<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________________
:
In the Matter of :
:
SOUTHWESTERN ELECTRIC POWER COMPANY : CERTIFICATE
:
File No. 70-8847 : OF
:
(Public Utility Holding Company Act of 1935) : NOTIFICATION
:
_______________________________________________:
Southwestern Electric Power Company (the "Company"), an
electric utility subsidiary of Central and South West Corporation
("CSW"), hereby certifies that:
1. On June 15, 1996, the Board of Directors of the
Company authorized the execution, delivery and performance by the
Company of (i) an Installment Payment Agreement between Sabine River
Authority of Texas (the "District") and the Company, and approved
the form and provisions of a Bond Purchase Agreement between the
District and Goldman, Sachs & Co. and J.P. Morgan Securities
Incorporated (the "Underwriters").
2. On June 25, 1996, the Company approved the terms of
the Bond Purchase Agreement which provided for the purchase by the
Underwriters of $81,700,000 aggregate principal amount of the
District's Pollution Control Revenue Refunding Bonds (Southwestern
Electric Power Company Project) Series 1996 (the "Refunding Bonds")
due April 1, 2018. The Bond Purchase Agreement provided that the
Underwriter would pay the District 100% of the principal amount of
the Refunding Bonds.
3. The Installment Payment Agreement dated as of June 15,
1996, was executed by the parties thereto in the form filed herewith
as Exhibit 1(a).
4. On July 11, 1996, the District issued, sold and
delivered $81,700,000 aggregate principal amount of its Refunding
Bonds at 99.5% of their principal amount, being the price specified
in the Bond Purchase Agreement.
5. The above-described transactions have been carried out
in accordance with the terms and conditions of, and for the purposes
represented in, the Form U-1 Application-Declaration of the Company,
in File No. 70-8847, and in accordance with the terms and conditions
of the Commission's order dated June 12, 1996, permitting said
Application-Declaration to become effective.
The following exhibits (in the final form thereof in which
executed, filed or used) are filed herewith:
Exhibit 1(a) - Installment Payment Agreement, dated as
of June 15, 1996, between the Company
and the District.
Exhibit 2(a) - Indenture of Trust, dated as of June
15, 1996, between the District and the
Trustee.
Exhibit 3(a) - Bond Purchase Agreement, dated June 25,
1996, between the District and the
Underwriters.
Exhibit 4(a) - Letter of Representation, dated June
25, 1996, from the Company to the
Issuer and the Purchasers.
Exhibit 5(a) - Official Statement relating to the
Bonds, dated June 26, 1996.
Exhibit 7(a) - Final or "past tense" opinion of
Milbank, Tweed, Hadley & McCloy,
counsel to CSW and the Company.
S I G N A T U R E
- - - - - - - - -
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, as amended, the undersigned company has duly
caused this document to be signed on its behalf by the undersigned
thereunto duly authorized.
DATED:
SOUTHWESTERN ELECTRIC POWER COMPANY
By: /s/SHIRLEY S. BRIONES_
Shirley S. Briones
Treasurer
INDEX TO EXHIBITS
Exhibit Transmission
Number Exhibit Method
- ------- ------- ------------
1(a) Installment Payment Agreement, Electronic
dated as of June 15, 1996,
between the Company and the
District.
2(a) Indenture of Trust, dated as of Electronic
June 15, 1996, between the
District and the Trustee.
3(a) Bond Purchase Agreement, dated Electronic
June 25, 1996, between the
District and the Underwriters.
4(a) Letter of Representation, dated Electronic
June 25, 1996, from the Company
to the Issuer and the Purchasers.
5(a) Official Statement relating to Electronic
the Bonds, dated June 26, 1996.
7(a) Final or "past tense" opinion of Electronic
Milbank, Tweed, Hadley & McCloy,
counsel to CSW and the Company.
<PAGE>
EXHIBIT 1(a)
INSTALLMENT PAYMENT AGREEMENT
between
SABINE RIVER AUTHORITY OF TEXAS
and
SOUTHWESTERN ELECTRIC POWER COMPANY
This Installment Payment Agreement dated as of June
15, 1996 (the "Agreement"), by and between SABINE RIVER AUTHORITY OF
TEXAS (the "Issuer"), and SOUTHWESTERN ELECTRIC POWER COMPANY (the
"Company"):
W I T N E S S E T H:
GENERAL RECITALS AND FINDINGS
(a) The terms used in these recitals shall have the
meanings assigned to such terms in the Indenture of Trust dated as
of June 15, 1996, entered into by and between the Issuer and The
Bank of New York, as trustee.
(b) The Issuer is a governmental agency and body
politic and corporate of the State of Texas, created and existing as
a conservation and reclamation district and political subdivision of
the State of Texas pursuant to Article XVI, Section 59 of the Texas
Constitution, and the laws of the State of Texas, particularly the
Issuer Act; and the Company is a corporation organized and existing
under and by virtue of the laws of the State of Delaware; and
(c) Pursuant to law, and particularly the Issuer
Act, Article 717k, Article 717q, Chapter 383, and Chapter 30, the
Issuer, being a "river authority" as defined in Chapter 383 and
Chapter 30 and being an "issuer" as defined in Article 717k and
Article 717q, is empowered to acquire, construct, and improve
various air and water pollution control facilities, and to issue
revenue bonds for such purpose and for the purpose of refunding any
such bonds or obligations issued for such purposes; and
(d) The Issuer and the Company have previously
entered into the Prior Agreement pursuant to which the Prior Bonds
were issued; and
(e) The Issuer entered into the Prior Indenture to
secure the Prior Bonds; and
(f) Pursuant to the terms of the Prior Agreement,
the Company is obligated to pay certain installment sale payments
with respect to the Project, which payments shall be made in amounts
which, together with other moneys available therefor will be
sufficient to pay the principal of, redemption premium, if any, and
interest on the Prior Bonds as the same come due, with such payments
to be made in funds which will be immediately available on the date
such principal of, redemption premium, if any, and interest is due
on such Prior Bonds; and
(g) The Company has requested that the Issuer issue
its revenue bonds for the purpose of refunding and retiring all of
the outstanding Prior Bonds; and
(h) The Company has agreed to make payments here-
under in lieu of its obligations under the Prior Agreement; and
(i) This Agreement is authorized and executed
pursuant to applicable laws, including the Acts; and
(j) The Issuer and the Company have taken all action
and have complied with all provisions of law with respect to the
execution, delivery and performance of this Agreement and the due
authorization of the consummation of the transactions contemplated
hereby.
NOW, THEREFORE, in consideration of the covenants and
agreements herein made, and subject to the conditions herein set
forth, the Issuer and the Company contract and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. CAPITALIZED TERMS USED BUT NOT
OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS ASSIGNED TO SUCH
TERMS IN THE INDENTURE OF TRUST DATED AS OF JUNE 15, 1996, ENTERED
INTO BY AND BETWEEN THE ISSUER AND THE BANK OF NEW YORK, AS TRUSTEE
(THE "INDENTURE").
References in the singular number in this Agreement
shall be considered to include the plural, if and when appropriate.
Any times referred to herein shall be deemed to be references to New
York City time. Any accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted
accounting principles.
ARTICLE II
REPRESENTATIONS
Section 2.01. REPRESENTATIONS BY ISSUER. The Issuer makes the
following representations as the basis for the undertakings on its
part herein contained:
(a) The Issuer is a governmental agency and body
politic and corporate of the State of Texas, a "river authority"
within the definition set forth in Chapter 30 and Chapter 383 and an
"issuer" within the definition set forth in Article 717k and Article
717q.
(b) The Issuer has the legal power under the Acts to
enter into the transactions contemplated by this Agreement and to
carry out its obligations hereunder, including the issuance and
delivery of the Bonds, and to adopt and perform the Bond Resolution.
The Issuer has been duly authorized to execute and deliver this
Agreement and the Indenture, and to adopt and perform the Bond
Resolution by proper action of the Board.
(c) Based on the representations of the Company, the
Issuer officially finds and determines that the Project constitutes
"control facilities" within the meaning of Chapter 383 and "disposal
systems" within the meaning of Chapter 30 and a "public utility"
within the meaning of Article 717q.
(d) The Issuer, by carrying out the purposes of the
Acts as provided in this Agreement, will be performing an essential
public function under the Texas Constitution.
(e) The Issuer is not in default under any of the
provisions of the laws of the State which would impair, interfere
with, or otherwise adversely affect the ability of the Issuer to
make and perform the provisions of this Agreement, the Indenture, or
the Bonds.
(f) There is no litigation pending, or to the
knowledge of the Issuer threatened, in any court, either state or
federal, calling into question the creation, organization or
existence of the Issuer, the validity or enforceability of this
Agreement or the authority of the Issuer to make or perform this
Agreement, the Indenture or to issue the Bonds or to adopt or
perform the Bond Resolution.
(g) The execution and delivery of this Agreement,
the Indenture and the Bonds, the adoption of the Bond Resolution and
the performance of the transactions contemplated thereby will not
violate any provision of law or regulation, or of any decree, writ,
order or injunction or the organic documents of the Issuer, and will
not contravene the provisions of or constitute a default under any
agreement, indenture, bond resolution or other instrument to which
the Issuer is a party or by which the Issuer is bound.
(h) All consents, authorizatons and approvals of
governmental bodies or agencies, including the Attorney General of
the State of Texas, required in connection with the execution and
delivery of this Agreement, the Indenture and the Bonds or the
adoption of the Bond Resolution or in connection with the carrying
out by the Issuer of its obligations under this Agreement, the
Indenture, the Bonds and the Bond Resolution will be duly obtained
or waived prior to the initial delivery of the Bonds to the
purchasers thereof.
(i) All requirements and conditions specified in the
Acts and all other laws and regulations applicable to the adoption
of the Bond Resolution, the execution and delivery of this
Agreement, the Indenture and the issuance and delivery of the Bonds
will be fulfilled prior to the initial delivery of the Bonds to the
purchasers thereof.
Section 2.02. REPRESENTATIONS BY COMPANY. The Company makes the
following representations as the basis for the undertakings on its
part herein contained:
(a) The Company (i) is a corporation duly
incorporated and in good standing in the State of Delaware, (ii) is
duly qualified to transact business in the State of Texas, (iii) is
not in violation of any provision of its restated articles of
incorporation or its by-laws, (iv) has full corporate power to own
its properties and conduct its business, (v) has full legal right,
power and authority to enter into this Agreement and consummate all
transactions contemplated by this Agreement and (vi) by proper
corporate action has duly authorized the execution and delivery of
this Agreement.
(b) Neither the execution and delivery by the
Company of this Agreement nor the consummation by the Company of the
transactions contemplated by this Agreement conflicts with, will
result in a breach of or default under or will result in the
imposition of any prohibited lien on any property of the Company
pursuant to the restated articles of incorporation or by-laws of the
Company or the terms, conditions or provisions of any statute,
order, rule, regulation, agreement or instrument to which the
Company is a party or by which it is bound.
(c) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the legal,
valid and binding obligation of the Company enforceable in
accordance with its terms, except to the extent that the enforcement
thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, or other laws now or hereafter in effect
relating to or affecting creditors' rights generally, and (ii)
general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity).
(d) There is no material litigation or proceeding
pending, or to the knowledge of the Company threatened, against the
Company which could reasonably be expected to have a material
adverse effect on the validity of this Agreement or the ability of
the Company to comply with its obligations under this Agreement.
(e) The Company has requested the Issuer to refund
the Prior Bonds.
(f) The Project constitutes "control facilities"
within the meaning of Chapter 383 and "disposal systems" within the
meaning of Chapter 30 and a "public utility" within the meaning of
Article 717q.
(g) All statements of facts or other information
furnished by the Company to Bond Counsel in connection with Bond
Counsel's opinion relating to the Bonds, including particularly the
Tax Letter of Representation, were true and correct in all material
respects when made and nothing has come to the Company's attention
that would change the truth or correctness of such statements of
facts or other information furnished to Bond Counsel. Moreover, to
the extent that such representations and statements relate to future
events, the Company agrees, at all times while the Bonds are
Outstanding, to take such action to prevent, or to refrain from any
action which would result in, such representations and statements
becoming false, inaccurate or incorrect.
(h) The representations of the Company stated in the
Prior Agreement were true and correct when made and nothing has come
to the Company's attention to make such representations untrue as of
the date hereof.
ARTICLE III
THE PROJECT
Section 3.01. INTENTIONALLY OMITTED.
Section 3.02. INTENTIONALLY OMITTED.
Section 3.03. INTENTIONALLY OMITTED.
Section 3.04. MAINTENANCE AND REPAIR. All costs of operating and
maintaining the Project shall be paid by the Company, and the Issuer
shall have no obligation or liability in this regard. It is
understood and agreed that the Issuer shall have no duties or
responsibilities whatsoever with respect to the operation or main-
tenance of the Project, or the performance of the Project for its
designed purposes.
Section 3.05. RIGHT TO DISCONTINUE OPERATION OF PROJECT. Although
the Company intends to operate, or cause to be operated, the Project
for its designed purposes until the date on which no Bonds are
Outstanding, the Company is not required by this Agreement to
operate, or cause to be operated, any portion of the Project after
the Company shall deem in its discretion that such continued
operation is not advisable and in such event it is not prohibited by
this Agreement from selling, leasing or retiring all or any such
portion of the Project; provided, however, that, prior to any such
sale, lease, or retirement, the Company shall have provided to the
Issuer and the Trustee a Favorable Opinion. The net proceeds from
such sale, lease or other disposition, if any, shall belong to, and
may be used for any lawful purpose by, the Company.
Section 3.06. INSURANCE AND CONDEMNATION AWARDS. The net proceeds
of any insurance or condemnation award as a result of the
destruction or condemnation of the Project or any portion thereof
shall belong to, and may be used for any lawful purpose by, the
Company.
Section 3.07. TAXATION OF PROJECT. During the term of this
Agreement, the Company will promptly remit when due all taxes,
including specifically all sales taxes and ad valorem taxes, levied
in respect of the Project or the Installment Payments payable
hereunder to the appropriate taxing body. The Company may, at its
own expense and in its own name, in good faith contest any such
taxes, assessments and other charges and, in the event of such
contest, may permit the taxes, assessments or other charges so
contested to remain unpaid during the period of such contest and any
appeal therefrom. All taxes, assessments and other charges levied
or imposed with respect to the Project shall be the obligation of
the Company, and the Issuer shall have no obligation or liability in
this regard.
Section 3.08. ISSUER'S LIMITED LIABILITY. It is recognized that
the Issuer's only source of funds with which to carry out its
commitments under this Agreement will be from the proceeds from the
sale of the Bonds or from any available income or earnings derived
therefrom, from payment made or caused to be made by the Company
hereunder, or from any funds which otherwise might be made available
by the Company; and it is expressly agreed that the Issuer shall
have no financial liability, obligation, or responsibility with
respect to this Agreement or the Project except to the extent of
funds available from such sources.
Section 3.09. GOVERNMENTAL REGULATION. The Company recognizes and
agrees that this Agreement and the issuance of the Bonds pursuant
hereto will not diminish or limit the authority of the United States
Environmental Protection Agency, the Texas Natural Resources
Conservation Commission, the Texas Water Development Board, or any
other State agency or local governments in performing any of the
powers, functions and duties vested in such entities by federal and
state laws, and that all applicable laws shall be enforced without
regard to ownership of the Project; and that the Company will not be
relieved of any responsibility under any applicable federal or state
laws or regulations pertaining to pollution control, either now, or
during, or after the acquisition, construction and improvement of
the Project, and the Issuer shall have no responsibility or
obligation to take any action to comply with such laws or
regulations with respect to the Project.
ARTICLE IV
ISSUANCE OF BONDS; REFUNDING THE PRIOR BONDS;
PAYMENTS; DISBURSEMENTS
Section 4.01. ISSUANCE OF BONDS. In order to provide funds for the
refunding of the Prior Bonds, the Issuer, concurrently with the
execution of this Agreement, will sell, issue and deliver to the
initial purchasers thereof the Bonds, all in accordance with the
Indenture. The Issuer agrees to pay, from the proceeds from the
sale and delivery of the Bonds, or from any available income or
earnings derived therefrom, or from any funds which otherwise might
be made available to the Issuer for such purpose by the Company, the
cost of the Refunding of the Prior Bonds, to the full extent
provided in this Agreement and permitted by the Acts.
Section 4.02. BOND PROCEEDS.
(a) The Issuer shall cause to be deposited into a
separate account within the bond fund established pursuant to the
Prior Indenture proceeds from the sale of the Bonds equal to
$81,291,500, and the Company shall cause to be deposited into such
separate account the amount of $2,805,487.22, which together shall
be sufficient to pay the redemption price of and redeem all of the
Prior Bonds on August 12, 1996.
(b) The Company agrees to pay all fees, charges and
expenses of the Prior Trustee as required by the Prior Indenture.
Section 4.03. SECURITY FOR THE BONDS. The obligations of the
Company under this Agreement, including specifically the obligation
to make Installment Payments as provided in Sections 5.01, 5.03 and
5.04 hereof, shall be direct general obligations of the Company.
Prior to or simultaneously with the issuance of the Bonds, the
Issuer will assign to the Trustee under the terms of the Indenture
all of the Issuer's right, title, and interest in and to the
Installment Payments and certain other rights under this Agreement
as provided in the Indenture.
Section 4.04. BOND FUNDS. The Issuer has authorized and directed
the Trustee pursuant to the Indenture to transfer all of the
proceeds from the sale of the Bonds to the Prior Trustee, as trustee
and paying agent for the Prior Bonds. The Company agrees (i) to
direct the Prior Trustee to invest such proceeds, together with
amounts provided by the Company pursuant to Section 4.05 hereof,
only in direct obligations of the United States of America,
including obligations the principal of and interest on which are
unconditionally guaranteed by the United States of America, which
may be in book-entry form, and which mature on or before the
redemption date for the Prior Bonds and (ii) that any such funds
which cannot be so invested shall remain uninvested.
Section 4.05. COMPANY REQUIRED TO PAY IN EVENT MONIES HELD PURSUANT
TO THE PRIOR INDENTURE ARE INSUFFICIENT. The Company shall, on the
Issue Date, cause to be deposited in the bond fund for the Prior
Bonds held by the Prior Trustee monies sufficient, together with the
Bond proceeds so transferred on the Issue Date, to pay the total
redemption price of the Prior Bonds on their redemption date, plus
any fees and charges due the Prior Trustee. In the event that
monies held pursuant to the Prior Indenture are not sufficient to
accomplish the Refunding on the redemption date for the Prior Bonds,
the Company shall at its own expense and without any right of
reimbursement in respect thereof immediately pay that portion of
such costs as may be in excess of said monies.
Section 4.06. NOTICE TO BOND INSURER. The Company agrees to give
written notice to Bond Insurer not less than two days prior to any
regularly scheduled payment date for principal of or interest on the
Bonds if the Company does not intend or will be unable to make the
corresponding payment to the Trustee hereunder.
ARTICLE V
THE COMPANY'S PAYMENTS
Section 5.01. COMPANY APPROVAL OF ISSUANCE OF BONDS. (a)
Simultaneously with the authorization of this Agreement by the Board
of Directors of the Issuer, such Board has adopted the Bond Res-
olution. In consideration of the covenants and agreements set forth
in this Agreement, and to enable the Issuer to issue the Bonds to
carry out the intents and purposes hereof, this Agreement is
executed to assure the issuance of such Bonds, and to provide for
the due and punctual payment by the Company to the Issuer, or to the
Trustee under the Indenture, of amounts not less than those required
to pay, as and when due (whether at stated maturity, upon
redemption, acceleration of maturity, tender, deemed tender, or
otherwise), all of the principal of, redemption premium, if any, and
interest on, and Purchase Price of, the Bonds, and all other
payments required in connection with such Bonds, the Agreement, or
the Indenture. Each such payment is hereby designated as an
"Installment Payment", and collectively such payments are hereby
designated as "Installment Payments". The Company hereby agrees to
make, or cause to be made, each Installment Payment, as and when
due, for the benefit of the owners of the Bonds into the Bond Fund,
or, in the case of an Installment Payment in respect of Purchase
Price, into the Bond Purchase Fund, all as provided in the
Indenture.
(b) By execution and delivery of this Agreement, the
Company hereby approves the Bond Resolution and the Indenture. It
is hereby agreed that the foregoing approval of the Bond Resolution
and the Indenture constitutes the acknowledgement and agreement of
the Company that the Bonds, when issued, sold, and delivered as
provided in the Bond Resolution and the Indenture, will be issued in
accordance with and in compliance with this Agreement,
notwithstanding any other provisions of this Agreement or any other
contract or agreement to the contrary. Any Bondholder is entitled
to rely fully and unconditionally on the foregoing approval.
Notwithstanding any provisions of this Agreement or any other
contract or agreement to the contrary, the Company's approval of the
Bond Resolution and the Indenture shall be the Company's agreement
that all covenants and provisions in this Agreement and the
Indenture affecting the Company shall, upon the delivery of the
Bonds and the Indenture, become unconditional, valid, and binding
covenants and obligations of the Company so long as the Bonds and
the interest thereon are outstanding and unpaid. Particularly, the
obligation of the Company to make, promptly when due, all
Installment Payments specified in this Agreement and the Indenture
shall be absolute and unconditional, and said obligation may be
enforced as provided in this Agreement and the Indenture.
Section 5.02. REFUNDING OF BONDS. After the issuance of any Bonds,
the Issuer shall not refund any of the Bonds or change or modify the
Bonds in any way, except as provided for in the Indenture, without
the prior written approval of the Authorized Company Representative;
nor shall the Issuer redeem any Bonds prior to their scheduled
maturities except upon the request of the Authorized Company
Representative, unless such redemption is required by the Indenture.
Section 5.03. PAYMENT UPON REDEMPTION OF BONDS. The Issuer, upon
the written request of the Company (and provided that the affected
Bonds are subject to redemption or prepayment prior to maturity at
the option of the Issuer, or the Company, and provided that such
request is received in sufficient time prior to the date upon which
such redemption or prepayment is proposed), forthwith shall take or
cause to be taken all action that may be necessary under the
applicable redemption provisions of the Indenture to effect such
redemption prior to maturity, to the full extent of funds either
made available for such purpose by the Company or already on deposit
under the Indenture and available for such purpose. The redemption
of any outstanding Bonds prior to maturity at any time shall not
relieve the Company of its absolute and unconditional obligation to
pay each remaining Installment Payment with respect to any
Outstanding Bonds, as specified in the Indenture. If a redemption
of Bonds is required pursuant to the provisions of the Indenture,
the Company agrees as provided herein to forthwith make Installment
Payments sufficient to pay the principal of, premium, if any, and
interest on the Bonds.
Section 5.04. INSTALLMENT PAYMENTS. Payment of all Installment
Payments shall be made and deposited so as to fund payment on the
Bonds as required by the Indenture, including all such payments
which may come due because of the acceleration of the maturity or
maturities of the Bonds upon default, call for redemption, purchase
or deemed purchase, or otherwise, under the provisions of the
Indenture. If any available funds in excess of current requirements
are held on deposit in the Bond Fund or the Bond Purchase Fund, as
the case may be, at the time payment of any Installment Payment is
due, such payment of Installment Payment shall be reduced by the
amount of the available funds so held on deposit, to the benefit of
the Company. The Installment Payments, together with available
funds held on deposit in the Bond Fund or the Bond Purchase Fund, as
the case may be, except funds held therein for payment of matured
installments of principal on the Bonds or interest payable thereon,
shall be sufficient to pay when due all principal of, redemption
premium, if any, and interest on, and Purchase Price of, the Bonds.
The Company shall have the right to prepay or cause to be prepaid
all or a portion of each Installment Payment at any time, and shall
be obligated to do so in a timely manner if and to the extent the
Company requests redemption or prepayment of the Bonds. Any such
prepayment by the Company shall not relieve it of liability for each
remaining Installment Payment with respect to the Outstanding Bonds
except as provided in this Agreement and the Indenture. In the
event the Company should fail to make any of the payments required
in this Section 5.04, the amount so in default shall continue as an
obligation of the Company until such amount in default shall have
been fully paid. If the amount on deposit in any fund is
insufficient on any Interest Payment Date, redemption date or
Purchase Date to make timely payment due on such date, the Company
shall deposit sufficient moneys in such fund to enable timely
payment to be made on such date.
Section 5.05. PAYMENTS TO ISSUER. Out of money from the proceeds
from the sale and delivery of the Bonds or out of funds provided by
the Company, there shall be paid all of the Issuer's reasonable
actual out-of-pocket expenses and Costs of Issuance in connection
with the Bonds. In addition, the Issuer shall receive out of
proceeds of the Bonds or out of funds provided by the Company an
amount equal to 1/2 of 1% of the aggregate principal amount of the
Bonds to pay and reimburse the Issuer for its administrative and
overhead expenses directly attributable and chargeable to the
issuance of the Bonds. The Company shall pay directly to the Issuer
on or before June 15, 1997, and on or before each June 15 thereafter
while any Bonds are outstanding, an amount equal to one hundred
dollars per one million dollars (or fraction thereof) in principal
amount of the Bonds then outstanding, but with a minimum of $1000
annually, to pay and reimburse the Issuer for its annual
administrative cost, auditing costs, and paying agent or trustee
fees, attributable and chargeable to each series of Bonds; provided,
however, that such annual payment shall never exceed an amount equal
to one-eighth of one percent of the then outstanding aggregate
principal amount of Bonds.
Section 5.06. ISSUER'S RIGHTS ASSIGNED TO TRUSTEE. The Company is
advised and recognizes that as security for the payment of the
Bonds, the Issuer will assign to the Trustee the Issuer's rights
under this Agreement, including the right to receive payments
hereunder (except the right to receive payments, if any, under
Section 5.05, 6.03, and 7.03 hereof), and hereby directs the Company
to make said payments directly to the Trustee. The Company herewith
assents to such assignment and will make such payments directly to
the Trustee without defense or set-off by reason of any dispute
between the Company and the Issuer or the Trustee. All rights
against the Company arising under this Agreement or the Bond
Resolution or Indenture and assigned to the Trustee under the
Indenture may be enforced by the Trustee, or the owners of the
Bonds, to the extent provided in the Indenture, and the Trustee, or
the owners of the Bonds, shall be entitled to bring any suit,
action, or proceeding against the Company, to the extent provided in
the Bond Resolution or Indenture, for the enforcement of this
Agreement, and it shall not be necessary in any such suit, action,
or proceeding to make the Issuer a party thereto.
Section 5.07. PAYMENTS TO TRUSTEE. The Company agrees to pay (1)
the initial acceptance fee of the Trustee and reasonable costs and
expenses, including reasonable attorneys fees, incurred by the
Trustee in entering into and executing the Indenture and the
issuance of the Bonds and (2) until the principal of, premium, if
any, and interest on the Bonds shall have been fully paid or
provision for the payment thereof shall have been made in accordance
with the provisions of the Indenture, (i) the reasonable annual fee
of the Trustee for the ordinary services of the Trustee, as trustee,
rendered and its reasonable ordinary expenses incurred under the
Indenture, including reasonable attorneys fees, as and when the same
become due, (ii) the reasonable fees, charges and expenses of the
Trustee, as Bond Registrar and as Paying Agent, and any other Bond
Registrar or Paying Agent on the Bonds, as and when the same become
due, (iii) the reasonable fees, charges and expenses of the Trustee
for the necessary extraordinary services rendered by it and
extraordinary expenses incurred by it under the Indenture or this
Agreement, as and when the same become due, including reasonable
attorneys fees; provided, that the Company may, without creating a
default hereunder, contest in good faith the necessity for any such
extraordinary services and extraordinary expenses and the
reasonableness of any such fees, charges, or expenses, and (iv) the
cost of printing any Bonds required to be furnished by the Issuer.
In the event the Company should fail to make any of the payments
required in this Section 5.07, the item or installments so in
default shall continue as an obligation of the Company until the
amount in default shall have been fully paid.
Section 5.08. PAYMENT TO REMARKETING AGENT. The Company agrees to
pay to the Remarketing Agent the reasonable fees, costs and expenses
set forth in the Remarketing Agreement.
Section 5.09. COMPANY OPTION TO DESIGNATE INTEREST RATE
DETERMINATION METHODS. The Company is hereby granted the option to
designate from time to time changes in interest rate determination
methods in the manner and to the extent set forth in Section 2.02 of
the Indenture. In the event the Company elects to exercise any such
option, the Company agrees that it shall cause notices of changes in
interest rate determination methods to be given to the Issuer, the
Trustee, the Paying Agent, and the Remarketing Agent in accordance
with Section 2.02 of the Indenture.
Section 5.10. PURCHASE OF BONDS. (a) In consideration of the
issuance of the Bonds by the Issuer, but for the benefit of the
owners of the Bonds, the Company has agreed, and does hereby
covenant, to cause the necessary arrangements to be made and to be
thereafter continued whereby owners from time to time of the Bonds
may deliver Bonds for purchase and whereby such Bonds shall be so
purchased. In furtherance of the foregoing covenant of the Company,
the Issuer, at the direction of the Company, has set forth in
Section 2.10 of the Indenture the terms and conditions relating to
the delivery of Bonds by the registered holders thereof to the
Remarketing Agent for purchase and has set forth in the Indenture or
the Remarketing Agreement the duties and responsibilities of the
Remarketing Agent with respect to the purchase and remarketing of
Bonds. The Company hereby authorizes and directs the Remarketing
Agent to purchase, offer, sell, and deliver Bonds in accordance with
the provisions of Section 2.10 of the Indenture.
Without limiting the generality of the foregoing
covenant of the Company or the other provisions of this Article V,
the Company covenants, for the benefit of the owners of the Bonds,
to pay, or cause to be paid, to the Trustee such amounts as shall be
necessary to enable the Trustee to pay the Purchase Price of the
Bonds delivered to it for purchase or deemed delivered for purchase,
all as more particularly described in the Indenture; provided,
however, that the obligation of the Company to make, or cause to be
made, any such payment hereunder shall be reduced to the extent that
funds are received by the Trustee or the Paying Agent from the
remarketing of the Bonds by the Remarketing Agent or, in the event
sufficient funds are not available from such remarketing, from the
Company.
(b) The Issuer shall have no obligation or
responsibility, financial or otherwise, with respect to the purchase
of Bonds or the making or continuation of arrangements therefor
other than as expressly set forth in subsection (a) of this Section
5.10, except that the Issuer shall generally cooperate with the
Company and the Remarketing Agent as contemplated by the Indenture.
Section 5.11. USURY. Anything herein to the contrary
notwithstanding, it is the intention of the parties hereto to
conform strictly to the usury laws in force that are applicable to
this transaction. Accordingly, all agreements among the parties
hereto and beneficiaries hereof and their assigns or any of them,
whether now existing or hereafter arising, and whether written or
oral, are hereby limited so that in no contingency, whether by
reason of acceleration of amounts due hereunder or any part thereof
or otherwise, shall the interest (including all sums that are deemed
to be interest) contracted for, charged or received hereunder and/or
with respect to the refinancing of the Project exceed the maximum
amount permissible under applicable law. The parties hereto agree
that to the extent interest is payable by the Company under this
Agreement, Article 5069-1.04, Vernon's Texas Civil Statutes, as
amended, shall apply, and, to the extent Article 5069-1.04 is
applicable to this Agreement, the indicated rate ceiling thereunder
shall apply.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. EVENTS OF DEFAULT. The occurrence and continuation
of any one of the following shall constitute an "Event of Default"
under this Agreement (an "Event of Default"):
(a) failure by the Company to pay Installment
Payments with respect to principal of or premium on any Bond at the
times specified therein; or
(b) failure by the Company to pay Installment
Payments with respect to interest on any Bond at the times specified
therein and (i) if such Bond bears interest at a Flexible, Daily,
Weekly, Monthly, Quarterly or Semiannual Rate, the continuation of
such failure for a period of one Business Day or more or (ii) if
such Bond bears interest at a Multiannual or Fixed Rate, the
continuation of such failure for a period of sixty days or more; or
(c) failure by the Company to pay Installment
Payments with respect to the Purchase Price of any Bond at the times
specified therein and the continuation of such failure for a period
of one Business Day or more; or
(d) failure by the Company to observe and perform any
covenant, condition or agreement on its part required to be observed
or performed in this Agreement, other than as referred to in (a),
(b) or (c) above, for a period of 90 days after receipt by the
Company of written notice specifying such failure and requesting
that it be remedied, given to the Company by the Issuer or the
Trustee, unless the Issuer and the Trustee shall agree in writing to
an extension of such time prior to its expiration; provided, howev-
er, that if the failure stated in the notice can, in the reasonable
judgment of the Company, be corrected, but cannot be corrected
within the applicable period, the Issuer and the Trustee will not
unreasonably withhold their consent to an extension of such time if
corrective action is instituted within the applicable period and
diligently pursued until the default is corrected; or
(e) dissolution or liquidation of the Company. How-
ever, the term "dissolution or liquidation of the Company", as used
in this paragraph, shall not be construed to include the cessation
of the corporate existence of the Company resulting either from a
merger or consolidation of the Company into or with another corpora-
tion or a dissolution or liquidation of the Company following a
transfer of all or substantially all of its assets as an entirety
under the conditions permitting such actions contained in Section
7.02; or
(f) the Company shall commence a voluntary case or
other proceeding seeking liquidation, reorganization, or other
relief with respect to itself or its debts under any bankruptcy,
insolvency, or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator, cus-
todian, or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it, or shall
make a general assignment for the benefit of creditors, or shall
fail generally to pay its debts as they become due, or shall take
any corporate action to authorize any of the foregoing; or
(g) an involuntary case or other proceeding shall be
commenced against the Company seeking liquidation, reorganization,
or other relief with respect to it or its debts under any
bankruptcy, insolvency, or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of
sixty (60) days; or
(h) the occurrence of an "Event of Default" under the
Indenture.
The provisions of paragraph (d) of this Section 6.01 are subject to
the following limitations: if by reason of acts of God, strikes,
lockouts or other industrial disturbances; acts of public enemies;
orders or regulations of any kind of the government of the United
States of America or of the State of Texas or any of their
departments, agencies, political subdivisions, or officials, or any
civil military authority; insurrections; riots; epidemics; land-
slides; lightning; earthquakes; tidal waves; fires; hurricanes;
tornadoes; blue northers; other storms; floods; washouts; droughts;
arrests; restraints of government and people; civil disturbances;
explosions; breakage or accident to machinery, transmission pipes,
transmission facilities or canals; partial or entire failure of
utilities; shortages of labor, material, supplies or
transportation; or any other cause or event not reasonably within
the control of the Company (collectively, "events of force
majeure"), the Company is unable in whole or in part to carry out
the agreements on the Company's part herein contained, the Company
shall not be deemed in default during the continuance of such
inability. The Company, however, will use its best efforts to
remedy with all reasonable dispatch the cause or causes preventing
the Company from carrying out such agreements; provided, that the
settlement of strikes, lockouts and other industrial disturbances
shall be entirely within the discretion of the Company, and the Com-
pany shall not be required to make settlement of strikes, lockouts,
and other industrial disturbances by acceding to the demands of the
opposing party or parties when such course is, in the judgment of
the Company, unfavorable to the Company. The occurrence of any
event of force majeure shall not suspend or otherwise abate, and the
Company shall not be relieved from, any obligation under this
Agreement to the extent that the failure of the Company to observe
or perform any such obligation would result in the failure to pay
when due the principal of, premium, if any, and interest on the
Bonds or would result in the interest on any Bonds becoming
includable in the gross income of the owners thereof for federal
income tax purposes.
The above provisions, however, are subject to the
condition that, after any such Event of Default, subject to and as
provided in Article VI of the Indenture, the Trustee may waive such
Event of Default and rescind and annul any remedial step theretofore
taken by it or by the Issuer with respect to such default and its
consequences; but no such waiver, rescission or annulment shall
extend to or affect any subsequent default or impair any right or
remedy consequent thereon.
Section 6.02. REMEDIES ON DEFAULT. Whenever any Event of Default
shall have occurred and is continuing, the Issuer, with the consent
of the Trustee, or the Trustee may take any one or more of the
following remedial steps, but only if acceleration of the principal
amount of the Bonds has been declared pursuant to Section 6.02 of
the Indenture:
(a) By notice in writing to the Company, declare the
unpaid Installment Payments to be due and payable immediately, if
concurrently with or prior to such notice the unpaid principal
amount of the Bonds has been declared to be due and payable under
the Indenture, and upon any such declaration the amounts payable
under Sections 5.01 and 5.04 hereof shall become and shall be
immediately due and payable in the amount set forth in Section 6.02
of the Indenture; provided, however, that an Event of Default shall
be deemed waived and a declaration accelerating payment of unpaid
Installment Payments payable under this Agreement shall be deemed
rescinded without further action on the part of the Trustee or the
Issuer upon any rescission by the Trustee of the corresponding
declaration of acceleration of the Bonds under Section 6.02 of the
Indenture.
(b) Whatever action at law or in equity may appear
necessary or desirable to collect the payment and other amounts then
due or to enforce performance and observance of any obligation,
agreement or covenant of the Company under this Agreement.
In case the Issuer, with the consent of the Trustee,
or the Trustee shall have proceeded to enforce its rights under this
Agreement and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to
the Issuer and/or the Trustee, then and in every such case the
Issuer, the Company and the Trustee shall be restored respectively
to their several positions and rights hereunder, and all rights,
remedies and powers of the Issuer, the Company and the Trustee shall
continue as though no such proceeding had been taken.
The Company covenants that, in case an Event of
Default shall occur with respect to the payment of any Installment
Payment payable under Sections 5.01 and 5.04 hereof, then, upon
demand of the Trustee, the Company will pay to the Trustee the whole
amount that then shall have become due and payable under said
Sections 5.01 and 5.04, with interest (to the extent permitted by
law) on such amount at the rate of interest borne by the Bonds at
the time of such failure from the due date thereof until paid.
In case the Company shall fail forthwith to pay such
amounts upon such demand, the Trustee shall be entitled and
empowered to institute any action or proceeding at law or in equity
for the collection of the sums so due and unpaid, and may prosecute
any such action or proceeding to judgment or final decree, and may
enforce any such judgment or final decree against the Company and
collect in the manner provided by law out of the property of the
Company, the moneys adjudged or decreed to be payable.
The remedies for any "Event of Default" under the
Indenture shall be as specified in Article VI of the Indenture and
are in addition to any remedies hereunder.
In acting or omitting to act pursuant to the
provisions of this Agreement, the Trustee shall be entitled to all
of the rights, protections and immunities accorded to the Trustee
under the terms of the Indenture, including but not limited to those
set out in Article VII thereof.
Section 6.03. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In
the event the Company defaults under any of the provisions of this
Agreement and the Issuer or the Trustee employs attorneys or incurs
other expenses for the collection of the payments due under this
Agreement or the enforcement of performance or observance of any
obligation or agreement on the part of the Company herein contained,
the Company agrees that it will on demand therefor, and upon
presentation of an itemized bill, pay to the Issuer or the Trustee
the reasonable fees of such attorneys and such other expenses so
incurred by the Issuer or the Trustee; provided, however, the
Company, without creating a default hereunder or under the
Indenture, may contest in good faith the necessity for and the
reasonableness of any such fees and expenses of the Trustee.
ARTICLE VII
SPECIAL COVENANTS
Section 7.01. NO DEFENSE OR SET-OFF; UNCONDITIONAL OBLIGATION. The
obligations of the Company to make the payments required by this
Agreement and to perform and observe the other agreements on its
part contained herein shall be absolute and unconditional,
irrespective of any defense or any rights of set-off, recoupment or
counterclaim it might otherwise have against the Issuer or any other
person, and the Company shall pay during the term of this Agreement
the payments to be made as prescribed in Sections 5.01, 5.03, 5.04,
5.05 or 5.10 and all other payments required hereunder free of any
deductions and without abatement, diminution or set-off; and until
such time as the principal of, premium, if any, and interest on the
Bonds shall have been fully paid, or provision for the payment
thereof shall have been made in accordance with the Indenture, the
Company: (i) will not suspend or discontinue any payments provided
for in Sections 5.01, 5.03, 5.04, 5.05 or 5.10 hereof; (ii) will
perform and observe all of its other agreements contained in this
Agreement; and (iii) except as permitted herein, will not terminate
this Agreement for any cause, including, without limiting the
generality of the foregoing, failure of the Company to use the
Project, destruction of or damage to the Project, commercial
frustration of purpose, any change in the tax laws of the United
States of America or of the State or any political subdivision of
either of these, or any failure of the Issuer or the Trustee to
perform and observe any agreement, whether express or implied, or
any duty, liability or obligation arising out of or connected with
this Agreement or the Indenture, except to the extent permitted by
this Agreement. Nothing contained in this Section shall be
construed to relieve the Issuer or the Trustee from the performance
of any agreements on their respective parts contained herein and the
Company shall be entitled to institute such action against the
Issuer or the Trustee as the Company shall deem appropriate to
compel performance of any such agreement, duty or obligation;
provided, however, that the Issuer shall not be required to carry
out any such agreement, duty or obligation unless it is reimbursed
for its costs and expenses and no agreement, duty or obligation of
the Issuer shall arise out of this Agreement other than as
specifically set forth herein.
Section 7.02. CORPORATE EXISTENCE. The Company agrees that it will
not dispose of all or substantially all of its assets as an entirety
(whether by liquidation, dissolution, or otherwise) and will not
consolidate with or merge into another corporation, or permit one or
more corporations to consolidate with or merge into it, unless the
resulting, surviving, or transferee corporation, as the case may be,
if other than the Company, irrevocably and unconditionally assumes,
in an instrument delivered to the Issuer and to the Trustee, the due
and punctual performance of the obligations of the Company under
this Agreement. Upon the delivery of such instrument, the Company
shall thereupon be relieved of any further obligation or liability
under this Agreement or with respect to the Bonds; and the
resulting, surviving, or transferee corporation, as the case may be,
shall succeed to and be substituted for the Company under this
Agreement with the same effect as if such resulting or surviving
corporation or transferee had been named herein as the Company. If
consolidation, merger, or sale, or other transfer is made as
provided in this Section 7.02, the provisions of this Section 7.02
shall continue in full force and effect and no further
consolidation, merger, or sale or other transfer shall be made
except in compliance with the provisions of this Section 7.02.
Section 7.03. INDEMNITIES. The Company releases the Issuer, its
officers, directors, employees, agents, and attorneys (collectively,
the "Indemnified Parties") from, and the Indemnified Parties shall
not be liable for, and the Company agrees, and shall be liable to
protect, indemnify, defend, and hold the Indemnified Parties
harmless from any and all liability, cost, expense, damage, or loss
of whatever nature (including, but not limited to, attorneys' fees,
litigation and court costs, amounts paid in settlement, and amounts
paid to discharge judgments) directly or indirectly resulting from,
arising out of, in connection with, or related to (i) the issuance,
offering, sale or delivery of the Bonds, the Indenture, this
Agreement, and the obligations imposed on Issuer hereby and thereby;
or the design, construction, installation, operation, use, occup-
ancy, maintenance, or ownership of the Project; (ii) any written
statements or representations made or given by the Company, or any
of its officers or employees, to the Indemnified Parties, the
Trustee, or any underwriters or purchasers of any of the Bonds, with
respect to the Issuer, the Company, the Project, or the Bonds,
including, but not limited to, statements or representations of
facts, financial information, or corporate affairs; (iii) damage to
property or any injury to or death of any person that may be
occasioned by any cause whatsoever pertaining to the Project; and
(iv) any loss or damage incurred by the Issuer as a result of viol-
ation by the Company of the provisions of the Prior Agreement or
Section 7.04 or 7.05 hereof. The provisions of the preceding
sentence shall remain and be in full force and effect even if any
such liability, cost, expense, damage, or loss or claim therefor by
any person, directly or indirectly results from, arises out of, or
relates to or is asserted to have resulted from, arisen out of, or
related to, in whole or in part, one or more negligent acts or
omissions of the Issuer or its officers, directors, employees,
agents, servants, or any other party acting for or on behalf of the
Issuer in connection with the matters set forth in clauses (i)
through (iv) of said sentence.
Section 7.04. TAX-EXEMPT STATUS OF THE BONDS. It is the intention
of the Company and the Issuer that the interest on the Bonds be
excludable from the gross income of the holders thereof for federal
income tax purposes, except for any Bond for any period that such
Bond is owned by a person who is a "substantial user" of the Project
or a "related person" within the meaning of Section 103(b)(13) of
the Internal Revenue Code of 1954 (the "1954 Code"). To that end,
the Company and the Issuer (to the extent reasonably within the
control of the Issuer) covenant with each other, and with the
Trustee for the benefit of the Bondholders, to refrain from any
action which would adversely affect, and to take such action to
assure, the treatment of the Bonds as obligations described in
Section 103 (a) of the Code, the interest on which is not includable
in the "gross income" of the holder (other than the income of a
"substantial user" of the Projector a "related person" within the
meaning of Section 103(b)(13) of the 1954 Code) for purposes of
federal income taxation. Furthermore, the Company hereby covenants
as follows:
(a) to use all of the proceeds of the Bonds for the
payment of principal on the Prior Bonds;
(b) to refrain from using the facilities constituting
the Project in a manner that would result in the Bonds not being
"exempt facility bonds" within the meaning of Section 103(b)(4) of
the 1954 Code.
(c) to refrain from taking any action that would
result in the Bonds being "federally guaranteed" within the meaning
of Section 149(b) of the Code;
(d) to refrain from using any portion of the proceeds
of the Bonds, directly or indirectly, to acquire or to replace funds
which were used, directly or indirectly, to acquire investment
property (as defined in Section 148(b)(2) of the Code) which
produces a materially higher Yield over the term of the Bonds than
the Yield on the Bonds, other than investment property acquired with
- --
(1) proceeds of the Bonds invested for a period of
90 days or less until such proceeds are needed for the purpose for
which the Bonds are issued,
(2) amounts invested in a bona fide debt service
fund, within the meaning of Section 1.148-1 of the Regulations, and
(3) amounts deposited in any reasonably required
reserve or replacement fund to the extent such amounts do not exceed
10 percent of the proceeds of the Bonds and to the extent that at no
time during any bond year will the aggregate amount so invested
exceed 150 percent of debt service on the Bonds for such year;
(e) to otherwise restrict the use or investment of
the proceeds of the Bonds or amounts treated as proceeds of the
Bonds, as may be necessary, to satisfy the requirements of Section
148 of the Code (relating to arbitrage);
(f) to provide to the Trustee, at such time as
required by the Trustee, all information required by the Trustee
with respect to Nonpurpose Investments not held in any fund under
the Indenture; and
(g) to use no more than 2 percent of the gross
proceeds of the Bonds for the payment of costs of issuance.
The terms Nonpurpose Investments, Excess Earnings,
and Yield shall have the meanings given to such terms in section 148
of the Code and the Regulations promulgated pursuant to such
section.
It is the understanding of the Issuer and the Company
that the covenants contained herein are intended to assure
compliance with the Code and any regulations or rulings promulgated
by the United States Department of the Treasury pursuant thereto.
In the event that regulations or rulings are hereafter promulgated
which modify or expand provisions of the Code, as applicable to the
Bonds, the Issuer and the Company will not be required to comply
with any covenant contained herein to the extent that such failure
to comply, in the opinion of Bond Counsel delivered to the Issuer,
the Company, and the Trustee, will not adversely affect the
exclusion of interest on the Bonds from the gross income of the
owners of the Bonds for federal income tax purposes under Section
103 of the Code. In the event that regulations or rulings are
hereafter promulgated which impose additional requirements which are
applicable to the Bonds, the Company and the Issuer agree to comply
with the additional requirements to the extent necessary, in the
opinion of Bond Counsel delivered to the Issuer, the Company, and
the Trustee, to preserve the exclusion of interest on the Bonds from
the gross income of the owners of the Bonds for federal income tax
purposes under Section 103 of the Code. In furtherance of such
intention, the Issuer hereby authorizes and directs its Executive
Vice President and General Manager to execute any documents,
certificates or reports required by the Code and to make such
elections, on behalf of the Issuer, which may be permitted by the
Code as are consistent with the purpose for the issuance of the
Bonds.
Section 7.05. ARBITRAGE COVENANTS. The Issuer and the Company
covenant and agree, for the benefit of the Trustee and the owners of
the Bonds, that they will not knowingly take any action or omit from
taking any action within their respective control, which would
result in a loss of the exemption from federal income taxation of
interest on the Bonds by virtue of the Bonds being considered
"arbitrage bonds" within the meaning of Section 148 of the Code.
Section 7.06. PAYMENT TO REBATE FUND. The Company hereby covenants
and agrees to make the determinations and to pay any deficiency in
the Rebate Fund, at the times and as described in Section 4.10 of
the Indenture. In any event, if the amount of cash held in the
Rebate Fund shall be insufficient to permit the Trustee to make
payment to the United States of any amount due under
Section 148(f)(2) of the Code, the Company forthwith shall pay the
amount of such insufficiency on such date to the Trustee in
immediately available funds. The obligations of the Company under
this Section 7.06 are direct obligations of the Company, acting
under the authorization of, and on behalf of, the Issuer and the
Issuer shall have no further obligation or duty with respect to the
Rebate Fund.
Section 7.07. QUALIFICATION IN TEXAS. The Company agrees that, so
long as it owns and operates the Project, it will be incorporated
under the laws of the State or will be qualified to do business in
the State.
Section 7.08. RECORDATION. The Company agrees that it will record
and file any of the financing statements and all supplements
thereto, and such other instruments as may be required from time to
time to be recorded or filed, in such manner and in such places as
from time to time may be required by law in order fully to preserve
and protect the securities of the Owners of the Bonds and the rights
of the Trustee hereunder and under the Indenture.
Section 7.09. NO PERSONAL LIABILITY. No officer, employee,
representative, or agent of the Issuer or the Company shall be
personally liable on this Agreement.
Section 7.10. COMPLIANCE WITH RULE 15C2-12. The Company hereby
agrees that it will comply with and perform its duties under the
Rule 15c2-12 Undertakings dated as of June 15, 1996 and attached to
this Agreement as Exhibit A and that the Issuer shall have no
responsibility or obligation with respect to compliance with Rule
15c2-12.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. GENERAL PROVISIONS. (a) The terms of this Agreement
may be enforced as to one or more breaches either separately or
cumulatively.
(b) No remedy conferred upon or reserved to the
Issuer, the Company, the Trustee, or the owners of the Bonds in this
Agreement is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy now or hereafter existing
at law or in equity or by statute. No delay or omission to exercise
any right or power accruing upon any default, omission, or failure
of performance hereunder shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right and
power may be exercised from time to time and as often as may be
deemed expedient. In the event any provision contained in this
Agreement should be breached by the Issuer or the Company and
thereafter duly waived, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any
other breach of this Agreement. No waiver by either party of any
breach by the other party of any of the provisions of this Agreement
shall be construed as a waiver of any subsequent breach, whether of
the same or of a different provision of this Agreement.
(c) Headings of the Sections of this Agreement have
been inserted for convenience of reference only and in no way shall
they affect the interpretation of any of the provisions of this
Agreement.
(d) This Agreement is made for the exclusive benefit
of the Issuer, the Bond Insurer, the Trustee, the owners of the
Bonds and the Company, and their respective successors and assigns
herein permitted, and not for any third party or parties; and
nothing in this Agreement, expressed or implied, is intended to
confer upon any party or parties other than the Issuer, the Trustee,
the owners of the Bonds and the Company, and their respective
successors and assigns herein permitted, any rights or remedies
under or by reason of this Agreement. In particular, but not by way
of limitation, the Trustee shall be a third-party beneficiary for
purposes of enforcing its rights and the Company's obligations under
Sections 5.07 and 7.03 of this Agreement as fully as if the Trustee
had been a party in privity of contract with the Company hereunder.
Section 8.02. INTENTIONALLY OMITTED.
Section 8.03. AMENDMENT OF AGREEMENT. No amendment, change,
addition to, or waiver of any of the provisions of this Agreement
shall be binding upon the parties hereto unless in writing signed by
the Authorized Company Representative and the Authorized Issuer
Representative and in compliance with Sections 9.05 and 9.06 of the
Indenture. A copy of any such amendment, change, addition to, or
waiver shall be provided to the Trustee. Notwithstanding any of the
foregoing or anything in the Indenture to the contrary, it is
covenanted and agreed, for the benefit of the holders of the Bonds
and the Trustee, that the provisions of this Agreement shall not be
amended, changed, added to, or waived in any way which would
relieve, reduce or abrogate the obligations of the Company to make
or pay, or cause to be made or paid, when due, any and all Install-
ment Payments with respect to any then Outstanding Bonds, in the
manner and under the terms and conditions provided herein and in the
Bond Resolution or Indenture, or which would change or affect
Article II, Sections 5.01, 5.03, 5.04, 5.05, 5.06, 5.10, 6.01, 7.01,
7.02, 8.03, or 8.04 hereof or the provisions of this sentence
unless, in the judgment of the Trustee, such change or amendment
would not materially adversely affect the interests of the
Bondholders.
Section 8.04. ASSIGNMENT. The Company may assign its interest in
this Agreement in whole or in part, provided, however, no such
assignment shall relieve the Company from primary liability for any
of its obligations hereunder, and without limiting the generality of
the foregoing, in the event of any such assignment, the Company
shall continue to remain primarily liable for its payments specified
herein and for performance and observance of the other covenants and
agreements on its part herein provided. In addition, the Company
may also assign its interest in this Agreement in connection with a
consolidation with or merger into another domestic corporation, or
the sale or transfer of all or substantially all of its assets as an
entirety to another domestic corporation, if such transaction
complies with the requirements of Section 7.02 hereof. Anything in
this Agreement notwithstanding, no assignment of the Company's
interest in this Agreement shall be effective unless the Company
shall, on or prior to the effective date of any such assignment,
furnish or cause to be furnished to the Issuer and the Trustee
notice of such assignment, together with a Favorable Opinion.
Section 8.05. TERM OF AGREEMENT. The term of this Agreement shall
be from the date hereof until all payments and indemnities required
to be made by the Company pursuant hereto shall have been made.
Section 8.06. NOTICES. Any notice, request or other communication
under this Agreement shall be given in writing and shall be deemed
to have been given by either party to the other party at the
addresses shown below upon any of the following dates:
(a) The date of notice by Electronic Notice;
(b) Three Business Days after the date of the mailing
thereof, as shown by the post office receipt if mailed to the other
party hereto by registered or certified mail;
(c) The date of the receipt thereof by such other
party if not given pursuant to (a) or (b) above.
The address for notice for each of the parties shall
be as follows:
Sabine River Authority of Texas
P. O. Box 579
12777 Highway 87 N
Orange, Texas 77630
Attention: Executive Vice President and
General Manager
Telephone No.: (409) 746-2192
Telecopy No.: (409) 746-3780
Southwestern Electric Power Company
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone No.: (214) 777-1205
Telecopy No.: (214) 777-1223
or the latest address specified by such other party
in writing.
Any notice given hereunder shall also be given to the
Bond Insurer at its address set forth in Section 9.07(g) of the
Indenture.
Section 8.07. SEVERABILITY. If any clause, provision or Section
of this Agreement should be held illegal or invalid by any court,
the invalidity of such clause, provision or Section shall not affect
any of the remaining clauses, provisions or Sections hereof and this
Agreement shall be construed and enforced as if such illegal or
invalid clause, provision or Section had not been contained herein.
In case any agreement or obligation contained in this Agreement
should be held to be in violation of law, then such agreement or
obligation shall be deemed to be the agreement or obligation of the
Company or the Issuer, as the case may be, to the full extent
permitted by law.
Section 8.08. EXECUTION OF COUNTERPARTS. This Agreement may be
simultaneously executed in several counterparts, each of which shall
be an original and all of which shall constitute but one and the
same instrument.
Section 8.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
EXCLUSIVELY BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS
OF THE STATE OF TEXAS. VENUE FOR ANY ACTIONS BROUGHT HEREUNDER TO
WHICH THE ISSUER IS A PARTY SHALL LIE IN ORANGE COUNTY, TEXAS.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be signed in multiple counterparts, each of which
shall be considered an original for all purposes, as of the day and
year first set out above.
SABINE RIVER AUTHORITY OF TEXAS
By:______________________________
President
ATTEST:
_____________________________________
Secretary
(SEAL)
APPROVED:
_____________________________________
Executive Vice President and General Manager
SOUTHWESTERN ELECTRIC POWER COMPANY
By:_______________________________
Authorized Agent
INSTALLMENT PAYMENT AGREEMENT
between
SABINE RIVER AUTHORITY OF TEXAS
and
SOUTHWESTERN ELECTRIC POWER COMPANY
Dated as of
June 15, 1996
Relating to
Sabine River Authority of Texas
Pollution Control Revenue Refunding Bonds
(Southwestern Electric Power Company Project)
Series 1996
TABLE OF CONTENTS
General Recitals and Findings. . . . . . . . . . . . . . . 1
ARTICLE I
Definitions
Section 1.01. Definitions. . . . . . . . . . . . . . . . . 2
ARTICLE II
Representations
Section 2.01. Representations by Issuer. . . . . . . . . . 3
Section 2.02. Representations by Company . . . . . . . . . 3
ARTICLE III
The Project
Section 3.01. Intentionally Omitted. . . . . . . . . . . . 5
Section 3.02. Intentionally Omitted . . . . . . . . . . . 5
Section 3.03. Intentionally Omitted. . . . . . . . . . . . 5
Section 3.04. Maintenance and Repair . . . . . . . . . . . 5
Section 3.05. Right to Discontinue Operation of Project. . 5
Section 3.06. Insurance and Condemnation Awards . . . . . 5
Section 3.07. Taxation of Project. . . . . . . . . . . . . 5
Section 3.08. Issuer's Limited Liability . . . . . . . . . 5
Section 3.09. Governmental Regulation . . . . . . . . . . 5
ARTICLE IV
Issuance of Bonds; Refunding the Prior Bonds;
Payments; Disbursements
Section 4.01. Issuance of Bonds . . . . . . . . . . . . . 6
Section 4.02. Bond Proceeds. . . . . . . . . . . . . . . . 6
Section 4.03. Security for the Bonds . . . . . . . . . . . 6
Section 4.04. Bond Funds . . . . . . . . . . . . . . . . . 6
Section 4.05. Company Required to Pay in Event Monies Held
Pursuant to the Prior Indenture are Insufficient6
Section 4.06. Notice to Bond Insurer . . . . . . . . . . . 6
ARTICLE V
The Company's Payments
Section 5.01. Company Approval of Issuance of the Bonds. . 7
Section 5.02. Refunding of Bonds . . . . . . . . . . . . . 7
Section 5.03. Payment Upon Redemption of Bonds . . . . . . 7
Section 5.04. Installment Payments . . . . . . . . . . . . 7
Section 5.05. Payments to Issuer . . . . . . . . . . . . 10
Section 5.06. Issuer's Rights Assigned to Trustee. . . . .10
Section 5.07. Payments to Trustee. . . . . . . . . . . . .10
Section 5.08. Payment to Remarketing Agent . . . . . . . .10
Section 5.09. Company Option to Designate Interest Rate
Determination Methods . . . . . . . . . . . .11
Section 5.10. Purchase of Bonds. . . . . . . . . . . . . .11
Section 5.11. Usury. . . . . . . . . . . . . . . . . . . .11
ARTICLE VI
Defaults and Remedies
Section 6.01. Events of Default. . . . . . . . . . . . . .10
Section 6.02. Remedies of Default. . . . . . . . . . . . .11
Section 6.03. Agreement to Pay Attorneys' Fees and Expenses12
ARTICLE VII
Special Covenants
Section 7.01. No Defense or Set-Off; Unconditional Obligation13
Section 7.02. Corporate Existence. . . . . . . . . . . . .13
Section 7.03. Indemnities. . . . . . . . . . . . . . . . .13
Section 7.04. Tax-Exempt Status of the Bonds . . . . . . .14
Section 7.05. Arbitrage Covenants. . . . . . . . . . . . .15
Section 7.06. Payment to Rebate Fund . . . . . . . . . . .15
Section 7.07. Qualification in Texas . . . . . . . . . . .15
Section 7.08. Recordation. . . . . . . . . . . . . . . . .15
Section 7.09. No Personal Liability. . . . . . . . . . . .15
Section 7.10. Compliance with Rule 15c2-12 . . . . . . . .15
ARTICLE VII
General Provisions
Section 8.01. General Provisions . . . . . . . . . . . . .16
Section 8.02. Intentionally Omitted. . . . . . . . . . . .16
Section 8.03. Amendment of Agreement . . . . . . . . . . .16
Section 8.04. Assignment . . . . . . . . . . . . . . . . .16
Section 8.05. Term of Agreement. . . . . . . . . . . . . .17
Section 8.06. Notices. . . . . . . . . . . . . . . . . . .17
Section 8.07. Severability . . . . . . . . . . . . . . . .17
Section 8.08. Execution of Counterparts. . . . . . . . . .17
Section 8.09. Governing Law. . . . . . . . . . . . . . . .17
Execution . . . . . . . . . . . . . . . . . . . . . . . .18
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT A
Exhibit 1
SOUTHWESTERN ELECTRIC POWER COMPANY
$81,700,000
Sabine River Authority of Texas
Pollution Control Revenue Refunding Bonds
(Southwestern Electric Power Company Project)
Series 1996
June 25, 1996
RULE 15C2-12 UNDERTAKINGS
(1) The agreements of Southwestern Electric Power Company (the "Company")
contained herein (a) are made solely for the purpose of enabling
the Underwriters as defined below) of the Sabine River Authority
of Texas Pollution Control Revenue Refunding Bonds (Southwestern
Electric Power Company Project) Series 1996 (the "Refunding
Bonds") to comply with the requirements of Rule 15c2-12(b)(5) (the
"Rule") promulgated by the Securities and Exchange Commission
("Commission") pursuant to the Securities Exchange Act of 1934, as
amended, (b) are not intended to impose obligations on the Company
that are not required by the Rule, (c) do not constitute an
acknowledgment by the Company of the validity of the Rule and (d)
are valid and binding only to the extent that the Rule is valid.
The Company expressly reserves the right to contest the validity
of all or any portion of the Rule, including, without limitation,
as a defense in any action. The Company and its officers and
directors shall have no liability by reason of any act taken or
not taken by reason of the undertakings herein except to the
extent required for the agreements contained herein to satisfy the
requirements of the Rule. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings assigned
thereto in the Bond Purchase Agreement between Sabine River
Authority of Texas (the "Issuer") and Goldman, Sachs & Co. and J.
P. Morgan Securities Inc. (the "Underwriters") pursuant to which
the Issuer has agreed to sell the Refunding Bonds to the
Underwriters.
(2) The Company agrees to provide, either directly or
indirectly through the Trustee, to each nationally recognized
municipal securities information repository ("NRMSIR") and to the
appropriate state information depository, if any, for the State of
Texas ("SID"), in each case as designated by the Commission in
accordance with the Rule, a copy of its (a) annual financial
information with respect to the fiscal year of the Company ended
December 31, 1996, and each fiscal year of the Company ending
thereafter, on or before the date 10 days following the date that
the Company is required to file its Annual Report on Form 10-K (or
any successor form) ("Form 10-K") with the Commission for such
fiscal year (or if the Company is no longer required to file its
Form 10-K with the Commission, on or before the date 100 days
following the last day of each fiscal year of the Company,
commencing with the fiscal year ending December 31, 1996) and (b)
to the extent that audited financial statements of the Company are
not submitted as part of the annual financial information, audited
financial statements of the Company, when and if available.
(3) The Company agrees to provide, either directly or
indirectly through the Trustee, to each NRMSIR or to the Municipal
Securities Rulemaking Board (the "MSRB") and to a SID, in a timely
manner, notice of any of the following events with respect to the
Refunding Bonds, if such event is material to the Company:
(a) principal and interest payment delinquencies;
(b) non-payment related defaults;
(c) unscheduled draws on debt service reservesreflecting financial
difficulties;
(d) unscheduled draws on credit enhancements reflecting
financial difficulties;
(e) substitution of credit or liquidity providers, or
their failure to perform;
(f) adverse tax opinions or events affecting the tax-
exempt status of the Refunding Bonds;
(g) modifications to rights of the holders of the
Refunding Bonds;
(h) Refunding Bond calls;
(i) defeasances;
(j) release, substitution, or sale of property securing
repayment of the Refunding Bonds; and
(k) rating changes.
(4) The Company agrees to provide, either directly or
indirectly through the Trustee, to each NRMSIR or to the MSRB and
to the SID, in a timely manner, notice of any failure of the
Company to provide the information specified in paragraph 2 on or
before the date specified in paragraph 2.
(5)Information contained in any filing by the Company
with the Commission may be filed with each NRMSIR, the MSRB and
the SID by specific cross-reference to such filing with the
Commission, to the extent consistent with the requirements of the
Rule.
(6) All obligations of the Company to provide
information pursuant to paragraph 2 and notices pursuant to
paragraphs 3 and 4 shall terminate if and when the Company is no
longer an obligated person with respect to the Refunding Bonds
within the meaning of the Rule.
(7) The Company agrees that the agreements contained
herein are for the benefit of the beneficial owners from time to
time of the Refunding Bonds and shall be enforceable by the
Trustee on behalf of such beneficial owners in accordance with the
provisions of the Indenture as well as by the beneficial owners
individually through a suit for specific performance.
(8) The Company's Form 10-K will be the financial
information and operating data required to be provided. The
financial statements will be prepared in accordance with the
accounting principles applicable to the Company's financial
information contained in its Form 10-K.
(9) Until such time as it shall be definitively
established to the contrary, the Company may assume for purposes
of the agreements contained herein:
(a) that its Form 10-K contains all of the annual
financial information and operating data required by the Rule and
the audited financial information set forth therein constitutes
all the audited financial statements required by the Rule;
(b) the phrase "adverse tax opinions or events
affecting the tax-exempt status" as used in the Rule refers to
opinions of Bond Counsel rendered to the Company and the words
"events affecting" means events transpiring in the operation of
the Company or its service area;
(c) that its Form 10-K filed hereunder need not include
exhibits thereto or documents incorporated by reference therein;
(d) the term "defaults" as used in the Rule means
Events of Default as such term is defined in the Indenture;
(e)the term "timely" as used in the Rule means the
taking of action or giving of notice within ten business days of
any event; and
(f) there are no "debt services reserves," "credit
enhancements," or "credit or liquidity providers" as such terms
are used in the Rule, except the Municipal Bond Insurance Policy.
(10) The Company reserves the right to modify from time
to time the information to be provided to each NRMSIR, the MSRB
and to SID and the format of the presentation of such information,
provided that the modified information or format is consistent
with the requirements of the Rule. If the Rule is amended to
reduce the undertakings required to be obtained from "obligated
persons," within the meaning of the Rule, from those set forth
herein, the requirements contained herein shall be deemed to be
amended to like extent. Any amendment of the requirements
contained herein must satisfy the following conditions:
(a) The amendment may only be made in connection with a
change in circumstances that arises from a change in legal
requirements, change in law, or change in the identity, nature, or
status of the obligated person, or type of business conducted;
(b) Any undertaking, as amended, would have complied
with the requirements of the Rule at the time of the primary
offering, after taking into account any amendments or
interpretations of the Rule, as well as any change in
circumstances; and
(c) The amendment does not materially impair the
interests of beneficial owners of the Refunding Bonds, as
determined either by the Trustee or Bond Counsel, or by approving
vote of the holders of the Refunding Bonds pursuant to the terms
of the Indenture.
Additionally, any annual financial information
containing amended operating data or financial information must
explain, in narrative form, the reasons for the amendment and the
impact of the change in the type of operating data or financial
information being provided.
Exhibit 1
SOUTHWESTERN ELECTRIC POWER COMPANY
$81,700,000
Sabine River Authority of Texas
Pollution Control Revenue Refunding Bonds
(Southwestern Electric Power Company Project)
Series 1996
June 25, 1996
RULE 15C2-12 UNDERTAKINGS
(1) The agreements of Southwestern Electric Power Company (the "Company")
contained herein (a) are made solely for the purpose of enabling
the Underwriters as defined below) of the Sabine River Authority
of Texas Pollution Control Revenue Refunding Bonds (Southwestern
Electric Power Company Project) Series 1996 (the "Refunding
Bonds") to comply with the requirements of Rule 15c2-12(b)(5) (the
"Rule") promulgated by the Securities and Exchange Commission
("Commission") pursuant to the Securities Exchange Act of 1934, as
amended, (b) are not intended to impose obligations on the Company
that are not required by the Rule, (c) do not constitute an
acknowledgment by the Company of the validity of the Rule and (d)
are valid and binding only to the extent that the Rule is valid.
The Company expressly reserves the right to contest the validity
of all or any portion of the Rule, including, without limitation,
as a defense in any action. The Company and its officers and
directors shall have no liability by reason of any act taken or
not taken by reason of the undertakings herein except to the
extent required for the agreements contained herein to satisfy the
requirements of the Rule. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings assigned
thereto in the Bond Purchase Agreement between Sabine River
Authority of Texas (the "Issuer") and Goldman, Sachs & Co. and J.
P. Morgan Securities Inc. (the "Underwriters") pursuant to which
the Issuer has agreed to sell the Refunding Bonds to the
Underwriters.
(2) The Company agrees to provide, either directly or
indirectly through the Trustee, to each nationally recognized
municipal securities information repository ("NRMSIR") and to the
appropriate state information depository, if any, for the State of
Texas ("SID"), in each case as designated by the Commission in
accordance with the Rule, a copy of its (a) annual financial
information with respect to the fiscal year of the Company ended
December 31, 1996, and each fiscal year of the Company ending
thereafter, on or before the date 10 days following the date that
the Company is required to file its Annual Report on Form 10-K (or
any successor form) ("Form 10-K") with the Commission for such
fiscal year (or if the Company is no longer required to file its
Form 10-K with the Commission, on or before the date 100 days
following the last day of each fiscal year of the Company,
commencing with the fiscal year ending December 31, 1996) and (b)
to the extent that audited financial statements of the Company are
not submitted as part of the annual financial information, audited
financial statements of the Company, when and if available.
(3) The Company agrees to provide, either directly or
indirectly through the Trustee, to each NRMSIR or to the Municipal
Securities Rulemaking Board (the "MSRB") and to a SID, in a timely
manner, notice of any of the following events with respect to the
Refunding Bonds, if such event is material to the Company:
(a) principal and interest payment delinquencies;
(b) non-payment related defaults;
(c) unscheduled draws on debt service reserves
reflecting financial difficulties;
(d) unscheduled draws on credit enhancements
reflecting financial difficulties;
(e) substitution of credit or liquidity providers, or
their failure to perform;
(f) adverse tax opinions or events affecting the tax-
exempt status of the Refunding Bonds;
(g) modifications to rights of the holders of the
Refunding Bonds;
(h) Refunding Bond calls;
(i) defeasances;
(j) release, substitution, or sale of property
securing repayment of the Refunding Bonds; and
(k) rating changes.
(4) The Company agrees to provide, either directly or
indirectly through the Trustee, to each NRMSIR or to the MSRB and
to the SID, in a timely manner, notice of any failure of the
Company to provide the information specified in paragraph 2 on or
before the date specified in paragraph 2.
(5) Information contained in any filing by the Company
with the Commission may be filed with each NRMSIR, the MSRB and
the SID by specific cross-reference to such filing with the
Commission, to the extent consistent with the requirements of the
Rule.
(6) All obligations of the Company to provide
information pursuant to paragraph 2 and notices pursuant to
paragraphs 3 and 4 shall terminate if and when the Company is no
longer an obligated person with respect to the Refunding Bonds
within the meaning of the Rule.
(7) The Company agrees that the agreements contained
herein are for the benefit of the beneficial owners from time to
time of the Refunding Bonds and shall be enforceable by the
Trustee on behalf of such beneficial owners in accordance with the
provisions of the Indenture as well as by the beneficial owners
individually through a suit for specific performance.
(8) The Company's Form 10-K will be the financial
information and operating data required to be provided. The
financial statements will be prepared in accordance with the
accounting principles applicable to the Company's financial
information contained in its Form 10-K.
(9) Until such time as it shall be definitively
established to the contrary, the Company may assume for purposes
of the agreements contained herein:
(a) that its Form 10-K contains all of the annual
financial information and operating data required by the Rule and
the audited financial information set forth therein constitutes
all the audited financial statements required by the Rule;
(b) the phrase "adverse tax opinions or events
affecting the tax-exempt status" as used in the Rule refers to
opinions of Bond Counsel rendered to the Company and the words
"events affecting" means events transpiring in the operation of
the Company or its service area;
(c) that its Form 10-K filed hereunder need not include
exhibits thereto or documents incorporated by reference therein;
(d) the term "defaults" as used in the Rule means
Events of Default as such term is defined in the Indenture;
(e) the term "timely" as used in the Rule means the
taking of action or giving of notice within ten business days of
any event; and
(f) there are no "debt services reserves," "credit
enhancements," or "credit or liquidity providers" as such terms
are used in the Rule, except the Municipal Bond Insurance Policy.
(10) The Company reserves the right to modify from time
to time the information to be provided to each NRMSIR, the MSRB
and to SID and the format of the presentation of such information,
provided that the modified information or format is consistent
with the requirements of the Rule. If the Rule is amended to
reduce the undertakings required to be obtained from "obligated
persons," within the meaning of the Rule, from those set forth
herein, the requirements contained herein shall be deemed to be
amended to like extent. Any amendment of the requirements
contained herein must satisfy the following conditions:
(a) The amendment may only be made in connection with a
change in circumstances that arises from a change in legal
requirements, change in law, or change in the identity, nature, or
status of the obligated person, or type of business conducted;
(b) Any undertaking, as amended, would have complied
with the requirements of the Rule at the time of the primary
offering, after taking into account any amendments or
interpretations of the Rule, as well as any change in
circumstances; and
(c) The amendment does not materially impair the
interests of beneficial owners of the Refunding Bonds, as
determined either by the Trustee or Bond Counsel, or by approving
vote of the holders of the Refunding Bonds pursuant to the terms
of the Indenture.
Additionally, any annual financial information
containing amended operating data or financial information must
explain, in narrative form, the reasons for the amendment and the
impact of the change in the type of operating data or financial
information being provided.
<PAGE>
EXHIBIT 2(a)
INDENTURE OF TRUST
This Indenture of Trust, made and entered into as of
June 15, 1996, by and between Sabine River Authority of Texas, a
governmental agency and body politic and corporate of the State of
Texas (herein called the "Issuer") created and existing as a
conservation and reclamation district and political subdivision of
the State of Texas pursuant to Article XVI, Section 59 of the
Texas Constitution and the laws of the State of Texas,
particularly Article 8280-133, Vernon's Texas Civil Statutes, as
amended (the "Issuer Act"), and The Bank of New York, a New York
banking corporation, having a principal corporate trust office in
The City of New York, New York, and being qualified to accept and
administer the trusts hereby created acting as trustee (herein
called the "Trustee")
WITNESSETH:
WHEREAS, pursuant to law, and particularly the Issuer
Act, Article 717k, Vernon's Texas Civil Statutes, as amended
("Article 717k"), Article 717q, Vernon's Texas Civil Statutes, as
amended ("Article 717q"), the Clean Air Financing Act, Chapter
383, Texas Health and Safety Code, as amended, ("Chapter 383"),
and the Regional Waste Disposal Act, Chapter 30 of the Texas Water
Code, as amended ("Chapter 30"), the Issuer, being a "river
authority" as defined in Chapter 383 and Chapter 30 and being an
"issuer" as defined in Article 717k and Article 717q, is empowered
to acquire, construct and improve various pollution control
facilities, and to issue bonds to refund and retire bonds
previously issued for such purpose;
WHEREAS, the Acts also authorize the Issuer to issue
revenue bonds to finance such projects, payable solely from the
revenues derived from payments to the Issuer by the user of the
project for the purpose of defraying the cost of financing,
acquiring, constructing or improving any project;
WHEREAS, the Issuer has previously issued its Pollution
Control Revenue Refunding Bonds (Southwestern Electric Power
Company Project) Series 1986 (the "Prior Bonds") in the original
principal amount of $81,700,000, which were issued for the purpose
of refunding certain bonds of the Issuer which were issued for the
purpose of paying a portion of the costs of acquiring,
constructing and improving certain pollution control facilities
(the "1986 Project") at the H.W. Pirkey electric generating plant
of Southwestern Electric Power Company (the "Company") in Harrison
County, Texas;
WHEREAS, the Acts empower the Issuer to issue refunding
bonds to refund all or any part of its outstanding bonds;
WHEREAS, the Company has requested that the Issuer
issue its revenue bonds to refund and retire all of the
outstanding Prior Bonds;
WHEREAS, an Installment Payment Agreement, dated as of
June 15, 1996 (hereinafter the "Agreement"), relating to the
below defined Bonds has been duly executed between the Issuer and
the Company;
WHEREAS, the recitals and provisions of the Agreement
are incorporated herein as if set forth in its entirety, and the
capitalized terms of this Indenture shall have the same meanings,
and shall be defined, as set forth in the Agreement and the Bond
Resolution (hereinafter defined);
WHEREAS, the Board of Directors of the Issuer duly
adopted a Resolution authorizing Sabine River Authority of Texas
Pollution Control Revenue Refunding Bonds (Southwestern Electric
Power Company Project) Series 1996; the execution of an Indenture
of Trust, an Installment Payment Agreement, and a Bond Purchase
Agreement; approval of an Official Statement; and other matters in
connection therewith (together with any amendment or supplement to
such resolution as authorized therein, hereinafter called the
"Bond Resolution");
WHEREAS, the Bond Resolution authorized the issuance of
Sabine River Authority of Texas Pollution Control Revenue
Refunding Bonds (Southwestern Electric Power Company Project)
Series 1996 (hereinafter called the "Bonds") for the purpose of
paying a portion of the costs of refunding the Prior Bonds, all as
authorized by the Issuer Act, Chapter 383, Chapter 30, Article
717k and Article 717q;
WHEREAS, the Bonds, and the interest thereon, are and
shall be payable from and secured by a first and superior lien on
and pledge of the payments designated as "Installment Payments" to
be made by the Company pursuant to the Agreement in amounts
sufficient to pay and redeem, and provide for the payment of the
principal of, premium, if any, and interest on, and Purchase Price
(hereinafter defined) of, the Bonds, when due, and the fees and
expenses of the Trustee and any paying agent for the Bonds, all as
required by the Bond Resolution;
WHEREAS, certified copies of the Bond Resolution have
been duly filed with the Trustee;
WHEREAS, the Trustee has agreed to accept the trusts
herein created upon the terms herein set forth; and
WHEREAS, all things necessary to make the Bonds, when
issued as provided in this Indenture, the valid, binding and legal
special obligations of the Issuer according to the import thereof,
and to constitute this Indenture a valid assignment of the amounts
pledged to the payment of the principal of, premium, if any, and
interest on, and Purchase Price of, the Bonds have been done and
performed, and the creation, execution and delivery of this
Indenture and the execution and issuance of the Bonds, subject to
the terms hereof, in all respects have been duly authorized;
NOW, THEREFORE, the Issuer, in consideration of the
premises and the acceptance by the Trustee of the trusts hereby
created, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, and in order to secure
the payment of the principal of, premium, if any, and interest on,
and Purchase Price of, the Bonds according to their tenor and
effect, and to secure the payment, performance and observance by
the Issuer of all of the covenants and obligations expressed or
implied herein and in the Bonds, does hereby irrevocably grant,
alienate, bargain, sell, convey, transfer, assign and pledge unto
the Trustee (to the extent of its legal capacity to hold the same
for the purposes hereof), and the successors in trust and assigns
of the Trustee, forever.
GRANTING CLAUSE FIRST
All right, title, and interest of the Issuer in, to and
under the Agreement (except Unassigned Rights), and all extensions
and renewals of the term thereof, if any, and to do any and all
other things which the Issuer is or may become entitled to do
under the Agreement; provided, however, that the assignment made
pursuant to this clause shall not impair or diminish any
obligation of the Issuer under the Agreement or alter the rights,
duties and obligations of the Trustee under the remaining terms of
this Indenture;
GRANTING CLAUSE SECOND
All moneys, income, revenues, issues, profits, receipts
and other amounts payable to or receivable by the Issuer under or
with respect to the Agreement, including the Installment Payments
(except Unassigned Rights);
GRANTING CLAUSE THIRD
All right, title, and interest of the Issuer in and to
all moneys and securities from time to time held by the Trustee
under the terms of this Indenture (except amounts held in the
Rebate Fund and the Bond Purchase Fund); and
GRANTING CLAUSE FOURTH
All right, title and interest of the Issuer in and to
any and all property, rights, and interest of every kind or
description which, from time to time hereafter, may be sold,
transferred, conveyed, assigned, pledged, mortgaged or delivered
to the Trustee as additional security hereunder.
TO HAVE AND TO HOLD all and singular the Trust Estate
(as hereinafter defined), whether now owned or hereafter acquired,
irrevocably unto the Trustee and its successors in trust and
assigns forever;
IN TRUST, NEVERTHELESS, upon the terms and trusts
herein set forth for the equal and proportionate benefit, security
and protection of all present and future owners of the Bonds from
time to time issued under and secured by this Indenture without
privilege, priority, or distinction as to the lien or otherwise of
any of the Bonds over any of the other Bonds;
PROVIDED, HOWEVER, that if the Issuer, its successors
or assigns, shall well and truly pay, or cause to be paid, but
only from the payments made pursuant to the Agreement, the
principal of, premium, if any, and interest on the Bonds due or to
become due thereon at the times and in the manner mentioned in the
Bonds according to the true intent and meaning thereof, and shall
cause the payments to be made on the Bonds as required under
Article IV hereof or shall provide, as permitted hereby, for the
payment thereof by depositing with the Trustee the entire amount
due or to become due thereon (or Governmental Obligations
sufficient for that purpose as provided in Article V hereof), and
shall pay or cause to be paid to the Trustee all sums of money due
or to become due to it in accordance with the terms and provisions
hereof, then upon the final payment thereof or provisions therefor
this Indenture and the rights hereby granted shall cease,
determine, and be void; otherwise this Indenture shall remain in
full force and effect.
THIS INDENTURE FURTHER WITNESSETH, and it is expressly
declared, that all Bonds issued and secured hereunder are to be
issued, authenticated and delivered, and all said property, rights
and interest, including, without limitation, the amounts hereby
assigned, are to be dealt with and disposed of under, upon and
subject to the terms, conditions, stipulations, covenants,
agreements, trusts, uses and purposes hereinafter expressed, and
that the Issuer has agreed and covenanted, and hereby does agree
and covenant, with the Trustee and with the Owners, from time to
time, of the Bonds, as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.01.Definitions. Each of the following terms shall have the
meaning assigned to it in this Section 1.01 whenever used in this Indenture,
unless the context in which such term is used clearly requires otherwise:
Acts - shall mean, collectively, the Issuer Act,
Chapter 30, Chapter 383, Article 717k and Article 717q.
Agreement - shall mean the Installment Payment
Agreement, dated as of June 15, 1996, by and between the Issuer
and the Company, including all amendments thereof or supplements
thereto.
Approval Certificate - shall mean the certificate of
the President of the Issuer approving certain terms of the Bonds.
Article 717k - shall mean Article 717k, Vernon's Texas
Civil Statutes, as amended.
Article 717q - shall mean Article 717q, Vernon's Texas
Civil Statutes, as amended.
Authorized Company Representative - shall mean such
person at the time and from time to time designated by written
certificate furnished to the Issuer and the Trustee containing the
specimen signature of such person and signed on behalf of the
Company by the Chairman of the Board of Directors, the President,
any Vice President, Treasurer or Assistant Treasurer of the
Company to act on behalf of the Company. Such certificate may
designate an alternate or alternates.
Authorized Denominations - shall mean (i) for Bonds in
the Daily or Weekly Mode, $100,000 or any integral multiple
thereof; provided that if the principal amount of Bonds in the
Daily or Weekly Mode, as the case may be, is not evenly divisible
by $100,000, then the remainder of such principal amount shall be
added to another Bond in the same Mode that is in a principal
amount of $100,000 or any integral multiple thereof, (ii) for
Bonds in the Flexible Mode, $100,000 or any integral multiple of
$1,000 in excess of $100,000, and (iii) for Bonds in the Monthly,
Quarterly, Semiannual, Multiannual or Fixed Rate Mode, $5,000 or
any integral multiple thereof.
Authorized Issuer Representative - shall mean such
person at the time and from time to time designated by written
certificate furnished to the Company and the Trustee containing
the specimen signature of such person and signed on behalf of the
Issuer by its President or Secretary. Such certificate may
designate an alternate or alternates.
Beneficial Owner - shall mean the actual purchaser of a
Bond.
Board - shall mean the lawfully qualified Board of
Directors of the Issuer.
Bond Counsel - shall mean McCall, Parkhurst & Horton
L.L.P. or such other firm of attorneys of nationally recognized
standing in the field of law relating to municipal bond law and
the exemption from federal income taxation of interest on state or
local bonds, selected by the Issuer and acceptable to the Trustee
and the Company.
Bond Fund - shall mean the fund by that name
established by Section 4.02 of this Indenture.
Bond Insurer - shall mean MBIA Insurance Corporation
and its successors and assigns.
Bond Owner, Bondowner, Owner, Bondholder, bondholder,
holder, Registered Owner or owner of the Bonds -when used with
respect to a Bond, shall mean the person or entity in whose name
such Bond shall be registered.
Bond Purchase Agreement - shall mean the Bond Purchase
Agreement dated the date of its execution between the Issuer and
the Underwriter.
Bond Purchase Fund - shall mean the fund by that name
established by Section 4.04 of this Indenture.
Bond Registrar - shall mean the Trustee or any
successor bond registrar serving as such under this Indenture.
Principal Office of the Bond Registrar shall mean the office
thereof designated in writing to the Trustee.
Bond Resolution or Resolution - shall mean the
Resolution of the Board of Directors authorizing the issuance of
the Bonds (including the Indenture prescribed and authorized to be
executed in the Bond Resolution) together with any supplemental
resolutions or amendments to the Resolution or such Indenture.
Bonds - shall mean the Sabine River Authority of Texas
Pollution Control Revenue Refunding Bonds (Southwestern Electric
Power Company Project) Series 1996, executed and delivered
pursuant hereto.
Business Day - shall mean any day on which commercial
banks located in all of the cities in which the Principal Offices
of the Trustee, the Paying Agent and the Remarketing Agent are
located are not required or authorized by law or regulation to
remain closed and on which the New York Stock Exchange is not
closed.
Chapter 30 - shall mean Chapter 30 of the Texas Water
Code, as amended.
Chapter 383 - shall mean Chapter 383 of the Texas
Health and Safety Code, as amended.
Code - shall mean the Internal Revenue Code of 1986, as
amended, and the rulings and regulations (including temporary and
proposed regulations) promulgated thereunder or, to the extent
applicable, under the Internal Revenue Code of 1954, as amended.
Company - shall mean Southwestern Electric Power
Company and any successors and assigns as permitted by Section
7.02 of the Agreement.
Company-Held Bonds - shall mean Bonds owned by or held
in the name of the Company or its designee or held by the Trustee
for the account of the Company or its designee as described in
Section 2.10(b) hereof.
Conversion or conversion - shall mean a change from
one Mode to another with respect to a Bond, and with respect to a
Bond in the Multiannual Mode, a change from one Interest Rate
Period to another.
Conversion Date - shall mean the date on which a new
Mode becomes effective with respect to a Bond, and with respect to
a Bond in the Multiannual Mode, the date on which a new Interest
Rate Period becomes effective.
Costs of Issuance - shall mean all costs and expenses
incurred by the Issuer or the Company in connection with the
issuance and sale of the Bonds, including without limitation (i)
reasonable fees and expenses of accountants, attorneys, engineers,
and financial advisors, (ii) materials, supplies, and printing and
engraving costs, (iii) recording and filing fees, (iv) rating
agency fees, and (v) the Issuer's administrative expenses as
provided in Section 5.05 of the Agreement.
Daily Mode - shall mean the Mode in which the interest
rate on the Bonds is set at the Daily Rate, all as set forth in
the form of Bond set forth in Section 2.03 hereof.
Daily Rate - shall mean the rate of interest that is
set on the Bonds by the Remarketing Agent while they are in the
Daily Mode.
Delivery Date - shall mean, with respect to a Bond
tendered for purchase, the Purchase Date or any subsequent
Business Day on which such Bond is delivered to the Paying Agent
as provided in the form of Bond.
DTC - shall mean The Depository Trust Company, New
York, New York, or any successor securities depository.
DTC Participant - shall mean any securities broker
dealer, bank, trust company, clearing corporation or other
organization with Bonds credited to an account maintained on its
behalf by DTC.
Effective Date - shall mean with respect to a Bond (a)
in the Daily, Flexible, Weekly, Monthly, Quarterly, Semiannual and
Multiannual Modes, the date on which a new Interest Rate Period
for that Bond takes effect and (b) in the Multiannual or Fixed
Rate Mode, any date on which such Bond is subject to optional
redemption pursuant to Section 2.06(b)(ii) hereof.
Electronic Notice - shall mean notice transmitted
through a time-sharing terminal, by facsimile transmission or by
telephone (promptly confirmed in writing or by facsimile
transmission).
Event of Default - used with respect to this Indenture,
shall mean any event specified in Section 6.01 of this Indenture.
Favorable Opinion - shall mean an opinion of Bond
Counsel addressed to the Issuer, the Company and the Trustee to
the effect that the action proposed to be taken is authorized or
permitted by, to the extent applicable, the Acts and this
Indenture and will not adversely affect the excludability of
interest on the Bonds from gross income of the owners thereof for
federal income tax purposes (other than as held by a "substantial
user" of the Projector a "related person" within the meaning of
the Code).
Fixed Rate - shall mean a rate of interest on a Bond
that is fixed for the remaining term of the Bond or until such
Bond is converted to a different Mode.
Fixed Rate Conversion Date - shall mean with respect to
a Bond, the date upon which the Fixed Rate first becomes effective
for the Bond, and shall mean the Issue Date if the Bonds are
initially delivered bearing interest at a Fixed Rate.
Fixed Rate Mode - shall mean the Mode in which the
interest rate on the Bonds is set at the Fixed Rate Conversion
Date until the Maturity Date or until such Bond is converted to a
different Mode.
Flexible Mode - shall mean the Mode in which the
interest rate on the Bonds is set at the Flexible Rate, all as set
forth in the form of Bond set forth in Section 2.03 hereof.
Flexible Rate - shall mean a rate of interest set by
the Remarketing Agent for periods from 1 to 270 days.
Government Obligations - shall mean direct obligations
of, or obligations the timely payment of principal of and interest
on which is fully and unconditionally guaranteed by, the United
States of America.
Indenture - shall mean this Indenture of Trust, as
originally executed and as amended, modified or supplemented
thereafter in accordance with the terms hereof.
Installment Payment - shall mean each payment required
to pay amounts due and owing on the Bonds issued pursuant to the
Agreement, as defined in Section 5.01 thereof and as provided for
in this Indenture, including the principal of, redemption premium,
if any, and interest on, and Purchase Price of, such Bonds.
Interest Accrual Date - shall mean the first day of any
Interest Rate Period and thereafter, each Interest Payment Date in
respect thereof, other than the last such Interest Payment Date.
Interest Payment Date - shall mean (i) each April 1 and
October 1 for Bonds in the Semiannual, Multiannual or Fixed Rate
Mode, (ii) the first day (which must be a Business Day) after an
Interest Rate Period for Bonds in the Flexible Mode; (iii) the
first Business Day of each calendar month for Bonds in the Daily,
Weekly or Monthly Mode; (iv) each January 1, April 1, July 1 and
October 1 for Bonds in the Quarterly Mode; and (v) the Maturity
Date.
Interest Rate Period or Rate Period - shall mean, when
used with respect to any particular rate of interest for a Bond,
the period during which such rate of interest determined for such
Bond will remain in effect as described herein. Notwithstanding
anything in this Indenture to the contrary, the Interest Rate
Period with respect to each Bond in the Flexible Mode shall end on
a day which is immediately followed by a Business Day, and, in any
event, not later than the day next preceding the Maturity Date.
Issue Date - shall mean the date on which the Bonds are
first authenticated and delivered to the initial purchasers
against payment therefor.
Issuer - shall mean Sabine River Authority of Texas, a
conservation and reclamation district and a governmental agency
and body politic and corporate of the State of Texas.
Issuer Act - shall mean Article 8280-133, Vernon's
Texas Civil Statutes, as amended.
Maturity Date - shall mean the Maturity Date as set
forth in the Approval Certificate.
Maximum Rate - shall mean a "net effective interest
rate" (as defined and calculated in accordance with the provisions
of Article 717k-2, Vernon's Texas Civil Statutes) of twelve
percent (12%) per annum.
Mode - shall mean the period for and the manner in
which the interest rates on the Bonds are set and includes the
Daily Mode, the Flexible Mode, the Weekly Mode, the Monthly Mode,
the Quarterly Mode, the Semiannual Mode, the Multiannual Mode and
the Fixed Rate Mode.
Monthly Mode - shall mean the Mode in which the
interest rate on the Bonds is set at the Monthly Rate, all as set
forth in the form of Bond set forth in Section 2.03 hereof.
Monthly Rate - shall mean the rate of interest that is
set on the Bonds while they are in the Monthly Mode.
Moody's - shall mean Moody's Investors Service, Inc.,
or any successor thereto maintaining a rating on the Bonds at the
request of the Company.
Multiannual Mode - shall mean the Mode in which the
interest rate on the Bonds is fixed for periods of one year or
multiples thereof designated by the Remarketing Agent, after
consultation with the Company, as described in the form of Bond
set forth in Section 2.03 hereof.
Multiannual Rate - shall mean the rate of interest that
is set on Bonds while they are in the Multiannual Mode.
Municipal Bond Insurance Policy - shall mean the
financial guaranty insurance policy issued by the Bond Insurer
insuring the payment when due of the principal of and interest on
the Bonds as provided therein.
Official Statement - shall mean the Official Statement
relating to the Bonds.
Outstanding, Bonds Outstanding or Bonds then
Outstanding - shall mean when used with reference to Bonds at any
date as of which the amount of Outstanding Bonds is to be
determined, means all Bonds authenticated and delivered under the
Indenture, except:
(a)Bonds canceled or delivered for cancellation at or
prior to such date;
(b)Bonds deemed to be paid pursuant to the terms of
this Indenture;
(c)Bonds in lieu of which others have been
authenticated and delivered under this Indenture;
(d)Bonds registered in the name of the Issuer;
(e)On or after any Purchase Date for Bonds, all Bonds
(or portions of Bonds) which are tendered or deemed to
have been tendered for purchase on such date, provided
that funds sufficient for such purchase are on deposit
with the Paying Agent; and
(f)For purposes of any consent, request, demand,
authorization, direction, notice, waiver or other
action to be taken by the holders of a specified
percentage of outstanding Bonds hereunder, all Bonds
held by or for the account of the Issuer or the
Company, except that for purposes of any such consent,
request, demand, authorization, direction, notice,
waiver or action the Trustee shall be obligated to
consider as not being outstanding only Bonds known by
the Trustee by actual notice thereof to be so held.
In determining whether the owners of a requisite
aggregate principal amount of Bonds outstanding have concurred in
any request, demand, authorization, direction, notice, consent or
waiver under the provisions hereof, Bonds which are held by or on
behalf of the Company or any affiliates thereof (unless all of
the Outstanding Bonds are then owned by said parties) shall be
disregarded for the purpose of any such determination.
Notwithstanding the foregoing, Bonds so owned which have been
pledged in good faith shall not be disregarded as aforesaid if the
pledgee has established to the satisfaction of the Bond Registrar
the pledgee's right so to act with respect to such Bonds and that
the pledgee is not the Company or an affiliate thereof.
Paying Agent - shall mean the Trustee or any successor
paying agent or co-paying agent serving as such under this
Indenture. Principal Office of the Paying Agent shall mean the
office thereof designated in writing to the Trustee. So long as
any Bond is Outstanding hereunder, the Paying Agent shall maintain
an office or have an agent with an office in New York City.
Permitted Investments - shall mean any of the following
obligations or securities, to the extent permitted by law, on
which the Issuer is not the obligor:
(a)Government Obligations;
(b)money market funds registered under the Investment
Company Act of 1940, whose shares are registered under
the Securities Act of 1933, and having a rating by S&P
of AAAm-G; AAAm; or AAm; and
(c)obligations or securities approved in writing by the
Bond Insurer.
Plant - shall mean the H.W. Pirkey electric generating
plant of the Company in Harrison County, Texas.
Principal Office - is defined in the definitions of
Trustee, Paying Agent, Bank, Bond Registrar and Remarketing Agent,
herein.
Prior Agreement - shall mean the Installment Sale
Agreement, dated as of October 15, 1981, between the Issuer and
the Company, as supplemented.
Prior Bonds - shall mean Sabine River Authority of
Texas Pollution Control Revenue Refunding Bonds (Southwestern
Electric Power Company Facilities) Series 1986.
Prior Indenture - shall mean the Indenture of Trust,
dated as of October 15, 1981, between the Issuer and the Prior
Trustee, as supplemented.
Prior Trustee - shall mean The Bank of New York.
Project - shall mean, collectively, the facilities, as
described more fully in Exhibit A to the Prior Agreement.
Purchase Date - shall mean the date upon which Bonds
are required to be purchased pursuant to a mandatory or optional
tender in accordance with the provisions in the forms of Bonds set
forth in Section 2.03 hereof.
Purchase Price - shall mean, with respect to a Bond on
a Purchase Date, a price equal to par plus accrued interest to the
Purchase Date; provided, that in the event that the Purchase Date
is an Interest Payment Date for such Bond and such Bond is not in
the Flexible Mode, accrued interest will be paid separately and
not as a part of the Purchase Price on such Date; and further
provided that in the event such Bond bears interest at a
Multiannual or Fixed Rate and is subject to mandatory tender on a
date on which the Bond is subject to optional redemption, Purchase
Price shall include any premium that would be payable on the
Purchase Date if such Bond were redeemed on the Purchase Date.
Quarterly Mode - shall mean the Mode in which the
interest rate on the Bonds is set at the Quarterly Rate, all as
set forth in Section 2.03 hereof.
Quarterly Rate - shall mean the rate of interest that
is set on the Bonds while they are in the Quarterly Mode.
Rating Agencies - shall mean S&P and/or Moody's,
according to which of such rating agencies then rates the Bonds;
and provided that if neither of such rating agencies then rates
the Bonds, the term "Rating Agencies" shall refer to any national
rating agency (if any), mutually acceptable to the Company and the
Remarketing Agent, which provides such rating.
Rebate Fund - shall mean the fund by that name
established in Section 4.10 hereof.
Record Date - shall mean (i) with respect to Bonds in
the Flexible Mode, the time of payment on the Interest Payment
Date; (ii) with respect to Bonds in the Daily, Weekly, Monthly,
Quarterly or Semiannual Mode, the close of business on the
Business Day preceding an Interest Payment Date; and (iii) with
respect to Bonds in the Multiannual or Fixed Rate Mode, the 15th
day of the calendar month immediately preceding any Interest
Payment Date, regardless of whether such day is a Business Day or,
in the case of an Interest Payment Date which shall not be at
least 15 days after the first day of a Quarterly, Semiannual,
Multiannual or Fixed Rate Period, the first day of such Quarterly,
Semiannual, Multiannual or Fixed Rate Period.
Refunding - shall mean the refunding of the Prior
Bonds, as described in the Agreement and this Indenture.
Registration Books - shall mean the registration
records of the Issuer, maintained by the Trustee, as registrar for
the Bonds.
Regulations - shall mean the Income Tax Regulations
promulgated pursuant to the Code or under the 1954 Code.
Remarketing Account - shall mean the special account of
that name within the Bond Purchase Fund.
Remarketing Agent - shall mean the initial and any
successor remarketing agent appointed in accordance with Article
VIII hereof. Principal Office of the Remarketing Agent shall mean
the office thereof designated in writing to the Trustee.
Remarketing Agreement - means any remarketing agreement
executed by the Company and the Remarketing Agent pursuant to
Article VIII hereof.
Remarketing Proceeds - shall mean proceeds from the
sale of the Bonds by the Remarketing Agent other than to the
Issuer or the Company.
S&P - shall mean Standard & Poor's Rating Services, a
division of McGraw Hill, Inc., or any successor thereto
maintaining a rating on the Bonds at the request of the Company.
Semiannual Mode - shall mean the Mode in which the
interest rate on the Bonds is set at the Semiannual Rate, all as
set forth in the form of Bond set forth in Section 2.03 hereof.
Semiannual Rate - shall mean the rate of interest that
is set on the Bonds while they are in the Semiannual Mode.
State - shall mean the State of Texas.
Tax Letter of Representation - shall mean the letter of
representation regarding the use of the proceeds of the Bonds and
the Prior Bonds and other facts that are within the Company's
knowledge, furnished by the Company to Bond Counsel in connection
with the issuance of the Bonds.
Tendered Bond - shall mean any Bond tendered or deemed
tendered for purchase pursuant to Sections 2.02(A)(3), 2.02(B)(3)
or (4), 2.02(C)(3) or (4), 2.02(D)(3) or (4), 2.02(E)(3) or (4),
2.02(F)(3) or (4), 2.02(G)(3) or (4) or 2.02(H)(3) hereof.
Trustee - shall mean The Bank of New York, or any
successor trustee or co-trustee serving as such under this
Indenture. Principal Office of the Trustee shall mean the
business address designated in writing to the Issuer and the
Remarketing Agent as its principal office for its duties
hereunder.
Trustee's Prime Rate - shall mean, on any day, the
lesser of (a) the corporate base rate for that day as announced by
the Trustee in its commercial banking capacity and (b) the highest
nonusurious interest rate ("Ceiling Rate") permitted for each such
day by whichever of Texas or federal laws permit the higher
nonusurious rate, stated as a rate per annum.
Trust Estate - shall mean the property conveyed to the
Trustee pursuant to the Granting Clauses of this Indenture.
Unassigned Rights - shall mean the rights of the Issuer
under Sections 5.05, 6.03 and 7.03(a) of the Agreement and the
right to receive notices thereunder.
Undelivered Bonds - shall mean Bonds which are deemed
to have been tendered as provided in the forms of the Bonds for
the Daily Mode, Flexible Mode, Weekly Mode, Monthly Mode,
Quarterly Mode, Semiannual Mode, Multiannual Mode and Fixed Rate
Mode set forth in Section 2.03 hereof.
Underwriter - shall mean, collectively, the initial
underwriters of the Bonds, Goldman, Sachs & Co. and J. P. Morgan
Securities Inc.
Weekly Mode - shall mean the Mode in which the interest
rate on the Bonds is set at the Weekly Rate, all as set forth in
the form of the Bond set forth in Section 2.03 hereof.
Weekly Rate - shall mean the rate of interest that is
set on the Bonds while they are in the Weekly Mode.
Section 1.02.Article and Section Headings. The
headings or titles of the several Articles and Sections of this
Indenture, and the Table of Contents appended hereto, are solely
for convenience of reference and shall not affect the meaning or
construction of the provisions hereof.
Section 1.03.Interpretation. The singular form of any
word used herein shall include the plural, and vice versa, if
applicable. The use of a word of any gender shall include all
genders, if applicable. This Indenture and all of the terms and
provisions hereof shall be construed so as to effectuate the
purposes contemplated hereby and to sustain the validity hereof.
All references to any person or entity defined in Section 1.01
shall be deemed to include any person or entity succeeding to the
rights, duties and obligations of such person or entity. Unless
otherwise specified herein, all references to specific times shall
be deemed to refer to New York City time.
ARTICLE II
AUTHORIZATION AND ISSUANCE OF THE BONDS
Section 2.01.Authorization of Bonds. (a) The Bonds
are hereby authorized to be issued in one series, designated
"Sabine River Authority of Texas Pollution Control Revenue
Refunding Bonds (Southwestern Electric Power Company Project)
Series 1996". The Bonds shall be issued for the purpose of
accomplishing the Refunding as provided herein and in the
Agreement. No Bonds may be issued pursuant to this Indenture in
addition to those authorized by this Section 2.01, except Bonds
issued upon transfer or exchange pursuant to Section 3.06 hereof,
temporary Bonds issued pursuant to Section 3.16 hereof,
replacement Bonds issued pursuant to Section 3.17 hereof and Bonds
issued pursuant to Section 2.09 hereof.
(b)The Bonds (i) shall be dated as provided in the
paragraph next preceding the last paragraph of this Section, (ii)
shall be in the aggregate principal amount set forth in the
Approval Certificate, (iii) shall bear interest initially in the
Mode set forth in the Approval Certificate and thereafter as set
forth in Section 2.02 and as provided in the form of the Bond,
until paid; and (iv) shall mature on the Maturity Date set forth
in the Approval Certificate.
The Bonds are subject to redemption prior to maturity
as set forth in Section 2.06 hereof.
The Bonds are issuable in the form of registered Bonds
without coupons in Authorized Denominations. The Bonds shall be
numbered from 1 upwards, provided that the number assigned to each
definitive Bond shall be prefixed by the letters "R." Temporary
Bonds shall be prefixed by the letters "TR."
Subject to the provisions related to the book-entry
only system of Section 3.07 hereof, principal of, and premium, if
any, on the Bonds shall be payable to the Bondholders upon
presentation and surrender of the Bonds as the same become due at
the Principal Office of the Paying Agent. Interest on the Bonds
shall be paid as provided in the form of the Bond. Such interest
shall be paid notwithstanding the cancellation of any Bonds upon
any exchange or registration of transfer thereof subsequent to the
Record Date and prior to such Interest Payment Date, except that,
if and to the extent there shall be a default in the payment of
the interest due on such Interest Payment Date, such defaulted
interest shall be paid to the Bondholders in whose names any such
Bonds (or any Bond or Bonds issued upon registration of transfer
or exchange thereof) are registered at the close of business on
the Business Day next preceding the date of payment of such
defaulted interest. Payment of principal of, premium, if any, and
interest on the Bonds shall be made in such lawful money of the
United States of America as, at the respective times of payment,
shall be legal tender for the payment of public and private debts.
The Bonds shall be dated as of June 15, 1996, and shall
initially bear interest from the Issue Date unless initially
issued bearing interest at a Fixed Rate, in which case, the Bonds
shall initially bear interest from June 15, 1996. Thereafter, the
Bonds shall bear interest from the Interest Payment Date to which
interest has been paid or duly provided for, or unless no interest
has been paid or duly provided for on the Bonds, in which case
from the Issue Date until paid, in each case at the rates set
forth in Section 2.02 hereof and as provided in the Bonds. If, as
shown by the records of the Trustee, interest on the Bonds is in
default, Bonds issued in exchange for Bonds surrendered for
registration of transfer or exchange shall note such default and
shall bear interest from the date to which interest has been paid
in full on the Bonds, or, if no interest has been paid on the
Bonds, from the Issue Date. Each Bond shall bear interest on
overdue principal and, to the extent permitted by law, on overdue
interest at the applicable rate in effect on the date which such
principal and interest became due and payable.
With respect to Bonds in the Daily, Flexible, Weekly,
Monthly, Quarterly or Semiannual Mode, on the Business Day before
each Interest Payment Date and for Bonds in the Multiannual and
Fixed Rate Mode, on the fifteenth day of the calendar month prior
to each Interest Payment Date, the Trustee shall calculate the
amount of interest to be paid on the next succeeding Interest
Payment Date and shall, not later than 11:00 a.m., New York City
time, on such date the calculation is made, notify the Company and
the Paying Agent of the amount of interest to be paid. Any
contest by the Company of the amount calculated by the Trustee to
be due on an Interest Payment Date shall not relieve the Company
of its obligation to pay such amount to enable the Trustee to pay
the interest payable on the Bonds on such Interest Payment Date.
Section 2.02.Interest. The interest rate on the Bonds,
as provided in the Bonds, will be the lesser of (i) the Maximum
Rate or (ii) the rate determined as provided in this Section 2.02.
In no event shall the Interest Rate exceed the Maximum Rate.
Initially, the Bonds shall bear interest at the interest rate set
forth in the Approval Certificate determined by the Underwriter in
accordance with the Mode set forth in the Approval Certificate.
Interest on the Bonds in a Flexible Mode, Daily Mode, Weekly Mode
or Monthly Mode shall be payable on the applicable Interest
Payment Date as herein described, computed on the basis of a 365
or 366-day year, as applicable for the number of days actually
elapsed based on the calendar year in which such Rate Period
commences. The interest on the Bonds in a Fixed Rate Mode,
Multiannual Mode, Semiannual Mode or Quarterly Mode shall be
payable on the applicable Interest Payment Date as herein
described, computed on the basis of a 360-day year of twelve
30-day months. While there exists an Event of Default under this
Indenture, the interest rate on the Bonds will be the rate on the
Bonds on the day before the Event of Default occurred.
(A) Flexible Mode.
(1) Determination of Flexible Rates. The Flexible Rate
for Bonds in the Flexible Mode shall be the rate of interest
determined by the Remarketing Agent, for each Interest Rate
Period, to be the lowest rate which in its judgment, on the basis
of prevailing financial market conditions, is necessary on and as
of the Effective Date, to remarket each Bond having such Interest
Rate Period (as determined by the Remarketing Agent) in a
secondary market transaction at a price equal to the principal
amount thereof, but not in excess of the Maximum Rate. The
Remarketing Agent shall determine the initial Flexible Rate or
Rates and Interest Rate Period or Periods on or before the date of
conversion to the Flexible Mode. Thereafter, the Remarketing
Agent shall redetermine the Flexible Rate for each Interest Rate
Period and shall redetermine each Interest Rate Period. While any
Bonds are in the Flexible Mode, such Bonds may have successive
Interest Rate Periods and any Bond may bear interest at a rate and
for a period different from any other Bond. The interest rate and
the Interest Rate Period for each particular Bond in the Flexible
Mode will be determined by the Remarketing Agent and will remain
in effect from and including the Effective Date of the Interest
Rate Period selected for that Bond by the Remarketing Agent
through the last date thereof. The Remarketing Agent shall notify
the Paying Agent of the Flexible Rate and Interest Rate Period by
Electronic Notice not later than 1:00 p.m., New York City time, on
the Effective Date. The Paying Agent shall give written notice of
the Flexible Rate and Interest Rate Period to the Trustee and the
Company. Each determination and redetermination of the Flexible
Rate shall be conclusive and binding on the Issuer, the Trustee,
the Paying Agent, the Bond Registrar, the Company and the
Bondowners. If the Remarketing Agent fails for any reason to
determine the Flexible Rate or Interest Rate Period for any Bond
while in the Flexible Mode, or if for any reason such manner of
determination shall be determined to be invalid or unenforceable,
the Bond shall be deemed to be in an Interest Rate Period ending
on the next succeeding day which is immediately followed by a
Business Day and the Flexible Rate shall be equal to 100% of the
rate for the Public Securities Association Municipal Swap Index as
published by Municipal Market Data for 7 day high-grade tax-exempt
variable rate demand obligations on the day on which such rate is
determined or, if such rate is not published on that day, the most
recent publication of such rate.
In determining the Flexible Rate and remarketing Bonds
in the Flexible Mode, the Remarketing Agent shall (i) not offer
Interest Rate Periods greater than 270 days, (ii) not offer
Interest Rate Periods applicable to Bonds to be converted
extending beyond the day preceding any scheduled conversion of the
Bonds to another Mode or the final maturity of the Bonds, and
(iii) follow any written directions of the Company not
inconsistent with the preceding clauses (i) and (ii) as to the
Interest Rate Periods to be made available. The Company, the
Trustee, the Paying Agent and the Remarketing Agent shall
cooperate to ensure compliance with this requirement.
(2) Conversions from the Flexible Mode. Bonds in the
Flexible Mode or any portion of such Bonds may be converted at the
election of the Company from the Flexible Mode to the Daily,
Weekly, Monthly, Quarterly, Semiannual, Multiannual or Fixed Rate
Mode as provided in the form of Bond, so long as no Event of
Default hereunder exists as certified to the Trustee by the
Company. Written notice of a conversion of Bonds from the
Flexible Mode shall be given by the Company to the Issuer, the
Trustee, the Paying Agent, the Remarketing Agent and the Rating
Agencies not fewer than 30 days before the proposed Conversion
Date, which date shall be specified by the Company in such notice
and shall not be earlier than the day following the expiration of
the Interest Rate Period with the longest remaining term then in
effect for the Bonds to be converted. Prior to the proposed
Conversion Date, the Remarketing Agent shall not offer Interest
Rate Periods for the Bonds to be converted extending beyond the
proposed Conversion Date. Conversions to the Fixed Rate Mode
shall also be governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to a new Mode established by the preceding paragraph
and Section 2.02(K) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Company and the Remarketing Agent and the Bonds
subject to such failed conversion shall remain in the Flexible
Mode with an Interest Rate Period ending on the next succeeding
day which is immediately followed by a Business Day. In such
event, such Bonds shall remain subject to mandatory tender
pursuant to Section 2.11 hereof. In no event shall the failure of
Bonds to be converted to another Mode for any reason be deemed to
be, in and of itself, an Event of Default under this Indenture, so
long as the Purchase Price of all Bonds required to be purchased
is made available as provided above.
(3)Mandatory Tender for Purchase. Bonds in the
Flexible Mode are subject to mandatory tender for purchase as
provided in the form of Bond and in Section 2.11 hereof.
(B) Daily Mode.
(1) Determination of Daily Rates. The Daily Rate shall be
the rate of interest determined by the Remarketing Agent for each
Interest Rate Period, to be the lowest rate which in its judgment,
on the basis of prevailing financial market conditions, would
permit the sale of the Bonds in the Daily Mode at par plus accrued
interest on and as of the Effective Date, but not in excess of the
Maximum Rate. The Remarketing Agent shall determine the initial
Daily Rate on or before the date of conversion to the Daily Mode.
Thereafter, the Remarketing Agent shall redetermine the Daily Rate
for each subsequent Interest Rate Period. When such Bond is in
the Daily Mode, the Daily Rate in effect for each Interest Rate
Period (the "Effective Rate" for such Period) shall be determined
not later than the Effective Date and shall be effective from the
Effective Date until the next succeeding Business Day. The
Remarketing Agent shall notify the Paying Agent of the Daily Rate
by Electronic Notice not later than 10:30 a.m., New York City
time, on such Business Day. The Paying Agent shall give written
notice of the Daily Rate to the Trustee and the Company. Each
determination and redetermination of the Daily Rate shall be
conclusive and binding on the Issuer, the Trustee, the Paying
Agent, the Company and the Bondowners. If for any reason the
Remarketing Agent fails to determine the Daily Rate (including,
but not limited to, a failure to determine the Daily Rate for a
day that is not a Business Day) or if for any reason such manner
of determination shall be determined to be invalid or
unenforceable, the Daily Rate to take effect on such date will be
the Daily Rate in effect on the day next preceding such date.
(2)Conversions from the Daily Mode. The Bonds in the
Daily Mode or any portion of such Bonds may be converted on any
Interest Payment Date at the election of the Company from the
Daily Mode to the Flexible, Weekly, Monthly, Quarterly,
Semiannual, Multiannual or Fixed Rate Mode as provided in the form
of Bond, so long as no Event of Default hereunder exists as
certified to the Trustee by the Company. Written notice of a
conversion from the Daily Mode shall be given by the Company to
the Issuer, the Trustee, the Paying Agent, the Remarketing Agent
and the Rating Agencies not fewer than 30 days prior to the
proposed Conversion Date, which date shall be specified by the
Company in such notice. Notice of a conversion of Bonds from the
Daily Mode and the mandatory tender of Bonds for purchase on such
Conversion Date shall be given to the owners of such Bonds as
provided in Section 2.02(B)(4) hereof and the form of Bond.
Conversions to the Fixed Rate Mode shall also be governed by
Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Company and the Remarketing Agent, and the Bonds
shall be subject to mandatory tender as provided in Section
2.02(B)(4) hereof. In addition, the failed conversion shall cause
the interest rate on the Bonds subject to such failed conversion
to immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided herein.
(3)Bondowners' Option to Tender Bonds in Daily Mode.
Bonds in the Daily Mode are subject to tender, at the election of
the owner thereof, in the manner and subject to the limitations
described in the form of Bond. The owners of Tendered Bonds shall
receive on the Delivery Date 100% of the principal amount of the
Tendered Bonds plus accrued interest to the Purchase Date,
provided that if the Purchase Date is an Interest Payment Date,
accrued interest shall be paid separately, and not as part of the
Purchase Price on such date. The purchase of Tendered Bonds shall
not extinguish the debt represented by such Bonds which shall
remain Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds properly tendered
to it for purchase as provided in the form of Bond and in this
subsection (3); provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price therefor shall
not be paid if on the Purchase Date the principal of the Bonds
shall have been accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
Notice of the Bondholder's option to tender Bonds in the Daily
Mode shall be given to the Paying Agent at the time and as
provided in the form of Bond. The Bondowners' Election Notice
delivered to the Paying Agent at the time and as provided in the
form of Bond shall be in substantially the form provided in the
form of Bond.
As soon as practicable after receiving notice of a
tender of Bonds under this Section, the Paying Agent shall notify
the Remarketing Agent, the Company and the Trustee by telephone
promptly confirmed in writing of the amount of Tendered Bonds and
the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be given by the
Beneficial Owner in accordance with the procedures of DTC or its
successor. The Remarketing Agent and the Paying Agent shall be
entitled to rely on the accuracy of any Bondowners' Election
Notice delivered to the Paying Agent.
(4)Mandatory Tender of Bonds. Bonds in the Daily Mode
are subject to mandatory tender for purchase as provided in the
form of Bond and in Section 2.11 hereof
(C)Weekly Mode.
(1)Determination of Weekly Rates. The Weekly Rate
shall be the rate of interest determined by the Remarketing Agent
for each Interest Rate Period, to be the lowest rate which in its
judgment, on the basis of prevailing financial market conditions,
would permit the sale of the Bonds in the Weekly Mode at par plus
accrued interest on and as of the Effective Date, but not in
excess of the Maximum Rate. The Remarketing Agent shall determine
the initial Weekly Rate on or before the date of issue in or
conversion to the Weekly Mode. Thereafter, the Remarketing Agent
shall redetermine the Weekly Rate for each subsequent Interest
Rate Period. The Weekly Rate in effect for each Interest Rate
Period shall be determined not later than the Effective Date which
shall be a Wednesday unless the Effective Date is also a
Conversion Date, in which case the Conversion Date will be the
Effective Date. The Remarketing Agent shall notify the Paying
Agent of the Weekly Rate by Electronic Notice not later than 10:00
a.m., New York City time, on the Effective Date (or if the
Effective Date is not a Business Day, on the next preceding
Business Day). The Paying Agent shall give written notice of the
Weekly Rate to the Trustee and the Company. Each determination
and redetermination of the Weekly Rate shall be conclusive and
binding on the Issuer, the Trustee, the Paying Agent, the Company
and the Bondowners. If for any reason the Remarketing Agent fails
to determine the Weekly Rate for any Bond or if for any reason
such manner of determination shall be determined to be invalid or
unenforceable, the Bond shall be deemed to be in a Flexible Mode
with an Interest Rate Period ending on the next succeeding day
which is immediately followed by a Business Day.
(2)Conversions from the Weekly Mode. The Bonds in the
Weekly Mode or any portion of such Bonds may be converted on any
Interest Payment Date at the election of the Company from the
Weekly Mode to the Daily, Monthly, Quarterly, Semiannual,
Multiannual, Flexible or Fixed Rate Mode as provided in the form
of Bond, so long as no Event of Default hereunder exists as
certified to the Trustee by the Company. Written notice of a
conversion from the Weekly Mode shall be given by the Company to
the Issuer, the Trustee, the Paying Agent, the Remarketing Agent
and the Rating Agencies not fewer than 30 days prior to the
proposed Conversion Date, which date shall be specified by the
Company in such notice. Notice of a conversion of Bonds from the
Weekly Mode and the mandatory tender of Bonds for purchase on such
Conversion Date shall be given to the owners of such Bonds as
provided in Section 2.02(C)(4) hereof and the form of Bond.
Conversions to the Fixed Rate Mode shall also be governed by
Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Company and the Remarketing Agent, and the Bonds
shall be subject to mandatory tender as provided in Section
2.02(C)(4) hereof. In addition, the failed conversion shall cause
the interest rate on the Bonds subject to such failed conversion
to immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted
to another Mode for any reason be deemed to be, in and of itself,
an Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3)Bondowners' Option to Tender Bonds in Weekly Mode.
Bonds in the Weekly Mode are subject to tender, at the election of
the owner thereof, in the manner and subject to the limitations
described in the form of Bond. The owners of Tendered Bonds
shall receive on the Delivery Date 100% of the principal amount of
the Tendered Bonds plus accrued interest to the Purchase Date,
provided that if the Purchase Date is an Interest Payment Date,
accrued interest shall be paid separately, and not as part of the
Purchase Price on such date. The purchase of Tendered Bonds shall
not extinguish the debt represented by such Bonds which shall
remain Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds
properly tendered to it for purchase as provided in the form of
Bond and in this subsection (3); provided, however, that the
Paying Agent shall not accept any Tendered Bonds and the Purchase
Price therefor shall not be paid if on the Purchase Date the
principal of the Bonds shall have been accelerated pursuant to
Section 6.02 hereof and such acceleration shall not have been
annulled.
Notice of the Bondholders' option to tender Bonds in
the Weekly Mode shall be given to the Paying Agent at the time and
as provided in the form of Bond. The Bondowners' Election Notice
delivered to the Paying Agent at the time and as provided in the
form of Bond shall be in substantially the form provided in the
form of Bond.
As soon as practicable after receiving notice of a
tender of Bonds under this Section, the Paying Agent shall notify
the Remarketing Agent, the Company and the Trustee by telephone
promptly confirmed in writing of the amount of Tendered Bonds and
the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be given by the
Beneficial Owner in accordance with the procedures of DTC or its
successor. The Remarketing Agent and the Paying Agent shall be
entitled to rely on the accuracy of any Bondowners' Election
Notice delivered to the Paying Agent.
(4)Mandatory Tender of Bonds. Bonds in the Weekly Mode
are subject to mandatory tender for purchase as provided in the
form of Bond and in Section 2.11 hereof.
(5)Interest Rate Periods for Bonds in Weekly Mode. The
Interest Rate Period for Bonds in a Weekly Rate Mode shall
commence on Wednesday of each week and end on the next following
Tuesday; except that (a) in the case of a Conversion of Bonds to a
Weekly Mode from a different Mode, the Interest Rate Period for
such Bonds shall commence on the last Interest Payment Date in
respect of the immediately preceding Interest Rate Period and end
on the next following Tuesday; and (b) in the case of a Conversion
of Bonds from a Weekly Mode to a different Mode, the last Interest
Rate Period for such Bonds prior to Conversion shall end on the
last day immediately preceding the Conversion.
(D) Monthly Mode.
(1)Determination of Monthly Rates. The Monthly Rate
shall be the rate of interest determined by the Remarketing Agent
for each Interest Rate Period, to be the lowest rate which in its
judgment, on the basis of prevailing financial market conditions,
would permit the sale of the Bonds in the Monthly Mode at par plus
accrued interest on and as of the Effective Date, but not in
excess of the Maximum Rate. The Remarketing Agent shall determine
the initial Monthly Rate on or before the date of conversion to
the Monthly Mode, which Rate shall remain in effect as provided in
this Indenture. Thereafter, the Remarketing Agent shall
redetermine the Monthly Rate for each subsequent Interest Rate
Period. The Monthly Rate in effect for each Interest Rate
Period shall be determined not later than the Business Day next
preceding the Effective Date which shall be the first Business Day
of a month. Each Monthly Rate will remain in effect through the
day preceding the first Business Day of the succeeding month. The
Remarketing Agent shall notify the Paying Agent of the Monthly
Rate by Electronic Notice not later than 2:00 p.m., New York City
time, on the Business Day immediately preceding the Effective
Date. The Paying Agent shall give written notice of the Monthly
Rate to the Trustee and the Company. Each determination and
redetermination of the Monthly Rate shall be conclusive and
binding on the Issuer, the Trustee, the Paying Agent, the Company
and the Bondowners. If for any reason the Remarketing Agent fails
to determine the Monthly Rate for any Bond or if for any reason
such manner of determination shall be determined to be invalid or
unenforceable, the Bond shall be deemed to be in a Flexible Mode
with an Interest Rate Period ending on the next succeeding day
which is immediately followed by a Business Day.
(2)Conversions from the Monthly Mode. The Bonds in the
Monthly Mode or any portion of such Bonds may be converted on any
Interest Payment Date at the election of the Company from the
Monthly Mode to the Daily, Flexible, Weekly, Quarterly,
Semiannual, Multiannual or Fixed Rate Mode as provided in the form
of Bond, so long as no Event of Default hereunder exists as
certified to the Trustee by the Company. Written notice of a
conversion from the Monthly Mode shall be given by the Company to
the Issuer, the Trustee, the Paying Agent, the Remarketing Agent
and the Rating Agencies not fewer than 45 days prior to the
proposed Conversion Date, which date shall be specified by the
Company in such notice. Notice of a conversion of Bonds from the
Monthly Mode and the mandatory tender of Bonds for purchase on
such Conversion Date shall be given to the owners of such Bonds as
provided in Section 2.02(D)(4) hereof and the form of Bond.
Conversions to the Fixed Rate Mode shall also be governed by
Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Company and the Remarketing Agent, and the Bonds
shall be subject to mandatory tender as provided in Section
2.02(D)(4) hereof. In addition, the failed conversion shall cause
the interest rate on the Bonds subject to such failed conversion
to immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3)Bondowners' Option to Tender Bonds in Monthly Mode.
Bonds in the Monthly Mode are subject to tender, at the election
of the owner thereof, in the manner and subject to the limitations
described in the form of Bond. The owners of Tendered Bonds shall
receive on the Delivery Date 100% of the principal amount of the
Tendered Bonds. Accrued interest shall be paid separately, and
not as part of the Purchase Price on such date. The purchase of
Tendered Bonds shall not extinguish the debt represented by such
Bonds which shall remain Outstanding and unpaid under this
Indenture.
The Paying Agent shall accept all Tendered Bonds
properly tendered to it for purchase as provided in the form of
Bond and in this subsection (3); provided, however, that the
Paying Agent shall not accept any Tendered Bonds and the Purchase
Price therefor shall not be paid if on the Purchase Date the
principal of the Bonds shall have been accelerated pursuant to
Section 6.02 hereof and such acceleration shall not have been
annulled.
The Bondowners' Election Notice delivered to the Paying
Agent at the time and as provided in the form of Bond shall be in
substantially the form provided in the form of Bond.
As soon as practicable after receiving notice of a
tender of Bonds under this Section, the Paying Agent shall notify
the Remarketing Agent, the Company and the Trustee by telephone
promptly confirmed in writing of the amount of Tendered Bonds and
the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be given by the
Beneficial Owner in accordance with the procedures of DTC or its
successor. The Paying Agent shall be entitled to rely on the
accuracy of any Bondowners' Election Notice delivered to the
Paying Agent.
(4)Mandatory Tender of Bonds. Bonds in the Monthly
Mode are subject to mandatory tender for purchase as provided in
the form of Bond and in Section 2.11 hereof.
(E) Quarterly Mode.
(1)Determination of Quarterly Rates. The Quarterly
Rate shall be the rate of interest determined by the Remarketing
Agent for each Interest Rate Period, to be the lowest rate which
in its judgment, on the basis of prevailing financial market
conditions, would permit the sale of the Bonds in the Quarterly
Mode at par plus accrued interest on and as of the Effective Date,
but not in excess of the Maximum Rate. The Remarketing Agent
shall determine the initial Quarterly Rate on or before the date
of conversion to the Quarterly Mode. Thereafter, the Remarketing
Agent shall redetermine the Quarterly Rate for each subsequent
Interest Rate Period. The Quarterly Rate in effect for each
Interest Rate Period shall be determined not later than the
Business Day next preceding the Effective Date. The Remarketing
Agent shall notify the Paying Agent of the Quarterly Rate by
Electronic Notice not later than 2:00 p.m., New York City time, on
the Business Day immediately preceding the Effective Date. The
Paying Agent shall give written notice of the Quarterly Rate to
the Trustee and the Company. Each determination and
redetermination of the Quarterly Rate shall be conclusive and
binding on the Issuer, the Trustee, the Paying Agent, the Company
and the Bondowners. If for any reason the Remarketing Agent fails
to determine the Quarterly Rate for any Bond or if for any reason
such manner of determination shall be determined to be invalid or
unenforceable, the Quarterly Rate Bond shall be deemed to be in a
Flexible Mode with an Interest Rate Period ending on the next
succeeding day which is immediately followed by a Business Day.
(2)Conversions from the Quarterly Mode. The Bonds in
the Quarterly Mode or any portion of such Bonds may be converted
on any Interest Payment Date at the election of the Company from
the Quarterly Mode to the Flexible, Daily, Weekly, Monthly,
Semiannual, Multiannual or Fixed Rate Mode as provided in the form
of Bond, so long as no Event of Default hereunder exists as
certified to the Trustee by the Company. Written notice of a
conversion from the Quarterly Mode shall be given by the Company
to the Issuer, the Trustee, the Paying Agent, the Remarketing
Agent and the Rating Agencies not fewer than 45 days prior to the
proposed Conversion Date, which date shall be specified by the
Company in such notice. Notice of a conversion of Bonds from the
Quarterly Mode and the mandatory tender of Bonds for purchase on
such Conversion Date shall be given to the owners of such Bonds as
provided in Section 2.02(E)(4) hereof and the form of Bond.
Conversions to the Fixed Rate Mode shall also be governed by
Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Company and the Remarketing Agent, and the Bonds
shall be subject to mandatory tender as provided in Section
2.02(E)(4) hereof. In addition, the failed conversion shall cause
the interest rate on the Bonds subject to such failed conversion
to immediately convert to the Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3)Bondowners' Option to Tender Bonds in Quarterly
Mode. Bonds in the Quarterly Mode are subject to tender, at the
election of the owner thereof, in the manner and subject to the
limitations described in the form of Bond. The owners of Tendered
Bonds shall receive on the Delivery Date 100% of the principal
amount of the Tendered Bonds. Accrued interest shall be paid
separately, and not as part of the Purchase Price on such date.
The purchase of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain Outstanding and
unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds
properly tendered to it for purchase as provided in the form of
Bond and in this subsection (3); provided, however, that the
Paying Agent shall not accept any Tendered Bonds and the Purchase
Price therefor shall not be paid if on the Purchase Date the
principal of the Bonds shall have been accelerated pursuant to
Section 6.02 hereof and such acceleration shall not have been
annulled.
The Bondowners' Election Notice delivered to the Paying
Agent at the time and as provided in the form of Bond shall be in
substantially the form provided in the form of Bond.
As soon as practicable after receiving notice of a
tender of Bonds under this Section, the Paying Agent shall notify
the Remarketing Agent, the Company and the Trustee by telephone
promptly confirmed in writing of the amount of Tendered Bonds and
the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be given by the
Beneficial Owner in accordance with the procedures of DTC or its
successor. The Paying Agent shall be entitled to rely on the
accuracy of any Bondowners' Election Notice delivered to the
Paying Agent.
(4)Mandatory Tender of Bonds. Bonds in the Quarterly
Mode are subject to mandatory tender for purchase as provided in
the form of Bond and in Section 2.11 hereof.
. . . . . . . . . . . . . . . . . . . . . . . (F)
Semiannual Mode.
(1)Determination of Semiannual Rates. The Semiannual
Rate shall be the rate of interest determined by the Remarketing
Agent, for each Interest Rate Period, to be the lowest rate which
in its judgment, on the basis of prevailing financial market
conditions, would permit the sale of the Bonds in the Semiannual
Mode at par plus accrued interest on and as of the Effective Date,
but not in excess of the Maximum Rate. The Remarketing Agent
shall determine the initial Semiannual Rate on or before the date
of conversion to the Semiannual Mode. Thereafter, the Remarketing
Agent shall redetermine the Semiannual Rate for each subsequent
Interest Rate Period. The Semiannual Rate in effect for each
Interest Rate Period shall be determined not later than the
Business Day next preceding the Effective Date. The Remarketing
Agent shall notify the Paying Agent of the Semiannual Rate by
Electronic Notice not later than 2:00 p.m., New York City time, on
the Business Day immediately preceding the Effective Date. The
Paying Agent shall give written notice of the Semiannual Rate to
the Trustee and the Company. Each determination and
redetermination of the Semiannual Rate shall be conclusive and
binding on the Issuer, the Trustee, the Paying Agent, the Company
and the Bondowners. If for any reason the Remarketing Agent fails
to determine the Semiannual Rate for any Bond or if for any reason
such manner of determination shall be determined to be invalid or
unenforceable, the Bond shall be deemed to be in a Flexible Mode
with an Interest Rate Period ending on the next succeeding day
which is immediately followed by a Business Day.
(2)Conversions from the Semiannual Mode. The Bonds in
the Semiannual Mode or any portion of such Bonds may be converted
on any Interest Payment Date at the election of the Company from
the Semiannual Mode to the Flexible, Daily, Weekly, Monthly,
Quarterly, Multiannual or Fixed Rate Mode as provided in the form
of Bond, so long as no Event of Default hereunder exists as
certified to the Trustee by the Company. Written notice of a
conversion from the Semiannual Mode shall be given by the Company
to the Issuer, the Trustee, the Paying Agent, the Remarketing
Agent and the Rating Agencies not fewer than 45 days prior to the
proposed Conversion Date, which date shall be specified by the
Company in such notice. Notice of a conversion of Bonds from the
Semiannual Mode and the mandatory tender of Bonds for purchase on
such Conversion Date shall be given to the owners of such Bonds as
provided in Section 2.02(F)(4) hereof and the form of Bond.
Conversions to the Fixed Rate Mode shall also be governed by
Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Company and the Remarketing Agent, and the Bonds
shall be subject to mandatory tender as provided in Section
2.02(F)(4) hereof. In addition, the failed conversion shall cause
the interest rate on the Bonds to immediately convert to the
Flexible Mode with an Interest Rate Period ending on the next
succeeding day which is immediately followed by a Business Day.
In such event, such Bonds shall remain subject to mandatory tender
pursuant to Section 2.11 hereof. In no event shall the failure of
Bonds to be converted to another Mode for any reason be deemed to
be, in and of itself, an Event of Default under this Indenture, so
long as the Purchase Price of all Bonds required to be purchased
is made available as provided above.
(3)Bondowners' Option to Tender Bonds in Semiannual
Mode. Bonds in the Semiannual Mode are subject to tender, at the
election of the owner thereof, in the manner and subject to the
limitations described in the form of Bond. The owners of Tendered
Bonds shall receive on the Delivery Date 100% of the principal
amount of the Tendered Bonds. Accrued interest shall be paid
separately, and not as part of the Purchase Price on such date.
The purchase of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain Outstanding and
unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds
properly tendered to it for purchase as provided in the form of
Bond and in this subsection (3); provided, however, that the
Paying Agent shall not accept any Tendered Bonds and the Purchase
Price therefor shall not be paid if on the Purchase Date the
principal of the Bonds shall have been accelerated pursuant to
Section 6.02 hereof and such acceleration shall not have been
annulled.
The Bondowners' Election Notice delivered to the Paying
Agent at the time and as provided in the form of Bond
shall be in substantially the form provided in the form
of Bond.
As soon as practicable after receiving notice of a
tender of Bonds under this Section, the Paying Agent shall notify
the Remarketing Agent, the Company and the Trustee by telephone
promptly confirmed in writing of the amount of Tendered Bonds and
the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be given by the
Beneficial Owner in accordance with the procedures of DTC or its
successor. The Paying Agent shall be entitled to rely on the
accuracy of any Bondowners' Election Notice delivered to the
Paying Agent.
(4)Mandatory Tender of Bonds. Bonds in the Semiannual
Mode are subject to mandatory tender for purchase as provided in
the form of Bond and in Section 2.11 hereof.
(G) Multiannual Mode.
(1)Determination of Multiannual Rates. The Multiannual
Rate shall be the rate of interest determined by the Remarketing
Agent for each Interest Rate Period, to be the lowest rate which
in its judgment, on the basis of prevailing financial market
conditions, would permit the sale of the Bonds with the same
Interest Rate Period in a secondary market transaction on and as
of the Effective Date, at a price equal to the principal amount
thereof plus accrued interest, but not in excess of the Maximum
Rate. The Remarketing Agent shall determine the initial
Multiannual Rate and Interest Rate Period on or before the date of
conversion to the Multiannual Mode. Thereafter, the Remarketing
Agent shall redetermine the Multiannual Rate for each subsequent
Interest Rate Period as provided herein and shall redetermine each
subsequent Interest Rate Period. The Multiannual Rate in effect
for each Interest Rate Period and the duration of the Interest
Rate Period shall be determined not later than two (2) Business
Days prior to the Effective Date. The Effective Date shall be the
first Business Day of a month if the preceding Interest Rate
Period is a Flexible, Daily, Weekly, or Monthly Rate Period and
shall be the first day of a month if the preceding Interest Rate
Period is a Quarterly, Semiannual, or Multiannual Rate Period.
The Multiannual Rate will remain in effect until the first day of
the month following the whole number of years specified as the
duration of the Interest Rate Period for the Bonds in the
Multiannual Mode; provided that if the following Rate Period is a
Flexible, Daily, Weekly, or Monthly Rate Period, the Multiannual
Rate will remain in effect until the day preceding the first
Business Day of the month following the whole number of years
specified as the duration of the Multiannual Rate Period and if
the following Rate Period is a Quarterly, Semiannual, Multiannual
or Fixed Rate Period, the Effective Date will remain in effect
until the day preceding the first day of the month following the
whole number of years specified as the Multiannual Rate Period.
The Remarketing Agent shall notify the Paying Agent of the
Multiannual Rate and the Interest Rate Period by Electronic Notice
not later than 2:00 p.m., New York City time, two (2) Business
Days preceding the Effective Date. The Paying Agent shall give
written notice of the Multiannual Rate to the Trustee and the
Company. Each determination and redetermination of the
Multiannual Rate shall be conclusive and binding on the Issuer,
the Trustee, the Paying Agent, the Company and the Bondowners. If
the Remarketing Agent fails to make such determination or fails to
announce the Multiannual Rate as required with respect to any
Bonds in the Multiannual Mode, or if for any reason such manner of
determination shall be determined to be invalid or unenforceable,
the Bonds shall be automatically converted to the Flexible Mode
with an Interest Rate Period ending on the next succeeding day
which is immediately followed by a Business Day.
(2)Conversions from the Multiannual Mode. The Bonds in
the Multiannual Mode or any portion of such Bonds may be converted
on any Effective Date at the election of the Company from the
Multiannual Mode to the Daily, Weekly, Flexible, Monthly,
Quarterly, Semiannual or Fixed Rate Mode and may be converted
within the Multiannual Mode to a new Interest Rate Period with the
same or a different length as provided in the form of Bond, so
long as no Event of Default hereunder exists as certified to the
Trustee by the Company. Written notice of a change in Mode or
Interest Rate Period within the Multiannual Mode shall be given by
the Company to the Issuer, the Trustee, the Paying Agent, the
Remarketing Agent and the Rating Agencies not fewer than 45 days
prior to the proposed Conversion Date. Conversions to the Fixed
Rate Mode shall also be governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Company and the Remarketing Agent and the Bonds shall
automatically convert to a Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode or Interest Rate Period for any reason be deemed to
be, in and of itself, an Event of Default under this Indenture, so
long as the Purchase Price of all Bonds required to be purchased
is made available as provided above.
(3)Bondowners' Option to Tender Bonds in Multiannual
Mode. Bonds in the Multiannual Mode are subject to tender, at the
election of the owner thereof, in the manner and subject to the
limitations described in the form of Bond. The owners of Tendered
Bonds shall receive on the Delivery Date 100% of the principal
amount of the Tendered Bonds. Accrued interest shall be paid
separately, and not as part of the Purchase Price on such date.
The purchase of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain Outstanding and
unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds
properly tendered to it for purchase as provided in the form of
Bond and in this subsection (3); provided, however, that the
Paying Agent shall not accept any Tendered Bonds and the Purchase
Price therefor shall not be paid if on the Purchase Date the
principal of the Bonds shall have been accelerated pursuant to
Section 6.02 hereof and such acceleration shall not have been
annulled.
The Bondowners' Election Notice delivered to the Paying
Agent at the time and as provided in the form of Bond shall be in
substantially the form provided in the form of Bond.
As soon as practicable after receiving notice of a
tender of Bonds under this Section, the Paying Agent shall notify
the Remarketing Agent, the Company and the Trustee by telephone
promptly confirmed in writing of the amount of Tendered Bonds and
the specified Purchase Date.
During the time Bonds are issued in the book-entry-only
system, all Bondowners' Election Notices shall be given by the
Beneficial Owner in accordance with the procedures of DTC or its
successor. The Paying Agent shall be entitled to rely on the
accuracy of any Bondowners' Election Notice delivered to the
Paying Agent.
(4)Mandatory Tender for Purchase. Bonds in the
Multiannual Mode are subject to mandatory tender for purchase as
provided in the form of Bond and in Section 2.11 hereof.
(H)Fixed Rate Mode.
(1)Determination of Fixed Rate and Conversion to Fixed
Rate Mode. The interest rate on all or any portion of the Bonds
may be converted by the Company to the Fixed Rate as provided in
the form of Bond and Sections 2.02(A), (B), (C), (D), (E), (F) and
(G) hereof. Written notice of conversion to the Fixed Rate Mode
shall be given by the Company to the Issuer, the Trustee, the
Paying Agent, the Remarketing Agent and the Rating Agencies not
fewer than 30 days prior to the proposed Conversion Date. Upon
receipt of the notice of conversion to the Fixed Rate Mode from
the Company, the Remarketing Agent shall determine the Fixed Rate
not later than 12:00 noon, New York City time, on the Business Day
immediately preceding the Conversion Date. The Fixed Rate shall
be the lowest rate which in the judgment of the Remarketing Agent,
on the basis of prevailing financial market conditions, would
permit the sale of the Bonds being so converted at par plus
accrued interest as of the Conversion Date on the basis of their
terms as converted.
On the date of determination thereof, the Remarketing
Agent shall notify the Paying Agent, the Company and the Trustee
by Electronic Notice of the Fixed Rate. The Trustee shall
promptly notify the Issuer in writing of the Fixed Rate. The
determination of the Fixed Rate shall be conclusive and binding on
the Issuer, the Trustee, the Paying Agent, the Company and the
Bondowners. The first Interest Payment Date of Bonds converted to
the Fixed Rate shall be the next April 1 or October 1 after the
Conversion Date. The Fixed Rate shall become effective on the
Conversion Date.
Notwithstanding the foregoing, if the preconditions to
conversion to the Fixed Rate Mode established by this subsection
and Section 2.02(K) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall immediately notify
the Trustee and the Company by telephone promptly confirmed in
writing. Upon such notice, the Trustee shall deem the proposed
conversion to have failed and shall proceed as such under Sections
2.02(A)(2), 2.02(B)(2), 2.02(C)(2), 2.02(D)(2), 2.02(E)(2),
2.02(F)(2) or 2.02(G)(2) hereof, whichever is applicable.
(2)Conversions from the Fixed Rate Mode. The Bonds in
the Fixed Rate Mode or any portion of such Bonds may be converted
on any Effective Date at the election of the Company from the
Fixed Rate Mode to the Daily, Weekly, Flexible, Monthly,
Quarterly, Semiannual, Multiannual or Fixed Rate Mode, so long as
no Event of Default hereunder exists as certified to the Trustee
by the Company. Written notice of a change in Mode shall be given
by the Company to the Issuer, the Trustee, the Paying Agent, the
Remarketing Agent and the Rating Agencies not fewer than 45 days
prior to the proposed Conversion Date. Conversions to the Fixed
Rate Mode shall also be governed by Section 2.02(H)(1) hereof.
Notwithstanding the foregoing, if the preconditions to
conversion to another Mode established by the preceding paragraph
and Section 2.02(K) are not met by 10:30 a.m., New York City time,
on the Conversion Date, the Paying Agent shall deem the proposed
conversion to have failed and shall immediately notify the
Trustee, the Company and the Remarketing Agent and the Bonds shall
automatically convert to a Flexible Mode with an Interest Rate
Period ending on the next succeeding day which is immediately
followed by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to Section 2.11
hereof. In no event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and of itself, an
Event of Default under this Indenture, so long as the Purchase
Price of all Bonds required to be purchased is made available as
provided above.
(3)Mandatory Tender of Bonds. Bonds in the Fixed Rate
Mode are subject to mandatory tender for purchase as provided in
the form of Bond and in Section 2.11 hereof.
(I)Partial Conversions.
(1)General. The Bonds may be converted in whole or in
part to the Daily Mode, the Flexible Mode, the Weekly Mode, the
Monthly Mode, the Quarterly Mode, the Semiannual Mode, any
Interest Rate Period in the Multiannual Mode or the Fixed Rate
Mode upon compliance with the conditions set forth in this
Indenture. In the event the Bonds are in (or are to be converted
to) more than one Mode, the provisions herein relating to Bonds in
a particular Mode (or to be converted to a particular Mode) shall
apply only to the Bonds in (or to be converted to) such Mode and,
where necessary or appropriate, any reference in this Indenture to
the Bonds shall be construed to mean the Bonds in (or to be
converted to) such Mode.
(2)Selection. In the event of any partial conversion
of the Bonds to a new Mode, the Bonds to be converted shall be
selected by the Paying Agent from the Bonds in the Mode selected
by the Company. The particular Bonds (or portions thereof) to be
converted shall be selected by lot by the Paying Agent from all
the Bonds in the Mode (or in the case of Bonds in the Multiannual
Mode, the Interest Rate Period) from which Bonds are to be
converted. The principal amount of Bonds to be converted shall be
determined so that all of the Bonds shall be in Authorized
Denominations. Bonds (or portions thereof) in the Daily Mode,
Weekly Mode, Monthly Mode, Quarterly Mode and Semiannual Mode
shall be selected by lot and the selection of the Bonds to be
converted shall occur prior to the date notice of mandatory tender
is sent by the Paying Agent to the Bondowners pursuant to Sections
2.02(B)(4), 2.02(C)(4), 2.02(D)(4), 2.02(E)(4) and 2.02(F)(4).
(3)Amendments. The provisions of this Indenture may be
amended to permit or facilitate partial conversions of the Bonds
without Bondowner consent in accordance with Section 9.01 hereof.
(J)Notice to Registered Owners of Change in Mode. When
a change in Mode is to be made, or upon commencement of a new
Interest Rate Period in the Multiannual Mode, the Paying Agent
will notify the registered owners of the affected Bonds in the
Daily Mode, Weekly Mode, Monthly Mode, Quarterly Mode and
Semiannual Mode at least 15 days, and will notify the registered
owners of the affected Bonds in the Multiannual Mode and Fixed
Rate Mode at least 30 days, before the effective date of the
change. The notice will state:
(1)that the Mode will be changed or that a new Interest
Rate Period in the Multiannual Mode, will commence,
(2)the effective date or dates of the new rate or a new
Interest Rate Period, as applicable, and
(3)that a mandatory tender will result on the Effective
Date of the change as provided in the Indenture.
(K)Change In Interest Rate Mode - Opinion of Counsel;
Issuer Veto Right. No (i) conversion of Bonds to or from a
Multiannual Mode with an Interest Rate Period of over one year,
including for this purpose the conversion to a new Interest Rate
Period in the Multiannual Mode, or (ii) conversion to or from the
Fixed Rate Mode shall be effective unless on or prior to the
Conversion Date the Company shall provide the Issuer, the Paying
Agent, and the Trustee with a Favorable Opinion. Furthermore, all
Conversions are subject to veto by the Issuer, which veto may not
be unreasonably exercised and must be exercised by the Authorized
Issuer Representative within one hour after the receipt of notice
from the Company of such change in interest rate determination
method by the sending of a telephonic notice, confirmed in
writing, to the Company, the Trustee, and the Remarketing Agent.
Section 2.03.Form of Bond. The Bonds, the Trustee's
Certificate of Authentication to be executed by the Trustee for
all Bonds delivered hereunder except those initially delivered
hereunder, the Registration Certificate of the Comptroller of
Public Accounts of the State of Texas to be attached to or
endorsed upon the Bonds initially delivered hereunder, the
provision for registration and the form of assignment shall be in
substantially the forms hereinafter set forth, with such
appropriate variations, omissions, substitutions and insertions as
are permitted or required hereby and may have such letters,
numbers or other marks of identification and such legends and
endorsements placed thereon as may be required to comply with any
applicable laws or rules or regulations, or as may, consistently
herewith, be determined by the officers executing such Bonds, as
evidenced by their execution of the Bonds.
FORM OF BOND
Dollars
No. ___ $__________
[The following legend shall appear so long as the Book-
Entry System described in Section 3.07 of the Indenture
has not been discontinued; provided that such legend
shall not appear on the Bond initially delivered under
this Indenture.]
THE ISSUER HAS ESTABLISHED A BOOK ENTRY SYSTEM OF REGISTRATION FOR
THIS BOND. EXCEPT AS SPECIFICALLY PROVIDED OTHERWISE IN THE
INDENTURE, CEDE & CO., AS NOMINEE OF THE DEPOSITORY TRUST COMPANY,
A NEW YORK CORPORATION ("DTC"), WILL BE THE REGISTERED OWNER AND
WILL HOLD THIS BOND ON BEHALF OF EACH BENEFICIAL OWNER HEREOF. BY
ACCEPTANCE OF A CONFIRMATION OF PURCHASE, DELIVERY OR TRANSFER,
EACH BENEFICIAL OWNER OF THIS BOND SHALL BE DEEMED TO HAVE AGREED
TO SUCH ARRANGEMENT. CEDE & CO., AS REGISTERED OWNER OF THIS
BOND, MAY BE TREATED AS THE OWNER OF IT FOR ALL PURPOSES.
UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC TO THE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS BOND IS SUBJECT TO MANDATORY TENDER FOR PURCHASE AT THE TIME
AND IN THE MANNER HEREINAFTER DESCRIBED AND MUST BE SO TENDERED OR
WILL BE DEEMED TO HAVE BEEN SO TENDERED UNDER CERTAIN
CIRCUMSTANCES AS DESCRIBED HEREIN.
ANY BONDHOLDER WHO FAILS TO DELIVER A BOND FOR PURCHASE AT THE
TIMES AND AT THE PLACE REQUIRED HEREIN SHALL HAVE NO FURTHER
RIGHTS HEREUNDER EXCEPT THE RIGHT TO RECEIVE THE PURCHASE PRICE
HEREOF UPON DELIVERY OF THIS BOND TO THE PAYING AGENT, AND SHALL
HOLD THIS BOND AS AGENT FOR THE PAYING AGENT.
UNITED STATES OF AMERICA
STATE OF TEXAS
SABINE RIVER AUTHORITY OF TEXAS
POLLUTION CONTROL REVENUE REFUNDING BONDS
(SOUTHWESTERN ELECTRIC POWER COMPANY PROJECT)
SERIES 1996
Maturity Date: ________________ CUSIP _______________
Dated Date: June 15, 1996
Issue Date: July 11, 1996
Interest Rate:**_________________
Registered Owner:
Principal Amount: $__________
Mode:
Last Day of Flexible Rate Period* ______Interest Rate*_____
Number of Days in Period*_____Interest Due at End of Period*______
_______________________
* Complete only for Bonds accruing interest at Flexible Rates
**Complete only for Bonds accruing interest at the Fixed Rate
Sabine River Authority of Texas (the "Issuer"), a
governmental agency and body politic and corporate created and
operating as a conservation and reclamation district and political
subdivision of the State of Texas pursuant to Article XVI, Section
59 of the Texas Constitution and the laws of the State of Texas,
particularly Article 8280-133, Vernon's Texas Civil Statutes (the
"Issuer Act"), for value received, hereby promises to pay (but
only out of the sources hereinafter mentioned) to the Registered
Owner set forth above, or registered assigns, on the Maturity Date
specified above, unless this Bond shall have been called for
redemption in whole or in part, upon surrender hereof, the
Principal Amount set forth above and to pay (but only out of the
sources hereinafter mentioned) to the Registered Owner, or
registered assigns, interest thereon at the rate determined as
herein provided from the most recent Interest Payment Date
(hereinafter defined) to which interest has been paid or duly
provided for, or if no interest has been paid or duly provided
for, from the Issue Date (unless this Bond initially bears
interest at the Fixed Rate, in which case from June 15, 1996),
such payments of interest to be made on each Interest Payment Date
until the principal or redemption price hereof has been paid or
duly provided for as aforesaid. The principal or redemption price
of this Bond (or of a portion of this Bond, in the case of a
partial redemption) is payable to the Registered Owner hereof in
immediately available funds upon presentation and surrender hereof
at the Principal Office of the Trustee or its successor, as paying
agent (the "Paying Agent"), under the Indenture of Trust, dated as
of June 15, 1996 (the "Indenture") by and between the Issuer and
The Bank of New York, or its successor, as trustee (the "Trustee")
securing the series of Bonds of which this Bond is one. All
payments of interest on Bonds accruing interest at Multiannual or
Fixed Rates shall be paid to the Registered Owner hereof whose
name appears in the Bond Register kept by the Bond Registrar as of
the close of business on the applicable Record Date (as described
below) by check mailed on the Interest Payment Date, provided that
any Registered Owner of $1,000,000 or more in aggregate principal
amount of the Bonds may, upon written request given to the Paying
Agent at least five Business Days prior to an Interest Payment
Date designating an account in a domestic bank, be paid by wire
transfer of immediately available funds. All payments of interest
on Bonds accruing interest at Flexible, Daily, Weekly, Monthly,
Quarterly, or Semiannual Rates shall be paid to the Registered
Owner hereof whose name appears in the Bond Register kept by the
Bond Registrar as of the close of business on the applicable
Record Date in immediately available funds by wire transfer to a
bank within the continental United States or deposited to a
designated account if such account is maintained with the Paying
Agent as directed by the Registered Owner in writing or as
otherwise directed in writing by the Registered Owner prior to the
time of payment with respect to Bonds accruing interest at a
Flexible, Daily, Weekly, Monthly, Quarterly, or Semiannual Rate or
five Business Days prior to the Interest Payment Date with respect
to Bonds accruing interest at Daily or Weekly Rates. The Record
Date for any Interest Payment Date shall be the close of business
on the Business Day immediately preceding the Interest Payment
Date, except that, (i) while this Bond bears interest at the
Flexible Rate (as described herein), the Record Date shall be the
time of payment on the Interest Payment Date and (ii) while this
Bond accrues interest at the Multiannual or Fixed Rates (as
described herein), the Record Date shall be the close of business
on the 15th day (whether or not a Business Day) of the calendar
month immediately preceding such Interest Payment Date. This Bond
is registered as to both principal and interest in the Bond
Register kept by the Bond Registrar and may be transferred or
exchanged, subject to the further conditions specified in the
Indenture, only upon surrender hereof at the office of the Bond
Registrar. This Bond is payable solely from the sources
hereinafter mentioned.
The principal of, premium, if any, and interest on, and
Purchase Price of, this Bond are payable in lawful money of the
United States of America.
CAPITALIZED TERMS NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE
MEANINGS SPECIFIED THEREFOR IN THE INDENTURE.
THE BONDS SHALL BE DEEMED NOT TO CONSTITUTE A DEBT OF THE
STATE OF TEXAS, THE ISSUER, OR OF ANY OTHER POLITICAL CORPORATION,
SUBDIVISION, OR AGENCY OF THE STATE OR A PLEDGE OF THE FAITH AND
CREDIT OF ANY OF THEM. NO RECOURSE SHALL BE HAD FOR ANY CLAIM
BASED ON THE AGREEMENT, THE INDENTURE, OR THE BONDS AGAINST ANY
MEMBER, OFFICER OR EMPLOYEE, PAST, PRESENT OR FUTURE, OF THE
ISSUER, OR OF ANY SUCCESSOR BODY THERETO, EITHER DIRECTLY OR
THROUGH THE ISSUER, OR ANY SUCH SUCCESSOR BODY, UNDER ANY
CONSTITUTIONAL PROVISION, STATUTE OR RULE OF LAW OR BY THE
ENFORCEMENT OF ANY ASSESSMENT OR PENALTY OR OTHERWISE. NEITHER
THE FAITH AND CREDIT NOR THE TAXING POWER OF THE STATE OF TEXAS,
THE ISSUER, OR ANY OTHER POLITICAL CORPORATION, SUBDIVISION, OR
AGENCY IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF, REDEMPTION
PREMIUM, IF ANY, OR INTEREST ON, OR PURCHASE PRICE OF, THE BONDS.
THIS BOND IS A SPECIAL REVENUE OBLIGATION OF THE ISSUER PAYABLE
SOLELY FROM THE SOURCES DESCRIBED HEREIN AND THE HOLDER HEREOF
SHALL NEVER HAVE THE RIGHT TO DEMAND PAYMENT FROM MONEYS DERIVED
BY TAXATION OR ANY REVENUES OF THE ISSUER EXCEPT THE FUNDS PLEDGED
TO THE PAYMENT HEREOF.
This Bond is authorized and issued under and pursuant to
authority conferred by the Issuer Act, Chapter 30, Texas Water
Code, as amended, Chapter 383, Texas Health and Safety Code, as
amended, Article 717k, Vernon's Texas Civil Statutes, as amended,
and Article 717q, Vernon's Texas Civil Statutes, as amended
(collectively, the "Acts"), a resolution adopted by the Issuer
(the "Bond Resolution") and the Indenture. This Bond is one of a
duly authorized issue of revenue bonds of the Issuer issued in the
aggregate principal amount of $81,700,000 designated "Sabine River
Authority of Texas Pollution Control Revenue Refunding Bonds
(Southwestern Electric Power Company Project) Series 1996" (the
"Bonds") issued under the Indenture. The Bonds are being issued
by the Issuer for the purpose of paying a portion of the costs of
refunding $81,700,000 in aggregate principal amount of Sabine
River Authority of Texas Pollution Control Revenue Refunding Bonds
(Southwestern Electric Power Company Facilities) Series 1986.
The Indenture pledges substantially all right, title and interest
of the Issuer, in and to the Installment Payment Agreement, dated
as of June 15, 1996 (the "Agreement"), between the Issuer and the
Company, together with all moneys payable thereunder including
"Installment Payments" to be made by the Company in amounts equal
to the principal of, premium, if any, and interest on and Purchase
Price of, the Bonds, when due, but excluding certain payments to
the Issuer for fees, expenses, and indemnification.
FOR SO LONG AS THIS BOND IS HELD IN BOOK-ENTRY FORM
REGISTERED IN THE NAME OF CEDE & CO. ON THE REGISTRATION BOOKS OF
THE ISSUER KEPT BY THE TRUSTEE, AS BOND REGISTRAR, THIS BOND, IF
CALLED FOR PARTIAL REDEMPTION IN ACCORDANCE WITH THE INDENTURE,
SHALL BECOME DUE AND PAYABLE ON THE REDEMPTION DATE DESIGNATED IN
THE NOTICE OF REDEMPTION GIVEN IN ACCORDANCE WITH THE INDENTURE
AT, AND ONLY TO THE EXTENT OF, THE REDEMPTION PRICE, PLUS ACCRUED
INTEREST TO THE SPECIFIED REDEMPTION DATE; AND THIS BOND SHALL BE
PAID, TO THE EXTENT SO REDEEMED, (i) UPON PRESENTATION AND
SURRENDER THEREOF AT THE OFFICE SPECIFIED IN SUCH NOTICE OR (ii)
AT THE WRITTEN REQUEST OF CEDE & CO., BY CHECK OR DRAFT MAILED TO
CEDE & CO. BY THE TRUSTEE OR BY WIRE TRANSFER TO CEDE & CO. BY
THE TRUSTEE IF CEDE & CO. AS BONDOWNER SO ELECTS. IF, ON THE
REDEMPTION DATE, MONEYS FOR THE REDEMPTION OF BONDS TO BE
REDEEMED, TOGETHER WITH INTEREST TO THE REDEMPTION DATE, SHALL BE
HELD BY THE TRUSTEE SO AS TO BE AVAILABLE THEREFOR ON SUCH DATE,
AND AFTER NOTICE OF REDEMPTION SHALL HAVE BEEN GIVEN IN ACCORDANCE
WITH THE INDENTURE, THEN, FROM AND AFTER THE REDEMPTION DATE, THE
AGGREGATE PRINCIPAL AMOUNT OF THIS BOND SHALL BE IMMEDIATELY
REDUCED BY AN AMOUNT EQUAL TO THE AGGREGATE PRINCIPAL AMOUNT
THEREOF SO REDEEMED, NOTWITHSTANDING WHETHER THIS BOND HAS BEEN
SURRENDERED TO THE TRUSTEE FOR CANCELLATION.
If an Event of Default occurs, the principal of all Bonds
issued under the Indenture may become due and payable upon the
conditions and in the manner and with the effect provided in the
Indenture.
No recourse shall be had for the payment of the principal,
Purchase Price or redemption price of, premium, if any, or
interest on, this Bond, or for any claim based hereon or on the
Indenture, against any member, officer or employee, past, present
or future, of the Issuer or of any successor body, as such, either
directly or through the Issuer or any such successor body, under
any constitutional provision, statute or rule of law, or by the
enforcement of any assessment or by any legal or equitable
proceeding or otherwise.
Interest on the Bonds
The Bonds shall accrue interest at interest rates and for
Interest Rate Periods as determined in accordance with the
applicable provisions of the Indenture. The Bonds will be
subject to conversion as herein provided. Interest on the Bonds
in a Flexible Mode, Daily Mode, Weekly Mode or Monthly Mode shall
be payable on the applicable Interest Payment Date as herein
described, computed on the basis of a 365 or 366-day year, as
applicable for the number of days actually elapsed based on the
calendar year in which such Rate Period commences. The interest
on the Bonds in a Fixed Rate Mode, Multiannual Mode, Semiannual
Mode or Quarterly Mode shall be payable on the applicable Interest
Payment Date as herein described, computed on the basis of a 360-
day year of twelve 30-day months. While there exists an Event of
Default under this Indenture, the interest rate on the Bonds will
be the rate on the Bonds on the day before the Event of Default
occurred.
At the option of the Company and subject to certain
conditions provided for in the Indenture, including being subject
to veto by the Issuer, which veto may not be unreasonably
exercised, all or a portion of the Bonds (a) may be converted or
reconverted from time to time to or from the Daily Mode, the
Weekly Mode, the Monthly Mode, the Quarterly Mode, the Semiannual
Mode or the Multiannual Mode, which means that the Interest Rate
Period for Bonds in such Mode is, respectively, one day, one week,
one month, three months, six months or one year or any multiple of
one year, (b) may be converted or reconverted from time to time to
or from the Flexible Mode, and will have Interest Rate Periods of
from one to 270 days during the Flexible Mode as provided herein,
or (c) may be converted to or from the Fixed Rate Mode; provided,
however, that in the Multiannual Mode the first Interest Rate
Period occurring after conversion to such Mode may be shorter than
the applicable multiple of one year as provided herein.
Each determination and redetermination of interest rates and
Interest Rate Periods shall be made in accordance with the
Indenture and shall be conclusive and binding on the Issuer, the
Trustee, the Paying Agent, the Company and the Bondowners. Any
Bondowner may ascertain the rate of interest on its Bond or Bonds,
at any time by contacting the Paying Agent or the Remarketing
Agent.
Unless otherwise defined herein, capitalized terms used in
this Bond shall have the meaning given them in the Indenture. As
used herein, "premium" shall mean, with respect to any amount
payable on the Bonds, the amount, if any, by which the redemption
price thereof (exclusive of interest) exceeds the principal amount
thereof at the time such amount is payable. The following terms
are defined as follows:
"Business Day" means any day on which commercial banks
located in all of the cities in which the Principal Offices of the
Trustee, the Paying Agent and the Remarketing Agent are located
are not required or authorized by law or regulation to remain
closed and on which the New York Stock Exchange is not closed.
"Conversion Date" means the date on which a new Mode becomes
effective with respect to a Bond, and with respect to a Bond in
the Multiannual Mode, the date on which a new Interest Rate Period
for such Bond becomes effective.
"Effective Date" means, with respect to a Bond (a) in the
Daily, Flexible, Weekly, Monthly, Quarterly, Semiannual and
Multiannual Modes, the date on which a new Interest Rate Period
for that Bond takes effect and (b) in the Multiannual or Fixed
Rate Mode, any date on which such Bond is subject to optional
redemption.
"Electronic Notice" means notice transmitted through a time-
sharing terminal, by facsimile transmission or by telephone
(promptly confirmed in writing or by facsimile transmission).
"Interest Rate Period" or " Rate Period" means, when used
with respect to any particular rate of interest for a Bond in the
Daily, Flexible, Weekly, Monthly, Quarterly, Semiannual or
Multiannual Mode, the period during which such rate of interest
determined for such Bond will remain in effect as described
herein.
"Mode" means the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily Mode,
the Flexible Mode, the Weekly Mode, the Monthly Mode, the
Quarterly Mode, the Semiannual Mode, the Multiannual Mode and the
Fixed Rate Mode.
"Principal Office" means the business address designated as a
principal office pursuant to the Indenture. In the case of the
initial Trustee and Paying Agent, "Principal Office" refers to its
principal corporate trust office in New York, New York.
"Purchase Date" means the date on which this Bond shall be
required to be purchased pursuant to a mandatory or optional
tender in accordance with the provisions hereof.
"Purchase Price" means, with respect to a Bond on a Purchase
date, a price equal to par plus accrued interest to the Purchase
Date; provided that in the event that the Purchase Date is an
Interest Payment Date for such Bond and such Bond is not in the
Flexible Mode, accrued interest will be paid separately and not as
a part of the Purchase Price on such date; and further provided
that in the event such Bond bears interest at a Multiannual or
Fixed Rate and is subject to mandatory tender on a date on which
the Bond is subject to optional redemption, Purchase Price shall
include any premium that would be payable on the Purchase Date if
such Bond were redeemed on the Purchase Date..
Flexible Rate
While the Bonds accrue interest at Flexible Rates, the
Remarketing Agent shall determine the Flexible Rate and the
Flexible Rate Period for each Bond and such Flexible Rate will
remain in effect from and including the commencement date of the
Flexible Rate Period selected for that Bond by the Remarketing
Agent to, but not including, the last date thereof. While the
Bonds are in the Flexible Mode, Bonds may have successive
Interest Rate Periods of any duration up to 270 days each and any
Bond may accrue interest at a rate and for a period different from
any other Bond. No Interest Rate Period may be established which
exceeds such maximum Interest Rate Period or, if the Remarketing
Agent has given or received notice of any conversion to a
Multiannual or Fixed Rate, the remaining number of days prior to
the Conversion Date or, if the Remarketing Agent has given or
received notice of any conversion to a Daily, Weekly, Monthly,
Quarterly or Semiannual Mode, the length of each Interest Rate
Period for each Bond in the Flexible Mode shall be determined by
the Remarketing Agent to be either (A) that length of period that,
as soon as possible, shall enable the Interest Rate Periods for
all Bonds to end on the day before the Conversion Date, or (B)
that length of period which, based on the Remarketing Agent's
judgment, will best promote an orderly transition to the next
Interest Rate Period.
Daily Rate
While the Bonds accrue interest at a Daily Rate, the interest
rate established for the Bonds will be effective from day to day
until changed by the Remarketing Agent in accordance with the
Indenture.
Weekly Rate
While the Bonds accrue interest at a Weekly Rate, the rate of
interest on the Bonds will be determined weekly by the Remarketing
Agent in accordance with the Indenture to be effective for a seven
day period commencing on Wednesday of the week of such
determination. (The length of the period, the day of commencement
and the last day of the period may vary in the event of a
conversion to or from a Weekly Mode.)
Monthly Rate
While the Bonds accrue interest at a Monthly Rate, the rate
of interest on the Bonds will be determined monthly by the
Remarketing Agent in accordance with the Indenture to be effective
from the first Business Day of a month through the day preceding
the first Business Day of the succeeding month. (The length of
the period, the day of commencement and the last day of the period
may vary in the event of a conversion to or from a Monthly Mode.)
Quarterly Rate
While the Bonds accrue interest at a Quarterly Rate, the rate
of interest on the Bonds will be determined quarterly by the
Remarketing Agent in accordance with the Indenture to be effective
for a calendar quarter, commencing on January 1, April 1, July 1
and October 1. (The length of the period, the day of commencement
and the last day of the period may vary in the event of a
conversion to or from a Quarterly Mode.)
Semiannual Rate
While the Bonds accrue interest at a Semiannual Rate, the
rate of interest on the Bonds will be determined semiannually by
the Remarketing Agent in accordance with the Indenture to be
effective for a six month period, commencing on April 1 or October
1. (The length of the period, the day of commencement and the
last day of the period may vary in the event of a conversion to or
from a Semiannual Mode.)
Multiannual Rate
While the Bonds accrue interest at a Multiannual Rate, the
interest rate will be determined by the Remarketing Agent in
accordance with the Indenture to remain in effect for a term of
one year or any whole multiple of one year selected by the Company
provided that the initial Interest Rate Period may be shorter than
the applicable multiple of one year. The length of any such
Interest Rate Period established will remain in effect until
changed by the Company, in accordance with the Indenture.
Fixed Rate
Upon conversion to a Fixed Rate, the Bonds shall bear
interest to the Maturity Date set forth above or until converted
to a different Mode at a fixed rate of interest determined by the
Remarketing Agent in accordance with the Indenture. If initially
issued at a Fixed Rate, the Bonds shall bear interest to the
Maturity Date set forth above or until converted to a different
Mode at the Interest Rate set forth above.
Authorized Denominations
Bonds which accrue interest at a Flexible Rate will be issued
in denominations of $100,000 and any integral multiples of
$1,000 in excess thereof. Bonds which accrue interest at a
Daily or Weekly Rate will be issued in denominations of $100,000
and whole multiples thereof; provided that if the principal amount
of Bonds in the Daily or Weekly Mode, as the case may be, is not
evenly divisible by $100,000, then the remainder of such amount
shall be added to another Bond in the same Mode that is in a
principal amount of $100,000 or any integral multiples thereof.
Bonds which accrue interest at a Monthly, Quarterly, Semiannual,
Multiannual or Fixed Rate will be issued in the denomination of
$5,000 and whole multiples thereof.
Optional Tenders
While this Bond accrues interest at a Daily, Weekly, Monthly,
Quarterly, Semiannual or Multiannual Rate, the Registered Owner of
this Bond has the right to tender this Bond for purchase at the
principal amount hereof plus accrued interest as follows: (i)
during a Daily Rate Period on any Business Day upon written
notice, telephonic notice, or Electronic Notice to the Paying
Agent on the Purchase Date, (ii) during a Weekly Mode on any
Business Day upon written or Electronic Notice to the Paying Agent
on a Business Day not fewer than seven days prior to the Purchase
Date or (iii) during a Monthly, Quarterly, Semiannual, or
Multiannual Rate Period, on any Interest Payment Date, which also
must be an Effective Date of a Rate Period, upon written notice to
the Paying Agent not less than fifteen days before the Purchase
Date.
As long as the book-entry system is in effect, the Beneficial
Owner of a Bond may demand purchase of the Bond (or portion
thereof) owned by it by providing notice as provided above through
the Beneficial Owner's DTC Participant; provided such notice shall
be given by 10:00 a.m., New York City time, on the date such
notice is required to be given. If the book-entry system is not
in effect, the registered owner of this Bond may demand purchase
of this Bond (or portion thereof in Authorized Denominations) by
providing notice to the Paying Agent as provided above and
delivering this Bond to the Paying Agent at its Principal Office.
If the Registered Owner of a Bond has elected to tender such
Bond for purchase, such Registered Owner shall be deemed to have
agreed irrevocably to sell such Bond to any purchaser determined
in accordance with the provisions of the Indenture on the date
fixed for purchase at the Purchase Price and any Bond not
delivered shall be deemed tendered (an "Undelivered Bond") and
shall cease to be Outstanding under the Indenture and no further
interest shall accrue as of the Purchase Date. Notice of tender
of a Bond is irrevocable. All notices of tender of Bonds bearing
interest at a Weekly, Monthly, Quarterly, Semiannual or
Multiannual Rate shall be made to the Paying Agent in writing or
by Electronic Notice (or such other notice as may be specified by
the procedures of The Depository Trust Company or its successor so
long as this Bond is held in book-entry form) at its Principal
Office in substantially the form as provided in the Form of
Bondholder's Election Notice for Bonds Subject to Optional Tender
attached hereto or such other form of notice satisfactory to the
Paying Agent which sets forth the principal amount of Bonds to be
purchased, the purchase date on which such Bonds shall be
purchased, the name, address and taxpayer identification number of
the Registered Owner and the payment instructions for the Purchase
Price. All deliveries of tendered Bonds, including deliveries of
Bonds subject to mandatory tender, shall be made to the Paying
Agent at its Principal Office.
Mandatory Tenders
While this Bond accrues interest at a Flexible Rate, this
Bond is subject to mandatory tender on each Effective Date
applicable to this Bond at the Purchase Price.
This Bond is subject to mandatory tender on the effective
date of a change from one Mode to a different Mode (other than
from a Daily Mode to a Weekly Mode or a Weekly Mode to a Daily
Mode) or a change from one Interest Rate Period to an Interest
Rate Period of different duration within the Multiannual Mode at
the Purchase Price.
BY ACCEPTANCE OF THIS BOND, THE REGISTERED OWNER HEREOF
AGREES THAT THIS BOND WILL BE PURCHASED, WHETHER OR NOT SURREN-
DERED, ON THE PURCHASE DATE AS DESCRIBED ABOVE. IN SUCH EVENT,
THE REGISTERED OWNER OF THIS BOND SHALL NOT BE ENTITLED TO RECEIVE
ANY FURTHER INTEREST HEREON, SHALL HAVE NO FURTHER RIGHTS UNDER
THIS BOND OR THE INDENTURE EXCEPT TO RECEIVE PAYMENT OF THE
PURCHASE PRICE HELD THEREFOR, AND SHALL THEREAFTER HOLD THIS BOND
AS AGENT FOR THE PAYING AGENT.
Payment of Purchase Price
The Purchase Price for Bonds (except Bonds in the Multiannual
Mode, which shall be in clearinghouse funds) is payable by wire or
bank transfer within the continental United States in immediately
available funds from the Paying Agent to the Registered Owner. If
on any date this Bond is subject to mandatory tender for purchase
or is required to be purchased at the election of the Registered
Owner, payment of the Purchase Price of this Bond to such
Registered Owner shall be made on the Purchase Date if delivery of
this Bond is made prior to 11:00 a.m., New York City time, on the
Purchase Date or on such later Business Day upon which delivery of
this Bond is made prior to 11:00 a.m., New York City time.
BY ACCEPTANCE OF THIS BOND, THE REGISTERED OWNER HEREOF
AGREES THAT THIS BOND WILL BE PURCHASED, WHETHER OR NOT SURREN-
DERED, ON THE PURCHASE DATE AS DESCRIBED ABOVE. IN SUCH EVENT,
THE REGISTERED OWNER OF THIS BOND SHALL NOT BE ENTITLED TO RECEIVE
ANY FURTHER INTEREST HEREON, SHALL HAVE NO FURTHER RIGHTS UNDER
THIS BOND OR THE INDENTURE EXCEPT TO RECEIVE PAYMENT OF THE
PURCHASE PRICE HELD THEREFOR, AND SHALL THEREAFTER HOLD THIS BOND
AS AGENT FOR THE PAYING AGENT.
The initial Remarketing Agent under the Indenture is
Goldman, Sachs & Co. The Remarketing Agent may be changed at any
time in accordance with the Indenture.
Written Notice of Mode or Interest Rate Period Change
The Trustee shall give notice, by first class mail, to the
Registered Owners of all Bonds of the proposed conversion from one
Mode to another Mode, or the commencement of a new Interest Rate
Period in the Multiannual Mode, at least 15 days before the
proposed Conversion Date while the Bonds accrue interest at
Flexible, Daily, Weekly, Monthly, Quarterly or Semiannual Rates
and at least 30 days before the proposed Conversion Date while the
Bonds accrue interest at Multiannual or Fixed Rates.
Interest Payment Dates
While this Bond accrues interest at a Flexible Rate, interest
is payable on the first Business Day after the last day of each
Interest Rate Period. While this Bond accrues interest at Daily,
Weekly or Monthly Rates, interest is payable on the first Business
Day of each calendar month following a month in which interest at
such rate has accrued. While this Bond accrues interest at a
Quarterly Rate, interest is payable on each January 1, April 1,
July 1 and October 1. While this Bond accrues interest at a
Semiannual, Multiannual or Fixed Rate, interest is payable on the
first day of the immediately succeeding April or October after
Conversion to such Mode and thereafter on each April 1 and October
1.
Optional Redemption
The Bonds are subject to optional redemption as follows:
(A) During any Daily, Flexible, Weekly, Monthly,
Quarterly or Semiannual Mode, the Bonds in such Mode shall be
subject to redemption prior to maturity at the option of the
Issuer upon written direction of the Company delivered to the
Trustee in whole or in part (and if in part in an Authorized
Denomination) on any Interest Payment Date, at a redemption price
equal to the principal amount thereof plus accrued interest
thereon to the redemption date.
(B) During any Multiannual or Fixed Rate Mode, the
Bonds in such Mode shall be subject to redemption prior to
maturity at the option of the Issuer upon written direction of the
Company delivered to the Trustee in whole or in part (and if in
part in an Authorized Denomination) on any Business Day after the
No-Call Period described below, at the following redemption
prices (expressed as percentages of the principal amount of the
Bonds called for redemption) plus accrued interest to the date
fixed for redemption:
LENGTH OF
INTEREST
RATE PERIOD
greater than or
equal to 11 years
less than 11 years<PAGE>
NO-CALL PERIOD
10 years from the
commencement of
Interest
Rate Period
No call<PAGE>
REDEMPTION PRICES
102%, declining 1%
per year to 100%
The optional redemption dates and redemption prices set forth
above may be changed as provided in the Indenture, provided that
any alternate redemption schedule shall be accompanied by a
Favorable Opinion.
[Insert Redemption Provisions for Initial Fixed Rate Mode
Interest Period from Approval Certificate].
So long as any Bond is in the Multiannual or Fixed Rate Mode,
such Bond is subject to mandatory tender in lieu of optional
redemption at the election of the Company.
Extraordinary Optional Redemption
The Bonds are subject to redemption in whole on the next
available Interest Payment Date for which notice of redemption can
be given, at a redemption price equal to the aggregate principal
amount of the Bonds Outstanding plus accrued interest thereon to
the redemption date, without premium, upon receipt by the Trustee
of a written notice from the Company stating that any of the
following events has occurred within the preceding 270 days and
that it intends to exercise its option to effect the redemption
of the Bonds as a whole:
(i) In the reasonable judgment of the Company
unreasonable burdens or excessive liabilities shall have been
imposed upon the Issuer or the Company with respect to the Project
or the Plant, including without limitation (A) the imposition of
any income or other taxes not being imposed on June 15, 1996 or
(B) the imposition of any ad valorem property or other taxes
(other than ad valorem property or other taxes being imposed on
June 15, 1996 upon similarly assessed property within the same
taxing jurisdiction);
(ii) The Project or the Plant shall have been damaged
or destroyed to such extent that, in the opinion of the Company,
(A) within a period of six consecutive months following such
damage or destruction, it is not practicable or desirable to
rebuild, repair or restore the same, (B) the Company will be
thereby prevented from carrying on its normal operations of the
Project or the Plant for a period of six or more consecutive
months or (C) the cost of restoration would exceed by $1,500,000
or more the net proceeds of insurance thereon;
(iii) Title to, or temporary use of, all or
substantially all of the Project or the Plant shall have been
taken under the exercise of the power of eminent domain;
(iv) Changes in the economic availability of materials,
labor, services, supplies (including fuel), equipment or other
property, facilities or things necessary for the operation of the
Project or the Plant shall have occurred, or technological,
regulatory or other changes shall have occurred, which, in the
opinion of the Company, render the continued operation of the
Project or the Plant uneconomic;
(v) Any court or administrative body shall enter a
judgment, order or decree requiring the Company to cease, or
dispose of, all or any substantial part of its operations of the
Project or the Plant to such extent that, in the opinion of the
Company, it is or will be thereby prevented from carrying on its
normal operations of the Project or the Plant for a period of six
or more consecutive months; or
(vi) As a result of any change in the Constitution
of the State of Texas or the Constitution of the United
States of America or of any legislative or
administrative action (whether state or federal) or of
any final decree, judgment, or order of any court or
administrative body (whether state or federal), the
obligations of the Company under the Agreement shall
have become unenforceable or impossible of performance
in any material respect in accordance with the intent
and purpose of the parties as expressed in the
Agreement.
Extraordinary Mandatory Redemption
The Bonds are subject to mandatory redemption in whole or in
part at any time if such partial redemption will preserve the
exemption from federal income taxation of interest on the
remaining Bonds Outstanding, at a redemption price equal to the
principal amount thereof together with unpaid interest accrued to
the date fixed for redemption, and without premium, if (i) a final
decree or judgment of any federal court, in which the Company
participates to the extent it deems sufficient, or (ii) a final
action by the Internal Revenue Service, in proceedings in which
the Company participates to the extent it deems sufficient,
determines that the interest paid or payable on any such Bonds to
other than, as provided in the Code, a "substantial user" of the
Projector a "related person" is or was includable in the gross
income of the owner thereof for federal income tax purposes under
the Code, as a result of the failure by the Company to observe or
perform any covenant, condition, or agreement on its part to be
observed or performed under the Agreement or the inaccuracy of any
representation by the Company under the Agreement; provided,
however, that no decree or judgment by any court or action by the
Internal Revenue Service shall be considered final unless the
Registered Owner involved in such proceeding or action (A) gives
the Company and the Trustee prompt notice of the commencement
thereof and (B), if the Company agrees to pay all expenses in
connection therewith and to indemnify such Registered Owner
against all liabilities in connection therewith, offers the
Company the opportunity to control the defense thereof. Any such
redemption shall be made on a date determined by the Trustee not
more than 180 days after the time of such final decree, judgment
or action. The Trustee shall give the Issuer and the Company not
less than forty-five days written notice of such date.
Not less than 30 nor more than 60 days prior to any
redemption date, the Trustee shall cause notice of the call for
redemption, identifying each Bond or portion thereof to be
redeemed, given in the name of the Issuer, to be sent by first
class mail (except when DTC is the Registered Owner of all of the
Bonds and except for persons or entities owning or providing
evidence of ownership satisfactory to the Trustee of a legal or
beneficial ownership in at least $1,000,000 in principal amount of
Bonds, in which cases, certified mail) to the Registered Owner of
each Bond to be redeemed at the address shown on the books kept by
the Trustee as Bond Registrar; should any Bond called for
redemption not be presented for payment within 30 days of the
redemption date therefor, the Trustee shall cause a second notice
of the call for redemption to be given by certified mail within 60
days after the redemption date. Failure to give such notice or
any defect therein shall not affect the sufficiency or validity of
any proceedings for the redemption of any other Bond. By the date
fixed for any such redemption, due provision shall be made with
the Trustee for the payment of the redemption price of, and
interest on, the Bonds to be redeemed on the date of redemption.
If notice of redemption is given and if due provision for payment
of the redemption price and interest is made, all as provided in
the Indenture, the Bonds or portions thereof which are to be
redeemed shall not bear interest after the date fixed for
redemption, and shall not be entitled to any benefit or security
under the Indenture, except for the right of the Registered Owner
to receive the redemption price thereof and accrued interest
thereon out of the funds provided for such payment.
Notwithstanding the provisions of the foregoing paragraph, no
notice of redemption is required to be given to the owner of any
Bond which is subject to mandatory tender on the date fixed for
redemption.
If at the time of mailing of notice of any optional
redemption in connection with a refunding of the Bonds, the
Company shall not have deposited with the Trustee moneys
sufficient to redeem all of the Bonds called for redemption, such
notice may state that it is conditional in that it is subject to
the deposit of the proceeds of refunding bonds with the Trustee
not later than the redemption date, and such notice shall be of no
effect unless such moneys are so deposited.
General Provisions
The Bonds are all issued under and entitled to the benefits
of the Indenture. Pursuant to the Indenture, the Issuer has
pledged and assigned to the Trustee the Trust Estate (as defined
in the Indenture), which includes the Installment Payments, as
security for its obligation to pay the principal of, premium, if
any, and interest on, and Purchase Price of, the Bonds. Reference
is made to the Indenture for definitions of the terms used herein,
for a description of the Trust Estate and for the provisions
thereof with respect to the nature and extent of the security
granted by the Issuer to the Trustee thereunder, the rights,
duties and obligations of the Issuer and the Trustee, the rights
of the Registered Owners of the Bonds, and the terms on which the
Bonds are issued and secured, to all of which provisions, and to
all other provisions of the Indenture, the Registered Owner hereof
by the acceptance of this Bond assents. The Registered Owner
hereof shall never have the right to demand payment out of any
funds raised or to be raised by taxation or from any source
whatsoever except the Trust Estate. Except for the lien on and
the assignment and pledge of the Trust Estate, no property of the
Issuer is encumbered by any lien or security interest for the
benefit of the Registered Owner of this Bond.
The ownership of this Bond may be transferred (in Authorized
Denominations) only upon presentation and surrender of this Bond
at the Principal Office of the Trustee as Bond Registrar together
with an assignment duly executed by the Registered Owner hereof or
his duly authorized attorney-in-fact in such form as shall be
satisfactory to the Trustee, and subject to the provisions made
therefor in the Indenture, provided that the Trustee shall not be
required to make any such transfer of any Bond during the 10
Business Days immediately preceding the mailing of a notice of
Bonds selected for redemption or, with respect to a Bond, after
such Bond or any portion thereof has been selected for redemption.
Bonds may be exchanged at the principal corporate trust office of
the Trustee or at the offices of the Trustee's Agent for other
Bonds aggregating a like principal amount. Bonds issued in
exchange for other Bonds may be issued only in Authorized
Denominations. Any service charge made by the Trustee or the
Trustee's Agent for any such registration, transfer or exchange
hereinbefore referred to shall be paid by the Company. The
Trustee, the Trustee's Agent, or the Issuer may require payment by
the Registered Owner of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. The Issuer,
the Company, the Trustee and the Trustee's Agent may treat the
person in whose name this Bond is registered as the absolute owner
hereof for any purpose, whether or not this Bond would be overdue,
and neither the Issuer, the Company, the Trustee, nor the
Trustee's Agent shall be affected by notice to the contrary.
Provisions may be made for the payment of amounts represented
by the Bonds as provided in the Indenture, in which event all
liability of the Issuer to the Registered Owners of the applicable
Bonds for the payment of such Bonds shall forthwith cease,
terminate and be completely discharged, and thereupon it shall be
the duty of the Trustee to hold such funds (but only for the
period specified and as provided in the Indenture), without
liability for interest thereon, for the benefit of the Registered
Owners of such Bonds, who shall thereafter be restricted
exclusively to such funds for any claims of whatever nature under
the Indenture or on, or with respect to, said Bonds.
The Bonds are secured by the Indenture, whereunder the
Trustee undertakes to enforce the rights of the Registered Owners
of the Bonds and to perform other duties to the extent and under
the conditions stated in the Indenture. In case an Event of
Default shall occur, the principal of the Bonds then Outstanding
may, and, under certain circumstances, shall, be declared to be
due and payable immediately upon the conditions and in the manner
provided in the Indenture. Failure to pay interest on any Bond
when due does not constitute an Event of Default until such
failure has continued for a period of one Business Day or more,
except while the Bonds bear interest at a Multiannual Rate or the
Fixed Rate, in which case until such failure has continued for a
period of sixty days or more. Under the circumstances provided in
the Indenture, the Trustee may in its discretion and upon written
request of the Registered Owners of a majority in aggregate
principal amount of the Bonds then Outstanding shall, waive any
Event of Default and its consequences; provided, however, that
default in the payment of the principal of, premium, if any, or
interest on, or Purchase Price of, the Bonds may not be so waived.
The Registered Owners of the Bonds shall have no right to
institute any action, suit or proceeding at law or in equity to
enforce the Indenture, except as provided in the Indenture;
provided, however, that nothing in the Indenture shall affect or
impair the right of the Registered Owner of any Bond to enforce
the payment of the principal of, premium, if any, and interest on
such Bond from the source and in the manner herein expressed.
Reference is hereby made to the Indenture and the Agreement for
additional provisions with respect to the nature and extent of the
security, the rights, duties, and obligations of the Company, the
Issuer, the Trustee, and the owners of the Bonds, the terms upon
which the Bonds are issued and secured, and the modification of
any of the foregoing.
The Issuer has reserved the right to amend the Indenture.
Under some (but not all) circumstances amendments thereto must
also be approved by (a) the Registered Owners of at least a
majority in aggregate principal amount of the Outstanding Bonds or
(b) if less than all of the Bonds are in a particular Mode and the
amendment affects only the Owners of Bonds in that Mode, the
Owners of at least a majority in aggregate principal amount of the
Outstanding Bonds in such Mode.
No recourse shall be had for the payment of the principal,
Purchase Price or redemption price of, premium, if any, or
interest on, this Bond, or for any claim based hereon or on the
Indenture, against any member, officer or employee, past, present
or future, of the Issuer or of any successor body, as such, either
directly or through the Issuer or any such successor body, under
any conditional provision, statute or rule of law, or by the
enforcement of any assessment of by any legal or equitable
proceeding or otherwise.
This Bonds shall not be valid or become obligatory for any
purpose or be entitled to any security or benefit under the
Indenture until either (i) the Certificate of Authentication
hereon shall have been signed by the Trustee as Bond Registrar, or
any successor, or (ii) a manually signed Comptroller's
Registration Certificate has been attached hereto or endorsed
hereon.
It is hereby certified, recited and declared that all acts,
conditions and things required to exist, happen and be performed
precedent to and in the execution and delivery of the Indenture
and the issuance of this Bond do exist, have happened and have
been performed in due time, form and manner as required by law;
and that the issuance of this Bond and the issue of which it forms
a part, together with all other obligations of the Issuer, does
not exceed or violate any constitutional or statutory limitation.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be
executed in its name by the manual or facsimile signature of its
President and attested by the manual or facsimile signature of its
Secretary, all as of the date first above written.
SABINE RIVER AUTHORITY OF TEXAS
By:______________________________
President
ATTEST:
By:______________________________
Secretary
(SEAL)
(FORM OF TRUSTEE'S AUTHENTICATION CERTIFICATE FOR BONDS)
TRUSTEE'S CERTIFICATE
DATE: __________
This bond is one of the bonds described in the within
mentioned Indenture of Trust.
THE BANK OF NEW YORK, Trustee
__________________________________
Authorized Signatory
(INSERT APPROPRIATE BOND INSURANCE LEGEND, IF ANY)
(FORM OF BONDOWNERS' ELECTION NOTICE FOR BONDS
SUBJECT TO OPTIONAL TENDER)
(to be used only in connection with Bonds
subject to optional tender)
Sabine River Authority of Texas
Pollution Control Revenue Refunding Bond
(Southwestern Electric Power Company Project) Series 1996
Principal Principal Amount
Amount CUSIP Tendered for Purchase Bond NumbersPurchase
Date
The undersigned hereby certifies that it is the Registered
Owner or the Beneficial Owner (as described below) of the Bonds
described above (the "Tendered Bonds"), all of which are in the
_________________ Mode [insert Mode of Tendered Bonds], and hereby
agrees that the delivery of this instrument of transfer to the
Paying Agent by 10:00 A.M. New York City time on this Business Day
(for Daily Mode Bonds only) constitutes an irrevocable offer to sell
the Tendered Bonds to the Company or its designee on the Purchase
Date, which shall be a Business Day at least __________ (____)
calendar days following delivery of this instrument*, at a purchase
price equal to the unpaid principal balance thereof plus accrued and
unpaid interest thereon to the Purchase Date (the "Purchase Price")
provided that if the Purchase Date is an Interest Payment Date, it
is recognized that accrued interest will be paid separately and not
as part of the Purchase Price on such date. The undersigned
acknowledges and agrees that this election notice is irrevocable and
that the undersigned will have no further rights with respect to the
Tendered Bonds, except payment, upon presentation and surrender, of
the Purchase Price by wire or bank transfer within the continental
United States from the Paying Agent, at its address shown on the
registration books of the Bond Registrar (i) on the Purchase Date if
the Tendered Bonds shall have been surrendered to the Paying Agent
prior to 11:00 A.M., New York City time, on the Purchase Date or
(ii) on any Delivery Date subsequent to the Purchase Date on which
Tendered Bonds are delivered to the Paying Agent by 11:00 A.M., New
York City time.
Except as otherwise indicated herein and unless the context
otherwise requires, the terms used herein shall have the meanings
set forth in the Indenture of Trust dated as of June 15, 1996
between the Sabine River Authority of Texas and The Bank of New
York, as Trustee, relating to the Bonds.
Date: ______________________________
- -----------------------
* In the case of Tendered Bonds that were in the Daily Mode, the
words on the Purchase Date, which shall be a Business Day at least
______ (______) calendar days following delivery of this instrument
shalll be replaced by the words on this Business Day.
Signature(s)
________________________________________
________________________________________
________________________________________
(Street City
State Zip)
IMPORTANT: The above signature(s) must correspond with the name(s)
as set forth on the face of the Tendered Bond(s) with respect to
which this Bondowner's Election Notice is being delivered without
any change whatsoever. If this notice is signed by a person other
than the Registered Owner of any Tendered Bond(s), the Tendered
Bond(s) must be either endorsed on the Assignment appearing on each
Bond or accompanied by appropriate Bond powers, in each case signed
exactly as the name or names of the Registered Owner or owners
appear on the Bond Register. The method of presenting this notice
to the Paying Agent is the choice of the person making such
presentation. If it is made by mail, it should be by registered
mail with return receipt requested.
Notwithstanding the foregoing, during the time the Bonds are
issued in book-entry-only form, this Bondowner's Election Notice
must be signed by the Beneficial Owner of the Bonds or by a duly
authorized attorney and must be accompanied by an affidavit in the
form attached hereto.
AFFIDAVIT
State of ______________________
Parish/County of _______________
Before Me, the undersigned authority, duly commissioned and
qualified within and for the State and Parish/County aforesaid,
personally came and appeared
_____________________________________
who being by me first duly sworn, deposed and said that he/she is
the owner of the following Sabine River Authority of Texas Pollution
Control Revenue Refunding Bonds (Southwestern Electric Power Company
Project) Series 1996.
Principal Amount CUSIP Maturity Date
Sworn to and subscribed before me this _______ day of
____________________, ______.
______________________________________
Notary Public
[FORM OF ASSIGNMENT]
ASSIGNMENT
THIS ASSIGNMENT IS SUBJECT TO THE RESTRICTIONS ON
TRANSFERABILITY SET FORTH ON THE FACE OF THE BOND
The following abbreviations, when used in the inscription on
the face of this Bond, shall be construed as though they were
written out in full according to applicable laws or regulations:
UNIF GIFT MIN ACT--
TEN COM -- as tenants in common ____ Custodian ____
TEN ENT -- as tenants by the entireties (Cust) (Minor)
JT TEN -- as joint tenants with right under Uniform Gifts to
of survivorship and not as Minors Act _________
tenants in common (State)
Additional abbreviations may also be used though not in the above
list.
FOR VALUE RECEIVED, the undersigned sells, assigns and
transfers unto
Please Insert Social Security or
Other Identifying Number of Assignee
/___________________________________/
____________________________________________________________
(Name and Address of Assignee)
the within Bond and does hereby irrevocably constitute and appoint
_________________________ to transfer said Bond on the books kept
for registration thereof with full power of substitution in the
premises.
Date: _____________________
____________________________________
Signature Guaranteed: ____________________________________
NOTICE: The signature to this assignment must correspond with the
name as it appears upon the face of the within Bond in every
particular, without alteration or enlargement or any change
whatever; and
NOTICE: Signature(s) must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Trustee, which
requirements include membership or participation in STAMP or such
other "signature guaranty program" as may be determined by the
Trustee in addition to or in substitution for STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
[FORM OF REGISTRATION INFORMATION]
REGISTRATION INFORMATION
Under the terms of the Indenture, the Trustee will register a
Bond in the name of a transferee only if the owner of such Bond (or
his duly authorized representative) provides as much of the
information requested below as is applicable to such owner prior to
submitting this Bond for transfer.
Name:
_________________________________________________________
Address:
_________________________________________________________
Social Security or Employer
Identification Number:
_________________________________________________________
If a Trust, Name and Address of
Trustee(s) and Date of Trust:
_________________________________________________________
[FORM OF REGISTRATION CERTIFICATE
(to be attached to initial bonds only)]
COMPTROLLER'S REGISTRATION CERTIFICATE: REGISTER NO.
I hereby certify that this bond has been examined, certified as
to validity, and approved by the Attorney General of the State of
Texas, and that this bond has been registered by the Comptroller of
Public Accounts of the State of Texas.
Witness my signature and seal this
________________________________
Comptroller of Public Accounts
of the State of Texas
Section 2.04. Execution; Limited Obligations. The Bonds shall
be executed on behalf of the Issuer with the manual or facsimile
signature of the President of the Issuer, and attested, under a
manual or facsimile impression of the seal of the Issuer, with the
manual or facsimile signature of the Secretary of the Issuer. All
authorized facsimile signatures shall have the same force and effect
as manual signatures. A facsimile impression of the Issuer's seal
shall have the same force and effect as a manual impression. In
case any officer of the Issuer whose signature or a facsimile
thereof appears on a Bond shall cease to be such officer before the
delivery of such Bond, such signature or such facsimile shall
nevertheless be valid and sufficient for all purposes, the same as
if such officer had remained in office until delivery.
The Bonds are not and never shall become general obligations of
the Issuer, but are limited obligations payable by the Issuer solely
and only from the payments received under or with respect to the
documents executed by the Company (except to the extent paid out of
moneys attributable to the proceeds derived from the sale of the
Bonds or income from the temporary investment of such funds or other
funds held hereunder), which amounts, together with any other
security provided herein, are hereby specifically assigned and
pledged to such purposes, in the manner and to the extent provided
herein. The Bonds shall be deemed not to constitute a debt of the
State of Texas, the Issuer, or of any other political corporation,
subdivision, or agency of the State or a pledge of the faith and
credit of any of them. No recourse shall be had for any claim based
on the Agreement, the Indenture, or the Bonds against any member,
officer or employee, past, present or future, of the Issuer, or of
any successor body thereto, either directly or through the Issuer,
or any such successor body, under any constitutional provision,
statute or rule of law or by the enforcement of any assessment or
penalty or otherwise. Neither the State of Texas nor any political
corporation, subdivision, or agent or the State of Texas shall be
obligated to pay the Bonds and neither the faith and credit nor the
taxing power of the State of Texas or any other political
corporation, subdivision, or agency is pledged to the payment of the
principal of, redemption premium, if any, or interest on, or
Purchase Price of, the Bonds. This Bond is a special revenue
obligation of the Issuer payable solely from the sources described
herein and the holder hereof shall never have the right to demand
payment from moneys derived by taxation or any revenues of the
Issuer except the funds pledged to the payment hereof.
Section 2.05. Conditions Precedent to Delivery of Bonds;
Authentication. The Issuer shall execute and deliver the Bonds to
the Trustee, and the Trustee shall, upon receipt by the Trustee of
the purchase price for the Bonds, deliver the Bonds to the initial
purchasers thereof. Prior to and as a condition precedent to the
delivery of the Bonds there shall be filed with and delivered to the
Trustee:
(i) a certified copy of the Bond Resolution;
(ii) original executed counterparts of this Indenture, the
Approval Certificate, and the Agreement;
(iii) a written order of the Issuer, directed to the
Trustee, instructing the Trustee to deliver the Bonds to the initial
purchasers thereof upon payment to the Trustee for the account of
the Issuer of the sum specified in such written order; and
(iv) an opinion of Bond Counsel substantially to the effect
that (A) the Bonds constitute legal, valid and binding limited
obligations of the Issuer, enforceable in accordance with their
terms, subject to bankruptcy, insolvency, moratorium, reorganization
and other similar laws affecting the rights of creditors and to the
exercise of judicial discretion in accordance with general
principles of equity and (B) the interest on the Bonds is excludable
from gross income for Federal income tax purposes under existing
statutes, regulations, published rulings and judicial decisions,
except for interest on any Bond for any period during which such
Bond is held by a "substantial user" of any facilities financed with
the proceeds of the Bonds or a "related person," as such terms are
used in Section 147(a) of the Code, and other customary exclusions.
No Bond shall be valid or obligatory for any purpose or
entitled to any security or benefit under this Indenture unless and
until either (i) a certificate of authentication on such Bond shall
have been duly executed by the Trustee or (ii) a Comptroller's
Registration Certificate attached to or endorsed on such Bond has
been duly executed. Such executed certificate of the Trustee or
Comptroller's Registration Certificate upon any such Bond shall be
conclusive evidence that such Bond has been authenticated or
registered and delivered under this Indenture. The certificate of
authentication on any Bond shall be deemed to have been executed by
the Trustee if signed by an authorized officer or signatory of the
Trustee, but it shall not be necessary that the same officer or
signatory sign the certificates of authentication on all Bonds
issued hereunder.
Section 2.06. Redemption of Bonds. The Bonds shall be subject
to redemption by the Issuer prior to maturity only as follows:
(a) Extraordinary Optional Redemption of Bonds. The Bonds are
subject to redemption in whole on the next available Interest
Payment Date for which notice of redemption can be given, at a
redemption price equal to the aggregate principal amount of the
Bonds outstanding plus accrued interest thereon to the redemption
date, without premium, upon receipt by the Trustee of a written
notice from the Company stating that any of the following events has
occurred within the preceding 270 days and that it therefore intends
to exercise its option to effect the redemption of Bonds in whole:
(i) In the reasonable judgment of the Company
unreasonable burdens or excessive liabilities shall have been
imposed upon the Issuer or the Company with respect to the Project
or the Plant, including without limitation (A) the imposition of any
income or other taxes not being imposed on June 15, 1996 or (B) the
imposition of any ad valorem property or other taxes (other than ad
valorem property or other taxes being imposed on June 15, 1996 upon
similarly assessed property within the same taxing jurisdiction);
(ii) The Project or the Plant shall have been damaged or
destroyed to such extent that, in the opinion of the Company, (A)
within a period of six consecutive months following such damage or
destruction, it is not practicable or desirable to rebuild, repair
or restore the same, (B) the Company will be thereby prevented from
carrying on its normal operations of the Project or the Plant for a
period of six or more consecutive months or (C) the cost of restora-
tion would exceed by $1,500,000 or more the net proceeds of
insurance thereon;
(iii) Title to, or temporary use of, all or
substantially all of the Project or the Plant shall have been taken
under the exercise of the power of eminent domain;
(iv) Changes in the economic availability of materials,
labor, services, supplies (including fuel), equipment or other
property, facilities or things necessary for the operation of the
Project or the Plant shall have occurred, or technological,
regulatory or other changes shall have occurred, which, in the
opinion of the Company, render the continued operation of the
Project or the Plants uneconomic;
(v) Any court or administrative body shall enter a
judgment, order or decree requiring the Company to cease, or dispose
of, all or any substantial part of its operations of the Project or
the Plant to such extent that, in the opinion of the Company, it is
or will be thereby prevented from carrying on its normal operations
of the Project or the Plant for a period of six or more consecutive
months; or
(vi) As a result of any change in the Constitution of the
State of Texas or the Constitution of the United States of America
or of any legislative or administrative action (whether state or
federal) or of any final decree, judgment, or order of any court or
administrative body (whether state or federal), the obligations of
the Company under the Agreement shall have become unenforceable or
impossible of performance in any material respect in accordance with
the intent and purpose of the parties as expressed in the Agreement.
(b) Optional Redemption. The Bonds are subject to optional
redemption as follows:
(i) During any Daily, Flexible, Weekly, Monthly,
Quarterly or Semiannual Mode, the Bonds in such Mode shall be
subject to redemption prior to maturity at the option of the Issuer
upon written direction of the Company delivered to the Trustee, in
whole or in part (and if in part in an Authorized Denomination) on
any Interest Payment Date applicable to the Bonds in such Mode, at
a redemption price equal to the principal amount thereof plus
accrued interest thereon to the redemption date.
(ii) During any Multiannual or Fixed Rate Mode, the Bonds
in such Mode shall be subject to redemption prior to maturity at the
option of the Issuer upon written direction of the Company delivered
to the Trustee, in whole or in part (and if in part in an Authorized
Denomination) on any Business Day after the No-Call Period described
below, at the following redemption prices (expressed as percentages
of the principal amount of the Bonds called for redemption) plus
accrued interest to the date fixed for redemption:
LENGTH OF NO-CALL
INTEREST PERIOD REDEMPTION PRICES
RATE PERIOD
greater than 10 years from the 102%, declining 1%
or equal to commencement of per year to 100%
11 years of Interest Rate
Period
less than 11 years No call
Notwithstanding the foregoing, if the Bonds initially bear
interest at a Multiannual Rate or a Fixed Rate, the redemption
schedule shall be as set forth in the Approval Certificate. In
connection with a Conversion with respect to Bonds to bear interest
at the Multiannual or Fixed Interest Rate, the Remarketing Agent,
upon the request of the Company (which request shall not
unreasonably be refused) and in order to achieve the lowest rate
which, in the judgment of the Remarketing Agent, on the basis of
prevailing financial market conditions, would permit the sale of the
Bonds so converted at par plus accrued interest as of the Conversion
Date, may deliver to the Issuer and the Trustee an alternative
redemption schedule to that shown above, provided that the Company
delivers to the Issuer, the Remarketing Agent and the Trustee a
Favorable Opinion with respect to the alternative schedule of
redemption. Prior to such Conversion, the Trustee shall determine
the optional redemption provisions applicable to the Bonds in such
Modes, and such provisions shall be inserted in the form of Bond.
After the Conversion Date succeeding the delivery of such
alternative schedule and Favorable Opinion during any Mode, the
Bonds shall be subject to redemption in accordance with the
provisions of such alternative schedule.
So long as any Bond is in the Multiannual or Fixed Rate Mode,
such Bond is subject to mandatory tender in lieu of optional
redemption at the election of the Company as provided in Section
2.11 hereof.
(c) Extraordinary Mandatory Redemption. The Bonds are subject
to mandatory redemption in whole or in part at any time if such
partial redemption will preserve the exemption from federal income
taxation of interest on the remaining Bonds Outstanding, at a
redemption price equal to the principal amount thereof together with
unpaid interest accrued to the date fixed for redemption, and
without premium, if (i) a final decree or judgment of any federal
court, in which the Company participates to the extent it deems
sufficient, or (ii) a final action by the Internal Revenue Service,
in proceedings in which the Company participates to the extent it
deems sufficient, determines that the interest paid or payable on
any such Bonds to other than, as provided in the Code, a
"substantial user" of the Projector a "related person" is or was
includable in the gross income of the owner thereof for federal
income tax purposes under the Code, as a result of the failure by
the Company to observe or perform any covenant, condition, or
agreement on its part to be observed or performed under the
Agreement or the inaccuracy of any representation by the Company
under the Agreement; provided, however, that no decree or judgment
by any court or action by the Internal Revenue Service shall be
considered final unless the Registered Owner involved in such
proceeding or action (A) gives the Company and the Trustee prompt
written notice of the commencement thereof and (B), if the Company
agrees to pay all expenses in connection therewith and to indemnify
such Registered Owner against all liabilities in connection
therewith, offers the Company the opportunity to control the defense
thereof. Any such redemption shall be made on a date determined by
the Trustee not more than 180 days after the time of such final
decree, judgment or action. The Trustee shall give the Issuer and
the Company not less than forty-five days written notice of such
date.
Section 2.07. Notice of Redemption. Not less than thirty (30)
days or more than sixty (60) days prior to any date fixed for
redemption of Bonds, the Trustee shall give notice of any redemption
by sending such notice by (i) first-class mail to the Owner of each
Bond to be redeemed in whole or in part at the address shown on the
Registration Books, (ii) by certified mail, return receipt
requested, to DTC (so long as it owns all the Bonds), and upon
request, to any person or entities which provide evidence acceptable
to the Trustee that such person has a legal or beneficial interest
in at least $1,000,000 in principal amount of the Bonds, and (iii)
by certified mail, return receipt requested, or by overnight
delivery, received by the registered depositories at least two (2)
days prior to the general publication date for such redemption
notices and to be received by at least two (2) of the national
information services that disseminate bond redemption notices on or
before the general mailing date for such notices; provided, however,
that the failure to send, mail, or receive such notice described
above, or any defect therein or in the sending or mailing thereof,
with respect to any Bond shall not affect the validity or
effectiveness of the proceedings for the redemption of any other
Bond. In addition, within sixty (60) days after the redemption date
an additional redemption notice shall be sent to any Owner of the
Bonds who has not surrendered Bonds for redemption during the thirty
(30) day period following the redemption date and to any person or
entities having legal or beneficial ownership interest in at least
$1,000,000 in principal amount of such Bonds which have not been
surrendered.
All notices of redemption shall state: (i) the redemption
date, (ii) the redemption price, (iii) the identification, including
complete designation (including series) and issue date of the Bonds
and the CUSIP number, certificate number (and in the case of partial
redemption, the respective principal amounts), interest rates and
maturity dates of the Bonds to be redeemed, (iv) that on the
redemption date the redemption price will become due and payable
upon each such Bond, and that interest thereon shall cease to accrue
from and after said date, and (v) the name and address of Trustee
and any Paying Agent for such Bonds, including the place where such
Bonds are to be surrendered for payment of the redemption price
therefor.
Upon written request of any Owner, or of any person or entity
which provides evidence acceptable to the Trustee that such person
or entity has a legal or beneficial interest in Bonds in an
aggregate principal amount of at least $1,000,000, the Trustee shall
send an additional copy of any notice to be given to such Owner,
person or entity by the Trustee under the Indenture by first-class
mail to a second address specified by such Owner, person or entity.
Any such additional notices shall be given simultaneously with the
original notices.
Section 2.08. Redemption Payments; Effect of Call for
Redemption. On the date fixed for redemption of any Bond, funds for
the payment thereof shall be on deposit in the Bond Fund
representing moneys deposited or caused to be deposited by the
Company with the Trustee, and the Trustee hereby is authorized and
directed to apply such funds to the payment of each Bond or portion
thereof called for redemption, together with accrued interest
thereon to the redemption date and any required premium. If at the
time of mailing of notice of any optional redemption in connection
with a refunding of the Bonds the Company shall not have deposited
with the Trustee moneys sufficient to redeem all of the Bonds called
for redemption, such notice may state that it is conditional in that
it is subject to the deposit of the proceeds of refunding bonds with
the Trustee not later than the redemption date, and such notice
shall be of no effect unless such moneys are so deposited. On the
date so designated for redemption, notice having been given in the
manner and under the conditions hereinabove provided, any Bond or
portion thereof so called for redemption shall become and be due and
payable at the redemption price provided for herein; and if, in
accordance with the provisions of Article V hereof, sufficient
moneys and/or Government Obligations, the principal of, and interest
on, which at maturity will provide sufficient moneys at the times
required for payment of the redemption price and accrued interest to
the redemption date are then held by the Trustee in trust for the
Owners of every Bond or portion thereof to be redeemed, interest on
each such Bond or portion so called for redemption shall cease to
accrue and each such Bond or portion thereof shall cease to be
entitled to any benefit or security under this Indenture, and the
Owner of each such Bond or portion thereof shall have no rights in
respect thereof except to receive payment of the redemption price
thereof and accrued interest thereon to the redemption date from
such moneys and/or Government Obligations.
Section 2.09. Partial Redemption . If fewer than all of the
Bonds shall be called for redemption, the Company may designate the
principal amount of Bonds in each Mode to be redeemed, and the Bonds
to be redeemed in each Mode shall be selected by lot by the Trustee
from among all Outstanding Bonds in such Mode for this purpose, each
minimum increment of Authorized Denominations represented by any
Bond shall be considered a separate Bond for purposes of selecting
the Bonds to be redeemed. If it is determined that one or more, but
not all, of the minimum increments of Authorized Denominations
represented by any Bond is to be called for redemption, then, upon
notice of intention to redeem such minimum increments of Authorized
Denominations of such Bond, the Owner of such Bond, upon surrender
of such Bond to the Trustee for payment to such Owner of the
redemption price or the principal amount of such Bond called for
redemption, shall be entitled to receive a new Bond or Bonds in the
aggregate principal amount of the unredeemed balance of the
principal amount of such Bond. New Bonds representing the
unredeemed balance of the principal amount of such Bonds shall be
issued to the Owner thereof without a charge therefor.
If the owner of any Bond of a denomination greater than the
minimum increment of Authorized Denominations shall fail to present
such Bond to the Trustee for payment and exchange as aforesaid, such
Bond shall, nevertheless, become due and payable on the date fixed
for redemption to the extent of the minimum increments of Authorized
Denominations called for redemption (and to that extent only), and,
after the date fixed for redemption, interest shall cease to accrue
on such principal amount called for redemption.
Section 2.10. Remarketing and Purchase.
(a) Remarketing of Tendered Bonds. Unless otherwise
instructed by the Company, the Remarketing Agent shall offer for
sale and use its best efforts to find purchasers for all Bonds or
portions thereof for which notice of tender has been received
pursuant hereto or which are subject to mandatory tender. While the
Bonds are in book-entry only form, the Remarketing Agent will make
payment for the Purchase Price for tendered Bonds in accordance with
the procedures established by DTC. If the book-entry only system is
not in effect, the terms of any sale by the Remarketing Agent shall
provide for the payment of the Purchase Price for tendered Bonds by
the Remarketing Agent to the Paying Agent (i) in immediately
available funds at or before 3:00 p.m., New York City time, on the
Purchase Date, in the case of Bonds accruing interest at Flexible
Rates, (ii) in immediately available funds at or before 4:00 p.m.,
New York City time, on the Purchase Date, in the case of Bonds
accruing interest at Daily Rates, Weekly Rates, Monthly Rates,
Quarterly Rates or Semiannual Rates, and (iii) in clearinghouse
funds at or before 12:00 noon, New York City time, on the Purchase
Date, in the case of bonds accruing interest at Multiannual or Fixed
Rates. The Remarketing Agent shall not sell any Bond as to which a
notice of conversion from one type of Rate Period to another or as
to which a notice of redemption has been given by the Trustee unless
the Remarketing Agent has advised the person to whom the sale is
made of the conversion or redemption, as applicable. The
Remarketing Agent shall not remarket any Bonds pursuant to this
Section if the Remarketing Agent has received notice that an Event
of Default shall have occurred and is continuing hereunder with
respect to the Bonds.
(b) Purchase of Tendered Bonds.
(i) Notice. At or before 3:00 p.m., New York City time,
on the Business Day immediately preceding the Purchase Date of
tendered Bonds bearing interest at Multiannual or Fixed Rates (or
11:30 a.m., New York City time, on the Purchase Date in the case of
Bonds accruing interest at Daily, Weekly, Flexible, Monthly,
Quarterly or Semiannual Rates), the Remarketing Agent shall give
Electronic Notice to the Trustee of the principal amount of tendered
Bonds as to which the Remarketing Agent has found purchasers. Not
later than 4:00 p.m. for Bonds bearing interest at Multiannual or
Fixed Rates (or 11:45 a.m., in the case of Bonds accruing interest
at Daily, Weekly, Flexible, Monthly, Quarterly or Semiannual Rates
), New York City time, on the date of receipt of such notice the
Trustee shall give Electronic Notice to the Paying Agent and the
Company, specifying the principal amount of tendered Bonds as to
which the Remarketing Agent has found purchasers (the "Deficiency
Notice"). At or before 3:00 p.m., New York City time, on the
Business Day prior to the Purchase Date to the extent known to the
Remarketing Agent, but in any event, no later than 12:00 noon, New
York City time, on the Purchase Date (or two Business Days prior to
the Purchase Date in the event tendered Bonds accrue interest at
Multiannual or Fixed Rates), the Remarketing Agent shall give notice
to the Paying Agent by Electronic Notice of the names, addresses and
taxpayer identification numbers of the purchasers, the denominations
of Bonds to be delivered to each purchaser and, if available,
payment instructions for regularly scheduled interest payments, or
of any changes in any such information previously communicated.
(ii) Sources of Payments. The Remarketing Agent shall
cause to be paid to the Paying Agent on the Purchase Date of
tendered Bonds, all amounts representing proceeds of the remarketing
of such Bonds to persons other than the Issuer, the Company or an
affiliate thereof, such payments to be made in the manner and at the
time specified in subsection 2.10 (a) above. If the amounts
specified in the Deficiency Notice will not be sufficient to pay the
Purchase Price on the Purchase Date, the Company shall deliver or
cause to be delivered such amounts at such times so that there will
be delivered to the Paying Agent (A) immediately available funds in
an amount equal to such deficiency prior to 2:30 p.m., New York City
time, on the Purchase Date of tendered Bonds accruing interest at
Daily Rates (3:00 p.m., New York City time, in the case of Flexible
Rate Bonds), (B) immediately available funds in an amount equal to
such deficiency prior to 1:15 p.m., New York City time, on the
Purchase Date of tendered Bonds accruing interest at Weekly,
Monthly, Quarterly or Semiannual Rates, and (C) clearinghouse funds
in an amount equal to such deficiency prior to 12:15 p.m., New York
City time, on the Purchase Date of tendered Bonds accruing interest
at Multiannual or Fixed Rates (the obligation of the Company to
deliver such moneys not being conditioned on receipt by the Company
of the foregoing notice from the Trustee). All moneys received by
the Paying Agent as remarketing proceeds and additional amounts, if
any, received from the Company, as the case may be, shall be
deposited by the Paying Agent in the appropriate account of the Bond
Purchase Fund to be used solely for the payment of the Purchase
Price of tendered Bonds and shall not be commingled with other funds
held by the Paying Agent and shall not be invested.
(iii) Payments by the Paying Agent. At or before 4:30
p.m., New York City time, on the Purchase Date for tendered Bonds
and upon receipt by the Paying Agent of 100% of the aggregate
Purchase Price of the tendered Bonds, the Paying Agent shall pay or
receipt the Purchase Price of such Bonds to the Registered Owners
thereof. Such payments shall be made in immediately available funds
(or by wire transfer), unless the Bonds to be purchased accrue
interest at Multiannual or Fixed Rates, in which event such payments
shall be made in clearinghouse funds. The Paying Agent shall make
payment of the Purchase Price by applying in order of priority (A)
first, moneys paid to it by the Remarketing Agent as proceeds of the
remarketing of such Bonds by the Remarketing Agent, and (B) second,
other moneys made available by the Company.
(iv) Registration and Delivery of Tendered or Purchased Bonds.
On the date of purchase, the Paying Agent shall register and deliver
(or hold) or cancel all Bonds purchased on any Purchase Date as
follows: (A) Bonds purchased or remarketed by the Remarketing Agent
shall be registered and made available to the Remarketing Agent by
2:15 p.m., New York City time, in accordance with the instructions
of the Remarketing Agent, and (B) Bonds purchased with amounts
provided by the Company shall be registered in the name of the
Company and shall be delivered to the Trustee to be held in trust by
the Trustee on behalf of the Company and shall not be released from
such trust unless the Trustee shall have received written
instructions from the Company. Notwithstanding anything herein to
the contrary, so long as the Bonds are held under the book-entry
only system in accordance with Section 3.07 hereof, Bonds will not
be delivered as set forth above; rather, transfers of beneficial
ownership of the Bonds to the person indicated above will be
effected on the registration books of DTC pursuant to its rules and
procedures.
(v) (Intentionally Omitted).
(vi) Resale of Bonds Purchased by the Company. In the
event that any Bonds are registered to the Company pursuant to
subparagraph (iv) above, to the extent requested by the Company, the
Remarketing Agent shall offer for sale and use its best efforts to
sell such Bonds at a price equal to the principal amount thereof
plus accrued interest.
(vii) Delivery of Tendered Bonds; Effect of Failure to
Surrender Bonds. All Bonds to be purchased on any date shall be
required to be delivered to the principal office of the Paying Agent
at or before 11:00 a.m., New York City time, on the Purchase Date.
If the Owner of any Bond (or portion thereof) in certificated form
that is subject to optional or mandatory purchase pursuant to this
Article fails to deliver such Bond to the Trustee for purchase on
the Purchase Date, and if the Paying Agent is in receipt of the
Purchase Price therefor, such Bond (or portion thereof) shall
nevertheless be deemed purchased on the Purchase Date thereof and
ownership of such Bond (or portion thereof) shall be transferred to
the purchaser thereof as provided in subsection (ii) above. Any
Owner who fails to deliver such Bond for purchase shall have no
further rights thereunder except the right to receive the Purchase
Price thereof upon presentation and surrender of said Bond to the
Paying Agent. The Paying Agent shall, as to any tendered Bonds
which have not been delivered to it (1) promptly notify the
Remarketing Agent of such nondelivery, and (2) place or cause to be
placed a stop transfer against an appropriate amount of Bonds
registered in the name of such Registered Owner(s) on the bond
registration books. The Paying Agent shall place or cause to be
placed such stop(s) commencing with the lowest serial number Bond
registered in the name of such Registered Owner(s) until stop
transfers have been placed against an appropriate amount of Bonds
until the appropriate tendered Bonds are delivered to the Paying
Agent. Upon such delivery, the Paying Agent shall make or cause the
Bond Registrar to make any necessary adjustments to the bond
registration books. Notwithstanding anything herein to the
contrary, so long as the Bonds are held under the book-entry only
system in accordance with Section 3.07 hereof, Bonds will not be
delivered as set forth above; rather, transfers of beneficial
ownership of the Bonds to the person indicated above will be
effected on the registration books of the DTC pursuant to its rules
and procedures.
Section 2.11. Mandatory Tenders for Purchase.
(a) Flexible. Each Bond accruing interest at a Flexible Rate
shall be subject to mandatory tender for purchase on each Interest
Payment Date applicable to such Bond, at the Purchase Price
applicable to such Bond. The Registered Owner of any Bond accruing
interest at a Flexible Rate shall provide the Paying Agent with
written payment instructions for the Purchase Price of its Bond on
or before tender thereof to the Paying Agent.
(b) Conversions between Interest Rate Periods. Bonds to be
converted from one Mode to a different Mode (other than from a Daily
Mode to a Weekly Mode or from a Weekly Mode to a Daily Mode) or a
change from one Interest Rate Period to an Interest Rate Period of
different duration within the Multiannual Mode are subject to
mandatory tender for purchase on the Conversion Date at the Purchase
Price applicable to such Bonds. The Paying Agent shall give notice
of such mandatory tender for purchase to the Registered Owners of
Bonds by first class mail, not less than 15 days before the
mandatory tender date. If the Bonds are in certificated form, such
notice shall include information with respect to required delivery
of Bond certificates and payment of the Purchase Price.
(c) Mandatory Tender in lieu of Optional Redemption. For any
Bond in the Multiannual or Fixed Rate Mode, the Company may elect to
convert from the Multiannual or Fixed Rate Mode to a different Mode
or change from one Interest Rate Period to an Interest Rate Period
of different duration within the Multiannual Mode on any optional
redemption date for such Bond. The Company shall make such election
in accordance with Section 2.02 hereof and upon such election such
Bond shall be subject to mandatory tender for purchase on the
Conversion Date in lieu of optional redemption at the Purchase
Price applicable to such Bonds. The Paying Agent shall give notice
of such mandatory tender for purchase to the Registered Owners of
Bonds by first class mail, not less than 30 days before the
mandatory tender date. If the Bonds are in certificated form, such
notice shall include information with respect to required delivery
of Bond certificates and payment of the Purchase Price.
Section 2.12. Special Conditions to Conversions from
Multiannual or Fixed Rate Mode. Notwithstanding any other provision
contained herein, no conversion from the Multiannual or Fixed Rate
Mode to a different Mode or change from one Interest Rate Period to
an Interest Rate Period of different duration within the Multiannual
Mode on any optional redemption date for a Bond shall take place
unless there is delivered to the Trustee at least 45 days prior to
the proposed Conversion Date (a) written evidence that the Bonds
will qualify for a short-term credit rating from a Rating Agency
and (b) written consent of the Bond Insurer to the conversion of
such Bond, which consent shall not be unreasonably withheld.
ARTICLE III
GENERAL PROVISIONS
Section 3.01. Authorization for Indenture; Indenture to
Constitute Contract. This Indenture is entered into pursuant to the
Acts. In consideration of the purchase of the Bonds by the Bond
Owners, the provisions of this Indenture shall be part of the
contract of the Issuer with the Owners of the Bonds, and shall be
deemed to be and shall constitute a contract among the Issuer, the
Trustee and the Bond Owners. The provisions hereof are covenants
and agreements with such Bond Owners, which the Issuer hereby
determines to be necessary and desirable for the security and
payment of the Bonds.
Section 3.02. Payment of Principal, Premium, if any, and
Interest. (a) The Issuer covenants that it will duly and punctually
pay or cause to be paid the principal of, premium, if any, and
interest on the Bonds issued under this Indenture at the place, on
the dates and in the manner provided herein and therein according to
the true intent and meaning thereof, but solely from the payments,
revenues and receipts specifically assigned herein for such purposes
as set forth in Section 4.03 of this Indenture.
(b) The Trustee is appointed as the Paying Agent for the
Bonds. The principal of, premium, if any, and interest on the Bonds
shall be payable, without exchange or collection charges, in lawful
money of the United States of America. During any period in which
the Bonds are on deposit at DTC, in accordance with Section 3.07
hereof, payment of principal of, together with any premium and
interest on, the Bonds shall be paid to DTC in immediately available
or next day funds on each payment date, and shall be payable as
directed in writing by DTC.
(c) The Company in issuing the Bonds may use "CUSIP" numbers
(if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no
representation is made as to the correctness of such numbers either
as printed on the Bonds or as contained in any notice of a
redemption and that reliance may be placed only on the other
identification numbers printed on the Bonds, and any such redemption
shall not be affected by any defect in or omission of such numbers.
(d) Notwithstanding any other provision of this Indenture or
in the forms of Bond, if the Bonds are on deposit at DTC in
accordance with Section 3.07 hereof, presentation and surrender of
the Bonds at the Principal Office of the Trustee shall not be
required other than at the maturity thereof.
Section 3.03. Performance of Covenants; Issuer Immunity. (a)
The Issuer covenants that it will faithfully comply with the
stipulations and provisions required to be performed by it and
contained in this Indenture, or in any of its proceedings pertaining
hereto.
(b) Upon execution of this Indenture, the Issuer shall not be
liable for any action taken, suffered or omitted to be taken by it
in good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this
Indenture. The Issuer's immunity and protection from liability
hereunder shall survive the final payment of the Bonds.
Section 3.04. Instruments of Further Assurance. The Issuer
covenants that it will do, execute, acknowledge and deliver, or
cause to be done, executed, acknowledged and delivered, such
indentures supplemental hereto and such further acts, instruments
and transfers as reasonably may be required for the better and more
effectual assignment to the Trustee of all payments, revenues and
other amounts payable under or with respect to the Agreement and any
other income and other moneys assigned hereby to the payment of the
principal of, premium, if any, and interest on the Bonds. The
Issuer further covenants that it will not create or suffer to be
created any lien, encumbrance or charge upon its interest in the
revenues and other amounts payable under or with respect to the
Trust Estate, except the lien and charge granted hereby.
Section 3.05. Recordation. The Trustee agrees that it will
cooperate with the Company, at the direction and expense of the
Company, to record and file any financing statements and all
supplements thereto, and such other instruments as may be directed
by the Company from time to time to be recorded or filed, in such
manner and in such places as from time to time may be directed by
the Company.
Section 3.06. Registration of Bonds; Trustee Appointed Bond
Registrar; Persons Treated as Owners.
(a) Registration. The Trustee is hereby appointed as Bond
Registrar of the Bonds and as such shall maintain the Registration
Books in the State of Texas as provided by this Indenture. The
Registration Books shall reflect the information required to be
provided by Bond Owners in connection with the transfer of Bonds.
At reasonable times and under reasonable regulations established by
the Trustee, the Registration Books may be inspected and copied by
the Company, the Issuer or the Owners (or designated representatives
thereof) of at least 25% in aggregate principal amount of Bonds then
Outstanding.
(b) Transfer and Exchange. The ownership of a Bond may be
transferred (in Authorized Denominations) only upon surrender
thereof at the Principal Office of the Trustee, accompanied by an
assignment, duly executed by the Owner of such Bond or his duly
authorized attorney-in-fact, in such form as shall be satisfactory
to the Trustee, along with the address and social security number or
federal employer identification number of such transferee (or, if
registration is to be made in the name of multiple individuals, of
all such transferees) and, if such transferee is a trust, the name
and address of the trustee(s) and the date of the trust of the
proposed transferee. Upon the due presentation of any Bond for
transfer and on request of the Trustee, the Issuer shall execute in
the name of the transferee, and the Trustee shall authenticate and
deliver, a new fully registered Bond or Bonds of the same Mode, in
any denomination permitted by this Indenture, in an aggregate
principal amount equal to the unmatured and unredeemed aggregate
principal amount of such transferred fully registered Bond, and
bearing interest at the same rate, and maturing on the same date, as
such transferred Bond.
Bonds may be exchanged at the Principal Office of the Trustee
or the Paying Agent for other Bonds of the same Mode (and same
Interest Rate Period with respect to Bonds in the Flexible Mode or
Multiannual Mode) aggregating a like principal amount. Bonds issued
in exchange for other Bonds may be issued only in Authorized
Denominations of the same Mode. All Bonds surrendered to the
Trustee for exchange pursuant to this Section 3.06 shall be canceled
by the Trustee and shall not be redelivered. Neither the Issuer nor
the Trustee shall be required to make any such transfer or exchange
of any Bond during the 10 Business Days immediately preceding the
mailing of a notice of Bonds selected for redemption or, with
respect to a Bond, after such Bond or any portion thereof has been
selected for redemption.
(c) Charges. In all cases of the transfer of a Bond, the
Trustee shall register at the earliest practicable time, on the
Registration Books, such Bond in accordance with the provisions of
this Indenture. The Issuer or the Trustee may make a charge to the
Bond Owner for every transfer or exchange of a Bond sufficient to
reimburse it for any tax or other governmental charge required to be
paid with respect to such transfer or exchange, and may demand that
such charge be paid before any new Bond is delivered.
(d) Ownership. As to any Bond, the person in whose name the
ownership of such Bond shall be registered on the Registration Books
shall be deemed and regarded as the absolute owner thereof for all
purposes, and payment of or on account of the principal of any such
Bond and the premium, if any, and interest thereon shall be made
only to or upon the order of the registered Owner thereof or his
legal representative. All such payments shall be valid and
effectual to satisfy and discharge the liability upon such Bond,
including the premium, if any, and interest thereon, to the extent
of the sum or sums so paid.
Section 3.07. Book-Entry Only System. The Bonds shall be
initially issued in the form of a single fully registered Bond.
Upon initial issuance, the ownership of each such Bond shall be
registered in the name of Cede & Co., as nominee of DTC, and, except
as provided in Section 3.08 hereof, all of the outstanding Bonds
shall be registered in the name of Cede & Co., as nominee of DTC.
With respect to Bonds registered in the name of Cede & Co., as
nominee of DTC, the Issuer and the Trustee shall have no
responsibility or obligation to any DTC Participant or to any person
on behalf of whom such a DTC Participant holds an interest in the
Bonds, except as provided in this Indenture. Without limiting the
immediately preceding sentence, the Issuer and the Trustee shall
have no responsibility or obligation with respect to (i) the
accuracy of the records of DTC, Cede & Co. or any DTC Participant
with respect to any ownership interest in the Bonds, (ii) the
delivery to any DTC Participant or any other person, other than a
Bondholder, as shown on the Registration Books, of any notice with
respect to the Bonds, including any notice of redemption, or (iii)
the payment to any DTC Participant or any other person, other than
a Bondholder, as shown in the Registration Books of any amount with
respect to principal of, premium, if any, or interest on, the Bonds.
Notwithstanding any other provision of this Indenture to the
contrary, the Issuer and the Trustee shall be entitled to treat and
consider the person in whose name each Bond is registered in the
Registration Books as the absolute owner of such Bond for the
purpose of payment of principal, premium, if any, and interest with
respect to such Bond, for the purpose of giving notices of
redemption and other matters with respect to such Bond, for the
purpose of registering transfers with respect to such Bond, and for
all other purposes whatsoever. The Trustee shall pay all principal
of, premium, if any, and interest on the Bonds only to or upon the
order of the respective owners, as shown in the Registration Books
as provided in this Indenture, or their respective attorneys duly
authorized in writing, and all such payments shall be valid and
effective to fully satisfy and discharge the Issuer's obligations
with respect to payment of principal of, premium, if any, and
interest on, the Bonds to the extent of the sum or sums so paid. No
person other than an owner, as shown in the Registration Books,
shall receive a Bond certificate evidencing the obligation of the
Issuer to make payments or principal, premium, if any, and interest,
pursuant to this Indenture. Upon delivery by DTC to the Trustee of
written notice to the effect that DTC has determined to substitute
a new nominee in place of Cede & Co., and subject to the provisions
in this Indenture with respect to interest checks or drafts being
mailed to the registered owner at the close of business on the
Record Date, the words "Cede & Co." in this Indenture shall refer to
such new nominee of DTC.
Section 3.08. Successor Securities Depository; Transfers
Outside Book-Entry Only System. (a) In the event that the Issuer,
at the direction of the Company, determines that DTC is incapable of
discharging its responsibilities described herein and in the
representation letter of the Issuer to DTC, the Issuer shall (i)
appoint a successor securities depository, qualified to act as such
under Section 17(a) of the Securities Exchange Act of 1934, as
amended, notify DTC and DTC Participants, identified by DTC, of the
appointment of such successor securities depository and transfer
one or more separate Bonds to such successor securities depository
or (ii) notify DTC and DTC Participants, identified by DTC, of the
availability through DTC of Bonds and transfer one or more separate
Bonds to DTC Participants, identified by DTC, having Bonds credited
to their DTC accounts. In such event, the Bonds shall no longer be
restricted to being registered in the Registration Books in the name
of Cede & Co., as nominee of DTC, but may be registered in the name
of the successor securities depository, or its nominee, or in
whatever name or names Bondholders transferring or exchanging Bonds
shall designate, in accordance with the provisions of this
Indenture.
(b) In addition to (a) above, upon the written consent of 100%
of the beneficial owners of the Bonds, the Trustee shall withdraw
the Bonds from DTC, and authenticate and deliver Bonds fully
registered to the assignees of DTC or its nominee. If the request
for such withdrawal is not the result of any Issuer action or
inaction, such withdrawal, authentication and delivery shall be at
the cost and expense (including costs of printing, preparing and
delivering such Bonds) of the persons requesting such withdrawal,
authentication and delivery.
Section 3.09. Payments to Cede & Co. Notwithstanding any
other provision of this Indenture to the contrary, so long as any
Bond is registered in the name of Cede & Co., as nominee of DTC, all
payments with respect to principal of, premium, if any, and interest
on, such Bond and all notices with respect to such Bond shall be
made and given, respectively, in the manner provided in the
representation letter of the Issuer to DTC.
Section 3.10. Cancellation. All Bonds which have been paid
at maturity or redeemed prior to maturity shall not be reissued but
shall be canceled by the Trustee. All Bonds which are canceled by
the Trustee shall be disposed of by the Trustee, in accordance with
its document retention policies, and a certificate of cancellation
shall be furnished promptly to the Issuer upon request; provided,
however, that if the Issuer shall so direct the Trustee, the Trustee
shall forward the canceled Bonds to the Issuer.
Section 3.11. Non-presentment of Bonds. If any check or draft
representing payment of interest, principal or premium on any Bond
is returned to the Trustee or is not presented for payment by the
payee thereof, or any Bond is not presented for payment of principal
or premium at the maturity or redemption date, if moneys and/or
Government Obligations sufficient to pay such interest, or such
principal and premium, shall have been deposited with and made
available to the Trustee for the benefit of the Owner of the
applicable Bond, all liability of the Issuer to the Owner of such
Bond for such interest or such principal and premium shall forthwith
cease, terminate and be completely discharged, and thereupon it
shall be the duty of the Trustee to hold such moneys and/or
Government Obligations, without investing or reinvesting the same
and without liability for interest thereon, for the benefit of the
Owner of such Bond, who shall thereafter be restricted exclusively
to such funds for any claim of whatever nature on such Owner's part
under this Indenture or on, or with respect to, such Bond, and such
Bond shall no longer be considered to be Outstanding. The Trustee's
obligation to hold such moneys and/or Government Obligations
relating to the Bonds shall continue for a period equal to two years
following the date on which the principal of all Bonds has become
due, whether at maturity, or at the date fixed for redemption or
purchase thereof, or otherwise, at which time the Trustee, upon
payment of all fees and expenses due and owing to it and receipt of
indemnity satisfactory to it, shall surrender any remaining funds so
held to the Company. Following such surrender, any claim under this
Indenture by the Owner of any Bond of whatever nature shall be made
only upon the Company.
The provisions of this Section 3.11 shall be subject to all
applicable escheat laws, including Title 6 of the Texas Property
Code.
Section 3.12. Rights under Agreement. This Indenture, the
Agreement and the documents executed by the Company in connection
therewith, duly executed counterparts or originals of which have
been filed with the Trustee, set forth the covenants and the
obligations of the Issuer, the Company and the Trustee. Reference
hereby is made to such documents for detailed statements of the
covenants and obligations set forth therein. The Issuer and the
Trustee agree that the Trustee, for and on behalf of the Bond
Owners, in its name or, to the extent permitted by law, in the name
of the Issuer, may enforce all rights of the Issuer (except for
Unassigned Rights) and all obligations of the Company under and
pursuant to the Agreement and such documents.
Section 3.13. Legal Existence of Issuer. The Issuer covenants
that it will take any action within its control to maintain its
legal existence and will duly procure any necessary renewals and
extensions thereof; will use its best efforts to maintain, preserve
and renew all the rights, powers, privileges and franchises owned by
it; and will comply with all valid acts, rules, regulations and
orders of any legislative, executive, judicial or administrative
body applicable to the Issuer in connection with the Bonds.
Section 3.14. Diminution of, or Encumbrance on, Trust Estate.
The Issuer covenants not to sell, transfer, assign, pledge, release,
encumber or otherwise diminish or dispose of, directly or
indirectly, by merger or otherwise, or cause or suffer the same to
occur, or create or allow to be created or to exist any lien upon,
all or any part of its interests in the Trust Estate, except as
expressly permitted by this Indenture.
Section 3.15. Books, Records and Accounts. The Trustee shall
keep proper books for the registration of, and transfer of ownership
of, each Bond, and proper books, records and accounts in which
complete and correct entries shall be made of all transactions
relating to the receipt, disbursement, investment, allocation and
application of the proceeds received from the sale of the Bonds, the
revenues received from the Agreement, the documents executed by the
Company in connection therewith, the funds and accounts created
pursuant to this Indenture, and all other moneys held by the Trustee
hereunder. The Trustee shall, during regular business hours and
upon reasonable prior notice, make such books, records and accounts
available for inspection by the Issuer and the Company.
Section 3.16. Temporary Bonds. Until definitive Bonds are
ready for delivery, there may be executed, and, upon written request
of the Issuer, the Trustee shall authenticate and deliver, in lieu
of definitive Bonds, but subject to the same limitations and
conditions, temporary printed, engraved, lithographed or typewritten
registered Bonds (without coupons), in the minimum denomination
permitted for definitive Bonds or any integral multiple thereof,
substantially of the tenor hereinabove set forth for definitive
Bonds, and with such omissions, insertions and variations as may be
appropriate. If temporary Bonds shall be issued, the Issuer shall
cause the definitive Bonds to be prepared and to be executed and
deposited with the Trustee, without undue delay, and the Trustee,
upon presentation to it at its Principal Office of any temporary
Bond, shall cancel the same and authenticate and deliver in exchange
therefor at the required location, without charge to the Owner
thereof, a definitive Bond or Bonds of an equal aggregate principal
amount and bearing interest at the same rate as the temporary Bond
or Bonds so surrendered. Until so exchanged the temporary Bonds
shall be entitled in all respects to the same benefit and security
of this Indenture as the definitive Bonds to be issued and
authenticated hereunder.
Section 3.17. Mutilated, Lost, Stolen or Destroyed Bonds. If
any Bond is mutilated, lost, stolen or destroyed, the Trustee, upon
request, shall authenticate a new Bond, dated as provided in Article
II hereof, of the same denomination and Mode and bearing interest at
the same rate as the Bond mutilated, lost, stolen or destroyed;
provided, however, that, in the case of any mutilated Bond, such
mutilated Bond shall first be surrendered to the Trustee, and, in
the case of any lost, stolen or destroyed Bond, there shall first be
furnished to the Trustee evidence of such loss, theft or destruction
satisfactory to the Trustee, together with indemnity covering the
Trustee, the Company and the Issuer satisfactory to the Trustee. If
any such Bond shall have matured instead of issuing a duplicate Bond
the Trustee may pay the same. The Trustee and the Issuer may charge
the Owner of such Bond with their reasonable fees and expenses in
connection with the issuance of any such duplicate Bond.
Section 3.18. Intentionally Omitted.
Section 3.19. Arbitrage Covenants. The Issuer covenants and
agrees, for the benefit of the owners of the Bonds, that it will not
knowingly take any action or omit from taking nor instruct the
Trustee to take or to omit from taking any action, which would
result in a loss of the exemption from federal income taxation of
interest on the Bonds by virtue of the Bonds being considered
"arbitrage bonds" within the meaning of section 148 of the Code.
ARTICLE IV
USE OF PROCEEDS; REVENUES AND FUNDS
Section 4.01. Application of Original Proceeds of Bonds.
(a) The proceeds of the sale of the Bonds, except accrued interest
thereon, if any, shall, on the Issue Date, be transferred by the
Trustee to the Prior Trustee for deposit into the bond fund created
under the Prior Indenture.
(b) The Company, prior to or on the Issue Date, will deposit
or cause to be deposited into the bond fund relating to the Prior
Bonds an amount which, together with the Bond proceeds described in
(a) above, will equal the principal of, premium and interest on the
Prior Bonds due on the date fixed for their redemption.
Section 4.02. Creation of Bond Fund. There is hereby created
by the Issuer and ordered established with the Trustee a trust fund
to be designated the "Sabine River Authority of Texas Pollution
Control Revenue Refunding Bonds (Southwestern Electric Power Company
Project) Series 1996 Bond Fund" (the "Bond Fund").
Section 4.03. Payments into Bond Fund and Use of Moneys in
Bond Fund. (a) There shall be deposited into the Bond Fund, when
received: (i) accrued interest, if any, on the Bonds from the date
thereof to the date of delivery to the initial purchaser thereof;
(ii) all payments specified in the Agreement (except for certain
payments of fees, expenses, and indemnification arising out of the
Issuer's Unassigned Rights); (iii) all moneys required to be so
deposited in connection with any redemption of Bonds; (iv) any
amounts directed to be transferred into the Bond Fund pursuant to
any provision of this Indenture; and (v) all other moneys when
received by the Trustee which are required to be deposited into the
Bond Fund or which are accompanied by directions that such moneys
are to be paid into the Bond Fund.
(b) Moneys held in the Bond Fund shall be used solely for the
payment of the principal of, premium, if any, and interest on the
Bonds on the dates due for the payment or redemption thereof. The
Issuer hereby authorizes and directs the Trustee to withdraw
sufficient funds from the Bond Fund to pay the principal of,
premium, if any, and interest on the Bonds as the same become due
and payable, which authorization and direction the Trustee hereby
accepts.
Section 4.04. Creation and Use of Bond Purchase Fund. There
is hereby created and established a Bond Purchase Fund with respect
to the Bonds to be held as a separate escrow fund, in trust and
administered and distributed by the Trustee as provided in this
Section. All moneys deposited in the Bond Purchase Fund shall be
used solely for the purposes set forth herein.
The Trustee shall deposit into the Bond Purchase Fund (i) all
Remarketing Proceeds received by the Trustee from the Remarketing
Agent; and (ii) funds paid by the Company pursuant to Section 5.10
of the Agreement. The Trustee shall apply moneys on deposit in
the Bond Purchase Fund to pay the Purchase Price of Bonds purchased
hereunder; provided, however, that any amounts received by the
Trustee from the Remarketing Agent that are not needed to pay the
Purchase Price of Bonds because such Bonds have been accelerated or
called for redemption shall be returned to the Remarketing Agent.
The funds held by the Paying Agent in the Bond Purchase Fund
shall not constitute part of the Trust Estate which is subject to
the lien of this Indenture. The moneys in the Bond Purchase Fund
shall be used solely to pay the Purchase Price of Bonds as aforesaid
and may not be used for any other purposes. It shall be the duty of
the Paying Agent to hold the moneys in the Bond Purchase Fund,
without liability for interest thereon, for the benefit of the
Registered Owners of Bonds which have been properly tendered for
purchase or deemed tendered on the Purchase Date, and if sufficient
funds to pay the Purchase Price for such tendered Bonds shall be
held by the Paying Agent in the Bond Purchase Fund for the benefit
of the Registered Owners thereof, each such Registered Owner shall
thereafter be restricted exclusively to the Bond Purchase Fund for
any claim of whatever nature on such Registered Owner's part under
this Indenture or on, or with respect to, such tendered Bond. Funds
held in the Bond Purchase Fund for the benefit of Registered Owners
of untendered Bonds shall be held in trust and not invested. The
provisions of Section 3.11 hereof shall govern any funds held in the
Bond Purchase Fund for such Registered Owners of the Bonds which
remain unclaimed for a period of two years after the applicable
Purchase Date.
Section 4.05. Investment of Moneys. Subject to the
restrictions hereinafter set forth in this Section 4.05 and in
Section 4.08, any moneys held in the Bond Fund shall be invested
and reinvested by the Trustee upon the written instructions of the
Company solely in Permitted Investments, maturing no later than the
date on which it is estimated by the Company that such moneys will
be required to be paid out hereunder. All investment instructions
hereunder shall be provided to the Trustee no later than one
Business Day prior to the making of the investment directed therein.
The Trustee may make any and all such investments through its own
investment department and may trade with itself in the purchase and
sale of securities for such investment when authorized to do so by
the Company. The Trustee shall be entitled to rely on all written
investment instructions provided by the Company hereunder. The
Trustee shall not be responsible or liable for the performance of
any such investments or for keeping the moneys held by it hereunder
fully invested at all times. Any moneys for which the Trustee has
received no investment instructions shall be automatically
reinvested into The Bank of New York Deposit Reserve or a permitted
money market fund as may be authorized by the Company. Any
obligations acquired by the Trustee as a result of such investment
or reinvestment shall be held by or under the control of the Trustee
(except for such investments held in book entry form) and shall be
deemed to constitute a part of the Fund from which the moneys used
for its purchase were taken. All investment income shall be
retained in the Fund to which the investment is credited from which
such income is derived. Although the Company recognizes that it may
obtain a broker confirmation or written statement containing
comparable information at no additional cost, the Company hereby
agrees that confirmations of investments made by the Trustee
pursuant to this Section 4.05 are not required to be issued by the
Trustee for each month in which a monthly statement is rendered. No
such statement need be rendered pursuant to the provisions hereof if
no activity occurred in the fund or account during such preceding
month. All funds held under this Indenture shall be secured to the
fullest extent required by Texas law. In the event of a loss on the
sale of such investments (after giving effect to any interest or
other income thereon except to the extent theretofore paid to the
Company), the Trustee shall have no responsibility in respect of
such loss except that the Trustee shall notify the Company of the
amount of such loss and the Company shall promptly pay such amount
to the Trustee to be credited as part of the moneys originally
invested. If the amount on deposit in any fund is insufficient on
any Interest Payment Date, redemption date or Purchase Date to make
timely payment due on such date, the Company shall deposit
sufficient moneys in such fund to enable such timely payment to be
made on such date.
Section 4.06. Moneys To Be Held in Trust. All moneys required
to be deposited with or paid to the Trustee for the account of any
Fund under any provisions of this Indenture shall be held by the
Trustee in trust, and, except for (i) moneys in the Bond Purchase
Fund, and (ii) moneys deposited with or paid to the Trustee for the
redemption of Bonds, notice of the redemption for which has been
duly given, shall, while held by the Trustee, constitute part of the
Trust Estate and be subject to the security interest created hereby.
Section 4.07. Repayment to Company from Indenture Funds.
Subject to Section 3.11 hereof, any amounts remaining in any Fund
created under this Indenture, after payment in full of the Bonds in
accordance with Article V hereof, the reasonable fees, charges and
expenses of the Issuer, the Trustee and any co-trustee appointed
hereunder, and all other amounts required to be paid hereunder or
under the Agreement, shall be paid, upon the expiration of, or upon
the sooner termination of, the terms of this Indenture, to the
Company.
Section 4.08. Custody of Funds and Accounts. All Funds
created pursuant to this Indenture shall be in the custody of the
Trustee but held in trust, in the name of the Issuer, for the
benefit of the Bondholders (other than amounts held in the Bond
Purchase Fund).
Section 4.09. Exemption from Federal Income Taxation. The
Issuer will not knowingly take any action, or omit to take any
action within its control, which action or omission will adversely
affect the exclusion from gross income for federal income tax
purposes of interest on the Bonds, and in the event of such action
or omission will promptly, upon receiving knowledge thereof, take
all lawful actions, based on advice of counsel and at the expense of
the Company, as may rescind or otherwise negate such action or
omission.
Section 4.10. Covenants Regarding Rebate.
(a) A special Rebate Fund is hereby established by the Issuer.
The Rebate Fund shall be for the sole benefit of the United States
of America and shall not be subject to the claim of any other
person, including without limitation the Bondholders. The Rebate
Fund is established for the purpose of complying with section 148 of
the Code and the Treasury Regulations promulgated pursuant thereto.
The money deposited in the Rebate Fund, together with all
investments thereof and investment income therefrom, shall be held
in trust and applied solely as provided in this Section. The Rebate
Fund is not a portion of the Trust Estate and is not subject to the
lien of this Indenture. Notwithstanding the foregoing, the Trustee
with respect to the Rebate Fund is afforded all the rights,
protections and immunities otherwise accorded to it hereunder.
(b) Within ten days after the close of each fifth anniversary
date of the issuance of the Bonds, the Trustee shall receive from
the Company a computation in the form of a certificate of an
authorized officer of the Company of the amount of "Excess
Earnings," if any, for the period beginning on the date of delivery
of the Bonds and ending at the close of such "Bond Year" and the
Company shall pay to the Trustee for deposit into the Rebate Fund an
amount equal to the difference, if any, between the amount then in
the Rebate Fund and the Excess Earnings so computed. The term "Bond
Year" means with respect to the Bonds each one-year period ending on
the anniversary of the date of delivery of the Bonds or such other
period as may be elected by the Issuer in accordance with the
Regulations and notice of which election has been given to the
Trustee. If, at the close of any Bond Year, the amount in the
Rebate Fund exceeds the amount that would be required to be paid to
the United States of America under paragraph (d) below if the Bonds
had been paid in full, such excess may be transferred from the
Rebate Fund and paid to the Company at the written instructions of
the Company, and the Company shall use such excess for such purposes
for which, or to be redeposited to such fund from which, such
amounts were originally derived.
(c) In general, "Excess Earnings" for any period of time means
the sum of
(i) the excess of --
(A) the aggregate amount earned during such period of
time on all "Nonpurpose Investments" (including gains on the
disposition of such Obligations) in which "Gross Proceeds" of the
issue are invested (other than amounts attributable to an excess
described in this subparagraph (c)(i), over
(B) the amount that would have been earned during such
period of time if the "Yield" on such Nonpurpose Investments (other
than amounts attributable to an excess described in this
subparagraph (c)(i)) had been equal to the yield on the issue, plus
(ii) any income during such period of time attributable to the
excess described in subparagraph (c)(i) above.
The term Nonpurpose Investments, Gross Proceeds, and Yield
shall have the meanings given to such terms in section 148 of the
Code and the Regulations promulgated pursuant to such section.
(d) The Trustee shall pay to the United States of American at
least once every five years, to the extent that funds are available
in the Rebate Fund or otherwise provided by the Company, an amount
that ensures that at least 90 percent of the Excess Earnings from
the date of delivery of the Bonds to the close of the period for
which the payment is being made will have been paid. The Trustee
shall pay to the United States of America not later than 60 days
after the Bonds have been paid in full, to the extent that funds are
available in the Rebate Fund or otherwise provided by the Company,
100 percent of the amount then required to be paid under section
148(f) of the Code as a result of Excess Earnings.
(e) The amounts to be computed, paid, deposited or disbursed
under this Section shall be determined by the Company acting on
behalf of the Issuer within ten days after each fifth anniversary of
the issuance of the Bonds. By such date, the Company shall also
notify, in writing, the Trustee and the Issuer of the determinations
the Company has made and the payment to be made pursuant to the
provisions of this section. Upon written request of any registered
owner of Bonds, the Company shall furnish to such registered owner
of Bonds a certificate (supported by reasonable documentation, which
may include calculation by Bond Counsel or by some other service
organization) showing compliance with this Section and other
applicable provisions of section 148 of the Code.
(f) The Trustee shall maintain a record of the periodic
determinations by the Company of the Excess Earnings for a period
beginning on the first anniversary date of the issuance of the Bonds
and ending on the date six years after the final retirement of the
Bonds. Such records shall state each such anniversary date and
summarize the manner in which the Excess Earnings, if any, was
determined.
(g) If the Trustee shall declare the principal of the Bonds
and the interest accrued thereon immediately due and payable as the
result of an Event of Default specified in the Indenture, or if the
Bonds are optionally or mandatorily prepaid or redeemed prior to
maturity as a whole in accordance with their terms, any amount
remaining in any of the funds shall be transferred to the Rebate
Fund at the written instructions of the Company, to the extent that
the amount therein is less than the Excess Earnings computed by the
Company as of the date of such acceleration or redemption, and the
balance of such amount shall be used immediately by the Trustee for
the purpose of paying principal of, redemption premium, if any, and
interest on the Bonds when due. In furtherance of such intention,
the Issuer hereby authorizes and directs its President to execute
any documents, certificates or reports required by the Code and to
make such elections, on behalf of the Issuer, which may be permitted
by the Code as are consistent with the purpose for the issuance of
the Bonds.
(h) The requirements contained in this Section relating to the
computation and payment of Excess Earnings shall not be applicable
if all Gross Proceeds of the Bonds are expended within 180 days of
the Issue Date.
ARTICLE V
DISCHARGE OF INDENTURE
Section 5.01. Discharge. If the Issuer shall pay or cause to
be paid, or there shall be otherwise paid, or provision shall be
made to or for the Owners of all Bonds for the payment of, the
principal, premium, if any, and interest due or to become due on the
Bonds at the times and in the manner stipulated therein, and if the
Issuer shall not then be in default under any of the other covenants
and promises in such Bonds and this Indenture to be kept, performed
and observed by it or on its part, and if the Issuer shall pay or
cause to be paid to the Trustee all sums of money due or to become
due according to the provisions hereof or of the Bonds and of the
Agreement, then, except for the rights, protections and immunities
of the Trustee under Article VII hereof, these presents and the
interest in the Trust Estate and rights hereby granted shall cease,
determine and be void, and the Trustee shall take such actions as
may be necessary to evidence the cancellation and discharge of the
lien of this Indenture. Any Bond, other than a Bond in the Daily or
the Weekly Mode, shall be deemed to be paid within the meaning of
this Article V and for all purposes of this Indenture when (i)
payment of the principal of, and applicable premium, if any, on such
Bond plus the interest thereon to the due date thereof (whether such
due date be by reason of maturity or upon redemption as provided in
this Indenture or otherwise), or, in the case of a Bond in the
Flexible Mode, the Monthly Mode, the Quarterly Mode, the Semiannual
Mode or the Multiannual Mode, to the date next following on which
such Bond is required to be, or may at the option of the Owner be,
tendered for purchase, shall have been provided to the Trustee by
irrevocably depositing with the Trustee, in trust, and the Trustee
shall have irrevocably set aside exclusively for such payment, any
combination of (1) moneys provided by the Company sufficient to make
such payment and/or (2) Government Obligations acquired with moneys
provided by the Company, not subject to redemption or prepayment and
maturing as to principal and interest in such amounts and at such
times as will, in the opinion of an independent certified public
accountant delivered to the Trustee, provide sufficient moneys to
make such payment without reinvestment (and there shall be no
reinvestment); (ii) all necessary and proper fees, compensation and
expenses of the Trustee pertaining to the Bonds shall have been paid
or the payment thereof provided for to the satisfaction of the
Trustee; (iii) the Trustee shall have received in form satisfactory
to it irrevocable instructions from an Authorized Company
Representative to redeem such Bonds on the date next following on
which such Bond is required to be, or may at the option of the Owner
be, tendered for purchase and either evidence that all redemption
notices required by this Indenture have been given or irrevocable
instructions to the Trustee to give such redemption notices has been
given; and (iv) there shall be delivered to the Trustee and the
Issuer an opinion of Bond Counsel to the effect that the deposit of
such moneys will not adversely affect the excludability from gross
income for purposes of federal income taxation of interest on any of
the Bonds.
Notwithstanding the foregoing, upon the deposit of funds as
described in the first paragraph of this Section, the Purchase Price
of Bonds tendered for optional or mandatory purchase shall be made
from the remarketing of such Bonds under Section 2.10 hereof. If
payment of such Purchase Price is not made from such source, payment
shall be made from funds on deposit pursuant to this Section, in
which case such Bonds shall be surrendered to the Trustee and
canceled.
Section 5.02. Defeasance. So long as the Municipal Bond
Insurance Policy shall be in full force and effect, prior to any
defeasance becoming effective under this Indenture, (i) the amounts
required to be deposited pursuant to this Indenture and any escrow
deposit agreement shall be invested only in Government Obligations,
(ii) the Bond Insurer and the Trustee shall have received (a) any
final official statement that may be delivered in connection with
any refunding obligations, (b) a copy of the accountants'
verification report, (c) a copy of an escrow deposit agreement, if
any, in form and substance acceptable to the Bond Insurer, and (d)
a copy of an opinion of bond counsel, addressed to the Bond Insurer
and the Trustee, to the effect that such Bonds have been paid within
the meaning and with the effect expressed in this Indenture, and
that the covenants, agreements and other obligations of the Issuer
to the holders of such Bonds have been discharged and satisfied and
(iii) the Trustee shall have received the written consent of the
Bond Insurer to such defeasance, which consent shall not be
unreasonably withheld.
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.01. Events of Default. Each of the following events
is hereby defined as, and declared to constitute an "Event of
Default" under this Indenture:
(i) default in the due and punctual payment of the principal
of or premium, if any, on any Outstanding Bond, as the same shall
become due and payable, whether at the stated maturity thereof, upon
any proceedings for redemption, or upon the maturity thereof by
declaration of acceleration;
(ii) default in the due and punctual payment of the interest
on any Outstanding Bond, as the same shall become due and payable,
and (i) if such Bond bears interest at a Flexible, Daily, Weekly,
Monthly, Quarterly or Semiannual Rate, the continuation of such
default for a period of one Business Day or more or (ii) if such
Bond bears interest at a Multiannual or Fixed Rate, the continuation
of such failure for a period of sixty days or more;
(iii) default in the due and punctual payment of the
Purchase Price of any Outstanding Bond, as the same shall become due
and payable and the continuation of such default for a period of one
Business Day or more;
(iv) default by the Issuer in its performance or observance of
any of the other covenants, agreements or conditions contained in
the Indenture, and the continuation thereof without corrective
action for the period after notice specified in Section 6.12 hereof
; or
(v) an Event of Default (as defined in the Agreement) has
occurred and is continuing under the Agreement.
Section 6.02. Acceleration. If any Event of Default occurs
and is continuing, the Trustee may, and upon request of the owners
of at least 25% in principal amount of all Bonds then Outstanding,
shall, by notice in writing to the Issuer and the Company, declare
the principal of all Bonds then Outstanding to be immediately due
and payable; and upon such declaration the said principal, together
with interest accrued thereon to the date of acceleration, shall
become due and payable immediately at the place of payment provided
therein, anything in the Indenture or in the Bonds to the contrary
notwithstanding. Upon the occurrence of any acceleration hereunder,
the Trustee shall immediately declare all payments under the
Agreement pursuant to Section 5.04 thereof to be due and payable
immediately.
Immediately after any acceleration hereunder, the Trustee, to
the extent it has not already done so, shall notify in writing the
Issuer, the Company, the Paying Agent and the Remarketing Agent of
the occurrence of such acceleration. Upon the occurrence of any
acceleration hereunder, the Trustee shall notify by first class
mail, postage prepaid, the owners of all Bonds Outstanding of the
occurrence of such acceleration.
If, after the principal of the Bonds has become due and
payable, all arrears of interest upon the Bonds are paid by the
Issuer, and the Issuer also performs all other things in respect to
which it may have been in default hereunder and pays the reasonable
charges of the Trustee and the Bondholders, including reasonable and
necessary attorneys' fees, then, and in every such case, the owners
of a majority in principal amount of the Bonds then Outstanding, by
notice to the Issuer and to the Trustee, may annul such acceleration
and its consequences, and such annulment shall be binding upon the
Trustee and upon all owners of Bonds issued hereunder. No such
annulment shall extend to or affect any subsequent default or impair
any right or remedy consequent thereon. The Trustee shall forward
a copy of any notice from Bondholders received by it pursuant to
this paragraph to the Company. Immediately upon such annulment, the
Trustee shall cancel, by notice to the Company, any demand for
prepayment of all amounts due under the Agreement made by the
Trustee pursuant to this Section. The Trustee shall promptly give
written notice of such annulment to the Issuer, the Company, the
Paying Agent, the Remarketing Agent, and, if notice of the
acceleration of the Bonds shall have been given to the Bondholders,
shall give notice thereof to the Bondholders.
Section 6.03. Other Remedies; Rights of Bond Owners. Upon the
occurrence of any Event of Default, the Trustee may pursue any
available remedy by suit at law or in equity to enforce the payment
of the principal of, premium, if any, and interest on the Bonds then
outstanding, and the performance by the Issuer of its obligations
hereunder, including, without limitation, the following:
(i) by mandamus, or other suit, action or proceeding at law
or in equity, enforce all rights of the Bondholders and require the
Issuer to carry out its obligations under this Indenture and the
Acts;
(ii) bring suit upon the Bonds;
(iii) by action, suit or proceeding at law or in equity,
require the Issuer to account as if it were the trustee of an
express trust for the Bondholders; and
(iv) by action, suit or proceeding at law or in equity, enjoin
any acts or things which may be unlawful or in violation of the
rights of the Bondholders.
Any judgment against the Issuer shall be enforceable only against
the Trust Estate. There shall not be authorized any deficiency
judgment against any assets of, or the general credit of, the
Issuer. Subject to the prior rights of the Bond Owners, the Issuer
shall be entitled to reimbursement for any of its expenses in
connection with such proceeding from any available funds in the
Trust Estate.
If any Event of Default shall have occurred, and if requested
to do so in writing by the Owners of not less than 25% in aggregate
principal amount of the Bonds then Outstanding and if indemnified as
provided in Section 7.01(l) hereof, the Trustee shall be obligated
to exercise one or more of the rights and powers conferred by this
Section 6.03, or by Section 6.02 hereof as the Trustee, being
advised by counsel, shall deem most expedient in the interests of
the Bond Owners, unless the Trustee shall determine, upon the advice
of counsel, that to take such action will prejudice the rights of
the majority of the Bond Owners.
No remedy conferred upon or reserved to the Trustee or the Bond
Owners by the terms of this Indenture is intended to be exclusive of
any other remedy, but each and every such remedy shall be cumulative
and in addition to any other remedy given to the Trustee or the Bond
Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon
any default or Event of Default shall impair any such right or
power, or shall be construed to be a waiver of any such default or
Event of Default or an acquiescence therein; and every such right
and power may be exercised from time to time as often as may be
deemed expedient. No waiver of any default or Event of Default
hereunder, whether by the Trustee or the Bond Owners, shall extend
to or affect any subsequent default or Event of Default, or impair
any right or remedy consequent thereon.
Section 6.04. Right of Bond Owners to Direct Proceedings.
Anything in this Indenture to the contrary notwithstanding, upon the
occurrence of an Event of Default, the Owners of a majority in
aggregate principal amount of the Bonds then Outstanding shall have
the right, at any time, by an instrument or instruments in writing
executed and delivered to the Trustee, to direct the method and
place of conducting all proceedings to be taken in connection with
the enforcement of the terms and conditions of this Indenture, or
for the appointment of a receiver or for any other proceedings
hereunder, other than for the payment of the principal of, premium,
if any, and interest on the Bonds or any part thereof; provided,
however, that direction shall not be otherwise than in accordance
with the provisions of law and this Indenture and shall be
accompanied by an indemnity as provided in Section 7.01(1) hereof.
Section 6.05. Appointment of Receiver. Upon the occurrence
of an Event of Default, and upon the filing of a suit or other
commencement of judicial proceedings to enforce the rights of the
Trustee and the Bond Owners under this Indenture, the Trustee shall
be entitled, as a matter of right, to request the appointment of a
receiver or receivers of the Trust Estate and the revenues, issues,
earnings, income, products and profits thereof, pending such
proceedings, with such powers as the court making such appointment
shall confer.
Section 6.06. Waiver of Certain Laws. Upon the occurrence of
an Event of Default, to the extent that such rights may then
lawfully be waived, neither the Issuer, nor anyone claiming through
or under it, shall claim or seek to take advantage of any
appraisement, valuation, stay, extension or redemption laws now or
hereafter in force in order to prevent or hinder the enforcement of
this Indenture. The Issuer, for itself and all who may claim
through or under it, hereby waives, to the extent that it lawfully
may do so, the benefit of all such laws.
Section 6.07. Application of Moneys. All moneys relating to
the Bonds received by the Trustee pursuant to any right given or
action taken under the provisions of this Article VI shall (after
payment of the costs and expenses of the proceedings resulting in
the collection of such moneys and of the fees and expenses,
liabilities and advances of the Issuer and the Trustee, it being
understood that such payment shall not be made from any moneys
already held for the benefit of the Bondholders) be deposited in the
Bond Fund, and all moneys in the Bond Fund shall be applied as
follows:
(i) Unless the principal of all the Bonds Outstanding shall
have become or been declared due and payable, all such moneys shall
be applied:
First: (a) in case the principal of the Bonds shall not
have become due, to the payment of the interest in default, in the
order of the maturity of the installments of such interest, with
interest, so far as the same may be legally enforceable, on the
overdue installments thereof at the highest rate borne by any
Outstanding Bonds, such payments to be made ratably to the persons
or parties entitled thereto, without discrimination or preference;
or
(b) in case the principal of any of the Bonds shall have
become due, by declaration or otherwise, first to the payment of the
interest in default, in the order of the maturity of the
installments of such interest, and thereafter to the payment of the
principal of, and premium, if any, on all Bonds then due with
interest, so far as the same may be legally enforceable, on the
overdue interest and principal (including premium) at the highest
rate borne by any Outstanding Bonds, such payments, respectively, to
be made ratably to the persons or parties entitled thereto, without
discrimination or preference.
Second: to the payment of the fees, counsel fees, and advances
and expenses of the Trustee and of the receiver, if any, and all
costs and disbursements allowed by the court if there be any court
action, and all other Trustee expenses accrued hereunder.
Third: to the payment of the Issuer's counsel fees and other
expenses, if any.
Fourth: to the payment of the surplus, if any, to whomever is
lawfully entitled to receive the same or as a court of competent
jurisdiction may direct.
(ii) If the principal of all the Outstanding Bonds shall have
become due or shall have been declared due and payable, all such
moneys shall be applied first to the payment of any amounts owed to
the Trustee; and second to the payment of the principal, premium, if
any, and interest then due on such Bonds, without preference or
priority of principal and premium over interest or of interest over
principal and premium, or of any installment or interest over any
other installment of interest, or of any Bond over any other Bond,
ratably, according to the amounts due respectively for principal,
premium, if any, and interest, to the persons entitled thereto,
without any discrimination or privilege.
(iii) If the principal of all the Outstanding Bonds shall
have been declared due and payable by acceleration, and if such
declaration shall thereafter have been rescinded and annulled under
the provisions of this Article VI, then the moneys shall be applied
in accordance with the provisions of subsection (i) above; provided,
however, that in the event that the principal of all the Bonds shall
later become due or be declared due and payable by acceleration, the
moneys shall be applied in accordance with the provisions of
subsection (ii) of this Section 6.07.
Whenever the Trustee shall apply such funds it shall fix the
date of application, which shall be an Interest Payment Date unless
it shall deem another date more suitable. The Trustee shall give
such notice of the deposit with it of any such moneys and of the
fixing of any such date.
Section 6.08. Remedies Vested in Trustee. All rights of
action (including the right to file proofs of claim) under this
Indenture and the Bonds may be enforced by the Trustee without the
possession of any Bond or the production thereof in any trial or
proceedings related thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its name as Trustee
without the necessity of joining as plaintiff or defendant the Owner
of any Bond.
Section 6.09. Rights and Remedies of Bond Owners. No Owner
of any Bond shall have any right to institute any suit, action or
proceeding in equity or at law for the enforcement of this Indenture
or for the execution of any trust hereof or for the appointment of
a receiver or any other remedy hereunder, unless:
(i) an Event of Default has occurred of which the Trustee has
been notified as provided in Section 7.01(h) hereof, or of which by
said Section 7.01(h) the Trustee is deemed to have notice;
(ii) the Owners of not less than 25% in aggregate principal
amount of the Bonds then Outstanding shall have made written request
to the Trustee and shall have offered it reasonable opportunity
either to proceed to exercise the powers hereinabove granted or to
institute such action, suit or proceeding in the name or names of
such Owners, and shall have offered to the Trustee indemnity as
provided in Section 7.01(1) hereof; and
(iii) the Trustee shall thereafter fail or refuse to
exercise the powers hereinbefore granted, or to institute such
action, suit or proceeding in its own name within 60 days;
and such notification, request and offer of indemnity are hereby
declared in every case, at the option of the Trustee, to be
conditions precedent to the execution of the powers and trusts of
this Indenture, and to any action or cause of action for the
enforcement of this Indenture, or for the appointment of a receiver
or for any other remedy hereunder. No one or more Owners of the
Bonds shall have any right in any manner whatsoever to affect,
disturb or prejudice the lien of this Indenture by such Owners'
action, and all proceedings at law or in equity shall be instituted,
had and maintained in the manner herein provided and (except as
herein otherwise provided) for the equal and ratable benefit of the
Owners of all Bonds then Outstanding. Nothing in this Indenture,
however, shall affect or impair the right of any Owner to enforce
the payment of the principal of, premium, if any, and interest on
any Bond owned by such Owner at and after the maturity thereof, or
the obligation of the Issuer to pay the principal of, premium, if
any, and interest on any Bond to the owner thereof at the time and
place, from the source, and in the manner expressed in such Bond.
Nothing contained herein shall be construed as permitting or
affording any Owner a right or cause of action against the Trustee
or in respect of the Bonds where a default has been waived under
Section 6.11 hereof or cured under Section 6.12 hereof.
Section 6.10. Termination of Proceedings. In case the Trustee
shall have proceeded to enforce any right under this Indenture by
the appointment of a receiver or otherwise, and such proceedings
shall have been discontinued or abandoned for any reason, or shall
have been determined adversely to the Trustee, then and in every
such case the Issuer, the Trustee and the Owners shall be restored
to their former positions and rights hereunder, and all rights,
remedies and powers of the Trustee shall continue as if no such
proceedings had been taken.
Section 6.11. Waivers of Events of Default. The Trustee may
waive any default or Event of Default hereunder and its consequences
and shall do so upon the written request of the Owners of a
majority in aggregate principal amount of the Bonds then
Outstanding, provided, however, that the Trustee may not waive an
Event of Default described in subparagraphs (i), (ii) or (iii) of
Section 6.01 hereof without the written consent of the Owners of all
of the Bonds.
Section 6.12. Notice of Default; Opportunity to Cure Defaults.
(a) Anything herein to the contrary notwithstanding, no default
under Section 6.01(iv) hereof shall constitute an Event of Default
hereunder until actual notice of such default by registered or
certified mail shall be given to the Issuer and the Company by the
Trustee or the Owners of not less than 25% in aggregate principal
amount of all Bonds Outstanding, and the Issuer and the Company
shall have had 90 days after receipt of such notice, at their
option, to correct said default or to cause said default to be
corrected, and shall not have corrected said default or caused said
default to be corrected within the applicable period; provided,
however, that if said default be such that it can be corrected, but
cannot be corrected within the applicable period, it shall not
constitute an Event of Default if corrective action is instituted by
the Issuer and the Company, or either of them, within the applicable
period and diligently pursued until the default is corrected.
(b) Upon the occurrence of an Event of Default or upon the
giving of written notice to the Issuer and the Company of a default,
the Trustee shall give notice thereof by first-class mail to the
Owners of all Bonds then Outstanding and, subject to Section 7.03
hereof, to persons or entities which provide evidence acceptable to
the Trustee that such person or entity has legal or beneficial
interest in at least $1,000,000 in principal amount of Bonds.
(c) With regard to any default concerning which notice is
given under the provisions of this Section 6.12, the Issuer, to the
full extent permitted by law, hereby grants the Company full
authority to perform and observe for the account of the Issuer any
covenants or obligation alleged in said notice not to have been
performed or observed in the name and stead of the Issuer with full
power to do any and all things and acts to the same extent that the
Issuer could do and perform any such things and acts, with power of
substitution. The Trustee hereby consents to such grant of
authority.
Section 6.13. Payments under Municipal Bond Insurance Policy.
So long as the Municipal Bond Insurance Policy shall be in full
force and effect, the Issuer and the Trustee hereby agree to comply
with the following provisions:
(a) If the Trustee has notice that any owner of the Bonds has
been required to disgorge payments of principal or interest on the
Bonds to a trustee in bankruptcy or creditors or others pursuant to
a final judgment by a court of competent jurisdiction that such
payment constitutes a voidable preference to such owner of Bonds
within the meaning of any applicable bankruptcy laws, then the
Trustee shall notify Bond Insurer or its designee of such fact by
telephone, facsimile, telecopy or telegraphic notice, confirmed in
writing by registered or certified mail.
(b) the Trustee is hereby irrevocably designated, appointed,
directed and authorized to act as attorney-in-fact for owners of the
Bonds as follows:
(i) If and to the extent there is a deficiency in amounts
required to pay interest on the Bonds, the Trustee shall (A) execute
and deliver to State Street Bank and Trust Company, N.A., or its
successors under the Municipal Bond Insurance Policy (the "Insurance
Paying Agent"), in form satisfactory to the Insurance Paying Agent,
an instrument appointing Bond Insurer as agent for such owners in
any legal proceeding related to the payment of such interest and an
assignment to Bond Insurer of the claims for interest to which such
deficiency relates and which are paid by Bond Insurer, (B) receive
as designee of the respective owners (and not as Trustee) in
accordance with the tenor of the Municipal Bond Insurance Policy
payment from the Insurance Paying Agent with respect to the claims
for interest so assigned, and (C) disburse the same to such
respective owners; and
(ii) If and to the extent of a deficiency in amounts required
to pay principal of the Bonds, the Trustee shall (A) execute and
deliver to the Insurance Paying Agent in form satisfactory to the
Insurance Paying Agent an instrument appointing Bond Insurer as
agent for such owner in any legal proceeding relating to the payment
of such principal and an assignment to Bond Insurer of any of the
Bonds surrendered to the Insurance Paying Agent of so much of the
principal amount thereof as has not previously been paid or for
which moneys are not held by the Trustee and available for such
payment (but such assignment shall be delivered only if payment from
the Insurance Paying Agent is received), (B) receive as designee of
the respective owners (and not as the Trustee) in accordance with
the tenor of the Municipal Bond Insurance Policy payment therefor
from the Insurance Paying Agent, and (C) disburse the same to such
owners.
(c) Payments with respect to claims for interest on and
principal of Bonds disbursed by the Trustee from proceeds of the
Municipal Bond Insurance Policy shall not be considered to discharge
the obligation of the Issuer or the Company with respect to such
Bonds, and Bond Insurer shall become the owner of such unpaid Bonds
and claims for the interest in accordance with the tenor of the
assignment made to it under the provisions of this subsection or
otherwise.
(d) Irrespective of whether any such assignment is executed
and delivered, Issuer and the Trustee hereby agree for the benefit
of Bond Insurer that:
(i) To the extent Bond Insurer makes payments, directly
or indirectly (as by paying through the Trustee), on account of
principal of or interest on the Bonds, Bond Insurer will be
subrogated to the rights of such owners to receive the amount
of such principal and interest from the Issuer, with interest
thereon as provided and solely from the sources stated in this
Indenture and the Bonds; and
(ii) They will accordingly pay Bond Insurer the amounts of such
principal and interest (including principal and interest recovered
under subparagraph (ii) of the first paragraph of the Municipal Bond
Insurance Policy, which principal and interest shall be deemed past
due and not have been paid), with interest thereon as provided in
this Indenture and the Bonds, but only from the sources and in the
manner provided herein for the payment of principal of and interest
on the Bonds to owners, and will otherwise treat Bond Insurer as
the owner of such rights to the amount of such principal and
interest.
ARTICLE VII
THE TRUSTEE
Section 7.01. Acceptance of Trust. The Trustee hereby accepts
the trusts imposed upon it by this Indenture, and agrees to perform
said trusts, but only upon and subject to the following express
terms and conditions:
(a) The Trustee, prior to the occurrence of an Event of
Default and after the curing or waiver of all Events of Default
which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee. Subject to the limitation on the liability of
the Trustee contained in Section 7.01(g), in case an Event of
Default has occurred of which the Trustee is deemed hereunder to
have knowledge (which has not been cured or waived), the Trustee
shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) The Trustee may execute any of the trusts or powers hereof
and perform any of its duties by or through attorneys, agents,
receivers or employees, but shall not be answerable for the conduct
of the same if chosen with due care. The Trustee shall be entitled
to advice of counsel of its selection concerning all matters of
trust hereof and the duties hereunder, and in all cases may pay such
reasonable compensation and expenses to all such attorneys, agents,
receivers and employees as may reasonably be employed in connection
with the trust hereof. The Trustee may act upon the opinion or
advice of any attorneys approved by the Trustee in the exercise of
reasonable care. The Trustee shall not be responsible for any loss
or damage resulting from any action or non-action exercised in good
faith in reliance upon such opinion or advice.
(c) The Trustee shall not be responsible for any recital
herein or in the Bonds (other than the certificate of authentication
thereon), the legality, sufficiency or validity of this Indenture,
the Agreement, the Bonds or any document or instrument relating
thereto; the recording or filing of any instrument required by this
Indenture to secure the Bonds; insuring the Project or collecting
any insurance proceeds; the validity of the execution by the Issuer
of this Indenture or of any supplement hereto or of any instrument
of further assurance; or the validity, priority, perfection or
sufficiency of the security for the Bonds issued hereunder or
intended to be secured hereby, or otherwise as to the maintenance of
the security hereof, except for the filing of Uniform Commercial
Code continuation statements as directed in writing by and at the
expense of, the Company pursuant to Section 3.05 hereof.
(d) The Trustee shall not be accountable for the use of any
Bonds authenticated or delivered hereunder or for the use or
application by the Company of any moneys disbursed by the Trustee in
accordance with the provisions hereof. To the extent permitted by
law, the Trustee may in good faith buy, sell, own and hold any of
the Bonds and may join in any action which any Bond Owner may be
entitled to take with like effect as if the Trustee were not a party
to this Indenture. The Trustee may also engage in or be interested
in financial or other transactions with the Issuer or the Company;
provided, however, that if the Trustee determines that any such
relationship is in conflict with its duties under this Indenture, it
shall eliminate the conflict or resign as Trustee. To the extent
permitted by law, the Trustee may also purchase Bonds with like
effect as if it were not the Trustee.
(e) The Trustee shall be protected in acting upon, and may
conclusively rely upon, any notice, request or other paper or
document reasonably believed to be genuine and correct, and
reasonably believed to have been signed or sent by the proper person
or persons. Any action taken by the Trustee pursuant to this
Indenture upon the request, authority or consent of any person who
at the time of making such request or giving such authority or
consent is the Owner of any Bond, shall be conclusive and binding
upon all future Owners of the same Bond and any Bond issued in
replacement therefor.
(f) As to the existence or nonexistence of any fact, or as to
the sufficiency or validity of any instrument, paper or proceeding,
the Trustee shall be entitled to rely upon a certificate signed by
a duly authorized representative of the Issuer or the Company as
sufficient evidence of the facts therein contained; and prior to the
occurrence of a default of which the Trustee has been notified as
provided in subsection (h) of this Section 7.01, or of which by said
subsection (h) it is deemed to have notice, shall also be at liberty
to accept a similar certificate to the effect that any particular
dealing, transaction or action is necessary or expedient. The
Trustee may at its discretion secure such further evidence deemed
necessary or advisable, but shall in no case be bound to secure the
same. The Trustee may accept a certificate of an Authorized Issuer
Representative to the effect that a resolution in the form therein
set forth has been adopted, and is in full force and effect.
(g) The right of the Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty. The
Trustee shall not be answerable for other than its negligence or
willful misconduct in the performance of its powers and duties under
this Indenture.
(h) The Trustee shall not be required to take notice or be
deemed to have notice of any default or Event of Default hereunder,
or in any other document or instrument executed in connection with
the execution and delivery of the Bonds, except an Event of Default
under Section 6.01(i), (ii) or (iii) hereof or Section 6.01(a), (b),
or (c) of the Agreement, unless the Trustee shall be specifically
notified in writing of such default or Event of Default by the
Issuer, the Company or the Owners of at least 25% in aggregate
principal amount of the Bonds then Outstanding. All notices or
other instruments required by this Indenture to be delivered to the
Trustee shall be delivered at the principal corporate trust office
of the Trustee, and, in the absence of such notice so delivered, the
Trustee may conclusively assume there is no default except as
aforesaid.
(i) At any and all reasonable times, the Trustee and its duly
authorized agents, attorneys, experts, engineers, accountants and
representatives shall have the right to inspect fully all books,
papers and records of the Issuer pertaining to the Agreement and the
Bonds, and to take such photocopies and memoranda therefrom and in
regard thereto as may be desired.
(j) The Trustee shall not be required to give any bond or
surety in respect of the execution of the trust created hereby or
the powers granted hereunder.
(k) Notwithstanding anything contained elsewhere in this
Indenture, the Trustee shall have the right, but not the obligation,
to demand, in respect of the withdrawal of any amount, the release
of any property, or the taking of any action whatsoever within the
purview of this Indenture, any showing, certificate, opinion,
appraisal or other information, or corporate action or evidence
thereof, in addition to that required by the terms hereof as a
condition of such action by the Trustee, as deemed desirable for the
purposes of establishing the right of the Issuer or the Company to
the withdrawal of any amount, the release of any property or the
taking of any other action by the Trustee.
(l) Before taking any action referred to in Article VI or
Section 7.04 hereof (except with respect to making payment on the
Bonds when due, acceleration of the Bonds and payment of the Bonds
upon such acceleration), the Trustee may require that a satisfactory
indemnity bond be furnished for the reimbursement of all expenses
which it may incur and to protect it against all liability, except
liability which is adjudicated to have resulted from its negligence
or willful misconduct, by reason of any action so taken.
(m) All moneys received by the Trustee shall, until used,
applied or invested as herein provided, be held in trust for the
purposes for which they were received but need not be segregated
from other funds, except to the extent required by law or this
Indenture. The Trustee shall be under no liability for interest on
any moneys received hereunder.
(n) Notwithstanding the effective date of this Indenture or
anything to the contrary in this Indenture, the Trustee shall have
no liability or responsibility for any act or event relating to this
Indenture which occurs prior to the date the Trustee formally
executes this Indenture and commences acting as Trustee hereunder.
(o) Upon the execution of this Indenture, the Trustee shall
not be liable for any action taken, suffered, or omitted to be taken
by it in good faith and reasonably believed by it to be authorized
or within the discretion or rights or powers conferred upon it by
this Indenture.
(p) No provision of this Indenture shall be deemed to require
the Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of its rights or powers, if the
Trustee shall have reasonable grounds for believing that repayment
of such funds or, in the alternative, adequate indemnity against
such risk or liability is not reasonably assured to it.
(q) The Trustee has no obligation or liability to the
Bondholders for the payment of interest or premium, if any, on or
principal of the Bonds, but rather the Trustee's sole obligations
are to administer, for the benefit of the Company and the
Bondholders, the various Funds and Accounts established hereunder.
(r) In the event the Trustee shall receive inconsistent or
conflicting requests and indemnity from two or more groups of
Bondholders, each representing less than a majority of the aggregate
principal amount of the Bonds then Outstanding, the Trustee shall
not be required to take any action hereunder.
(s) Except for information provided by the Trustee concerning
the Trustee, the Trustee shall have no responsibility with respect
to any information in any Official Statement or other disclosure
material distributed with respect to the Bonds. The Trustee shall
have no responsibility for compliance with securities laws in
connection with issuance of the Bonds.
(t) The Trustee's immunities and protections from liability,
and its right to payment of compensation and indemnification in
connection with performance of its duties and obligations under the
Indenture and the Agreement, shall survive the Trustee's resignation
or removal, or the final payment of the Bonds.
(u) In acting or omitting to act pursuant to the provisions
of the Agreement, the Trustee shall be entitled to all of the
rights, protections and immunities accorded to the Trustee under the
terms of this Indenture, including but not limited to those set out
in this Article VII.
Section 7.02.Fees, Charges and Expenses of Trustee. (a) The
Issuer has agreed with the Company in the Agreement that, as part of
the Installment Payments the Company shall pay to the Trustee its
charges for performing the duties of Trustee, Bond Registrar, and
Paying Agent for the Bonds. It is agreed by the Trustee that the
Company may, without causing or creating a default or Event of
Default hereunder, contest in good faith (and withhold payment of
the contested amount until such contest is resolved) the
reasonableness of any of the foregoing charges for service. All
payments due the Trustee for such charges, fees, or expenses shall
be paid by the Company upon prompt presentation of an invoice
therefor and no such charges, fees, or expenses shall be charged
against or be payable by the Issuer. Until the Trustee is paid in
full pursuant to its final notice, the rights of the Trustee under
this Section 7.02 shall survive the payment in full of the Bonds and
the discharge of this Indenture.
(b) In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as a Trustee, a court in its
discretion may require the filing by any party litigant in the suit
of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable
attorney's fees and expenses, against any party litigant in the
suit, having due regard to the merits and good faith of the claims
or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee or the Issuer, a suit by an Owner pursuant
to enforcement of the payment of the principal of or interest
hereunder or a suit by Owners of more than 10% in principal amount
of the then Outstanding Bonds.
Section 7.03.Trustee to Provide Additional Notices. (a) Upon
written request of any Owner of Bonds in an aggregate principal
amount of at least $1,000,000 (or any person or entity which
provides written evidence acceptable to the Trustee that such person
or entity has a legal or beneficial interest in Bonds in an
aggregate principal amount of at least $1,000,000), the Trustee
shall give an additional copy of any notice to be given by the
Trustee under this Indenture by first-class mail to a second address
specified by such Bond Owner, person or entity. Any such additional
notices shall be given simultaneously with the original notices.
(b) Upon written request of any person or entity which
provides evidence acceptable to the Trustee that such person or
entity has a legal or beneficial interest in at least $1,000,000 in
principal amount of the Bonds, the Trustee shall for the calendar
year in which such request is received provide one or more of the
following as requested to such person or entity: (i) notices of
redemption pursuant to Section 2.06; (ii) notices of default
pursuant to Section 6.12(b); (iii) copies of all notices to which
such person or entity is entitled under the Indenture to a specific
second address pursuant to Section 7.03(a); and (iv) outstanding
balances by maturity, redemption history, including redemption date,
amount and sources of funds, and distribution of the call to
maturity.
Section 7.04.Intervention by Trustee. In any judicial
proceeding to which the Issuer or the Company is a party, and which
in the opinion of the Trustee and its counsel has a substantial
bearing on the interests of Owners of the Outstanding Bonds, the
Trustee may intervene on behalf of the Owners of the Bonds and shall
do so if requested in writing by the Owners of at least 25% in
aggregate principal amount of the Bonds then Outstanding, and when
provided with sufficient indemnity pursuant to Section 7.01(1)
hereof.
Section 7.05. Successor Trustee by Merger. Subject to Section
7.11 hereof, any corporation or association into which the Trustee
may be converted or merged, with which it may be consolidated, or to
which it may sell or transfer its trust business and assets as a
whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or
transfer to which it is a party, ipso facto, shall (if it is
qualified to be Trustee hereunder) be and become the Trustee
hereunder and vested with all of the title to the Trust Estate and
all the trusts, powers, discretions, immunities, privileges,
responsibilities, obligations and all other matters as was its
predecessor, without the execution or filing of any instrument or
any further act, deed or conveyance on the part of any of the
parties hereto.
Section 7.06. Resignation by Trustee. The Trustee may resign
from the trusts hereby created by giving written notice to the
Issuer, the Company and the Owners of the Bonds then Outstanding,
and shall so resign whenever it ceases to be qualified to act as
Trustee hereunder. Such notice may be sent by first class mail,
postage prepaid, to the Owners of the Bonds, and by certified mail,
postage prepaid, to the Issuer and the Company. Such resignation
shall take effect only upon the appointment of a successor Trustee.
If no successor Trustee is appointed pursuant to Section 7.08 hereof
within 30 days after the delivery of such notice, a temporary
Trustee may be appointed by the Issuer, pursuant to Section 7.08
hereof. If no successor Trustee or temporary Trustee is appointed
within 45 days after delivery of such notice, the resigning Trustee
may petition any court of competent jurisdiction for the appointment
of a successor Trustee.
Section 7.07. Removal of Trustee. The Trustee may be removed
at any time by an instrument or substantially concurrent instruments
in writing delivered to the Trustee and the Bond Owners and signed
by the Issuer and the Company. Such removal shall take effect only
upon the appointment of a successor Trustee.
Section 7.08. Appointment of Successor Trustee. In case the
Trustee shall resign, be removed, be dissolved, be in the course of
dissolution or liquidation or otherwise become incapable of acting
or not qualified to act hereunder, or in case the Trustee shall be
taken under the control of any public officer or officers or a
receiver appointed by a court, a successor may be appointed by the
Issuer with the consent of the Company.
Section 7.09. Successor Trustee by Appointment. Every
successor Trustee appointed hereunder shall execute, acknowledge and
deliver to its predecessor, the Company and the Issuer an instrument
in writing accepting such appointment hereunder, and thereupon such
successor, without any further act, deed or conveyance, shall become
fully vested with the title to the Trust Estate and all of the trust
powers, discretions, immunities, privileges, responsibilities,
obligations and all other matters of its predecessor; but such
predecessor shall, nevertheless, on the written request of the
Issuer, or of its successor Trustee, execute and deliver an
instrument transferring to such successor Trustee all the estates,
properties, rights, powers and trusts of such predecessor hereunder;
and every predecessor Trustee shall deliver all securities and
moneys held by it hereunder to its successor. Should any instrument
in writing from the Issuer be required by any successor Trustee for
more fully and certainly vesting in such successor the estates,
rights, powers and duties hereby vested or intended to be vested in
the predecessor, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Issuer. The
resignation of any Trustee and the instrument or instruments
removing any Trustee and appointing a successor hereunder, together
with all other instruments provided for in this Article VII, shall
be filed and/or recorded by the successor Trustee in each recording
office where this Indenture shall have been filed and/or recorded.
No appointment of a successor Trustee hereunder shall become
effective unless such successor meets the qualifications set forth
in Section 7.11.
Section 7.10. Appointment of Separate Trustee or Co-Trustee.
It is the intent of the parties to this Indenture that there shall
be no violations of any law of any jurisdiction (including
particularly the laws of the State) denying or restricting the
rights of banking corporations or associations to transact business
as a trustee in such jurisdiction. It is recognized that in case
of litigation under this Indenture, and in particular in the case of
enforcement of this Indenture on default, or in case the Trustee
deems that by reason of any present or future law of any
jurisdiction it may not exercise any of the powers, rights or
remedies herein granted to the Trustee, or hold title to the
properties, in trust, as herein granted, or take any other action
which may be desirable or necessary in connection therewith, it may
be necessary that, subject to the qualifications set forth in
Section 7.11 hereof, the Trustee appoint an additional institution
as a separate trustee or co-trustee. The following provisions of
this Section 7.10 are adapted to these ends.
If the Trustee appoints an additional institution as a separate
trustee or co-trustee, each and every remedy, power, right, claim,
demand, cause of action, immunity, estate, duty, obligation, title,
interest and lien expressed or intended by this Indenture to be
exercised by, vested in or conveyed by the Trustee with respect
thereto shall be exercisable by, vested in and conveyed to such
separate trustee or co-trustee, but only to the extent necessary to
enable such separate trustee or co-trustee to exercise such powers,
rights and remedies, and every covenant and obligation necessary for
the exercise thereby by such separate trustee or co-trustee shall
run to and be enforceable by either of them.
Should any instrument in writing from the Issuer be required by
the separate trustee or co-trustee so appointed by the Trustee for
more fully vesting in and confirming to them such properties,
rights, powers, trusts, duties and obligations, any and all such
instruments in writing shall, on request, be executed, acknowledged
and delivered by the Issuer. If any separate trustee or co-trustee,
or a successor to either, shall die, become incapable of acting or
not qualified to act, resign or be removed, all the estates,
properties, rights, powers, trusts, duties and obligations of such
separate trustee or co-trustee, so far as permitted by law, shall
vest in and be exercised by the Trustee until the appointment of a
successor to such separate trustee or co-trustee.
The appointment of any separate trustee or co-trustee shall be
subject to written approval of the Company so long as no Event of
Default has occurred and is continuing under this Indenture.
Section 7.11. Qualifications. (a) Each successor to the
Trustee pursuant to Sections 7.05 and 7.09 hereof and each separate
trustee or co-trustee (if any) pursuant to Section 7.10 shall at all
times be a bank or trust company which (i) is organized as a
corporation or banking association and doing business under the laws
of the United States or any state thereof, (ii) is authorized under
such laws to exercise corporate trust powers and to perform all the
duties imposed upon it by this Indenture and the Agreement, (iii) is
subject to supervision or examination by federal or state authority,
(iv) has combined capital and surplus (as set forth in its most
recent published report of condition) of at least $50,000,000, (v)
shall not have become incapable of acting or have been adjudged a
bankrupt or an insolvent nor have had a receiver appointed for
itself or for any of its property, nor have had a public officer
take charge or control of it or its property or affairs for the
purpose of rehabilitation, conservation or liquidation and (vi) must
be an institution rated at least "Baa3" by Moody's (or Moody's shall
have provided written evidence that such successor Trustee is
otherwise acceptable to Moody's) if the Bonds are then rated by
Moody's, and at least "BBB-" or "A-3" by S&P (or S&P shall have
provided written evidence that such successor Trustee is otherwise
acceptable to S&P) if the Bonds are then rated by S&P.
(b) Should the Trustee or any separate trustee or co-trustee
at any time cease to be eligible, pursuant to this Section 7.11, to
act as Trustee or co-trustee (as the case may be), it shall promptly
notify the Owners of all Outstanding Bonds, the Issuer and the
Company of such fact. Any such notice shall set forth all the
relevant facts known to the Trustee.
Section 7.12. Paying Agent. All provisions of this Article
VII shall apply with equal force and effect to the Paying Agent
named hereunder, and, to the extent applicable, the Paying Agent
shall comply with the provisions of this Article VII.
ARTICLE VIII
THE REMARKETING AGENT
Section 8.01. The Remarketing Agent. At the direction of the
Company, Goldman, Sachs & Co. is hereby appointed by the Issuer as
Remarketing Agent for the Bonds. The Remarketing Agent shall act as
remarketing agent as provided in this Indenture, and, in accordance
with the agreement between the Remarketing Agent and the Company
shall remarket Bonds required to be purchased pursuant to Sections
2.10 and 2.11 hereof. The Issuer shall, at the direction of the
Company, appoint any successor Remarketing Agent for the Bonds,
subject to the conditions set forth in Section 8.02 hereof. The
Remarketing Agent shall designate its principal office to the
Trustee and signify its acceptance of the duties and obligations
imposed upon it hereunder by a written instrument of acceptance
delivered to the Issuer and the Trustee under which the Remarketing
Agent will agree, particularly, to:
(a) determine the Flexible Rates, Daily Rates, Weekly Rates,
Monthly Rates, Quarterly Rates, Semiannual Rates, Multiannual Rates
and Fixed Rates and give notice of such rates in accordance with
Section 2.02 and the form of Bond set forth in Section 2.03 hereof;
(b) keep such books and records with respect to its duties as
remarketing agent as shall be consistent with prudent industry
practice; and
(c) remarket Bonds in accordance with this Indenture and the
Remarketing Agreement.
Section 8.02. Qualifications of Remarketing Agent. The
Remarketing Agent shall be authorized by law to perform all the
duties imposed upon it by this Indenture. The Remarketing Agent
may resign and be discharged of the duties and obligations created
by this Indenture or may be removed, at the times and in the manner
set forth in the Remarketing Agreement. Any successor Remarketing
Agent shall be an institution rated at least "Baa3" by Moody's (or
Moody's shall have provided written evidence that such successor
Remarketing Agent is otherwise acceptable to Moody's) if the Bonds
are then rated by Moody's, and at least "BBB-" or "A-3" by S&P (or
S&P shall have provided written evidence that such successor
Remarketing Agent is otherwise acceptable to S&P) if the Bonds are
then rated by S&P, and authorized by law to perform all the duties
imposed upon it by this Indenture.
In the event of the resignation or removal of the Remarketing
Agent, the Remarketing Agent shall pay over, assign and deliver any
moneys and Bonds held by it in such capacity to its successor or, if
there is no successor, to the Trustee.
In the event that the Company should fail to direct the Issuer
to appoint a Remarketing Agent hereunder, or in the event that the
Remarketing Agent shall resign or be removed, or be dissolved, or if
the property or affairs of the Remarketing Agent shall be taken
under the control of any state or federal court or administrative
body because of bankruptcy or insolvency or for any other reason,
and the Company shall not have appointed its successor as
Remarketing Agent, the Trustee, notwithstanding the provisions of
the first paragraph of this Section 8.02 shall ipso facto be deemed
to be the Remarketing Agent for all purposes of this Indenture until
the appointment by the Company of the Remarketing Agent or successor
Remarketing Agent, as the case may be; provided, however, that the
Trustee, in its capacity as Remarketing Agent, shall not be required
to sell Bonds or determine the interest rates on the Bonds or to
perform the duties set forth in Sections 2.02 and 2.03 hereof.
ARTICLE IX
SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures Not Requiring Consent
of Bond Owners. Subject to the terms and provisions of Sections
9.03, 9.04 and 9.07 of this Indenture, the Issuer and the Trustee
may, but shall not be obligated to, without the consent of, or
notice to, any of the Bond Owners, enter into an indenture or
indentures supplemental to this Indenture, for any one or more of
the following purposes: (i) to cure any ambiguity, formal defect or
omission in this Indenture or to make such other changes which shall
not have a material adverse effect upon the interests of the Bond
Owners; (ii) to grant to or confer upon the Trustee, for the benefit
of the Bond Owners, any additional rights, remedies, powers or
authorities, or any additional security, that may lawfully be
granted to or conferred upon the Owners or the Trustee; (iii) to
subject to this Indenture additional revenues, properties or
collateral; (iv) to modify, amend or supplement this Indenture, or
any indenture supplemental hereto, in such manner as to permit the
qualification hereof and thereof under the Trust Indenture Act of
1939, as amended, or any similar federal statute hereafter in
effect, or to permit the qualification of the Bonds for sale under
the securities laws of any of the states of the United States, and
if the Issuer so determines, to add to this Indenture or any
indenture supplemental hereto such other terms, conditions and
provisions as may be permitted by the Trust Indenture Act of 1939,
as amended, or any similar federal statute; (v) to add to the
covenants and agreements of the Issuer contained in this Indenture
other covenants and agreements thereafter to be observed for the
protection of the Owners or to surrender or limit any right, power
or authority herein reserved to or conferred upon the Issuer; (vi)
effective upon any Conversion Date to a new Mode, to make any
amendment affecting only the Bonds being converted, including
revision to Authorized Denominations; (vii) to add provisions
relating to the partial conversion of Bonds to a new Mode; (viii) to
conform to the requirements of any Rating Agency, (ix) to add or
modify provisions permitting a mandatory tender of Bonds in lieu of
redemption and (x) to add provisions permitting the addition of a
credit facility or a liquidity facility.
Section 9.02. Supplemental Indentures Requiring Consent of
Bond Owners. (a) Exclusive of supplemental indentures covered by
Section 9.01 hereof, this Indenture may be amended or supplemented
only as provided in this Section 9.02.
(b) Subject to the terms and provisions contained in Sections
9.03 and 9.04 of this Indenture, the Owners of a majority in
aggregate principal amount of the Bonds then Outstanding shall have
the right, from time to time, to approve the execution by the Issuer
and the Trustee of such indenture or indentures supplemental hereto
as shall be deemed necessary and desirable by the Issuer for the
purposes of modifying, altering, amending, adding to or rescinding,
in any particular, any of the terms or provisions contained in this
Indenture or in any supplemental indenture.
(c) Subject to the terms and provisions contained in Sections
9.03 and 9.04 of this Indenture, if any proposed amendment or
supplement affects only the Owners of Bonds in a particular Mode or
Modes, the Owners of a majority in aggregate principal amount of the
Bonds then Outstanding in such affected Mode or Modes shall have the
right, from time to time, to approve the execution by the Issuer and
the Trustee of such amendment or supplement.
(d) If at any time the Issuer shall request the Trustee to
enter into any such supplemental indenture for any of the purposes
of this Section, the Trustee shall, upon being satisfactorily
indemnified with respect to expenses, cause notice of the proposed
execution of such supplemental indenture to be mailed by first class
mail to each of the Bond Owners at the addresses of such Bond Owners
indicated on the Registration Books. Such notice shall briefly set
forth the nature of the proposed supplemental indenture and shall
state that copies thereof are on file at the principal corporate
trust office of the Trustee for inspection by all Bond Owners. If,
within 90 days, or such longer period as shall be prescribed by the
Issuer, following the mailing of such notice, the owners of the
percentage required by this Section 9.02 or Section 9.03 hereof, as
applicable, in aggregate principal amount of the Bonds Outstanding
(or, as provided in subsection (c) above, of the Bonds Outstanding
in a particular Mode or Modes) at the time of the execution of such
supplemental indenture shall have consented to and approved the
execution thereof as herein provided, no Owner of any Bond shall
have any right to object to any of the terms and provisions
contained therein or the operation thereof, or in any manner to
question the propriety of the execution thereof, or to enjoin or
restrain the Trustee or the Issuer (subject to Section 9.04) from
executing the same or from taking any action pursuant to the
provisions thereof. Upon the execution of any such supplemental
indenture as in this Section and Section 9.04 permitted and
provided, this Indenture shall be and be deemed to be modified and
amended in accordance therewith.
(e) The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Owners entitled to
consent to any indenture supplemental hereto. If a record date is
fixed, the Owners on such record date, or their duly designated
proxies, and only such Owners, shall be entitled to consent to such
supplemental indenture, whether or not such Owners remain Owners
after such record date; provided, that unless such consent shall
have become effective by virtue of the requisite percentage having
been obtained prior to the date which is 90 days after such record
date, any such consent previously given shall automatically and
without further action by any Owner be cancelled and of no further
effect.
Section 9.03. Limitation upon Amendments and Supplements.
Nothing contained in Sections 9.01 and 9.02 hereof shall permit, or
be construed as permitting, without the consent and approval of the
Owners of all of the Bonds then Outstanding and affected (i) an
extension of the maturity of the principal of, or the time for
payment of any redemption premium or interest on, any Bond or a
reduction in the principal amount of any Bond, or the rate of
interest or redemption premium thereon, or a reduction in the amount
of, or extension of the time of any payment required by, any Bond;
(ii) a privilege or priority of any Bond over any other Bond (except
as herein provided); (iii) a reduction in the aggregate principal
amount of the Bonds required for consent to such a supplemental
indenture; (iv) the deprivation of the owner of any Bond then
outstanding of the lien created by the Indenture; or (v) the
amendment of this Section 9.03. With respect to any amendment or
supplement to be entered into pursuant to Sections 9.01 or 9.02
hereof, the Trustee shall be entitled to receive a Favorable
Opinion.
Section 9.04. Consent of Company Required. Anything herein
to the contrary notwithstanding, an amendment or supplemental
indenture under this Article IX shall not become effective unless
and until the Company shall have consented in writing to the
execution and delivery thereof.
Section 9.05. Amendments to Agreement. The Agreement may be
amended by written agreement of the Issuer and the Company, provided
that no amendment may be made which would materially adversely
affect the rights of the Owners of any of the Outstanding Bonds
without the consent of the Owners of a majority in aggregate
principal amount of the Bonds then Outstanding of each Mode that
would be so affected; and no amendment may be made which would (i)
decrease the amounts payable under the Agreement; (ii) change the
date of payment or prepayment provisions under the Agreement; or
(iii) change the amendment provisions of the Agreement without the
consent of all of the Owners of the Bonds adversely affected
thereby, and provided further that the Agreement may be amended by
written agreement of the Issuer and the Company in order to make
conforming changes with respect to amendments made to this Indenture
pursuant to Section 9.01 hereof.
Section 9.06. Opinion of Counsel. In executing, or accepting
any additional trusts created by any supplemental indenture
permitted by this Article or the modification thereby of the trusts
created by this Indenture, the Trustee shall be entitled to receive,
and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental
indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 9.07. Bond Insurer to be Deemed Bondowner; Rights of
Bond Insurer; Payments by Bond Insurer in Advance of Scheduled
Maturity Dates; Notices. (a) Notwithstanding any provision of this
Indenture to the contrary, Bond Insurer shall at all times be deemed
the exclusive owner of all Bonds for the purposes of all approvals,
consents, waivers, institution of any action, and the direction of
all remedies. No acceleration of the Bonds shall be permitted, and
no Event of Default relating to the Bonds shall be waived, without
Bond Insurer's consent. Subject to Section 7.01(l), Bond Insurer
shall have the right to direct all remedies pursuant to this
Indenture.
(b) No amendment or supplement shall be made to this Indenture
or to the Agreement without the prior written consent of Bond
Insurer to such amendment or supplement. A copy of such amendment
or supplement shall be sent by the Trustee to Standard & Poor's
Corporation, 25 Broadway, 21st Floor, New York, New York 10004.
(c) To the extent that Bond Insurer makes payment of the
principal of or interest on the Bonds, it shall become the owner of
such Bonds, appurtenant coupons or right to payment of such
principal of or interest on such Bonds and shall be fully subrogated
to all of the registered owners' rights to payment thereof. To
evidence such subrogation (i) in the case of subrogation as to
claims for past due interest, the Trustee shall note Bond Insurer's
rights as subrogee on the registration books of Issuer maintained
by the Trustee upon receipt of proof from Bond Insurer as to payment
of interest thereon to the registered owners of the Bonds, and (ii)
in the case of subrogation as to claims for past due principal, the
Trustee shall note Bond Insurer's rights as subrogee on the
registration books of the Issuer maintained by the Trustee upon
surrender of the Bonds by the registered owners thereof to the
Insurance Paying Agent.
(d) In the event that the principal of and/or interest on the
Bonds shall be paid by Bond Insurer pursuant to the terms of the
Municipal Bond Insurance Policy, (i) such Bonds shall continue to be
Outstanding under this Bond Indenture, (ii) the assignment and
pledge of the Trust Estate and all covenants, agreements and other
obligations of Issuer to the registered owners shall continue to
exist, and Bond Insurer shall be fully subrogated to all of the
rights of such registered owners in accordance with the terms and
conditions of subparagraph (c) above and the Municipal Bond
Insurance Policy, and (iii) the Company shall reimburse Bond Insurer
for the amounts paid by Bond Insurer under the policy. Amounts paid
to Bond Insurer as bond owner and subrogee shall, to the extent of
such payment, be credited against the amounts to be paid to Bond
Insurer pursuant to clause (iii).
(e) In the event that Bond Insurer shall make any payments of
principal of, and/or interest on, any of the Bonds pursuant to the
terms of the Municipal Bond Insurance Policy, and the Bonds are
accelerated, Bond Insurer may, at any time and at its sole option,
pay to the owners of the Bonds all or any portion of amounts due
under the Bonds prior to the stated maturity dates thereof.
(f) Bond Insurer shall be notified (i) in advance of the
execution of any supplemental indenture and of any amendment, change
or modifications of the Agreement in the event consent of the owners
of Bonds is not required, (ii) immediately upon the occurrence of
any Event of Default or of any event that with notice and/or with
the lapse of time could become an Event of Default, and (iii) of any
redemption of Bonds at the same time that the owners of the Bonds
to be redeemed are notified. In addition, all notices, reports,
certificates and opinions to be delivered to or by Bond Trustee or
to the owners of Bonds or available at the request of the owners of
the Bonds shall also be delivered to Bond Insurer or made available
at Bond Insurer's request, as the case may be.
(g) The Trustee shall also notify Bond Insurer immediately (a)
upon the resignation or removal of the Trustee or the appointment of
a successor Trustee and (b) upon receiving any notice from the
Company pursuant to Section 4.06 of the Agreement. Any notice that
is required to be given to the owners of the Bonds or to the
Trustee pursuant to this Indenture, any supplemental indenture and
the Agreement shall also be provided to Bond Insurer. All notices
required to be given to Bond Insurer under this Indenture shall be
in writing and shall be sent by registered or certified mail or by
overnight delivery, addressed to Manager, Surveillance Department,
MBIA Insurance Corporation, 113 King Street, Armonk, New York
10504.
(h) Notwithstanding the foregoing, the provisions of this
Section 9.07 shall apply only so long as the Municipal Bond
Insurance Policy is in full force and effect but shall have no
impact on any subrogation rights of the Bond Insurer.
ARTICLE X
MISCELLANEOUS
Section 10.01. Consents of Bond Owners. Any consent, request,
direction, approval, objection or other instrument required by this
Indenture to be signed and executed by a Bond Owner may be in any
number of concurrent writings of similar tenor, and may be signed or
executed by such Bond Owner in person or by his or her agent
appointed in writing. The fact and date of the execution by any
person of any such consent, request, direction, approval, objection
or other instrument, or of the writing appointing any such agent,
and of the ownership of a Bond, may be proved in any jurisdiction by
the certificate of any officer who by law has power to take
acknowledgment within such jurisdiction that the person signing such
writing acknowledged before him the execution thereof, or by an
affidavit of any witness to such execution, and, if made in such
manner, shall be sufficient for any of the purposes of this
Indenture, and shall be conclusive in favor of the Trustee with
regard to any action taken by it under such request or other
instrument.
Section 10.02. Limitation of Rights. With the exception of
rights herein expressly conferred, nothing expressed or mentioned in
or to be implied from this Indenture or the Bonds is intended or
shall be construed to give to any person other than the parties
hereto, the Company and the Owners of the Bonds any legal or
equitable right, remedy or claim under or with respect to this
Indenture or any covenants, conditions and provisions herein
contained. This Indenture and all of the covenants, conditions and
provisions hereof are intended to be, and are, for the sole and
exclusive benefit of the parties hereto, the Company, the Bond
Insurer and the Owners of the Bonds as herein provided.
Section 10.03. Severability. If any provisions of this
Indenture shall be held or deemed to be, or shall in fact be,
invalid, inoperative or unenforceable, the same shall not affect any
other provision herein contained or render the same invalid,
inoperative or unenforceable to any extent whatever.
Section 10.04. Notices. Except as otherwise provided in this
Indenture, any notice, request or other communication under this
Indenture shall be given in writing and shall be deemed to have been
given by either party to the other party at the addresses shown
below upon any of the following dates:
(a) The date of notice by telefax, telecopy, or similar
telecommunications, which is confirmed promptly in writing;
(b) Three Business Days after the date of the mailing thereof,
as shown by the post office receipt if mailed to the other party
hereto by registered or certified mail;
(c) The date of the receipt thereof by such other party if not
given pursuant to (a) or (b) above.
The address for notice for each of the parties shall be as follows:
If to the Issuer:
Sabine River Authority of Texas
P. O. Box 579
12777 Highway 87 N
Orange, Texas 77630
Attention: Executive Vice President and General Manager
Telephone No.: (409) 746-2192
Telecopy No.: (409) 746-3780
If to the Trustee:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telephone No.: (212) 815-5733
Telecopy No.: (212) 815-7185
If to the Company:
Southwestern Electric Power Company
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone No.: (214) 777-1205
Telecopy No.: (214) 777-1223
A duplicate copy of each notice given hereunder by any party shall
be given to each of the Issuer, the Trustee and the Company. Any
person or entity listed above may, by notice given hereunder,
designate any further or different addresses to which subsequent
notices, certificates or other communications shall be sent.
Section 10.05. Payments or Performance Due on Other Than
Business Days. If the last day for making any payment or taking any
action, including, without limitation, exercising any remedy, under
this Indenture falls on a day other than a Business Day, such
payment may be made, or such action may be taken, on the next
succeeding Business Day, and, if so made or taken, shall have the
same effect as if made or taken on the date required by this
Indenture. The amount of any payment due under this Indenture shall
not be affected because payment is made on a date other than the
date specified in this Indenture pursuant to this Section 10.05.
Section 10.06. Execution of Counterparts. This Indenture may
be executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same
instrument.
Section 10.07. Applicable Law. THIS INDENTURE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE;
PROVIDED, HOWEVER, THAT THE RIGHTS, DUTIES, IMMUNITIES AND STANDARDS
OF CARE RELATING TO THE TRUSTEE SHALL BE GOVERNED BY THE LAW OF THE
JURISDICTION IN WHICH ITS PRINCIPAL CORPORATE TRUST OFFICE IS
LOCATED.
Section 10.08. Disqualified Bonds. In determining whether the
Owners of the requisite aggregate principal amount of Bonds have
concurred with any demand, request, direction, consent or waiver
under this Indenture, Bonds which are owned or held by or for the
account of the Company or the Issuer, or by any person directly or
indirectly controlling or controlled by, or under direct or indirect
common control with, the Company or the Issuer, shall be disregarded
and deemed not to be Outstanding for purposes of any such
determination.
Section 10.09. No Personal Liability of Issuer or Trustee. No
covenant or agreement contained in the Bonds or in this Indenture,
shall be deemed to be the covenant or agreement of any officer,
director, agent or employee of the Issuer or the Trustee in such
person's individual capacity, and no such person of the Issuer or
the Trustee executing or authenticating the Bonds shall be liable
personally on the Bonds or subject to any personal liability or
accountability by reason of the issuance thereof.
Section 10.10. Notice of Change. The Trustee shall, upon
written instructions to do so by the Company, give notice to Moody's
(if the Bonds are then rated by Moody's) at 99 Church Street, New
York, NY 10007, and S&P (if the Bonds are then rated by S&P) at 25
Broadway, New York, New York 10004, of any of the following events:
(i) a change in the Trustee or Paying Agent;
(ii) a change in the Remarketing Agent;
(iii) an amendment to the Indenture or the Agreement;
(iv) payment or provision therefor of all the Bonds;
(v) conversion to a Multiannual or Fixed Rate Mode; and
(vi) conversion from a Multiannual or Fixed Rate Mode to a
different Mode.
IN WITNESS WHEREOF, the Board of the Issuer has caused these
presents to be signed in its name and on its behalf by its President
and by its Secretary, and the Trustee, to evidence its acceptance of
the trusts hereby created, has caused these presents to be signed in
its name and on its behalf by its duly authorized officer, all as of
the day and year first above written.
SABINE RIVER AUTHORITY OF TEXAS
By:___________________________
President
(SEAL)
ATTEST:
______________________________________
Secretary
APPROVED:
_____________________________________
Executive Vice President and General Manager
THE BANK OF NEW YORK, as Trustee
(SEAL) By:_____________________________
Vice President
Indenture of Trust
by and between
Sabine River Authority of Texas
and
The Bank of New York,
as Trustee
Dated as of June 15, 1996
Sabine River Authority of Texas
Pollution Control Revenue Refunding Bonds
(Southwestern Electric Power Company Project)
Series 1996
TABLE OF CONTENTS
Section Heading Page
Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Granting Clauses . . . . . . . . . . . . . . . . . . . . . . . 2
Article I
Definitions and Interpretation
Section 1.01.Definitions . . . . . . . . . . . . . . . . . . . .4
Section 1.02.Article and Section Headings. . . . . . . . . . 10
Section 1.03.Interpretation. . . . . . . . . . . . . . . . . 10
Article II
Authorization and Issuance of the Bonds
Section 2.01.Authorization of Bonds. . . . . . . . . . . . . 11
Section 2.02.Interest. . . . . . . . . . . . . . . . . . . . 11
Section 2.03.Form of Bond. . . . . . . . . . . . . . . . . . 23
Section 2.04.Execution; Limited Obligations. . . . . . . . . 39
Section 2.05.Conditions Precedent to Delivery of Bonds;
Authentication . . . . . . . . . . . . . . . . . .40
Section 2.06.Redemption of Bonds. . . . . . . . . . . . . . 40
Section 2.07.Notice of Redemption. . . . . . . . . . . . . . 42
Section 2.08.Redemption Payments; Effect of Call for Redemption 43
Section 2.09.Partial Redemption. . . . . . . . . . . . . . . 43
Section 2.10 Remarketing and Purchase. . . . . . . . . . . . 43
Section 2.11.Mandatory Tenders for Purchase. . . . . . . . . 45
Section 2.12.Special Conditions to Conversions from
Multiannual or Fixed Rate Mode. . . . . . . . . . 46
Article III
General Provisions
Section 3.01.Authorization for Indenture; Indenture to
Constitute Contract . . . . . . . . . . . . . . 47
Section 3.02.Payment of Principal, Premium, if any, and
Interest. . . . . . . . . . . . . . . . . . . . 47
Section 3.03.Performance of Covenants; Issuer Immunity . . . 47
Section 3.04.Instruments of Further Assurance. . . . . . . . 47
Section 3.05.Recordation . . . . . . . . . . . . . . . . . . 47
Section 3.06.Registration of Bonds; Trustee Appointed Bond . . .
Registrar; Persons Treated as Owners . . . . . . 48
Section 3.07.Book-Entry Only System. . . . . . . . . . . . . 48
Section 3.08.Successor Securities Depository; Transfers
Outside Book-Entry Only System . . . . . . . . . 49
Section 3.09.Payments to Cede & Co.. . . . . . . . . . . . . 49
Section 3.10.Cancellation. . . . . . . . . . . . . . . . . . 49
Section 3.11.Non-presentment of Bonds. . . . . . . . . . . . 49
Section 3.12.Rights under Agreement. . . . . . . . . . . . . 50
Section 3.13.Legal Existence of Issuer . . . . . . . . . . . 50
Section 3.14.Diminution of, or Encumbrance on, Trust Estate. 50
Section 3.15.Books, Records and Accounts . . . . . . . . . . 50
Section 3.16.Temporary Bonds . . . . . . . . . . . . . . . . 50
Section 3.17.Mutilated, Lost, Stolen or Destroyed Bonds. . . 50
Section 3.18.Intentionally Omitted . . . . . . . . . . . . . 51
Section 3.19.Arbitrage Covenants . . . . . . . . . . . . . . 51
Page
Article IV
Use of Proceeds; Revenues and Funds
Section 4.01.Application of Original Proceeds of Bonds . . . 52
Section 4.02.Creation of Bond Fund . . . . . . . . . . . . . 52
Section 4.03.Payments into Bond Fund and Use of Moneys in
Bond Fund . . . . . . . . . . . . . . . . . . . 52
Section 4.04.Creation and Use of Bond Purchase Fund. . . . . 52
Section 4.05.Investment of Moneys. . . . . . . . . . . . . . 52
Section 4.06.Moneys to be Held in Trust. . . . . . . . . . . 53
Section 4.07.Repayment to Company from Indenture Funds . . . 53
Section 4.08.Custody of Funds and Accounts . . . . . . . . . 53
Section 4.09.Exemption from Federal Income Taxation. . . . . 53
Section 4.10.Covenants Regarding Rebate. . . . . . . . . . . 53
Article V
Discharge
Section 5.01.Discharge . . . . . . . . . . . . . . . . . . . 56
Section 5.02.Defeasance. . . . . . . . . . . . . . . . . . . . 56
Article VI
Events of Default and Remedies
Section 6.01.Events of Default . . . . . . . . . . . . . . . 57
Section 6.02.Acceleration. . . . . . . . . . . . . . . . . . 57
Section 6.03.Other Remedies; Rights of Bond Owners . . . . . 57
Section 6.04.Right of Bond Owners to Direct Proceedings. . . 58
Section 6.05.Appointment of Receiver . . . . . . . . . . . . 58
Section 6.06.Waiver of Certain Laws. . . . . . . . . . . . . 58
Section 6.07.Application of Moneys . . . . . . . . . . . . . 59
Section 6.08.Remedies Vested in Trustee. . . . . . . . . . . 59
Section 6.09.Rights and Remedies of Bond Owners. . . . . . . 60
Section 6.10.Termination of Proceedings. . . . . . . . . . . 60
Section 6.11.Waivers of Events of Default. . . . . . . . . . 60
Section 6.12.Notice of Default; Opportunity to Cure Defaults 60
Section 6.13.Payments Under Municipal Bond Insurance Policy. . 61
Article VII
The Trustee
Section 7.01. Acceptance of Trust. . . . . . . . . . . . . . 63
Section 7.02. Fees, Charges and Expenses of Trustee. . . . . 65
Section 7.03.Trustee to Provide Additional Notices . . . . . 65
Section 7.04.Intervention by Trustee . . . . . . . . . . . . 66
Section 7.05.Successor Trustee by Merger . . . . . . . . . . 66
Section 7.06.Resignation by Trustee. . . . . . . . . . . . . 66
Section 7.07.Removal of Trustee. . . . . . . . . . . . . . . 66
Section 7.08.Appointment of Successor Trustee. . . . . . . . 66
Section 7.09.Successor Trustee by Appointment. . . . . . . . 66
Section 7.10.Appointment of Separate Trustee or Co-Trustee . 66
Section 7.11.Qualifications. . . . . . . . . . . . . . . . . 67
Section 7.12.Paying Agent. . . . . . . . . . . . . . . . . . 67
Page
Article VIII
The Remarketing Agent
Section 8.01.The Remarketing Agent . . . . . . . . . . . . . 68
Section 8.02.Qualifications of Remarketing Agent . . . . . . 68
Article IX
Supplemental Indentures
Section 9.01.Supplemental Indentures Not Requiring Consent
of Bond Owners . . . . . . . . . . . . . . . . . 69
Section 9.02.Supplemental Indentures Requiring Consent of
Bond Owners . . . . . . . . . . . . . . . . . . 69
Section 9.03.Limitation upon Amendments and Supplements. . . 70
Section 9.04.Consent of Company Required . . . . . . . . . . 70
Section 9.05.Amendments to Agreement . . . . . . . . . . . . 70
Section 9.06.Opinion of Counsel. . . . . . . . . . . . . . . 70
Section 9.07.Bond Insurer to be Deemed Bondowner; Rights of
Bond Insurer; Payments by Bond Insurer
in Advance of Scheduled Maturity Dates; Notices . 70
Article X
Miscellaneous
Section 10.01.Consents of Bond Owners. . . . . . . . . . . . 72
Section 10.02.Limitation of Rights . . . . . . . . . . . . . 72
Section 10.03.Severability . . . . . . . . . . . . . . . . . 72
Section 10.04.Notices. . . . . . . . . . . . . . . . . . . . 72
Section 10.05.Payments or Performance Due on Other Than Business
Days . . . . . . . . . . . . . . . . . . . . . . 73
Section 10.06.Execution of Counterparts. . . . . . . . . . . 73
Section 10.07.Applicable Law . . . . . . . . . . . . . . . . 73
Section 10.08.Disqualified Bonds . . . . . . . . . . . . . . 73
Section 10.09.No Personal Liability of Issuer or Trustee . . 73
Section 10.10.Notice of Change . . . . . . . . . . . . . . . 73
Execution . . . . . . . . . . . . . . . . . . . . . . . . . 75
<PAGE>
EXHIBIT 3.a
BOND PURCHASE AGREEMENT
SABINE RIVER AUTHORITY OF TEXAS
$81,700,000
Pollution Control Revenue Refunding Bonds
(Southwestern Electric Power Company Project)
Series 1996
BOND PURCHASE AGREEMENT (this "Purchase Agreement") dated
June 25, 1996 between SABINE RIVER AUTHORITY OF TEXAS, a
governmental agency and body politic and corporate of the State of
Texas (the "Issuer") and GOLDMAN, SACHS & CO. and J.P. MORGAN
SECURITIES INC. (the "Underwriters").
1. Background
(a) Subject to the terms and conditions herein set forth,
the Underwriters hereby agree to purchase from the Issuer, and the
Issuer hereby agrees to sell and deliver to the Underwriters, the
Issuer's Pollution Control Revenue Refunding Bonds (Southwestern
Electric Power Company Project) Series 1996 (the "Refunding Bonds")
in the principal amount of $81,700,000. The Refunding Bonds shall
be dated, shall mature and shall bear interest from time to time at
adjustable or fixed rates as set forth in Section 2 hereof and shall
otherwise have such terms and provisions as set forth in the
Refunding Bonds, the Official Statement and the Indenture (as
hereinafter defined).
(b) The Refunding Bonds will be issued pursuant to the
resolution adopted by the Board of Directors of the Issuer on June
3, 1996 (the "Resolution"), and under an Indenture of Trust dated as
of June 15, 1996 (the "Indenture") between the Issuer and The Bank
of New York, as trustee (the "Trustee"). The Refunding Bonds are to
be issued to provide funds for the redemption and cancellation of
all or a portion of the Issuer's 8.20% Pollution Control Revenue
Bonds (Southwestern Electric Power Company Project) Series 1986 (the
"Old Bonds"). The Old Bonds were originally issued to redeem all
the then outstanding $81,700,000 principal amount of the Issuer's
Adjustable Rate Pollution Control Revenue Bonds (Southwestern
Electric Power Company Project) Series 1984 (the "Series 1984
Bonds"). The Series 1984 Bonds were issued to pay at maturity the
Issuer's 11-1/2% Pollution Control Revenue Bonds (Southwestern
Electric Power Company Project) Series 1981 (the "Series 1981
Bonds") in the aggregate principal amount of $72,500,000 and to pay
additional costs of the Facilities (as hereinafter defined) and to
pay various costs incurred in connection with the issuance of the
Series 1984 Bonds. A portion of the proceeds of the Series 1984
Bonds and the proceeds of the Series 1981 Bonds were used to
acquire, construct and improve certain air and water pollution
control and solid waste disposal facilities (the "Facilities") at
the H.W. Pirkey Power Plant (the "Plant") which is operated by the
Company and located in Harrison County, Texas. In connection with
the issuance of the Refunding Bonds, the Issuer and the Company have
entered into an Installment Payment Agreement dated as of June 15,
1996 (the "Installment Agreement"), which obligates the Company to
pay amounts designed to be sufficient to pay the principal of,
premium, if any, and interest on the Refunding Bonds. The Issuer
has assigned the right to receive such payments from the Company to
the Trustee pursuant to the Indenture.
(c) Concurrently with the execution and delivery of this
Purchase Agreement, the Company is delivering to the Issuer and the
Underwriters its Letter of Representation dated of even date
herewith in substantially the form of Appendix A hereto (the "Letter
of Representation") indicating its approval of the terms and
provisions of this Purchase Agreement and acknowledging that the
Issuer will sell the Refunding Bonds to the Underwriters and the
Underwriters will purchase the Refunding Bonds and make a public
offering thereof in reliance upon the representations, covenants and
indemnities contained in the Letter of Representation.
(d) The Facilities constitute solid waste disposal
facilities or air or water pollution control facilities for purposes
of Section 103(b)(4)(E) or (F) of the Internal Revenue Code of 1954,
as amended. The Refunding Bonds will be obligations described in
Section 1313 of the Tax Reform Act of 1986 so that interest on the
Refunding Bonds will not be includible in gross income for federal
tax purposes (except as noted in the opinion of Bond Counsel
included as Appendix C to the Official Statement) and the
Underwriters may offer the Refunding Bonds for sale without
registration under the Securities Act of 1933, as amended (the
"Securities Act"), or qualification of the Indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Act").
(e) A Preliminary Official Statement dated June 19, 1996,
including all Appendices thereto and all documents incorporated
therein by reference (the "Preliminary Official Statement"), has
been prepared for use in the offering of the Refunding Bonds, and a
final Official Statement dated as of the date hereof, including all
Appendices thereto and all documents incorporated therein by
reference (the "Final Official Statement"), has been delivered by
the Issuer to the Underwriters. The Final Official Statement, as it
may be amended or supplemented with the consent of the Issuer, the
Underwriters and the Company, is hereinafter referred to as the
"Official Statement."
(f) MBIA Insurance Corporation ("MBIA") has made a
commitment to issue a municipal bond insurance policy (the
"Municipal Bond Insurance Policy") relating to the Refunding Bonds
effective as of the date of issuance of the Refunding Bonds. The
Municipal Bond Insurance Policy will insure payment only as
principal or interest payments become due but are not paid.
2. Purchase, Sale and Closing. Subject to the terms and
conditions herein set forth, the Underwriters agree jointly and
severally to purchase from the Issuer, and the Issuer agrees to sell
to the Underwriters, Refunding Bonds in the principal amount set
forth opposite each Underwriter's name on Schedule I hereto at a
purchase price equal to 99.50% of the principal amount thereof, plus
accrued interest from June 15, 1996 through the day preceding the
date of Closing (as herein defined). The Refunding Bonds shall be
dated June 15, 1996, shall mature on April 1, 2018, and shall
initially bear interest at the rate of 6.10% per annum. Payment for
the Refunding Bonds shall be made in immediately available Federal
funds payable to the order of the Trustee for the account of the
Issuer. Closing (the "Closing") will be at the offices of Milbank,
Tweed, Hadley & McCloy, One Chase Manhattan Plaza, New York, New
York at 10:00 a.m., New York time, on July 11, 1996 (the "Closing
Date"), or at such other date, time or place as may be agreed on by
the Issuer, the Company and the Underwriters. Refunding Bonds will
be delivered to The Depository Trust Company ("DTC") at least 24
hours before Closing; the Refunding Bond will be registered in the
name of CEDE & Co., as nominee for DTC, in the denomination of
$81,700,000.
3. Issuer's Representations. The Issuer makes the
following representations and warranties, all of which shall survive
Closing:
(a) Both at the time of acceptance and approval hereof by
the Issuer and at the Closing Date, the statements and information
contained in the Official Statement, as then amended or
supplemented, under the caption "The Issuer" are and will be true,
correct and complete in all material respects, the information
contained under such caption in the Official Statement, as then
amended or supplemented, does not and will not, and in the
Preliminary Official Statement as of its date of issue did not, omit
any statement or information which is necessary in order to make the
statements and information therein relating to the Issuer, in the
light of the circumstances under which they were made, not
misleading, except, in the case of the Preliminary Official
Statement, such as may have been corrected in the Official
Statement, as then amended or supplemented.
(b) The Issuer is and will be at the Closing Date duly
existing as a political subdivision of the State of Texas, a "river
authority" within the definition set forth in Chapter 30 of the
Texas Water Code, and Chapter 383 of the Texas Health and Safety
Code, and an "issuer" as defined in Articles 717k and 717q,
V.A.T.C.S., as amended, and Chapter 110, Acts of the Regular Session
of the 51st Texas Legislature, 1949, as amended (collectively, the
"Act"), and the Issuer is authorized by the provisions of the Act
(i) to issue and sell the Refunding Bonds, (ii) to refund and redeem
the Old Bonds, and (iii) to pledge under the Indenture, as security
for the payment of the principal of, premium, if any, and interest
on the Refunding Bonds, all of its rights under the Installment
Agreement, including the revenues and other amounts to be received
pursuant to the Installment Agreement.
(c) When delivered to and paid for by the Underwriters at
the Closing in accordance with the provisions of this Purchase
Agreement, the Refunding Bonds will have been duly authorized,
executed, issued and delivered and will constitute valid and binding
special obligations of the Issuer in conformity with, and entitled
to the benefit and security of, the Installment Agreement, the Act
and the Indenture.
(d) The adoption of the Resolution, the execution and
delivery of the Indenture, this Purchase Agreement, the Refunding
Bonds and the Installment Agreement and compliance with the
provisions thereof, will not conflict with or constitute a breach of
or default under any agreement or other instrument to which the
Issuer is a party or any law, administrative regulation, court order
or consent decree to which the Issuer is subject.
(e)The Resolution has been duly adopted and is, and at the
Closing Date will be, in full force and effect.
(f)The Issuer has authorized the use of copies of the
Official Statement, the Indenture and the Installment Agreement in
connection with the public offering and sale of the Refunding Bonds
and confirms that it has similarly authorized the use of the
Preliminary Official Statement dated June 19, 1996 (the "Preliminary
Official Statement"), "deemed final" as of such date by the Issuer
within the meaning of Rule 15c2-12(b)(1) of the Securities Exchange
Act of 1934, as amended (the Exchange Act"), for such purposes prior
to the availability of the Official Statement.
(g) The Issuer has not, since December 31, 1975, defaulted
in the payment of principal of, or interest on, any security or
other legally authorized obligation issued by the Issuer, and the
Issuer is not currently in default in the payment of any such
principal or interest.
4. Covenants and Agreements of the Issuer. The Issuer
covenants and agrees with the Underwriters that it will:
(a) Furnish or cause to be furnished to the Underwriters
(i) on the date of the execution of this Purchase Agreement, two
copies of the Final Official Statement and, on the date of any
amendment or supplement thereto, two copies of such amendment or
supplement, prepared in a manner consistent with (b) below and (ii)
on or prior to the Closing Date, two specimens of the form of
Refunding Bond, two certified copies of the Resolution and two
executed copies of the Indenture and of the Installment Agreement
(which documents shall be in the forms previously delivered to the
Underwriters, subject to such changes as the Underwriters shall
approve); the Issuer agrees that the Company may at its expense
furnish to the Underwriters, without charge, as many copies of the
Official Statement and any amendment or supplement thereto as the
Underwriters may reasonably request.
(b) Before amending or supplementing the Official
Statement, furnish or cause to be furnished to the Underwriters two
copies and to the Company two copies of each proposed amendment or
supplement. No amendment or supplement to the Official Statement
will contain material information with respect to the Issuer
different from that contained in the Final Official Statement which
is reasonably unsatisfactory to the Underwriters or the Company.
(c) During such period as the Underwriters believe
delivery of the Official Statement is necessary or desirable in
connection with sales of the Refunding Bonds by the Underwriters or
a dealer, if any event shall occur as a result of which it may be
necessary to amend or supplement the Official Statement in order to
make the statements therein with respect to the Issuer, in the light
of the circumstances when the Official Statement is delivered to a
purchaser, not misleading, immediately notify the Underwriters and
the Company of such event and cooperate at the request of the
Underwriters in the preparation of amendments or supplements to the
Official Statement which in the judgment of the Underwriters are
necessary so that the statements with respect to the Issuer in the
Official Statement as so amended or supplemented will not, in light
of the circumstances when the Official Statement is delivered to a
purchaser, be misleading.
(d) Cooperate in qualifying the Refunding Bonds for offer
and sale and in determining their eligibility for investment under
the laws of such jurisdictions as the Underwriters may reasonably
request, provided that the Issuer shall not be required to qualify
to do business or consent to general service of process in any state
or jurisdiction other than the State of Texas.
(e) Apply the proceeds from the issuance and sale of the
Refunding Bonds in the manner set forth in the Official Statement,
and not take any action which will adversely affect the exclusion
from gross income for federal income tax purposes of the interest on
the Refunding Bonds.
(f) Promptly make or cause to be made under the Uniform
Commercial Code of the State of Texas, or under any other applicable
law, at such times as may be required, all filings, if any, required
in order to establish, maintain, protect or preserve the interest of
the Trustee in the rights assigned to it under the Resolution, the
Installment Agreement and the Indenture.
(g) The Issuer will refrain from knowingly taking any
action with regard to which the Issuer may exercise control that
would result, or could reasonably be expected to result, in the loss
of the exclusion from gross income for federal income tax purposes
of the interest on the Refunding Bonds referred to under the caption
"Tax Matters" in the Official Statement.
5. Survival of Representations, Warranties and Agreements.
The respective covenants, agreements, representations, warranties
and other statements of each of the Issuer and the Underwriters, as
set forth in this Purchase Agreement or made by them pursuant to
this Purchase Agreement, shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Issuer
or any Underwriter or any officer, director or controlling person
thereof, and shall survive the termination of this Purchase
Agreement and the delivery of and payment for the Refunding Bonds.
6. Conditions of Underwriters' Obligations. The
Underwriters' obligation to purchase and pay for the Refunding Bonds
at Closing is subject to the performance by the Issuer of its
obligations and agreements to be performed hereunder and under the
Installment Agreement, the Resolution and the Indenture at or prior
to Closing and the performance by the Company of the obligations to
be performed by it under the Letter of Representation and the
Installment Agreement at or prior to Closing and to the fulfillment
of the following conditions at or prior to Closing:
(a) The Company shall have executed and the Issuer shall
have accepted the Letter of Representation, and the representations
and warranties of the Issuer herein and of the Company in the Letter
of Representation shall be true and correct on and as of the Closing
Date;
(b) Each of the Indenture and the Installment Agreement
shall have been duly authorized, executed and delivered by the
respective parties thereto and shall be in full force and effect,
and each shall not have been amended, modified or supplemented since
the date hereof except as may have been agreed to by the
Underwriters;
(c) Neither the Issuer nor the Company shall be in default
in the performance of any of its covenants and agreements herein or
in the Letter of Representation, respectively;
(d) Subsequent to the execution of this Purchase
Agreement, there shall not have been any downgrading of any rating
by Moody's Investors Service, Inc. or Standard & Poor's Ratings
Group of any securities issued by the Company or of any bonds issued
by the Issuer with respect to the Facilities or of the Refunding
Bonds;
(e) The Underwriters shall have received:
(i) The Final Official Statement deemed in final form by
the Issuer for purposes of Rule 15c2-12 of the Exchange Act,
together with any amendments or supplements thereto to the Closing
Date;
(ii) Opinions of McCall, Parkhurst & Horton L.L.P., Bond
Counsel ("Bond Counsel"), dated the Closing Date, substantially in
the forms attached hereto as Exhibit A-1 and Exhibit A-2;
(iii) An opinion, dated the Closing Date, of Roberts, Hill
& Calk, a Professional Corporation ("Issuer's Counsel"), counsel for
the Issuer, substantially in the form attached hereto as Exhibit B;
(iv) An opinion, dated the Closing Date, of Milbank,
Tweed, Hadley & McCloy, special counsel for the Company,
substantially in the form attached hereto as Exhibit C;
(v) An opinion of Wilkinson, Carmody, Gilliam & Hussey of
Shreveport, Louisiana, counsel for the Company in the State of
Louisiana, substantially in the form attached hereto as Exhibit D;
(vi) An opinion of Friday, Eldredge & Clark of Little
Rock, Arkansas, counsel for the Company in the State of Arkansas,
substantially in the form attached hereto as Exhibit E;
(vii)An opinion of Rainey, Ross, Rice & Binns of Oklahoma
City, Oklahoma, counsel for the Company in the State of Oklahoma,
substantially in the form attached hereto as Exhibit F;
(viii) An opinion of Coghlan, Crowson, Fitzpatrick and
Westbrook of Longview, Texas, counsel for the Company in the State
of Texas, substantially in the form attached hereto as Exhibit G;
(ix) An opinion, dated the Closing Date, of Sidley &
Austin, counsel for the Underwriters, substantially in the form
attached hereto as Exhibit H;
(x) A letter, dated the Closing Date, from Arthur Andersen
LLP, independent certified public accountants of the Company, in
form and substance satisfactory to the Underwriters and their
counsel and covering the matters set forth in Exhibit I hereto;
(xi) A certificate, dated the Closing Date, signed by the
President of the Issuer or other appropriate official satisfactory
to the Underwriters, to the effect that each of the representations
and warranties of the Issuer set forth in this Purchase Agreement is
true and correct on and as of the Closing Date as if made on and as
of the Closing Date and that all agreements to be complied with and
obligations to be performed by the Issuer hereunder and under the
Installment Agreement, the Resolution and the Indenture on or prior
to the Closing Date or as contemplated hereby or thereby have been
complied with and performed;
(xii) A certificate, dated the Closing Date, signed by the
President or the Treasurer of the Company to the effect that, (A)
the representations and warranties contained in the Letter of
Representation or in any certificate delivered by the Company
hereunder or thereunder are true and correct in all material
respects on and as of the Closing Date as if made on and as of the
Closing Date, (B) all agreements to be complied with and obligations
to be performed by the Company pursuant to the Letter of
Representation, or as contemplated by the Letter of Representation,
the Resolution, the Installment Agreement or the Indenture on or
prior to the Closing Date have been complied with and performed and
(C) there has been no material adverse change in the Company's
financial condition or any adverse development concerning its
business or assets which would result in a material adverse change
in its prospective financial condition or results of operations from
that described in or contemplated by the Official Statement or, if
such change has occurred, full information with respect thereto;
(xiii) A certificate, satisfactory in form and substance
to the Underwriters, of one or more duly authorized officers of the
Trustee, dated the Closing Date, as to the due authentication and
delivery of the Refunding Bonds by the Trustee under the Indenture;
(xiv) Arbitrage certifications, satisfactory in form to
the Underwriters and Underwriters' counsel, by the Company and the
Issuer (which may be in the form of a single document);
(xv) Evidence, satisfactory to the Underwriters, of the
ratings on the Refunding Bonds; and
(xvi) Such additional certificates (including appropriate
no litigation certificates), instruments or other documents as the
Underwriters or Underwriters' counsel may reasonably request to
evidence compliance with applicable law, the authority of the
Trustee to act under the Indenture, and the due performance and
satisfaction by the Company at or prior to such date of all
agreements then to be performed and all conditions then to be
satisfied by it, in connection with this Purchase Agreement, the
Letter of Representation, the Installment Agreement, the Resolution
and the Indenture, and to evidence that the interest on the
Refunding Bonds is excludable from the gross income of the owners
thereof for federal income tax purposes under the statutes,
regulations, published rulings and court decisions on the Closing
Date, and the status of the offering under the Securities Act, the
1935 Act and the Trust Act;
(xvii) An opinion, dated the Closing Date, of a Vice
President and Assistant General Counsel of MBIA, substantially in
the form attached hereto as Exhibit J; and
(xviii) A copy of the Municipal Bond Insurance Policy,
as issued by MBIA and delivered to the Trustee, substantially in the
form of Exhibit D to the Official Statement, together with evidence
satisfactory to the Underwriters that all general and special
conditions to the effectiveness of the Municipal Bond Insurance
Policy have been satisfied.
(f) At Closing there shall not have been any material
adverse change in the financial condition of the Company or any
adverse development concerning the business or assets of the Company
which would result in a material adverse change in the prospective
financial condition or results of operations of the Company from
that described in the Official Statement which, in the sole judgment
of the Underwriters, makes it inadvisable to proceed with the sale
of the Refunding Bonds;
(g) The Commission shall have issued an order under the
1935 Act, authorizing the Company's obligations with respect to the
Refunding Bonds, the Installment Agreement and the Municipal Bond
Insurance Policy, which order shall be in full force and effect; the
Attorney General of the State of Texas shall have examined the
Refunding Bonds and the records relating to their issuance, shall
have certified as to their validity and shall have approved the
Refunding Bonds; and the Refunding Bonds shall have been registered
by the Comptroller of Public Accounts of the State of Texas;
(h) All matters relating to this Purchase Agreement, the
Official Statement, the Refunding Bonds and the sale thereof, the
Installment Agreement, the Indenture, the Resolution, the Letter of
Representation, and the consummation of the transactions
contemplated hereby or thereby shall be satisfactory to and approved
by the Underwriters as of the Closing, which approval shall not be
unreasonably withheld. Any certificate signed by or on behalf of
the Issuer or the Company and delivered at the Closing shall be a
representation and warranty by the Issuer or the Company, as the
case may be, to the Underwriters as to the statements made therein;
(i) The Underwriters shall have received from the Company
payment on the Closing Date by wire transfer of the Underwriters'
fees (.84% of the principal amount of the Refunding Bonds) as set
forth in Section 5 of the Letter of Representation; and
(j) Subsequent to the dates as of which information is
given in the Official Statement, there shall not have been any
change or decrease specified in the letter required by subsection
(e)(x) which is, in the judgment of the Underwriters, so material
and adverse as to make it impractical or inadvisable to proceed with
the offering or delivery of the Refunding Bonds as contemplated in
the Official Statement.
7. Events Permitting the Underwriters to Terminate. The
Underwriters may terminate their obligations to purchase the
Refunding Bonds at any time before Closing if any of the following
occurs:
(a) A legislative, executive or regulatory action
(including the introduction or proposal for adoption of legislation,
executive orders or regulations) or a court decision which, in the
sole judgment of the Underwriters, casts sufficient doubt on the
legality of, or the tax-free status of interest on, obligations of
the general kind and character as the Refunding Bonds so as to
materially impair the marketability or materially lower the market
price thereof or would make it impractical to market the Refunding
Bonds on the terms and in the manner contemplated in the Official
Statement;
(b) Any action by the Commission, any other governmental
agency, or a court which, directly or indirectly, would require, in
the reasonable judgment of the Underwriters, (i) registration of the
Refunding Bonds under the Securities Act or (ii) qualification of an
indenture in respect of the Refunding Bonds under the Trust Act, or
any such action or legislative, executive or regulatory action with
the purpose or effect of otherwise prohibiting the issuance,
offering or sale of the Refunding Bonds as contemplated hereby or by
the Official Statement or of obligations of the general character of
the Refunding Bonds;
(c) (i) Any general suspension or material limitation on
trading in securities on the New York Stock Exchange or by the
Commission or by any federal or state agency or by the decision of
any court, any limitation on prices for such trading or any
restrictions on the distribution of securities, (ii) trading in any
securities of the Company shall have been suspended by the
Commission or a national securities exchange, (iii) a general
banking moratorium on commercial banking activities in New York
shall have been declared either by federal or New York State
authorities, (iv) the rating assigned by any nationally recognized
securities rating agency to any securities of the Company as of the
date of this Purchase Agreement shall have been lowered since that
date or (v) there shall have occurred any outbreak or material
escalation of hostilities or other calamity or crisis, the effect of
which on the financial markets of the United States is such as to
make it, in the judgment of the Underwriters, impracticable to
market the Refunding Bonds; or
(d) Any event or condition not expressly contemplated in
the Official Statement which, in the sole judgment of the
Underwriters, renders untrue or incorrect, in any material respect
as of the time to which the same purports to relate, the
information, including the financial statements, contained in the
Official Statement, including Appendices thereto and documents
incorporated therein by reference, or which requires that
information not reflected in such Official Statement should be
reflected therein in order to make the statements and information
contained therein not misleading in any material respect at such
time, which, in either event, in the sole judgment of the
Underwriters, makes it inadvisable to proceed with the sale of the
Refunding Bonds; provided, however, that the Underwriters shall not
exercise the termination right provided in this subparagraph (d) (i)
until the Underwriters shall have consulted with the Company with
respect to the event or condition at issue and (ii) so long as the
Company and the Underwriters shall reasonably believe that such
event or condition can be eliminated or cured prior to the Closing
Date.
8. Execution in Counterparts. This Purchase Agreement
may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of
the parties hereto may execute this Purchase Agreement by signing
any such counterpart.
9. Notices and Other Actions. All notices, requests,
demands and formal actions hereunder will be in writing mailed,
telecopied or delivered to:
The Underwriters:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Tax-Exempt Finance Dept.
Telephone No. (212) 902-1000
Telecopy No. (212) 902-2860
The Issuer:
Sabine River Authority of Texas
12777 Highway 87 N
Orange, Texas 77603
Attention: Executive Vice President
and General Manager
Telephone No. (409) 746-2192
Telecopy No. (409) 746-3780
[Intentionally Left Blank]
The Company:
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone No. (214) 777-1205
Telecopy No. (214) 777-1223
10. GOVERNING LAW. THIS PURCHASE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS.
11. Successors. This Purchase Agreement shall inure to
the benefit of and be binding upon the parties and their respective
successors, and will not confer any rights upon any
other person. The term "successor" shall not include any holder of
any Refunding Bonds merely by virtue of such holding.
SABINE RIVER AUTHORITY OF TEXAS
By:
President
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
By:____________________________
GOLDMAN, SACHS & CO.
SCHEDULE I
Underwriters . . . . . . . . . . . . . . . . . . Principal Amount
. . . . . . . . . . . . . . . . . . of Refunding Bonds
Goldman, Sachs & Co. . . . . . . . . . . . . . . . . $ 49,020,000
J.P. Morgan Securities Inc. . . . . . . . . . . . . $ 32,680,000
. . . . . . . . . . . . . . . . . . . ______________
Total. . . . . . . . . . . . . . . . . . . .$81,700,000
<PAGE>
EXHIBIT 4(a)
APPENDIX A
SOUTHWESTERN ELECTRIC POWER COMPANY
LETTER OF REPRESENTATION
$81,700,000
Sabine River Authority of Texas
Pollution Control Revenue Refunding Bonds
(Southwestern Electric Power Company Project)
Series 1996
June 25, 1996
Sabine River Authority of Texas
12777 Highway 87 N
Orange, Texas 77603
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
J.P. Morgan Securities Inc.
Corporate Finance - 33rd Floor
60 Wall Street
New York, New York 10260
Ladies and Gentlemen:
1.Introduction and Background. Pursuant to a Bond
Purchase Agreement of even date herewith (the "Purchase
Agreement") between Sabine River Authority of Texas (the "Issuer")
and Goldman, Sachs & Co. and J.P. Morgan Securities Inc. (the
"Underwriters"), the Issuer has agreed to sell to the
Underwriters, and the Underwriters have jointly and severally
agreed to purchase from the Issuer and to offer for sale the bonds
described above (the "Refunding Bonds"), by means of the Final
Official Statement of even date herewith, as it may be amended or
supplemented with the consent of the Underwriters, the Issuer and
Southwestern Electric Power Company, a Delaware corporation (the
"Company"), describing the definitive terms and provisions of the
Refunding Bonds and containing in Appendix A thereto information
concerning the Company, which Appendix A, including all documents
incorporated therein by reference, shall for all purposes hereof
be deemed to be a part of the Official Statement, all on terms
approved by the Company. Unless otherwise defined herein, all
capitalized terms used herein shall have the meanings assigned
thereto in the Purchase Agreement.
The Company hereby (i) approves the terms and
provisions of the Purchase Agreement and of the Refunding Bonds,
(ii) requests the Issuer to issue and sell the Refunding Bonds and
(iii) acknowledges that the Issuer and the Underwriters are
entering into the Purchase Agreement and agreeing to sell and
purchase the Refunding Bonds on the terms and subject to the
conditions therein set forth, in reliance on the representations,
covenants and agreements of the Company contained in this Letter
of Representation.
2. Representations by the Company. The Company makes
the following representations and warranties, all of which shall
survive the termination of the Purchase Agreement and the sale and
delivery of the Refunding Bonds to the Underwriters.
(a) That the Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware and is duly qualified as a foreign corporation and in
good standing under the laws of each of the States of Arkansas,
Louisiana, Oklahoma and Texas, with full corporate power and
authority to engage in the business and activities conducted by it
as described in the Official Statement and, subject to the opinion
of the Attorney General of the State of Texas approving the
Refunding Bonds and the registration of the Refunding Bonds upon
initial issue by the Comptroller of Public Accounts of the State
of Texas, the receipt of which are expressly made a condition to
the Company's obligations under the Installment Agreement, has
full power and authority to execute and deliver and to carry out
and perform its obligations under this Letter of Representation
and the Installment Agreement.
(b) That the Company has duly approved the forms of the
Resolution, the Indenture and the Purchase Agreement. The
Installment Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding
obligation of the Company enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and to the effect of general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law). The Company has
duly authorized the taking of all action necessary to carry out
and give effect to the transactions contemplated to be performed
by it by the Official Statement, the Installment Agreement, the
Municipal Bond Insurance Policy, the Purchase Agreement and this
Letter of Representation. The Commission has issued an order (the
"Order") under the 1935 Act authorizing the Company's obligations
with respect to this Letter of Representation, the Installment
Agreement, the Municipal Bond Insurance Policy, the Refunding
Bonds and the Purchase Agreement, such order being subject,
however, to the condition, among others, that the Company comply
with such supplemental order, if any, as the Commission may enter
thereunder. A copy of such order heretofore entered by the
Commission has been or will be delivered to the Underwriters.
(c) That this Letter of Representation has been duly
executed and delivered by the Company.
(d) That the approval of the Resolution, the Indenture
and the Purchase Agreement, the execution and delivery of this
Letter of Representation and the Installment Agreement and
compliance with the provisions of such instruments and
consummation of the transactions contemplated hereby and thereby,
do not and will not conflict with, violate or result in a breach
of any provision of or constitute a default (or an event which
with notice or passage of time, or both, would constitute a
default) on the part of the Company under its Restated Certificate
of Incorporation or By-laws, under any indenture, commitment,
agreement or other instrument to which the Company is a party or
by which it is bound or under any existing law, rule, regulation,
judgment, ordinance, order or decree to which the Company is
subject; nor will such approval, execution, delivery, compliance
or consummation result in the creation or imposition of any lien,
charge or other security interest or encumbrance of any nature
whatsoever upon any of the property or assets of the Company
(except the lien, if any, created by the Installment Agreement).
(e) That no consent, approval, authorization or order
of any court or governmental agency or body is required in respect
of the approval of the Resolution by the Company, the approval of
the terms of the Purchase Agreement, the valid execution, delivery
and performance by the Company of this Letter of Representation
and the Installment Agreement or the consummation by the Company
of the transactions contemplated by the Purchase Agreement, this
Letter of Representation, the Installment Agreement and the
Official Statement, except (i) the Order, (ii) the approving
opinion of the Attorney General of the State of Texas relating to
the Refunding Bonds, (iii) the registration of the Refunding Bonds
upon initial issuance by the Comptroller of Public Accounts of the
State of Texas and (iv) such as may be required under securities
or Blue Sky laws of any jurisdiction in connection with the
offering and sale of the Refunding Bonds.
(f) That the information with respect to it (including
Appendix A) and the Facilities and the use of the proceeds from
the issuance and sale of the Refunding Bonds included in the
Indenture, the Resolution, the Purchase Agreement and the
Refunding Bonds and the information (other than under the captions
"The Issuer", "The Bonds - Book-Entry Only System", "Tax Matters"
and "Underwriting") contained or incorporated by reference in the
Official Statement (including any amendments or supplements
thereto) is true and correct in all material respects and does not
include, and the Preliminary Official Statement as of its date did
not include, any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein not misleading in light of the circumstances under which
they were made; that it has approved the Official Statement and
consents to the use thereof by the Underwriters in connection with
the offering of the Refunding Bonds; that the Official Statement
is deemed final by the Company for purposes of Rule 15c2-12 under
the Exchange Act; and that the financial statements relating to it
included or incorporated by reference in the Official Statement
(including Appendix A thereto) and the Preliminary Official
Statement (including Appendix A thereto) have been prepared in
accordance with generally accepted accounting principles applied
on a consistent basis (except as otherwise disclosed in the notes
to such financial statements) and fairly present its financial
condition and the results of its operations at the dates and for
the respective periods indicated therein.
(g) That any document, certificate or other written
statement furnished by the Company to the Underwriters or McCall,
Parkhurst & Horton L.L.P., Bond Counsel, or Sidley & Austin,
counsel to the Underwriters, relating to the Company, the
Facilities or the Refunding Bonds is true and correct in all
material respects and does not or will not, as the case may be,
include any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order
to make the statements therein not misleading in light of the
circumstances under which they were made.
(h) Except as may be specifically set forth in the
Official Statement and except for the proceedings relating to the
approving opinion of the Attorney General of the State of Texas on
the Refunding Bonds and to the registration of the Refunding Bonds
upon initial issuance by the Comptroller of Public Accounts of the
State of Texas, there is no action, suit, proceeding or
investigation, at law or in equity, before or by any court,
governmental agency or body or arbitrator, involving the Company
or the Facilities, pending or, to the best knowledge of the
Company, threatened (i) which might reasonably be expected to (x)
materially and adversely affect the condition (financial or
otherwise), results of operations, business or properties of the
Company or (y) materially and adversely affect the operation,
condition or feasibility of the Facilities or (ii) wherein any
unfavorable decision, ruling or finding might reasonably be
expected to (x) adversely affect the transactions contemplated to
be performed by the Company hereby, by the Purchase Agreement, by
the Installment Agreement, or by the Official Statement or (y)
adversely affect the validity or enforceability of the Refunding
Bonds, the Installment Agreement, the Indenture, the Resolution,
the Purchase Agreement or this Letter of Representation or any
agreement or instrument to which the Company is a party and which
is used or contemplated for use in the consummation of the
transactions contemplated hereby or thereby.
(i) Arthur Andersen LLP, are independent public
accountants with respect to the Company, as would be required
under the Securities Act and the rules and regulations thereunder
if the Securities Act and the rules and regulations thereunder
were applicable to the Official Statement.
(j) That (i) the Facilities consist of either land or
property of a character subject to depreciation for federal income
tax purposes and will be used to abate or control air and water
pollution or contamination by removing, altering, disposing or
storing pollutants, contaminants, wastes or heat or to collect,
store or treat sewage or solid wastes prior to final disposal
thereof; (ii) the Facilities will not result in an increase in
production or capacity, production efficiencies, the production of
a by-product, the extension of the useful life of any
manufacturing or production facility or any part thereof at the
Plant or other property which is not part of the Plant, which
would jeopardize the exclusion of the interest on the Refunding
Bonds from the gross income of the recipients thereof for federal
income tax purposes, and none of the Facilities would have been
installed but for the purpose of disposing of sewage or solid
waste or controlling pollution; and (iii) all other information
supplied by the Company in connection with the transactions
contemplated hereby and by the Official Statement with respect to
the exclusion from gross income for federal income tax purposes of
interest on the Refunding Bonds is correct and complete.
(k) That all required certificates that the Facilities
(other than the solid waste disposal facilities that require no
certifications), as designed, are in furtherance of the purpose of
abating or controlling air or water pollution have been obtained
from the Texas Air Control Board and the Texas Department of Water
Resources, respectively, and remain in full force and effect.
(l) That the Company is eligible as an issuer to file
registration statements on Form S-3 under the Securities Act, and
each document filed by it under the Exchange Act and incorporated
(or to be incorporated) in the Preliminary Official Statement or
the Official Statement by reference complied when so filed (or
will comply when so filed) in all material respects with the act
under which it was so filed, and, during the period that an
Official Statement is required to be delivered, no such document
hereafter so filed will include any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading.
(m) That there has been no material adverse change in
the Company's financial condition or any adverse development
concerning the Company's business and assets which would
reasonably be expected to result in a material adverse change in
its prospective financial condition or results of operations from
that shown in the Official Statement.
(n) That no event of default or event which, with
notice or passage of time, or both, would constitute an event of
default or a default under any agreement or instrument to which
the Company is a party or by which it is or may be bound or to
which any of its property or assets is or may be subject and which
would materially and adversely affect the transactions
contemplated by the Installment Agreement, the Official Statement
or this Letter of Representation has occurred and is continuing.
(o)The Company is not currently in default in the payment of the
principal of, or interest on, any security or other legally authorized
obligation issued by the Company.
3. Covenants of the Company. The Company will:
(a) Notify the Underwriters of any material adverse
change in its business, properties or financial condition
occurring before Closing or within three months thereafter which
would require revision of the information in the Official
Statement in order to make the representations set forth in
Section 2(f) hereof true and correct.
(b) Refrain from taking any action, or from permitting
any action, with regard to which it may exercise control, to be
taken, that (i) would in any way cause the proceeds from the sale
of the Refunding Bonds to be applied in a manner other than as
provided in the Resolution, the Installment Agreement, the
Indenture and discussed in the Official Statement, (ii) would
result in the loss of the exclusion from gross income for federal
income tax purposes of interest on the Refunding Bonds, or (iii)
it has reason to believe will adversely jeopardize the continued
validity and effectiveness of such exemption.
(c) Deliver to the Underwriters upon request copies of
documents of the Company incorporated by reference into the
Official Statement and all documents to which Section 3(d) hereof
refers at such times and in such quantities as are necessary to
enable the Underwriters to satisfy requests for such information,
and enable the Underwriters to make such documents available for
inspection, as described in the Official Statement.
(d) During the period commencing on the date hereof and
ending upon completion of the distribution of the Refunding Bonds
(but in no event later than 90 days after the date of the
Closing), promptly after filing any document with the Commission
pursuant to Section 13, 14 or 15(d) of the Exchange Act, furnish a
copy thereof to the Underwriters and the Issuer.
(e)Comply with and perform its obligations set forth in its Rule
15c2-12 Undertakings attached hereto as Exhibit 1, which is hereby
incorporated by reference herein.
(f)Before amending or supplementing the Official Statement, furnish
to the Underwriters two copies and to the Issuer two copies of each
proposed amendment or supplement. No amendment or supplement to
the Official Statement will contain material information different
from that contained in the Final Official Statement which is
reasonably unsatisfactory to the Underwriters or the Issuer.
(g)During such period as the Underwriters believe delivery of the
Official Statement is necessary or desirable in connection with sales of
the Refunding Bonds by the Underwriters or a dealer, if any event
shall occur as a result of which it may be necessary to amend or
supplement the Official Statement in order to make the statements
therein, in the light of the circumstances when the Official
Statement is delivered to a purchaser, not misleading, immediately
notify the Underwriters and the Issuer of such event and cooperate
at the request of the Underwriters in the preparation of
amendments or supplements to the Official Statement which in the
judgment of the Underwriters are necessary so that the statements
in the Official Statement as so amended or supplemented will not,
in light of the circumstances when the Official Statement is
delivered to a purchaser, be misleading.
4. Indemnification; Contribution. (a) The Company
agrees to indemnify and hold harmless the Issuer, its officials,
directors, members, officers, employees and agents and each of the
Underwriters, their respective officers, directors, officials,
employees and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (collectively, "Indemnified
Parties") from and against any and all losses, claims, damages or
liabilities to which such Indemnified Party may become subject
under the Securities Act, the Exchange Act or the common law or
otherwise, and to reimburse each such Indemnified Party for any
reasonable legal or other expenses (including reasonable counsel
fees) incurred by it or them in connection with defending against
any such losses, claims, damages or liabilities, arising out of or
in connection with the offering and sale of the Refunding Bonds
(i) on the ground that the Preliminary Official Statement or the
Final Official Statement (except with respect to the Issuer for
the information relating to the Issuer under the caption "The
Issuer" and with respect to any such Underwriter for information
under the caption "Underwriting" and any information furnished in
writing by such Underwriter specifically for use therein) includes
any untrue statement or an alleged untrue statement of material
fact or any omission or an alleged omission to state a material
fact necessary in order to make the statements therein not
misleading in light of the circumstances under which they were
made, or (ii) arising by virtue of the failure to register the
Refunding Bonds under the Securities Act or to qualify the
Indenture under the Trust Act.
(b) By its acceptance hereof, each of the Underwriters
severally and not jointly agrees to indemnify and hold harmless
the Issuer, its officers, directors, employees and agents and the
Company, its officers, directors and employees, and each person,
if any, who controls the Company within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act
(collectively, "Indemnified Parties"), from and against any and
all losses, claims, damages or liabilities to which such
Indemnified Party may become subject under the Securities Act, the
Exchange Act or the common law or otherwise, and to reimburse each
such Indemnified Party for any reasonable legal or other expenses
(including reasonable counsel fees) incurred by it or them in
connection with defending against any such losses, claims, damages
or liabilities, arising out of or in connection with the offering
and sale of the Refunding Bonds on the grounds that the
information under the caption "Underwriting" furnished by such
Underwriter in writing specifically for use in the Preliminary
Official Statement or the Final Official Statement includes any
untrue statement or alleged untrue statement of a material fact or
an omission or an alleged omission to state a material fact
necessary in order to make the statements therein not misleading
in light of the circumstances under which they were made.
(c) Promptly after the commencement of any action
against an Indemnified Party hereunder in respect of which
indemnity is to be sought against the Company or any Underwriter,
as the case may be (the "Indemnifying Party"), such Indemnified
Party will notify the Indemnifying Party in writing of such action
and the Indemnifying Party may participate in, and, to the extent
that it may wish, jointly with any other Indemnifying Party
similarly notified, assume the defense thereof, including the
employment of counsel and the payment of all expenses; but the
omission so to notify the Indemnifying Party will not relieve the
Indemnifying Party from any liability which it may have to any
Indemnified Party otherwise than hereunder. The Indemnifying
Party shall not be liable for any settlement of any such action
effected without its consent, but if settled with the consent of
the Indemnifying Party or if there is a final judgment for the
plaintiff in any such action, the Indemnifying Party will
indemnify and hold harmless any Indemnified Party from and against
any loss or liability by reason of such settlement or judgment.
The indemnity agreements contained herein shall include
reimbursement for expenses reasonably incurred by an Indemnified
Party in investigating the claim and in defending it if the
Indemnifying Party declines to assume the defense and shall
survive termination of the Purchase Agreement, this Letter of
Representation and the delivery of the Refunding Bonds.
(d) If the indemnification provided for in this
Section 4 is unavailable to or insufficient to hold harmless an
Indemnified Party under Subsection (a) above in respect of any
losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then the Company shall contribute to
the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the
Indemnified Party on the other in connection with the statements
or omissions or other matters which resulted in such losses,
claims, damages and liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. Relative
fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or
the Indemnified Party on the other and each such party's relative
intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company
and the Underwriters agree that it would not be just and equitable
if contribution pursuant to this Subsection (d) were determined
solely by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations
referred to above in this Subsection (d). The amount paid or
payable by an Indemnified Party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to
above in this Subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or
claim. No Indemnified Party guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from the Company
if the Company is not guilty of such fraudulent misrepresentation.
The obligations of the Company under this Subsection (d) shall be
in addition to any liability which the Company may have otherwise
than under this Section 4.
5. Payment of Costs and Expenses. All expenses and
costs of the authorization, issuance, sale and delivery of the
Refunding Bonds (including, without limitation: the preparation
and furnishing to the Underwriters of the Preliminary Official
Statement and the Official Statement and any amendments or
supplements thereto, and the preparation and execution of the
Indenture, the Refunding Bonds, the Installment Agreement, the
Resolution, the Letter of Representation and the Purchase
Agreement; fees and expenses relating to the Municipal Bond
Insurance Policy, if any, rating agency fees, the issuance and
closing fees of the Issuer, the fees and disbursements of Bond
Counsel, Counsel to the Issuer, the financial advisor to the
Issuer and Counsel to the Company; the expenses, including the
legal fees, of Counsel to the Underwriters incurred in connection
with qualifying the Refunding Bonds for sale under the securities
laws of various jurisdictions and preparing Blue Sky memoranda)
shall be paid by the Company. In addition, the Company shall pay
to the Underwriters on the Closing Date by wire transfer the fees
of the Underwriters in connection with the offering of the
Refunding Bonds in an amount equal to .84% of the principal amount
of the Refunding Bonds. Each Underwriter will pay its own costs
and expenses, including advertising and legal expenses (except as
noted in this Section 5).
6. Execution in Counterparts. This Letter of
Representation may be executed and accepted in any number of
counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute and
accept this Letter of Representation by signing any such counterpart.
7. Notices. All notices, requests, demands and formal
actions hereunder will be in writing mailed, telecopied or
delivered to:
The Underwriters:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Tax-Exempt Finance Department
Telephone No.: (212) 902-1000
Telecopy No.: (212) 902-2860
The Issuer:
Sabine River Authority of Texas
12777 Highway 87 N
Orange, Texas 77603
Attention: Executive Vice President
and General Manager
Telephone No.: (409) 746-2192
Telecopy No.: (409) 746-3780
The Company:
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
Telephone No.: (214) 777-1205
Telecopy No.: (214) 777-1223
8. Successors. This Letter of Representation will
inure to the benefit of and be binding upon the parties and their
successors and each other Indemnified Party and will not confer
any rights upon any other person. The term "successor" shall not
include any holder of any Refunding Bonds merely by virtue of such
holding.
9. Survival of Agreements and Representations. The
indemnity and other agreements contained and the representations
and warranties of the Company set forth in this Letter of
Representation shall remain operative and in full force and effect
regardless of (i) any termination of the Purchase Agreement, (ii)
any investigation made by or on behalf of any Underwriter or any
person controlling any Underwriter or by or on behalf of the
Company, its directors or officers or any person controlling the
Company, and (iii) sale and delivery of the Refunding Bonds.
10. Governing Law. This Letter of Representation shall
be governed by and construed in accordance with the laws of the
State of New York, except that the rights, privileges, duties and
immunities of the Issuer shall be governed by the laws of the
State of Texas.
Very truly yours,
SOUTHWESTERN ELECTRIC POWER COMPANY
By:
Name:
Title:
Accepted:
SABINE RIVER AUTHORITY OF TEXAS
By:
Name:
Title:
Accepted:
GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
By:_________________________
GOLDMAN SACHS & CO.
<PAGE>
EXHIBIT 5(a)
NEW ISSUE
In the opinion of Bond Counsel, interest on the Bonds will be
excludable from gross income for federal income tax purposes under
existing statutes, regulations, rulings and court decisions,
except as explained under "TAX MATTERS" herein, and will not be
treated as a preference item in calculating the alternative
minimum tax imposed on individuals and
corporations. For further information, see "TAX MATTERS".
$81,700,000
Sabine River Authority of Texas
6.10% Pollution Control Revenue Refunding Bonds
(Southwestern Electric Power Company Project)
Series 1996
Dated: June 15, 1996 Due: April 1, 2018
The Bonds are limited obligations of the Issuer and do not
constitute an indebtedness or a charge against the general credit or
taxing powers of the Issuer or the State of Texas. The Bonds are
payable solely from, and secured by a pledge of, the revenues to be
received by the Issuer under an Installment Payment Agreement from
Southwestern Electric Power Company
The Bonds will be delivered as fully registered bonds without
coupons and when initially issued are expected to be registered in
the name of Cede & Co., as registered owner and nominee of The
Depository Trust Company, New York, New York ("DTC"). DTC will act
as securities depository for the Bonds. Bonds will be delivered
only in book-entry form in denominations of $5,000 or any integral
multiple thereof and, except under the limited circumstances
described herein, beneficial owners of the Bonds will not receive
certificates representing their ownership interests. Principal of
and premium, if any, and interest on the Bonds (payable on April 1
and October 1, commencing October 1, 1996), will be paid in the
manner described herein. So long as DTC or its nominee is the
registered owner of the Bonds, payments of principal, interest and
premium, if any, will be made through DTC and its Participants and
disbursements of such payments to beneficial owners will be the
responsibility of such Participants. See "BOOK-ENTRY ONLY SYSTEM"
herein.
The Bonds are subject to redemption prior to maturity as
described herein. Subject to certain conditions described herein,
the Bonds will be subject to mandatory tender for purchase and the
Company may elect to convert the Bonds, in whole or in part, on any
optional redemption date, to a different interest rate Mode as
described herein. The Purchase Price for tendered Bonds will
include any applicable premium that would be payable if the Bonds
were redeemed on the Purchase Date. See "THE BONDS" herein.
Payment of the principal and interest on the Bonds when due
will be insured by a financial guaranty insurance policy to be
issued by MBIA Insurance Corporation simultaneously with the
delivery of the Bonds. See "The MBIA Insurance Corporation
Insurance Policy" herein.
MBIA
________________________
Price 99.50%
(Plus accrued interest from June 15, 1996)
_______________________
The Bonds are offered, subject to prior sale, when, as and if issued
by the Issuer and accepted by the Underwriters, subject to the
approval of legality by the Attorney General of the State of Texas
and McCall, Parkhurst & Horton L.L.P., Bond Counsel, the approval of
certain other legal matters by Sidley & Austin, counsel for the
Underwriters, and certain other conditions. It is expected that the
Bonds will be available for delivery to DTC on or about July 11,
1996.
Goldman, Sachs & Co. J.P. Morgan & Co.
Dated: June 26, 1996
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF
THE BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
THE BONDS HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No dealer, salesman or any other person is authorized to give any
information or to make any representation not contained in this
Official Statement, and any information not contained herein must
not be relied upon as having been authorized by Sabine River
Authority of Texas, Southwestern Electric Power Company or any
Underwriter. This Official Statement does not constitute an offer
to sell or the solicitation of an offer to buy, nor shall there be
any sale of the Bonds, by any person in any jurisdiction in which it
is unlawful for such person to make such offer, solicitation or
sale. The Sabine River Authority of Texas neither has nor assumes
any responsibility as to the accuracy or completeness of the
information in this Official Statement, all of which has been
furnished by others, other than information under the caption "The
Issuer."
Neither the delivery of this Official Statement nor any sale
hereunder shall under any circumstances create any implication that
there has been no change in the affairs of Sabine River Authority of
Texas or Southwestern Electric Power Company since the date hereof.
_____________________
TABLE OF CONTENTS
Page
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 1
THE ISSUER . . . . . . . . . . . . . . . . . . . . . . . . . . 2
THE FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . 2
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . 3
THE BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
BOOK-ENTRY ONLY SYSTEM . . . . . . . . . . . . . . . . . . . . 8
THE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 11
THE INDENTURE. . . . . . . . . . . . . . . . . . . . . . . . . 16
THE MBIA INSURANCE CORPORATION INSURANCE POLICY. . . . . . . . 21
TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . 24
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . 27
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . 28
CONTINUING DISCLOSURE. . . . . . . . . . . . . . . . . . . . . 28
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . 29
APPENDIX A - SOUTHWESTERN ELECTRIC POWER COMPANY . . . . . . . A-1
APPENDIX B - CERTAIN DEFINITIONS . . . . . . . . . . . . . . . B-1
APPENDIX C - FORM OF OPINION OF BOND COUNSEL . . . . . . . . . C-1
APPENDIX D - FORM OF MUNICIPAL BOND INSURANCE POLICY . . . . . D-1
$81,700,000
SABINE RIVER AUTHORITY OF TEXAS
6.10% POLLUTION CONTROL REVENUE REFUNDING BONDS
(Southwestern Electric Power Company Project)
Series 1996
Due April 1, 2018
_______________
INTRODUCTION
This Official Statement is provided to furnish information
regarding the issuance by Sabine River Authority of Texas, a
governmental agency and body politic and corporate of the State of
Texas (the "Issuer"), of its Pollution Control Revenue Refunding
Bonds (Southwestern Electric Power Company Project) Series 1996 (the
"Bonds") in the aggregate principal amount of $81,700,000. The
Issuer neither has nor assumes any responsibility as to the accuracy
or completeness of the information in this Official Statement, all
of which has been furnished by others, other than the information
pertaining to the Issuer under the caption "The Issuer."
The issuance and sale of the Bonds has been authorized by a
Resolution adopted by the Issuer on June 3, 1996 (the "Resolution").
The Bonds will be issued pursuant to an Indenture of Trust to be
dated as of June 15, 1996 (the "Indenture") between the Issuer and
The Bank of New York, as trustee (the "Trustee").
The proceeds of the Bonds will be used to refund $81,700,000 of
the Issuer's outstanding 8.20% Pollution Control Revenue Refunding
Bonds, Series 1986 (Southwestern Electric Power Company Project)
(the "Prior Bonds"). The Prior Bonds were originally issued to
redeem all the then outstanding $81,700,000 principal amount of the
Issuer's Adjustable Rate Pollution Control Revenue Bonds
(Southwestern Electric Power Company Project) Series 1984 (the
"Series 1984 Bonds"). The Series 1984 Bonds were issued to pay at
maturity the Issuer's 11-1/2% Pollution Control Revenue Bonds
(Southwestern Electric Power Company Project) Series 1981 (the
"Series 1981 Bonds") in the aggregate principal amount of
$72,500,000 and to pay additional costs of the Facilities as
hereinafter defined and to pay various costs incurred in connection
with the issuance of the Series 1984 Bonds. A portion of the
proceeds of the Series 1984 Bonds and the proceeds of the Series
1981 Bonds were used to acquire, construct and improve certain air
and water pollution control and solid waste disposal facilities (the
"Facilities") at the H.W. Pirkey electric generating plant (the
"Plant") which is operated by Southwestern Electric Power Company
(the "Company") and located in Harrison County, Texas. The Company
owns an 85.9% undivided interest in the Plant.
Pursuant to an Installment Payment Agreement dated as of June
15, 1996 (the "Agreement") between the Issuer and the Company, the
Company will be obligated to make payments at such times and in such
amounts as shall be required to pay, when due, the principal of,
premium, if any, interest on, and Purchase Price for, the Bonds.
The payments will be made directly to the Trustee. Neither the
Facilities nor the Plant constitute security for the Bonds, which
will be secured only by the assignment and pledge of the Agreement,
the moneys deposited or required to be deposited under the Indenture
(other than moneys deposited to the Rebate Fund and the Bond
Purchase Fund), and the Company's absolute unconditional obligation
to make payments thereunder.
There follows in this Official Statement brief descriptions of
the Issuer, the Facilities, the Use of Proceeds, the Bonds, the
Agreement and the Indenture. The descriptions herein of the
Agreement and the Indenture do not purport to be complete and are
qualified in their entirety by reference to such documents, and the
descriptions herein of the Bonds are qualified in their entirety by
reference to the forms thereof and the information with respect
thereto included in the Indenture. See "MISCELLANEOUS" herein for
information with respect to obtaining copies of such documents.
Appendix A to this Official Statement has been furnished by, and
contains information concerning, the Company, including certain
financial statements and other information incorporated therein by
reference. Terms not defined herein have the meanings set forth in
the Agreement, the Indenture, or in Appendix B to this Official
Statement.
THE ISSUER
The Issuer is a governmental agency and body politic and
corporate of the State of Texas, created as a conservation and
reclamation district pursuant to Article XVI, Section 59 of the
Texas Constitution and by Chapter 110, Acts of the Regular Session
of the 51st Texas Legislature, 1949, as amended (formerly compiled
as Article 8280-133, V.A.T.C.S., as amended) (Sabine River Authority
Act).
The area of the Issuer comprises all of that part of the
territory lying within the watershed of the Sabine River and its
tributary streams which is situated within the State of Texas. The
Issuer is governed by a nine member Board of Directors appointed by
the Governor of Texas for staggered terms of six years each.
The Issuer is authorized by the Sabine River Authority Act,
Chapter 383 of the Texas Health and Safety Code, as amended, Chapter
30 of the Texas Water Code, as amended, and Articles 717k and 717q,
V.A.T.C.S. as amended, among other things to acquire, construct,
improve, sell and otherwise dispose of equipment, facilities and
systems for the control, abatement and prevention of water pollution
and the disposal of sewage and solid waste, to finance and refinance
the cost thereof by the issuance of its revenue bonds, and to refund
such bonds.
THE FACILITIES
The Facilities consist of air and water pollution control and
solid waste disposal facilities acquired, constructed and improved
as a part of the total environmental control program at the Plant.
The Plant is a lignite-fired 640 megawatt electric generating unit
which began commercial operation in January 1985.
The Facilities consist primarily of an electrostatic
precipitator, ash handling system, sulfur dioxide removal system,
sludge handling and treating system, dust control system, water
handling equipment and solid waste disposal landfill for the Plant.
The Texas Air Control Board and the Texas Department of Water
Resources have certified that the Facilities (other than certain
solid waste disposal facilities for which no certification is
required), as built and designed, are in furtherance of the purpose
of abating or controlling atmospheric pollutants or contaminants or
water pollution, as the case may be.
USE OF PROCEEDS
The Bonds are being issued by the Issuer for the purpose of
providing funds for the redemption of all outstanding Prior Bonds.
The proceeds to be received by the Issuer from the issuance and sale
of the Bonds will be deposited into a separate account within the
bond fund with respect to the Prior Bonds maintained by The Bank of
New York (successor to RepublicBank Dallas, National Association)
("The Bank of New York") pursuant to an Indenture of Trust dated as
of October 15, 1981, as supplemented, between the Issuer and The
Bank of New York. The Company will provide any additional funds
required to redeem all of the Prior Bonds from either internally
generated funds or short-term borrowings.
THE BONDS
The Bonds will be issuable only as fully registered bonds without
coupons in denominations of $5,000 or any integral multiple thereof.
Bonds may be transferred or exchanged without cost, except for any
tax or other governmental charge.
The Bonds initially will be dated June 15, 1996. The Bonds will
mature on April 1, 2018 and will bear interest at the rate of 6.10%
per annum until maturity, unless converted in lieu of optional
redemption as described under the caption "Redemption - Mandatory
Tender and Conversion in Lieu of Optional Redemption." Principal of
and premium, if any, on the Bonds will be payable at the corporate
trust office of the Trustee in New York, New York. Interest on the
Bonds will be payable semi-annually on April 1 and October 1 of each
year, commencing October 1, 1996, and will be paid by check mailed
on the Interest Payment Date to the registered owners thereof of
record as of the 15th day (whether or not a Business Day) of the
calendar month immediately preceding an Interest Payment Date,
provided that any Registered Owner of $1,000,000 or more in
aggregate principal amount of the Bonds may, upon written request
given to the Paying Agent at least five Business Days prior to an
Interest Payment Date designating an account in a domestic bank, be
paid by wire transfer of immediately available funds. Each such
payment date is hereinafter referred to as an "Interest Payment
Date."
The Bank of New York, the Trustee under the Indenture, has been
appointed as Paying Agent (the "Paying Agent") under the Indenture.
The Principal Office of the Paying Agent is located at 101 Barclay
Street, New York, New York 10286.
Limited Obligations of the Issuer
The Bonds will be limited obligations of the Issuer, payable
solely from, and secured equally and ratably by, a first lien on and
pledge of all the right, title and interest of the Issuer in and to
the Agreement, including all moneys payable thereunder (except for
certain rights of the Issuer relating to the payment of expenses and
indemnification). The Company is absolutely and unconditionally
obligated under the Agreement to pay to the Trustee, for the account
of the Issuer, an amount sufficient to pay, or provide for the
payment of, the principal of, premium, if any, and interest on the
Bonds when due (whether upon maturity, redemption or otherwise), and
to pay certain other charges. Neither the credit nor the taxing
power of the State of Texas, the Issuer or any other political
subdivision of the State of Texas is pledged for the payment of the
principal of, premium, if any, or interest on the Bonds; the Bonds
shall not be deemed a general obligation of the State of Texas, the
Issuer or any other political subdivision of the state of Texas; and
none of the State of Texas, the Issuer or any other political
subdivision of the State of Texas shall be liable for the payment of
the principal of, premium, if any, or interest on the Bonds, except
from those revenues to be derived by the Issuer pursuant to the
Agreement and pledged to such payment. No holder of a Bond shall
have the right to demand payment from moneys derived by taxation or
any revenues of the Issuer, except the funds pledged to the payment
of the Bonds.
Notwithstanding its authorization of the Bonds and its approval
of the distribution of this Official Statement, the Issuer does not
endorse, or in any manner guarantee or promise, directly or
indirectly, to pay any obligations on the Bonds from any source of
funds other than as described herein, nor does the Issuer guarantee,
warrant or endorse the creditworthiness or credit standing of the
Company or in any manner guarantee, warrant or endorse the
investment quality or value of the Bonds.
Redemption
The Bonds are subject to redemption prior to maturity as follows:
Optional Redemption
The Bonds are subject to redemption prior to maturity at the
option of the Issuer, upon written direction of the Company
delivered to the Trustee, in whole or in part on April 1, 2006 and
on any Business Day thereafter at the following redemption prices
(expressed as percentages of the principal amount of the Bonds
called for redemption) plus accrued interest to the date fixed for
redemption:
Redemption Date (dates inclusive) Redemption
Price
April 1, 2006 through March 31, 2007 102%
April 1, 2007 through March 31, 2008 101%
April 1, 2008 and thereafter 100%
Extraordinary Optional Redemption
The Bonds are subject to redemption in whole on the next
available Interest Payment Date for which notice of redemption can
be given, at a redemption price equal to the aggregate principal
amount of the Bonds Outstanding plus accrued interest thereon to the
redemption date, without premium, upon receipt by the Trustee of a
written notice from the Company stating that any of the following
events has occurred within the preceding 270 days and that it
intends to exercise its option to effect the redemption of the Bonds
as a whole:
(a) in the reasonable judgment of the Company,
unreasonable burdens or excessive liabilities shall have been
imposed upon the Issuer or the Company with respect to the
Facilities or the Plant, including, without limitation, (i) the
imposition of any income or other taxes not imposed on June 15, 1996
or (ii) the imposition of any ad valorem property or other taxes
(other than ad valorem property or other taxes imposed on June 15,
1996 upon similarly assessed property within the same taxing
jurisdiction);
(b) the Facilities or the Plant shall have been damaged
or destroyed to such extent that, in the opinion of the Company, (i)
within a period of six consecutive months following such damage or
destruction, it is not practicable or desirable to rebuild, repair
or restore the same, (ii) the Company will be thereby prevented from
carrying on its normal operations of the Facilities or the Plant for
a period of six or more consecutive months or (iii) the cost of
restoration would exceed by $1,500,000 or more the net proceeds of
insurance thereon;
(c) title to, or temporary use of, all or substantially
all of the Facilities or the Plant shall have been taken under the
exercise of the power of eminent domain;
(d) changes in the economic availability of materials,
labor, services, supplies (including fuel), equipment or other
property, facilities or things necessary for the operation of the
Facilities or the Plant shall have occurred, or technological,
regulatory or other changes shall have occurred, which, in the
opinion of the Company, render the continued operation of the
Facilities or the Plant uneconomic;
(e) any court or administrative body shall enter a
judgment, order or decree requiring the Company to cease, or dispose
of, all or any substantial part of its operations of the Facilities
or the Plant to such extent that, in the opinion of the Company, it
is or will be thereby prevented from carrying on its normal
operations of the Facilities or the Plant for a period of six or
more consecutive months; or
(f) as a result of any change in the Constitution of the
State of Texas or the Constitution of the United States of America
or of any legislative or administrative action (whether state or
federal), or of any final decree, judgment or order of any court or
administrative body (whether state or federal), the obligations of
the Company under the Agreement shall have become unenforceable or
impossible of performance in any material respect in accordance with
the intent and purpose of the parties as expressed in the Agreement
(as specified in the Indenture).
Extraordinary Mandatory Redemption
The Bonds are subject to mandatory redemption in whole or in
part at any time if such partial redemption will preserve the
exemption from federal income taxation of interest on the remaining
Bonds Outstanding, at a redemption price equal to the principal
amount thereof together with unpaid interest accrued to the date
fixed for redemption, and without premium, if (a) a final decree or
judgment of any federal court, in which the Company participates to
the extent it deems sufficient, or (b) a final action by the
Internal Revenue Service, in proceedings in which the Company
participates to the extent it deems sufficient, determines that the
interest paid or payable on any Bonds to other than, as provided in
the Internal Revenue Code of 1986, as amended (the "Code"), a
"substantial user" of the Facilities or a "related person" is or was
includable in the gross income of the owner thereof for federal
income tax purposes under the Code, as a result of the failure by
the Company to observe or perform any covenant, condition or
agreement on its part to be observed or performed under the
Agreement or the inaccuracy of any representation by the Company
under the Agreement; provided, however, that no decree or judgment
by any court or action by the Internal Revenue Service shall be
considered final unless the Registered Owner involved in such
proceeding or action (i) gives the Company and the Trustee prompt
written notice of the commencement thereof and (ii) if the Company
agrees to pay all expenses in connection therewith and to indemnify
such Registered Owner against all liabilities in connection
therewith, offers the Company the opportunity to control the defense
thereof. Any such redemption shall be made on a date determined by
the Trustee not more than 180 days after the date of such final
decree, judgment or action. The Trustee shall give the Issuer and
the Company not less than 45 days written notice of such date.
Notice of Redemption
Not less than thirty (30) days or more than sixty (60) days
prior to any date fixed for redemption of Bonds, the Trustee shall
give notice of any redemption by sending such notice by (i) first-
class mail to the Owner of each Bond to be redeemed in whole or in
part, (ii) by certified mail, return receipt requested, to DTC (so
long as it owns all the Bonds), and upon request, to any person or
entities which provide evidence acceptable to the Trustee that such
person has a legal or beneficial interest in at least $1,000,000 in
principal amount of the Bonds, and (iii) by certified mail, return
receipt requested, or by overnight delivery, received by the
registered depositories at least two (2) days prior to the general
publication date for such redemption notices and to be received by
at least two (2) of the national information services that
disseminate bond redemption notices on or before the general mailing
date for such notices; provided, however, that the failure to send,
mail or receive such notice described above, or any defect therein
or in the sending or mailing thereof, with respect to any Bond shall
not affect the validity or effectiveness of the proceedings for the
redemption of any other Bond. In addition, within sixty (60) days
after the redemption date an additional redemption notice shall be
sent to any Owner of the Bonds who has not surrendered Bonds for
redemption during the thirty (30) day period following the
redemption date and to any person or entities having legal or
beneficial ownership interest in at least $1,000,000 in principal
amount of such Bonds which have not been surrendered.
All notices of redemption shall state (i) the redemption date,
(ii) the redemption price, (iii) the identification, including
complete designation (including series) and issue date of the Bonds
and the CUSIP number, certificate number (and in the case of partial
redemption, the respective principal amounts), interest rates and
maturity dates of the Bonds to be redeemed, (iv) that on the
redemption date the redemption price will become due and payable
upon each such Bond, and that interest thereon shall cease to accrue
from and after said date, and (v) the name and address of the
Trustee and any Paying Agent for such Bonds, including the place
where such Bonds are to be surrendered for payment of the redemption
price therefor.
Mandatory Tender and Conversion in Lieu of Optional Redemption
So long as no Event of Default exists under the Indenture, the
Company may elect, on any optional redemption date for the Bonds,
beginning April 1, 2006, to convert all or any part of the Bonds to
a different interest rate Mode. The Company shall make such
election as specified in the Indenture and upon such election such
Bonds shall be subject to mandatory tender for purchase on such
mandatory tender date, in lieu of optional redemption, at the
applicable Purchase Price. The Paying Agent shall give notice of
such mandatory tender for purchase to the Registered Owners of Bonds
by first class mail, not less than thirty (30) days before the
mandatory tender date. Mandatory tender and conversion in lieu of
optional redemption is subject to certain conditions relating to
rating the Bonds and obtaining consent from MBIA Insurance
Corporation (the "Bond Insurer").
The Bonds will initially be issued in the "Fixed Rate Mode."
Other than the Fixed Rate Mode, the permitted Modes for the Bonds
are "Flexible Mode," for periods of from one to 270 days, and "Daily
Mode," "Weekly Mode," "Monthly Mode," "Quarterly Mode," "Semiannual
Mode" and "Multiannual Mode," for periods of one day, one week, one
month, three months, six months, one year or integral multiples
thereof, respectively. Except as otherwise provided in the
Indenture, the interest rates in each Mode and the period during
which a particular Mode is in effect will be determined by a
remarketing agent to be appointed under the Indenture. The Mode for
all or a portion of the Bonds after conversion as described above is
subject to subsequent conversion to a different Mode from time to
time at the election of the Company as provided in the Indenture.
Purchasers of Bonds after conversion will receive an offering
document describing the alternative Modes and other features of the
Bonds.
BOOK-ENTRY ONLY SYSTEM
The Depository Trust Company ("DTC"), New York, New York, will
act as securities depository for the Bonds (the "Securities
Depository"). The Bonds will be issued as fully-registered
securities registered in the name of Cede & Co., as nominee for DTC.
One fully-registered Bond certificate for Bonds of each Mode will be
issued in the aggregate principal amount of the Bonds of that Mode
and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the
New York Banking Law, a "banking organization" within the meaning of
the New York Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform
Commercial Code, and a "clearing agency" registered pursuant to the
provisions of Section 17A of the Securities Exchange Act of 1934, as
amended. DTC holds securities that its participants deposit with
DTC (such participants or the participants of any successor
Securities Depository are herein referred to as "Participants" or
"DTC Participants"). DTC also facilitates the settlement among DTC
Participants of securities transactions, such as transfers and
pledges, in deposited securities through electronic computerized
book-entry changes in DTC Participants' accounts, thereby
eliminating the need for physical movement of securities
certificates. Participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other
organizations. DTC is owned by a number of its Participants and by
the New York Stock Exchange, Inc., the American Stock Exchange, Inc.
and the National Association of Securities Dealers, Inc. Access to
the DTC system is also available to others such as securities
brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Participant, either
directly or indirectly ("Indirect Participants"). The rules
applicable to DTC and the Participants are on file with the
Securities and Exchange Commission.
Purchases of beneficial ownership interests in the Bonds under
the DTC system must be made by or through Participants, which will
receive a credit for the Bonds on DTC's records. The ownership
interest of each Beneficial Owner of a Bond is in turn to be
recorded on the Participant's and Indirect Participants' records.
Beneficial Owners will not receive written communication from DTC of
their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well
as periodic statements of their holdings, from the Participant or
Indirect Participant through which the Beneficial Owner entered into
the transaction. Transfers of ownership interests of the Bonds are
to be accomplished by entries made on the books of Participants
acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in the
Bonds, except in the event that use of the book-entry system for the
Bonds is discontinued as described under the caption
"Discontinuation of Book-Entry Only System."
To facilitate subsequent transfers, all Bonds deposited with
DTC are registered in the name of DTC's partnership nominee, Cede &
Co. The deposit of Bonds with DTC and their registration in the
name of Cede & Co. effect no change in beneficial ownership. DTC
has no knowledge of the actual Beneficial Owners of the Bonds.
DTC's records reflect only the identity of the Participants to whose
accounts such Bonds are credited, which may or may not be the
Beneficial Owners. The Participants will remain responsible for
keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to
Participants, by Participants to Indirect Participants, and by
Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Notices of redemption of Bonds will be sent to Cede & Co. If
less than all of the Bonds of a particular Mode are being redeemed,
DTC's practice is to determine by lot the amount of the interest of
each Participant in Bonds of such Mode to be redeemed.
Neither DTC nor Cede & Co. will consent or vote with respect to
Bonds. Under its usual procedures, DTC mails an "Omnibus Proxy" to
the Issuer as soon as possible after the record date. The "Omnibus
Proxy" assigns Cede & Co.'s consenting or voting rights to those
Participants to whose accounts the Bonds are credited on the record
date identified in a listing attached to the "Omnibus Proxy."
Principal and interest payments on the Bonds will be made to
DTC. DTC's practice is to credit DTC Participants' accounts on a
payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not
receive payment on a payment date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and
customary practices, as in the case with securities held for the
accounts of customers in bearer form or registered in "street name"
and will be the responsibility of such Participant and not of DTC,
the Trustee, the Issuer or the Company, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Payments of principal and interest to DTC is the responsibility of
the Trustee. Disbursement of such payments to Participants is the
responsibility of DTC and disbursement of such payments to the
Beneficial Owners is the responsibility of the Participants and
Indirect Participants.
DTC may discontinue providing its services as securities
depository with respect to the Bonds at any time by giving
reasonable notice to the Issuer. Under such circumstances, in the
event that a successor securities depository is not obtained, Bond
certificates are required to be printed and delivered as described
herein under the caption "Discontinuation of Book-Entry Only
System."
The Issuer may decide to discontinue use of the system of book-
entry transfers through DTC or a successor securities depository.
In that event, Bond certificates will be printed and delivered as
described herein under the caption "Discontinuation of Book-Entry
Only System."
THE INFORMATION PROVIDED IMMEDIATELY ABOVE UNDER THIS CAPTION
HAS BEEN PROVIDED BY DTC. NO REPRESENTATION IS MADE BY THE ISSUER,
THE COMPANY OR THE UNDERWRITERS AS TO THE ACCURACY OR ADEQUACY OF
SUCH INFORMATION PROVIDED BY DTC OR AS TO THE ABSENCE OF MATERIAL
ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF.
For so long as the Bonds are registered in the name of DTC or
its nominee, Cede & Co., the Issuer and the Trustee will recognize
only DTC or its nominee, Cede & Co., as the Registered Owner of the
Bonds for all purposes, including payments, notices (including
notices of redemption or mandatory tender) and voting.
Under the Indenture, payments made by the Trustee to DTC or its
nominee shall satisfy the Issuer's obligations under the Indenture
and the Company's obligations under the Agreement to the extent of
the payments so made.
Neither the Issuer, the Company nor the Trustee shall have any
responsibility or obligation with respect to:
(i) the accuracy of the records of DTC, its nominee or any
Participant or Indirect Participant with respect to any beneficial
ownership interest in any Bonds;
(ii) the delivery to any Participant or Indirect Participant
or any other person, other than an owner, as shown in the bond
register, of any notice with respect to any Bond including, without
limitation, any notice of redemption, tender, purchase or any event
which would or could give rise to a tender or purchase right or
option with respect to any Bond;
(iii) the payment to any Participant or Indirect
Participant or any other person, other than an owner, as shown in
the bond register, of any amount with respect to the principal of,
premium, if any, or interest on, or the Purchase Price of, any Bond;
or
(iv) any consent given by DTC as Registered Owner.
Prior to any discontinuation of the Book-Entry Only System
described above, the Issuer and the Trustee may treat DTC as, and
deem DTC to be, the absolute owner of the Bonds for all purposes
whatsoever, including, without limitation:
(i) the payment of principal of, premium, if any, and interest
on the Bonds;
(ii) giving notices of redemption and other matters with
respect to the Bonds;
(iii) registering transfers with respect to the Bonds; and
(iv) the selection of Bonds for redemption.
Discontinuation of Book-Entry Only System
In the event that the Issuer determines to remove the
Securities Depository, the Issuer will (i) appoint a successor
Securities Depository and transfer one or more separate Bond
certificates to such successor or (ii) notify the Participants of
the Securities Depository of the availability through the Securities
Depository of Bond certificates and transfer one or more separate
Bond certificates to the Participants of the Securities Depository
having Bonds credited to their accounts with the Securities
Depository. In such event, the Bonds will no longer be restricted
to being registered in the bond register in the name of the
Securities Depository, or its nominee, but may be registered in the
name of any successor Securities Depository, or its nominee, or in
whatever name or names the Participants of the Securities Depository
receiving Bonds shall designate, in accordance with the provisions
of the Indenture.
THE AGREEMENT
General
The following is a summary of certain provisions of the
Agreement. Reference is hereby made to the Agreement in its
entirety for the detailed provisions thereof.
Use of Bond Proceeds
The Issuer will issue the Bonds to provide funds to currently
refund the Prior Bonds. Upon the sale of the Bonds, the Issuer will
transfer the proceeds of the Bonds to the trustee for the Prior
Bonds for deposit into the bond fund created under the indenture for
the Prior Bonds.
Installment Payments
The Company will make Installment Payments to fund payments on
the Bonds in such amounts which, together with other moneys
available therefor in the Bond Fund created under the Indenture,
will be sufficient to pay when due the principal of, premium, if
any, and interest on the Outstanding Bonds as they shall mature, be
redeemed, be purchased or deemed purchased or otherwise become due
as provided in the Indenture. The Company shall make such payments
directly to the Trustee for the account of the Issuer.
Installment Payment obligations of the Company under the
Agreement will be absolute and unconditional, and the Company will
make such payments free of any deductions and without abatement,
diminution or setoff. In the event that the Company fails to make
any of such payments, the item or installment so in default will
continue as an obligation of the Company until the amount in default
has been fully paid.
Other Payments Under the Agreement
In addition to the Installment Payments, the Company agrees to
pay taxes, assessments and other charges of any kind whatsoever that
may at any time be lawfully levied or imposed with respect to the
Facilities or the Installment Payments under the Agreement and all
costs and expenses of the operation and maintenance of the
Facilities. The Company also agrees to pay certain costs and
expenses of the Issuer and the Trustee in connection with the Bonds
and to indemnify such parties against certain liabilities arising in
connection with the sale of the Bonds and the execution and delivery
of the related bond documents.
Corporate Existence
The Company agrees that it will not dispose of all or
substantially all of its assets as an entirety (whether by
liquidation, dissolution, or otherwise) and will not consolidate
with or merge into another corporation, or permit one or more
corporations to consolidate with or merge into it, unless the
resulting, surviving, or transferee corporation, as the case may be,
if other than the Company, irrevocably and unconditionally assumes,
in an instrument delivered to the Issuer and to the Trustee, the due
and punctual performance of the obligations of the Company under the
Agreement. Upon the delivery of such an instrument, the Company
shall thereupon be relieved of any further obligation or liability
under the Agreement or with respect to the Bonds, and the resulting,
surviving, or transferee corporation, as the case may be, shall
succeed to and be substituted for the Company under the Agreement
with the same effect as if such resulting or surviving corporation
or transferee had been a party to the Agreement.
Assignment
Under certain conditions, the Agreement may be assigned by the
Company, but such assignment will not relieve the Company from
primary liability for any of its obligations under the Agreement.
No assignment will be effective without a Favorable Opinion being
furnished to the Issuer and the Trustee, together with notice of
such assignment.
Defaults and Remedies
The Agreement provides that the occurrence and continuation of
any one of the following shall constitute an "Event of Default"
thereunder:
(a) failure by the Company to pay Installment Payments with
respect to principal of or premium on any Bond at the times
specified therein;
(b) failure by the Company to pay Installment Payments with
respect to interest on any Bond at the times specified therein and
the continuation of such failure for a period of 60 days or more;
(c) failure by the Company to pay Installment Payments with
respect to the Purchase Price of any Bond at the times specified
therein and the continuation of such failure for a period of one
Business Day or more after notice thereof shall have been given by
the Trustee to the Company and the Issuer;
(d) failure by the Company to observe and perform any
covenant, condition or agreement on its part required to be observed
or performed in the Agreement, other than as referred to in (a), (b)
or (c) above, for a period of 90 days after receipt by the Company
of written notice specifying such failure and requesting that it be
remedied, given to the Company by the Issuer or the Trustee, unless
the Issuer and the Trustee shall agree in writing to an extension of
such time prior to its expiration; provided, however, that if the
failure stated in the notice can, in the reasonable judgment of the
Company, be corrected, but cannot be corrected within the applicable
period, the Issuer and the Trustee will not unreasonably withhold
their consent to an extension of such time if corrective action is
instituted within the applicable period and diligently pursued until
the default is corrected;
(e) certain events of dissolution, liquidation, insolvency,
bankruptcy or reorganization involving the Company; or
(f) the occurrence of an "Event of Default" under the
Indenture.
The provisions of paragraph (d) above are subject to the
following limitations: if by reason of acts of God, strikes,
lockouts or other industrial disturbances; acts of public enemies;
orders or regulations of any kind of the government of the United
States of America or of the State of Texas or any of their
departments, agencies, political subdivisions, or officials, or any
civil or military authority; insurrections; riots; epidemics;
landslides; lightning; earthquakes; tidal waves; fires; hurricanes;
tornadoes; blue northers; other storms; floods; washouts; droughts;
arrests; restraints of government and people; civil disturbances;
explosions; breakage or accident to machinery, transmission pipes,
transmission facilities or canals; partial or entire failure of
utilities; shortages of labor, material, supplies or transportation;
or any other cause or event not reasonably within the control of the
Company (collectively, "events of force majeure"), the Company is
unable in whole or in part to carry out the agreements on the
Company's part herein contained, the Company shall not be deemed in
default during the continuance of such inability. The Company,
however, will use its best efforts to remedy with all reasonable
dispatch the cause or causes preventing the Company from carrying
out such agreements; provided, that the settlement of strikes,
lockouts and other industrial disturbances shall be entirely within
the discretion of the Company, and the Company shall not be required
to make settlement of strikes, lockouts, and other industrial
disturbances by acceding to the demands of the opposing party or
parties when such course is, in the judgment of the Company,
unfavorable to the Company. The occurrence of any event of force
majeure shall not suspend or otherwise abate, and the Company shall
not be relieved from, any obligation under this Agreement to the
extent that the failure of the Company to observe or perform any
such obligation would result in the failure to pay when due the
principal of, premium, if any, interest on, or the Purchase Price
for, the Bonds or would result in the interest on any Bonds becoming
includable in the gross income of the owners thereof for federal
income tax purposes.
The above provisions, however, are subject to the conditions
that, after any such Event of Default, subject to and as provided in
the Indenture, the Trustee may waive such Event of Default and
rescind and annul any remedial step theretofore taken by it or by
the Issuer with respect to such default and its consequences; but no
such waiver, rescission or annulment shall extend to or affect any
subsequent default or impair any right or remedy consequent thereon.
Whenever any Event of Default under the Agreement shall have
occurred and is continuing, the Issuer, with the consent of the
Trustee, or the Trustee may take any one or more of the following
remedial steps but only if acceleration of the principal amount of
the Bonds has been declared pursuant to the Indenture:
(a) By notice in writing to the Company, declare the unpaid
Installment Payments to be due and payable immediately, if
concurrently with or prior to such notice the unpaid principal
amount of the Bonds has been declared to be due and payable under
the Indenture, and upon any such declaration the Installment
Payments payable under the Agreement shall become and shall be
immediately due and payable in the amount equal to the principal of
and all accrued interest on the Bonds (without premium); provided,
however, that an Event of Default shall be deemed waived and a
declaration accelerating payment of unpaid Installment Payments
payable under the Agreement shall be deemed rescinded without
further action on the part of the Trustee or the Issuer upon any
rescission by the Trustee of the corresponding declaration of
acceleration of the Bonds under the Indenture.
(b) Whatever action at law or in equity may appear necessary
or desirable to collect the payment and other amounts then due or to
enforce performance and observance of any obligation, agreement or
covenant of the Company under the Agreement.
The Company has covenanted that, in case an Event of Default
shall occur with respect to the payment of any Installment Payment
payable then, upon demand of the Trustee, the Company will pay to
the Trustee the whole amount that then shall have become due and
payable, with interest (to the extent permitted by law) on such
amount, at the rate of interest borne by the Bonds at the time of
such failure, from the due date thereof until paid.
In case the Company shall fail to pay such amounts upon such
demand, the Trustee shall be entitled and empowered to institute any
action or proceeding at law or in equity for the collection of the
sums so due and unpaid, and may prosecute any such action or
proceeding to judgment or final decree, and may enforce any such
judgment or final decree against the Company and collect, in the
manner provided by law out of the property of the Company, the
moneys adjudged or decreed to be payable.
Certain Covenants Regarding Arbitrage and Tax Exemption
The Issuer and the Company have agreed not to knowingly take
any action or omit to take any action, which would result in a loss
of the exemption from federal income taxation of interest on the
Bonds by virtue of the Bonds being considered "arbitrage bonds"
within the meaning of Section 148 of the Code. The Issuer and the
Company have agreed to refrain from any action which would adversely
affect, and to take such action to assure, the treatment of the
Bonds as obligations described in Section 103(a) of the Code, the
interest on which is not includable in the "gross income" of the
holder (other than the income of a "substantial user" of the
Facilities or a "related person" within the meaning of Section
147(a) of the Code) for purposes of federal income taxation.
Amendment of Agreement
The Agreement may be amended by written agreement of the
Issuer, the Company and the Bond Insurer, provided that no amendment
may be made which would adversely affect the rights of the Owners of
any of the Outstanding Bonds without the consent of the Owners of a
majority in aggregate principal amount of the Bonds then
Outstanding; provided, however, that no amendment may be made which
would (i) decrease the amounts payable under the Agreement;
(ii) change the date of payment or prepayment provisions under the
Agreement; or (iii) change the amendment provisions of the Agreement
without the consent of all of the Owners of the Bonds adversely
affected thereby; and provided further that the Agreement may be
amended by written agreement of the Issuer and the Company in order
to make conforming changes with respect to certain amendments made
to the Indenture.
THE INDENTURE
General
The following is a summary of certain provisions of the
Indenture. Reference is hereby made to the Indenture in its
entirety for the detailed provisions thereof.
Bond Fund
The Indenture creates and establishes with the Trustee a
separate trust fund designated the "Sabine River Authority of Texas,
Pollution Control Revenue Refunding Bonds (Southwestern Electric
Power Company Project) Series 1996 Bond Fund" (the "Bond Fund"),
which will be used solely for the payment of the principal of,
premium, if any, and interest on the Bonds. All Installment
Payments made by the Company in connection with principal of,
premium, if any, and interest on the Bonds will be made to the
Trustee for deposit in the Bond Fund. There shall be deposited into
the Bond Fund, when received: (i) accrued interest, if any, on the
Bonds from the date thereof to the date of delivery to the initial
purchaser thereof; (ii) all payments specified in the Agreement
(except for certain payments of fees, expenses, and indemnification
arising out of the Issuer's Unassigned Rights); (iii) all moneys
required to be so deposited in connection with any redemption of
Bonds; (iv) any amounts directed to be transferred into the Bond
Fund pursuant to any provision of the Indenture, and (v) all other
moneys when received by the Trustee which are required to be
deposited into the Bond Fund or which are accompanied by directions
that such moneys are to be paid into the Bond Fund.
Moneys held in the Bond Fund shall be used solely for the
payment of the principal of, premium, if any, and interest on the
Bonds on the dates due for the payment or redemption thereof. The
Issuer has authorized and directed the Trustee to withdraw
sufficient funds from the Bond Fund to pay the principal of,
premium, if any, and interest on the Bonds as the same become due
and payable, which authorization and direction the Trustee has
accepted.
Investment
Except as provided in the Indenture, any moneys held as part of
the Bond Fund shall be invested or reinvested by the Trustee as
provided in written instructions of the Company solely in Permitted
Investments.
Moneys Held in Trust
All moneys required to be deposited with or paid to the Trustee
for the account of any fund under the Indenture shall be held by the
Trustee in trust and, except for (i) moneys in the Bond Purchase
Fund and the Rebate Fund, and (ii) moneys deposited with or paid to
the Trustee for the redemption of Bonds, notice of the redemption
for which has been duly given, shall, while held by the Trustee, be
part of the trust estate and be subject to the security interest
created by the Indenture.
Events of Default and Remedies
The Indenture provides that each of the following constitutes
an "Event of Default" thereunder:
(a) default in the due and punctual payment of the principal
of or premium, if any, on any Outstanding Bond, as the same shall
become due and payable, whether at the stated maturity thereof, upon
any proceedings for redemption, or upon the maturity thereof by
declaration of acceleration;
(b) default in the due and punctual payment of the interest
on any Outstanding Bond, as the same shall become due and payable,
and the continuation of such default for a period of 60 days or
more;
(c) default in the due and punctual payment of the Purchase
Price of any Outstanding Bond, as the same shall become due and
payable and the continuation of such default for a period of one
Business Day or more;
(d) default by the Issuer in its performance or observance of
any of the other covenants, agreements or conditions contained in
the Indenture, and the continuation thereof without corrective
action for a period of 90 days after receipt by the Issuer and the
Company of notice given by the Trustee or the Owners of not less
than 25% in aggregate principal amount of all Bonds Outstanding as
specified in the Indenture; or
(e) an Event of Default (as defined in the Agreement) has
occurred and is continuing under the Agreement.
If any Event of Default occurs and is continuing, the Trustee may,
and upon request of the owners of at least 25% in principal amount
of all Bonds then Outstanding shall, by notice in writing to the
Issuer and the Company, declare the principal of all Bonds then
Outstanding to be immediately due and payable, and upon such
declaration the said principal, together with interest accrued
thereon to the date of acceleration, shall become due and payable
immediately at the place of payment provided therein, anything in
the Indenture or in the Bonds to the contrary notwithstanding. Upon
the occurrence of any such acceleration, the Trustee shall
immediately declare all Installment Payments to be due and payable
immediately.
If, after the principal of the Bonds has become due and
payable, all arrears of interest upon the Bonds are paid by the
Issuer, and the Issuer also performs all other things in respect to
which it may have been in default under the Indenture and pays the
reasonable charges of the Trustee and the Bondholders, including
reasonable and necessary attorneys' fees, then, and in every such
case, the owners of a majority in principal amount of the Bonds then
Outstanding, by notice to the Issuer and to the Trustee, may annul
such acceleration and its consequences. No such annulment shall
extend to or affect any subsequent default or impair any right or
remedy consequent thereon.
Upon the occurrence of an Event of Default, the Trustee may
pursue any available remedy by suit at law or in equity to enforce
the payment of the principal of, premium, if any, and interest on
the Bonds then Outstanding, and the performance by the Issuer of its
obligations under the Indenture, including, without limitation, the
following: (a) by mandamus, or other suit, action or proceeding at
law or in equity, enforce all rights of the Bondholders and require
the Issuer to carry out its agreements under the Indenture and the
Acts; (b) bring suit upon the Bonds; (c) by action, suit or
proceeding at law or in equity, require the Issuer to account as if
it were the trustee of an express trust for the Bondholders; or (d)
by action, suit or proceeding at law or in equity, enjoin any acts
or things which may be unlawful or in violation of the rights of the
Bondholders.
MBIA Insurance Corporation Deemed to be a Bondholder
Notwithstanding any provision of the Indenture to the contrary,
the Bond Insurer shall at all times be deemed the exclusive owner of
all Bonds for the purposes of all approvals, consents, waivers,
institution of any action, and the direction of all remedies. No
acceleration shall be permitted, and no Event of Default shall be
waived, without the Bond Insurer's consent. The Bond Insurer shall
have the right to direct all remedies pursuant to the Indenture.
Defeasance
Subject to consent of the Bond Insurer, any Bond shall be
deemed to have been paid and discharged when payment of the
principal of and premium, if any, on such Bond plus the interest
thereon to the due date thereof (whether such due date be by reason
of maturity or upon redemption as provided in the Indenture or
otherwise) either (a) shall have been made in accordance with the
terms of the Indenture or (b) shall have been provided for by
irrevocably depositing with the Trustee, in trust solely for such
payment, any combination of (1) sufficient moneys to make such
payment and/or (2) Government Obligations not subject to redemption
or prepayment and maturing as principal and interest in such amounts
as in the opinion of an independent certified public accountant
delivered to the Trustee are sufficient to make such payment without
reinvestment and to pay all fees and expenses in connection
therewith.
Discharge of Lien
When all of the Bonds have been paid or deemed paid and the
Issuer is not in default under any of the covenants and promises
contained in such Bonds and the Indenture, and if the Issuer shall
pay or cause to be paid to the Trustee all sums of money due or to
become due according to the Indenture or of the Bonds and of the
Agreement, then the rights under the Indenture will become null and
void; provided, however, that the rights of the Trustee under the
Indenture to receive its fees, charges and expenses shall survive
the discharge of the Indenture until paid in full. See the caption
"Defeasance" above for a discussion of the conditions under which
the Bonds will be deemed to have been paid.
The Trustee; New York Paying Agent
To the extent permitted by law, the Trustee may invest in and
treat itself as any other holder of the Bonds. The Trustee may
resign at any time after notice to the Issuer, the Company and the
Bondholders, such resignation to take effect only upon the
appointment of a successor Trustee. The Trustee may be removed at
any time by written notice signed by the Issuer and the Company and
delivered to the Trustee and the Bondholders. Such removal shall
take effect only upon the appointment of a successor Trustee. Every
successor trustee may be appointed by the Issuer with the consent of
the Company and shall be a bank or trust company which (i) is
organized as a corporation or banking association and doing business
under the laws of the United States of America or any state thereof,
(ii) is authorized under such laws to exercise corporate trust
powers and to perform all the duties imposed upon it by the
Indenture and the Agreement, (iii) is subject to supervision or
examination by federal or state authority, (iv) has combined capital
and surplus of at least $50,000,000, (v) shall not have become
incapable of acting or have been adjudged a bankrupt or an insolvent
or have had a receiver appointed for itself or for any of its
property or have had a public officer take charge or control of it
or its property or affairs for the purpose of rehabilitation,
conservation or liquidation and (vi) must be an institution rated at
least "Baa3" by Moody's (or Moody's shall have provided written
evidence that such successor Trustee is otherwise acceptable to
Moody's) if the Bonds are then rated by Moody's, and at least "BBB-"
or "A-3" by S&P (or S&P shall have provided written evidence that
such successor Trustee is otherwise acceptable to S&P) if the Bonds
are then rated by S&P. Should the Trustee cease to be eligible to
act as trustee under the Indenture, it shall promptly notify the
Owners of all Bonds then Outstanding, the Issuer and the Company of
such fact. The Issuer may appoint a temporary trustee until the
appointment of such successor.
The Paying Agent is required to maintain an office, or have an
agent with an office, in New York City at all times that any Bonds
are outstanding.
Additional Notices
Upon written request of any Owner of Bonds in an aggregate
principal amount of at least $1,000,000 (or any person or entity
which provides written evidence acceptable to the Trustee that such
person or entity has a legal or beneficial interest in Bonds in an
aggregate principal amount of at least $1,000,000), the Trustee
shall give an additional copy of any notice to be given by the
Trustee under the Indenture by first-class mail to a second address
specified by such Owner, person or entity. Any such additional
notices shall be given simultaneously with the original notices.
Upon written request of any person or entity which provides
evidence acceptable to the Trustee that such person or entity has a
legal or beneficial interest in at least $1,000,000 in principal
amount of the Bonds, the Trustee shall, for the calendar year in
which such request is received, provide one or more of the following
as requested to such person or entity: (i) notices of redemption;
(ii) notices of default; (iii) copies of all notices to which such
person or entity is entitled under the Indenture to a specific
second address; and (iv) outstanding balances by maturity,
redemption history, including redemption date, amount and source of
funds and distribution of the call to maturity.
Supplemental Indentures
The Issuer and the Trustee, with the written consent of the
Company and the Bond Insurer, but without the consent of or notice
to the Bondholders, may enter into an indenture or indentures
supplemental to the Indenture, for any of the following purposes:
(a) to cure any ambiguity, formal defect or omission in the
Indenture or to make such other changes which shall not have a
material adverse effect upon the interests of the Bondholders;
(b) to grant to or confer upon the Trustee, for the benefit
of the Bondholders, any additional rights, remedies, powers or
authorities, or any additional security, that may lawfully be
granted to or conferred upon the Bondholders or the Trustee;
(c) to subject to the Indenture additional revenues,
properties or collateral;
(d) to modify, amend or supplement the Indenture, or any
indenture supplemental thereto, in such manner as to permit the
qualification thereof under the Trust Indenture Act of 1939, as
amended, or any similar federal statute hereafter in effect, or to
permit the qualification of the Bonds for sale under the securities
laws of any of the states of the United States and, if the Issuer so
determines, to add to the Indenture or any indenture supplemental
thereto such other terms, conditions and provisions as may be
permitted by the Trust Indenture Act of 1939, as amended, or any
similar federal statute;
(e) to add to the covenants and agreements of the Issuer
contained in the Indenture other covenants and agreements thereafter
to be observed for the protection of the Bondholders or to surrender
or limit any right, power or authority therein reserved to or
conferred upon the Issuer;
(f) effective upon any Conversion Date to a new Mode, to make
any amendment affecting only the Bonds being converted, including
revision to Authorized Denominations;
(g) to add provisions relating to the partial conversion of
Bonds to a new Mode;
(h) to conform the Indenture to the requirements of the Rating
Agencies;
(i) to add or modify provisions permitting a mandatory tender
of Bonds in lieu of redemption; and
(j) to add provisions permitting the addition of a credit
facility or a liquidity facility.
Exclusive of the purposes described in subparagraphs (a)
through (j) above, the Owners of a majority in aggregate principal
amount of the Bonds then Outstanding will have the right, from time
to time, to approve any supplemental indenture deemed necessary and
desirable by the Issuer for the purposes of modifying, altering,
amending, adding to or rescinding any of the terms or provisions
contained in the Indenture or any supplemental indenture. No
modification or alteration may be made without the consent of the
holders of all Bonds then Outstanding which permits (i) an extension
of the maturity of the principal of, or the time for payment of any
redemption premium or interest on, any Bond or a reduction in the
principal amount of any Bond, or the rate of interest or redemption
premium thereon, or a reduction in the amount of, or extension of
the time of any payment required by, any Bond; (ii) a privilege or
priority of any Bond over any other Bond (except as provided in the
Indenture); (iii) a reduction in the aggregate principal amount of
the Bonds required for consent to such a supplemental indenture;
(iv) the deprivation of the Owner of any Bond then Outstanding of
the lien created by the Indenture; or (v) the amendment of the
limitations described in this paragraph.
THE MBIA INSURANCE CORPORATION INSURANCE POLICY
The following information has been furnished by the Bond
Insurer for use in this Official Statement. Reference is made to
Appendix D to this Official Statement for a specimen of the Bond
Insurer's policy.
The Bond Insurer's policy unconditionally and irrevocably
guarantees the full and complete payment required to be made by or
on behalf of the Issuer to the Paying Agent or its successor of an
amount equal to (i) the principal of (either at the stated maturity
or by a mandatory redemption upon the occurrence of a determination
of taxability) and interest on, the Bonds as such payments shall
become due but shall not be so paid (except that in the event of any
acceleration of the due date of such principal by reason of
mandatory or optional redemption or acceleration resulting from
default or otherwise, other than a mandatory redemption upon the
occurrence of a determination of taxability, the payments guaranteed
by the Bond Insurer's policy shall be made in such amounts and at
such times as such payments of principal would have been due had
there not been any such acceleration); and (ii) the reimbursement of
any such payment which is subsequently recovered from any owner of
the Bonds pursuant to a final judgment by a court of competent
jurisdiction that such payment constitutes an avoidable preference
to such owner within the meaning of any applicable bankruptcy law (a
"Preference").
The Bond Insurer's policy does not insure against loss of any
prepayment premium which may at any time be payable with respect to
any Bond. The Bond Insurer's policy does not, under any
circumstance, insure against loss relating to: (i) optional or
mandatory redemptions (other than a mandatory redemption upon the
occurrence of a determination of taxability); (ii) any payments to
be made on an accelerated basis; (iii) payments of the purchase
price of Bonds under tender by an owner thereof; or (iv) any
Preference relating to (i) through (iii) above. The Bond Insurer's
policy also does not insure against nonpayment of principal of or
interest on the Bonds resulting from the insolvency, negligence or
any other act or omission of the Paying Agent or any other paying
agent for the Bonds.
Upon receipt of telephonic or telegraphic notice, such notice
subsequently confirmed in writing by registered or certified mail,
or upon receipt of written notice by registered or certified mail,
by the Bond Insurer from the Paying Agent or any owner of a Bond the
payment of an insured amount for which is then due, that such
required payment has not been made, the Bond Insurer on the due date
of such payment or within one business day after receipt of notice
of such nonpayment, whichever is later, will make a deposit of
funds, in an account with State Street Bank and Trust Company, N.A.,
in New York, New York, or its successor, sufficient for the payment
of any such insured amounts which are then due. Upon presentment
and surrender of such Bonds or presentment of such other proof of
ownership of the Bonds, together with any appropriate instruments of
assignment to evidence the assignment of the insured amounts due on
the Bonds as are paid by the Bond Insurer, and appropriate
instruments to effect the appointment of the Bond Insurer as agent
for such owners of the Bonds in any legal proceeding related to
payment of insured amounts on the Bonds, such instruments being in
a form satisfactory to State Street Bank and Trust Company, N.A.,
State Street Bank and Trust Company, N.A. shall disburse to such
owners or the Paying Agent payment of the insured amounts due on
such Bonds, less any amount held by the Paying Agent for the payment
of such insured amounts and legally available therefor.
The Bond Insurer, formerly known as Municipal Bond Investors
Assurance Corporation, is the principal operating subsidiary of MBIA
Inc., a New York Stock Exchange listed company. MBIA Inc. is not
obligated to pay the debts of or claims against the Bond Insurer.
The Bond Insurer is domiciled in the State of New York and licensed
to do business in all 50 states, the District of Columbia, the
Commonwealth of Puerto Rico, the Commonwealth of the Northern
Mariana Islands, the Virgin Islands of the United States and the
Territory of Guam. The Bond Insurer has one European branch in the
Republic of France.
As of December 31, 1995 the Bond Insurer had admitted assets of
$3.8 billion (audited), total liabilities of $2.5 billion (audited),
and total capital and surplus of $1.3 billion (audited) determined
in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities. As of March 31,
1996, the Bond Insurer had admitted assets of $4.0 billion
(unaudited), total liabilities of $2.7 billion (unaudited), and
total capital and surplus of $1.3 billion (unaudited) determined in
accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities. All information
regarding the Bond Insurer, a wholly owned subsidiary of MBIA Inc.,
including the financial statements of the Bond Insurer for the year
ended December 31, 1995, prepared in accordance with generally
accepted accounting principles, included in the Annual Report on
Form 10-K of MBIA Inc. for the year ended December 31, 1995 is
hereby incorporated by reference into this Official Statement and
shall be deemed to be a part hereof. Any statement contained in a
document incorporated by reference herein shall be modified or
superseded for purposes of this Official Statement to the extent
that a statement contained herein or in any other subsequently filed
document which also is incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to
constitute a part of this Official Statement.
Furthermore, copies of the Bond Insurer's year end financial
statements prepared in accordance with statutory accounting
practices are available from the Bond Insurer. A copy of the Annual
Report on Form 10-K of MBIA Inc. is available from the Bond Insurer
or the Securities and Exchange Commission. The address of the Bond
Insurer is 113 King Street, Armonk, New York 10504.
Moody's Investors Service ("Moody's") rates the claims paying
ability of the Bond Insurer "Aaa".
Standard & Poor's Ratings Services, a division of The McGraw-
Hill Companies, Inc. ("Standard & Poor's"), rates the claims paying
ability of the Bond Insurer "AAA".
Fitch Investors Service, L.P., rates the claims paying ability
of the Bond Insurer "AAA".
Each rating of the Bond Insurer should be evaluated
independently. The ratings reflect the respective rating agency's
current assessment of the creditworthiness of the Bond Insurer and
its ability to pay claims on its policies of insurance. Any further
explanation as to the significance of the above ratings may be
obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold
the Bonds, and such ratings may be subject to revision or withdrawal
at any time by the rating agencies. Any downward revision or
withdrawal of any of the above ratings may have an adverse effect on
the market price of the Bonds. The Bond Insurer does not guaranty
the market price of the Bonds nor does it guaranty that the ratings
on the Bonds will not be revised or withdrawn.
Disclosure of Guaranty Fund Non Participation
In the event the Bond Insurer is unable to fulfill its
contractual obligation under the policy or contract or application
or certificate or evidence of coverage, the policyholder or
certificateholder is not protected by an insurance guaranty fund or
other solvency protection arrangement.
TAX MATTERS
On the date of the initial delivery of the Bonds, McCall,
Parkhurst & Horton L.L.P., Dallas, Texas, Bond Counsel, will render
its opinion that, in accordance with statutes, regulations,
published rulings and court decisions existing on the date thereof,
(1) interest on the Bonds will be excludable from the "gross income"
of the holders thereof, except for any holder who is treated
pursuant to Section 103(b)(13) of the Internal Revenue Code of 1954
as a "substantial user" of the Facilities or a "related person" to
such user and (2) the Bonds will not be treated as "specified
private activity bonds" the interest on which would be included as
an alternative minimum tax preference item under Section 57(a)(5) of
the Code. Except as stated above, Bond Counsel will express no
opinion as to any other federal, state or local tax consequences of
the purchase, ownership or disposition of the Bonds. See Appendix C
- -- Form of Opinion of Bond Counsel.
In rendering its opinion, Bond Counsel will rely upon (a)
information furnished by the Company, and, particularly, written
representations of officers and agents of the Company with respect
to certain material facts that are solely within their knowledge
relating to the use of the proceeds of the Bonds and the Prior
Bonds, and the construction and use of the Facilities, and (b)
covenants of the Issuer and the Company with respect to arbitrage,
the application of the proceeds to be received from the issuance and
sale of the Bonds and the Prior Bonds and certain other matters.
Failure of the Issuer or the Company to comply with these
representations or covenants could cause the interest on the Bonds
to become includable in gross income retroactively to the date of
issuance of the Bonds.
The law upon which Bond Counsel has based its opinion is
subject to change by Congress and to subsequent judicial and
administrative interpretation by the courts and the Department of
the Treasury. There can be no assurance that such law or the
interpretation thereof will not be changed in a manner which would
adversely affect the tax treatment of the purchase, ownership or
disposition of the Bonds.
Federal Income Tax Accounting Treatment of Original Issue Discount
The initial public offering price of the Bonds stated on the
cover of this Official Statement (the "Original Issue Discount
Bonds") is less than the principal amount of the Bonds. The
difference between (i) the amount payable at maturity of each
Original Issue Discount Bond and (ii) the initial offering price to
the public of such Original Issue Discount Bond constitutes original
issue discount with respect to such Original Issue Discount Bond in
the hands of any owner who has purchased such Original Issue
Discount Bond in the initial public offering of the Bonds. Under
existing law, such initial owner is entitled to exclude from gross
income (as defined in section 61 of the Code) an amount of income
with respect to such Original Issue Discount Bond equal to that
portion of the amount of such original issue discount allocable to
the period that such Original Issue Discount Bond continues to be
owned by such owner. For a discussion of certain collateral federal
tax consequences, see the discussion set forth below.
In the event of the redemption, sale or other taxable
disposition of such Original Issue Discount Bond prior to stated
maturity, however, the amount realized by such owner in excess of
the basis of such Original Issue Discount Bond in the hands of such
owner (adjusted upward by the portion of the original issue discount
allocable to the period for which such Original Issue Discount Bond
was held by such initial owner) is includable in gross income.
Under existing law, the original issue discount on each
Original Issue Discount Bond is accrued daily to the stated maturity
thereof (in amounts calculated as described below for each six-month
period ending on the date before the semiannual anniversary dates of
the date of the Bonds and ratably within each such six-month period)
and the accrued amount is added to an initial owner's basis for such
Original Issue Discount Bond for purposes of determining the amount
of gain or loss recognized by such owner upon the redemption, sale
or other disposition thereof. The amount to be added to basis for
each accrual period is equal to (a) the sum of the issue price and
the amount of original issue discount accrued in prior period
multiplied by the yield to stated maturity (determined on the basis
of compounding at the close of each accrual period and properly
adjusted for the length of the accrual period) less (b) the amounts
payable as current interest during such accrual period on such
Original Issue Discount Bond.
The federal income tax consequences of the purchase, ownership,
redemption, sale or other disposition of Original Issue Discount
Bonds which are not purchased in the initial offering at the
original offering price may be determined according to rules which
differ from those described above. All owners of Original Issue
Discount Bonds should consult their own tax advisors with respect to
the determination for federal, state and local income tax purposes
of the treatment of interest accrued upon redemption, sale or other
disposition of such Original Issue Discount Bonds and with respect
to the federal, state, local and foreign tax consequences of the
purchase, ownership, redemption, sale or other disposition of such
Original Issue Discount Bonds.
Collateral Federal Income Tax Consequences
The following discussion is a summary of certain collateral
federal income tax consequences resulting from the purchase,
ownership or disposition of the Bonds. This discussion is based on
existing statutes, regulations, published rulings and court
decisions, all of which are subject to change or modification,
retroactively.
The following discussion is applicable to investors, other than
those who are subject to special provisions of the Code, such as
financial institutions, property and casualty insurance companies,
life insurance companies, individual recipients of Social Security
or Railroad Retirement benefits, certain S corporations with
Subchapter C earnings and profits, taxpayers claiming an earned
income tax credit and taxpayers who may be deemed to have incurred
or continued indebtedness to purchase tax-exempt obligations.
INVESTORS, INCLUDING THOSE WHO ARE SUBJECT TO SPECIAL
PROVISIONS OF THE CODE, SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO
THE TAX TREATMENT WHICH MAY BE ANTICIPATED TO RESULT FROM THE
PURCHASE, OWNERSHIP AND DISPOSITION OF TAX-EXEMPT OBLIGATIONS BEFORE
DETERMINING WHETHER TO PURCHASE THE BONDS.
Interest on the Bonds will be includable as an adjustment for
"adjusted earnings and profits" to calculate the alternative minimum
tax imposed on corporations by Section 55 of the Code. Section 55
of the Code imposes a tax equal to 20 percent of the taxpayer's
"alternative minimum taxable income" if the amount of such
alternative minimum tax is greater than the taxpayer's regular
income tax for the taxable year.
Interest on the Bonds is includable in the "alternative minimum
taxable income" of a corporation (other than a regulated investment
company or a real estate investment trust) for purposes of
determining the environmental tax imposed by Section 59A of the
Code. Section 59A of the Code imposes on a corporation an
environmental tax, in addition to any other income tax imposed by
the Code, equal to 0.12 percent of the excess of the modified
alternative minimum taxable income of such corporation for the
taxable year over $2,000,000.
Interest on the Bonds may be subject to the "branch profits
tax" imposed on the effectively-connected earnings and profits of a
foreign corporation doing business in the United States.
Under the Code, holders of tax-exempt obligations, such as the
Bonds, may be required to disclose interest received or accrued
during each taxable year on their returns of federal income
taxation.
Section 1276 of the Code provides for ordinary income tax
treatment of gain recognized upon the disposition of a tax-exempt
obligation, such as the Bonds, if such obligation was acquired at a
"market discount" and if the fixed maturity of such obligations is
equal to, or exceeds, one year from the date of issue. Such
treatment applies to "market discount bonds" to the extent such gain
does not exceed the accrued market discount of such bonds, although
for this purpose, a de minimis amount of market discount is ignored.
A "market discount bond" is one which is acquired by the holder at
a purchase price which is less than the stated redemption price at
maturity. The "accrued market discount" is the amount which bears
the same ratio to the market discount as the number of days during
which the holder holds the obligation bears to the number of days
between the acquisition date and the final maturity date.
State, Local and Foreign Taxes
Investors should consult their own tax advisors concerning the
tax implications of the purchase, ownership or disposition of the
Bonds under applicable state or local laws. Foreign investors
should also consult their own tax advisors regarding the tax
consequences unique to investors who are not United States persons.
LEGAL PROCEEDINGS
Legal matters incident to the authorization, issuance and sale
of the Bonds are subject to the unqualified approval of the Attorney
General of the State of Texas and of Bond Counsel. McCall,
Parkhurst & Horton L.L.P. has acted in the capacity as Bond Counsel
for the purpose of rendering an opinion with respect to the
authorization, issuance, delivery, legality and validity of the
Bonds and for the purpose of rendering an opinion on the exclusion
of the interest on the Bonds from gross income for federal income
tax purposes and certain other tax matters. Such firm has not been
requested to examine, and has not investigated or verified, any
statements, records, material or matters relating to the financial
condition or capabilities of the Company, and has not assumed
responsibility for the preparation of this Official Statement,
except that, in its capacity as Bond Counsel, such firm has reviewed
the information in this Official Statement under the captions "The
Issuer," "The Bonds," "The Agreement," "The Indenture" and "Tax
Matters." Certain legal matters are being passed upon for the
Issuer by the firm of Roberts, Hill & Calk, a Professional
Corporation, as counsel to the Issuer. McCall, Parkhurst & Horton
L.L.P. has not participated in the preparation of, or examined (and
they therefore will express no opinion on and assume no
responsibility for), the contents of this Official Statement, other
than as described above, and it has not considered it necessary to
do so in order to render its opinions.
Certain legal matters will be passed upon for the Company by
its counsel, Milbank, Tweed, Hadley & McCloy, New York, New York and
for the Underwriters by their counsel, Sidley & Austin, Chicago,
Illinois. Sidley & Austin has represented the Company, Central and
South West Corporation ("CSW"), a registered public utility holding
company under the Public Utility Holding Company Act of 1935 and
owner of all of the issued and outstanding common stock of the
Company, and other affiliates of CSW from time to time in connection
with certain legal matters.
UNDERWRITING
Goldman, Sachs & Co. and J.P. Morgan Securities Inc. (the
"Underwriters") have jointly and severally agreed to purchase the
Bonds at a price equal to 99.50% of the principal amount thereof
plus accrued interest from June 15, 1996 to the date of delivery.
Under the terms of the Bond Purchase Agreement dated June 25, 1996
between the Underwriters and the Issuer, the Underwriters have
agreed, subject to the approval of certain legal matters by counsel
and to certain other conditions, to purchase all of the Bonds if any
such Bonds are purchased. The Company has agreed to pay the
Underwriters a fee equal to .84% of the principal amount of the
Bonds. The Bonds may be offered and sold to certain dealers
(including dealers depositing such Bonds into investment accounts)
and others at prices lower than the public offering price set forth
on the cover page hereof. After such Bonds are released for sale to
the public, the offering price and other selling terms may from time
to time be varied by the Underwriters.
The Company has agreed to indemnify the Underwriters against or
to contribute toward certain liabilities, including liabilities
under federal securities laws.
CONTINUING DISCLOSURE
The Company has made certain undertakings to provide annual
financial statements of the Company (commencing with the fiscal year
of the Company ended December 31, 1996) and notice of certain
material events relating to the Bonds to each nationally recognized
municipal securities information repository or, in certain cases,
the Municipal Securities Rulemaking Board, and the appropriate state
information depository, if any, in each case to the extent required
by Rule 15c2-12 (the "Rule") promulgated by the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934,
as amended. The Company has made such covenants solely for the
purpose of enabling the Underwriters to comply with the Rule and
such covenants do not constitute an acknowledgement by the Company
of the validity of the Rule and are valid and binding only to the
extent that the Rule is valid. The Company expressly reserves the
right to contest the validity of all or any portion of the Rule,
including, without limitation, as a defense in any action. The
Company and its officers and directors shall have no liability in
respect of such covenants except to the extent required for such
covenants to satisfy the requirements imposed by the Rule.
MISCELLANEOUS
The foregoing summaries do not purport to be complete and are
expressly made subject to the exact provisions of the applicable
documents which are incorporated herein by reference. For details
of all terms and conditions with respect to the Bonds, reference is
made to the Indenture and the Agreement, copies of which may be
obtained from the Company and the Underwriters during the initial
offering period for the Bonds and thereafter from the Trustee.
Information concerning the Company is contained or incorporated by
reference in Appendix A to this Official Statement. All the
information contained under the heading "THE FACILITIES" has been
furnished by the Company, and the Issuer makes no representations as
to the accuracy or completeness of such information.
Under the Agreement, and otherwise, the Company is obligated to
make certain payments to the Issuer and has agreed to indemnify the
Issuer against certain liabilities, including liabilities under
federal securities laws.
The Issuer does not assume any responsibility for the matters
contained in this Official Statement, except for the matters
contained under the heading "THE ISSUER." All findings and
determinations by the Issuer relating to the issuance of the Bonds,
are, and have been, made by it for its own internal uses and
purposes in performing its duties under the laws of the State of
Texas.
APPENDIX A
SOUTHWESTERN ELECTRIC POWER COMPANY
The information contained in this Appendix to the Official Statement
has been obtained from Southwestern Electric Power Company.
THE COMPANY
The Company is a public utility engaged in generating,
purchasing, transmitting, distributing and selling electricity in
portions of northeastern Texas, northwestern Louisiana and western
Arkansas. It is a wholly-owned subsidiary of Central and South West
Corporation ("CSW"), a registered public utility holding company
under the Public Utility Holding Company Act of 1935.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), are incorporated
in this Official Statement by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
2. The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996.
3. The Company's Current Reports on Form 8-K dated April 19,
1996 and June 24, 1996.
All documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Official Statement and prior to the termination of this offering
shall be deemed to be incorporated by reference in this Appendix A
from their respective dates of filing.
The Company is subject to the informational requirements
of the 1934 Act and the Public Utility Holding Company Act of 1935
and, in accordance therewith, files reports and other information
with the Commission. Such reports and other information filed by
the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's Regional Offices at
Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661-2511 and 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material can also be obtained at
prescribed rates from the Public Reference Section of the Commission
at its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission maintains a Web site (http://www.sec.gov)
that contains reports, proxy and information statements and other
information regarding registrants who file electronically with the
Commission.
The Company hereby undertakes to provide without charge
to each person to whom a copy of this Official Statement has been
delivered, on the written or oral request of any such person, a copy
of any or all of the documents referred to above which have been or
may be incorporated in this Appendix by reference, other than
exhibits to such documents. Written requests should be directed to
Stephen D. Wise, Director, Finance, Central and South West
Corporation, 1616 Woodall Rogers Freeway, Dallas, Texas 75202, as
agent for the Company. The telephone number of CSW is (214) 777-
1000.
SUMMARY INFORMATION
Business. . . . . . . . . . . .. . Electric Utility
Service Area . . . . . . . . . . . Approximately 25,000 square
miles in northeastern Texas,
northwestern Louisiana and
western Arkansas
Population of Service Area . . . . Approximately 870,000
Customers. . . . . . . . . . . . . Approximately 409,000
Generating Fuels for 1995. . . . . Gas 20%; Coal 50%; Lignite 30%
SELECTED FINANCIAL INFORMATION
(in thousands, except percentages and ratios)
Twelve Months
Ended March 31, Year Ended December 31,
1996 1995 1994 1993
(Unaudited)
Income Summary:
Operating Revenues $868,346 $836,705 $825,296 $837,192
Operating Income 162,539 162,776 145,922 118,057
Net Income 116,356 117,114 105,712 81,876
Ratio of Earnings
to Fixed Charges* 3.81 3.80 3.70 3.27
______________________
*For computation of the foregoing ratios (i) earnings consist of
net income plus fixed charges, federal and state income taxes,
deferred income taxes and investment tax credits and (ii) fixed
charges consist of interest on long-term debt, other interest
charges, the interest component of leases and amortization of debt
discount, premium and expense.
Capitalization at
March 31, 1996
Capitalization Summary:
Common Equity . . . . . . . . . . . . . $686,982 51.5%
Preferred Stock . . . . . . . . . . . . 49,660 3.7
Long-term Debt. . . . . . . . . . . . . 598,697 44.8
Total Capitalization . . . . . . . . . . . . $1,335,339 $100.0%
CONSTRUCTION PROGRAM
The Company's capital expenditures for 1996-1998, including
allowance for funds used during construction ("AFUDC"), are
estimated at $98 million, $97 million and $105 million,
respectively. The Company anticipates that the majority of the
funds required for its 1996-1998 capital expenditure program will
be provided from internal sources. These estimates are subject to
change due to numerous factors, including load growth, escalation
of construction costs, changes in nuclear and environmental
regulation, delays from regulatory hearings, adequacy of rate
relief and the availability of necessary external capital.
EXPERTS
The audited financial statements and schedules of the Company
included in its Annual Report on Form 10-K for the year ended
December 31, 1995, which has been incorporated herein by
reference, have been examined by Arthur Andersen LLP, independent
public accountants, as indicated in their report dated February
28, 1996 with respect thereto, which has been incorporated herein
by reference, in reliance upon the authority of said firm as
experts in accounting and auditing in giving said report.
APPENDIX B
CERTAIN DEFINITIONS
CERTAIN DEFINITIONS
Certain capitalized terms used in the forepart of this
Official Statement and not defined therein have the meanings set
forth below:
Acts - shall mean, collectively, Chapter 30 of the Texas
Water Code, as amended, Chapter 383 of the Texas Health and Safety
Code, as amended, and Articles 8280-133 and Articles 717k and
717q, Vernon's Texas Civil Statutes, as amended.
Beneficial Owner - shall mean the actual purchaser of a Bond.
Bond Counsel - shall mean McCall, Parkhurst & Horton L.L.P.
or such other firm of attorneys of nationally recognized standing
in the field of law relating to municipal bond law and the
exemption from federal income taxation of interest on state or
local bonds, selected by the Issuer and acceptable to the Trustee
and the Company.
Bond Owner, Bondowner, Owner, owner, Bondholder, bondholder,
holder, Registered Owner or owner of the Bonds - when used with
respect to a Bond, shall mean the person or entity in whose name
such Bond shall be registered.
Bond Registrar - shall mean the Trustee or any successor bond
registrar serving as such under the Indenture.
Business Day - shall mean any day on which commercial banks
located in all of the cities in which the Principal offices of the
Trustee, the Paying Agent and the Remarketing Agent are located
are not required or authorized by law or regulation to remain
closed and on which the New York Stock Exchange is not closed.
Conversion Date - shall mean the date on which a new Mode
becomes effective with respect to a Bond, and with respect to a
Bond in the Multiannual Mode, the date on which a new Interest
Rate Period becomes effective.
The terms "substantial user" and "related person" shall have
the meanings given such terms in section 147(a) of the Code.
Favorable Opinion - shall mean an opinion of Bond Counsel
addressed to the Issuer, the Company and the Trustee to the effect
that the action proposed to be taken is authorized or permitted
by, to the extent applicable, the Acts and the Indenture and will
not adversely affect the excludability of interest on the Bonds
from gross income of the Owners thereof for federal income tax
purposes (other than as held by a "substantial user" of the
Facilities or a "related person" within the meaning of the Code).
Government Obligations - shall mean direct obligations of, or
obligations the timely payment of principal of and interest on
which is fully and unconditionally guaranteed by, the United
States of America.
Mode - shall mean the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily Mode,
the Flexible Mode, the Weekly Mode, the Monthly Mode, the
Quarterly Mode, the Semiannual Mode, the Multiannual Mode and the
Fixed Rate Mode.
Outstanding, Bonds Outstanding or Bonds then Outstanding -
shall mean when used with a reference to Bonds at any date as of
which the amount of Outstanding Bonds is to be determined, means
all Bonds authenticated and delivered under the Indenture, except:
(a) Bonds canceled or delivered for cancellation at or
prior to such date;
(b) Bonds deemed to be paid pursuant to the terms of the
Indenture;
(c) Bonds in lieu of which others have been authenticated
and delivered under the Indenture;
(d) Bonds registered in the name of the Issuer;
(e) On or after any Purchase Date for Bonds, all Bonds (or
portions of Bonds) which are tendered or deemed to have been
tendered for purchase on such date, provided that funds sufficient
for such purchase are on deposit with the Paying Agent; and
(f) For purposes of any consent, request, demand,
authorization, direction, notice, waiver or other action to be
taken by the holders of a specified percentage of outstanding
Bonds, all Bonds held by or for the account of the Issuer or the
Company, except that for purposes of any such consent, request,
demand, authorization, direction, notice, waiver or action the
Trustee shall be obligated to consider as not being outstanding
only Bonds known by the Trustee by actual notice thereof to be so
held.
Permitted Investments - shall mean any of the following
obligations or securities, to the extent permitted by law, on
which the Issuer is not the obligor:
(a) Government Obligations;
(b) money market funds registered under the Investment
Company Act of 1940, whose shares are registered under the
Securities Act of 1933, and having a rating by S&P of AAAm-G;
AAAm; or Aam; and
(c) obligations or securities approved in writing by the
Bond Insurer.
Purchase Date - shall mean the date upon which Bonds are
required to be purchased pursuant to a mandatory or optional
tender.
Purchase Price - shall mean, with respect to a Bond on a
Purchase Date, a price equal to par plus accrued interest to the
Purchase Date; provided that in the event that the Purchase Date
is an Interest Payment Date for such Bond and such Bond is not in
the Flexible Mode, accrued interest will be paid separately and
not as part of the Purchase Price on such date; and further
provided that in the event such Bond is in the Multiannual or
Fixed Rate Mode and is subject to mandatory tender on a date on
which the Bond is subject to optional redemption, the Purchase
Price shall include any premium that would be payable on the
Purchase Date if such Bond were redeemed on the Purchase Date.
Rating Agencies - shall mean Standard & Poor's Ratings
Services, a division of McGraw-Hill, Inc. and/or Moody's Investor
Service, Inc., according to which of such rating agencies then
rates the Bonds; and provided that if neither of such rating
agencies then rates the Bonds, the term "Rating Agencies" shall
refer to any national rating agency (if any), mutually acceptable
to the Company and the Remarketing Agent, and approved by the Bond
Insurer, which provides such rating.
APPENDIX C
FORM OF OPINION OF BOND COUNSEL
APPENDIX D
FORM OF MUNICIPAL BOND INSURANCE POLICY
<PAGE>
EXHIBIT 7(a)
July 31, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Southwestern Electric Power Company
Certificate of Notification to
Form U-1 Application-Declaration
(File No. 70-8847)
Dear Sirs:
We refer to the Form U-1 Application-Declaration (File No.
70-8847) (the "Application-Declaration") under the Public Utility
Holding Company Act of 1935, as amended (the "1935 Act"), and the
Certificate of Notification thereto, filed by Southwestern Electric
Power Company (the "Company"), a Delaware corporation and a wholly-
owned electric utility subsidiary of Central and South West
Corporation ("CSW"), a Delaware corporation and a registered holding
company under the 1935 Act. The Certificate of Notification relates
to the issue and sale by Sabine River Authority of Texas (the
"Authority") of $81,700,000 aggregate principal amount of its
Pollution Control Revenue Refunding Bonds (Southwestern Electric
Power Company Project) Series 1996, due April 1, 2018 (the "Bonds").
In connection with the issuance of the Bonds, the Company entered
into an Installment Payment Agreement (the "Installment Payment
Agreement") with the Authority which obligated the Company to pay
amounts designed to be sufficient to pay the principal of, premium,
if any, and interest on the Bonds. In connection with the
Application-Declaration and the Certificate of Notification, we have
acted as special counsel for the Company and, as such counsel, we
are familiar with the corporate proceedings taken by the Company in
connection with the issuance and sale of the Bonds as described in
the Application-Declaration and Certificate of Notification.
In rendering the opinions expressed below, we have
assumed, with respect to all of the documents referred to in this
opinion letter, that (except, to the extent set forth in the
opinions expressed below, as to the Company): (i) such documents
have been duly authorized by, have been duly executed and delivered
by, and constitute legal, valid, binding and enforceable obligations
of, all of the parties to such documents; (ii) all signatories to
such documents have been duly authorized; and (iii) all of the
parties to such documents are duly organized and validly existing
and have the power and authority (corporate or other) to execute,
deliver and perform such documents.
We have examined originals, or copies certified to our
satisfaction, of such corporate records of the Company, certificates
of public officials, certificates of officers and representatives of
the Company and other documents as we have deemed it necessary to
require as a basis for the opinions hereinafter expressed. In such
examination we have assumed the genuineness of all signatures and
the authenticity of all documents submitted to us as originals and
the conformity with the originals of all documents submitted to us
as copies. As to various questions of fact material to such
opinions we have, when relevant facts were not independently
established, relied upon certificates by officers of the Company and
other appropriate persons and statements contained in the
Application-Declaration and the Certificate of Notification.
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion that:
1. The Company is duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
2. All state laws applicable to the execution of the
Installment Payment Agreement by the Company have been complied
with.
3. The Installment Payment Agreement is a valid and
binding obligation of the Company enforceable in accordance
with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium or other similar laws of
general applicability relating to or affecting the enforcement
of creditors' rights generally and to the effects of general
principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law), including
without limitation (a) the possible unavailability of specific
performance, injunctive relief or any other equitable remedies
and (b) concepts of materiality, reasonableness, good faith and
fair dealing.
4. The consummation of the transactions as described in
the Application-Declaration and Certificate of Notification did
not violate the legal rights of the holders of any securities
issued by the Company or any associate company of the Company.
In rendering the opinions hereinabove expressed, we have
relied upon opinions of other counsel to the Company who are
qualified to practice in jurisdictions pertaining to the
transactions described above in which we are not admitted to
practice. We do not express any opinion as to matters governed by
any laws other than the Federal laws of the United States of
America, the laws of the State of New York and, to the extent
hereinabove stated, the laws of other jurisdictions pertaining to
the transactions described above in reliance upon said opinions of
counsel to the Company.
We hereby consent to the use of this opinion as an exhibit
to the Certificate of Notification.
Very truly yours,
