Trustee reasonable security
or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or document, but the Indenture Trustee, in
its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit, and, if the Indenture Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled to examine the relevant books, records and premises of TU Electric
or the Owner Trustee, personally or by agent or attorney;
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or indirectly or
by or through agents or attorneys and the Indenture Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it;
(h) the Indenture Trustee shall not be personally liable, in the case
of entry by it upon the Indenture Estate, for debts contracts or
liabilities or damages incurred in the management or operation of the
Indenture Estate, unless negligent or due to its misconduct; and
(i) for all purposes of this Indenture, in the absence of actual
knowledge of a Responsible Officer of the
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Indenture Trustee, the Indenture Trustee shall not be deemed to have
knowledge of an Indenture Default (except the failure of TU Electric to pay
any installment of Basic Rent when the same shall become due) unless
notified in writing by any Holder of a Bond, the Owner Participant, the
Owner Trustee or the Lessee.
SECTION 9.04. Not Responsible for Recitals or Issuance of Bonds.
-------------------------------------------------
The recitals contained herein and in the Bonds, except the
certificates of authentication, shall not be taken as the statements of the
Indenture Trustee, and the Indenture Trustee assumes no responsibility for their
correctness. The Indenture Trustee makes no representations as to the validity
or sufficiency of this Indenture, the Indenture Estate or the Bonds, except that
the Indenture Trustee hereby represents and warrants that this Indenture has
been executed and delivered by one of its officers who is duly authorized to
execute and deliver such document on its behalf and that it has power to perform
hereunder. The Indenture Trustee shall not be accountable for the use or
application by the Owner Trustee of Bonds or the proceeds thereof.
SECTION 9.05. Indenture Trustee and Authorized Agents May Hold Bonds.
------------------------------------------------------
The Indenture Trustee, any Paying Agent, Bond Registrar or any other
agent of the Owner Trustee, in its individual or any other capacity, may become
the owner or pledgee of Bonds and, subject to Sections 9.08 and 9.13, may
otherwise deal with the Owner Trustee and TU Electric with the same rights it
would have if it were not Indenture Trustee, Paying Agent, Bond Registrar or
such other agent.
SECTION 9.06. Funds May Be Held by Indenture Trustee or Paying Agent;
-------------------------------------------------------
Investments.
-----------
(a) Subject to Section 5.03 and subsection (b) of this Section 9.06,
any moneys held by the Indenture Trustee or the Paying Agent hereunder as part
of the Indenture Estate may until paid out by the Indenture Trustee or the
Paying Agent as herein provided, be carried by the Indenture Trustee or the
Paying Agent on deposit with itself, and neither the Indenture Trustee nor the
Paying Agent shall have any liability for interest upon any such moneys except
as otherwise agreed in writing with the Owner Trustee and approved in writing by
TU Electric.
(b) At any time and from time to time (subject to Section 3.01 hereof)
if at the time no Indenture Event of Default has occurred and is continuing, the
Indenture Trustee shall, on TU Electric Request, invest and reinvest in
Permitted Investments
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as specified in such TU Electric Request any moneys from the sale of the Bonds
at the time on deposit with the Indenture Trustee as part of the Indenture
Estate, together with any income and gains from the investment and reinvestment
thereof, and sell any Permitted Investments, in either case, at such prices,
including accrued interest, as are set forth in such Request, and such Permitted
Investments shall be held by the Indenture Trustee until so sold in trust as
part of the Indenture Estate. The Indenture Trustee shall, on TU Electric
Request, sell such Permitted Investments as may be specified therein. The
Indenture Trustee shall not be responsible for any losses on any investments or
sales of Permitted Investments made pursuant to the procedure specified in this
subsection (b).
SECTION 9.07. Compensation and Reimbursement.
------------------------------
TU Electric agrees:
(1) to pay, or cause to be paid, to each of the Indenture Trustee and
any Authorized Agent from time to time reasonable compensation for all
services rendered by it hereunder (which compensation shall not be limited
by any provision of law in regard to the compensation of a trustee of an
express trust);
(2) to reimburse, or cause to be reimbursed, each of the Indenture
Trustee and any Authorized Agent upon its request for all expenses,
disbursements and advances incurred or made by it in accordance with any
provision of this Indenture (including the compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its own negligence,
willful misconduct or bad faith; and
(3) to indemnify, or cause to be indemnified, each of the Indenture
Trustee, any predecessor Indenture Trustee and any Authorized Agent for,
and to hold it harmless against, any loss, liability or expense incurred
without negligence, willful misconduct or bad faith on its part, arising
out of or in connection with the acceptance or administration of this trust
or the performance of its duties hereunder, including the costs and
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
As security for the performance of the obligations of TU Electric
under this Section, the Indenture Trustee shall have a lien prior to the Bonds
upon all property and funds held or collected by the Indenture Trustee as such,
other than Excepted Payments and funds held in trust for the payment of
principal of (and premium, if any) or interest on particular Bonds.
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SECTION 9.08. Disqualification; Conflicting Interests.
---------------------------------------
(a) If the Indenture Trustee has or shall acquire any conflicting
interest, as defined in this Section, it shall, within 90 days after
ascertaining that it has such conflicting interest, either eliminate such
conflicting interest or resign in the manner and with the effect hereinafter
specified in this Article.
(b) In the event that the Indenture Trustee shall fail to comply with
the provisions of subsection (a) of this Section the Indenture Trustee shall,
within 10 days after the expiration of such 90-day period, transmit by mail to
all Bondholders, as their names and addresses appear in the Bonds Register,
notice of such failure.
(c) For the purposes of this Section, the Indenture Trustee shall be
deemed to have a conflicting interest if
(1) the Indenture Trustee is trustee under another indenture under
which any other securities, or certificates of interest or participation in
any other securities, of any obligor on the Bonds are outstanding, unless
such other indenture is a collateral trust indenture under which the only
collateral consists of Bonds issued under this Indenture, provided that
there shall be excluded from the operation of this paragraph any indenture
or indentures under which other securities, or certificates of interest or
participation in other securities of any obligor on the Bonds are
outstanding, if such obligor shall have sustained the burden of proving, on
application to the Commission and after opportunity for hearing thereon,
that trusteeship under this Indenture and such other indenture or
indentures is not so likely to involve a material conflict of interest as
to make it necessary in the public interest or for the protection of
investors to disqualify the Indenture Trustee from acting as such under one
of such indentures;
(2) the Indenture Trustee or any of its directors or executive
officers is an obligor upon the Bonds or an underwriter for such obligor;
(3) the Indenture Trustee directly or indirectly controls or is
directly or indirectly controlled by or is under direct or indirect common
control with any obligor on the Bonds or an underwriter for such obligor;
(4) the Indenture Trustee or any of its directors or executive
officers is a director, officer, partner, employee, appointee or
representative of any obligor on the Bonds, or of an underwriter (other
than the Indenture Trustee itself) for such obligor who is currently
engaged in
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the business of underwriting, except that (i) one individual may be a
director or an executive officer, or both, of an obligor on the Bonds but
may not be at the same time an executive officer of both the Indenture
Trustee and such obligor; (ii) if and so long as the number of directors of
the Indenture Trustee in office is more than nine, one additional
individual may be director or an executive officer, or both, of the
Indenture Trustee and director of an obligor on the Bonds; and (iii) the
Indenture Trustee may be designated by an obligor on the Bonds or by any
underwriter for such obligor to act in the capacity of transfer agent,
registrar, custodian, paying agent, fiscal agent, escrow agent, or
depositary, or in any other similar capacity, or, subject to the provisions
of paragraph (1) of this subsection, to act as trustee, whether under an
indenture or otherwise;
(5) 10% or more of the voting securities of the Indenture Trustee is
beneficially owned either by any director, partner, or executive officer
thereof, or 20% or more of such voting securities is beneficially owned,
collectively, by any two or more of such persons; or 10% or more of the
voting securities of the Indenture Trustee is beneficially owned either by
an underwriter for any obligor on the Bonds or by any director, partner or
executive officer thereof, or is beneficially owned collectively by any two
or more such persons;
(6) the Indenture Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as hereinafter
in this subsection defined), (i) 5% or more of the voting securities, or
10% or more of any other class of security, of any obligor on the Bonds not
including the Bonds issued under this Indenture and securities issued under
any other indenture under which the Indenture Trustee is also trustee, or
(ii) 10% or more of any class of security of an underwriter for any obligor
on the Bonds;
(7) the Indenture Trustee is the beneficial owner of, or holds as
collateral security for an obligation which is in default (as hereinafter
in this subsection defined), 5% or more of the voting securities of any
person who, to the knowledge of the Indenture Trustee, owns 10% or more of
the voting securities of or controls directly or indirectly or is under
direct or indirect common control with, any obligor on the Bonds;
(8) the Indenture Trustee is the beneficial owner of or holds as
collateral security for an obligation which is in default (as hereinafter
in this subsection defined), 10% or more of any class of security of any
person who, to the
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knowledge of the Indenture Trustee, owns 50% or more of the voting
securities of any obligor on the Bonds; or
(9) the Indenture Trustee owns, on May 15 in any calendar year, in the
capacity of executor, administrator, testamentary or inter vivos trustee,
guardian, committee or conservator, or in any other similar capacity, an
aggregate of 25% or more of the voting securities, or of any class of
security, of any person, the beneficial ownership of a specified percentage
of which would have constituted a conflicting interest under paragraph (6),
(7) or (8) of this subsection. As to any such securities of which the
Indenture Trustee acquired ownership through becoming executor,
administrator, or testamentary trustee of an estate which included them,
the provisions of the preceding sentence shall not apply, for a period of
two years from the date of such acquisition to the extent that such
securities included in such estate do not exceed 25% of such voting
securities or 25% of any such class of security. Promptly after May 15 in
each calendar year, the Indenture Trustee shall make a check of its
holdings of such securities in any of the above mentioned capacities as of
such May 15. If any obligor upon the Bonds fails to make payment in full
of the principal of, or the premium, if any, or interest on, any of the
Bonds when and as the same becomes due and payable, and such failure
continues for 30 days thereafter, the Indenture Trustee shall make a prompt
check of its holdings of such securities in any of the above mentioned
capacities as of the date of the expiration of such 30-day period, and
after such date, notwithstanding the foregoing provisions of this
paragraph, all such securities so held by the Indenture Trustee, with sole
or joint control over such securities vested in it, shall, but only so long
as such failure shall continue, be considered as though beneficially owned
by the Indenture Trustee for the purposes or paragraphs (6), (7) and (8) of
this subsection.
The specification of percentages in paragraphs (5) to (9) inclusive,
of this subsection, shall not be construed as indicating that the ownership of
such percentages of the securities of a person is or is not necessary or
sufficient to constitute direct or indirect control for the purposes of
paragraph (3) or (7) of this subsection.
For the purposes of paragraphs (6), (7) and (9) of this subsection
only, (i) the terms "security" and "securities" shall include only such
securities as are generally known as corporate securities, but shall not include
any note or other evidence of indebtedness issued to evidence an obligation to
repay moneys loaned to a person by one or more banks, trust or banking firms, or
any certificate of interest or participation in any such note or evidence or
indebtedness; (ii) an obligation shall be deemed
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to be "in default" when a default in payment of principal shall have continued
for 30 days or more and shall not have been cured; and (iii) the Indenture
Trustee shall not be deemed to be the owner or holder of (A) any security which
it holds as collateral security, as trustee or otherwise, for an obligation
which is not in default as defined in clause (ii) above or (B) any security
which it holds as collateral security under this Indenture, irrespective of any
default hereunder, or (C) any security which it holds as agent for collection,
or as custodian, escrow agent, or depositary, or in any similar representative
capacity.
Except as provided in the next preceding paragraph, the word
"security" or "securities" as used in this Indenture shall mean any note, stock,
treasury stock, bond, debenture, evidence of indebtedness, certificate of
interest or participation in any profit sharing agreement, collateral trust
certificate, preorganization certificate or subscription, transferable share,
investment contract, voting trust certificate, certificate of deposit for a
security, fractional undivided interest in oil, gas, or other mineral rights,
or, in general, any interest or instrument commonly known as a "security", or
any certificate of interest or participation in a temporary or interim
certificate for, receipt for, guarantee of, or warrant or right to subscribe to
purchase, any of the foregoing.
(d) For the purposes of this Section:
(1) The term "underwriter" when used with reference to any obligor on
the Bonds means every person who, within three years prior to the time as
of which the determination is made, has purchased from such obligor with a
view to, or has offered or sold for such obligor in connection with, the
distribution of any security of such obligor outstanding at such time, or
has participated or has had a direct or indirect participation in any such
undertaking, or has participated or has had a participation in the direct
or indirect underwriting of any such undertaking, but such term shall not
include a person whose interest was limited to a commission from an
underwriter or dealer not in excess of the usual and customary
distributors' or seller's commission.
(2) The term "director" means any director of a corporation, or any
individual performing similar functions with respect to any organization
whether incorporated or unincorporated.
(3) The term "person" means an individual, a company, a partnership,
an association, a joint-stock company, a trust, an unincorporated
organization, or a government or political subdivision thereof. As used in
this paragraph, the term "trust" shall include only a trust where the
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interest or interests of the beneficiary or beneficiaries are evidenced by
a security.
(4) The term "voting security" means any security presently entitling
the owner or holder thereof to vote in the direction or management of the
affairs of a person, or any security issued under or pursuant to any trust,
agreement or arrangement whereby a trustee or trustees or agent or agents
for the owner or holder of such security are presently entitled to vote in
the direction or management of the affairs of a person.
(5) The term "obligor" means any obligor upon the Bonds within the
meaning of the Trust Indenture Act.
(6) The term "executive officer" means the president, every vice
president, every trust officer, the cashier, the secretary, and the
treasurer of a corporation, and any individual customarily performing
similar functions with respect to any organization whether incorporated or
unincorporated, but shall not include the chairman of the board of
directors.
(e) The percentages of the voting securities and other securities
specified in this Section shall be calculated in accordance with the following
provisions:
(1) A specified percentage of the voting securities of the Indenture
Trustee, any obligor or any other person referred to in this Section (each
of whom is referred to as "person" in this paragraph) means such amount of
the outstanding voting securities of such person as entitles the holder or
holders thereof to cast such specified percentage of the aggregate votes
which the holders of all the outstanding voting securities of such person
are entitled to cast in the direction or management of the affairs of such
person.
(2) A specified percentage of a class of securities of a person means
such percentage of the aggregate amount of securities of the class
outstanding.
(3) The term "amount", when used in regard to securities, means the
principal amount if relating to evidences of indebtedness, the number of
shares if relating to capital shares and the number of units if relating to
any other kind of security.
(4) The term "outstanding" means issued and held by or for the account
of the issuer. The following securities shall not be deemed outstanding
within the meaning of this definition:
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(i) securities of an issuer held in a sinking fund relating
to securities of issuer of the same class;
(ii) securities of an issuer held in a sinking fund relating
to another class of securities of the issuer, if the obligation
evidenced by such other class of securities is not in default as to
principal or interest or otherwise;
(iii) securities pledged by the issuer thereof as security
for an obligation of the issuer not in default as to principal or
interest or otherwise; and
(iv) securities held in escrow if placed in escrow by the
issuer thereof;
provided, however, that any voting securities of an issuer shall be deemed
-------- -------
outstanding if any person other than the issuer is entitled to exercise the
voting rights thereof.
(5) A security shall be deemed to be of the same class as another
security if both securities confer upon the holder or holders substantially
the same rights and privileges provided, however, that in the case of
-------- -------
secured evidences of indebtedness, all of which are issued under a single
indenture, differences in the interest rates or maturity dates of various
series thereof shall not be deemed sufficient to constitute such series
different classes and provided, further, that in the case of unsecured
-------- -------
evidences of indebtedness, differences in the interest rates or maturity
dates thereof shall not be deemed sufficient to constitute them securities
of different classes, whether or not they are issued a single indenture.
SECTION 9.09. Corporate Indenture Trustee Required; Eligibility.
-------------------------------------------------
There shall at all times be an Indenture Trustee hereunder which shall
be a corporation organized and doing business under the laws of the United
States of America or of any State, authorized under such laws of the United
States of America or of any State, to exercise corporate trust powers, having a
combined capital and surplus of at least $50,000,000, and subject to supervision
or examination by Federal or State authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Indenture Trustee shall
cease to be eligible in
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accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
SECTION 9.10. Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Indenture Trustee and no
appointment of a successor Indenture Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Indenture
Trustee under Section 9.11.
(b) The Indenture Trustee may resign at any time by giving written
notice thereof to TU Electric and the Owner Trustee. If an instrument of
acceptance by a successor Indenture Trustee shall not have been delivered to TU
Electric, the Owner Trustee and the Indenture Trustee within 30 days after the
giving of such notice of resignation, the resigning Indenture Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Indenture Trustee.
(c) The Indenture Trustee may be removed at any time by Act of the
Holders of a majority in principal amount of Outstanding Bonds of all series,
delivered to the Indenture Trustee, TU Electric and to the Owner Trustee.
(d) If at any time:
(i) the Indenture Trustee shall fail to comply with Section
9.08(a) after written request therefor by the Owner Trustee or by any
Bondholder who has been a bona fide Holder of a Bond for at least 6
months, or
(ii) the Indenture Trustee shall cease to be eligible under
Section 9.09 and shall fail to resign after written request therefor by the
Owner Trustee or by such Bondholder, or
(iii) the Indenture Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the Indenture
Trustee or of its property shall be appointed or any public officer shall
take charge or control of the Indenture Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation,
then, in any such case, (i) the Owner Trustee, acting after consultation with
TU Electric, may remove the Indenture Trustee or (ii) subject to Section 8.10,
any Bondholder who has been a bona fide Holder of a Bond for at least 6 months
may, on behalf of himself and all others similarly situated, petition any court
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of competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee.
(e) If the Indenture Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Indenture
Trustee for any cause, the Owner Trustee, acting after consultation with TU
Electric, shall promptly appoint a successor Indenture Trustee. If, within 1
year after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Indenture Trustee shall be appointed by Act of the Holders
of a majority in principal amount of the Outstanding Bonds of all series
delivered to TU Electric, the Owner Trustee and the retiring Indenture Trustee,
the successor Indenture Trustee so appointed shall, forthwith upon its
acceptance of such appointment, become the successor Indenture Trustee and
supersede the successor Indenture Trustee appointed by the Owner Trustee. If no
successor Indenture Trustee shall have been so appointed by the Owner Trustee,
acting after consultation with TU Electric, or the Bondholders and accepted
appointment in the manner hereinafter provided, any Bondholder who has been a
bona fide Holder of a Bond for at least 6 months may, on behalf of himself and
all other similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Indenture Trustee.
(f) The Owner Trustee shall give notice of each resignation and each
removal of the Indenture Trustee and each appointment of a successor Indenture
Trustee by mailing written notice of such event by first-class mail, postage
prepaid, to the Holders of Bonds as their names and addresses appear in the Bond
Register. Each notice shall include the name of the successor Indenture Trustee
and the address of its Indenture Trustee Office.
SECTION 9.11. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Indenture Trustee appointed hereunder shall execute,
acknowledge and deliver to TU Electric, the Owner Trustee and to the retiring
Indenture Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective
and such successor Indenture Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Indenture Trustee; but on request of the Owner Trustee or the
successor Indenture Trustee, such retiring Indenture Trustee shall, upon payment
of its charges, execute and deliver an instrument transferring to such successor
Indenture Trustee all the rights, powers and trusts of the retiring Indenture
Trustee, and he shall duly assign, transfer and deliver to such successor
Indenture Trustee all property and money held by such retiring Indenture Trustee
hereunder, subject nevertheless to its lien, if any, provided for
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in Section 9.07. Upon request of any such successor Indenture Trustee,
TU Electric and the Owner Trustee shall execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Indenture
Trustee all such rights, powers and trusts.
No successor Indenture Trustee shall accept its appointment unless at
the time of such acceptance such successor Indenture Trustee shall be qualified
and eligible under this Article.
SECTION 9.12. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business.
--------
Any corporation into which the Indenture Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Indenture Trustee
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of the Indenture Trustee, shall be the successor of
the Indenture Trustee hereunder, provided such corporation shall be otherwise
qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Bonds shall have been authenticated, but not delivered, by the Indenture
Trustee then in office, any successor by merger, conversion or consolidation to
such authenticating Indenture Trustee may adopt such authentication and deliver
the Bonds so authenticated with the same effect as if such successor Indenture
Trustee had itself authenticated such Bonds.
SECTION 9.13. Preferential Collection of Claims against any Obligor.
--------------------------------- -------------------
(a) Subject to subsection (b) of this Section, if the Indenture
Trustee shall be or shall become a creditor, directly or indirectly, secured or
unsecured, of any obligor on the Bonds (as defined in subsection (c) of this
Section) within four months prior to a default, as defined in subsection (c) of
this Section, or subsequent to such a default, then, unless and until such
default shall be cured, the Indenture Trustee shall set apart and hold in a
special account for the benefit of the Indenture Trustee individually, the
Holders of the Bonds and the holders of other indenture securities (as defined
in subsection (c) of this Section):
(i) an amount equal to any and all reductions in the amount due and
owing upon any claim as such creditor in respect of principal or interest,
effected after the beginning of such four-month period and valid as against
any obligor on the Bonds and its other creditors, except any such reduction
result from the receipt or disposition of any
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property described in paragraph (ii) of this subsection, or from the
exercise of any right of set-off which the Indenture Trustee could have
exercised if a petition in bankruptcy had been filed by or against any such
obligor upon the date of such default; and
(ii) all property received by the Indenture Trustee in respect of any
claim as such creditor, either as security therefor, or in satisfaction or
composition thereof, or otherwise, after the beginning of such four-month
period, or an amount equal to the proceeds of any such property, if
disposed of, subject, however, to the rights, if any, of any obligor on the
Bonds and its other creditors in such property or such proceeds.
Nothing herein contained, however, shall affect the right of the Indenture
Trustee:
(A) to retain for its own account (i) payments made on account of any
such claim by any Person (other than an obligor on the Bonds) who is liable
thereon, and (ii) the proceeds of the bona fide sale of any such claim by
the Indenture Trustee to a third person, and (iii) distributions made in
cash, securities or other property in respect of claims filed against such
obligor in bankruptcy or receivership or in proceedings for reorganization
pursuant to the Federal Bankruptcy Code or applicable State law;
(B) to realize, for its own account, upon any property held by it as
security for any such claim, if such property was so held prior to the
beginning of such four-month period;
(C) to realize, for its own account, but only to the extent of the
claim hereinafter mentioned, upon any property held by it as security for
any such claim, if such claim was created after the beginning of such
four-month period and such property was received as security therefor
simultaneously with the creation thereof, and if the Indenture Trustee
shall sustain the burden of proving that at the time such property was so
received the Indenture Trustee had no reasonable cause to believe that a
default as defined in subsection (c) of this Section would occur within
four months; or
(D) to receive payment on any claim referred to in paragraph (B) or
(C), against the release of any property held as security for such claim as
provided in paragraph (B) or (C), as the case may be, to the extent of the
fair value of such property.
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For the purposes of paragraphs (B), (C) and (D), property substituted after the
beginning of such four-month period for property held as security at the time of
such substitution shall, to the extent of the fair value of the property
released, have the same status as the property released, and, to the extent that
any claim referred to in any of such paragraphs is created in renewal of or in
substitution for or for the purpose of repaying or refunding any pre-existing
claim of the Indenture Trustee as such creditor, such claim shall have the same
status as such pre-existing claim.
If the Indenture Trustee shall be required to account, the funds and
property held in such special account and the proceeds thereof shall be
apportioned between the Indenture Trustee, the Bondholders and the holders of
other indenture securities in such manner that the Indenture Trustee, the
Bondholders and the holders of other indenture securities realize, as a result
of payments from such special account and payments of dividends on claims filed
against the obligor on the Bonds in bankruptcy or receivership or in proceedings
for reorganization pursuant to the Federal Bankruptcy Code or applicable State
law, the same percentage of their respective claims, figured before crediting to
the claim of the Indenture Trustee anything on account of the receipt by it from
such obligor of the funds and property in such special account and before
crediting to the respective claims of the Indenture Trustee and the Bondholders
and the holders of other indenture securities dividends on claims filed against
such obligor in bankruptcy or receivership or in proceedings for reorganization
pursuant to the Federal Bankruptcy Code or applicable State law, but after
crediting thereon receipts on account of the indebtedness represented by their
respective claims from all sources other than from such dividends and from the
funds and property so held in such special account. As used in this paragraph,
with respect to any claim, the term "dividends" shall include any distribution
with respect to such claim, in bankruptcy or receivership or proceedings for
reorganization pursuant to the Federal Bankruptcy Code or applicable State law,
whether such distribution is made in cash, securities, or other property, but
shall not include any such distribution with respect to the secured portion, if
any, of such claim. The court in which such bankruptcy, receivership or
proceedings for reorganization is pending shall have jurisdiction (i) to
apportion between the Indenture Trustee and the Bondholders and the holders of
other indenture securities, in accordance with the provisions of this paragraph,
the funds and property held in such special account and proceeds thereof, or
(ii) in lieu of such apportionment, in whole or in part, to give to the
provisions of this paragraph due consideration in determining the fairness of
the distributions to be made to the Indenture Trustee and the Bondholders and
the holders of other indenture securities with respect to their respective
claims, in which event it shall not
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be necessary to liquidate or to appraise the value of any securities or other
property held in such special account or as security for any such claim, or to
make a specific allocation of such distributions as between the secured and
unsecured portions of such claims, or otherwise to apply the provisions of this
paragraph as a mathematical formula.
Any Indenture Trustee which has resigned or been removed after the
beginning of such four-month period shall be subject to the provisions of this
subsection as though such resignation or removal had not occurred. If any
Indenture Trustee has resigned or been removed prior to the beginning of such
four-month period, it shall be subject to the provisions of this subsection if
and only if the following conditions exist:
(i) the receipt of property or reduction of claim, which would have
given rise to the obligation to account if such Indenture Trustee had
continued as Indenture Trustee, occurred after the beginning of such
four-month period; and
(ii) such receipt of property or reduction of claim occurred within
four months after such resignation or removal.
(b) There shall be excluded from the operation of subsection (a) of
this Section a creditor relationship arising from
(1) the ownership or acquisition of securities issued under any
indenture, or any security or securities having a maturity of one year or
more at the time of acquisition by the Indenture Trustee;
(2) advances authorized by a receivership or bankruptcy court of
competent jurisdiction, or by this Indenture, for the purpose of preserving
any property which shall at any time be subject to the lien of this
Indenture or of discharging tax liens or other prior liens or encumbrances
thereon, if notice of such advances and of the circumstances surrounding
the making thereof is given to the Bondholders at the time and in the
manner provided in this Indenture;
(3) disbursements made in the ordinary course of business in the
capacity of trustee under an indenture, transfer agent, registrar,
custodian, paying agent, fiscal agent or depositary, or other similar
capacity;
(4) an indebtedness created as a result of service, rendered or
premises rented; or an indebtedness created as a result of goods or
securities sold in a cash transaction as defined in subsection (c) of this
Section;
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(5) the ownership of stock or other securities of a corporation
organized under the provisions of Section 25(a) of the Federal Reserve Act,
as amended, which is directly or indirectly a creditor of TU Electric; or
(6) the acquisition, ownership, acceptance or negotiation of any
drafts, bills of exchange, acceptances or obligations which fall within the
classification of self-liquidating paper as defined in subsection (c) of
this Section.
(c) For purposes of this Section only:
(1) The term "default" means any failure to make payment in full of
the principal of or interest on any of the Bonds or upon the other
indenture securities when and as such principal or interest becomes due and
payable.
(2) The term "other indenture securities" means securities upon which
the Person obligated thereunder is an obligor (as defined in the TIA)
outstanding under any other indenture (i) under which the Indenture Trustee
is also trustee, (ii) which contains provisions substantially similar to
the provisions of this Section, and (iii) under which a default exists at
the time of the apportionment of the funds and property held in a special
account as provided in subsection (a) of this Section.
(3) The term "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand.
(4) The term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by any obligor on the Bonds for the purpose of financing the
purchase, processing, manufacturing, shipment, storage or sale of goods,
wares or merchandise and which is secured by documents evidencing title to,
possession of or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security is
received by the Indenture Trustee simultaneously with the creation of the
creditor relationship with such obligor arising from the making, drawing,
negotiating or incurring of the draft, bill of exchange, acceptance or
obligation.
(5) The term "obligor" means any obligor upon the Bonds within the
meaning of the TIA.
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SECTION 9.14. Maintenance of Agencies.
-----------------------
(a) There shall at all times be maintained an office or agency where
Bonds may be presented or surrendered for transfer or exchange or for the
registration thereof, and for payment of principal, premium (if any) and
interest. Such office or agency shall be initially at the office of The First
National Bank of Chicago, as Paying Agent and Bond Registrar, located at One
North State Street, Chicago, Illinois 60602 or in the City of New York, at the
office of The First Chicago Trust Company of New York, as agent of Paying Agent
and Bond Registrar. Notices and demands to or upon the Indenture Trustee in
respect of the Bonds or of this Indenture may be served at the Indenture Trustee
Office. Written notice of the location of each such other office or agency and
of any change of location thereof shall be given to the Owner Trustee and to the
Indenture Trustee. In the event that no such office or agency shall be
maintained or no such notice of location or of change of location shall be
given, presentations and demands may be made and notices may be served at the
Corporate Trust Office of the Indenture Trustee.
(b) There shall at all times be a Bond Registrar and a Paying Agent
hereunder. The First National Bank of Chicago is hereby appointed as Paying
Agent and Bond Registrar hereunder. Each Bond Registrar (other than the
Indenture Trustee) shall furnish to the Indenture Trustee, at stated intervals
of not more than six months, and at such other times as the Indenture Trustee
may request in writing, a copy of the Bond Register.
(c) Any Paying Agent (other than the Indenture Trustee) from time to
time appointed hereunder shall execute and deliver to the Indenture Trustee an
instrument in which said Paying Agent shall agree with the Indenture Trustee,
subject to the provisions of this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of principal of, premium
(if any) and interest on Bonds in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(2) give the Indenture Trustee within five days thereafter notice of
any default by any obligor upon the Bonds in the making of any such payment
of principal, premium (if any) or interest; and
(3) at any time during the continuance of any such default, upon the
written request of the Indenture Trustee, forthwith pay to the Indenture
Trustee all sums so held in trust by such Paying Agent.
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Notwithstanding any other provision of this Indenture, any payment required to
be made to or received or held by the Indenture Trustee may, to the extent
authorized by written instructions of the Indenture Trustee, be made to or
received or held by a Paying Agent for the account of the Indenture Trustee.
(d) Any corporation into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authorized Agent shall
be a party, or any corporation succeeding to the corporate trust business of any
Authorized Agent, shall be the successor of such Authorized Agent hereunder, if
such successor corporation is otherwise eligible under this Section, without the
execution or filing of any paper or any further act on the part of the parties
hereto or such Authorized Agent or such successor corporation.
(e) Any Authorized Agent may at any time resign by giving written
notice of resignation to the Indenture Trustee, TU Electric and the Owner
Trustee. The Owner Trustee, may, and at the request of the Indenture Trustee
shall, at any time, terminate the agency of any Authorized Agent by giving
written notice of termination to such Authorized Agent and to the Indenture
Trustee. Upon the resignation or termination of an Authorized Agent or in case
at any time any such Authorized Agent shall cease to be eligible under this
Section (which, in either case, no other Authorized Agent performing the
functions of such Authorized Agent shall have been appointed), the Owner Trustee
shall promptly appoint one or more qualified successor Authorized Agents
approved by the Indenture Trustee and each Owner Trustee to perform the
functions of the Authorized Agent who has resigned or whose agency has been
terminated or who shall have ceased to be eligible under this Section. The
Owner Trustee shall give written notice of any such appointment to all Holders
as their names and addresses appear on the Bond Register.
SECTION 9.15. Co-Indenture Trustee or Separate Trustee.
-------------------------------- -------
(a) If at any time or times it shall be necessary or prudent in order
to conform to any law of any jurisdiction in which property shall be held
subject to the Lien hereof, or the Indenture Trustee shall be advised by
counsel, satisfactory to it, that it is necessary, prudent or convenient in the
interest of the Bondholders, or the Holders of a majority in principal amount of
the Outstanding Bonds shall in writing so request, the Indenture Trustee, the
Owner Trustee and TU Electric shall execute and deliver all instruments and
agreements necessary or proper to constitute another bank or trust company or
one or more Persons approved by the Indenture Trustee either to act as
co-trustee or co-trustees of all or any part of the Indenture Estate jointly
with the Indenture Trustee originally named herein
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or any successor or successors, or to act as separate trustee or trustees of all
or any such property. In the event TU Electric and the Owner Trustee shall have
not joined in the execution of such instruments and agreements within 10 days
after the receipt of a written request from the Indenture Trustee so to do, or
in case an Indenture Event of Default shall have occurred and be continuing, the
Indenture Trustee may act under the foregoing provisions of this Section without
the concurrence of TU Electric or the Owner Trustee upon giving written notice
to TU Electric of the name and address of such proposed co-trustee; and TU
Electric or the Owner Trustee hereby appoints the Indenture Trustee its agent
and attorney to act for it under the foregoing provisions of this Section in
either of such contingencies, provided, however, that within ninety days
following any appointment of a co-trustee without the concurrence of TU
Electric, TU Electric may, if there shall not have occurred and be continuing an
Indenture Event of Default, remove such co-trustee by written notice to the
Indenture Trustee, the co-trustee and the Owner Trustee.
(b) Every additional trustee hereunder shall, to the extent permitted
by law, be appointed and act, and such additional trustee and its successors
shall act, subject to the following provisions and conditions, namely:
(1) the Bonds shall be authenticated and delivered, and all powers,
duties, obligations and rights conferred upon the Indenture
Trustee in respect of the custody, control and management of
moneys, papers or securities, shall be exercised, solely by the
Indenture Trustee;
(2) all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such
additional trustee or trustees jointly, except to the extent that
under any law of any jurisdiction in which any particular act or
acts are to be performed, the Indenture Trustee shall be
incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties and obligations shall be
exercised and performed by such additional trustee or trustees;
(3) no power given hereby to, or which it is provided hereby may be
exercised by, any such additional trustee or trustees, shall be
exercised hereunder by such additional trustee or trustees,
except jointly with, or with the consent in writing of, the
Indenture Trustee, anything herein contained to the contrary
notwithstanding;
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(4) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(5) TU Electric, the Owner Trustee and the Indenture Trustee, at any
time, by an instrument in writing, executed by them jointly, may
remove any such additional trustee, and in that case, by an
instrument in writing executed by them jointly, may appoint a
successor or successors to such additional trustee or trustees,
as the case may be, anything herein contained to the contrary,
notwithstanding. In the event that TU Electric and the Owner
Trustee shall not have joined in the execution of any such
instrument within 10 days after the receipt of a written request
from the Indenture Trustee to do so, the Indenture Trustee shall
have the power to remove any such additional trustee and to
appoint a successor additional trustee without the concurrence of
TU Electric and the Owner Trustee, hereby appointing the Trustee
its agent and attorney to act for it in such connection in such
contingency provided, however, that, if there shall not have
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occurred and be continuing an Indenture Event of Default, within
ninety days following any appointment of a co-trustee without the
concurrence of TU Electric, TU Electric may remove such co-
trustee by written notice to the Indenture Trustee, the co-
trustee and the Owner Trustee. In the event that the Indenture
Trustee alone shall have appointed an additional trustee or
trustees or co-trustee or co-trustees as above provided, it may
at any time, by an instrument in writing, remove any such
additional trustee or co-trustee, the successor to any such
trustee or co-trustee so removed to be appointed by TU Electric,
the Owner Trustee and the Indenture Trustee, or by the Indenture
Trustee alone, as hereinbefore in this Section provided, subject
to the aforesaid right of TU Electric, if there shall not have
occurred and be continuing an Indenture Event of Default, to
remove such co-trustee within ninety days after such appointment.
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ARTICLE TEN
BONDHOLDERS' LISTS AND REPORTS BY
INDENTURE TRUSTEE AND TU ELECTRIC
SECTION 10.01. TU Electric to Furnish Indenture Trustee Names and
--------------------------------------------------
Addresses of Bondholders.
------------------------
TU Electric will furnish or cause to be furnished to the Indenture
Trustee semiannually, on a date not more than 15 days after each regular Record
Date with respect to an Interest Payment Date, in each year, and at such other
times as the Indenture Trustee may request in writing, within 30 days after
receipt by TU Electric of any such request, a list, in such form as the
Indenture Trustee may reasonably require, containing all of the information in
the possession or control of TU Electric or any Paying Agent other than the
Indenture Trustee as to the names and addresses of the Holders of Bonds, in each
case as of a date not more than 15 days prior to the time such list is
furnished; provided, however, that TU Electric need not furnish or cause to be
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furnished any such list with respect to Bonds with respect to which the
Indenture Trustee maintains the books for the registration and transfer of
Bonds.
SECTION 10.02. Preservation of Information; Communications to
---------------------------- -----------------
Bondholders.
-----------
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders of Bonds contained in
the most recent list, if any, furnished to the Indenture Trustee as provided in
Section 9.14(b) or Section 10.01, as the case may be, and the names and
addresses of Holders of Bonds received by the Indenture Trustee in its capacity
as Bond Registrar, if so acting. The Indenture Trustee may destroy any list
furnished to it as provided in Section 9.14(b) or Section 10.01, as the case may
be, upon receipt of a new list so furnished.
(b) If three or more Holders of Bonds (hereinafter referred to as
"applicants") apply in writing to the Indenture Trustee, and furnish to the
Indenture Trustee reasonable proof that each such applicant has owned a Bond for
a period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
of Bonds with respect to their rights under this Indenture or under the Bonds
and is accompanied by a copy of the form of proxy or other communication which
such applicants propose to transmit, then the Indenture Trustee shall, within
five Business Days after the receipt of such application, give written notice
thereof to TU Electric and the Owner Trustee and at its election, either:
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(i) afford such applicants access to the information preserved at
the time by the Indenture Trustee in accordance with Section 10.02(a), or
(ii) inform such applicants as to the approximate number of Holders
of Bonds whose names and addresses appear in the information preserved at
the time by the Indenture Trustee in accordance with Section 10.02(a), and
as to the approximate cost of mailing to such Bondholders the form of proxy
or other communication, if any, specified in such application.
If the Indenture Trustee shall not elect to afford such applicants
access to such information, the Indenture Trustee shall, upon the written
request of such applicants, mail to each Bondholder whose name and address
appears in the information preserved at the time by the Indenture Trustee in
accordance with Section 10.02(a), a copy of the form of proxy or other
communication which is specified in such request with reasonable promptness
after a tender to the Indenture Trustee of the material to be mailed and of
payment, or provision for the payment, of the reasonable expenses of mailing,
unless within five days after such tender, the Indenture Trustee shall mail to
such applicants and file with the Commission, together with a copy of the
material to be mailed, a written statement to the effect that, in the opinion of
the Indenture Trustee, such mailing would be contrary to the best interests of
the Holders of Bonds or would be in violation of applicable law. Such written
statement shall specify the basis of such opinions. If the Commission, after
opportunity for a hearing upon the objections specified in the written statement
so filed, shall enter an order refusing to sustain any of such objections or if,
after the entry of an order sustaining one or more of such objections, the
Commission shall find, after notice and opportunity for hearing, that all the
objections so sustained have been met and shall enter an order so declaring, the
Indenture Trustee shall mail copies of such material to all such Bondholders
with reasonable promptness after the entry of such order and the renewal of such
tender; otherwise the Indenture Trustee shall be relieved of any obligation or
duty to such applicant respecting their application.
(c) Every Holder of Bonds, by receiving and holding the same, agrees
with TU Electric, the Owner Trustee and the Indenture Trustee that neither TU
Electric, the Owner Trustee, the Owner Participant nor the Indenture Trustee
shall be held accountable by reason of the disclosure of any such information as
to the names and addresses of the Holders of Bonds in accordance with Section
10.02(b), regardless of the source from which such information was derived, and
that the Indenture Trustee shall not be held accountable by reason of mailing
any material pursuant to a request made under Section 10.02(b).
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SECTION 10.03. Reports by Indenture Trustee.
----------------------------
(a) Within 60 days after July 1 in each year, commencing with July 1,
1990, the Indenture Trustee shall transmit by mail to all Bondholders, as their
names and addresses appear in the Bond Register, a brief report dated as of such
July 1 with respect to:
(1) its eligibility under Section 9.09 and its qualifications under
Section 9.08, or in lieu thereof, if to the best of its knowledge it has
continued to be eligible and qualified under said Sections, a written
statement to such effect;
(2) the character and amount of any advances (and if the Indenture
Trustee elects so to state, the circumstances surrounding the making
thereof) made by the Indenture Trustee (as such) which remain unpaid on the
date of such report, and for the reimbursement of which it claims or may
claim a lien or charge, prior to that of the Bonds, on any property or
funds held or collected by it as Indenture Trustee, except that the
Indenture Trustee shall not be required (but may elect) to report such
advances if such advances so remaining unpaid aggregate not more than 1/2
of 1% of the principal amount of the Bonds Outstanding on the date of such
report;
(3) the amount, interest rate, and maturity date of all other
indebtedness owing by an obligor on the Bonds within the meaning of the TIA
to the Indenture Trustee in its individual capacity, on the date of such
report, with a brief description of any property held as collateral
security therefor, except an indebtedness based upon a creditor
relationship arising in any manner described in Section 9.13(b)(2), (3),
(4) or (6);
(4) the property and funds subject to the lien hereof, if any,
physically in the possession of the Indenture Trustee as such on the date
of such report;
(5) any release, or release and substitution, of property subject to
the Lien of this Indenture (and the consideration therefor, if any) which
the Indenture Trustee has not previously reported;
(6) any additional issue of Bonds which the Indenture Trustee has not
previously reported; and
(7) any action taken by the Indenture Trustee in the performance of
its duties hereunder which it has not previously reported and which in its
opinion materially
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affects the Bonds, except action in respect of a default, notice of which
has been or is to be withheld by the Indenture Trustee in accordance with
Section 9.02.
(b) The Indenture Trustee shall transmit to Bondholders as hereinafter
provided a brief report with respect to:
(1) the release, or release and substitution, of property subject to
the Lien of this Indenture (and the consideration therefor, if any), such
report to be transmitted within 90 days of such event; and
(2) the character and amount of any advances (and if the Indenture
Trustee elects to so state, the circumstances surrounding the making
thereof) made by the Indenture Trustee (as such) since the date of the last
report transmitted pursuant to subsection (a) of this Section (or if no
such report has yet been so transmitted, since the date of execution of
this instrument) for the reimbursement of which it claims or may claim a
lien or charge, prior to that of the Bonds, on property or funds held or
collected by it as Indenture Trustee, and which it has not previously
reported pursuant to this subsection, except that the Indenture Trustee
shall not be required (but may elect) to report such advances if such
advances remaining unpaid at any time aggregate 10% or less of the
principal amount of the Bonds Outstanding at such time, such report to be
transmitted within 90 days after such time.
(c) Reports pursuant to this Section 10.03 shall be transmitted
by mail:
(1) to all registered Holders, as the names and addresses of such
Holders appear in the Bond Register;
(2) to such Holders as have, within the two years preceding such
transmission, filed their names and addresses with the Indenture Trustee
for that purpose; and
(3) except in the case of reports pursuant to Section 10.03(b), to
each Bondholder whose name and address is preserved at the time by the
Indenture Trustee, as provided in Section 10.02(a).
(d) A copy of each such report shall, at the time of such transmission
to Bondholders, be filed by the Indenture Trustee with each stock exchange upon
which the Bonds are listed, and also with the Commission. The Owner Trustee
will notify the Indenture Trustee when the Bonds are listed on any stock
exchange.
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SECTION 10.04. Reports by TU Electric.
----------------------
TU Electric will:
(1) file with the Indenture Trustee, within 15 days after TU Electric
is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to
time by rules and regulations prescribe) which TU Electric may be required
to file with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934; or, if TU Electric is not required to file
information, documents or reports pursuant to either of said Sections, then
it will file with the Indenture Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the Commission,
such of the supplementary and periodic information, documents and reports
which may be required pursuant to Section 13 of the Securities Exchange Act
of 1934 in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules
and regulations;
(2) file with the Indenture Trustee and the Commission, in accordance
with rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to
compliance by TU Electric with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(3) transmit by mail to all Bondholders, as their names and addresses
appear in the Bond Register, within 30 days after the filing thereof with
the Indenture Trustee, such summaries of any information, documents and
reports required to be filed by TU Electric pursuant to paragraphs (1) and
(2) of this Section as may be required by rules and regulations prescribed
from time to time by the Commission.
Copies of all documents herein required to be provided to the
Indenture Trustee will be provided to the Owner Trustee.
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ARTICLE ELEVEN
SUPPLEMENTAL INDENTURES
SECTION 11.01. Supplemental Indentures Without Consent of Bondholders.
------------------------------------------------------
Without the consent of the Holders of any Bonds, TU Electric, when
authorized by a Board Resolution, the Owner Trustee and the Indenture Trustee,
at any time and from time to time, may enter into one or more indentures
supplemental hereto, in form satisfactory to the Indenture Trustee, for any of
the following purposes:
(1) to evidence the succession of another corporation to TU Electric,
and the assumption by any such successor of the covenants of TU Electric
herein contained, or to evidence the succession of another corporation to
the Owner Trustee, and the assumption by any such successor of the
covenants of the Owner Trustee herein and in the Bonds contained; or
(2) to add to the covenants of TU Electric or the Owner Trustee, for
the benefit of the Holders of the Bonds, or to surrender any right or power
herein conferred upon TU Electric or the Owner Trustee; or
(3) to convey, transfer and assign to the Indenture Trustee, and to
subject to the Lien of this Indenture, with the same force and effect as
though included in the Granting Clauses hereof, additional properties, and
to correct or amplify the description of any property at any time subject
to the Lien of this Indenture or to assure, convey and confirm unto the
Indenture Trustee any property subject or required to be subject to the
lien of this Indenture; or
(4) to modify, eliminate or add to the provisions of this Indenture to
such extent as shall be necessary to qualify or continue the qualification
of this Indenture (including any supplemental indenture) under the TIA, or
under any similar Federal statute hereafter enacted, and to add to this
Indenture such other provisions as may be expressly permitted by the TIA,
excluding, however, the provisions referred to in Section 316(a)(2) of the
TIA as in effect at the date as of which this instrument was executed or
any corresponding provision in any similar Federal statute hereafter
enacted; or
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein; or
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(6) to establish the form or terms of the Bonds or any Series as
permitted by Section 2.15 hereof; or
(7) to effect an assumption by TU Electric of the obligations on the
Bonds pursuant to Section 2.16; or
(8) to change or amend any provision hereof provided that such change
or amendment will not be applicable to any Bonds Outstanding prior to the
date thereof;
(9) to evidence the succession of a new Indenture Trustee hereunder or
add a co-trustee and to make provisions as to the rights and duties of such
co-trustee and as to the appointment and dismissal of any such co-trustee;
or
(10) to make any other provisions with respect to matters or questions
arising under this Indenture, provided such action shall not adversely
affect the interest of the Holders of the Bonds.
Notwithstanding the foregoing, no supplemental indenture shall become
effective except with the consent of the Holders of all Bonds then outstanding
if as a result thereof the amounts payable to the Owner Trustee under the Lease
(other than Excepted Payments) and assigned to the Indenture Trustee hereunder
shall not be sufficient to pay when due the principal of, premium (if any) and
interest on the Bonds.
SECTION 11.02. Supplemental Indenture With Consent of Bondholders.
--------------------------------------------------
With the consent of the Holders of not less than a majority in
principal amount of the Outstanding Bonds of all series, by Act of said Holders
delivered to the Owner Trustee and the Indenture Trustee, TU Electric, when
authorized by a Board Resolution, and the Owner Trustee may and the Indenture
Trustee, subject to Section 11.03 shall, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner the rights and obligations of the Holders of the Bonds and of TU
Electric and the Owner Trustee under this Indenture; provided, however, that no
-------- -------
such supplemental indenture shall, without the consent of the Holder of each
Outstanding Bond affected thereby,
(1) change the Stated Maturity of the principal of, or any installment
of interest on, or the dates or circumstances of payment of premium (if
any) on, any Bond, or reduce the principal amount thereof or the interest
thereon or any amount payable upon the redemption thereof, or change the
circumstances for redemption or change the Place of Payment where, or the
coin or currency in which, any Bond or the premium (if any) or the interest
thereon is
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payable, or impair the right to institute suit for the enforcement of any
such payment of principal or interest on or after the Stated Maturity
thereof (or, in the case of redemption, on or after the Redemption Date) or
such payment of premium (if any) on or after the date such premium becomes
due and payable or change the dates or the amounts of payments to be made
through the operation of the Sinking Fund in respect of a Bond of any
series, or
(2) permit the creation of any lien prior to or pari passu with the
---- -----
Lien of this Indenture with respect to any of the Indenture Estate, or
terminate the Lien of this Indenture on any Indenture Estate or deprive any
Bondholder of the security afforded by the Lien of this Indenture, or
(3) terminate the Lease, reduce the amounts payable under the Lease
assigned to the Indenture Trustee or change the time for the payment
thereof so that such payments are less than the amounts necessary to pay
when due the principal of, premium, if any, and interest on the Outstanding
Bonds, or
(4) reduce the percentage in principal amount of the Outstanding Bonds
of all series, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for any
waiver (of compliance with certain provisions of this Indenture or certain
defaults hereunder and their consequences) provided for in this Indenture,
or
(5) modify any of the provisions of this Section or Section 5.08,
except to increase any such percentage or to provide that certain other
provisions of this Indenture cannot be modified or waived without the
consent of the Holder of each Bond affected thereby.
Upon receipt by the Indenture Trustee of Board Resolutions of TU
Electric and an Owner Trustee Certificate and such other documentation as the
Indenture Trustee may reasonably require and upon the filing with the Indenture
Trustee of evidence of the Act of said Holders, the Indenture Trustee shall join
in the execution of such supplemental indenture or other instrument, as the case
may be, subject to the provisions of Section 11.04.
It shall not be necessary for any Act of Bondholders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
-86-
<PAGE>
SECTION 11.03. Documents Affecting Immunity or Indemnity.
-----------------------------------------
If in the opinion of the Owner Trustee, or the Indenture Trustee any
document required to be executed by it pursuant to the terms of Section 11.02
affects any interest, right, duty, immunity or indemnity in favor of the Owner
Trustee, or the Indenture Trustee under this Indenture or the Participation
Agreement, the Owner Trustee, or the Indenture Trustee, as the case may be, may
in its discretion decline to execute such document.
SECTION 11.04. Execution of Supplemental Indentures.
------------------------------------
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and (subject to Section 9.01) 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.
SECTION 11.05. Effect of Supplemental Indentures.
---------------------------------
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Bonds theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.
SECTION 11.06. Conformity with Trust Indenture Act.
-----------------------------------
Every supplemental indenture executed pursuant to this Article shall
conform to the requirements of the TIA as then in effect.
SECTION 11.07. Reference in Bonds to Supplemental Indentures.
---------------------------------------------
Bonds authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Owner Trustee, bear a notation in form approved by the Owner Trustee and the
Indenture Trustee as to any matter provided for in such supplemental indenture;
and, in such case, suitable notation may be made upon Outstanding Bonds after
proper presentation and demand. If the Owner Trustee shall so determine, new
Bonds so modified as to conform, in the opinion of the Owner Trustee and the
Indenture Trustee, to any such supplemental indenture may be prepared and
executed by the Owner
-87-
<PAGE>
Trustee and authenticated and delivered by the Indenture Trustee or other
Authorized Agent in exchange for Outstanding Bonds.
ARTICLE TWELVE
RELEASE OF PROPERTY
SECTION 12.01. Release of Property in the Event of Condemnation.
------------------------------------------------
The Indenture Trustee shall release from the Lien of this Indenture
property taken by the exercise of a power of eminent domain or by right to
purchase of any governmental subdivision, body or agency, which taking does not
constitute an Event of Loss, upon receipt of the consideration therefor, but in
each such case only upon receipt by the Indenture Trustee of:
(a) an Owner Trustee Request, dated the date of the application for
such release, requesting such release;
(b) an Officers' Certificate dated the date of such Owner Trustee
Request, stating that such property has been taken by the exercise of a
power of eminent domain or by purchase by a governmental subdivision, body
or agency in the exercise of a right which it had to purchase the same; and
(c) an Opinion of Counsel complying with the requirements of Section
1.02 hereof.
SECTION 12.02. Release of Security Interest in Components for Reasons
------------------------------------------------------
Other Than Condemnation.
-----------------------
Subject to Section 12.03 hereof, the Indenture Trustee shall release
from the Lien of this Indenture any Components, the removal of which will not
materially impair or reduce the operating capacity, cost efficiency, utility or
value of the Leased Assets, upon receipt by the Indenture Trustee of an Owner
Trustee Request requesting such release, and the following:
(1) A release certificate (herein called a "Release Certificate"),
-------------------
which shall be an Officers' Certificate, dated not more than 30 days prior
to the date of the application for such release, and signed also (except as
to subclauses (i) and (iv) of this clause) by an Engineer setting forth:
(i) a description of the Component or Components sought to be
released and stating such facts as shall
-88-
<PAGE>
be necessary to show that the release sought is authorized under the
provisions of this Section 12.02;
(ii) whether (x) the aggregate of the fair value of the
property to be released at the date of the Release Certificate and the
fair value of all other property released since the commencement of
the then current calendar year (as previously certified to the
Indenture Trustee in connection with such release) is 10% or more of
the aggregate principal amount of all Bonds at the time Outstanding
and (y) said fair value of the property to be released is at least
$25,000 and is at least 1% of the aggregate principal amount of all
Bonds at the time Outstanding; and, if (x) and (y) are answered in the
affirmative, that an Independent Engineer's Certificate as to the fair
value of the property to be released will be furnished under the
following clause (2);
(iii) the fair value, in the opinion of said Engineer, of the
property to be released at the date of the Release Certificate; except
that it shall not be necessary under this clause to state the fair
value of any property the fair value of which is certified in an
Independent Engineer's Certificate under the following clause (2);
(iv) that no Indenture Default (with respect to Section
8.01(3) or (4)) has occurred and is continuing;
(v) that, in the opinion of the signers, the proposed release
will not impair the security under this Indenture in contravention of
the provisions hereof;
(vi) if any Components are to replace the Components to be
released, that the fair value of the replacement Components is at
least equal to the fair value of the Components to be released or, if
no Components are to replace the Components to be released, or the
fair value of the replacement Components is less than the fair value
of the Components to be released, that the fair value of the
replacement Components, if any, plus the fair value of any Components
theretofore incorporated in or becoming part of the Leased Assets
since the completion thereof (and not theretofore used as a basis for
release of Components) is at least equal to the fair value of the
Components to be released; provided, however, that if (x) within six
-------- -------
months prior to the acquisition of any replacement or other Components
used as the basis for release, such Components had been used or
operated by
-89-
<PAGE>
any Person other than the Owner Trustee or TU Electric in a business
similar to that in which they have been or will be used in connection
with the operation of the Leased Assets and (y) the fair value of such
Components (to the extent of the Interest) is not less than $25,000
and not less than 1% of the aggregate principal amount of the Bonds
Outstanding, the matters set forth in this subclause (vi) shall be
certified by an Independent Engineer; and
(vii) that the Owner Trustee has good title to such property
to be substituted pursuant to subclause (vi).
(2) In case subclause (ii) or (vi) of the foregoing clause (1)
requires that an Independent Engineer's Certificate be furnished under this
clause, an Independent Engineer's Certificate dated not more than 30 days
prior to the date of the application for the release of such property,
stating the fair value, in said Independent Engineer's opinion, at the date
of the Release Certificate of the property to be released, and stating also
that, in the opinion of said Independent Engineer, the proposed release
will not impair the security under this Indenture in contravention of the
provisions hereof.
(3) An Opinion of Counsel complying with the requirements of Section
1.02 hereof and stating that the certificates, opinions and other
instruments which have been or are therewith delivered to and deposited
with the Indenture Trustee conform to the requirements of this Indenture
and that, upon the basis of such application, the Components referred to in
the Release Certificate may be lawfully released from the Lien of this
Indenture, and that all conditions precedent herein provided for relating
to such release have been complied with.
SECTION 12.03. Removal of Components Without Release.
-------------------------------------
In addition to any Components released from the Lien of this Indenture
pursuant to the provisions of Section 12.02 hereof the Owner Trustee may remove,
or permit the removal pursuant to the Lease of, any Component which has become
worn out, destroyed, obsolete or damaged beyond repair or permanently rendered
unfit for use or is otherwise no longer useful in connection with the operation
of the Facilities, free from the Lien of this Indenture and without any release
from or consent by the Indenture Trustee. All replacement Components shall
immediately become subject to the Lien hereof.
The Indenture Trustee shall from time to time execute any written
instrument to confirm the propriety of any action taken by the Owner Trustee
under this Section 12.03 upon receipt
-90-
<PAGE>
by the Indenture Trustee of an Owner Trustee Request requesting the same,
together with an Officers' Certificate stating that said action was duly taken
by the Owner Trustee in conformity with this Section 12.03 and that the
execution of such written instrument is appropriate to confirm the propriety of
such action under this Section 12.03.
SECTION 12.04. Purchasers Not Bound to Inquire.
-------------------------------
In no event shall any purchaser or purchasers in good faith of any
property purported to be released hereunder be bound to ascertain the authority
of the Indenture Trustee to execute a release, or to inquire as to any facts
required by the provisions hereof for the exercise of such authority, or to see
to the application of the purchase moneys.
SECTION 12.05. Releases If Certain Defaults Exist.
----------------------------------
The Indenture Trustee shall not be required under any of the
provisions of this Article Twelve to release any part of the Indenture Estate
from the Lien hereof when an Indenture Default (with respect to Section 8.01(4)
or (5)) shall have occurred and be continuing; but notwithstanding any such
Indenture Default, the Indenture Trustee may release from the Lien hereof any
part of the Indenture Estate upon compliance with the other conditions specified
in this Article Twelve in respect thereof if the Indenture Trustee in its
discretion, or the Holders of not less than a majority in aggregate principal
amount of the Bonds then Outstanding, by Act of such Holders, shall consent to
such action.
SECTION 12.06. Indenture Trustee Appointed Attorney-in-Fact.
--------------------------- ----------------
For the purpose of granting releases provided in this Article Twelve,
the Indenture Trustee is hereby irrevocably constituted as agent and attorney-
in-fact for the Holders of the Bonds and to that end may execute, sign, seal,
acknowledge and deliver all necessary instruments of release.
ARTICLE THIRTEEN
SUNDRY PROVISIONS
SECTION 13.01. Execution in Counterparts.
-------------------------
This instrument may be executed in any number of counterparts, each of
which when so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
-91-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers thereunto duly authorized, and
their respective corporate seals to be hereunto affixed and attested, all as of
the day and year first above written.
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
except to the extent set forth
herein, but as Owner Trustee
under the Trust Agreement.
By: /s/ GILMAN N. GAUVIN
-----------------------------
GILMAN N. GAUVIN
Vice President
Attest:
------------------------
TEXAS UTILITIES ELECTRIC COMPANY
By: /s/ M.S. GREENE
-----------------------------
Vice President
Attest:
/s/ G.A. ENGELLAND
------------------------
G.A. Engelland
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO,
Indenture Trustee
By: /s/ R. BREMEN
------------------------------
Attest:
------------------------
-92-
<PAGE>
ACKNOWLEDGMENT
State of Connecticut
County of Hartford
This instrument was acknowledged before me on November 22, 1989, by
Gilman N. Gauvin, as Vice President of The Connecticut National Bank, a national
banking association, on behalf of said association.
/s/ DEBRA A. JOHNSON
----------------------------------------
Debra A. Johnson
Notary Public, State of Connecticut
My commission expires:
March 31, 1990
-----------------------
<PAGE>
ACKNOWLEDGMENT
State of Texas
County of Dallas
This instrument was acknowledged before me on December 6, 1989, by
M. S. Greene, as Vice President of Texas Utilities Electric Company, a Texas
corporation, on behalf of said corporation.
/s/ JO MACDOWELL
----------------------------------------
Jo Macdowell
Notary Public, State of Texas
My commission expires:
6/27/92
----------------------
<PAGE>
ACKNOWLEDGMENT
State of Illinois
County of Cook
This instrument was acknowledged before me on November 22, 1989, by
R. Bremen, as V.P. of American National Bank and Trust Company of Chicago, a
national banking association, on behalf of said association.
/s/ SUZANNE G. BAKER
-----------------------------------------
Suzanne G. Baker
Notary Public, State of Illinois
My commission expires:
6/20/92
--------------------
<PAGE>
ATTACHMENT A
to
Trust Indenture, Security
Agreement and Mortgage dated as
of December 1, 1989 among The
Connecticut National Bank, as
Owner Trustee, and Certain Other
Parties
[FORM OF FACE OF BOND]
No. R- $_____________
THE CONNECTICUT NATIONAL BANK
not in its individual capacity but solely
as Owner Trustee under
Trust Agreement dated as of
December 1, 1988
SECURED FACILITY BOND, INITIAL SERIES
INTEREST RATE: STATED MATURITY:
REGISTERED HOLDER:
PRINCIPAL AMOUNT: DOLLARS
THE CONNECTICUT NATIONAL BANK, a national banking association
(hereinafter called the "Owner Trustee", which term includes any successor
corporation under the Indenture referred to on the reverse hereof), not in its
individual capacity, but solely as owner trustee under a Trust Agreement dated
as of December 1, 1988, with the owner participant named therein (together with
its permitted successors and assigns, hereinafter called the "Owner
Participant"), for value received, hereby promises to pay to the Registered
Holder named above or registered assigns, the Principal Amount (stated
<PAGE>
-2-
above) on the Stated Maturity (stated above) and to pay interest thereon
(computed on the basis of a 360-day year of twelve 30-day months) from the date
of the initial authentication of the Initial Series Bonds, if the date of this
Bond is prior to January 1, 1990, or, if the date of this Bond is on or after
January 1, 1990, from the January 1 or July 1 next preceding the date of this
Bond to which interest has been paid (unless the date hereof is an Interest
Payment Date, as defined below, to which interest has been paid, in which case
from the date hereof) or if no interest has been paid hereon, from the date of
the initial authentication of the Initial Series Bonds, the first interest
payment to be made on January 1, 1990 for the period from the date of initial
authentication of the Initial Series Bonds to January 1, 1990, with subsequent
interest payments to be made semiannually on January 1 and July 1 in each year
(each an "Interest Payment Date"), at the Interest Rate (stated above) per
annum, until the principal hereof is paid in full or made available for payment
in accordance with the Indenture.
Capitalized terms used in this Bond which are not otherwise defined
herein shall have the meanings ascribed thereto in the Indenture.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in such Indenture, be paid to the
Person in whose name this Bond is registered at the close of business on the
Record Date relating to such Interest Payment Date, which shall mean the
December 15 or June 15, as the case may be, next preceding such Interest Payment
Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the registered Holder on such regular Record
Date and may be paid to the Person in whose name this Bond is registered at the
close of business on a subsequent Record Date for the payment of such Defaulted
Interest to be fixed by the Indenture Trustee, notice whereof shall be given to
the Bondholders not less than 15 days prior to such subsequent Record Date.
Payment of the principal of and premium (if any) on this Bond will be made upon
presentation and surrender hereof at the corporate trust office of the Paying
Agent, The First National Bank of Chicago in Chicago, Illinois or at the office
of The First Chicago Trust Company of New York, agent of the Paying Agent, in
the City of New York. Interest on this Bond shall be paid by check drawn upon
the Paying Agent and mailed to the registered address of the Holder of this Bond
as such address shall appear on the Bond Register. Payment as aforesaid of
principal of, premium (if any) and interest on this Bond shall be made in such
coin or currency of the United States of America as at the time of payment is
legal tender for the payment of public and private debts.
Interest on any overdue principal and premium (if any) and (to the
extent permitted by applicable law) any overdue interest shall be paid, on
demand, from the due date thereof at the rate of interest per annum (computed on
the basis of a 360-day year of twelve 30-day months) equal to the Interest Rate
(stated above) on this Bond for the period during which any such principal,
premium or interest shall be overdue.
<PAGE>
-3-
Reference is hereby made to the further provisions of this Bond set
forth on the reverse hereof which further provisions shall for all purposes have
the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee by manual signature, this Bond shall not be entitled to
any benefit under such Indenture, or be valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Owner Trustee has caused this instrument to be
duly executed under its corporate seal.
Dated:
-------------------
THE CONNECTICUT NATIONAL BANK
not in its individual capacity but
solely as Owner Trustee
By
----------------------------
Attest:
----------------------
Authorized Signatory
<PAGE>
-4-
[FORM OF REVERSE OF SECURED FACILITY BOND]
This Bond is one of an authorized issue of Bonds of the Owner Trustee
known as its "Secured Facility Bonds, Initial Series" (herein called the
"Bonds") issued under, and all equally and ratably secured by, a Trust
Indenture, Security Agreement and Mortgage dated as of December 1, 1989
(together with any indenture supplemental thereto, herein called the
"Indenture"), among the Owner Trustee, Texas Utilities Electric Company, a Texas
corporation (herein called "TU Electric"), and American National Bank and Trust
Company of Chicago, a national banking association, as Indenture Trustee (herein
called the "Indenture Trustee", which term includes any successor Indenture
Trustee under the Indenture), to which Indenture reference is hereby made for a
description of the nature and extent of the property assigned, pledged,
transferred and mortgaged thereunder, the respective rights of the Holders of
said Bonds and of the Indenture Trustee and the Owner Trustee in respect of such
security, and the terms upon which said Bonds are to be authenticated and
delivered. The Indenture permits the issuance of additional series of bonds for
the purposes and as provided therein.
All payments of principal, premium (if any) and interest to be made
hereunder and under the Indenture shall be made only from the Indenture Estate
or the income and proceeds received by the Indenture Trustee therefrom, and all
payments of principal, premium (if any) and interest shall be made in accordance
with the terms of the Indenture. Each Holder hereof, by its acceptance of this
Bond, agrees that (a) except as expressly provided in the Indenture, it will
look solely to the Indenture Estate or the income and proceeds received by the
Indenture Trustee therefrom to the extent available for distribution to the
Holder hereof as provided in the Indenture and (b) neither the Owner Participant
nor the Owner Trustee, in its individual capacity, nor the Indenture Trustee, in
its individual capacity, is liable to the Holder hereof for any amounts payable
under this Bond or the Indenture or, except as provided in the Indenture, for
any liability under the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of TU
Electric and the Owner Trustee and the rights of the Holders of the Bonds under
the Indenture at any time by TU Electric and the Owner Trustee with the consent
of the Holders of not less than a majority in aggregate principal amount of the
Bonds and all other series of bonds issued under the Indenture at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Bonds and all other
series of bonds issued under the Indenture at the time Outstanding, on behalf of
the Holders of all the Bonds and all the bonds of such other series, to waive
compliance by TU Electric and the Owner Trustee with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holder of this Bond shall be conclusive and
binding upon such Holder and upon all
<PAGE>
-5-
future Holders of this Bond and of any Bond issued upon the transfer hereof or
in exchange herefor or in lieu hereof whether or not notation of such consent or
waiver is made upon this Bond.
The Bonds are limited in aggregate principal amount to $118,575,000,
consisting of:
<TABLE>
<CAPTION>
Interest Principal
Stated Maturity Rate Amount
--------------- -------- ---------
<S> <C> <C>
January 1, 2005 9.45% $36,980,000
January 1, 2018 10.35 81,595,000
</TABLE>
As more fully provided in the Indenture, the Bonds of each Stated
Maturity are subject to mandatory redemption, in whole but not in part, at 100%
of the principal amount thereof, together with interest accrued to the
Redemption Date, upon the receipt of payment of the applicable purchase price or
Termination Value resulting from a termination of the Lease pursuant to
Section 7 thereof.
The Bonds of each Stated Maturity are also subject to mandatory
redemption, at 100% of the principal amount thereof, together with interest
accrued to the Redemption Date, upon the receipt of payment of the applicable
payment of Casualty Value resulting from an Event of Loss under the Lease
(unless, in connection with an Event of Loss described in clause (e) of the
definition thereof, TU Electric assumes the Bonds then Outstanding pursuant to
Section 2.16 of the Indenture), in the respective principal amounts set forth in
the Indenture.
The Bonds of each Stated Maturity are also subject to mandatory
redemption pursuant to sinking fund installments, as more fully provided in the
Indenture, at 100% of the principal amount thereof, together with interest
accrued to the Redemption Date, on the dates and in the respective principal
amounts (before taking into account any adjustment as indicated in the next two
succeeding paragraphs) set forth in the table below:
<TABLE>
<CAPTION>
Stated Maturity
---------------
Redemption Date January 1, 2005 January 1, 2018
--------------- --------------- ---------------
<S> <C> <C>
</TABLE>
<PAGE>
-6-
<TABLE>
<S> <C> <C>
January 1, 1991 $4,419,000 0
July 1, 1991 0 0
January 1, 1992 293,000 0
July 1, 1992 0 0
January 1, 1993 321,000 0
July 1, 1993 0 0
January 1, 1994 351,000 0
July 1, 1994 0 0
January 1, 1995 385,000 0
July 1, 1995 0 0
January 1, 1996 421,000 0
July 1, 1996 0 0
January 1, 1997 462,000 0
July 1, 1997 0 0
January 1, 1998 506,000 0
July 1, 1998 0 0
January 1, 1999 3,126,000 0
July 1, 1999 0 0
January 1, 2000 3,500,000 0
July 1, 2000 0 0
January 1, 2001 3,834,000 0
July 1, 2001 0 0
January 1, 2002 4,200,000 0
July 1, 2002 0 0
January 1, 2003 4,601,000 0
July 1, 2003 0 0
January 1, 2004 5,040,000 0
July 1, 2004 0 0
January 1, 2005 5,521,000 0
July 1, 2005 0 0
January 1, 2006 - $1,550,000
July 1, 2006 - 0
January 1, 2007 - 3,637,000
July 1, 2007 - 0
</TABLE>
<PAGE>
-7-
<TABLE>
<S> <C> <C>
January 1, 2008 - 4,808,000
July 1, 2008 - 0
January 1, 2009 - 4,699,000
July 1, 2009 - 0
January 1, 2010 - 4,965,000
July 1, 2010 - 0
January 1, 2011 - 5,301,000
July 1, 2011 - 0
January 1, 2012 - 5,661,000
July 1, 2012 - 0
January 1, 2013 - 6,047,000
July 1, 2013 - 0
January 1, 2014 - 6,530,000
July 1, 2014 - 0
January 1, 2015 - 10,557,000
July 1, 2015 - 0
January 1, 2016 - 11,659,000
July 1, 2016 - 0
January 1, 2017 - 12,877,000
July 1, 2017 - 756,000
January 1, 2018 - 2,548,000
</TABLE>
In the event of any partial redemption of Bonds of a particular Stated
Maturity (other than pursuant to the aforementioned sinking fund), the principal
amount of Bonds of such Stated Maturity to be redeemed thereafter pursuant to
the sinking fund schedule indicated above shall be adjusted as provided in the
Indenture.
Under certain circumstances, Bonds acquired by the Owner Trustee may
be credited against subsequent sinking fund requirements, as provided in the
Indenture.
The Bonds of each Stated Maturity shall be subject to special
mandatory redemption, in whole but not in part, at the redemption prices set
forth in the immediately succeeding paragraph with respect to the Bonds with a
Stated Maturity of January 1, 2005 and at the redemption prices set forth under
paragraph (ii) below with respect to the Bonds with a Stated Maturity of
January 1, 2018, upon the receipt of payment of the applicable purchase price
upon the exercise by TU Electric of its option to purchase the Facilities
<PAGE>
-8-
under Section 6.1(c)(i) or (ii) of the Lease, unless, in either case, TU
Electric shall assume the Bonds then Outstanding pursuant to Section 2.16 of the
Indenture; provided, however, that, if TU Electric exercises its option to
-------- -------
purchase the Facilities under Subsection 6.1(c)(i) or (ii) of the Lease at a
time prior to the first date on which the Bonds with a Stated Maturity of
January 1, 2018 are redeemable under paragraph (ii) below, the redemption price
shall be the redemption price which would be applicable on such first date, all
as more fully described in the Indenture.
Bonds with a Stated Maturity of January 1, 2005 shall be subject to
special mandatory redemption at 104.73% of the principal amount thereof,
together with interest accrued to the Special Mandatory Redemption Date, if
redeemed on or before December 31, 1995, and if redeemed thereafter, at the
following times and Redemption Prices (expressed as a percentage of principal
amount), together with interest accrued to the Redemption Date:
<TABLE>
<CAPTION>
Twelve Month Period Special Mandatory
Beginning January 1, Redemption Price
-------------------- -----------------
<S> <C>
1996.............. 103.78%
1997.............. 102.84
1998.............. 101.89
1999.............. 100.95
</TABLE>
and thereafter at the principal amount thereof, together with interest accrued
to the Redemption Date.
The Bonds of each Stated Maturity are subject to redemption at the option
of the Owner Trustee, as a whole at any time and in part from time to time, as
provided below:
(i) Bonds with a Stated Maturity of January 1, 2005. Bonds with a Stated
-----------------------------------------------
Maturity of January 1, 2005 shall not be redeemable prior to Maturity at the
option of the Owner Trustee.
(ii) Bonds with a Stated Maturity of January 1, 2018. Bonds with a Stated
-----------------------------------------------
Maturity of January 1, 2018 shall be redeemable prior to Maturity at the option
of the Owner Trustee, as a whole at any time and in part from time to time, at
the following times and Redemption Prices (expressed as a percentage of
principal amount), together with interest the Redemption Date:
<TABLE>
<CAPTION>
Twelve Twelve
Month Month
<S> <C>
</TABLE>
<PAGE>
-9-
<TABLE>
<CAPTION>
Period Period
Beginning Redemption Beginning Redemption
January 1 Price January 1 Price
--------- ---------- --------- -----------
<S> <C> <C> <C>
1995.......... 107.47% 2002.......... 103.45
1996.......... 106.90 2003.......... 102.87
1997.......... 106.32 2004.......... 102.30
1998.......... 105.75 2005.......... 101.72
1999.......... 105.17 2006.......... 101.15
2000.......... 104.60 2007.......... 100.57%
2001.......... 104.02
</TABLE>
and thereafter at the principal amount thereof, together with interest accrued
to the Redemption Date; provided, however, that no such redemption shall be made
-------- -------
prior to January 1, 1995.
In the case of any redemption of Bonds, unpaid installments of interest
maturing on or prior to the Redemption Date will be payable to the Holders of
such Bonds of record at the close of business on the relevant regular or
subsequent Record Date referred to on the face hereof.
In the event any of the Bonds are called for redemption, the Indenture
Trustee shall give notice, in the name of the Owner Trustee, of the redemption
of such Bonds. Notice of redemption of Bonds (including redemption through the
operation of the sinking fund with respect to any series) shall be given by
first-class mail, postage prepaid, mailed not less than 30 days prior to the
Redemption Date, to each Holder of Bonds to be redeemed, at his address
appearing on the Bond Register.
With respect to any notice of redemption of Bonds at the option of the Owner
Trustee pursuant to subparagraph (ii) of the third preceding paragraph, unless,
upon the giving of such notice, such Bonds shall be deemed to have been paid
within the meaning of the Indenture, such notice shall state that such
redemption shall be conditional upon the receipt by the Indenture Trustee on or
prior to the Redemption Date of moneys sufficient to pay the principal of and
premium (if any) and interest on such Bonds to be redeemed, and that if such
moneys shall not have been so received said notice shall be of no force and
effect and the Owner Trustee shall not be required to redeem such Bonds. In the
event that such notice of redemption contains such a condition and such moneys
are not so received, the redemption shall not be made and the Indenture Trustee
shall within a reasonable time thereafter give notice, in the manner in which
the notice of redemption was given, that such moneys were not so received.
<PAGE>
-10-
If a notice of redemption shall be unconditional, or if the conditions of a
conditional notice of redemption shall have been satisfied, then upon
presentation and surrender of Bonds so called for redemption at the corporate
trust office of the Paying Agent, such Bonds shall be redeemed.
The Indenture provides that Bonds of a denomination larger than $1,000 may be
redeemed in part ($1,000 or an integral multiple thereof) and that upon any
partial redemption of any such Bond the same may be surrendered at the corporate
trust office of the Paying Agent in exchange for one or more new Bonds of the
same series and the same Stated Maturity for the unredeemed portion thereof.
Bonds (or portions thereof as aforesaid) for whose redemption and payment
provision is made in accordance with the Indenture shall thereupon cease to be
entitled to the Lien of the Indenture and shall cease to bear interest from and
after the Redemption Date.
If an Event of Default under the Indenture shall occur and be continuing, the
principal of this Bond may, subject to certain rights of the Owner Trustee or
the Owner Participant contained or referred to in the Indenture, become or be
declared immediately due and payable, in the manner and with the effect provided
in the Indenture.
Under certain circumstances, the Owner Trustee may make payments or perform
obligations of TU Electric under the Indenture and the Lease. Exercise of the
Owner Trustee's limited right to cure would prevent the Indenture Trustee and
the Holder hereof from exercising any remedies otherwise available under the
Indenture as a result of TU Electric's failure to make such payments or perform
such obligations.
Following a declaration of acceleration of the Bonds, the Owner Trustee may,
subject to the conditions specified in the Indenture, purchase all of the Bonds
in accordance with the terms of the Indenture. Each Holder of this Bond, by
accepting the same, agrees, subject to the provisions of the Indenture, that,
upon payment to the Indenture Trustee of all amounts payable on the Bonds and
upon satisfaction of all of the conditions contained in the Indenture pertaining
to the purchase of Bonds by the Owner Trustee, such Holder shall be deemed to
have sold this Bond to the Owner Trustee.
Under certain circumstances, the obligations of the Owner Trustee under the
Bonds and the Indenture may be assumed in whole by TU Electric and upon such
assumption the Owner Trustee shall be released and discharged from its liability
on this Bond and under the Indenture in respect of obligations to be performed
on or after the date of such assumption.
<PAGE>
-11-
The Lien upon the Indenture Estate is subject to being legally discharged
prior to the Maturity of this Bond upon the deposit with the Indenture Trustee
of money or certain obligations of the United States of America sufficient to
pay the principal of, premium (if any) and interest on this Bond when due, all
in accordance with the terms and conditions of the Indenture.
The Bond is transferable by the registered owner hereof, in person or by
attorney authorized in writing, at the corporate trust office of the Bond
Registrar, The First National Bank of Chicago in Chicago, Illinois or at the
office of The First Chicago Trust Company of New York, agent of the Bond
Registrar, in the City of New York, upon surrender of this Bond, and, upon any
such transfer, a new Bond of the same series with the same Stated Maturity for
the same aggregate principal amount will be issued to the transferee in exchange
herefor.
The Bonds are issuable only as registered Bonds in denominations of $1,000
and any integral multiple thereof. As provided in, and subject to the
provisions of, the Indenture, Bonds of a particular Stated Maturity are
exchangeable at the corporate trust office of the Bond Registrar for an equal
aggregate principal amount of Bonds of the same series with the same Stated
Maturity of a different authorized denomination or denominations, as requested
by the Holder surrendering the same.
No service charge will be made to any Holder of Bonds for any such transfer
or exchange, but the Bond Registrar may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentation of this Bond for registration of transfer, the
Person in whose name this Bond is registered shall be deemed to be the owner
hereof for the purpose of receiving payment as herein provided and for all other
purposes whether or not this Bond shall be overdue, regardless of any notice to
anyone to the contrary.
As provided in the Indenture, the Bond Registrar shall not be required (i) to
issue, register the transfer of or exchange any Bond of any series during a
period beginning at the opening of business 15 days before the date of the first
mailing of the notice of redemption of Bonds for redemption and ending at the
close of business on the date of the first mailing of the notice of redemption,
or (ii) to transfer or exchange any Bond so selected for redemption in whole or
in part except the unredeemed portion of any Bond selected for redemption in
part.
AS PROVIDED IN THE INDENTURE, THE INDENTURE AND THE BONDS SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
<PAGE>
-12-
[FORM OF CERTIFICATE OF AUTHENTICATION]
This is one of the Secured Facility Bonds, Initial Series,
described in the within-mentioned Indenture.
AMERICAN NATIONAL BANK AND
TRUST COMPANY OF CHICAGO
Indenture Trustee
By:
----------------------------
Authorized Officer
<PAGE>
EXHIBIT (4)(a)(ii)
--------------------------------------------------------------------------------
TRUST INDENTURE, SECURITY AGREEMENT AND MORTGAGE
SUPPLEMENT NO. 1
Dated as of _________, 1995
Among
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION,
Not in its individual capacity,
except to the extent set forth in the Indenture, but
as Owner Trustee under the Trust Agreement
TEXAS UTILITIES ELECTRIC COMPANY
and
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
Indenture Trustee
--------------------------------------------------------------------------------
MASTER FORM RECORDED
BY AMERICAN NATIONAL
BANK AND TRUST COMPANY OF CHICAGO,
INDENTURE TRUSTEE
<PAGE>
TRUST INDENTURE, SECURITY AGREEMENT AND MORTGAGE
SUPPLEMENT NO. 1
This Trust Indenture, Security Agreement and Mortgage Supplement
No. 1, dated as of ___________, 1995 ("Supplement No. 1"), among SHAWMUT BANK
----------------
CONNECTICUT, NATIONAL ASSOCIATION, a national banking association (not in its
individual capacity except to the extent set forth in the Indenture (as defined
below) but as owner trustee under the Trust Agreement dated as of December 1,
1988, as amended and supplemented (the "Trust Agreement"), between the Owner
----------------
Participant and Shawmut Bank Connecticut, National Association, as Owner
Trustee (the "Owner Trustee"), and TEXAS UTILITIES ELECTRIC COMPANY ("TU
------------- --
Electric"), and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a national
--------
banking association, as trustee for the benefit of the Holders of the Bonds (the
"Indenture Trustee").
-----------------
RECITALS.
--------
A. The Owner Trustee executed and delivered to the Indenture Trustee
the Trust Indenture, Security Agreement and Mortgage dated as of December 1,
1989 (the "Original Indenture") filed of record in Vol. ___ commencing on
------------------
Page ___ of the Deed of Trust Records of ______ County, Texas and in Vol. ___
commencing on Page ___ of the Official Public Records in _________County, Texas,
(the Original Indenture as hereafter amended, modified or supplemented from time
to time, being hereinafter referred to as the "Indenture"), the entirety of
---------
which is hereby incorporated by reference pursuant to Section 12.009 of the
Texas Property Code; and
B. Pursuant to the Indenture, the Owner Trustee granted, conveyed,
assigned, transferred, mortgaged and pledged to the Indenture Trustee and its
successors and assigns, and created a security interest in favor of the
Indenture Trustee and its successors and assigns in, the property, rights and
privileges described in the Indenture to secure both the payment of all
indebtedness of the Owner Trustee as described in the Indenture and the
performance of all of the Owner Trustee's obligations described in the
Indenture; and
C. Sections 2.15 and 11.01 of the Indenture provide, among other
things, that the Owner Trustee, TU Electric and the Indenture Trustee may enter
into indentures supplemental to the Indenture for, among other things, the
purpose of establishing the form of Bonds of any series as permitted by Sections
2.15 and 11.01 of the Indenture; and
D. On _______________, 1995 the Indenture Trustee gave a notice of
optional redemption with respect to $81,595,000 of the Initial Series Bonds with
a Stated Maturity of January 1, 2018, such redemption to occur on ____________,
1995. On _____________, 1995, pursuant to a letter agreement dated such date
among Lessee and the Owner Participant, the Owner Trustee (i)
-2-
<PAGE>
exercised its option to redeem on __________, 1995 all of the Initial Series
Bonds with a Stated Maturity of January 1, 2018 and (ii) gave notice of such
optional redemption to the Indenture Trustee pursuant to Section 6.02 of the
Indenture. On _____________, 1995, pursuant to Section 6.04 of the Indenture,
the Indenture Trustee gave notice of such optional redemption to each Holder of
the Initial Series Bonds with a Stated Maturity of January 1, 2018.
E. All action on the part of the Owner Trustee necessary to authorize
the issuance of $81,595,000 aggregate principal amount of its Bonds (the "1995
----
Series Bonds") under the Indenture, including this Supplement No. 1, has been
------------
duly taken; and
F. All acts and things necessary to make the 1995 Series Bonds, when
executed by the Owner Trustee and authen ticated and delivered by the Indenture
Trustee as provided in the Indenture, the valid, binding and legal obligations
of the Owner Trustee, and to constitute these presents a valid and binding
supplemental indenture and agreement according to its terms, have been done and
performed, and the execution of this Supplement No. 1 and the creation and
issuance under the Indenture of $81,595,000 aggregate principal amount of the
1995 Series Bonds have in all respects been duly authorized, and the Owner
Trustee, in the exercise of the legal right and power vested in it, executes
this Supplement No. 1 and proposes to create, execute, issue and deliver the
1995 Series Bonds.
NOW, THEREFORE, THIS SUPPLEMENT NO. 1 WITNESSETH that, in order to
establish the form and terms of and to authorize the authentication and delivery
of the 1995 Series Bonds, and in consideration of the acceptance of the 1995
Series Bonds by the registered owners (the "Holders") thereof and of the sum of
-------
one dollar duly paid to the Owner Trustee by the Indenture Trustee at the
execution of these presents, the receipt and sufficiency of which are hereby
acknowledged, the Owner Trustee covenants and agrees with the Indenture Trustee,
for the equal and proportionate benefit of the respective Holders from time to
time of the 1995 Series Bonds, as follows:
-3-
<PAGE>
ARTICLE ONE
1995 SERIES BONDS
SECTION 1.01. Terms of the 1995 Series Bonds.
------------------------------
There is hereby created a series of Bonds designated "Secured Facility
Bonds, 1995 Series". 1995 Series Bonds in the aggregate amount of $81,595,000
may forthwith be executed by the Owner Trustee and delivered to the Indenture
Trustee in accordance with the provisions of Section 2.12 of the Indenture in
the following principal amounts for the Stated Maturities and at the interest
rates indicated:
Principal
Stated Maturity Interest Rate Amount
--------------- ------------- ---------
The 1995 Series Bonds shall be payable, bear interest and have and be
subject to such other terms as provided in the form of 1995 Series Bond attached
as Exhibit A hereto and shall have and be subject to such other terms as are
provided in the Indenture. The term "Record Date" as used with respect to any
Interest Payment Date or Installment Payment Date (except a date for payment of
Defaulted Interest or Defaulted Installment) shall mean, with respect to the
1995 Series Bonds, the December 15 or June 15 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date or Installment
Payment Date, as the case may be. "Defaulted Installment" shall mean any unpaid
installment payment of principal of a 1995 Series Bond in respect of which the
Owner Trust shall default in the payment when due on an Installment Payment
Date.
All reference in the Indenture to the principal amount of Bonds shall,
when used with respect to the 1995 Series Bonds, mean the unpaid principal
amount thereof, except that, for purposes of Section 2.06, and 2.07 and 6.08 of
the Indenture, principal amount shall, when used with respect to the 1995 Series
Bonds, refer to Original Principal Amount.
SECTION 1.02. Mandatory Redemption of the 1995 Series Bonds.
---------------------------------------------
(a) Mandatory Redemption - Obsolescence. The 1995 Series Bonds of
-----------------------------------
each Stated Maturity shall be subject to redemption in whole but not in part, at
100% of the unpaid principal amount thereof, together with interest accrued to
the Redemption Date, upon the receipt of payment of the applicable purchase
price or Termination Value resulting from a termination of the Lease pursuant to
Section 7 thereof.
(b) Mandatory Redemption - Event of Loss. The 1995 Series Bonds of
------------------------------------
each Stated Maturity shall be subject to
-4-
<PAGE>
redemption, at 100% of the unpaid principal amount thereof, together with
interest accrued to the Redemption Date upon the receipt of the applicable
payment of Casualty Value resulting from an Event of Loss under the Lease
(unless, in connection with an Event of Loss described in clause (e) of the
definition thereof, TU Electric assumes the 1995 Series Bonds then Outstanding
pursuant to Section 2.16 of the Indenture), in the principal amount equal to the
product of (i) the aggregate unpaid principal amount of 1995 Series Bonds of
such Stated Maturity then Outstanding and (ii) a fraction the numerator of which
is the Purchase Price of the Facility to which such Event of Loss pertains and
the denominator of which is the aggregate Purchase Price of the Facilities then
subject to the Lien of the Indenture. The aggregate amount payable upon a
partial redemption pursuant to this subsection 1.02(b) shall be allocated among
the Holders of 1995 Series Bonds of a Stated Maturity pro rata, in proportion,
as nearly as practicable, to the respective unpaid principal amounts of 1995
Series Bonds of such Stated Maturity held by such Holders, and upon payment of
the applicable redemption price to the Holders in accordance with the Indenture,
the unpaid principal amount of each 1995 Series Bond recorded on the Bond
Register maintained by the Indenture Trustees shall be controlling.
(c) Installment Payments. On each Installment Payment Date, the
--------------------
Holder of a 1995 Series Bond of each Stated Maturity will receive a payment of
principal equal to the Installment Payment Percentage for such Installment
Payment Date multiplied by the Original Principal Amount of such 1995 Series
Bond. The payments of principal installments pursuant to this subsection
1.02(c) shall not be deemed to be subject to Article 6 or Article 7 of the
Indenture.
-5-
<PAGE>
Installment
------------
Payment Percentage
------------------
Bonds with Bonds with
Stated Maturity Stated Maturity
of of
--------------- ----------------
Installment Payment Date
------------------------
100.00000 100.00000
In the event that there shall have been any partial redemption of 1995
Series Bonds of any Stated Maturity (other than pursuant to principal
installment payments), each Installment Payment Amount for each Bonds of a
Stated Maturity subsequent to such redemption shall be reduced by an amount
equal to the amount obtained by (i) multiplying such Installment Payment Amount
as in effect prior to such redemption by a fraction of which the numerator shall
be the aggregate principal amount of 1995 Series Bonds of such Stated Maturity
redeemed pursuant to such partial redemption, and the denominator shall be the
aggregate unpaid principal amount of 1995 Series Bonds of such Stated Maturity
Outstanding immediately prior to such redemption.
ARTICLE TWO
AMENDMENT OF INDENTURE
SECTION 2.01. Amendments.
----------
(a) Appendix A. Appendix A to the Indenture is hereby amended to
-----------
read, in its entirety, as set forth in Appendix A attached hereto.
(b) Section 2.09. The first sentence of the second paragraph of
-------------
Section 2.09 of the Indenture is hereby amended to read, in its entirety, as
follows: "Except as otherwise provided in a supplemental indenture creating a
series of Bonds or in the terms of such series of Bonds, principal of and
premium, if any, on Bonds shall be payable to the Holders of such bonds upon
presentation and surrender at the office or agency for payment of Bonds
maintained pursuant to Section 9.14."
(c) Section 3.01. Section 3.01 of the Indenture is hereby amended by
-------------
deleting such section in its entirely and inserting in lien thereof the
following:
SECTION 3.01. Satisfaction and Discharge of Indenture.
---------------------------------------
With respect to Bonds of any series of a particular Stated Maturity,
if at any time (a) the principal of
-6-
<PAGE>
and premium (if any) and interest on all of the Bonds of such series with such
Stated Maturity Outstanding hereunder shall have been paid or (b) all of the
Bonds of such series with such Stated Maturity theretofore authenticated (other
than any such Bonds which shall have been destroyed, lost or stolen and which
shall have been replaced or paid as provided in Section 2.08 hereof) shall have
been delivered to the Indenture Trustee for cancellation or (c) there shall have
been irrevocably deposited with the Indenture Trustee as trust funds the entire
amount in cash (other than moneys repaid by the Indenture Trustee or any Paying
Agent to the Owner Trustee in accordance with Section 5.03 hereof) necessary to
pay, or direct obligations of the United States of America, backed by its full
faith and credit, maturing as to principal and premium (if any) and interest in
such amounts and at such times as will ensure the availability of cash
sufficient to pay, at the Stated Maturity and all mandatory Sinking Fund payment
dates or Installment Payment Dates, if any, of principal of, premium (if any)
and interest thereon upon the Stated Maturity thereof, upon Installment Payment
Date, Redemption Date or Redemption Dates, as the case may be (but not upon
acceleration), (iv) rights, obligations and immunities of the Indenture Trustee
hereunder, (v) rights of such Bondholders under this Article Three and (vi) the
right, in the case of such Bonds for which a Redemption Date has not been
specified, of the Owner Trustee to optionally redeem such Bonds pursuant to
Article Six), and the Indenture Trustee, on demand of and at the cost and
expense of the Owner Trustee Certificate and upon delivery to the Indenture
Trustee of an Owner Trustee Certificate and an Opinion of Counsel for the Owner
Trustee, each containing the statements provided for in Section 1.02 and stating
that all conditions precedent to the satisfaction and discharge of this
Indenture have been complied with, with respect to such Bonds, shall execute
proper instruments acknowledging such satisfaction of an discharging this
Indenture and the Lien thereof (except as provided in this Article Three) with
respect to such Bonds except as aforesaid.
If this Indenture is satisfied and discharged with respect to the
Bonds of any series of a particular Stated Maturity and such Bonds will not
become due and payable in full at Maturity or upon redemption (pursuant to a
notice of redemption duly given to the Holders of such Bonds) within 60 days
from the date of deposit pursuant to Section 3.01 hereof, the Indenture Trustee
shall, as soon as practicable after the date of such deposit and not more than
60 days from the date of deposit pursuant to Section 3.01 hereof, the Indenture
Trustee shall, as soon as practicable after the date of such deposit and not
more than 60 days or less than 30 days before each date of Maturity or
Redemption Date, mail notice by first-class mail, postage prepaid, to the
Holders of such Bonds at their last addresses as they shall appear upon the Bond
Register, stating that the deposit required by Section 3.01 hereof has been made
with the Indenture Trustee and that such Bonds are no longer entitled to the
benefits of and security provided by this
-7-
<PAGE>
Indenture except as provided above and with respect to the cash and direct
obligations deposited with the Indenture Trustee and stating the Maturity,
Installment Payment Dates, or Redemption Date or Dates upon which moneys are to
be available for the payment of the principal any) and interest on such Bonds
and stating that such Bond is no longer otherwise mandatorily redeemable and
stating that, in the case of such Bonds for which a Redemption Date has not been
specified, such Bonds remain optionally redeemable.
(d) Section 6.04. The second paragraph of Section 6.04 of the
-------------
Indenture is hereby amended by adding the following sentence to the end thereof:
"Notwithstanding anything to the contrary contained in this paragraph, a
supplemental indenture creating a series of Bonds may specify that such Bonds
are subject to partial redemption on a pro rata basis without the necessity of
presentment and surrender of such Bond."
(e) Subsection 6.06(b). Subsection 6.06(b) of the Indenture is hereby
-------------------
deleted in its entirety and the following inserted in its place: "(b)
[Intentionally Left Blank]".
-8-
<PAGE>
(f) Section 7.02. Section 7.02 of the Indenture is hereby amended by
-------------
deleting the proviso at the end of the first paragraph thereof.
(g) Section 7.03(b). Subsection 7.03(b) of the Indenture is hereby
----------------
deleted in its entirety and the following inserted in its place: "(b)
[Intentionally Left Blank]".
(h) Section 11.02. Section 11.02 of the Indenture is hereby amended by
-------------
deleting clause (1) of the proviso to the first paragraph thereof in its
entirety and inserting, in lieu thereof, the following:
change the Stated Maturity of the principal of, or any installment of
interest on, or any Installment Payment Date, or the dates or circumstances of
payment of premium (if any) on, any Bond, or reduce the principal amount thereof
or the interest thereon or any amount payable at maturity, on any Installment
Payment Date or upon the redemption thereof, or change the circumstances for
redemption or change the Place of Payment where, or the coin or currency in
which, any Bond or the premium (if any) or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment of
principal or interest on or after the Stated Maturity thereof (or, in the case
of redemption, on or after the Redemption Date) or such payment of premium (if
any) on or after the date such premium becomes due and payable or change the
dates or the amounts of any installment payments of principal or payments to be
made through the operation of the Sinking Fund in respect of a Bond of any
series, or
ARTICLE THREE
MISCELLANEOUS
SECTION 3.01. New York Contract.
-----------------
THIS SUPPLEMENT NO. 1 AND THE 1995 SERIES BONDS SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 3.02. Provisions Binding on Successors.
--------------------------------
All the covenants, agreements, representations and warranties in this
Supplement No. 1 by the Indenture Trustee, TU Electric and the Owner Trustee
shall bind and, to the extent permitted by the Indenture shall inure to the
benefit of and be enforceable by their respective successors and assigns,
whether so expressed or not.
-9-
<PAGE>
SECTION 3.03. Definitions.
-----------
Capitalized terms used herein without definition shall have the
respective meanings set forth in the Indenture.
SECTION 3.04. Counterparts.
------------
This Supplement No. 1 may be executed in separate counterparts, each
of which when so executed and delivered is an original, but all such
counterparts shall together constitute but one and the same supplement.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Supplement No.
1 to be duly executed by their respective officers thereunto duly authorized, as
of the day and year first above written.
SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION, not in its individual capacity
except to the extent set forth in the
Indenture, but as Owner Trustee under the
Trust Agreement
Attest: ________________ By: ___________________________
Name:
Title:
TEXAS UTILITIES ELECTRIC COMPANY
Attest: ________________ By: ___________________________
Name:
Title:
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,
Indenture Trustee
Attest: ________________ By: ___________________________
Name:
Title:
-11-
<PAGE>
ACKNOWLEDGMENT
--------------
STATE OF CONNECTICUT)
) ss.:
COUNTY OF HARTFORD )
On this ___ day of ____, 1995 before me, a Notary Public duly
commissioned, qualified and acting within and for the County and State
aforesaid, appeared in person the within named _________________, Vice President
of SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, to me personally known, who
stated that he was duly authorized in his capacity to execute the foregoing
instrument for and in its name and on its behalf, and further stated and
acknowledged that he had so signed, executed and delivered the foregoing
instrument, as Shawmut Bank Connecticut, National Association, not in its
individual capacity except as set forth in the Indenture, but as Owner Trustee
under the Trust Agreement, for the consideration, use and purposes therein
mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal.
____________________________
(Notary Public)
My Commission Expires:
(SEAL)
-12-
<PAGE>
ACKNOWLEDGMENT
--------------
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On this __ day of ____, 1995 before me, a Notary Public duly
commissioned, qualified and acting within and for the County and State
aforesaid, appeared in person the within named __________________ of TEXAS
UTILITIES ELECTRIC COMPANY, to me personally known, who stated that he was duly
authorized in his capacity to execute the foregoing instrument for and in its
name and on its behalf, and further stated and acknowledged that he had so
signed, executed and delivered the foregoing instrument, as TEXAS UTILITIES
ELECTRIC COMPANY, for the consideration, uses and pur poses therein mentioned
and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal.
____________________________
(Notary Public)
My Commission Expires:
(SEAL)
-13-
<PAGE>
ACKNOWLEDGMENT
--------------
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On this ___ day of ____, 1995 before me, a Notary Public duly
commissioned, qualified and acting within and for the County and State
aforesaid, appeared in person the within named _______________ of AMERICAN
NATIONAL BANK AND TRUST COMPANY OF CHICAGO, to me personally known, who stated
that he was duly authorized in his capacity to execute the foregoing instrument
for and in its name and on its behalf, and further stated and acknowledged that
he had so signed, executed and delivered the foregoing instrument, as American
National Bank and Trust Company of Chicago, Indenture Trustee, for the
consideration, uses and purposes therein mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal.
____________________________
(Notary Public)
My Commission Expires:
(SEAL)
-14-
<PAGE>
EXHIBIT 4(b)(i)
================================================================================
LEASE AGREEMENT
dated as of
December 1, 1989
between
THE CONNECTICUT NATIONAL BANK,
as Owner Trustee,
as Lessor
and
TEXAS UTILITIES ELECTRIC COMPANY
as Lessee
This Lease has been executed in 20 original counterparts of which this is
original counterpart number 6; only original counterpart number 1 constitutes
chattel paper within the meaning of the Uniform Commercial Code; accordingly,
any assignee of any rights of Lessor under this Lease cannot perfect a security
interest in such rights without taking possession of original counterpart number
1.
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS................................................... 1
SECTION 2. LEASE OF FACILITIES; ETC...................................... 1
2.1. Lease............................................................... 1
2.2. Enforcement of Warranties........................................... 1
SECTION 3. RENT.......................................................... 2
3.1. Basic Rent.......................................................... 2
3.2. Supplemental Rent................................................... 3
3.3. Method of Payment................................................... 3
3.4. Late Payment........................................................ 3
3.5. Net Lease; No Setoff; etc........................................... 3
SECTION 4. RECOMPUTATION OF BASIC
RENT AND CASUALTY VALUE..................................... 4
4.1. Adjustments for Tax Changes, etc.................................... 4
4.2. Adjustments for Changes in Certain Assumptions...................... 5
4.3. Adjustments for Alterations......................................... 6
4.4. Adjustments for Payments under Tax Indemnity
Agreement......................................................... 6
4.5. Adjustments for Refinancing of the Bonds............................ 6
4.6. Adjustments to Comply with Revenue Procedure........................ 7
4.7. Limitations on Adjustments.......................................... 7
4.8. Preservation of Net AfterTax Return................................. 7
4.9. Timing of Adjustments............................................... 7
4.10. Confirmation of Adjustments......................................... 8
4.11. Further Assurances.................................................. 9
SECTION 5. RENEWAL....................................................... 9
5.1. Renewal............................................................. 9
5.2. Rent................................................................ 9
5.3. Notice.............................................................. 10
SECTION 6. PURCHASE OPTIONS.............................................. 11
6.1. Purchase Options.................................................... 11
6.2. Notice of Election; Manner of Purchase; Transfer
After Purchase................................................... 12
6.3. Assumption of Obligations........................................... 13
SECTION 7. EARLY TERMINATION............................................. 13
7.1. Decision............................................................ 13
7.2. Notice of Election.................................................. 13
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<PAGE>
<TABLE>
<S> <C>
7.3. Sale of Facilities.................................................. 13
7.4. Termination Payment................................................. 15
7.5. No Obligation....................................................... 15
SECTION 8. RETURN OF FACILITIES.......................................... 15
8.1. Return of Facilities................................................ 15
8.2. Cooperation......................................................... 16
SECTION 9. QUIET ENJOYMENT; DISCLAIMER OF WARRANTIES..................... 16
9.1. Quiet Enjoyment..................................................... 16
9.2. Disclaimer of Warranties............................................ 16
SECTION 10. LIENS........................................................ 17
SECTION 11. OPERATION AND MAINTENANCE;
INSPECTION; REPLACEMENTS AND
ALTERATIONS; IDENTIFICATION................................ 17
11.1. Operation and Maintenance.......................................... 17
11.2. Inspection and Reports............................................. 18
11.3. Replacement of Components.......................................... 19
11.4. Required Alterations............................................... 20
11.5. Title to Alterations and Components; Purchase
or Lease Option for Severable Alterations........................ 20
11.6. Payment for Alterations and Components............................. 21
11.7. Reports of Alterations and Components.............................. 23
11.8. Identification..................................................... 24
11.9. Manuals, Logs, Plans and Specifications............................ 24
11.10. Regulation......................................................... 25
11.11. Personal Property.................................................. 25
SECTION 12. EVENTS OF LOSS............................................... 25
12.1. Notice of Damage or Loss........................................... 25
12.2. Payment of Casualty Value, etc..................................... 26
12.3. Application of Other Payments on an Event of Loss.................. 27
12.4. Application of Payments Not Relating to
an Event of Loss................................................. 27
12.5. Other Dispositions................................................. 28
SECTION 13. INSURANCE.................................................... 28
13.1. Coverage........................................................... 28
(a) Insurance Against Loss or Damage.............................. 28
(b) Personal Injury and Property Damage
Liability Insurance......................................... 29
(c) Miscellaneous Policy Provisions............................... 30
13.2. Adjustment of Losses............................................... 30
13.3. Application of Insurance Proceeds.................................. 31
13.4. Annual Insurance Report............................................ 31
</TABLE>
-ii-
<PAGE>
13.5. Additional Insurance by Lessor..................................... 32
SECTION 14. INDEMNIFICATION.............................................. 32
14.1. Indemnification.................................................... 32
14.2. Taxes.............................................................. 34
(a) Payment of Taxes.............................................. 34
(b) Contests...................................................... 37
(c) Refunds....................................................... 38
14.3. Indemnities........................................................ 38
14.4. Payment............................................................ 39
SECTION 15. RIGHTS TO ASSIGN OR SUBLEASE................................. 39
15.1. Assignment or Sublease by Lessee................................... 39
15.2. Assignment by Lessor; Security for Lessor's
Obligations to Indenture Trustee................................. 40
SECTION 16. LEASE EVENTS OF DEFAULT...................................... 41
SECTION 17. REMEDIES..................................................... 43
17.1. In General......................................................... 43
17.2. No Release......................................................... 46
17.3. Remedies Cumulative................................................ 46
SECTION 18. NOTICES...................................................... 46
SECTION 19. COVENANTS.................................................... 47
SECTION 20. RIGHT TO PERFORM FOR LESSEE.................................. 47
SECTION 21. MISCELLANEOUS................................................ 47
21.1. Amendments in Writing.............................................. 47
21.2. Survival of Agreements............................................. 47
21.3. Severability of Provisions......................................... 48
21.4. True Lease......................................................... 48
21.5. GOVERNING LAW; CONSENT TO JURISDICTION............................. 48
21.6. Headings........................................................... 48
21.7. Counterpart Execution.............................................. 48
21.8. Successors and Assigns............................................. 48
21.9. Immunities; Satisfaction of Undertakings........................... 49
21.10. Payment for Appraisal Procedure.................................... 49
21.11. Further Assurances................................................. 50
-iii-
<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT, dated as of December 1, 1989, is made between
THE CONNECTICUT NATIONAL BANK, a national banking association, not in its
individual capacity but solely as owner trustee under the Trust Agreement dated
as of December 1, 1988, as Lessor, and TEXAS UTILITIES ELECTRIC COMPANY, a
corporation organized and operating under the laws of the State of Texas, as
Lessee.
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. DEFINITIONS.
-----------
For the purposes hereof, capitalized terms used herein shall have the
meanings assigned to them in Appendix A hereto; provided, that references in
Appendix A hereto to Schedules PBF, PBS, DCF and DCS to the Participation
Agreement shall be deemed to refer, respectively, to Schedules PBF, PBS, DCF and
DCS to this Lease. References in this Lease to Sections, subsections, Schedules
and Exhibits are to Sections, subsections, Schedules and Exhibits in this Lease
unless otherwise indicated.
SECTION 2. LEASE OF FACILITIES; ETC.
-------------------------
2.1. Lease. Lessor agrees to lease and hereby as of the Permian
-----
Basin Funding Date leases the Permian Basin Facility to Lessee, and Lessee
agrees to lease and hereby as of the Permian Basin Funding Date leases the
Permian Basin Facility from Lessor, for the Interim Lease Term for such
Facility, the Basic Term for such Facility and, subject to the exercise by
Lessee of its renewal option or options as provided in Section 5, for the
Renewal Term or Terms for such Facility. Lessor agrees to lease and hereby as
of the De Cordova Funding Date leases the De Cordova Facility to Lessee, and
Lessee agrees to lease and hereby as of the De Cordova Funding Date leases the
De Cordova Facility from Lessor, for the Interim Lease Term for such Facility,
the Basic Term for such Facility and, subject to the exercise by Lessee of its
renewal option or options as provided in Section 5, for the Renewal Term or
Terms for such Facility.
2.2. Enforcement of Warranties. Unless a Lease Default or Lease
-------------------------
Event of Default shall have occurred and be continuing, Lessor hereby authorizes
Lessee, at Lessee's expense, to assert, prior to the Lessor Possession Date for
a Facility subject to this Lease, all Lessor's claims and rights under any and
all warranties of and other claims against dealers, manufacturers, vendors,
contractors or subcontractors relating to such Facility. Any amount received by
Lessee under any such
<PAGE>
warranty or claim shall be applied to restore such Facility to the condition
required by Section 11 and thereafter the balance, if any, of such amount shall
be paid to Lessee.
SECTION 3. RENT.
----
3.1. Basic Rent. (a) Lessee shall pay to Lessor, as Basic Rent, the
----------
semiannual installments of Basic Rent on the Basic Rent Payment Dates during the
Basic Term and during each Renewal Term. Subject to adjustment as provided
herein, each such installment during the Basic Term shall be in an amount equal
to the sum of (i) if the Permian Basin Facility is then subject to this Lease,
the percentage of the Purchase Price of the Permian Basin Facility set forth in
the column entitled "Permian Basin Facility" set forth in Schedule 1 opposite
such Basic Rent Payment Date and (ii) if the De Cordova Facility is then subject
to this Lease, the percentage of the Purchase Price of the De Cordova Facility
set forth in the column entitled "De Cordova Facility" set forth in Schedule 1
opposite such Basic Rent Payment Date, and in each case shall be allocable to
(A) the use of such Facility by Lessee for the semiannual period immediately
preceding such Basic Rent Payment Date if Schedule 1 indicates that such payment
is in arrears and (B) to the use of such Facility by Lessee for the semiannual
period immediately succeeding such Basic Rent Payment Date if Schedule 1
indicates that such payment is in advance.
(b) Basic Rent shall be payable and paid in the manner set forth in
subsection 3.3. Notwithstanding any other provision of this Lease, the amount
of Rent payable on each Rent Payment Date shall be at least equal to the
aggregate amount of principal and accrued interest due and payable on the Bonds
Outstanding on such Rent Payment Date.
(c) Amounts of Basic Rent payable under this subsection 3.1 are
subject to adjustment pursuant to Section 4.
(d) Lessee may purchase, or acquire, and, if so purchased or
acquired, Lessee shall promptly deliver to Lessor, Bonds which can be applied
for a credit against a Sinking Fund payment on the next scheduled Redemption
Date to the extent permitted by Section 6.06(b) of the Indenture. Upon the
receipt by Lessor of such Bonds from Lessee, Lessor shall exercise its right
under Section 6.06(b) of the Indenture to apply such Bonds as a credit against
such Sinking Fund payment. On the Basic Rent Payment Date which coincides with
such Redemption Date, the installment of Basic Rent payable shall be adjusted
downward by an amount equal to the sum of (i) the aggregate principal amount of
the Bonds delivered by Lessee so applied as such a credit and (ii) the amount of
interest on such Bonds which would, but for the cancellation of such Bonds, be
payable on such date.
-2-
<PAGE>
3.2. Supplemental Rent. (a) Lessee shall pay to Lessor, or to
-----------------
whomever shall be entitled thereto, any and all Supplemental Rent promptly as
the same shall become due and payable. In the event of any payment of interest
only on any Bond after the first Basic Rent Payment Date on a date other than a
Basic Rent Payment Date, Lessee shall pay to Lessor as Supplemental Rent on the
date of such payment an amount equal to all interest accrued and unpaid on such
Bond or portion thereof to but excluding the date of payment, except to the
extent payment by Lessee of such accrued and unpaid interest is otherwise
provided for in connection therewith. The amount of Supplemental Rent paid
pursuant to the preceding sentence shall be deducted from the amount of Basic
Rent payable on the next succeeding Basic Rent Payment Date.
(b) Lessee shall make payments to Lessor, as Supplemental Rent, on or
prior to each of the Interim Rent Payment Date and the Basic Lease Commencement
Date, of amounts equal to the amounts of interest due in respect of the Bonds
then Outstanding on the Interim Rent Payment Date and the Basic Lease
Commencement Date, respectively.
3.3. Method of Payment. Subject to subsection 15.2, all Basic Rent
-----------------
payable to Lessor and Supplemental Rent payable to Lessor pursuant to subsection
3.2(b) shall be paid to Owner Trustee's Account No. 01364058 (ABA No. 011900445)
at The Connecticut National Bank, 777 Main Street, Hartford, Connecticut 06115
Attention: Corporate Trust Administration, for the account of PHILIP MORRIS
CREDIT CORPORATION re: TEXAS UTILITIES ELECTRIC COMPANY, or to such other
account at such other place as Lessor shall specify in writing. Each payment of
Rent shall be made by Lessee in Federal or other immediately available funds, on
or before 11:00 a.m., Dallas time, on the scheduled date on which such payment
shall be due, unless such scheduled date shall not be a Business Day, in which
case such payment shall be due and payable on the next succeeding Business Day.
3.4. Late Payment. If any Rent shall not be paid when due, Lessee
------------
shall pay to Lessor (or, in the case of Supplemental Rent, to whomever shall be
entitled thereto as expressly provided herein or in any other Operative
Document), as Supplemental Rent, interest (to the extent permitted by law) on
such overdue amount from and including the due date thereof to but excluding the
date of payment thereof at the Stipulated Interest Rate.
3.5. Net Lease; No Setoff; etc. This Lease is a net lease and,
--------------------------
notwithstanding any other provision of this Lease (except as may be expressly
provided herein), Rent shall be paid without notice, demand, counterclaim,
setoff, deduction or defense and without abatement, suspension, deferment,
diminution or reduction. The obligations and liabilities of Lessee hereunder
shall in no way be released, discharged or otherwise
-3-
<PAGE>
affected (except as may be expressly provided herein) for any reason, including
without limitation: (a) any defect in the condition, quality or fitness for use
of the Facilities or any part thereof; (b) any damage to, removal, abandonment,
salvage, loss, scrapping or destruction of or any requisition or taking of the
Facilities or any part thereof; (c) any restriction, prevention or curtailment
of or interference with any use of the Facilities or any part thereof; (d) any
defect in, or any Lien on, title to the Facilities or any part thereof; (e) any
change, waiver, extension, indulgence or other action or omission in respect of
any obligation or liability of Lessee or Lessor; (f) any bankruptcy, insolvency,
reorganization, composition, adjustment, dissolution, liquidation or other like
proceeding relating to Lessee, Indenture Trustee, Lessor, Owner Participant,
Seller, any Bondholder, or any other Person, or any action taken with respect to
this Lease by any trustee or receiver of any Person mentioned above, or by any
court; (g) any claim that Lessee has or might have against any Person, including
without limitation Indenture Trustee, Lessor, Owner Participant, Seller or any
Bondholder (but shall not constitute a waiver of any such claim); (h) any
failure on the part of Lessor to perform or comply with any of the terms hereof
or of any other agreement; (i) any invalidity or unenforceability or
disaffirmance of this Lease or any provision hereof or any of the other
Operative Documents or any provision of any thereof, in each case whether
against or by Lessee or otherwise; or (j) any other occurrence whatsoever,
whether similar or dissimilar to the foregoing, whether or not Lessee shall have
notice or knowledge of any of the foregoing. This Lease shall be noncancellable
by Lessee, and (except as expressly provided herein) Lessee, to the extent
permitted by law, waives all rights now or hereafter conferred by statute or
otherwise to quit, terminate or surrender this Lease, or to any diminution or
reduction of Rent payable by Lessee hereunder. Nothing contained in this
subsection 3.5 shall be construed as (a) a guaranty of (i) the value of the
Facilities upon termination of the Interim Lease Term, the Basic Term or any
Renewal Term or (ii) the Useful Life or (iii) payment of any of the Bonds or (b)
a prohibition of assertion of any claim against any manufacturer, supplier or
installer with respect to the Facilities or (c) a waiver by Lessee of its right
to contest the matters referred to above following Lessee's performance of its
obligations and discharge of its obligations hereunder.
SECTION 4. RECOMPUTATION OF BASIC
RENT AND CASUALTY VALUE.
-----------------------
4.1. Adjustments for Tax Changes, etc. In the event that (1) on or
---------------------------------
prior to the Funding Date with respect to a Facility, any Change in Tax Law is
enacted, promulgated or published; (2) within one year after the Funding Date
with respect to a Facility, there is enacted any amendment, modification,
deletion, addition or change in or to the
-4-
<PAGE>
provisions of the Code as it existed on the Funding Date of the respective
Facility, which amendment, modification, deletion, addition or change, on or
prior to such Funding Date had been (a) introduced in substantially the same
form in the House of Representatives by a member of the Ways and Means Committee
thereof; or (b) introduced in substantially the same form in the Senate by a
member of the Finance Committee thereof; or (c) announced in substantially the
same form by the Administration as a change it intended to have enacted by the
United States Congress; (3) there is enacted any technical correction to the Tax
Reform Act of 1986; (4) a Treasury Regulation, administrative interpretation or
Executive Order with respect to the Tax Reform Act of 1986 or with respect to a
technical correction thereof is enacted, promulgated or published within three
years after the Funding Date with respect to a Facility; or (5) a Treasury
Regulation which had been published in the Federal Register after December 6,
----------------
1988 and prior to the Funding Date of a Facility as a proposed regulation is
published in the Federal Register after such Funding Date as a temporary or
----------------
final regulation, which (in any such event (1) through (5)) is inconsistent with
the Tax Assumptions set forth in clauses (c) through (e) of Section 1 of the Tax
Indemnity Agreement, then the amounts of Basic Rent and Casualty Value relating
to such Facility shall be adjusted by such amounts as shall preserve Net
AfterTax Return while minimizing the present value of the portion of Basic Rent
attributable to such Facility; provided, however, that in no event will the
-------- -------
amounts of Basic Rent and Casualty Value relating to a Facility be adjusted
pursuant to clauses (2) or (5) of this subsection 4.1 unless the Owner
Participant shall have provided Lessee with timely written notice of the
specific section of the proposed legislation or Treasury Regulation, the
enactment or promulgation of which would be the basis for adjustment, as
required by subsection 2.7 of the Participation Agreement; and provided further,
any amendment, modification, deletion or change described in clause (2) of this
subsection 4.1 which results in the application of section 55, 56, 57 or 291 of
the Code (or any successor provision thereof) to the Owner Participant shall not
be treated as inconsistent with the Tax Assumptions set forth in clauses (c)
through (e) of Section 1 of the Tax Indemnity Agreement. Except as provided in
clauses (2), (3), (4) and (5) of the preceding sentence, the amounts of Basic
Rent and Casualty Value shall not be adjusted with respect to a Facility for any
Change in Tax Law which is enacted, promulgated or published after the Funding
Date with respect to such Facility.
4.2. Adjustments for Changes in Certain Assumptions. In the event
----------------------------------------------
that (i) the assumptions set forth in Part I of Schedule 1 to the Participation
Agreement prove to be incorrect, (ii) the assumption set forth in Part II of
Schedule 1 to the Participation Agreement proves to be incorrect, (iii) on or
prior to the date which is 90 days after the Funding Date with respect to a
Facility, the assumption set forth with respect to the
-5-
<PAGE>
allocation of the Purchase Price to Classes in Part III of Schedule 1 to the
Participation Agreement proves to be incorrect, (iv) a Funding Date occurs after
December 31, 1989, and the yield on treasury notes maturing approximately 84
months after such Funding Date, as reported in The Wall Street Journal dated two
--- ---- ------ -------
Business Days prior to such Funding Date, is other than 8.83%, or (v) the
assumption set forth in Part IV of Schedule 1 to the Participation Agreement
proves to be incorrect, then the amounts of Basic Rent and Casualty Value
relating to the Facility to which such assumptions pertain shall be adjusted
from time to time by such amounts as shall preserve Net AfterTax Return while
minimizing the present value of the portion of the Basic Rent attributable to
such Facility (using a discount rate of 10.75% per annum). In the case of an
adjustment made pursuant to clause (iv) above, such adjustment shall be made on
the basis of a new net aftertax multiple investment sinking fund yield, which
yield shall be (A) the yield originally used by Owner Participant in calculating
Basic Rent and Casualty Values as set forth in Annex A and Annex B of Schedule 1
to the Participation Agreement, (B) adjusted, upward or downward as appropriate,
to reflect the aftertax change from such 8.83% referred to in such clause (iv).
4.3. Adjustments for Alterations. Upon the occurrence of any payment
---------------------------
or financing by Owner Participant and/or Lessor provided for in paragraph (c) of
subsection 11.6, the amounts of Basic Rent and Casualty Value relating to such
Facility shall be adjusted in such manner as shall preserve Net AfterTax Return,
taking into account any additional tax benefits actually realized by Lessor or
Owner Participant arising out of the relevant Alterations or the financing
thereof, while minimizing the present value of the portion of Basic Rent
attributable to such Facility, except that, if Owner Participant is making any
additional investment in connection therewith, such adjustment shall be made in
such manner as shall be acceptable to Lessee and Owner Participant utilizing any
pricing assumptions then agreed to by Lessee and Owner Participant with respect
to such financing.
4.4. Adjustments for Payments under Tax Indemnity Agreement. If
------------------------------------------------------
Lessee pays an indemnity to Owner Participant pursuant to Section 5 of the Tax
Indemnity Agreement for any Loss, as therein defined, the amounts of Casualty
Value relating to the Facility to which such indemnification pertains shall be
appropriately recomputed to reflect such payment.
4.5. Adjustments for Refinancing of the Bonds. In the event that any
----------------------------------------
Bonds are refinanced with Refunding Bonds pursuant to Section 18 of the
Participation Agreement, the amounts of Basic Rent and Casualty Value relating
to both Facilities shall be adjusted by such amounts as shall preserve Net
After-Tax Return while minimizing the present value of Basic Rent.
-6-
<PAGE>
4.6. Adjustments to Comply with Revenue Procedure. Any adjustment of
--------------------------------------------
Basic Rent pursuant to this Section 4 shall satisfy the requirements of Sections
4.07(1) and (2) and 4.08 of Revenue Procedure 75-28 (provided that the
requirements of such Section 4.08 shall be applied on a prospective basis and in
a manner which shall minimize the present value of the portion of Basic Rent
attributable to the Facility to which such adjustment relates) as in effect on
the Permian Basin Funding Date with respect to the Permian Basin Facility, and
as in effect on the De Cordova Funding Date with respect to the De Cordova
Facility (provided that such requirements in both circumstances shall be subject
to, and modified by, if applicable, Changes in Tax Law described in (1) through
(5) of Section 4.1) and shall be consistent with the maintenance of the
Investment Percentage (except as otherwise agreed to by Lessor and Owner
Participant with respect to additional investments by Owner Participant in
accordance with paragraph (c) of subsection 11.6), but in any event, any upward
adjustment shall be in an amount not less than the adjustment required to take
into account both the circumstances giving rise to such adjustment and the
limitations imposed by subsections 4.7 and 4.8 hereof.
4.7. Limitations on Adjustments. Notwithstanding any other provision
--------------------------
of this Lease or of any other Operative Document, after giving effect to any
adjustment referred to in this Section 4, thereafter (a) Casualty Value as of
any date shall comply with the provisos to the definition thereof and (b) the
amount of Basic Rent payable on each Basic Rent Payment Date shall be at least
equal to the aggregate amount of principal of, and accrued and unpaid interest
on, the Bonds due and payable on such Basic Rent Payment Date.
4.8. Preservation of Net After-Tax Return. Whenever adjustments to
------------------------------------
Basic Rent and Casualty Value are to be made to preserve Net After-Tax Return,
such adjustments shall be made in such manner that (a) each Component of Net
After-Tax Return, as recomputed taking into consideration the circumstances
which mandate such adjustments, is at least as great as when originally computed
and (b) at least one Component of Net After-Tax Return, as so recomputed, is
equal to the amount of such Component as originally computed in accordance with
the assumptions specified in Schedule 1 to the Participation Agreement. In
determining the present value of Basic Rent for purposes of this Section 4, a
discount rate of 10.75% per annum shall be used, except that, with respect to
any adjustment to Basic Rent pursuant to subsection 4.3 (and those portions of
Basic Rent previously changed by such adjustments), the discount rate used at
the time of the applicable payment or financing shall be utilized.
4.9. Timing of Adjustments. All adjustments to be made under this
---------------------
Section 4 shall be made as soon as practicable after the event giving rise to
the adjustment and in respect of
-7-
<PAGE>
installments of Basic Rent falling due after such adjustment is made and
Casualty Values for dates after such event.
4.10. Confirmation of Adjustments. Subject to subsections 4.6, 4.7
---------------------------
and 4.8, the amount of any adjustment pursuant to this Section 4 shall be
determined by Owner Participant, who shall confirm in writing to Lessee that (i)
each of the assumptions and methods employed in the original calculation of
Basic Rent and Casualty Values (a sealed copy of which shall have been deposited
in escrow on the Permian Basin Funding Date with Hunton & Williams) is
consistent with the definition of Net After-Tax Return, the assumptions set
forth in Schedule 1 to the Participation Agreement and Section 1 of the Tax
Indemnity Agreement and (ii) each of the assumptions and methods used in such
proposed adjustment is consistent with such original assumptions and methods (as
such assumptions have been modified by previous adjustments under this Section
4). Within 30 days after receipt of notice of the amount of such proposed
adjustment, Lessee may request that such adjustment and confirmation be verified
by a nationally recognized firm of independent certified public accountants,
such firm to be selected by Owner Participant and reasonably satisfactory to
Lessee. Any contract employing such firm for such verification shall provide
that such firm will be required to complete the verification process within 30
days after the date of selection by Owner Participant. In such verification
process, such firm shall be given access by Owner Participant to the books,
records and computer programs utilized by Owner Participant in calculating such
proposed adjustment and the sealed copy of the assumptions and methods employed
in the original calculation of Basic Rent and Casualty Values; provided,
--------
however, that the Owner Participant may require such firm to enter into such
-------
confidentiality agreements with respect to all such information as Owner
Participant deems appropriate. Such verification shall be at the expense of
Lessee, unless such verified adjustment reduces the present value of the
aggregate payments of Basic Rent during the remainder of the Basic Term ("PV
Verified") from the present value of the aggregate payments of Basic Rent
payable during the remainder of the Basic Term as proposed by Owner Participant
("PV Owner"), and the excess of (i) PV Owner over (ii) PV Verified is in excess
of the greater of (i) $5,000 and (ii) 5% of the difference between (A) PV
Verified and (B) the present value of the aggregate payments of Basic Rent
payable during the remainder of the Basic Term calculated without taking such
adjustment into effect, in which case such verification shall be at the expense
of Lessor. Such determination by Owner Participant, or, if so requested, such
verified adjustment, as the case may be, shall be conclusive and binding.
Pending verification, Lessee shall pay Basic Rent or Casualty Value, as the case
may be, in accordance with the proposed adjustment and if after such
verification process is completed there is a change to the originally proposed
schedule of either Basic Rent or
-8-
<PAGE>
Casualty Values, Lessor shall rebate any overpayment of Basic Rent or Casualty
Value, as the be, and the party making the payment shall include interest on the
applicable rebate or payment at the Prime Rate from the date of original payment
by Lessee to but excluding the date on which such rebate or payment is made.
4.11. Further Assurances. At the time any adjustment is made
------------------
pursuant to this Section 4, the parties hereto agree to enter into an amendment
and supplement to the Lease to reflect such adjustment and to enter into such
amendments and supplements to the other Operative Documents (including an
amendment to Schedule 1 to the Participation Agreement to reflect any
assumptions utilized in an adjustment under subsection 4.3) and do such further
acts and things as may be reasonably required in order to effectuate such
adjustment.
SECTION 5. RENEWAL.
-------
5.1. Renewal. Unless a Lease Default or Lease Event of Default shall
-------
have occurred and be continuing at the time of the giving by Lessee of the
notice referred to in subsection 5.3 or at the time of the commencement of the
relevant Renewal Term, Lessee shall have the right to renew this Lease with
respect to either Facility or both Facilities, in Lessee's discretion, (a) at
the end of the Basic Term for the Fixed Rental Renewal Term or a Fair Market
Rental Renewal Term, (b) at the end of any Fair Market Rental Renewal Term for a
Fair Market Rental Renewal Term, and (c) at the end of the Fixed Rental Renewal
Term for a Fair Market Rental Renewal Term; provided that (i) no Renewal Term
--------
may extend beyond the term of the Ground Lease, (ii) the Fixed Rental Renewal
Term may not follow a Fair Market Rental Renewal Term, (iii) the term of any
Fair Market Rental Renewal Term shall be three years or an integral multiple of
years in excess of three years, and (iv) a Fair Market Rental Renewal Term may
not terminate within the last three years of the term of the Ground Lease except
for termination on the termination date for the Ground Lease set forth in
Section 5(c) thereof.
5.2. Rent. All the terms and provisions of this Lease shall be
----
applicable during any Renewal Term, except that Lessee shall pay to Lessor as
Basic Rent, in arrears, (a) on each Basic Rent Payment Date during the Fixed
Rental Renewal Term, an amount equal to 25% of the average of the installments
of Basic Rent actually payable during the Basic Term for the Facility or
Facilities with respect to which this Lease is being renewed and (b) on each
Basic Rent Payment Date during any Fair Market Rental Renewal Term an amount
equal to the quarterly installment of the Fair Market Rental Value of the
Facility or Facilities with respect to which this Lease is being renewed, as
determined in accordance with subsection 5.3.
-9-
<PAGE>
5.3. Notice. In order to exercise its right to renew this Lease for
------
a Renewal Term pursuant to subsection 5.1, Lessee shall notify Lessor, Owner
Participant and Indenture Trustee in writing at least 360, but not more than
450, days prior to the expiration date of the Basic Term or Renewal Term then in
effect of Lessee's tentative election either (i) to purchase either or both
Facilities pursuant to paragraph (a) or (b) of subsection 6.1 or (ii) to renew
the Lease for (a) a Fair Market Rental Renewal Term for either or both
Facilities (specifying the term of such renewal for each Facility) or (b) the
Fixed Rental Renewal Term for either or both Facilities. Promptly after Lessee
shall have given such notice of tentative election to renew or purchase, Lessee
and Owner Participant shall attempt to agree upon the Fair Market Sale Value and
Fair Market Rental Value of each such Facility as of the anticipated date of
purchase or renewal and, with respect to any Renewal Term, as of the anticipated
date of the end of such Renewal Term. If they shall fail to agree within 30
days after the giving of such notice, such Fair Market Sale Value and Fair
Market Rental Value shall be determined by the Appraisal Procedure. At least
270 days prior to the expiration date of the Basic Term or Renewal Term then in
effect, Lessee shall give irrevocable notice to Lessor, Owner Participant and
Indenture Trustee in writing stating whether Lessee will (i) purchase either
Facility pursuant to paragraph (a) or (b) of subsection 6.1, (ii) renew the
Lease with respect to either or both Facilities for a Fair Market Rental Renewal
Term at a quarterly rental payment, in arrears, equal to the Fair Market Rental
Value for such Facility or Facilities determined in accordance with the two
immediately preceding sentences, or (iii) renew the Lease with respect to either
or both Facilities for the Fixed Rental Renewal Term. Promptly after any such
determination and Lessee's irrevocable election to renew, Schedule 2 hereto
shall be modified in accordance with the definition of Casualty Value, such
modification to be effective on the first day of the applicable Renewal Term.
Lessee may, at least 90 days prior to the end of the Basic Term or any Renewal
Term then in effect, instruct Lessor to treat an irrevocable notice delivered
pursuant to this subsection 5.3 as a notice of election to purchase pursuant to
subsection 6.2 hereof, in which case the provisions of Section 6 hereof shall
govern such notice. In the event that Lessee fails to give notice of its
tentative election to renew pursuant to this subsection 5.3, Lessee shall have
no right to renewal (or further renewal, as the case may be) of this Lease,
which shall expire at the expiration date of the Basic Term or any Renewal Term
then in effect.
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SECTION 6. PURCHASE OPTIONS.
----------------
6.1. Purchase Options. Lessee shall have the right to purchase
----------------
either Facility or both Facilities, in Lessee's discretion:
(a) on the date of expiration of the Basic Term, at a purchase price
equal to the lesser of (i) the Fair Market Sale Value on such date of the
Facility or Facilities to be purchased and (ii) the sum of (1) the
estimated fair market value of the Facility or Facilities to be purchased
as of such date as set forth in the Appraisal and (2) the estimated fair
market value as of such date of any Nonseverable Alterations to such
Facility or Facilities to be purchased or completed after the date of the
Appraisal and financed by an additional investment of Owner Participant in
accordance with paragraph (c) of subsection 11.6, as set forth in the
appraisal utilized for such financing;
(b) on the date of expiration of a Renewal Term, at a purchase price
equal to the Fair Market Sale Value on such date of the Facility or
Facilities which were leased for such Renewal Term; and
(c) (i) as provided in paragraph 9.2.4(b) of the Participation
Agreement, if Owner Participant shall not have waived compliance with
paragraph 9.2.4(a) of the Participation Agreement, as provided in paragraph
9.2.4(b)(ii) of the Participation Agreement, or (ii) as provided in clause
(i) of the second paragraph of subsection 14.2(a), in each case on either
of the next two Basic Rent Payment Dates for which Lessee may give timely
notice pursuant to subsection 6.2(b), at a purchase price equal to the
greater of (a) the sum of the Termination Value applicable on such Basic
Rent Payment Date, the premium, if any, on the Bonds then Outstanding and
the installment of Basic Rent due on such date (excluding any amount of
Basic Rent due on such date which would represent a payment in advance) and
(b) the sum of the Fair Market Sale Value of the Facilities on such date,
the premium, if any, on the Bonds then Outstanding and the installment of
Basic Rent due on such date (excluding any amount of Basic Rent due on such
date which would represent a payment in advance); provided that, for
--------
purposes of this paragraph, Lessee may credit against such purchase price
the principal amount of and accrued and unpaid interest on the Bonds then
Outstanding so long as the conditions set forth in subsection 6.3 hereof
and Section 2.16 of the Indenture have been satisfied.
If Lessee shall fail to purchase either or both Facilities pursuant to
this subsection 6.1, Lessor shall, subject
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to Section 5 hereof, be free to lease or sell any such Facility not so purchased
and its interest in the relevant Support Agreements to any other Person on any
terms acceptable to Lessor.
6.2. Notice of Election; Manner of Purchase; Transfer After Purchase.
---------------------------------------------------------------
(a) In order to exercise its right to purchase a Facility or the Facilities
pursuant to paragraph (a) or (b) of subsection 6.1, Lessee shall notify Lessor
in writing at least 360, but not more than 450, days prior to the expiration
date of the Basic Term or Renewal Term then in effect of Lessee's tentative
election to purchase either or both Facilities pursuant to paragraph (a) or (b)
of subsection 6.1 (which notice may also contain a tentative election to renew
pursuant to subsection 5.3). Promptly after Lessee shall have given such notice
of tentative election to purchase or renew, Lessee and Owner Participant shall
attempt to agree upon the Fair Market Sale Value and Fair Market Rental Value of
each such Facility as of the anticipated date of purchase or renewal. If they
fail to agree within 30 days after the giving of such notice, such Fair Market
Sale Value and Fair Market Rental Value shall be determined by the Appraisal
Procedure. At least 270 days prior to the expiration date of the Basic Term or
Renewal Term then in effect, Lessee shall give irrevocable notice to Lessor,
Owner Participant and Indenture Trustee in writing stating whether Lessee will
purchase either Facility pursuant to paragraph (a) or (b) of subsection 6.1.
Lessee may, at least 270 days prior to the end of the Basic Term or any Renewal
Term then in effect, instruct Lessor to treat an irrevocable notice delivered
pursuant to this paragraph (a) of subsection 6.2 as a notice of election to
renew pursuant to subsection 5.3, in which case the provisions of Section 5
shall govern such notice. In the event that Lessee fails to give notice of its
tentative election to purchase pursuant to this paragraph (a) of subsection 6.2,
Lessee shall have no right to purchase pursuant to paragraph (a) or (b) of
subsection 6.1.
(b) In order to exercise its right to purchase the Facilities
pursuant to paragraph (c) of subsection 6.1, Lessee shall notify Lessor, Owner
Participant and Indenture Trustee in writing at least 45, but not more than 180,
days prior to the anticipated date of purchase of Lessee's tentative election to
purchase the Facilities pursuant to paragraph (c) of subsection 6.1. Promptly
after Lessee shall have given such notice of tentative election so to purchase,
Lessee and Owner Participant shall attempt to agree upon the Fair Market Sale
Value of the Facilities as of the anticipated date of purchase. If they shall
fail to agree within 15 days after the giving of such notice, such Fair Market
Sale Value shall be determined by the Appraisal Procedure. At least 45 days
prior to the date of purchase, Lessee shall give irrevocable notice to Lessor,
Owner Participant and Indenture Trustee in writing stating whether Lessee will
purchase pursuant to paragraph (c) of subsection 6.1. In the
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event that Lessee fails to give notice of its tentative election to purchase
pursuant to this paragraph (b) of subsection 6.2, Lessee shall have no right to
purchase pursuant to paragraph (c) of subsection 6.1.
(c) Lessee shall pay, simultaneously with payment of such purchase
price, whether pursuant to paragraph (a), (b) or (c) of subsection 6.1, all
amounts of Rent due (excluding any amount of Basic Rent due on such date which
would represent a payment in advance), whereupon Lessor shall Transfer the
Facility or Facilities subject to purchase to Lessee and this Lease shall
terminate.
6.3. Assumption of Obligations. Notwithstanding the foregoing
-------------------------
provisions of this Section 6, in the event of a purchase by Lessee of the
Facilities as provided in paragraph (c) of subsection 6.1, if, in connection
with such purchase, an assumption agreement shall have been duly executed and
delivered as permitted by and in accordance with Section 2.16 of the Indenture,
the obligation of Lessee to pay the purchase price for the Facilities shall be
satisfied by such assumption of the Bonds to the extent of the principal amount
of and accrued and unpaid interest to the date of purchase on the Bonds so
assumed and not otherwise due on the date of payment of such purchase price.
SECTION 7. EARLY TERMINATION.
-----------------
7.1. Decision. If at any time the Board of Directors of Lessee shall
--------
have reasonably determined that the Facilities are obsolete, surplus or
uneconomic for Lessee's purposes and will no longer be used by Lessee, then
Lessee may elect to terminate this Lease in accordance with this Section 7 on
any Basic Rent Payment Date which occurs on or after the seventh anniversary of
the Basic Lease Commencement Date and during the Basic Term.
7.2. Notice of Election. To exercise its right to terminate the
------------------
Lease as provided in subsection 7.1, Lessee shall provide Lessor and Indenture
Trustee with irrevocable notice in writing at least 180 days prior to the Basic
Rent Payment Date as of which Lessee elects to terminate the Lease ("Termination
-----------
Date"), such notice to include (a) the Termination Date, (b) a certified copy of
----
a resolution of Lessee's Board of Directors authorizing such termination and
setting forth the determinations specified in subsection 7.1, (c) the
Termination Value as of the Termination Date and (d) whether Lessee intends to
purchase the Facilities subject to the Lease pursuant to subsection 7.3(c).
7.3. Sale of Facilities. (a) Subject to paragraph (b) and (c) of
------------------
this subsection 7.3, following such notice of termination, Lessee shall, as
agent for Lessor, use its best efforts to obtain bids from Persons (which
Persons may be Owner
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<PAGE>
Participant or a Person proposed by Owner Participant) not Affiliates of Lessee
for the cash purchase of the Facilities on the Termination Date. In the event
that Lessee shall have obtained any such bids from any such Person, Lessor shall
sell the Facilities to the Person which shall have submitted the highest bid for
a purchase price payable all in immediately available funds at the closing of
title, which shall occur on the Termination Date. Upon payment to Lessor of the
purchase price in immediately available funds (and all other amounts due
pursuant to subsection 7.4), on the Termination Date Lessor shall Transfer the
Facilities to such Person free and clear of this Lease, which shall terminate,
subject to subsection 21.2, concurrently with such Transfer.
(b) Unless Lessee shall have elected to acquire the Facilities
pursuant to 7.3(c), Lessor may elect to retain rather than sell the Facilities
by giving notice to Lessee and Indenture Trustee no later than 60 days prior to
the Termination Date. It shall be a condition precedent to Lessor's right to
retain the Facilities that on or prior to the Termination Date Lessor shall have
(a) paid to Indenture Trustee the principal of, premium, if any, and accrued and
unpaid interest on the Bonds then Outstanding to the date of payment or (b)
caused the Bonds to be deemed to have been paid in accordance with Section 3.01
of the Indenture. If Lessor elects to retain the Facilities pursuant to this
paragraph, (i) Lessee shall pay to Lessor on the Termination Date any Basic Rent
and other Rent due on or prior to such date (excluding any amount of Basic Rent
due on such date which would represent a payment in advance) and any premium
payable on any Bond then Outstanding, but shall not be required to pay Casualty
Value pursuant to subsection 7.4, and (ii) Lessor shall deliver to Lessee on the
Termination Date such instruments as Lessee shall reasonably request to evidence
the termination of this Lease.
(c) In the event that no purchaser of the Facilities is found
pursuant to paragraph (a) or (b) of this subsection 7.3 or in the event that
Lessee's notice pursuant to subsection 7.2 shall have stated that Lessee
intended to purchase the Facilities pursuant to this clause (c), then, the Lease
shall terminate on the Termination Date and Lessee shall pay to Lessor on the
Termination Date the higher of the Fair Market Sales Value of the Facilities as
determined in accordance with the Appraisal Procedure and the Termination Value
in effect on the Termination Date and Lessor shall Transfer the Facilities to
Lessee; provided, however, that Lessee shall not directly or indirectly use or
-------- -------
operate the Facilities for its own account for a period of five years,
commencing on the Termination Date, except upon the prior payment to Owner
Participant of $25 million. If Lessee has so acquired the Facilities, within 30
days after each of the first five anniversary dates of the Termination Date,
Lessee shall deliver to Owner Participant an Officers' Certificate of
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Lessee stating that Lessee has not directly or indirectly used or operated such
Facilities during the preceding year.
7.4. Termination Payment. As a condition to the Transfer described
-------------------
in paragraph (a) of subsection 7.3 and as a condition to termination of this
Lease pursuant to paragraph (a) of subsection 7.3, Lessee shall pay on the
Termination Date to Lessor, in immediately available funds, an amount equal to
the excess, if any, of (i) the aggregate of the Termination Value in effect on
the Termination Date, over (ii) the purchase price actually paid to Lessor by
the purchaser, after deduction therefrom of all reasonable costs, expenses and
fees whatsoever payable by Lessor, as seller, and all reasonable fees and
expenses including, without limitation, attorneys' fees incurred by Lessor or
Owner Participant in connection with such purchase and sale. As a condition to
the Transfer described in paragraph (a) or (c) of subsection 7.3 and as a
condition to termination of this Lease pursuant to paragraph (a) or (c) of
subsection 7.3, Lessee shall pay on the Termination Date to Lessor, in
immediately available funds, all other sums then due and owing by Lessee to
Lessor under any of the Operative Documents, including but not limited to all
Rent due through the Termination Date (excluding any amount of Basic Rent due on
such date which would represent a payment in advance) and any premium on any
Outstanding Bond and all other sums due under the Bonds (without duplication)
and, in the case of a Transfer described in paragraph (c) of subsection 7.3, the
amount required in such paragraph (c) to be paid on the Termination Date.
7.5. No Obligation. Nothing contained in this Section 7 shall be
-------------
construed to impose upon Lessor any obligation to offer the Facilities for sale
or to take any action to induce any Person to purchase the Facilities. Lessor
shall cooperate with Lessee in obtaining a purchaser with respect to the
Facilities, but such cooperation shall not extend beyond execution of documents
required to give effect to such sale. Such documents shall be in form and
substance reasonably satisfactory to Lessor and Owner Participant and shall
provide that neither Lessor nor Owner Participant shall have any liability to
the purchaser thereunder for failure to perform any obligation thereunder. Any
contract of purchase and sale executed pursuant to subsection 7.3(a) shall
provide that Lessor shall have no obligation to effect any Transfer to the
purchaser until Lessee's termination payment provided in subsection 7.4 shall
have been paid.
SECTION 8. RETURN OF FACILITIES.
--------------------
8.1. Return of Facilities. Unless the Facilities shall have been
--------------------
Transferred to Lessee pursuant to this Lease, Lessee, at its own expense, shall
return the Facilities to Lessor or to any transferee or assignee of Lessor on
the Lease Termination Date by surrendering the same to Lessor or such
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<PAGE>
transferee or assignee in the condition required by Section 11, free and clear
of all Liens other than Permitted Project Liens and the Liens described in
clauses (a) (excluding the rights and interest of Lessee in the Operative
Documents) and (b) of the definition of Permitted Interest Liens. The
obligations of Lessee under this subsection 8.1 shall survive the termination of
this Lease.
8.2. Cooperation. If Lessee shall not have exercised its option to
-----------
renew or purchase as provided in Section 5 or 6, respectively, during the last
270 days of the Lease Term, Lessee shall cooperate fully (including cooperating
in seeking and acquiring any necessary Governmental Action) with Lessor and
Owner Participant in connection with efforts to lease or dispose of the Leased
Assets.
SECTION 9. QUIET ENJOYMENT; DISCLAIMER OF WARRANTIES.
-----------------------------------------
9.1. Quiet Enjoyment. Subject to Section 20 hereof, so long as no
---------------
Lease Event of Default shall have occurred and be continuing, Lessee shall be
entitled to the quiet enjoyment of the benefits of the Leased Assets.
9.2. Disclaimer of Warranties. The warranty set forth in subsection
------------------------
9.1 is in lieu of all other representations or warranties of Lessor or Owner
Participant, whether written, oral or implied, with respect to this Lease, the
Support Agreements, the Leased Assets or any part thereof. As between Lessor
and Lessee, execution by Lessee of this Lease and the Certificate of Acceptance
shall be conclusive proof of the compliance of the Facilities with all
requirements of this Lease, and LESSOR LEASES AND LESSEE TAKES THE LEASED ASSETS
AND EACH PART THEREOF AS IS, and Lessor shall not be deemed to have made, and
LESSOR HEREBY DISCLAIMS, any other representation or warranty, either express or
implied, as to any matter whatsoever, including without limitation THE DESIGN OR
CONDITION of the Leased Assets or any part thereof, THE MERCHANTABILITY THEREOF
---------------
OR THE FITNESS THEREOF FOR ANY PARTICULAR PURPOSE, title to the Leased Assets or
-------
any part thereof, THE QUALITY OF THE MATERIALS OR WORKMANSHIP THEREOF OR
CONFORMITY THEREOF TO SPECIFICATIONS, OR THE PRESENCE OR ABSENCE OF ANY LATENT
OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, nor shall Lessor be liable for
incidental or consequential damages (including liability in tort, strict or
otherwise), it being agreed that all such risks, as between Lessor and Lessee,
are to be borne by Lessee. The provisions of this subsection 9.2 have been
negotiated, and, except as provided in subsection 9.1 hereof and Sections 5 and
6 of the Participation Agreement, the foregoing provisions are intended to be a
complete exclusion and negation of any representation or warranty by Lessor or
Owner Participant, express or implied, with respect to this Lease, the Support
Agreements, the Leased Assets or any part thereof that may arise pursuant to any
law now or
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<PAGE>
hereafter in effect or otherwise. Nothing contained in this subsection 9.2
shall be construed as a waiver of any warranty or other claim against any
manufacturer, supplier or installer.
SECTION 10. LIENS.
-----
Except as permitted by subsection 11.5, Lessee has no right to, and
will not, directly or indirectly, create, incur, assume or suffer to exist any
Liens on or with respect to all or any part of the Facilities, title thereto or
any interest therein, or the Trust Estate or the Indenture Estate, or any asset
included in any thereof, other than Permitted Interest Liens and Permitted
Project Liens, and Lessee will, within 30 days of the incurrence of such Lien,
at its own expense, take such actions as may be necessary duly to discharge any
such Lien. Lessee will, promptly upon obtaining knowledge thereof, give Owner
Participant, Lessor and Indenture Trustee notice of any Lien which Lessee is
obligated to discharge pursuant to this Section 10.
SECTION 11. OPERATION AND MAINTENANCE;
INSPECTION; REPLACEMENTS AND
ALTERATIONS; IDENTIFICATION.
---------------------------
11.1. Operation and Maintenance. Lessee covenants to cause, without
-------------------------
cost or expense to Lessor, (a) the Facilities to be maintained in accordance
with Prudent Utility Practice, taking into account the operational
characteristics of the Facilities and manufacturers' recommended maintenance
practices and standards, and not to discriminate between the Facilities and
other facilities of a similar size and nature owned, operated or leased by it,
(b) all necessary or useful Components of the Facilities, to be operated,
serviced, maintained and repaired and all necessary or useful Components thereof
to be replaced so that the condition and operating efficiency of the Facilities
will be maintained and preserved, in all material respects in accordance with
(i) Prudent Utility Practice and Lessee's normal maintenance practice for other
facilities of a similar size and nature owned, operated or leased by it, taking
into account the operational characteristics of the Facilities and
manufacturers' recommended maintenance practices and standards, and (ii) the
terms and conditions of any insurance policy maintained pursuant to Section 13
in effect from time to time with respect thereto and (iii) in such a manner so
as not to invalidate any material contractor's or manufacturer's warranties in
effect with respect thereto, (c) all applicable Governmental Rules and
Governmental Actions affecting the Facilities, or the use, operation or
maintenance thereof to be complied with; provided, however, that Lessee shall
-------- -------
not be obligated so to exercise such rights, powers, elections and options to
cause compliance with any Governmental Rule or Governmental Action (i) whose
application or validity is being contested diligently and in good faith by
appropriate
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proceedings, (ii) compliance with which shall have been excused or exempted by a
nonconforming use permit, waiver, extension or forbearance exempting it from
such Governmental Rule or Governmental Action, (iii) if good faith efforts and
appropriate steps are being taken to comply, or (iv) if failure of compliance
would result in no material adverse consequences to Lessor, Indenture Trustee,
Lessee or Owner Participant, so long as in each of (i) through (iv) above such
----------
failure of compliance cannot result in any material danger of the sale,
forfeiture or loss of any part of the Leased Assets or subject any of the
foregoing to any Lien, other than Permitted Interest Liens or Permitted Project
Liens, or materially interfere with the operation or use or disposition of any
of the foregoing, or the Trust Estate or the Indenture Estate, or any part
thereof, title thereto or any interest therein, or the payment of Rent, or
subject any Indemnitee to burdensome regulation as a Texas Public Utility, an
"electric utility" or a "public utility holding company" or other electric
public utility or any Affiliate of any of the foregoing, and (d) proper books
and records relating to all services rendered and all funds expended for
operation, maintenance, repair and replacement of the Facilities and the
acquisition, construction or installation of all Components and Alterations, to
be kept and maintained, all in accordance with GAAP and customary practices in
the electric utility industry. Except as set forth in subsection 11.4, Lessee
further covenants that it will not make any modification to a Facility which
diminishes the Useful Life or the fair market value thereof or causes such
Facility to become "limited use property", within the meaning of Revenue
Procedure 76-30, as interpreted as of the date of such modification. Lessor
shall have no obligation to maintain, alter, repair, rebuild or replace a
Facility or any part thereof, and Lessee expressly waives (to the extent legally
permitted to do so) the right to perform any such action at the expense of
Lessor pursuant to any law at any time in effect.
11.2. Inspection and Reports. Lessor, Owner Participant or Indenture
----------------------
Trustee, each acting through not more than two representatives at any time, and,
if no Lease Default or Lease Event of Default shall have occurred and be
continuing, accompanied by a representative of Lessee, during normal business
hours, may inspect, at their own expense, the Facilities or any part thereof and
the books and records of Lessee relative to the operation thereof and make
copies and extracts therefrom, but only if, unless a Lease Default or Lease
Event of Default shall have occurred and be continuing, Lessee shall have been
provided with 48 hours' prior notice of such inspection. Any such
representative shall comply with all applicable site rules and regulations.
Such inspecting party may discuss the results of such inspection with Lessee's
officers. Lessee shall, as promptly as practicable, furnish to Lessor, Owner
Participant and Indenture Trustee statements accurate in all material respects
regarding the condition and state of repair of the Facilities as
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may be reasonably requested from time to time. None of Lessor, Owner
Participant or Indenture Trustee shall have any duty to make any such inspection
or inquiry and shall not incur any liability or obligation, nor waive any rights
hereunder or under any of the other Operative Documents, by reason of not making
any such inspection or inquiry. Lessee shall cause to be prepared and filed in
timely fashion, or, where Lessor shall be required to file, Lessee shall prepare
and deliver to Lessor within a reasonable time prior to the date for filing, any
material reports with respect to the condition or operation of the Facilities
that shall be required to be filed by any Governmental Rule or Governmental
Action.
11.3. Replacement of Components. Except after the occurrence of an
-------------------------
Event of Loss described in clauses (a) through (d) and (f) of the definition
thereof, without expense to Lessor, Lessee shall cause any necessary or useful
Component which from time to time fails to function in accordance with its
intended use, or becomes worn out, destroyed, damaged beyond repair, lost,
condemned, confiscated, stolen or seized for any reason whatsoever to be
repaired or replaced promptly. In addition, in the ordinary course of
maintenance, service, repair or testing, any Component may be removed, but
Lessee shall cause such Component to be replaced (unless such Component is
obsolete and not necessary for the operation of the Facility from which it was
removed) by a replacement Component as promptly as practicable and Lessee shall
be entitled to retain the amount of the net proceeds of any sale or disposition
of any such removed Component. Lessee shall cause all replacement Components to
be free and clear of all Liens, except Permitted Interest Liens and Permitted
Project Liens, and to be in as good operating condition as, and to have a value,
utility and useful life at least equal to, the Components replaced, assuming
such replaced Components were in at least the condition and repair required to
be maintained hereunder. Each Component at any time removed from a Facility
shall remain the property of the Lessor no matter where located, until such time
as such Component shall be replaced by a replacement Component which has been
incorporated in such Facility which meets the requirements for replacement
Components specified above. Immediately upon any replacement Component becoming
incorporated in a Facility, without further act, so long as no Lease Default or
Lease Event of Default shall have occurred and be continuing, (i) Lessor and
Indenture Trustee shall release their interests in the removed Component, (ii)
title to such replacement Component thereupon shall vest in Lessor and be
subject to the Lien of the Indenture and (iii) such replacement Component shall
become subject to this Lease and be deemed a part of such Facility for all
purposes hereof to the same extent as the Component originally incorporated in
such Facility. Prior to or on the date of installation of any replacement
Component, Lessee, if requested by Lessor, at no expense to Lessor, shall (A)
cause to be furnished to Lessor a bill of sale, or certified
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copy of the same, in form and substance satisfactory to Lessor and Indenture
Trustee, conveying title to such replacement Component to Lessor free and clear
of all Liens except Permitted Interest Liens and Permitted Project Liens and (B)
cause to be furnished to Lessor and Indenture Trustee, such evidence of Lessor's
and Indenture Trustee's title to, and the condition of, such replacement
Component as Lessor or Indenture Trustee may request.
11.4. Required Alterations. Lessee shall cause all Severable and
--------------------
Nonseverable Alterations to be made as may be required from time to time to meet
in all material respects the requirements of clause (c) of subsection 11.1 and
Section 13 of this Agreement. Lessee shall use its best efforts to cause all
such Alterations to be completed in a good and workmanlike manner, with
reasonable dispatch. Except as provided in the Tax Indemnity Agreement, Lessee
shall have no responsibility to Lessor for any decrease in the fair market value
of the Facilities, any reduction in the Useful Life or any characterization of
the Facilities as "limited use property," within the meaning of Revenue
Procedure 76-30, as of the date of such modification, resulting from any such
required Alterations.
11.5. Title to Alterations and Components; Purchase or Lease Option
-------------------------------------------------------------
for Severable Alterations. (a) Title to Severable Alterations whose cost is
-------------------------
paid by Lessee pursuant to paragraph (a) of subsection 11.6 shall vest in Lessee
and not in Lessor, subject to this subsection 11.5. Lessee may place a Lien
upon its interest in such Severable Alterations.
(b) Title to all Components and Nonseverable Alterations shall vest
in Lessor. At the request of Lessor, Lessee shall execute and deliver to Lessor
a Certificate of Acceptance with respect to each Nonseverable Alteration and
Component.
(c) Provided that Lessee has not exercised its option to purchase a
Facility pursuant to Section 6, Lessor shall have the option to purchase or
lease any Severable Alteration on the last day of the Lease Term for such
Facility at (i) a price determined in accordance with subsection 11.5(d), or
(ii) a purchase or lease price equal to the Fair Market Sale Value or the Fair
Market Rental Value, as the case may be, of such Severable Alteration. Such
option shall be exercised by written notice to such effect from Lessor to Lessee
which, to be effective, shall be received by Lessee at least 30 days prior to
expiration of the Lease Term. Lessor and Lessee shall attempt to agree upon the
Fair Market Sale Value or the Fair Market Rental Value, as the case may be, of
any such Severable Alteration as of the expiration of the Lease Term. If they
shall fail to agree within 15 days after such written notice, such Fair Market
Sale Value or Fair Market Rental Value, as the case may be, of any
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such Severable Alteration shall be determined by the Appraisal Procedure. If
Lessor shall have exercised such option, Lessee shall cause any such Severable
Alteration to be released from the Lien of the Existing Mortgages on or prior to
the last day of the Lease Term. If Lessor shall have exercised its option to
purchase any Severable Alteration pursuant to this paragraph (c) of subsection
11.5, Lessee, if requested by Lessor, at no expense to Lessor, shall (A) cause
to be furnished to Lessor a bill of sale, or certified copy of the same, in form
and substance reasonably satisfactory to Lessor, conveying title to any such
Severable Alteration, free and clear of all Liens except Permitted Interest
Liens and Permitted Project Liens, and (B) cause to be furnished to Lessor and
Indenture Trustee such evidence of Lessor's and Indenture Trustee's title to,
and the condition of, any such Severable Alteration as Lessor or Indenture
Trustee may reasonably request. If Lessor shall have exercised its option to
lease any Severable Alteration pursuant to this paragraph (c) of subsection
11.5, Lessee and Lessor shall execute and deliver lease agreements therefor in
form and substance satisfactory to Lessee and Lessor.
(d) In the case of any Principal Severable Alterations for which an
appraisal shall have been obtained pursuant to subsection 11.7(b), if the last
day of the Lease Term shall be a date with respect to which such appraisal was
obtained, the purchase or lease price of any Principal Severable Alterations
may, at Lessor's option, be the estimated Fair Market Sale Value or the Fair
Market Rental Value as set forth in such appraisal for such date together with
the Fair Market Sale Value or Fair Market Rental Value, as the case may be, of
any Nonseverable Alteration to such Severable Alteration provided that, in the
case of any lease of such Severable Alteration, such lease shall be consistent
with the assumptions with respect thereto utilized in such appraisal.
11.6. Payment for Alterations and Components. (a) The cost of all
--------------------------------------
Severable Alterations shall be paid by Lessee.
(b) Subject to the provisions of paragraph (c), the Nonseverable
Alteration Cost of all Nonseverable Alterations and Components shall be paid by
Lessee.
(c) If Lessee desires financing for the Nonseverable Alteration Cost
of any Nonseverable Alteration, Lessee shall notify Lessor, Owner Participant
and Indenture Trustee in writing at least 90 days prior to the date of such
proposed financing. As set forth in Section 17 of the Participation Agreement,
upon receipt of such notice, Owner Participant shall negotiate with Lessee in
good faith to participate in the financing (in combination with the issuance by
Owner Trustee of additional Bonds) of the Nonseverable Alteration Cost of such
Nonseverable Alteration by making an additional equity investment in such
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amount as, in its sole discretion, it shall determine at the then prevailing
rates for leases of similar assets and term with lessees of comparable credit.
If Owner Participant shall desire to participate in the financing of the
Nonseverable Alteration Cost of such Nonseverable Alteration, which decision
shall be in the sole discretion of Owner Participant, Owner Participant shall
advise Lessee of its desire to participate in such financing as well as the
amount of its proposed participation within 60 days after its receipt of the
notice from Lessee referred to in the first sentence of this paragraph (c). If
Owner Participant declines to participate in the financing of such Nonseverable
Alteration, and if no Lease Default or Lease Event of Default shall have
occurred and be continuing, Owner Participant agrees upon request of Lessee to
cause Owner Trustee to effect the financing of the Nonseverable Alteration Cost
of such Nonseverable Alteration through the issuance and sale of additional
Bonds, subject to the restrictions set forth in Section 2.15 of the Indenture,
and provided that purchasers for the Bonds (other than any Person affiliated
with Lessee within the meaning of Section 318 of the Code) issued in connection
with such financing may be found (such financing being herein called a
"Supplemental Alteration Financing"); provided, however, that (i) the amount of
---------------------------------- -------- -------
any such Supplemental Alteration Financing shall not exceed 85% of the
Nonseverable Alteration Cost of such Nonseverable Alteration; (ii) the Lien of
the Indenture securing payment of the Bonds issued in connection with such
Supplemental Alteration Financing shall be a first Lien on the Leased Assets
subject only to Permitted Interest Liens and Permitted Project Liens; (iii)
Basic Rent and Casualty Value shall have been adjusted as provided in subsection
4.3; (iv) any Bonds issued in connection with such Supplemental Alteration
Financing shall not have maturities in excess of the remaining Lease Term; (v)
on the date on which any Bonds are issued in connection with such Supplemental
Alteration Financing, Lessee has Outstanding senior secured long-term debt
securities rated by both Moody's Investors Services, Inc. and Standard & Poor's
Corporation (or any other nationally recognized securities rating agency if such
agencies shall no longer rate securities) in any investment grade rating
category (or, so rated by only one such agency if the other such agency does not
rate such securities) and (unless Owner Participant shall have consented
thereto) neither such agency has publicly announced that it is reviewing such
rating for a possible reduction thereof, provided, however, that in the event
-------- -------
that either such agency has publicly announced that it is reviewing such rating
for a possible reduction thereof, Owner Participant, upon Lessee's request,
shall review Lessee's financial condition and other relevant circumstances and
conditions and shall not withhold the consent provided for in this clause (v) if
Owner Participant, in its sole discretion (so long as such discretion is
exercised in good faith), shall not consider it likely that, as a result of such
agency's review, such agency shall reduce such rating below the lowest
investment
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grade rating category; (vi) Lessee shall be obligated to reimburse Lessor,
Indenture Trustee and on an After-Tax Basis, Owner Participant, for all out-of-
pocket costs incurred by any such party in connection with such Supplemental
Alteration Financing; and (vii) Owner Participant shall have received (a) a
satisfactory opinion of independent counsel, selected by Owner Participant and
reasonably acceptable to Lessee, that such proposed Supplemental Alteration
Financing will not result in a material risk of adverse legal consequences to
Owner Participant (including, without limitation, adverse tax consequences other
than with respect to taxes indemnified as a result of any Nonseverable
Alteration) or (b) an indemnity from Lessee satisfactory to Owner Participant
with respect to any such adverse consequences.
11.7. Reports of Alterations and Components. (a) On or before
-------------------------------------
February 15 of each year until the Lessor Possession Date, commencing February
15, 1990, and 270 days before a scheduled Lessor Possession Date, Lessee shall
deliver to each of Lessor, Owner Participant and Indenture Trustee an Officers'
Certificate describing separately and in sufficient detail to enable Lessor and
Owner Participant to prepare their income tax returns taking into account all
credits and deductions to which they might be entitled in connection with such
Alterations and Components, each Alteration or group of Alterations or Component
or group of Components which shall have been made or installed, as the case may
be, during the period from the date hereof to the date of such report, in the
case of the first such report, or during the period from the last previous
report to the date of such Officers' Certificate, in the case of all subsequent
Officers' Certificates, or stating that no such Alteration or group of
Alterations or Component or group of Components was made or installed, as the
case may be, during the period to which such Officers' Certificate relates.
Each such report shall indicate the actual cost of such Alterations and
Components, the details with respect to any arrangement for the financing
thereof and the Person who holds title thereto in accordance with the provisions
of subsections 11.5 and 11.6 and shall identify any Principal Severable
Alterations completed during the period covered by such report.
(b) Within 90 days after receipt of any such report pursuant to
subsection 11.7(a), Owner Participant may request Lessee to provide an appraisal
setting forth the estimated Fair Market Sale Value and the estimated Fair Market
Rental Value as of the end of the Basic Term and as of such other dates as are
requested by Owner Participant with respect to the Principal Severable
Alterations described in such report; provided that Owner Participant shall have
undertaken in such request to reimburse Lessee's reasonable costs and expenses
in obtaining such an appraisal. Such an appraisal shall determine such
estimated values by assuming that the Lease Term shall end on the
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last day of the Basic Term or such other requested dates, as the case may be,
and that, in the case of any lease of any Severable Alteration, such lease would
be for a term commencing on the day next succeeding the last day of the Basic
Term or such other requested dates, as the case may be, and end on the earlier
of (i) the end of the useful life of such Severable Alteration or (ii) July 1,
2031 and that the obligations of Lessor under such lease would be the same, in
all material respects, as Lessee's obligations hereunder.
11.8. Identification. At all times until expiration or earlier
--------------
termination of the Lease, Lessee shall maintain at each Site and on each
Facility conspicuous markings bearing the inscription "PROPERTY OF THE
CONNECTICUT NATIONAL BANK, OWNER TRUSTEE, LESSOR" and, so long as the Leased
Assets shall constitute part of the Indenture Estate, the inscription "AMERICAN
NATIONAL BANK AND TRUST COMPANY OF CHICAGO, AS INDENTURE TRUSTEE, SECURED
PARTY," in letters not less than two inches in height. Except as above provided
or as otherwise directed by Lessor, Owner Participant, and (so long as the Bonds
are Outstanding) Indenture Trustee, Lessee shall prevent the name of any Person
other than that of Lessee from being placed on any part of the Facilities as a
designation that reasonably might be interpreted as a claim of ownership or
right to possession or use thereof.
11.9. Manuals, Logs, Plans and Specifications. Lessee shall cause
---------------------------------------
manuals and logs relating to each Facility, maintenance and repair reports in
sufficient detail to indicate the nature and date of major maintenance and other
work done on or with respect to each Facility and a set of the plans and
specifications showing each Facility as built and as modified by all significant
Alterations to be kept on file, such manuals, logs, reports and plans and
specifications to be made available to Lessor, Owner Participant and Indenture
Trustee upon reasonable request. Unless a Facility shall have been Transferred
to Lessee pursuant to this Lease, on the Lease Termination Date for such
Facility Lessee shall cause to be delivered to Lessor a set, current as of the
Lease Termination Date, to the extent the same are reasonably available to
Lessee, of all such manuals, logs, reports and plans and specifications with
respect to such Facility. Manuals, logs and reports may be destroyed in
accordance with the normal course of Lessee's record retention program;
provided, however, that, during the last 180 days of the Lease Term if Lessee
-------- -------
shall not have exercised an option to purchase a Facility or renew this Lease
for such Facility at the end of such 180 days, Lessee shall not destroy any
material manuals, logs or reports available to Lessee of any type then
designated by Lessor for retention and delivery to Lessor on the Lease
Termination Date for such Facility.
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11.10. Regulation. Except to the extent required by law, Lessee will
----------
not take any action or omit to take any action as a result of which Owner
Participant or Owner Trustee would become (i) a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of a "subsidiary
company" or "holding company" or "public utility" within the meaning of the
Holding Company Act or subject to regulation under the Holding Company Act or
subject to the jurisdiction, control or regulation of the Commission thereunder;
(ii) a "public utility" within the meaning of the Federal Power Act or subject
to regulation under the Federal Power Act or subject to the jurisdiction,
control or regulation of the Federal Energy Regulation Commission thereunder;
(iii) a Texas Public Utility subject to regulation as such under any public
utility regulatory law of the State of Texas; or subject to the jurisdiction,
control or regulation of the PUC as a Texas Public Utility; or (iv) subject to
regulation by any other Governmental Authority or under any other Governmental
Rules or Governmental Actions relating to electric public utilities or the
production, sale or transmission of energy.
11.11. Personal Property. Lessee and Lessor agree for purposes of
-----------------
this Lease that each Facility and every part thereof shall be considered as
personal and not real property. Lessor and Lessee agree that each Facility and
every part thereof are severed from any real property and, even if physically
attached to any real property, it is the express intention of Lessor and Lessee
that each Facility and every part thereof (i) shall retain the character of
personal property, (ii) shall be removable, (iii) shall be treated as personal
property with respect to the rights of all Persons whomsoever, (iv) shall not
become part of any real property, and (v) by virtue of their nature as personal
property, shall not be affected in any way by any instrument dealing with any
real property. Notwithstanding the foregoing, if either Facility or any part
thereof shall be deemed to be real property, then this Lease shall be deemed to
be two separate leases, one of Lessor's interest in that portion of such
Facility as shall be deemed to constitute real property, and one of Lessor's
interest in the remainder of such Facility. In no event shall the ownership of
either Facility be merged with the ownership of the Site with respect to such
Facility or the leasehold estate created in such Site without the express
written agreement of Lessee and Lessor.
SECTION 12. EVENTS OF LOSS.
--------------
12.1. Notice of Damage or Loss. If there shall occur an Event of
------------------------
Loss with respect to a Facility, such fact shall be reported promptly by Lessee
to Lessor, each Participant and Indenture Trustee (except that, with respect to
an Event of Loss described in clause (e) of the definition thereof, the notice
shall be from Owner Trustee or Owner Participant, as the case may
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be, to each such other party and to Lessee). With respect to an Event of Loss
described in clause (c) of the definition thereof, Owner Participant may give
notice to Lessee, Indenture Trustee and Lessor prior to the date that notice of
the prepayment of the Bonds resulting from such Event of Loss shall have been
given to the Bondholders that the event giving rise to such Event of Loss shall
be deemed not to constitute an Event of Loss. Upon the giving of such notice,
such Event of Loss shall be deemed not to have occurred.
12.2. Payment of Casualty Value, etc. If an Event of Loss with
-------------------------------
respect to a Facility shall occur, Lessee shall pay to Lessor (subject to
subsection 15.2) as compensation for such Event of Loss the Casualty Value for
such Facility hereinafter specified. From the date of the Event of Loss to and
including the date of payment of such Casualty Value, all Rent shall continue to
be paid when due (excluding, however, any amount of Basic Rent due on the date
of payment of Casualty Value which would represent a payment in advance). Such
Casualty Value shall be paid on the Basic Lease Commencement Date or the Basic
Rent Payment Date next succeeding the occurrence of the Event of Loss, unless
the Event of Loss shall have occurred less than 45 days prior to such date, in
which case such Casualty Value shall be determined as of and paid on the Basic
Rent Payment Date next succeeding the occurrence of such Basic Lease
Commencement Date or Basic Rent Payment Date. Lessee shall pay, simultaneously
with such payment of such Casualty Value, any and all Rent due through and
including the date of such payment (excluding, however, any amount of Basic Rent
due on the date of payment of Casualty Value which would represent a payment in
advance) and all other sums due and owing from Lessee to Lessor under the
Operative Documents, whereupon (a) the Lease shall terminate with respect to the
Facility suffering such Event of Loss and the obligations of Lessee hereunder
with respect to such Facility (other than the obligation to pay Supplemental
Rent and any obligation expressed herein as surviving termination of this Lease)
shall terminate as of the date of such payment and (b) upon payment of all sums
then due and owing by Lessee to Lessor under any of the Operative Documents and
the premium, if any, on the Bonds then Outstanding, Lessor shall Transfer the
Facility subject to such Event of Loss to Lessee or as Lessee shall direct, free
and clear of the Lien of the Indenture. Notwithstanding the foregoing
provisions of this subsection 12.2, in the case of an Event of Loss specified in
clause (e) of the definition thereof, if Lessee shall have duly executed and
delivered the assumption agreement as permitted by and in accordance with
Section 2.16 of the Indenture, the obligation of Lessee to pay Casualty Value
shall be reduced by the principal amount of the Outstanding Bonds so assumed and
not otherwise due on the date of such payment (after payment of all Basic Rent
designated to be a payment in arrears due on such date and application thereof
in accordance with the Indenture, and
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assuming that all amounts of Rent (other than amounts of Supplemental Rent which
constitute Excepted Payments) due prior to such date have been paid and so
applied).
12.3. Application of Other Payments on an Event of Loss. Any
-------------------------------------------------
payments with respect to a Facility received at any time by Lessor, Indenture
Trustee or Lessee from any Governmental Authority or other Person (except
Lessee) as a result of the occurrence of an Event of Loss with respect to such
Facility shall be applied as follows:
(a) unless a Lease Default or Lease Event of Default shall have
occurred and be continuing, so much of such payments as shall not exceed
the Casualty Value for such Facility required to be paid by Lessee pursuant
to subsection 12.2 shall be applied in reduction of Lessee's obligation to
pay the amount of Casualty Value for such Facility if not already paid by
Lessee or, if already paid by Lessee, shall be applied to reimburse Lessee
for its payment of such amount and for interest on such amount from the
date of payment by Lessee to but excluding the date of such reimbursement,
to be paid in arrears on such date of reimbursement, at a rate which shall
be imputed, by linear interpolation, from the yields of those United States
Treasury securities having maturities as close as practicable corresponding
to the period from the date of Lessee's payment to the date Lessee is
reimbursed. The yields of such United States Treasury securities shall be
determined as of the date of Lessee's payment by reference to rates
published by the Federal Reserve Board in its most recent (as of such day)
Statistical Release H.15 (519) or any successor publication thereto or, if
H.15 (519) or a successor is no longer published by the Federal Reserve
Board, a comparable publication by any other U.S. government department or
agency or any Federal Reserve Bank; and
(b) if such payments shall exceed the aggregate of the amounts
payable pursuant to the foregoing clause (a), Lessee shall receive an
amount equal to such excess multiplied by a fraction, the numerator of
which shall be the number of whole months remaining in the Basic Term or
the then effective Renewal Term as of the date of the occurrence of such
Event of Loss and the denominator of which shall be the number of months
remaining to the expiration date of the Ground Lease for such Facility as
in effect on such date, and Lessor shall receive an amount equal to the
remainder, if any, of such excess.
12.4. Application of Payments Not Relating to an Event of Loss.
--------------------------------------------------------
Unless a Lease Default or Lease Event of Default shall have occurred and be
continuing, payments (except for payments
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under insurance policies described in Section 13 and payments under warranties
described in subsection 2.2) received at any time by Lessor, Indenture Trustee
or Lessee from any Governmental Authority or other Person with respect to any
destruction, damage, loss, condemnation, confiscation, theft or seizure of or
requisition of title to or use of the Leased Assets or any part thereof not
constituting an Event of Loss shall be paid to or retained by Indenture Trustee
(or Lessor after discharge of the Lien of the Indenture) and shall be applied as
follows: first, in accordance with the provisions of subsection 13.3 (other
-----
than the last sentence thereof); and second, the balance remaining, if any,
------
shall be paid to Lessee.
12.5. Other Dispositions. Notwithstanding the foregoing provisions
------------------
of this Section 12, so long as any Lease Default or Lease Event of Default shall
have occurred and be continuing, any amount that otherwise would be payable to
or for the account of, or that otherwise would be retained by, Lessee pursuant
to this Section 12 or subsection 13.3 shall be paid to Indenture Trustee (or to
Lessor after discharge of the Lien of the Indenture) as security for the
obligations of Lessee under this Lease and, at such time thereafter as no Lease
Default or Lease Event of Default shall be continuing, such amount shall be paid
promptly to Lessee or as it may direct, unless this Lease theretofore shall have
been declared to be in default pursuant to subsection 17.1, in which event such
amount shall be disposed of in accordance with the provisions hereof, of the
Indenture and of the Trust Agreement.
SECTION 13. INSURANCE.
---------
13.1. Coverage. Without limiting any of the other obligations or
--------
liabilities of Lessee under this Lease, Lessee at its own cost and expense shall
carry and maintain or cause to be carried and maintained with insurers of
recognized responsibility having the legal authority to enter into valid and
enforceable contracts of insurance as insurers of the risks covered therein in
the State of Texas at all times prior to expiration or earlier termination of
the Lease at least the following insurance coverage with respect to the
Facilities, provided, in all cases, that any such insurance is commercially
available at a reasonable cost.
(a) Insurance Against Loss or Damage. Property insurance covering
--------------------------------
physical loss or damage to the Facilities shall be maintained at all times
prior to expiration or earlier termination of this Lease against such risks
and perils and in such form and in such amounts as is consistent with
Prudent Utility Practice for similar companies operating like properties.
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<PAGE>
Any insurance carried in accordance with this subsection 13.1(a) shall
be endorsed to provide that:
(1) Lessor, as owner of the Facilities subject to this Lease,
Owner Participant and Indenture Trustee (for purposes of this
subsection 13.1 referred to as "Section 13.1(a) Insureds") are
------------------------
included as insureds with the understanding that any obligation
imposed upon the insureds (including without limitation the liability
for payment of premiums) shall be the sole obligation of Lessee and
not that of any Section 13.1(a) Insured and that no such Section
13.1(a) Insured shall be or become a co-insurer of any loss under any
co-insurance provisions contained in any policies in existence under
this subsection; and
(2) subject to subsections 13.2 and 13.3, losses shall be
payable to Indenture Trustee, so long as the Indenture Estate shall be
subject to the Lien of the Indenture, and thereafter to Lessor.
Any such insurance carried in accordance with this subsection 13.1(a)
may insure other properties owned or leased by Lessee and need not be
amended to provide that the Facilities shall have priority to insurance
proceeds in the event of losses.
(b) Personal Injury and Property Damage Liability Insurance. Public
--------------------------------------------- ---------
liability insurance covering personal injury, bodily injury and property
damage liability shall be maintained covering claims arising out of the
ownership, operation, maintenance, condition or use of the Facilities. In
no event shall such insurance be written for limits less than $25,000,000
per occurrence and in the annual aggregate of $25,000,000 combined personal
injury, bodily injury and property damage liability. Such coverage may
include deductible amounts not exceeding $5,000,000 or such greater amount
as may be approved from time to time by Lessor. In the event Lessee cannot
obtain such personal injury, bodily injury or property damage liability
insurance at a reasonable cost, and Owner Participant does obtain such
insurance at a reasonable cost, Lessee shall reimburse Owner Participant,
as Supplemental Rent, for all costs and expenses, including premiums,
incurred by Owner Participant in obtaining such insurance.
Any insurance carried in accordance with this paragraph (b) shall be
endorsed to provide that:
(1) Lessor, as owner of the Facilities subject to this Lease, Owner
Participant and Indenture Trustee (for purposes of this subsection 13.1
referred to as "Additional 13.1(b)
------------------
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<PAGE>
Insureds") are included as additional insureds with the understanding that
--------
any obligation imposed upon the insureds (including without limitation the
liability to pay premiums) shall be the sole obligation of Lessee and not
that of any Additional 13.1(b) Insureds; and
(2) inasmuch as the policy is written to cover more than one insured,
all terms, conditions, insuring agreements and endorsements, with the
exception of limits of liability and deductibles, shall operate in the same
manner as if there were a separate policy covering each insured.
(c) Miscellaneous Policy Provisions. Each insurance policy required
-------------------------------
hereunder shall provide that the respective interests of Lessor, Indenture
Trustee and Owner Participant thereunder shall not be invalidated by any
action or inaction of Lessee or any other Person (other than the
beneficiary of such respective interest) and that such insurance shall
insure Lessor, Indenture Trustee and Owner Participant as their interests
may appear, regardless of any breach or violation of any warranty,
declaration or condition contained in such policies by Lessee or any other
Person (other than the beneficiary of such respective interest). Each
policy required hereunder shall provide that the insurers, with the
exception of Associated Electric & Gas Insurance Services Limited, will
notify Lessor of any default in the payment of any premium, and that if the
insurers cancel such insurance for any reason whatsoever or any materially
adverse change is made in policy terms or conditions, or if such insurance
is allowed to lapse for nonpayment of premium, such cancellation, change or
lapse shall not be effective as to Lessor, Owner Participant, or Indenture
Trustee for (i) 10 days, in the case of lapse for nonpayment of premium, or
(ii) 30 days, in the case of any cancellation, change or lapse for any
reason other than the nonpayment of premium, after receipt by Lessor, Owner
Participant or Indenture Trustee, respectively, of written notice from such
insurers of such cancellation, change or lapse. Lessee shall provide
Lessor and Indenture Trustee with insurance binders and other evidence of
insurance that may be required pursuant to subsection 13.4 for any
insurance policies obtained in replacement of any such cancelled, changed
or lapsed policy promptly after having obtained such replacement policy.
13.2. Adjustment of Losses. The loss, if any, under any insurance
--------------------
required to be carried under paragraph (a) of subsection 13.1 shall be adjusted
with the insurance companies, including the filing of appropriate proceedings,
by Lessee. Lessee shall give Lessor and Indenture Trustee prompt notice of any
loss in excess of $3,000,000.
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13.3. Application of Insurance Proceeds. All proceeds of insurance
---------------------------------
maintained pursuant to paragraph (a) of subsection 13.1 on account of any damage
to or destruction of the Facilities or any part thereof (in each case less the
actual costs, fees and expenses incurred in the collection thereof) shall:
(a) so long as no Lease Default or Lease Event of Default shall have
occurred and be continuing, be paid to Lessee if the amount of such
insurance proceeds payable by reason of such damage or destruction is
$3,000,000 or less, and applied by Lessee to pay the costs and expenses
relating to the repair or restoration of the Facility suffering such
damage; and
(b) if not payable to Lessee under clause (a) of this subsection
13.3, be paid to Indenture Trustee or to Lessor (after discharge of the
Lien of the Indenture), and, so long as no Lease Default or Lease Event of
Default shall have occurred and be continuing, all such proceeds actually
so received on account of any such damage or destruction other than in
connection with an Event of Loss shall be paid over to Lessee or as it may
direct to pay the costs and expenses relating to the repair or restoration
of the Facility suffering such damage, but only upon receipt of an
Officers' Certificate of Lessee stating that no Lease Default or Lease
Event of Default has occurred and is continuing, and a certificate of an
Engineer (who may be an employee of Lessee) approved by Owner Participant
that the repair or restoration relating to such damage or destruction has
been completed and that the Facility is in the condition required by
Section 11.
If Lessee shall have received and not yet applied insurance proceeds
pursuant to clause (a) above in an aggregate amount in excess of thirty million
dollars, then Lessee shall pay or cause to be paid such amount in excess of
thirty million dollars to Indenture Trustee for application pursuant to clause
(b) above.
All such proceeds received or payable on account of an Event of Loss
shall be distributed in accordance with subsection 12.3. If a Lease Default or
Lease Event of Default shall have occurred and be continuing, such proceeds
shall be held and applied as provided in subsection 12.5.
13.4. Annual Insurance Report. As soon as practicable after the end
-----------------------
of each fiscal year of Lessee commencing with the end of fiscal year 1990, and
in any event within 105 days thereafter, Lessee shall deliver to Lessor, Owner
Participant and Indenture Trustee (i) an Officers' Certificate of Lessee setting
forth the insurance obtained by Lessee pursuant to this Section 13 and as then
in effect, stating whether, in the opinion of such
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officers, such insurance policies comply with the requirements of this Section
13, that all premiums then due thereon have been paid and that the same are in
full force and effect, and setting forth all property owned or leased which is
covered under any blanket insurance policies also covering the Facilities, (ii)
a report by an independent insurance broker or independent insurance consultant
reasonably satisfactory to Owner Participant, confirming the most recent report
delivered pursuant to the preceding sentence and (iii) certification of all
insurance required to be maintained under Section 13, executed by each insurer,
or by an authorized representative of each insurer, identifying underwriters,
the type of insurance, the insurance limits (including applicable deductibles)
and the policy term, and the other material policy terms, including the special
provisions enumerated for such insurance required by subsection 13.1(c). Upon
request, Lessee will make available for inspection, review and reproduction at
Lessee's offices by Owner Participant or Indenture Trustee copies of all
insurance policies, binders and cover notes or other evidence of such insurance
in respect of all insurance required to be maintained pursuant to this Section
13, certified by authorized representatives of the insurers.
13.5. Additional Insurance by Lessor. Nothing in this Section 13
------------------------------
shall prohibit Lessee, Lessor or Owner Participant from maintaining, at their
expense, additional insurance for their own account with respect to loss or
damage to the Facilities or any part thereof provided that any such additional
insurance shall not provide for or result in a reduction of coverage or amounts
payable under insurance required to be maintained under this Section 13.
SECTION 14. INDEMNIFICATION.
---------------
14.1. Indemnification. Lessee agrees, whether or not any of the
---------------
transactions contemplated hereby shall be consummated, to assume liability for,
and to indemnify, defend, protect, save and keep harmless each Indemnitee, on an
After-Tax Basis, from and against, any and all Claims of or against any
Indemnitee, whether or not such Indemnitee shall also be indemnified as to any
such Claim by any other Person, in any way relating to or arising out of (i) a
disposition of all or any part of the Leased Assets or any part thereof in
connection with an Event of Default, an Event of Loss, the purchase by Lessee of
a Facility or the purchase by any other Person of a Facility following
termination of this Lease pursuant to Section 7 hereof, (ii) the Facilities or
any part thereof, (iii) the Operative Documents, the issuance of the Bonds
(including Claims arising under the Securities Act with respect to a public
offering of any series of Bonds) or the making of any investment in the
Facilities, payments made pursuant to any thereof or the enforcement by any
Indemnitee of any of its rights under the Operative Documents or
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any other transaction contemplated by the Operative Documents, (iv) the
manufacture, financing, refinancing, construction, purchase, ownership,
acquisition, acceptance, rejection, delivery, nondelivery, possession,
transportation, lease, sublease, mortgaging, granting of a security interest in,
preparation, installation, condition, transfer of title, rental, use, operation,
storage, maintenance, modification, alteration, repair, assembly, sale, return,
abandonment or other application or disposition of all or any part of the
Facilities or any interest therein during the Lease Term, including without
limitation (A) claims or penalties arising from any violation of law or
liability in tort (strict or otherwise) or from the negligence of, or negligence
imputed to, any Indemnitee, (B) loss of or damage to any property or the
environment or death or injury to any Person, and (C) any claim for patent,
trademark or copyright infringement, (v) indemnification by Owner Participant of
the Owner Trustee, the Indenture Trustee or any bondholder arising from or in
connection with the transactions contemplated by the Participation Agreement, or
(vi) any failure of compliance with Governmental Rules or Governmental Actions
permitted in accordance with subsection ll.l(c) hereof with respect to a
Facility which first occurred prior to the Lessor Possession Date and continues
after the Lessor Possession Date for such Facility; provided, however, that
-------- -------
Lessee shall not be required to indemnify any Indemnitee under this subsection
14.1 for (1) any Claim in respect of the Leased Assets arising solely from acts
or events which occur after such Leased Assets have been returned and delivered
to Lessor in accordance with subsection 8.1 (other than any such Claims arising
after the termination of this Lease pursuant to subsection 17.1), (2) any Claim
resulting from acts which would constitute the willful misconduct or gross
negligence of such Indemnitee, its agents, employees, Affiliates and
predecessors (excluding Lessee and its Affiliates in any of such capacities),
(3) any Transaction Expense to be paid by Owner Participant pursuant to the
Participation Agreement or any other expense expressly provided under any of the
Operative Documents to be borne by any Indemnitee without indemnification, (4)
any Claim resulting directly from a transfer by such Indemnitee of all or part
of its interest in this Lease or the Leased Assets, other than to Lessee or in
connection with an Event of Default or an Event of Loss or in connection with
the provisions of Section 7 hereof, (5) any Claim resulting solely from breach
by such Indemnitee (which, in the case of Lessor or Indenture Trustee, shall
have resulted from its gross negligence or willful misconduct) of any of its
representations, warranties or covenants in any of the Operative Documents in
any material respect, or (6) any Claims in respect of Taxes (except to the
extent that Indemnitees are held harmless hereunder on an After-Tax Basis).
When an Indemnitee has received indemnification payments from Lessee in full
satisfaction of the indemnification provisions of this subsection 14.1, Lessee
shall be subrogated, to the extent of such indemnity paid, to such
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Indemnitee's rights with respect to the transaction or event requiring or giving
rise to such indemnity, other than such rights against other Indemnitees to the
extent such Indemnitees are indemnified hereunder. Nothing contained in this
subsection 14.1 shall be construed as a guaranty of (A) payment of any of the
Bonds or (B) the Useful Life of the Facilities or (C) the value of the Leased
Assets upon termination of the Basic Term or any Renewal Term.
14.2. Taxes. (a) Payment of Taxes. Lessee agrees to pay, and to
----- ----------------
indemnify, protect, defend, save and keep harmless each Indemnitee, on an After-
Tax Basis, from and against, any and all Taxes imposed or asserted against any
Indemnitee, Lessee, the Facilities or any portion thereof or any Indemnitee's
interest in any of the foregoing, by any state or local government or taxing
authority in the United States of America or any territory or possession of the
United States of America upon or with respect to (i) the Facilities or any
portion thereof or interest therein, (ii) the manufacture, financing,
mortgaging, construction, purchase, ownership, acceptance, rejection, delivery,
nondelivery, possession, transportation, lease, sublease, preparation,
installation, condition, transfer of title, rental, use, operation, storage,
maintenance, modification, alteration, repair, assembly, sale, return,
abandonment, insurance, or other application or disposition of all or any part
of the Facilities or any portion thereof or interest therein or product thereof
(including Energy), (iii) the rental payments (including without limitation all
Rent), receipts or earnings arising from the Facilities or any portion thereof
or interest therein or payable pursuant to this Lease or any other payment or
right to receive payment pursuant to the Operative Documents (including without
limitation any payment of principal, interest, discount or premium on or with
respect to the Bonds), (iv) the Operative Documents or the issuance of the Bonds
pursuant to the Indenture, or any other document executed and delivered in
connection with the consummation or confirmation of the transactions
contemplated by the Operative Documents or any Indemnitee's interest in any of
the foregoing, or the execution, issuance, delivery, acquisition or subsequent
transfer of any of the foregoing, (v) the Indenture Estate or the property, or
the income or other proceeds received with respect to the property, held by
Indenture Trustee under the Indenture, or (vi) otherwise with respect to or in
connection with the transactions contemplated by the Operative Documents.
Without prejudice to the provisions of the Tax Indemnity Agreement,
the provisions of this subsection 14.2 shall not apply to:
(i) Taxes of any state or local, governmental or taxing
jurisdiction in the United States of America based on, or measured by,
net income other than such Taxes, to the extent imposed on an
Indemnitee by the
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state of, or local governmental or taxing jurisdiction in, Texas as a
result of a nexus between the taxing jurisdiction and (a) a Facility,
or (b) the activities in the taxing jurisdiction of the Lessee or any
other person using such Facility, or any Affiliate of any of the
foregoing; provided, however, that no indemnity shall be paid to the
Owner Participant pursuant to this subsection 14.2 for the franchise
tax imposed by Chapter 171 of Subtitle F of Title 2 of the Tax Code of
Texas in excess of the sum of: (x) the lesser of $42,000 per year on
an annualized basis or the actual amount of such franchise tax for
such year, (y) the excess, if any, of the amount of such franchise tax
over $42,000 per year that is payable by the Owner Participant as a
result of a change in Texas law after the Funding Date with respect to
a Facility or any administrative or judicial interpretations thereof,
and (z) any interest and penalties imposed with respect to such
franchise tax; and provided further that in the event any indemnity
-------- -------
required pursuant to this clause (i) of subsection 14.2(a) is a result
of a change in Texas law after the Funding Date with respect to a
Facility and results in an increase above $42,000 for any year
remaining in the Basic Term and such increase exceeds 5% of the Basic
Rent for such year, Lessee may elect to terminate the Lease and
purchase the Leased Assets pursuant to subsection 6.1(c)(ii);
(ii) Taxes based on, or measured by, items of tax preference
and minimum Taxes;
(iii) Taxes imposed with respect to any voluntary or
involuntary sale or other disposition of the Leased Assets or any
interest therein, unless a Lease Event of Default shall have occurred
and be continuing on the effective date of such sale or disposition;
(iv) Taxes to the extent such Taxes would not have been
imposed on an Indemnitee if such Indemnitee had not engaged in
activities in the jurisdiction imposing such Taxes, which activities
are wholly unrelated to the transactions contemplated by the Operative
Documents;
(v) Taxes that are imposed on an Indemnitee as a result of
such Indemnitee's gross negligence or willful misconduct;
(vi) Taxes in the nature of franchise taxes (except to the
extent provided in clause (i) of the second paragraph of this
subsection 14.2(a)), value
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added taxes, capital stock taxes or taxes on doing business;
(vii) Taxes of any state or local, governmental or taxing
jurisdiction in the United States of America based on, or measured by,
any fees or compensation received by Lessor or Indenture Trustee for
services rendered in connection with the transaction contemplated by
the Operative Documents;
(viii) So long as no Lease Event of Default shall have
occurred and be continuing, Taxes relating to any period or
circumstance that occurs after the Lease Termination Date for the
Facility to which such Taxes relate;
(ix) Taxes, to the extent and so long as contested by Lessee
in good faith, or by such Indemnitee in accordance with the provisions
of subsection 14.2(b) hereof;
(x) Taxes, to the extent imposed on an Indemnitee as a result
of failure by such Indemnitee to contest such Taxes in accordance with
subsection 14.2(b) hereof;
(xi) Taxes imposed on an Indemnitee resulting from the failure
of such Indemnitee to timely and properly file a return or claim an
exemption, deduction or credit, unless such failure results from a
breach by Lessee of its obligations pursuant to this subsection 14.2;
(xii) Taxes that are enacted or adopted by their express terms
as a substitute for any Taxes imposed on an Indemnitee that are not
Taxes within any category of Taxes indemnified against under this
subsection 14.2; and
(xiii) Taxes, to the extent included in Transaction Expenses.
Notwithstanding anything to the contrary herein or in any other
Operative Document, Lessee acknowledges and agrees to indemnify and hold
harmless, on an After-Tax Basis, Owner Participant and Lessor (but no other
Indemnitee) against any and all withholding Taxes imposed under Section 1441 or
1442 of the Code (together with any interest or penalties with respect thereto)
on or with respect to any amounts paid to a Bondholder or any successor, assign
or Affiliate thereof.
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In case any report or return is required to be made with respect to
Tax that is subject to indemnification under this subsection 14.2, other than
Taxes subject to indemnification pursuant to clause (i) of this subsection
14.2(a), Lessee shall either (i) make such report or return in such manner
(including the making thereof in Lessor's name) as will show the ownership of
the Facilities in Lessor and send a copy of such report or return to Lessor or
(ii) notify Lessor of such requirement and make such report or return in such
manner as shall be satisfactory to Lessor. Each Indemnitee agrees that it will
promptly forward to Lessee any notice, bill or advice received by it concerning
any such Taxes and in good faith will use reasonable efforts in filing its tax
returns and in dealing with taxing authorities to seek and claim all tax
benefits available with respect to items referred to herein. Lessee will
provide such information as any Indemnitee reasonably may require from Lessee to
enable such Indemnitee to fulfill its tax filing requirements, including its
Federal income tax filing requirements. Such Indemnitee shall have the right to
receive a copy of any return filed by Lessee on behalf of such Indemnitee.
(b) Contests. If any written claim shall be made against any
--------
Indemnitee or if any proceeding shall be commenced against any Indemnitee
(including a written notice of such proceeding) for any Taxes as to which Lessee
shall have an indemnity obligation pursuant to subsection 14.2 or if any
Indemnitee shall determine that any Tax as to which Lessee shall have an
indemnity obligation pursuant to subsection 14.2 shall be payable, such
Indemnitee shall promptly notify Lessee of any claim for any such Taxes (the
failure to so notify Lessee shall relieve Lessee of its obligation under
subsection 14.2 to the extent such failure effectively precludes Lessee from
presenting a claim or defense of the Lessee) and shall, in good faith with due
diligence and at Lessee's expense, if requested in writing to do so by Lessee,
contest (or shall permit Lessee to contest) any such Taxes; provided, however,
-------- -------
that such Indemnitee shall, after consulting in good faith with Lessee,
determine whether any such contest of the validity, applicability or amount of
such Taxes shall be by (i) resisting payment thereof if practicable, (ii) not
paying the same except under protest, if protest is necessary and proper, or
(iii) paying such Taxes, and if the payment is made, using reasonable efforts to
obtain a refund thereon in appropriate administrative or judicial proceedings,
and provided, however, that such Indemnitee shall not be required to take any
-------- -------
action pursuant to this sentence unless and until (x) Lessee shall have agreed
to pay such Indemnitee on demand all reasonable costs and expenses that such
Indemnitee shall incur in connection with contesting such claim (including,
without limitation, all reasonable legal and accounting fees and disbursements),
(y) such action to be taken will not result in the risk of an imposition of
criminal penalties or the risk of any sale, forfeiture or loss of the Leased
Assets or any interest therein, or (z) if such
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contest shall be conducted in a manner requiring the payment of the claim,
Lessee shall have paid the amount required directly to the appropriate authority
or made an advance of the amount thereof to such Indemnitee on an interest-free
basis and agreed to indemnify Indemnitee against any additional net after-tax
cost to such Indemnitee with respect to such advance (taking into account any
imputed interest deductions arising from such interest-free advance from Lessee
and any tax benefit from making such payment).
Notwithstanding anything to the contrary contained in this subsection
14.2, any Indemnitee may at any time decline to contest, or may settle or
compromise a claim or decline to take any further action in contesting a claim;
provided, however, that if Lessee has properly requested such contest, the
-------- -------
failure by such Indemnitee to contest or the settlement or compromise of or
failure to take any further action in contesting a claim shall constitute a
waiver (and such Indemnitee shall so notify Lessee in writing) of its right to
any indemnity payment by Lessee under subsection 14.2 hereof; provided, further,
-------- -------
however, that Owner Participant shall not be obligated to appeal an adverse
-------
determination of a court to the United States Supreme Court.
(c) Refunds. Provided no Lease Default or Lease Event of Default
-------
shall have occurred and be continuing, if any Indemnitee shall obtain a refund
(or would have obtained a refund but for a counterclaim not indemnified by the
Lessee hereunder) of all or any part of any Taxes, payment of or indemnity for
which shall have been made by Lessee pursuant to this subsection 14.2, such
Indemnitee shall promptly pay to Lessee an amount equal to (i) the amount of
such refund, together with the amount of any interest received by such
Indemnitee on account of such refund, plus (ii) an amount equal to the tax
benefits realized by such Indemnitee as the result of the payment of the amounts
referred to in the foregoing clause (i) and this clause (ii) and minus (iii) an
amount equal to any tax detriment realized by such Indemnitee as the result of
the receipt or accrual of any interest referred to in the foregoing clause (i);
provided, however, that any payments of such amounts to Lessee shall not exceed
-------- -------
the amount of all prior indemnity payments paid to such Indemnitee by Lessee
pursuant to this subsection 14.2; and provided, further, that any interest
-------- -------
received which is payable to Lessee pursuant to this subsection 14.2(c) shall
not be taken into account for purposes of computing the limitation described in
the immediately preceding clause. Any subsequent loss of such refund shall be
treated as a Tax subject to full indemnification under this subsection 14.2.
14.3. Indemnities. Lessee agrees to comply with and to pay, as
-----------
Supplemental Rent, all amounts payable by it under the provisions of the Tax
Indemnity Agreement.
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14.4. Payment. (a) Any amount payable to an Indemnitee pursuant to
-------
subsection 14.1 or 14.2 shall be paid within 30 days after receipt of a written
demand therefor from such Indemnitee together with interest at the Prime Rate
from the date of such demand to the date of payment, accompanied by a written
statement describing the basis for such indemnity and the computation of the
amount so payable and, if requested by Lessee, such determination shall be
verified at Lessee's expense (or at such Indemnitee's expense if such amount
shall be determined to have been materially overstated) by a nationally
recognized independent accounting firm mutually acceptable to Lessee and the
Indemnitee. Each Indemnitee agrees in good faith to claim all proper
exemptions, deductions and credits with respect to Taxes indemnified hereunder.
(b) Any amount payable to Lessee pursuant to subsection 14.2(c) as
the result of a refund shall be paid to Lessee within 30 days from the date the
Indemnitee receives such refund (or the benefit of such refund as a credit
against an amount not indemnified by Lessee hereunder) together with interest at
the Prime Rate from the date of receipt of such refund (or credit) until the
date of payment to Lessee.
SECTION 15. RIGHTS TO ASSIGN OR SUBLEASE.
----------------------------
15.1. Assignment or Sublease by Lessee. Without the prior written
--------------------------------
consent of Lessor, Owner Participant and Indenture Trustee, Lessee shall not
assign, transfer or encumber all or any part of its leasehold interest or other
rights under this Lease, except that, Lessee shall have the right, provided that
no Lease Default or Lease Event of Default shall have occurred and be
continuing, to sublease or assign the Leased Assets, in whole or in part, if (i)
such sublease or assignment shall not extend beyond the Basic Term, (ii) a copy
of such sublease or assignment shall be delivered to Lessor, Owner Participant
and Indenture Trustee within 30 days of the execution of such sublease or
assignment if such sublease or assignment extends for more than one year, (iii)
such sublease or assignment shall not (a) impair or diminish any of the
obligations or liabilities of Lessee hereunder or under any of the other
Operative Documents (except as provided hereinafter), which obligations and
liabilities will continue in full force and effect as though no sublease or
assignment had been made, nor (b) result, in the reasonable opinion of Owner
Participant, in adverse tax consequences to Owner Participant, (iv) such
sublease or assignment shall be expressly subject and subordinate to the
provisions of this Lease and the Operative Documents, including the rights of
Lessor to enforce remedies under Section 17 if a Lease Event of Default shall
have occurred and be continuing, (v) such sublessee or assignee has all
necessary legal and regulatory authority to discharge Lessee's obligations and
liabilities in respect of the Facilities under the Lease and the other Operative
Documents,
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(vi) upon such assignment, the assignee (if other than an Affiliate of TU
Electric) (a) shall have outstanding senior secured long-term debt securities
rated by both Moody's Investors Services, Inc. and Standard & Poor's Corporation
(or any other nationally recognized securities rating agency if such agencies
shall no longer rate securities) in any investment grade rating category (or, so
rated by only one such agency if either such agency does not rate such
securities) and, if any such ratings are in the lowest investment grade rating
category for either such rating agency (or any other nationally recognized
securities rating agency if such agencies shall no longer rate securities),
neither such agency has publicly announced that it is reviewing such rating for
a possible reduction thereof or (b) shall have otherwise established its
creditworthiness to the reasonable satisfaction of Owner Participant, (vii) such
sublease or assignment shall not render the Owner Participant's investment in
the Facilities illegal or subject to burdensome regulation, and (viii) in the
case of a sublease or assignment which relates to any period within two years of
the end of the Lease Term, Lessee shall be the operator of the Facilities,
unless otherwise consented to by Owner Participant.
15.2. Assignment by Lessor; Security for Lessor's Obligations to
----------------------------------------------------------
Indenture Trustee. Except as provided in the Participation Agreement and this
-----------------
Lease, during the Lease Term Lessor may not assign, transfer or encumber this
Lease or the Facilities or all or any part of its interests and rights
hereunder. In order to secure the indebtedness evidenced by the Bonds and
certain other obligations as provided in the Indenture, the Indenture provides,
among other things, for the assignment by Lessor to Indenture Trustee of its
right, title and interest in, to and under this Lease, to the extent set forth
in the Indenture, and for the creation of a Lien on and security interest in the
Leased Assets in favor of the Indenture Trustee. Subject to subsection 9.1,
Lessee hereby consents to such assignment and to the creation of such Lien and
security interest and consents to the terms and provisions thereof. Lessee (a)
acknowledges that such assignment, mortgage and security interest provide for
the exercise by Indenture Trustee of all rights of Lessor hereunder to give any
consents, approvals, waivers, notices or the like, to make any elections,
demands or the like or to take any other discretionary action hereunder, except
as specifically set forth in the Indenture, (b) acknowledges receipt of an
executed counterpart of the Indenture as in effect on the date hereof and (c)
agrees that, to the extent provided in the Indenture, Indenture Trustee shall
have all the rights of Lessor hereunder as if Indenture Trustee had originally
been named as Lessor herein (every reference herein to "Lessor" being read to
mean, to the extent provided in the Indenture, and except where the context
otherwise requires, Indenture Trustee). Lessee will furnish to Indenture
Trustee counterparts of all notices, certificates, opinions or other documents
of any kind required to
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be delivered hereunder by Lessee to Lessor. So long as any Bonds remain
Outstanding, Lessee shall make all payments of Basic Rent, Supplemental Rent
payable pursuant to subsection 3.2(b), and all other amounts payable hereunder
to Lessor, other than Excepted Payments, to Indenture Trustee at the Indenture
Trustee Office (to Corporate Trust Account No. 75560003 re: Texas Utilities
Electric Company, or such other account as may be designated by Indenture
Trustee), and the right of Indenture Trustee to receive all such payments shall
not be subject to any defense, counterclaim, setoff (subject to subsection 3.6
hereof) or other right or claim of any kind which Lessee may be able to assert
against Lessor or Owner Participant in an action brought by either thereof on
this Lease. Notwithstanding the foregoing, Indenture Trustee shall not have any
obligation or liability under this Lease except as set forth in the Indenture
and the Participation Agreement.
In the event of the completion of the foreclosure proceedings and sale
of the Leased Assets pursuant to Article Eight of the Indenture or in the event
Indenture Trustee shall otherwise acquire Lessor's title to the Leased Assets by
the exercise of remedies pursuant to Article Eight of the Indenture, Lessee
shall recognize the purchaser or Indenture Trustee as Lessor under this Lease.
Lessee agrees to execute and deliver, at any time and from time to time
thereafter, upon the request of Indenture Trustee or the purchaser in the
foreclosure proceedings, as the case may be, any instrument which may be
necessary or appropriate to evidence such recognition. Lessee further waives
the provisions of any statute or rule of law now or hereafter in effect which
may give or purport to give Lessee any right of election to terminate this Lease
or to surrender possession of the Leased Assets in the event foreclosure
proceedings pursuant to Article Eight of the Indenture should be instituted.
SECTION 16. LEASE EVENTS OF DEFAULT.
-----------------------
The term "Lease Event of Default", wherever used herein, shall mean
----------------------
any of the following events (whatever the reason for such Lease Event of Default
and whether it shall be voluntary or involuntary, or come about or be effected
by operation of law, or be pursuant to or in compliance with any judgment,
decree or order of any court or any Governmental Rule):
(a) Lessee shall fail to pay:
(i) Basic Rent, Casualty Value or the payment of Supplemental Rent
specified in subsection 3.2(b) within ten days after the date the same
become due, or
(ii) Supplemental Rent (other than that specified in (i) above) or
any other amount payable hereunder within
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fifteen days after notice of such failure from the Lessor or the
Indenture Trustee; or
(b) Lessee shall fail to maintain insurance required to be maintained
pursuant to Section 13; or
(c) Lessee shall fail to perform or observe any other covenant or
agreement to be performed or observed by it under this Lease or any of the
Operative Documents (including, without limitation, any covenant or
agreement that is incorporated by reference in this Lease or any of the
Operative Documents to be performed or observed by Lessee) and such failure
shall continue for a period of thirty days after there shall have been
given to Lessee by Lessor, Owner Participant or Indenture Trustee a notice
specifying such failure and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder; provided, however, that the
----------------- -------- -------
continuation of such a failure for thirty days after such notice shall not
constitute a Lease Event of Default if (i) such default is curable but
cannot be cured within thirty days, (ii) Lessee is diligently pursuing the
cure of such default, and (iii) such default does not impair in any
material respect the rights of the Owner Participant or the Owner Trustee
in the Leased Assets or under the Operative Documents or the security
interest of the Indenture Trustee created pursuant to the Indenture; or
(d) any representation or warranty made by Lessee in any Operative
Document (other than the Tax Indemnity Agreement) shall prove to have been
incorrect in any material respect when made and shall remain material and
uncured for a period of thirty days after there shall have been given to
Lessee by Lessor, Owner Participant or Indenture Trustee a notice
specifying such misrepresentation and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder, provided,
----------------- --------
however, that the continuation of such a misrepresentation for thirty days
-------
after such notice shall not constitute a Lease Event of Default if (i) such
default is curable but cannot be cured within thirty days, (ii) Lessee is
diligently pursuing the cure of such default, and (iii) such default does
not impair in any material respect the rights of the Owner Participant or
the Owner Trustee in the Leased Assets or under the Operative Documents or
the security interest of the Indenture Trustee created pursuant to the
Indenture; or
(e) Lessee 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,
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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 or taking possession by any such official or agency 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 an involuntary case or other proceeding
shall be commenced against Lessee seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian or other similar
official or agency of it or any substantial part of its property, and such
involuntary case or other proceeding shall remain undismissed and unstayed
for a period of 90 days.
SECTION 17. REMEDIES.
--------
17.1. In General. Upon the occurrence of any Lease Event of Default
----------
and so long as the same shall be continuing, Lessor, at its option, may declare
this Lease to be in default by written notice to such effect given to Lessee,
and at any time thereafter Lessor may, to the extent permitted by applicable
law, exercise one or more of the following remedies, as Lessor in its sole
discretion shall elect:
(a) Lessor, by notice to Lessee, may rescind or terminate this Lease;
(b) Lessor may demand that Lessee, and upon the written demand of
Lessor, Lessee shall, surrender the Leased Assets promptly to Lessor in the
manner and condition required by, and otherwise in accordance with the
provisions of, this Lease as if the Leased Assets were being returned at
the end of the Lease Term and Lessor shall not be liable for the
reimbursement of Lessee for any costs and expenses incurred by Lessee in
connection therewith;
(c) Lessor may sell all or any portion of or an undivided interest in
the Leased Assets, in a commercially reasonable manner, at public or
private sale, as Lessor may determine, free and clear of any rights of
Lessee in the Leased Assets and without any duty to account to Lessee with
respect to such action or inaction or any proceeds with respect thereto
(except to the extent required by paragraph (e) below if Lessor shall elect
to exercise its rights thereunder), in which event Lessee's obligation to
pay Basic Rent hereunder with respect to the interest sold for periods
commencing after the date of such sale shall be terminated (except to the
extent that Basic Rent is to be included in
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computations under paragraph (e) or (f) below if Lessor shall elect to
exercise its rights thereunder);
(d) Lessor may hold or lease to others all or any portion of or an
undivided interest in the Leased Assets as Lessor in its sole discretion
may determine, free and clear of any rights of Lessee and without any duty
to account to Lessee with respect to such action or inaction or for any
proceeds with respect to such action or inaction, except that Lessee's
obligation to pay Basic Rent for periods commencing after Lessee shall have
been deprived of use of the Facilities or an undivided interest therein
pursuant to this paragraph (d) shall be reduced by the net proceeds, if
any, received by Lessor from leasing the Facilities or an interest therein,
to any Person other than Lessee for the same periods or any portion
thereof;
(e) Whether or not Lessor shall have exercised or thereafter at any
time shall exercise its rights under paragraph (a), (b), (c) or (d) above,
Lessor may demand, by written notice to Lessee specifying a payment date
which shall be a Basic Rent Payment Date (or, if the date of such notice is
prior to the Basic Lease Commencement Date, such payment date may be the
Basic Lease Commencement Date) not earlier than five days after the date of
such notice, that Lessee pay to Lessor, and Lessee shall pay to Lessor, on
the Basic Rent Payment Date (or the Basic Lease Commencement Date, if
applicable) specified in such notice, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the Basic Rent due after the Basic
Rent Payment Date (or the Basic Lease Commencement Date, if applicable)
specified in such notice), any unpaid Rent due and attributable to the use
of the Facilities by Lessee through and including the Basic Rent Payment
Date (or the Basic Lease Commencement Date, if applicable) specified in
such notice (excluding any amount of Basic Rent due on such date which
would represent a payment in advance) plus whichever of the following
amounts Lessor, in its sole discretion, shall specify in such notice
(together with interest on such amount at the Stipulated Interest Rate from
the Basic Rent Payment Date (or the Basic Lease Commencement Date, if
applicable) specified in such notice to the date of actual payment):
(i) an amount equal to the excess, if any, of Termination
Value, computed as of the Basic Rent Payment Date (or the Basic Lease
Commencement Date, if applicable) specified in such notice, over the
Fair Market Rental Value of the Facilities during the remaining Lease
Term, after discounting such Fair Market Rental Value semiannually to
present value as of the Basic Rent Payment Date (or the Basic Lease
-44-
<PAGE>
Commencement Date, if applicable) specified in such notice at a rate
of 10.75% per annum; or
(ii) an amount equal to the excess, if any, of such
Termination Value over the Fair Market Sale Value of the Facilities as
of the Basic Rent Payment Date (or the Basic Lease Commencement Date,
if applicable) specified in such notice; or
(iii) an amount equal to the highest of (A) such Termination
Value, (B) such discounted Fair Market Rental Value and (C) such Fair
Market Sale Value, and, in this event, upon full payment by Lessee of
all sums due hereunder, Lessor shall exercise its best efforts
promptly to sell the Facilities and pay over to Lessee the net
proceeds thereof up to the amount set forth in (A), (B) or (C) above
actually paid by Lessee to Lessor; or
(iv) an amount equal to the excess of (A) the present value as
of the Basic Rent Payment Date (or the Basic Lease Commencement Date,
if applicable) specified in such notice of all installments of Basic
Rent until the end of the Basic Term, discounted semiannually at a
rate of 10.75% per annum, over (B) the present value as of such Basic
Rent Payment Date (or the Basic Lease Commencement Date, if
applicable) of the Fair Market Rental Value of the Facilities until
the end of the Basic Term, discounted semiannually at a rate of 10.75%
per annum; or
(f) if Lessor shall have sold all of the Facilities, as a whole or by
a series of sales of undivided interests, pursuant to paragraph (c) above,
Lessor, in lieu of exercising its rights under paragraph (e) above with
respect to the Facilities, may, if it shall so elect, demand that Lessee
pay to Lessor and Lessee shall pay to Lessor on the date of such sale, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of
Basic Rent due for periods commencing after the next Basic Rent Payment
Date (or the Basic Lease Commencement Date if such date of sale is prior to
the Basic Lease Commencement Date) following the date of such sale), any
unpaid Rent due and attributable to the use of the Facilities by Lessee
through such Basic Rent Payment Date (or the Basic Lease Commencement Date,
if applicable), plus the amount of any deficiency between Termination
Value, computed as of such Basic Rent Payment Date (or the Basic Lease
Commencement Date, if applicable), and the net proceeds of such sale,
together with interest at the Stipulated Interest Rate on the amount of
such Rent and such deficiency from the date of such sale until the date of
actual payment; or
-45-
<PAGE>
(g) Lessor may exercise any other right or remedy that may be
available to it under applicable law or proceed by appropriate court action
to enforce the terms hereof or to recover damages for the breach hereof.
17.2. No Release. No rescission or termination of this Lease, in
----------
whole or in part, or repossession of the Leased Assets or exercise of any remedy
under subsection 17.1 shall, except as specifically provided therein, relieve
Lessee of any of its liabilities and obligations hereunder. In addition, Lessee
shall be liable, except as otherwise provided above, for any and all unpaid Rent
due hereunder before, after or during the exercise of any of the foregoing
remedies, including all reasonable legal fees and other costs and expenses
incurred by Lessor, Owner Participant or Indenture Trustee by reason of the
occurrence of any Lease Event of Default or the exercise of Lessor's remedies
with respect thereto and including all costs and expenses incurred in connection
with the return of the Facilities in the manner and condition required by, and
otherwise in accordance with the provisions of, this Lease as if the Facilities
were being returned at the end of the Lease Term. At any sale of the Facilities
or any part thereof with or without any of its interest under the Support
Agreements pursuant to subsection 17.1, Lessor, Owner Participant, Indenture
Trustee or any Bondholder may bid for and purchase such property.
17.3. Remedies Cumulative. To the extent permitted by applicable
-------------------
law, no remedy under subsection 17.1 is intended to be exclusive, but each shall
be cumulative and in addition to any other remedy provided under subsection 17.1
or otherwise available to Lessor at law or in equity or otherwise. No express
or implied waiver by Lessor of any Lease Default or Lease Event of Default
hereunder shall in any way be, or be construed to be, a waiver of any future or
subsequent Lease Default or Lease Event of Default. The failure or delay of
Lessor in exercising any rights granted it hereunder upon any occurrence of any
of the contingencies set forth herein shall not constitute a waiver of any such
right upon the continuation or recurrence of any such contingencies or similar
contingencies and any single or partial exercise of any particular right by
Lessor shall not exhaust the same or constitute a waiver of any other right
provided herein. To the extent permitted by applicable law, Lessee hereby
waives any rights now or hereafter conferred by statute or otherwise which may
require Lessor to sell, lease or otherwise use the Leased Assets in mitigation
of Lessee's damages as set forth in subsection 17.1 or which may otherwise limit
or modify any of Lessor's rights and remedies provided in such subsection.
SECTION 18. NOTICES.
-------
All communications and notices provided for in this Lease shall be in
writing and given in person or by courier or by
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<PAGE>
means of telex, telecopy or other wire transmission (with provision for
assurance of receipt in a manner typical with respect to communications of that
type), or mailed by first class mail, addressed to the respective addresses set
forth in Schedule 6 to the Participation Agreement; or in each case at such
other address as the Person entitled thereto shall from time to time designate
by notice in writing to Lessee and Lessor. All such communications and notices
given in such manner shall be effective on the date of receipt (or when
proffered, if receipt is refused) of such communication or notice.
SECTION 19. COVENANTS.
---------
Lessee shall comply with its covenants contained in each Operative
Document to which it is a party, which covenants are incorporated herein by this
reference as fully as if set forth herein.
SECTION 20. RIGHT TO PERFORM FOR LESSEE.
---------------------------
Subject to Section 8.09 of the Indenture, if Lessee shall fail to make
any payment to be made by it hereunder or shall fail to perform or comply with
any of its other agreements contained herein or in any Support Agreement, Lessor
may, but shall not be obligated to, make such payment or perform or comply with
such agreement, and the amount of such payment and the amount of all costs and
expenses (including, without limitation, reasonable attorneys' and other
professionals' fees and expenses) incurred in connection with such payment or
the performance of or compliance with such agreement, as the case may be,
together with interest thereon at the Stipulated Interest Rate, shall be deemed
Supplemental Rent, payable by Lessee upon demand.
SECTION 21. MISCELLANEOUS.
-------------
21.1. Amendments in Writing. Neither this Agreement nor any of the
---------------------
terms hereof may be amended, supplemented, waived or modified orally, but only
by an instrument in writing signed by the party against which enforcement of
such change is sought.
21.2. Survival of Agreements. The representations, warranties and
----------------------
indemnities of the parties provided for in the Operative Documents, and the
parties' obligations under any and all thereof, shall survive the execution and
delivery of this Lease, the investment by Owner Participant, any disposition of
any interest of Owner Participant or Lessor in the Facilities and the expiration
or other termination of any of the other Operative Documents, and shall be and
continue in effect notwithstanding any investigation made by any of such parties
and the fact that compliance with any of the other terms, provisions or
conditions of any of the Operative Documents shall have been waived.
-47
<PAGE>
21.3. Severability of Provisions. Any provision of this Lease which
--------------------------
may be determined by competent authority to be prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, Lessee hereby
waives any provision of law which renders any provision hereof prohibited or
unenforceable in any respect.
21.4. True Lease. This Lease shall constitute an agreement of lease
----------
and nothing herein shall be construed as conveying to Lessee any right, title or
interest in the Facilities except as lessee only.
21.5. GOVERNING LAW; CONSENT TO JURISDICTION. THIS LEASE SHALL BE
--------------------------------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
EXCEPT TO THE EXTENT THAT THE LAWS OF ANOTHER JURISDICTION ARE MANDATORILY
APPLICABLE THERETO. TO THE EXTENT PERMITTED BY LAW, ANY STATE, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS LEASE, ANY OF THE OTHER OPERATIVE
DOCUMENTS, OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY, MAY BE INSTITUTED
IN ANY FEDERAL COURT OF COMPETENT JURISDICTION IN THE COUNTY OF NEW YORK AND
STATE OF NEW YORK, AND LESSEE WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING,
INCLUDING AN OBJECTION OF FORUM NON CONVENIENS, AND IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, PROVIDED,
--------
HOWEVER, THAT NOTHING CONTAINED IN THIS SUBSECTION 21.5 SHALL BE CONSTRUED TO
-------
PROHIBIT LESSEE FROM INITIATING AND MAINTAINING ANY SUIT, ACTION OR PROCEEDING
IN ANY OTHER COURT OR FORUM.
21.6. Headings. The division of this Lease into sections, the
--------
provision of a table of contents and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Lease.
21.7. Counterpart Execution. This Lease may be executed in any
---------------------
number of counterparts and by each of the parties hereto on separate
counterparts, all such counterparts together constituting but one and the same
instrument, with the counterparts delivered to Indenture Trustee pursuant to the
Indenture being deemed the "Original" and all other counterparts being deemed
duplicates.
21.8. Successors and Assigns. This Lease, including all agreements,
----------------------
covenants, representations and warranties, shall be binding upon and inure to
the benefit of Lessor and its
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<PAGE>
successors and permitted assigns and Lessee and its successors and permitted
assigns.
21.9. Immunities; Satisfaction of Undertakings. Anything herein to
----------------------------------------
the contrary notwithstanding, all and each of the representations, warranties,
undertakings and agreements herein made on the part of Lessor are made and
intended not as personal representations, warranties, undertakings and
agreements by or for the purpose or with the intention of binding Lessor
personally but are made and intended for the purpose of binding only the Trust
Estate, and this Lease is executed and delivered by Lessor solely in the
exercise of the powers expressly conferred upon it as trustee under the Trust
Agreement; and no personal liability or responsibility is assumed hereunder by
or at any time shall be enforceable against Lessor or any successor in trust or
Owner Participant on account of any representation, warranty, undertaking or
agreement hereunder of Lessor, either expressed or implied, all such personal
liability, if any, being expressly waived by Lessee; provided, however, that (i)
-------- -------
Lessee or any Person claiming by, through or under it, making claim hereunder,
may look to the Trust Estate for satisfaction of such liability or
responsibility and (ii) Lessor or its successor in trust, as applicable, shall
be personally liable for its own gross negligence and willful misconduct.
Neither Owner Participant nor any Bondholder shall be liable for any matter
hereunder except to the extent provided herein. Each time a successor Owner
Trustee is appointed in accordance with the terms of the Trust Agreement, such
successor Owner Trustee shall, without further act, succeed to all the rights,
duties, immunities and obligations of its predecessor Owner Trustee hereunder
and under the other Operative Documents, and the predecessor Owner Trustee shall
be released from all further duties and obligations hereunder and under the
other Operative Documents, all without the necessity of any consent or approval
by Lessee and without in any way altering the terms of this Lease or such other
Operative Document or the obligations of Lessee hereunder or thereunder.
Lessee, at its expense, upon receipt of written notice of the appointment of a
successor Owner Trustee under the Trust Agreement, promptly shall make such
modifications and changes to reflect such appointment as reasonably shall be
requested by such successor Owner Trustee in such insurance policies, schedules,
certificates and other instruments relating to the Leased Assets or this Lease
or the other Operative Documents, all in form and substance reasonably
satisfactory to such successor Owner Trustee.
21.10. Payment for Appraisal Procedure. If Lessee gives tentative
-------------------------------
notice of election to renew the Lease or purchase the Leased Assets as provided
in subsection 5.3 or 6.2, Lessee shall pay all costs and fees of the Appraisal
Procedure; provided, that if Lessee gives irrevocable notice of election to
--------
renew the Lease or purchase the Leased Assets at Fair Market Sale
-49-
<PAGE>
Value or Fair Market Renewal Value, as the case may be, and thereafter so renews
or purchases the Leased Assets as provided in Section 5 or 6, each of Lessee and
Lessor (for the account of Owner Participant) shall be obligated hereunder to
pay the costs, fees and expenses of its appointed appraiser and the costs, fees
and expenses of the third appraiser, if any, and all other costs of the
Appraisal Procedure, shall be borne equally by Lessee and Lessor (for the
account of Owner Participant).
21.11. Further Assurances. The Lessee shall cause the Operative
------------------
Documents and any amendments and supplements to any of them (together with any
other instruments, financing statements, continuation statements, records or
papers necessary in connection therewith) to be recorded and/or filed and
rerecorded and/or refiled in each jurisdiction as and to the extent required by
law in order to, and shall take such other actions as may from time to time be
necessary to, establish, perfect and maintain (a) the Lessor's right, title and
interest in and to the Facilities, subject to no liens other than Permitted
Interest Liens and Permitted Project Liens, (b) for the benefit of Indenture
Trustee and the Holders of the Bonds, the first mortgage lien and first priority
security interest in the Trust Estate provided for in the Indenture and (c) each
of the other rights and interests created by the Indenture or by any other
Operative Document in Owner Participant, Lessor, Indenture Trustee, or any
Holder of a Bond. The Lessee will promptly and duly execute and deliver to each
of Owner Participant, Lessor, and Indenture Trustee such documents and
assurances and take such further action as the Lessor may from time to time
reasonably request in order to carry out more effectively the intent and purpose
of this Lease and to establish and protect the rights and remedies created or
intended to be created in favor of Lessor, to establish, perfect and maintain
Lessor's right, title and interest in and to the Facilities and, for the benefit
of Indenture Trustee and the Holders of the Bonds, the first mortgage lien and
first priority security interest in the Trust Estate provided for in the
Indenture, including, without limitation, if requested by Owner Participant,
Lessor or Indenture Trustee, at the expense of Lessee, the recording or filing
of counterparts or appropriate memoranda hereof, or of such financing statements
or other documents with respect hereto as Owner Participant, Lessor or Indenture
Trustee may from time to time reasonably request, and Lessor agrees promptly to
execute and deliver such of the foregoing financing statements or other
documents as may require execution by Lessor.
-50-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Lease to
be duly executed as of the date first above written.
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
but solely as owner trustee
under the Trust Agreement,
By: /s/ GILMAN N. GAUVIN
----------------------------
Title: VICE PRESIDENT
TEXAS UTILITIES ELECTRIC
COMPANY
By:
----------------------------
Title:
-51-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Lease to
be duly executed as of the date first above written.
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
but solely as owner trustee
under the Trust Agreement,
By:
----------------------------
Title:
TEXAS UTILITIES ELECTRIC
COMPANY
By: /s/ M.S. GREENE
----------------------------
Title: Vice President
-52-
<PAGE>
ACKNOWLEDGMENT
State of Connecticut
County of Hartford
This instrument was acknowledged before me on November 22, 1989, by
Gilman N. Gauvin, as Vice President of The Connecticut National Bank, a national
banking association, on behalf of said association.
/s/ Debra A. Johnson
-----------------------------------
Debra A. Johnson
Notary Public, State of Connecticut
My commission expires:
March 31, 1990
----------------------
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<PAGE>
ACKNOWLEDGMENT
State of Texas
County of Dallas
This instrument was acknowledged before me on December 6, 1989, by
M. S. Greene, as Vice President of Texas Utilities Electric Company, a Texas
corporation, on behalf of said corporation.
/s/ Jo Macdowell
-------------------------------------
Jo Macdowell
Notary Public, State of Texas
My commission expires:
June 27, 1992
----------------------
[NOTARY SEAL OF JO MACDOWELL APPEARS HERE]
-54-
<PAGE>
SCHEDULE 1
to
LEASE AGREEMENT
INSTALLMENTS OF BASIC RENT
<TABLE>
<CAPTION>
Percentage of Purchase Percentage of Purchase
Basic Rent Price of Permian Basin Basic Rent Price of Permian Basin
Payment Date and DeCordova Facilities Payment Date and DeCordova Facilities
<S> <C> <C> <C>
January 1, 1991 7.8803019 January 1, 2005 7.1997209
July 1, 1991 4.1666084 July 1, 2005 3.0532323
January 1, 1992 4.3766740 January 1, 2006 5.4900501
July 1, 1992 4.1565897 July 1, 2006 2.9952323
January 1, 1993 4.3866972 January 1, 2007 6.5545864
July 1, 1993 4.1456135 July 1, 2007 2.8591381
January 1, 1994 4.3976688 January 1, 2008 7.5826515
July 1, 1994 4.1336116 July 1, 2008 2.6792258
January 1, 1995 4.4096707 January 1, 2009 7.7625637
July 1, 1995 4.1204471 July 1, 2009 2.5033923
January 1, 1996 4.4228352 January 1, 2010 7.9302765
July 1, 1996 4.1060516 July 1, 2010 2.3176052
January 1, 1997 4.4372344 January 1, 2011 8.1241844
July 1, 1997 4.0902542 July 1, 2011 2.1192452
January 1, 1998 4.4530282 January 1, 2012 8.3225444
July 1, 1998 4.0729523 July 1, 2012 1.9074142
January 1, 1999 6.3138125 January 1, 2013 8.5343753
July 1, 1999 3.9660632 July 1, 2013 1.6811394
January 1, 2000 6.4750238 January 1, 2014 8.7606502
July 1, 2000 3.8463858 July 1, 2014 1.4367910
January 1, 2001 6.5947729 January 1, 2015 9.0049986
July 1, 2001 3.7152877 July 1, 2015 1.0417548
January 1, 2002 6.7260404 January 1, 2016 9.4000347
July 1, 2002 3.5716748 July 1, 2016 0.6054826
January 1, 2003 6.8698827 January 1, 2017 9.8363070
July 1, 2003 3.4143503 July 1, 2017 0.6655690
January 1, 2004 7.0272535 January 1, 2018 9.7762205
July 1, 2004 3.2420148 July 1, 2018 0.7251243
</TABLE>
-55-
<PAGE>
SCHEDULE 2
to
LEASE AGREEMENT
CASUALTY VALUES
<TABLE>
<CAPTION>
Percentage of Purchase Percentage of Purchase
Basic Rent Price of Permian Basin Basic Rent Price of Permian Basin
Payment Date and DeCordova Facilities Payment Date and DeCordova Facilities
<S> <C> <C> <C>
July 1, 1990 107.74179 January 1, 2005 101.66089
January 1, 1991 112.52633 July 1, 2005 97.59726
July 1, 1991 109.80445 January 1, 2006 97.73353
January 1, 1992 110.76876 July 1, 2006 95.32903
July 1, 1992 111.49041 January 1, 2007 95.45668
January 1, 1993 112.38099 July 1, 2007 91.86024
July 1, 1993 112.98566 January 1, 2008 92.01029
January 1, 1994 113.78314 July 1, 2008 87.22029
July 1, 1994 114.27647 January 1, 2009 87.40090
January 1, 1995 114.99077 July 1, 2009 82.26686
July 1, 1995 115.37908 January 1, 2010 82.46510
January 1, 1996 116.01467 July 1, 2010 76.98930
July 1, 1996 116.29597 January 1, 2011 77.20454
January 1, 1997 116.84902 July 1, 2011 71.34865
July 1, 1997 117.01411 January 1, 2012 71.58168
January 1, 1998 117.47749 July 1, 2012 65.32903
July 1, 1998 117.51597 January 1, 2013 65.58142
January 1, 1999 117.88190 July 1, 2013 58.90536
July 1, 1999 115.85819 January 1, 2014 59.17880
January 1, 2000 116.14905 July 1, 2014 52.05185
July 1, 2000 113.78310 January 1, 2015 52.35204
January 1, 2001 114.01479 July 1, 2015 44.79204
July 1, 2001 111.33927 January 1, 2016 45.31638
January 1, 2002 111.51278 July 1, 2016 37.16804
July 1, 2002 108.50453 January 1, 2017 37.95738
January 1, 2003 108.62102 July 1, 2017 29.18084
July 1, 2003 105.25530 January 1, 2018 29.72267
January 1, 2004 105.31907 July 1, 2018 20.72512
July 1, 2004 101.59590
</TABLE>
-56-
<PAGE>
EXHIBIT 4(b)(ii)
LEASE SUPPLEMENT NO. 1
LEASE SUPPLEMENT NO. 1 dated as of December 31, 1990, to Lease
Agreement dated as of December 1, 1989 (the "Original Lease"), between THE
CONNECTICUT NATIONAL BANK, a national banking association, not in its individual
capacity but solely as Owner Trustee under the Trust Agreement dated as of
December 1, 1988 with Philip Morris Capital Corporation (formerly known as
Philip Morris Credit Corporation), a Delaware corporation, and supplemented by
the Trust Agreement Supplement No. 1 dated as of November 28, 1989
(collectively, the "Trust Agreement"), as Lessor, and TEXAS UTILITIES ELECTRIC
COMPANY, a Texas corporation, as Lessee.
WHEREAS, the Original Lease was recorded in the Real Property Records
of Hood County, Texas, on the 6th day of December, 1989, as Instrument No. 10703
in volume No. 1271, Page No. 075 and in the Real Property Records of Ward
County, Texas on the 6th day of December, 1989 as Instrument No. 3190 in Book
No. 569, Page 529;
WHEREAS, the Original Lease provides that in the event any of the
assumptions set forth in Part I or Part II of Schedule 1 to the Participation
Agreement proves to have been incorrect, then in such case (a) the percentages
for Basic Rent and Casualty Value set forth, respectively, in Schedules 1 and 2
to the Original Lease shall be adjusted so as to preserve the Owner
Participant's Net After-Tax Return, and (b) the Lessor and the Lessee shall
execute a supplement to the Original Lease amending Schedules 1 and 2 thereof to
set forth such recalculated percentages for Basic Rent and Casualty Value,
respectively; and
WHEREAS, (i) the terms of the Initial Series Bonds are other than as
assumed as set forth in Part I of Schedule 1 to the Participation Agreement and
(ii) transaction expenses paid by the Owner Trustee with funds provided by the
Owner Participant are other than as assumed as set forth in Part II of Schedule
1 to the Participation Agreement;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, the Lessor and the Lessee hereby agree as follows:
1. Capitalized terms used in this Lease Supplement and not defined
herein shall have the respective meanings assigned to them in the Original
Lease.
<PAGE>
2. The percentages for Basic Rent set forth in Schedule 1 hereto and
the Casualty Value percentages set forth in Schedule 2 hereto shall replace any
prior Schedules 1 and 2 of the Original Lease, respectively, for all purposes.
3. This Lease Supplement shall be construed as supplemental to the
Lease and shall form a part thereof and the Lease is hereby incorporated by
reference herein and each is hereby ratified, approved and confirmed.
4. This Lease Supplement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
5. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE
AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT TO THE EXTENT THAT THE
LAWS OF ANOTHER JURISDICTION ARE MANDATORILY APPLICABLE THERETO. TO THE EXTENT
PERMITTED BY LAW, ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS LEASE SUPPLEMENT, ANY OF THE OTHER OPERATIVE DOCUMENTS, OR ANY TRANSACTION
CONTEMPLATED HEREBY OR THEREBY, MAY BE INSTITUTED IN ANY FEDERAL COURT OF
COMPETENT JURISDICTION IN THE COUNTY OF NEW YORK AND STATE OF NEW YORK, AND
LESSEE WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING, INCLUDING AN OBJECTION OF
FORUM NON CONVENIENS, AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH
COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, PROVIDED, HOWEVER, THAT NOTHING
-------- -------
CONTAINED IN THIS PARAGRAPH 4 SHALL BE CONSTRUED TO PROHIBIT LESSEE FROM
INITIATING AND MAINTAINING ANY SUIT, ACTION OR PROCEEDING IN ANY OTHER COURT OR
FORUM.
6. The owner Participant hereby authorizes and directs the Owner
Trustee, pursuant to Section 6.2 of the Trust Agreement, to execute and deliver
this Lease Supplement and perform the terms of the Original Lease, as amended by
this Lease Supplement.
<PAGE>
IN WITNESS WHEREOF, the Lessor and Lessee have caused this Lease
Supplement to by duly executed as of the date and year set forth in the opening
paragraph hereof.
Lessor
THE CONNECTICUT NATIONAL BANK
Not in its individual capacity but
solely as Owner Trustee under the Trust
Agreement
(CORPORATE SEAL)
Attest:/s/ Robert L. Reynolds By:/s/ Gilman N. Gauvin
--------------------------- ---------------------------
Name: Robert L. Reynolds Name: Gilman N. Gauvin
Title: Corporate Trust Title: Vice President
Officer
Lessee
TEXAS UTILITIES ELECTRIC COMPANY
(CORPORATE SEAL)
Attest:/s/ G.A. Engelland By:/s/ H. Dan Farell
--------------------------- ---------------------------
Name: G.A. Engelland Name: H. Dan Farell
Title: Assistant Title: Treasurer
Secretary
Consented and agreed to
PHILIP MORRIS CAPITAL CORPORATION
By:/s/ Michael J. Kinney
-------------------------------------
Name: Michael J. Kinney
Title: Vice President-Lease Financing
3
<PAGE>
STATE OF CONNECTICUT )
COUNTY OF HARTFORD ) SS.: HARTFORD
On this, the 27th day of December, 1990, before me, a Notary Public in
and for said County and State, personally appeared Gilman N. Gauvin and Robert
L. Reynolds, the Vice President and Corporate Trust Officer of THE CONNECTICUT
NATIONAL BANK, who acknowledged themselves to be duly authorized officers of THE
CONNECTICUT NATIONAL BANK, and that, as such officers, being authorized to do
so, they executed the foregoing instrument for the purposes therein contained by
signing and attesting the name of THE CONNECTICUT NATIONAL BANK.
/s/ Susan P. McNally
-------------------------------------------------------
Name: Susan P. McNally
Notary Public
My Commission Expires: March 31, 1995
Residing in Tollan County
[STAMP OF NOTARY PUBLIC APPEARS HERE]
-4-
<PAGE>
STATE OF TEXAS )
COUNTY OF DALLAS ) SS.:
On this, the 7th day of January, 1991, before me, a Notary Public in
and for said County and State, personally appeared H. Dan Farell, the Treasurer,
of TEXAS UTILITIES ELECTRIC COMPANY, who acknowledged himself to be duly
authorized officer of TEXAS UTILITIES ELECTRIC COMPANY, and that, as such
officer, being authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name of TEXAS
UTILITIES ELECTRIC COMPANY.
/s/ Jo Macdowell
-------------------------------------------------------
Jo Macdowell
Notary Public
[STAMP OF NOTARY PUBLIC APPEARS HERE]
-5-
<PAGE>
STATE OF NEW YORK )
COUNTY OF NEW YORK ) SS.:
On this, the 28th day of December, 1990, before me, a Notary Public in
and for said County and State, personally appeared Michael J. Kinney, the Vice
President of PHILIP MORRIS CAPITAL CORPORATION, who acknowledged himself to be
duly authorized officers of PHILIP MORRIS CAPITAL CORPORATION, and that, as such
officers, being authorized to do so, they executed the foregoing instrument for
the purposes therein contained by signing and attesting the name of PHILIP
MORRIS CAPITAL CORPORATION.
/s/ Laura Larangeira
-------------------------------------------------------
Name: Laura Larangeira
Notary Public
My Commission Expires: April 30, 1991
Residing in New York County
[STAMP OF NOTARY PUBLIC APPEARS HERE]
-6-
<PAGE>
BASIC RENT
SCHEDULE 1 TO LEASE SUPPLEMENT NO. 1
<TABLE>
<CAPTION>
Advance Arrears
Total Rent Rent Rent
Rent Date No. (%) (%) (%)
------------ --- ------------- ------------- ------------
<S> <C> <C> <C> <C>
1 Jul 1990 1 0.66298045 0.66298045
1 Jan 1991 2 7.44720161 7.44720161
1 Jul 1991 3 4.12978387 2.82079106 1.30899281
1 Jan 1992 4 4.33981971 4.33981971
1 Jul 1992 5 4.11985968 2.46054336 1.65931632
1 Jan 1993 6 4.34996720 4.34996720
1 Jul 1993 7 4.10898710 2.09960658 2.00938051
1 Jan 1994 8 4.36060000 4.36060000
1 Jul 1994 9 4.09709839 1.73737522 2.35972317
1 Jan 1995 10 4.37308405 4.37308405
1 Jul 1995 11 4.08405806 1.37468360 2.70937646
1 Jan 1996 12 4.38585018 4.38585018
1 Jul 1996 13 4.06979839 1.01045421 3.05934417
1 Jan 1997 14 4.40098118 4.40098118
1 Jul 1997 15 4.05415000 0.64584798 3.40830202
1 Jan 1998 16 4.41687401 4.41687401
1 Jul 1998 17 4.03701129 0.28003529 3.75697600
1 Jan 1999 18 6.27787151 6.27787151
1 Jul 1999 19 3.93113065 3.93113065
1 Jan 2000 20 6.44009122 6.44009122
1 Jul 2000 21 3.81265822 3.81258226
1 Jan 2001 22 6.56096935 6.56096935
1 Jul 2001 23 3.68272097 3.68272097
1 Jan 2002 24 6.69347366 6.69347366
1 Jul 2002 25 3.54046290 0.47872203 3.06174087
1 Jan 2003 26 6.83867079 6.83867079
1 Jul 2003 27 3.38462258 3.38462258
1 Jan 2004 28 6.99752581 6.99752581
1 Jul 2004 29 3.21391290 0.50348511 2.71042779
1 Jan 2005 30 7.17161900 7.17161900
1 Jul 2005 31 3.02691129 3.02691129
1 Jan 2006 32 7.44228744 7.44228744
1 Jul 2006 33 2.96941129 2.96941129
1 Jan 2007 34 7.86721305 7.86721305
1 Jul 2007 35 2.83449032 2.83449032
1 Jan 2008 36 8.03954096 8.03954096
1 Jul 2008 37 2.65612903 2.65612903
1 Jan 2009 38 8.21442031 8.21442031
1 Jul 2009 39 2.48181129 2.48181129
1 Jan 2010 40 8.39723527 8.39723527
1 Jul 2010 41 2.29762581 2.29762581
1 Jan 2011 42 8.59215409 8.59215409
1 Jul 2011 43 2.10097581 2.10097581
1 Jan 2012 44 8.80030409 8.80030409
1 Jul 2012 45 1.89097097 1.89097097
1 Jan 2013 46 9.02263948 9.02263948
1 Jul 2013 47 1.66664677 1.66664677
1 Jan 2014 48 9.26239284 9.26239284
1 Jul 2014 49 1.42440484 1.42440484
1 Jan 2015 50 9.63327506 9.63327506
1 Jul 2015 51 1.03277419 1.03277419
1 Jan 2016 52 10.0601084 10.06010848
1 Jul 2016 53 0.60026290 0.60026290
1 Jan 2017 54 10.23442685 10.23442685
1 Jul 2017 55 0.66450323 0.19691468 0.46758855
1 Jan 2018 56 8.06863654 8.06863654
1 Jul 2018 57 2.43646418 2.43646418
</TABLE>
-7-
<PAGE>
<TABLE>
<CAPTION>
CASUALTY VALUES Schedule 2 to
Lease Supple-
ment No. 1
-------------
Date Stip. Loss
Value
<S> <C>
Jul 1 1990 108.74256
Jan 1 1991 113.56734
Jul 1 1991 111.32239
Jan 1 1992 112.37329
Jul 1 1992 113.17581
Jan 1 1993 114.15238
Jul 1 1993 114.84521
Jan 1 1994 115.73759
Jul 1 1994 116.32909
Jan 1 1995 117.14797
Jul 1 1995 117.64380
Jan 1 1996 118.39385
Jul 1 1996 118.79313
Jan 1 1997 119.47089
Jul 1 1997 119.76407
Jan 1 1998 120.36335
Jul 1 1998 120.54173
Jan 1 1999 121.05582
Jul 1 1999 119.18924
Jan 1 2000 119.64547
Jul 1 2000 117.45243
Jan 1 2001 117.86508
Jul 1 2001 115.37898
Jan 1 2002 115.75048
Jul 1 2002 112.94976
Jan 1 2003 113.28297
Jul 1 2003 110.14465
Jan 1 2004 110.44335
Jul 1 2004 106.95953
Jan 1 2005 107.28151
Jul 1 2005 103.50153
Jan 1 2006 103.93311
Jul 1 2006 99.68659
Jan 1 2007 100.01899
Jul 1 2007 95.19921
Jan 1 2008 95.51213
Jul 1 2008 90.37170
Jan 1 2009 90.71407
Jul 1 2009 85.22337
Jan 1 2010 85.57426
Jul 1 2010 79.71589
Jan 1 2011 80.07273
Jul 1 2011 73.82207
Jan 1 2012 74.18473
Jul 1 2012 67.51466
Jan 1 2013 67.88305
Jul 1 2013 60.76455
Jan 1 2014 61.13858
Jul 1 2014 53.53980
Jan 1 2015 53.92310
Jul 1 2015 45.76986
Jan 1 2016 46.35272
Jul 1 2016 37.55659
Jan 1 2017 38.37715
Jul 1 2017 29.21279
Jan 1 2018 29.77242
Jul 1 2018 22.43646
</TABLE>
-8-
<PAGE>
EXHIBIT 4(b)(iii)
LEASE AGREEMENT SUPPLEMENT NO. 2
LEASE AGREEMENT SUPPLEMENT NO. 2, dated as of __________, 1995, is
made between SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity but solely as owner trustee under
the Trust Agreement dated as of December 1, 1988, as amended and supplemented,
as Lessor, and TEXAS UTILITIES ELECTRIC COMPANY, a corporation organized and
operating under the laws of the State of Texas, as Lessee.
RECITALS.
--------
A. Lessor and Lessee have executed and delivered a Lease Agreement
dated as of December 1, 1989, as supplemented by a Lease Agreement Supplement
No. 1, dated as of December 31, 1990 and this Lease Supplement No. 2 (the Lease
Agreement as so supplemented by Supplement No. 1and this Supplement No. 2, and
as hereafter amended, modified or supplemented from time to time, being
hereinafter referred to as the "Lease"); and
-----
B. The Lease is still in full force and effect; and
C. The Lease provides for the execution and delivery of supplements
thereto (herein called a "Lease Supplement") to reflect any adjustments made
----------------
pursuant to Section 4 of the Lease.
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Subsection 3.1(d) of the Lease is hereby amended to read, in its
entirety, as follows: "(d) [Intentionally Left Blank]".
2. Section 4.5 of the Lease is hereby amended by adding the following
language at the end of such Section after the word "Rent" and before the ".":
"which adjustments shall include, without limitation, any adjustments necessary
to reflect the fact that the pricing assumptions set forth in Schedule 1 to the
Participation Agreement as adopted by a supplement to the Participation
Agreement entered into at the time of the pricing of such refinancing shall
thereafter prove to be incorrect."
3. Section 6.1(c) of the Lease is hereby amended by adding the
following language of the end thereof: "So long as any 1995 Series Bonds are
Outstanding Lessee shall
1
<PAGE>
not be entitled to purchase the Facilities pursuant to this subsection 6.1(c)
unless Lessee shall have assumed the 1995 Series Bonds in accordance with
subsection 6.3 hereof and Section 2.16 of the Indenture."
4. Appendix A to the Lease is hereby amended to read, in its entirety,
as set forth in Appendix A attached hereto.
5. Schedules 1 and 2 to the Lease are hereby amended to read, in their
entirety, as set forth in Schedules 1 and 2, respectively, attached hereto.
6. This Lease Supplement shall be construed as supplemental to the
Lease and shall form a part thereof and the Lease is hereby incorporated by
reference herein and each is hereby ratified, approved and confirmed.
7. This Lease Supplement may be executed in separate counterparts,
each of which when so executed and delivered is an original, but all such
counterparts shall together constitute but one and the same supplement.
2
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Lease
Supplement No. 2 to be duly executed as of the date first above written.
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity but solely as owner
trustee under the Trust Agreement
By:___________________________
Name:
Title:
TEXAS UTILITIES ELECTRIC COMPANY
By:_______________________
Name:
Title:
3
<PAGE>
ACKNOWLEDGMENT
--------------
STATE OF CONNECTICUT)
) ss.:
COUNTY OF HARTFORD )
On this ___ day of ____, 1995 before me, a Notary Public duly
commissioned, qualified and acting within and for the County and State
aforesaid, appeared in person the within named ___________, of SHAWMUT BANK
CONNECTICUT, NATIONAL ASSOCIATION, to me personally known, who stated that he
was duly autho rized in his capacity to execute the foregoing instrument for and
in its name and on its behalf, and further stated and acknowledged that he had
so signed, executed and delivered the foregoing instrument, as Shawmut Bank
Connecticut, National Association, not in its individual capacity but as Owner
Trustee under the Trust Agreement, for the consideration, use and purposes
therein mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal.
____________________________
(Notary Public)
My Commission Expires:
(SEAL)
<PAGE>
ACKNOWLEDGMENT
--------------
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On this ___ day of ________, 1995 before me, a Notary Public duly
commissioned, qualified and acting within and for the County and State
aforesaid, appeared in person the within named __________________ of TEXAS
UTILITIES ELECTRIC COMPANY, to me personally known, who stated that he was duly
authorized in his capacity to execute the foregoing instrument for and in its
name and on its behalf, and further stated and acknowledged that he had so
signed, executed and delivered the foregoing instrument, as TEXAS UTILITIES
ELECTRIC COMPANY, for the consideration, uses and purposes therein mentioned and
set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal.
____________________________
(Notary Public)
My Commission Expires:
(SEAL)
<PAGE>
APPENDIX A
[DEFINITIONS]
<PAGE>
SCHEDULE 1
[INSTALLMENTS OF BASIC RENT]
<PAGE>
SCHEDULE 2
[CASUALTY VALUES]
<PAGE>
EXHIBIT 4(c)(i)
================================================================================
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
among
THE CONNECTICUT NATIONAL BANK,
Owner Trustee
THE FIRST NATIONAL BANK OF CHICAGO,
Original Indenture Trustee
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
Indenture Trustee
PHILIP MORRIS CREDIT CORPORATION,
Owner Participant
MESQUITE POWER CORPORATION,
Seller
and
TEXAS UTILITIES ELECTRIC COMPANY,
Lessee
-----------------------
Dated as of November 28, 1989
------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
RECITALS....................................................... 1
SECTION 1. Definitions.................................... 2
SECTION 2. Participation by, and Commitment of, Owner
Participant.................................. 3
2.1 Participation.................................. 3
2.2 Transaction Expenses........................... 4
2.3 Funding Date: Expiration of Commitments........ 4
2.4 Termination of Commitment by Lessee............ 5
2.5 Change in Tax Laws or Assumptions.............. 6
2.6 Changes in Schedules........................... 6
2.7 Notice of Proposed Legislation and
Regulations.................................. 7
SECTION 3. Purchase Sale, Financing and Lease of a
Facility..................................... 7
SECTION 4. Certificate of Purchase Price; Closing......... 8
4.1 Certificate of Purchase Price.................. 8
4.2 Closing........................................ 8
SECTION 5. Representations, Warranties and Agreements of
Owner Participant............................ 8
5.1 Representations, Warranties and Covenants...... 8
5.1.1 Due Organization............................... 8
5.1.2 Due Authorization; Enforceability.............. 8
5.1.3 No Violation................................... 8
5.1.4 Owner Participant's Liens; Performance Does
Not Create Liens............................. 9
5.1.5 Acquisition for Investment..................... 9
5.1.6 Securities Act................................. 9
5.1.7 ERISA.......................................... 9
5.1.8 Utility Status................................. 10
5.1.9 Holding Company Act............................ 10
5.2 Agreements..................................... 10
5.2.1 Discharge of Liens............................. 10
5.2.2 Transfers...................................... 11
SECTION 6. Representations, Warranties and Agreements of
Owner Trustee................................ 11
6.1 Representations and Warranties of Owner
Trustee...................................... 11
6.1.1 Due Organization............................... 11
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
6.1.2 Due Authorization; Enforceability; etc......... 11
6.1.3 No Violation................................... 12
6.1.4 Defaults....................................... 12
6.1.5 Litigation..................................... 12
6.1.6 Lessor's Liens; Performance Does Not Create
Liens........................................ 12
6.1.7 Securities Act................................. 13
6.1.8 Location of Chief Place of Business and Chief
Executive Office, etc. ...................... 13
6.1.9 Holding Company Act............................ 13
6.2 Agreements..................................... 13
6.2.1 Discharge of Liens............................. 13
6.2.2 Change of Chief Place of Business.............. 13
SECTION 7. Untitled....................................... 14
SECTION 8. Representations, Warranties and Agreements
of Indenture Trustee......................... 14
8.1 Representations and Warranties................. 14
8.1.1 Due Organization............................... 14
8.1.2 Due Authorization; Enforceability.............. 14
8.1.3 No Violation................................... 14
8.2 Discharge of Liens............................. 14
SECTION 9. Representations, Warranties and Agreements
of Lessee.................................... 15
9.1 Representations and Warranties................. 15
9.1.1 Due Incorporation, etc. ....................... 15
9.1.2 Authorization.................................. 15
9.1.3 Execution...................................... 15
9.1.4 No Violations, etc. ........................... 15
9.1.5 Governmental Actions........................... 16
9.1.6 Securities Act................................. 17
9.1.7 Title to Sites, etc. .......................... 17
9.1.8 Location of Chief Place of Business
and Chief Executive Office, etc. ............ 18
9.1.9 Financial Statements........................... 19
9.1.10 Litigation..................................... 19
9.1.11 Tax Returns.................................... 19
9.1.12 ERISA.......................................... 20
9.1.13 Regulation..................................... 21
9.1.14 Lease Default; Lease Event of Default;
Event of Loss................................ 22
9.1.15 Support Agreements............................. 22
9.1.16 Survey of Sites................................ 22
</TABLE>
-ii-
<PAGE>
<TABLE>
<S> <C> <C>
9.1.17 Appraisal Information.......................... 22
9.1.18 Title to Facilities, etc. ..................... 22
9.2 Agreements..................................... 23
9.2.1 Delivery of Documents.......................... 23
9.2.2 Further Assurances............................. 24
9.2.3 Maintenance of Corporate Existence, etc. ...... 25
9.2.4 Merger, Sale, etc. ............................ 25
9.2.5 Indemnity...................................... 27
9.2.6 Inspection..................................... 27
9.2.7 Bonds.......................................... 27
9.2.8 Certain Governmental Actions................... 27
9.2.9 Change of Principal Place of Business.......... 27
9.2.10 Certain Lessee Actions......................... 27
SECTION 10. Representations, Warranties and Agreements
of Seller.................................... 28
10.1 Representations and Warranties................. 28
10.1.1 Due Incorporation, etc. ....................... 28
10.1.2 Authorization.................................. 28
10.1.3 Execution...................................... 28
10.1.4 No Violations, etc. ........................... 28
10.1.5 Securities Act................................. 28
10.1.6 Litigation..................................... 29
10.2 Lessee Acting as Seller........................ 29
SECTION 11. Conditions Precedent........................... 29
11.1 Conditions Precedent to Participation and
Commitment on the Funding Dates.............. 29
11.1.1 Operative Documents............................ 30
11.1.2 Initial Series Bonds........................... 30
11.1.3 Certificate of Acceptance...................... 30
11.1.4 Lease Default; Lease Event of Default.......... 30
11.1.5 Filings and Recordings......................... 30
11.1.6 Representations and Warranties................. 31
11.1.7 Lessee's and Seller's Performance.............. 31
11.1.8 Opinions....................................... 32
11.1.9 Insurance...................................... 32
11.1.10 Taxes.......................................... 32
11.1.11 Certificate of Purchase Price.................. 32
11.1.12 Purchase Price................................. 33
11.1.13 Title Insurance................................ 33
11.1.14 Survey......................................... 33
11.1.15 Appraisal...................................... 33
11.1.16 Schedules...................................... 33
11.1.17 Certain Letter................................. 33
11.1.18 Certificates................................... 34
</TABLE>
-iii-
<PAGE>
<TABLE>
<S> <C> <C>
11.1.19 Other Evidence................................. 34
11.1.20 Event of Loss; Casualty........................ 34
11.1.21 Legality, etc.................................. 34
11.1.22 Tax In-Service Date............................ 34
11.1.23 Ratings........................................ 34
11.1.24 Registration Statement......................... 35
SECTION 12. Expenses Incurred After the Funding Date....... 35
SECTION 13. Brokerage and Finders' Fees and Commissions.... 35
SECTION 14. Survival of Representations and Warranties;
Binding Effect............................... 36
14.1 Survival....................................... 36
14.2 Binding Effect................................. 36
SECTION 15. Notices........................................ 36
SECTION 16. Transfer of Owner Participant's Interest....... 36
SECTION 17. Further Series of Bonds for Alterations,
etc. ........................................ 38
SECTION 18. Refinancing of Bonds........................... 39
SECTION 19. Public Offering of Bonds....................... 41
SECTION 20. Miscellaneous.................................. 42
20.1 Execution...................................... 42
20.2 GOVERNING LAW.................................. 42
20.3 Amendments, Supplements, etc................... 42
20.4 Headings....................................... 42
20.5 Separability................................... 42
20.6 Entire Agreement............................... 43
20.7 Obligations of Seller.......................... 43
</TABLE>
APPENDIX A Definitions
SCHEDULE 1
Annex A - Hypothetical Basic Rent
Annex B - Hypothetical Casualty Values
Annex C - Hypothetical Loan Amortization
SCHEDULE 2 Transmission Facilities
SCHEDULE 3 Governmental Actions
SCHEDULE 4 Title Exceptions
Annex A - Permian Basin Title Insurance Exception
Annex B - De Cordova Title Insurance Exception
SCHEDULE 5 Filings and Recordings
SCHEDULE 6 Addresses for Notices
-iv-
<PAGE>
SCHEDULE PBF Permian Basin Facility
Annex A - Included Property
Annex B - Excluded Property
SCHEDULE DCF De Cordova Facility
Annex A - Included Property
Annex B - Excluded Property
SCHEDULE PBS Permian Basin Site Description
Annex A - Permian Basin Common Site
- Included Property
- Excluded Property
Annex B - Permian Basin Turbine Site
SCHEDULE DCS De Cordova Site Description
Annex A - De Cordova Common Site
- Included Property
- Excluded Property
Annex B - De Cordova Turbine Site
EXHIBITS
EXHIBIT A Lease
EXHIBIT B Indenture
EXHIBIT C Bill of Sale
EXHIBIT D Ground Lease
EXHIBIT E Trust Agreement
EXHIBIT F Certificate of Acceptance
EXHIBIT G Tax Indemnity Agreement
EXHIBIT H Certificate of Purchase Price
EXHIBIT I Facility Agreement
-v-
<PAGE>
AMENDED AND RESTATED PARTICIPATION AGREEMENT
THIS AMENDED AND RESTATED PARTICIPATION AGREEMENT is dated as of
November 28, 1989, among THE CONNECTICUT NATIONAL BANK, a national banking
association, not in its individual capacity except to the extent set forth
herein but as trustee ("Owner Trustee"), AMERICAN NATIONAL BANK AND TRUST
-------------
COMPANY OF CHICAGO, a national banking association, in its individual capacity
to the extent set forth herein and as indenture trustee ("Indenture Trustee"),
-----------------
THE FIRST NATIONAL BANK OF CHICAGO, a national banking association ("Original
--------
Indenture Trustee"), PHILIP MORRIS CREDIT CORPORATION, a Delaware corporation
-----------------
("Owner Participant"), MESQUITE POWER CORPORATION, a Texas corporation
-------------------
("Seller"), and TEXAS UTILITIES ELECTRIC COMPANY, a Texas corporation ("TU
--
Electric" or "Lessee"), being an amendment and restatement of the Participation
-------- ------
Agreement, dated as of December 1, 1988, among Owner Trustee, Original Indenture
Trustee, Owner Participant, TU Electric and Seller.
RECITALS:
--------
A. TU Electric has entered into various purchase order contracts with
General Electric Company for the purchase by TU Electric of two combustion
turbine electric generating units to be located at the Permian Basin Site in
Ward County, Texas.
B. TU Electric has entered into various construction contracts for the
construction on the Permian Basin Site of the Permian Basin Facility (the
various purchase order contracts and construction contracts with respect to the
Permian Basin Facility are hereinafter referred to as the "Permian Basin
Contracts").
C. TU Electric has entered into various purchase order contracts with
General Electric Company for the purchase by TU Electric of four combustion
turbine electric generating units to be located at the De Cordova Site in Hood
County, Texas.
D. TU Electric has entered into various construction contracts for the
construction on the De Cordova Site of the De Cordova Facility (the various
purchase order contracts and construction contracts with respect to the De
Cordova Facility are hereinafter referred to as the "De Cordova Contracts").
E. The Permian Basin Facility is to be supported by the rights
described in the Permian Basin Support Agreements, which rights are necessary or
desirable for the use and operation of the Permian Basin Facility.
F. The De Cordova Facility is to be supported by the rights described
in the De Cordova Support Agreements, which rights are necessary or desirable
for the use and operation of the De Cordova Facility.
<PAGE>
G. Owner Trustee, Original Indenture Trustee, Owner Participant,
Seller and Lessee have entered into that certain Participation Agreement, dated
as of December 1, 1988 (the "Original Participation Agreement").
H. The parties to the Original Participation Agreement and Indenture
Trustee wish to make certain technical amendments thereto and to restate the
Original Participation Agreement herein.
I. Subject to the terms and conditions of this Agreement, on or prior
to the first Funding Date, (i) Owner Participant is willing to cause Owner
Trustee to enter into the Underwriting Agreement and (ii) TU Electric is willing
to enter into the Underwriting Agreement.
J. Subject to the terms and conditions of this Agreement, on the
Permian Basin Funding Date (i) Seller is willing to sell the Permian Basin
Facility to Owner Trustee, (ii) Owner Participant is willing to cause Owner
Trustee to enter into the Lease and the Permian Basin Support Agreements, to
purchase the Permian Basin Facility from Seller, to lease the Permian Basin
Facility to Lessee, to issue the Initial Series Bonds and to grant a security
interest to Indenture Trustee in the Indenture Estate pursuant to the Indenture,
and (iii) Lessee is willing to enter into the Lease and the Permian Basin
Support Agreements, and to lease the Permian Basin Facility from Owner Trustee.
K. Subject to the terms and conditions of this Agreement, on the De
Cordova Funding Date (i) Seller is willing to sell the De Cordova Facility to
Owner Trustee, (ii) Owner Participant is willing to cause Owner Trustee to enter
into the Lease and the De Cordova Support Agreements, to purchase the De Cordova
Facility from Seller, to lease the De Cordova Facility to Lessee, to issue the
Initial Series Bonds and to grant a security interest to Indenture Trustee in
the Indenture Estate pursuant to the Indenture and (iii) Lessee is willing to
enter into the De Cordova Support Agreements and to lease the De Cordova
Facility from Owner Trustee.
Accordingly, in consideration of the premises and of other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto hereby amend and restate the Original Participation Agreement, in its
entirety, as follows:
SECTION 1. Definitions. For the purposes hereof, capitalized terms
-----------
used herein shall have the meanings assigned to them in Appendix A hereto.
References in this Agreement to sections, subsections and paragraphs are to
sections, subsections and paragraphs in this Agreement unless otherwise
indicated.
-2-
<PAGE>
SECTION 2. Participation by, and Commitment of, Owner Participant.
------------------------------------------------------
2.1 Participation. (a) Subject to the terms and conditions of this
-------------
Agreement and in reliance on the representations and warranties contained herein
or made pursuant hereto, on each Funding Date Owner Participant shall make an
investment, through the Trust Estate, in the Permian Basin Facility or the De
Cordova Facility, as the case may be, in an amount (herein referred to as Owner
Participant's "Investment") equal to the product of the Purchase Price of such
----------
Facility and the Investment Percentage. Owner Participant's Investment and the
cash purchase price for the Initial Series Bonds received by the Owner Trustee
upon the sale of the Initial Series Bonds shall be made available through wire
transfer in Federal or other immediately available funds on or before 11:00
a.m., New York City time, on each respective Funding Date to an account
specified in writing by Owner Trustee to Owner Participant at least three (3)
Business Days prior to such respective Funding Dates.
(b) Notwithstanding any provision of this Agreement to the contrary,
the Owner Participant agrees with the Lessee (and only with the Lessee and not
with or for the benefit of any other Person) to make available to the Indenture
Trustee on behalf of Lessee (and as a rebate of Lessee's obligation to pay
Supplemental Rent as specified in Section 3.2(b) of the Lease) (i) on the
Interim Rent Payment Date, an amount equal to the interest then due on the
Outstanding Bonds, and (ii) on the Basic Lease Commencement Date, an amount
equal to the excess of (x) the interest then due on the Outstanding Bonds over
(y) the Purchase Price of the Facilities multiplied by 0.6629804516%; provided,
--------
however, that (A) if a Lease Event of Default has been declared, the Owner
-------
Participant's obligation to make such payment shall be postponed, as hereinafter
provided and (B) if an Event of Loss shall have occurred prior to the date
either such payment becomes due, the Owner Participant shall not be obligated to
make any such funds available to the Indenture Trustee. If a Lease Event of
Default has been declared at the time such payment is due, the Owner
Participant's obligation to make such payment shall be postponed until such
Lease Event of Default has been cured, whereupon the Owner Participant shall
make such payment, within two Business Days after demand by the Lessee, by
paying the same (less the aggregate amount, if any, previously offset by the
Lessee pursuant to the second sentence of the next succeeding paragraph) to the
Indenture Trustee, provided that no other Lease Event of Default has been
declared and shall then be continuing. The resulting amount specified in clause
(ii)(y) of this subsection 2.1(b) shall be deemed to be part of, and to be
adjusted as, Basic Rent for the purposes of Section 4 of the Lease. Nothing in
this Section 2.1(b) shall be construed to limit or relieve the Lessee's absolute
and unconditional obligation to pay Rent, including without limitation the
obligation to pay Basic Rent
-3-
<PAGE>
on the due dates thereof pursuant to the Lease and Supplemental Rent.
The Owner Participant agrees to reimburse the Lessee for (x) amounts,
if any, of Supplemental Rent paid by the Lessee pursuant to the provisions of
Section 3.2(b) of the Lease for which Lessee is entitled to the reimbursement
specified in the foregoing paragraph, plus (y) accrued interest on the
unreimbursed portion thereof at a rate of 18% per annum from the date such
amount is payable by the Owner Participant to but not including the date such
reimbursement is made (such amount to be reimbursed being herein called the
"Reimbursement Amount"). The Lessee shall be entitled to offset, without
limitation of any other right the Lessee may have against any other Person,
against any Rent (other than any Rent constituting Excepted Payments payable to
the Owner Trustee in its individual capacity or the Indenture Trustee in its
individual capacity and other than as limited by the proviso to this sentence)
due from the Lessee to the Lessor or the Owner Participant under the Operative
Documents, until the Lessee has been fully reimbursed for the Reimbursement
Amount; provided, however, that in the case of any payment due from the Lessee
-------- -------
to the Lessor or the Owner Participant which is distributable to the Lessor
under the terms of the Indenture, the Indenture Trustee shall, pursuant to the
Indenture return to the Lessee the Reimbursement Amount specified by the Lessee
to the Indenture Trustee to the extent of the amount distributable to the Lessor
under the Indenture (but not any amounts distributable to the Indenture Trustee
in its individual capacity or to any of the holders of the Bonds). No such
offset or aggregate combined effect of separate offsets shall be made if the
effect would be to reduce the amount of Supplemental Rent or Basic Rent due on
the Interim Rent Payment Date, the Basic Lease Commencement Date or any Basic
Rent Payment Date to an amount insufficient to pay in full the payments then
required to be made on account of the principal of, and interest on, the Bonds.
2.2 Transaction Expenses. If the transactions contemplated by this
--------------------
Agreement are consummated, Owner Participant shall pay all Transaction Expenses
when due or promptly reimburse Lessee therefor. If the transactions contemplated
by this Agreement are not consummated, Lessee shall pay all Transaction Expenses
when due; provided, however, that Lessee shall not be obligated to pay
-------- -------
Transaction Expenses incurred by Owner Participant if such transactions shall
not be consummated by reason of a breach by Owner Participant of its obligations
hereunder.
2.3 Funding Date: Expiration of Commitments. (a) The Permian Basin
---------------------------------------
Funding Date shall be December 6, 1989 and the De Cordova Funding Date shall be
December 6, 1989, or such other dates which Lessee shall specify upon not less
than three (3) Business Days' notice to each of the other parties hereto and in
accordance with paragraph (b) below.
-4-
<PAGE>
(b) The commitment of Owner Participant to make its Investment on each
Funding Date shall expire at 11:59 p.m., New York City time, on the later of
June 30, 1990, and the date selected by Lessee which shall not be later than
December 31, 1990. If the Funding Date for either Facility shall not have
occurred prior to the expiration of Owner Participant's commitment, Owner
Participant shall have no obligations under this Agreement with respect to such
Facility. If such expiration date is extended as provided in this paragraph (b),
the parties hereto will be obligated under this Agreement until such extended
date and agree to enter into such technical amendments, supplements and
documents and to do such further acts and things as Lessee and Owner Participant
may reasonably require, and only those reasonably required, in order to reflect
such deferral and the effect thereof; provided, that no such party shall be
--------
obligated to enter into any such amendment, supplement or document or to do any
such act or thing if, in such party's reasonable judgment, such party would be
adversely affected thereby.
2.4 Termination of Commitment by Lessee. (a) In the event that an
-----------------------------------
adjustment pursuant to subsection 4.1 of the Lease required to be made pursuant
to subsection 2.5 hereof (or a potential adjustment pursuant to clause (2) or
(5) of subsection 4.1 of the Lease) would result in an increase in Basic Rent
payable during the Basic Term and such increase would result in a change in the
pretax present value as of a respective Funding Date of aggregate Basic Rent
payable during the Basic Term of at least 400 basis points (when discounted at
an annual rate of 10.75% on a semiannual basis) as originally calculated, Lessee
may, in its sole discretion and by notice to the parties hereto, terminate the
commitment of Owner Participant with respect to any Facility for which the
Funding Date has not occurred, provided, however, that whenever an adjustment
-------- -------
required by subsection 4.1 of the Lease would (or could, in the case of such a
potential adjustment) result in an increase of 400 basis points or more in the
pretax present value of Basic Rent as set forth above, and if directed to do so
by notice in writing by Owner Participant, Lessee and Owner Trustee shall make
such adjustment (or shall be permitted in the future to make such an adjustment,
in the case of such a potential adjustment) only to the extent that there is a
resulting increase in such pretax present value of Basic Rent of 399 basis
points, and shall not be entitled to terminate the commitment of Owner
Participant as a result of such adjustment.
(b) In the event that an adjustment pursuant to subsection 4.1 of the
Lease or subsection 4.2(iv) of the Lease required to be made pursuant to
subsection 2.5 hereof (or a potential adjustment pursuant to clause (2) or (5)
of subsection 4.1 of the Lease) would cause the Lessee to be advised by its
independent accountants against the use of operating lease accounting treatment
pursuant to the Financial Accounting Standards Boards' ("FASB") Rule 13 (or any
successor rule thereto), Lessee
-5-
<PAGE>
may, in its sole discretion and by notice to the parties hereto, terminate the
commitment of Owner Participant with respect to any Facility for which the
Funding Date has not occurred; provided, however, that such commitment shall not
-------- -------
be so terminated if Owner Participant proposes amendments or supplements to the
Operative Documents which do not materially adversely affect the rights or
obligations of any party hereto and which would, in the opinion of Lessee's
independent accountants, preserve such operating lease accounting treatment and,
in such circumstances, the parties hereto shall enter into such amendments or
supplements or do such further acts and things as may be reasonably required in
order to so preserve operating lease accounting treatment thereof pursuant to
FASB Rule 13 (or any successor rule thereto).
(c) If Lessee terminates the commitment of Owner Participant, all
obligations of Owner Participant to Lessee and, except as expressly provided
herein, of Lessee to Owner Participant, with respect to any Facility for which
the Funding Date has not occurred, shall cease and terminate.
2.5 Change in Tax Laws or Assumptions. Subject to subsection 2.4(a)
---------------------------------
hereof, in the event that at any time prior to a Funding Date with respect to a
Facility there shall have occurred any event or condition which would require an
adjustment pursuant to subsection 4.1, 4.2 or 4.5 of the Lease, Basic Rent and
Casualty Values shall be adjusted by Owner Participant, Lessee and Owner Trustee
pursuant to and in accordance with subsection 4.1, 4.2 or 4.5 of the Lease, as
the case may be, and such adjusted amounts shall be included in the Lease.
2.6 Changes in Schedules. It is understood that, as of the date of
--------------------
the execution and delivery hereof, construction of the Permian Basin Facility
and the De Cordova Facility is not completed and that Schedules PBF, DCF, PBS,
DCS and 4 may require modification on or prior to the respective Funding Dates.
If any such schedule shall require modification, Lessee or Lessor shall, at
least ten (10) Business Days prior to the respective Funding Date, furnish, by
notice, copies of such revised schedule to the parties hereto, and, unless
notified by any party hereto at least three Business Days prior to such Funding
Date that such revision would adversely affect such party's interests hereunder
or under the Operative Documents, such revised schedule shall be deemed to
replace the corresponding schedule hereto as of such Funding Date. Subject to
subsection 2.3(b) hereof, in the event that a party hereto shall have so
notified Lessee of such an adverse effect, such Funding Date shall be delayed
pending the development of mutually satisfactory schedules.
2.7 Notice of Proposed Legislation and Regulations. On or before
----------------------------------------------
seven days prior to the Funding Date with respect to a Facility, Owner
Participant shall deliver to Lessee, in writing, notice of (a) each section in
any proposed legislation as of such
-6-
<PAGE>
date with respect to which it will, if such section is enacted within one year
after the Funding Date with respect to a Facility, request an adjustment of
Basic Rent and Casualty Value with respect to such Facility pursuant to clause
(2) of subsection 4.1 of the Lease and subsection 2.5 of the Participation
Agreement and (b) each section in any proposed Treasury Regulation as of such
date with respect to which it will, if such section is promulgated as a
temporary or final regulation after the Funding Date, request an adjustment of
Basic Rent and Casualty Value with respect to such Facility pursuant to clause
(5) of subsection 4.1 of the Lease and subsection 2.5 of the Participation
Agreement. The Owner Participant shall, on the Funding Date with respect to a
Facility, update such notice to include any sections described in clause (a) or
clause (b) of the preceding sentence which have been proposed following such
notice and on or before such Funding Date.
SECTION 3. Purchase Sale, Financing and Lease of a Facility.
------------------------------------------------
Subject to satisfaction of the conditions of Section 11, on the Funding Date for
a Facility:
(a) Owner Participant shall deposit with Owner Trustee an amount in
immediately available funds equal to Owner Participant's Investment for such
Facility;
(b) the Initial Series Bonds shall be sold pursuant to the
Underwriting Agreement against payment of the purchase price thereof in an
amount in immediately available funds equal to the product of the Debt
Percentage and the Purchase Price for such Facility;
(c) as evidenced by the Bill of Sale for such Facility, Owner Trustee
shall purchase, and Seller shall sell, such Facility against payment of the
Purchase Price therefor;
(d) pursuant to the Ground Lease for such Facility, Seller shall
assign the Original Ground Lease and the Ground Interest for such Facility to
Owner Trustee and Owner Trustee shall accept the assignment of the Original
Ground Lease and the Ground Interest for such Facility; and
(e) pursuant to the Lease, Owner Trustee shall lease such Facility to
Lessee and Lessee shall lease such Facility from Owner Trustee.
SECTION 4. Certificate of Purchase Price; Closing.
--------------------------------------
4.1 Certificate of Purchase Price. At least three (3) Business Days
-----------------------------
prior to the Funding Date for a Facility, Lessee shall deliver a completed
Certificate of Purchase Price to Owner Trustee, Owner Participant and Indenture
Trustee, as provided in subsection 11.1.11 hereof, dated as of a date not
earlier than 30 days prior to such Funding Date. All documents and instruments
-7-
<PAGE>
required to be delivered on such Funding Date pursuant to this Agreement shall
be delivered at the offices of Reid & Priest, special New York counsel to
Lessee, or at such other location as may be determined by the Owner Participant
and Lessee.
4.2 Closing. Upon satisfaction of the conditions of subsection 4.1
-------
and Section 11, on the Funding Date for a Facility, Owner Trustee shall pay or
cause to be paid the Purchase Price for such Facility identified in the
Certificate of Purchase Price for such Facility in immediately available funds
to, or as directed by, Seller.
SECTION 5. Representations, Warranties and Agreements of Owner
---------------------------------------------------
Participant.
-----------
5.1 Representations, Warranties and Covenants. Owner Participant
-----------------------------------------
represents and warrants that:
5.1.1 Due Organization. Owner Participant is a corporation duly
----------------
organized and validly existing in good standing under the laws of the State of
Delaware and has the corporate power and authority to enter into and perform its
obligations under this Agreement and each other Operative Document to which it
is or will be a party.
5.1.2 Due Authorization; Enforceability. This Agreement and each
---------------------------------
other Operative Document to which it is or will be a party have been or, when
executed and delivered will be, duly authorized, executed and delivered by Owner
Participant and, assuming the due authorization, execution and delivery hereof
and thereof by the other parties hereto and thereto and the correctness of
Lessee's representations in paragraphs 9.1.5 and 9.1.13 hereof, are or upon
execution and delivery thereof will be legal, valid and binding obligations of
Owner Participant, enforceable against Owner Participant in accordance with
their respective terms.
5.1.3 No Violation. The execution and delivery by Owner Participant of
------------
this Agreement and each other Operative Document to which it is or will be a
party are not and will not be, and the performance by Owner Participant of its
obligations under each will not be, inconsistent with its charter documents or
by-laws, do not and will not contravene any Governmental Rule, assuming the
correctness of Lessee's representations in paragraphs 9.1.5 and 9.1.13 hereof,
applicable to it, and do not and will not contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which Owner Participant is a party or by which it or its property
is bound, or require any Governmental Action assuming the correctness of
Lessee's representations in paragraphs 9.1.5 and 9.1.13 hereof.
5.1.4 Owner Participant's Liens; Performance Does Not Create Liens.
------------------------------------------------------------
Neither the execution and delivery by Owner
-8-
<PAGE>
Participant of this Agreement or any other Operative Document to which it is or
will be a party nor the performance by it of its obligations hereunder or
thereunder will subject the Trust Estate or the Indenture Estate, or any portion
thereof, to any Lien under any indenture, mortgage, contract or other instrument
to which Owner Participant is a party or by which it is bound, other than the
Indenture, and Owner Participant has not taken or knowingly omitted to take any
action which would result in the creation of any Lien on any part of the Trust
Estate or the Indenture Estate assuming the correctness of Lessee's
representations in paragraphs 9.1.5 and 9.1.13 hereof.
5.1.5 Acquisition for Investment. Owner Participant is acquiring
--------------------------
its interest in the Trust Estate for its own account for investment and not with
a view to, or for the sale in connection with, any distribution of any such
interest, except that Owner Participant reserves the right to assign any of or
all such interest to the extent permitted by the terms of this Agreement and the
Trust Agreement.
5.1.6 Securities Act. Other than the offering and sale of the
--------------
Initial Series Bonds, neither Owner Participant nor anyone authorized by Owner
Participant has directly or indirectly offered or sold any interest in the Trust
Estate or in any similar security relating to the Facilities, or in any security
the offering of which for the purposes of the Securities Act would be deemed to
be part of the same offering as the offering of the aforementioned securities
to, or solicited any offer to acquire any of the same from, any Person, and
neither Owner Participant nor anyone authorized to act on its behalf will take
any action which would subject the issuance of any interest in the Trust Estate
(other than the Initial Series Bonds) to the provisions of Section 5 of the
Securities Act.
5.1.7 ERISA. Owner Participant is not acquiring, either directly
-----
or indirectly, any part of its interest in the Trust Estate with the "plan
assets" of any "employee benefit plan" within the meaning of Section 3(3) of
ERISA, as interpreted by the Service and the U.S. Department of Labor ("DOL") in
rules, regulations, releases or bulletins in effect on the date of the execution
hereof, or any other entity described in Section 4975(e)(1) of the Code or
Section 3(2) of ERISA (collectively, a "Plan").
5.1.8 Utility Status. Assuming the correctness of Lessee's
--------------
representations in paragraphs 9.1.5 and 9.1.13 hereof, none of Owner Participant
or its Affiliates is:
(i) an "electric utility", an "electric utility company", a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate"
of a "subsidiary company" or "holding company" or "public utility" within
the meaning of
-9-
<PAGE>
the Holding Company Act or subject to regulation under the Holding Company
Act or subject to the jurisdiction, control or regulation of the Commission
thereunder;
(ii) an "electric utility", an "electric utility company", a "public
utility" within the meaning of the Federal Power Act or subject to
regulation under the Federal Power Act or subject to the jurisdiction,
control or regulation of the Federal Energy Regulatory Commission
thereunder;
(iii) a Texas Public Utility subject to regulation as such under any
comparable law of the State of Texas or subject to the jurisdiction,
control or regulation of the PUC as a Texas Public Utility; or
(iv) subject to the jurisdiction, control or regulation by any other
Governmental Authority under any other Governmental Rules relating to
electric public utilities or the production, sale or transmission of
electric energy.
5.1.9 Holding Company Act. The Owner Participant is primarily
-------------------
engaged in one or more businesses other than the business of a public utility
company, or is a company all of whose equity interest is owned by one or more
companies so engaged, either directly or through subsidiaries, within the
meaning of Rule 7(d)(1)(B) under the Holding Company Act.
5.2 Agreements. Owner Participant covenants and agrees that:
----------
5.2.1 Discharge of Liens. Owner Participant will not create or
------------------
permit to exist, and will, at its own cost and expense, promptly take such
action as may be necessary duly to discharge, or to cause to be discharged, all
Owner Participant's Liens on any part of the Leased Assets, the Trust Estate,
the Indenture Estate, or title thereto or any interest therein; provided,
--------
however, that Owner Participant shall not be required to so discharge any such
-------
Owner Participant's Lien while the same is being contested in good faith by
appropriate proceedings diligently prosecuted so long as (i) such proceedings
shall not involve any material danger of the sale, forfeiture or loss, and shall
not interfere with the use or disposition, of any part of the foregoing, and
(ii) Owner Participant shall have provided reserves deemed by it to be adequate
in respect of any such Lien.
5.2.2 Transfers. Any transfer or assignment by Owner Participant
---------
of its interest in the Trust Estate shall be subject to, and shall be effected
in accordance with, the terms and conditions hereof and of the Trust Agreement.
-10-
<PAGE>
SECTION 6. Representations, Warranties and Agreements of Owner
---------------------------------------------------
Trustee.
-------
6.1 Representations and Warranties of Owner Trustee. The Connecticut
-----------------------------------------------
National Bank ("CNB"), as Owner Trustee and in its individual capacity to the
extent set forth herein, represents and warrants that:
6.1.1 Due Organization. CNB is a national banking association
----------------
validly existing in good standing under the banking laws of the United States of
America and has the corporate power and authority to enter into and perform its
obligations (a) in its individual capacity under the Trust Agreement and, to the
extent it is a party hereto in its individual capacity, this Agreement and (b)
acting as Owner Trustee under the Trust Agreement, under this Agreement and each
other Operative Document to which it is or will be a party as Owner Trustee.
6.1.2 Due Authorization; Enforceability; etc. This Agreement and
---------------------------------------
each other Operative Document to which CNB is or will be a party have been or
will be (to the extent it is to be a party thereto in its individual capacity),
or (to the extent it is to be a party thereto as Owner Trustee) upon due
direction by Owner Participant or its successors or assigns pursuant to the
Trust Agreement, duly authorized, executed and delivered by or on behalf of CNB
(in its individual capacity or in its capacity as Owner Trustee, as the case may
be) and, assuming due authorization, execution and delivery by the other parties
hereto and thereto, are or upon execution and delivery will be legal, valid and
binding obligations of CNB (in its individual capacity or in its capacity as
Owner Trustee, as the case may be) enforceable against it in accordance with
their respective terms. Upon execution of the Initial Series Bonds by CNB, as
Owner Trustee, authentication thereof by Indenture Trustee and delivery thereof
against payment or the giving of consideration therefor in accordance with the
Indenture and this Agreement, the Initial Series Bonds will be legal, valid and
binding obligations of CNB, as Owner Trustee, enforceable against it in
accordance with their respective terms.
6.1.3 No Violation. The execution and delivery by (a) CNB, in its
------------
individual capacity, of the Trust Agreement and, to the extent it is party
hereto in its individual capacity, this Agreement and (b) CNB, in its capacity
as Owner Trustee, of each Operative Document to which Owner Trustee is or will
be party, are not or will not be, and the performance by CNB in its individual
capacity or as Owner Trustee, as the case may be, of its obligations under each
will not be, inconsistent with the charter documents or by-laws of CNB, do not
and will not contravene any Connecticut or United States Governmental Rule
(assuming the correctness of Lessee's representations in paragraphs 9.1.5 and
9.1.13 hereof) applicable to CNB or the banking or trust powers of CNB and do
not and will not contravene any provision of, or
-11-
<PAGE>
constitute a default under, any indenture, mortgage, contract or other
instrument to which CNB is a party or by which it or its property is bound or
require any Connecticut or Federal Governmental Action relating to its banking
or trust powers (assuming the correctness of Lessee's representations in
paragraphs 9.1.5 and 9.1.13 hereof), except that it has made the filing required
by Section 131.3 of the New York Banking Law and Section 105A of the Texas
Probate Code Annotated (Vernon 1980).
6.1.4 Defaults. To the best knowledge of CNB, in its capacity as
--------
Owner Trustee, no Indenture Default or Indenture Event of Default has occurred
and is continuing. CNB in its capacity as Owner Trustee is not in violation in
any respect of any terms of this Agreement or any other Operative Document to
which it is a party.
6.1.5 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the knowledge of CNB, threatened against CNB (in its
individual capacity or as Owner Trustee) before any court, arbitrator or
administrative or governmental body governing its banking or trust powers which,
individually or in the aggregate, if decided adversely to the interests of CNB
(in either such capacity), would have a materially adverse effect upon the
ability of CNB (in either such capacity) to perform its obligations under this
Agreement or any other Operative Document to which it is or will be a party (in
either such capacity).
6.1.6 Lessor's Liens; Performance Does Not Create Liens. Neither
-------------------------------------------------
the execution and delivery by CNB (in its individual capacity or as Owner
Trustee, as the case may be) of this Agreement or any other Operative Document
to which it is or will be a party nor the performance by it of its obligations
hereunder or thereunder will subject the Trust Estate or the Indenture Estate,
or any portion thereof, to any Lien under any indenture, mortgage, contract or
other instrument to which CNB (in its individual capacity or as Owner Trustee,
as the case may be) is a party or by which it is bound, other than the
Indenture.
6.1.7 Securities Act. Other than the offering and sale of the
--------------
Initial Series Bonds, neither CNB (in its individual capacity or as Owner
Trustee) nor anyone authorized by CNB (in its capacity as Owner Trustee) has
directly or indirectly offered or sold any interest in the Trust Estate or the
Indenture Estate or in any similar security relating to the Facilities, or in
any security the offering of which for the purposes of the Securities Act would
be deemed to be part of the same offering as the offering of the aforementioned
securities to, or solicited any offer to acquire any of the same from, any
Person, and neither CNB (in its individual capacity or as Owner Trustee) nor
anyone authorized to act on its behalf will take any action which would subject
the issuance of any interest in the Trust Estate or the Indenture Estate (other
than
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<PAGE>
the Initial Series Bonds) to the provisions of Section 5 of the Securities Act.
6.1.8 Location of Chief Place of Business and Chief Executive Office,
---------------------------------------------------------------
etc. CNB's chief place of business, chief executive office, and office where the
----
documents, accounts and records relating to the transactions contemplated by
this Agreement and each other Operative Document are kept are located in
Hartford, Connecticut.
6.1.9 Holding Company Act. CNB, in its individual capacity, is
-------------------
primarily engaged in one or more businesses other than the business of a public
utility company, or is a company all of whose equity interest is owned by one or
more companies so engaged, either directly or through subsidiaries, within the
meaning of Rule 7(d)(1)(B) under the Holding Company Act.
6.2 Agreements. CNB covenants and agrees as Owner Trustee and in its
----------
individual capacity that:
6.2.1 Discharge of Liens. It will not create or permit to exist, and
------------------
will, at its own cost and expense, promptly take such action as may be necessary
to duly discharge all Lessor's Liens on any part of the Leased Assets, the Trust
Estate, the Indenture Estate, or title thereto or any interest therein;
provided, however, that Owner Trustee shall not be required to so discharge any
-------- -------
such Lessor's Lien while the same is being contested in good faith by
appropriate proceedings diligently prosecuted so long as (i) such proceedings
shall not involve any material danger of the sale, forfeiture or loss, and shall
not interfere with the use or disposition, of any part of the foregoing, and
(ii) Owner Trustee shall have provided reserves deemed by it to be adequate in
respect of any such Lien.
6.2.2 Change of Chief Place of Business. CNB shall give prompt notice
---------------------------------
to Lessee, Owner Participant and Indenture Trustee if CNB's chief place of
business or chief executive office shall cease to be located in the State of
Connecticut.
SECTION 7. Untitled.
--------
[This Section intentionally left blank.]
SECTION 8. Representations, Warranties and Agreements of Indenture
-------------------------------------------------------
Trustee.
-------
8.1 Representations and Warranties. Indenture Trustee represents and
------------------------------
warrants in its individual capacity that:
8.1.1 Due Organization. Indenture Trustee is a national banking
----------------
association duly organized and validly existing in good standing under the
banking laws of the United States of America and
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<PAGE>
has the corporate power and authority to enter into and perform its obligations
under this Agreement, and each other Operative Document to which it is or will
be a party.
8.1.2 Due Authorization; Enforceability. This Agreement and each
---------------------------------
other Operative Document to which it is or will be a party have been, or when
executed and delivered will be, duly authorized, executed and delivered by
Indenture Trustee and, assuming the due authorization, execution and delivery
hereof and thereof by the other parties hereto and thereto and the correctness
of Lessee's representations in paragraphs 9.1.5 and 9.1.13 hereof, are, or upon
execution and delivery thereof will be, legal, valid and binding obligations of
Indenture Trustee, enforceable against it in accordance with their respective
terms.
8.1.3 No Violation. The execution and delivery by Indenture Trustee
------------
of this Agreement and each other Operative Document to which it is or will be a
party are not and will not be, and the performance by it of the obligations
under each will not be, inconsistent with the charter documents or by-laws of
Indenture Trustee, do not and will not contravene any Governmental Rule,
assuming the correctness of Lessee's representations in paragraphs 9.1.5 and
9.1.13 hereof, applicable to it, or require any Governmental Action, assuming
the correctness of Lessee's representations in paragraphs 9.1.5 and 9.1.13
hereof, except for the filings required by Section 105A of the Texas Probate
Code Annotated (Vernon 1980) and Section 131.3 of the New York Banking Law.
8.2 Discharge of Liens. Indenture Trustee covenants and agrees in its
------------------
individual capacity that it will not create or permit to exist, and will, at its
own cost and expense, promptly take such action as may be necessary to
discharge, all Indenture Trustee's Liens on any part of the Leased Assets, the
Trust Estate or the Indenture Estate, or title thereto or any interest therein;
provided, however, that Indenture Trustee shall not be required to so discharge
-------- -------
any such Indenture Trustee's Lien while the same is being contested in good
faith by appropriate proceedings diligently prosecuted so long as (i) such
proceedings shall not involve any material danger of the sale, forfeiture or
loss, and shall not interfere with the use or disposition, of any part of the
foregoing, and (ii) Indenture Trustee shall have provided reserves deemed by it
to be adequate in respect of any such Lien.
SECTION 9. Representations, Warranties and Agreements of Lessee.
----------------------------------------------------
9.1 Representations and Warranties. Lessee represents and warrants
------------------------------
that:
9.1.1 Due Incorporation, etc. Lessee is a corporation duly organized
-----------------------
and validly existing in good standing under the laws
-14-
<PAGE>
of the State of Texas and has the corporate power and authority to carry on its
business as presently conducted, to own its property, to lease the Facilities
from Owner Trustee pursuant to the Lease, to lease the Ground Interests to Owner
Trustee pursuant to the Ground Leases and to perform its obligations under this
Agreement and each other Operative Document to which it is or will be a party.
Lessee has not failed to qualify to do business in any jurisdiction where
failure so to qualify would materially and adversely affect the financial
condition of Lessee or affect its ability to perform any of its obligations
under this Agreement or any other Operative Document to which it is or will be a
party.
9.1.2 Authorization. The execution, delivery and performance by
-------------
Lessee of this Agreement and each other Operative Document to which it is or
will be a party have been duly authorized by all necessary corporate action on
the part of Lessee and do not, and will not, require the consent or approval of
any shareholder of Lessee or any trustee or holder of any indebtedness or other
obligation of Lessee or any other Person which is a party to any other agreement
with Lessee, except for the release of the Ground Interests from the Lien of the
Existing Mortgages, which shall have been obtained on or prior to the Funding
Date for the Facility to which each Ground Interest pertains.
9.1.3 Execution. This Agreement and each other Operative Document to
---------
which it is or will be a party have been or when executed and delivered will be,
duly executed and delivered by Lessee and, assuming the due authorization,
execution and delivery hereof and thereof by the other parties hereto and
thereto are, or upon execution and delivery thereof will be, legal, valid and
binding obligations of Lessee, enforceable against Lessee in accordance with
their respective terms.
9.1.4 No Violations, etc. The execution and delivery by Lessee of
-------------------
this Agreement and each other Operative Document to which it is or will be a
party are not and will not be, and the performance by Lessee of its obligations
under each will not be, inconsistent with its charter documents or by-laws, do
not and will not contravene any Governmental Rule or Governmental Action
applicable to it, and do not and will not contravene any provision of, or
constitute a default under, any indenture, mortgage, contract or other
instrument to which Lessee is a party or by which it or its property is bound,
or has resulted or will result in the creation or imposition of any Lien (other
than Permitted Interest Liens or Permitted Project Liens) upon any property of
Lessee; except, with respect to each Funding Date, as disclosed in any annual,
quarterly or current reports filed by Lessee with the Commission prior to such
Funding Date, there is no such provision which materially adversely affects or
(so far as Lessee now can reasonably foresee) in the future is likely to
materially adversely affect the properties, business or financial condition of
Lessee; there is no such provision which materially adversely affects or
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(so far as Lessee now can reasonably foresee) in the future is likely to
materially adversely affect Lessee's ability to perform its obligations under
this Agreement or any other Operative Document to which it is or will be a
party; and Lessee is not in default under or with respect to the provisions of
its charter documents, by-laws, any Governmental Rule or Governmental Action
(except as disclosed in any annual, quarterly or current reports filed by Lessee
with the Commission prior to the date of the execution and delivery hereof) or
any indenture, mortgage, lease or any other agreement or instrument to which
Lessee is a party or by which it or any of its properties is bound which could
be materially adverse to the properties, business, or financial condition of
Lessee or (so far as Lessee now can reasonably foresee) in the future is likely
to materially adversely affect the ability of Lessee to perform its obligations
under this Agreement or any of the other Operative Documents to which it is or
will be a party.
9.1.5 Governmental Actions. No Governmental Actions are or (so far as
--------------------
Lessee now can reasonably foresee) will be required (a) in connection with the
participation by Lessee, Seller, Owner Trustee, Indenture Trustee or Owner
Participant in the consummation of the transactions contemplated by this
Agreement and each other Operative Document, or (b) to be obtained by Lessee,
Seller, Owner Trustee, Indenture Trustee or Owner Participant with respect to
the sale, ownership, use, lease, occupancy, operation or maintenance of the
Leased Assets including, without limitation, compliance with Governmental Rules,
or (c) in connection with the execution and delivery by any of such Persons of
any of the Operative Documents, except, in each case under (a), (b) and (c)
above, (i) such as may be required under applicable Governmental Rules providing
for the supervision or regulation of the business of the Owner Trustee,
Indenture Trustee or Owner Participant (not including Governmental Rules
specifically relating to ownership, operation, maintenance, control or financing
of electric utility assets applicable solely because of such Person's execution
of any of the Operative Documents or performance thereunder and participation in
the transactions contemplated thereby), (ii) Governmental Actions specified on
Schedule 3, all of which have been given, taken or accomplished except as
otherwise described in such Schedule 3, (iii) appropriate filings and recordings
to perfect the Lien of the Indenture and the ownership interest of the Owner
Trustee under each Bill of Sale and the leasehold interest of Owner Trustee
under each Ground Lease and release the Liens of the Existing Mortgages, (iv)
such as may be required under existing Governmental Rules to be obtained, given,
accomplished or renewed from time to time in connection with the maintenance or
operation of the Facilities, and which are routine in nature or which cannot be
obtained, or are not normally applied for, prior to the time they are required,
or which are not required to be obtained prior to the date of this Agreement,
and which Lessee has no reason to believe will not be timely obtained, (v) as
may be required in consequence of any
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utility status of such Person following any transfer of ownership of a Facility
by Owner Trustee or any relinquishment of use or operation of a Facility by
Lessee, (vi) the Registration Statement shall have been filed with the
Commission and shall have been declared effective as contemplated by the
Underwriting Agreement and the Indenture shall have been qualified under the
Trust Indenture Act on or prior to the first Funding Date to occur or (vii) as
may be required under any Governmental Rule enacted or adopted after the date of
this representation. The representation contained in this paragraph is given in
reliance on the representations and warranties contained in paragraphs 5.1.3,
5.1.5, 5.1.6, 6.1.3, 6.1.7 and 8.1.3.
9.1.6 Securities Act. Other than the offering and sale of the Initial
--------------
Series Bonds, neither Lessee nor anyone authorized by it has directly or
indirectly offered or sold any interest in the Trust Estate or in any similar
security relating to the Facilities, or in any security the offering of which
for purposes of the Securities Act would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person, other than Owner Participant
and the institutions referred to in a letter or letters dated the respective
Funding Dates, from Salomon Brothers Inc., with respect to the offering and sale
of interests in the Trust Estate and neither Lessee nor anyone authorized to act
on its behalf will take any action which would subject the issuance of any
interest in the Trust Estate (other than the Initial Series Bonds) to the
provisions of Section 5 of the Securities Act.
9.1.7 Title to Sites, etc. The Permian Basin Site and the De Cordova
--------------------
Site are owned by Lessee. Lessee has all property and ownership rights and
contractual rights necessary to perform its obligations under the Facilities
Agreements, which properties and rights are free and clear of all Liens (other
than Liens (including the Liens of the Existing Mortgages) which do not (except
in the case of an exercise of remedies under an Existing Mortgage if a default
exists thereunder) in the aggregate materially adversely affect or interfere
with the occupancy, use or operation of such properties and rights for the
performance of such obligations or the economic value, utility, Useful Life or
condition of the Leased Assets or Lessee's peaceful and quiet use and possession
of its ownership interest therein) and there are no material impediments to the
exercise of such rights by Lessee or any imminent danger that such rights will
be lost or forfeited. On the Funding Date for a Facility, (i) a good and valid
leasehold interest in the Ground Interest for such Facility will be duly,
validly and effectively conveyed and transferred to Owner Trustee, upon the
terms and conditions of the Ground Lease for such Facility, free and clear of
all Liens other than Permitted Interest Liens and Permitted Project Liens, (ii)
the filings and recordings listed on Schedule 5 in respect of such Facility are
all the filings and recordings necessary or advisable to perfect Owner
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Trustee's right, title and interest in and to the portion of the Leased Assets
relating to such Facility, and to perfect for the benefit of Indenture Trustee
and the holders of the Bonds the first mortgage lien and first priority security
interest provided for in the Indenture, and all such filings and recordings will
have been duly made, subject to requirements for filing continuation statements,
(iii) no action, including any action reasonably to comply with any fraudulent
conveyance statute, will be required to protect the title and interest of Owner
Trustee in and to the Leased Assets against the claims of all Persons whomsoever
or to perfect such first mortgage Lien and first priority security interest in
favor of Indenture Trustee and (iv) as of the Permian Basin Funding Date, all
material rights in respect of the Permian Basin Contracts will have been, and,
as of the De Cordova Funding Date, the De Cordova Contracts will have been,
validly assigned to Owner Trustee, including in each case any and all material
warranties of and other claims against dealers, manufacturers, vendors,
contractors and subcontractors and all material indemnities with respect to
patent infringements and other related general intangibles. On and after the
Funding Date for a Facility, none of the Permitted Project Liens described in
clause (a) of the definition thereof will materially interfere with the use of,
or the exercise by Lessor or Indenture Trustee (as assignee under the Indenture)
of their rights with respect to, the Leased Assets or the Facility Agreement for
such Facility.
9.1.8 Location of Chief Place of Business and Chief Executive Office,
---------------------------------------------------------------
etc. The chief place of business and chief executive office of Lessee and the
----
office where it keeps its records concerning its accounts and contract rights is
in Dallas County, Texas.
9.1.9 Financial Statements. The balance sheet of Lessee at December
--------------------
31, 1988 and the related statements of income and source of funds for
construction for the fiscal year ended on such date, certified by Deloitte
Haskins & Sells, copies of which, as contained in or incorporated by reference
in Lessee's Annual Report on Form 10-K for the fiscal year ended December 31,
1988, have heretofore been furnished to Owner Participant present fairly the
financial position of Lessee at such dates and the results of its operations or
cash flows for the fiscal years then ended. The unaudited balance sheets of
Lessee at March 31, 1989, June 30, 1989 and September 30, 1989 and the related
unaudited statements of income for the three-, six- and nine-month periods ended
on such dates, copies of which (as contained in Lessee's Quarterly Reports on
Form 10-Q for the fiscal quarters ended March 31, 1989, June 30, 1989 and
September 30, 1989) have heretofore been furnished to Owner Participant and any
Quarterly Report on Form 10-Q filed by Lessee with the Commission after the date
hereof and prior to the last Funding Date to occur, which will be furnished to
Owner Participant, as of their respective dates present and will present fairly
the financial position of Lessee at such dates and the
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results of its operations or cash flows for the periods then ended, subject to
year-end audit adjustments. All such financial statements and reports, including
the related schedules and notes thereto, have been prepared in accordance with
GAAP consistently applied (except as otherwise disclosed therein).
9.1.10 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the knowledge of Lessee, threatened against Lessee or
its properties before any court, arbitrator or administrative or governmental
body which, individually or in the aggregate (so far as Lessee now can
reasonably foresee), is likely to have a material adverse effect on the
properties, business or financial condition of Lessee (other than such actions,
suits, investigations or proceedings referred to in Lessee's Annual Report on
Form 10-K for the fiscal year ended December 31, 1988, Lessee's Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, 1989, June 30, 1989
and September 30, 1989 or with respect to each Funding Date, any subsequent
quarterly or current reports filed with the Commission prior to such Funding
Date) or (so far as Lessee now can reasonably foresee) is likely to materially
and adversely affect the ability of Lessee to perform its obligations under this
Agreement or any other Operative Document to which it is or will be a party or
would affect the legality, validity or enforceability of any of the Operative
Documents.
9.1.11 Tax Returns. All Federal, state, local and foreign tax
-----------
returns, if any, which were required to be filed with respect to Lessee have
been filed, and all Taxes levied upon Lessee or any of its properties, assets,
income or franchises which are due and payable have been paid, other than those
presently payable without penalty or interest, or of which the amount,
applicability or validity is in dispute and is currently being contested in good
faith by appropriate proceedings. Lessee does not know of any proposed Tax
assessment against it and in its opinion all Tax liabilities of Lessee are
adequately provided for on the books of Lessee. There are no Taxes payable in
connection with the execution or recordation of either Bill of Sale, the Lease,
either Ground Lease, or the Indenture, the filing of financing statements with
respect thereto or the sale or transfer of the Facilities or any part thereof or
the execution, delivery or consummation of this Agreement and the other
Operative Documents and the transactions contemplated hereby and thereby or upon
or with respect to the Trust Estate or the Indenture Estate, except for Taxes
with respect to a Facility paid on or prior to the Funding Date relating thereto
or other Taxes which Lessee is obligated to pay for or on behalf of an
Indemnitee pursuant to subsection 14.2 of the Lease or Taxes based upon the net
income of any Person.
9.1.12 ERISA. No material liability to the Pension Benefit Guaranty
-----
Corporation has been or is expected by Lessee to be incurred by Lessee with
respect to any employee pension benefit
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plan (as defined in Section 3(2) of ERISA) and which is subject to Title IV of
ERISA, which is or has been established or maintained, or to which contributions
are or have been made, by Lessee or any trade or business (whether or not
incorporated) which, together with Lessee, is under common control as described
in Section 414(b), (c) or (m) of the Code (being referred to hereinafter as a
"Pension Plan"); the present value of all benefits vested under each Pension
Plan (based on the assumptions used to fund such Pension Plan) did not, as of
the last valuation date applicable thereto, exceed the value of the assets of
such Pension Plan allocable to such vested benefits; there has been no complete
or partial withdrawal within the meaning of Section 4201 of ERISA by Lessee or
any of its subsidiaries from any Pension Plan which is a multi-employer plan
within the meaning of Section 4001(a)(3) of ERISA; there has been no reportable
event (within the meaning of Section 4043(b) of ERISA) with respect to any
Pension Plan, or any other event or condition, which presents a material risk of
termination of any Pension Plan by the Pension Benefit Guaranty Corporation; and
no accumulated funding deficiency (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, exists with respect to any
Pension Plan; neither Lessee nor any Pension Plan or any trust created
thereunder has engaged in a "prohibited transaction," within the meaning of
Section 406 of ERISA or Section 4975 of the Code, which could subject Lessee or
any party dealing with any such Plan or trust to any material tax or penalty on
prohibited transactions imposed by ERISA or the Code; and the execution and
delivery of this Agreement and the initial acquisition by Owner Participant of
its interest in the Trust Estate will not involve any prohibited transaction
within the meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through
(D) of the Code (such representation being made in reliance upon and subject to
the accuracy of the representations contained in paragraph 5.1.7) which could
subject Lessee or any party dealing with any such Plan or trust to any material
tax or penalty on prohibited transactions imposed by ERISA or the Code.
9.1.13 Regulation. By virtue of the execution, delivery and
----------
performance of the Operative Documents by the parties thereto, based upon the
provisions of the Holding Company Act and the Federal Power Act and the rules
and regulations under each such Act and the laws of the State of Texas and
Governmental Authorities thereof, as the foregoing are in effect on the date
hereof, neither Owner Trustee, Indenture Trustee nor Owner Participant will be
or become, prior to the Lessor Possession Date, by virtue of the execution,
delivery or performance of the Operative Documents:
(i) an "electric utility", and "electric utility company", a "holding
company" or a "subsidiary company" of a "holding company" or an "affiliate"
of a "subsidiary company" or "holding company" or "public utility" within
the meaning of the Holding Company Act or subject to regulation under the
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<PAGE>
Holding Company Act or subject to the jurisdiction, control or regulation
of the Commission thereunder;
(ii) an "electric utility" an "electric utility company", a "public
utility" within the meaning of the Federal Power Act or subject to
regulation under the Federal Power Act or subject to the jurisdiction,
control or regulation of the Federal Energy Regulatory Commission
thereunder;
(iii) a Texas Public Utility subject to regulation as such under any
comparable law of the State of Texas or subject to the jurisdiction,
control or regulation of the PUC as a Texas Public Utility; or
(iv) subject to the jurisdiction, control or regulation by any other
Governmental Authority under any other Governmental Rules relating to
electric public utilities or the production, sale or transmission of
electric energy.
Lessee is not a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" within the meaning of
the Holding Company Act which is required to register as such under the Holding
Company Act.
Lessee is not an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
9.1.14 Lease Default; Lease Event of Default; Event of Loss. No
----------------------------------------------------
event or condition has occurred and is continuing which constitutes a Lease
Default, Lease Event of Default or Event of Loss.
9.1.15 Support Agreements. The rights granted or made available to
------------------
Owner Trustee pursuant to the Support Agreements will be sufficient to enable
Owner Trustee or Indenture Trustee (as assignee under the Indenture) for the
term of the respective Support Agreements to derive the benefits of ownership of
the Facility to which such Support Agreements relate, subject to and in the
manner provided by the terms and conditions of the Operative Documents, for the
production of electricity, to enable each Facility to be operated at its
intended capability (subject to the reduction in such capability which results
from Prudent Utility Practice and ordinary wear and tear occurring during
operations and maintenance in compliance with the Lease) and to deliver
electricity in a commercially efficient manner to the Points of Interconnection.
Fuel, water and any additional services (including transportation), materials or
rights required for such operation are, and (so far as Lessee now can reasonably
foresee) can be expected to be, commercially available to any entity operating
each Facility on commercially reasonable terms. No rights under patents,
copyrights or trademarks, or rights in confidential proprietary
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<PAGE>
information or proprietary "know-how", are required to be granted to Owner
Trustee or Indenture Trustee in order for either such Person to be able to
operate the Facilities for their intended purposes.
9.1.16 Survey of Sites. The current surveys of each Site provided
---------------
to each Participant prior to the Funding Date for the Facility located on such
Site are true and accurate in all material respects.
9.1.17 Appraisal Information. All written information supplied by
---------------------
Lessee, its Affiliates or agents to Ebasco Services Incorporated with respect to
each Facility was complete and accurate in all material respects at the time
given and as of the Funding Date for such Facility.
9.1.18 Title to Facilities, etc. On the Funding Date for a Facility
-------------------------
(i) good and marketable title to such Facility will be duly, validly and
effectively conveyed and transferred to Owner Trustee free and clear of all
Liens (other than Permitted Interest Liens described in clauses (a), (b) or (d)
of the definition thereof and Liens for Taxes not delinquent and Permitted
Project Liens), (ii) except as otherwise set forth in the survey of the
DeCordova Site delivered pursuant to Section 11.1.14 hereof, such Facility will
be located wholly on the Site for such Facility and the Turbines for such
Facility will be located wholly on the Turbine Site for such Facility, without
any encroachments by any portion thereof on any other property, and (iii) the
Schedule hereto describing such Facility will correctly describe, with
sufficient accuracy to permit a competent engineer to locate the same and in
sufficient detail for purposes of conveyancing, recording, filing and perfecting
security interests in and liens upon, the items of equipment and structures
identified therein as belonging to such Facility and there are no additional
items of equipment or structures which belong to such Facility which are not
described in such Schedule.
9.2 Agreements. Lessee covenants and agrees as follows:
----------
9.2.1 Delivery of Documents. Lessee will deliver to Owner
---------------------
Participant:
(a) Financial Statements; No Default. As soon as practicable and in
--------------------------------
any event within 105 days after the end of each fiscal year, a balance sheet of
Lessee as at the end of such fiscal year and the related statements of income
and source of funds for construction for the year then ended (or such other
financial documents as are required to be filed on an annual basis with the
Commission by a company subject to the financial reporting requirements of the
Securities Exchange Act) together with the report with respect thereto of
Deloitte Haskins & Sells or other independent public accountants of recognized
national standing and
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<PAGE>
an Officers' Certificate of Lessee stating that (1) the signers have made, or
caused to be made under their supervision, a review of this Agreement and the
other Operative Documents and (2) such review has not disclosed the existence
during such fiscal year (and the signers do not have knowledge of the existence
as of the date of such certificate) of any condition or event constituting a
Lease Default or Lease Event of Default, or, if any such condition or event
existed or exists, specifying the nature thereof, the period of existence
thereof and what action Lessee has taken or proposes to take with respect
thereto.
(b) Quarterly Statements. Unless otherwise provided pursuant to
--------------------
subsection (c) hereof, as soon as practicable and in any event within 60 days
after the end of each of the first three fiscal quarters of Lessee, an unaudited
balance sheet of Lessee for the respective fiscal quarter then ended, together
with the related statement of income.
(c) Other Reports; Consolidation. Promptly after the filing thereof,
----------------------------
copies of all regular, periodic and special reports which Lessee (i) files with
the Commission or any successor authority, pursuant to the rules and regulations
promulgated under the Securities Exchange Act or any successor statute and (ii)
files with the PUC with respect to the Facilities. All financial statements
delivered pursuant to this paragraph 9.2.1 shall be consolidated with the
financial statements of any subsidiaries of Lessee (except that, to the extent
permitted by GAAP in presenting consolidated financial statements, Lessee may
utilize the equity method of accounting). So long as Lessee is subject to the
financial reporting requirements of the Securities Exchange Act, the financial
statements contained in any annual or quarterly reports filed with the
Commission thereunder may be delivered by Lessee in satisfaction of its
obligations to deliver financial statements pursuant to clause (a) or (b), as
the case may be, of this paragraph 9.2.1 and notwithstanding the dates for
delivery of such reports in such clauses, any such report delivered not later
than 15 days after the date that such report was required to be filed with the
Commission shall be a timely delivery hereunder.
(d) Requested Information. With reasonable promptness, such other data
---------------------
and information as to the Facilities and the financial condition of Lessee as
from time to time may be reasonably requested by Owner Participant.
9.2.2 Further Assurances. Lessee, at its own cost and expense,
------------------
will cause to be promptly and duly taken, executed, acknowledged and delivered
all such further acts, documents and assurances as Owner Trustee, Owner
Participant or Indenture Trustee reasonably may request from time to time in
order to carry out more effectively the intent and purposes of this Agreement
and the other Operative Documents and the transactions contemplated hereby and
thereby. Lessee, at its own cost and expense, will cause the Bills
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of Sale, the Indenture, the Lease and the Ground Leases (or memoranda thereof),
any supplements or amendments thereto and all financing statements, fixture
filings and other documents, to be recorded or filed at such places and times in
such manner, and will take all such other actions or cause such actions to be
taken as may be necessary or as may be reasonably requested by Owner Trustee,
Owner Participant or Indenture Trustee in order to establish, preserve, protect
and perfect the good and marketable title of Owner Trustee to the Facilities and
Owner Trustee's rights under this Agreement and the other Operative Documents
and, so long as any Bonds are Outstanding, the valid first mortgage and prior
perfected security interest of Indenture Trustee in the Indenture Estate granted
or intended to be created under the Indenture and Indenture Trustee's rights
under this Agreement and the other Operative Documents, subject only to
Permitted Interest Liens and Permitted Project Liens. Lessee at its own cost and
expense promptly will furnish to Owner Trustee, Owner Participant and Indenture
Trustee annually (but not later than 105 days after the end of the preceding
year), commencing with the end of the year 1990, an opinion of counsel (a)
either (i) to the effect that such filings and recordations (or refilings and
rerecordations) have been duly made and that all other action has been taken as
is necessary to comply with the requirements of this paragraph 9.2.2 or (ii)
that no such additional filings, recordings, refilings, rerecordings or other
actions are necessary to comply with the requirements of this paragraph 9.2.2
and (b) specifying the particulars of all action required by this paragraph
9.2.2 during the period from the date of such opinion through the last day of
the next succeeding calendar year, including, in the case of each continuation
statement required to be filed during such period, the office in which each such
continuation statement is to be filed and the filing date and filing number of
the original financing statement or fixture filing to be continued, and the
dates within which such continuation statement may be filed under applicable
law. Owner Trustee, Owner Participant and Indenture Trustee will cooperate with
Lessee to enable it to perform its obligations under this paragraph 9.2.2.
9.2.3 Maintenance of Corporate Existence, etc. Subject to the
----------------------------------------
provisions of paragraph 9.2.4, Lessee shall at all times maintain its existence
as a corporation under Texas law. Lessee will use its best efforts to maintain
its status as an electric public utility and keep in full force and effect its
electric franchises; provided, however, that subject to the first sentence of
-------- -------
this paragraph 9.2.3, Lessee may discontinue any such right or franchise taken
by condemnation by a Governmental Authority or if its Board of Directors shall
reasonably determine that the continuation of such franchise is not necessary or
desirable to the conduct of its business and such discontinuation shall not
materially adversely affect the transactions contemplated by the Operative
Documents. Lessee will obtain, accomplish, renew and/or cause to be continued in
full force and effect, as
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<PAGE>
appropriate, any Governmental Actions required for the lease, use, ownership,
operation and maintenance of the Facilities during the term of the Lease,
including all Governmental Actions specified in clauses (ii) and (iv) of Section
9.1.5 above.
9.2.4 Merger, Sale, etc. (a) Lessee shall not consolidate or merge
------------------
with or into any other corporation or convey, transfer or lease all or
substantially all of its assets to any Person, unless (i) such successor
corporation (if other than Lessee) shall have executed and delivered to Owner
Trustee, Owner Participant and, if the Lien of the Indenture shall then be in
effect, Indenture Trustee an agreement in form reasonably satisfactory to Owner
Participant containing an assumption by such successor corporation of the due
and punctual performance of each covenant and condition of this Agreement and
each other Operative Document then in effect to which Lessee is a party to be
performed or complied with by Lessee, (ii) such Person is a corporation
organized under the laws of a state of the United States or under Federal laws,
(iii) such consolidation, merger or transfer shall not violate any provision of,
or create a relationship which would be in material violation of, Governmental
Rules or Governmental Actions, (iv) if such successor corporation is other than
Lessee, Lessee shall have delivered to each of Owner Trustee, Owner Participant
and, if the Lien of the Indenture shall then be in effect, Indenture Trustee (a)
an opinion of counsel (which may be counsel to Lessee) in form reasonably
satisfactory to Owner Participant confirming the due authorization, execution,
delivery, validity and enforceability of the agreement referred to in clause (i)
above and as to compliance with clause (ii) and (iii) above and (b) an Officers'
Certificate in form reasonably satisfactory to Owner Participant stating that
such consolidation, merger, conveyance, transfer or lease and the agreement
referred to in clause (i) above complies with this paragraph 9.2.4 and that all
conditions precedent provided for herein relating to such action have been
complied with, and (v) Owner Participant shall not have determined (so long as
such determination is exercised in good faith after consultation with Lessee),
that upon such consolidation, merger, transfer or lease, such Person would not
have outstanding senior unsecured long-term debt securities (or, if such Person
is an electric utility company or does not have rated senior unsecured long-term
debt securities, senior secured long-term debt securities) rated by both Moody's
Investors Services, Inc. and Standard & Poor's Corporation (or any other
nationally recognized securities rating agency if such agencies shall no longer
rate securities) in any investment grade rating category (or, so rated by only
one such agency if the other such agency does not rate such securities) and
(unless Owner Participant shall have consented thereto) neither such agency has
publicly announced that it is reviewing such rating for a possible reduction
thereof; provided, however, that in the event that either such agency has
-------- -------
publicly announced that it is reviewing such rating for a possible reduction
thereof, Owner Participant, upon Lessee's
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<PAGE>
request, shall review Lessee's financial condition and other relevant
circumstances and considerations and shall not withhold the consent provided for
in this clause (v) if Owner Participant, in its sole discretion (so long as such
discretion is exercised in good faith), shall not consider it likely that, as a
result of such agency's review, such agency shall reduce such rating below the
lowest investment grade rating category; provided, further, that clause (v)
-------- -------
shall be deemed to be satisfied if Lessee shall have delivered to Owner
Participant written evidence, in substance satisfactory to the Owner
Participant, from each such rating agency to the effect that, upon such
consolidation, merger, transfer or lease, such Person would have such securities
rated in an investment grade rating category by such rating agency.
(b) Notwithstanding the provisions of paragraph 9.2.4(a) hereof,
Lessee may engage in any transaction not otherwise permitted by such paragraph
9.2.4(a) if, prior to the consummation of such transaction, (i) Lessee shall, in
accordance with the provisions of subsection 6.1(c) of the Lease, purchase the
Facilities or (ii) Owner Participant shall have waived compliance with paragraph
9.2.4(a) hereof.
(c) Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all the assets of Lessee in accordance with this
paragraph 9.2.4, the successor corporation formed by such consolidation or into
which Lessee is merged or to which such conveyance, transfer or lease is made
shall succeed to, and be substituted for, and may exercise every right and power
of, Lessee under this Agreement and each other Operative Document then in effect
and to which Lessee is a party, with the same effect as if such successor
corporation had been named as Lessee herein and therein. No such conveyance,
transfer or lease of all or substantially all the assets of Lessee shall have
the effect of releasing Lessee or any successor corporation which shall
theretofore have become such in the manner prescribed in this paragraph 9.2.4
from its liability hereunder or under any other Operative Document to which
Lessee is a party without the prior written consent of Lessor, Owner Participant
and Indenture Trustee. Nothing contained herein shall permit any lease, sublease
or other arrangement with respect to the Facilities except in compliance with
the applicable provisions of the Lease.
9.2.5 Indemnity. Lessee will indemnify each Indemnitee in
---------
accordance with the provisions of subsections 14.1 and 14.2 of the Lease.
9.2.6 Inspection. From the date hereof, Lessor, Owner Participant
----------
and Indenture Trustee will have the inspection and inquiry rights contained in
subsection 11.2 of the Lease.
9.2.7 Bonds. Lessee will not, and will not permit any entity to
-----
which it is related within the meaning of Section 318 of
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the Code to, acquire Bonds; provided, that Lessee may acquire Bonds in
--------
accordance with subsection 3.1(d) of the Lease.
9.2.8 Certain Governmental Actions. In the event of termination of
----------------------------
the Lease, Lessee will cooperate with Owner Participant, Owner Trustee and
Indenture Trustee in obtaining and use its best efforts to ensure the valid and
effective issue or, as the case may be, transfer or amendment, of all necessary
Governmental Actions for the continued operation of each Facility for which a
Funding Date has occurred.
9.2.9 Change of Principal Place of Business. Lessee will notify
-------------------------------------
Owner Trustee, Owner Participant and Indenture Trustee prior to the time Lessee
changes its principal place of business.
9.2.10 Certain Lessee Actions. Except to the extent required by
----------------------
law, Lessee will avoid the taking of any action which would subject any
Indemnitee to regulation under any Governmental Rule or Governmental Action
specifically applicable to electric utility companies.
SECTION 10. Representations, Warranties and Agreements of Seller.
----------------------------------------------------
10.1 Representations and Warranties. Seller represents and warrants
------------------------------
that:
10.1.1 Due Incorporation, etc. Seller is a corporation duly
-----------------------
organized and validly existing in good standing under the laws of the State of
Texas and has the corporate power and authority to carry on its business as
presently conducted, to own its property and sell each Facility to Owner Trustee
and to perform its obligations under this Agreement and each other Operative
Document to which it is or will be a party.
10.1.2 Authorization. The execution, delivery and performance by
-------------
Seller of this Agreement and each other Operative Document to which it is or
will be a party have been duly authorized by all necessary corporate action on
the part of Seller and do not, and will not, require the consent or approval of
any shareholder of Seller or any trustee or holder of any indebtedness or other
obligation of Seller, except for the release of each Facility from the Lien of
the Existing Mortgages.
10.1.3 Execution. This Agreement and each other Operative Document
---------
to which Seller is or will be a party have been, or when executed and delivered
will be, duly executed and delivered by Seller and, assuming the due
authorization, execution and delivery hereof and thereof by the other parties
hereto and thereto are, or upon execution and delivery thereof will be, legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms, subject to limitations
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imposed by applicable bankruptcy, insolvency or other laws affecting creditors'
rights generally and principles of equity.
10.1.4 No Violations, etc. The execution and delivery by Seller of
-------------------
this Agreement and each other Operative Document to which it is or will be a
party, are not and will not be, and the performance by Seller of the obligations
under each will not be inconsistent with its charter documents or by-laws, do
not and will not contravene any Governmental Rule or Governmental Action
applicable to it, and do not and will not contravene, any indenture, mortgage,
contract, or other instrument to which Seller is a party or by which it or its
property is bound.
10.1.5 Securities Act. Neither Seller nor anyone authorized by
--------------
Seller acting on its behalf has directly or indirectly offered any interest in
the Trust Estate or in any similar security, or in any security the offering of
which for purposes of the Securities Act would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person and neither Seller nor anyone
authorized to act on its behalf has taken or will take any action which would
subject the issuance of any interest in the Trust Estate to the provisions of
Section 5 of the Securities Act.
10.1.6 Litigation. There is no action, suit, investigation or
----------
proceeding pending or, to the knowledge of Seller, threatened against Seller or
its properties before any court, arbitrator or administrative or governmental
body which questions, or which, individually or in the aggregate, would affect,
the legality, validity or enforceability of any of the Operative Documents or
the ability of Seller to consummate the transactions contemplated thereby.
10.2 Lessee Acting as Seller. It is understood that, under certain
-----------------------
circumstances, it may be necessary or advisable for Seller to sell all or part
of either Facility to Lessee prior to the sale of such Facility to Owner Trustee
hereunder. Seller shall be entitled to so sell to Lessee all or part of either
Facility and to the extent of such a sale Lessee shall be deemed to have assumed
Seller's obligations hereunder with respect to such Facility or part thereof and
Seller shall be released from its obligations hereunder relating thereto. Upon
the occurrence of such a sale and purchase, the parties hereto shall enter into
any modification or supplements hereto and to the other Operative Documents as
shall be deemed necessary or desirable to evidence such assumption and
discharge.
SECTION 11. Conditions Precedent.
--------------------
11.1 Conditions Precedent to Participation and Commitment on the
-----------------------------------------------------------
Funding Dates. The obligation (a) of Owner Participant to
-------------
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make its Investment on each Funding Date shall be subject to the issue, sale and
delivery on such Funding Date of the Initial Series Bonds pursuant to the
Underwriting Agreement in an aggregate amount equal to the product of the Debt
Percentage and the Purchase Price for the Facility to which such Funding Date
relates and the receipt of payment or credit therefor, and to receipt of the
Certificate of Purchase Price for such Facility, (b) of Owner Trustee to
purchase a Facility and of Seller to sell such Facility on each Funding Date to
which such Funding Date relates shall be subject to the making by Owner
Participant of its Investment for such Facility and the receipt of payment or
credit for the Initial Series Bonds in an amount equal to the product of the
Debt Percentage and the Purchase Price for such Facility and (c) of Owner
Participant, Owner Trustee, Indenture Trustee, Seller and Lessee to consummate
the transactions contemplated hereby on each Funding Date shall, in each case,
be subject to the fulfillment on or prior to such Funding Date of the following
conditions precedent (each instrument, document, certificate or opinion referred
to below to be in form and substance satisfactory to the recipient):
11.1.1 Operative Documents. In the case of Owner Participant,
-------------------
Lessee, Seller, Indenture Trustee and Owner Trustee, the respective signatories
(other than such Person) to this Agreement, the Indenture, the Lease, the Tax
Indemnity Agreement, the Trust Agreement, the Trust Agreement Supplement No. 1
and the Support Agreements and the Bill of Sale for such Facility shall have
executed and delivered such documents and such other documents as are
contemplated hereby. All of the foregoing documents shall have been duly
authorized, executed and delivered by the parties thereto and shall be in full
force and effect on such Funding Date, and, in the case of Owner Participant,
Lessee, Seller, Owner Trustee and Indenture Trustee, such Persons shall have
received such evidence as to such authorization, execution and delivery by the
other parties thereto as they shall request. In the case of Owner Participant,
Lessee, Seller, Indenture Trustee and Owner Trustee, Schedules PBF, DCF, PBS,
DCS and 4 shall be acceptable to each such Person in accordance with the
provisions of Section 2.6 hereof.
11.1.2 Initial Series Bonds. In the case of Owner Participant,
--------------------
Seller and Lessee, on the Funding Date, Owner Trustee shall have executed and
delivered in accordance with the Underwriting Agreement the Initial Series
Bonds, duly authenticated by Indenture Trustee, in an aggregate principal amount
equal to the product of the Debt Percentage and the Purchase Price for such
Facility.
11.1.3 Certificate of Acceptance. In the case of Owner Participant
-------------------------
and Owner Trustee, such Persons shall have received duly executed copies of the
Certificate of Acceptance with respect to the Facility to be purchased on such
Funding Date.
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11.1.4 Lease Default; Lease Event of Default. In the case of Owner
-------------------------------------
Participant, Owner Trustee and Indenture Trustee, no Lease Default or Lease
Event of Default shall have occurred and be continuing.
11.1.5 Filings and Recordings. In the case of Owner Participant,
----------------------
Indenture Trustee, Owner Trustee and Lessee, financing statements under the
Uniform Commercial Code shall have been duly filed against Owner Trustee in
respect of the security interests to be created by the Indenture in all places
reasonably specified by special counsel for the Underwriters as being necessary
or advisable to perfect and protect such security interests, and financing
statements and fixture filings under the Uniform Commercial Code of any
jurisdiction shall have been duly filed, as precautionary filings, against
Lessee in favor of Owner Trustee (and assigned to Indenture Trustee) in respect
of the Facility to be purchased on such Funding Date in all places reasonably
specified by special counsel for Owner Participant or the Underwriters as being
necessary or advisable, and all filing fees in respect thereof shall have been
paid. The Bill of Sale and the Ground Lease with respect to such Facility, the
Lease and the Indenture (or memoranda thereof) shall have been duly recorded
with the applicable Recorder's Office of the county in which such Facility is
located and all recording and filing fees in respect thereof shall have been
paid. In the case of Owner Participant and Owner Trustee, all other filings,
recordings or other actions reasonably specified by special counsel for Owner
Participant or the Underwriters as being necessary or advisable to perfect or
protect the interests granted to Owner Trustee or Indenture Trustee pursuant to
any of the Operative Documents including, without limitation, appropriate
releases of the Liens from the Existing Mortgages with respect to the applicable
Facility, shall have been duly effected and all filing and recording fees in
respect thereof shall have been paid.
11.1.6 Representations and Warranties. With respect to Lessee and
------------------------------
the respective Persons not making the following representations and warranties,
the representations and warranties of (a) Owner Participant set forth in Section
5 and the last sentence of Section 13, (b) Owner Trustee set forth in Section 6
and the last sentence of Section 13, and (c) Indenture Trustee set forth in
Section 8 and the last sentence of Section 13, shall be true and correct on and
as of such Funding Date with the same effect as though made on and as of the
Funding Date, and Owner Participant, Owner Trustee, Indenture Trustee and Lessee
(in each case except as to the Person making such representations and
warranties) shall have received a certificate of a duly authorized officer or
representative of such Person, dated such Funding Date, to such effect, except
that, in the case of representations made by Owner Trustee in its fiduciary
capacity, such certificate shall be made by Owner Trustee.
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11.1.7 Lessee's and Seller's Performance. In the case of Owner
---------------------------------
Participant, Owner Trustee and Indenture Trustee, the representations and
warranties of Lessee and Seller set forth in Sections 9 and 10 and in any other
Operative Document to which Lessee is or will be a party shall be true and
correct on and as of the Funding Date with the same effect as though made on and
as of the Funding Date, Lessee and Seller shall have performed all of the
covenants and agreements in each Operative Document to which they are or will be
a party to be performed by them on or before such Funding Date, and all
conditions to the appropriate releases of the Liens of the Existing Mortgages
with respect to the applicable Facility are satisfied on such Funding Date, and
Owner Participant, Owner Trustee and Indenture Trustee shall have received an
Officers' Certificate of Seller, dated such Funding Date, to such effect with
respect to Seller and an Officers' Certificate of Lessee, dated such Funding
Date, to such effect with respect to Lessee and to the effect that no Lease
Default or Lease Event of Default shall have occurred and be continuing.
11.1.8 Opinions. In the case of Owner Participant, Lessee, Owner
--------
Trustee and Indenture Trustee, such Persons (other than the Person represented
by the following counsel) shall have received opinions of Hunton & Williams,
Owner Participant's special counsel, Baker & Botts, Owner Participant's special
Texas counsel, Worsham, Forsythe, Sampels & Wooldridge, Lessee's general
counsel, Reid & Priest, Lessee's special counsel, Shipman & Goodwin, Owner
Trustee's counsel, Indenture Trustee's counsel, Thelen, Marrin, Johnson &
Bridges, Seller's counsel, each dated such Funding Date, addressed to such
Persons, and each in form and substance satisfactory to the recipient thereof.
In the case of Owner Participant, it shall have received favorable opinions,
dated such Funding Date, and addressed and delivered only to it, of Hunton &
Williams, its special counsel, as to such tax and other matters as Owner
Participant may reasonably request.
11.1.9 Insurance. Insurance complying with the provisions of
---------
Section 13 of the Lease shall be in full force and effect and Owner Participant,
Owner Trustee and Indenture Trustee shall have received a certificate of an
independent insurance broker dated such Funding Date, reasonably satisfactory to
Owner Participant, setting forth the insurance obtained by or on behalf of
Lessee in accordance with such Section 13 and stating that such insurance is in
full force and effect and that all premiums then due thereon have been paid and,
in the opinion of the signer, such insurance complies with the provisions of the
Lease. Owner Participant, Owner Trustee and Indenture Trustee shall have
received certified copies of all policies evidencing such insurance (or
certificates therefor signed by the insurer or an agent authorized to bind the
insurer) and the form of such independent insurance broker's certificate at
least five (5) Business Days prior to the Funding Date.
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11.1.10 Taxes. In the case of Owner Participant, Owner Trustee and
-----
Indenture Trustee, all Taxes, if any, payable in connection with the execution,
delivery, recording and filing of all the documents and instruments referred to
in paragraph 11.1.5 above, this Agreement or any other Operative Document or in
connection with the original issue and sale of the Initial Series Bonds issued
on such Funding Date and the making by Owner Participant of its Investment on
such Funding Date shall have been duly paid in full by Lessee.
11.1.11 Certificate of Purchase Price. In the case of Owner
-----------------------------
Participant, it shall have received, at least three (3) Business Days prior to
the Funding Date for a Facility, a Certificate of Purchase Price for such
Facility as provided in subsection 4.1, completed in a manner satisfactory to
Owner Participant and its counsel. Owner Participant shall have the right to
review all books and records of Seller or Lessee necessary to verify the amounts
shown in the Certificate of Purchase Price.
11.1.12 Purchase Price. In the case of Owner Participant, the
--------------
Purchase Price of the Facility to be purchased on such Funding Date, together
with the Purchase Price of the Facility purchased on the prior Funding Date, if
any, shall not exceed $170,500,000.
11.1.13 Title Insurance. In the case of Owner Participant, Owner
---------------
Trustee and Indenture Trustee, Owner Trustee and Indenture Trustee shall have
received such leasehold, owner's and mortgagee's title insurance policies with
respect to the Ground Interest for such Facility (excluding any personal
property included therein) (including Owner Trustee's and Indenture Trustee's
interests therein) insuring each of Owner Trustee and Indenture Trustee in the
amount of $2,000,000, which policies (i) shall not disclose any exceptions
material to the operation and value of such Facility or the Site for such
Facility or the performance by Lessee of its obligations under this Agreement
and the other Operative Documents to which it is a party, and (ii) shall be in a
form reasonably satisfactory to Owner Participant.
11.1.14 Survey. In the case of Owner Participant, Owner Participant
------
and its special counsel shall have received from Lessee a current survey of the
Site with respect to which such Funding Date relates in form and substance
satisfactory to them. In the case of Indenture Trustee, Indenture Trustee and
its special counsel shall have received from Lessee such current survey.
11.1.15 Appraisal. In the case of Owner Participant, Owner
---------
Participant shall have received the Appraisal, which shall be in form and
substance satisfactory to Owner Participant, and a copy of such Appraisal shall
have been delivered to Lessee by Owner Participant.
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11.1.16 Schedules. In the case of Owner Participant, Owner
---------
Participant shall be satisfied that the Investment Percentage, Debt Percentage,
principal amount of the Initial Series Bonds, amortization schedules therefor
and average life thereof, interest rates and redemption premiums therefor, are
correct and in accord with those assumptions on which Basic Rent and Casualty
Value are to be calculated as of such Funding Date and permit adjustments to be
made pursuant to subsection 2.5.
11.1.17 Certain Letter. In the case of Owner Participant, the
--------------
letter, dated the Funding Date, referred to in paragraph 9.1.6 shall have been
delivered to Owner Participant.
11.1.18 Certificates. In the case of Owner Participant, Owner
------------
Trustee and Indenture Trustee, each of such Persons shall have received (i) a
copy of the resolutions of the Board of Directors of Lessee and of Seller duly
authorizing the execution, delivery and performance by Lessee or Seller, as the
case may be, of each of the Operative Documents to which it is or will be a
party, (ii) a copy of the charter documents of Lessee and of Seller, (iii) a
copy of the by-laws of Lessee and of Seller, each of which items described in
clauses (ii) through (iii) shall have been certified by the Secretary or any
Assistant Secretary of Lessee or Seller, as the case may be, (iv) an incumbency
certificate of the Secretary or any Assistant Secretary of Lessee and of Seller
as to the Person or Persons authorized to execute and deliver on behalf of
Lessee or Seller, as the case may be, the documents required to be executed and
delivered by such Person pursuant to this Agreement.
11.1.19 Other Evidence. In the case of Owner Participant, Lessee,
--------------
Owner Trustee and Indenture Trustee, each of such Persons shall have received
such other documents and certificates and opinions as such Person or its counsel
shall reasonably request.
11.1.20 Event of Loss; Casualty. In the case of Owner Participant,
-----------------------
Owner Trustee, Indenture Trustee and Lessee, no Event of Loss with respect to
such Facility shall have occurred. In the case of Owner Participant, no material
damage to such Facility shall have occurred.
11.1.21 Legality, etc. In the case of Owner Participant, Owner
--------------
Trustee, Indenture Trustee and Lessee, no change shall have occurred in
applicable law, or regulations thereunder or interpretations thereof, of or by
appropriate regulatory authorities that, in the opinion of such party or its
counsel, would make it illegal for such party to participate in any of the
transactions contemplated by the Operative Documents to which it is or will be a
party or subject such party to any material penalty or liability or burdensome
condition or regulation under or pursuant to any applicable law or governmental
regulation.
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11.1.22 Tax In-Service Date. In the case of Owner Participant, the
-------------------
Tax In-Service Date for such Facility shall have occurred on or before such
Funding Date.
11.1.23 Ratings. In the case of Owner Participant, Lessee shall have
-------
outstanding senior long term debt securities rated by both Moody's Investors
Service, Inc. and Standard & Poor's Corporation in any investment grade rating
category and, if either such rating agency has publicly announced that it is
reviewing such rating for a possible reduction thereof, there is, in the good
faith opinion of Owner Participant, no imminent risk of a reduction in such
rating to a rating which is below investment grade.
11.1.24 Registration Statement. Owner Participant shall have
----------------------
received an Officers' Certificate of Lessee, dated the first Funding Date to
occur, to the effect that, on the date it became effective and on such Funding
Date, the Registration Statement did not and does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements contained therein not misleading, and the final prospectus did
not and does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements contained therein not
misleading in light of the circumstances under which any such shall have been
made.
SECTION 12. Expenses Incurred After the Funding Date. Lessee will
----------------------------------------
pay, as Supplemental Rent, to the Person entitled thereto, (a) the ongoing fees,
expenses, disbursements and costs (including legal and other professional fees
and expenses) of Owner Trustee and Indenture Trustee and (b) all fees, expenses,
disbursements and costs (including, without limitation, legal and other
professional fees and expenses) (on an After-Tax Basis with respect to Owner
Participant) incurred by Owner Participant, Owner Trustee and Indenture Trustee
in connection with (i) any Lease Default or Lease Event of Default, (ii) the
entering into or giving or withholding of any amendment, modification,
supplement, waiver or consent with respect to any Operative Document, other than
the fees, expenses, disbursements and costs (including, without limitation,
legal and other professional fees and expenses) incurred by such Persons
directly associated with any such amendment, modification, supplement, waiver or
consent requested by Owner Participant in connection with any transfer of its
interest hereunder (except any transfers resulting from an Event of Loss, Lease
Default or Lease Event of Default) or under the Trust Agreement, which Owner
Participant shall pay, (iii) any Event of Loss and (iv) any financing of a
Nonseverable Alteration pursuant to Section 17 or issuance of Bonds pursuant to
Section 18.
SECTION 13. Brokerage and Finders' Fees and Commissions. Except to
-------------------------------------------
the extent payable by Owner Participant as Transaction Expenses, Lessee will
indemnify and hold harmless Seller, Owner Trustee and Owner Participant in
respect of any
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commissions, fees, judgments or other expenses of any nature and kind (except
fees of Lease Management Corporation in its capacity as financial advisor to
Owner Participant in connection with this transaction, which fees shall be paid
by Owner Participant) which any of them may become liable to pay by reason of
any claims by or on behalf of investment bankers, brokers, finders or agents in
connection with the transactions contemplated by this Agreement or any other
Operative Document, or any litigation or similar proceeding arising from such
claims (other than those arising out of claims with respect to contracts made by
Owner Participant). Each of Owner Participant, Seller, Owner Trustee and
Indenture Trustee represents and warrants that it has not made any contract in
respect of any commissions, fees, judgments or other expenses of the type
referred to above (except, in the case of Owner Participant, fees payable to
Lease Management Corporation in its capacity as financial advisor to Owner
Participant in connection with this transaction).
SECTION 14. Survival of Representations and Warranties; Binding
---------------------------------------------------
Effect.
------
14.1 Survival. All agreements, representations, warranties and
--------
indemnities contained in this Agreement and the other Operative Documents and in
any agreement, document or certificate delivered pursuant hereto or thereto or
in connection herewith or therewith shall survive and continue in effect
following the execution and delivery of this Agreement and the other Operative
Documents, the participation by Owner Participant in the Purchase Price of a
Facility, and all the agreements referred to in subsection 2.2 shall survive the
termination of this Agreement and the Lease.
14.2 Binding Effect. All agreements, representations, warranties and
--------------
indemnities in this Agreement and the other Operative Documents and in any
agreement, document or certificate delivered pursuant hereto or thereto or in
connection herewith or therewith shall bind the Person making the same and its
successors and assigns and shall inure to the benefit of each Person for whom
made and its permitted successors and assigns.
SECTION 15. Notices. All communications, notices and consents
-------
provided for in this Agreement shall be in writing and shall be given in person
or by courier or by means of telex, telecopy or other wire transmission (with
request for assurance of receipt in a manner typical with respect to
communications of that type), or mailed by first class mail, addressed as set
forth in Schedule 6 or at such other address as any such Person may from time to
time designate by notice duly given in accordance with the provisions of this
Section to the other parties hereto and shall be deemed given when received by
(or when proffered to, if receipt is not accepted) the party to whom it is
addressed.
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SECTION 16. Transfer of Owner Participant's Interest. Owner
----------------------------------------
Participant may at any time assign, convey or otherwise transfer all or a part
of its right, title and interest in and to the Trust Estate (whether or not the
same shall then have been pledged or mortgaged under the Indenture, but subject
to the Lien of the Indenture if then in effect) and in and to this Agreement and
the other Operative Documents if, but only if:
(a) the transferee or transferees shall be permitted transferees of
Owner Participant's interests under subsection 12.9 of the Trust Agreement and
Lessee and (if the Lien of the Indenture shall then be in effect) Indenture
Trustee shall have received advance notice of such transfer;
(b) the transferee or transferees shall enter into an agreement or
agreements, in form and substance reasonably satisfactory to Lessee and (if the
Lien of the Indenture shall then be in effect) Indenture Trustee, whereby the
transferee or transferees shall confirm that they have the requisite power and
authority to enter into and to carry out the transactions contemplated hereby
and in each Operative Document to which Owner Participant is or will be a party,
and that they shall be deemed a party to each of such Operative Documents and
shall agree to be bound by all the terms of, and to undertake all the
obligations of the transferor contained in, each of such Operative Documents
with respect to the interest being conveyed;
(c) such transfer shall not violate any provision of, or create a
relationship which in any material respect would be in violation of, any
applicable Governmental Rules or Governmental Actions and shall not involve,
either directly or indirectly, the assets of any Pension Plan;
(d) there shall be delivered to Indenture Trustee (if the Lien of the
Indenture shall then be in effect) and Lessee an opinion of counsel (which may
be counsel to Owner Participant) reasonably satisfactory to Indenture Trustee
and (unless a Lease Default or Lease Event of Default shall have occurred and be
continuing) to Lessee as to the due authorization, execution, delivery, validity
and enforceability of the agreement or agreements referred to in clause (b)
above and as to compliance with clause (c) above;
(e) the transferee or transferees shall be either: (1) Affiliates of
Owner Participant, (2) Persons (i) with a net worth at the time of such
conveyance of not less than $50 million and (ii) (unless Lessee shall have
consented thereto) which are not electric utility companies or Affiliates
thereof or (3) such other Person or Persons as Lessee shall have consented to,
such consent not to be unreasonably withheld; and
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(f) after giving effect to such transfer, there shall not be more than
three Owner Participants.
Upon any such transfer by Owner Participant as above provided, the
transferee or transferees shall be deemed an "Owner Participant" for all
purposes of the Operative Documents and each reference herein to Owner
Participant making such transfer shall thereafter be deemed a reference to the
transferee or transferees for all purposes; provided, however, that no such
-------- -------
transfer, if made to an Affiliate of Philip Morris Credit Corporation which does
not meet the requirements specified in paragraph (e)(2) or (3) in this Section
16 shall affect Philip Morris Credit Corporation's primary liability hereunder
and under the other Operative Documents to which it is a party; provided
--------
further, however, that if any such transfer shall be made (i) in compliance with
------- -------
the requirements of this Section 16 and (ii) (A) to a Person (including an
Affiliate of Philip Morris Credit Corporation) specified in paragraph (e)(2) or
(3) in this Section 16 or (B) Philip Morris Credit Corporation executes and
delivers a guarantee of the transferee's obligations under the Participation
Agreement, the Trust Agreement and the Tax Indemnity Agreement, in form and
substance satisfactory to Lessee, Philip Morris Credit Corporation shall, except
as otherwise provided in the guarantee referenced in clause (ii)(B) above, be
released, to the extent of such transfer, from its liability hereunder and under
the other Operative Documents to which it is or will be a party in respect of
obligations to be performed on or after the date of such transfer. If Owner
Participant shall have become subject to regulation as described in clause (e)
of the definition of "Event of Loss" (irrespective of whether such regulation
arose "solely" by reason of the transactions contemplated by the Operative
Documents), Owner Participant may make transfers pursuant to this Section 16
without regard to paragraph (e)(2)(ii) or (f) herein if Owner Participant shall
certify to Lessee that Owner Participant is making such transfer in an effort to
relieve itself of such regulation.
SECTION 17. Further Series of Bonds for Alterations, etc. If Lessee
---------------------------------------------
desires financing of any Nonseverable Alteration, Lessee may give Lessor, Owner
Participant and Indenture Trustee notice thereof in accordance with paragraph
(c) of subsection 11.6 of the Lease. Upon receipt of such notice, Owner
Participant shall negotiate with Lessee in good faith to participate in the
financing (in combination with the issuance of additional Bonds) of the
Nonseverable Alteration Cost of such Nonseverable Alteration by making an
additional equity investment in such amount as it shall, in its sole discretion,
determine at the prevailing rates for leases of similar assets and term with
lessees of comparable credit. If Owner Participant shall desire to participate
in the financing of the Nonseverable Alteration Cost of such Nonseverable
Alteration, which decision shall be in the sole discretion of Owner Participant,
Owner Participant shall advise Lessee of its desire to participate in such
financing as well as the amount of its proposed
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participation within 60 days following its receipt of the notice from Lessee
referred to in the first sentence of this Section 17. If Owner Participant
declines to participate in the financing of such Alteration, Owner Participant
agrees upon request of Lessee to cause Owner Trustee to effect a Supplemental
Alteration Financing in accordance with and subject to the limitations and
restrictions set forth in paragraph (c) of subsection 11.6 of the Lease and
Section 2.15 of the Indenture. In connection with any such Supplemental
Alteration Financing by Owner Participant described in subsection 11.6(c) of the
Lease, Basic Rent and Casualty Value shall be adjusted in accordance with
subsection 4.3 of the Lease.
SECTION 18. Refinancing of Bonds. (a) So long as no Lease Default
--------------------
or Lease Event of Default shall have occurred and be continuing, and subject to
full compliance with the terms and conditions of this Section 18 and of Section
2.15 of the Indenture, Lessee shall have the right to request Owner Trustee to,
and upon any such request, Owner Trustee shall, take such steps as may be
necessary to refund in whole or in part any series of Bonds then Outstanding
(the "Refunded Bonds") including the issuance and sale of one or more additional
--------------
series of Bonds (the "Refunding Bonds") in an aggregate principal amount which
---------------
shall be equal to the unpaid principal amount of the Refunded Bonds, the
proceeds of such issuance and sale to be applied to prepay the principal amount
of such Outstanding Refunded Bonds; provided, however, that the Refunding Bonds
-------- -------
shall have a maturity date not later than the expiration of the Basic Term;
provided, further, that, unless Owner Participant shall have, in its sole
-------- -------
discretion, consented thereto, in no event shall the Lessee exercise the right
granted under this Section on more than three separate occasions. Subject to
clause (iii) of paragraph (b), the amortization or sinking fund schedule for the
Refunding Bonds may be different from such schedule for the Refunded Bonds.
Lessee shall pay as Supplemental Rent under the Lease to the Persons entitled
thereto (i) an amount equal to any applicable premium and, subject to
subsections 3.2 and 3.6 of the Lease, if such refunding shall occur on a date
after the first Basic Rent Payment Date which is not a Basic Rent Payment Date,
accrued interest payable on the Refunded Bonds pursuant to the Indenture, and
(ii) except to the extent such fees, costs and expenses are payable by Owner
Participant pursuant to paragraph 2.2, an amount sufficient to compensate such
Person for the reasonable fees, costs and expenses (including, solely with
respect to Owner Participant, reasonable overhead costs) incurred by Owner
Trustee and Indenture Trustee and their respective counsel and Owner Participant
(on an After-Tax Basis) and its counsel in connection with such refunding.
(b) Lessee, Owner Trustee, Indenture Trustee and Owner Participant
agree that they will cooperate in any refinancing contemplated by this Section
18 and enter into such additional agreements and such supplements or amendments
to or consents or waivers under each of the Operative Documents (including
amendments
-38-
<PAGE>
to Schedule 1 to the Participation Agreement and annexes thereto to record any
change to the assumptions used in determining Basic Rent and Casualty Value) as
may reasonably be requested by Lessee to effectuate the transactions
contemplated in connection with any such refinancing, subject, however, to the
satisfaction of the following conditions:
(i) payment in full of the unpaid principal amount of, and premium, if
any, and accrued and unpaid interest on the Refunded Bonds and of all other
amounts then due and owing pursuant to the Indenture or the deposit of
sufficient funds or securities therefor in accordance with Section 3.01 of
the Indenture;
(ii) no Lease Default or Lease Event of Default shall have occurred
and be continuing;
(iii) such prepayment, all action taken pursuant to or to effect such
prepayment, the terms of the Refunding Bonds to be issued by Owner Trustee,
and the terms of any amendments to this Agreement and any other Operative
Document and the terms of any other document required in connection with
the issuance and sale of the Refunding Bonds, shall not individually or in
the aggregate, in the opinion of Owner Participant or Owner Trustee (if the
terms and conditions of the Refunding Bonds differ from those of the
Refunded Bonds in any respect other than the rate of interest payable
thereon), adversely affect the rights of Owner Participant, Owner Trustee
or Indenture Trustee, in their respective opinions, pursuant to this
Agreement (it being understood that, if the Owner Participant's Payback
Period is not extended to any time beyond the seventh anniversary of the
last Funding Date to occur as a result of any difference between the
amortization schedule or sinking fund schedule of the Refunded Bonds and
the Refunding Bonds and the corresponding adjustment to Basic Rent pursuant
to subsection 4.5 of the Lease, such different amortization schedule or
sinking fund schedule and adjustments to Basic Rent shall not be deemed an
adverse effect) and the transactions contemplated hereby and shall not, in
the opinion of tax counsel to Owner Participant, cause or result in any
material risk of an adverse tax consequence to it;
(iv) the percentages for Basic Rent and Casualty Value shall be
adjusted as provided in subsection 4.5 of the Lease;
(v) the Lessee shall have agreed to indemnify Owner Participant and
Owner Trustee against liabilities arising in connection with the offer or
sale of the Refunding Bonds under the Securities Act, and any other
applicable law relating to the sale of securities in a manner satisfactory
to Owner Participant and Owner Trustee;
-39-
<PAGE>
(vi) Owner Participant and Owner Trustee shall have received such
opinions of counsel as they may reasonably request concerning compliance
with the Securities Act, and any other applicable law relating to the sale
of securities;
(vii) in the case of any public offering of Bonds, any registration
statement filed with the Commission in connection therewith shall have been
in form reasonably satisfactory to Owner Participant and, if requested by
Owner Participant, there shall have been obtained from the staff of the
Commission a no action letter addressing such areas of applicable law
relating to the sale of securities as Owner Participant shall reasonably
request; and
(viii) any changes in the Operative Documents and the provisions of
all documentation relating to the offer and sale of the Refunding Bonds
shall be subject to the approval of Owner Participant and Owner Trustee,
which approval shall not be unreasonably withheld.
(c) Lessee shall give Owner Trustee, Owner Participant and Indenture
Trustee at least 60 days' prior written notice of any proposed refunding
pursuant to this Section 18, which notice shall set forth the terms and
conditions of such refunding and specify the proposed date therefor.
(d) Notwithstanding anything to the contrary contained in this Section
18, in no event shall Owner Participant have any obligation to initiate or
structure any refunding of Bonds or to take, or to cause Owner Trustee to take,
any action other than such as may be reasonably requested by Lessee as provided
in this Section.
(e) Nothing in this Section shall be construed as a limitation on
Owner Trustee's right to defease the Bonds, including any Refunding Bonds, as
provided in Section 3.01 of the Indenture; provided, however, that Owner Trustee
-------- -------
shall not deposit moneys or obligations with Indenture Trustee pursuant to
Section 3.01 of the Indenture and concurrently therewith specify a Redemption
Date for such Bonds without the prior written consent of Lessee. Notwithstanding
any such defeasance, any such defeased Bonds for which a Redemption Date was not
specified upon the deposit of moneys or obligations pursuant to Section 3.01 of
the Indenture may be refinanced in accordance with this Section.
SECTION 19. Public Offering of Bonds. Lessee shall have the right
------------------------
to cause any series of Bonds issued under the Indenture to be registered
pursuant to Section 5 of the Securities Act and to be publicly offered or to
cause Bonds to be sold to a special purpose corporation whose primary assets
would consist of such Bonds and which, in turn, would publicly offer notes to
enable it to purchase such Bonds. In any such event, the parties hereto,
-40-
<PAGE>
subject to the provisions of Section 18, shall perform such further acts and
execute such further documents as are reasonably necessary to effect such
transactions.
SECTION 20. Miscellaneous.
-------------
20.1 Execution. This Agreement may be executed in any number of
---------
counterparts and by the different parties hereto on separate counterparts, each
of which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
20.2 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
-------------
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE. TO THE EXTENT PERMITTED BY
LAW, ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT, AND OF THE OTHER OPERATIVE DOCUMENTS, OR ANY TRANSACTION CONTEMPLATED
HEREBY OR THEREBY, MAY BE INSTITUTED IN ANY FEDERAL COURT OF COMPETENT
JURISDICTION IN THE COUNTY OF NEW YORK AND STATE OF NEW YORK, AND LESSEE WAIVES
ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING, INCLUDING AN OBJECTION OF FORUM NON
CONVENIENS, AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY SUCH COURT IN ANY
SUCH SUIT, ACTION OR PROCEEDING, PROVIDED, HOWEVER, THAT NOTHING CONTAINED IN
-------- -------
THIS SUBSECTION 20.2 SHALL BE CONSTRUED TO PROHIBIT LESSEE FROM INITIATING AND
MAINTAINING ANY SUIT, ACTION OR PROCEEDING IN ANY OTHER COURT OR FORUM.
20.3 Amendments, Supplements, etc. Neither this Agreement nor any of
-----------------------------
the terms hereof may be amended, supplemented, waived or modified orally, but
only by an instrument in writing signed by the party against which enforcement
of such change is sought.
20.4 Headings. The headings of the sections and paragraphs of this
--------
Agreement have been inserted for convenience of reference only and shall in no
way restrict or otherwise modify any of the terms or provisions hereof.
20.5 Separability. If any term or provision hereof or the application
------------
thereof to any circumstance shall, in any jurisdiction and to any extent, be
invalid or unenforceable, such term or such provision shall be ineffective as to
such jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable any remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable. To the extent permitted
by applicable law, the parties hereto hereby waive any provision thereof that
renders any term or provision hereof invalid or unenforceable in any respect.
-41-
<PAGE>
20.6 Entire Agreement. This Agreement (including the schedules and
----------------
exhibits hereto) and the other Operative Documents supersede all prior
agreements, written or oral, between or among any of the parties hereto relating
to the transactions contemplated hereby and thereby and each of the parties
hereto represents and warrants to the others that this Agreement and the other
Operative Documents constitute the entire agreement among the parties relating
to the transactions contemplated hereby and thereby.
20.7 Obligations of Seller. Seller's obligations, representations and
---------------------
warranties hereunder and in any Operative Document, agreement, instrument or
certificate to which it is a party and delivers pursuant hereto are corporate
obligations only, and no director, officer, employee or agent of Seller shall in
any way be personally liable for any breach of any such obligation, and no party
hereto shall make nor be entitled to make any claim against any director,
officer, employee or agent of Seller in respect of any such breach of any such
obligation (such claims against such persons being hereby waived).
Notwithstanding any provision in this Agreement or any Operative Document to the
contrary, Seller shall have no obligation to sell, convey or deliver any
Facility to Owner Trustee except upon satisfaction, to the extent relating to
such Facility, of all of the terms in, and payment of all amounts due under,
those certain Project Sale and Purchase Agreements, each by and between Seller
and Lessee and dated as of December 15, 1988. Seller shall have no liability
hereunder to any party hereto arising from or relating to Seller's failure to
sell, convey or deliver any Facility; such failure being deemed the failure of a
condition precedent to consummation of the transactions contemplated hereby and
not a breach of any representation, warranty, covenant or other obligation of
Seller hereunder.
-42-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written.
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
except to the extent expressly
provided herein but as Owner
Trustee pursuant to the Trust
Agreement
By: /s/ Gilman N. Gauvin
---------------------------------
Title: Vice President
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,
not in its individual capacity
except to the extent expressly
provided herein but as Indenture
Trustee pursuant to the
Indenture
By:
---------------------------------
Title:
PHILIP MORRIS CREDIT CORPORATION,
Owner Participant
By:
---------------------------------
Title:
TEXAS UTILITIES ELECTRIC COMPANY,
Lessee
By:
---------------------------------
Title:
MESQUITE POWER CORPORATION,
Seller
By:
---------------------------------
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
Original Indenture Trustee
By:
---------------------------------
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written.
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
except to the extent expressly
provided herein but as Owner
Trustee pursuant to the Trust
Agreement
By:
---------------------------------
Title:
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,
not in its individual capacity
except to the extent expressly
provided herein but as Indenture
Trustee pursuant to the Indenture
By: /S/ BRUCE F. LEWIS
---------------------------------
Title: Second Vice President
PHILIP MORRIS CREDIT CORPORATION,
Owner Participant
By:
---------------------------------
Title:
TEXAS UTILITIES ELECTRIC COMPANY,
Lessee
By: [signature to come]
---------------------------------
Title: President
MESQUITE POWER CORPORATION,
Seller
By:
---------------------------------
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
Original Indenture Trustee
By:
---------------------------------
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written.
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
except to the extent expressly
provided herein but as Owner
Trustee pursuant to the Trust
Agreement
By:
---------------------------------
Title:
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,
not in its individual capacity
except to the extent expressly
provided herein but as Indenture
Trustee pursuant to the Indenture
By: [signature to come]
---------------------------------
Title: Second Vice President
PHILIP MORRIS CREDIT CORPORATION,
Owner Participant
By: /S/ JOHN T. MULLIGAN
---------------------------------
Title: Director, Lease Financing
TEXAS UTILITIES ELECTRIC COMPANY,
Lessee
By:
---------------------------------
Title:
MESQUITE POWER CORPORATION,
Seller
By:
---------------------------------
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
Original Indenture Trustee
By:
---------------------------------
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written.
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
except to the extent expressly
provided herein but as Owner
Trustee pursuant to the Trust
Agreement
By:
---------------------------------
Title:
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,
not in its individual capacity
except to the extent expressly
provided herein but as Indenture
Trustee pursuant to the Indenture
By:
---------------------------------
Title:
PHILIP MORRIS CREDIT CORPORATION,
Owner Participant
By:
---------------------------------
Title:
TEXAS UTILITIES ELECTRIC COMPANY,
Lessee
By: /S/ M.S. GREENE
---------------------------------
Title: Vice President
MESQUITE POWER CORPORATION,
Seller
By:
---------------------------------
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
Original Indenture Trustee
By:
---------------------------------
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written.
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
except to the extent expressly
provided herein but as Owner
Trustee pursuant to the Trust
Agreement
By:
---------------------------------
Title:
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,
not in its individual capacity
except to the extent expressly
provided herein but as Indenture
Trustee pursuant to the Indenture
By:
---------------------------------
Title:
PHILIP MORRIS CREDIT CORPORATION,
Owner Participant
By:
---------------------------------
Title:
TEXAS UTILITIES ELECTRIC COMPANY,
Lessee
By:
---------------------------------
Title:
MESQUITE POWER CORPORATION,
Seller
By: /S/ E.T. MOLNAR
---------------------------------
Title: President
THE FIRST NATIONAL BANK OF CHICAGO,
Original Indenture Trustee
By:
---------------------------------
Title:
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed as of the date first above written.
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
except to the extent expressly
provided herein but as Owner
Trustee pursuant to the Trust
Agreement
By:
---------------------------------
Title:
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,
not in its individual capacity
except to the extent expressly
provided herein but as Indenture
Trustee pursuant to the Indenture
By:
---------------------------------
Title:
PHILIP MORRIS CREDIT CORPORATION,
Owner Participant
By:
---------------------------------
Title:
TEXAS UTILITIES ELECTRIC COMPANY,
Lessee
By:
---------------------------------
Title:
MESQUITE POWER CORPORATION,
Seller
By:
---------------------------------
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
Original Indenture Trustee
By: /S/ SHARON MCGRATH
---------------------------------
Title: Trust Officer
<PAGE>
APPENDIX A
----------
DEFINITIONS
The following terms shall have the following meanings for all purposes
and such meanings are equally applicable both to the singular and plural forms
of the terms defined. Any term defined below by reference to any agreement shall
have such meaning whether or not such document is in effect. The terms "hereof,"
------
"herein," "hereunder" and comparable terms refer to the entire agreement with
------ ---------
respect to which such terms are used and not to any particular Section,
subsection, paragraph or other subdivision thereof.
"Act" when used with respect to any Holder shall have the meaning
---
specified in Section 1.04 of the Indenture.
"Additional 13.1(b) Insureds" shall have the meaning ascribed thereto
---------------------------
in subsection 13.1 of the Lease.
"Administration" shall mean the executive branch of the government of
--------------
the United States, including any agency or department thereof.
"Affiliate" shall mean, with respect to any Person, any other Person
---------
directly or indirectly controlling or controlled by, or under direct or
indirect common control with, such Person. For purposes of this definition,
the term "control" (including the correlative meanings of the terms
-------
"controlled by" and "under common control with"), as used with respect to
-------------- -------------------------
any Person, shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management policies of such Person,
whether through the ownership of voting securities or by contract or
otherwise.
"After-Tax Basis" shall mean, with respect to any payment received or
---------------
deemed to have been received by any Person, the amount of such payment
supplemented by a further payment to that Person so that the sum of the two
payments, after deduction of all Taxes and other charges (taking into
account any credits or deductions arising therefrom and the timing thereof
and any deductions or credits resulting from the payment, event or
circumstances giving rise to the obligation to make payment on the basis
herein described) resulting from the receipt (actual or constructive) of
such two payments imposed under any Federal, state or local law or by any
Governmental Authority or any taxing authority of any thereof (other than
payments imposed by a foreign country or subdivision or taxing authority of
a foreign country in which such Person is located), shall be equal to such
payment received or deemed to have been received.
<PAGE>
"Alterations" shall mean alterations, modifications, additions and
-----------
improvements to either Facility but does not include any original or
substitute or replacement Component. Unless subsequently agreed to by Owner
Participant and Lessee, additional combustion turbine electric generating
units constructed on either Site shall not be considered as Alterations.
"Applicable Interest Rate" shall mean, with respect to any Bond, the
------------------------
stated interest rate thereon.
"Appraisal" shall mean, with respect to each Facility, an appraisal,
---------
dated the Funding Date for such Facility, of Ebasco Services Incorporated
which shall take into account the rights and obligations of Owner Trustee
under the Support Agreements for such Facility and state (i) that on such
Funding Date, the Fair Market Sale Value of such Facility shall equal the
Purchase Price of such Facility; (ii) the useful life of such Facility and
that such useful life is at least equal to 125% of the sum of the Interim
Lease Term, the Basic Term and the Fixed Rental Renewal Term; (iii) that
the fair market value, as of the day 30 years after the Basic Lease
Commencement Date, of such Facility shall be at least equal to 20% of the
Purchase Price of such Facility (computed without regard to inflation or
deflation); (iv) that assuming Owner Trustee, and purchasers from and
assignees of Owner Trustee, will have those rights which the Support
Agreements for such Facility purport to grant and convey to Owner Trustee,
it will be commercially feasible for Owner Trustee, and purchasers from or
assignees of Owner Trustee unrelated to Lessee, to use such Facility upon
the expiration of the Lease Term; (v) that such Facility is a fully
integrated and, when operated in conjunction with the Support Agreements,
self-contained unit, and each Component of such Facility is interrelated to
the other Components in terms of useful life, function, structure and
design; (vi) that the term of the Support Agreements for such Facility is
at least as long as the Useful Life for such Facility; (vii) the fair
market value, as of the day 28 years after the Basic Lease Commencement
Date, of such Facility (taking into account the effects of inflation or
deflation); and (viii) the Fair Market Rental Value of the Ground Interest
for such Facility during the Lease Term.
"Appraisal Procedure" shall mean a procedure whereby two independent
-------------------
appraisers, one chosen by Lessee and one by Lessor, shall agree upon the
determinations then the subject of appraisal. Lessor or Lessee, as the case
may be, shall deliver a written notice to the other appointing its
appraiser within 15 days after receipt from the other of a written notice
appointing its appraiser. Each appraiser then shall prepare a written
appraisal with respect to the determinations which then are the subject of
appraisal. If within 30 days
-2-
<PAGE>
after appointment of the two appraisers they are unable to agree upon the
amount in question, a third independent appraiser shall be chosen within
ten days thereafter by the mutual consent of such first two appraisers or,
if such first two appraisers fail to agree upon the appointment of a third
appraiser, such appointment shall be made by the American Arbitration
Association, or any organization successor thereto, from a panel of
arbitrators having experience in the business of operating combustion
turbine electric generating units and a familiarity with equipment used or
operated in such business. The decision of the third appraiser so appointed
and chosen shall be given within 30 days after the selection of such third
appraiser. If three appraisers shall be appointed and the determination of
one appraiser is disparate from the middle determination by more than twice
the amount by which the other determination is disparate from the middle
determination, then the determination of such appraiser shall be excluded,
the remaining two determinations shall be averaged and such average shall
be binding and conclusive on Lessor and Lessee; otherwise the average of
all three determinations shall be binding and conclusive on Lessor and
Lessee.
"Authorized Agent" shall mean any Paying Agent or Bond Registrar.
----------------
"Basic Lease Commencement Date" shall mean July 1, l990.
-----------------------------
"Basic Rent" shall mean the rent payable pursuant to subsection 3.1 or
----------
5.2 of the Lease.
"Basic Rent Payment Dates" shall mean and include (a) each January 1
------------------------
and July l, commencing January 1, 1991, throughout the Basic Term and July
1, 2018, (b) each January 1, April 1, July 1 and October 1, throughout any
Renewal Term if elected, and the day immediately following the last day of
any Renewal Term, and (c) with respect to payments under the Ground Lease
after the Lease Termination Date, each April 1, July 1, October 1 and
January 1 after the Lease Termination Date and through such Ground Lease
Termination Date.
"Basic Term" shall mean the period commencing on the Basic Lease
----------
Commencement Date and ending on June 30, 2018, or such shorter period as
may result from earlier termination as provided in the Lease.
"Bill of Sale" shall mean either the Permian Basin Bill of Sale or the
------------
De Cordova Bill of Sale. "Bills of Sale" shall mean the collective
-------------
reference to the Permian Basin Bill of Sale and the De Cordova Bill of
Sale.
-3-
<PAGE>
"Board of Directors" shall mean either the Board of Directors of TU
------------------
Electric or any committee of that Board of Directors duly authorized to act
for it.
"Board Resolution" shall mean a copy of a resolution certified by the
----------------
Secretary or an Assistant Secretary of TU Electric to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to Indenture Trustee.
"Bondholder" or "Holder" shall mean a Person in whose name a Bond is
---------- ------
registered in the Bond Register.
"Bonds" shall mean any bonds issued pursuant to the Indenture and
-----
shall include, without limitation, the Initial Series Bonds.
"Bond Register" shall have the meaning specified in Section 2.07 of
-------------
the Indenture.
"Bond Registrar" shall mean any Person acting as Bond Registrar
--------------
pursuant to Section 9.14 of the Indenture.
"Business Day" shall mean any day other than a Saturday or Sunday or
------------
any other day on which banks located in the city in which the Indenture
Trustee Office is located (and, after the Lien of the Indenture is
discharged, the city in which the corporate trust department of the Owner
Trustee is located) are required or authorized to remain closed.
"Casualty Value", as of the Basic Lease Commencement Date or any Basic
--------------
Rent Payment Date, shall mean with respect to a Facility (a) during the
Basic Term, the amount determined by multiplying the Purchase Price of such
Facility by the percentage set forth in the column for such Facility
opposite such Basic Lease Commencement Date or Basic Rent Payment Date in
Schedule 2 to the Lease and (b) during the Fixed Rental Renewal Term or any
Fair Market Renewal Term, the amount determined by amortizing ratably the
Fair Market Sale Value of such Facility as of the day following the last
day of the immediately preceding term in quarterly steps to the estimated
Fair Market Sale Value of such Facility as of the end of such Renewal Term,
which amortized amounts shall be set forth in a revised Schedule 2 to the
Lease prior to the last day of the preceding term; provided, however, that
-------- -------
the sum of Casualty Value as of any date plus Supplemental Rent payable and
actually paid on such date to Persons entitled to distributions pursuant to
clauses "FIRST" through "FIFTH" of Section 4.03 of the Indenture shall be,
under any circumstances and in any event, an amount at least sufficient to
pay in full all sums which on such date of payment, if Section 4.03 of the
Indenture were applicable, would be
-4-
<PAGE>
entitled to be paid in priority to or on a parity with the payment
specified in clause "Fifth" thereof, after taking into account any
installment of Basic Rent paid on such date.
"Certificate of Acceptance" shall mean, with respect to a Facility,
-------------------------
any certificate, substantially in the form of Exhibit F to the
Participation Agreement, duly completed and executed and delivered on the
Funding Date for such Facility or thereafter as requested by Lessor
pursuant to paragraph (b) of subsection 11.5 of the Lease and executed by
the President or any Vice President of Lessee.
"Certificate of Purchase Price" shall mean, with respect to a
-----------------------------
Facility, an Officers' Certificate of Lessee in substantially the form of
Exhibit H to the Participation Agreement and indicating (i) the Purchase
Price of such Facility and (ii) Lessee's allocation of such Purchase Price
to the respective Classes.
"Change in Tax Laws" shall mean any amendment, modification, addition,
------------------
deletion or change in the provisions of the Code or the regulations
thereunder or any revenue procedure.
"Claims" shall mean liabilities, obligations, losses, damages,
------
penalties, claims (including without limitation claims involving liability
in tort, strict or otherwise), actions, suits, judgments, costs, expenses
and disbursements (including without limitation reasonable legal fees and
expenses) of any kind and nature whatsoever without any limitation as to
amount.
"Class" shall mean any of the depreciation categories of assets making
-----
up a Facility as specified in a Certificate of Purchase Price for such
Facility or a supplement thereto.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Commission" shall mean the Securities and Exchange Commission, as
----------
from time to time constituted, created under the Securities Exchange Act,
or if at any time such Commission is not existing and performing the duties
assigned to it as of the Permian Basin Funding Date under the Trust
Indenture Act, then the body performing such duties at such time.
"Components" shall mean appliances, parts, instruments, appurtenances,
----------
accessories, equipment and other property of whatever nature that may from
time to time be included in the Facilities or any part thereof.
"Debt Percentage" shall mean 85%.
---------------
-5-
<PAGE>
"De Cordova Bill of Sale" shall mean the deed and bill of sale,
-----------------------
substantially in the form of Exhibit C to the Participation Agreement,
between Seller and Lessor, duly completed and delivered on the De Cordova
Funding Date.
"De Cordova Common Site" shall mean the land described as such on
----------------------
Schedule DCS to the Participation Agreement and all rights of way,
easements, permits and other appurtenances to such land described on
Schedule DCS to the Participation Agreement (specifically excluding
therefrom any Transmission Facilities and the De Cordova Turbine Site).
"De Cordova Common Site Interest" shall mean an undivided 50% of TU
-------------------------------
Electric's 100% undivided interest in the De Cordova Common Site.
"De Cordova Contracts" shall have the meaning set forth in the
--------------------
Recitals to the Participation Agreement.
"De Cordova Facility" shall mean four combustion turbine electric
-------------------
generating units and associated equipment which are described in Schedule
DCF to the Participation Agreement and all assets included or incorporated
therein title to which shall vest in Lessor pursuant to the De Cordova Bill
of Sale (specifically excluding therefrom any Transmission Facilities).
"De Cordova Facility Agreement" shall mean the facility agreement, in
-----------------------------
substantially the form of Exhibit I to the Participation Agreement, between
Lessee and Owner Trustee, with appropriate inclusions with respect to the
De Cordova Facility and the De Cordova Site, as amended, modified or
supplemented from time to time.
"De Cordova Funding Date" shall mean the date of closing of the
-----------------------
transactions contemplated for the De Cordova Funding Date by the
Participation Agreement.
"De Cordova Ground Interest" shall mean, collectively, the De Cordova
--------------------------
Turbine Site Interest and the De Cordova Common Site Interest.
"De Cordova Ground Lease" shall mean the Assignment, Amendment and
-----------------------
Restatement of the ground lease, substantially in the form of Exhibit D to
the Participation Agreement, between Seller, Lessee and Owner Trustee, with
appropriate inclusions with respect to the De Cordova Site, as amended,
modified or supplemented from time to time.
"De Cordova Site" shall mean the collective reference to the De
---------------
Cordova Turbine Site and the De Cordova Common Site.
-6-
<PAGE>
"De Cordova Support Agreements" shall mean the De Cordova Ground Lease
-----------------------------
and the De Cordova Facility Agreement.
"De Cordova Turbine Site" shall mean the land described as such on
-----------------------
Schedule DCS to the Participation Agreement and all rights of way,
easements, permits and other appurtenances to such land described on
Schedule DCS to the Participation Agreement (specifically excluding
therefrom the Transmission Facilities).
"De Cordova Turbine Site Interest" shall mean TU Electric's 100%
--------------------------------
undivided interest in the De Cordova Turbine Site.
"De Cordova Turbines" shall mean the combustion turbines which are
-------------------
described in Schedule DCF to the Participation Agreement.
"Defaulted Interest" shall have the meaning set forth in Section 2.09
------------------
of the Indenture.
"DOL" shall have the meaning set forth in Section 5.1.7 of the
---
Participation Agreement.
"Effective Date" shall have the meaning ascribed thereto in subsection
--------------
7.1 of each Facility Agreement.
"Eligible Securities" shall mean any of the following obligations or
-------------------
securities on which neither TU Electric nor any of its subsidiaries is the
obligor: (a) interest bearing deposit accounts (which may be represented by
certificates of deposit) in national, state or foreign banks having a
combined capital and surplus of not less than $10,000,000, or savings and
loan association having total assets of not less than $25,000,000; (b)
bankers' acceptances drawn on and accepted by commercial banks having a
combined capital and surplus of not less than $10,000,000; (c)(i) direct
obligations of, (ii) obligations the principal of and interest on which are
unconditionally guaranteed by, and (iii) any other obligations the interest
on which is exempt from federal income taxation issued by, any State of the
United States of America, the District of Columbia or the Commonwealth of
Puerto Rico, or any political subdivision of any of the foregoing, which
are rated by a nationally recognized rating agency in any of its three
highest rating categories; (d) obligations of any agency or instrumentality
of the United States of America; (e) commercial or finance company paper
which is rated by a nationally recognized rating agency in its highest
rating category; (f) corporate debt securities (other than commercial or
financing company paper) or municipal debt securities rated by a nationally
recognized rating agency in any of its three highest rating categories; and
(g) repurchase agreements with
-7-
<PAGE>
banking or financial institutions having a combined capital and surplus of
not less than $10,000,000 with respect to any of the foregoing obligations
or securities.
"Energy" shall mean megawatt hours of electric energy.
------
"Engineer" shall mean a Person engaged in the engineering profession
--------
and familiar with engineering matters relating to the Facilities or
facilities similar thereto, whether or not an officer of or employed by TU
Electric (unless such Engineer is required to be Independent), appointed by
TU Electric.
"Engineer's Certificate" shall mean a certificate signed by an
----------------------
Engineer.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended.
"Event of Loss" shall mean, with respect to a Facility, any of the
-------------
following events: (a) the loss of such Facility, in its entirety or
substantially in its entirety, due to theft, disappearance, destruction or,
in the good faith and reasonable opinion of Lessee (evidenced by a
certified copy of a resolution of the Board of Directors of Lessee to that
effect), damage beyond economic repair or the loss of use of such Facility
for a period reasonably anticipated to extend for at least 30 months (or
such longer period not exceeding 60 months as may be required to repair or
restore such Facility to use, provided work of repair and restoration is
commenced promptly following loss and prosecuted diligently to completion)
for any such reasons; (b) the receipt of insurance proceeds based upon an
actual or constructive total loss with respect to such Facility; (c) the
condemnation, confiscation or seizure or loss of title to such Facility or
the Ground Interest relating thereto (in their entirety or a substantial
portion thereof such that the then remaining portion cannot practically be
utilized for the purposes intended) (including any such condemnation,
confiscation or seizure of title for a stated period which shall, or for an
indefinite period which is reasonably expected to, exceed the lesser of (i)
the remaining portion of the Lease Term and (ii) 60 months); (d) shutdown
of all or substantially all of such Facility as a result of any
Governmental Rule or Governmental Action for a period exceeding the lesser
of (i) the remaining portion of the Lease Term and (ii) 60 months,
provided, that any such shutdown reasonably expected to be permanent shall
--------
be deemed a permanent shutdown subject to clause (f) below; (e) at any time
after the Funding Date for such Facility and before the Lessor Possession
Date, Owner Trustee or Owner Participant or any Affiliate of either, which
was exempt from regulation as hereinafter described prior to the Funding
Date for such Facility or such later date as Owner Trustee or Owner
-8-
<PAGE>
Participant become a party to the Participation Agreement, solely by reason
of the ownership of such Facility or the interest in the Ground Interest
for such Facility by Lessor or the lease of such Facility to Lessee or any
of the other transactions contemplated by the Operative Documents, shall be
deemed by any Governmental Authority having jurisdiction to be, or shall be
subjected to regulation as, a Texas Public Utility, an "electric utility"
or a "public utility" or a "public utility holding company" or an Affiliate
of any of the foregoing under any Governmental Rule or Governmental Action
and the Person so subject to regulation, or Owner Trustee or Owner
Participant in the case of an Affiliate of either, shall have sent written
notice as provided in subsection 12.1 of the Lease that such Person deems
such regulation to be materially burdensome; or (f) the permanent
decommissioning or the permanent shutdown or taking out of service of such
Facility. In the case of an "Event of Loss" described in clause (e) above,
such regulation shall be deemed to have occurred solely by reason of the
ownership of such Facility or its interest in the Ground Interest for such
Facility by Lessor or the lease of such Facility to Lessee or any of the
other transactions contemplated by the Operative Documents, if such
ownership, leasing, or other transactions, assuming Owner Trustee and Owner
Participant had no other involvement, including investment in gas or
electric utility assets, in the gas or electric utility business, would
subject Owner Trustee or Owner Participant to such regulation.
"Excepted Payments" shall mean and include (i) any indemnity or other
-----------------
payment (whether or not Supplemental Rent and whether or not a Lease
Default or Lease Event of Default exists) payable under any Operative
Document directly to any Person other than Indenture Trustee, any
Bondholder or Lessor, including, without limitation, The Connecticut
National Bank, in its individual capacity, or American National Bank and
Trust Company of Chicago, in its individual capacity, or payable by Lessee
to Owner Trustee or Owner Participant to reimburse any such Person for its
costs and expenses in exercising its rights under the Operative Documents,
(ii) (A) insurance proceeds, if any, payable to Lessor or Owner Participant
under insurance separately maintained by Lessor or Owner Participant with
respect to a Facility or any portion thereof as permitted by subsection
13.5 of the Lease or (B) proceeds of personal injury or property damage
liability insurance maintained under any Operative Document for the benefit
of Lessor or Owner Participant, (iii) any amounts payable under any
Operative Document to reimburse Lessor or Owner Participant (including the
reasonable expenses of Lessor or Owner Participant incurred in connection
with any such payment) for expenses incurred in performing or complying
with any of the obligations of Lessee under and as permitted by any
Operative Document, (iv) any amount payable to Owner
-9-
<PAGE>
Participant in respect of the purchase price of Owner Participant's
interest in the Trust Estate, (v) any payments, insurance proceeds or other
amounts with respect to any portion of a Facility which have been released
from the Lien of the Indenture, (vi) any payment in reimbursement for a
payment made by the Owner Participant or the Owner Trustee pursuant to
Section 20 of the Lease, (vii) any payments to Owner Trustee under the
Ground Lease, (viii) any moneys or obligations to be released to the Owner
Trustee pursuant to Section 3.02 of the Indenture and (ix) any payments in
respect of interest to the extent attributable to payments referred to in
clauses (i) through (viii) above which constitute Excepted Payments.
"Existing Mortgage" shall mean (a) with respect to TU Electric, the
-----------------
Mortgage and Deed of Trust dated as of December 1, l983 from TU Electric in
favor of Irving Trust Company (now the Bank of New York), as trustee, and
(with respect to the Permian Basin Site) the Mortgage and Deed of Trust,
dated as of May 1, 1945 from Texas Electric Service Company in favor of The
Fort Worth National Bank (now Texas American Bank/Fort Worth, N.A. or its
successor), as trustee, and (with respect to the De Cordova Site) the
Mortgage and Deed of Trust, dated as of May 1, 1945 from Texas Power &
Light Company in favor of Republic National Bank of Dallas, as trustee
(NCNB Texas National Bank, successor trustee), and (b) with respect to
Seller, the Deed of Trust, Security Agreement and Fixture Filing, dated as
of December 15, 1988 from Seller in favor of Andrew C. Bennett, as trustee,
for the benefit of Morgan Guaranty Trust Company of New York and Morgan
Guaranty Trust Company of New York, as agent, and the Security Agreement,
dated as of December 15, 1988 between Seller and Morgan Guaranty Trust
Company of New York, as agent.
"Facilities" shall mean the collective references to the Permian Basin
----------
Facility and the De Cordova Facility. "Facility" shall mean either the
--------
Permian Basin Facility or the De Cordova Facility.
"Facilities Agreements" shall mean the De Cordova Facility Agreement
---------------------
and the Permian Basin Facility Agreement. "Facility Agreement" shall mean
------------------
either the De Cordova Facility Agreement or the Permian Basin Facility
Agreement.
"Fair Market Rental Renewal Term" shall mean the period commencing at
-------------------------------
the end of the Basic Term, the Fixed Rental Renewal Term, or any Fair
Market Rental Renewal Term, as the case may be, and ending on the date
chosen by Lessee pursuant to subsection 5.3 of the Lease, during which
either Facility may be leased for Fair Market Rental Value for such
Facility as permitted by subsection 5.1 of the Lease, or such shorter
period as may result from earlier termination of the Lease.
-10-
<PAGE>
"Fair Market Rental Value" or "Fair Market Sale Value" of any property
------------------------ ----------------------
or service as of any date shall mean the cash rent or cash price obtainable
in an arm's-length lease or sale, respectively, between an informed and
willing lessee or buyer (under no compulsion to lease or purchase) and an
informed and willing lessor or seller (under no compulsion to lease or
sell) of the property or services in question, and shall, in the case of a
Facility, be determined (unless determined pursuant to Section 17 of the
Lease) on the basis that (i) such Facility has been maintained in
accordance with, and Lessee has complied with, the requirements of the
Lease and the other Operative Documents, (ii) lessee or buyer would have
rights in, or an assignment of, the Operative Documents to which Lessor is
a party and the obligations related thereto, (iii) Lessee has complied with
the requirements of the Lease and each other Operative Document to which
Lessee is a party, and (iv) in the case of Fair Market Rental Value, the
Lease and the other Operative Documents would remain in effect. Owner
Participant and Lessee may agree upon a determination of Fair Market Rental
Value or Fair Market Sale Value, as the case may be; provided, that in the
--------
event that Owner Participant and Lessee are unable to agree upon such a
determination, such Fair Market Rental Value or Fair Market Sale Value
shall be determined in accordance with the Appraisal Procedure.
"FASB" shall have the meaning set forth in Section 2.4(b) of the
----
Participation Agreement.
"Federal Power Act" shall mean the Federal Power Act, as amended.
-----------------
"Fixed Rental Renewal Term" shall mean the period commencing on the
-------------------------
28th anniversary of the Basic Lease Commencement Date and ending on the day
immediately preceding the 30th anniversary of the Basic Lease Commencement
Date, during which either Facility may be leased as permitted by subsection
5.1 of the Lease, or such shorter period as may result from earlier
termination of the Lease.
"Funding Date" shall mean either the Permian Basin Funding Date or the
------------
De Cordova Funding Date.
"GAAP" shall mean generally accepted accounting principles in the
----
United States in effect from time to time as, in the case of Lessee,
modified by appropriate Governmental Authorities.
"Governmental Actions" shall mean all authorizations, consents,
--------------------
approvals, waivers, exceptions, variances, filings and declarations of or
with, Federal, state, county, municipal, regional or other governmental
authorities,
-11-
<PAGE>
agencies or boards and shall include without limitation those siting,
environmental and operating permits and licenses generally described in
Schedule 3 to the Participation Agreement.
"Governmental Authority" shall mean any nation or government, any
----------------------
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to government.
"Governmental Rules" shall mean, as of the time of any representation,
------------------
warranty or covenant with respect thereto, then existing statutes, laws,
rules, codes, ordinances, decisions, regulations, permits, certificates and
orders of Federal, state, county, municipal, regional or other governmental
authorities, agencies, boards or courts, including without limitation those
pertaining to health, safety, the environment or otherwise.
"Ground Interest" shall mean either the Permian Basin Ground Interest
---------------
or the De Cordova Ground Interest.
"Ground Leases" shall mean the Permian Basin Ground Lease and the De
-------------
Cordova Ground Lease. "Ground Lease" shall mean either the Permian Basin
------------
Ground Lease or the De Cordova Ground Lease.
"Ground Lease Termination Date" shall have, with respect to each
-----------------------------
Ground Lease, the meaning set forth in Section 5 of such Ground Lease.
"Guidelines" shall mean the guidelines set forth in Revenue Procedure
----------
75-21, 1975-1 C.B. 715, as further delineated in Revenue Procedure 75-28,
1975-1 C.B. 752, and as modified in Revenue Procedure 76-30, 1976-2 C.B.
647 and Revenue Procedure 79-48, 1979-2 C.B. 529, and as may be
subsequently modified, further delineated, clarified, interpreted or
substituted for.
"Holding Company Act" shall mean the Public Utility Holding Company
-------------------
Act of 1935, as amended.
"Incorporated in" shall mean incorporated or installed in or attached
---------------
to or otherwise made a part of.
"Indemnitee" shall mean Owner Trustee (both in its individual and
----------
fiduciary capacity), Owner Participant, the Trust Estate, Indenture Trustee
(both in its individual and fiduciary capacity), the Indenture Estate, and
the respective successors, assigns, agents, employees, officers, directors
and Affiliates of any thereof.
-12-
<PAGE>
"Indenture" shall mean the Trust Indenture, Security Agreement and
---------
Mortgage, dated as of December 1, 1989, among Lessee, Owner Trustee and
Indenture Trustee, in substantially the form of Exhibit B to the
Participation Agreement, as amended, supplemented or modified from time to
time.
"Indenture Default" shall mean an event which, after giving of notice
-----------------
or lapse of time, or both, would become an Indenture Event of Default.
"Indenture Estate" shall have the meaning specified in the Granting
----------------
Clause of the Indenture.
"Indenture Event of Default" shall mean any of the events specified in
--------------------------
subsection 8.01 of the Indenture.
"Indenture Trustee" shall mean American National Bank and Trust
-----------------
Company of Chicago, a national banking association, and each successor as
Indenture Trustee of the trusts created by the Indenture.
"Indenture Trustee Office" shall mean the office of the Indenture
------------------------
Trustee located at 33 North Lasalle Street, Chicago, Illinois 60690, or
such other office as may be designated by Indenture Trustee to Owner
Trustee and Lessee.
"Indenture Trustee's Liens" shall mean Liens which result from acts
-------------------------
of, or failure to act by, or as a result of Claims against, Indenture
Trustee (including in its individual capacity) unrelated either to the
Indenture or the Indenture Estate or the transactions contemplated by the
Participation Agreement or any other Operative Document.
"Independent" shall mean, when used with respect to any Person, a
-----------
Person who (i) is in fact independent, (ii) does not have any direct
financial interest or any material indirect financial interest in any
obligor upon the Bonds or any Affiliate of any such obligor and (iii) is
not connected with such obligor or any Affiliate of such obligor as an
officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions. Whenever it is provided in the
Indenture that any Independent Person's opinion or certificate shall be
furnished to Indenture Trustee, such Person shall be satisfactory to
Indenture Trustee in the exercise of reasonable care. Such opinion or
certificate shall state that the signer has read this definition and that
the signer is independent within the meaning hereof.
"Independent Engineer's Certificate" shall mean an Engineer's
----------------------------------
Certificate signed by an Independent Engineer.
-13-
<PAGE>
"Initial Series Bonds" shall mean the Secured Facility Bonds, Initial
--------------------
Series, issued pursuant to Section 2.14 of the Indenture, including any
Bonds issued under Section 2.06, 2.07, 2.08, 6.08 or 11.07 of the Indenture
in exchange therefor or in replacement thereof.
"Installment Payments" shall mean the regularly scheduled payments,
--------------------
containing interest only or both principal and interest, to be made on the
Bonds.
"Installment Payment Dates" shall mean the dates on which Installment
-------------------------
Payments on the Bonds are scheduled to be made.
"Interest Payment Date" shall mean the date of maturity of an
---------------------
installment of interest on the Bonds.
"Interim Lease Term" shall mean, with respect to a Facility, the
------------------
period commencing on the Funding Date for such Facility and ending on the
day immediately preceding the Basic Lease Commencement Date, or such
shorter period as may result from earlier termination of the Lease.
"Interim Rent Payment Date" shall mean January 1, 1990.
-------------------------
"Investment" shall have the meaning set forth in paragraph 2.1 of the
----------
Participation Agreement.
"Investment Percentage" shall mean 15.0%.
---------------------
"Lease" shall mean the Lease Agreement, dated as of December 1, 1989,
-----
between Owner Trustee, as lessor, and Lessee, as lessee, in substantially
the form of Exhibit A to the Participation Agreement, as amended,
supplemented or modified from time to time.
"Lease Default" shall mean an event which, after giving of notice or
-------------
lapse of time, or both, would become a Lease Event of Default.
"Lease Event of Default" shall have the meaning set forth in Section
----------------------
16 of the Lease.
"Lease Term" shall mean, with respect to a Facility, the term of the
----------
Lease, including the Interim Lease Term, the Basic Term, and all elected
Renewal Terms for such Facility.
"Lease Termination Date" shall mean, with respect to a Facility, the
----------------------
last day of the Lease Term for such Facility, whether occurring by reason
of expiration of the Lease Term for such Facility upon earlier termination
of the Lease pursuant to the terms thereof for such Facility.
-14-
<PAGE>
"Leased Assets" shall mean the collective reference to the Facilities
-------------
and the Ground Interests.
"Lessee" shall mean Texas Utilities Electric Company, a Texas
------
corporation, its successors or assigns.
"Lessor" shall mean Owner Trustee.
------
"Lessor Possession Date" shall mean, with respect to a Facility, the
----------------------
earlier of the Lease Termination Date for such Facility and the date of
loss of use or possession of such Facility by Lessee pursuant to Section 17
of the Lease.
"Lessor's Liens" shall mean Liens (a) which result from acts of, or
--------------
any failure to act by, or as result of Claims against, Lessor (including in
its individual capacity) unrelated to its interest in the Leased Assets,
the administration of the Trust Estate or the transactions contemplated by
the Operative Documents or (b) which result from Liens in favor of any
taxing authority by reason of the nonpayment by Lessor of any Tax, except
that Lessor's Liens shall not include any Lien directly resulting from any
Tax for which Lessee is specifically obligated to indemnify until such time
as Lessee shall have already paid to, or on behalf of, Lessor an indemnity
with respect to the same.
"Lien" shall mean any mortgage, pledge, security interest,
----
encumbrance, lien or charge of any kind, including, without limitation, any
conditional sale or other title retention agreement, any lease in the
nature thereof or the filing of, or agreement to give, any financing
statement under the Uniform Commercial Code of any jurisdiction.
"Majority in Interest" shall mean as of any particular date
--------------------
Bondholders holding in aggregate more than 50% of the total Outstanding
principal amount of the Bonds of all series.
"Maturity", when used with respect to any Bond, shall mean the date on
--------
which the principal of, and premium (if any) on, such Bond becomes due and
payable as therein or in the Indenture provided, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or
otherwise.
"Net After-Tax Return" means, with respect to a Facility, (a) Owner
--------------------
Participant's net after-tax multiple investment sinking fund yield, (b)
Owner Participant's aggregate after-tax cash flow computed in accordance
with the assumptions and methods of the Owner Participant, and (c) at least
90% of Owner Participant's originally anticipated aggregate book earnings
over the first five years of the Lease Term, each as computed in accordance
with the assumptions set forth in Schedule 1 to the Participation Agreement
and Section
-15-
<PAGE>
1 of the Tax Indemnity Agreement (except that with respect to any
Nonseverable Alteration financed pursuant to paragraph (e) of subsection
11.6 of the Lease, each of which shall be computed in accordance with the
assumptions used in connection with such financing) and "Components of Net
-----------------
After-Tax Return" shall mean each of the factors referred to in clauses
----------------
(a), (b) and (e) of this definition. The yield referred to in clause (a)
above shall be adjusted from time to time in accordance with the second
sentence of subsection 4.2 of the Lease.
"Nonseverable", when used in respect to any Alteration, shall mean any
------------
Alteration which is not a Severable Alteration.
"Nonseverable Alteration Cost" shall mean, with respect to any
----------------------------
Nonseverable Alteration, the cost thereof.
"Officers' Certificate" shall mean a certificate signed by the
---------------------
Chairman, the President or any Vice President and by the Comptroller,
Treasurer, any Assistant Treasurer, the Secretary or any Assistant
Secretary of the Person or any other Person duly authorized and acting in
such capacity with respect to which such term is used.
"Operative Documents" shall mean the Participation Agreement, the
-------------------
Trust Agreement, the Lease, the Bills of Sale, the Indenture, the Bonds,
the Support Agreements and the Tax Indemnity Agreement.
"Opinion of Counsel" shall mean a written opinion of counsel for any
------------------
Person either expressly referred to in the Indenture or otherwise
satisfactory to Indenture Trustee which may include, without limitation,
counsel to Owner Trustee, Owner Participant or TU Electric, whether or not
such counsel is an employee of any of them.
"Original Ground Leases" shall mean the Permian Basin Ground Lease,
----------------------
dated as of December 15, 1988 and the De Cordova Ground Lease, dated as of
December 15, 1988, each between Lessee and Seller.
"Original Indenture Trustee" shall mean The First National Bank of
--------------------------
Chicago, a national banking association.
"Outstanding", when used with respect to Bonds, shall mean, as of the
-----------
date of determination, all Bonds theretofore authenticated and delivered
under the Indenture, except:
(i) Bonds theretofore cancelled by the Indenture Trustee or
delivered to Indenture Trustee for cancellation;
-16-
<PAGE>
(ii) Bonds or portions thereof for whose payment or redemption
money in the necessary amount has been theretofore deposited with
Indenture Trustee in trust for the Holders of such Bonds as provided
in Section 3.01 of the Indenture, provided that, if such Bonds are to
--------
be redeemed (otherwise than through the operation of the Sinking
Fund), notice of such redemption has been duly given pursuant to the
Indenture or provision therefor satisfactory to Indenture Trustee has
been made; and
(iii) Bonds paid or in exchange for or in lieu of which other
Bonds have been authenticated and delivered pursuant to the Indenture
unless held by a Holder in whose hands such Bonds constitute valid
obligations of Owner Trustee;
provided, however, that in determining whether the holders of the requisite
-------- -------
principal amount of Bonds Outstanding have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Bonds owned
by Owner Trustee, TU Electric, Owner Participant, or any Affiliate of TU
Electric, Owner Trustee or Owner Participant, shall be disregarded and
deemed not to be Outstanding, unless such Person owns 100% of the Bonds
owned by all Persons, except that, in determining whether Indenture Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Bonds which Indenture Trustee
knows to be so owned shall be so disregarded. Bonds so owned which have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of Indenture Trustee the pledgee's right so
to act with respect to such Bonds and that the pledgee is not the Owner
Trustee, TU Electric, Owner Participant or any Affiliate of Owner Trustee,
TU Electric, or Owner Participant.
"Owner Participant" shall mean Philip Morris Credit Corporation and
-----------------
its successors or assigns, in each case as permitted under the Trust
Agreement and the Participation Agreement.
"Owner Participant's Liens" shall mean Liens (a) which result from
-------------------------
acts of, or any failure to act by, or as a result of Claims against, Owner
Participant unrelated to the transactions contemplated by the Operative
Documents or (b) which result from Liens in favor of any taxing authority
by reason of the nonpayment by Owner Participant of any Tax, except that
Owner Participant's Liens shall not include any Lien directly resulting
from any Tax for which Lessee is specifically obligated to indemnify until
such time as Lessee shall have already paid to, or on behalf of, Owner
Participant an indemnity with respect to the same.
-17-
<PAGE>
"Owner Trustee" shall mean The Connecticut National Bank, a national
-------------
banking corporation, and each successor as Owner Trustee, not in its
individual capacity (except as expressly provided otherwise) but solely as
trustee under the Trust Agreement.
"Owner Trustee Request" and "Owner Trustee Certificate" shall mean,
--------------------- -------------------------
respectively, a written request or certificate signed in the name of Owner
Trustee by a Responsible Officer thereof.
"Participation Agreement" shall mean the Amended and Restated
-----------------------
Participation Agreement, dated as of November 28, 1989, among Owner
Trustee, Original Indenture Trustee, Indenture Trustee, Owner Participant,
Seller and Lessee, being an amendment and restatement of the Participation
Agreement, dated as of December 1, 1988, among Owner Trustee, Original
Indenture Trustee, Owner Participant, Seller and Lessee, as amended,
supplemented or modified from time to time.
"Payback Period" shall mean the number of months, commencing with and
--------------
including the last Funding Date to occur, until the cumulative,
undiscounted, net after-tax cash flow which Owner Participant receives is
equal to the Investment.
"Paying Agent" shall mean any Person acting as Paying Agent pursuant
------------
to Section 9.14 of the Indenture.
"Pension Plan" shall have the meaning set forth in Section 9.1.12 of
------------
the Participation Agreement.
"Permian Basin Bill of Sale" shall mean the deed and bill of sale,
--------------------------
substantially in the form of Exhibit C to the Participation Agreement,
between Seller and Lessor, duly completed and delivered on the Permian
Basin Funding Date.
"Permian Basin Common Site" shall mean the land described as such on
-------------------------
Schedule PBS to the Participation Agreement and all rights of way,
easements, permits and other appurtenances to such land described on
Schedule PBS to the Participation Agreement (specifically excluding
therefrom any Transmission Facilities and the Permian Basin Turbine Site).
"Permian Basin Common Site Interest" shall mean an undivided 50% of TU
----------------------------------
Electric's 50% undivided interest in the Permian Basin Common Site.
"Permian Basin Contracts" shall have the meaning set forth in the
-----------------------
Recitals to the Participation Agreement.
"Permian Basin Facility" shall mean two combustion turbine electric
----------------------
generating units and associated equipment
-18-
<PAGE>
which are described in Schedule PBF to the Participation Agreement and all
assets included or incorporated therein title to which shall vest in Lessor
pursuant to the Lease (specifically excluding therefrom any Transmission
Facilities).
"Permian Basin Facility Agreement" shall mean the facility agreement,
--------------------------------
in substantially the form of Exhibit I to the Participation Agreement,
between Lessee and Owner Trustee, with appropriate inclusions with respect
to the Permian Basin Facility and the Permian Basin Site, as amended,
modified or supplemented from time to time.
"Permian Basin Funding Date" shall mean the date of closing of the
--------------------------
transactions contemplated for the Permian Basin Funding Date by the
Participation Agreement.
"Permian Basin Ground Interest" shall mean, collectively, the Permian
-----------------------------
Basin Turbine Site Interest and the Permian Basin Common Site Interest.
"Permian Basin Ground Lease" shall mean the Assignment, Amendment and
--------------------------
Restatement of the ground lease, substantially in the form of Exhibit D to
the Participation Agreement, between Seller, Lessee and Owner Trustee, with
appropriate inclusions with respect to the Permian Basin Site, as amended,
modified or supplemented from time to time.
"Permian Basin Site" shall mean the collective reference to the
------------------
Permian Basin Turbine Site and the Permian Basin Common Site.
"Permian Basin Support Agreements" shall mean the Permian Basin Ground
--------------------------------
Lease and the Permian Basin Facility Agreement.
"Permian Basin Turbine Site" shall mean the land described as such on
--------------------------
Schedule PBS to the Participation Agreement and all rights of way,
easements, permits and other appurtenances to such land described on
Schedule PBS to the Participation Agreement (specifically excluding
therefrom any Transmission Facilities).
"Permian Basin Turbine Site Interest" shall mean TU Electric's 100%
-----------------------------------
undivided interest in the Permian Basin Turbine Site.
"Permian Basin Turbines" shall mean the combustion turbines which are
----------------------
described in Schedule PBF to the Participation Agreement.
"Permitted Interest Liens" shall mean (a) the respective rights and
------------------------
interests of Lessee, Owner Participant, Lessor,
-19-
<PAGE>
Indenture Trustee and Bondholders, as provided in the Operative Documents,
(b) Lessor's Liens, Owner Participant's Liens and Indenture Trustee's
Liens, (c) Liens for Taxes either not delinquent or being contested in good
faith and by appropriate proceedings, so long as such proceedings shall not
involve any material danger of the sale, forfeiture or loss of any part of
the Leased Assets, the Trust Estate, the Indenture Estate, title thereto or
any interest therein, and shall not interfere with the use or disposition
of any of the foregoing or any part thereof, or title thereto or any
interest therein, or the payment of Rent, and Lessee shall have provided
reserves if and to the extent deemed appropriate by it to be adequate for
the payment of such Taxes, (d) materialmen's, mechanics', workers',
repairmen's, employees', vendors', laborers' or other like Liens, the
aggregate amount of which does not exceed $7,500,000, arising in the
ordinary course of business for amounts either not due or being contested
in good faith and by appropriate proceedings so long as such proceedings
shall not involve any material danger of the sale, forfeiture or loss of
any part of the Leased Assets, the Trust Estate, the Indenture Estate,
title thereto or any interest therein and shall not interfere with the use
or disposition of any of the foregoing or any part thereof, title thereto
or interest therein, or the payment of Rent, and Lessee shall have provided
reserves if and to the extent deemed appropriate by it to be adequate for
the payment of such amounts, (e) Liens arising out of judgments or awards
against Lessee with respect to which at the time an appeal or proceeding
for review is being prosecuted in good faith and either which have been
bonded or for the payment of which adequate reserves shall have been
provided so long as such judgment, award or appeal shall not involve any
material danger of the sale, forfeiture or loss of any part of the Leased
Assets, the Trust Estate, the Indenture Estate, title thereto or any
interest therein and shall not interfere with the use or disposition of any
of the foregoing or any part thereof or title thereto or interest therein,
or the payment of Rent.
"Permitted Investments" shall mean (i) obligations of the United
---------------------
States of America, fully guaranteed as to interest and principal by the
United States of America, (ii) certificates of deposit of any commercial
bank incorporated under the laws of the United States of America or any
state thereof or the District of Columbia which bank is a member of the
Federal Reserve System, has a combined capital and surplus of not less than
$100,000,000 and whose long-term unsecured debt rating is rated A or better
by Standard and Poor's Corporation and (iii) commercial paper, rated P-l or
better by Moody's Investors Services, Inc. and A-l or better by Standard
and Poor's Corporation; provided, however, that no such investment made
-------- -------
while there shall have occurred and be continuing an Indenture Default or
an Indenture Event of Default shall be a Permitted
-20-
<PAGE>
Investment unless directed to be made by a Majority in Interest, and
provided, further, that such investments shall mature not later than the
-------- -------
dates on which the moneys so invested shall be required to be applied
pursuant to the terms of the Indenture.
"Permitted Project Liens" shall mean (a) the reservations,
-----------------------
encumbrances and title defects set forth in Schedule 4 to the Participation
Agreement and (b) Liens arising after the Funding Date for the Facility to
which such Lien pertains with respect to the Site for such Facility so long
as such Liens shall not, individually or in the aggregate, involve any
material danger of the sale, forfeiture or loss of any part of the Leased
Assets, the Trust Estate, the Indenture Estate, title thereto or any
interest therein and shall not interfere with the use or disposition
thereof or title thereto or interest therein, or the payment of Rent.
"Person" shall mean any individual, partnership, corporation, trust,
------
unincorporated association, joint venture, government or any department or
agency thereof, or any other entity.
"Place of Payment" shall mean the city in which Indenture Trustee
----------------
Office is located.
"Plan" shall have the meaning set forth in Section 5.1.7 of the
----
Participation Agreement.
"Points of Interconnection" shall mean the points of access where the
-------------------------
transmission system of TU Electric interconnects with the transmission
system of another electric utility.
"Power" shall mean electric capacity and associated Energy.
-----
"Predecessor Bonds" of any particular Bond shall mean every previous
-----------------
Bond evidencing all or a portion of the same debt as that evidenced by such
particular Bond; and, for the purposes of this definition, any Bond
authenticated and delivered under Section 2.08 of the Indenture in lieu of
a lost, destroyed or stolen Bond shall be deemed to evidence the same debt
as the lost, destroyed or stolen Bond.
"Prime Rate" shall mean the rate of interest publicly announced by
----------
Morgan Guaranty Trust Company of New York, in New York, New York, from time
to time as its prime or reference rate.
-21-
<PAGE>
"Principal Severable Alteration" shall mean (with respect to a
------------------------------
Facility) one or more Severable Alterations having an aggregate cost in
excess of $1 million.
"Prudent Utility Practice" shall mean, at a particular time, either
------------------------
any of the practices, methods and acts engaged in or approved by a
significant portion of the investor-owned electrical utility industry prior
thereto or any of the practices, methods or acts, which, in the exercise of
reasonable judgment in the light of the facts known at the time the
decision was made, could have been expected to accomplish the desired
result at the lowest reasonable cost consistent with reliability, safety
and expedition. Prudent Utility Practice is not intended to be limited to
the optimum practice, method or act, to the exclusion of all others, but
rather to be a spectrum of possible practices, methods or acts.
"PUC" shall mean the Public Utility Commission of the State of Texas
---
or any successor thereto.
"Purchase Price" shall mean, with respect to a Facility, the costs and
--------------
expenses incurred or reasonably estimated to be incurred through the date
of commercial operation thereof for such Facility in connection with the
design, engineering, acquisition, construction, erection, assembly,
inspection, testing and completion of such Facility, which shall be
includable in the capitalized costs thereof in accordance with sound
accounting practice, including, without limitation (to the extent so
includable in capitalized costs), (i) any property, sales, use and other
taxes payable with respect to such Facility, (ii) all costs and expenses of
construction of such Facility, including temporary facilities utilized by
the Lessee, and of the purchase of equipment and materials for such
Facility and (iii) interest and fees payable in connection with such
Facility.
"Record Date" shall have the meaning set forth in Section 2.09 of the
-----------
Indenture.
"Redemption Date or Dates", when used with respect to any Bond or
------------------------
portion thereof to be redeemed, shall mean the date or dates fixed for such
redemption by or pursuant to the Indenture.
"Redemption Price", when used with respect to any Bond or portion
----------------
thereof to be redeemed, shall mean the applicable percentage of the
principal amount thereof indicated in the Indenture as payable upon the
redemption thereof or in the form of Bond for a series.
-22-
<PAGE>
"Refunded Bonds" shall have the meaning ascribed thereto in Section 18
--------------
of the Participation Agreement.
"Refunding Bonds" shall have the meaning ascribed thereto in Section
---------------
18 of the Participation Agreement.
"Registration Statement" shall mean the registration statement on Form
----------------------
S-3, including all exhibits and all documents incorporated in the
Registration Statement by reference, filed with the Commission under the
Securities Act in connection with the offer, issuance and sale of the
Initial Series Bonds.
"Reimbursement Amount" shall have the meaning ascribed thereto in
--------------------
subsection 2.1(b) of the Participation Agreement.
"Renewal Term" shall mean any of the Fixed Rental Renewal Term or a
------------
Fair Market Rental Renewal Term.
"Rent" shall mean the collective reference to Basic Rent and
----
Supplemental Rent.
"Rent Payment Date" shall mean the collective reference to Basic Lease
-----------------
Commencement Date, Basic Rent Payment Dates and Interim Rent Payment Date.
"Responsible Officer", when used with respect to Owner Trustee, shall
-------------------
mean an officer in its Corporate Trust Administration (or any successor
group of Owner Trustee) or any other officer customarily performing
functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject. "Responsible
-----------
Officer", when used with respect to the Indenture Trustee, shall mean any
-------
officer within the Corporate Trust Administration (or any successor group
of the Indenture Trustee), including any vice president, assistant vice
president, assistant secretary or any other officer or assistant officer of
the Indenture Trustee customarily performing functions similar to those
performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred at the
Indenture Trustee's Office because of his knowledge of and familiarity with
the particular subject.
"Scrap Value" shall have the meaning accorded such term under GAAP.
-----------
"Section 13.1(a) Insureds" shall have the meaning ascribed thereto in
------------------------
paragraph (a) of subsection 13.1 of the Lease.
-23-
<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Securities Exchange Act" shall mean the Securities Exchange Act of
-----------------------
1934, as amended.
"Seller" shall mean Mesquite Power Corporation, a Texas corporation,
------
its successors and assigns.
"Service" shall mean the Internal Revenue Service of the United States
-------
of America.
"Severable", when used with respect to any Alteration to a Facility,
---------
shall mean any Alteration which can be readily removed from such Facility
without (i) materially damaging such Facility or (ii) materially
diminishing or impairing the value, Useful Life, utility or condition which
such Facility would have had if the applicable Alteration had not been
made.
"Sinking Fund" shall mean, with respect to any series of Bonds, the
------------
sinking fund provided for such series in the Indenture.
"Site" shall mean either the Permian Basin Site or the De Cordova
----
Site.
"Stated Maturity", when used with respect to any Bond, shall mean the
---------------
date specified in such Bond as the fixed date on which the principal of
such Bond is due and payable.
"Stipulated Interest Rate" at any time shall mean (i) with respect to
------------------------
the portion of Rent equal in amount to principal, premium and (to the
extent permitted by applicable law) interest on any Bond then due and
payable, the Applicable Interest Rate of each such Bond and (ii) in respect
of all other portions of Rent, 2% in excess of the Prime Rate.
"Supplemental Alteration Financing" shall have the meaning ascribed
---------------------------------
thereto in paragraph (c) of subsection 11.6 of the Lease.
"Supplemental Rent" shall mean any and all amounts, liabilities and
-----------------
obligations other than Basic Rent which Lessee assumes or agrees to pay to
or on behalf of Lessor, Owner Trustee, Owner Participant, any Bondholder,
Indenture Trustee or any Indemnitee under any Operative Document (whether
or not designated as Supplemental Rent), including, without limitation,
Casualty Value, Fair Market Sale Value and Termination Value payments, or
damages for breach of any covenants, representations, warranties,
indemnities or agreements therein.
-24-
<PAGE>
"Support Agreements" shall mean, collectively, the Ground Leases and
------------------
the Facilities Agreements.
"Tax" shall mean any and all fees (including, without limitation,
---
documentation, recording, license and registration fees), taxes (including,
without limitation, income, gross receipts, sales, use, property (personal
and real, tangible and intangible), intangibles, excise and stamp taxes),
levies, imposts, duties, charges, assessments or withholdings of any nature
whatsoever, general or special, ordinary or extraordinary, together with
any and all penalties, fines, additions and interest thereon.
"Tax Indemnity Agreement" shall mean the Tax Indemnity Agreement,
-----------------------
dated as of December 1, 1989 between Owner Participant and Lessee
substantially in the form of Exhibit G to the Participation Agreement, as
amended, modified or supplemented from time to time.
"Tax In-Service Date" shall mean, with respect to a Facility, the date
-------------------
such Facility was placed in service within the meaning of Section 1.168-
2(1)(2) of the Proposed Treasury Regulations.
"Termination Date" shall have the meaning set forth in subsection 7.2
----------------
of the Lease.
"Termination Value", as of the Basic Lease Commencement Date or any
-----------------
Basic Rent Payment Date, shall mean the aggregate Casualty Values of the
Facilities subject to the Lease for such Basic Lease Commencement Date or
Basic Rent Payment Date.
"Texas Public Utility" shall mean a "public utility", "utility",
--------------------
"retail public utility", "electric utility" or "utility company", each
within the meaning of the Texas Public Utility Regulatory Act, the Texas
Tax Code or the Texas Business and Commerce Code.
"Transaction Expenses" shall mean and include the fees, expenses,
--------------------
disbursements and costs incurred in connection with the preparation,
execution and delivery of the Operative Documents and the Underwriting
Agreement and the consummation of the transactions contemplated thereby
including, without limitation, (i) counsel's fees (other than fees of
Lessee's and Seller's counsel), expenses and disbursements (including those
of Winthrop, Stimson, Putnam & Roberts, as special counsel to the
Underwriters), (ii) fees and expenses of any accounting engineering firm(s)
retained by Owner Participant, (iii) fees of Salomon Brothers Inc and the
Underwriters, (iv) rating agency fees, (v) initial (but not ongoing) fees
of Owner Trustee and Indenture Trustee, (vi) Taxes paid on the Funding
Dates in respect of the recording of the Indenture,
-25-
<PAGE>
the Lease and the Ground Leases, (vii) printing and reproduction costs,
(viii) premiums payable in respect of title insurance, (ix) appraisal fees,
(x) costs incurred in connection with a current survey of the Sites, (xi)
out-of-pocket expenses of Owner Participant and (xii) any other fees,
expenses, disbursements and costs as shall have been agreed to between
Owner Participant and Lessee.
"Transfer" shall mean the transfer, by bill of sale or otherwise, by
--------
Lessor to any Person of all Lessor's right, title and interest in and to
assets on an "as is, where is" basis, free and clear of all Lessor's Liens
but otherwise without recourse, representation or warranty, express or
implied, including an express disclaimer of representations and warranties
in a manner comparable to that set forth in the second sentence of
subsection 9.2 of the Lease, together with the due assumption by such
Person of, and the due release of Lessor from, all Lessor's obligations and
liabilities under the Support Agreements relating thereto by instrument or
instruments satisfactory in form and substance to Lessee, and "Transferred"
-----------
shall be construed accordingly.
"Transmission Facilities" shall have the meaning ascribed thereto in
-----------------------
Schedule 2 of the Participation Agreement.
"Treasury Regulation" shall mean any regulation promulgated under the
-------------------
Code.
"Trust Agreement" shall mean the Trust Agreement, dated as of December
---------------
1, 1988, between Owner Participant and Owner Trustee substantially in the
form attached as Exhibit E to the Participation Agreement, as amended,
modified or supplemented from time to time.
"Trust Estate" shall have the meaning set forth in subsection 2.2 of
------------
the Trust Agreement.
"Trust Indenture Act" or "TIA" shall mean the Trust Indenture Act of
------------------- ---
1939 as in force at the date as of which the Indenture was executed, except
as provided in Section 11.06 of the Indenture.
"TU Electric" shall mean Texas Utilities Electric Company, a Texas
-----------
corporation, its successors or assigns (including any subsequent obligor
(within the meaning of the TIA) on the Bonds).
"TU Electric Request" shall mean a written request signed in the name
-------------------
of TU Electric by its Chairman of the Board, President or one of its Vice
Presidents or Assistant Vice Presidents and by its Treasurer or Secretary
or one of its Assistant Treasurers or Assistant Secretaries, or by any
-26-
<PAGE>
authorized agent of TU Electric, and delivered to Indenture Trustee.
"Turbine Site" shall mean either the Permian Basin Turbine Site or the
------------
De Cordova Turbine Site.
"Turbines" shall mean the Permian Basin Turbines and the De Cordova
--------
Turbines.
"Underwriters" shall mean the underwriters named or referred to in the
------------
Underwriting Agreement.
"Underwriting Agreement" shall mean the Underwriting Agreement, dated
----------------------
as of November 28, 1989, among Owner Trustee, TU Electric, Salomon Brothers
Inc and Morgan Stanley & Co. Incorporated (acting either as underwriters or
representatives of the underwriters named therein) relating to the
purchase, sale and delivery of the Initial Series Bonds.
"Useful Life" of a Facility shall mean the economic useful life of
-----------
such Facility as set forth in the Appraisal.
"Utility Services" shall have the meaning ascribed thereto in Section
----------------
2.3 of each Facility Agreement.
"Wheeling Compensation" shall have the meaning ascribed thereto in
---------------------
Section 3.3 of each Facility Agreement.
"Wheeling Service" shall have the meaning ascribed thereto in Section
----------------
3.1 of each Facility Agreement.
-27-
<PAGE>
SCHEDULE 1
----------
ASSUMPTIONS
-----------
Based on the assumptions set forth below, the Basic Rent installments
are as shown on Annex A hereto, Casualty Values are as shown on Annex B hereto
and the Hypothetical Loan Amortization is as shown on Annex C hereto.
Part I
------
Funding Dates December 6, 1989 for the Permian
Basin Facility and the De
Cordova Facility; all debt and
equity investments in Purchase
Price on such Funding Dates.
Initial Series Bonds Interest payable on each January
1 and July 1, commencing January
1, 1990.
(i) Initial Series Bonds due
January 1, 2005.
a) Interest Rate - 9.54%
b) Average Life -
10.56163 years
(including the Interim
Term).
(ii) Initial Series Bonds due
January 1, 2018.
a) Interest Rate - 10.44%
b) Average Life -
23.35874 years
(including the Interim
Term).
Amortization Schedule on the As per Annex C hereto (in each
Bonds case, on a 12 30-day month,
360-day year basis).
Part II
-------
Transaction Expenses 1.00% of Purchase Price, paid
pro rata on each Funding Date,
amortized over the Interim Lease
Term and the Basic Term.
1-2
<PAGE>
Part III
--------
Purchase Price $42,500,000 for Permian Basin
Facility
$97,000,000 for De Cordova
Facility
Tax Benefits (as a matter of 34.66% rate of tax; 100% of the
economics and subject to the Purchase Price qualifying for
verification described in 15-year depreciation (150%
subsection 4.10 of the declining balance switching to
Lease) straightline at the optimal
point, taking into account a
half-year election for the first
year).
Interest deductions on the Bonds
available on an accrual basis.
Basic Rent Basic Rent deemed not to be
received prior to Basic Rent
Payment Date.
Owner Participant's Fiscal December 31
Year-End
Part IV
-------
Interest on Bonds Payable on Paid in accordance with the
or prior to first Basic Rent Participation Agreement by Owner
Payment Date Participant only on January 1,
1990, and, in part, on July 1,
1990 at rate set forth in Part
I.
2-2
<PAGE>
Annex A
to
Schedule 1
Hypothetical Basic Rent
<TABLE>
<CAPTION>
Basic Rent Percentage of Basic Rent Percentage
Payment Date Purchase Price Payment Date of
Purchase
Price
<S> <C> <C> <C>
January 1, 1991 7.8803019 January 1, 2005 7.1997209
July 1, 1991 4.1666084 July 1, 2005 3.0532323
January 1, 1992 4.3766740 January 1, 2006 5.4900501
July 1, 1992 4.1565897 July 1, 2006 2.9952323
January 1, 1993 4.3866972 January 1, 2007 6.5545864
July 1, 1993 4.1456135 July 1, 2007 2.8591381
January 1, 1994 4.3976688 January 1, 2008 7.5826515
July 1, 1994 4.1336116 July 1, 2008 2.6792258
January 1, 1995 4.4096707 January 1, 2009 7.7625637
July 1, 1995 4.1204471 July 1, 2009 2.5033923
January 1, 1996 4.4228352 January 1, 2010 7.9302765
July 1, 1996 4.1060516 July 1, 2010 2.3176052
January 1, 1997 4.4372344 January 1, 2011 8.1241844
July 1, 1997 4.0902542 July 1, 2011 2.1192452
January 1, 1998 4.4530282 January 1, 2012 8.3225444
July 1, 1998 4.0729523 July 1, 2012 1.9074142
January 1, 1999 6.3138125 January 1, 2013 8.5343753
July 1, 1999 3.9660632 July 1, 2013 1.6811394
January 1, 2000 6.4750238 January 1, 2014 8.7606502
July 1, 2000 3.8463858 July 1, 2014 1.4367910
January 1, 2001 6.5947729 January 1, 2015 9.0049986
July 1, 2001 3.7152877 July 1, 2015 1.0417548
January 1, 2002 6.7260404 January 1, 2016 9.4000347
July 1, 2002 3.5716748 July 1, 2016 0.6054826
January 1, 2003 6.8698827 January 1, 2017 9.8363070
July 1, 2003 3.4143503 July 1, 2017 0.6655690
January 1, 2004 7.0272535 January 1, 2018 9.7762205
July 1, 2004 3.2420148 July 1, 2018 0.7251243
</TABLE>
<PAGE>
Annex B
to
Schedule 1
Hypothetical Casualty Values
<TABLE>
<CAPTION>
Basic Rent Percentage of Basic Rent Percentage
Payment Date Purchase Price Payment Date of
Purchase
Price
<S> <C> <C> <C>
July 1, 1990 107.74179 January 1, 2005 101.66089
January 1, 1991 112.52633 July 1, 2005 97.59726
July 1, 1991 109.80445 January 1, 2006 97.73353
January 1, 1992 110.76876 July 1, 2006 95.32903
July 1, 1992 111.49041 January 1, 2007 95.45668
January 1, 1993 112.38099 July 1, 2007 91.86024
July 1, 1993 112.98566 January 1, 2008 92.01029
January 1, 1994 113.78314 July 1, 2008 87.22029
July 1, 1994 114.27647 January 1, 2009 87.40090
January 1, 1995 114.99077 July 1, 2009 82.26686
July 1, 1995 115.37908 January 1, 2010 82.46510
January 1, 1996 116.01467 July 1, 2010 76.98930
July 1, 1996 116.29597 January 1, 2011 77.20454
January 1, 1997 116.84902 July 1, 2011 71.34865
July 1, 1997 117.01411 January 1, 2012 71.58168
January 1, 1998 117.47749 July 1, 2012 65.32903
July 1, 1998 117.51597 January 1, 2013 65.58142
January 1, 1999 117.88190 July 1, 2013 58.90536
July 1, 1999 115.85819 January 1, 2014 59.17880
January 1, 2000 116.14905 July 1, 2014 52.05185
July 1, 2000 113.78310 January 1, 2015 52.35204
January 1, 2001 114.01479 July 1, 2015 44.79204
July 1, 2001 111.33927 January 1, 2016 45.31638
January 1, 2002 111.51278 July 1, 2016 37.16804
July 1, 2002 108.50453 January 1, 2017 37.95738
January 1, 2003 108.62102 July 1, 2017 29.18084
July 1, 2003 105.25530 January 1, 2018 29.72267
January 1, 2004 105.31907 July 1, 2018 20.72512
July 1, 2004 101.59590
</TABLE>
<PAGE>
Annex C
to
Schedule 1
<TABLE>
<CAPTION>
Redemption Date Stated Maturity
<S> <C>
January 1, 1991 11.94970254
July 1, 1991 0.00000000
January 1, 1992 0.79232017
July 1, 1992 0.00000000
January 1, 1993 0.86803678
July 1, 1993 0.00000000
January 1, 1994 0.94916171
July 1, 1994 0.00000000
January 1, 1995 1.04110330
July 1, 1995 0.00000000
January 1, 1996 1.13845322
July 1, 1996 0.00000000
January 1, 1997 1.24932396
July 1, 1997 0.00000000
January 1, 1998 1.36830719
July 1, 1998 0.00000000
January 1, 1999 8.45321796
July 1, 1999 0.00000000
January 1, 2000 9.46457545
July 1, 2000 0.00000000
January 1, 2001 10.36776636
July 1, 2001 0.00000000
January 1, 2002 11.35749054
July 1, 2002 0.00000000
January 1, 2003 12.44186047
July 1, 2003 0.00000000
January 1, 2004 13.62898864
July 1, 2004 0.00000000
January 1, 2005 14.92969173
-----------
100.0000000%
</TABLE>
<PAGE>
Annex C
to
Schedule 1
<TABLE>
<CAPTION>
Redemption Date Stated Maturity
<S> <C>
January 1, 2006 1.89962620
July 1, 2006 0.00000000
January 1, 2007 4.45738097
July 1, 2007 0.00000000
January 1, 2008 5.89251792
July 1, 2008 0.00000000
January 1, 2009 5.75893131
July 1, 2009 0.00000000
January 1, 2010 6.08493167
July 1, 2010 0.00000000
January 1, 2011 6.49672161
July 1, 2011 0.00000000
January 1, 2012 6.93792512
July 1, 2012 0.00000000
January 1, 2013 7.41099332
July 1, 2013 0.00000000
January 1, 2014 8.00294136
July 1, 2014 0.00000000
January 1, 2015 12.93829279
July 1, 2015 0.00000000
January 1, 2016 14.28886574
July 1, 2016 0.00000000
January 1, 2017 15.78160426
July 1, 2017 0.92652736
January 1, 2018 3.12274036
-----------
100.0000000%
</TABLE>
<PAGE>
EXHIBIT 4 (c)(ii)
--------------------------------------------------------------------------------
SUPPLEMENT NO. 1 TO THE
AMENDED AND RESTATED PARTICIPATION AGREEMENT
AMONG
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION,
(FORMERLY THE CONNECTICUT NATIONAL BANK)
OWNER TRUSTEE
THE FIRST NATIONAL BANK OF CHICAGO,
ORIGINAL INDENTURE TRUSTEE
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
INDENTURE TRUSTEE
HNB INVESTMENT CORP.
(AS TRANSFEREE FROM PHILIP MORRIS CREDIT CORPORATION),
OWNER PARTICIPANT
MESQUITE POWER CORPORATION,
SELLER
AND
TEXAS UTILITIES ELECTRIC COMPANY,
LESSEE
___________________
DATED AS OF _______, 1995
--------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS ..................................................... 1
Section 1. Amendments......................................... 2
Section 2. Obligations of the Owner Trustee in Respect of 1995
Series Bonds.................................................. 2
Section 3. Conditions Precedent to Obligations of the Owner
Participant, Lessee, the Owner Trustee and the Indenture
Trustee ...................................................... 3
Section 4. Waiver ............................................ 5
Section 5. Amendments ........................................ 5
Section 6. Counterparts ...................................... 5
Section 7. Supplement ........................................ 5
Section 8. Instructions of the Owner Participant ............. 6
Section 9. Governing Law ..................................... 7
Signatures ................................................... 7
</TABLE>
APPENDIX A - Definitions
Schedule 1 - Assumptions
Annex A to Schedule 1 - Basic Rent
Annex B to Schedule 1 - Casualty Values
Annex C through /1/ to Schedule 1 - Bond Amortization Schedules
EXHIBIT A - Lease Agreement Supplement No. 2
EXHIBIT B - Indenture Supplement No. 1
<PAGE>
SUPPLEMENT NO. 1 TO THE PARTICIPATION AGREEMENT
THIS SUPPLEMENT NO. 1, dated as of ____________, 1995 to the AMENDED
AND RESTATED PARTICIPATION AGREEMENT, dated as of November 28, 1989, as
supplemented (the "Participation Agreement"), among SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION (FORMERLY THE CONNECTICUT NATIONAL BANK), a national
banking association, not in its individual capacity except to the extent set
forth herein but as trustee ("Owner Trustee"), AMERICAN NATIONAL BANK AND TRUST
COMPANY, a national banking association, as indenture trustee, ("Indenture
Trustee"), THE FIRST NATIONAL BANK OF CHICAGO, a national banking association,
as original indenture trustee, HNB INVESTMENT CORP., a Delaware corporation (as
Transferee from Philip Morris Credit Corporation)("Owner Participant"), MESQUITE
POWER CORPORATION, a Texas Corporation, as Seller and TEXAS UTILITIES ELECTRIC
COMPANY, a Texas corporation ("TU Electric" or "Lessee").
RECITALS:
--------
A. The Participation Agreement provides, among other things, that the
Owner Trustee will issue and sell Refunding Bonds for the purpose of refunding
the Initial Series Bonds (such term and the other capitalized terms used herein
without definition having the respective meanings specified in Appendix A
hereto).
C. The parties to the Participation Agreement wish to amend and
supplement in certain respects the Participation Agreement for the purpose,
among others, of providing for the refunding of the Initial Series Bonds, and to
set forth more fully their agreement with respect to the subject matter hereof.
D. On ______, 1995, the Indenture Trustee gave a notice of optional
redemption with respect to $81,595,000 of the Initial Series Bonds with a Stated
Maturity of January 1, 2018 , such optional redemption to occur on ______, 1995.
On ______, 1995, pursuant to a letter agreement dated such date among Lessee and
the Owner Participant, the Owner Trustee (i) exercised its option to redeem on
______, 1995 all of the Initial Series Bonds of a Stated Maturity of January 1,
2018 and (ii) gave notice of such optional redemption to the Indenture Trustee
pursuant to Section 6.02 of the Indenture. On ______, 1995, pursuant to Section
6.04 of the Indenture, the Indenture Trustee gave notice to each Holder of
Initial Series Bonds of a Stated Maturity of January 1, 2018 of such optional
redemption.
Accordingly, in consideration of the premises and of other good and
valuable consideration, receipt and sufficiency of
<PAGE>
which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Amendments. (a) Appendix A. Appendix A to the
---------- ----------
Participation Agreement is hereby amended to read, in its entirety, as set forth
in Appendix A attached hereto.
(b) Schedule 1. Pursuant to Section 18(b) of the Participation
----------
Agreement, Schedule 1 to the Participation Agreement is hereby amended to read,
in its entirety, as set forth in Schedule 1 hereto. The parties hereto agree to
enter into a further supplement to the Participation Agreement, if necessary, to
record any changes in the assumptions set forth in Schedule 1 attached hereto as
a result of an adjustment pursuant to Section 4.5 of the Lease if the
assumptions set forth in Schedule 1 attached hereto at the time of the pricing
of the refinancing contemplated hereby shall thereafter prove to be incorrect.
(d) Amendments to Certain Operative Documents. As contemplated by
------------------------------------------
(1) Section 18(b) of the Participation Agreement, (2) in the case of item (iii)
below, Section 2.15 of the Indenture, and (3) in the case of item (i) below,
Sections 4.5 and 4.11 of the Lease, subject nevertheless to the satisfaction or
waiver of the conditions set forth in such Sections 18(b), 2.15 and 4.11 and
Section 3 hereof, on or before the Refunding Date (i) the Owner Trustee and
Lessee shall execute and deliver Lease Agreement Supplement No. 2 (which shall
be substantially in the form of Exhibit A hereto, the "Lease Supplement") and
the Owner Trustee and Lessee hereby request and instruct the Indenture Trustee
to consent to the Lease Supplement and the Owner Participant and the Indenture
Trustee shall consent to the Lease Supplement, and (ii) the Owner Trustee, the
Indenture Trustee and Lessee shall execute and deliver Trust Indenture, Security
Agreement and Mortgage Supplement No. 1, which shall be substantially in the
form of Exhibit B hereto, with such changes as the parties hereto shall agree
(the "Indenture Supplement").
Section 2. Obligations of the Owner Trustee in Respect of 1995 Series
----------------------------------------------------------
Bonds. Subject to the terms and conditions of this Supplement No. 1 and in
-----
reliance on the representations and warranties of the other parties hereto
contained herein or made pursuant hereto, the Owner Trustee at the direction of
the Owner Participant, and at the request hereof of Lessee, on the Refunding
Date shall execute, and shall request the Indenture Trustee to authenticate and
deliver, the 1995 Series Bonds, in the aggregate principal amount of
$81,595,000. The proceeds of the sale of the 1995 Series Bonds shall be
deposited in immediately available funds with the Indenture Trustee for
prepayment of the Initial Series Bonds of a Stated Maturity of January 1, 2018
on the Refunding Date.
<PAGE>
Section 3. Conditions Precedent to Obligations of the Owner
------------------------------------------------
Participant, Lessee, the Owner Trustee and the Indenture Trustee on the
-----------------------------------------------------------------------
Refunding Date. The obligations of the Owner Participant, Lessee, the Owner
--------------
Trustee and the Indenture Trustee to participate in the transactions
contemplated hereunder shall be subject to the fulfillment to the satisfaction
of, or waiver by, the Owner Participant, Lessee, the Owner Trustee and the
Indenture Trustee (acting directly or by authorization to its counsel but in no
event in the capacity as a fiduciary for any party to any Operative Document or
any holder of a 1995 Series Bond) (i) prior to or on the Refunding Date, of all
of the conditions precedent set forth in Section 18 of the Participation
Agreement, as heretofore amended, and (ii) of the following conditions:
(a) On the Refunding Date, the following statements shall be true and the
Owner Participant, Lessee, the Owner Trustee and the Indenture Trustee
shall have received
(i) an Officer's Certificate of Lessee, dated the Refunding
Date, stating that (A) the representations and warranties of
Lessee contained in Sections 9.1 (except subsection 9.1.6
and except that, with respect to subsection 9.1.7, TU
Electric has leased the Sites to Lessor pursuant to the
Ground Leases) of the Participation Agreement are true and
accurate on and as of the Refunding Date as though made on
and as of the Refunding Date except (I) to the extent that
such representations and warranties relate solely to an
earlier date (in which case such representations and
warranties shall have been true and accurate on and as of
such earlier date), (II) any reference to "Funding Date" in
subsections 9.1.4, 9.1.10 and 9.1.11 shall be deemed to be a
reference to the Refunding Date; and (III) any references in
subsections 9.1.9 and 9.1.10 to "Lessee's Annual Report on
Form 10-K" shall be deemed to be a reference to Lessee's
Annual Report on Form 10-K for the fiscal year ended
December 31, 1994, and any references to "Lessee's Quarterly
Report on Form 10-Q" shall be deemed to be a reference to
Lessee's Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1995 and June 30, 1995; (B) no
event or condition has occurred and is continuing, or would
result from the consummation of any transaction contemplated
by the Operative Documents to which it is a
<PAGE>
party, which constitutes a Lease Default or Lease Event of
Default, and no Event of Loss has occurred; and (C) each of
the Operative Documents to which it is a party remains in
full force and effect with respect to it, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditor's rights generally and
by general principles of equity; and
(ii) an Officer's Certificate of each of the Owner
Participant, the Owner Trustee and the Indenture Trustee,
each in its respective individual capacity, which Officers'
Certificates shall be dated the Refunding Date, stating that
(A) the respective representations and warranties of the
Owner Trustee, the Owner Participant (except subsection
5.1.6) and the Indenture Trustee contained in Sections 6.l,
5.l and 8.1, respectively, of the Participation Agreement
are true and accurate on and as of the Refunding Date as
though made on and as of the Refunding Date except to the
extent that such representations and warranties relate
solely to an earlier date (in which case such
representations and warranties shall have been true and
accurate on and as of such earlier date) and (B) each
Operative Document to which it is a party remains in full
force and effect with respect to it, except as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditor's rights generally and
by general principles of equity.
(b) Each of the parties hereto (other than the Person represented by the
following counsel) shall have received opinions of ________________,
the Owner Participant's special counsel, Worsham, Forsythe &
Wooldridge, L.L.P., Lessee's general counsel, Reid & Priest LLP,
Lessee's special counsel, Shipman & Goodwin, the Owner Trustee's
counsel, and _______________, the Indenture Trustee's counsel, each
dated the Refunding Date, addressed to such Persons and each in form
and substance satisfactory to the recipients thereof.
<PAGE>
(c) The Lease Supplement and the Indenture Supplement shall have each
been validly executed and delivered.
Section 4. Waiver. By their execution hereof, the parties hereto
------
waive any notice requirement contained in Section 18(c) of the Participation
Agreement.
Section 5. Amendments. Neither this Supplement No. 1 nor the
----------
Participation Agreement nor any of the terms hereof or thereof may be approved,
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which enforcement of such
change is sought.
Section 6. Counterparts. This Supplement No. 1 may be executed by
------------
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all of such counterparts shall together
constitute but one and the same instrument.
Section 7. Supplement. This Supplement No. 1 shall be construed a
----------
supplemental to the Participation Agreement and shall form a part thereof and
the Participation Agreement is hereby incorporated by reference herein and each
is hereby ratified, approved and confirmed.
Section 8. Instructions of the Owner Participant. In accordance with
--------------------------------------
the Trust Agreement, the Owner Participant hereby authorizes and directs the
Owner Trustee to execute and deliver this Supplement No. 1, the Lease
Supplement, the Indenture Supplement, and the Series 1995 Bonds, and any
letters, certificates or other writings contemplated by any of such documents.
<PAGE>
Section 9. Governing Law. THIS SUPPLEMENT NO. 1 SHALL BE CONSTRUED
--------------
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have each caused this
Supplement No. 1 to be duly executed as of the date first above written.
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity except to the
extent expressly provided herein but as Owner
Trustee pursuant to the Trust Agreement
By:__________________________________________
Name:
Title:
AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO, not in its individual capacity except
to the extent expressly provide herein
but as Indenture Trustee pursuant to
the Indenture
By:__________________________________________
Name:
Title:
HNB INVESTMENT CORPORATION,
Owner Participant
By:__________________________________________
Name:
Title:
TEXAS UTILITIES ELECTRIC COMPANY,
Lessee
By:__________________________________________
Name:
Title:
<PAGE>
SCHEDULE 1
[ASSUMPTIONS]
<PAGE>
ANNEX A TO SCHEDULE 1
[BASIC RENT]
<PAGE>
ANNEX B TO SCHEDULE 1
[CASUALTY VALUES]
<PAGE>
ANNEX C TO SCHEDULE 1
[BOND AMORTIZATION SCHEDULE]
<PAGE>
EXHIBIT A
[LEASE AGREEMENT SUPPLEMENT NO. 2]
<PAGE>
EXHIBIT B
[INDENTURE SUPPLEMENT NO. 1]
<PAGE>
Exhibit 5(a)
New York, New York
August 18, 1995
Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
Re: Texas Utilities Electric Company
Registration Statement on Form S-3
$81,595,000 Principal Amount of
Secured Facility Bonds
----------------------
Ladies and Gentlemen:
In connection with the proposed issuance and sale by Shawmut Bank
Connecticut, National Association, not in its individual capacity, but solely as
Owner Trustee under a Trust Agreement dated as of December 1, 1988, as
supplemented (the "Owner Trustee"), of $81,595,000 principal amount of Secured
Facility Bonds (the "Bonds"), secured by, among other things, an assignment of
rentals under a Lease between the Owner Trustee, as Lessor, and Texas Utilities
Electric Company (the "Company") as Lessee, dated as of December 1, 1989, as
heretofore supplemented (as so supplemented, the "Lease"), to be paid by the
Company, and with the registration of the Bonds under the Securities Act of
1933, as amended, (the "1933 Act") we advise you that, in our opinion the rental
payments under the Lease are valid and binding obligations of the Company; and
the Bonds will be valid, legal and binding obligations of the Owner Trustee
when:
1. The Registration Statement of the Company on Form S-3 (the
"Registration Statement") with respect to the Bonds shall have become effective
under the 1933 Act and the Bonds shall have been issued and sold for the
consideration contemplated in the Registration Statement and any prospectus and
prospectus supplement relating to the Bonds and in accordance with the
provisions of the Trust Indenture, Security Agreement and Mortgage, dated as of
December 1, 1989, (the "Indenture") as to be supplemented by a Supplement No.1
thereto ("Supplement No.1"), from the Owner Trustee to the American National
Bank and Trust Company of Chicago; and
<PAGE>
Texas Utilities Electric Company -2- August 18, 1995
2. Supplement No.1 has been duly executed and delivered and the Bonds
shall have been duly executed, authenticated and delivered.
We are members of the New York Bar and do not hold ourselves out as
experts on the laws of the States of Connecticut and Texas. Accordingly, in
rendering this opinion, we have relied (i) as to all matters of Connecticut and
Federal laws applicable to the organization and trust powers of Shawmut Bank
Connecticut, National Association and the authorization by such Bank, in its
capacity as Owner Trustee, of the Bonds on the opinion of Shipman & Goodwin,
Hartford, Connecticut, counsel for such Bank, and (ii) as to all matters of
Texas law on the opinion of Worsham, Forsythe & Wooldridge, L.L.P., General
Counsel for the Company. A copy of each such opinion is filed as an exhibit to
the Registration Statement.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We further consent to the use of the name of this Firm
in the Registration Statement and in the Prospectus or any Prospectus Supplement
forming a part thereof.
Very truly yours,
REID & PRIEST LLP
<PAGE>
Exhibit 5 (b)
WORSHAM, FORSYTHE & WOOLDRIDGE, L.L.P.
ATTORNEYS AND COUNSELORS AT LAW
ENERGY PLAZA
1601 BRYAN STREET, 30TH FLOOR
DALLAS, TEXAS 75201-3402
___________
TELEPHONE (214) 979-3000
FAX (214) 880-0011
August 18, 1995
Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
Ladies and Gentlemen:
Referring to the proposed issuance and sale by Shawmut Bank Connecticut,
National Association, not in its individual capacity but solely as Owner Trustee
under a Trust Agreement dated as of December 1, 1988, as supplemented ("Owner
Trustee"), of $81,595,000 aggregate principal amount of Secured Facility Bonds
("Bonds"), secured by, among other things, an assignment of rentals under a
Lease between the Owner Trustee, as Lessor, and Texas Utilities Electric Company
("TU Electric"), as Lessee, dated as of December 1, 1989, as supplemented
("Lease"), which are to be paid by TU Electric pursuant to the Lease, as
described in the prospectus filed as part of the Registration Statement on Form
S-3 (Registration Statement) that is to be filed by TU Electric with the
Securities and Exchange Commission ("Commission") under the Securities Act of
1933, as amended ("Act") on or about the date hereof, we are of the opinion
that:
1. TU Electric is a corporation validly organized and existing under the
laws of the State of Texas.
2. The rental payments under the Lease are valid and binding obligations
of TU Electric.
3. The Bonds will be valid and binding obligations of the Owner Trustee
when:
<PAGE>
-2-
(a) The Registration Statement shall have become effective under
the Act and the Bonds shall have been issued and sold for the
consideration contemplated therein and in any prospectus and
prospectus supplement relating to the Bonds, and in accordance with
the provisions of the Trust Indenture, Security Agreement and
Mortgage, dated as of December 1, 1989, as supplemented ("Indenture");
(b) An appropriate supplement to the Indenture shall have been duly
executed and delivered; and
(c) The Bonds shall have been duly executed, authenticated and
delivered.
We are members of the State Bar of Texas and do not hold ourselves out as
experts on, nor do we purport to opine as to, the laws of any other
jurisdiction. Accordingly, in rendering this opinion, we have relied (i) as to
all matters of Connecticut and Federal laws applicable to the organization and
trust powers of Shawmut Bank Connecticut, National Association and the
authorization of the Bonds by such bank as Owner Trustee, on the opinion of
Shipman & Goodwin, counsel for such bank and (ii) as to all matters of New York
law, on the opinion of Reid & Priest LLP, of counsel to TU Electric. A copy of
each such opinion is filed as an exhibit to the Registration Statement.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We further consent to the use of our name in the
Registration Statement as authority for certain of the statements contained, or
incorporated by reference, therein.
Very truly yours,
WORSHAM, FORSYTHE
& WOOLDRIDGE, L.L.P.
By: /s/ Neil D. Anderson
____________________
A Partner
<PAGE>
Exhibit 5(c)
August 18, 1995
Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, TX 75201
Re: Texas Utilities Electric Company Registration Statement on Form S-3,
$81,595,000 Principal Amount of Secured Facility Bonds
Ladies and Gentlemen:
In connection with the proposed issuance and sale, pursuant to a sale and
leaseback transaction, by Shawmut Bank Connecticut, National Association, not in
its individual capacity but solely as Owner Trustee under a Trust Agreement,
dated as of December 1, 1988, as supplemented (the "Owner Trustee"), of
$81,595,000 principal amount of Secured Facility Bonds (the "Bonds"), secured
by, among other things, an assignment of rentals under a Lease between the Owner
Trustee, as Lessor, and Texas Utilities Electric Company (the "Company") as
Lessee, dated as of December 1, 1989, as supplemented by Supplement No 1 thereto
dated as of December 31, 1990 (as so supplemented, the "Lease"), to be paid by
the Company, and with the registration of the Bonds under the Securities Act of
1933, as amended, we advise you that, when Exhibit 4(a)(ii) to the Registration
Statement and the Bonds have been duly authorized, executed and delivered and,
in the case of the Bonds, authenticated, by the parties thereto, the Bonds will
have been duly and validly authorized, by, and will be valid and binding
obligations of, the Owner Trustee.
We are members of the bar of the State of Connecticut and do not hold
ourselves out as experts on the laws of any other state. Accordingly, we
express no opinion as to laws other than the laws of the State of Connecticut
and the federal laws of the United States governing Shawmut Bank Connecticut,
National Association's banking and trust powers.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement of the Company on Form S-3 with respect to the Bonds.
Very truly yours,
Shipman & Goodwin
<PAGE>
EXHIBIT 12
TEXAS UTILITIES ELECTRIC COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED
--------------------------------------------------------------------------
DECEMBER 31, JUNE 30,
-----------------------------------------------------------
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
THOUSANDS OF DOLLARS, EXCEPT RATIOS
<S> <C> <C> <C> <C> <C> <C>
FIXED CHARGES:
Interest on mortgage bonds..................... $ 551,986 $ 608,729 $ 598,235 $ 610,999 $ 567,363 $ 549,306
Interest on other long-term debt............... 92,749 61,822 54,379 45,787 32,183 37,464
Amortization of debt discount (premium)
and expense................................... 3,698 4,111 4,778 6,493 8,615 9,334
Amortization of loss on reacquired debt........ 4,635 5,052 9,301 12,471 17,608 18,129
Other interest charges......................... 38,271 52,948 22,123 10,222 36,408 30,951
Rentals representative of the interest factor.. 25,545 28,737 30,828 29,637 26,017 25,248
---------- --------- ---------- ---------- ---------- ----------
Total fixed charges....................... $ 716,884 $ 761,399 $ 719,644 $ 715,609 $ 688,194 $ 670,432
========== ========= ========== ========== ========== ==========
EARNINGS:
Net income (loss).............................. $ 964,276 $(289,173) $ 821,123 $ 476,526 $ 658,192 $ 661,057
Add:
Federal income taxes......................... 57,930 76,073 29,049 96,951 146,633 240,826
Deferred federal income taxes - net.......... 45,724 (232,464) 233,125 164,487 219,752 115,395
Federal investment tax credits - net......... 33,841 (53,498) (20,322) (19,698) (23,698) (21,385)
Fixed charges................................ 716,884 761,399 719,644 715,609 688,194 670,432
---------- --------- ---------- ---------- ---------- ----------
Total earnings............................ $1,818,655 $ 262,337 $1,782,619 $1,433,875 $1,689,073 $1,666,325
========== ========= ========== ========== ========== ==========
RATIO OF EARNINGS TO FIXED CHARGES.............. 2.54 0.34* 2.48 2.00 2.45 2.49
==== ===== ==== ==== ==== ====
</TABLE>
* The Company's earnings were inadequate to cover fixed charges for the twelve
months ended December 31, 1991. The deficiency was $499,062,000. The
computation of the ratio of earnings to fixed charges does not include
interest payments made by affiliated companies on senior notes, which are
recovered currently through the fuel component of rates.
<PAGE>
EXHIBIT 15
Texas Utilities Electric Company:
We have reviewed, in accordance with standards established by the American
Institute of Certified Public Accountants, the unaudited condensed interim
financial information of Texas Utilities Electric Company for the periods ended
March 31, 1995 and 1994, and June 30, 1995 and 1994, as indicated in our reports
dated May 10, 1995 and August 8, 1995, respectively; because we did not perform
an audit, we expressed no opinion on that information.
We are aware that our reports referred to above, which were included in your
Quarterly Reports on Form 10-Q for the quarters ended March 31, 1995 and June
30, 1995, are being used in this Registration Statement.
We also are aware that the aforementioned reports, pursuant to Rule 436(c) under
the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
August 15, 1995
<PAGE>
EXHIBIT 23(a)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Texas Utilities Electric Company ("the Company") on Form S-3 of our report dated
March 1, 1995 appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 and to the reference to us under the heading "Experts
and Legality" in the Prospectus which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Dallas, Texas
August 15, 1995
<PAGE>
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY
[_] OF A TRUSTEE PURSUANT TO SECTION 305(b)(2)
AMERICAN NATIONAL BANK AND TRUST COMPANY
OF CHICAGO
(Exact name of trustee as specified in its charter)
36-0727623
(I.R.S. employer identification No.)
33 NORTH LA SALLE STREET, CHICAGO, ILLINOIS
(Address of principal executive offices)
60690
(zip code)
TEXAS UTILITIES ELECTRIC COMPANY
(Name of obligor)
TEXAS 75-1837355
(State or other jurisdiction of (I.R.S. employer identification No.)
incorporation or organization)
1601 BRYAN STREET 75201
DALLAS, TEXAS (zip code)
(Address of principal executive offices)
SECURED FACILITY BONDS
(Title of Indenture Securities)
<PAGE>
GENERAL
1. General information. Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency, Washington, D.C.
Director of Financial Institutions, State of Illinois, Springfield,
Illinois (as to Trust Department only).
Chicago Clearing House Association, 164 West Jackson Boulevard,
Chicago, Illinois.
Federal Deposit Insurance Corporation, Washington, D.C.
The Board of Governors of the Federal Reserve System, Washington,
D.C.
(b) Whether it is authorized to execute corporate trust powers.
The trustee is authorized to execute corporate trust powers.
2. Affiliations with obligor and underwriters. If the obligor or any
underwriter for the obligor is an affiliate of the trustee, describe each
affiliation.
No such affiliation exists. See Note, page 3 hereof.
16. List of Exhibits.
Exhibit 1 A copy of the existing Articles of Association of the trustee.
(Filed herewith).
Exhibit l(a) A copy of Certificate of Change of Name.*
Exhibit 2 A copy of the Certificate of Authority to commence business.*
Exhibit 3 A copy of the authorization to exercise corporate trust powers.*
Exhibit 4 A copy of existing by-laws of the trustee. (Filed herewith).
Exhibit 5 None.
Exhibit 6 The Consent of the trustee required by Section 321(b) of the Act.
(Filed herewith).
Exhibit 7 A copy of the latest report of condition of the trustee published
pursuant to law or requirements of its supervising authority.
(Filed herewith).
* These Exhibits are hereby incorporated by reference to Exhibits bearing
identical Exhibit numbers submitted by this trustee in its statement of
eligibility and qualification filed with Securities and Exchange Commission
with respect to the Indianapolis Power & Light Company First Mortgage
Bonds, 5 1/8% Series due July 1996, Securities and Exchange Commission
Registration No. 2-24581.
<PAGE>
NOTE
The answer to item 2 is based on incomplete information. To the best of our
knowledge and belief, however, there is no person, firm or corporation
ordinarily engaged in underwriting securities of the obligor:
(1) which is an affiliate of the trustee;
(2) of which any director or executive officer of the trustee is a
director, officer, partner, employee, appointee, or representative;
(3) which individually owns, beneficially, or whose directors, partners
and executive officers collectively own, beneficially, more than 1% of
the outstanding Common Stock of the trustee or First Chicago
Corporation;
(4) whose securities are owned beneficially by the trustee as collateral
security for obligations in default.
This statement may therefore be considered as correct unless amended
contemporaneously with the filing by the obligor of the Amendment or Supplement
to its Registration Statement disclosing underwriters for the Indenture
securities.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a corporation
organized and existing under the laws of the United States of America, has duly
caused this Statement of Eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of Chicago, State of
Illinois, on the 16th day of August, 1995.
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
By: /s/ Patricia B. Martirano
-------------------------
Its: Second Vice President
---------------------
<PAGE>
State of Illinois )
County of Cook )
The Undersigned, Patricia B. Martirano, hereby certifies that she is a
---------------------
duly appointed and qualified Second Vice President of American National Bank and
---------------------
Trust Company of Chicago, a corporation duly organized and existing as a
national banking association under the laws of the United States of America, and
has authority to execute this Certificate.
She further certifies that attached to this certificate are true and
correct copies of Amended Articles of Association and the By-Laws of said
Association, that said Articles and By-Laws were duly adopted by the Board by
Directors of said Association, and that said Amended Articles and By-Laws have
never Been repealed and are still in full force and effect.
She Further certifies that the Seal affixed to this certificate is the
corporate seal of said Association.
In witness whereof, the undersigned has set his hand and has affixed
the corporate seal of said association, this 16th day of August, 1995.
---- ------------
By: /s/ Patricia B. Martirano
-------------------------
Patricica Martirano
Its: Second Vice President
---------------------
(Seal)
<PAGE>
EXHIBIT 1
===============================================================================
Amended Articles of Association
of
American National Bank and Trust Company
of Chicago
Charter No. 13216
===============================================================================
<PAGE>
Amended Articles of Association
of
American National Bank and Trust Company
of Chicago
Charter No. 13216
First. The title of this Association, which shall carry on the business of
banking under the laws of the United States, shall be "American National Bank
and Trust Company of Chicago."
Second. The place where the main banking house or office of this Association
shall be located. Its operations of discount and deposit carried on, and its
general business conducted, shall be Chicago, County of Cook, State of Illinois.
Third. The Board of Directors of this Association shall consist of such number
of its shareholders, not less than five nor more than twenty-five, as from time
to time shall be determined by a majority of the votes to which all of its
shareholders are at the time entitled. By vote of a majority of the full Board
of Directors, the Board may increase such number, within such maximum limit, by
not more than two and appoint a person or persons to fill the resulting vacancy
or vacancies between meetings of the shareholders. A majority of the Board of
Directors shall be necessary to constitute a quorum for the transaction of
business.
Fourth. The regular annual meeting of the shareholders of this Association shall
be held at its main banking house, or such other convenient place as shall be
duly authorized by the Board of Directors, on such day of each year as is
specified therefor in the By-Laws of the Association, at which meeting a Board
of Directors shall be elected; but, if no such election shall be held on that
day, it may be held on any subsequent day, in accordance with the provisions of
the banking laws of the United States.
Fifth. The amount of capital stock of this Association shall be divided into
2,000,000 shares of common stock of the par value of Ten Dollars ($10) each; but
said capital stock may be increased or decreased from time to time, in
accordance with the provisions of the laws of the United States.
If the capital stock is increased by the sale of additional shares thereof, each
shareholder shall be entitled to subscribe for such additional shares in
proportion to the number of shares of said capital stock owned by him at the
time the increase is authorized by the shareholders, unless another time
subsequent to the date of the shareholders' meeting is specified in a resolution
adopted by the shareholders at the time the increase is authorized. The Board of
Directors shall have the power to prescribe a reasonable period of time within
which the pre-emptive rights to subscribe to the new shares of capital stock
must be exercised.
If the capital stock is increased by a stock dividend, each shareholder shall be
entitled to his proportionate amount of such increase in accordance with the
number of shares of capital stock owned by him at the time the increase is
authorized by the shareholders, unless another time subsequent to the date of
the shareholders' meeting is specified in a resolution adopted by the
shareholders at the time the increase is authorized.
Sixth. The Board of Directors shall appoint one of its members President of this
Association, who shall be Chairman of the Board; but the Board of Directors may
appoint a Director, in lieu of the President, to be Chairman of the Board, who
shall perform such duties as may be designated by the Board of Directors. The
Board of Directors shall have the power to appoint one or more Vice-Presi-
1
<PAGE>
dents, at least one of whom shall also be a member of the Board of Directors,
and who shall be authorized, in the absence of the President, to perform all
acts and duties pertinent to the office of President, except such as the
President only is authorized by law to perform; to appoint a Cashier and such
other officers as may be required to transact the business of this Association;
to fix the salaries to be paid to all officers of this Association; and to
dismiss such officers, or any of them.
The Board of Directors shall have the power to define the duties of officers and
employees of this Association, to require bonds from them, and to fix the
penalty thereof; to regulate the manner in which Directors shall be elected or
appointed, and to appoint judges of the election; to make all by-laws that it
may be lawful for them to make for the general regulation of the business of
this Association and the management of its affairs; and generally to do and
perform all acts that it may be lawful for a Board of Directors to do and
perform.
Any person made a party to any action, suit or other proceeding, civil or
criminal, by reason of the fact that he is or was a director, officer, or
employee of the Association shall be indemnified by the Association against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorney's fees, actually and necessarily incurred by him in connection with the
defense of such proceeding, or in connection with any appeal therein, except in
relation to (i) any matter as to which it shall be adjudged in such proceeding
that he is liable for negligence or misconduct in the performance of his
duties to the Association, provided that in the case of a criminal action,
suit, or proceeding, a conviction or judgment shall not be deemed an
adjudication that the director, officer, or employee is liable for negligence or
misconduct in the performance of this duties to the Association if it shall be
determined that he was acting in good faith in what he considered to be the best
interest of the Association and without reasonable cause to know that his acts
were illegal; or (ii) any matter settled or compromised unless it shall be
determined that there is not reasonable ground for such person being adjudged
liable for negligence or misconduct in the performance of his duties to the
Association. All such determinations hereunder shall be made by a majority of
those members of the Board of Directors who were not parties to such proceeding,
or by one or more disinterested persons to whom the question shall be referred
by the Board of Directors. Such right of indemnification shall not be deemed
exclusive of any other rights to which such director, officer, or employee may
be entitled apart from this provision.
Seventh. This Association shall have succession from the date of its
organization certificate until such time as it be dissolved by the act of its
shareholders in accordance with the provisions of the banking laws of the United
States, or until its franchise becomes forfeited by reason of violation of law,
or until terminated by either a general or a special act to Congress, or until
its affairs by placed in the hands of a receiver and finally wound up by him.
Eighth. The Board of Directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than ten per centum of the stock
of this Association, may call a special meeting of shareholders at any time:
Provided, however, that, unless otherwise provided by law, not less than ten
days prior to the date fixed for any such meeting, a notice of the time, place,
and purpose of the meeting shall be given by first-class mail, postage prepaid,
to all shareholders of record of this Association at their respective addresses
as shown upon the books of the Association. These Articles of Association may be
amended at any regular or special meeting of the shareholders by the affirmative
vote of the shareholders owning at least a majority of the stock of this
Association, subject to the provisions of the banking laws of the United States.
The notice of any shareholders' meeting, at which an amendment to the Articles
of Association of this Association is to be considered, shall be given as
hereinabove set forth.
* * *
Certified to be a true copy of the Articles of Association of American National
Bank and Trust Company of Chicago, as amended, now in force and effect.
Date:______________________, 19__
____________________________________
(Seal)
2
<PAGE>
EXHIBIT 4
===============================================================================
By-Laws
of
[LOGO OF AMERICAN NATIONAL BANK APPEARS HERE]
American National Bank
and Trust Company of Chicago
Charter No. 13216
===============================================================================
<PAGE>
Table of Contents
Page
Article I Meetings of Shareholders..................................... 1
Article II Directors.................................................... 2
Article III Committees................................................... 3
Article IV Officers..................................................... 4
Article V Transfers of Real Estate..................................... 5
Article VI Contracts and Voting......................................... 5
Article VII Authority to Sell Stocks, Bonds, Etc......................... 6
Article VIII Stock Certificates and The Transfer Thereof.................. 6
Article IX Increase of Stock............................................ 7
Article X Banking Hours................................................ 7
Article XI Seal.......................................................... 7
Article XII Trust Department.............................................. 7
Article XIII Amendments of By-Laws......................................... 8
<PAGE>
By-Laws
of
American National Bank and Trust Company
of Chicago
Charter No. 13216
ARTICLE 1
MEETINGS OF SHAREHOLDERS
Section 1. The regular annual meeting of shareholders of this Bank for the
election of Directors and the transaction of such other business as properly may
come before the meeting shall be held at its main banking house, or such other
convenient place as shall be duly authorized by the Board of Directors, on the
second Friday of February of each year at 10:00 A.M. or at such other hour as
shall be specified in the notice of the meeting. A notice of the time of said
meeting shall be mailed by the Secretary at least ten days prior to the date
thereof to each shareholder at his address appearing on the books of the
Association. At such meeting such number of directors as may be determined in
accordance with the Articles of Association and these By-Laws shall be elected
by ballot from the shareholders of this Bank. Special meetings of shareholders
may be called and held as provided in the Articles of Association.
Section 2. At all meetings of the shareholders each shareholder shall be
entitled to one vote for each share of stock held by him, and shareholders may
vote by proxy duly authorized in writing. No officer, director or employee of
the Bank may act as proxy.
Section 3. The Secretary, upon the election of directors as contemplated by
Section 1 above, shall notify the directors-elect of their election and of the
time of their first meeting. If at the time fixed for the meeting of the
directors-elect there is not a quorum in attendance, the members present may
adjourn from time to time until a quorum is secured; and no business shall be
transacted prior to the taking of the oath of office as required by law.
Section 4. If for any cause an election of directors should not be made at the
annual meeting of the shareholders, the Board of Directors shall order an
election to be held on some other day in accordance with the provisions of law,
of which special election notice shall be given as required by law and directors
notified, as hereinbefore provided.
Section 5. Nominations for election to the Board of Directors may be made by the
Board or by any shareholder of any outstanding class of capital stock of the
Bank entitled to vote for the election of directors. Nominations, other than
those made by or on behalf of the existing management of the Bank, shall be made
in writing, containing such information as the Controller of the Currency shall
have prescribed, and shall be delivered or mailed to the Chairman of the Board
or the President of the Bank and to the Comptroller of the Currency, Washington,
D.C., not less than 14 days nor more than 50 days prior to any meeting of
shareholders called for the election of directors, provided, however, that if
less than 21 days' notice of the meeting is given to shareholders, such
nomination shall be mailed or delivered to the Chairman of the Board or the
President of the Bank and to the Comptroller of the Currency no later than the
close of business on the seventh day following the day on which the notice of
meeting was mailed. Nominations not made in accordance herewith may, in his
discretion, be disregarded by the chairman of the meeting, and upon his
instructions, the vote tellers may disregard all votes cast for each such
nominee.
1
<PAGE>
Section 6. A majority of the outstanding capital stock, represented in person
or by proxy, shall constitute a quorum at any meeting of shareholders, unless
otherwise provided by law; but less than a quorum may adjourn any meeting,
from time to time, and the meeting may be held, as adjourned, without further
notice. A majority of the votes cast shall decide every question or matter
submitted to the shareholders at any meeting, unless otherwise provided by law
or by the Articles of Association.
ARTICLE II
DIRECTORS
Section 1. All corporate powers shall be vested in and exercised by a Board of
Directors. The Board shall consist of not less than five nor more than
twenty-five shareholders, the exact number within such minimum and maximum
limits to be fixed and determined from time to time by resolution of a majority
of the full Board or by resolution of the shareholders at any meeting thereof;
provided, however, that a majority of the full Board of Directors may not
increase the number of directors to a number which: (i) exceeds by more than
two the number of directors last elected by shareholders where such number was
fifteen or less; and (ii) to a number which exceeds by more than four the number
of directors last elected by shareholders where such number was sixteen or more,
but in no event shall the number of directors exceed twenty-five.
Section 2. A regular meeting of the Board of Directors shall be held on the
dates and at a time and location duly authorized by the Board of Directors. No
notice of regular meetings shall be required. Special meetings of the Board of
Directors may be called at any time by the Chairman, or by any three members of
the Board. Notice of any special meeting may be given by delivering, mailing,
telephoning or telegraphing the same to each Director at his address appearing
on the books of the Association one day previous to such meeting.
Section 3. A majority of the directors shall constitute a quorum for the
transaction of business, but a less number may adjourn from time to time until a
quorum shall be obtained, and an adjourned meeting may be held without notice.
In the absence of a quorum no business shall be transacted.
Section 4. The organization papers of this Bank, the proceedings of all regular
and special meetings of the directors and of the shareholders, and the By-Laws
and any amendments thereto shall be recorded in the Minute Books of the Bank;
and the minutes of each meeting shall be signed by the presiding officer of
such meeting and attested by the secretary of the meeting.
Section 5. The directors shall hold their respective offices until the next
annual meeting of the Shareholders following their election, or until their
successors are duly elected and qualified. Any director ceasing to be the owner
of the amount of stock required by law, or in any other manner becoming
disqualified, shall thereby vacate his office as director. When any vacancy
occurs among the directors, the remaining members of the Board may elect a
director to fill such vacancy at any regular meeting of the Board or at a
special meeting called for that purpose.
A director who is an officer of the Bank or one of its subsidiaries shall retire
from the Board of Directors at annual meeting coincident with or next following
the date of his retirement from his principal occupation with the Bank or such
subsidiary. A director who is not an officer of the Bank or any such subsidiary
shall not stand for re-election to the Board of Directors at the annual meeting
of the Bank held in the third year following the year in which he retired from
his principal occupation, however, no such director shall be eligible for
re-election at the annual meeting of the Bank next following his 70th birthday.
Any outside director who has attained his 70th birthday and who is serving on
the Board of Directors on January 11, 1980, shall be eligible for re-election
until the annual meeting next following his 74th birthday.
Section 6. The Board of Directors shall have power to change the form of the
books and accounts of the Bank when deemed expedient, and to define the manner
in which the affairs of the Bank shall be conducted.
2
<PAGE>
ARTICLE III
COMMITTEES
Section 1. The Board of Directors shall appoint an Advisory Committee,
consisting of such number of directors of the Association as the Board shall
determine. The Chairman of the Board shall be Chairman of the Advisory
Committee. The Committee shall meet at the request of the Chairman and shall
have the authority to exercise the duties and power of the Board between
meetings of the Board when it shall deem it in the best interest of the
Association to do so, subject, however, to ratification by the Board at its next
meeting.
Section 2. The Board of Directors shall appoint a Loan Committee, consisting of
such number of directors and/or officers of the Association as the Board shall
determine and shall designate a Chairman of the Committee. Such Committee shall
have such powers and perform such duties in respect to the making of loans and
discounts as shall from time to time be specified by resolution of the Board of
Directors. The members of said Committee shall hold office at the pleasure of
the Board of Directors.
Section 3. The Board of Directors shall appoint an Asset and Liability
Management Committee, consisting of such number of directors and/or officers of
the Association as the Board shall determine and shall designate a Chairman of
the Committee. Such Committee shall have power to supervise and direct the
purchase and sale of investment securities by the Association for its own
account, provided that such Committee shall operate within the framework of
policies established by the Chairman or the President. It shall make a written
report to the Board of Directors at each regular meeting thereof.
Section 4. The Board of Directors shall appoint a Trust Investment Committee,
consisting of such number of directors and/or officers of the Association as the
Board shall determine, and shall designate a Chairman of the Committee. Such
Committee shall be responsible for the review of assets in fiduciary accounts
and for the exercise and performance of the investment powers and duties
specified in Regulation 9 of the Comptroller of the Currency. In discharging
this responsibility, such Trust Investment Committee may assign, by action duly
entered in its minutes, the administration of each of its powers and duties as
if may consider proper to assign, to such committee(s), officer(s) or
employee(s) as it may designate. Such Committee shall have such additional
duties and powers relating to investments of the Trust Department as may be
prescribed from time to time by the Board of Directors.
Section 5. The Board of Directors shall designate the Executive Head of the
Trust Department as the Officer responsible for the supervision of the
administration of the Trust Department of the Bank and the exercise of the
fiduciary powers and performance of the duties specified in Regulation 9 of the
Comptroller of the Currency other than those otherwise assigned by said
regulation, these By-Laws or the Board of Directors. In discharging this
responsibility, the Executive Head of the Trust Department may assign the
administration of the management of the Trust Department to the Trust
Administrative Group, of which he shall be a member. All actions of the Trust
Administrative Group shall be duly noted in its minutes. Subject to the general
supervision aforesaid, the Executive Head of the Trust Department shall
determine the policies of the Trust Department and shall make recommendations to
the Board of Directors with respect thereto when deemed by him to be necessary
or advisable or shall be requested by the Board. The Executive Head of the Trust
Department shall have such additional duties and powers relating to the
administration of the Trust Department as may from time to time be prescribed by
the Board of Directors.
Section 6. The Board of Directors shall appoint a Trust Audit Committee,
consisting of such number of directors, exclusive of any active officers of the
Bank, as the Board shall determine, and shall designate a Chairman of the
Committee. Such Committee shall be responsible for the audits
3
<PAGE>
and examinations of the Trust Department prescribed by Section 9.9 of Regulation
9 of the Comptroller of the Currency. Subject to and in accordance with the
provisions of such Regulation, it shall discharge this responsibility in such
manner and by use of the services of such auditor(s), officer(s), or agent(s) as
it shall deem appropriate. Such Committee shall have such additional duties and
powers relating to audits and examinations of the Trust Department as may be
prescribed from time to time by the Board of Directors. Reports of the audits
and examinations made or caused to be made by such Committee, together with the
action taken thereon, shall be noted in the minutes of the Board of Directors.
Section 7. From time to time the Board of Directors may appoint any other
committee or committees for any purpose or purposes and such other committee or
committees shall have and may exercise such powers as shall be conferred or
authorized by the resolution of appointment.
Section 8. Except as otherwise herein provided the members of all committees
shall hold office until the next annual meeting of the Board of Directors
following their appointment, or until their successors are appointed. All
vacancies occurring in said committees may be filled by the Board of Directors.
ARTICLE IV
OFFICERS
Section 1. The officers of the Association shall be a Chairman of the Board
of Directors, a President, one or more Senior Executive Vice-Presidents, one or
more Executive Vice-Presidents, one or more Senior Vice-Presidents, one or more
Vice-Presidents, one or more Second Vice-Presidents, a Cashier, one or more
Deputy Cashiers, a Secretary, one or more Assistant Secretaries, one or more
Trust Officers, a COmptroller; one or more Assistant Comptrollers, an Auditor,
one or more Assistant Auditors, and such other officers as may be required for
the prompt and orderly transaction of the business of the bank. Officers
appointed Senior Vice-President or above shall be elected by the Board of
Directors; the Chairman of the Board or President (in the absence of the
Chairman) shall confer the titles of first level officer, Second Vice-President,
and Vice-President on those personnel deemed worthy of such recognition as
officers of the Corporation, and shall so advise the Board of Directors of such
action. The duties and authority of all officers, in addition to those
specifically prescribed herein, shall be those usually pertaining to their
respective offices, or as may be designated by the Board of Directors or by the
Chairman of the Board, or in his absence, by the President. Any one person may
hold at the same time any two of said offices except that neither the Chairman
of the Board nor the President shall hold the office of either Cashier or
Secretary. No person shall be eligible to the office of the Chairman of the
Board of Directors or President who is not a director, but none of the other
officers need be directors.
Section 2. The Chairman of the Board of Directors and the President shall be
elected by the Board of Directors for the current year for which such Board was
elected and each shall hold his office for such year unless he shall resign,
become disqualified or be removed. All incumbent officer appointments shall be
ratified annually by the Board of Directors.
Section 3. The Chairman of the Board of Directors shall preside at all
meetings of the Board at which he is present. In the absence of the Chairman
of the Board the President shall preside; in the absence of both the Chairman
and the President, the Board of Directors shall designate another one of their
number so to preside. The Board of Directors shall appoint the Chairman of the
Board of Directors or the President to be the chief executive officer of the
Bank and as such he shall have general supervision and direction of its
business. In all cases where the duties of the officers and employees of the
Bank are not prescribed by these By-Laws or by resolution of the Board of
Directors they shall be designated by the chief executive officer. In case of
his absence all of the duties of the chief executive officer shall be
performed by one or more officers designated by the chief executive officer or
by the Board of Directors. In case of the death or disability of the Chairman
of the Board, the President shall exercise the powers and discharge the duties
of the Chairman until his successor shall have been elected by the Board.
Section 4. The Secretary shall keep accurate minutes of all meetings of the
Board of Directors and Shareholders, and he shall be responsible for sending
out all notices required by these By-Laws. In his absence the Chairman of the
Board or (in the absence of the Chairman) the President shall designate an
alternate to act in his place. The Secretary shall be custodian of the
corporate seal. The Board may appoint one or more Assistant Secretaries who
may have access to the corporate seal.
4
<PAGE>
Section 5. The Cashier shall be responsible for all assets of the Banking
Department of the Association and shall keep proper records in respect thereto.
He shall make up a report concerning such assets for examination by the Board of
Directors whenever requested, and shall give such information to the Board as
may be from time to time required of him regarding such assets.
Section 6. The Comptroller shall have charge of all records, papers and
documents belonging to the Association. He shall make up a report of the
condition of the Bank for examination by the Board of Directors whenever
requested, and shall give such information to the Board as may be from time to
time required of him regarding the records, concerns and business of the Bank.
Section 7. All officers and employees of the Association who shall be
responsible for any moneys, funds or valuables of the Bank shall give bond, or
be covered by a blanket bond, in such penal sum and with such security as shall
be approved by the Board of Directors, conditioned for the faithful and honest
discharge of their duties as such officers or employees and that they will
faithfully apply and account for all such moneys, funds and valuables and
deliver the same on proper demand to the order of the Board of Directors of this
Bank, or to the person or persons authorized to receive the same.
ARTICLE V
TRANSFERS OF REAL ESTATE
Section 1. The Chairman of the Board of Directors, the President, any Senior
Executive Vice President, any Executive Vice President, any Senior Vice
President, and Vice President or the Cashier of this Bank shall have authority
(without an order of the Board of Directors) to execute and deliver on behalf of
and in the name of this Bank, deeds or contracts for deeds conveying any real
estate owned by this Bank in its own right or in which this Bank has an
interest, either with or without covenants of warranty and the same shall be
attested to by any of such officers of this Bank other than the officers so
executing said deed or deeds or contracts for deeds; provided, however, that the
authority contained in this Article shall not apply in respect of any real
estate by this Bank as banking quarters.
Section 2. Releases of mortgages or trust deeds shall be executed in the same
manner as provided in Section 1 of this Article in respect of transfers and
conveyances of real estate.
ARTICLE VI
CONTRACTS AND VOTING
Section 1. Any officer of the Bank, and such other person as may be authorized
by the Chairman of the Board, his designate, (or in their absence, the
President) are severally and respectively authorized in the name of this Bank to
guarantee signatures, certify resolutions and/or agreements, sign or endorse
checks and drafts, endorse notes, sign orders for the deposit of securities and
for the withdrawal of securities deposited with the bank correspondents of this
Bank, to execute assignments and releases of assignments, and to sign or
countersign all other contracts and obligations (other than notes and letters of
credit) covering transactions conducted in the ordinary course of the business
of the Bank. Notes may be executed and delivered in the name of the Bank by the
Chairman of the Board of Directors, the President, or any Vice President of the
Cashier and letters of credit may be signed and issued by any two officers or by
an officer and any employee who shall be authorized to do so by the Chairman of
the Board of Directors or (in his absence the President).
5
<PAGE>
Section 2. The vote of this Bank as stockholder in any corporation in which it
may hold stock or upon any securities carrying voting rights which it shall have
the right to vote in its individual capacity as a bank, shall be cast at any
stockholders' or shareholders' meeting by the Chairman of the Board of
Directors, the President, any Senior Executive Vice-President, any Executive
Vice-President, any Senior Vice-President, any Vice-President or the Cashier in
person, or by some person or persons authorized by written proxy signed by one
of said officers.
Section 3. In all cases where shares of stock or other securities carrying
voting rights and owned by this Bank, shall be held in the name of a nominee of
the Bank, the Chairman of the Board of Directors, the President, any Senior
Executive Vice-President, any Executive Vice-President, any Senior
Vice-President, any Vice-President or the Cashier may authorize such nominee to
vote such stock or other securities in person, either unconditionally or upon
such terms, limitations, or conditions as such officer may direct, or any such
officer may authorize such nominee to execute a proxy to vote such shares of
stock or other securities carrying voting rights, either unconditionally or upon
such terms, limitations or conditions as such officer shall approve.
ARTICLE VII
AUTHORITY TO SELL STOCKS, BONDS, ETC.
Any two officers from the group consisting of the Chairman of the Board of
Directors, the President, any Senior Executive Vice-President, any Executive
Vice-President, any Senior Vice-President, the Vice-Presidents and the Cashier
may at any time jointly:
(1) Sell, assign and transfer any and all United States registered bonds now
standing, or which may hereafter stand in the name of the Bank;
(2) Sell, assign and transfer any and all notes, bonds, certificates of
indebtedness or obligations of any corporation, firm or individual, which said
notes, bonds, certificates of indebtedness or obligations are now registered, or
may hereafter be registered in the name of this Bank, or are payable or endorsed
to this Bank; or
(3) Sell, assign and transfer to any assignee or transferee, for and on behalf
of this Bank and in its name, any and all shares of capital stock of any
corporation or corporations held by this Bank.
ARTICLE VIII
STOCK CERTIFICATES AND THE TRANSFER THEREOF
Section 1. Shares of stock of this Bank shall be transferable only upon the
books of the Bank, subject to the provisions of the National Bank Act, and a
transfer book shall be kept in which all transfers of stock shall be recorded.
Transfers of stock may be suspended preparatory to any election or payment of
any dividends. The Board of Directors shall have power to fix a date of record
of stock holdings for purposes of notices of shareholders' meetings, voting
rights at such meetings, the payment of dividends, or any other proper purpose.
Section 2. All stock certificates shall be signed with a manual or facsimile
signature by the Chairman of the Board of Directors, the President, any Senior
Executive Vice-President, any Executive Vice-President, any Senior
Vice-President, or any Vice President, and by another of such officers or the
Secretary or Cashier, and the seal of the Association shall be impressed thereon
or a facsimile thereof printed thereon; and each certificate shall also be
signed manually by the Comptroller or an
6
<PAGE>
Assistant Comptroller, or by the Auditor or an Assistant Auditor, on behalf of
the Bank as Registrar, and by a duly authorized officer or employee of the
Trust Department as Transfer Agent. Each certificate shall recite on its face
that the stock represented thereby is transferable only upon the books of the
Association by the holder thereof, or his attorney, upon surrender of the
certificate, and when stock is transferred, the certificates thereof shall be
returned to the Bank, cancelled, preserved, and new certificates issued. In case
of loss of any certificates a new one executed in the manner above provided,
shall be issued in lieu thereof upon proof satisfactory to the Chairman of the
Board of Directors, the President, any Senior Executive Vice-President, or any
Executive Vice-President of the Association of such loss and upon appropriate
indemnity if required by the Chairman of the Board of Directors, the President,
any Senior Executive Vice-President, or any Executive Vice-President.
ARTICLE IX
INCREASE OF STOCK
Section 1. In the event of any increase in the capital stock of this
Association the pre-emptive rights, if any, of the shareholders in respect of
any such increased stock shall be as set forth in the Articles of Association.
ARTICLE X
BANKING HOURS
The bank shall be open for business during such days of the year as the Board of
Directors shall determine and during such hours of the day as the Chairman of
the Board, or, in his absence, the President shall determine.
ARTICLE XI
SEAL
The seal of the Bank shall be circular in form and the words AMERICAN NATIONAL
BANK AND TRUST COMPANY OF CHICAGO-CORPORATE SEAL thereon. Such seal or a
facsimile thereof may be affixed to or printed on any instrument requiring the
same and attested by the Comptroller or any Assistant Comptroller, the Cashier
or any Deputy Cashier, the Secretary or any Assistant Secretary, any Trust
Officer or other officer thereunto designated by the Board of Directors.
ARTICLE XII
TRUST DEPARTMENT
Section 1. All fiduciary powers of the Association shall be exercised through
the Trust Department, subject to all applicable laws and governmental
regulations. All books and records of the Trust Department shall be kept
separate and distinct from the other books and records of the Association.
Section 2. Subject to the powers and duties of the Board of Directors, the
Committees appointed by the Board, the Chairman of the Board, the President, any
Senior Executive Vice-President, and any Executive Vice-President, as set forth
in Article II, III and IV, respectively, hereof, all operations of the Trust
Department shall be in charge of a Vice-President or a Trust Officer (as the
Board of
7
<PAGE>
Directors shall determine) and, in addition to the officer in charge, the Board
of Directors may appoint one or more Vice-Presidents and/or officers to
administer said Trust Department, who shall have such powers and perform such
duties as may be prescribed by these By-Laws or as may be delegated to them by
the Board of Directors or by the Chairman of the Board of Directors, the
President, any Senior Executive Vice-President, any Executive Vice-President, or
the officer in charge of the Trust Department.
Section 3. All checks against any Trust Department account or accounts and all
agreements, indentures, mortgages, deeds, conveyances, releases, transfers,
assignments, certificates, declarations, receipts, discharges, satisfactions,
settlements, petitions, schedules, accounts, affidavits, bonds, undertakings and
other instruments or documents in connection with the exercise of any of the
fiduciary powers of the Association in the ordinary course of the business of
the Trust Department, may be signed, executed, acknowledged, verified, delivered
and accepted in behalf of the Association by the Chairman of the Board of
Directors, the President, any Senior Executive Vice President, any Executive
Vice-President, any Senior Vice-President, any Vice-President or Second Vice-
President, the Secretary or any Assistant Secretary, any Trust Officer, the
Cashier or any Deputy Cashier, the Comptroller or any Assistant Comptroller, or
by any other officer or person appointed by the Chairman of the Board of
Directors or in his absence, the President for that purpose, or for the purpose
of appointing Vault Custodians, and the seal of the Association or a facsimile
thereof may be affixed to or printed on any such document and attested by the
Secretary or any Assistant Secretary, and any instrument when so executed shall
be binding on the Bank and shall be the valid act of the Bank; provided,
however, that any deeds or contract for deeds conveying any real estate owned or
held by the Bank in any fiduciary capacity shall be attested by one of said
officers other than the officer so executing any such deed or contract, and
joint execution of any transfers or assignments of any registered securities or
any shares of stock of any corporation owned or held by the Bank in its
fiduciary capacity shall be required unless otherwise ordered by the Board of
Directors.
Section 4. All authentication or certificates by the Association as trustee
under any mortgage, deed of trust or other instrument securing bonds, notes,
debentures or other obligations of any person or corporation, and all
certificates as registrar or transfer agent, and all certificates of deposit for
stocks, bonds or other securities, and interim and trust certificates may be
signed or countersigned on behalf of the Association by any of the officers
designated in the preceding Section hereof or by any other person appointed by
the Chairman of the Board of Directors or in his absence, the President, and
when so signed shall be binding on the Bank and shall be the valid act of the
Bank.
Section 5. The vote of this Bank as stockholder in any corporation in which it
may hold capital stock as trustee or other fiduciary capacity may be cast at the
stockholders' meetings of such corporation by the Chairman of the Board of
Directors, the President, any Senior Executive Vice-President, any Executive
Vice-President, any Senior Vice-President, any Vice-President or any Second
Vice-President, the Secretary or any Assistant Secretary, or any Trust Officer,
in person or by some person authorized by written proxy signed by one of said
officers; provided, however, that such proxy if given to any person not an
officer or director of this Bank shall be limited to a single meeting and shall
either be limited to voting for trustees or directors or shall direct how such
proxyholder shall vote. The above proviso, however, shall not apply to stock
held by this Bank under a written agreement which expressly provides for the
giving of proxies. Whenever this Bank has been or may be appointed attorney in
fact with power of substitution in and about the transfer of shares of capital
stock of any corporation, the Chairman of the Board of Directors, the President,
any Senior Executive Vice-President, any Executive Vice-President, any Senior
Vice-President, any Vice-President or any Second Vice-President may substitute
by proper written instrument an attorney in fact to act in the place and stead
of this Bank in and about such transfer.
ARTICLE XIII
AMENDMENTS OF BY-LAWS
These By-Laws may be amended, altered or repealed at any regular meeting of the
Board of Directors, or at any special meeting of the Board duly called for that
purpose, by a vote of a majority of the whole number of Directors.
8
<PAGE>
EXHIBIT 6
CONSENT OF TRUSTEE UNDER SECTION 321(b) OF THE
TRUST INDENTURE ACT OF 1939
The American National Bank and Trust Company of Chicago hereby
consents that reports of examination of said bank by Federal, State, Territorial
or District authorities may be furnished by such authorities to the Securities
and Exchange Commission upon its request therefor.
Such reports shall be used for the purposes and subject to the
limitations and conditions set forth in Section 321(b) of the Trust Indenture
Act of 1939.
Dated: August 16, 1995
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO
By: /s/ Patricia B. Martirano
-------------------------
Its: Second Vice President
---------------------
<PAGE>
EXHIBIT 7
Federal Financial Institutions Examination Council
--------------------------------------------------------------------------------
[LOGO APPEARS HERE] Please refer to page 1, [1]
Table of Contents, for
the required disclosure
of estimated burden.
--------------------------------------------------------------------------------
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices -- FFIEC 031
Report at the close of business June 30, 1995
This report is required by law: 12 U.S.C. (S)324 (State member banks); 12 U.S.C.
(S)1817 (State nonmember banks); and 12 U.S.C. (S)161 (National banks).
--------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, Ruth Ann M. Gillis, Chief Financial Officer & Senior Officer & Senior V.P.
-----------------------------------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and are true
to the best of my knowledge and belief.
/s/ Ruth Ann M. Gillis
--------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report
July 18, 1995
--------------------------------------------------------------------------------
Date of Signature
--------------------------------------------------------------------------------
For Banks Submitting Hard Copy Report Forms:
State Member Banks: Return the original and one copy to the appropriate Federal
Reserve District Bank.
State Nonmember Banks: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
--------------------------------------------------------------------------------
FDIC Certificate Number [_][_][_][_][_]
IRCRI 90501
(950630)
------------
IRCRI 99991
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
international Banking Facilities.
--------------------------------------------------------------------------------
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in some
cases differ from generally accepted accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/ SIGNATURE APPEARS HERE
--------------------------------------------------------------------------------
Director (Trustee)
/s/ SIGNATURE APPEARS HERE
--------------------------------------------------------------------------------
Director (Trustee)
/s/ SIGNATURE APPEARS HERE
--------------------------------------------------------------------------------
Director (Trustee)
--------------------------------------------------------------------------------
National Banks: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
--------------------------------------------------------------------------------
++ ++
+ +
CALL NO. 192 31 06-30-95
CERT: 03619 00952 STSK 17-1490
AMERICAN NATIONAL BANK AND TRUST COM
33 NORTH LA SALLE STREET
CHICAGO, IL 60609
+ +
++ ++
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
[2]
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices
--------------------------------------------------------------------------------
Table of Contents
Signature Page Cover
Report of Income
Schedule RI-Income Statement.............................RI-1,2,3
Schedule RI-A-Changes in Equity Capital......................RI-4
Schedule RI-B-Charge-offs and Recoveries and
Changes in Allowance for Loan and Lease
Losses....................................................RI4,5
Schedule RI-C-Applicable Income Taxes by
Taxing Authority...........................................RI-5
Schedule RI-D-Income from
International Operations...................................RI-6
Schedule RI-E-Explanations.................................RI-7,8
Disclosure of Estimated Burden
The estimated average burden associated with this information collection is 31.5
hours per respondent and is estimated to vary from 15 to 225 hours per response,
depending on individual circumstances. Burden estimates include the time for
reviewing instructions, gathering and maintaining data in the required form, and
completing the information collection, but exclude the time for compiling and
maintaining business records in the normal course of a respondent's activities.
Comments concerning the accuracy of this burden estimates and suggestions for
reducing this burden should be directed to the Office of information and
Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503, and
to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Controller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
Report of Condition
Schedule RC-Balance Sheet..................................RC-1,2
Schedule RC-A-Cash and Balances Due
From Depository Institutions...............................RC-3
Schedule RC-B-Securities.................................RC-3,4,5
Schedule RC-C-Loans and Lease Financing
Receivables:
Part I, Loans and Leases.................................RC-6,7
Part II, Loans to Small Businesses and
Small Farms (included in the forms for
June 30 only)........................................RC-7a,7b
Schedule RC-D-Trading Assets and Liabilities
(to be completed only by selected banks)...................RC-8
Schedule RC-E-Deposit Liabilities.......................C-9,10,11
Schedule RC-F-Other Assets..................................RC-11
Schedule RC-G-Other Liabilities.............................RC-11
Schedule RC-H-Selected Balance Sheet Items
for Domestic Offices......................................RC-12
Schedule RC-I-Selected Assets and Liabilities
of IBFs...................................................RC-13
Schedule RC-K-Quarterly Averages............................RC-13
Schedule RC-L-Off-Balance Sheet
Items...............................................RC-14,15,16
Schedule RC-M-Memoranda..................................RC-17,18
Schedule RC-N-Past Due and Nonaccrual
Loans, Losses, and Other Assets........................RC-19-20
Schedule RC-O-Other Data for Deposit
Insurance Assessments..................................RC-21,22
Schedule RC-R-Risk-Based Capital.........................RC-23,24
Optional Narrative Statement Concerning
the Amounts Reported in the Reports
of Condition and Income...................................RC-25
Special Report (to be completed by all banks)
Schedule RC-J-Repricing Opportunities (sent only to and to be completed only by
savings banks)
For information or assistance, National and State nonmember banks should contact
the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington, D.C.
20429, toll free on (800) 688-FDIC(3342), Monday through Friday between 8:00a.m.
and 5:00 p.m., Eastern time. State member banks should contact their Federal
Reserve District Bank.
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1690 FFIEC 031
Page RI-1
Consolidated Report of Income
for the period January 1, 1995-June 30, 1995
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
Schedule RI--Income Statement
<TABLE>
<CAPTION>
1480
Dollar Amounts in Thousands RIAD Bil Mil Thou
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income:
a. Interest and fee income on loans:
(1) In domestic offices:
(a) Loans secured by real estate................................................. 4011 58,564 1.a.(1)(a)
(b) Loans to depository institutions............................................. 4019 1,454 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers.......... 4024 76 1.a.(1)(c)
(d) Commercial and industrial loans............................................. 4012 134,156 1.a.(1)(d)
(e) Acceptances of other banks................................................... 4026 0 1.a.(1)(e)
(f) Loans to individuals for household, family,and other personal expenditures:
(1) Credit cards and related plans........................................... 4054 131 1.a.(1)(f)(1)
(2) Other.................................................................... 4055 7,013 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions....................... 4056 0 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political
subdivisions in the U.S.:
(1) Taxable obligations...................................................... 4503 0 1.a.(1)(h)(l)
(2) Tax-exempt obligations................................................... 4504 5,735 1.a.(1)(h)(2)
(i) All other loans in domestic offices.......................................... 4058 11,771 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs.................... 4059 0 1.a.(2)
b. Income from lease financing receivables:
(1) Taxable leases................................................................... 4305 0 1.b.(1)
(2) Tax-exempt leases................................................................ 4307 0 1.b.(2)
c. Interest income on balances due from depository institutions:(1)
(1) In domestic offices.............................................................. 4105 11 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs.................... 4106 1 1.c.(2)
d. Interest and dividend income on securities:
(1) U.S. Treasury securities and U.S. Government agency and corporation obligations.. 4027 6,743 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.:
(a) Taxable securities........................................................... 4506 0 1.d.(2)(a)
(b) Tax-exempt securities........................................................ 4307 175 1.d.(2)(b)
(3) Other domestic debt securities................................................... 3657 5 1.d.(3)
(4) Foreign debt securities.......................................................... 3658 132 1.d.(4)
(5) Equity securities (including investments in mutual funds)........................ 3659 261 1.d.(5)
e. Interest income from trading assets.................................................. 4069 592 1.e.
</TABLE>
-------------
(1) Includes interest income on time certificates of deposit not held for
trading.
3
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RI-2
Schedule RI--Continued
<TABLE>
<CAPTION>
------------
Dollar Amounts in Thousands Year-to-date
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Interest income (continued) RIAD Bil Mil Thou
f. Interest income on federal funds sold and securities purchased under
agreements to resell in domestic offices of the bank and of its Edge
and Agreement subsidiaries, and in IBFs................................ 4020 10,400 1.f.
g. Total interest income (sum of items 1.a through 1.f)................... 4107 237,240 1.g.
2. Interest expense:
a. Interest on deposits:
(1) Interest on deposits in domestic offices:
(a) Transaction accounts (NOW accounts, ATS accounts, and
telephone and preauthorized transfer accounts)................. 4508 3,747 2.a.(1)(a)
(b) Nontransaction accounts:
(1) Money market deposit accounts (MMDAs)...................... 4509 12,353 2.a.(1)(b)(1)
(2) Other savings deposits..................................... 4511 4,237 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more........... 4174 15,936 2.a.(1)(b)(3)
(4) All other time deposits
(2) Interest on deposits in foreign offices, Edge and Agreement
subsidiaries, and ISFs............................................. 4172 29,994 2.a.(2)
b. Expense of federal funds purchased and securities sold under
agreements to repurchase in domestic offices of the bank and of its
Edge and Agreement subsidiaries, and in ISFs........................... 4180 10,307 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading
liabilities, and other borrowed money.................................. 4185 695 2.c.
d. Interest on mortgage indebtedness and obligations under capitalized
leases................................................................. 4072 11 2.d.
e. Interest on subordinated notes and debentures.......................... 4200 2,495 2.e.
f. Total interest expense (sum of items 2.a through 2.e).................. 4073 90,410 2.f.
-------------------
3. Net interest income (item 1.g minus 2.f).................................. RIAD 4074 146,830 3.
-------------------
4. Provisions: -------------------
a. Provision for loan and lease losses.................................... RIAD 4230 12,000 4.a.
b. Provision for allocated transfer risk.................................. RIAD 4243 0 4.b.
5. Noninterest income: -------------------
a. Income from fiduciary activities....................................... 4070 12,182 5.a.
b. Service charges on deposit accounts in domestic offices................ 4080 7,641 5.b.
c. Trading gains (losses) and fees from foreign exchange transactions..... 4075 1,491 5.c.
d. Other foreign transaction gains (losses)............................... 4076 0 5.d.
e. Other gains (losses) and fees from trading assets and liabilities...... 4077 3,644 5.e.
f. Other noninterest income:
(1) Other fee income................................................... 5407 14,024 5.f.(1)
(2) All other noninterest income*...................................... 5408 644 5.f.(2)
-------------------
g. Total noninterest income (sum of items 5.a through 5.f)................ RIAD 4079 39,626 5.g.
6. a. Realized gains (losses) on held-to-maturity securities................. RIAD 3521 6 6.a
b. Realized gains (losses) on available-for-sale securities............... RIAD 3196 0 6.b
7. Noninterest expense: -------------------
a. Salaries and employee benefits......................................... 4135 56,148 7.a.
b. Expenses of premises and fixed assets (net of rental income)
(excluding salaries and employee benefits and mortgage interest)....... 4217 13,506 7.b.
c. Other noninterest expense*............................................. 4092 33,451 7.c.
-------------------
d. Total noninterest expense (sum of items 7.a through 7.c)............... RIAD 4093 103,105 7.d.
8. Income (loss) before income taxes and extraordinary items and other -------------------
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d). RIAD 4301 71,357 8.
-------------------
9. Applicable income taxes (on item 8)....................................... RIAD 4302 25,314 9.
-------------------
10. Income (loss) before extraordinary items and other adjustment (item 8 -------------------
minus 9).................................................................. RIAD 4300 46,043 10.
-------------------
</TABLE>
-----------------
*Describe on Schedule RI-E--Explanations.
4
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RI-3
Schedule RI--Continued
<TABLE>
<CAPTION>
----------------
Year-to-date
-----------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11. Extraordinary items and other adjustments:
a. Extraordinary items and other adjustments,
gross of income taxes*.......................................... 4310 0 11.a.
b. Applicable income taxes (on item 11.a)*......................... 4315 0 11.b.
c. Extraordinary items and other adjustments, net of
income taxes (item 11.a minus 11.b)............................. RIAD 4320 0 11.c.
12. Net income (loss) (sum of items 10 and 11.c)....................... RIAD 4340 46,043 12.
<CAPTION>
1481
--------
Memoranda Year-to-date
--------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases
acquired after August 7, 1986, that is not deductible for federal income
tax purposes ...................................................................... 4513 1,388 M.1.
2. Income from the sale and servicing of mutual funds and annuities in
domestic offices (included in Schedule RI, item 8) ................................ 8431 504 M.2.
3. Estimated foreign tax credit included in applicable income taxes,
items 9 and 11.b above ............................................................ 4309 0 M.3.
4. To be completed only by banks with $1 billion or more in total assets:
Taxable equivalent adjustment to "Income (loss) before income taxes
and extraordinary items and other adjustments" (item 8 above) ..................... 1244 2,410 M.4.
5. Number of full-time equivalent employees on payroll at end of current period Number
(round to nearest whole number) ................................................... 4150 2,108 M.5.
6. Not applicable
7. If reporting bank has restated its balance sheet as a result of applying push down MM DD YY
accounting this calendar year, report the date of the bank's acquisition .......... 9106 00/00/00 M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments)
(including in Schedule RI, items 5.c. and 5.e): Bil Mil Thou
a. Interest rate exposures.......................................................... 8757 496 M.8.a.
b. Foreign exchange exposures....................................................... 8758 1,491 M.8.b.
c. Equity security and index exposures.............................................. 8759 0 M.8.c.
d. Commondity and other exposures................................................... 8760 0 M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes
other than trading:
a. Net increase (decrease) to interest income....................................... 8761 (1,817) M.9.a.
b. Net (increase) decrease to interest expense...................................... 8762 (1,553) M.9.b.
c. Other (noninterest) allocations.................................................. 8763 0 M.9.c.
------------------------------------------
</TABLE>
---------
*Describe on Schedule RI-E--Explanations.
5
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
-----------
Call Date: 6/30/95 ST-BC: 17-1490 SFIEC 031
Page RI-4
Schedule RI-A--Changes in Equity Capital
Indicated decreases and losses in parentheses.
<TABLE>
<CAPTION>
1483
----
Dollar Amounts in Thousands RIAD BIL MIL Thou
---------------------------------------------------------------------------------------------------- --------------------------
<S> <C> <C> <C>
1. Total equity capital originally reported in the December 31, 1994, Reports of Condition
and Income ..................................................................................... 3215 562,104 1.
2. Equity capital adjustments from amended Reports of Income, net* ................................ 3216 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2) ........................... 3217 562,104 3.
4. Net income (loss) (must equal Schedule RI, item 12) ............................................ 4340 46,043 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net ............................. 4346 0 5.
6. Changes incident to business combinations, net ................................................. 4356 7,213 6.
7. LESS: Cash dividends declared on preferred stock ............................................... 4470 0 7.
8. LESS: Cash dividends declared on common stock .................................................. 4460 24,000 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions for
this schedule) ................................................................................. 4411 0 9.
10. Corrections of material accounting errors from prior years* (see instructions for this schedule) 4412 0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities ............... 8433 0 11.
12. Foreign currency translation adjustments ....................................................... 4414 0 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above) ....... 4415 1,365 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal
Schedule RC, item 28) .......................................................................... 3210 592,725 14.
</TABLE>
-------------
*Describe in Schedule RI-E--Explanations.
Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance for Loan and Lease Losses
Part I. Charge-offs and Recoveries on Loans and Leases
Part I excludes charge-offs and recoveries through
the allocated transfer risk reserve.
<TABLE>
<CAPTION>
1486
----
(Column A) (Column B)
Charge-offs Recoveries
-----------------------------------------------------
Calendar year-to-date
-----------------------------------------------------
Dollar Amounts in Thousands RIAD BIL MIL Thou RIAD BIL MIL Thou
----------------------------------------------------------------------- -------------------------- --------------------------
<S> <C> <C> <C> <C> <C>
1. Loans secured by real estate:
a. To U.S. addressees (domicile) .................................. 4651 5,577 4661 1,574 1.a.
b. To non-U.S. addressees (domicile) .............................. 4652 0 4662 0 1.b.
2. Loans to depository institutions and acceptance of other banks:
a. To. U.S. banks and other U.S. depository institutions .......... 4653 0 4663 0 2.a.
b. To foreign banks ............................................... 4656 0 4664 0 2.b.
3. Loans to finance agricultural production and other loans to farmers 4655 0 4665 0 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile) .................................. 4645 3,695 4617 3,097 4.a.
b. To non-U.S. addressees (domicile) .............................. 4646 0 4418 0 4.b.
5. Loans to individuals for household, family, and other personal
expenditures:
a. Credit cards and related plans ................................. 4656 0 4666 0 5.a.
b. Other (includes single payment, installment, and all student
loans).......................................................... 4657 139 4667 127 5.b.
6. Loans to foreign governments and official institutions ............ 4643 0 4627 0 6.
7. All other loans ................................................... 4644 296 4628 760 7.
8. Lease financing receivables:
a. Of U.S. addressees (domicile) .................................. 4658 0 4668 0 8.a.
b. Of non-U.S. addressees (domicile) .............................. 4659 0 4669 0 8.b.
9. Total (sum of items 1 through 8) .................................. 4639 9,707 4605 5,558 9.
</TABLE>
6
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RI-5
Schedule RI-B--Continued
Part I. Continued
<TABLE>
<CAPTION>
----------------------------------------------
(Column A) (Column B)
Charge-offs Recoveries
----------------------------------------------
Calendar year-to-date
Memoranda ----------------------------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1-3. Not applicable
4. Loans to finance commercial real estate, construction, and land
development activities (not secured by real estate) included in
Schedule RI-B, part 1, items 4 and 7, above .......................... 5409 0 5410 0 M.4.
5. Loans secured by real estate in domestic offices (included in
Schedule RI-B, part I, Item 1, above):
a. Construction and land development ................................. 3582 0 3583 0 M.5.a.
b. Secured by farmland ............................................... 3584 0 3585 0 M.5.b.
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4 family
residential properties and extended under lines
of credit ..................................................... 5411 92 5412 3 M.5.c.(1)
(2) All other loans secured by 1-4 family residential
properties .................................................... 5413 0 5414 18 M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties ......... 3588 141 3589 0 M.5.d.
e. Secured by nonfarm nonresidential properties ...................... 3590 5,344 3591 1,553 M.5.e.
-----------------------------------------------
Part II. Changes in Allowance for Loan and Lease Losses
--------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
-----------------------------------------------------------------------------------------------------------------------
1. Balance originally reported in the December 31, 1994, Reports of Condition and Income ... 3124 144,932 1.
2. Recoveries (must equal part 1, Item 9, column 8 above) .................................. 4605 5,558 2.
3. LESS: Charge-offs (must equal part 1, item 9, column A above) ........................... 4635 9,707 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a) .................. 4230 12,000 4.
5. Adjustments* (see instructions for this schedule) ....................................... 4815 435 5.
6. Balance end of current period (sum of Items 1 through 5) (must equal Schedule RC,
item 4.b) ............................................................................... 3123 153,218 6.
---------------------------
----------------
*Describe on Schedule RI-E--Explanations.
Schedule RI-C--Applicable Income Taxes by Taxing Authority
Schedule RI-C is to be reported with the December Report of Income.
----
1489
-------------------
Dollar Amounts in Thousands Riad Bil Mil Thou
-----------------------------------------------------------------------------------------------------------------------
1. Federal ........................................................................................ 4780 N/A 1.
2. State and local ................................................................................ 4790 N/A 2.
3. Foreign ........................................................................................ 4795 N/A 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b) ............. 4770 N/A 4.
--------------------------------
5. Deferred portion of item 4 ................................ RIAD 4772 N/A 5.
--------------------------------------------------------
</TABLE>
7
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-SK: 17-1490 FFIEC 031
Page R1-6
For all banks with foreign offices, Edge or Agreement subsidiaries, or IBfs
where international operations account for more than 10 percent of total
revenues, total assets, or net income.
Schedule RI-D--Income from International Operations
<TABLE>
<CAPTION>
1492
------------
Year-to-date
---- -------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries,
and IBFs:
a. Interest income booked...................................................................... 4837 30,146 1.a.
b. Interest expense booked..................................................................... 4838 30,096 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and
IBFs (item 1.a minus 1.b)................................................................... 4839 50 1.c.
2. Adjustments for booking location of international operations:
a. Net interest income attributable to international operations booked at domestic offices..... 4840 0 2.a.
b. Net interest income attributable to domestic business booked at foreign offices............. 4841 (30,094) 2.b.
c. Net booking location adjustment (item 2.a. minus 2.b.)...................................... 4842 30,094 2.c.
3. Noninterest income and expense attributable to international operations:
a. Noninterest income attributable to international operations................................. 4097 1,491 3.a.
b. Provision for loan and lease losses attributable to international operations................ 4235 0 3.b.
c. Other noninterest expense attributable to international operations.......................... 4239 531 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a minus
3.b and 3.c)................................................................................ 4843 960 3.d.
4. Estimated pretax income attributable to international operations before capital allocation
adjustment (sum of items 1.c, 2.c, and 3.d).................................................... 4844 31,104 4.
5. Adjustment to pretax income for internal allocations to international operations to reflect
the effects of equity capital on overall bank funding costs.................................... 4845 0 5.
6. Estimated pretax income attributable to international operations after capital allocation
adjustment (sum of items 4 and 5).............................................................. 4846 31,104 6.
7. Income taxes attributable to income from international operations as estimated in item 6....... 4797 11,607 7.
8. Estimated net income attributable to international operations (item 6 minus 7)................. 4341 19,497 8.
<CAPTION>
Memoranda ------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Intracompany interest income included in item 1.a above........................................ 4847 30,145 M.1.
2. Intracompany interest expense included in item 1.b above....................................... 4848 103 M.2.
------------------
</TABLE>
Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts
<TABLE>
<CAPTION>
------------
Year-to-date
---- -------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income booked at IBFs................................................................. 4849 0 1.
2. Interest expense booked at IBFs................................................................ 4850 0 2.
3. Noninterest income attributable to international operations booked at domestic offices
(excluding IBFs):
a. Gains (losses) and extraordinary item....................................................... 5491 0 3.a.
b. Fees and other noninterest income........................................................... 5491 1,491 3.b.
4. Provision for loan and lease losses attributable to international operations booked at domestic
offices (excluding IBFs)....................................................................... 4852 0 4.
5. Other noninterest expense attributable to international operations booked at domestic offices
(excluding IBFs)............................................................................... 4853 515 5.
</TABLE>
8
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RI-7
Schedule RI-E--Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedule RI-A and RI-B, all extraordinary items and
other adjustments in Schedule RI, and all significant items of other noninterest
income and other noninterest expense in Schedule RI. (See instructions for
details.)
<TABLE>
<CAPTION>
----------
1495
-----------------
Year-to-date
-------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2))
Report amounts that exceed 10% of Schedule RI, item 5.f.(2):
a. Net gains on other real estate owned ................................................... 5415 587 1.a.
b. Net gains on sales of loans ............................................................ 5416 0 1.b.
c. Net gains on sales of premises and fixed assets......................................... 5417 0 1.c.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI,
item 5.f.(2):
---------
d. TEXT 4461 4461 1.d.
--------------------------------------------------------------------------------------
e. TEXT 4462 4462 1.e.
--------------------------------------------------------------------------------------
f. TEXT 4463 4463 1.f.
--------------------------------------------------------------------------------------
2. Other noninterest expense (from Schedule RI, item 7.c):
a. Amortization expense of intangible assets............................................... 6531 557 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c:
b. Net losses on other real estate owned................................................... 5418 0 2.b.
c. Net losses on sales of loans............................................................ 5419 0 2.c.
d. Net losses on sales of premises and fixed assets........................................ 5420 0 2.d.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI,
item 7.c:
---------
e. TEXT 4464 INTERCOMPANY CHARGES 4464 11,829 2.e.
--------------------------------------------------------------------------------------
f. TEXT 4467 FDIC INSURANCE PREMIUMS 4467 4,361 2.f.
--------------------------------------------------------------------------------------
g. TEXT 4468 4468 2.g.
--------------------------------------------------------------------------------------
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and applicable
income tax effect (from Schedule RI, item 11.b) (itemize and describe all extraordinary
items and other adjustments):
---------
a. (1) TEXT 4469 4469 3.a.(1)
----------------------------------------------------------------------------------
(2) Applicable income tax effect RIAD 4486 3.a.(2)
----------- ----------------------
b. (1) TEXT 4487 4487 3.b.(1)
----------------------------------------------------------------------------------
(2) Applicable income tax effect RIAD 4488 3.b.(2)
--------- ----------------------
c. (1) TEXT 4489 4489 3.c.(1)
----------------------------------------------------------------------------------
(2) Applicable income tax effect RIAD 4491 3.c.(2)
----------------------
4. Equity capital adjustments from amended Reports of income (from Schedule RI-A, item 2)
(itemize and describe all adjustments):
---------
a. TEXT 4492 4492 4.a.
--------------------------------------------------------------------------------------
b. TEXT 4493 4493 4.b.
--------------------------------------------------------------------------------------
5. Cumulative effect of changes in accounting principles from prior years
(from Schedule RI-A, item 9) (itemize and describe all changes in accounting principles):
---------
a. TEXT 4494 4494 5.a.
--------------------------------------------------------------------------------------
b. TEXT 4495 4495 5.b.
--------------------------------------------------------------------------------------
6. Corrections of material accounting errors from prior years (from Schedule RI-A, item 10)
(itemize and describe all corrections):
---------
a. TEXT 4496 4496 6.a.
--------------------------------------------------------------------------------------
b. TEXT 4497 4497 6.b.
--------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RI-8
Schedule RI-E--continued
<TABLE>
<CAPTION>
Year-to-date
-----------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7. Other transactions with parent holding company (from Schedule RI-A, item 13)
(itemize and describe all such transactions):
a. TEXT 4498 POST CLOSING ADJUSTMENT OF 1994 SALE OF SUBSIDIARY 4498 1,365 7.a.
b. TEXT 4499 4499 7.b.
8. Adjustments to allowance for loan and lease losses (from Schedule RI-8, part II, item 5)
(itemize and describe all adjustments):
a. TEXT 4521 ADJUSTMENT INCIDENT TO BUSINESS COMBINATION 4521 435 8.a.
b. TEXT 4522 4522 8.b.
------------------------
9. Other explanations (the space below is provided for the bank to briefly describe, at its 1498 1499
option, any other significant items affecting the Report of income): ------------------------
</TABLE>
No comment [ ] (RIAD 4769)
Other explanations (please type or print clearly):
(TEXT 4769)
10
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
-----------
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC D31
Page RC-1
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for June 30, 1995
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC--Balance Sheet
<TABLE>
<CAPTION>
-----------
C400
----------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin(1) .................................. 0081 503,226 1.a.
b. Interest-bearing balances(2) ........................................................... 0071 600 1.b.
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) ............................. 1754 294,346 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D) ........................... 1773 9,031 2.b.
3. Federal funds sold and securities purchased under agreements to resell in domestic offices
of the bank and of its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds sold ..................................................................... 0276 252,250 3.a.
b. Securities purchased under agreements to resell ........................................ 0277 0 3.b.
4. Loans and lease financing receivables: -------------------------
a. Loans and leases, net of unearned income (from Schedule RC-C) RCFD 2122 5,055,656 4.a.
b. LESS: Allowance for loan and lease losses .................... RCFD 3123 153,218 4.b.
c. LESS: Allocated transfer risk reserve ........................ RCFD 3128 0 4.c.
-------------------------
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c) .................................... 2125 4,902,438 4.d.
5. Trading assets (from Schedule RC-D) ....................................................... 3545 34,824 5.
6. Premises and fixed assets (including capitalized leases) .................................. 2145 42,393 6.
7. Other real estate owned (from Schedule RC-M) .............................................. 2150 3,988 7.
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule RC-M) .. 2130 0 8.
9. Customers' liability to this bank on acceptances outstanding .............................. 2155 32,552 9.
10. Intangible assets (from Schedule RC-M) .................................................... 2143 5,198 10.
11. Other assets (from Schedule RC-F) ......................................................... 2160 119,491 11.
12. Total assets (sum of items 1 through 11) .................................................. 2170 6,200,337 12.
----------------------------
</TABLE>
-------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
11
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-2
Schedule RC--Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands Bil Mil Thou
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E,
part I) ............................................................................. RCON 2200 3,908,833 13.a.
(1) Noninterest-bearing(1) ....................................... RCON 6631 1,843,067 13.a.(1)
(2) Interest-bearing ............................................. RCON 6636 2,065,766 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E,
part II) .............................................................................. RCFN 2200 1,106,496 13.b.
(1) Noninterest-bearing ........................................... RCFN 6631 0 13.b.(1)
(2) Interest-bearing .............................................. RCFN 6636 1,106,496 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase in domestic
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs:
a. Federal funds purchased ............................................................... RCFD 0278 400,495 14.a.
b. Securities sold under agreements to repurchase ........................................ RCFD 0279 25,945 14.b.
15. a. Demand notes issued to the U.S. Treasury .............................................. RCON 2840 0 15.a.
b. Trading liabilities (from Schedule RC-D) .............................................. RCFD 3548 11,980 15.b.
16. Other borrowed money:
a. With original maturity of one year or less ............................................ RCFD 2332 825 16.a.
b. With original maturity of more than one year .......................................... RCFD 2333 0 16.b.
17. Mortgage indebtedness and obligations under capitalized leases ........................... RCFD 2910 299 17.
18. Bank's liability on acceptances executed and outstanding ................................. RCFD 2920 32,552 18.
19. Subordinated notes and debentures ........................................................ RCFD 3200 75,000 19.
20. Other liabilities (from Schedule RC-G) ................................................... RCFD 2930 45,187 20.
21. Total liabilities (sum of items 13 through 20) ........................................... RCFD 2948 5,607,612 21.
22. Limited-life preferred stock and related surplus ......................................... RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus ............................................ RCFD 3838 0 23.
24. Common stock ............................................................................. RCFD 3230 20,600 24.
25. Surplus (exclude all surplus related to preferred stock) ................................. RCFD 3839 274,680 25.
26. a. Undivided profits and capital reserves ................................................ RCFD 3632 297,445 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities ................ RCFD 8434 0 26.b.
27. Cumulative foreign currency translation adjustments ...................................... RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27) ........................................ RCFD 3210 592,725 28.
29. Total liabilities, limited-life preferred stock, and equity capital (sum of items 21, 22,
and 28) .................................................................................. RCFD 3300 6,200,337 29.
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1994 ............................................................... RCFD 6724 N/A N.1.
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit work
accordance with generally accepted auditing standards
by a certified public accounting firm (may be required by
state chartering authority)
</TABLE>
-------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-3
Schedule RC-A--Cash and Balances Due From Depository Institutions
Exclude assets held for trading.
<TABLE>
<CAPTION>
C405
-------
(Column A) (Column B)
Consolidated Domestic
Bank Offices
-----------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Cash items in process of collection, unposted debits, and currency
and coin ............................................................. 0022 352,183 1.
a. Cash items in process of collection and unposted debits ........... 0020 321,010 1.a.
b. Currency and coin ................................................. 0080 31,173 1.b.
2. Balances due from depository institutions in the U.S. ................ 0082 7,748 2.
a. U.S. branches and agencies of foreign banks (including their IBFs). 0083 0 2.a.
b. Other commercial banks in the U.S. and other depository
institutions in the U.S. (including their IBFs) .................... 0085 7,748 2.b.
3. Balances due from banks in foreign countries and foreign central banks. 0070 4,994 3.
a. Foreign branches of other U.S. banks ............................... 0073 100 3.a.
b. Other banks in foreign countries and foreign central banks ......... 0074 4,994 3.b.
4. Balances due from Federal Reserve Banks ............................... 0090 138,801 0090 138,801 4.
5. Total (sum of item 1 through 4) (total of column A must equal
Schedule RC, sum of items 1.a and 1.b) ................................ 0010 503,826 0010 503,726 5.
<CAPTION>
Memorandum Dollar Amounts in Thousands RCON Bil Mil Thou
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2,
column B above) .......................................................................... 0050 7,248 M.1.
------------------------
Schedule RC-B--Securities
Exclude assets held for trading.
<CAPTION>
C410
-------
Held-to-maturity Available-for-sale
-----------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value/1/
-----------------------------------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1. U.S. Treasury securities .................. 0211 275,866 0213 274,708 1286 0 1287 0 1.
2. U.S. Government agency and corporation
obligations (exclude mortgage-backed
securities)
a. Issued by U.S. Government
agencies(2) ............................ 1289 0 1290 0 1291 0 1293 0 2.a.
b. Issued by U.S. Government-sponsored
agencies(3) ............................ 1294 9,127 1295 9,216 1297 0 1298 0 2.b.
------------------------------------------------------------------------------
</TABLE>
------------------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c., column D.
(2) Includes Small Business Administration ``Guaranteed Loan Pool
Certificates,'' U.S. Maritime Administration obligations, and Export-Import
Bank participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the
Farm Credit System, the Federal Home Loan Bank System, the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage Association, the
Financing Corporation, Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
13
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
-----------
Call Date: 4/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-4
Schedule RC-B--Continued
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value(1)
------------------------------------------------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3. Securities issued by states
and political subdivisions
in the U.S.:
a. General obligations........... 1676 4,561 1677 4,596 1678 0 1679 0 3.a.
b. Revenue obligations........... 1681 127 1686 131 1690 0 1691 0 3.b.
c. Industrial development
and similar obligations....... 1694 0 1695 0 1696 0 1697 0 3.c.
4. Mortgage-backed
securities (MBS):
a. Pass-through securities:
(1) Guaranteed by GNMA........ 1698 379 1699 391 1701 0 1702 0 4.a.(1)
(2) Issued by FNMA and FHLMC.. 1703 676 1705 688 1706 0 1707 0 4.a.(2)
(3) Other pass-through
securities................ 1709 0 1710 0 1711 0 1713 0 4.a.(3)
b. Other mortgage-backed
securities (include CMOs,
REMICs, and stripped MBS):
(1) Issued or guaranteed by
FNMA, FHLMC, or GNMA...... 1714 201 1715 212 1716 0 1717 0 4.b.(1)
(2) Collateralized by MBS
issued or guaranteed
by FNMA, FHLMC, or GNMA... 1718 0 1719 0 1731 0 1732 0 4.b.(2)
(3) All other mortgage-backed
securities................ 1733 0 1734 0 1735 0 1736 0 4.b.(3)
5. Other debt securities:
a. Other domestic debt
securities.................... 1737 294 1738 301 1739 0 1741 0 5.a.
b. Foreign debt securities....... 1742 3,115 1743 3,110 1744 0 1746 0 5.b.
6. Equity securities:
a. Investments in mutual funds... 1747 0 1748 0 6.a.
b. Other equity securities
with readily determinable
fair values................... 1749 0 1751 0 6.b.
c. All other equity
securities(1)................. 1752 9,031 1753 9,031 6.c.
7. Total (sum of items 1 through 6)
(total of column A must equal
Schedule RC, item 2.a) (total
of column D must equal
Schedule RC, item 2.b)........... 1754 294,346 1771 293,353 1772 9,031 1773 9,031 7.
-----------------------------------------------------------------------------------
</TABLE>
-----------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
14
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-5
FDIC Certificate No.: |0|3|6|1|9|
Schedule RC-B--Continued
<TABLE>
<CAPTION>
Memoranda C412
------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Pledged securities(2).............................................................. 0416 285,422 M.1.
2. Maturity and repricing data for debt securities(2)(3)(4) (excluding those in non-
accrual status):
a. Fixed rate debt securities with a remaining maturity of:
(1) Three months or less........................................................ 0343 15,980 M.2.a.(1)
(2) Over three months through 12 months......................................... 0344 82,963 M.2.a.(2)
(3) Over one year through five years............................................ 0345 191,908 M.2.a.(3)
(4) Over five years............................................................. 0346 1,315 M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a.(1) through
2.a.(4)).................................................................... 0347 292,166 M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of:
(1) Quarterly or more frequently................................................ 4544 63 M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly............. 4545 2,117 M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually...... 4551 0 M.2.b.(3)
(4) Less frequently than every five years....................................... 4552 0 M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b.(1)
through 2.b.(4))............................................................ 4553 2,180 M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must
equal total debt securities from Schedule RC-B, sum of items 1 through 5,
columns A and D, minus nonaccrual debt securities included in Schedule RC-N,
item 9, column C)............................................................... 0393 294,346 M.2.c.
3. Not applicable
4. Held-to-maturity debt securities restructured and in compliance with modified terms
(included in Schedule RC-B, items 3 through 5, column A, above).................... 5365 0 M.4.
5. Not applicable
6. Floating rate debt securities with a remaining maturity of one year or less(2)
(included in Memorandum item 2.b.(5) above)........................................ 5519 0 M.6.
7. Amortized cost of held-to-maturity securities sold or transferred to available-
for-sale or trading securities during the calendar year-to-date (report the
amortized cost at date of sale or transfer)........................................ 1778 0 M.7.
8. High-risk mortgage securities (included in the held-to-maturity and available-for-
sale accounts in Schedule RC-B, item 4.b):
a. Amortized cost.................................................................. 8780 0 M.8.a.
b. Fair value...................................................................... 8781 0 M.8.b.
9. Structured notes (included in the held-to-maturity and available-for-sale accounts
in Schedule RC-B, items 2, 3, and 5):
a. Amortized cost.................................................................. 8782 0 M.9.a.
b. Fair value...................................................................... 8783 0 M.9.b.
</TABLE>
-----------------
(2) Includes held-to-maturity securities at amortized cost and available-for-
sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(4) Memorandum item 2 is not applicable to savings banks that must complete
supplemental Schedule RC-J.
15
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC
Page RC-6
Schedule RC-C--Loans and Lease Financing Receivables
Part I. Loans and Leases
Do not deduct the allowance for loan and lease losses from amounts reported in
this schedule. Report total loans and leases, net of unearned income. Exclude
assets held for trading.
<TABLE>
<CAPTION>
--------
C415
---------------------------------------
(Column A) (Column B)
Consolidated Domestic
Bank Offices
---------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Loans secured by real estate ............................................... 1410 1,399,628 1.
a. Construction and land development ....................................... 1415 114,904 1.a.
b. Secured by farmland (including farm residential and other
improvements) ........................................................... 1420 0 1.b.
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4 family residential
properties and extended under lines of credit ....................... 1797 97,618 1.c.(1)
(2) All other loans secured by 1-4 family residential properties:
(a) Secured by first liens .......................................... 5367 313,976 1.c.(2)(a)
(b) Secured by junior liens ......................................... 5368 143 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties .............. 1460 58,600 1.d.
e. Secured by nonfarm nonresidential properties ........................... 1480 814,387 1.e.
2. Loans to depository institutions:
a. To commercial banks in the U.S. ......................................... 1505 25,628 2.a.
(1) To U.S. branches and agencies of foreign banks ...................... 1506 0 2.a.(1)
(2) To other commercial banks in the U.S. ............................... 1507 24,628 2.a.(2)
b. To other depository institutions in the U.S. ........................... 1517 0 1517 0 2.b.
c. To banks in foreign countries .......................................... 1510 2,845 2.c.
(1) To foreign branches of other U.S. banks ............................. 1513 0 2.c.(1)
(2) To other banks in foreign countries ................................. 1516 2,845 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers ........ 1590 1,799 1590 1,799 3.
4. Commercial and industrial loans:
a. To U.S. addresses (domicile) ............................................ 1763 3,000,147 1763 3,000,147 4.a.
b. To non-U.S. addresses (domicile) ........................................ 1764 0 1764 0 4.b.
5. Acceptances of other banks:
a. Of U.S. banks ........................................................... 1756 0 1756 0 5.a.
b. Of foreign banks ........................................................ 1757 0 1757 0 5.b.
6. Loans to individuals for household, family, and other personal
expenditures (i.e., consumer loans) (includes purchased paper) ............. 1975 184,015 6.
a. Credit cards and related plans (includes check credit and other
revolving credit plans) ................................................. 2008 1,639 6.a.
b. Other (includes single payment, installment, and all student loans) ..... 2011 182,376 6.b.
7. Loans to foreign governments and official institutions (including
foreign central banks) ..................................................... 2081 0 2081 0 7.
8. Obligations (other than securities and leases) of states and political
subdivisions in the U.S. (includes nonrated industrial development
obligations) ............................................................... 2107 171,151 2107 171,151 8.
9. Other loans ................................................................ 1563 288,904 9.
a. Loans for purchasing or carrying securities (secured and unsecured) ..... 1545 149,924 9.a.
b. All other loans (exclude consumer loans) ................................ 1564 138,980 9.b.
10. Lease financing receivables (net of unearned income) ....................... 2165 0 10.
a. Of U.S. addresses (domicile) ............................................ 2182 0 10.a.
b. Of non-U.S. addressses (domicile) ....................................... 2183 0 10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above ............ 2123 17,461 2123 17,461 11.
12. Total loans and leases, net of unearned income (sum of items 1
through 10 minus item 11) (total of column A must equal
Schedule RC, item 4.a) ..................................................... 2122 5,055,656 2122 5,055,656 12.
</TABLE>
16
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-7
Schedule RC-C--Continued
Part I. Continued
<TABLE>
<CAPTION>
------------------------------------------
(Column A) (Column B)
Consolidated Domestic
Bank Offices
Memoranda -------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCON Bil Mil Thou
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Commercial paper included in Schedule RC-C, part I, above............. 1496 0 1496 0 M.1.
2. Loans and leases restructured and in compliance with modified terms
(included in Schedule RC-C, part I, above and not reported as past due
or nonaccrual in Schedule RC-N, Memorandum item 1):
a. Loans secured by real estate:
(1) To U.S. addressees (domicile).................................. 1687 0 M.2.a.(1)
(2) To non-U.S. addressees (domicile).............................. 1689 0 M.2.a.(2)
b. All other loans and all lease financing receivables (exclude loans
to individuals for household, family, and other personal
expenditures)...................................................... 8691 0 M.2.b.
c. Commercial and industrial loans to and lease financing receivables
of non-U.S. addressees (domicile) included in Memorandum item 2.b
above.............................................................. 8692 0 M.2.c.
3. Maturity and repricing data for loans and leases(1) (excluding those
in nonaccrual status):
a. Fixed rate loans and leases with a remaining maturity of:
(1) Three months or less........................................... 0348 782,027 M.3.a.(1)
(2) Over three months through 12 months............................ 0349 201,303 M.3.a.(2)
(3) Over one year through five years............................... 0356 628,312 M.3.a.(3)
(4) Over five years................................................ 0357 262,672 M.3.a.(4)
(5) Total fixed rate loans and leases (sum of Memorandum
items 3.a.(1) through 3.a.(4))................................. 0358 1,874,314 M.3.a.(5)
b. Floating rate loans with a repricing frequency of:
(1) Quarterly or more frequently................................... 4554 3,145,803 M.3.b.(1)
(2) Annually or more frequently, but less frequently than
quarterly...................................................... 4555 6,138 M.3.b.(2)
(3) Every five years or more frequently, but less frequently than
annually....................................................... 4561 605 M.3.b.(3)
(4) Less frequently than every five years.......................... 4564 0 M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1)
through 3.b.(4))............................................... 4567 3,152,546 M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and
3.b.(5)) (must equal the sum of total loans and leases, net, from
Schedule RC-C, part I, item 12, plus unearned income from
Schedule RC-C, part I, item 11, minus total nonaccrual loans and
leases from schedule 2C-M, sum of items 1 through 8, column C)..... 1479 5,026,860 M.3.c.
4. Loans to finance commercial real estate, construction, and land
development activities (not secured by real estate) included in
Schedule RC-C, part I, item 4 and 9, column A, page RC-6(2)........... 2746 27,281 M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I,
above)................................................................ 5369 2,616 M.5.
6. Adjustable rate closed-end loans secured by first liens on 1-4 family
--------------------
residential properties (included in Schedule RC-C, part I, RCON Bil Mil Thou
--------------------
item 1,c.(2)(a), column 3, page RC-6)................................. 5370 18,724 M.6.
-------------------------------------------
</TABLE>
------------------
(1) Memorandum item 3 is not applicable to savings banks that must complete
supplemental Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C,
part I, item 1, column A.
17
<PAGE>
Legal Title of Bank: American National Bank &
Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FF1EC 031
Page RC-7a
Schedule RC-C--Continued
Part II. Loans to Small Businesses and Small Farms
Schedule RC-C, Part II is to be reported only with the June Report of Condition.
Report the number and amount currently outstanding as of June 30 of business
loans with "original amounts" of $1,000,000 or less and farm loans with
"original amounts" of $500,000 or less. The following guidelines should be
used to determine the "original amount" of a loan: (1) For loans drawn down
under lines of credit or loan commitments, the "original amount" of the loan
is the size of the line of credit or loan commitment when the line of credit or
loan commitment was most recently approved, extended, or renewed prior to the
report date. However, if the amount currently outstanding as of the report date
exceeds this size, the "original amount" is the amount currently outstanding
on the report date. (2) For loan participations and syndications, the "original
amount" of the loan participation or syndication is the entire amount of the
credit originated by the lead lender. (3) For all other loans, the "original
amount" is the total amount of the loan at origination or the amount currently
outstanding as of the report date, whichever is larger.
Loans to Small Businesses
<TABLE>
<S> <C> <C> <C> <C>
1. Indicate in the appropriate box at the right whether all or substantially all
of the dollar volume of your bank's "Loans secured by nonfarm nonresidential
properties" in domestic offices reported in Schedule RC-C, part I, item 1.e,
column B, and all or substantially all of the dollar volume of your bank's
"Commercial and industrial loans to U.S. addresses" in domestic offices
reported in Schedule RC-C, part I, item 4.a, column B, have original amounts
of $100,000 or less. (If your bank has no loans outstanding in both of these C418
two loan categories, place an "X" in the box marked "NO" and go to item RCON YES NO
5; otherwise, see instructions for further information.)........................ 6999 X 1.
</TABLE>
If YES, complete items 2.a and 2.b below, skip items 3 and 4, and go to item 5,
if NO and your bank has loans outstanding in either loan category, skip items
2.a and 2.b, complete items 3 and 4 below, and go to item 5.
<TABLE>
<S> <C> <C> <C>
2. Report the total number of loans currently Number of Loans
outstanding for each of the following RCON
Schedule RC-C, part I, loan categories:
a. "Loans secured by nonfarm nonresidential
properties" in domestic offices reported
in Schedule RC-C, part I, item 1.e, column B... 5562 N/A 2.a.
b. "Commercial and industrial loans to U.S.
addresses" in domestic offices reported
in Schedule RC-C, part I, item 4.a, column B... 5563 N/A 2.b.
</TABLE>
<TABLE>
<CAPTION>
(Column A) (Column B)
Amount
Currently
Number of Loans Outstanding
--------------- -----------------
Dollar Amounts in Thousands RCON RCON Bil Mil Thou
------------------------------------------ ---- -----------------
<S> <C> <C> <C> <C> <C>
3. Number and amount currently outstanding
of "Loans secured by nonfarm nonres-
idential properties" in domestic offices
reported in Schedule RC-C, part I, item
1.e, column B (sum of items 3.a through
3.c must be less than or equal to Schedule
RC-C, part I, item 1.e, column B):
a. With original amounts of $100,000
or less............................... 5564 97 5565 5,574 3.a.
b. With original amounts of more than
$100,000 through $250,000............. 5566 155 5567 22,108 3.b.
c. With original amounts of more than
$250,000 through $1,000,000........... 5568 339 5569 152,978 3.c.
4. Number and amount currently outstanding
of "Commercial and industrial loans to
U.S. addresses" in domestic offices
reported in Schedule RC-C, part I, item
4.a, column B (sum of items 4.a through
4.c must be less than or equal to Schedule
RC-C, part I, item 4.a, column B):
a. With original amounts of $100,000
or less............................... 5570 1,734 5571 50,610 4.a.
b. With original amounts of more than
$100,000 through $250,000............. 5572 726 5573 89,500 4.b.
c. With original amounts of more than
$250,000 through $1,000,000........... 5574 1,162 5575 424,005 4.c.
</TABLE>
17a
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-7b
Schedule RC-C--Continued
<TABLE>
<S> <C> <C>
Part II. Continued
Agricultural Loans to Small Farms
5. Indicate in the appropriate box at the right whether all or substantially all of the dollar
volume of your bank's "Loans secured by farmland (including farm residential and other
improvements)" in domestic offices reported in Schedule RC-C, part I, item 1.b, column B,
and all or substantially all of the dollar volume of your bank's "Loans to finance
agricultural production and other loans to farmers" in domestic offices reported in
Schedule RC-C, part I, item 3, column B, have original amounts of $100,000 or less. (If
your bank has no loans outstanding in both of these two loan categories, place an "X"
in the box marked "NO" and do not complete items 7 and 8; otherwise, see instructions for YES NO
-------------------------
further information)........................................................................ 6860 X 5.
-------------------------
</TABLE>
If YES, complete items 6.a and 6.b below and do not complete items 7 and 8. If
NO and your bank has loans outstanding in either loan category, skip items 6.a
and 6.b and complete items 7 and 8 below.
<TABLE>
<CAPTION>
6. Report the total number of loans currently outstanding for each of the following
Schedule RC-C, part I, loan categories: -----------------------
Number of Loans
-----------------------
<S> <C> <C>
a. "Loans secured by farmland (including farm residential and other improvements)" RCON
----
in domestic offices reported in Schedule RC-C, part I, items 1.b, column B........ 5576 N/A 6.a.
b. "Loans to finance agricultural production and other loans to farmers" in
domestic offices reported in Schedule RC-C, part I, Item 3, column B.............. 5577 N/A 6.b.
-----------------------
</TABLE>
<TABLE>
<CAPTION>
----------------------------------
(Column A) (Column B)
Amount
Currently
Number of Loans Outstanding
----------------------------------
Dollar Amounts in Thousands RCON RCON Bil Mil Thou
----------------------------------------------------------------------------------------------- --------------------
<S> <C> <C> <C>
7. Number and amount currently outstanding of "Loans secured by farmland (including
farm residential and other improvements)" in domestic offices reported in Schedule
RC-C, part I, item 1.b, column B (sum of items 7.a through 7.c must be less than
or equal to Schedule RC-C, part I, item 1.b, column B):
a. With original amounts of $100,000 or less......................................... 5578 0 5579 0 7.a.
b. With original amounts of more than $100,000 through $250,000...................... 5580 0 5581 0 7.b.
c. With original amounts of more than $250,000 through $500,000...................... 5582 0 5583 0 7.c.
8. Number and amount currently outstanding of "Loans to finance agricultural
production and other loans to farmers" in domestic offices reported in Schedule RC-C,
part I, item 3, column B (sum of items 8.a through 8.c must be less than or equal
to Schedule RC-C, part I, item 3, column B):
a. With original amounts of $100,000 or less......................................... 5584 4 5585 65 8.a.
b. With original amounts of more than $100,000 through $250,000...................... 5586 1 5587 200 8.b.
c. With original amounts of more than $250,000 through $500,000...................... 5588 0 5589 0 8.c.
-----------------------------------
</TABLE>
17b
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-8
Schedule RC-D--Trading Assets and Liabilities
Schedule RC-D is to be completed only by banks with $1 billion or more in total
assets or with $2 billion or more in par/notional amount of off-balance sheet
derivative contrasts (as reported in Schedule RC-L, items 14.a through 14.e,
columns A through D).
<TABLE>
<CAPTION>
C420
---------
Dollar Amounts in Thousands Bil Mil Thou
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
1. U.S. Treasury securities in domestic offices........................................... RCON 3531 0 1.
2. U.S. Government agency and corporation obligations in domestic offices (exclude
mortgage-backed securities)............................................................ RCON 3532 0 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic
offices................................................................................ RCON 3533 14,539 3.
4. Mortgage-backed securities (MBS) in domestic offices:
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA................ RCON 3534 0 4.a.
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC, or GNMA
(include CMOs, REMICs, and stripped MBS)............................................ RCON 3535 5,620 4.b
c. All other mortgage-backed securities................................................ RCON 3536 0 4.c.
5. Other debt securities in domestic offices.............................................. RCON 3537 249 5.
6. Certificates of deposit in domestic offices............................................ RCON 3538 0 6.
7. Commercial paper in domestic offices................................................... RCON 3539 0 7.
8. Bankers acceptances in domestic offices................................................ RCON 3540 12,719 8.
9. Other trading assets in domestic offices............................................... RCON 3541 0 9.
10. Trading assets in foreign offices...................................................... RCFN 3542 0 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and
equity contracts:
a. In domestic offices................................................................. RCON 3543 1,697 11.a.
b. In foreign offices.................................................................. RCFN 3544 0 11.b.
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, Item 5)...... RCFD 3545 34,824 12.
------------------------------
<CAPTION>
------------------------------
LIABILITIES Bil Mil Thou
------------------------------
<S> <C> <C> <C> <C>
13. Liability for short positions.......................................................... RCFD 3546 10,999 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and
equity contracts....................................................................... RCFD 3547 981 14.
15. Total trading liabilities (sum of items 13 and 14)
(must equal Schedule RC, item 15.b).................................................... RCFD 3548 11,980 15.
------------------------------
</TABLE>
18
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
Call Date: 6/30/95 ST-BK: FFIEC 031
Page RC-9
FDIC Certificate No.: |0|3|6|1|9|
Schedule RC-E--Deposit Liabilities
Part I. Deposits in Domestic Offices
<TABLE>
<CAPTION>
------------
C425
----------------------------------------------------------------------
Nontransaction
Transaction Accounts Accounts
----------------------------------------------------------------------
(Column A) (Column B) (Column C)
Total transaction Memo: Total Total
accounts (including demand deposits nontransaction
total demand (included in accounts
deposits) column A) (including MMDAs)
---------------------- ---------------------- ----------------------
Dollar Amounts in Thousands RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Deposits of:
1. Individuals, partnerships, and corporations......... 2201 1,866,652 2240 1,563,097 2346 1,599,672 1.
2. U.S. Government..................................... 2202 12,158 2280 12,158 2520 0 2.
3. States and political subdivisions in the U.S. ...... 2203 26,196 2290 3,983 2530 196,922 3.
4. Commercial banks in the U.S. ....................... 2206 155,069 2310 155,069 4.
a. U.S. branches and agencies of foreign banks...... 2347 0 4.a.
b. Other commercial banks in the U.S. .............. 2348 5,625 4.b.
5. Other depository institutions in the U.S. .......... 2207 13,052 2312 13,052 2349 0 5.
6. Banks in foreign countries.......................... 2213 4,384 2320 4,384 6.
a. Foreign branches of other U.S. banks............. 2367 0 6.a.
b. Other banks in foreign countries................. 2373 0 6.b.
7. Foreign governments and official institutions
(including foreign central banks)................... 2216 331 2300 331 2377 0 7.
8. Certified and official checks....................... 2330 28,772 2330 28,772 8.
9. Total (sum of items 1 through 8) (sum of
columns A and C must equal Schedule RC,
item 13.a).......................................... 2215 2,106,614 2210 1,780,846 2385 1,802,219 9.
---------------------------------------------------------------------
</TABLE>
Memoranda
<TABLE>
<CAPTION>
------------------------
Dollar Amounts in Thousands RCOM Bil Mil Thou
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C):
a. Total individual Retirement Accounts (IRAs) and Keogh Plan accounts........................ 6835 81,596 M.1.a.
b. Total brokered deposits.................................................................... 2365 10,000 M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above):
(1) Issued in denominations of less than $100,000.......................................... 2343 0 M.1.c.(1)
(2) Issued either in denominations of $100,000 or in denominations greater than
$100,000 and participated out by the broker in shares of $100,000 or less.............. 2344 10,000 M.1.c.(2)
d. Total deposits denominated in foreign currencies........................................... 3776 0 M.1.d.
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S.
reported in item 3 above which are secured or collateralized as required under state law).. 5590 38,224 M.1.e.
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d
must equal item 9, column C above):
a. Savings deposits:
(1) Money market deposit accounts (MMDAs).................................................. 6810 656,052 M.2.a.(1)
(2) Other savings deposits (excludes MMDAs)................................................ 0352 238,830 M.2.a.(2)
b. Total time deposits of less than $100,000.................................................. 6648 267,905 M.2.b.
c. Time certificates of deposit of $100,000 or more........................................... 6645 505,804 M.2.c.
d. Open-account time deposits of $100,000 or more............................................. 6646 133,628 M.2.d.
3. All NOW accounts (included in column A above)................................................. 2398 325,768 M.3.
---------------------
</TABLE>
19
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-10
Schedule RC-E--Continued
Part I. Continued
<TABLE>
<CAPTION>
Memoranda (continued)
-------------------------------------------------------------------------------------------------------------------------------
Deposit Totals for FDIC Insurance Assessments
----------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
---------------------------------------------------------------------------------------------- ----------------------
<S> <C> <C> <C>
4. Total deposits in domestic offices (sum of item 9, column A and item 9, column C)
(must equal Schedule RC, item 13.a)..................................................... 2200 3,908,833 M.4.
a. Total demand deposits (must equal item 9, column B).................................. 2210 1,780,846 M.4.a.
b. Total time and savings deposits(1) (must equal item 9, column A plus item 9,
column C minus item 9, column B)..................................................... 2350 2,127,987 M.4.b.
------------------------
</TABLE>
----------------
(1) For FDIC insurance assessment purposes, "total time and savings deposits"
consists of nontransaction accounts and all transaction accounts other than
demand deposits .
<TABLE>
<CAPTION>
----------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
---------------------------------------------------------------------------------------------- ----------------------
<S> <C> <C> <C>
5. Time deposits of less than $100,000 and open-account time deposits of $100,000 or more
(included in Memorandum items 2.b and 2.d above) with a remaining maturity or repricing
frequency of:(1)
a. Three months or less................................................................. 0359 238,114 M.5.a.
b. Over three months through 12 months (but not over 12 months)......................... 3644 108,931 M.5.b.
6. Maturity and repricing data for time certificates of deposit of $100,000 or more:(1)
a. Fixed rate time certificates of deposit of $100,000 or more with a remaining
maturity of:
(1) Three months or less............................................................. 2761 326,460 M.6.a.(1)
(2) Over three months through 12 months.............................................. 2762 138,679 M.6.a.(2)
(3) Over one year through five years................................................. 2763 38,828 M.6.a.(3)
(4) Over five years.................................................................. 2765 1,007 M.6.a.(4)
(5) Total fixed rate time certificates of deposit of $100,000 or more (sum of
Memorandum items 6.a.(1) through 6.a.(4))........................................ 2767 504,974 M.6.a.(5)
b. Floating rate time certificates of deposit of $100,000 or more with a repricing
frequency of:
(1) Quarterly or more frequently..................................................... 4568 830 M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly.................. 4569 0 M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually........... 4571 0 M.6.b.(3)
(4) Less frequently than every five years............................................ 4572 0 M.6.b.(4)
(5) Total floating rate time certificates of deposit of $100,000 or more (sum of
Memorandum items 6.b.(1) through 6.b.(4))........................................ 4573 830 M.6.b.(5)
c. Total time certificates of deposit of $100,000 or more (sum of Memorandum items
6.a.(5) and 6.b.(5)) (must equal Memorandum item 2.c. above)......................... 6645 505,804 M.6.c.
----------------------
</TABLE>
----------------
(1) Memorandum items 5 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.
20
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FCIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-11
Schedule RC-E--Continued
Part II. Deposits in Foreign Offices (including Edge and
Agreement subsidiaries and IBFs)
<TABLE>
<CAPTION>
------------------
Dollar Amounts in Thousands RCFN Bil Mil Thou
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deposits of:
1. Individual, partnerships, and corporations ............................................. 2621 1,041,496 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks) ......................... 2623 65,000 2.
3. Foreign banks ( including U.S. branches and agencies of foreign banks, including
their IBFs) ........................................................................... 2625 0 3.
4. Foreign governments and official institutions (including foreign central banks) ........ 2650 0 4.
5. Certified and official checks .......................................................... 2330 0 5.
6. All other deposits ..................................................................... 2668 0 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, Item 13.b) ................... 2200 1,106,496 7.
----------------------
</TABLE>
Schedule RC-F--Other Assets
<TABLE>
<CAPTION>
C430
--------
Dollar Amounts in Thousands RCFN Bil Mil Thou
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Income earned, net collected on loans ............................................... RCFD 2164 26,925 1.
2. Net deferred tax assets(1) ........................................................ RCFD 2148 60,260 2.
3. Excess residential mortgage servicing fees receivable ............................... RCFD 5371 0 3.
4. Other (itemize amounts that exceed 25% of this item) ................................ RCFD 2168 32,306 4.
-------------------------
a. TEXT 3549 SECURITIES PENDING SETTLEMENT RCFD 3549 8,774 4.a.
-------------------------------------------------------
b. TEXT 3550 RCFD 3550 4.b.
-------------------------------------------------------
c. TEXT 3551 RCFD 3551 4.c.
----------------------------------------------------------------------------------
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11) .................. RCFD 2160 119,491 5.
-------------------------------
</TABLE>
Memorandum
<TABLE>
<CAPTION>
C430
--------
Dollar Amounts in Thousands RCFN Bil Mil Thou
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Income earned, net collected on loans ............................................... RCFD 5610 0 M.1.
</TABLE>
Schedule RC-G--Other Liabilities
<TABLE>
<CAPTION>
C435
--------
Dollar Amounts in Thousands RCFN Bil Mil Thou
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. a. Interest accrued and unpaid on deposits in domestic offices(2) .............................. RCON 3645 8,139 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable) ................... RCFD 3646 32,516 1.b.
2. Net deferred tax liabilities(1) .............................................................. RCFD 3049 0 2
3. Minority interest in consolidated subsidiaries ................................................. RCFD 3000 0 3.
4. Other (itemize amounts that exceed 25% of this item) ........................................... RCFD 2938 4,532 4.
-------------------------
a. TEXT 3552 STANDBY LETTER OF CREDIT FEES (PRE FAS 91) RCFD 3552 1,171 4.a.
-------------------------------------------------------
b. TEXT 3553 RCFD 3553 1,167 4.b.
-------------------------------------------------------
c. TEXT 3554 RCFD 3554 4.c.
----------------------------------------------------------------------------------
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20) .................. RCFD 2930 119,491 5.
-------------------------------
</TABLE>
----------------------------
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.
21
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-SK: 17-1490 FFIEC 031
Page RC-12
Schedule RC-H--Selected Balance Sheet Items for Domestic Offices
<TABLE>
<CAPTION>
C440
----
Domestic Offices
----------------
Dollar Amounts in Thousands RCON Bil Mil Thou
----------------------------------------------------------------------------------------------------- -------------------
<S> <C> <C> <C>
1. Customers' liability to this bank on acceptances outstanding..................................... 2155 32,552 1.
2. Bank's liability on acceptances executed and outstanding......................................... 2920 32,552 2.
3. Federal funds sold and securities purchased under agreements to resell........................... 1330 252,250 3.
4. Federal funds purchased and securities sold under agreements to repurchase....................... 2800 426,440 4.
5. Other borrowed money............................................................................. 3190 825 5.
EITHER
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs...................... 2163 N/A 6.
OR
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs........................ 2941 1,112,286 7.
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and IBFs).. 2192 6,189,926 8.
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, and
IBFs)............................................................................................ 3129 4,484,913 9.
Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices.
RCON Bil Mil Thou
-------------------
10. U.S. Treasury securities......................................................................... 1779 275,866 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed securities).......... 1785 9,127 11.
12. Securities issued by states and political subdivisions in the U.S................................ 1786 4,688 12.
13. Mortgage-backed securities (MBS):
a. Pass-through securities:
(1) Issued or guaranteed by FNMA, FHLMC, or GNNA.............................................. 1787 1,055 13.a.(1)
(2) Other pass-through securities............................................................. 1869 0 13.a.(2)
b. Other mortgage-backed securities (include CMO's, REMICs, and stripped MBS):
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA.............................................. 1877 201 13.b.(1)
(2) All other mortgage-backed securities...................................................... 2253 0 13.b.(2)
14. Other domestic debt securities................................................................... 3159 296 14.
15. Foreign debt securities.......................................................................... 3160 3,115 15.
16. Equity securities:
a. Investments in mutual funds................................................................... 3161 0 16.a.
b. Other equity securities with readily determinable fair values................................. 3162 0 16.b.
c. All other equity securities................................................................... 3169 9,031 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16)............ 3170 303,377 17.
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
Dollar Amounts in Thousands RCON Bil Mil Thou
----------------------------------------------------------------------------------------------------- -------------------
EITHER
1. Net due from the IBF of the domestic offices of the reporting bank............................... 3051 N/A M.1.
OR
2. Net due to the IBF of the domestic offices of the reporting bank................................. 3059 N/A M.2.
</TABLE>
22
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FF1EC 031
Page RC-13
Schedule RC-I--Selected Assets and Liabilities of IBFs
To be completed only by banks with IBPs and other "foreign" offices.
<TABLE>
<CAPTION>
C445
Dollar Amounts in Thousands RCFN Bil Mil Thou
----------------------------------------------------- ---- --- --- ----
<S> <C> <C> <C>
1. Total IBF assets of the consolidated bank
(component of Schedule RC, item 12)............... 2133 N/A 1.
2. Total IBF loans and lease financing receivables
(component of Schedule RC-C, part I, item 12,
column A)......................................... 2076 N/A 2.
3. IBF commercial and industrial loans (component
of Schedule RC-C, part I, item 4, column A)....... 2077 N/A 3.
4. Total IBF liabilities (component of Schedule RC,
item 21).......................................... 2898 N/A 4.
5. IBF deposit liabilities due to banks, including
other IBFs (component of Schedule RC-E, part II,
items 2 and 3).................................... 2379 N/A 5.
6. Other IBF deposit liabilities (component of
Schedule RC-E, part II, items 1, 4, 5, and 6)..... 2381 N/A 6.
</TABLE>
Schedule RC-K--Quarterly Averages(1)
<TABLE>
<CAPTION>
C445
Dollar Amounts in Thousands Bil Mil Thou
------------------------------------------------- ----- --- --- ----
<S> <C> <C>
1. Interest-bearing balances due from depository
institutions................................... RCFD 3381 594 1.
2. U.S. Treasury securities and U.S. Government
agency and corporation obligations(2).......... RCFD 3382 256,812 2.
3. Securities issued by states and political
subdivisions in the U.S.(2).................... RCFD 3383 4,972 3.
4. a. Other debt securities(2).................... RCFD 3647 3,705 4.a.
b. Equity securities(3) (includes investments
in mutual funds and Federal Reserve stock).. RCFD 3648 9,031 4.b.
5. Federal funds sold and securities purchased
under agreements to resell in domestic offices
of the bank and of its Edge and Agreement
subsidiaries, and in IBFs...................... RCFD 3365 288,969 5.
6. Loans:
a. Loans in domestic offices:
(1) Total loans............................. RCDN 3360 4,993,832 6.a.(1)
(2) Loans secured by real estate............ RCDN 3385 1,362,239 6.a.(2)
(3) Loans to finance agricultural production
and other loans to farmers.............. RCDN 3386 1,640 6.a.(3)
(4) Commercial and industrial loans......... RCDN 3387 2,979,217 6.a.(4)
(5) Loans to individuals for household,
family, and other personal expenditures. RCDN 3388 171,388 6.a.(5)
b. Total loans in foreign offices, Edge and
Agreement subsidiaries, and IBFs............ RCFN 3360 0 6.b.
7. Trading assets................................. RCFD 3401 18,363 7.
8. Lease financing receivables (net of unearned
income)........................................ RCFD 3484 0 8.
9. Total assets(4)................................ RCFD 3368 6,082,952 9.
LIABILITIES
10. Interest-bearing transaction accounts in
domestic offices (NOW accounts, ATS accounts,
and telephone and preauthorized transfer
accounts) (exclude demand deposits)........... RCOM 3485 366,109 10.
11. Nontransaction accounts in domestic offices:
a. Money market deposit accounts (MMDAs)...... RCOM 3486 670,387 11.a.
b. Other savings deposits..................... RCOM 3487 245,989 11.b.
c. Time certificates of deposit of $100,000
or more.................................... RCOM 3345 517,855 11.c.
d. All other time deposits.................... RCOM 3469 395,964 11.d.
12. Interest-bearing deposits in foreign offices,
Edge and Agreement subsidiaries, and IBFs..... RCFN 3404 1,020,872 12.
13. Federal funds purchased and securities sold
under agreements to repurchase in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs........... RCFD 3353 385,449 13.
14. Other borrowed money.......................... RCFD 3355 36,266 14.
</TABLE>
---------------
(1) For all items, banks have the option of reporting either (1) an average
of daily figures for the quarter, or (2) an average of weekly figures
(i.e., the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized
cost.
(3) Quarterly averages for all equity securities should be based on historical
cost.
(4) The quarterly average for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
23
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: 03619
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-14
Schedule RC-L--Off-Balance Sheet Items
Please read carefully the instructions for the preparation of Schedule RC-L.
Some of the amounts reported in Schedule RC-L are regarded as volume indicators
and not necessarily as measures of risk.
<TABLE>
<CAPTION>
---------
C460
-----------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Unused commitments:
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g.,
home equity lines.................................................................... 3814 81,370 1.a.
b. Credit card lines.................................................................... 3815 18,356 1.b.
c. Commercial real estate, construction, and land development:
(1) Commitments to fund loans secured by real estate................................. 3816 132,580 1.c.(1)
(2) Commitments to fund loans not secured by real estate............................. 6550 19,105 1.c.(2)
d. Securities underwriting.............................................................. 3817 0 1.d.
e. Other unused commitments............................................................. 3818 2,144,371 1.e.
2. Financial standby letters of credit and foreign office guarantees....................... 3819 509,435 2.
---------------------
a. Amount of financial standby letters of credit conveyed to others RCFD 3820 45,444 2.a.
---------------------
3. Performance standby letters of credit and foreign office guarantees..................... 3821 194,416 3.
---------------------
a. Amount of performance standby letters of credit conveyed to others RCFD 3822 13,486 3.a.
---------------------
4. Commercial and similar letters of credit................................................ 3411 95,939 4.
5. Participations in acceptance (as described in the instructions) conveyed to others by
the reporting bank...................................................................... 3428 0 5.
6. Participations in acceptances (as described in the instructions) acquired by the
reporting (nonaccepting) bank........................................................... 3429 0 6.
7. Securities borrowed..................................................................... 3432 0 7.
8. Securities lent (including customers' securities lent where the customer is
indemnified against loss by the reporting bank)......................................... 3433 0 8.
9. Mortgages transferred (i.e., sold or swapped) with recourse that have been treated as
sold for Call Report purposes:
a. FNMA and FHLMC residential mortgage loan pools:
(1) Outstanding principal balance of mortgages transferred as of the report date..... 3650 0 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date............. 3651 0 9.a.(2)
b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools:
(1) Outstanding principal balance of mortgages transferred as of the report date..... 3652 0 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date............. 3653 0 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools:
(1) Outstanding principal balance of mortgages transferred as of the report date..... 3654 0 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report date............. 3655 0 9.c.(2)
10. When-issued securities:
a. Gross commitments to purchase....................................................... 3434 300 10.a.
b. Gross commitments to sell........................................................... 3435 300 10.b.
11. Spot foreign exchange contracts......................................................... 8765 1,885 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives)
(itemize and describe each component of this item over 25% of Schedule RC, item 28,
"Total equity capital")................................................................. 3430 0 12.
----------- --------------------------------
a. TEXT 3555 RCFD 3555 12.a.
----------------------------------------------------
b. TEXT 3556 RCFD 3556 12.b.
----------------------------------------------------
c. TEXT 3557 RCFD 3557 12.c.
----------------------------------------------------
d. TEXT 3558 RCFD 3558 12.d.
------------------------------------------------------------------------------------
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and
describe each component of this item over 25% of Schedule RC, item 28, "Total equity
capital")............................................................................... 5591 0 13.
----------- --------------------------------
a. TEXT 5592 RCFD 5592 13.a.
----------------------------------------------------
b. TEXT 5593 RCFD 5593 13.b.
----------------------------------------------------
c. TEXT 5594 RCFD 5594 13.c.
----------------------------------------------------
d. TEXT 5595 RCFD 5595 13.d.
------------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-15
Schedule RC-L--Continued
<TABLE>
<CAPTION>
C461
-----------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
------------------------------------------ Contracts Contracts Contracts Other Contracts
Off-balance Sheet Derivatives ----------------- ----------------- ----------------- -----------------
Position Indicators Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou
------------------------------------------ ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C>
14. Gross amounts (e.g., notional
amounts) (for each column, sum of
Items 14.a through 14.e must equal
sum of items 15, 16.a, and 16.b):
a. Futures contracts.................. 0 0 0 0 14.a.
----------------- ----------------- ----------------- -----------------
RCFD 8693 RCFD 8694 RCFD 8695 RCFD 8696
----------------- ----------------- ----------------- -----------------
b. Forward contracts.................. 0 49,091 0 0 14.b.
----------------- ----------------- ----------------- -----------------
RCFD 8697 RCFD 8698 RCFD 8699 RCFD 8700
----------------- ----------------- ----------------- -----------------
c. Exchange-traded option contracts:
(1) Written options................ 0 0 0 0 14.c.(1)
----------------- ----------------- ----------------- -----------------
RCFD 8701 RCFD 8702 RCFD 8703 RCFD 8704
----------------- ----------------- ----------------- -----------------
(2) Purchased options.............. 0 0 0 0 14.c.(2)
----------------- ----------------- ----------------- -----------------
RCFD 8705 RCFD 8706 RCFD 8707 RCFD 8708
----------------- ----------------- ----------------- -----------------
d. Over-the-counter option contracts:
(1) Written options................ 104,625 0 0 0 14.d.(1)
----------------- ----------------- ----------------- -----------------
RCFD 8709 RCFD 8710 RCFD 8711 RCFD 8712
----------------- ----------------- ----------------- -----------------
(2) Purchased options.............. 104,625 0 0 0 14.d.(2)
----------------- ----------------- ----------------- -----------------
RCFD 8713 RCFD 8714 RCFD 8715 RCFD 8716
----------------- ----------------- ----------------- -----------------
e. Swaps.............................. 526,372 0 0 0 14.e.
----------------- ----------------- ----------------- -----------------
RCFD 3450 RCFD 3826 RCFD 8719 RCFD 8720
----------------- ----------------- ----------------- -----------------
15. Total gross notional amount of
derivative contracts held for trading. 252,696 0 0 0 15.
----------------- ----------------- ----------------- -----------------
RCFD A126 RCFD A127 RCFD 8723 RCFD 8724
----------------- ----------------- ----------------- -----------------
16. Total gross notional amount of
derivative contracts held for
purposes other than trading:
a. Contracts marked to market......... 0 0 0 0 16.a.
----------------- ----------------- ----------------- -----------------
RCFD 8725 RCFD 8726 RCFD 8727 RCFD 8728
----------------- ----------------- ----------------- -----------------
b. Contracts not marked to market..... 482,926 49,091 0 0 16.b.
----------------- ----------------- ----------------- -----------------
RCFD 8729 RCFD 8730 RCFD 8731 RCFD 8732
----------------- ----------------- ----------------- -----------------
</TABLE>
25
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-16
Schedule RC-L--Continued
<TABLE>
<CAPTION>
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
--------------------------------- Contracts Contracts Contracts Other Contracts
Off-balance Sheet Derivatives ------------------ ------------------ ------------------ ------------------
Position Indicators RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
--------------------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17. Gross fair values of
derivative contracts:
a. Contracts held for
trading:
(1) Gross positive
fair value............ 8733 2,243 8734 0 8735 0 8736 0 17.a.(1)
(2) Gross negative
fair value............ 8737 1,892 8738 0 8739 0 8740 0 17.a.(2)
b. Contracts held for
purposes other than
trading that are marked
to market:
(1) Gross positive
fair value............ 8741 0 8742 0 8743 0 8744 0 17.b.(1)
(2) Gross negative
fair value............ 8745 0 8746 0 8747 0 8748 0 17.b.(2)
c. Contracts held for
purposes other than
trading that are not
marked to market:
(1) Gross positive
fair value............ 8749 6,671 8750 563 8751 0 8752 0 17.c.(1)
(2) Gross negative
fair value............ 8753 4,790 8754 531 8755 0 8756 0 17.c.(2)
------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------
Memoranda Dollar Amounts in Thousands RCFD Bil Mil Thou
------------------------------------------------------------------------------------------------- ------------------
<S> <C> <C> <C>
1.-2. Not applicable.............................................................................
3. Unused commitments with an original maturity exceeding one year that are reported in
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments
that are fee paid or otherwise legally binding)............................................... 3833 1,070,513 M.3.
a. Participations in commitments with an original maturity
--------------------------
exceeding one year conveyed to others.......................... RCFD 3834 | 0 M.3.a.
--------------------------
4. To be completed only by banks with $1 billion ormore in total assets:
Standby letters of credit and foreign office guarantees (both financial and performance)
issued to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above...... 3377 2,892 M.4.
5. To be completed for the September report only:
Installment loans to individuals for household, family, and other personal expenditures that
have been securitized and sold without recourse (with servicing retained), amounts
outstanding by type of loan:
a. Loans to purchase private passenger automobiles............................................ 2741 N/A M.5.a.
b. Credit cards and related plans............................................................. 2742 N/A M.5.b.
c. All other consumer installment credit (including mobile home loans)........................ 2743 N/A M.5.c.
------------------
</TABLE>
26
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: 03619
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-17
Schedule RC-M--Memoranda
<TABLE>
<CAPTION>
---------
C465
----------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors,
principal shareholders, and their related interests as of the report date:
a. Aggregate amount of all extensions of credit to all executive officers,
directors, principal shareholders, and their related interests................... 6164 25,994 1.a.
b. Number of executive officers, directors, and principal shareholders to whom
the amount of all extensions of credit by the reporting bank (including
extensions of credit to related interests) equals or exceeds the lesser
of $500,000 or 5 percent of total capital as defined for this purpose in
agency regulations. Number
-----------------------------------
RCFD 6165 3 1.b.
-----------------------------------
2. Federal funds sold and securities purchased under agreements to resell with U.S.
branches and agencies of foreign banks(1) (included in Schedule RC, items 3.a
and 3.b)............................................................................ 3405 65,600 2.
3. Not applicable.
4. Outstanding principal (balance of 1-4 family residential mortgage loans serviced
for others (include both retained servicing and purchased servicing):
a. Mortgages serviced under a GNMA contract......................................... 5500 0 4.a.
b. Mortgages serviced under a FHLMC contract:
(1) Serviced with recourse to servicer........................................... 5501 0 4.b.(1)
(2) Serviced without recourse to servicer........................................ 5502 0 4.b.(2)
c. Mortgages services under a FNMA contract:
(1) Serviced under a regular option contract..................................... 5503 0 4.c.(1)
(2) Serviced under a special option contract..................................... 5504 0 4.c.(2)
d. Mortgages serviced under other servicing contracts............................... 5505 0 4.d.
5. To be completed only by banks with $1 billion or more in total assets:
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and
5.b must equal Schedule RC, item 9:)
a. U.S. addressees (domicile)....................................................... 2103 32,385 5.a.
b. Non-U.S. addressees (domicile)................................................... 2104 167 5.b.
6. Intangible assets:
a. Mortgage servicing rights........................................................ 3164 0 6.a.
b. Other identifiable intangible assets:
(1) Purchased credit card relationships.......................................... 5506 0 6.b.(1)
(2) All other identifiable intangible assets..................................... 5507 1,579 6.b.(2)
c. Goodwill......................................................................... 3163 3,619 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10)........... 2143 5,198 6.d.
e. Intangible assets that have been grandfathered for regulatory capital purposes... 6442 0 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated
to redeem the debt.................................................................. 3295 0 7.
---------------------------------
------------------
(1) Do not report federal funds sold and securities purchased under agreements to
resell with other commercial banks in the U.S. in this item.
</TABLE>
27
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: 03619
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-18
Schedule RC-M--Continued
<TABLE>
<CAPTION>
---------------------------------
Dollar Amounts in Thousands Bil Mil Thou
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
8. a. Other real estate owned:
(1) Direct and indirect investments in real estate ventures................. RCFD 5372 0 8.a.(1)
(2) All other real estate owned:
(a) Construction and land development in domestic offices............... RCDN 5508 909 8.a.(2)(a)
(b) Farmland in domestic offices........................................ RCDN 5509 0 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices............... RCDN 5510 2,509 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices.. RCDN 5511 0 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices............... RCDN 5512 570 8.a.(2)(e)
(f) In foreign offices.................................................. RCFN 5513 0 8.a.(2)(f)
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC,
item 7)................................................................. RCFD 2150 3,988 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies:
(1) Direct and indirect investments in real estate ventures................. RCFD 5374 0 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated
companies............................................................... RCFD 5375 0 8.b.(2)
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC,
item 8)................................................................. RCFD 2130 0 8.b.(3)
c. Total assets of unconsolidated subsidiaries and associated companies........ RCFD 5376 0 8.c.
9. Noncumulative perpetual preferred stock and related surplus included in
Schedule RC, item 23, "Perpetual preferred stock and related surplus".......... RCFD 3778 0 9.
10. Mutual fund and annuity sales in domestic offices during the quarter
(include proprietary, private label, and third party products):
a. Money market funds.......................................................... RCDN 6441 41,446 10.a.
b. Equity securities funds..................................................... RCDN 8427 427 10.b.
c. Debt securities funds....................................................... RCDN 8428 224 10.c.
d. Other mutual funds.......................................................... RCDN 8429 0 10.d.
e. Annuities................................................................... RCDN 8430 0 10.e.
f. Sales of proprietary mutual funds and annuities (included in items 10.a
through 10.e above)......................................................... RCDN 8784 0 10.f.
-----------------------------------------------------------------------------------------------------------------------------------
Memorandum Dollar Amounts in Thousands RCFD Bil Mil Thou
-----------------------------------------------------------------------------------------------------------------------
1. Interbank holdings of capital instruments (to be completed for the December report only):
a. Reciprocal holdings of banking organizations' capital instruments............... 3836 N/A M.1.a.
b. Nonreciprocal holdings of banking organizations' capital instruments............ 3837 N/A M.1.b.
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-19
Schedule RC-N--Past Due and Nonaccrual Loans, Leases,
and Other Assets
<TABLE>
<CAPTION>
The FFIEC regards the information reported in -----------
all of Memorandum item 1, in items 1 though 10, C470
column A, and in Memorandum items 2 through 4, ------------------------------------------------------------------
column A, as confidential. (Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accuring accuring
------------------------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Loans secured by real estate:
a. To U.S. addressees (domicile).................... 1245 60,787 1246 8,275 1247 24,167 1.a.
b. To non-U.S. addressees (domicile)................ 1248 0 1249 0 1250 0 1.b.
2. Loans to depository institutions and acceptances
of other banks:
a. To U.S. banks and other U.S. depository
institutions..................................... 5377 0 5378 0 5379 0 2.a.
b. To foreign banks................................. 5380 0 5381 0 5382 0 2.b.
3. Loans to finance agricultural production and
other loans to farmers.............................. 1594 0 1597 0 1583 0 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile).................... 1251 46,860 1252 0 1253 17,225 4.a.
b. To non-U.S. addressees (domicile)................ 1254 0 1255 0 1256 0 4.b.
5. Loans to individuals for household, family, and
other personal expenditures:
a. Credit cards and related plans................... 5383 0 5384 0 5385 0 5.a.
b. Other (includes single payment, installment,
and all student loans)........................... 5386 2,268 5387 154 5388 1,100 5.b.
6. Loans to foreign governments and official
institutions........................................ 5389 0 5390 0 5391 0 6.
7. All other loans..................................... 5459 2,972 5460 0 5461 3,765 7.
8. Lease financing receivables:
a. Of U.S. addressees (domicile).................... 1257 0 1258 o 1259 0 8.a.
b. Of non-U.S. addressees (domicile)................ 1271 0 1272 0 1791 0 8.b.
9. Debt securities and other assets (exclude other
real estate owned and other repossessed assets)..... 3505 0 3506 0 3507 0 9.
-------------------------------------------------------------------
====================================================================================================================================
</TABLE>
Amounts reported in item 1 though 8 above include guaranteed and unguaranteed
portions of past due and nonaccrual loans and leases. Report in item 10 below
certain guaranteed loans and leases that have already been included in the
amounts reported in items 1 though 8.
<TABLE>
<CAPTION>
------------------------------------------------------------------
RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
10. Loans and leases reported in items 1
through 8 above which are wholly or partially
guaranteed by the U.S. Government.................. 5612 18 5613 0 5614 0 10.
a. Guaranteed portion of loans and leases
included in item 10 above....................... 5615 15 5616 0 5617 0 10.a.
-----------------------------------------------------------------
</TABLE>
29
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-20
Schedule RC-N--Continued
<TABLE>
<CAPTION>
-----------
C473
------------------------------------------------------------
(Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
Memoranda accruing accruing
---------------- ------------------ ---------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1. Restructured loans and leases included in
Schedule RC-N, items 1 through 8, above (and not
reported in Schedule RC-C, part I, Memorandum
item 2) ........................................... 1658 0 1659 0 1661 23 M.1.
2. Loans to finance commercial real estate,
construction, and land development activities
(not secured by real estate) included in
Schedule RC-N, items 4 and 7, above ............... 6558 329 6559 0 6560 57 M.2.
----------------------------------------------------------------
3. Loans secured by real estate in domestic offices RCON Bil Mil Thou RCON Bil Mil Thou RCON Bil Mil Thou
---------------------------------------------------------------
(included in Schedule RC-N, item 1, above):
a. Construction and land development .............. 2759 12,975 2769 0 3492 335 M.3.a.
b. Secured by farm land ........................... 3493 0 3494 0 3495 0 M.3.b.
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by
1-4 family residential properties and
extended under lines of credit ................. 5398 3,142 5399 4,910 5400 0 M.3.c.(1)
(2) All other loans secured by 1-4 family
residential properties ..................... 5401 2,870 5402 3,365 5403 979 M.3.c.(2)
d. Secured by multifamily (5 or more) residential
properties ..................................... 3499 329 3500 0 3501 5,151 M.3.d.
e. Secured by nonfarm nonresidential properties ... 3502 41,561 3503 0 3504 17,402 M.3.e.
----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
(Column A) (Column B)
Past due 30 Past due 90
through 89 days days or more
-----------------------------------------------
RCFD Bil Mil Thou RCFD Bil Mil Thou
-----------------------------------------------
<S> <C> <C> <C> <C>
4. Interest rate, foreign exchange rate, and other
commodity and equity contracts:
a. Book value of amounts carried as assets ..... 3522 0 3528 8 M.4.a.
b. Replacement cost of contracts with a
positive replacement cost ................... 3529 0 3530 108 M.4.b.
-----------------------------------------------
</TABLE>
30
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-21
Schedule RC-O--Other Data for Deposit Insurance Assessments
<TABLE>
<CAPTION>
-------------
C475
----------------------------
Dollar Amounts in Thousands RCOM Bil Mil Thou
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Unposted debits (see instructions):
a. Actual amount of all unposted debits ........................................ 0030 N/A 1.a.
OR
b. Separate amount of unposted debits:
(1) Actual amount of unposted debits to demand deposits...................... 0031 5,852 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits(1) ........ 0032 28 1.b.(2)
2. Unposted credits (see instructions):
a. Actual amount of all unposted credits ....................................... 3510 N/A 1.a.
OR
b. Separate amount of unposted credits:
(1) Actual amount of unposted credits to demand deposits..................... 3512 4,458 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1) ....... 3514 2 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included
in total deposits in domestic offices).......................................... 3520 55 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured
branches in Puerto Rico and U.S. territories and possessions (not included in
total deposits):
a. Demand deposits of consolidated subsidiaries................................. 2211 416 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries.................... 2351 0 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries......... 5514 0 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions:
a. Demand deposits in insured branches (included in Schedule RC-E, Part II)..... 2229 0 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E,
Part II)..................................................................... 2383 0 5.b.
c. Interest accrued and unpaid on deposits in insured branches (included in
Schedule RC-E, item 1.b)..................................................... 5515 0 5.c.
----------------------------
----------------------------
Item 6 is not applicable to state nonmember banks that have not been authorized by
the Federal Reserve to act as pass-through correspondents.
6. Reserve balances actually passed through to the Federal Reserve by the reporting
bank on behalf of its respondent depository institutions that are also reflected
as deposit liabilities of the reporting bank:
a. Actual reflected in demand deposits (included in Schedule RC-E, Part I,
Memorandum item 4.a)........................................................ 2314 760 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E,
Part 1, Memorandum item 4.b)................................................. 2315 0 6.b.
7. Unamortized premiums and discounts on time and savings deposits(1)
a. Unamortized premiums......................................................... 5516 0 7.a.
b. Unamortized discounts........................................................ 5517 0 7.b.
----------------------------
---------------------------------------------------------------------------------------------------------------------------------
8. To be completed by banks with "Oaker deposits."
Total "Adjusted Attributable Deposits" of all institutions acquired under
Section 5(d)(3) of the Federal Deposit Insurance Act (from most recent FDIC ----------------------------
Oaker Transaction Worksheet(s))................................................ 5518 N/A 8.
----------------------------
----------------------------------------------------------------------------------------------------------------------------------
---------------------------
9. Deposits in lifeline accounts................................................... 5596 9.
10. Benefit-responsive "Depositary Institution Investment Contracts" (included in
total deposits in domestic offices).............................................. 5432 0 10.
---------------------------
</TABLE>
-------------------
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists
of nontransaction accounts and all transaction accounts other than demand
deposits.
31
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 40690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-22
Schedule RC-O--Continued
<TABLE>
<CAPTION>
----------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
11. Adjustments to demand deposits in domestic offices reported in Schedule RC-E for
certain reciprocal demand balances:
a. Amount by which demand deposits would be reduced if reciprocal demand balances
between the reporting bank and savings associations were reported on a net basis
rather than a gross basis in Schedule RC-E .............................................. 8785 0 11.a.
b. Amount by which demand deposits would be increased if reciprocal demand balances
between the reporting bank and U.S. branches and agencies of foreign banks
were reported on a gross basis rather than a net basis in Schedule RC-E ................. A181 0 11.b.
c. Amount by which demand deposits would be reduced if cash items in process
of collection were included in the calculation of net reciprocal demand
balances between the reporting bank and the domestic offices of of U.S. banks and
savings associations in Schedule RC-E ................................................... A182 1,390 11.c.
----------------------
<CAPTION>
Memoranda (to be completed each quarter except as noted)
----------------------
Dollar Amounts in Thousands RCON Bil Mil Thou
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and
1.b.(1) must equal Schedule RC, item 13.a):
a. Deposit accounts of $100,000 or less:
(1) Amount of deposit accounts of $100,000 or less ...................................... 2702 1,095,005 M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (to be Number
------------------------
completed for the June report only) ......................... RCON 3779 109,137 M.1.a.(2)
b. Deposit accounts of more than $100,000: ------------------------
(1) Amount of deposit accounts of more than $100,000 ..................................... 2710 2,813,828 M.1.b.(1)
Number
------------------------
(2) Number of deposit accounts of more than $100,000 ............ RCON 2722 6,741 M.1.b.(2)
------------------------
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by multiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item
1.b.(2) above by $100,000 and subtracting the result from the amount of deposit
accounts of more than $100,000 reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether your bank has a method or YES NO
procedure for determining a better estimate of uninsured deposits than the -----------------------------------
estimate described above ................................................... RCON 6861 X M.2.a.
-----------------------------------
b. If the box marked YES has been checked, report the estimate of uninsured -----------------------------
deposits determined by using your bank's method or procedure ...................... RCON Bil Mil Thou
-----------------------------
5597 N/A M.2.b.
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Person to whom questions about the Reports of Condition and Income should
be directed: C477
----
Gerald R. Huesing, Second Vice President
----------------------------------------
Name and Title (TEXT 8901)
(312) 661-5662
--------------------------------------------
Area code/phone number/extension (TEXT 8902)
32
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-23
Schedule RC-R--Risk-Based Capital
This schedule must be completed by all banks as follows: Banks that reported
total assets of $1 billion or more in Schedule RC, item 12, for June 30, 1994,
must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets
of less than $1 billion must complete items 1 and 2 below or Schedule RC-R in
its entirety, depending on their response to item 1 below.
<TABLE>
<S> <C> <C> <C>
-----------
C480
1. Test for determining the extent to which Schedule RC-R must be completed. To be -----------------
completed only by banks with total assets of less than $1 billion. Indicate in the YES NO
appropriate box at the right whether the bank has total capital greater than or ------------------------------
equal to eight percent of adjusted total assets......................................... RCFD 6056 |////| 1.
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government agency
obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan and lease losses and
selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete item 2 below. If the box marked NO has been
checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight
percent or that the bank is not in compliance with the risk-based capital guidelines.
</TABLE>
<TABLE>
<CAPTION>
------------------ ------------------
(Column A) (Column B)
Subordinated Debt(1) Other
and Intermediate Limited-
Item 2 is to be completed by all banks Term Preferred Life Capital
Stock Instruments
------------------ ------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou
------------------------------------------------------------------------------ ------------------ ------------------
<S> <C> <C> <C> <C> <C>
2. Subordinated debt(1) and other limited-life capital instruments (original
weighted average maturity of at least five years) with a remaining
maturity of:
a. One year or less........................................................ 3780 0 3786 0 2.a.
b. Over one year through two years......................................... 3781 0 3787 0 2.b.
c. Over two years through three years...................................... 3782 0 3788 0 2.c.
d. Over three years through four years..................................... 3783 0 3789 0 2.d.
e. Over four years through five years...................................... 3784 0 3790 0 2.e.
f. Over five years......................................................... 3785 75,000 3791 0 2.f.
----------------------------------------
3. Not applicable
------------------ ------------------
(Column A) (Column B)
Items 4-9 and Memoranda items 1 and 2 are to be completed Assets Credit Equiv-
by banks that answered NO to item 1 above and Recorded alent Amount
by banks with total assets of $1 billion or more. on the of off-Balance
Balance Sheet Sheet Items(2)
------------------ ------------------
4. Assets and credit equivalent amounts of off-balance sheet items RCFD Bil Mil Thou RCFD Bil Mil Thou
assigned to the Zero percent risk category: ------------------ ------------------
a. Assets recorded on the balance sheet:
(1) Securities issued by, other claims on, and claims unconditionally
guaranteed by, the U.S. Government and its agencies and
other OECD central governments...................................... 3794 276,245 4.a.(1)
(2) All other........................................................... 3795 178,832 4.a.(2)
b. Credit equivalent amount of off-balance sheet items..................... 3796 0 4.b.
----------------------------------------
</TABLE>
-----------
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not report in column B the risk-weighted amount of assets reported in
column A.
33
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK 17-1490 FFIEC 031
Page RC-24
Schedule RC-R--Continued
<TABLE>
<CAPTION>
-----------------------------------------------
(Column A) (Column B)
Assets Credit Equiv-
Recorded alent Amount
on the of Off-Balance
Balance Sheet Sheet Items(1)
-----------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
5. Assets and credit equivalent amounts of off-balance sheet items
assigned to the 20 percent risk category:
a. Assets recorded on the balance sheet:
(1) Claims conditionally guaranteed by the U.S. Government and
its agencies and other OECD central governments............... 3798 0 5.a.(1)
(2) Claims collateralized by securities issued by the U.S.
Government and its agencies and other OECD central
governments; by securities issued by U.S. Government-sponsored
agencies; and by cash on deposit.............................. 3799 178,236 5.a.(2)
(3) All other..................................................... 3800 618,708 5.a.(3)
b. Credit equivalent amount of off-balance sheet items............... 3,801 72,026 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items
assigned to the 50 percent risk category:
a. Assets recorded on the balance sheet.............................. 3802 317,565 6.a.
b. Credit equivalent amount of off-balance sheet items............... 3,803 14,283 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items
assigned to the 100 percent risk category:
a. Assets recorded on the balance sheet.............................. 3804 4,783,971 7.a.
b. Credit equivalent amount of off-balance sheet items............... 3,805 1,088,162 7.b.
8. On-balance sheet asset values excluded from the calculation of the
risk-based capital ratio(2).......................................... 3806 0 8.
9. Total assets recorded on the balance sheet (sum of items 4.a, 3.a,
6.a, 7.a, and 8, column A) (must equal Schedule RC, item 12 plus
items 4.b and 4.c)................................................... 3807 6,353,555 9.
-----------------------------------------------
Memoranda ---------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
--------------------------------------------------------------------------------------------------------------------------
1. Current credit exposure across all off-balance sheet derivative contracts covered
by the risk-based capital standards....................................................... 8764 10,615 M.1.
---------------------------
<CAPTION>
--------------------------------------------------------------------------------
With a remaining maturity of
--------------------------------------------------------------------------------
(Column A) (Column B) (Column C)
One year or less Over one year Over five years
through five years
--------------------------------------------------------------------------------
RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou RCFD Tril Bil Mil Thou
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
2. Notional principal amounts of off-
balance sheet derivative
contracts(3):
a. Interest rate contracts............ 3809 156,468 8766 320,685 8767 154,444 M.2.a.
b. Foreign exchange contracts......... 3812 68,962 8769 129 8770 0 M.2.b.
c. Gold contracts..................... 8771 0 8772 0 8773 0 M.2.c.
d. Other precious metals contracts.... 8774 0 8775 0 8776 0 M.2.d.
e. Other commodity contracts.......... 8777 0 8778 0 8779 0 M.2.e.
f. Equity derivative contracts........ A000 0 A0001 0 A0002 0 M.2.f.
-------------------------------------------------------------------------------
</TABLE>
-------------------
(1) Do not report in column B the risk-weighted amount of assets reported in
column A.
(2) Include the difference between the fair value and the amortized cost of
available-for-sale securities in item 8 and report the amortized cost of
three securities in item 4 through 7 above. Item 8 also includes on-balance
sheet asset values (or portions thereof) of off-balance sheet interest rate,
foreign exchange rate, and commodity contracts and those contracts (e.g.,
futures contracts) not subject to risk-based capital. Exclude from item 8
margin accounts and accrued receivables as well as any portion of the
allowance for loan and lease losses in excess of the amount that may be
included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity of 14 days or
less and all futures contracts.
34
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK: 17-1490 FFIEC 031
Page RC-25
Optional Narrative Statement Concerning the Amounts
Reported in the Reports of Condition and Income
at close of business on June 30, 1995
American National Bank & Trust Company of Chicago Chicago, Illinois
--------------------------------------------------------------------------------
Legal Title of Bank City State
The management of the reporting bank may, if it wishes, submit a brief narrative
statement on the amounts reported in the Reports of Condition and Income. This
optional statement will be made available to the public, along with the publicly
available date in the Reports of Condition and Income, in response to any
request for individual bank report data. However, the information reported in
column A and in all of Memorandum item 1 of Schedule RC-N is regarded as
confidential and will not be released to the public. BANKS CHOOSING TO SUBMIT
THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT DOES NOT CONTAIN THE
NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK CUSTOMERS, REFERENCES TO THE
AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN SCHEDULE RC-N, OR ANY OTHER
INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE PUBLIC OR THAT WOULD
COMPROMISE THE PRIVACY OF THEIR CUSTOMERS, Banks choosing not to make a
statement may check the "No comment" box below and should make no entries of any
kind in the space provided for the narrative statement; i.e., DO NOT enter in
this space such phrases as "No statement," "Not applicable," "N/A," "No
comment," and "None."
The optional statement must be entered on this sheet. The statement should not
exceed 100 words. Further, regardless of the number of words, the statement must
not exceed 750 characters, including punctuation, indentation, and standard
spacing between words and sentences. If any submission should exceed 750
characters, as defined, it will be truncated at 750 characters with no notice to
the submitting bank and the truncated statement will appear as the bank's
statement both on agency computerized records and in computer-file releases to
the public.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must be
signed, in the space provided below, by a senior officer of the bank who thereby
attests to its accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing narrative
statement will be deleted from the files, and from disclosure; the bank, at its
option, may replace it with a statement, under signature, appropriate to the
amended data.
The optional narrative statement will appear in agency records and in release to
the public exactly as submitted (or amended as described in the preceding
paragraph by the management of the bank (except for the truncation of statements
exceeding the 750-character limit described above). THE STATEMENT WILL NOT BE
EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR ACCURACY OR
RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY FEDERAL
SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE INFORMATION
CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY PUBLIC RELEASE
OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE REPORTING BANK.
--------------------------------------------------------------------------------
NO COMMENT |_| (RCON 6979) | C471 | C472 |
-------------------
BANK MANAGEMENT STATEMENT (please type or print clearly):
(TEXT 6980)
____________________________________________ ___________________
Signature of Executive Officer of Bank Date of Signature
35
<PAGE>
Legal Title of Bank: American National Bank & Trust Company of Chicago
Address: 33 North LaSalle Street
City, State Zip: Chicago, IL 60690
FDIC Certificate No.: |0|3|6|1|9|
Call Date: 6/30/95 ST-BK 17-1490
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
-------------------------------------------------------------------------------
CALL NO. 192 31 06-30-95
CERT: 03619 00952 ST-BK 17-1490
AMERICAN NATIONAL BANK AND TRUST COM
33 NORTH LA SALLE STREET
CHICAGO, IL 60690
-------------------------------------------------------------------------------
OMB No. For OCC: 1557-0081
OMB No. For FDIC: 3064-0052
OMB No. For Federal Reserve: 7100-0036
Expiration Date: 3/31/96
SPECIAL REPORT
(Dollar Amounts in Thousands)
------------------------------------------------------------------
CLOSE OF BUSINESS FDIC Certificate Number
DATE C-700
6/30/95 |0|3|6|1|9|
-------------------------------------------------------------------------------
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
-------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but does
not constitute a part of the Report of Condition. With each Report of Condition,
these Laws required all banks to furnish a report of all loans or other
extensions of credit to their executive officers made since the date of the
previous Report of Condition. Data regarding individual loans or other
extensions of credit are not required. If no such loans or other extensions of
credit were made during the period, insert "none" against subitem (a). (Exclude
the first $15,000 of indebtedness of each executive officer under bank credit
card plan.) See Sections 215.2 and 215.3 of Title 12 of the Code of Federal
Regulations (Federal Reserve Board Regulation O) for the definitions of
"executive officer" and "extension of credit," respectively. Exclude loans and
other extensions of credit to directors and principal shareholders who are not
executive officers.
-------------------------------------------------------------------------------
a. Number of loans made to
executive officers
since the previous Call --------------------
Report date................................... | RCFD 3561 | 0 a.
b. Total dollar amount of above loans --------------------
(in thousands of dollars) .................... | RCFD 3562 | 0 b.
--------------------
c. Range of interest
charged on above loans -----------------------------------------------
(example: 9 3/4% = 9.75)..|RCFD 7701 | 0.00 | % to | RCFD 7702 | 0.00 | % c.
-----------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT
/s/ Ruth Ann M. Gillis
Ruth Ann M. Gillis, Chief Financial Officer & Senior V.P.
--------------------------------------------------------------------------------
DATE (Month, Day, Year)
July 18, 1995
-------------------------------------------------------------------------------
NAME AND TITLE OF PERSON TO WHOM INQUIRIES MAY BE DIRECTED (TEXT 8903)
Gerald R. Huesing, Second Vice President
-------------------------------------------------------------------------------
AREA CODE/PHONE NUMBER/EXTENSION
(TEXT 8904)
(312) 661-5662
-------------------------------------------------------------------------------
FDIC 8040/53 (6-95)
36
<PAGE>
EXHIBIT 99(a)
================================================================================
PERMIAN BASIN DEED AND BILL OF SALE
between
MESQUITE POWER CORPORATION
Seller
and
THE CONNECTICUT NATIONAL BANK,
as Owner Trustee,
Buyer
----------------------------
Dated as of December 6, 1989
----------------------------
THIS DEED AND BILL OF SALE has been executed in 20 original counterparts, of
which this is original counterpart no. 5 ; only original counterpart no. 1
constitutes chattel paper within the meaning of the Uniform Commercial Code;
accordingly, any assignee of any rights of the purchaser under this Deed and
Bill of Sale cannot perfect a security interest in such rights without taking
possession of original counterpart no. 1.
================================================================================
<PAGE>
THIS DEED AND BILL OF SALE, dated this 6th day of December 1989, is between
MESQUITE POWER CORPORATION, a corporation organized and operating under the laws
of the State of Texas ("Seller"), and THE CONNECTICUT NATIONAL BANK, a national
------
banking association, not in its individual capacity but solely as owner trustee
("Buyer") under the Trust Agreement, dated as of December 1, 1988, with PHILIP
-----
MORRIS CREDIT CORPORATION, a Delaware corporation ("Owner Participant").
RECITALS:
--------
Seller desires to sell, and Buyer desires to purchase, the Permian Basin
Facility for and in consideration of the amounts paid by Buyer to Seller
pursuant to that certain Amended and Restated Participation Agreement, dated as
of November 28, 1989 (the "Participation Agreement"), among Seller, Buyer, Owner
-----------------------
Participant and others. All capitalized terms herein not otherwise defined have
the meanings ascribed to them in Appendix A hereto.
AGREEMENT:
---------
NOW, THEREFORE, in consideration of the premises, of ten dollars paid by
Buyer to Seller, and of other good and valuable consideration, receipt of which
is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. SALE OF PERMIAN BASIN FACILITY
Seller does hereby GRANT, BARGAIN, SELL, ASSIGN, DELIVER, CONVEY, TRANSFER,
SET OVER, WARRANT AND CONFIRM unto Buyer, its successors and assigns, the
Permian Basin Facility which includes, without limitation, the assets described
on Exhibit A hereto, which assets, except as indicated on Exhibit A, are wholly
located on the Permian Basin Site (which is described on Exhibit B hereto);
TO HAVE AND TO HOLD the same, together with, all and singular, the rights
and appurtenances thereto in anywise belonging unto Buyer, its successors and
assigns forever; and Seller does hereby bind itself to warrant and forever
defend, all and singular, the same unto Buyer, its successors and assigns,
against every person whomsoever lawfully claiming or to claim the same, or any
part thereof.
SECTION 2. ASSIGNMENT OF WARRANTIES
Seller hereby assigns, without recourse, to Buyer Seller's rights in any
and all warranties of and other claims against dealers, manufacturers, vendors,
contractors and subcontractors relating to the Permian Basin Facility and all
<PAGE>
-2-
indemnities with respect to patent infringements and other related general
intangibles.
SECTION 3. LIABILITY OF BUYER
Any payments to be made by Buyer hereunder shall be made only from the
Trust Estate. Seller shall look solely to the Trust Estate for the payment of
any amounts payable by Buyer hereunder and agrees and confirms that neither The
Connecticut National Bank nor Owner Participant is or shall be in any way
personally liable for any such amounts on account of any representation,
warranty, covenant or agreement hereunder. Except as expressly set forth in the
Participation Agreement, Owner Participant shall have no liability, obligation,
responsibility or duty to Seller whatsoever for or with respect to any of the
transactions contemplated by this Deed and Bill of Sale. If a successor trustee
is appointed in accordance with the terms of the Trust Agreement, such successor
or other trustee shall succeed to all the rights, duties and obligations of
Owner Trustee hereunder, without necessity of any further act.
SECTION 4. SEVERANCE OF TITLE TO THE PERMIAN BASIN FACILITY FROM TITLE TO THE
PERMIAN BASIN SITE
Seller and Buyer agree for purposes of this Deed and Bill of Sale that the
Permian Basin Facility and every part thereof shall be considered as personal
and not real property. Seller and Buyer agree that the Permian Basin Facility
and every part thereof are severed from any real property and, even if
physically attached to any real property, it is the express intention of Seller
and Buyer that the Permian Basin Facility and every part thereof (i) shall
retain the character of personal property, (ii) shall be removable, (iii) shall
be treated as personal property with respect to the rights of all Persons
whomsoever, (iv) shall not become part of any real property, and (v) by virtue
of their nature as personal property, shall not be affected in any way by any
instrument dealing with any real property. In no event shall the ownership of
the Permian Basin Facility be merged with the ownership of the Permian Basin
Site or the leasehold estate created in the Permian Basin Site without the
express written agreement of TU Electric and Buyer.
SECTION 5. SELLER'S REPRESENTATIONS AND WARRANTIES.
Seller has good and indefeasible title to the Permian Basin Facility.
Seller has all property and ownership rights and contractual rights necessary to
perform its obligations under the Permian Basin Bill of Sale. On the Permian
Basin Funding Date (i) good and marketable title to the Permian Basin Facility
will be
<PAGE>
-3-
duly, validly and effectively conveyed and transferred to Owner Trustee free and
clear of all Liens (other than Permitted Interest Liens described in clauses
(a), (b) or (d) of the definition thereof and Liens for Taxes not delinquent and
Permitted Project Liens), and (ii) the Exhibit hereto describing such Facility
correctly describes, with sufficient accuracy to permit a competent engineer to
locate the same and in sufficient detail for purposes of conveyancing,
recording, filing and perfecting security interests in and liens upon, those
items of equipment and structures identified therein as belonging to such
Facility and there are no additional items of equipment or structures which
belong to such Facility which are not described in such Exhibit. Seller makes
other warranties, express or implied, other than those contained in this Section
5.
SECTION 6. DELIVERY OF POSSESSION
By delivery of this Deed and Bill of Sale, the Seller delivers possession,
dominion and control over the Permian Basin Facility to Buyer.
SECTION 7. GOVERNING LAW
THE INTERPRETATION OF THIS DEED AND BILL OF SALE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
SECTION 8. OBLIGATIONS OF SELLER.
Seller's obligations, representations and warranties hereunder are
corporate obligations only, and no director, officer, employee or agent of
Seller shall be in any way personally liable for the breach of such obligations
and Buyer shall not make any claim or be entitled to make any claim against any
director, officer, employee or agent of Seller in respect of any such breach of
any such obligation (such claims against such persons being hereby waived).
<PAGE>
-4-
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Deed and Bill of Sale as of the day and date first written above.
MESQUITE POWER CORPORATION
By /s/ E. T. Molnar
____________________________
Name: E. T. Molnar
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
but solely as owner trustee
under the Trust Agreement dated
as of December 1, 1988
By /s/ Gilman N. Gauvin
____________________________
Name: Gilman N. Gauvin
Vice President
<PAGE>
ACKNOWLEDGEMENT
State of Texas
County of Harris
This instrument was acknowledged before me on November 28, 1989, by E. T.
Molnar , as President of Mesquite Power Corporation, a Texas corporation, on
behalf of said corporation.
------------------------------
Notary's name printed:
/s/ Noelle R. Michaelson
______________________________
Notary Public, State of Texas
My commission expires:
-------------------------
<PAGE>
ACKNOWLEDGEMENT
State of Connecticut
County of Hartford
This instrument was acknowledged before me on November 22, 1989, by Gilman
N. Gauvin, as Vice President of The Connecticut National Bank, a national
banking association, on behalf of said association.
/s/ Debra A. Johnson
_____________________________
Debra A. Johnson
Notary Public, State of Connecticut
My commission expires:
March 31, 1990
<PAGE>
EXHIBIT 99(b)
================================================================================
ASSIGNMENT, AMENDMENT AND RESTATEMENT OF THE
PERMIAN BASIN GROUND LEASE
between
MESQUITE POWER CORPORATION,
Assignor
and
TEXAS UTILITIES ELECTRIC COMPANY,
Lessor
and
THE CONNECTICUT NATIONAL BANK,
as Owner Trustee,
Lessee
__________________________
Dated as of December 1, 1989
__________________________
================================================================================
<PAGE>
TABLE OF CONENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ASSIGNMENT
---------
SECTION 1. ASSIGNMENT.................................................. 2
SECTION 2. RELEASE..................................................... 2
SECTION 3. WAIVER AND ESTOPPEL......................................... 2
AGREEMENT
---------
SECTION 1. DEFINITIONS................................................ 3
1.1 Defined Terms........................................................ 3
1.2 Other Definitional Provisions........................................ 3
SECTION 2. LEASE...................................................... 4
SECTION 3. REPRESENTATIONS AND WARRANTIES............................. 4
3.1 TU Electric.......................................................... 4
3.2 Owner Trustee........................................................ 4
SECTION 4. SEVERANCE.................................................. 4
SECTION 5. TERM....................................................... 4
SECTION 6. USE........................................................ 5
SECTION 7. RENT....................................................... 5
7.1 Basic Rent........................................................... 5
7.2 Payment, Etc......................................................... 6
SECTION 8. DEFAULT; REMEDIES.......................................... 6
8.1 Default.............................................................. 6
8.2 Remedy............................................................... 7
SECTION 9. OPERATION AND MAINTENANCE.................................. 7
SECTION 10. TERMINATION OPTION......................................... 8
SECTION 11. ASSIGNMENT AND SUBLETTING.................................. 9
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 12. RESPONSIBILITY OF LESSEE.................................. 9
SECTION 13. LIABILITY OF OWNER TRUSTEE; SUCCESSOR..................... 9
SECTION 14. GOVERNING LAW............................................. 9
SECTION 15. MISCELLANEOUS............................................. 10
15.1 Notices................................................... 10
15.2 Amendments................................................ 10
15.3 Headings, Etc............................................. 10
15.4 Successors and Assigns.................................... 10
15.5 Severability.............................................. 10
15.6 Quiet Enjoyment........................................... 11
-ii-
</TABLE>
<PAGE>
ASSIGNMENT, AMENDMENT AND RESTATEMENT OF THE
--------------------------------------------
PERMIAN BASIN GROUND LEASE
--------------------------
THIS ASSIGNMENT, AMENDMENT AND RESTATEMENT OF THE PERMIAN BASIN GROUND
LEASE, dated as of December 1, 1989, is made between MESQUITE POWER CORPORATION,
a corporation organized and operating under the laws of the State of Texas
("Mesquite"), TEXAS UTILITIES ELECTRIC COMPANY, a corporation organized and
----------
operating under the laws of the State of Texas ("TU Electric"; together with its
-----------
successors and assigns as owner of the Permian Basin Ground Interest, "Lessor"),
------
as lessor, and THE CONNECTICUT NATIONAL BANK, not in its individual capacity but
solely as owner trustee, under the Trust Agreement with PHILIP MORRIS CREDIT
CORPORATION ("Owner Participant"), dated as of December 1, 1988 ("Owner
----------------- -----
Trustee"; together with its successors and assigns as lessee under the Permian
-------
Basin Ground Lease of the Permian Basin Ground Interest, including, without
limitation, any successor trustee under the Trust Agreement, "Lessee"), as
------
lessee.
RECITALS:
--------
A. TU Electric is the owner of the Permian Basin Turbine Site
Interest and the Permian Basin Common Site Interest.
B. Owner Trustee is the owner of the Permian Basin Facility, as
conveyed by the Permian Basin Bill of Sale.
C. By Permian Basin Ground Lease dated as of December 15, 1988 (the
"Original Ground Lease"), TU Electric leased the Permian Basin Ground Interest
to Mesquite.
D. Mesquite desires to assign the Original Ground Lease to the Owner
Trustee and the Owner Trustee desires to accept the assignment of the Original
Ground Lease from Mesquite.
E. The Owner Trustee and TU Electric desire to amend and restate the
Original Ground Lease in its entirety to provide for new terms and conditions
for the leasing of the Permian Basin Ground Interest.
<PAGE>
ASSIGNMENT:
----------
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, Mesquite, TU Electric and the Owner Trustee, intending to be
legally bound hereby, agree as follows:
SECTION 1. ASSIGNMENT
Mesquite hereby assigns all of its right, title and interest as lessee
under the Original Ground Lease to the Owner Trustee. TU Electric hereby
indemnifies and saves the Owner Trustee harmless from any and all liability and
claims arising under the Original Ground Lease prior to the date hereof, whether
in contract or in tort, for damage to personal or real property or injury or
death to person or persons, including the reasonable attorneys' fees and related
legal costs of the Owner Trustee.
SECTION 2. RELEASE
TU Electric hereby releases Mesquite from any obligations and
liabilities arising under the Original Ground Lease from and after the date
hereof.
SECTION 3. WAIVER AND ESTOPPEL
TU Electric and Mesquite hereby represent and warrant to the Owner
Trustee that, as of the date hereof, there are no defaults or conditions which,
with the passage of time or the giving of notice or both, would constitute a
default under the Original Ground Lease. TU Electric and Mesquite acknowledge
that this representation and warranty is a material inducement to the acceptance
by the Owner Trustee of the Assignment effected hereby and agree that the Owner
Trustee is justified in relying upon this representation and warranty.
AGREEMENT:
---------
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, TU Electric and Owner Trustee, intending to be legally bound
hereby, hereby amend and restate the Original Ground Lease in its entirety as
follows:
-2-
<PAGE>
SECTION 1. DEFINITIONS
1.1 Defined Terms. (a) Unless otherwise defined herein,
-------------
capitalized terms used herein shall have the meanings assigned to them in
Appendix A hereto.
(b) As used in this Ground Lease, the terms defined in the recitals
hereto shall have the meaning set forth therein and the following terms shall
have the following respective meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"Permian Basin Common Site" shall mean the land described as such on
-------------------------
Exhibit A hereto and all rights of way, easements, permits and other
appurtenances to such land described on Exhibit A (specifically excluding
therefrom any Transmission Facilities and the Permian Basin Turbine Site).
"Permian Basin Common Site Interest" shall mean an undivided 50% of
----------------------------------
Lessor's 50% undivided interest in the Permian Basin Common Site.
"Permian Basin Ground Interest" shall mean, collectively, the Permian
-----------------------------
Basin Turbine Site Interest and the Permian Basin Common Site Interest.
"Ground Lease Default" shall have the meaning set forth in subsection
--------------------
8.1.
"Ground Lease Termination Date" shall have the meaning set forth in
-----------------------------
Section 5.
"Permian Basin Site" shall mean the collective reference to the
------------------
Permian Basin Turbine Site and the Permian Basin Common Site.
"Permian Basin Turbine Site" shall mean the land described as such on
--------------------------
Exhibit A hereto and all rights of way, easements, permits and other
appurtenances to such land described on Exhibit A (specifically excluding
therefrom any Transmission Facilities).
"Permian Basin Turbine Site Interest" shall mean Lessor's 100%
-----------------------------------
undivided interest in the Permian Basin Turbine Site.
1.2 Other Definitional Provisions. The words "hereof," "herein" and
-----------------------------
"hereunder" and words of similar import when used in this Ground Lease
shall refer to this Ground Lease as a whole and not to any particular
provision of this Ground Lease. Section, subsection, Schedule and Exhibit
references contained in this Ground Lease are
-3-
<PAGE>
references to Sections, subsections, Schedules and Exhibits in or to this
Ground Lease unless otherwise specified.
SECTION 2. LEASE
TU Electric hereby demises and leases to Owner Trustee, and Owner
Trustee hereby leases and hires from TU Electric upon and subject to the terms
and conditions hereinafter set forth, the Permian Basin Ground Interest, TO HAVE
AND TO HOLD the same, subject as aforesaid, unto the Owner Trustee and, subject
to the provisions of Section 11, Owner Trustee's successors and assigns,
commencing on the date hereof and continuing for the term provided in Section 5.
SECTION 3. REPRESENTATIONS AND WARRANTIES
3.1 TU Electric. TU Electric agrees that its representations and
-----------
warranties contained in subsection 9.1 of the Participation Agreement are made
for and shall inure to the benefit of Lessee.
3.2 Owner Trustee. Owner Trustee agrees that its representations
-------------
and warranties contained in subsection 6.1 of the Participation Agreement are
made for and shall inure to the benefit of Lessor.
SECTION 4. SEVERANCE
TU Electric and Owner Trustee agree for purposes of this Ground Lease
that the Permian Basin Facility and every part thereof shall be considered as
personal and not real property. TU Electric and Owner Trustee agree that the
Permian Basin Facility and every part thereof are severed from the Permian Basin
Site and, even if physically attached to the Permian Basin Site, it is the
express intention of Lessor and Lessee that the Permian Basin Facility and every
part thereof (i) shall retain the character of personal property, (ii) shall be
removable, (iii) shall be treated as personal property with respect to the
rights of all Persons whomsoever, (iv) shall not become part of any real
property, and (v) by virtue of their nature as personal property, shall not be
affected in any way by any instrument dealing with the Permian Basin Site. In
no event shall the ownership of the Permian Basin Facility be merged with the
ownership of the Permian Basin Site or the leasehold estate created in the
Permian Basin Site without the express written agreement of TU Electric and
Owner Trustee.
SECTION 5. TERM
The term of this Ground Lease shall commence on the Permian Basin
Funding Date and shall end on the date (the "Ground Lease Termination Date")
which is the earliest of (a) the
-4-
<PAGE>
termination of this Ground Lease pursuant to Section 10 hereof, (b) the date, if
ever, on which title to the Leased Assets vests in Lessor and (c) July 1, 2031.
SECTION 6. USE
During the term hereof the Permian Basin Ground Interest shall be used
by Lessee in connection with the operation, maintenance, repair and restoration
of the Permian Basin Facility and the location of all Alterations thereon and
such other uses which may be necessary to ensure that Lessee enjoys the benefits
of ownership of the Permian Basin Facility, and for no other purpose. Lessor
may use the Permian Basin Site and the portion of the Permian Basin Facility
located thereon in connection with the operation, maintenance, repair or
restoration of the Permian Basin Facility or any other facilities located from
time to time on the Permian Basin Common Site and such other uses which may be
necessary to ensure that Lessor may enjoy the benefits of ownership of the
Permian Basin Common Site and such other facilities; provided, however, that
-------- -------
such use shall not materially interfere with the use, enjoyment and occupancy of
the Permian Basin Facility by Lessee. Lessee hereby acknowledges TU Electric's
right to convey rights to all or any portion of TU Electric's remaining interest
in the Permian Basin Common Site to third parties including, without limitation,
in connection with the financing of any other facilities located thereon,
provided, however, that such conveyance and the exercise of rights granted
-------- -------
pursuant thereto shall not materially interfere with the use, enjoyment and
occupancy of the Permian Basin Facility or the Permian Basin Common Site by
Lessee and shall be subject to an express waiver by such third party of all
rights to partition the Permian Basin Common Site, and provided, further, that
-------- -------
TU Electric (i) notifies Lessee of such conveyance at least 30 days prior to
such conveyance and (ii) delivers an Officers' Certificate to Lessee prior to
such conveyance to the effect that such conveyance is in compliance with all of
the terms of this Section 6. Lessor and Lessee also waive all rights they may
have to partition the Permian Basin Common Site.
SECTION 7. RENT
7.1 Basic Rent. (a) As rent for the Permian Basin Ground Interest
----------
for the period from the date of commencement of the term of this Ground Lease to
the Ground Lease Termination Date, Lessee shall pay to Lessor, in arrears on
each Basic Rent Payment Date, the Fair Market Rental Value of the Permian Basin
Ground Interest as determined (i) during the Lease Term by the Appraisal for the
Permian Basin Facility and (ii) for all times after the Lessor Possession Date
for the Permian Basin Facility, as of such Lessor Possession Date and every
anniversary thereof; provided, however, that Lessee's obligation to pay rent or
-------- -------
interest on overdue rent hereunder during the Lease Term for the
-5-
<PAGE>
Permian Basin Facility shall be contingent upon Lessor having paid the rent or
interest on overdue rent due Lessee under subsection 7.1(b); and provided,
--------
further, that for all times after the Lessor Possession Date for the Permian
-------
Basin Facility, Lessee shall indemnify and hold Lessor harmless for (and Lessor
shall use commercially reasonable means to minimize) (a) damages, losses, claims
or expenses incurred in the performance hereof or of the Permian Basin Facility
Agreement which continue after the termination of this Ground Lease pursuant to
Section 10 or (b) damages, losses, claims or expenses initially incurred by
Lessee but which, upon the termination of this Ground Lease pursuant to Section
10, become damages, losses, claims or expenses of Lessor.
(b) As subrent for the use with respect to the Permian Basin Facility
of the Permian Basin Ground Interest by Lessor for the period from the date of
commencement of the term of this Ground Lease to the earlier to occur of (i) the
Lessor Possession Date for the Permian Basin Facility and (ii) the expiration or
earlier termination of the Lease for the Permian Basin Facility, Lessor shall
pay to Lessee an amount equal to the rent payable by Lessee pursuant to
subsection 7.1(a).
7.2 Payment, Etc. If the date for payment of any rent payable under
-------------
this Section 7 shall not be a Business Day, then such rent shall not be due
until the next Business Day. Any rent which is not paid at the close of
business on the date the same becomes due shall be payable, together with
interest thereon from the date the same becomes due to the date such rent is
paid at a rate per annum which is 2% in excess of Prime Rate, but in no event in
excess of the maximum rate permitted by law.
SECTION 8. DEFAULT; REMEDIES
8.1 Default. The term "Ground Lease Default" shall mean (a) failure
------- --------------------
of Lessee to pay rent as provided in subsection 7.1 for 30 days after notice by
Lessor or (b) commencement by Lessee of 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 by Lessee of the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or consent by Lessee to any such relief or to
the appointment of or taking possession by any such official or agency in an
involuntary case or other proceeding commenced against it, or making by Lessee
of a general assignment for the benefit of creditors, or failure by Lessee
generally to pay its debts as they become due, or taking by Lessee of any
corporate action to authorize any of the foregoing; or commencement against
Lessee of an involuntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law
-6-
<PAGE>
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official or agency of it or any
substantial part of its property, and such involuntary case or other proceeding
remaining undismissed and unstayed for a period of 90 days.
8.2 Remedy. Upon the occurrence of a Ground Lease Default, Lessor
------
may exercise any right or remedy that may be available to it under applicable
law; provided, however, that no Ground Lease Default shall constitute a ground
-------- -------
for termination hereof or of the interest of Lessee hereunder and neither this
Ground Lease nor the interest of Lessee shall be terminated by reason of a
Ground Lease Default.
SECTION 9. OPERATION AND MAINTENANCE
Lessor covenants to cause, without cost or expense to Lessee, (a) the
Permian Basin Site to be maintained in accordance with Prudent Utility Practice
and Lessor's normal maintenance practice for other properties of a similar size
and nature and not to discriminate between the Permian Basin Site and other
properties of a similar size and nature owned, operated or leased by it and
taking into account the operational characteristics of the Permian Basin
Facility, (b) all necessary or useful components of the Permian Basin Site to be
operated, serviced, maintained and repaired and all necessary or useful
components thereof to be replaced so that the condition and operating efficiency
of the Permian Basin Site will be maintained and preserved, in all material
respects in accordance with Prudent Utility Practice and Lessor's normal
maintenance practice for other properties of a similar size and nature and not
to discriminate between the Permian Basin Site and other properties of a similar
size and nature owned, operated or leased by it, taking into account the
operational characteristics of the Permian Basin Facility, (c) all applicable
Governmental Rules and Governmental Actions affecting the Permian Basin Site, or
the use, operation or maintenance thereof to be complied with; provided,
--------
however, that Lessor shall not be obligated so to exercise such rights, powers,
-------
elections and options to cause compliance with any Governmental Rule or
Governmental Action (i) whose application or validity is being contested
diligently and in good faith by appropriate proceedings, (ii) compliance with
which shall have been excused or exempted by a nonconforming use permit, waiver,
extension or forbearance exempting it from such Governmental Rule or
Governmental Action, (iii) if good faith efforts and appropriate steps are being
taken to comply, or (iv) if failure of compliance would result in no material
adverse consequences to Lessee, Indenture Trustee, Lessor or Owner Participant,
so long as in each of (i) through (iv) above such failure of compliance cannot
----------
result in any material danger of the sale, forfeiture or loss of any part of the
Permian Basin Ground Interest or subject any of the foregoing or the Permian
Basin
-7-
<PAGE>
Facility to any Lien, other than Permitted Interest Liens or Permitted Project
Liens, or materially interfere with the operation or use or disposition of any
of the foregoing, or the Trust Estate or the Indenture Estate, or any part
thereof, title thereto or any interest therein, or the payment of Rent, or
subject any Indemnitee to burdensome regulation as a Texas Public Utility or
otherwise as an electric public utility or affiliate thereof, and (d) proper
books and records relating to all services rendered and all funds expended for
operation, maintenance, repair and replacement of the Permian Basin Site, to be
kept and maintained, all in accordance with GAAP and customary practices in the
electric utility industry. Lessee shall have no obligation to maintain, alter,
repair, rebuild or replace the Permian Basin Site or any part thereof, and
Lessor expressly waives the right to perform any such action at the expense of
Lessee pursuant to any law at any time in effect. Lessor may use, or permit
the use of, the Permian Basin Site in any manner which would not materially
interfere with the use, enjoyment and occupancy of the Permian Basin Facility by
Lessee.
SECTION 10. TERMINATION OPTION
(a) Owner Trustee shall have the option to terminate this Ground
Lease in consideration of a termination fee in the amount of $l.00, effective at
any time on or after the Lease Termination Date for the Permian Basin Facility,
by written notice by Owner Trustee to Lessor given not less than 30 days prior
to the date selected by Lessee for the termination of this Ground Lease.
(b) Upon termination of this Ground Lease, Lessor shall decommission,
dismantle and remove (to the nearest railhead) the Permian Basin Facility and
use its best efforts to find a Person that is not an Affiliate of TU Electric to
purchase the Permian Basin Facility from Lessee at a purchase price not less
than the greater of (i) the Fair Market Sale Value of the Permian Basin Facility
and (ii) Scrap Value of the Permian Basin Facility (assuming in both cases the
payment of all costs and expenses related to decommissioning, dismantling and
removal of the Permian Basin Facility by Lessor). If such Person is found as
provided herein, Lessee shall transfer the Permian Basin Facility to such Person
for such purchase price, payable in immediately available funds at the closing
of title, under a contract of sale which shall specify a closing date which is
the Ground Lease Termination Date for the Permian Basin Facility. If Lessor is
not able to cause the Permian Basin Facility to be decommissioned, dismantled
and removed, Lessor shall exercise the option provided in Section 10(c).
(c) In lieu of complying with Section 10(b), Lessor may purchase the
Permian Basin Facility from Lessee on the date as of which this Ground Lease
will terminate pursuant to Section
-8-
<PAGE>
10(a) hereof or Section 5(c) hereof at a purchase price equal to the Fair Market
Sale Value of the Permian Basin Facility (based upon (A) the assumption that any
buyer shall be required to pay any decommissioning, dismantling, removal and re-
erecting costs and (B) the Lessee's remaining rights hereunder) which purchase
price will not be less than $1.00.
SECTION 11. ASSIGNMENT AND SUBLETTING
Lessee shall have the right and consent of Lessor to assign or sublet
its interest in this Ground Lease or any part thereof to any transferee of such
Lessee's interest in the Permian Basin Facility or any part thereof and shall
have the right and consent of Lessor to pledge, mortgage, encumber or otherwise
hypothecate its interest under this Ground Lease to secure payment of
indebtedness of Lessee, provided that payment of such indebtedness also is
--------
secured by Lessee's interest in the Permian Basin Facility.
SECTION 12. RESPONSIBILITY OF LESSEE
Lessee shall have no duty, responsibility, liability or obligation to
Lessor in respect of the Permian Basin Ground Interest or the use, maintenance
or condition of the Permian Basin Site except only the obligation to pay rent as
provided in Section 7.
SECTION 13. LIABILITY OF OWNER TRUSTEE; SUCCESSOR TRUSTEE
All payments to be made by Owner Trustee hereunder shall be made only
from the Trust Estate. Lessor shall look solely to the Trust Estate for the
payment of any amounts payable by Owner Trustee hereunder and agrees and
confirms that neither The Connecticut National Bank, whether as an individual or
in its capacity as Owner Trustee, nor Owner Participant is or shall be in any
way personally liable for any such amounts or on account of any representation,
warranty, covenant or agreement hereunder. Owner Participant shall have no
liability, obligation, responsibility or duty to Lessor whatsoever for or with
respect to any of the transactions contemplated by this Ground Lease. If a
successor trustee is appointed in accordance with the terms of the Trust
Agreement, such successor or other trustee shall succeed to all the rights,
duties and obligations of Owner Trustee hereunder, without necessity of any
further act.
SECTION 14. GOVERNING LAW
This Ground Lease shall be governed by and construed in accordance
with the laws of the State of Texas.
-9-
<PAGE>
SECTION 15. MISCELLANEOUS
15.1 Notices. All notices, consents, approvals, instructions,
-------
requests and other communications required or permitted by the terms hereof
shall be given in person or by courier or by means of telex, telecopy or other
wire transmission (with request for assurance of receipt in a manner typical
with respect to communications of that type), or mailed by first class mail,
addressed as follows:
if to Owner Trustee:
The Connecticut National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: Corporate Trust Administration
if to TU Electric:
Texas Utilities Electric Company
2001 Bryan Tower
Dallas, Texas 75201
Attention: Principal Financial Officer
Either party may designate a new address for purposes of notice hereunder by
notice to each of the other party. All such communications and notices given
in such manner shall be effective on the date of receipt (or when proffered, if
receipt is not accepted) of such communication or notice.
15.2 Amendments. Neither this Ground Lease nor any of the terms
----------
hereof may be terminated, amended, supplemented, waived or modified orally, but
only by an instrument in writing signed by the party against which enforcement
of the termination, amendment, supplement, waiver or modification shall be
sought.
15.3 Headings, Etc. The headings of various Sections and
--------------
subsections of this Ground Lease are for convenience of reference only and shall
not modify, define, expand or limit any of the terms or provisions hereof.
15.4 Successors and Assigns. The terms of this Ground Lease shall
----------------------
be binding upon and inure to the benefit of TU Electric and Owner Trustee and
their respective successors and assigns.
15.5 Severability. Any provision of this Ground Lease that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
-10-
<PAGE>
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15.6 Quiet Enjoyment. So long as no Ground Lease Default shall
---------------
have occurred and be continuing, Lessee shall be entitled to the quiet enjoyment
of the benefits of the Permian Basin Ground Interest as provided herein.
Notwithstanding that the Permian Basin Ground Interest is subject to the
Permitted Project Liens, Lessor undertakes that in the event that any holder of
an interest in or to the Permian Basin Site under clause (a) of the definition
of Permitted Project Lien or Person otherwise entitled to enforce any lien
contemplated by clause (a) of the definition of Permitted Project Lien (a
"Permitted Lienholder") should take any action or omit to take any action as a
result of which the use or occupancy of the Permian Basin Site or enjoyment of
the benefits of the Permian Basin Ground Interest by Lessee are materially
interfered with, Lessor shall use reasonable efforts to obtain from such
Permitted Lienholder a sublease, waiver, variance, release or joint use or other
agreement in form and substance reasonably satisfactory to Lessee or use
reasonable efforts to take such other action as may be reasonably necessary to
permit Lessee to use and occupy the Permian Basin Site and enjoy the benefits of
the Permian Basin Ground Interest, and Lessor agrees to indemnify and hold
Lessee and its successors and assigns harmless from and against any and all
losses, claims, costs, expenses, fines or penalties imposed on Lessee as a
consequence of any such action by a Permitted Lienholder or occasioned by the
material interference by any Permitted Lienholder with Lessee's use and
occupancy of the Permian Basin Site and the enjoyment of the benefits of the
Permian Basin Ground Interest in accordance with the terms hereof. The
foregoing shall be in addition to and cumulative with any and all other remedies
to which Lessee may be entitled under any provision of the Operative Documents.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Ground Lease
to be duly executed as of the day and year first above written.
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
but solely as Owner Trustee
By: /s/ Gilman N. Gauvin
-----------------------------
Name: Gilman N. Gauvin
Vice President
TEXAS UTILITIES ELECTRIC COMPANY
By: /s/ MS. Greene
-----------------------------
Name: M.S. Greene
MESQUITE POWER CORPORATION
By: /s/ E.T. Molnar
-----------------------------
Name: E.T. Molnar
-12-
<PAGE>
ACKNOWLEDGEMENT
State of Connecticut
County of Hartford
This instrument was acknowledged before me on November 22, 1989, by
Gilman N. Gauvin, as Vice President of The Connecticut National Bank, a national
banking association, on behalf of said association.
/s/ Debra A. Johnson
----------------------------------
Debra A. Johnson
Notary Public, State of Connecticut
My commission expires:
March 31, 1990
--------------------------
<PAGE>
ACKNOWLEDGEMENT
State of Texas
County of Dallas
This instrument was acknowledged before me on December 6, 1989, by
M. S. Greene, as Vice President of Texas Utilities Electric Company, a Texas
corporation, on behalf of said corporation.
/s/ Jo Macdowell
----------------------------------
Jo Macdowell
Notary Public, State of Texas
My commission expires:
6/27/92
--------------
<PAGE>
ACKNOWLEDGEMENT
State of Texas
County of Harris
This instrument was acknowledged before me on November 28, 1995, by
E. T. Molnar, as President of Mesquite Power Corporation, a Texas corporation,
on behalf of said corporation.
----------------------------------
Notary's name printed:
/s/ Noelle R. Michaelson
----------------------------------
Notary Public, State of Texas
My commission expires:
--------------------------
<PAGE>
EXHIBIT 99(c)
================================================================================
PERMIAN BASIN FACILITY AGREEMENT
Dated as of December 1, 1989
between
TEXAS UTILITIES ELECTRIC COMPANY
and
THE CONNECTICUT NATIONAL BANK,
as Owner Trustee
_____________________________________________
This Permian Basin Facility Agreement has been executed in 20 original
counterparts of which this is original counterpart number 3; only original
counterpart number 1 constitutes chattel paper within the meaning of the Uniform
Commercial Code; accordingly, any assignee of any rights of Owner Trustee under
this Permian Basin Facility Agreement cannot perfect a security interest in such
rights without taking possession of original counterpart number 1.
================================================================================
<PAGE>
PERMIAN BASIN FACILITY AGREEMENT, dated as of December 1, 1989,
between TEXAS UTILITIES ELECTRIC COMPANY, a corporation organized and operating
under the laws of the State of Texas ("TU Electric"), and THE CONNECTICUT
NATIONAL BANK, not in its individual capacity but solely as owner trustee under
the Trust Agreement ("Owner Trustee") with PHILIP MORRIS CREDIT CORPORATION,
-------------
dated as of December 1, 1988.
RECITALS:
--------
A. TU Electric is a corporation engaged in the generation and
transmission of electric power and energy for sale and distribution in the State
of Texas.
B. The Permian Basin Facility is designed to burn either gas or oil
as a primary fuel, and such gas or oil is expected to be commercially available
in quantities sufficient to operate the Permian Basin Facility for the Ground
Lease Term.
C. The Owner Trustee has acquired the Permian Basin Facility and
leased its interest therein to TU Electric pursuant to the Lease for the Lease
Term and TU Electric has granted the Permian Basin Ground Interest to the
Permian Basin Site to the Owner Trustee pursuant to the Permian Basin Ground
Lease.
D. From and after the Lessor Possession Date and to and including the
Ground Lease Termination Date for the Permian Basin Facility, subject to the
terms hereof, Owner Trustee desires to obtain the use of primary fuel and other
raw materials, supplies and services, in each case to the extent required for
the full use of the Permian Basin Facility as electric generating units.
E. Subject to the terms and provisions of this Agreement, TU Electric
is willing to provide such services to permit such use and to provide such
primary fuel, other raw materials and supplies and such benefits.
NOW THEREFORE, in consideration of the premises and of other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
For the purposes hereof, capitalized terms used herein shall have the
meanings assigned to them in Appendix A hereto. References in this Agreement to
Sections, subsections, Articles and paragraphs are to Sections, subsections,
Articles and paragraphs in this Agreement unless otherwise indicated.
-2-
<PAGE>
ARTICLE II
OPERATION, SERVICES AND ASSIGNMENT
SECTION 2.1. Operation and Approvals. Commencing on the Effective
-----------------------
Date and at all times during the term of this Agreement, TU Electric, at the
cost and expense of the Owner Trustee, shall operate the Permian Basin Facility,
or cause the Permian Basin Facility to be operated, in accordance with Section
2.4 hereof. In addition, at all times during the term of this Agreement, TU
Electric, at the cost and expense of the Owner Trustee, shall obtain and
maintain, or cause to be obtained and maintained, in full force and effect all
Governmental Actions necessary or desirable with respect to the operation of the
Permian Basin Facility, unless such Governmental Actions cannot be obtained or
maintained by reasons beyond the control of TU Electric.
SECTION 2.2. Maintenance. TU Electric, at the cost and expense of
-----------
the Owner Trustee, shall at all times on and after the Effective Date during the
term of this Agreement maintain, service and repair the Permian Basin Facility
and the Permian Basin Site or cause the same to be maintained, serviced and
repaired, in accordance with Section 2.4 hereof.
SECTION 2.3. Furnishing of Utility Services. TU Electric hereby
------------------------------
covenants and agrees that at all times during the term of this Agreement it will
deliver, provide and make available, or cause to be delivered, provided and made
available, at the Permian Basin Site (i) sufficient amounts of readily available
water, electric energy and power for the operation and maintenance of the
Permian Basin Facility and the Permian Basin Site as it relates to the Permian
Basin Ground Interest; (ii) sufficient waste disposal services to dispose of all
waste material from the Permian Basin Facility; (iii) access to high and low-
pressure water systems and other fire protection systems necessary to extinguish
fires occurring in or proximate to the Permian Basin Facility; (iv) such other
ancillary rights, services, goods (including spare parts) and materials as may
be necessary or desirable from time to time to permit the operation and
maintenance of the Permian Basin Facility in compliance with applicable law and
at its intended operating capacity and (v) to the extent then commercially
obtainable, gas and/or oil or such alternative fuel as the Permian Basin
Facility shall have been converted to use at the time (it being understood that
prior to any such conversion, TU Electric shall reasonably believe that such
alternative fuel is then commercially obtainable), in sufficient amounts to
operate the Permian Basin Facility at its intended operating capacity
(collectively, the "Utility Services"). TU Electric further covenants and
agrees that at all times during the term of this Agreement, TU Electric shall
maintain or cause to be maintained such equipment and facilities
-3-
<PAGE>
at the Permian Basin Site in addition to the Permian Basin Facility as shall be
necessary or desirable in order to provide the Utility Services to the extent
reasonably possible on a continuous and uninterrupted basis, consistent with
Prudent Utility Practice. The Owner Trustee shall make payment to TU Electric
in respect of the Utility Services and those expenses incurred which are
expressly provided herein to be for the account of the Owner Trustee, pursuant
to this Agreement in an amount and on terms that fully compensate TU Electric
for its costs, including a reasonable return on investment, which payments shall
be made at such times and in such manner as shall be agreed upon by the Owner
Trustee and TU Electric (but in no event more frequently than monthly), or,
absent agreement among such parties, as such costs may be approved by the
regulatory agency having jurisdiction over such charges.
SECTION 2.4. Performance of Article II Obligations. The obligations
-------------------------------------
of TU Electric under this Article II shall be performed (i) in accordance with
all applicable Governmental Actions and Governmental Rules, except to the extent
being contested in good faith by appropriate proceedings, so long as such
failure of compliance cannot result in any material danger of the sale,
forfeiture or loss of any part of the Permian Basin Facility or the Permian
Basin Site as it relates to the Permian Basin Ground Interest or subject any of
the foregoing to any Lien, other than Permitted Interest Liens or Permitted
Project Liens, or materially interfere with the intended operation or use or
disposition of any of the foregoing, title thereto or any interest therein, (ii)
so that the Permian Basin Facility is maintained in good operating condition,
ordinary wear and tear excepted, (iii) so that the Permian Basin Facility
continues to have the capacity and functional ability to perform, on a
continuous basis (subject to normal interruption in the ordinary course of
business for maintenance, service, repair and testing), in commercial operation,
in accordance with the functions for which it was specifically designed and
taking into account manufacturers' recommended practices and standards, (iv) in
all material respects in accordance with any insurance policies maintained
pursuant to reasonable industry standards at the time, (v) at least in
accordance with the same standards TU Electric applies to other facilities of
similar nature owned, leased or operated by TU Electric, and (vi) in accordance
with Prudent Utility Practice.
ARTICLE III
TRANSMISSION OF POWER AND ENERGY
SECTION 3.1. Wheelinq Service. TU Electric, upon the request of
----------------
Owner Trustee, shall wheel, and shall otherwise make available wheeling
transmission service, in accordance with this Agreement (the "Wheeling
Service"), for the Owner Trustee, all
-4-
<PAGE>
Power and Energy generated by the Permian Basin Facility in accordance with the
normal practices of TU Electric for such wheeling service (which shall be
provided on a nondiscriminatory basis, as compared with similar wheeling service
provided by TU Electric to other wheeling customers from time to time) at the
time over transmission facilities of TU Electric from the Permian Basin Facility
to Points of Interconnection with transmission facilities owned by other
utilities, provided, however, that TU Electric shall be obligated to provide
-------- -------
such Wheeling Service only if TU Electric can do so on a commercially reasonable
basis and the provision of such Wheeling Service does not cause TU Electric to
become subject to (i) jurisdiction of the Federal Energy Regulatory Commission
as a public utility under the Federal Power Act, or (ii) any additional
regulatory burdens which materially adversely affect the business or operations
of TU Electric. It is understood and agreed that, if Wheeling Services were to
be provided on the date of the execution and delivery of this Agreement, the
foregoing clauses (i) and (ii) of the proviso to the next preceding sentence
would limit such Wheeling Services to Points of Interconnection with
transmission facilities owned by other utilities in control areas of the
Electric Reliability Council of Texas ("ERCOT").
SECTION 3.2. Delivery Voltages. Energy wheeled by TU Electric
-----------------
hereunder shall be delivered (i) in a manner consistent with the operating
characteristics of the Permian Basin Facility and the transmission facilities of
TU Electric, or (ii) as shall be agreed to by TU Electric and the Owner Trustee.
SECTION 3.3. Determination of Wheeling Compensation. Wheeling costs
--------------------------------------
("Wheeling Compensation") shall be paid to TU Electric on terms that fully
compensate TU Electric for its costs, determined from time to time on a basis no
less favorable to the Owner Trustee than the basis for determining the charges
for similar transmission service by TU Electric for its other wheeling customers
at the time of the provision of such service, including a reasonable return on
investment, subject to approval by the regulatory agency having jurisdiction
over such charges.
SECTION 3.4. Limitations on TU Electric's Duty to Schedule. Transfer
-------------------------------------------------------
or Wheel Power and Energy. TU Electric shall use reasonable diligence in
-------------------------
accordance with Prudent Utility Practice to prevent and minimize the
interruption of the Wheeling Service and to schedule, transfer or wheel Power
and Energy from the Permian Basin Facility subject to:
a) The provisions of Section 3.1 and Article V hereof;
b) Payment of Wheeling Compensation to TU Electric for the Wheeling
Service, including payment for line losses on TU Electric's
transmission system
-5-
<PAGE>
caused by the transfer of Power and Energy and payment for any
scheduling services provided by TU Electric for the Owner
Trustee;
c) Sufficient transmission capacity on TU Electric's transmission
system to permit the safe and reliable transmission of Power and
Energy;
d) Notification by any third party having transmission facilities
impacted by the scheduling, transfer or wheeling of Power and
Energy that there is insufficient transmission capacity on such
third party's transmission system to permit the safe and reliable
transmission of Power and Energy;
e) An electrical system emergency which affects or will affect the
ability to maintain safe, adequate and continuous electric
service; and
f) Any irregularities, forced outages, interruptions or
curtailments, outages for construction and maintenance, orders or
restraints of law and public authorities, other cause(s)
reasonably beyond TU Electric's control.
During periods of curtailment, TU Electric will diligently provide
Wheeling Service to the Owner Trustee (which shall be provided on a non-
discriminatory basis, as compared with similar wheeling services provided by TU
Electric to other wheeling customers from time to time) to the extent possible
without interfering with TU Electric's obligation to provide service to its
customers.
SECTION 3.5. Term. The Wheeling Service to be supplied hereunder
----
shall commence on the Effective Date and shall continue through the term of this
Agreement, unless otherwise agreed in writing with respect to any period by TU
Electric and the Owner Trustee.
SECTION 3.6. Parties' Rights and Obligations. The obligation of TU
-------------------------------
Electric hereunder is to wheel for the Owner Trustee, on the terms and
conditions herein set forth, Power and Energy derived from the Permian Basin
Facility in consideration of the payment of Wheeling Compensation. Nothing in
this Agreement is intended to give the Owner Trustee (i) any right or interest
in any transmission facilities owned by TU Electric, or (ii) any right to
delivery of Power and Energy other than Power and Energy derived from the
Permian Basin Facility. Nothing in this Agreement is intended to obligate TU
Electric to sell Power and Energy to any customers of the Owner Trustee or of TU
Electric.
-6-
<PAGE>
SECTION 3.7. Third Party Transmission Service. At the request of the
--------------------------------
Owner Trustee, TU Electric (to the extent it is able to do so) shall be
responsible for making all necessary arrangements with all third parties that
are impacted by the transfer of Power and Energy generated from the Permian
Basin Facility provided, that, the Owner Trustee shall be solely responsible for
--------
paying the compensation and charges ultimately determined to be payable by the
Owner Trustee and such third parties. Under no circumstances shall TU Electric
be responsible for the payment of any compensation or charge to such third
parties.
ARTICLE IV
PAYMENT
Prior to the Effective Date, the Owner Trustee shall have no
obligation whatsoever to make any payments hereunder. In addition, TU Electric
shall not be entitled to any payment in respect of any Utility Services or any
Wheeling Services or other service provided or expense incurred hereunder during
such time as there shall have occurred and be continuing a Lease Event of
Default. Upon curing any such Lease Event of Default, and so long as no other
Lease Event of Default shall have occurred and then be continuing, TU Electric
shall be entitled to all payments withheld upon such Lease Event of Default,
less any costs or damages incurred by the Owner Trustee as a result of such
Lease Event of Default.
ARTICLE V
FORCE MAJEURE
The provisions of this Agreement are subject to the following
limitations: if by reason of an act of God, fire, flood, explosion, earthquake,
strike, sabotage, pestilence, an act of the public enemy, civil or military
authority (including court orders, injunctions and orders of government agencies
of competent jurisdiction prohibiting (or the failure of any such government
agencies to issue orders permitting) acts necessary to the performance under a
relevant agreement or permitting any such act only subject to unreasonable
conditions), insurrection or riot, an act of the elements, or inability to
obtain or ship materials, equipment or fuel because of the effect of similar
causes on suppliers or carriers or any other cause or event not reasonably
within its control, TU Electric is unable in whole or in part to carry out any
one or more of its agreements or obligations contained herein, TU Electric shall
not be deemed to be in default by reason of not carrying out said agreement or
agreements or performing said obligation or obligations during the continuance
of such inability. TU Electric shall make reasonable effort to remedy with all
reasonable dispatch the
-7-
<PAGE>
cause or causes preventing it from carrying out its agreements; provided, that
the settlement of strikes, lockouts and other industrial disturbances shall be
entirely within the discretion of TU Electric, and TU Electric 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 TU Electric unfavorable to TU Electric.
Notwithstanding any other provision of this Agreement to the contrary, however,
TU Electric shall not be excused from performance of any obligation hereunder by
reason of Force Majeure unless it shall, within 30 days after the beginning of
any such period of forced delay, have first notified the Owner Trustee in
writing.
ARTICLE VI
INDEMNITY
Each party hereto (an "Indemnitor") agrees to indemnify and hold the
other party hereto and their respective Affiliates, officers, employees, agents
and invitees, free and harmless from any Claims (other than with respect to
consequential damages), arising out of, or in any way relating to, such
Indemnitor's gross negligent act or willful misconduct with respect to the
execution and performance of this Agreement, except in any case as a result of
the negligence or bad faith of the party otherwise to be indemnified.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Effective Date; Term. This Agreement shall be binding
--------------------
on the parties hereto from and after the Permian Basin Funding Date but the
provisions of Articles II, III and IV hereof shall only become operative on and
after the Lessor Possession Date for the Permian Basin Facility (the "Effective
Date"), but without in any way affecting the respective rights and obligations
of TU Electric and the Owner Trustee under the terms of the Lease. Nothing
herein contained shall be construed as requiring TU Electric or the Owner
Trustee to take any action in violation of, or to prevent TU Electric or the
Owner Trustee from exercising any of their respective rights under, the Lease.
Prior to the Lease Termination Date for the Permian Basin Facility, the duties,
responsibilities and rights of TU Electric in respect of the Permian Basin
Facility shall be governed exclusively by the terms of the Lease. The term of
this Agreement shall be coextensive with the term of the Permian Basin Ground
Lease.
-8-
<PAGE>
SECTION 7.2. Regulatory Authorities. The parties, in their
----------------------
performance of their obligations hereunder, shall conform to all applicable
Governmental Rules and Governmental Actions.
SECTION 7.3. Accounting and Reports. TU Electric shall at all times
----------------------
maintain, or cause to be maintained, books of account containing detailed
entries of all expenditures relating to the Permian Basin Facility. All
accounting with respect to the Permian Basin Facility shall be in accordance
with the customary practices of the electric utility industry. Such books shall
be made available to any of Owner Participant, Owner Trustee or their respective
agents, employees and advisors upon 30 days' notice at the offices of TU
Electric or the operator of the Permian Basin Facility at all reasonable times
for inspection, reproduction and audit.
SECTION 7.4. Notices. Unless otherwise specifically provided for
-------
herein, all notices, consents, directions, approvals, instructions, requests and
other communications required or permitted by the terms hereof to be given to
any Person shall be in writing and shall be given in person or by means of
telex, telecopy, or other wire transmission (with request for assurance of
receipt in a manner typical with respect to communications of that type) or
mailed by first class mail, addressed as follows: (i) if to Owner Trustee, to
The Connecticut National Bank, 777 Main Street, Hartford, Connecticut 06115,
Attention: Corporate Trust Administration, and (ii) if to TU Electric, to the
Texas Utilities Electric Company, 2001 Bryan Tower, Dallas, Texas 75201,
Attention: Principal Financial Officer or in each case at such other address as
such party shall from time to time designate in writing to such other party.
All such communications shall be effective on the date of receipt (or when
proffered, if receipt is not accepted) (in the case of any such notice sent by
hand, by courier service, by registered or certified mail or by any other means
requiring receipt of delivery, the receipt therefor, executed on behalf of the
recipient at the recipient's address, shall be conclusive evidence of receipt
thereof on the date indicated on such receipt).
SECTION 7.5. Nature of Obligations. Nothing herein contained shall
---------------------
be construed to create an association, joint venture or partnership, or impose a
partnership duty, obligation or liability on or with regard to any of the
parties. No party shall have the right or authority to bind another party
without its express written consent, except as may be expressly provided in this
Agreement or other agreements contemplated hereby. Nothing herein contained
shall be construed to limit any right to which a party may otherwise be entitled
under law or equity.
SECTION 7.6. Successor and Assigns. This Agreement shall be binding
---------------------
upon and inure to the benefit of TU Electric and
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<PAGE>
Owner Trustee and their respective successors and assigns; provided, however,
-------- -------
that TU Electric shall not assign its rights or delegate its duties hereunder,
or any part thereof, without the prior written consent of the Owner Trustee
which consent shall not be unreasonably withheld. The terms and provisions
contained in this Agreement are for the sole benefit of the parties hereto and
their respective successors and permitted assigns and shall not be construed to
confer any right or to avail any remedy to any other Person.
SECTION 7.7. Successor Owner Trustees. Each time a successor Owner
------------------------
Trustee is appointed in accordance with the terms of the Trust Agreement, such
successor Owner Trustee shall, without further act, succeed to all rights,
duties, immunities and obligations of the predecessor Owner Trustee hereunder
and the predecessor Owner Trustee shall be released from all further duties and
obligations hereunder, all without the necessity of any consent or approval by
TU Electric and without in any way altering the terms of this Agreement or the
rights or obligations of Owner Trustee hereunder. TU Electric shall at its own
expense or, after the Effective Date, at the expense of the Owner Trustee, upon
receipt of written notice of the appointment of a successor Owner Trustee under
the Trust Agreement, promptly make such modifications and changes to reflect
such appointment as shall be reasonably requested by such successor Owner
Trustee in any insurance policies, schedules, certificates and other instruments
relating to the Permian Basin Facility or this Agreement all in form and
substance satisfactory to such successor Owner Trustee.
SECTION 7.8. Consent to Assignment for Security Purposes. In order
-------------------------------------------
to secure the indebtedness evidenced by the Bonds and certain other obligations
as provided in the Indenture, the Indenture provides, among other things, for
the assignment by Owner Trustee to Indenture Trustee of its right, title and
interest in, to and under this Agreement, to the extent set forth in the
Indenture, and for the creation of a mortgage lien on and security interest in
the Permian Basin Facility in favor of Indenture Trustee. TU Electric hereby
consents to such assignment and to the creation of such mortgage lien and
security interest, consents to the terms and provisions thereof and (a)
acknowledges that such assignment, mortgage and security interest provide for
the exercise by Indenture Trustee of all rights of Owner Trustee hereunder to
give any consents, approvals, waivers, notices or the like, to make any
elections, demands or the like or to take any other discretionary action
hereunder, except as specifically set forth in the Indenture, and (b) agrees
that, to the extent provided in the Indenture, Indenture Trustee shall have all
the rights of Owner Trustee hereunder as if Indenture Trustee had originally
been named as a party hereto (every reference herein to Owner Trustee being read
to mean, except where the context otherwise requires, Indenture Trustee). TU
-10-
<PAGE>
Electric will furnish to Indenture Trustee counterparts of all notices,
certificates, opinions or other documents of any kind required to be delivered
hereunder by TU Electric to Owner Trustee. Notwithstanding the foregoing,
Indenture Trustee shall have no liability under this Agreement except to the
extent set forth in the Indenture and the Participation Agreement. The original
counterpart number 1 of this Agreement shall be the TU Electric "Original" of
this Agreement. To the extent that this Agreement constitutes chattel paper, as
such term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction, no security interest in this Agreement may be created
through the transfer or possession of any counterpart other than the "Original."
SECTION 7.9. Survival of Obligations. Except as otherwise provided
-----------------------
herein, TU Electric hereby agrees that no dispute with Owner Trustee and no
default by Owner Trustee in the performance of any of its obligations under this
Agreement or any of the Operative Documents shall give TU Electric the right to
discontinue the performance of its obligations under this Agreement, provided
that this Section 7.9 shall not be construed so as to deprive TU Electric of any
remedy available to it at law or equity.
SECTION 7.10. Amendments; Severability. This Agreement may not be
------------------------
amended, modified or otherwise altered in any manner except in writing signed by
TU Electric and Owner Trustee. In the event that any provision in this
Agreement is declared illegal or no longer in force by reason of any judgment or
order issued by a court or regulatory body of competent jurisdiction, all
remaining provisions of this Agreement not affected by such judgment or order
shall continue in full force and effect.
SECTION 7.11. Counterparts. This Agreement may be executed in any
------------
number of counterparts. All such counterparts shall be deemed originals and
shall constitute but one and the same instrument.
SECTION 7.12. GOVERNING LAW. THE INTERPRETATION OF THIS AGREEMENT
-------------
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT TO THE
EXTENT THAT, PURSUANT TO THE LAWS OF THE STATE OF TEXAS, THE LAWS OF TEXAS ARE
MANDATORILY APPLICABLE THERETO.
-11-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
TEXAS UTILITIES ELECTRIC COMPANY
BY: /s/ M. S. Greene
-----------------------------
Title: Vice President
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
but solely as owner trustee
under the Trust Agreement
dated as of December 1, 1988
By: /s/ Gilman N. Gauvin
-----------------------------
Title: Vice President
-12-
<PAGE>
ACKNOWLEDGMENT
State of Texas
County of Dallas
This instrument was acknowledged before me on December 6, 1989, by
M. S. Greene, as Vice President of Texas Utilities Electric Company, a Texas
corporation, on behalf of said corporation.
/s/ Jo Macdowell
-----------------------------
Jo Macdowell
Notary Public, State of Texas
My commission expires:
6/27/92
------------------------
<PAGE>
ACKNOWLEDGMENT
State of Connecticut
County of Hartford
This instrument was acknowledged before me on November 22, 1989, by
Gilman N. Gauvin, as Vice President of The Connecticut National Bank, a national
banking association, on behalf of said association.
/s/ Debra A. Johnson
----------------------------------
Debra A. Johnson
Notary Public, State of Connecticut
My commission expires:
March 31, 1990
----------------------------
<PAGE>
EXHIBIT 99(d)
================================================================================
DE CORDOVA DEED AND BILL OF SALE
between
MESQUITE POWER CORPORATION
Seller
and
THE CONNECTICUT NATIONAL BANK,
as Owner Trustee,
Buyer
-------------------------------
Dated as of December 6, 1989
-------------------------------
THIS DEED AND BILL OF SALE has been executed in 20 original counterparts, of
which this is original counterpart no. 5; only original counterpart no. 1
constitutes chattel paper within the meaning of the Uniform Commercial Code;
accordingly, any assignee of any rights of the purchaser under this Deed and
Bill of Sale cannot perfect a security interest in such rights without taking
possession of original counterpart no. 1.
================================================================================
<PAGE>
THIS DEED AND BILL OF SALE, dated this 6th day of December 1989, is
between MESQUITE POWER CORPORATION, a corporation organized and operating under
the laws of the State of Texas ("Seller"), and THE CONNECTICUT NATIONAL BANK, a
national banking association, not in its individual capacity but solely as owner
trustee ("Buyer") under the Trust Agreement, dated as of December 1, 1988, with
PHILIP MORRIS CREDIT CORPORATION, a Delaware corporation ("Owner Participant").
RECITALS:
--------
Seller desires to sell, and Buyer desires to purchase, the De Cordova
Facility for and in consideration of the amounts paid by Buyer to Seller
pursuant to that certain Amended and Restated Participation Agreement, dated as
of November 28, 1989 (the "Participation Agreement"), among Seller, Buyer, Owner
-----------------------
Participant and others. All capitalized terms herein not otherwise defined have
the meanings ascribed to them in Appendix A hereto.
AGREEMENT:
---------
NOW, THEREFORE, in consideration of the premises, of ten dollars paid
by Buyer to Seller, and of other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. SALE OF DE CORDOVA FACILITY
Seller does hereby GRANT, BARGAIN, SELL, ASSIGN, DELIVER, CONVEY,
TRANSFER, SET OVER, WARRANT AND CONFIRM unto Buyer, its successors and assigns,
the De Cordova Facility which includes, without limitation, the assets described
on Exhibit A hereto, which assets, except as indicated on Exhibit A, are wholly
located on the De Cordova Site (which is described on Exhibit B hereto);
TO HAVE AND TO HOLD the same, together with, all and singular, the
rights and appurtenances thereto in anywise belonging unto Buyer, its successors
and assigns forever; and Seller does hereby bind itself to warrant and forever
defend, all and singular, the same unto Buyer, its successors and assigns,
against every person whomsoever lawfully claiming or to claim the same, or any
part thereof.
SECTION 2. ASSIGNMENT OF WARRANTIES
Seller hereby assigns, without recourse, to Buyer Seller's rights in
any and all warranties of and other claims against dealers, manufacturers,
vendors, contractors and subcontractors relating to the De Cordova Facility and
all
<PAGE>
indemnities with respect to patent infringements and other related general
intangibles.
SECTION 3. LIABILITY OF BUYER
Any payments to be made by Buyer hereunder shall be made only from the
Trust Estate. Seller shall look solely to the Trust Estate for the payment of
any amounts payable by Buyer hereunder and agrees and confirms that neither The
Connecticut National Bank nor Owner Participant is or shall be in any way
personally liable for any such amounts on account of any representation,
warranty, covenant or agreement hereunder. Except as expressly set forth in the
Participation Agreement, Owner Participant shall have no liability, obligation,
responsibility or duty to Seller whatsoever for or with respect to any of the
transactions contemplated by this Deed and Bill of Sale. If a successor trustee
is appointed in accordance with the terms of the Trust Agreement, such successor
or other trustee shall succeed to all the rights, duties and obligations of
Owner Trustee hereunder, without necessity of any further act.
SECTION 4. SEVERANCE OF TITLE TO THE DE CORDOVA FACILITY FROM TITLE TO
THE DE CORDOVA SITE
Seller and Buyer agree for purposes of this Deed and Bill of Sale that
the De Cordova Facility and every part thereof shall be considered as personal
and not real property. Seller and Buyer agree that the De Cordova Facility and
every part thereof are severed from any real property and, even if physically
attached to any real property, it is the express intention of Seller and Buyer
that the De Cordova Facility and every part thereof (i) shall retain the
character of personal property, (ii) shall be removable, (iii) shall be treated
as personal property with respect to the rights of all Persons whomsoever, (iv)
shall not become part of any real property, and (v) by virtue of their nature as
personal property, shall not be affected in any way by any instrument dealing
with any real property. In no event shall the ownership of the De Cordova
Facility be merged with the ownership of the De Cordova Site or the leasehold
estate created in the De Cordova Site without the express written agreement of
TU Electric and Buyer.
SECTION 5. SELLER'S REPRESENTATIONS AND WARRANTIES.
Seller has good and indefeasible title to the De Cordova Facility.
Seller has all property and ownership rights and contractual rights necessary to
perform its obligations under the De Cordova Bill of Sale. On the De Cordova
Funding Date (i) good and marketable title to the De Cordova Facility will be
duly, validly and effectively conveyed and transferred to Owner Trustee free and
clear of all Liens (other than Permitted
-2-
<PAGE>
Interest Liens described in clauses (a), (b) or (d) of the definition thereof
and Liens for Taxes not delinquent and Permitted Project Liens), and (ii) the
Exhibit hereto describing such Facility correctly describes, with sufficient
accuracy to permit a competent engineer to locate the same and in sufficient
detail for purposes of conveyancing, recording, filing and perfecting security
interests in and liens upon, those items of equipment and structures identified
therein as belonging to such Facility and there are no additional items of
equipment or structures which belong to such Facility which are not described in
such Exhibit. Seller makes no other warranties, express or implied, other than
those contained in this Section 5.
SECTION 6. DELIVERY OF POSSESSION
By delivery of this Deed and Bill of Sale, the Seller delivers
possession, dominion and control over the De Cordova Facility to Buyer.
SECTION 7. GOVERNING LAW
THE INTERPRETATION OF THIS DEED AND BILL OF SALE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
SECTION 8. OBLIGATIONS OF SELLER.
Seller's obligations, representations and warranties hereunder are
corporate obligations only, and no director, officer, employee or agent of
Seller shall be in any way personally liable for the breach of such obligations
and Buyer shall not make any claim or be entitled to make any claim against any
director, officer, employee or agent of Seller in respect of any such breach of
any such obligation (such claims against such persons being hereby waived).
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Deed and Bill of Sale as of the day and date first written above.
MESQUITE POWER CORPORATION
By: /s/ E. T. Molnar
-----------------------------
Name: E. T. Molnar
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
but solely as owner trustee under
the Trust Agreement dated as of
December 1, 1988
By: /s/ Gilman N. Gauvin
-----------------------------
Name: Gilman N. Gauvin
Vice President
-4-
<PAGE>
ACKNOWLEDGMENT
State of Texas
County of Harris
This instrument was acknowledged before me on November 28, 1989, by
E. T. Molnar, as President of Mesquite Power Corporation, a Texas corporation,
on behalf of said corporation.
---------------------------------
Notary's name printed:
/s/ Noelle R. Michaelson
---------------------------------
Notary Public, State of Texas
My commission expires:
--------------------------
<PAGE>
ACKNOWLEDGMENT
State of Connecticut
County of Hartford
This instrument was acknowledged before me on November 22, 1989, by
Gilman N. Gauvin, as Vice President of The Connecticut National Bank, a national
banking association, on behalf of said association.
/s/ Debra A. Johnson
-----------------------------------
Debra A. Johnson
Notary Public, State of Connecticut
My commission expires:
March 31, 1990
<PAGE>
EXHIBIT 99(e)
================================================================================
ASSIGNMENT, AMENDMENT AND RESTATEMENT OF THE
DE CORDOVA GROUND LEASE
between
MESQUITE POWER CORPORATION,
Assignor
and
TEXAS UTILITIES ELECTRIC COMPANY,
Lessor
and
THE CONNECTICUT NATIONAL BANK,
as Owner Trustee,
Lessee
-----------------------
Dated as of December 1, 1989
-----------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ASSIGNMENT
----------
SECTION 1. ASSIGNMENT.............................................. 2
SECTION 2. RELEASE................................................. 2
SECTION 3. WAIVER AND ESTOPPEL..................................... 2
AGREEMENT
---------
SECTION 1. DEFINITIONS............................................. 3
1.1 Defined Terms................................................... 3
1.2 Other Definitional Provisions................................... 3
SECTION 2. LEASE................................................... 4
SECTION 3. REPRESENTATIONS AND WARRANTIES.......................... 4
3.1 TU Electric..................................................... 4
3.2 Owner Trustee................................................... 4
SECTION 4. SEVERANCE............................................... 4
SECTION 5. TERM.................................................... 4
SECTION 6. USE..................................................... 5
SECTION 7. RENT.................................................... 5
7.1 Basic Rent...................................................... 5
7.2 Payment. Etc.................................................... 6
SECTION 8. DEFAULT; REMEDIES....................................... 6
8.1 Default......................................................... 6
8.2 Remedy.......................................................... 7
SECTION 9. OPERATION AND MAINTENANCE............................... 7
SECTION 10. TERMINATION OPTION...................................... 8
SECTION 11. ASSIGNMENT AND SUBLETTING............................... 9
SECTION 12. RESPONSIBILITY OF LESSEE................................ 9
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 13. LIABILITY OF OWNER TRUSTEE; SUCCESSOR TRUSTEE........... 9
SECTION 14. GOVERNING LAW........................................... 9
SECTION 15. MISCELLANEOUS........................................... 9
15.1 Notices......................................................... 9
15.2 Amendments...................................................... 10
15.3 Headings, Etc................................................... 10
15.4 Successors and Assigns.......................................... 10
15.5 Severability.................................................... 10
15.6 Quiet Enjoyment................................................. 10
APPENDIX A DEFINITIONS
Exhibit A DE CORDOVA SITE
</TABLE>
ii
<PAGE>
ASSIGNMENT, AMENDMENT AND RESTATEMENT OF THE
--------------------------------------------
DE CORDOVA GROUND LEASE
-----------------------
THIS ASSIGNMENT, AMENDMENT AND RESTATEMENT OF THE DE CORDOVA GROUND
LEASE, dated as of December 1, 1989, is made between MESQUITE POWER CORPORATION,
a corporation organized and operating under the laws of the State of Texas
("Mesquite"), TEXAS UTILITIES ELECTRIC COMPANY, a corporation organized and
----------
operating under the laws of the State of Texas ("TU Electric"); together with
-----------
its successors and assigns as owner of the De Cordova Ground Interest,
("Lessor"), as lessor, and THE CONNECTICUT NATIONAL BANK, not in its individual
------
capacity but solely as owner trustee, under the Trust Agreement with PHILIP
MORRIS CREDIT CORPORATION ("Owner Participant"), dated as of December 1, 1988
-----------------
("Owner Trustee"; together with its successors and assigns as lessee under the
---------------
De Cordova Ground Lease of the De Cordova Ground Interest, including, without
limitation, any successor trustee under the Trust Agreement, "Lessee"), as
------
lessee.
RECITALS:
--------
A. TU Electric is the owner of the De Cordova Turbine Site Interest
and the De Cordova Common Site Interest.
B. Owner Trustee is the owner of the De Cordova Facility, as conveyed
by the De Cordova Bill of Sale.
C. By De Cordova Ground Lease dated as of December 15, 1988 (the
"Original Ground Lease"), TU Electric leased the De Cordova Ground Interest to
Mesquite.
D. Mesquite desires to assign the Original Ground Lease to the Owner
Trustee and the Owner Trustee desires to accept the assignment of the Original
Ground Lease from Mesquite.
E. The Owner Trustee and TU Electric desire to amend and restate the
Original Ground Lease in its entirety to provide for new terms and conditions
for the leasing of the De Cordova Ground Interest.
<PAGE>
ASSIGNMENT:
----------
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, Mesquite, TU Electric and the Owner Trustee, intending to be
legally bound hereby, agree as follows:
SECTION 1. ASSIGNMENT
Mesquite hereby assigns all of its right, title and interest as lessee
under the Original Ground Lease to the Owner Trustee. TU Electric hereby
indemnifies and saves the Owner Trustee harmless from any and all liability and
claims arising under the Original Ground Lease prior to the date hereof, whether
in contract or in tort, for damage to personal or real property or injury or
death to person or persons, including the reasonable attorneys' fees and related
legal costs of the Owner Trustee.
SECTION 2. RELEASE
TU Electric hereby releases Mesquite from any obligations and
liabilities arising under the Original Ground Lease from and after the date
hereof.
SECTION 3. WAIVER AND ESTOPPEL
TU Electric and Mesquite hereby represent and warrant to the Owner
Trustee that, as of the date hereof, there are no defaults or conditions which,
with the passage of time or the giving of notice or both, would constitute a
default under the Original Ground Lease. TU Electric and Mesquite acknowledge
that this representation and warranty is a material inducement to the acceptance
by the Owner Trustee of the Assignment effected hereby and agree that the Owner
Trustee is justified in relying upon this representation and warranty.
AGREEMENT:
---------
In consideration of the mutual agreements herein contained and other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, TU Electric and Owner Trustee, intending to be legally bound
hereby, hereby amend and restate the Original Ground Lease in its entirety as
follows:
-2-
<PAGE>
SECTION 1. DEFINITIONS
1.1 Defined Terms. (a) Unless otherwise defined herein, capitalized
-------------
terms used herein shall have the meanings assigned to them in Appendix A hereto.
(b) As used in this Ground Lease, the terms defined in the recitals
hereto shall have the meaning set forth therein and the following terms shall
have the following respective meanings (such definitions to be equally
applicable to the singular and plural forms thereof):
"De Cordova Common Site" shall mean the land described as such on
----------------------
Exhibit A hereto and all rights of way, easements, permits and other
appurtenances to such land described on Exhibit A (specifically excluding
therefrom any Transmission Facilities and the De Cordova Turbine Site).
"De Cordova Common Site Interest" shall mean an undivided 50% of
-------------------------------
Lessor's 100% undivided interest in the De Cordova Common Site.
"De Cordova Ground Interest" shall mean, collectively, the De Cordova
--------------------------
Turbine Site Interest and the De Cordova Common Site Interest.
"Ground Lease Default" shall have the meaning set forth in subsection
--------------------
8.1.
"Ground Lease Termination Date" shall have the meaning set forth in
-----------------------------
Section 5.
"De Cordova Site" shall mean the collective reference to the De
---------------
Cordova Turbine Site and the De Cordova Common Site.
"De Cordova Turbine Site" shall mean the land described as such on
-----------------------
Exhibit A hereto and all rights of way, easements, permits and other
appurtenances to such land described on Exhibit A (specifically excluding
therefrom any Transmission Facilities).
"De Cordova Turbine Site Interest" shall mean Lessor's 100% undivided
--------------------------------
interest in the De Cordova Turbine Site.
1.2 Other Definitional Provisions. The words "hereof," "herein" and
-----------------------------
"hereunder" and words of similar import when used in this Ground Lease shall
refer to this Ground Lease as a whole and not to any particular provision of
this Ground Lease. Section, subsection, Schedule and Exhibit references
contained in this Ground Lease are references to Sections, subsections,
Schedules and Exhibits in or to this Ground Lease unless otherwise specified.
-3-
<PAGE>
SECTION 2. LEASE
TU Electric hereby demises and leases to Owner Trustee, and Owner
Trustee hereby leases and hires from TU Electric upon and subject to the terms
and conditions hereinafter set forth, the De Cordova Ground Interest, TO HAVE
AND TO HOLD the same, subject as aforesaid, unto the Owner Trustee and, subject
to the provisions of Section 11, Owner Trustee's successors and assigns,
commencing on the date hereof and continuing for the term provided in Section 5.
SECTION 3. REPRESENTATIONS AND WARRANTIES
3.1 TU Electric. TU Electric agrees that its representations and
-----------
warranties contained in subsection 9.1 of the Participation Agreement are made
for and shall inure to the benefit of Lessee.
3.2 Owner Trustee. Owner Trustee agrees that its representations and
-------------
warranties contained in subsection 6.1 of the Participation Agreement are made
for and shall inure to the benefit of Lessor.
SECTION 4. SEVERANCE
TU Electric and Owner Trustee agree for purposes of this Ground Lease
that the De Cordova Facility and every part thereof shall be considered as
personal and not real property. TU Electric and Owner Trustee agree that the De
Cordova Facility and every part thereof are severed from the De Cordova Site
and, even if physically attached to the De Cordova Site, it is the express
intention of Lessor and Lessee that the De Cordova Facility and every part
thereof (i) shall retain the character of personal property, (ii) shall be
removable, (iii) shall be treated as personal property with respect to the
rights of all Persons whomsoever, (iv) shall not become part of any real
property, and (v) by virtue of their nature as personal property, shall not be
affected in any way by any instrument dealing with the De Cordova Site. In no
event shall the ownership of the De Cordova Facility be merged with the
ownership of the De Cordova Site or the leasehold estate created in the De
Cordova Site without the express written agreement of TU Electric and Owner
Trustee.
SECTION 5. TERM
The term of this Ground Lease shall commence on the De Cordova Funding
Date and shall end on the date (the "Ground Lease Termination Date") which is
-----------------------------
the earliest of (a) the termination of this Ground Lease pursuant to Section 10
hereof, (b) the date, if ever, on which title to the Leased Assets vests in
Lessor and (c) July 1, 2031.
-4-
<PAGE>
SECTION 6. USE
During the term hereof the De Cordova Ground Interest shall be used by
Lessee in connection with the operation, maintenance, repair and restoration of
the De Cordova Facility and the location of all Alterations thereon and such
other uses which may be necessary to ensure that Lessee enjoys the benefits of
ownership of the De Cordova Facility, and for no other purpose. Lessor may use
the De Cordova Site and the portion of the De Cordova Facility located thereon
in connection with the operation, maintenance, repair or restoration of the De
Cordova Facility or any other facilities located from time to time on the De
Cordova Common Site and such other uses which may be necessary to ensure that
Lessor may enjoy the benefits of ownership of the De Cordova Common Site and
such other facilities; provided, however, that such use shall not materially
-------- -------
interfere with the use, enjoyment and occupancy of the De Cordova Facility by
Lessee. Lessee hereby acknowledges TU Electric's right to convey rights to all
or any portion of TU Electric's remaining interest in the De Cordova Common Site
to third parties including, without limitation, in connection with the financing
of any other facilities located thereon; provided, however, that such conveyance
-------- -------
and the exercise of rights granted pursuant thereto shall not materially
interfere with the use, enjoyment and occupancy of the De Cordova Facility or
the De Cordova Common Site by Lessee and shall be subject to an express waiver
by such third party of all rights to partition the De Cordova Common Site, and
provided, further, that TU Electric (i) notifies Lessee of such conveyance at
-------- -------
least 30 days prior to such conveyance and (ii) delivers an Officers'
Certificate to Lessee prior to such conveyance to the effect that such
conveyance is in compliance with all of the terms of this Section 6. Lessor
and Lessee also waive all rights they may have to partition the De Cordova
Common Site.
SECTION 7. RENT
7.1 Basic Rent. (a) As rent for the De Cordova Ground Interest for
----------
the period from the date of commencement of the term of this Ground Lease to the
Ground Lease Termination Date, Lessee shall pay to Lessor, in arrears on each
Basic Rent Payment Date, the Fair Market Rental Value of the De Cordova Ground
Interest as determined (i) during the Lease Term by the Appraisal for the De
Cordova Facility and (ii) for all times after the Lessor Possession Date for the
De Cordova Facility, as of such Lessor Possession Date and every anniversary
thereof; provided, however, that Lessee's obligation to pay rent or interest on
-------- -------
overdue rent hereunder during the Lease Term for the De Cordova Facility shall
be contingent upon Lessor having paid the rent or interest on overdue rent due
Lessee under subsection 7.1(b); and provided, further, that for all times after
-------- -------
the Lessor Possession Date for the De Cordova Facility, Lessee shall
-5-
<PAGE>
indemnify and hold Lessor harmless for (and Lessor shall use commercially
reasonable means to minimize) (a) damages, losses, claims or expenses incurred
in the performance hereof or of the De Cordova Facility Agreement which continue
after the termination of this Ground Lease pursuant to Section 10 or (b)
damages, losses, claims or expenses initially incurred by Lessee but which, upon
the termination of this Ground Lease pursuant to Section 10, become damages,
losses, claims or expenses of Lessor.
(b) As subrent for the use with respect to the De Cordova Facility of
the De Cordova Ground Interest by Lessor for the period from the date of
commencement of the term of this Ground Lease to the earlier to occur of (i) the
Lessor Possession Date for the De Cordova Facility and (ii) the expiration or
earlier termination of the Lease for the De Cordova Facility, Lessor shall pay
to Lessee an amount equal to the rent payable by Lessee pursuant to subsection
7.1(a).
7.2 Payment. Etc. If the date for payment of any rent payable under
-------------
this Section 7 shall not be a Business Day, then such rent shall not be due
until the next Business Day. Any rent which is not paid at the close of
business on the date the same becomes due shall be payable, together with
interest thereon from the date the same becomes due to the date such rent is
paid at a rate per annum which is 2% in excess of Prime Rate, but in no event in
excess of the maximum rate permitted by law.
SECTION 8. DEFAULT; REMEDIES
8.1 Default. The term "Ground Lease Default" shall mean (a) failure
------- --------------------
of Lessee to pay rent as provided in subsection 7.1 for 30 days after notice by
Lessor or (b) commencement by Lessee of 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 by Lessee of the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or consent by Lessee to any such relief or to
the appointment of or taking possession by any such official or agency in an
involuntary case or other proceeding commenced against it, or making by Lessee
of a general assignment for the benefit of creditors, or failure by Lessee
generally to pay its debts as they become due, or taking by Lessee of any
corporate action to authorize any of the foregoing; or commencement against
Lessee of an involuntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to it or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, custodian or other
similar official or agency of it or any substantial part of its property,
-6-
<PAGE>
and such involuntary case or other proceeding remaining undismissed and unstayed
for a period of 90 days.
8.2 Remedy. Upon the occurrence of a Ground Lease Default, Lessor
------
may exercise any right or remedy that may be available to it under applicable
law; provided, however, that no Ground Lease Default shall constitute a ground
-------- -------
for termination hereof or of the interest of Lessee hereunder and neither this
Ground Lease nor the interest of Lessee shall be terminated by reason of a
Ground Lease Default.
SECTION 9. OPERATION AND MAINTENANCE
Lessor covenants to cause, without cost or expense to Lessee, (a) the
De Cordova Site to be maintained in accordance with Prudent Utility Practice and
Lessor's normal maintenance practice for other properties of a similar size and
nature and not to discriminate between the De Cordova Site and other properties
of a similar size and nature owned, operated or leased by it and taking into
account the operational characteristics of the De Cordova Facility, (b) all
necessary or useful components of the De Cordova Site to be operated, serviced,
maintained and repaired and all necessary or useful components thereof to be
replaced so that the condition and operating efficiency of the De Cordova Site
will be maintained and preserved, in all material respects in accordance with
Prudent Utility Practice and Lessor's normal maintenance practice for other
properties of a similar size and nature and not to discriminate between the De
Cordova Site and other properties of a similar size and nature owned, operated
or leased by it, taking into account the operational characteristics of the De
Cordova Facility, (c) all applicable Governmental Rules and Governmental Actions
affecting the De Cordova Site, or the use, operation or maintenance thereof to
be complied with; provided, however, that Lessor shall not be obligated so to
-------- -------
exercise such rights, powers, elections and options to cause compliance with any
Governmental Rule or Governmental Action (i) whose application or validity is
being contested diligently and in good faith by appropriate proceedings, (ii)
compliance with which shall have been excused or exempted by a nonconforming use
permit, waiver, extension or forbearance exempting it from such Governmental
Rule or Governmental Action, (iii) if good faith efforts and appropriate steps
are being taken to comply, or (iv) if failure of compliance would result in no
material adverse consequences to Lessee, Indenture Trustee, Lessor or Owner
Participant, so long as in each of (i) through (iv) above such failure of
----------
compliance cannot result in any material danger of the sale, forfeiture or loss
of any part of the De Cordova Ground Interest or subject any of the foregoing or
the De Cordova Facility to any Lien, other than Permitted Interest Liens or
Permitted Project Liens, or materially interfere with the operation or use or
disposition of any of the foregoing, or the Trust Estate or the Indenture
-7-
<PAGE>
Estate, or any part thereof, title thereto or any interest therein, or the
payment of Rent, or subject any Indemnitee to burdensome regulation as a Texas
Public Utility or otherwise as an electric public utility or affiliate thereof,
and (d) proper books and records relating to all services rendered and all funds
expended for operation, maintenance, repair and replacement of the De Cordova
Site, to be kept and maintained, all in accordance with GAAP and customary
practices in the electric utility industry. Lessee shall have no obligation to
maintain, alter, repair, rebuild or replace the De Cordova Site or any part
thereof, and Lessor expressly waives the right to perform any such action at the
expense of Lessee pursuant to any law at any time in effect. Lessor may use, or
permit the use of, the De Cordova Site in any manner which would not materially
interfere with the use, enjoyment and occupancy of the De Cordova Facility by
Lessee.
SECTION 10. TERMINATION OPTION
(a) Owner Trustee shall have the option to terminate this Ground
Lease in consideration of a termination fee in the amount of $1.00, effective at
any time on or after the Lease Termination Date for the De Cordova Facility, by
written notice by Owner Trustee to Lessor given not less than 30 days prior to
the date selected by Lessee for the termination of this Ground Lease.
(b) Upon termination of this Ground Lease, Lessor shall decommission,
dismantle and remove (to the nearest railhead) the De Cordova Facility and use
its best efforts to find a Person that is not an Affiliate of TU Electric to
purchase the De Cordova Facility from Lessee at a purchase price not less than
the greater of (i) the Fair Market Sale Value of the De Cordova Facility and
(ii) Scrap Value of the De Cordova Facility (assuming in both cases the payment
of all costs and expenses related to decommissioning, dismantling and removal of
the De Cordova Facility by Lessor). If such Person is found as provided herein,
Lessee shall transfer the De Cordova Facility to such Person for such purchase
price, payable in immediately available funds at the closing of title, under a
contract of sale which shall specify a closing date which is the Ground Lease
Termination Date for the De Cordova Facility. If Lessor is not able to cause
the De Cordova Facility to be decommissioned, dismantled and removed, Lessor
shall exercise the option provided in Section 10(c).
(c) In lieu of complying with Section 10(b), Lessor may purchase the
De Cordova Facility from Lessee on the date as of which this Ground Lease will
terminate pursuant to Section 10(a) hereof or Section 5(c) hereof at a purchase
price equal to the Fair Market Sale Value of the De Cordova Facility (based upon
(A) the assumption that any buyer shall be required to pay any
-8-
<PAGE>
decommissioning, dismantling, removal and re-erecting costs and (B) the Lessee's
remaining rights hereunder) which purchase price will not be less than $1.00.
SECTION 11. ASSIGNMENT AND SUBLETTING
Lessee shall have the right and consent of Lessor to assign or sublet
its interest in this Ground Lease or any part thereof to any transferee of such
Lessee's interest in the De Cordova Facility or any part thereof and shall have
the right and consent of Lessor to pledge, mortgage, encumber or otherwise
hypothecate its interest under this Ground Lease to secure payment of
indebtedness of Lessee, provided that payment of such indebtedness also is
--------
secured by Lessee's interest in the De Cordova Facility.
SECTION 12. RESPONSIBILITY OF LESSEE
Lessee shall have no duty, responsibility, liability or obligation to
Lessor in respect of the De Cordova Ground Interest or the use, maintenance or
condition of the De Cordova Site except only the obligation to pay rent as
provided in Section 7.
SECTION 13. LIABILITY OF OWNER TRUSTEE; SUCCESSOR TRUSTEE
All payments to be made by Owner Trustee hereunder shall be made only
from the Trust Estate. Lessor shall look solely to the Trust Estate for the
payment of any amounts payable by Owner Trustee hereunder and agrees and
confirms that neither The Connecticut National Bank, whether as an individual or
in its capacity as Owner Trustee, nor Owner Participant is or shall be in any
way personally liable for any such amounts or on account of any representation,
warranty, covenant or agreement hereunder. Owner Participant shall have no
liability, obligation, responsibility or duty to Lessor whatsoever for or with
respect to any of the transactions contemplated by this Ground Lease. If a
successor trustee is appointed in accordance with the terms of the Trust
Agreement, such successor or other trustee shall succeed to all the rights,
duties and obligations of Owner Trustee hereunder, without necessity of any
further act.
SECTION 14. GOVERNING LAW
This Ground Lease shall be governed by and construed in accordance
with the laws of the State of Texas.
SECTION 15. MISCELLANEOUS
15.1 Notices. All notices, consents, approvals, instructions,
-------
requests and other communications required or permitted by the terms hereof
shall be given in person or by
-9-
<PAGE>
courier or by means of telex, telecopy or other wire transmission (with request
for assurance of receipt in a manner typical with respect to communications of
that type), or mailed by first class mail, addressed as follows:
if to Owner Trustee:
The Connecticut National Bank
777 Main Street
Hartford, Connecticut 06115
Attention: Corporate Trust Administration
if to TU Electric:
Texas Utilities Electric Company
2001 Bryan Tower
Dallas, Texas 75201
Attention: Principal Financial Officer
Either party may designate a new address for purposes of notice hereunder by
notice to each of the other party. All such communications and notices given in
such manner shall be effective on the date of receipt (or when proffered, if
receipt is not accepted) of such communication or notice.
15.2 Amendments. Neither this Ground Lease nor any of the terms
----------
hereof may be terminated, amended, supplemented, waived or modified orally, but
only by an instrument in writing signed by the party against which enforcement
of the termination, amendment, supplement, waiver or modification shall be
sought.
15.3 Headings, Etc. The headings of various Sections and subsections
--------------
of this Ground Lease are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof.
15.4 Successors and Assigns. The terms of this Ground Lease shall be
----------------------
binding upon and inure to the benefit of TU Electric and Owner Trustee and their
respective successors and assigns.
15.5 Severability. Any provision of this Ground Lease that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
15.6 Quiet Enjoyment. So long as no Ground Lease Default shall have
---------------
occurred and be continuing, Lessee shall be entitled to the quiet enjoyment of
the benefits of the De Cordova
-10-
<PAGE>
Ground Interest as provided herein. Notwithstanding that the De Cordova Ground
Interest is subject to the Permitted Project Liens, Lessor undertakes that in
the event that any holder of an interest in or to the De Cordova Site under
clause (a) of the definition of Permitted Project Lien or Person otherwise
entitled to enforce any lien contemplated by clause (a) of the definition of
Permitted Project Lien (a "Permitted Lienholder") should take any action or omit
to take any action as a result of which the use or occupancy of the De Cordova
Site or enjoyment of the benefits of the De Cordova Ground Interest by Lessee
are materially interfered with, Lessor shall use reasonable efforts to obtain
from such Permitted Lienholder a sublease, waiver, variance, release or joint
use or other agreement in form and substance reasonably satisfactory to Lessee
or use reasonable efforts to take such other action as may be reasonably
necessary to permit Lessee to use and occupy the De Cordova Site and enjoy the
benefits of the De Cordova Ground Interest, and Lessor agrees to indemnify and
hold Lessee and its successors and assigns harmless from and against any and all
losses, claims, costs, expenses, fines or penalties imposed on Lessee as a
consequence of any such action by a Permitted Lienholder or occasioned by the
material interference by any Permitted Lienholder with Lessee's use and
occupancy of the De Cordova Site and the enjoyment of the benefits of the De
Cordova Ground Interest in accordance with the terms hereof. The foregoing
shall be in addition to and cumulative with any and all other remedies to which
Lessee may be entitled under any provision of the Operative Documents.
IN WITNESS WHEREOF, the parties hereto have caused this Ground Lease
to be duly executed as of the day and year first above written.
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
but solely as Owner Trustee
By: /s/ Gilman N. Gauvin
------------------------------
Name: Gilman N. Gauvin
Vice President
TEXAS UTILITIES ELECTRIC COMPANY
By: /s/ M. S. Greene
------------------------------
Name: M. S. Greene
MESQUITE POWER CORPORATION
By: /s/ E. T. Molnar
------------------------------
Name: E. T. Molnar
-11-
<PAGE>
ACKNOWLEDGMENT
State of Connecticut
County of Hartford
This instrument was acknowledged before me on November 22, 1989, by
Gilman N. Gauvin, as Vice President of The Connecticut National Bank, a national
banking association, on behalf of said association.
/s/ Debra A. Johnson
-----------------------------
Debra A. Johnson
Notary Public, State of
Connecticut
My commission expires:
March 31, 1990
<PAGE>
ACKNOWLEDGMENT
State of Texas
County of Dallas
This instrument was acknowledged before me on December 6, 1989, by M.
S. Greene, as Vice President of Texas Utilities Electric Company, a Texas
corporation, on behalf of said corporation.
/s/ Jo Macdowell
------------------------------
Jo Macdowell
Notary Public, State of Texas
My commission expires:
6/27/92
<PAGE>
ACKNOWLEDGEMENT
State of Texas
County of Harris
This instrument was acknowledged before me on November 28, 1989, by
E. T. Molnar, as President of Mesquite Power Corporation, a Texas corporation,
on behalf of said corporation.
------------------------------
Notary's Name printed:
/s/ Noelle R. Michaelson
------------------------------
Notary Public, State of Texas
My commission expires:
----------------------
<PAGE>
EXHIBIT 99(f)
================================================================================
DE CORDOVA FACILITY AGREEMENT
Dated as of December 1, 1989
between
TEXAS UTILITIES ELECTRIC COMPANY
and
THE CONNECTICUT NATIONAL BANK,
as Owner Trustee
--------------------------------------------------------------------------------
This De Cordova Facility Agreement has been executed in 20 original counterparts
of which this is original counterpart number 3; only original counterpart number
1 constitutes chattel paper within the meaning of the Uniform Commercial Code;
accordingly, any assignee of any rights of Owner Trustee under this De Cordova
Facility Agreement cannot perfect a security interest in such rights without
taking possession of original counterpart number 1.
================================================================================
<PAGE>
DE CORDOVA FACILITY AGREEMENT, dated as of December 1, 1989, between
TEXAS UTILITIES ELECTRIC COMPANY, a corporation organized and operating under
the laws of the State of Texas ("TU Electric"), and THE CONNECTICUT NATIONAL
BANK, not in its individual capacity but solely as owner trustee under the Trust
Agreement ("Owner Trustee") with PHILIP MORRIS CREDIT CORPORATION, dated as of
-------------
December 1, 1988.
RECITALS:
--------
A. TU Electric is a corporation engaged in the generation and
transmission of electric power and energy for sale and distribution in the State
of Texas.
B. The De Cordova Facility is designed to burn either gas or oil as a
primary fuel, and such gas or oil is expected to be commercially available in
quantities sufficient to operate the De Cordova Facility for the Ground Lease
Term.
C. The Owner Trustee has acquired the De Cordova Facility and leased
its interest therein to TU Electric pursuant to the Lease for the Lease Term and
TU Electric has granted the De Cordova Ground Interest to the De Cordova Site to
the Owner Trustee pursuant to the De Cordova Ground Lease.
D. From and after the Lessor Possession Date and to and including the
Ground Lease Termination Date for the De Cordova Facility, subject to the terms
hereof, Owner Trustee desires to obtain the use of primary fuel and other raw
materials, supplies and services, in each case to the extent required for the
full use of the De Cordova Facility as electric generating units.
E. Subject to the terms and provisions of this Agreement, TU Electric
is willing to provide such services to permit such use and to provide such
primary fuel, other raw materials and supplies and such benefits.
NOW THEREFORE, in consideration of the premises and of other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
For the purposes hereof, capitalized terms used herein shall have the
meanings assigned to them in Appendix A hereto. References in this Agreement to
Sections, subsections, Articles and paragraphs are to Sections, subsections,
Articles and paragraphs in this Agreement unless otherwise indicated.
ARTICLE II
OPERATION, SERVICES AND ASSIGNMENT
SECTION 2.1. Operation and Approvals. Commencing on the Effective
-----------------------
Date and at all times during the term of this Agreement, TU Electric, at the
cost and expense of the Owner Trustee, shall operate the De Cordova Facility, or
cause the De Cordova Facility to be operated, in accordance with Section 2.4
hereof. In addition, at all times during the term of this Agreement, TU
Electric, at the cost and expense of the Owner Trustee, shall obtain and
maintain, or cause to be obtained and maintained, in full force and effect all
Governmental Actions necessary or desirable with respect to the operation of the
De Cordova Facility, unless such Governmental Actions cannot be obtained or
maintained by reasons beyond the control of TU Electric.
SECTION 2.2. Maintenance. TU Electric, at the cost and expense of the
-----------
Owner Trustee, shall at all times on and after the Effective Date during the
term of this Agreement maintain, service and repair the De Cordova Facility and
the De Cordova Site or cause the same to be maintained, serviced and repaired,
in accordance with Section 2.4 hereof.
SECTION 2.3. Furnishing of Utility Services. TU Electric hereby
------------------------------
covenants and agrees that at all times during the term of this Agreement it will
deliver, provide and make available, or cause to be delivered, provided and made
available, at the De Cordova Site (i) sufficient amounts of readily available
water, electric energy and power for the operation and maintenance of the De
Cordova Facility and the De Cordova Site as it relates to the De Cordova Ground
Interest; (ii) sufficient waste disposal services to dispose of all waste
material from the De Cordova Facility; (iii) access to high and low-pressure
water systems and other fire protection systems necessary to extinguish fires
occurring in or proximate to the De Cordova Facility; (iv) such other ancillary
rights, services, goods (including spare parts) and materials as may be
necessary or desirable from time to time to permit the operation and maintenance
of the De Cordova Facility in compliance with applicable law and at its intended
operating capacity and (v) to the extent then commercially
<PAGE>
obtainable, gas and/or oil or such alternative fuel as the De Cordova Facility
shall have been converted to use at the time (it being understood that prior to
any such conversion, TU Electric shall reasonably believe that such alternative
fuel is then commercially obtainable), in sufficient amounts to operate the De
Cordova Facility at its intended operating capacity (collectively, the "Utility
Services"). TU Electric further covenants and agrees that at all times during
the term of this Agreement, TU Electric shall maintain or cause to be maintained
such equipment and facilities at the De Cordova Site in addition to the De
Cordova Facility as shall be necessary or desirable in order to provide the
Utility Services to the extent reasonably possible on a continuous and
uninterrupted basis, consistent with Prudent Utility Practice. The Owner Trustee
shall make payment to TU Electric in respect of the Utility Services and those
expenses incurred which are expressly provided herein to be for the account of
the Owner Trustee, pursuant to this Agreement in an amount and on terms that
fully compensate TU Electric for its costs, including a reasonable return on
investment, which payments shall be made at such times and in such manner as
shall be agreed upon by the Owner Trustee and TU Electric (but in no event more
frequently than monthly), or, absent agreement among such parties, as such costs
may be approved by the regulatory agency having jurisdiction over such charges.
SECTION 2.4. Performance of Article II Obligations. The obligations
-------------------------------------
of TU Electric under this Article II shall be performed (i) in accordance with
all applicable Governmental Actions and Governmental Rules, except to the extent
being contested in good faith by appropriate proceedings, so long as such
failure of compliance cannot result in any material danger of the sale,
forfeiture or loss of any part of the De Cordova Facility or the De Cordova Site
as it relates to the De Cordova Ground Interest or subject any of the foregoing
to any Lien, other than Permitted Interest Liens or Permitted Project Liens, or
materially interfere with the intended operation or use or disposition of any of
the foregoing, title thereto or any interest therein, (ii) so that the De
Cordova Facility is maintained in good operating condition, ordinary wear and
tear excepted, (iii) so that the De Cordova Facility continues to have the
capacity and functional ability to perform, on a continuous basis (subject to
normal interruption in the ordinary course of business for maintenance, service,
repair and testing), in commercial operation, in accordance with the functions
for which it was specifically designed and taking into account manufacturers'
recommended practices and standards, (iv) in all material respects in accordance
with any insurance policies maintained pursuant to reasonable industry standards
at the time, (v) at least in accordance with the same standards TU Electric
applies to other facilities of similar nature owned, leased or operated by TU
Electric, and (vi) in accordance with Prudent Utility Practice.
<PAGE>
ARTICLE III
TRANSMISSION OF POWER AND ENERGY
SECTION 3.1. Wheeling Service. TU Electric, upon the request of Owner
----------------
Trustee, shall wheel, and shall otherwise make available wheeling transmission
service, in accordance with this Agreement (the "Wheeling Service"), for the
Owner Trustee, all Power and Energy generated by the De Cordova Facility in
accordance with the normal practices of TU Electric for such wheeling service
(which shall be provided on a nondiscriminatory basis, as compared with similar
wheeling service provided by TU Electric to other wheeling customers from time
to time) at the time over transmission facilities of TU Electric from the De
Cordova Facility to Points of Interconnection with transmission facilities owned
by other utilities, provided, however, that TU Electric shall be obligated to
-------- -------
provide such Wheeling Service only if TU Electric can do so on a commercially
reasonable basis and the provision of such Wheeling Service does not cause TU
Electric to become subject to (i) jurisdiction of the Federal Energy Regulatory
Commission as a public utility under the Federal Power Act, or (ii) any
additional regulatory burdens which materially adversely affect the business or
operations of TU Electric. It is understood and agreed that, if Wheeling
Services were to be provided on the date of the execution and delivery of this
Agreement, the foregoing clauses (i) and (ii) of the proviso to the next
preceding sentence would limit such Wheeling Services to Points of
Interconnection with transmission facilities owned by other utilities in control
areas of the Electric Reliability Council of Texas ("ERCOT").
SECTION 3.2. Delivery Voltages. Energy wheeled by TU Electric
-----------------
hereunder shall be delivered (i) in a manner consistent with the operating
characteristics of the De Cordova Facility and the transmission facilities of TU
Electric, or (ii) as shall be agreed to by TU Electric and the Owner Trustee.
SECTION 3.3. Determination of Wheeling Compensation. Wheeling costs
--------------------------------------
("Wheeling Compensation") shall be paid to TU Electric on terms that fully
compensate TU Electric for its costs, determined from time to time on a basis no
less favorable to the Owner Trustee than the basis for determining the charges
for similar transmission service by TU Electric for its other wheeling customers
at the time of the provision of such service, including a reasonable return on
investment, subject to approval by the regulatory agency having jurisdiction
over such charges.
SECTION 3.4. Limitations on TU Electric's Duty to Schedule, Transfer
-------------------------------------------------------
or Wheel Power and Energy. TU Electric shall use reasonable diligence in
-------------------------
accordance with Prudent Utility Practice to prevent and minimize the
interruption of the Wheeling
<PAGE>
Service and to schedule, transfer or wheel Power and Energy from the De Cordova
Facility subject to:
a) The provisions of Section 3.1 and Article V hereof;
b) Payment of Wheeling Compensation to TU Electric for the Wheeling
Service, including payment for line losses on TU Electric's
transmission system caused by the transfer of Power and Energy
and payment for any scheduling services provided by TU Electric
for the Owner Trustee;
c) Sufficient transmission capacity on TU Electric's transmission
system to permit the safe and reliable transmission of Power and
Energy;
d) Notification by any third party having transmission facilities
impacted by the scheduling, transfer or wheeling of Power and
Energy that there is insufficient transmission capacity on such
third party's transmission system to permit the safe and reliable
transmission of Power and Energy;
e) An electrical system emergency which affects or will affect the
ability to maintain safe, adequate and continuous electric
service; and
f) Any irregularities, forced outages, interruptions or
curtailments, outages for construction and maintenance, orders or
restraints of law and public authorities, or other cause(s)
reasonably beyond TU Electric's control.
During periods of curtailment, TU Electric will diligently provide
Wheeling Service to the Owner Trustee (which shall be provided on a non-
discriminatory basis, as compared with similar wheeling services provided by TU
Electric to other wheeling customers from time to time) to the extent possible
without interfering with TU Electric's obligation to provide service to its
customers.
SECTION 3.5. Term. The Wheeling Service to be supplied hereunder
----
shall commence on the Effective Date and shall continue through the term of this
Agreement, unless otherwise agreed in writing with respect to any period by TU
Electric and the Owner Trustee.
SECTION 3.6. Parties' Rights and Obligations. The obligation of TU
-------------------------------
Electric hereunder is to wheel for the Owner Trustee, on the terms and
conditions herein set forth, Power and
<PAGE>
Energy derived from the De Cordova Facility in consideration of the payment of
Wheeling Compensation. Nothing in this Agreement is intended to give the Owner
Trustee (i) any right or interest in any transmission facilities owned by TU
Electric, or (ii) any right to delivery of Power and Energy other than Power and
Energy derived from the De Cordova Facility. Nothing in this Agreement is
intended to obligate TU Electric to sell Power and Energy to any customers of
the Owner Trustee or of TU Electric.
SECTION 3.7. Third Party Transmission Service. At the request of the
--------------------------------
Owner Trustee, TU Electric (to the extent it is able to do so) shall be
responsible for making all necessary arrangements with all third parties that
are impacted by the transfer of Power and Energy generated from the De Cordova
Facility provided, that, the Owner Trustee shall be solely responsible for
--------
paying the compensation and charges ultimately determined to be payable by the
Owner Trustee and such third parties. Under no circumstances shall TU Electric
be responsible for the payment of any compensation or charge to such third
parties.
ARTICLE IV
PAYMENT
Prior to the Effective Date, the Owner Trustee shall have no
obligation whatsoever to make any payments hereunder. In addition, TU Electric
shall not be entitled to any payment in respect of any Utility Services or any
Wheeling Services or other service provided or expense incurred hereunder during
such time as there shall have occurred and be continuing a Lease Event of
Default. Upon curing any such Lease Event of Default, and so long as no other
Lease Event of Default shall have occurred and then be continuing, TU Electric
shall be entitled to all payments withheld upon such Lease Event of Default,
less any costs or damages incurred by the Owner Trustee as a result of such
Lease Event of Default.
ARTICLE V
FORCE MAJEURE
The provisions of this Agreement are subject to the following
limitations: if by reason of an act of God, fire, flood, explosion, earthquake,
strike, sabotage, pestilence, an act of the public enemy, civil or military
authority (including court orders, injunctions and orders of government agencies
of competent jurisdiction prohibiting (or the failure of any such government
agencies to issue orders permitting) acts necessary to the performance under a
relevant agreement or permitting any such act only subject to unreasonable
conditions), insurrection or riot, an act of the elements, or inability to
obtain or ship
<PAGE>
materials, equipment or fuel because of the effect of similar causes on
suppliers or carriers or any other cause or event not reasonably within its
control, TU Electric is unable in whole or in part to carry out any one or more
of its agreements or obligations contained herein, TU Electric shall not be
deemed to be in default by reason of not carrying out said agreement or
agreements or performing said obligation or obligations during the continuance
of such inability. TU Electric shall make reasonable effort to remedy with all
reasonable dispatch the cause or causes preventing it from carrying out its
agreements; provided, that the settlement of strikes, lockouts and other
industrial disturbances shall be entirely within the discretion of TU Electric,
and TU Electric 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 TU Electric unfavorable
to TU Electric. Notwithstanding any other provision of this Agreement to the
contrary, however, TU Electric shall not be excused from performance of any
obligation hereunder by reason of Force Majeure unless it shall, within 30 days
after the beginning of any such period of forced delay, have first notified the
Owner Trustee in writing.
ARTICLE VI
INDEMNITY
Each party hereto (an "Indemnitor") agrees to indemnify and hold the
other party hereto and their respective Affiliates, officers, employees, agents
and invitees, free and harmless from any Claims (other than with respect to
consequential damages), arising out of, or in any way relating to, such
Indemnitor's gross negligent act or willful misconduct with respect to the
execution and performance of this Agreement, except in any case as a result of
the negligence or bad faith of the party otherwise to be indemnified.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1. Effective Date; Term. This Agreement shall be binding
--------------------
on the parties hereto from and after the De Cordova Funding Date but the
provisions of Articles II, III and IV hereof shall only become operative on and
after the Lessor Possession Date for the De Cordova Facility (the "Effective
Date"), but without in any way affecting the respective rights and obligations
of TU Electric and the Owner Trustee under the terms of the Lease. Nothing
herein contained shall be construed as requiring TU Electric or the Owner
Trustee to take any action in violation of, or to prevent TU Electric or the
Owner Trustee from exercising any of their respective rights under, the Lease.
<PAGE>
Prior to the Lease Termination Date for the De Cordova Facility, the duties,
responsibilities and rights of TU Electric in respect of the De Cordova Facility
shall be governed exclusively by the terms of the Lease. The term of this
Agreement shall be coextensive with the term of the De Cordova Ground Lease.
SECTION 7.2. Regulatory Authorities. The parties, in their
----------------------
performance of their obligations hereunder, shall conform to all applicable
Governmental Rules and Governmental Actions.
SECTION 7.3. Accounting and Reports. TU Electric shall at all times
----------------------
maintain, or cause to be maintained, books of account containing detailed
entries of all expenditures relating to the De Cordova Facility. All accounting
with respect to the De Cordova Facility shall be in accordance with the
customary practices of the electric utility industry. Such books shall be made
available to any of Owner Participant, Owner Trustee or their respective agents,
employees and advisors upon 30 days' notice at the offices of TU Electric or the
operator of the De Cordova Facility at all reasonable times for inspection,
reproduction and audit.
SECTION 7.4. Notices. Unless otherwise specifically provided for
-------
herein, all notices, consents, directions, approvals, instructions, requests and
other communications required or permitted by the terms hereof to be given to
any Person shall be in writing and shall be given in person or by means of
telex, telecopy, or other wire transmission (with request for assurance of
receipt in a manner typical with respect to communications of that type) or
mailed by first class mail, addressed as follows: (i) if to Owner Trustee, to
The Connecticut National Bank, 777 Main Street, Hartford, Connecticut 06115,
Attention: Corporate Trust Administration, and (ii) if to TU Electric, to the
Texas Utilities Electric Company, 2001 Bryan Tower, Dallas, Texas 75201,
Attention: Principal Financial Officer or in each case at such other address as
such party shall from time to time designate in writing to such other party. All
such communications shall be effective on the date of receipt (or when
proffered, if receipt is not accepted) (in the case of any such notice sent by
hand, by courier service, by registered or certified mail or by any other means
requiring receipt of delivery, the receipt therefor, executed on behalf of the
recipient at the recipient's address, shall be conclusive evidence of receipt
thereof on the date indicated on such receipt).
SECTION 7.5. Nature of Obligations. Nothing herein contained shall
---------------------
be construed to create an association, joint venture or partnership, or impose a
partnership duty, obligation or liability on or with regard to any of the
parties. No party shall have the right or authority to bind another party
without its express written consent, except as may be expressly provided
<PAGE>
in this Agreement or other agreements contemplated hereby. Nothing herein
contained shall be construed to limit any right to which a party may otherwise
be entitled under law or equity.
SECTION 7.6. Successor and Assigns. This Agreement shall be binding
---------------------
upon and inure to the benefit of TU Electric and Owner Trustee and their
respective successors and assigns; provided, however, that TU Electric shall not
-------- -------
assign its rights or delegate its duties hereunder, or any part thereof, without
the prior written consent of the Owner Trustee which consent shall not be
unreasonably withheld. The terms and provisions contained in this Agreement are
for the sole benefit of the parties hereto and their respective successors and
permitted assigns and shall not be construed to confer any right or to avail any
remedy to any other Person.
SECTION 7.7. Successor Owner Trustees. Each time a successor Owner
------------------------
Trustee is appointed in accordance with the terms of the Trust Agreement, such
successor Owner Trustee shall, without further act, succeed to all rights,
duties, immunities and obligations of the predecessor Owner Trustee hereunder
and the predecessor Owner Trustee shall be released from all further duties and
obligations hereunder, all without the necessity of any consent or approval by
TU Electric and without in any way altering the terms of this Agreement or the
rights or obligations of Owner Trustee hereunder. TU Electric shall at its own
expense or, after the Effective Date, at the expense of the Owner Trustee, upon
receipt of written notice of the appointment of a successor Owner Trustee under
the Trust Agreement, promptly make such modifications and changes to reflect
such appointment as shall be reasonably requested by such successor Owner
Trustee in any insurance policies, schedules, certificates and other instruments
relating to the De Cordova Facility or this Agreement all in form and substance
satisfactory to such successor Owner Trustee.
SECTION 7.8. Consent to Assignment for SecuritY Purposes. In order
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to secure the indebtedness evidenced by the Bonds and certain other obligations
as provided in the Indenture, the Indenture provides, among other things, for
the assignment by Owner Trustee to Indenture Trustee of its right, title and
interest in, to and under this Agreement, to the extent set forth in the
Indenture, and for the creation of a mortgage lien on and security interest in
the De Cordova Facility in favor of Indenture Trustee. TU Electric hereby
consents to such assignment and to the creation of such mortgage lien and
security interest, consents to the terms and provisions thereof and (a)
acknowledges that such assignment, mortgage and security interest provide for
the exercise by Indenture Trustee of all rights of Owner. Trustee hereunder to
give any consents, approvals, waivers, notices or the like, to make any
elections, demands or the like or to take any other discretionary action
hereunder, except as specifically
<PAGE>
set forth in the Indenture, and (b) agrees that, to the extent provided in the
Indenture, Indenture Trustee shall have all the rights of Owner Trustee
hereunder as if Indenture Trustee had originally been named as a party hereto
(every reference herein to Owner Trustee being read to mean, except where the
context otherwise requires, Indenture Trustee). TU Electric will furnish to
Indenture Trustee counterparts of all notices, certificates, opinions or other
documents of any kind required to be delivered hereunder by TU Electric to Owner
Trustee. Notwithstanding the foregoing, Indenture Trustee shall have no
liability under this Agreement except to the extent set forth in the Indenture
and the Participation Agreement. The original counterpart number 1 of this
Agreement shall be the TU Electric "Original" of this Agreement. To the extent
that this Agreement constitutes chattel paper, as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction, no security
interest in this Agreement may be created through the transfer or possession of
any counterpart other than the "Original."
SECTION 7.9. Survival of Obligations. Except as otherwise provided
-----------------------
herein, TU Electric hereby agrees that no dispute with Owner Trustee and no
default by Owner Trustee in the performance of any of its obligations under this
Agreement or any of the Operative Documents shall give TU Electric the right to
discontinue the performance of its obligations under this Agreement, provided
that this Section 7.9 shall not be construed so as to deprive TU Electric of any
remedy available to it at law or equity.
SECTION 7.10. Amendments; Severability. This Agreement may not be
------------------------
amended, modified or otherwise altered in any manner except in writing signed by
TU Electric and Owner Trustee. In the event that any provision in this Agreement
is declared illegal or no longer in force by reason of any judgment or order
issued by a court or regulatory body of competent jurisdiction, all remaining
provisions of this Agreement not affected by such judgment or order shall
continue in full force and effect.
SECTION 7.11. Counterparts. This Agreement may be executed in any
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number of counterparts. All such counterparts shall be deemed originals and
shall constitute but one and the same instrument.
SECTION 7.12. GOVERNING LAW. THE INTERPRETATION OF THIS AGREEMENT AND
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THE RIGHTS AND OBLIGATIONS OF THE PARTIES SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT TO THE
EXTENT THAT, PURSUANT TO THE LAWS OF THE STATE OF TEXAS, THE LAWS OF TEXAS ARE
MANDATORILY APPLICABLE THERETO.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
TEXAS UTILITIES ELECTRIC COMPANY
By: /s/ M. S. Greene
----------------------------
Title: Vice President
THE CONNECTICUT NATIONAL BANK,
not in its individual capacity
but solely as owner trustee under
the Trust Agreement dated as of
December 1, 1988
By: /s/ Gilman N. Gauvin
----------------------------
Title: Vice President
<PAGE>
ACKNOWLEDGMENT
State of Texas
County of Dallas
This instrument was acknowledged before me on December 6, 1989, by
M. S. Greene, as Vice President of Texas Utilities Electric Company, a Texas
corporation, on behalf of said corporation.
/s/ Jo Macdowell
-----------------------------------
Jo Macdowell
Notary Public, State of Texas
My commission expires:
6/27/92
<PAGE>
ACKNOWLEDGMENT
State of Connecticut
County of Hartford
This instrument was acknowledged before me on November 22, 1989, by
Gilman N. Gauvin, as Vice President of The Connecticut National Bank, a national
banking association, on behalf of said association.
/s/ Debra A. Johnson
-----------------------------------
Debra A. Johnson
Notary Public, State of Connecticut
My commission expires:
March 31, 1990
