<PAGE>
File No. 70-8847
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO
FORM U-1 APPLICATION-DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
_________________________
SOUTHWESTERN ELECTRIC POWER COMPANY
428 Travis Street
Shreveport, Louisiana 71101
(Name of company filing this statement and address
of principal executive office)
_________________________
CENTRAL AND SOUTH WEST CORPORATION
(Name of top registered holding company parent)
_________________________
Shirley S. Briones, Treasurer
Southwestern Electric Power Company
428 Travis Street
Shreveport, Louisiana 71101
Wendy G. Hargus, Treasurer
Central and South West Corporation
1616 Woodall Rodgers Freeway
P.O. Box 660164
Dallas, Texas 75266-0164
Joris M. Hogan, Esq.
Milbank, Tweed, Hadley & McCloy
1 Chase Manhattan Plaza
New York, New York 10005
(Names and addresses of agents for service)
Southwestern Electric Power Company (the "Company"), a
Delaware corporation and a wholly-owned electric public
utility subsidiary of Central and South West Corporation
("CSW"), a Delaware corporation and a registered holding
company under the Public Utility Holding Company Act of 1935,
as amended (the "Act"), hereby amends its Form U-1
Application-Declaration in File No. 70-8847 for the purpose
of amending Item 1 and Item 6 in the following respects. In
all other respects, the Application-Declaration as previously
filed will remain the same.
Item 1. Description of Proposed Transaction.
The first paragraph of the section of Item 1 entitled
Managing Interest Rates is hereby amended and restated in
its entirety to read as follows:
The Company proposes to manage interest rate risk, as
appropriate, through the used of hedging products,
including interest rate swaps, forward swaps, caps,
collars and floors, and through forward transactions as
described under the heading Forward Underwritings
below. The Company may also use interest rate swaps
for the purpose of effectively lowering its interest
costs on Old Bonds and/or New Bonds. The Company
requests authority to enter into the foregoing types
of transactions from time to time in connection with
the Old Bonds or the New Bonds.
Item 6. Exhibits and Financial Statements.
Item 6 is hereby amended to file the following exhibits:
Exhibit 1 - Form of Installment Sale Agreement between
the Company and the Issuer.
Exhibit 2 - Form of Indenture of Trust between the
Issuer and the Trustee.
Exhibit 3 - Form of Bond Purchase Agreement between the
Issuer and the Underwriters.
Exhibit 4 - Form of Letter of Representation from the
Company to the Purchasers.
Exhibit 5 - Preliminary Official Statement relating to
the Bonds.
Exhibit 6 - Preliminary opinion of Milbank, Tweed,
Hadley & McCloy, counsel for the Company.
Exhibit 8 - Financial Statements per books and pro
forma as of December 31, 1995.
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: June 7, 1996
SOUTHWESTERN ELECTRIC POWER COMPANY
By:/s/SHIRLEY S. BRIONES
Shirley S. Briones
Treasurer
INDEX OF EXHIBITS
EXHIBIT TRANSMISSION
NUMBER EXHIBITS METHOD
- ------- -------- ------------
1 Form of Installment Sale Agreement between Electronic
the Company and the Issuer.
2 Form of Indenture of Trust between the Electronic
Issuer and the Trustee.
3 Form of Bond Purchase Agreement between Electronic
Issuer and the Underwriters.
4 Form of Letter of Representation from the Electronic
Company to the Purchasers.
5 Preliminary Official Statement relating Electronic
to the Bonds.
6 Preliminary opinion of Milbank, Tweed, Electronic
Hadley & McCloy, counsel for the Company.
8 Financial Statements per books and pro Electronic
forma as of December 31, 1995.
<PAGE>
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....................................
ARTICLE I
Definitions
Section 1.01. Definitions.......................................
ARTICLE II
Representations
Section 2.01. Representations by Issuer.........................
Section 2.02. Representations by Company........................
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............................
Section 3.05. Right to Discontinue Operation of Project.........
Section 3.06. Insurance and Condemnation Awards.................
Section 3.07. Taxation of Project...............................
Section 3.08. Issuer's Limited Liability........................
Section 3.09. Governmental Regulation...........................
ARTICLE IV
Issuance of Bonds; Refunding the Prior Bonds;
Payments; Disbursements
Section 4.01. Issuance of Bonds.................................
Section 4.02. Bond Proceeds.....................................
Section 4.03. Security for the Bonds............................
Section 4.04. Bond Funds........................................
Section 4.05. Company Required to Pay in Event Monies Held
Pursuant to the Prior Indenture are Insufficient..
ARTICLE V
The Company's Payments
Section 5.01. Company Approval of Issuance of the Bonds.........
Section 5.02. Refunding of Bonds................................
Section 5.03. Payment Upon Redemption of Bonds..................
Section 5.04. Installment Payments..............................
Section 5.05. Payments to Issuer................................
Section 5.06. Issuer's Rights Assigned to Trustee...............
Section 5.07. Payments to Trustee...............................
Section 5.08. Payment to Remarketing Agent......................
Section 5.09. Company Option to Designate Interest Rate
Determination Methods.............................
Section 5.10. Purchase of Bonds.................................
Section 5.11. Usury.............................................
ARTICLE VI
Defaults and Remedies
Section 6.01. Events of Default.................................
Section 6.02. Remedies of Default...............................
Section 6.03. Agreement to Pay Attorneys' Fees and Expenses.....
ARTICLE VII
Special Covenants
Section 7.01. No Defense or Set-Off; Unconditional Obligation...
Section 7.02. Corporate Existence...............................
Section 7.03. Indemnities.......................................
Section 7.04. Tax-Exempt Status of the Bonds....................
Section 7.05. Arbitrage Covenants...............................
Section 7.06. Payment to Rebate Fund............................
Section 7.07. Qualification in Texas............................
Section 7.08. Recordation.......................................
Section 7.09. No Personal Liability.............................
Section 7.10 Compliance with Rule 15c2-12......................
ARTICLE VII
General Provisions
Section 8.01. General Provisions................................
Section 8.02. Intentionally Omitted.............................
Section 8.03. Amendment of Agreement............................
Section 8.04. Assignment........................................
Section 8.05. Term of Agreement.................................
Section 8.06. Notices...........................................
Section 8.07. Severability......................................
Section 8.08. Execution of Counterparts.........................
Section 8.09. Governing Law.....................................
Execution
Exhibit A A-1
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 hereunder
in lieu of its obligations under the Prior Agreement; and
(i) This Agreement is authorized and executed pursuant
to applicable laws, including the Acts; and
(j) The Issuer and the Company have taken all action
and have complied with all provisions of law with respect to the
execution, delivery and performance of this Agreement and the due
authorization of the consummation of the transactions contemplated
hereby.
NOW, THEREFORE, in consideration of the covenants and
agreements herein made, and subject to the conditions herein set
forth, the Issuer and the Company contract and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. CAPITALIZED TERMS USED BUT NOT
OTHERWISE DEFINED HEREIN SHALL HAVE THE MEANINGS ASSIGNED TO SUCH
TERMS IN THE INDENTURE OF TRUST DATED AS OF 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, authorizations 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 maintenance of the Project, or the performance of the
Project for its designed purposes.
Section 3.05. RIGHT TO DISCONTINUE OPERATION OF PROJECT.
Although the Company intends to operate, or cause to be operated,
the Project for its designed purposes until the date on which no
Bonds are Outstanding, the Company is not required by this
Agreement to operate, or cause to be operated, any portion of the
Project after the Company shall deem in its discretion that such
continued operation is not advisable and in such event it is not
prohibited by this Agreement from selling, leasing or retiring all
or any such portion of the Project; provided, however, that, prior
to any such sale, lease, or retirement, the Company shall have
provided to the Issuer and the Trustee a Favorable Opinion. The
net proceeds from such sale, lease or other disposition, if any,
shall belong to, and may be used for any lawful purpose by, the
Company.
Section 3.06. INSURANCE AND CONDEMNATION AWARDS. The net
proceeds of any insurance or condemnation award as a result of the
destruction or condemnation of the Project or any portion thereof
shall belong to, and may be used for any lawful purpose by, the
Company.
Section 3.07. TAXATION OF PROJECT. During the term of this
Agreement, the Company will promptly remit when due all taxes,
including specifically all sales taxes and ad valorem taxes,
levied in respect of the Project or the Installment Payments
payable hereunder to the appropriate taxing body. The Company
may, at its own expense and in its own name, in good faith contest
any such taxes, assessments and other charges and, in the event of
such contest, may permit the taxes, assessments or other charges
so contested to remain unpaid during the period of such contest
and any appeal therefrom. All taxes, assessments and other
charges levied or imposed with respect to the Project shall be the
obligation of the Company, and the Issuer shall have no obligation
or liability in this regard.
Section 3.08. ISSUER'S LIMITED LIABILITY. It is recognized
that the Issuer's only source of funds with which to carry out its
commitments under this Agreement will be from the proceeds from
the sale of the Bonds or from any available income or earnings
derived therefrom, from payment made or caused to be made by the
Company hereunder, or from any funds which otherwise might be made
available by the Company; and it is expressly agreed that the
Issuer shall have no financial liability, obligation, or
responsibility with respect to this Agreement or the Project
except to the extent of funds available from such sources.
Section 3.09. GOVERNMENTAL REGULATION. The Company
recognizes and agrees that this Agreement and the issuance of the
Bonds pursuant hereto will not diminish or limit the authority of
the United States Environmental Protection Agency, the Texas
Natural Resources Conservation Commission, the Texas Water
Development Board, or any other State agency or local governments
in performing any of the powers, functions and duties vested in
such entities by federal and state laws, and that all applicable
laws shall be enforced without regard to ownership of the Project;
and that the Company will not be relieved of any responsibility
under any applicable federal or state laws or regulations
pertaining to pollution control, either now, or during, or after
the acquisition, construction and improvement of the Project, and
the Issuer shall have no responsibility or obligation to take any
action to comply with such laws or regulations with respect to the
Project.
ARTICLE IV
ISSUANCE OF BONDS; REFUNDING THE PRIOR BONDS;
PAYMENTS; DISBURSEMENTS
Section 4.01. ISSUANCE OF BONDS. In order to provide funds
for the refunding of the Prior Bonds, the Issuer, concurrently
with the execution of this Agreement, will sell, issue and deliver
to the initial purchasers thereof the Bonds, all in accordance
with the Indenture. The Issuer agrees to pay, from the proceeds
from the sale and delivery of the Bonds, or from any available
income or earnings derived therefrom, or from any funds which
otherwise might be made available to the Issuer for such purpose
by the Company, the cost of the Refunding of the Prior Bonds, to
the full extent provided in this Agreement and permitted by the
Acts.
Section 4.02. BOND PROCEEDS. (a) The Issuer shall cause to
be deposited into a separate account within the bond fund
established pursuant to the Prior Indenture proceeds from the sale
of the Bonds equal to $81,700,000, and the Company shall cause to
be deposited into such separate account the amount of
$_______________, which together shall be sufficient to pay the
redemption price of and redeem all of the Prior Bonds on
___________, 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.
ARTICLE V
THE COMPANY'S PAYMENTS
Section 5.01. COMPANY APPROVAL OF ISSUANCE OF BONDS. (a)
Simultaneously with the authorization of this Agreement by the
Board of Directors of the Issuer, such Board has adopted the Bond
Resolution. In consideration of the covenants and agreements set
forth in this Agreement, and to enable the Issuer to issue the
Bonds to carry out the intents and purposes hereof, this Agreement
is executed to assure the issuance of such Bonds, and to provide
for the due and punctual payment by the Company to the Issuer, or
to the Trustee under the Indenture, of amounts not less than those
required to pay, as and when due (whether at stated maturity, upon
redemption, acceleration of maturity, tender, deemed tender, or
otherwise), all of the principal of, redemption premium, if any,
and interest on, and Purchase Price of, the Bonds, and all other
payments required in connection with such Bonds, the Agreement, or
the Indenture. Each such payment is hereby designated as an
"Installment Payment", and collectively such payments are hereby
designated as "Installment Payments". The Company hereby agrees
to make, or cause to be made, each Installment Payment, as and
when due, for the benefit of the owners of the Bonds into the Bond
Fund, or, in the case of an Installment Payment in respect of
Purchase Price, into the Bond Purchase Fund, all as provided in
the Indenture.
(b) By execution and delivery of this Agreement, the
Company hereby approves the Bond Resolution and the Indenture. It
is hereby agreed that the foregoing approval of the Bond Reso-
lution and the Indenture constitutes the acknowledgement and
agreement of the Company that the Bonds, when issued, sold, and
delivered as provided in the Bond Resolution and the Indenture,
will be issued in accordance with and in compliance with this
Agreement, notwithstanding any other provisions of this Agreement
or any other contract or agreement to the contrary. Any
Bondholder is entitled to rely fully and unconditionally on the
foregoing approval. Notwithstanding any provisions of this
Agreement or any other contract or agreement to the contrary, the
Company's approval of the Bond Resolution and the Indenture shall
be the Company's agreement that all covenants and provisions in
this Agreement and the Indenture affecting the Company shall, upon
the delivery of the Bonds and the Indenture, become unconditional,
valid, and binding covenants and obligations of the Company so
long as the Bonds and the interest thereon are outstanding and
unpaid. Particularly, the obligation of the Company to make,
promptly when due, all Installment Payments specified in this
Agreement and the Indenture shall be absolute and unconditional,
and said obligation may be enforced as provided in this Agreement
and the Indenture.
Section 5.02. REFUNDING OF BONDS. After the issuance of
any Bonds, the Issuer shall not refund any of the Bonds or change
or modify the Bonds in any way, except as provided for in the
Indenture, without the prior written approval of the Authorized
Company Representative; nor shall the Issuer redeem any Bonds
prior to their scheduled maturities except upon the request of the
Authorized Company Representative, unless such redemption is
required by the Indenture.
Section 5.03. PAYMENT UPON REDEMPTION OF BONDS. The
Issuer, upon the written request of the Company (and provided that
the affected Bonds are subject to redemption or prepayment prior
to maturity at the option of the Issuer, or the Company, and
provided that such request is received in sufficient time prior to
the date upon which such redemption or prepayment is proposed),
forthwith shall take or cause to be taken all action that may be
necessary under the applicable redemption provisions of the
Indenture to effect such redemption prior to maturity, to the full
extent of funds either made available for such purpose by the
Company or already on deposit under the Indenture and available
for such purpose. The redemption of any outstanding Bonds prior
to maturity at any time shall not relieve the Company of its
absolute and unconditional obligation to pay each remaining
Installment Payment with respect to any Outstanding Bonds, as
specified in the Indenture. If a redemption of Bonds is required
pursuant to the provisions of the Indenture, the Company agrees as
provided herein to forthwith make Installment Payments sufficient
to pay the principal of, premium, if any, and interest on the
Bonds.
Section 5.04. INSTALLMENT PAYMENTS. Payment of all
Installment Payments shall be made and deposited so as to fund
payment on the Bonds as required by the Indenture, including all
such payments which may come due because of the acceleration of
the maturity or maturities of the Bonds upon default, call for
redemption, purchase or deemed purchase, or otherwise, under the
provisions of the Indenture. If any available funds in excess of
current requirements are held on deposit in the Bond Fund or the
Bond Purchase Fund, as the case may be, at the time payment of any
Installment Payment is due, such payment of Installment Payment
shall be reduced by the amount of the available funds so held on
deposit, to the benefit of the Company. The Installment Payments,
together with available funds held on deposit in the Bond Fund or
the Bond Purchase Fund, as the case may be, except funds held
therein for payment of matured installments of principal on the
Bonds or interest payable thereon, shall be sufficient to pay when
due all principal of, redemption premium, if any, and interest on,
and Purchase Price of, the Bonds. The Company shall have the
right to prepay or cause to be prepaid all or a portion of each
Installment Payment at any time, and shall be obligated to do so
in a timely manner if and to the extent the Company requests
redemption or prepayment of the Bonds. Any such prepayment by the
Company shall not relieve it of liability for each remaining
Installment Payment with respect to the Outstanding Bonds except
as provided in this Agreement and the Indenture. In the event the
Company should fail to make any of the payments required in this
Section 5.04, the amount so in default shall continue as an
obligation of the Company until such amount in default shall have
been fully paid. If the amount on deposit in any fund is
insufficient on any Interest Payment Date, redemption date or
Purchase Date to make the payment due on such date, the Company
shall deposit sufficient moneys in such fund to enable such
payment to be made on such date.
Section 5.05. PAYMENTS TO ISSUER. Out of 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 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. Also
the Company agrees to pay directly to the Issuer on June 15 of
each year while any of the Bonds are outstanding, an amount
sufficient to pay and reimburse the Issuer for its annual
administrative and overhead expenses directly attributable and
chargeable to the administration of the Bonds during the prior
twelve month period. The amount to be paid by the Company to the
Issuer hereunder on each June 15 shall be the greater of the
following two amounts: (i) the actual costs reasonably and
necessarily incurred by the Issuer during the prior twelve month
period as set forth in a bill or statement submitted by the Issuer
to the Company prior to said June 15, or (ii) an amount of money
equal to $100.00 for each $1,000,000, or part thereof, of
principal amount of the Bonds which are outstanding and unpaid as
of the June 14 prior to said June 15 (the "alternate fee"). If
the Company shall have not received a bill or statement on or
before June 15 for the Issuer's actual costs incurred during the
prior twelve month period, the Company shall pay the alternate fee
on said June 15. Although the amounts payable to the Issuer
hereunder are due on June 15 of each year, the Company shall not
be in default in the payment of such amounts so long as they are
paid to the Issuer within thirty days of their due date.
Section 5.06. ISSUER'S RIGHTS ASSIGNED TO TRUSTEE. The
Company is advised and recognizes that as security for the payment
of the Bonds, the Issuer will assign to the Trustee the Issuer's
rights under this Agreement, including the right to receive
payments hereunder (except the right to receive payments, if any,
under Section 5.05, 6.03, and 7.03 hereof), and hereby directs the
Company to make said payments directly to the Trustee. The
Company herewith assents to such assignment and will make such
payments directly to the Trustee without defense or set-off by
reason of any dispute between the Company and the Issuer or the
Trustee. All rights against the Company arising under this
Agreement or the Bond Resolution or Indenture and assigned to the
Trustee under the Indenture may be enforced by the Trustee, or the
owners of the Bonds, to the extent provided in the Indenture, and
the Trustee, or the owners of the Bonds, shall be entitled to
bring any suit, action, or proceeding against the Company, to the
extent provided in the Bond Resolution or Indenture, for the
enforcement of this Agreement, and it shall not be necessary in
any such suit, action, or proceeding to make the Issuer a party
thereto.
Section 5.07. PAYMENTS TO TRUSTEE. The Company agrees to
pay (1) the initial acceptance fee of the Trustee and reasonable
costs and expenses, including reasonable attorneys fees, incurred
by the Trustee in entering into and executing the Indenture and
the issuance of the Bonds and (2) until the principal of, premium,
if any, and interest on the Bonds shall have been fully paid or
provision for the payment thereof shall have been made in
accordance with the provisions of the Indenture, (i) the
reasonable annual fee of the Trustee for the ordinary services of
the Trustee, as trustee, rendered and its reasonable ordinary
expenses incurred under the Indenture, including reasonable
attorneys fees, as and when the same become due, (ii) the
reasonable fees, charges and expenses of the Trustee, as Bond
Registrar and as Paying Agent, and any other Bond Registrar or
Paying Agent on the Bonds, as and when the same become due, (iii)
the reasonable fees, charges and expenses of the Trustee for the
necessary extraordinary services rendered by it and extraordinary
expenses incurred by it under the Indenture or this Agreement, as
and when the same become due, including reasonable attorneys fees;
provided, that the Company may, without creating a default
hereunder, contest in good faith the necessity for any such
extraordinary services and extraordinary expenses and the
reasonableness of any such fees, charges, or expenses, and (iv)
the cost of printing any Bonds required to be furnished by the
Issuer. In the event the Company should fail to make any of the
payments required in this Section 5.07, the item or installments
so in default shall continue as an obligation of the Company until
the amount in default shall have been fully paid.
Section 5.08. PAYMENT TO REMARKETING AGENT. The Company
agrees to pay to the Remarketing Agent the reasonable fees, costs
and expenses set forth in the Remarketing Agreement.
Section 5.09. COMPANY OPTION TO DESIGNATE INTEREST RATE
DETERMINATION METHODS. The Company is hereby granted the option
to designate from time to time changes in interest rate
determination methods in the manner and to the extent set forth in
Section 2.02 of the Indenture. In the event the Company elects to
exercise any such option, the Company agrees that it shall cause
notices of changes in interest rate determination methods to be
given to the Issuer, the Trustee, the Paying Agent, and the
Remarketing Agent in accordance with Section 2.02 of the
Indenture.
Section 5.10. PURCHASE OF BONDS. (a) In consideration of
the issuance of the Bonds by the Issuer, but for the benefit of
the owners of the Bonds, the Company has agreed, and does hereby
covenant, to cause the necessary arrangements to be made and to be
thereafter continued whereby owners from time to time of the Bonds
may deliver Bonds for purchase and whereby such Bonds shall be so
purchased. In furtherance of the foregoing covenant of the
Company, the Issuer, at the direction of the Company, has set
forth in Section 2.10 of the Indenture the terms and conditions
relating to the delivery of Bonds by the registered holders
thereof to the Remarketing Agent for purchase and has set forth in
the Indenture or the Remarketing Agreement the duties and
responsibilities of the Remarketing Agent with respect to the
purchase and remarketing of Bonds. The Company hereby authorizes
and directs the Remarketing Agent to purchase, offer, sell, and
deliver Bonds in accordance with the provisions of Section 2.10 of
the Indenture.
Without limiting the generality of the foregoing covenant
of the Company or the other provisions of this Article V, the
Company covenants, for the benefit of the owners of the Bonds, to
pay, or cause to be paid, to the Trustee such amounts as shall be
necessary to enable the Trustee to pay the Purchase Price of the
Bonds delivered to it for purchase or deemed delivered for
purchase, all as more particularly described in the Indenture;
provided, however, that the obligation of the Company to make, or
cause to be made, any such payment hereunder shall be reduced to
the extent that funds are received by the Trustee or the Paying
Agent from the remarketing of the Bonds by the Remarketing Agent
or, in the event sufficient funds are not available from such
remarketing, from the Company.
(b) The Issuer shall have no obligation or
responsibility, financial or otherwise, with respect to the
purchase of Bonds or the making or continuation of arrangements
therefor other than as expressly set forth in subsection (a) of
this Section 5.10, except that the Issuer shall generally
cooperate with the Company and the Remarketing Agent as
contemplated by the Indenture.
Section 5.11. USURY. Anything herein to the contrary
notwithstanding, it is the intention of the parties hereto to
conform strictly to the usury laws in force that are applicable to
this transaction. Accordingly, all agreements among the parties
hereto and beneficiaries hereof and their assigns or any of them,
whether now existing or hereafter arising, and whether written or
oral, are hereby limited so that in no contingency, whether by
reason of acceleration of amounts due hereunder or any part
thereof or otherwise, shall the interest (including all sums that
are deemed to be interest) contracted for, charged or received
hereunder and/or with respect to the refinancing of the Project
exceed the maximum amount permissible under applicable law. The
parties hereto agree that to the extent interest is payable by the
Company under this Agreement, Article 5069-1.04, Vernon's Texas
Civil Statutes, as amended, shall apply, and, to the extent
Article 5069-1.04 is applicable to this Agreement, the indicated
rate ceiling thereunder shall apply.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. EVENTS OF DEFAULT. The occurrence and
continuation of any one of the following shall constitute an
"Event of Default" under this Agreement (an "Event of Default"):
(a)failure by the Company to pay Installment
Payments with respect to principal of or premium on any
Bond at the times specified therein; or
(b)failure by the Company to pay Installment
Payments with respect to interest on any Bond at the times
specified therein and (i) if such Bond bears interest at a
Flexible, Daily, Weekly, Monthly, Quarterly or Semiannual
Rate, the continuation of such failure for a period of one
Business Day or more or (ii) if such Bond bears interest
at a Multiannual or Fixed Rate, the continuation of such
failure for a period of sixty days or more; or
(c)failure by the Company to pay Installment
Payments with respect to the Purchase Price of any Bond at
the times specified therein and the continuation of such
failure for a period of one Business Day or more; or
(d)failure by the Company to observe and perform
any covenant, condition or agreement on its part required
to be observed or performed in this Agreement, other than
as referred to in (a), (b) or (c) above, for a period of
90 days after receipt by the Company of written notice
specifying such failure and requesting that it be
remedied, given to the Company by the Issuer or the
Trustee, unless the Issuer and the Trustee shall agree in
writing to an extension of such time prior to its
expiration; provided, however, that if the failure stated
in the notice can, in the reasonable judgment of the
Company, be corrected, but cannot be corrected within the
applicable period, the Issuer and the Trustee will not
unreasonably withhold their consent to an extension of
such time if corrective action is instituted within the
applicable period and diligently pursued until the default
is corrected; or
(e)dissolution or liquidation of the Company. How-
ever, the term "dissolution or liquidation of the
Company", as used in this paragraph, shall not be
construed to include the cessation of the corporate
existence of the Company resulting either from a merger or
consolidation of the Company into or with another 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, custodian, or other similar
official of it or any substantial part of its property, or
shall consent to any such relief or to the appointment of
or taking possession by any such official in an
involuntary case or other proceeding commenced against it,
or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as
they become due, or shall take any corporate action to
authorize any of the foregoing; or
(g)an involuntary case or other proceeding shall be
commenced against the Company seeking liquidation,
reorganization, or other relief with respect to it or its
debts under any bankruptcy, insolvency, or other similar
law now or hereafter in effect or seeking the appointment
of a trustee, receiver, liquidator, 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;
landslides; lightning; earthquakes; tidal waves; fires; hurri-
canes; tornadoes; blue northers; other storms; floods; washouts;
droughts; arrests; restraints of government and people; civil
disturbances; explosions; breakage or accident to machinery,
transmission pipes, transmission facilities or canals; partial or
entire failure of utilities; shortages of labor, material,
supplies or transportation; or any other cause or event not
reasonably within the control of the Company (collectively,
"events of force majeure"), the Company is unable in whole or in
part to carry out the agreements on the Company's part herein
contained, the Company shall not be deemed in default during the
continuance of such inability. The Company, however, will use its
best efforts to remedy with all reasonable dispatch the cause or
causes preventing the Company from carrying out such agreements;
provided, that the settlement of strikes, lockouts and other
industrial disturbances shall be entirely within the discretion of
the Company, and the Company shall not be required to make
settlement of strikes, lockouts, and other industrial disturbances
by acceding to the demands of the opposing party or parties when
such course is, in the judgment of the Company, unfavorable to the
Company. The occurrence of any event of force majeure shall not
suspend or otherwise abate, and the Company shall not be relieved
from, any obligation under this Agreement to the extent that the
failure of the Company to observe or perform any such obligation
would result in the failure to pay when due the principal of,
premium, if any, and interest on the Bonds or would result in the
interest on any Bonds becoming includable in the gross income of
the owners thereof for federal income tax purposes.
The above provisions, however, are subject to the
condition that, after any such Event of Default, subject to and as
provided in Article VI of the Indenture, the Trustee may waive
such Event of Default and rescind and annul any remedial step
theretofore taken by it or by the Issuer with respect to such
default and its consequences; but no such waiver, rescission or
annulment shall extend to or affect any subsequent default or
impair any right or remedy consequent thereon.
Section 6.02. REMEDIES ON DEFAULT. Whenever any Event of
Default shall have occurred and is continuing, the Issuer, with
the consent of the Trustee, or the Trustee may take any one or
more of the following remedial steps, but only if acceleration of
the principal amount of the Bonds has been declared pursuant to
Section 6.02 of the Indenture:
(a)By notice in writing to the Company, declare the
unpaid Installment Payments to be due and payable
immediately, if concurrently with or prior to such notice
the unpaid principal amount of the Bonds has been declared
to be due and payable under the Indenture, and upon any
such declaration the amounts payable under Sections 5.01
and 5.04 hereof shall become and shall be immediately due
and payable in the amount set forth in Section 6.02 of the
Indenture; provided, however, that an Event of Default
shall be deemed waived and a declaration accelerating
payment of unpaid Installment Payments payable under this
Agreement shall be deemed rescinded without further action
on the part of the Trustee or the Issuer upon any
rescission by the Trustee of the corresponding declaration
of acceleration of the Bonds under Section 6.02 of the
Indenture.
(b)Whatever action at law or in equity may appear
necessary or desirable to collect the payment and other
amounts then due or to enforce performance and observance
of any obligation, agreement or covenant of the Company
under this Agreement.
In case the Issuer, with the consent of the Trustee, or
the Trustee shall have proceeded to enforce its rights under this
Agreement and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely
to the Issuer and/or the Trustee, then and in every such case the
Issuer, the Company and the Trustee shall be restored respectively
to their several positions and rights hereunder, and all rights,
remedies and powers of the Issuer, the Company and the Trustee
shall continue as though no such proceeding had been taken.
The Company covenants that, in case an Event of Default
shall occur with respect to the payment of any Installment Payment
payable under Sections 5.01 and 5.04 hereof, then, upon demand of
the Trustee, the Company will pay to the Trustee the whole amount
that then shall have become due and payable under said Sections
5.01 and 5.04, with interest (to the extent permitted by law) on
such amount at the rate of interest borne by the Bonds at the time
of such failure from the due date thereof until paid.
In case the Company shall fail forthwith to pay such
amounts upon such demand, the Trustee shall be entitled and
empowered to institute any action or proceeding at law or in
equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against
the Company and collect in the manner provided by law out of the
property of the Company, the moneys adjudged or decreed to be
payable.
The remedies for any "Event of Default" under the
Indenture shall be as specified in Article VI of the Indenture and
are in addition to any remedies hereunder.
In acting or omitting to act pursuant to the provisions of
this Agreement, the Trustee shall be entitled to all of the
rights, protections and immunities accorded to the Trustee under
the terms of the Indenture, including but not limited to those set
out in Article VII thereof.
Section 6.03. AGREEMENT TO PAY ATTORNEYS' FEES AND
EXPENSES. In the event the Company defaults under any of the
provisions of this Agreement and the Issuer or the Trustee employs
attorneys or incurs other expenses for the collection of the
payments due under this Agreement or the enforcement of
performance or observance of any obligation or agreement on the
part of the Company herein contained, the Company agrees that it
will on demand therefor, and upon presentation of an itemized
bill, pay to the Issuer or the Trustee the reasonable fees of such
attorneys and such other expenses so incurred by the Issuer or the
Trustee; provided, however, the Company, without creating a
default hereunder or under the Indenture, may contest in good
faith the necessity for and the reasonableness of any such fees
and expenses of the Trustee.
ARTICLE VII
SPECIAL COVENANTS
Section 7.01. NO DEFENSE OR SET-OFF; UNCONDITIONAL
OBLIGATION. The obligations of the Company to make the payments
required by this Agreement and to perform and observe the other
agreements on its part contained herein shall be absolute and
unconditional, irrespective of any defense or any rights of set-
off, recoupment or counterclaim it might otherwise have against
the Issuer or any other person, and the Company shall pay during
the term of this Agreement the payments to be made as prescribed
in Sections 5.01, 5.03, 5.04, 5.05 or 5.10 and all other payments
required hereunder free of any deductions and without abatement,
diminution or set-off; and until such time as the principal of,
premium, if any, and interest on the Bonds shall have been fully
paid, or provision for the payment thereof shall have been made in
accordance with the Indenture, the Company: (i) will not suspend
or discontinue any payments provided for in Sections 5.01, 5.03,
5.04, 5.05 or 5.10 hereof; (ii) will perform and observe all of
its other agreements contained in this Agreement; and (iii) except
as permitted herein, will not terminate this Agreement for any
cause, including, without limiting the generality of the
foregoing, failure of the Company to use the Project, destruction
of or damage to the Project, commercial frustration of purpose,
any change in the tax laws of the United States of America or of
the State or any political subdivision of either of these, or any
failure of the Issuer or the Trustee to perform and observe any
agreement, whether express or implied, or any duty, liability or
obligation arising out of or connected with this Agreement or the
Indenture, except to the extent permitted by this Agreement.
Nothing contained in this Section shall be construed to relieve
the Issuer or the Trustee from the performance of any agreements
on their respective parts contained herein and the Company shall
be entitled to institute such action against the Issuer or the
Trustee as the Company shall deem appropriate to compel
performance of any such agreement, duty or obligation; provided,
however, that the Issuer shall not be required to carry out any
such agreement, duty or obligation unless it is reimbursed for its
costs and expenses and no agreement, duty or obligation of the
Issuer shall arise out of this Agreement other than as
specifically set forth herein.
Section 7.02. CORPORATE EXISTENCE. The Company agrees that
it will not dispose of all or substantially all of its assets as
an entirety (whether by liquidation, dissolution, or otherwise)
and will not consolidate with or merge into another corporation,
or permit one or more corporations to consolidate with or merge
into it, unless the resulting, surviving, or transferee corpora-
tion, 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 deliv-
ery of such instrument, the Company shall thereupon be relieved of
any further obligation or liability under this Agreement or with
respect to the Bonds; and the resulting, surviving, or transferee
corporation, as the case may be, shall succeed to and be
substituted for the Company under this Agreement with the same
effect as if such resulting or surviving corporation or transferee
had been named herein as the Company. If consolidation, merger,
or sale, or other transfer is made as provided in this Section
7.02, the provisions of this Section 7.02 shall continue in full
force and effect and no further consolidation, merger, or sale or
other transfer shall be made except in compliance with the
provisions of this Section 7.02.
Section 7.03. INDEMNITIES. The Company releases the
Issuer, its officers, directors, employees, agents, and attorneys
(collectively, the "Indemnified Parties") from, and the
Indemnified Parties shall not be liable for, and the Company
agrees, and shall be liable to protect, indemnify, defend, and
hold the Indemnified Parties harmless from any and all liability,
cost, expense, damage, or loss of whatever nature (including, but
not limited to, attorneys' fees, litigation and court costs,
amounts paid in settlement, and amounts paid to discharge
judgments) directly or indirectly resulting from, arising out of,
in connection with, or related to (i) the issuance, offering, sale
or delivery of the Bonds, the Indenture, this Agreement, and the
obligations imposed on Issuer hereby and thereby; or the design,
construction, installation, operation, use, occupancy,
maintenance, or ownership of the Project; (ii) any written
statements or representations made or given by the Company, or any
of its officers or employees, to the Indemnified Parties, the
Trustee, or any underwriters or purchasers of any of the Bonds,
with respect to the Issuer, the Company, the Project, or the
Bonds, including, but not limited to, statements or
representations of facts, financial information, or corporate
affairs; (iii) damage to property or any injury to or death of any
person that may be occasioned by any cause whatsoever pertaining
to the Project; and (iv) any loss or damage incurred by the Issuer
as a result of violation by the Company of the provisions of the
Prior Agreement or Section 7.04 or 7.05 hereof. The provisions
of the preceding sentence shall remain and be in full force and
effect even if any such liability, cost, expense, damage, or loss
or claim therefor by any person, directly or indirectly results
from, arises out of, or relates to or is asserted to have resulted
from, arisen out of, or related to, in whole or in part, one or
more negligent acts or omissions of the Issuer or its officers,
directors, employees, agents, servants, or any other party acting
for or on behalf of the Issuer in connection with the matters set
forth in clauses (i) through (iv) of said sentence.
Section 7.04. TAX-EXEMPT STATUS OF THE BONDS. It is the
intention of the Company and the Issuer that the interest on the
Bonds be excludable from the gross income of the holders thereof
for federal income tax purposes, except for any Bond for any
period that such Bond is owned by a person who is a "substantial
user" of the Project or a "related person" within the meaning of
Section 103(b)(13) of the Internal Revenue Code of 1954 (the "1954
Code"). To that end, the Company and the Issuer (to the extent
reasonably within the control of the Issuer) covenant with each
other, and with the Trustee for the benefit of the Bondholders, to
refrain from any action which would adversely affect, and to take
such action to assure, the treatment of the Bonds as obligations
described in Section 103 (a) of the Code, the interest on which is
not includable in the "gross income" of the holder (other than the
income of a "substantial user" of the 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 give to such terms in section 148 of
the Code and the Regulations promulgated pursuant to such section.
It is the understanding of the Issuer and the Company that
the covenants contained herein are intended to assure compliance
with the Code and any regulations or rulings promulgated by the
United States Department of the Treasury pursuant thereto. In the
event that regulations or rulings are hereafter promulgated which
modify or expand provisions of the Code, as applicable to the
Bonds, the Issuer and the Company will not be required to comply
with any covenant contained herein to the extent that such failure
to comply, in the opinion of Bond Counsel delivered to the Issuer,
the Company, and the Trustee, will not adversely affect the
exclusion of interest on the Bonds from the gross income of the
owners of the Bonds for federal income tax purposes under Section
103 of the Code. In the event that regulations or rulings are
hereafter promulgated which impose additional requirements which
are applicable to the Bonds, the Company and the Issuer agree to
comply with the additional requirements to the extent necessary,
in the opinion of Bond Counsel delivered to the Issuer, the
Company, and the Trustee, to preserve the exclusion of interest on
the Bonds from the gross income of the owners of the Bonds for
federal income tax purposes under Section 103 of the Code. In
furtherance of such intention, the Issuer hereby authorizes and
directs its 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 provi-
sion contained in this Agreement should be breached by the Issuer
or the Company and thereafter duly waived, such waiver shall be
limited to the particular breach so waived and shall not be deemed
to waive any other breach of this Agreement. No waiver by either
party of any breach by the other party of any of the provisions of
this Agreement shall be construed as a waiver of any subsequent
breach, whether of the same or of a different provision of this
Agreement.
(c) Headings of the Sections of this Agreement have
been inserted for convenience of reference only and in no way
shall they affect the interpretation of any of the provisions of
this Agreement.
(d) This Agreement is made for the exclusive benefit of
the Issuer, the Trustee, the owners of the Bonds and the Company,
and their respective successors and assigns herein permitted, and
not for any third party or parties; and nothing in this Agreement,
expressed or implied, is intended to confer upon any party or
parties other than the Issuer, the Trustee, the owners of the
Bonds and the Company, and their respective successors and assigns
herein permitted, any rights or remedies under or by reason of
this Agreement. In particular, but not by way of limitation, the
Trustee shall be a third-party beneficiary for purposes of
enforcing its rights and the Company's obligations under Sections
5.07 and 7.03 of this Agreement as fully as if the Trustee had
been a party in privity of contract with the Company hereunder.
Section 8.02. INTENTIONALLY OMITTED.
Section 8.03. AMENDMENT OF AGREEMENT. No amendment,
change, addition to, or waiver of any of the provisions of this
Agreement shall be binding upon the parties hereto unless in
writing signed by the Authorized Company Representative and the
Authorized Issuer Representative and in compliance with Sections
9.05 and 9.06 of the Indenture. A copy of any such amendment,
change, addition to, or waiver shall be provided to the Trustee.
Notwithstanding any of the foregoing or anything in the Indenture
to the contrary, it is covenanted and agreed, for the benefit of
the holders of the Bonds and the Trustee, that the provisions of
this Agreement shall not be amended, changed, added to, or waived
in any way which would relieve, reduce or abrogate the obligations
of the Company to make or pay, or cause to be made or paid, when
due, any and all Installment Payments with respect to any then
Outstanding Bonds, in the manner and under the terms and
conditions provided herein and in the Bond Resolution or
Indenture, or which would change or affect Article II, Sections
5.01, 5.03, 5.04, 5.05, 5.06, 5.10, 6.01, 7.01, 7.02, 8.03, or
8.04 hereof or the provisions of this sentence unless, in the
judgment of the Trustee, such change or amendment would not
materially adversely affect the interests of the Bondholders.
Section 8.04. ASSIGNMENT. The Company may assign its
interest in this Agreement in whole or in part, provided, however,
no such assignment shall relieve the Company from primary
liability for any of its obligations hereunder, and without
limiting the generality of the foregoing, in the event of any such
assignment, the Company shall continue to remain primarily liable
for its payments specified herein and for performance and
observance of the other covenants and agreements on its part
herein provided. In addition, the Company may also assign its
interest in this Agreement in connection with a consolidation with
or merger into another domestic corporation, or the sale or
transfer of all or substantially all of its assets as an entirety
to another domestic corporation, if such transaction complies with
the requirements of Section 7.02 hereof. Anything in this
Agreement notwithstanding, no assignment of the Company's interest
in this Agreement shall be effective unless the Company shall, on
or prior to the effective date of any such assignment, furnish or
cause to be furnished to the Issuer and the Trustee notice of such
assignment, together with a Favorable Opinion.
Section 8.05. TERM OF AGREEMENT. The term of this
Agreement shall be from the date hereof until all payments and
indemnities required to be made by the Company pursuant hereto
shall have been made.
Section 8.06. NOTICES. Any notice, request or other
communication under this Agreement shall be given in writing and
shall be deemed to have been given by either party to the other
party at the addresses shown below upon any of the following
dates:
(a)The date of notice by Electronic Notice;
(b)Three Business Days after the date of the
mailing thereof, as shown by the post office receipt if
mailed to the other party hereto by registered or
certified mail;
(c)The date of the receipt thereof by such other
party if not given pursuant to (a) or (b) above.
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.
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:______________________________
Treasurer
ATTEST:
_________________________________
Secretary
<PAGE>
EXHIBIT 2
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 Page
Preamble.........................................................
Granting Clauses.................................................
Article I
Definitions and Interpretation
Section 1.01. Definitions...............................
Section 1.02. Article and Section Headings..............
Section 1.03. Interpretation............................
Article II
Authorization and Issuance of the Bonds
Section 2.01. Authorization of Bonds...................
Section 2.02. Interest.................................
Section 2.03. Form of Bond.............................
Section 2.04. Execution; Limited Obligations...........
Section 2.05. Conditions Precedent to Delivery Bonds of
Authentication...........................
Section 2.06. Redemption of Bonds.....................
Section 2.07. Notice of Redemption.....................
Section 2.08. Redemption Payments; Effect of Call for
Redemption...............................
Section 2.09. Partial Redemption.......................
Section 2.10. Remarketing and Purchase.................
Section 2.11. Mandatory Tenders for Purchase...........
Article III
General Provisions
Section 3.01. Authorization for Indenture; Indenture to
Constitute Contract.....................
Section 3.02. Payment of Principal, Premium, if any, and
Interest................................
Section 3.03. Performance of Covenants; Issuer
Immunity................................
Section 3.04. Instruments of Further Assurance........
Section 3.05. Recordation.............................
Section 3.06. Registration of Bonds; Trustee Appointed
Bond Registrar; Persons Treated as
Owners..................................
Section 3.07. Book-Entry Only System..................
Section 3.08. Successor Securities Depository; Transfers
Outside Book-Entry Only System..........
Section 3.09. Payments to Cede & Co...................
Section 3.10. Cancellation............................
Section 3.11. Non-presentment of Bonds................
Section 3.12. Rights under Agreement..................
Section 3.13. Legal Existence of Issuer...............
Section 3.14. Diminution of, or Encumbrance on, Trust
Estate..................................
Section 3.15. Books, Records and Accounts.............
Section 3.16. Temporary Bonds.........................
Section Page
Section 3.17. Mutilated, Lost, Stolen or Destroyed
Bonds...................................
Section 3.18. Intentionally Omitted...................
Section 3.19. Arbitrage Covenants.....................
Article IV
Use of Proceeds; Revenues and Funds
Section 4.01. Application of Original Proceeds of Bonds
Section 4.02. Creation of Bond Fund...................
Section 4.03. Payments into Bond Fund and Use of Moneys
in Bond Fund............................
Section 4.04. Creation and Use of Bond Purchase Fund..
Section 4.05. Investment of Moneys....................
Section 4.06. Moneys to be Held in Trust..............
Section 4.07. Repayment to Company from Indenture
Funds...................................
Section 4.08. Custody of Funds and Accounts...........
Section 4.09. Exemption from Federal Income Taxation..
Section 4.10. Covenants Regarding Rebate..............
Article V
Discharge
Section 5.01. Discharge...............................
Article VI
Events of Default and Remedies
Section 6.01. Events of Default.......................
Section 6.02. Acceleration............................
Section 6.03. Other Remedies; Rights of Bond Owners...
Section 6.04. Right of Bond Owners to Direct
Proceedings.............................
Section 6.05. Appointment of Receiver.................
Section 6.06. Waiver of Certain Laws..................
Section 6.07. Application of Moneys...................
Section 6.08. Remedies Vested in Trustee..............
Section 6.09. Rights and Remedies of Bond Owners......
Section 6.10. Termination of Proceedings..............
Section 6.11. Waivers of Events of Default............
Section 6.12. Notice of Default; Opportunity to Cure
Defaults................................
Article VII
The Trustee
Section 7.01. Acceptance of Trust.....................
Section 7.02. Fees, Charges and Expenses of Trustee...
Section 7.03. Trustee to Provide Additional Notices...
Section 7.04. Intervention by Trustee.................
Section 7.05. Successor Trustee by Merger.............
Section 7.06. Resignation by Trustee..................
Section Page
Section 7.07. Removal of Trustee...................... Section
7.08. Appointment of Successor Trustee........
Section 7.09. Successor Trustee by Appointment........
Section 7.10. Appointment of Separate Trustee or
Co-Trustee..............................
Section 7.11. Qualifications..........................
Section 7.12. Paying Agent............................
Article VIII
The Remarketing Agent
Section 8.01. The Remarketing Agent...................
Section 8.02. Qualifications of Remarketing Agent.....
Article IX
Supplemental Indentures
Section 9.01. Supplemental Indentures Not Requiring
Consent of Bond Owners..................
Section 9.02. Supplemental Indentures Requiring
Consent of Bond Owners..................
Section 9.03. Limitation upon Amendments and
Supplements.............................
Section 9.04. Consent of Company Required.............
Section 9.05. Amendments to Agreement.................
Section 9.06. Opinion of Counsel......................
Article X
Miscellaneous
Section 10.01. Consents of Bond Owners.................
Section 10.02. Limitation of Rights....................
Section 10.03. Severability............................
Section 10.04. Notices.................................
Section 10.05. Payments or Performance Due on Other
Than Business Days......................
Section 10.06. Execution of Counterparts...............
Section 10.07. Applicable Law..........................
Section 10.08. Disqualified Bonds......................
Section 10.09. No Personal Liability of Issuer or
Trustee.................................
Section 10.10. Notice of Change........................
Execution
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 Public Service
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
President 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 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 in the
Daily, Flexible, Weekly, Monthly, Quarterly, Semiannual and
Multiannual Modes, the date on which a new Interest Rate Period for
that Bond takes effect.
Electronic Notice - shall mean notice transmitted through
a time-sharing terminal, by facsimile transmission or by telephone
(promptly confirmed in writing or by facsimile transmission).
Event of Default - used with respect to this Indenture,
shall mean any event specified in Section 6.01 of this Indenture.
Favorable Opinion - shall mean an opinion of Bond Counsel
addressed to the Issuer, the Company and the Trustee to the effect
that the action proposed to be taken is authorized or permitted by,
to the extent applicable, the Acts and this Indenture and will not
adversely affect the excludability of interest on the Bonds from
gross income of the owners thereof for federal income tax purposes
(other than as held by a "substantial user" of the 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.
Fixed Rate Conversion Date - shall mean with respect to a
Bond, the date upon which the Fixed Rate first becomes effective
for the Bond, and shall mean the Issue Date if the Bonds are
initially delivered bearing interest at a Fixed Rate.
Fixed Rate Mode - shall mean the Mode in which the interest
rate on the Bonds is fixed from the Fixed Rate Conversion Date
until the Maturity Date.
Flexible Mode - shall mean the Mode in which the interest
rate on the Bonds is set at the Flexible Rate, all as set forth in
the form of Bond set forth in Section 2.03 hereof.
Flexible Rate - shall mean a rate of interest set by the
Remarketing Agent for periods from 1 to 270 days.
Government Obligations - shall mean (a) direct obligations
of the United States of America (including obligations issued or
held in book-entry form on the books of the Department of the
Treasury of the United States of America); (b) obligations the
timely payment of the principal of and interest on which are fully
guaranteed by the United States of America; (c) evidences of
ownership of proportionate interest in future interest or principal
payments of obligations described in clause (a) or (b) (investments
in such proportionate interests must be limited to circumstances
wherein (x) a bank or trust company acts as custodian and holds the
underlying Government Obligations; (y) the owner of the investment
is the real party in interest and has the right to proceed directly
and individually against the obligor of the underlying Government
Obligations; and (z) the underlying Government Obligations are held
in a special subaccount, segregated from the custodian's general
assets, and are not available to satisfy any claim of the
custodian, any person claiming through the custodian, or any person
to whom the custodian may be obligated); or (d) obligations issued
or fully guaranteed by the following instrumentalities or agencies
of the United States of America:
(i) Federal Home Loan Bank System;
(ii) Export-Import Bank of the United States;
(iii) Federal Financing Bank;
(iv) Government National Mortgage Association;
(v) Farmers Home Administration;
(vi) Federal Home Loan Mortgage Company;
(vii) Federal Housing Administration;
(viii) Federal National Mortgage Association; and
(ix) Resolution Funding Corporation (stripped interest
obligations only).
Indenture - shall mean this Indenture of Trust, as
originally executed and as amended, modified or supplemented
thereafter in accordance with the terms hereof.
Installment Payment - shall mean each payment required to
pay amounts due and owing on the Bonds issued pursuant to the
Agreement, as defined in Section 5.01 thereof and as provided for
in this Indenture, including the principal of, redemption premium,
if any, and interest on, and Purchase Price of, such Bonds.
Interest Accrual Date - shall mean the first day of any
Interest Rate Period and thereafter, each Interest Payment Date in
respect thereof, other than the last such Interest Payment Date.
Interest Payment Date - shall mean (i) each June 15 and
December 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 March 1, June 15, September 1 and
December 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.
Maximum Rate - shall mean a "net effective interest rate"
(as defined and calculated in accordance with the provisions of
Article 717k-2, Vernon's Texas Civil Statutes) of twelve percent
(12%) per annum.
Mode - shall mean the period for and the manner in which
the interest rates on the Bonds are set and includes the Daily
Mode, the Flexible Mode, the Weekly Mode, the Monthly Mode, the
Quarterly Mode, the Semiannual Mode, the Multiannual Mode and the
Fixed Rate Mode.
Monthly Mode - shall mean the Mode in which the interest
rate on the Bonds is set at the Monthly Rate, all as set forth in
the form of Bond set forth in Section 2.03 hereof.
Monthly Rate - shall mean the rate of interest that is set
on the Bonds while they are in the Monthly Mode.
Moody's - shall mean Moody's Investors Service, Inc., or
any successor thereto maintaining a rating on the Bonds at the
request of the Company.
Multiannual Mode - shall mean the Mode in which the
interest rate on the Bonds is fixed for periods of one year or
multiples thereof designated by the Remarketing Agent, after
consultation with the Company, as described in the form of Bond
set forth in Section 2.03 hereof.
Multiannual Rate - shall mean the rate of interest that is
set on Bonds while they are in the Multiannual Mode.
Official Statement - shall mean the Official Statement
relating to the Bonds.
Outstanding, Bonds Outstanding or Bonds then Outstanding -
shall mean when used with reference to Bonds at any date as of
which the amount of Outstanding Bonds is to be determined, means
all Bonds authenticated and delivered under the Indenture, except:
(a)Bonds canceled or delivered for cancellation at
or prior to such date;
(b)Bonds deemed to be paid pursuant to the terms of
this Indenture;
(c)Bonds in lieu of which others have been
authenticated and delivered under this Indenture;
(d)Bonds registered in the name of the Issuer;
(e)On or after any Purchase Date for Bonds, all
Bonds (or portions of Bonds) which are tendered or deemed
to have been tendered for purchase on such date, provided
that funds sufficient for such purchase are on deposit with
the Paying Agent; and
(f)For purposes of any consent, request, demand,
authorization, direction, notice, waiver or other action to
be taken by the holders of a specified percentage of
outstanding Bonds hereunder, all Bonds held by or for the
account of the Issuer or the Company, except that for
purposes of any such consent, request, demand,
authorization, direction, notice, waiver or action the
Trustee shall be obligated to consider as not being
outstanding only Bonds known by the Trustee by actual
notice thereof to be so held.
In determining whether the owners of a requisite aggregate
principal amount of Bonds outstanding have concurred in any
request, demand, authorization, direction, notice, consent or
waiver under the provisions hereof, Bonds which are held by or on
behalf of the Company or any affiliates thereof (unless all of the
Outstanding Bonds are then owned by said parties) shall be
disregarded for the purpose of any such determination.
Notwithstanding the foregoing, Bonds so owned which have been
pledged in good faith shall not be disregarded as aforesaid if the
pledgee has established to the satisfaction of the Bond Registrar
the pledgee's right so to act with respect to such Bonds and that
the pledgee is not the Company or an affiliate thereof.
Paying Agent - shall mean the Trustee or any successor
paying agent or co-paying agent serving as such under this
Indenture. Principal Office of the Paying Agent shall mean the
office thereof designated in writing to the Trustee. So long as
any Bond is Outstanding hereunder, the Paying Agent shall maintain
an office or have an agent with an office in New York City.
Permitted Investments - shall mean any of the following
obligations or securities, to the extent permitted by law, on which
the Issuer is not the obligor:
(a)Government Obligations;
(b)obligations issued or guaranteed by any state of
the United States of America or the District of Columbia or
any political subdivision thereof;
(c)general or revenue obligations issued by any
state of the United States of America or the District of
Columbia or any political subdivision thereof;
(d)commercial or finance company paper;
(e)certificates of deposit of, and bankers
acceptances drawn on and accepted by, any bank organized
and doing business under the laws of the United States of
America, including the Trustee in its commercial banking
capacity, or any state of the United States of America;
(f)repurchase agreements collateralized by
Government Obligations with (i) a registered broker dealer
or a registered government bond "primary dealer" in either
case which is subject to the jurisdiction of the Securities
Investors' Protection Corporation, or (ii) any bank
including the Trustee, which is a member of the Federal
Deposit Insurance Corporation and which has combined
capital, surplus and undivided profits of not less than $50
million;
(g)shares in money market funds, including money
market funds managed by the Trustee;
(h)investment contracts or funding arrangements with
any insurance company, financial institution or bank; and
(i)any other investment or security to the extent
permitted by Texas law.
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.
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) or 2.02(G)(3) or (4) hereof.
Trustee - shall mean The Bank of New York, or any successor
trustee or co-trustee serving as such under this Indenture.
Principal Office of the Trustee shall mean the business address
designated in writing to the Issuer and the Remarketing Agent as
its principal office for its duties hereunder.
Trustee's Prime Rate - shall mean, on any day, the lesser
of (a) the corporate base rate for that day as announced by the
Trustee in its commercial banking capacity and (b) the highest
nonusurious interest rate ("Ceiling Rate") permitted for each such
day by whichever of Texas or federal laws permit the higher
nonusurious rate, stated as a rate per annum.
Trust Estate - shall mean the property conveyed to the
Trustee pursuant to the Granting Clauses of this Indenture.
Unassigned Rights - shall mean the rights of the Issuer
under Sections 5.05, 6.03 and 7.03(a) of the Agreement and the
right to receive notices thereunder.
Undelivered Bonds - shall mean Bonds which are deemed to
have been tendered as provided in the forms of the Bonds for the
Daily Mode, Flexible Mode, Weekly Mode, Monthly Mode, Quarterly
Mode, Semiannual Mode and Multiannual Mode set forth in Section
2.03 hereof.
Underwriter - shall mean the initial underwriter of the
Bonds, Goldman, Sachs & Co.
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) and (L) are
not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the
proposed conversion to have failed and shall
immediately notify the Trustee and the Remarketing
Agent and the Bonds subject to such failed
conversion shall remain in the Flexible Mode with
an Interest Rate Period ending on the next
succeeding day which is immediately followed by a
Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to
Section 2.11 hereof. In no event shall the failure
of Bonds to be converted to another Mode for any
reason be deemed to be, in and of itself, an Event
of Default under this Indenture, so long as the
Purchase Price of all Bonds required to be
purchased is made available as provided above.
(3)Mandatory Tender for Purchase. Bonds in the
Flexible Mode are subject to mandatory tender for
purchase as provided in the form of Bond and in
Section 2.11 hereof.
(B)Daily Mode.
(1)Determination of Daily Rates. The Daily Rate
shall be the rate of interest determined by the
Remarketing Agent for each Interest Rate Period, to
be the lowest rate which in its judgment, on the
basis of prevailing financial market conditions,
would permit the sale of the Bonds in the Daily
Mode at par plus accrued interest on and as of the
Effective Date, but not in excess of the Maximum
Rate. The Remarketing Agent shall determine the
initial Daily Rate on or before the date of
conversion to the Daily Mode. Thereafter, the
Remarketing Agent shall redetermine the Daily Rate
for each subsequent Interest Rate Period. When
such Bond is in the Daily Mode, the Daily Rate in
effect for each Interest Rate Period (the
"Effective Rate" for such Period) shall be
determined not later than the Effective Date and
shall be effective from the Effective Date until
the next succeeding Business Day. The Remarketing
Agent shall notify the Paying Agent of the Daily
Rate by Electronic Notice not later than 10:30
a.m., New York City time, on such Business Day.
The Paying Agent shall give written notice of the
Daily Rate to the Trustee and the Company. Each
determination and redetermination of the Daily Rate
shall be conclusive and binding on the Issuer, the
Trustee, the Paying Agent, the Company and the
Bondowners. If for any reason the Remarketing
Agent fails to determine the Daily Rate (including,
but not limited to, a failure to determine the
Daily Rate for a day that is not a Business Day) or
if for any reason such manner of determination
shall be determined to be invalid or unenforceable,
the Daily Rate to take effect on such date will be
the Daily Rate in effect on the day next preceding
such date.
(2)Conversions from the Daily Mode. The Bonds in
the Daily Mode or any portion of such Bonds may be
converted on any Interest Payment Date at the
election of the Company from the Daily Mode to the
Flexible, Weekly, Monthly, Quarterly, Semiannual,
Multiannual or Fixed Rate Mode as provided in the
form of Bond, so long as no Event of Default
hereunder exists as certified to the Trustee by the
Company. Written notice of a conversion from the
Daily Mode shall be given by the Company to the
Issuer, the Trustee, the Paying Agent, the
Remarketing Agent and the Rating Agencies not fewer
than 30 days prior to the proposed Conversion Date,
which date shall be specified by the Company in
such notice. Notice of a conversion of Bonds from
the Daily Mode and the mandatory tender of Bonds
for purchase on such Conversion Date shall be given
to the owners of such Bonds as provided in Section
2.02(B)(4) hereof and the form of Bond.
Conversions to the Fixed Rate Mode shall also be
governed by Section 2.02(H) hereof.
Notwithstanding the foregoing, if the preconditions
to conversion to another Mode established by the
preceding paragraph and Section 2.02(K) and (L) are
not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the
proposed conversion to have failed and shall
immediately notify the Trustee and the Remarketing
Agent, and the Bonds shall be subject to mandatory
tender as provided in Section 2.02(B)(4) hereof.
In addition, the failed conversion shall cause the
interest rate on the Bonds subject to such failed
conversion to immediately convert to the Flexible
Mode with an Interest Rate Period ending on the
next succeeding day which is immediately followed
by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to
Section 2.11 hereof. In no event shall the failure
of Bonds to be converted to another Mode for any
reason be deemed to be, in and of itself, an Event
of Default under this Indenture, so long as the
Purchase Price of all Bonds required to be
purchased is made available as provided herein.
(3)Bondowners' Option to Tender Bonds in Daily
Mode. Bonds in the Daily Mode are subject to
tender, at the election of the owner thereof, in
the manner and subject to the limitations described
in the form of Bond. The owners of Tendered Bonds
shall receive on the Delivery Date 100% of the
principal amount of the Tendered Bonds plus accrued
interest to the Purchase Date, provided that if the
Purchase Date is an Interest Payment Date, accrued
interest shall be paid separately, and not as part
of the Purchase Price on such date. The purchase
of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain
Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds
properly tendered to it for purchase as provided in
the form of Bond and in this subsection (3);
provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date
the principal of the Bonds shall have been
accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
Notice of the Bondholder's option to tender Bonds
in the Daily Mode shall be given to the Paying
Agent at the time and as provided in the form of
Bond. The Bondowners' Election Notice delivered to
the Paying Agent at the time and as provided in the
form of Bond shall be in substantially the form
provided in the form of Bond.
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) and (L) are
not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the
proposed conversion to have failed and shall
immediately notify the Trustee and the Remarketing
Agent, and the Bonds shall be subject to mandatory
tender as provided in Section 2.02(C)(4) hereof.
In addition, the failed conversion shall cause the
interest rate on the Bonds subject to such failed
conversion to immediately convert to the Flexible
Mode with an Interest Rate Period ending on the
next succeeding day which is immediately followed
by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to
Section 2.11 hereof. In no event shall the
failure of Bonds to be converted to another Mode
for any reason be deemed to be, in and of itself,
an Event of Default under this Indenture, so long
as the Purchase Price of all Bonds required to be
purchased is made available as provided above.
(3)Bondowners' Option to Tender Bonds in Weekly
Mode. Bonds in the Weekly Mode are subject to
tender, at the election of the owner thereof, in
the manner and subject to the limitations described
in the form of Bond. The owners of Tendered Bonds
shall receive on the Delivery Date 100% of the
principal amount of the Tendered Bonds plus accrued
interest to the Purchase Date, provided that if the
Purchase Date is an Interest Payment Date, accrued
interest shall be paid separately, and not as part
of the Purchase Price on such date. The purchase
of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain
Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds
properly tendered to it for purchase as provided in
the form of Bond and in this subsection (3);
provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date
the principal of the Bonds shall have been
accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
Notice of the Bondholders' option to tender Bonds
in the Weekly Mode shall be given to the Paying
Agent at the time and as provided in the form of
Bond. The Bondowners' Election Notice delivered to
the Paying Agent at the time and as provided in the
form of Bond shall be in substantially the form
provided in the form of Bond.
As soon as practicable after receiving notice of a
tender of Bonds under this Section, the Paying
Agent shall notify the Remarketing Agent, the
Company and the Trustee by telephone promptly
confirmed in writing of the amount of Tendered
Bonds and the specified Purchase Date.
During the time Bonds are issued in the
book-entry-only system, all Bondowners' Election
Notices shall be signed by the Beneficial Owner 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) and (L) are
not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the
proposed conversion to have failed and shall
immediately notify the Trustee and the Remarketing
Agent, and the Bonds shall be subject to mandatory
tender as provided in Section 2.02(D)(4) hereof.
In addition, the failed conversion shall cause the
interest rate on the Bonds subject to such failed
conversion to immediately convert to the Flexible
Mode with an Interest Rate Period ending on the
next succeeding day which is immediately followed
by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to
Section 2.11 hereof. In no event shall the failure
of Bonds to be converted to another Mode for any
reason be deemed to be, in and of itself, an Event
of Default under this Indenture, so long as the
Purchase Price of all Bonds required to be
purchased is made available as provided above.
(3)Bondowners' Option to Tender Bonds in Monthly
Mode. Bonds in the Monthly Mode are subject to
tender, at the election of the owner thereof, in
the manner and subject to the limitations described
in the form of Bond. The owners of Tendered Bonds
shall receive on the Delivery Date 100% of the
principal amount of the Tendered Bonds. Accrued
interest shall be paid separately, and not as part
of the Purchase Price on such date. The purchase
of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain
Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds
properly tendered to it for purchase as provided in
the form of Bond and in this subsection (3);
provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date
the principal of the Bonds shall have been
accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the
Paying Agent at the time and as provided in the
form of Bond shall be in substantially the form
provided in the form of Bond.
As soon as practicable after receiving notice of a
tender of Bonds under this Section, the Paying
Agent shall notify the Remarketing Agent, the
Company 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) and (L) are
not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the
proposed conversion to have failed and shall
immediately notify the Trustee and the Remarketing
Agent, and the Bonds shall be subject to mandatory
tender as provided in Section 2.02(E)(4) hereof.
In addition, the failed conversion shall cause the
interest rate on the Bonds subject to such failed
conversion to immediately convert to the Flexible
Mode with an Interest Rate Period ending on the
next succeeding day which is immediately followed
by a Business Day. In such event, such Bonds shall
remain subject to mandatory tender pursuant to
Section 2.11 hereof. In no event shall the failure
of Bonds to be converted to another Mode for any
reason be deemed to be, in and of itself, an Event
of Default under this Indenture, so long as the
Purchase Price of all Bonds required to be
purchased is made available as provided above.
(3)Bondowners' Option to Tender Bonds in Quarterly
Mode. Bonds in the Quarterly Mode are subject to
tender, at the election of the owner thereof, in
the manner and subject to the limitations described
in the form of Bond. The owners of Tendered Bonds
shall receive on the Delivery Date 100% of the
principal amount of the Tendered Bonds. Accrued
interest shall be paid separately, and not as part
of the Purchase Price on such date. The purchase
of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain
Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds
properly tendered to it for purchase as provided in
the form of Bond and in this subsection (3);
provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date
the principal of the Bonds shall have been
accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the
Paying Agent at the time and as provided in the
form of Bond shall be in substantially the form
provided in the form of Bond.
As soon as practicable after receiving notice of a
tender of Bonds under this Section, the Paying
Agent shall notify the Remarketing Agent, the
Company 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) and (L) are
not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the
proposed conversion to have failed and shall
immediately notify the Trustee and the Remarketing
Agent, and the Bonds shall be subject to mandatory
tender as provided in Section 2.02(F)(4) hereof.
In addition, the failed conversion shall cause the
interest rate on the Bonds to immediately convert
to the Flexible Mode with an Interest Rate Period
ending on the next succeeding day which is
immediately followed by a Business Day. In such
event, such Bonds shall remain subject to mandatory
tender pursuant to Section 2.11 hereof. In no
event shall the failure of Bonds to be converted to
another Mode for any reason be deemed to be, in and
of itself, an Event of Default under this
Indenture, so long as the Purchase Price of all
Bonds required to be purchased is made available as
provided above.
(3)Bondowners' Option to Tender Bonds in Semiannual
Mode. Bonds in the Semiannual Mode are subject to
tender, at the election of the owner thereof, in
the manner and subject to the limitations described
in the form of Bond. The owners of Tendered Bonds
shall receive on the Delivery Date 100% of the
principal amount of the Tendered Bonds. Accrued
interest shall be paid separately, and not as part
of the Purchase Price on such date. The purchase
of Tendered Bonds shall not extinguish the debt
represented by such Bonds which shall remain
Outstanding and unpaid under this Indenture.
The Paying Agent shall accept all Tendered Bonds
properly tendered to it for purchase as provided in
the form of Bond and in this subsection (3);
provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date
the principal of the Bonds shall have been
accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the
Paying Agent at the time and as provided in the
form of Bond shall be in substantially the form
provided in the form of Bond.
As soon as practicable after receiving notice of a
tender of Bonds under this Section, the Paying
Agent shall notify the Remarketing Agent, the
Company 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) and (L) are
not met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall deem the
proposed conversion to have failed and shall
immediately notify the Trustee and the Remarketing
Agent and the Bonds shall automatically convert to
a Flexible Mode with an Interest Rate Period ending
on the next succeeding day which is immediately
followed by a Business Day. In such event, such
Bonds shall remain subject to mandatory tender
pursuant to Section 2.11 hereof. In no event shall
the failure of Bonds to be converted to another
Mode or Interest Rate Period for any reason be
deemed to be, in and of itself, an Event of Default
under this Indenture, so long as the Purchase Price
of all Bonds required to be purchased is made
available as provided above.
(3)Bondowners' Option to Tender Bonds in
Multiannual Mode. Bonds in the Multiannual Mode
are subject to tender, at the election of the owner
thereof, in the manner and subject to the
limitations described in the form of Bond. The
owners of Tendered Bonds shall receive on the
Delivery Date 100% of the principal amount of the
Tendered Bonds. Accrued interest shall be paid
separately, and not as part of the Purchase Price
on such date. The purchase of Tendered Bonds shall
not extinguish the debt represented by such Bonds
which shall remain Outstanding and unpaid under
this Indenture.
The Paying Agent shall accept all Tendered Bonds
properly tendered to it for purchase as provided in
the form of Bond and in this subsection (3);
provided, however, that the Paying Agent shall not
accept any Tendered Bonds and the Purchase Price
therefor shall not be paid if on the Purchase Date
the principal of the Bonds shall have been
accelerated pursuant to Section 6.02 hereof and
such acceleration shall not have been annulled.
The Bondowners' Election Notice delivered to the
Paying Agent at the time and as provided in the
form of Bond shall be in substantially the form
provided in the form of Bond.
As soon as practicable after receiving notice of a
tender of Bonds under this Section, the Paying
Agent shall notify the Remarketing Agent, the
Company 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.
Determination of Fixed Rate and Conversion to Fixed
Rate Mode. If initially issued in a Mode other
than the Fixed Rate Mode, the interest rate on all
or any portion of the Bonds may be converted by the
Company to the Fixed Rate as provided in the form
of Bond and Sections 2.02(A), (B), (C), (D), (E),
(F) and (G) hereof. Written notice of conversion
to the Fixed Rate Mode shall be given by the
Company to the Issuer, the Trustee, the Paying
Agent, the Remarketing Agent and the Rating
Agencies not fewer than 30 days prior to the
proposed Conversion Date. Upon receipt of the
notice of conversion to the Fixed Rate Mode from
the Company, the Remarketing Agent shall determine
the Fixed Rate not later than 12:00 noon, New York
City time, on the Business Day immediately
preceding the Conversion Date. The Fixed Rate
shall be the lowest rate which in the judgment of
the Remarketing Agent, on the basis of prevailing
financial market conditions, would permit the sale
of the Bonds being so converted at par plus accrued
interest as of the Conversion Date on the basis of
their terms as converted. The Fixed Rate will be
in effect until the Maturity Date and no
conversions to another Mode may be effected.
On the date of determination thereof, the
Remarketing Agent shall notify the Paying Agent,
the Company and the Trustee by Electronic Notice of
the Fixed Rate. The Trustee shall promptly notify
the Issuer in writing of the Fixed Rate. The
determination of the Fixed Rate shall be conclusive
and binding on the Issuer, the Trustee, the Paying
Agent, the Company and the Bondowners. The first
Interest Payment Date of Bonds converted to the
Fixed Rate shall be the next June 15 or December 1
after the Conversion Date. The Fixed Rate shall
become effective on the Conversion Date and shall
remain in effect for the remaining term of the
Bonds so converted.
Notwithstanding the foregoing, if the preconditions
to conversion to the Fixed Rate Mode established by
this subsection and Section 2.02(K) and (L) are not
met by 10:30 a.m., New York City time, on the
Conversion Date, the Paying Agent shall immediately
notify the Trustee by telephone promptly confirmed
in writing. Upon such notice, the Trustee shall
deem the proposed conversion to have failed and
shall proceed as such under Sections 2.02(A)(2),
2.02(B)(2), 2.02(C)(2), 2.02(D)(2), 2.02(E)(2),
2.02(F)(2) or 2.02(G)(2) hereof, whichever is
applicable.
(I)Partial Conversions.
(1)General. The Bonds may be converted in whole or
in part to the Daily Mode, the Flexible Mode, the
Weekly Mode, the Monthly Mode, the Quarterly Mode,
the Semiannual Mode, any Interest Rate Period in
the Multiannual Mode or the Fixed Rate Mode upon
compliance with the conditions set forth in this
Indenture. In the event the Bonds are in (or are
to be converted to) more than one Mode, the
provisions herein relating to Bonds in a particular
Mode (or to be converted to a particular Mode)
shall apply only to the Bonds in (or to be
converted to) such Mode and, where necessary or
appropriate, any reference in this Indenture to the
Bonds shall be construed to mean the Bonds in (or
to be converted to) such Mode.
(2)Selection. In the event of any partial
conversion of the Bonds to a new Mode, the Bonds to
be converted shall be selected by the Paying Agent
from the Bonds in the Mode selected by the Company.
The particular Bonds (or portions thereof) to be
converted shall be selected by lot by the Paying
Agent from all the Bonds in the Mode (or in the
case of Bonds in the Multiannual Mode, the Interest
Rate Period) from which Bonds are to be converted.
The principal amount of Bonds to be converted shall
be determined so that all of the Bonds shall be in
Authorized Denominations. Bonds (or portions
thereof) in the Daily Mode, Weekly Mode, Monthly
Mode, Quarterly Mode and Semiannual Mode shall be
selected by lot and the selection of the Bonds to
be converted shall occur prior to the date notice
of mandatory tender is sent by the Paying Agent to
the Bondowners pursuant to Sections 2.02(B)(4),
2.02(C)(4), 2.02(D)(4), 2.02(E)(4) and 2.02(F)(4).
(3)Amendments. The provisions of this Indenture
may be amended to permit or facilitate partial
conversions of the Bonds without Bondowner consent
in accordance with Section 9.01 hereof.
(J)Notice to Registered Owners of Change in Mode.
When a change in Mode is to be made, or upon commencement
of a new Interest Rate Period in the Multiannual Mode, the
Paying Agent will notify the registered owners of the
affected Bonds in the Daily Mode, Weekly Mode, Monthly
Mode, Quarterly Mode, Semiannual Mode and Multiannual Mode
at least 15 days before the effective date of the change.
The notice will state:
(1)that the Mode will be changed or that a new
Interest Rate Period in the Multiannual Mode, will
commence,
(2)the effective date or dates of the new rate or a
new Interest Rate Period, as applicable, and
(3)that a mandatory tender will result on the
Effective Date of the change as provided in the
Indenture.
(K)Change In Interest Rate Mode - Opinion of
Counsel; Issuer Veto Right. No (i) conversion of Bonds to
or from a Multiannual Mode with an Interest Rate Period of
over one year, including for this purpose the conversion to
a new Interest Rate Period in the Multiannual Mode, or (ii)
conversion to the Fixed Rate Mode shall be effective unless
on or prior to the Conversion Date the Company shall
provide the Issuer, the Paying Agent, and the Trustee with
a Favorable Opinion. Furthermore, all Conversions are
subject to veto by the Issuer, which veto may not be
unreasonably exercised and must be exercised by the
Authorized Issuer Representative within one hour after the
receipt of notice from the Company of such change in
interest rate determination method by the sending of a
telephonic notice, 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: ____________, 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 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 in the Daily,
Flexible, Weekly, Monthly, Quarterly, Semiannual and Multiannual
Modes, the date on which a new Interest Rate Period for that Bond
takes effect.
"Electronic Notice" means notice transmitted through a time-
sharing terminal, by facsimile transmission or by telephone
(promptly confirmed in writing or by facsimile transmission).
"Interest Rate Period" or " Rate Period" means, when used with
respect to any particular rate of interest for a Bond in the Daily,
Flexible, Weekly, Monthly, Quarterly, Semiannual or Multiannual
Mode, the period during which such rate of interest determined for
such Bond will remain in effect as described herein.
"Mode" means the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily Mode,
the Flexible Mode, the Weekly Mode, the Monthly Mode, the Quarterly
Mode, the Semiannual Mode, the Multiannual Mode and the Fixed Rate
Mode.
"Principal Office" means the business address designated as a
principal office pursuant to the Indenture. In the case of the
initial Trustee and Paying Agent, "Principal Office" refers to its
principal corporate trust office in New York, New York.
"Purchase Date" means the date on which this Bond shall be
required to be purchased pursuant to a mandatory or optional tender
in accordance with the provisions hereof.
"Purchase Price" means, with respect to a Bond on a Purchase
date, a price equal to par plus accrued interest to the Purchase
Date; provided that in the event that the Purchase Date is an
Interest Payment Date for such Bond and such Bond is not in the
Flexible Mode, accrued interest will be paid separately and not as
a part of the Purchase Price on such date.
Flexible Rate
While the Bonds accrue interest at Flexible Rates, the
Remarketing Agent shall determine the Flexible Rate and the
Flexible Rate Period for each Bond and such Flexible Rate will
remain in effect from and including the commencement date of the
Flexible Rate Period selected for that Bond by the Remarketing
Agent to, but not including, the last date thereof. While the
Bonds are in the Flexible Mode, Bonds may have successive Interest
Rate Periods of any duration up to 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 March 1, June 15, September
1 and December 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 June 15 or December 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 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 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 shall be made to the
Paying Agent in writing or by Electronic Notice (or such other
notice as may be specified by the procedures of The Depository
Trust Company or its successor so long as this Bond is held in
book-entry form) at its Principal Office in substantially the form
as provided in the Form of Bondholder's Election Notice for Bonds
Subject to Optional Tender attached hereto or such other form of
notice satisfactory to the Paying Agent which sets forth the
principal amount of Bonds to be purchased, the purchase date on
which such Bonds shall be purchased, the name, address and taxpayer
identification number of the Registered Owner and the payment
instructions for the Purchase Price. All deliveries of tendered
Bonds, including deliveries of Bonds subject to mandatory tender,
shall be made to the Paying Agent at its Principal Office.
Mandatory Tenders
While this Bond accrues interest at a Flexible Rate, this Bond
is subject to mandatory tender on each Effective Date applicable to
this Bond at the Purchase Price.
This Bond is subject to mandatory tender on the effective date
of a change from one Mode to a different Mode (other than from a
Daily Mode to a Weekly Mode or a Weekly Mode to a Daily Mode) or a
change from one Interest Rate Period to an Interest Rate Period of
different duration within the Multiannual Mode at the Purchase
Price.
BY ACCEPTANCE OF THIS BOND, THE REGISTERED OWNER HEREOF AGREES
THAT THIS BOND WILL BE PURCHASED, WHETHER OR NOT SURRENDERED, ON
THE PURCHASE DATE AS DESCRIBED ABOVE. IN SUCH EVENT, THE REGIS-
TERED OWNER OF THIS BOND SHALL NOT BE ENTITLED TO RECEIVE ANY
FURTHER INTEREST HEREON, SHALL HAVE NO FURTHER RIGHTS UNDER THIS
BOND OR THE INDENTURE EXCEPT TO RECEIVE PAYMENT OF THE PURCHASE
PRICE HELD THEREFOR, AND SHALL THEREAFTER HOLD THIS BOND AS AGENT
FOR THE PAYING AGENT.
Payment of Purchase Price
The Purchase Price for Bonds (except Bonds in the Multiannual
Mode, which shall be in clearinghouse funds) is payable by wire or
bank transfer within the continental United States in immediately
available funds from the Paying Agent to the Registered Owner. If
on any date this Bond is subject to mandatory tender for purchase
or is required to be purchased at the election of the Registered
Owner, payment of the Purchase Price of this Bond to such
Registered Owner shall be made on the Purchase Date if delivery of
this Bond is made prior to 11:00 a.m., New York City time, on the
Purchase Date or on such later Business Day upon which delivery of
this Bond is made prior to 11:00 a.m., New York City time.
BY ACCEPTANCE OF THIS BOND, THE REGISTERED OWNER HEREOF AGREES
THAT THIS BOND WILL BE PURCHASED, WHETHER OR NOT SURRENDERED, ON
THE PURCHASE DATE AS DESCRIBED ABOVE. IN SUCH EVENT, THE REGIS-
TERED OWNER OF THIS BOND SHALL NOT BE ENTITLED TO RECEIVE ANY
FURTHER INTEREST HEREON, SHALL HAVE NO FURTHER RIGHTS UNDER THIS
BOND OR THE INDENTURE EXCEPT TO RECEIVE PAYMENT OF THE PURCHASE
PRICE HELD THEREFOR, AND SHALL THEREAFTER HOLD THIS BOND AS AGENT
FOR THE PAYING AGENT.
The initial Remarketing Agent under the Indenture is Goldman,
Sachs & Co. The Remarketing Agent may be changed at any time in
accordance with the Indenture.
Written Notice of Mode or Interest Rate Period Change
The Trustee shall give notice, by first class mail, to the
Registered Owners of all Bonds of the proposed conversion from one
Mode to another Mode, or the commencement of a new Interest Rate
Period in the Multiannual Mode, at least 15 days before the
proposed Conversion Date while the Bonds accrue interest at
Flexible, Daily or Weekly Rates, and at least 30 days before the
Effective Date of such change while the Bonds accrue interest at a
Monthly, Quarterly, Semiannual or Multiannual Rate.
Interest Payment Dates
While this Bond accrues interest at a Flexible Rate, interest
is payable on the first Business Day after the last day of each
Interest Rate Period. While this Bond accrues interest at Daily,
Weekly or Monthly Rates, interest is payable on the first Business
Day of each calendar month following a month in which interest at
such rate has accrued. While this Bond accrues interest at a
Quarterly Rate, interest is payable on each March 1, June 15,
September 1 and December 1. While this Bond accrues interest at a
Semiannual, Multiannual or Fixed Rate, interest is payable on the
first day of the immediately succeeding June or December after
Conversion to such Mode and thereafter on each June 15 and December
1.
Optional Redemption
The Bonds are subject to optional redemption as follows:
(A) During any Daily, Flexible, Weekly, Monthly,
Quarterly or Semiannual Mode, the Bonds in such Mode
shall be subject to redemption prior to maturity at the
option of the Issuer upon written direction of the
Company delivered to the Trustee in whole or in part
(and if in part in an Authorized Denomination) on any
Interest Payment Date, at a redemption price equal to the
principal amount thereof plus accrued interest thereon to
the redemption date.
(B) During any Multiannual or Fixed Rate Mode, the
Bonds in such Mode shall be subject to redemption prior
to maturity at the option of the Issuer upon written
direction of the Company delivered to the Trustee in
whole on any Business Day or in part (and if in part in
an Authorized Denomination) on any Interest Payment Date
after the No-Call Period described below, at the
following redemption prices (expressed as percentages of
the principal amount of the Bonds called for redemption)
plus accrued interest to the date fixed for redemption:
LENGTH OF greater than or equal to 11 years less than 11 years
INTEREST
RATE PERIOD
NO-CALL PERIOD
11 years from the
commencement of Interest
Rate Period
No call 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.
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
(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 Numbers Purchase Date
The undersigned hereby certifies that it is the Registered
Owner or the Beneficial Owner (as described below) of the Bonds
described above (the "Tendered Bonds"), all of which are in the
_________________ Mode [insert Mode of Tendered Bonds], and hereby
agrees that the delivery of this instrument of transfer to the
Paying Agent by 10:00 A.M. New York City time on this Business Day
(for Daily Mode Bonds only) constitutes an irrevocable offer to
sell the Tendered Bonds to the Company or its designee on the
Purchase Date, which shall be a Business Day at least __________
(____) calendar days following delivery of this instrument <F1>, 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: ______________________________
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
____________________
[FN]
In the case of Tendered Bonds that were in the Daily Mode, the
words "on the Purchase Date, which shall be a Business Day at least
____ (____) calendar days following delivery of this instrument
"shall be replaced by the words "on this Business Day."
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)
under Uniform Gifts to
JT TEN --as joint tenants with right Minors Act _________
of survivorship and not as (State)
tenants in common
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 restoration would exceed by $1,500,000 or
more the net proceeds of insurance thereon;
(iii) Title to, or temporary use of, all or
substantially all of the Project or the Plant shall have
been taken under the exercise of the power of eminent
domain;
(iv) Changes in the economic availability of
materials, labor, services, supplies (including fuel),
equipment or other property, facilities or things
necessary for the operation of the Project or the Plant
shall have occurred, or technological, regulatory or
other changes shall have occurred, which, in the opinion
of the Company, render the continued operation of the
Project or the Plants uneconomic;
(v) Any court or administrative body shall enter a
judgment, order or decree requiring the Company to cease,
or dispose of, all or any substantial part of its
operations of the Project or the Plant to such extent
that, in the opinion of the Company, it is or will be
thereby prevented from carrying on its normal operations
of the Project or the Plant for a period of six or more
consecutive months; or
(vi) As a result of any change in the Constitution
of the State of Texas or the Constitution of the United
States of America or of any legislative or administrative
action (whether state or federal) or of any final decree,
judgment, or order of any court or administrative body
(whether state or federal), the obligations of the
Company under the Agreement shall have become
unenforceable or impossible of performance in any
material respect in accordance with the intent and
purpose of the parties as expressed in the Agreement.
(b) Optional Redemption. The Bonds are subject to
optional redemption as follows:
(i) During any Daily, Flexible, Weekly, Monthly,
Quarterly or Semiannual Mode, the Bonds in such Mode
shall be subject to redemption prior to maturity at the
option of the Issuer upon written direction of the
Company delivered to the Trustee, in whole or in part
(and if in part in an Authorized Denomination) on any
Interest Payment Date applicable to the Bonds in such
Mode, at a redemption price equal to the principal amount
thereof plus accrued interest thereon to the redemption
date.
(ii) During any Multiannual or Fixed Rate Mode, the
Bonds in such Mode shall be subject to redemption prior
to maturity at the option of the Issuer upon written
direction of the Company delivered to the Trustee, in
whole on any Business Day or in part (and if in part in
an Authorized Denomination) on any Interest Payment Date
after the No-Call Period described below, at the
following redemption prices (expressed as percentages of
the principal amount of the Bonds called for redemption)
plus accrued interest to the date fixed for redemption:
LENGTH OF greater than or equal to 11 years less than 11 years
INTEREST
RATE PERIOD
NO-CALL
PERIOD
11 years from the
commencement of Interest
Rate Period REDEMPTION PRPICES
No call
102%, declining 1% per year to 100%
Notwithstanding the foregoing, if the Bonds initially bear
interest at a Multiannual Rate or a Fixed Rate, the redemption
schedule shall be as set forth in the Approval Certificate. In
connection with a Conversion with respect to Bonds to bear interest
at the Multiannual or Fixed Interest Rate, the Remarketing Agent,
upon the request of the Company (which request shall not
unreasonably be refused) and in order to achieve the lowest rate
which, in the judgment of the Remarketing Agent, on the basis of
prevailing financial market conditions, would permit the sale of
the Bonds so converted at par plus accrued interest as of the
Conversion Date, may deliver to the Issuer and the Trustee an
alternative redemption schedule to that shown above, provided that
the Company delivers to the Issuer, the Remarketing Agent and the
Trustee a Favorable Opinion with respect to the alternative
schedule of redemption. Prior to such Conversion, the Trustee
shall determine the optional redemption provisions applicable to
the Bonds in such Modes, and such provisions shall be inserted in
the form of Bond. After the Conversion Date succeeding the delivery
of such alternative schedule and Favorable Opinion during any Mode,
the Bonds shall be subject to redemption in accordance with the
provisions of such alternative schedule.
(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 Rates. The Remarketing Agent shall not sell any
Bond as to which a notice of conversion from one type of Rate
Period to another or as to which a notice of redemption has been
given by the Trustee unless the Remarketing Agent has advised the
person to whom the sale is made of the conversion or redemption, as
applicable. The Remarketing Agent shall not remarket any Bonds
pursuant to this Section if the Remarketing Agent has received
notice that an Event of Default shall have occurred and is
continuing hereunder with respect to the Bonds.
(b) Purchase of Tendered Bonds.
(i) Notice. At or before 3:00 p.m., New York City time,
on the Business Day immediately preceding the Purchase Date of
tendered Bonds bearing interest at Multiannual Rates (or 11:30
a.m., New York City time, on the Purchase Date in the case of Bonds
accruing interest at Daily, Weekly, Flexible, Monthly, Quarterly or
Semiannual Rates), the Remarketing Agent shall give Electronic
Notice to the Trustee of the principal amount of tendered Bonds as
to which the Remarketing Agent has found purchasers. Not later
than 4:00 p.m. for Bonds bearing interest at Multiannual Rates (or
11:45 a.m., in the case of Bonds accruing interest at Daily,
Weekly, Flexible, Monthly, Quarterly or Semiannual Rates ), New
York City time, on the date of receipt of such notice the Trustee
shall give Electronic Notice to the Paying Agent 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 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
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 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.
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 the payment due on
such date, the Company shall deposit sufficient moneys in such fund
to enable such payment to be made on such date.
Section 4.06. Moneys To Be Held in Trust. All moneys
required to be deposited with or paid to the Trustee for the
account of any Fund under any provisions of this Indenture shall be
held by the Trustee in trust, and, except for (i) moneys in the
Bond Purchase Fund, and (ii) moneys deposited with or paid to the
Trustee for the redemption of Bonds, notice of the redemption for
which has been duly given, shall, while held by the Trustee,
constitute part of the Trust Estate and be subject to the security
interest created hereby.
Section 4.07. Repayment to Company from Indenture Funds.
Subject to Section 3.11 hereof, any amounts remaining in any Fund
created under this Indenture, after payment in full of the Bonds in
accordance with Article V hereof, the reasonable fees, charges and
expenses of the Issuer, the Trustee and any co-trustee appointed
hereunder, and all other amounts required to be paid hereunder or
under the Agreement, 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 (except those items described in clause (d)
under the definition of Government Obligations) acquired with
moneys provided by the Company, not subject to redemption or
prepayment and maturing as to principal and interest in such
amounts and at such times as will, in the opinion of an independent
certified public accountant delivered to the Trustee, 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.
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.
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
theTrustee 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 and 9.04 of this Indenture, the Issuer and the Trustee may,
but shall not be obligated to, without the consent of, or notice
to, any of the Bond Owners, enter into an indenture or indentures
supplemental to this Indenture, for any one or more of the
following purposes: (i) to cure any ambiguity, formal defect or
omission in this Indenture or to make such other changes which
shall not have a material adverse effect upon the interests of the
Bond Owners; (ii) to grant to or confer upon the Trustee, for the
benefit of the Bond Owners, any additional rights, remedies, powers
or authorities, or any additional security, that may lawfully be
granted to or conferred upon the Owners or the Trustee; (iii) to
subject to this Indenture additional revenues, properties or
collateral; (iv) to modify, amend or supplement this Indenture, or
any indenture supplemental hereto, in such manner as to permit the
qualification hereof and thereof under the Trust Indenture Act of
1939, as amended, or any similar federal statute hereafter in
effect, or to permit the qualification of the Bonds for sale under
the securities laws of any of the states of the United States, and
if the Issuer so determines, to add to this Indenture or any
indenture supplemental hereto such other terms, conditions and
provisions as may be permitted by the Trust Indenture Act of 1939,
as amended, or any similar federal statute; (v) to add to the
covenants and agreements of the Issuer contained in this Indenture
other covenants and agreements thereafter to be observed for the
protection of the Owners or to surrender or limit any right, power
or authority herein reserved to or conferred upon the Issuer; (vi)
effective upon any Conversion Date to a new Mode, to make any
amendment affecting only the Bonds being converted, including
revision to Authorized Denominations; (vii) to add provisions
relating to the partial conversion of Bonds to a new Mode; (viii)
to conform to the requirements of any Rating Agency, (ix) to add
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.
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 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) 815-5915
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
If to the Remarketing Agent:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: _______________________
Telephone No.: (___) ___-____
Telecopy No.: (___) ___-____
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; and
(v) conversion to a Multiannual or Fixed Rate 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
<PAGE>
EXHIBIT 3
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
_________, 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. (the "Underwriter").
1. Background
(a) Subject to the terms and conditions herein set
forth, the Underwriter hereby agrees to purchase from the Issuer,
and the Issuer hereby agrees to sell and deliver to the
Underwriter, the Pollution Control Revenue Refunding Bonds
(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
__, 1996 (the "Resolution"), and under an Indenture of Trust dated
as of June 1, 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 1, 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
Underwriter its Letter of Representation dated of even date
herewith in substantially the form of Appendix A hereto (the
"Letter of Representation") indicating its approval of the terms
and provisions of this Purchase Agreement and acknowledging that
the Issuer will sell the Refunding Bonds to the Underwriter and the
Underwriter will purchase the Refunding Bonds and make a public
offering thereof in reliance upon the representations, covenants
and indemnities contained in the Letter of Representation.
(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 B to the Official Statement) and
the Underwriter may offer the Refunding Bonds for sale without
registration under the Securities Act of 1933, as amended (the
"Securities Act"), or qualification of the Indenture under the
Trust Indenture Act of 1939, as amended (the "Trust Act").
(e) A Preliminary Official Statement dated _______,
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 Underwriter. The Final
Official Statement, as it may be amended or supplemented with the
consent of the Issuer, the Underwriter and the Company, is
hereinafter referred to as the "Official Statement."
2. Purchase, Sale and Closing. Subject to the terms
and conditions herein set forth, the Underwriter agrees to purchase
from the Issuer, and the Issuer agrees to sell to the Underwriter,
the Refunding Bonds at a purchase price equal to 100% of the
principal amount thereof. The Refunding Bonds shall be dated as of
June 1, 1996, shall mature on ______, ____, and shall bear interest
at the Flexible Rate, the Daily Rate, the Weekly Rate, the Monthly
Rate, the Quarterly Rate, the Semiannual Rate, the Multiannual Rate
or the Fixed Rate (all as defined and more fully described in the
Indenture). Payment for the Refunding Bonds shall be made in
immediately available Federal funds payable to the order of the
Trustee for the account of the Issuer. Closing (the "Closing")
will be at the offices of [McCall, Parkhurst and Horton L.L.P., 717
North Harwood, 9th Floor, Dallas, Texas at 9:00 a.m., Dallas time,]
on ______, 1996 (the "Closing Date"), or at such other date, time
or place as may be agreed on by the Issuer, the Company and the
Underwriter. Refunding Bonds will be delivered to The Depository
Trust Company ("DTC") at least 24 hours before Closing; the
Refunding Bond will be registered in the name of CEDE & Co., as
nominee for DTC, in the denomination of $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 Underwriter 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 Official Statement is deemed final by the Issuer
for purposes of Rule 15c2-12 under the Exchange Act.
(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 Underwriter that it will:
(a) Furnish or cause to be furnished to the Underwriter
(i) on the date of the execution of this Purchase Agreement, two
copies of the Final Official Statement and, on the date of any
amendment or supplement thereto, two copies of such amendment or
supplement, prepared in a manner consistent with (b) below and (ii)
on or prior to the Closing Date, two specimens of the form of
Refunding Bond, two certified copies of the Resolution and two
executed copies of the Indenture and of the Installment Agreement
(which documents shall be in the forms previously delivered to the
Underwriter, subject to such changes as the Underwriter shall
approve); the Issuer agrees that the Company may at its expense
furnish to the Underwriter, without charge, as many copies of the
Official Statement and any amendment or supplement thereto as the
Underwriter may reasonably request.
(b) Before amending or supplementing the Official
Statement, furnish or cause to be furnished to the Underwriter two
copies and the Company two copies of each proposed amendment or
supplement. No amendment or supplement to the Official Statement
will contain material information with respect to the Issuer
different from that contained in the Final Official Statement which
is reasonably unsatisfactory to the Underwriter or the Company.
(c) During such period as the Underwriter believes
delivery of the Official Statement is necessary or desirable in
connection with sales of the Refunding Bonds by the Underwriter or
a dealer, if any event shall occur as a result of which it may be
necessary to amend or supplement the Official Statement in order to
make the statements therein 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 Underwriter
and the Company of such event and cooperate at the request of the
Underwriter in the preparation of amendments or supplements to the
Official Statement which in the judgment of the Underwriter are
necessary so that the statements 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 Underwriter may
reasonably request, provided that the Issuer shall not be required
to qualify to do business or consent to general service of process
in any state or jurisdiction other than the State of Texas.
(e) Apply the proceeds from the issuance and sale of the
Refunding Bonds in the manner set forth in the Official Statement,
and not take any action which will adversely affect the exclusion
from gross income for federal income tax purposes of the interest
on the Refunding Bonds.
(f) Promptly make or cause to be made under the Uniform
Commercial Code of the State of Texas, or under any other
applicable law, at such times as may be required, all filings, if
any, required in order to establish, maintain, protect or preserve
the interest of the Trustee in the rights assigned to it under the
Resolution, the Installment Agreement and the Indenture.
(g) The Issuer will refrain from knowingly taking any
action with regard to which the Issuer may exercise control that
would result, or could reasonably be expected to result, in the
loss of the exclusion from gross income for federal income tax
purposes of the interest on the Refunding Bonds referred to under
the caption "Tax Matters" in the Official Statement.
5. Survival of Representations, Warranties and
Agreements. The respective covenants, agreements, representations,
warranties and other statements of each of the Issuer and the
Underwriter, as set forth in this Purchase Agreement or made by
them pursuant to this Purchase Agreement, shall remain in full
force and effect, regardless of any investigation made by or on
behalf of the Issuer or the Underwriter or any officer, director or
controlling person thereof, and shall survive the termination of
this Purchase Agreement and the delivery of and payment for the
Refunding Bonds.
6. Conditions of Underwriter's Obligations. The
Underwriter's obligation to purchase and pay for the Refunding
Bonds at Closing is subject to the performance by the Issuer of its
obligations and agreements to be performed hereunder and under the
Installment Agreement, the Resolution and the Indenture at or prior
to Closing and the performance by the Company of the obligations to
be performed by it under the Letter of Representation, the
Installment Agreement, and the Remarketing Agreement between the
Company [and the Remarketing Agent dated the Closing Date relating
to the Refunding Bonds (the "Remarketing Agreement") at or prior to
Closing] and to the fulfillment of the following conditions at or
prior to Closing:
(a) The Company shall have executed and the Issuer shall
have accepted the Letter of Representation, and the representations
and warranties of the Issuer herein and of the Company in the
Letter of Representation shall be true and correct on and as of the
Closing Date;
(b) Each of the Indenture, the Installment Agreement and
the Remarketing Agreement shall have been duly authorized, executed
and delivered by the respective parties thereto and shall be in
full force and effect, and each shall not have been amended,
modified or supplemented since the date hereof except as may have
been agreed to by the Underwriter;
(c) Neither the Issuer nor the Company shall be in
default in the performance of any of its covenants and agreements
herein or in the Letter of Representation, respectively;
(d) Subsequent to the execution of this Purchase
Agreement, there shall not have been any downgrading of any rating
by Moody's Investors Service, Inc. or Standard & Poor's Ratings
Group of any securities issued by the Company or of any bonds
issued by the Issuer with respect to the Facilities or of the
Refunding Bonds;
(e) The Underwriter shall have received:
(i) The Final Official Statement 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 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 Underwriter, 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 Underwriter
and its 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 Underwriter, to the effect that each of
the representations and warranties of the Issuer set forth in
this Purchase Agreement is true and correct on and as of the
Closing Date as if made on and as of the Closing Date and that
all agreements to be complied with and obligations to be
performed by the Issuer hereunder and under the Installment
Agreement, the Resolution and the Indenture on or prior to the
Closing Date or as contemplated hereby or thereby have been
complied with and performed;
(xii) A certificate, dated the Closing Date, signed
by a Vice President or the Treasurer of the Company to the
effect that, (A) the representations and warranties contained
in the Letter of Representation [and the Remarketing
Agreement] or in any certificate delivered by the Company
hereunder or thereunder are true and correct in all material
respects on and as of the Closing Date as if made on and as of
the Closing Date, (B) all agreements to be complied with and
obligations to be performed by the Company pursuant to the
Letter of Representation, [and the Remarketing Agreement] or
as contemplated by the Letter of Representation, [the
Remarketing Agreement] the Resolution, the Installment
Agreement or the Indenture on or prior to the Closing Date
have been complied with and performed and (C) there has been
no material adverse change in the Company's financial
condition or any adverse development concerning its business
or assets which would result in a material adverse change in
its prospective financial condition or results of operations
from that described in or contemplated by the Official
Statement or, if such change has occurred, full information
with respect thereto;
(xiii) A certificate, satisfactory in form and
substance to the Underwriter, of one or more duly authorized
officers of the Trustee, dated the Closing Date, as to the due
authentication and delivery of the Refunding Bonds by the
Trustee under the Indenture;
(xiv) Arbitrage certifications, satisfactory in form
to the Underwriter and Underwriter's counsel, by the Company
and the Issuer (which may be in the form of a single
document);
(xv) Evidence, satisfactory to the Underwriter, of
the ratings on the Refunding Bonds; and
(xvi) Such additional certificates (including
appropriate no litigation certificates), instruments or other
documents as the Underwriter or Underwriter's counsel may
reasonably request to evidence compliance with applicable law,
the authority of the Trustee to act under the Indenture, and
the due performance and satisfaction by the Company at or
prior to such date of all agreements then to be performed and
all conditions then to be satisfied by it, in connection with
this Purchase Agreement, the Letter of Representation, [the
Remarketing Agreement,] the 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.
(f) At Closing there shall not have been any material
adverse change in the financial condition of the Company or any
adverse development concerning the business or assets of the
Company which would result in a material adverse change in the
prospective financial condition or results of operations of the
Company from that described in the Official Statement which, in the
sole judgment of the Underwriter, makes it inadvisable to proceed
with the sale of the Refunding Bonds;
(g) The Commission shall have issued an order under the
1935 Act, authorizing the Company's obligations with respect to the
Refunding Bonds[, and] the Installment Agreement[, the Remarketing
Agreement]; the Attorney General of the State of Texas shall have
examined the Refunding Bonds and the records relating to their
issuance, shall have certified as to their validity and shall have
approved the Refunding Bonds; and the Refunding Bonds shall have
been registered by the Comptroller of Public Accounts of the State
of Texas;
(h) All matters relating to this Purchase Agreement, the
Official Statement, the Refunding Bonds and the sale thereof, the
Installment Agreement, [the Remarketing Agreement,] the Indenture,
the Resolution, the Letter of Representation, and the consummation
of the transactions contemplated hereby or thereby shall be
satisfactory to and approved by the Underwriter as of the Closing,
which approval shall not be unreasonably withheld. Any certificate
signed by or on behalf of the Issuer or the Company and delivered
at the Closing shall be a representation and warranty by the Issuer
or the Company, as the case may be, to the Underwriter as to the
statements made therein;
(i) The Underwriter shall have received from the Company
payment on the Closing Date by wire transfer of the Underwriter's
fees (___% of the principal amount of the Refunding Bonds) as set
forth in Section 5 of the Letter of Representation; and
(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 Underwriter, so material
and adverse as to make it impractical or inadvisable to proceed
with the offering or delivery of the Refunding Bonds as
contemplated in the Official Statement.
7. Events Permitting the Underwriter to Terminate. The
Underwriter may terminate its obligations to purchase the Refunding
Bonds at any time before Closing if any of the following occurs:
(a) A legislative, executive or regulatory action
(including the introduction or proposal for adoption of
legislation, executive orders or regulations) or a court decision
which, in the sole judgment of the Underwriter, casts sufficient
doubt on the legality of, or the tax-free status of interest on,
obligations of the general kind and character as the Refunding
Bonds so as to materially impair the marketability or materially
lower the market price thereof or would make it impractical to
market the Refunding Bonds on the terms and in the manner
contemplated in the Official Statement;
(b) Any action by the Commission, any other governmental
agency, or a court which, directly or indirectly, would require, in
the reasonable judgment of the Underwriter, (i) registration of the
Refunding Bonds under the Securities Act or (ii) qualification of
an indenture in respect of the Refunding Bonds under the Trust Act,
or any such action or legislative, executive or regulatory action
with the purpose or effect of otherwise prohibiting the issuance,
offering or sale of the Refunding Bonds as contemplated hereby or
by the Official Statement or of obligations of the general
character of the Refunding Bonds;
(c) (i) Any general suspension or material limitation on
trading in securities on the New York Stock Exchange or by the
Commission or by any federal or state agency or by the decision of
any court, any limitation on prices for such trading or any
restrictions on the distribution of securities, (ii) trading in any
securities of the Company shall have been suspended by the
Commission or a national securities exchange, (iii) a general
banking moratorium on commercial banking activities in New York
shall have been declared either by federal or New York State
authorities, (iv) the rating assigned by any nationally recognized
securities rating agency to any securities of the Company as of the
date of this Purchase Agreement shall have been lowered since that
date or (v) there shall have occurred any outbreak or material
escalation of hostilities or other calamity or crisis, the effect
of which on the financial markets of the United States is such as
to make it, in the judgment of the Underwriter, impracticable to
market the Refunding Bonds; or
(d) Any event or condition not expressly contemplated in
the Official Statement which, in the sole judgment of the
Underwriter, renders untrue or incorrect, in any material adverse
respect as of the time to which the same purports to relate, the
information, including the financial statements, contained in the
Official Statement, including Appendices thereto and documents
incorporated therein by reference, or which requires that
information not reflected in such Official Statement should be
reflected therein in order to make the statements and information
contained therein not misleading in any material respect at such
time, which, in either event, in the sole judgment of the
Underwriter, makes it inadvisable to proceed with the sale of the
Refunding Bonds; provided, however, that the Underwriter shall not
exercise the termination right provided in this subparagraph (d)
(i) until the Underwriter shall have consulted with the Company
with respect to the event or condition at issue and (ii) so long as
the Company and the Underwriter shall reasonably believe that such
event or condition can be eliminated or cured prior to the Closing
Date.
8. Execution in Counterparts. This Purchase Agreement
may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of
the parties hereto may execute this Purchase Agreement by signing
any such counterpart.
9. Notices and Other Actions. All notices, requests,
demands and formal actions hereunder will be in writing mailed,
telegraphed or delivered to:
The Underwriter:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Tax-Exempt Finance Dept.
The Issuer:
Sabine River Authority of Texas
12777 Highway 87 N
Orange, Texas 77603
Attention: Executive Vice President
and General Manager
The Company:
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
10. GOVERNING LAW. THIS PURCHASE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS.
11. Successors. This Purchase Agreement 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.
<PAGE>
EXHIBIT 4
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
____________, 1996
Sabine River Authority of Texas
12777 Highway 87 N
Orange, Texas 77603
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
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. (the
"Underwriter"), the Issuer has agreed to sell to the Underwriter, and the
Underwriter has agreed to purchase from the Issuer and to offer for sale the
bonds described above (the "Refunding Bonds"), by means of the Final Official
Statement of even date herewith, as it may be amended or supplemented with the
consent of the Underwriter, the Issuer and 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 Underwriter are entering into the Purchase Agreement and agreeing to sell
and purchase the Refunding Bonds on the terms and subject to the conditions
therein set forth, in reliance on the representations, covenants and
agreements of the Company contained in this Letter of Representation.
2. Representations by the Company. The Company makes the
following representations and warranties, all of which shall survive the
termination of the Purchase Agreement and the sale and delivery of the
Refunding Bonds to the Underwriter.
(a) That the Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of 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 [and the Remarketing Agreement].
(b) That the Company has duly approved the forms of the
Resolution, the Indenture and the Purchase Agreement. [Each of] the
Installment Agreement [and the Remarketing Agreement] has been duly
authorized, executed and delivered by the Company and is a legal, valid and
binding obligation of the Company enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally and to the effect of general principles of equity (regardless of
whether enforceability is considered in a proceeding in equity or at law).
The Company has duly authorized the taking of all action necessary to carry
out and give effect to the transactions contemplated to be performed by it by
the Official Statement, the Installment Agreement, [the Remarketing
Agreement,] the Purchase Agreement and this Letter of Representation. The
Commission has issued an order (the "Order") under the 1935 Act authorizing
the Company's obligations with respect to this Letter of Representation, the
Installment Agreement, [the Remarketing Agreement,] the Refunding Bonds and
the Purchase Agreement, such order being subject, however, to the condition,
among others, that the Company comply with such supplemental order, if any, as
the Commission may enter thereunder. A copy of such order heretofore entered
by the Commission has been or will be delivered to the Underwriter.
(c) That this Letter of Representation has been duly executed
and delivered by the Company.
(d) That the approval of the Resolution, the Indenture and the
Purchase Agreement, the execution and delivery of this Letter of
Representation, the Installment Agreement, [the Remarketing Agreement and the
Letter of Credit Agreement] and compliance with the provisions of such
instruments and consummation of the transactions contemplated hereby and
thereby, do not and will not conflict with, violate or result in a breach of
any provision of or constitute a default (or an event which with notice or
passage of time, or both, would constitute a default) on the part of the
Company under its Restated 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, the Installment Agreement [and the Remarketing
Agreement] or the consummation by the Company of the transactions contemplated
by the Purchase Agreement, this Letter of Representation, the Installment
Agreement[, the Remarketing Agreement,] 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 Underwriter in connection with the offering of the
Refunding Bonds; that the Official Statement is deemed final by the Company
for purposes of Rule 15c2-12 under the Exchange Act; and that the financial
statements relating to it included or incorporated by reference in the
Official Statement (including Appendix A thereto) and the Preliminary Official
Statement (including Appendix A thereto) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis (except
as otherwise disclosed in the notes to such financial statements) and fairly
present its financial condition and the results of its operations at the dates
and for the respective periods indicated therein.
(g) That any document, certificate or other written statement
furnished by the Company to the Underwriter or McCall, Parkhurst & Horton
L.L.P., Bond Counsel, or Sidley & Austin, counsel to the Underwriter, relating
to the Company, the Facilities or the Refunding Bonds is true and correct in
all material respects and does not or will not, as the case may be, include
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary 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, [by the Remarketing
Agreement] or by the Official Statement or (y) adversely affect the validity
or enforceability of the Refunding Bonds, the Installment Agreement, [the
Remarketing Agreement,] the Indenture, the Resolution, the Purchase Agreement
or this Letter of Representation or any agreement or instrument to which the
Company is a party and which is used or contemplated for use in the
consummation of the transactions contemplated hereby or thereby.
(i) Arthur Andersen LLP, are independent public accountants with
respect to the Company, as would be required under the Securities Act and the
rules and regulations thereunder if the Securities Act and the rules and
regulations thereunder were applicable to the Official Statement.
(j) That (i) the Facilities consist of either land or property
of a character subject to depreciation for federal income tax purposes and
will be used to abate or control air and water pollution or contamination by
removing, altering, disposing or storing pollutants, contaminants, wastes or
heat or to collect, store or treat sewage or solid wastes prior to final
disposal thereof; (ii) the Facilities will not result in an increase in
production or capacity, production efficiencies, the production of a by-
product, the extension of the useful life of any manufacturing or production
facility or any part thereof at the Plant or other property which is not part
of the Plant, which would jeopardize the exclusion of the interest on the
Refunding Bonds from the gross income of the recipients thereof for federal
income tax purposes, and none of the Facilities would have been installed but
for the purpose of disposing of sewage or solid waste or controlling
pollution; and (iii) all other information supplied by the Company in
connection with the transactions contemplated hereby and by the Official
Statement with respect to the exclusion from gross income for federal income
tax purposes of interest on the Refunding Bonds is correct and complete.
(k) That all required certificates that the Facilities (other
than the solid waste disposal facilities that require no certifications), as
designed, are in furtherance of the purpose of abating or controlling air or
water pollution have been obtained from the Texas Air Control Board and the
Texas Department of Water Resources, respectively, and remain in full force
and effect.
(l) That the Company is eligible as an issuer to file
registration statements on Form S-3 under the Securities Act, and each
document filed by it under the Exchange Act and incorporated (or to be
incorporated) in the Preliminary Official Statement or the Official Statement
by reference complied when so filed (or will comply when so filed) in all
material respects with the act under which it was so filed, and, during the
period that an Official Statement is required to be delivered, no such
document hereafter so filed will include any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(m) That there has been no material adverse change in the
Company's financial condition or any adverse development concerning the
Company's business and assets which would reasonably be expected to result in
a material adverse change in its prospective financial condition or results of
operations from that shown in the Official Statement.
(n) That no event of default or event which, with notice or
passage of time, or both, would constitute an event of default or a default
under any agreement or instrument to which the Company is a party or by which
it is or may be bound or to which any of its property or assets is or may be
subject and which would materially and adversely affect the transactions
contemplated by the Installment Agreement, [the Remarketing Agreement, the
Letter of Credit Agreement,] the Official Statement 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 Underwriter of any material adverse change in its
business, properties or financial condition occurring before Closing or within
three months thereafter which would require revision of the information in the
Official Statement in order to make the representations set forth in Section
2(f) hereof true and correct.
(b) Refrain from taking any action, or from permitting any
action, with regard to which it may exercise control, to be taken, that (i)
would in any way cause the proceeds from the sale of the Refunding Bonds to be
applied in a manner other than as provided in the Resolution, the Installment
Agreement, the Indenture and discussed in the Official Statement, (ii) would
result in the loss of the exclusion from gross income for federal income tax
purposes of interest on the Refunding Bonds, or (iii) it has reason to believe
will adversely jeopardize the continued validity and effectiveness of such
exemption.
(c) Deliver to the Underwriter upon request copies of documents
of the Company incorporated by reference into the Official Statement and all
documents to which Section 3(d) hereof refers at such times and in such
quantities as are necessary to enable the Underwriter to satisfy requests for
such information, and enable the Underwriter to make such documents available
for inspection, as described in the Official Statement.
(d) During the period commencing on the date hereof and ending
upon completion of the distribution of the Refunding Bonds (but in no event
later than 90 days after the date of the Closing), promptly after filing any
document with the Commission pursuant to Section 13, 14 or 15(d) of the
Exchange Act, furnish a copy thereof to the Underwriter and the Issuer.
(e) Comply with and perform its obligations set forth in its
Rule 15c2-12 Undertakings attached hereto as Exhibit 1, which is hereby
incorporated by reference herein.
(f) Before amending or supplementing the Official Statement,
furnish to the Underwriter two copies and 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
Underwriter or the Issuer.
(g) During such period as the Underwriter believes delivery of
the Official Statement is necessary or desirable in connection with sales of
the Refunding Bonds by the Underwriter or a dealer, if any event shall occur
as a result of which it may be necessary to amend or supplement the Official
Statement in order to make the statements therein, in the light of the
circumstances when the Official Statement is delivered to a purchaser, not
misleading, immediately notify the Underwriter and the Issuer of such event
and cooperate at the request of the Underwriter in the preparation of
amendments or supplements to the Official Statement which in the judgment of
the Underwriter are necessary so that the statements in the Official Statement
as so amended or supplemented will not, in light of the circumstances when the
Official Statement is delivered to a purchaser, be misleading.
4. Indemnification; Contribution. (a) The Company agrees to
indemnify and hold harmless the Issuer, its officials, directors, members,
officers, employees and agents and the Underwriter, its officers, directors,
officials, employees and each person, if any, who controls the Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act (collectively, "Indemnified Parties") from and against any and
all losses, claims, damages or liabilities to which such Indemnified Party may
become subject under the Securities Act, the Exchange Act or the common law or
otherwise, and to reimburse each such Indemnified Party for any reasonable
legal or other expenses (including reasonable counsel fees) incurred by it or
them in connection with defending against any such losses, claims, damages or
liabilities, arising out of or in connection with the offering and sale of the
Refunding Bonds (i) on the ground that the Preliminary Official Statement or
the Final Official Statement (except with respect to the Issuer for the
information relating to the Issuer under the caption "The Issuer" and with
respect to the Underwriter for information under the caption "Underwriting"
and any information furnished in writing by the Underwriter specifically for
use therein) includes any untrue statement or an alleged untrue statement of
material fact or any omission or an alleged omission to state a material fact
necessary 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, the Underwriter agrees to indemnify
and hold harmless the Issuer, its officers, directors, employees and agents
and the Company, its officers, directors and employees, and each person, if
any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act (collectively, "Indemnified
Parties"), from and against any and all losses, claims, damages or liabilities
to which such Indemnified Party may become subject under the Securities Act,
the Exchange Act or the common law or otherwise, and to reimburse each such
Indemnified Party for any reasonable legal or other expenses (including
reasonable counsel fees) incurred by it or them in connection with defending
against any such losses, claims, damages or liabilities, arising out of or in
connection with the offering and sale of the Refunding Bonds on the grounds
that the information under the caption "Underwriting" furnished by the
Underwriter in writing specifically for use in the Preliminary Official
Statement or the Final Official Statement includes any untrue statement or
alleged untrue statement of a material fact or an omission or an alleged
omission to state a material fact necessary 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 the Underwriter, as the case may be (the "Indemnifying
Party"), such Indemnified Party will notify the Indemnifying Party in writing
of such action and the Indemnifying Party may participate in, and, to the
extent that it may wish, jointly with any other Indemnifying Party similarly
notified, assume the defense thereof, including the employment of counsel and
the payment of all expenses; but the omission so to notify the Indemnifying
Party will not relieve the Indemnifying Party from any liability which it may
have to any Indemnified Party otherwise than hereunder. The Indemnifying
Party shall not be liable for any settlement of any such action effected
without its consent, but if settled with the consent of the Indemnifying Party
or if there is a final judgment for the plaintiff in any such action, the
Indemnifying Party will indemnify and hold harmless any Indemnified Party from
and against any loss or liability by reason of such settlement or judgment.
The indemnity agreements contained herein shall include reimbursement for
expenses reasonably incurred by an Indemnified Party in investigating the
claim and in defending it if the Indemnifying Party declines to assume the
defense and shall survive termination of the Purchase Agreement, this Letter
of Representation and the delivery of the Refunding Bonds.
(d) If the indemnification provided for in this Section 4 is
unavailable to or insufficient to hold harmless an Indemnified Party under
Subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then the
Company shall contribute to the amount paid or payable by such Indemnified
Party as a result of such losses, claims, damages or liabilities (or actions
in respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and the Indemnified Party on the
other in connection with the statements or omissions or other matters which
resulted in such losses, claims, damages and liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations.
Relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or the Indemnified Party on the other
and each such party's relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The
Company and the Underwriter agree that it would not be just and equitable if
contribution pursuant to this Subsection (d) were determined solely by pro
rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Subsection
(d). The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this Subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such Indemnified Party in connection
with investigating or defending any such action or claim. No Indemnified
Party guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from the
Company if the Company is not guilty of such fraudulent misrepresentation.
The obligations of the Company under this Subsection (d) shall be in addition
to any liability which the Company may have otherwise than under this Section
4.
5. Payment of Costs and Expenses. All expenses and costs of
the authorization, issuance, sale and delivery of the Refunding Bonds
(including, without limitation: the preparation and furnishing to the
Underwriter of the Preliminary Official Statement and the Official Statement
and any amendments or supplements thereto, and the preparation and execution
of the Indenture, the Refunding Bonds, the Installment Agreement, [the
Remarketing Agreement, the Letter of Credit Agreement, the Letter of Credit,]
the Resolution, the Letter of Representation and the Purchase Agreement;
rating agency fees, the issuance and closing fees of the Issuer, the fees and
disbursements of Bond Counsel, Counsel to the Issuer, the financial advisor to
the Issuer and Counsel to the Company; the expenses, including the legal fees,
of Counsel to the Underwriter incurred in connection with qualifying the
Refunding Bonds for sale under the securities laws of various jurisdictions
and preparing Blue Sky memoranda) shall be paid by the Company. In addition,
the Company shall pay to the Underwriter on the Closing Date by wire transfer
the fees of the Underwriter in connection with the offering of the Refunding
Bonds in an amount equal to ___% of the principal amount of the Refunding
Bonds. The Underwriter will pay its own costs and expenses, including
advertising and legal expenses (except as noted in this Section 5).
6. Execution in Counterparts. This Letter of Representation
may be executed and accepted in any number of counterparts, all of which taken
together shall constitute one and the same instrument, and any of the parties
hereto may execute and accept this Letter of Representation by signing any
such counterpart.
7. Notices. All notices, requests, demands and formal actions
hereunder will be in writing mailed, telegraphed or delivered to:
The Underwriter:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attention: Tax-Exempt Finance Department
The Issuer:
Sabine River Authority of Texas
12777 Highway 87 N
Orange, Texas 77603
Attention: Executive Vice President
and General Manager
The Company:
c/o Central and South West Corporation
1616 Woodall Rodgers Freeway
Dallas, Texas 75202
Attention: Director, Finance
8. Successors. This Letter of Representation will inure to the
benefit of and be binding upon the parties and their successors and each other
Indemnified Party and will not confer any rights upon any other person. The
term "successor" shall not include any holder of any Refunding Bonds merely by
virtue of such holding.
9. Survival of Agreements and Representations. The indemnity
and other agreements contained and the representations and warranties of the
Company set forth in this Letter of Representation shall remain operative and
in full force and effect regardless of (i) any termination of the Purchase
Agreement, (ii) any investigation made by or on behalf of the Underwriter or
any person controlling the Underwriter or by or on behalf of the Company, its
directors or officers or any person controlling the Company, and (iii) sale
and delivery of the Refunding Bonds.
10. Governing Law. This Letter of Representation shall be
governed by and construed in accordance with the laws of the State of New
York, except that the rights, privileges, duties and immunities of the Issuer
shall be governed by the laws of the State of Texas.
Very truly yours,
SOUTHWESTERN ELECTRIC POWER COMPANY
By:
Name:
Title:
Accepted:
SABINE RIVER AUTHORITY OF TEXAS
By:
Name:
Title:
Accepted:
GOLDMAN, SACHS & CO.
SOUTHWESTERN ELECTRIC POWER COMPANY
$81,700,000
Sabine River Authority of Texas
Pollution Control Revenue Refunding Bonds
(Southwestern Electric Power Company Project)
Series 1996
__________, 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 Underwriter (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.
(the "Underwriter") pursuant to which the Issuer has agreed to sell
the Refunding Bonds to the Underwriter.
(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.
(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 5
PRELIMINARY OFFICIAL STATEMENT DATED , 1996
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
Pollution Control Revenue Refunding Bonds
(Southwestern Electric Power Company Project)
Series 1996
Interest to Accrue from Date of Issuance Due:
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
Initially, the Bonds will bear interest in the _____ Mode. The
Bonds may subsequently be converted to the Daily Mode for Rate
Periods of one day, the Weekly Mode for Rate Periods of seven days,
the Flexible Mode for Rate Periods of any duration up to 270 days,
the Monthly Mode for Rate Periods of 30 days, the Quarterly Mode
for Rate Periods of 90 days, the Semiannual Mode for Rate Periods
of 180 days, the Multiannual Mode for Rate Periods of one year or
any integral multiple thereof or the Fixed Rate Mode for a Rate
Period from the date of conversion to the Maturity Date of the
Bonds. The Daily Mode, Weekly Mode, Monthly Mode, Quarterly Mode
and Semiannual Mode are referred to herein as the "Short Term
Modes." Subject to certain conditions described herein, the Bonds
may be converted in whole or in part, from time to time, from any
Mode then in effect (other than a Fixed Rate Mode) to any Flexible
Mode, Short Term Mode, Multiannual Mode or Fixed Rate Mode. [THIS
OFFICIAL STATEMENT DESCRIBES THE TERMS AND CONDITIONS OF THE BONDS
ONLY WHILE IN A FLEXIBLE MODE OR A SHORT TERM MODE.]
The Remarketing Agent for the Bonds will be Goldman, Sachs &
Co.
The Bonds will be delivered as fully registered bonds without
coupons in denominations of $100,000 or any integral multiple of
$1,000 in excess thereof in the Flexible Mode, denominations of
$100,000 or any integral multiple thereof in the Daily Mode or the
Weekly Mode and denominations of $5,000 or any integral multiple
thereof in the Monthly Mode, Quarterly Mode, Semiannual Mode,
Multiannual Mode or Fixed Rate Mode. Bonds will be initially
registered in the name of Cede & Co., as registered owner and
nominee for The Depository Trust Company, New York, New York
("DTC"). DTC will act as securities depository for the Bonds.
Bonds will be delivered only in book-entry form and, except under
the limited circumstances described herein, beneficial owners of
such Bonds will not receive certificates representing their
ownership interests. Principal of, premium, if any, interest on,
and the Purchase Price for, the Bonds, will be paid in the manner
described herein. So long as DTC or its nominee is the registered
owner of the Bonds, payments of principal, interest and premium, if
any, and the Purchase Price, will be made through DTC and its
Participants and disbursements of such payments to beneficial
owners will be the responsibility of such Participants. See
"BOOK-ENTRY ONLY SYSTEM" herein.
The Bonds are subject to optional and mandatory redemption and
mandatory tender prior to maturity, and while in a Short Term Mode
to optional tender, all as described herein.
______________
Price 100%
The Bonds are offered, subject to prior sale, when, as and if
issued by the Issuer and accepted by Goldman, Sachs & Co.,
subject to the approval of legality by the Attorney
General of the State of Texas and McCall, Parkhurst &
Horton, L.L.P., Bond Counsel, the approval of
certain other legal matters by Sidley & Austin
counsel for the Underwriter, and certain
other conditions. It is expected that
the Bonds will be available for
delivery to DTC on or about
________________, 1996.
_______________
Goldman, Sachs & Co.
Dated: , 1996
This Preliminary Official Statement and the information contained
herein are subject to completion or amendment. Under no
circumstances shall this Preliminary Official Statement constitute
an offer to sell or solicitation of an offer to buy nor shall there
be any sale of these securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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 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 the
Underwriter. This Official Statement does not constitute an offer
to sell or the solicitation of an offer to buy, nor shall there be
any sale of the Bonds, by any person in any jurisdiction in which
it is unlawful for such person to make such offer, solicitation or
sale. 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
THE FACILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
THE BONDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
BOOK-ENTRY ONLY SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . 17
THE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
THE INDENTURE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
TAX MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
CONTINUING DISCLOSURE. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
APPENDIX A - SOUTHWESTERN ELECTRIC POWER COMPANY . . . . . . . . . . . . . A-1
APPENDIX B - CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . B-1
APPENDIX C - FORM OF OPINION OF BOND COUNSEL . . . . . . . . . . . . . . . C-1
$81,700,000
SABINE RIVER AUTHORITY OF TEXAS
POLLUTION CONTROL REVENUE REFUNDING BONDS
(Southwestern Electric Power Company Project)
Series 1996
Due [FN]1
_______________
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 [up
to] $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 the Company and located in
Harrison County, Texas.
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.
The Bonds will mature on ________________.[FN]1 The Bonds
will be dated June 15, 1996, but will initially bear interest from
the date of issuance thereof at a _____ Rate, subject to conversion
in certain circumstances as described under "THE BONDS Conversion
Between Modes." [Interest on the Bonds in the Flexible Mode or a
Short Term Mode will be computed as described under the caption
"THE BONDS Determination of Interest Rates."]
Purchases of beneficial interests in the Bonds may be made,
during a Flexible Mode, only in the denominations of $100,000 or
any integral multiple of $1,000 in excess of $100,000, during a
Daily or Weekly Mode, only in the denominations of $100,000 or any
integral multiple thereof; provided that if the principal amount of
the Bonds in the Daily Mode or Weekly Mode, as the case may be, is
not divisible by $100,000, then the remainder of such principal
amount shall be added to another Bond in the same Mode that is in
a principal amount of $100,000 or any integral multiple thereof,
and during a Monthly, Quarterly or Semiannual Mode, only in the
denominations of $5,000 or any integral multiple thereof. The
Bonds will be subject to optional and mandatory redemption prior to
maturity, as described under the caption "THE BONDS Redemption
Prior to Maturity."
There follows in this Official Statement brief
descriptions of the Issuer, the Facilities, the Use of Proceeds,
the Bonds, the Agreement and the Indenture. [This Official
Statement describes the Bonds only while they are in the Flexible
Mode or a Short Term Mode (i.e., a Daily, Weekly, Monthly,
Quarterly or Semiannual Mode)]. The descriptions herein of the
Agreement 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 residing in
the area and 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
General
Definitions used in the forepart of this Official Statement and
not defined herein shall have the meanings ascribed thereto in
Appendix B hereto. The Bonds are being issued in fully registered
form only in the aggregate amount set forth on the cover page
hereof and will mature on ____________. Interest on the Bonds will
be payable on each Interest Payment Date at the rates per annum
determined as hereinafter described. Such interest rate may not
exceed the Maximum Rate (i.e., a "net effective interest rate" as
defined and calculated in accordance with the provisions of Article
717k-2, Vernon's Texas Civil Statutes) of 12% per annum. [Interest
on the Bonds during a Flexible Mode, Daily Mode, Weekly Mode or
Monthly Mode will be computed on the basis of a 365 or 366-day
year, as applicable, for the number of days actually elapsed based
on the calendar year in which such rate year commences; and
interest on Bonds in a Quarterly Mode or Semiannual Mode will be
calculated on the basis of a 360-day year comprised of twelve 30-
day months.]
The Bonds will initially be issued in the ________ Mode. With
the exception of Bonds in the Fixed Rate Mode, all or any portion
of the Bonds may be converted at the election of the Company to any
authorized Mode or Modes (i.e., a Daily Mode, a Weekly Mode, a
Monthly Mode, a Quarterly Mode, a Flexible Mode, a Semiannual Mode,
a Multiannual Mode or a Fixed Rate Mode), all as described below.
IF ANY BONDS ARE CONVERTED TO A MODE OTHER THAN A SHORT TERM MODE
OR FLEXIBLE MODE, THE ISSUER AND THE COMPANY WILL PREPARE AN
OFFICIAL STATEMENT WITH RESPECT TO SUCH BONDS DESCRIBING SUCH MODE
AT THE TIME OF SUCH CONVERSION. THIS OFFICIAL STATEMENT DESCRIBES
THE TERMS AND CONDITIONS OF THE BONDS ONLY WHILE IN A FLEXIBLE MODE
OR A SHORT TERM MODE.
Beneficial interests in the Bonds will initially be issued
pursuant to a Book-Entry Only System (the "Book-Entry Only System")
maintained by The Depository Trust Company, New York, New York
("DTC"), as described below under the caption "BOOK-ENTRY ONLY
SYSTEM." Under the Indenture, the Issuer may appoint a successor
securities depository to DTC. (DTC, together with any such
successor securities depository, is hereinafter referred to as the
"Securities Depository.") The holders of the Bonds have no right
to a Book-Entry Only System for the Bonds. The following
information is subject in its entirety to the provisions described
below under the caption "BOOK-ENTRY ONLY SYSTEM" while the Bonds
are in the Book-Entry Only System.
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.
Form and Denomination of Bonds; Payments on the Bonds
General
The Bonds will be issued only as fully registered bonds, without
coupons, in denominations of (i) $100,000 or any integral multiple
of $1,000 in excess of $100,000 during a Flexible Mode, (ii)
$100,000 or any integral multiple thereof during a Daily or Weekly
Mode, provided that if the principal amount of Bonds in the Daily
or Weekly Mode, as the case may be, is not evenly divisible by
$100,000, then the remainder of such principal amount shall be
added to another Bond in the same Mode that is in a principal
amount of $100,000 or any integral multiple thereof and (iii)
$5,000 or any integral multiple thereof during a Monthly, Quarterly
or Semiannual Mode (each, an "Authorized Denomination", and
collectively the "Authorized Denominations").
The Bank of New York, the Trustee under the Indenture, has been
appointed as Paying Agent (the "Paying Agent") under the Indenture.
The Principal Office of the Paying Agent is located at 101 Barclay
Street, 21st Floor, New York, New York 10286.
The Bonds may be transferred (in Authorized Denominations) only
upon surrender thereof at the Principal Office of the Trustee,
accompanied by an assignment, duly executed by the Owner of such
Bond or such Owner's attorney, in such form as shall be
satisfactory to the Trustee. Upon the due presentation of any Bond
for transfer and on request of the Trustee, the Issuer will execute
in the name of the transferee, and the Trustee shall authenticate
and deliver, a new fully registered Bond or Bonds of the same Mode,
in an aggregate principal amount equal to the unmatured and
unredeemed aggregate principal amount of such transferred fully
registered Bond, and bearing interest at the same rate, and
maturing on the same date, as such transferred Bond.
The Bonds may be exchanged for an equal aggregate principal
amount of Bonds of Authorized Denominations of the same Mode upon
surrender of such Bonds at the Principal Office of the Trustee, as
Bond Registrar for the Bonds located at 101 Barclay Street, 21st
Floor, New York, New York 10286, together with a written instrument
of transfer executed by the Registered Owner or the Owner's
attorney in such form as shall be satisfactory to the Trustee.
Neither the Issuer nor the Trustee shall be required to make any
transfer or exchange of any Bond during the ten Business Days prior
to the mailing of a notice of Bonds selected for redemption or,
with respect to a Bond, after such Bond or any portion thereof has
been selected for redemption. Registration of transfers and
exchanges shall be made without charge to the Bondholders, except
that any required taxes or other governmental charges shall be paid
by the Bondholder requesting registration of transfer or exchange.
Principal and Interest Payments
The principal of and interest on the Bonds during a Flexible
Mode, and the principal of the Bonds during a Short Term Mode, is
payable when due by wire or bank transfer of immediately available
funds within the continental United States to the Registered Owner,
but only upon presentation and surrender of the Bonds at the
Principal Office of the Paying Agent. Interest on the Bonds during
a Short Term Mode is payable when due in immediately available
funds by wire or bank transfer within the continental United States
from the Paying Agent to the Registered Owner, determined on the
Record Date (as described below), at its address as shown on the
registration books maintained by the Trustee as Bond Registrar.
Interest Payment Dates
The interest payment dates (the "Interest Payment Dates") for
Bonds during a Flexible Mode will be the first day (which must be
a Business Day) after an Interest Rate Period and the Maturity
Date; for Bonds during a Daily, Weekly, or Monthly Mode, the first
Business Day of each calendar month following a month in which
interest at such rates has accrued and the Maturity Date; for Bonds
during a Quarterly Mode, each March 1, June 1, September 1,
December 1 and the Maturity Date; and for Bonds during a Semiannual
Mode, each June 1 and December 1 and the Maturity Date.
The Record Date for a Bond during a Flexible Mode will be the
time of payment on the Interest Payment Date applicable to that
Bond; for the Daily, Weekly, Monthly, Quarterly, or Semiannual
Modes, the close of business of the Trustee on the Business Day
preceding an Interest Payment Date applicable to that Bond.
Interest Rate Modes
From and including the date of initial issuance and delivery,
the Bonds will bear interest at the rate determined as the _____
Rate until converted in whole or in part to a different Mode
permitted under the Indenture. The permitted Modes for the Bonds
are the "Flexible Mode" for periods of from one to 180 days, the
"Daily Mode," the "Weekly Mode," the "Monthly Mode," the "Quarterly
Mode," the "Semiannual Mode" and the "Multiannual Mode" for periods
of one day, one week, one month, three months, six months or one
year or integral multiples thereof, respectively, and the "Fixed
Rate Mode" for the remaining term of the Bonds. The period during
which a particular Mode is in effect is referred to as a "Rate
Period" or an "Interest Rate Period." Except as otherwise provided
in the Indenture, the interest rates in each Mode and the Rate
Periods will be determined by Goldman, Sachs & Co., appointed as
the Remarketing Agent under the Indenture (the "Remarketing
Agent"). The interest rate on the Bonds may not exceed the Maximum
Rate. Except for Bonds bearing interest at a Fixed Rate, the Mode
for all or a portion of the Bonds is subject to conversion (a
"Conversion") to a different Mode from time to time at the election
of the Company. Each determination by the Remarketing Agent of the
interest rate and Rate Period applicable to the Bonds shall be
conclusive and binding on the Issuer, the Trustee, the Paying
Agent, the Bond Registrar, the Company and the Bondholders.
Until converted to a different Mode, the Bonds during a Daily
Mode will accrue interest at a Daily Rate from the first day of
such Mode through the day next preceding the first Interest Payment
Date applicable thereto and, thereafter, from an Interest Payment
Date through the day next preceding the next Interest Payment Date;
during a Weekly Mode will accrue interest at a Weekly Rate from the
first day of such Mode through the day next preceding the first
Interest Payment Date applicable thereto and, thereafter, from an
Interest Payment Date through the day next preceding the next
Interest Payment Date; during a Monthly Mode will accrue interest
at a Monthly Rate from the first day of such Mode through the day
next preceding the first Interest Payment Date applicable thereto
and, thereafter, from an Interest Payment Date through the day next
preceding the next Interest Payment Date; during a Quarterly Mode
will accrue interest at a Quarterly Rate from the first day of such
Mode through the next succeeding [February 28 or 29, May 31, August
31 or November 30;] during a Semiannual Mode will accrue interest
from the first day of such Mode through the next succeeding [May 31
or November 30; and Bonds during a Flexible Mode will accrue
interest at the Flexible Rate from the most recent Interest Payment
Date or the Effective Date, as applicable, until the last day of
the Flexible Rate Period.
Determination of Interest Rates
Flexible Mode
The Flexible Rate for Bonds in the Flexible Mode shall be the
rate of interest determined by the Remarketing Agent, for each
Interest Rate Period, to be the lowest rate which in its judgment,
on the basis of prevailing financial market conditions, is
necessary on and as of the Effective Date, to remarket each Bond
having such Interest Rate Period (as determined by the Remarketing
Agent) in a secondary market transaction at a price equal to the
principal amount thereof, but not in excess of the Maximum Rate.
The Remarketing Agent shall determine the initial Flexible Rate or
Rates and Interest Rate Period or Periods on or before the date of
conversion to the Flexible Mode. Thereafter, the Remarketing Agent
shall redetermine the Flexible Rate for each Interest Rate Period
and shall redetermine each Interest Rate Period. While any Bonds
are in the Flexible Mode, such Bonds may have successive Interest
Rate Periods and any Bond may bear interest at a rate and for a
period different from any other Bond. The interest rate and the
Interest Rate Period for each particular Bond in the Flexible Mode
will be determined by the Remarketing Agent and will remain in
effect from and including the Effective Date of the Interest Rate
Period selected for that Bond by the Remarketing Agent through the
last date thereof. The Remarketing Agent shall notify the Paying
Agent of the Flexible Rate and Interest Rate Period by Electronic
Notice not later than 1:00 p.m., New York City time, on the
Effective Date.
If the Remarketing Agent fails for any reason to determine the
Flexible Rate or Rate Period for any Bond in the Flexible Mode, or
if for any reason such manner of determination shall be determined
to be invalid or unenforceable, such Bond will be deemed to be in
a Rate Period ending on the next day which is immediately succeeded
by a Business Day and the Flexible Rate will be equal to 100% of
the rate for the Public Securities Association Municipal Swap Index
as published by Municipal Market Data for seven day high-grade tax-
exempt variable rate demand obligations on the day on which such
rate is determined or, if such rate is not published on that day,
the most recent publication of such rate.
In determining the Flexible Rate and remarketing Bonds in the
Flexible Mode, the Remarketing Agent will (i) not offer Rate
Periods greater than 270 days, (ii) not offer Rate Periods
applicable to Bonds to be converted extending beyond the day
preceding any scheduled Conversion of the Bonds to another Mode or
the final maturity of the Bonds and (iii) follow any written
directions of the Company not inconsistent with the preceding.
Daily Mode
The Daily Rate shall be the rate of interest determined by the
Remarketing Agent for each Interest Rate Period, to be the lowest
rate which in its judgment, on the basis of prevailing financial
market conditions, would permit the sale of the Bonds in the Daily
Mode at par plus accrued interest on and as of the Effective Date,
but not in excess of the Maximum Rate. The Remarketing Agent shall
determine the initial Daily Rate on or before the date of
conversion to the Daily Mode. Thereafter, the Remarketing Agent
shall redetermine the Daily Rate for each subsequent Interest Rate
Period. When such Bond is in the Daily Mode, the Daily Rate in
effect for each Interest Rate Period (the "Effective Rate" for such
Period) shall be determined not later than the Effective Date and
shall be effective from the Effective Date until the next
succeeding Business Day. The Remarketing Agent shall notify the
Paying Agent of the Daily Rate by Electronic Notice not later than
10:30 a.m., New York City time, on such Business Day.
If the Remarketing Agent fails for any reason to determine the
Daily Rate for any Bond in the Daily Mode (including a failure to
determine the Daily Rate for a day that is not a Business Day), or
if for any reason such manner of determination shall be determined
to be invalid or unenforceable, the Daily Rate to take effect on
such date will be the Daily Rate in effect on the day next
preceding such date.
Weekly Mode
The Weekly Rate shall be the rate of interest determined by the
Remarketing Agent for each Interest Rate Period, to be the lowest
rate which in its judgment, on the basis of prevailing financial
market conditions, would permit the sale of the Bonds in the Weekly
Mode at par plus accrued interest on and as of the Effective Date,
but not in excess of the Maximum Rate. The Remarketing Agent shall
determine the initial Weekly Rate on or before the date of issue in
or conversion to the Weekly Mode. Thereafter, the Remarketing
Agent shall redetermine the Weekly Rate for each subsequent
Interest Rate Period. The Weekly Rate in effect for each Interest
Rate Period shall be determined not later than the Effective Date
which shall be a Wednesday unless the Effective Date is also a
Conversion Date, in which case the Conversion Date will be the
Effective Date. The Remarketing Agent shall notify the Paying
Agent of the Weekly Rate by Electronic Notice not later than 10:00
a.m., New York City time, on the Effective Date.
If the Remarketing Agent fails for any reason to determine the
Weekly Rate for any Bond in the Weekly Mode, or if for any reason
such manner of determination shall be determined to be invalid or
unenforceable, such Bond shall be deemed to be in a Flexible Mode
with an Interest Rate Period ending on the next succeeding day
which is immediately followed by a Business Day.
Monthly Mode
The Monthly Rate shall be the rate of interest determined by the
Remarketing Agent for each Interest Rate Period, to be the lowest
rate which in its judgment, on the basis of prevailing financial
market conditions, would permit the sale of the Bonds in the
Monthly Mode at par plus accrued interest on and as of the
Effective Date, but not in excess of the Maximum Rate. The
Remarketing Agent shall determine the initial Monthly Rate on or
before the date of conversion to the Monthly Mode, which Rate shall
remain in effect as provided in the Indenture. Thereafter, the
Remarketing Agent shall redetermine the Monthly Rate for each
subsequent Interest Rate Period. The Monthly Rate in effect for
each Interest Rate Period shall be determined not later than the
Business Day next preceding the Effective Date which shall be the
first Business Day of a month. Each Monthly Rate will remain in
effect through the day preceding the first Business Day of the
succeeding month. The Remarketing Agent shall notify the Paying
Agent of the Monthly Rate by Electronic Notice not later than 2:00
p.m., New York City time, on the Business Day immediately preceding
the Effective Date.
If the Remarketing Agent fails for any reason to determine the
Monthly Rate for any Bond in the Monthly Mode, or if for any reason
such manner of determination shall be determined to be invalid or
unenforceable, such Bond shall be deemed to be in a Flexible Mode
with an Interest Rate Period ending on the next succeeding day
which is immediately followed by a Business Day.
Quarterly Mode
The Quarterly Rate shall be the rate of interest determined by
the Remarketing Agent for each Interest Rate Period, to be the
lowest rate which in its judgment, on the basis of prevailing
financial market conditions, would permit the sale of the Bonds in
the Quarterly Mode at par plus accrued interest on and as of the
Effective Date, but not in excess of the Maximum Rate. The
Remarketing Agent shall determine the initial Quarterly Rate on or
before the date of conversion to the Quarterly Mode. Thereafter,
the Remarketing Agent shall redetermine the Quarterly Rate for each
subsequent Interest Rate Period. The Quarterly Rate in effect for
each Interest Rate Period shall be determined not later than the
Business Day next preceding the Effective Date. The Remarketing
Agent shall notify the Paying Agent of the Quarterly Rate by
Electronic Notice not later than 2:00 p.m., New York City time, on
the Business Day immediately preceding the Effective Date.
If the Remarketing Agent fails for any reason to determine the
Quarterly Rate for any Bond in the Quarterly Mode, or if for any
reason such manner of determination is determined to be invalid or
unenforceable, such Bond shall be deemed to be in a Flexible Mode
with an Interest Rate Period ending on the next succeeding day
which is immediately followed by a Business Day.
Semiannual Mode
The Semiannual Rate shall be the rate of interest determined by
the Remarketing Agent, for each Interest Rate Period, to be the
lowest rate which in its judgment, on the basis of prevailing
financial market conditions, would permit the sale of the Bonds in
the Semiannual Mode at par plus accrued interest on and as of the
Effective Date, but not in excess of the Maximum Rate. The
Remarketing Agent shall determine the initial Semiannual Rate on or
before the date of conversion to the Semiannual Mode. Thereafter,
the Remarketing Agent shall redetermine the Semiannual Rate for
each subsequent Interest Rate Period. The Semiannual Rate in
effect for each Interest Rate Period shall be determined not later
than the Business Day next preceding the Effective Date. The
Remarketing Agent shall notify the Paying Agent of the Semiannual
Rate by Electronic Notice not later than 2:00 p.m., New York City
time, on the Business Day immediately preceding the Effective Date.
If the Remarketing Agent fails for any reason to determine the
Semiannual Rate for any Bond in the Semiannual Mode, or if for any
reason such manner of determination shall be determined to be
invalid or unenforceable, such Bond shall be deemed to be in a
Flexible Mode with an Interest Rate Period ending on the next
succeeding day which is immediately followed by a Business Day.
Conversion Between Modes
So long as no Event of Default exists under the Indenture, the
Mode for all or any portion of the Bonds (other than Bonds bearing
interest at a Fixed Rate) is subject to Conversion at the election
of the Company upon notice given as provided in the Indenture to
the Issuer, the Trustee, the Paying Agent, the Remarketing Agent,
the Rating Agencies and upon not less than 15 days' notice to the
Bondholders. All Conversions are subject to veto by the Issuer,
which veto may not be unreasonably exercised. Such Bonds will be
subject to mandatory tender on the proposed date of the Conversion,
whether or not the Conversion occurs. If only a portion of the
Bonds is to be converted to a new Mode and if Bonds are then in
more than one Mode, the Mode from which such Bonds are to be
converted will be selected by the Company and, within a Mode, the
Bonds to be converted will be selected by the Paying Agent by lot
from all of the Bonds in that Mode.
Conversion from a Flexible Mode
While a Bond is in the Flexible Mode, Conversion to any other
Mode may take place only on the Interest Payment Date for that Bond
upon fifteen (15) days prior written notice from the Trustee to the
Registered Owner of the Bond. Conversion of a Bond to another Mode
is subject to certain conditions set forth in the Indenture. In
the event that the conditions for a proposed Conversion to a new
Mode are not met (i) such new Mode will not take effect on the
proposed Conversion Date, notwithstanding any prior notice to the
Bondholders of such Conversion and (ii) the Bond will remain in the
Flexible Mode with an Interest Rate Period ending on the next
succeeding day which is immediately followed by a Business Day.
Conversion from a Short Term Mode
While a Bond is in a Short Term Mode, Conversions to any other
Mode may take place only on an Interest Payment Date for that Bond
upon fifteen (15) days prior written notice, if such Bond is in a
Daily or Weekly Mode, or upon thirty (30) days prior written
notice, if such Bond is in a Monthly, Quarterly or Semiannual Mode,
from the Trustee to the Registered Owner of the Bond. Conversion
of a Bond to another Mode is subject to certain conditions set
forth in the Indenture. In the event that the conditions for a
proposed Conversion to a new Mode are not met (i) such new Mode
will not take effect on the proposed Conversion Date,
notwithstanding any prior notice to the Bondowners of such
Conversion; and (ii) the Bond will nonetheless automatically
convert to the Flexible Mode with an Interest Rate Period ending on
the next succeeding day which is immediately followed by a Business
Day.
Purchases of Bonds
Mandatory Tender
Each Bond in the Flexible Mode will be subject to mandatory
tender for purchase on each Interest Payment Date for that Bond, at
a Purchase Price equal to the principal amount thereof, plus
accrued interest to the date of such purchase. Each Bond in a
Short Term Mode will be subject to mandatory tender for purchase on
the date of Conversion or proposed Conversion from one Mode to
another Mode (other than from a Daily Mode to a Weekly Mode or from
a Weekly Mode to a Daily Mode).
Optional Tender
Each Owner of any Bond during a Short Term Mode may demand that
its Bond (or portion thereof in Authorized Denominations) be
purchased by the Paying Agent on any Purchase Date therefor, at a
Purchase Price equal to the principal amount thereof plus accrued
interest, if any, to the Purchase Date. To effect such purchase,
an Owner must tender such Bond (i) during a Daily Mode, on any
Business Day upon written notice, telephonic notice or Electronic
Notice to the Paying Agent on the Purchase Date, (ii) during a
Weekly Mode, on any Business Day upon written notice or Electronic
Notice to the Paying Agent on a Business Day not fewer than seven
days prior to the Purchase Date, or (iii) during a Monthly Mode,
Quarterly Mode or a Semiannual Mode, on any Interest Payment Date,
which also must be an Effective Date of a Rate Period, upon written
notice to the Paying Agent not less than fifteen days before the
Purchase Date. All notices of tender of Bonds shall be made to the
Paying Agent in writing or by Electronic Notice (or such other
notice as may be specified by the procedures of The Depository
Trust Company or its successor so long as such Bonds are 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 to the Bond or such other form
of notice satisfactory to the Paying Agent which sets forth the
principal amount of Bonds to be purchased, the purchase date on
which such Bonds shall be purchased, the name, address and taxpayer
identification number of the Owner and the payment instructions for
the Purchase Price.
As long as the book-entry system is in effect, the Beneficial
Owner of a Bond may demand purchase of the Bond by providing notice
as provided above through such Beneficial Owner's DTC Participant
(as defined below); provided such notice shall be given by 10:00
a.m., New York City time, on the date such notice is required to be
given. If the book-entry system is not in effect, the Owner of the
Bond may demand purchase of such Bond by providing notice to the
Paying Agent as provided above and delivering the Bond to the
Paying Agent at its Principal Office.
Bonds will not be purchased as described in the preceding
paragraphs if on the date fixed for purchase an acceleration of the
principal of the Bonds shall have occurred and not have been
annulled in accordance with the Indenture.
Purchase Price
The Purchase Price is to be paid on the Delivery Date, which
will be the Purchase Date or any subsequent Business Day on which
a Bond is delivered to the Paying Agent. The Purchase Price of
Bonds will be paid only upon surrender of the Bond to the Paying
Agent as provided in the Indenture. The Purchase Price of Bonds
tendered for purchase is payable by wire or bank transfer within
the continental United States in immediately available funds from
the Paying Agent. If on any date the Bond is subject to mandatory
tender for purchase or is required to be purchased at the election
of the Registered Owner, payment of the Purchase Price of the Bonds
to such Registered Owner is to be made on the Purchase Date if
presentation and surrender of the Bond is made prior to 11:00 A.M.,
New York City time, on the Purchase Date or on such later Business
Day upon which presentation and surrender of the Bond is made prior
to 11:00 A.M., New York City time.
The Purchase Price for Bonds during a Short Term Mode which are
to be purchased pursuant to an optional tender for purchase in
accordance with the Indenture shall include interest, if any, to
the Purchase Date, provided that if the Purchase Date is an
Interest Payment Date, accrued interest shall be paid separately
and not as part of the Purchase Price on such date.
Bonds Deemed Tendered
All Bonds not delivered on the dates on which they are required
to be purchased will, nevertheless, be deemed to be tendered on
such Purchase Date. The Purchase Price of any Bond so purchased
will be payable only upon surrender of such Bond to the Paying
Agent at its Principal Office. From and after the Purchase Date
each Bond tendered or so deemed to be tendered shall cease to bear
interest and the former Owner thereof shall have no rights with
respect thereto, other than the right to receive the Purchase Price
thereof upon surrender of such Bond to the Paying Agent.
Redemption Prior to Maturity
Optional Redemption
Bonds in the Flexible Mode or any Short Term Mode will be
subject to redemption prior to maturity at the option of the Issuer
upon written direction of the Company delivered to the Trustee, in
whole or in part (and if in part in an Authorized Denomination) on
any Interest Payment Date applicable to that Bond at a redemption
price equal to the principal amount thereof plus accrued interest
thereon to the redemption date, without premium.
Extraordinary Optional Redemption
The Bonds are subject to redemption in whole on the next
available Interest Payment Date for which notice of redemption can
be given, at a redemption price equal to the aggregate principal
amount of the Bonds Outstanding plus accrued interest thereon to
the redemption date, without premium, upon receipt by the Trustee
of a written notice from the Company stating that any of the
following events has occurred within the preceding 270 days and
that it intends to exercise its option to effect the redemption of
the Bonds as a whole:
(a) in the reasonable judgment of the Company,
unreasonable burdens or excessive liabilities shall have been
imposed upon the Issuer or the Company with respect to the
Facilities or the Plant, including, without limitation, (i) the
imposition of any income or other taxes not imposed on June 1, 1996
or (ii) the imposition of any ad valorem property or other taxes
(other than ad valorem property or other taxes imposed on June 1,
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 Facility 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.
Partial Redemption
If fewer than all of the Bonds are called for redemption, the
Company may designate the principal amount of Bonds in each Mode to
be redeemed, and the Bonds to be redeemed in each Mode shall be
selected by lot by the Trustee from among all the Bonds then
Outstanding in such Mode. Each minimum increment of Authorized
Denominations represented by any Bond shall be considered a
separate Bond for purposes of selecting the Bonds to be redeemed.
Bonds representing any unredeemed balance of the principal amount
of the Bonds shall be issued to the Owner thereof without charge
therefor.
Remarketing Agent
Goldman, Sachs & Co. has been appointed as Remarketing Agent for
the Bonds pursuant to a Remarketing Agreement dated as of ________,
1996 (the "Remarketing Agreement"). The Remarketing Agreement may
be terminated at any time by the Company upon fifteen (15) days'
prior written notice to the Remarketing Agent. The Remarketing
Agent may resign at any time upon thirty (30) days' prior written
notice to the Company. The Principal Office of the Remarketing
Agent is 85 Broad Street, New York, New York 10004.
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.
A Beneficial Owner must give notice to elect to have its Bonds
bearing interest during a Short Term Mode purchased through its
Participant to the Remarketing Agent, and must effect delivery of
such Bonds by causing the Participant to transfer the Participant's
interest in the Bonds, on DTC's records, to the Remarketing Agent.
The requirement for physical delivery of Bonds in connection with
a demand for purchase or a mandatory purchase will be deemed
satisfied when the ownership rights in the Bonds are transferred by
the Participant on DTC's records.
DTC may discontinue providing its services as securities
depository with respect to the Bonds at any time by giving
reasonable notice to the Issuer. Under such circumstances, in the
event that a successor securities depository is not obtained, Bond
certificates are required to be printed and delivered as described
herein under the caption "Discontinuation of Book-Entry Only
System."
The Issuer may decide to discontinue use of the system of book-
entry transfers through DTC or a successor securities depository.
In that event, Bond certificates will be printed and delivered as
described herein under the caption "Discontinuation of Book-Entry
Only System."
THE INFORMATION PROVIDED IMMEDIATELY ABOVE UNDER THIS CAPTION
HAS BEEN PROVIDED BY DTC. NO REPRESENTATION IS MADE BY THE ISSUER,
THE COMPANY
OR THE UNDERWRITER AS TO THE ACCURACY OR ADEQUACY OF SUCH
INFORMATION PROVIDED BY DTC OR AS TO THE ABSENCE OF MATERIAL
ADVERSE CHANGES IN SUCH INFORMATION SUBSEQUENT TO THE DATE HEREOF.
For so long as the Bonds are registered in the name of DTC or
its nominee, Cede & Co., the Issuer and the Trustee will recognize
only DTC or its nominee, Cede & Co., as the Registered Owner of the
Bonds for all purposes, including payments, notices (including
notices of redemption or mandatory tender) and voting.
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.
While Bonds are in the Book-Entry Only System: (a) presentation
of tendered bonds to the Paying Agent shall be deemed made when the
right to exercise ownership rights in such tendered bonds through
DTC or the Participant is transferred by DTC on its books;
(b) Beneficial Owners of Bonds in a Short Term Mode must exercise
their rights to optionally tender as described under the caption
"THE BONDS--Purchases of Bonds--Optional Tender" by giving
telephonic notice (confirmed in writing) or written notice to the
Remarketing Agent, in lieu of notice by DTC (or by a Participant or
Indirect Participant to DTC and, then, by DTC) to the Paying Agent.
Further, the requirement for physical delivery of Bonds will be
deemed satisfied when the right to exercise ownership rights in the
Bonds through DTC is transferred by DTC on its books. Payments for
the Purchase Price of tendered bonds will be made to DTC by wire
transfer.
Discontinuation of Book-Entry Only System
In the event that the Issuer determines to remove the Securities
Depository, the Issuer will (i) appoint a successor Securities
Depository and transfer one or more separate Bond certificates to
such successor or (ii) notify the Participants of the Securities
Depository of the availability through the Securities Depository of
Bond certificates and transfer one or more separate Bond
certificates to the Participants of the Securities Depository
having Bonds credited to their accounts with the Securities
Depository. In such event, the Bonds will no longer be restricted
to being registered in the bond register in the name of the
Securities Depository, or its nominee, but may be registered in the
name of any successor Securities Depository, or its nominee, or in
whatever name or names the Participants of the Securities
Depository receiving Bonds shall designate, in accordance with the
provisions of the Indenture.
THE AGREEMENT
General
The following is a summary of certain provisions of the
Agreement. Reference is hereby made to the Agreement in its
entirety for the detailed provisions thereof.
Use of Bond Proceeds
The Issuer will issue the Bonds to provide funds to currently
refund the Prior Bonds. [Upon the sale of the Bonds, the Issuer
will transfer the proceeds of the Bonds to the 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 or the Bond Purchase Fund
created under the Indenture, will be sufficient to pay when due the
principal of, premium, if any, and interest on and Purchase Price
of the Outstanding Bonds as they shall mature, be redeemed, be
purchased or deemed purchased or otherwise become due as provided
in the Indenture. The Company shall make such payments directly to
the Trustee for the account of the Issuer.
Installment Payment obligations of the Company under the
Agreement will be absolute and unconditional, and the Company will
make such payments free of any deductions and without abatement,
diminution or setoff. In the event that the Company fails to make
any of such payments, the item or installment so in default will
continue as an obligation of the Company until the amount in
default has been fully paid.
Other Payments Under the Agreement
In addition to the Installment Payments, the Company agrees to
pay taxes, assessments and other charges of any kind whatsoever
that may at any time be lawfully levied or imposed with respect to
the Facilities or the Installment Payments under the Agreement and
all costs and expenses of the operation and maintenance of the
Facilities. The Company also agrees to pay certain costs and
expenses of the Issuer and the Trustee in connection with the Bonds
and to indemnify such parties against certain liabilities arising
in connection with the sale of the Bonds and the execution and
delivery of the related bond documents.
Corporate Existence
The Company agrees that it will not dispose of all or
substantially all of its assets as an entirety (whether by
liquidation, dissolution, or otherwise) and will not consolidate
with or merge into another corporation, or permit one or more
corporations to consolidate with or merge into it, unless the
resulting, surviving, or transferee corporation, as the case may
be, if other than the Company, irrevocably and unconditionally
assumes, in an instrument delivered to the Issuer and to the
Trustee, the due and punctual performance of the obligations of the
Company under the Agreement. Upon the delivery of such an
instrument, the Company shall thereupon be relieved of any further
obligation or liability under the Agreement or with respect to the
Bonds, and the resulting, surviving, or transferee corporation, as
the case may be, shall succeed to and be substituted for the
Company under the Agreement with the same effect as if such
resulting or surviving corporation or transferee had been a party
to the Agreement.
Assignment
Under certain conditions, the Agreement may be assigned by the
Company, but such assignment will not relieve the Company from
primary liability for any of its obligations under the Agreement.
No assignment will be effective without a Favorable Opinion being
furnished to the Issuer and the Trustee, together with notice of
such assignment.
Defaults and Remedies
The Agreement provides that the occurrence and continuation of
any one of the following shall constitute an "Event of Default"
thereunder:
(a) failure by the Company to pay Installment Payments
with respect to principal of or premium on any Bond at the times
specified therein;
(b) failure by the Company to pay Installment Payments
with respect to interest on any Bond at the times specified
therein and, during a Flexible or Short Term Mode, the
continuation of such failure for a period of one Business Day
or more, or, during a Multiannual Mode or Fixed Rate Mode, the
continuation of such failure for a period of 60 days or more;
(c) failure by the Company to pay Installment Payments
with respect to the Purchase Price of any Bond at the times
specified therein and the continuation of such failure for a
period of one Business Day or more after notice thereof shall
have been given by the Trustee to the Company and the Issuer;
(d) failure by the Company to observe and perform any
covenant, condition or agreement on its part required to be
observed or performed in the Agreement, other than as referred
to in (a), (b) or (c) above, for a period of 90 days after
receipt by the Company of written notice specifying such failure
and requesting that it be remedied, given to the Company by the
Issuer or the Trustee, unless the Issuer and the Trustee shall
agree in writing to an extension of such time prior to its
expiration; provided, however, that if the failure stated in the
notice can, in the reasonable judgment of the Company, be
corrected, but cannot be corrected within the applicable period,
the Issuer and the Trustee will not unreasonably withhold their
consent to an extension of such time if corrective action is
instituted within the applicable period and diligently pursued
until the default is corrected;
(e) 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
and the Company, provided that no amendment may be made which would
adversely affect the rights of the Owners of any of the Outstanding
Bonds without the consent of the Owners of a majority in aggregate
principal amount of the Bonds then Outstanding of each Mode that
would be so affected; provided, however, that no amendment may be
made which would (i) decrease the amounts payable under the
Agreement; (ii) change the date of payment or prepayment provisions
under the Agreement; or (iii) change the amendment provisions of
the Agreement without the consent of all of the Owners of the Bonds
adversely affected thereby; and provided further that the Agreement
may be amended by written agreement of the Issuer and the Company
in order to make conforming changes with respect to certain
amendments made to the Indenture.
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.
Bond Purchase Fund
The Indenture creates and establishes with the Paying Agent a
separate fund designated the "Bond Purchase Fund." All moneys
deposited in the Bond Purchase Fund shall be used solely for the
purposes set forth in the Indenture. 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 under the Indenture; 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.
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 as part of the Bond Purchase Fund are to
be held uninvested.
Moneys Held in Trust
All moneys required to be deposited with or paid to the Trustee
for the account of any fund under the Indenture shall be held by
the Trustee in trust and, except for (i) moneys in the Bond
Purchase Fund, and (ii) moneys deposited with or paid to the
Trustee for the redemption of Bonds, notice of the redemption for
which has been duly given, shall, while held by the Trustee, be
part of the trust estate and be subject to the security interest
created by the Indenture.
Events of Default and Remedies
The Indenture provides that each of the following constitutes
an "Event of Default" thereunder:
(a) default in the due and punctual payment of the
principal of or premium, if any, on any Outstanding Bond, as the
same shall become due and payable, whether at the stated
maturity thereof, upon any proceedings for redemption, or upon
the maturity thereof by declaration of acceleration;
(b) default in the due and punctual payment of the
interest on any Outstanding Bond, as the same shall become due
and payable, and, during a Flexible or Short Term Mode, the
continuation of such default for a period of one Business Day
or more, or, during a Multiannual Mode or Fixed Rate Mode, the
continuation of such default for a period of 60 days or more;
(c) default in the due and punctual payment of the
Purchase Price of any Outstanding Bond, as the same shall become
due and payable and the continuation of such default for a
period of one Business Day or more;
(d) default by the Issuer in its performance or observance
of any of the other covenants, agreements or conditions
contained in the Indenture, and the continuation thereof without
corrective action for a period of 90 days after receipt by the
Issuer and the Company of notice given by the Trustee or the
Owners of not less than 25% in aggregate principal amount of all
Bonds Outstanding as specified in the Indenture; 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.
Defeasance
Any Bond, other than a Bond in a Daily Mode or a Weekly Mode,
shall be deemed to have been paid and discharged when payment of
the principal of and premium, if any, on such Bond plus the
interest thereon to the due date thereof (whether such due date be
by reason of maturity or upon redemption as provided in the
Indenture or otherwise) or, in the case of a Bond in the Flexible
Mode, the Monthly Mode, the Quarterly Mode, the Semiannual Mode, or
the Multiannual Mode, to the date next following on which such a
Bond is required to be or may, at the Owner's option be tendered
for purchase, either (a) shall have been made in accordance with
the terms of the Indenture or (b) shall have been provided for by
irrevocably depositing with the Trustee, in trust solely for such
payment, any combination of (1) sufficient moneys to make such
payment and/or (2) Government Obligations not subject to redemption
or prepayment and maturing as principal and interest in such
amounts as in the opinion of an independent certified public
accountant delivered to the Trustee are sufficient to make such
payment without reinvestment and to pay all fees and expenses in
connection therewith.
Discharge of Lien
When all of the Bonds have been paid or deemed paid and the
Issuer is not in default under any of the covenants and promises
contained in such Bonds and the Indenture, and if the Issuer shall
pay or cause to be paid to the Trustee all sums of money due or to
become due according to the Indenture or of the Bonds and of the
Agreement, then the rights under the Indenture will become null and
void; provided, however, that the rights of the Trustee under the
Indenture to receive its fees, charges and expenses shall survive
the discharge of the Indenture until paid in full. See the caption
"Defeasance" above for a discussion of the conditions under which
the Bonds will be deemed to have been paid.
The Trustee; New York Paying Agent
To the extent permitted by law, the Trustee may invest in and
treat itself as any other holder of the Bonds. The Trustee may
resign at any time after notice to the Issuer, the Company and the
Bondholders, such resignation to take effect only upon the
appointment of a successor Trustee. The Trustee may be removed at
any time by written notice signed by the Issuer and the Company and
delivered to the Trustee and the Bondholders. Such removal shall
take effect only upon the appointment of a successor Trustee.
Every successor trustee may be appointed by the Issuer with the
consent of the Company and shall be a bank or trust company which
(i) is organized as a corporation or banking association and doing
business under the laws of the United States of America or any
state thereof, (ii) is authorized under such laws to exercise
corporate trust powers and to perform all the duties imposed upon
it by the Indenture and the Agreement, (iii) is subject to
supervision or examination by federal or state authority, (iv) has
combined capital and surplus of at least $50,000,000, (v) shall not
have become incapable of acting or have been adjudged a bankrupt or
an insolvent or have had a receiver appointed for itself or for any
of its property or have had a public officer take charge or control
of it or its property or affairs for the purpose of rehabilitation,
conservation or liquidation and (vi) must be an institution rated
at least "Baa3" by Moody's (or Moody's shall have provided written
evidence that such successor Trustee is otherwise acceptable to
Moody's) if the Bonds are then rated by Moody's, and at least "BBB-
" or "A-3" by S&P (or S&P shall have provided written evidence that
such successor Trustee is otherwise acceptable to S&P) if the Bonds
are then rated by S&P. Should the Trustee cease to be eligible to
act as trustee under the Indenture, it shall promptly notify the
Owners of all Bonds then Outstanding, the Issuer and the Company of
such fact. The Issuer may appoint a temporary trustee until the
appointment of such successor.
The Paying Agent is required to maintain an office, or have an
agent with an office, in New York City at all times that any Bonds
are outstanding.
Additional Notices
Upon written request of any Owner of Bonds in an aggregate
principal amount of at least $1,000,000 (or any person or entity
which provides written evidence acceptable to the Trustee that such
person or entity has a legal or beneficial interest in Bonds in an
aggregate principal amount of at least $1,000,000), the Trustee
shall give an additional copy of any notice to be given by the
Trustee under the Indenture by first-class mail to a second address
specified by such Owner, person or entity. Any such additional
notices shall be given simultaneously with the original notices.
Upon written request of any person or entity which provides
evidence acceptable to the Trustee that such person or entity has
a legal or beneficial interest in at least $1,000,000 in principal
amount of the Bonds, the Trustee shall, for the calendar year in
which such request is received, provide one or more of the
following as requested to such person or entity: (i) notices of
redemption; (ii) notices of default; (iii) copies of all notices to
which such person or entity is entitled under the Indenture to a
specific second address; and (iv) outstanding balances by maturity,
redemption history, including redemption date, amount and source of
funds and distribution of the call to maturity.
Supplemental Indentures
The Issuer and the Trustee, with the written consent of the
Company, but without the consent of or notice to the Bondholders,
may enter into an indenture or indentures supplemental to the
Indenture, for any of the following purposes:
(a) to cure any ambiguity, formal defect or omission in
the Indenture or to make such other changes which shall not have
a material adverse effect upon the interests of the Bondholders;
(b) to grant to or confer upon the Trustee, for the
benefit of the Bondholders, any additional rights, remedies,
powers or authorities, or any additional security, that may
lawfully be granted to or conferred upon the Bondholders or the
Trustee;
(c) to subject to the Indenture additional revenues,
properties or collateral;
(d) to modify, amend or supplement the Indenture, or any
indenture supplemental thereto, in such manner as to permit the
qualification thereof under the Trust Indenture Act of 1939, as
amended, or any similar federal statute hereafter in effect, or
to permit the qualification of the Bonds for sale under the
securities laws of any of the states of the United States and,
if the Issuer so determines, to add to the Indenture or any
indenture supplemental thereto such other terms, conditions and
provisions as may be permitted by the Trust Indenture Act of
1939, as amended, or any similar federal statute;
(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 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. If any
proposed amendment or supplement affects only the Owners of Bonds
in a particular Mode or Modes, the Owners of not less than a
majority in aggregate principal amount of the Bonds Outstanding of
such affected Mode or Modes shall have the right, from time to
time, to approve, such amendment or supplement. No modification or
alteration may be made without the consent of the holders of all
Bonds then Outstanding which permits (i) an extension of the
maturity of the principal of, or the time for payment of any
redemption premium or interest on, any Bond or a reduction in the
principal amount of any Bond, or the rate of interest or redemption
premium thereon, or a reduction in the amount of, or extension of
the time of any payment required by, any Bond; (ii) a privilege or
priority of any Bond over any other Bond (except as provided in the
Indenture); (iii) a reduction in the aggregate principal amount of
the Bonds required for consent to such a supplemental indenture;
(iv) the deprivation of the Owner of any Bond then Outstanding of
the lien created by the Indenture; or (v) the amendment of the
limitations described in this paragraph.
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.
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
for the Underwriter by its counsel, Sidley & Austin, Chicago,
Illinois. Sidley & Austin has represented the Company, Central and
South West Corporation ("CSW"), a registered public utility holding
company under the Public Utility Holding Company Act of 1935 and
owner of all of the issued and outstanding common stock of the
Company, and other affiliates of CSW from time to time in
connection with certain legal matters.
UNDERWRITING
Goldman, Sachs & Co. (the "Underwriter") has agreed to
purchase the Bonds at a price equal to 100% of the principal amount
thereof. Under the terms of the Bond Purchase Agreement dated
____________, 1996 between the Underwriter and the Issuer, the
Underwriter has agreed, subject to the approval of certain legal
matters by counsel and to certain other conditions, to purchase all
of the Bonds if any such Bonds are purchased. The Company has
agreed to pay the Underwriter a commission equal to % of the
principal amount of the Bonds. The Bonds may be offered and sold
to certain dealers (including dealers depositing such Bonds into
investment accounts) and others at prices lower than the public
offering price set forth on the cover page hereof. After such
Bonds are released for sale to the public, the offering price and
other selling terms may from time to time be varied by the
Underwriter.
The Company has agreed to indemnify the Underwriter against
or to contribute toward certain liabilities, including liabilities
under federal securities laws.
CONTINUING DISCLOSURE
The Company has made certain undertakings to provide annual
financial statements of the Company (commencing with the fiscal
year of the Company ended December 31, 1997) and notice of certain
material events relating to the Bonds to each nationally recognized
municipal securities information repository or, in certain cases,
the Municipal Securities Rulemaking Board, and the appropriate
state information depository, if any, in each case to the extent
required by Rule 15c2-12 (the "Rule") promulgated by the Securities
and Exchange Commission pursuant to the Securities Exchange Act of
1934, as amended. The Company has made such covenants solely for
the purpose of enabling the Underwriter to comply with the Rule and
such covenants do not constitute an acknowledgement by the Company
of the validity of the Rule and are valid and binding only to the
extent that the Rule is valid. The Company expressly reserves the
right to contest the validity of all or any portion of the Rule,
including, without limitation, as a defense in any action. The
Company and its officers and directors shall have no liability in
respect of such covenants except to the extent required for such
covenants to satisfy the requirements imposed by the Rule.
MISCELLANEOUS
The foregoing summaries do not purport to be complete and
are expressly made subject to the exact provisions of the
applicable documents which are incorporated herein by reference.
For details of all terms and conditions with respect to the Bonds,
reference is made to the Indenture and the Agreement, copies of
which may be obtained from the Company and the Underwriter during
the initial offering period for the Bonds and thereafter from the
Trustee. Information concerning the Company is contained or
incorporated by reference in Appendix A to this Official Statement.
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 Report[s] on Form 8-K dated
________________.
All documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Official Statement and prior to the termination of this offering
shall be deemed to be incorporated by reference in this Appendix A
from their respective dates of filing.
The Company is subject to the informational requirements
of the 1934 Act and the Public Utility Holding Company Act of 1935
and, in accordance therewith, files reports and other information
with the Commission. Such reports and other information filed by
the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's Regional Offices at
Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60661-2511 and 7 World Trade Center, 13th Floor, New York,
New York 10048. Copies of such material can also be obtained at
prescribed rates from the Public Reference Section of the
Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549.
The Company hereby undertakes to provide without charge to
each person to whom a copy of this Official Statement has been
delivered, on the written or oral request of any such person, a
copy of any or all of the documents referred to above which have
been or may be incorporated in this Appendix by reference, other
than exhibits to such documents. Written requests should be
directed to Stephen D. Wise, Director, Finance, Central and South
West Corporation, 1616 Woodall Rogers Freeway, Dallas, Texas 75202,
as agent for the Company. The telephone number of CSW is (214)
777-1000.
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)
<TABLE>
<CAPTION>
Twelve Months
Ended March 31, Year Ended December 31,
1996 1995 1994 1993
(Unaudited)
<S> <C> <C> <C> <C>
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.
</TABLE>
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 or conversion - shall mean a change from one Mode
to another with respect to a Bond, and with respect to a Bond in
the Multiannual Mode, a change from one Interest Rate Period to
another.
Conversion Date - shall mean the date on which a new Mode
becomes effective with respect to a Bond, and with respect to a
Bond in the Multiannual Mode, the date on which a new Interest
Rate Period becomes effective.
Delivery Date - shall mean, with respect to a Bond tendered
for purchase, the Purchase Date or any subsequent Business Day on
which such Bond is delivered to the Paying Agent as provided in
the forms of the Bonds.
The terms "substantial user" and "related person" shall have
the meanings given such terms in section 147(a) of the Code.
Effective Date - shall mean, with respect to a Bond in the
Daily, Flexible, Weekly, Monthly, Quarterly, Semiannual and
Multiannual Modes, the date on which a new Interest Rate Period
for that Bond takes effect.
Electronic Notice - shall mean notice transmitted through a
time-sharing terminal, by facsimile transmission or by telephone
(promptly confirmed in writing or by facsimile transmission).
Favorable Opinion - shall mean an opinion of Bond Counsel
addressed to the Issuer, the Company and the Trustee to the
effect that the action proposed to be taken is authorized or
permitted by, to the extent applicable, the Acts and the
Indenture and will not adversely affect the excludability of
interest on the Bonds from gross income of the Owners thereof for
federal income tax purposes (other than as held by a "substantial
user" of the Facilities or a "related person" within the meaning
of the Code).
Government Obligations - shall mean (a) direct obligations
of the United States of America (including obligations issued or
held in book-entry form on the books of the Department of the
Treasury of the United States of America); (b) obligations the
timely payment of the principal of and interest on which are
fully guaranteed by the United States of America; (c) evidences
of ownership of proportionate interest in future interest or
principal payments of obligations described in clause (a) or (b)
(investments in such proportionate interests must be limited to
circumstances wherein (x) a bank or trust company acts as
custodian and holds the underlying Government Obligations; (y)
the owner of the investment is the real party in interest and has
the right to proceed directly and individually against the
obligor of the underlying Government Obligations; and (z) the
underlying Government Obligations are held in a special
subaccount, segregated from the custodian's general assets, and
are not available to satisfy any claim of the custodian, any
person claiming through the custodian, or any person to whom the
custodian may be obligated); or (d) obligations issued or fully
guaranteed by the following instrumentalities or agencies of the
United States of America:
(i) Federal Home Loan Bank System;
(ii) Export-Import Bank of the United States;
(iii) Federal Financing Bank;
(iv) Government National Mortgage Association;
(v) Farmers Home Administration;
(vi) Federal Home Loan Mortgage Company;
(vii) Federal Housing Administration;
(viii) Federal National Mortgage Association; and
(ix) Resolution Funding Corporation (stripped interest
obligations only.)
Interest Rate Period or Rate Period - shall mean, when used
with respect to any particular rate of interest for a Bond, the
period during which such rate of interest determined for such
Bond will remain in effect as described in the Indenture.
Notwithstanding anything in the Indenture to the contrary, the
Interest Rate Period with respect to a Bond in the Flexible Mode
shall end on a day which is immediately followed by a Business
Day and, in any event, not later than the day next preceding the
Maturity Date.
Maximum Rate - shall mean a "net effective interest rate"
(as defined and calculated in accordance with the provisions of
Article 717k-2, Vernon's Texas Civil Statutes) of twelve percent
(12%) per annum.
Mode - shall mean the period for and the manner in which the
interest rates on the Bonds are set and includes the Daily Mode,
the Flexible Mode, the Weekly Mode, the Monthly Mode, the
Quarterly Mode, the Semiannual Mode, the Multiannual Mode and the
Fixed Rate Mode.
Outstanding, Bonds Outstanding or Bonds then Outstanding -
shall mean when used with a reference to Bonds at any date as of
which the amount of Outstanding Bonds is to be determined, means
all Bonds authenticated and delivered under the Indenture,
except:
(a) Bonds canceled or delivered for cancellation at or
prior to such date;
(b) Bonds deemed to be paid pursuant to the terms of
the Indenture;
(c) Bonds in lieu of which others have been
authenticated and delivered under the Indenture;
(d) Bonds registered in the name of the Issuer;
(e) On or after any Purchase Date for Bonds, all Bonds
(or portions of Bonds) which are tendered or deemed to have
been tendered for purchase on such date, provided that funds
sufficient for such purchase are on deposit with the Paying
Agent; and
(f) For purposes of any consent, request, demand,
authorization, direction, notice, waiver or other action to
be taken by the holders of a specified percentage of
outstanding Bonds, all Bonds held by or for the account of
the Issuer or the Company, except that for purposes of any
such consent, request, demand, authorization, direction,
notice, waiver or action the Trustee shall be obligated to
consider as not being outstanding only Bonds known by the
Trustee by actual notice thereof to be so held.
Permitted Investments - shall mean any of the following
obligations or securities, to the extent permitted by law, on
which the Issuer is not the obligor:
(a) Government Obligations;
(b) obligations issued or guaranteed by any state of
the United States of America or the District of Columbia or
any political subdivision thereof;
(c) general or revenue obligations issued by any state
of the United States of America or the District of Columbia
or any political subdivision thereof;
(d) commercial or finance company paper;
(e) certificates of deposit of, and bankers
acceptances drawn on and accepted by, any bank organized and
doing business under the laws of the United States of
America, including the Trustee in its commercial banking
capacity, or any state of the United States of America;
(f) repurchase agreements collateralized by Government
Obligations with (i) a registered broker dealer or a
registered government bond "primary dealer" in either case
which is subject to the jurisdiction of the Securities
Investors' Protection Corporation, or (ii) any bank
including the Trustee, which is a member of the Federal
Deposit Insurance Corporation and which has combined
capital, surplus and undivided profits of not less than $50
million;
(g) shares in money market funds, including money
market funds managed by the Trustee;
(h) investment contracts or funding arrangements with
any insurance company, financial institution or bank; and
(i) any other investment or security to the extent
permitted by Texas law.
Purchase Date - shall mean the date upon which Bonds are
required to be purchased pursuant to a mandatory or optional
tender.
Purchase Price - shall mean, with respect to a Bond on a
Purchase Date, a price equal to par plus accrued interest to the
Purchase Date; provided that in the event that the Purchase Date
is an Interest Payment Date for such Bond and such Bonds is not
in the Flexible Mode, accrued interest will be paid separately
and not as part of the Purchase Price on such date.
Rating Agencies - shall mean Standard & Poor's Ratings
Services, a division of McGraw-Hill, Inc. and/or Moody's Investor
Service, Inc., according to which of such rating agencies then
rates the Bonds; and provided that if neither of such rating
agencies then rates the Bonds, the term "Rating Agencies" shall
refer to any national rating agency (if any), mutually acceptable
to the Company and the Remarketing Agent, which provides such
rating.
APPENDIX C
<PAGE>
EXHIBIT 6
FORM OF OPINION OF BOND COUNSEL
June __, 1996
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Southwestern Electric Power Company
Form U-1 Application-Declaration
Dear Sirs:
We refer to the Form U-1 Application-Declaration (File
No. 70-08847) (the "Application-Declaration"), under the Public
Utility Holding Company Act of 1935, as amended (the "1935 Act"),
filed by Southwestern Electric Power Company (the "Company"), a
Delaware corporation and a wholly-owned electric public utility
subsidiary of Central and South West Corporation ("CSW"), a
Delaware corporation and a registered holding company under the
1935 Act. The Application-Declaration relates to the proposed
issue and sale by Sabine River Authority of Texas ("Sabine"), in
one or more series, of Pollution Control Revenue Bonds and/or
Pollution Control Revenue Refunding Bonds (Southwestern Electric
Power Company Project) (the "New Bonds") in an aggregate
principal amount not to exceed $131,700,000 and the possible
issue, as security for the New Bonds, of one or more series of
First Mortgage Bonds of the Company (the "First Mortgage Bonds")
in the same aggregate principal amount as the related issue of
the New Bonds. In connection with the issuance of the New Bonds,
the Company expects to enter into new or amended installment sale
agreements (the "Amended Sale Agreements"). As more fully
described in the Application-Declaration, proceeds of the
issuance of the New Bonds will be used to redeem (i) Sabine's
$81,700,000 of outstanding 8.20% Pollution Control Revenue
Refunding Bonds (Southwestern Electric Power Company Project)
Series 1986 (the "Old Bonds"). The proceeds of the New Bonds may
also be used to reimburse the Company's treasury for any
expenditures made that qualify for tax exempt financing or to
provide for current solid waste expenditures.
The Application-Declaration also relates to the
proposed use by the Company of forward refinancing techniques and
hedging products including interest rate swaps, forward swaps,
caps, collars, floors, and related instruments (the
"Instruments") to manage interest rate risk or effectively lower
the Company's interest cost on one or more series of New Bonds,
all as more fully described in the Application-Declaration.
In connection with the Application-Declaration, we have
acted as special counsel for the Company and, as such counsel, we
are familiar with the corporate proceedings taken and to be taken
by the Company in connection with the proposed issue and sale of
the New Bonds, the possible issue of the First Mortgage Bonds,
the proposed entering into of the Instruments, and the redemption
of the Old Bonds as described in the Application-Declaration.
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.
Based upon the foregoing, and having regard to legal
considerations which we deem relevant, we are of the opinion
that, in the event that the proposed transactions are consummated
in accordance with the Application-Declaration, as it may be
amended, and subject to the assumptions and conditions set forth
below:
1. The Company is validly organized and duly existing
under the laws of the State of Delaware.
2. All state laws applicable to the execution of any
Amended Sale Agreement, the issue of any First Mortgage
Bonds, and, to the extent they are deemed to be securities
within the meaning of the 1935 Act, the entering into of the
Instruments, as described in the Application-Declaration,
will have been complied with.
3. Any First Mortgage Bonds issued by the Company
will be valid and binding obligations of the Company in
accordance with their terms, subject in respect of the
enforceability of the indenture pursuant to which the First
Mortgage Bonds are to be issued, to (a) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
of general applicability affecting the enforcement of
creditors' rights, and (b) the application of general
principles of equity (regardless of whether considered in a
proceeding in equity or at law), including without
limitation (i) the possible unavailability of specific
performance, injunctive relief or any other equitable
remedies and (ii) concepts of materiality, reasonableness,
good faith and fair dealing.
4. Any Amended Sale Agreement will be a valid and
binding obligation of the Company in accordance with its
terms, subject to the qualifications stated in paragraph 3
above.
5. Any Instruments, to the extent they are deemed to
be securities within the meaning of the 1935 Act, will be
valid and binding obligations of the Company in accordance
with their terms, subject to the qualifications stated in
paragraph 3 above.
6. The consummation of the proposed transactions as
described in the Application-Declaration will not violate
the legal rights of the holders of any securities issued by
the Company or any associate company of the Company.
The opinions expressed above in respect of the
transactions described in the Application-Declaration are subject
to the following assumptions or conditions:
a. The transactions shall have been duly authorized
and approved to the extent required by state law by the
Board of Directors of the Company.
b. The Securities and Exchange Commission (the
"Commission") shall have duly entered an appropriate order
or orders granting and permitting the Application-
Declaration to become effective with respect to the
transactions described therein.
c. Any First Mortgage Bonds issued by the Company
shall have been duly issued and sold in accordance with the
authorization of the Board of Directors of the Company and
such order or orders of the Commission.
d. Any First Mortgage Bonds shall have been duly
issued and sold in accordance with required approvals,
authorizations, consents, certificates and orders of any
state commission or regulatory authority with respect
thereto.
e. Any Instruments, to the extent they are deemed to
be securities within the meaning of the 1935 Act, shall have
been duly authorized, executed and delivered by the party
thereto other than the Company and such party is duly
organized and validly existing under the laws of its
jurisdiction of organization and has full power and
authority to make and perform any of the Instruments.
f. The consummation of the transactions shall be
conducted under our supervision and all legal matters
incident thereto shall be satisfactory to us, including the
receipt in satisfactory form of opinions of other counsel
qualified to practice in jurisdictions pertaining to the
transactions in which we are not admitted to practice.
Prior to the consummation of the issuance of First
Mortgage Bonds, as contemplated by the Application-Declaration,
such First Mortgage Bonds must be qualified or registered under
Blue Sky or securities laws or regulations of any state or other
jurisdiction in which they are offered for sale or sold to the
extent required by such laws or regulations.
We hereby consent to the use of this opinion as an
exhibit to the Application-Declaration.
Very truly yours,
/s/MILBANK, TWEED, HADLEY & MCCLOY
Milbank, Tweed, Hadley & McCloy
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
INDEX EXHIBIT 8
TO
FINANCIAL STATEMENTS
Page
Number
CENTRAL AND SOUTH WEST CORPORATION AND SUBSIDIARY COMPANIES
Consolidated Balance Sheets - Per Books and Pro Forma
as of December 31, 1995 2 - 3
Consolidated Statement of Income for the Twelve Months Ended
December 31, 1995 4
Consolidated Statement of Retained Earnings for the Twelve Months
Ended December 31, 1995 5
Statements of Long-Term Debt Outstanding as of December 31, 1995 6 - 9
Statements of Preferred Stock Outstanding as of December 31, 1995 10
CENTRAL AND SOUTH WEST CORPORATION (CORPORATE)
Balance Sheets - Per Books and Pro Forma as of December 31, 1995 11
Statement of Income for the Twelve Months Ended December 31, 1995 12
SOUTHWESTERN ELECTRIC POWER COMPANY
Balance Sheets - Per Books and Pro Forma as of December 31, 1995 13 - 14
Statement of Income for the Twelve Months Ended December 31, 1995 15
Statement of Retained Earnings for the Twelve Months Ended
December 31, 1995 16
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS 17
STATEMENT OF CHANGES 18
CAPITALIZATION RATIOS - Per books and Pro forma 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 0
<PAGE> 2
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF DECEMBER 31, 1995
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
<S> <C> <C> <C>
ASSETS
PLANT
Electric utility
Production $5,888 50 $5,938
Transmission 1,484 1,484
Distribution 3,799 3,799
General 1,209 1,209
Construction work in progress 346 346
Nuclear fuel 165 165
Gas 869 869
Other diversified 18 18
------- -------- --------
13,778 50 13,828
Less - Accumulated depreciation 4,761 4,761
------- -------- --------
9,017 50 9,067
------- -------- --------
CURRENT ASSETS
Cash and temporary cash investments 401 401
National Grid assets held for sale 100 100
Accounts receivable 1,093 1,093
Materials and supplies, at average cost 188 188
Electric fuel inventory, substantially
at average cost 129 129
Gas inventory/products for resale 13 13
Prepayments and other 115 115
-------- -------- --------
2,039 2,039
-------- -------- --------
DEFERRED CHARGES AND OTHER ASSETS
Deferred plant costs 514 514
Mirror CWIP asset - net 312 312
Other non-utility investments 296 296
Income tax related regulatory assets,
net 253 253
Goodwill 1,074 1,074
Other 364 364
-------- -------- --------
2,813 2,813
-------- -------- --------
$13,869 $50 $13,919
======== ======== ========
<PAGE>
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF DECEMBER 31, 1995
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
<CAPTION>
CAPITALIZATION AND LIABILITIES
<S> <C> <C> <C>
CAPITALIZATION
Common Stock Equity -
Common stock, $3.50 par value,
authorized 350,000,000 shares;
issued and outstanding 192,300,000
shares $675 $675
Paid-in capital 610 610
Retained earnings 1,893 1,893
-------- -------- --------
Total Common Stock Equity 3,178 3,178
Preferred stock
Not subject to mandatory redemption 292 292
Subject to mandatory redemption 34 34
Long-term debt 3,914 50 3,964
-------- -------- --------
Total Capitalization 7,418 50 7,468
-------- -------- --------
Minority Interest 202 202
-------- -------- --------
CURRENT LIABILITIES
Long-term debt/preferred stock
due within twelve months 30 30
Short-term debt 692 692
Short-term debt - CSW Credit 646 646
Accounts payable 595 595
Accrued taxes 228 228
Accrued interest 77 77
Provision for SEEBOARD acceptances 1,001 1,001
Other 156 156
-------- -------- --------
3,425 3,425
-------- -------- --------
DEFERRED CREDITS
Income taxes 2,306 2,306
Investment tax credits 306 306
Other 212 212
-------- -------- --------
2,824 2,824
-------- -------- --------
$13,869 $50 $13,919
======== ======== ========
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
UNAUDITED
(Millions)
OPERATING REVENUES $3,735
--------
OPERATING EXPENSES AND TAXES
Fuel and purchased power 1,184
Gas purchased for resale 372
Gas extraction and marketing 109
Other operating 629
Restructuring charges (36)
Maintenance 161
Depreciation and amortization 384
Taxes, other than income 171
Income taxes 105
--------
3,079
--------
OPERATING INCOME 656
--------
OTHER INCOME AND DEDUCTIONS
Mirror CWIP liability amortization 41
Other 58
--------
99
INCOME BEFORE INTEREST CHARGES 755
--------
INTEREST CHARGES
Interest on long-term debt 284
Interest on short-term debt and other 50
--------
334
--------
NET INCOME 421
Preferred stock dividends 19
--------
NET INCOME FOR COMMON STOCK $402
========
<PAGE> 5
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
UNAUDITED
(Millions)
RETAINED EARNINGS AT DECEMBER 31, 1994 $1,824
Add: Net income for common stock 402
--------
2,226
Deduct: Common stock dividends 329
True-up of proir period liability 4
--------
RETAINED EARNINGS AT DECEMBER 31, 1995 $1,893
========
<PAGE> 6
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING
AS OF DECEMBER 31, 1995
UNAUDITED
(Millions)
CENTRAL POWER AND LIGHT COMPANY
First mortgage bonds -
Series J, 6-5/8%, due January 1, 1998 $28
Series L, 7%, due February 1, 2001 36
Series T, 7-1/2%, due December 15, 2014 112
Series AA, 7-1/2%, due March 1, 2020 50
Series BB, 6%, due October 1, 1997 200
Series CC, 7-1/4%, due October 1, 2004 100
Series DD, 7-1/8%, due December 1, 1999 25
Series EE, 7-1/2%, due December 1, 2002 115
Series FF, 6-7/8%, due February 1, 2003 50
Series GG, 7-1/8%, due February 1, 2008 75
Series HH, 6%, due April 1, 2000 100
Series II, 7-1/2%, due April 1, 2023 100
Series JJ, 7-1/2%, due May 1, 1999 100
Series KK, 6-5/8%, due July 1, 2005 200
Installment sales agreements -
Pollution control bonds
Series 1984, 7-7/8%, due September 15, 2014 6
Series 1986, 7-7/8%, due December 1, 2016 60
Series 1993, 6%, due July 1, 2028 120
Series 1995, 6-1/10%, due July 1, 2028 101
Series 1995, variable, due November 1, 2015 41
Unamortized discount (6)
Unamortized costs of reacquired debt (95)
--------
$1,518
--------
<PAGE> 7
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING (Continued)
AS OF DECEMBER 31, 1995
UNAUDITED
(Millions)
PUBLIC SERVICE COMPANY OF OKLAHOMA
First mortgage bonds -
Series J, 5-1/4%, due March 1, 1996 $25
Series K, 7-1/4%, due January 1, 1999 25
Series L, 7-3/8%, due March 1, 2002 30
Series S, 7-1/4%, due July 1, 2003 65
Series T, 7-3/8%, due December 1, 2004 50
Series U, 6-1/4%, due April 1, 2003 35
Series V, 7-3/8%, due April 1, 2023 100
Series W, 6-1/2%, due June 1, 2005 50
Installment sales agreements -
Pollution control bonds
Series A, 5.9%, due December 1, 2007 35
Series 1984 7-7/8, due December 15, 2014 13
Unamortized discount (5)
Unamortized costs of reacquired debt (19)
Amount to be redeemed within one year (25)
--------
$379
--------
<PAGE> 8
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING (Continued)
AS OF DECEMBER 31, 1995
UNAUDITED
(Millions)
SOUTHWESTERN ELECTRIC POWER COMPANY
First mortgage bonds -
Series V, 7-3/4%, due June 1, 2004 $40
Series W, 6-1/8%, due September 1, 1999 40
Series X, 7%, due September 1, 2007 90
Series Y, 6-5/8%, due February 1, 2003 55
Series Z, 7-1/4%, due July 1, 2023 45
Series AA, 5-1/4%, due April 1, 2000 45
Series BB, 6-7/8%, due October 1, 2025 80
1976 Series A, 6.2%, due November 1, 2006 7
1976 Series B, 6.2%, due November 1, 2006 1
Installment sales agreements -
Pollution control bonds
1978 Series A, 6%, due January 1, 2008 14
Series 1986, 8.2%, due July 1, 2014 82
1991 Series A, 8.2%, due August 1, 2011 17
1991 Series B, 6.9%, due November 1, 2004 12
Series 1992, 7.6%, due January 1, 2019 54
Bank loan, variable rate, due June 15, 2000 50
Railcar lease obligations 14
Unamortized costs of reacquired debt (43)
Amount to be redeemed within one year (4)
--------
$599
--------
WEST TEXAS UTILITIES COMPANY
First mortgage bonds -
Series P, 7-3/4%, due July 1, 2007 25
Series Q, 6-7/8%, due October 1, 2002 35
Series R, 7%, due October 1, 2004 40
Series S, 6-1/8%, due February 1, 2004 40
Series T, 7-1/2%, due April 1, 2000 40
Series U, 6-3/8%, due October 1, 2005 80
Installment sales agreement -
Pollution control bonds
Series 1984, 7-7/8%, due September 15, 2014 44
Unamortized discount and premium (2)
Unamortized costs of reacquired debt (29)
--------
$273
--------
<PAGE> 9
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF LONG-TERM DEBT OUTSTANDING (Continued)
AS OF DECEMBER 31, 1995
UNAUDITED
(millions)
SEEBOARD plc
Eurobond, 8-1/2%, due October 3, 2005 $155
Unamortized discount and premium (1)
--------
$154
--------
TRANSOK, INC.
Note payable, 8.960%, due April 17, 2017 $15
Note payable, 8.280%, due April 16, 2007 3
Note payable, 7.712%, due April 16, 2002 3
Note payable, 7.712%, due April 22, 2002 17
Note payable, 8.625%, due May 21, 2012 5
Note payable, 7.106%, due May 20, 1999 3
Note payable, 7.694%, due May 20, 2004 1
Note payable, 7.762%, due May 22, 2003 2
Note payable, 7.106%, due May 21, 1999 5
Note payable, 7.694%, due May 28, 2004 2
Note payable, 7.762%, due June 3, 2003 4
Note payable, 7.694%, due June 2, 2004 2
Note payable, 8.625%, due August 27, 2012 5
Note payable, 7.712%, due August 26, 2002 5
Note payable, 7.712%, due August 26, 2002 1
Note payable, 7.712%, due August 28, 2002 14
Note payable, 7.106%, due December 1, 1999 15
Note payable, 7.694%, due March 1, 2004 10
Note payable, 7.694%, due March 1, 2004 3
Note payable, 7.694%, due December 15, 2004 2
Note payable, 7.694%, due December 15, 2004 1
Note payable, 7.694%, due March 1, 2004 1
Note payable, 7.712%, due May 15, 2002 5
Note payable, 7.712%, due May 15, 2002 5
Note payable, 7.762%, due December 23, 2003 11
Note payable, 6.875%, due March 18, 2005 1
Note payable, 6.875%, due March 18, 2005 1
Note payable, 6.875%, due March 1, 2005 6
Note payable, 6.875%, due March 24, 2005 5
Note payable, 6.875%, due March 28, 2005 12
Note payable, 7.750%, due April 24, 2023 10
Note payable, 6.875%, due April 25, 2005 3
Note payable, 7.750%, due April 26, 2023 5
Note payable, 6.875%, due April 26, 2005 7
Note payable, 7.762%, due April 29, 2003 2
Note payable, 7.694%, due April 30, 2004 1
Note payable, 6.875%, due May 5, 2005 1
Note payable, 7.070%, due May 5, 2008 1
Note payable, 7.694%, due January 12, 2004 5
--------
$200
--------
CENTRAL AND SOUTH WEST CORPORATION
Credit facility(for SEEBOARD purchase), 6.287%, due
November 13, 2000 731
--------
$731
CENTRAL AND SOUTH WEST SERVICES, INC. --------
Term loan facility, Variable rate, due
December 1, 2001 60
--------
$60
--------
TOTAL CONSOLIDATED $3,914
========
<PAGE> 10
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF PREFERRED STOCK OUTSTANDING
AS OF DECEMBER 31, 1995
UNAUDITED
(Millions)
NOT SUBJECT TO MANDATORY REDEMPTION
CENTRAL POWER AND LIGHT COMPANY
4.00% Series, 100,000 shares $10
4.20% Series, 75,000 shares 7
7.12% Series, 260,000 shares 26
8.72% Series, 500,000 shares 50
Auction Money Market, 750,000 shares 75
Auction Series A, 425,000 shares 42
Auction Series B, 425,000 shares 43
Issuance expense (3)
--------
$250
--------
PUBLIC SERVICE COMPANY OF OKLAHOMA
4.00% Series, 97,900 shares $10
4.24% Series, 100,000 shares 10
--------
$20
--------
SOUTHWESTERN ELECTRIC POWER COMPANY
5.00% Series, 75,000 shares $8
4.65% Series, 25,000 shares 2
4.28% Series, 60,000 shares 6
--------
$16
--------
WEST TEXAS UTILITIES COMPANY
4.40% Series, 60,000 shares 6
--------
Total Consolidated $292
========
SUBJECT TO MANDATORY REDEMPTION
SOUTHWESTERN ELECTRIC POWER COMPANY
6.95% Series, 352,000 shares $36
Amount to be redeemed within one year (2)
--------
Total Consolidated $34
========
<PAGE> 11
CENTRAL AND SOUTH WEST CORPORATION
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF DECEMBER 31, 1995
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
<CAPTION>
ASSETS <C> <C> <C>
Electric Utility
General $4 $4
Less - Accumulated depreciation (1) (1)
-------- -------- --------
NET PLANT 3 3
INVESTMENTS IN COMMON STOCK
OF SUBSIDIARY COMPANIES (at equity) 3,338 3,338
-------- -------- --------
CURRENT ASSETS
Cash and temporary cash investments 11 11
Advances to affiliates 410 410
Accounts receivable - Affiliated 831 831
Prepayments and other 14 14
-------- -------- --------
1,266 1,266
-------- -------- --------
DEFERRED CHARGES AND OTHER ASSETS 50 50
-------- -------- --------
$4,657 $0 $4,657
======== ======== ========
CAPITALIZATION
Common Stock Equity -
Common stock, $3.50 par value;
authorized 350,000,000 shares;
issued and outstanding 192,900,000
shares $675 $675
Paid-in capital 610 610
Retained earnings 1,893 1,893
-------- -------- --------
Total Common Stock Equity 3,178 3,178
-------- -------- --------
Long-term debt 731 731
-------- -------- --------
Total Capitalization 3,909 3,909
-------- -------- --------
CURRENT LIABILITIES
Short-term debt 692 692
Accounts payable and other 19 19
-------- -------- --------
711 711
-------- -------- --------
DEFERRED CREDITS 37 37
-------- -------- --------
$4,657 $0 $4,657
======== ======== ========
CENTRAL AND SOUTH WEST CORPORATION
STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
UNAUDITED
(Millions)
INCOME
Equity in earnings of subsidiaries
Central Power and Light Company $192
Public Service Company of Oklahoma 81
Southwestern Electric Power Company 114
West Texas Utilities Company 34
SEEBOARD plc 10
Transok, Inc. 25
CSW Credit, Inc. 8
CSW Energy, Inc. 8
CSW Leasing, Inc. 0
CSW International, Inc. (3)
CSW Communications, Inc. (1)
Central and South West Services, Inc. 0
Other Income 44
--------
$512
--------
EXPENSES AND TAXES
General and administrative expenses 75
Interest expense 58
Federal income taxes (26)
Other 3
--------
110
--------
NET INCOME $402
========
<PAGE> 13
SOUTHWESTERN ELECTRIC POWER COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF DECEMBER 31, 1995
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
<CAPTION>
<S> <C> <C> <C>
ASSETS
ELECTRIC UTILITY PLANT
Production $1,411 50 $1,461
Transmission 435 435
Distribution 790 790
General 231 231
Construction work in progress 129 129
-------- -------- --------
2,996 50 3,046
Less - Accumulated depreciation 1,116 1,116
-------- -------- --------
1,880 50 1,930
-------- -------- --------
CURRENT ASSETS
Cash and temporary cash investments 2 2
Accounts receivable 55 55
Materials and supplies, at average
cost 30 30
Fuel inventory, at average cost 73 73
Accumulated deferred income taxes 5 5
Prepayments and other 14 14
-------- -------- --------
179 179
-------- -------- --------
DEFERRED CHARGES AND OTHER ASSETS 58 58
-------- -------- --------
$2,117 $50 $2,167
======== ======== ========
<PAGE>
SOUTHWESTERN ELECTRIC POWER COMPANY
BALANCE SHEETS
PER BOOKS AND PRO FORMA
AS OF DECEMBER 31, 1995
UNAUDITED
(Millions)
Per Pro Forma Pro
Books Adjustments Forma
-------- -------- --------
CAPITALIZATION AND LIABILITIES
CAPITALIZATION
Common stock, $18 par value;
authorized 7,600,000 shares;
issued and outstanding 7,536,640
shares $136 $136
Paid-in capital 245 245
Retained earnings 302 302
-------- -------- --------
Total common stock equity 683 683
Preferred stock
Not subject to mandatory redemption 16 16
Subject to mandatory redemption 34 34
Long-term debt 599 50 649
-------- -------- --------
Total capitalization 1,332 50 1,382
-------- -------- --------
CURRENT LIABILITIES
Long-term debt and preferred stock
due within twelve months 5 5
Advances from affiliates 101 101
Accounts payable 35 35
Payable to affiliates 53 53
Over-recovered fuel cost 9 9
Customer deposits 11 11
Accrued taxes 30 30
Accrued interest 18 18
Other 25 25
-------- -------- --------
287 287
-------- -------- --------
DEFERRED CREDITS
Income taxes 377 377
Investment tax credits 76 76
Income tax related regulatory
liabilities, net 38 38
Other 7 7
-------- -------- --------
498 498
-------- -------- --------
$2,117 $50 $2,167
======== ======== ========
<PAGE> 15
SOUTHWESTERN ELECTRIC POWER COMPANY
STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
UNAUDITED
(Millions)
ELECTRIC OPERATING REVENUE $837
--------
OPERATING EXPENSES AND TAXES
Fuel 319
Purchased power 19
Other Operating 122
Restructuring charges (1)
Maintenance 43
Depreciation and amortization 83
Taxes, other than income 45
Income taxes 44
--------
674
--------
OPERATING INCOME 163
--------
OTHER INCOME AND DEDUCTIONS
Allowance for equity funds used during construc 4
Other 0
--------
4
--------
INCOME BEFORE INTEREST CHARGES 167
--------
INTEREST CHARGES
Interest on long-term debt 44
Interest on short-term debt and other 11
Allowance for borrowed funds used during constr (5)
--------
50
--------
NET INCOME 117
PREFERRED STOCK DIVIDENDS 3
--------
NET INCOME FOR COMMON STOCK $114
========
<PAGE> 16
SOUTHWESTERN ELECTRIC POWER COMPANY
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
UNAUDITED
(Millions)
RETAINED EARNINGS AT DECEMBER 31, 1994 $297
Add: Net income (loss) for common stock 114
--------
411
Deduct: Common stock dividends 109
--------
RETAINED EARNINGS AT DECEMBER 31, 1995 $302
========
<PAGE> 17
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
PRO FORMA ADJUSTMENTS TO BALANCE SHEETS
DECEMBER 31, 1995
UNAUDITED
(Millions)
DR CR
-------- --------
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
Cash 50
Long-term debt 50
Record issuance of new Pollution Control Bonds
Production Plant 50
Cash 50
Record purchase and installation of new facilities
Long-term debt (old bonds) 82
Cash 82
Record refunding of old debt
Cash 82
Long-term debt (new bonds) 82
Record refunding of old debt
CENTRAL AND SOUTH WEST
CORPORATION (CORPORATE)
N/A
SOUTHWESTERN ELECTRIC POWER COMPANY
Cash 50
Long-term debt 50
Record issuance of new Pollution Control Bonds
Production Plant 50
Cash 50
Record purchase and installation of new facilities
Long-term debt (old bonds) 82
Cash 82
Record refunding of old debt
Cash 82
Long-term debt (new bonds) 82
Record refunding of old debt
<PAGE> 18
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
STATEMENT OF CHANGES
There have been no significant changes in the financial statements of
Central and South West Corporation and subsidiary companies subsequent to
December 31, 1995, other than in the ordinary course of business, except for
the sale of Transok. See CSW Combined Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996.
<PAGE> 19
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
CAPITALIZATION RATIOS
PER BOOKS AND PRO FORMA
AS OF DECEMBER 31, 1995
<CAPTION>
Common
Stock Preferred Long-term
Equity Stock Debt
-------- -------- --------
<S> <C> <C> <C>
Central and South West Corporation
and Subsidiary Companies
(Consolidated) Per books * 42.8% 4.4% 52.8%
Central and South West Corporation
and Subsidiary Companies
(Consolidated) Pro forma * 42.6% 4.4% 53.1%
Central and South West Corporation (Corporate)
Per books 81.3% 0.0% 18.7%
Central and South West Corporation (Corporate)
Pro forma 81.3% 0.0% 18.7%
Southwestern Electric Power Company
Per books 51.3% 3.8% 45.0%
Southwestern Electric Power Company
Pro forma 49.4% 3.6% 47.0%
(*) Long Term Debt includes Transok's Medium-Term Notes Payable
<PAGE> 20
CENTRAL AND SOUTH WEST CORPORATION
AND SUBSIDIARY COMPANIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The notes to consolidated financial statements included in Central and
South West Corporation's 1995 Annual Report on Form 10-K are hereby
incorporated by reference and made a part of this report.
Page
Reference
1995 Annual Report on Form 10-K pages 2-32 through 2-67
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 001
<NAME> CENTRAL AND SOUTH WEST CONSOLIDATED
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-END> DEC-31-1995 DEC-31-1995
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 8,269 8,319
<OTHER-PROPERTY-AND-INVEST> 748 748
<TOTAL-CURRENT-ASSETS> 2,039 2,039
<TOTAL-DEFERRED-CHARGES> 514 514
<OTHER-ASSETS> 2,299 2,299
<TOTAL-ASSETS> 13,869 13,919
<COMMON> 675 675
<CAPITAL-SURPLUS-PAID-IN> 610 610
<RETAINED-EARNINGS> 1,893 1,893
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,178 3,178
34 34
292 292
<LONG-TERM-DEBT-NET> 3,854 3,904
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 50 50
<COMMERCIAL-PAPER-OBLIGATIONS> 1,338 1,338
<LONG-TERM-DEBT-CURRENT-PORT> 25 25
1 1
<CAPITAL-LEASE-OBLIGATIONS> 10 10
<LEASES-CURRENT> 4 4
<OTHER-ITEMS-CAPITAL-AND-LIAB> 5,083 5,083
<TOT-CAPITALIZATION-AND-LIAB> 13,869 13,919
<GROSS-OPERATING-REVENUE> 3,735 0
<INCOME-TAX-EXPENSE> 105 0
<OTHER-OPERATING-EXPENSES> 2,974 0
<TOTAL-OPERATING-EXPENSES> 3,079 0
<OPERATING-INCOME-LOSS> 656 0
<OTHER-INCOME-NET> 99 0
<INCOME-BEFORE-INTEREST-EXPEN> 755 0
<TOTAL-INTEREST-EXPENSE> 334 0
<NET-INCOME> 421 0
19 0
<EARNINGS-AVAILABLE-FOR-COMM> 402 0
<COMMON-STOCK-DIVIDENDS> 329 0
<TOTAL-INTEREST-ON-BONDS> 212 0
<CASH-FLOW-OPERATIONS> 799 0
<EPS-PRIMARY> 2.10 0
<EPS-DILUTED> 2.10 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 002
<NAME> CENTRAL AND SOUTH WEST CORP
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-END> DEC-31-1995 DEC-31-1995
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 3 3
<OTHER-PROPERTY-AND-INVEST> 3,338 3,338
<TOTAL-CURRENT-ASSETS> 1,266 1,266
<TOTAL-DEFERRED-CHARGES> 0 0
<OTHER-ASSETS> 50 50
<TOTAL-ASSETS> 4,657 4,657
<COMMON> 675 675
<CAPITAL-SURPLUS-PAID-IN> 610 610
<RETAINED-EARNINGS> 1,893 1,893
<TOTAL-COMMON-STOCKHOLDERS-EQ> 3,178 3,178
0 0
0 0
<LONG-TERM-DEBT-NET> 731 731
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 0 0
<COMMERCIAL-PAPER-OBLIGATIONS> 692 692
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
0 0
<CAPITAL-LEASE-OBLIGATIONS> 0 0
<LEASES-CURRENT> 0 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 56 56
<TOT-CAPITALIZATION-AND-LIAB> 4,657 4,657
<GROSS-OPERATING-REVENUE> 0 0
<INCOME-TAX-EXPENSE> (26) 0
<OTHER-OPERATING-EXPENSES> 78 0
<TOTAL-OPERATING-EXPENSES> 52 0
<OPERATING-INCOME-LOSS> (52) 0
<OTHER-INCOME-NET> 512 0
<INCOME-BEFORE-INTEREST-EXPEN> 460 0
<TOTAL-INTEREST-EXPENSE> 58 0
<NET-INCOME> 402 0
0 0
<EARNINGS-AVAILABLE-FOR-COMM> 402 0
<COMMON-STOCK-DIVIDENDS> 329 0
<TOTAL-INTEREST-ON-BONDS> 0 0
<CASH-FLOW-OPERATIONS> (252) 0
<EPS-PRIMARY> 2.10 0
<EPS-DILUTED> 2.10 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> OPUR1
<SUBSIDIARY>
<NUMBER> 005
<NAME> SOUTHWESTERN ELECTRIC POWER COMPANY
<MULTIPLIER> 1,000,000
<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-END> DEC-31-1995 DEC-31-1995
<BOOK-VALUE> PER-BOOK PRO-FORMA
<TOTAL-NET-UTILITY-PLANT> 1,880 1,930
<OTHER-PROPERTY-AND-INVEST> 3 3
<TOTAL-CURRENT-ASSETS> 179 179
<TOTAL-DEFERRED-CHARGES> 17 17
<OTHER-ASSETS> 38 38
<TOTAL-ASSETS> 2,117 2,167
<COMMON> 136 136
<CAPITAL-SURPLUS-PAID-IN> 245 245
<RETAINED-EARNINGS> 302 302
<TOTAL-COMMON-STOCKHOLDERS-EQ> 683 683
34 34
16 16
<LONG-TERM-DEBT-NET> 539 589
<SHORT-TERM-NOTES> 0 0
<LONG-TERM-NOTES-PAYABLE> 50 50
<COMMERCIAL-PAPER-OBLIGATIONS> 0 0
<LONG-TERM-DEBT-CURRENT-PORT> 0 0
1 1
<CAPITAL-LEASE-OBLIGATIONS> 10 10
<LEASES-CURRENT> 4 4
<OTHER-ITEMS-CAPITAL-AND-LIAB> 780 780
<TOT-CAPITALIZATION-AND-LIAB> 2,117 2,167
<GROSS-OPERATING-REVENUE> 837 0
<INCOME-TAX-EXPENSE> 44 0
<OTHER-OPERATING-EXPENSES> 630 0
<TOTAL-OPERATING-EXPENSES> 674 0
<OPERATING-INCOME-LOSS> 163 0
<OTHER-INCOME-NET> 4 0
<INCOME-BEFORE-INTEREST-EXPEN> 167 0
<TOTAL-INTEREST-EXPENSE> 50 0
<NET-INCOME> 117 0
3 0
<EARNINGS-AVAILABLE-FOR-COMM> 114 0
<COMMON-STOCK-DIVIDENDS> 109 0
<TOTAL-INTEREST-ON-BONDS> 44 0
<CASH-FLOW-OPERATIONS> 214 0
<EPS-PRIMARY> .59 0
<EPS-DILUTED> .59 0
</TABLE>
