<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
-- OR --
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
_______________________
TEXAS UTILITIES COMPANY
A Texas Corporation I.R.S. Employer Identification
Commission File Number 1-3591 No. 75-0705930
ENERGY PLAZA, 1601 BRYAN STREET, DALLAS, TEXAS 75201
(214) 812-4600
TEXAS UTILITIES ELECTRIC COMPANY
A Texas Corporation I.R.S. Employer Identification
Commission File Number 0-11442 No. 75-1837355
ENERGY PLAZA, 1601 BRYAN STREET, DALLAS, TEXAS 75201
(214) 812-4600
_____________________
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No
--- ---
COMMON STOCK OUTSTANDING AT APRIL 30, 1996:
Texas Utilities Company: 225,841,037 shares, without par value.
Texas Utilities Electric Company: 156,800,000 shares, without par value.
THIS COMBINED FORM 10-Q IS FILED SEPARATELY BY TEXAS UTILITIES COMPANY AND
TEXAS UTILITIES ELECTRIC COMPANY. INFORMATION CONTAINED HEREIN RELATING TO AN
INDIVIDUAL REGISTRANT IS FILED BY THAT REGISTRANT ON ITS OWN BEHALF EXCEPT THAT
THE INFORMATION WITH RESPECT TO TEXAS UTILITIES ELECTRIC COMPANY, OTHER THAN
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF TEXAS UTILITIES ELECTRIC
COMPANY, IS FILED BY EACH OF TEXAS UTILITIES ELECTRIC COMPANY AND TEXAS
UTILITIES COMPANY. NEITHER TEXAS UTILITIES ELECTRIC COMPANY NOR TEXAS
UTILITIES COMPANY MAKES ANY REPRESENTATIONS AS TO INFORMATION FILED BY THE
OTHER REGISTRANT.
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<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Financial Statements
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
Condensed Statements of Consolidated Income
Three and Twelve Months Ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . 3
Condensed Statements of Consolidated Cash Flows
Three Months Ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . 4
Condensed Consolidated Balance Sheets
March 31, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 5
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
Condensed Statements of Consolidated Income
Three and Twelve Months Ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . 7
Condensed Statements of Consolidated Cash Flows
Three Months Ended March 31, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . 8
Condensed Consolidated Balance Sheets
March 31, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . 9
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . 11
INDEPENDENT ACCOUNTANTS' REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
PART II. OTHER INFORMATION
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
----------------------- ---------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . . $1,463,900 $1,244,265 $5,858,323 $5,606,430
---------- ---------- ---------- ----------
OPERATING EXPENSES
Fuel and purchased power . . . . . . . . . . . . . . 481,831 390,592 1,732,230 1,702,398
Operation . . . . . . . . . . . . . . . . . . . . . 210,424 195,616 834,441 853,577
Maintenance . . . . . . . . . . . . . . . . . . . . 71,019 68,831 292,198 301,393
Depreciation and amortization . . . . . . . . . . . 153,309 138,914 578,214 551,855
Taxes other than income . . . . . . . . . . . . . . 132,379 138,968 530,019 550,416
---------- ---------- ---------- ----------
Total operating expenses . . . . . . . . . . . . . 1,048,962 932,921 3,967,102 3,959,639
---------- ---------- ---------- ----------
OPERATING INCOME . . . . . . . . . . . . . . . . . . . 414,938 311,344 1,891,221 1,646,791
OTHER INCOME AND (DEDUCTIONS) - NET . . . . . . . . . . 3,590 4,681 23,491 30,846
---------- ---------- ---------- ----------
TOTAL INCOME 418,528 316,025 1,914,712 1,677,637
---------- ---------- ---------- ----------
INTEREST AND OTHER CHARGES
Interest . . . . . . . . . . . . . . . . . . . . . . 199,575 176,520 729,236 716,861
Allowance for borrowed funds used during
construction . . . . . . . . . . . . . . . . . . . (3,956) (5,169) (14,114) (13,956)
Impairment of assets . . . . . . . . . . . . . . . . -- -- 1,233,320 --
TU Electric obligated, mandatorily redeemable, preferred
securities of trusts distributions . . . . . . . . 8,249 -- 10,050 --
Preferred stock dividends of subsidiary . . . . . . . 14,419 23,546 75,788 97,346
---------- ---------- ---------- ----------
Total interest and other charges . . . . . . . . . 218,287 194,897 2,034,280 800,251
---------- ---------- ---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES . . . . . . . . . . . 200,241 121,128 (119,568) 877,386
INCOME TAX EXPENSE (BENEFIT) . . . . . . . . . . . . . 74,167 45,717 (31,586) 325,922
---------- ---------- ---------- ----------
CONSOLIDATED NET INCOME (LOSS) . . . . . . . . . . . . $ 126,074 $ 75,411 $ (87,982) $ 551,464
========== ========== ========== ==========
Average shares of common stock
outstanding (thousands) . . . . . . . . . . . . . . . 225,841 225,841 225,841 225,841
Earnings (loss) and dividends per share of common stock:
Earnings (loss) (on average shares outstanding) . . $0.56 $0.33 $(0.39) $2.44
Dividends declared per share of common stock . . . . $0.50 $0.77 $2.54 $3.08
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
3
<PAGE> 4
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-----------------------
1996 1995
---------- -----------
THOUSANDS OF DOLLARS
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 126,074 $ 75,411
Adjustments to reconcile consolidated net income to cash provided
by operating activities:
Depreciation and amortization (including amounts charged to fuel) . . . . . . . . 189,781 177,885
Deferred federal income taxes -- net . . . . . . . . . . . . . . . . . . . . . . . 59,964 46,811
Federal investment tax credits -- net . . . . . . . . . . . . . . . . . . . . . . (5,761) (5,753)
Allowance for equity funds used during construction . . . . . . . . . . . . . . . (546) 54
Changes in operating assets and liabilities:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,806 55,868
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,090 17,510
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (32,323) (12,817)
Interest and taxes accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . (26,766) (71,590)
Other working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (23,935) (33,053)
Over/(under) -- recovered fuel revenue -- net of deferred taxes . . . . . . . . (37,695) 44,774
Other -- net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,321 12,442
---------- -----------
Cash provided by operating activities . . . . . . . . . . . . . . . . . . . . 337,010 307,542
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of securities:
First mortgage bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133,010 --
Other long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 300,000
Retirement of long-term debt and preferred stock . . . . . . . . . . . . . . . . . . (172,438) (139,705)
Change in notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (18,121) (171,886)
Common stock dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . (112,921) (173,872)
Debt premium, discount, financing and reacquisition expenses . . . . . . . . . . . . (10,257) (2,862)
---------- -----------
Cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . (180,727) (188,325)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (94,804) (87,443)
Allowance for equity funds used during construction (excluding
amount for nuclear fuel) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337 (54)
Change in construction receivables/payables -- net . . . . . . . . . . . . . . . . . -- 1,097
Non-utility property -- net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,599 (15,947)
Nuclear fuel (excluding allowance for equity funds used during construction) . . . . (14,785) (15,663)
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (82,574) (5,996)
---------- -----------
Cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . (190,227) (124,006)
---------- -----------
INCREASE IN CASH DUE TO EXCHANGE RATE CHANGES . . . . . . . . . . . . . . . . . . . . . 22,057 --
---------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . (11,887) (4,789)
CASH AND CASH EQUIVALENTS -- BEGINNING BALANCE . . . . . . . . . . . . . . . . . . . . 24,853 7,426
---------- -----------
CASH AND CASH EQUIVALENTS -- ENDING BALANCE . . . . . . . . . . . . . . . . . . . . . . $ 12,966 $ 2,637
========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
4
<PAGE> 5
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
(UNAUDITED)
----------- -----------
THOUSANDS OF DOLLARS
<S> <C> <C>
UTILITY PLANT
In service:
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,664,437 $16,661,053
Transmission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,596,837 1,592,610
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,433,028 5,333,396
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 473,175 466,474
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,167,477 24,053,533
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . 5,713,947 5,562,190
----------- -----------
Utility plant in service less accumulated depreciation . . . . . . . . 18,453,530 18,491,343
Construction work in progress . . . . . . . . . . . . . . . . . . . . . . 299,399 271,033
Nuclear fuel (net of accumulated amortization: 1996 -- $312,751,000;
1995 -- $295,390,000) . . . . . . . . . . . . . . . . . . . . . . . . . 264,368 266,735
Held for future use . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,096 25,096
----------- -----------
Utility plant less accumulated depreciation and amortization . . . . . 19,042,393 19,054,207
Less reserve for regulatory disallowances . . . . . . . . . . . . . . . . 1,308,460 1,308,460
----------- -----------
Net utility plant . . . . . . . . . . . . . . . . . . . . . . . . . . 17,733,933 17,745,747
----------- -----------
INVESTMENTS
Non-utility property . . . . . . . . . . . . . . . . . . . . . . . . . . 420,822 422,421
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697,465 617,583
----------- -----------
Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . 1,118,287 1,040,004
----------- -----------
CURRENT ASSETS
Cash in banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,966 24,853
Special deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,980 19,455
Accounts receivable:
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241,195 275,275
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,166 51,735
Allowance for uncollectible accounts . . . . . . . . . . . . . . . . . . (5,054) (5,965)
Inventories -- at average cost:
Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . 199,140 200,145
Fuel stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,932 128,028
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,761 55,528
Deferred federal income taxes . . . . . . . . . . . . . . . . . . . . . . 43,628 84,410
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 15,202 14,924
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . 753,916 848,388
----------- -----------
DEFERRED DEBITS
Unamortized regulatory assets . . . . . . . . . . . . . . . . . . . . . . 1,879,481 1,901,310
Other deferred debits . . . . . . . . . . . . . . . . . . . . . . . . . . 74,560 73,087
----------- -----------
Total deferred debits . . . . . . . . . . . . . . . . . . . . . . . . 1,954,041 1,974,397
Less reserve for regulatory disallowances . . . . . . . . . . . . . . . . 72,685 72,685
----------- -----------
Net deferred debits . . . . . . . . . . . . . . . . . . . . . . . . . 1,881,356 1,901,712
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $21,487,492 $21,535,851
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
5
<PAGE> 6
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
(UNAUDITED)
------------ ------------
THOUSANDS OF DOLLARS
<S> <C> <C>
CAPITALIZATION
Common stock without par value -- net:
Authorized shares -- 500,000,000
Outstanding shares -- 225,841,037 . . . . . . . . . . . . . . . . . . . $ 4,808,958 $ 4,806,912
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 938,620 924,444
Cumulative currency translation adjustment . . . . . . . . . . . . . . . 32,832 397
------------ ------------
Total common stock equity . . . . . . . . . . . . . . . . . . . . . 5,780,410 5,731,753
Preferred stock:
Not subject to mandatory redemption . . . . . . . . . . . . . . . . . . 489,695 489,695
Subject to mandatory redemption . . . . . . . . . . . . . . . . . . . . 263,246 263,196
TU Electric obligated, mandatorily redeemable, preferred
securities of trusts . . . . . . . . . . . . . . . . . . . . . . . . . . 381,578 381,476
Long-term debt, less amounts due currently . . . . . . . . . . . . . . . 8,877,670 9,174,575
------------ ------------
Total capitalization 15,792,599 16,040,695
------------ ------------
CURRENT LIABILITIES
Notes payable:
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . 235,000 321,990
Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 343,469 275,000
Long-term debt due currently . . . . . . . . . . . . . . . . . . . . . . 367,150 61,321
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 268,480 300,726
Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,113 125,929
Customers' deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,276 76,963
Taxes accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 139,821 167,951
Interest accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,639 165,277
Over-recovered fuel revenue . . . . . . . . . . . . . . . . . . . . . . . 57,865 115,858
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 81,671 101,566
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . 1,873,484 1,712,581
------------ ------------
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES
Accumulated deferred federal income taxes . . . . . . . . . . . . . . . . 2,707,575 2,669,808
Unamortized federal investment tax credits . . . . . . . . . . . . . . . 617,026 622,786
Other deferred credits and noncurrent liabilities . . . . . . . . . . . . 496,808 489,981
------------ ------------
Total deferred credits and other noncurrent liabilities . . . . . . 3,821,409 3,782,575
COMMITMENTS AND CONTINGENCIES (Note 6)
------------ ------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 21,487,492 $ 21,535,851
============ ============
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
6
<PAGE> 7
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31,
----------------------------- --------------------------
1996 1995 1996 1995
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
OPERATING REVENUES . . . . . . . . . . . . . . . . . . $ 1,348,330 $ 1,233,772 $ 5,675,020 $ 5,556,331
------------ ------------- ----------- ------------
OPERATING EXPENSES
Fuel and purchased power . . . . . . . . . . . . . 449,821 406,702 1,740,210 1,771,652
Operation . . . . . . . . . . . . . . . . . . . . . 180,567 187,532 760,785 800,431
Maintenance . . . . . . . . . . . . . . . . . . . . 69,825 67,378 283,731 292,205
Depreciation and amortization . . . . . . . . . . . 139,064 136,557 552,118 542,787
Federal income taxes . . . . . . . . . . . . . . . 78,809 47,444 413,680 337,052
Taxes other than income . . . . . . . . . . . . . . 125,187 132,768 504,464 526,495
------------ ------------- ----------- ------------
Total operating expenses . . . . . . . . . . . . 1,043,273 978,381 4,254,988 4,270,622
------------ ------------- ----------- ------------
OPERATING INCOME . . . . . . . . . . . . . . . . . . . 305,057 255,391 1,420,032 1,285,709
------------ ------------- ----------- ------------
OTHER INCOME
Allowance for equity funds used during construction 540 (58) 7,256 7,802
Impairment of assets . . . . . . . . . . . . . . . -- -- (486,350) --
Other income and deductions -- net . . . . . . . . (228) 2,362 6,035 9,736
Federal income taxes . . . . . . . . . . . . . . . 112 (784) 170,258 (4,060)
------------ ------------- ----------- ------------
Total other income . . . . . . . . . . . . . . . 424 1,520 (302,801) 13,478
------------ ------------- ----------- ------------
TOTAL INCOME . . . . . . . . . . . . . . . . . . . . . 305,481 256,911 1,117,231 1,299,187
------------ ------------- ----------- ------------
INTEREST AND OTHER CHARGES
Interest on mortgage bonds . . . . . . . . . . . . 125,966 136,942 516,001 555,659
Interest on other long-term debt . . . . . . . . . 8,296 8,599 43,768 32,699
Other interest . . . . . . . . . . . . . . . . . . 14,140 14,780 57,860 63,587
TU Electric obligated, mandatorily redeemable,
preferred securities of trusts distributions . . 8,249 -- 10,050 --
Allowance for borrowed funds used during construction (3,955) (5,168) (14,106) (13,947)
------------ ------------- ----------- ------------
Total interest and other charges . . . . . . . . 152,696 155,153 613,573 637,998
------------ ------------- ----------- ------------
CONSOLIDATED NET INCOME . . . . . . . . . . . . . . . . 152,785 101,758 503,658 661,189
PREFERRED STOCK DIVIDENDS . . . . . . . . . . . . . . . 14,419 23,546 75,788 97,346
------------ ------------- ----------- ------------
CONSOLIDATED NET INCOME AVAILABLE FOR COMMON
STOCK . . . . . . . . . . . . . . . . . . . . . . . $ 138,366 $ 78,212 $ 427,870 $ 563,843
============ ============= =========== ============
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
7
<PAGE> 8
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED STATEMENTS OF CONSOLIDATED CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------
1996 1995
---------- -----------
THOUSANDS OF DOLLARS
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 161,034 $ 101,758
Adjustments to reconcile consolidated net income to cash provided by
operating activities:
Depreciation and amortization (including amounts charged to fuel) . . . . . . . 168,480 170,450
Deferred federal income taxes -- net . . . . . . . . . . . . . . . . . . . . . . 55,336 43,143
Federal investment tax credits -- net . . . . . . . . . . . . . . . . . . . . . (5,367) (5,365)
Allowance for equity funds used during construction . . . . . . . . . . . . . . (540) 58
Changes in operating assets and liabilities:
Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40,812 53,553
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,860 2,609
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,414 13,470
Interest and taxes accrued . . . . . . . . . . . . . . . . . . . . . . . . . . 3,089 (52,936)
Other working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . (36,496) (25,065)
Over/(under) -- recovered fuel revenue -- net of deferred taxes . . . . . . . (37,695) 44,774
Other -- net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,843 4,461
---------- -----------
Cash provided by operating activities . . . . . . . . . . . . . . . . . . . 382,770 350,910
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of securities:
First mortgage bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133,010 --
Other long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 300,000
Retirement of long-term debt and preferred stock . . . . . . . . . . . . . . . . . . (168,874) (136,140)
Change in notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (86,990) (208,904)
Change in notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563 --
TU Electric obligated, mandatorily redeemable, preferred securities of trusts
distributions paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,147) --
Preferred stock dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,386) (23,629)
Common stock dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . (122,304) (180,320)
Debt premium, discount, financing and reacquisition expenses . . . . . . . . . . . . (8,355) (2,862)
---------- -----------
Cash used in financing activities . . . . . . . . . . . . . . . . . . . . . (267,483) (251,855)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (83,019) (84,239)
Allowance for equity funds used during construction (excluding amount
for nuclear fuel) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 331 (58)
Change in construction receivables/payables -- net . . . . . . . . . . . . . . . . . -- 1,097
Non-utility property -- net . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 16
Nuclear fuel (excluding allowance for equity funds used during construction) . . . . (14,785) (15,663)
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,206) (5,383)
---------- -----------
Cash used in investing activities . . . . . . . . . . . . . . . . . . . . . (127,679) (104,230)
---------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . . . . . . . (12,392) (5,175)
CASH AND CASH EQUIVALENTS -- BEGINNING BALANCE . . . . . . . . . . . . . . . . . . . . 22,633 6,699
---------- -----------
CASH AND CASH EQUIVALENTS -- ENDING BALANCE . . . . . . . . . . . . . . . . . . . . . . $ 10,241 $ 1,524
========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
8
<PAGE> 9
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
(UNAUDITED)
----------- -----------
THOUSANDS OF DOLLARS
<S> <C> <C>
ELECTRIC PLANT
In service:
Production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15,700,514 $15,699,488
Transmission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,590,775 1,586,547
Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,274,264 4,229,794
General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410,511 407,897
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,976,064 21,923,726
Less accumulated depreciation . . . . . . . . . . . . . . . . . . . . . 5,209,784 5,075,428
----------- -----------
Electric plant in service less accumulated depreciation . . . . . . . 16,766,280 16,848,298
Construction work in progress . . . . . . . . . . . . . . . . . . . . . 258,787 236,913
Nuclear fuel (net of accumulated amortization: 1996 -- $312,751,000;
1995 -- $295,390,000) . . . . . . . . . . . . . . . . . . . . . . . . 264,368 266,735
Held for future use . . . . . . . . . . . . . . . . . . . . . . . . . . 25,096 25,096
----------- -----------
Electric plant less accumulated depreciation and amortization . . . . 17,314,531 17,377,042
Less reserve for regulatory disallowances . . . . . . . . . . . . . . . 1,308,460 1,308,460
----------- -----------
Net electric plant . . . . . . . . . . . . . . . . . . . . . . . . . . 16,006,071 16,068,582
----------- -----------
INVESTMENTS
Non-utility property . . . . . . . . . . . . . . . . . . . . . . . . . . 332,234 332,234
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,094 103,888
----------- -----------
Total investments . . . . . . . . . . . . . . . . . . . . . . . . . . 466,328 436,122
----------- -----------
CURRENT ASSETS
Cash in banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,241 22,633
Special deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 552 527
Notes receivable -- affiliates . . . . . . . . . . . . . . . . . . . . 1,793 2,356
Accounts receivable:
Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171,987 212,165
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,262 34,906
Allowance for uncollectible accounts . . . . . . . . . . . . . . . . . (2,904) (3,914)
Inventories -- at average cost:
Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . 178,512 179,001
Fuel stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,518 82,889
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,596 31,225
Deferred federal income taxes . . . . . . . . . . . . . . . . . . . . . 52,724 79,629
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . 1,705 1,455
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . 572,986 642,872
----------- -----------
DEFERRED DEBITS
Unamortized regulatory assets . . . . . . . . . . . . . . . . . . . . . 1,858,624 1,879,369
Other deferred debits . . . . . . . . . . . . . . . . . . . . . . . . . 52,251 49,114
----------- -----------
Total deferred debits . . . . . . . . . . . . . . . . . . . . . . . . 1,910,875 1,928,483
Less reserve for regulatory disallowances . . . . . . . . . . . . . . . 72,685 72,685
----------- -----------
Net deferred debits . . . . . . . . . . . . . . . . . . . . . . . . . 1,838,190 1,855,798
----------- -----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,883,575 $19,003,374
=========== ===========
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
9
<PAGE> 10
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
(UNAUDITED)
------------ ------------
THOUSANDS OF DOLLARS
<S> <C> <C>
CAPITALIZATION
Common stock without par value:
Authorized shares -- 180,000,000
Outstanding shares -- 156,800,000 . . . . . . . . . . . . . . . . . . . $ 4,732,305 $ 4,732,305
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,083,655 1,067,593
------------ ------------
Total common stock equity . . . . . . . . . . . . . . . . . . . . . 5,815,960 5,799,898
Preferred stock:
Not subject to mandatory redemption . . . . . . . . . . . . . . . . . . 489,695 489,695
Subject to mandatory redemption . . . . . . . . . . . . . . . . . . . . 263,246 263,196
TU Electric obligated, mandatorily redeemable, preferred
securities of trusts . . . . . . . . . . . . . . . . . . . . . . . . . 381,578 381,476
Long-term debt, less amounts due currently . . . . . . . . . . . . . . . 6,872,071 7,212,070
------------ ------------
Total capitalization . . . . . . . . . . . . . . . . . . . . . . . . 13,822,550 14,146,335
------------ ------------
CURRENT LIABILITIES
Notes payable -- commercial paper . . . . . . . . . . . . . . . . . . . . 235,000 321,990
Long-term debt due currently . . . . . . . . . . . . . . . . . . . . . . 349,287 43,458
Accounts payable:
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114,127 101,722
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,411 109,402
Dividends declared . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,193 13,210
Customers' deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 64,681 63,564
Taxes accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,930 142,364
Interest accrued . . . . . . . . . . . . . . . . . . . . . . . . . . . . 148,338 141,815
Over-recovered fuel revenue . . . . . . . . . . . . . . . . . . . . . . . 57,865 115,858
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . 46,749 63,716
------------ ------------
Total current liabilities . . . . . . . . . . . . . . . . . . . . . 1,289,581 1,117,099
------------ ------------
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES
Accumulated deferred federal income taxes . . . . . . . . . . . . . . . . 2,907,659 2,869,049
Unamortized federal investment tax credits . . . . . . . . . . . . . . . 604,099 609,466
Other deferred credits and noncurrent liabilities . . . . . . . . . . . . 259,686 261,425
------------ ------------
Total deferred credits and other noncurrent liabilities . . . . . . 3,771,444 3,739,940
COMMITMENTS AND CONTINGENCIES (Note 6)
------------ ------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18,883,575 $ 19,003,374
============ ============
</TABLE>
See accompanying Notes to Condensed Consolidated Financial Statements.
10
<PAGE> 11
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL
THE COMPANY AND TU ELECTRIC
Basis of Presentation -- The consolidated financial statements of Texas
Utilities Company (Company) and its subsidiaries and Texas Utilities Electric
Company and its subsidiaries (TU Electric) have been prepared on the same basis
as those in the 1995 Annual Reports of the Company and TU Electric on Form 10-K
and, in the opinion of the Company or TU Electric, as the case may be, all
adjustments (constituting only normal recurring accruals) necessary to a fair
presentation of the results of operation and financial position have been
included therein. The statements are presented pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). Certain
information and footnote disclosures normally included in annual consolidated
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations.
These consolidated financial statements, and notes thereto, should be
considered in conjunction with the consolidated financial statements, and the
notes thereto, of the Company and TU Electric included in the 1995 Annual
Reports of the Company and TU Electric on Form 10-K, and the information under
Management's Discussion and Analysis of Financial Condition and Results of
Operation herein. The Company and TU Electric each believes that its
respective disclosures are adequate to make the information presented not
misleading. Certain financial statement items have been reclassified to
conform to the current year presentation.
Impairment of Assets -- In September 1995, the Company and TU Electric
recorded the impairment of several non- performing assets in accordance with
the early adoption of Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" which prescribes a methodology for assessing and measuring
impairments in the carrying value of certain assets.
Use of Estimates -- The preparation of the Company's and TU Electric's
condensed consolidated financial statements, in conformity with generally
accepted accounting principles, requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the balance sheet dates and
the reported amounts of revenue and expense during the reporting periods. In
the event estimates and/or assumptions prove to be different from actual
amounts, appropriate adjustments will be made in subsequent periods.
THE COMPANY
Consolidation -- The consolidated financial statements include the Company
and all of its subsidiaries (System Companies):
<TABLE>
<S> <C>
TU Electric Texas Utilities Services Inc. (TU Services)
Texas Utilities Australia Pty. Ltd. (TU Australia) Texas Utilities Properties Inc. (TU Properties)
Southwestern Electric Service Company (SESCO) Texas Utilities Communications Inc. (TU Communications)
Texas Utilities Fuel Company (Fuel Company) Basic Resources Inc. (Basic)
Texas Utilities Mining Company (Mining Company) Chaco Energy Company (Chaco)
</TABLE>
All significant intercompany items and transactions have been eliminated in
consolidation.
TU ELECTRIC
Consolidation -- The consolidated financial statements of TU Electric
include all of its subsidiaries, all of which are business trusts. All
significant intercompany items and transactions have been eliminated in
consolidation.
11
<PAGE> 12
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
2. SHORT-TERM FINANCING
THE COMPANY AND TU ELECTRIC
At March 31, 1996, the Company and TU Electric had joint lines of credit
aggregating $1,000,000,000 under two credit facility agreements with a group of
commercial banks. In addition, the Company had a revolving credit facility
agreement with a group of commercial banks which provided for borrowings, on a
standby basis, of up to $200,000,000. Borrowings under these facilities were
used for working capital and other corporate purposes, including commercial
paper backup. The total of short-term borrowings authorized by the Board of
Directors of the Company at March 31, 1996, from banks or other lenders, was
$1,500,000,000.
On April 26, 1996, the Company and TU Electric entered into two new credit
facility agreements (Credit Agreements) with a group of commercial banks which
replaced the facilities referred to above. The Credit Agreements, for which
the Company pays a fee, have three facilities. Facility A provides for
short-term borrowings of up to $375,000,000 at a variable interest rate and
terminates April 25, 1997. Facility B provides for short-term borrowings of
up to $875,000,000 at a variable interest rate and terminates April 26, 2001.
The Company's borrowings under Facilities A and B are limited to an aggregate
of $750,000,000 at any one time outstanding. Borrowings under these facilities
will be used for working capital and other corporate purposes, including
commercial paper backup. Facility C is a separate five-year, unsecured
long-term loan to the Company in the principal amount of $300,000,000.
3. CAPITALIZATION
THE COMPANY
COMMON STOCK
In 1990, the Company's Employee Thrift Plan (Thrift Plan) borrowed
$250,000,000 from an outside lender in the form of a note payable and
purchased 7,142,857 shares of common stock (LESOP Shares) from the Company in
connection with the leveraged employee stock ownership provision of the Thrift
Plan. LESOP Shares are held by the trustee until allocated to Thrift Plan
participants when required to meet the System Companies' obligations under the
terms of the Thrift Plan. The Company has purchased the note from the outside
lender, which has been recorded as a reduction to common stock equity. The
Thrift Plan uses dividends on the LESOP Shares purchased and contributions from
the System Companies, if required, to repay interest and principal on the note.
Common stock equity increases at such time as LESOP Shares are allocated to
participants' accounts even though shares of common stock outstanding include
unallocated LESOP Shares held by the trustee. Allocations to participants'
accounts during the three months ended March 31, 1996, increased common stock
equity by $2,046,000.
LONG-TERM DEBT
On April 26, 1996, the Company borrowed $300,000,000 pursuant to Facility C
of the Credit Agreements as discussed in Note 2. The proceeds were used to
refinance outstanding indebtedness of the Company. Facility C matures April
26, 2001. The Company may choose to use either or both of two methods of
calculating a variable interest rate for portions of the term loan. The
initial interest rate for the entire term loan, 5.95%, is based on a
three-month LIBOR rate.
TU ELECTRIC
PREFERRED STOCK
At March 31, 1996 and December 31, 1995, TU Electric had 17,000,000 shares
of preferred stock authorized by its articles of incorporation of which
7,609,103 shares were issued and outstanding.
12
<PAGE> 13
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TU Electric redeemed 125,000 shares of its $9.64 Cumulative Preferred Stock
on May 1, 1996, which fulfills its mandatory redemption requirements, with
respect to preferred stock, until November 1, 1996.
PREFERRED SECURITIES OF TRUSTS
At March 31, 1996 and December 31, 1995, TU Electric Capital I, TU Electric
Capital II and TU Electric Capital III had an aggregate of 15,862,297 units of
preferred securities outstanding.
LONG-TERM DEBT
In March 1996, the Brazos River Authority, the Sabine River Authority of
Texas and the Trinity River Authority of Texas issued $133,010,000 aggregate
principal amount of Pollution Control Revenue Bonds collateralized by TU
Electric's First Mortgage Bonds. All such bonds mature on March 1, 2026, have
variable interest rates and are subject to mandatory tender and remarketing
from time to time. The remarketing of the bonds is supported by standby bond
purchase agreements. Scheduled payments of interest and of principal at
maturity or on mandatory redemption, upon the occurrence of certain events, is
supported by insurance policies. Interest rates on all the bonds are currently
determined daily. For the period ended March 31, 1996, such rates ranged from
3.15% to 3.85%.
TU Electric redeemed or reacquired the following long-term debt during the
three months ended March 31, 1996:
<TABLE>
<CAPTION>
PRINCIPAL
DESCRIPTION AMOUNT INTEREST RATE MATURITY
----------- ------------ ----------------- -------------
<S> <C> <C> <C>
First mortgage bonds . . . . . . . . . . . . . . . . . . . . . . $ 80,595,000 7-3/8% to 9.95% 2001-2025
Taxable pollution control revenue bonds . . . . . . . . . . . . . 25,060,000 5.16% to 6.65% 2021
Pollution control revenue bonds . . . . . . . . . . . . . . . . . 57,950,000 7-3/4% 2016
------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $163,605,000
============
</TABLE>
4. RETAINED EARNINGS
THE COMPANY AND TU ELECTRIC
The articles of incorporation and the mortgages, as supplemented, of TU
Electric and SESCO contain provisions which, under certain conditions, restrict
distributions on or acquisitions of their common stock. At March 31, 1996,
$76,954,000 of retained earnings of TU Electric and $13,969,000 of retained
earnings of SESCO were thus restricted as a result of such provisions.
5. RATE PROCEEDINGS
TU ELECTRIC
As a result of recent legislation, flexible retail and wholesale pricing
may be approved by the Public Utility Commission of Texas (PUC) at levels lower
than a utility's approved rates but higher than a utility's marginal cost. In
September 1995, TU Electric filed an application for such a wholesale rate with
the PUC for service to two rural electric cooperatives it has served since
1963. The proposed rate was approved by the PUC in March 1996. Such approval
enables TU Electric to retain a combined load of approximately 23 megawatts.
The rate includes provisions for a five- year term of service. TU Electric is
actively pursuing several other opportunities through flexible pricing to
enhance its ability to compete for new wholesale loads, as well as to retain
existing wholesale loads.
13
<PAGE> 14
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. COMMITMENTS AND CONTINGENCIES
COOLING WATER CONTRACTS
TU ELECTRIC
TU Electric has entered into contracts with public agencies to purchase
cooling water for use in the generation of electric energy. In connection with
certain contracts, TU Electric has agreed, in effect, to guarantee the
principal, $34,575,000 at March 31, 1996, and interest on bonds issued to
finance the reservoirs from which the water is supplied. The bonds mature at
various dates through 2011 and have interest rates ranging from 5-1/2% to 7%.
TU Electric is required to make periodic payments equal to such principal and
interest, including amounts assumed by a third party and reimbursed to TU
Electric. In addition, TU Electric is obligated to pay certain variable costs
of operating and maintaining the reservoirs. TU Electric has assigned to a
municipality all contract rights and obligations of TU Electric in connection
with $79,865,000 remaining principal amount of bonds at March 31, 1996, issued
for similar purposes which had previously been guaranteed by TU Electric. TU
Electric is, however, contingently liable in the unlikely event of default by
the municipality.
NUCLEAR DECOMMISSIONING AND DISPOSAL OF SPENT FUEL
TU ELECTRIC
TU Electric has established a reserve, charged to depreciation expense and
included in accumulated depreciation, for the decommissioning of Comanche Peak
nuclear generating station (Comanche Peak), whereby decommissioning costs are
being recovered from customers over the life of the plant and deposited in
external trust funds (included in other investments). At March 31, 1996, such
reserve totaled $81,888,000 which includes an accrual of $4,545,000 and
$18,179,000 for the three and twelve months ended March 31, 1996, respectively.
As of March 31, 1996, the market value of deposits in the external trust for
decommissioning of Comanche Peak was $93,689,000. Realized earnings on funds
deposited in the external trust are recognized in the reserve. Based on a
site-specific study during 1992 using the prompt dismantlement method and
then-current dollars, decommissioning costs for Comanche Peak Unit 1, and Unit
2 and common facilities were estimated to be $255,000,000 and $344,000,000,
respectively. Decommissioning activities are projected to begin in 2030 and
2033 for Comanche Peak Unit 1, and Unit 2 and common facilities, respectively.
TU Electric is recovering such costs based upon the 1992 study through its
rates placed in effect under Docket 11735.
TU Electric has a contract with the United States Department of Energy for
the future disposal of spent nuclear fuel at a cost of one mill per
kilowatt-hour of Comanche Peak net generation. The disposal fee is included in
nuclear fuel expense.
GENERAL
THE COMPANY AND TU ELECTRIC
In addition to the above, the Company and TU Electric are involved in
various legal and administrative proceedings which, in the opinion of each,
should not have a material effect upon its financial position or results of
operation.
14
<PAGE> 15
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
7. SUBSEQUENT EVENT
THE COMPANY
In April 1996, the Company announced that it had entered into an agreement
with Dallas-based ENSERCH Corporation (ENSERCH). Under the terms of the
agreement, Lone Star Gas Company (Lone Star Gas) and Lone Star Pipeline Company
(Lone Star Pipeline), the local distribution and pipeline divisions of ENSERCH,
and other businesses, excluding Enserch Exploration Inc. (EEX), will be
acquired by the Company. Lone Star Gas is one of the largest gas distribution
companies in the United States and the largest in Texas, serving over 1.3
million customers and providing service through over 23,500 miles of
distribution mains. Lone Star Pipeline has one of the largest pipelines in the
United States and consists of 9,200 miles of gathering and transmission
pipelines in Texas. Also included in the acquisition are ENSERCH's
subsidiaries engaged in natural gas processing, natural gas marketing and
independent power production. The Company is expected to issue approximately
$550 million of the Company's common stock to ENSERCH shareholders and
approximately $1.15 billion of ENSERCH's debt and preferred stock would remain
in effect. The transaction is subject to certain conditions which include the
approval of ENSERCH's and EEX's shareholders and, under certain circumstances,
the Company's shareholders. The transaction will be reported to the Texas
Railroad Commission and is subject to approval by the SEC, review by the
Antitrust Division of the U.S. Department of Justice and receipt by ENSERCH of
a favorable ruling from the Internal Revenue Service.
15
<PAGE> 16
INDEPENDENT ACCOUNTANTS' REPORT
Texas Utilities Company:
We have reviewed the accompanying condensed consolidated balance sheet of Texas
Utilities Company and subsidiaries as of March 31, 1996, and the related
condensed statements of consolidated income for the three-month and
twelve-month periods ended March 31, 1996 and 1995, and of consolidated cash
flows for the three-month periods ended March 31, 1996 and 1995. These
financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Texas Utilities Company and
subsidiaries as of December 31, 1995, and the related consolidated statements
of income, retained earnings and cash flows for the year then ended (not
presented herein); and in our report dated February 29, 1996, we expressed an
unqualified opinion on those consolidated financial statements, which opinion
included an explanatory paragraph concerning Texas Utilities Company and
subsidiaries' change in accounting for the impairment of long-lived assets and
long-lived assets to be disposed of. In our opinion, the information set forth
in the accompanying condensed consolidated balance sheet as of December 31,
1995, is fairly stated in all material respects in relation to the consolidated
balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Dallas, Texas
May 7, 1996
16
<PAGE> 17
INDEPENDENT ACCOUNTANTS' REPORT
Texas Utilities Electric Company:
We have reviewed the accompanying condensed consolidated balance sheet of Texas
Utilities Electric Company and subsidiaries (TU Electric) as of March 31, 1996,
and the related condensed statements of consolidated income for the three-month
and twelve-month periods ended March 31, 1996 and 1995, and of consolidated
cash flows for the three-month periods ended March 31, 1996 and 1995. These
financial statements are the responsibility of the TU Electric's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of TU Electric and subsidiaries as of
December 31, 1995, and the related consolidated statements of income, retained
earnings and cash flows for the year then ended (not presented herein); and in
our report dated February 29, 1996, we expressed an unqualified opinion on
those consolidated financial statements, which opinion included an explanatory
paragraph concerning TU Electric and subsidiaries' change in accounting for the
impairment of long-lived assets and long-lived assets to be disposed of. In
our opinion, the information set forth in the accompanying condensed
consolidated balance sheet as of December 31, 1995, is fairly stated in all
material respects in relation to the consolidated balance sheet from which it
has been derived.
DELOITTE & TOUCHE LLP
Dallas, Texas
May 7, 1996
17
<PAGE> 18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
For information concerning liquidity and capital resources, see Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operation in the Texas Utilities Company (Company) and Texas Utilities Electric
Company (TU Electric) Annual Reports on Form 10-K for the year 1995. Quarterly
results presented herein are not necessarily indicative of expectations for a
full year's operations because of seasonal and other factors, including rate
changes, variations in maintenance and other operating expense patterns, the
impact of the change in AFUDC accruals and the charges for regulatory
disallowances. No significant changes or events which might affect the
financial condition of the Company and its subsidiaries (System Companies) have
occurred subsequent to year-end other than as disclosed in the reports of the
Company and TU Electric included herein .
THE COMPANY AND TU ELECTRIC
On April 26, 1996, the Company and TU Electric entered into two new credit
facility agreements (Credit Agreements) with a group of commercial banks. The
Credit Agreements, for which the Company pays a fee, have three facilities.
Facility A provides for short-term borrowings of up to $375,000,000 at a
variable interest rate and terminates April 25, 1997. Facility B provides for
short-term borrowings of up to $875,000,000 at a variable interest rate and
terminates April 26, 2001. The Company's borrowings under Facilities A and B
are limited to an aggregate of $750,000,000 outstanding at any one time.
Borrowings under these facilities will be used for working capital and other
corporate purposes, including commercial paper backup. Facility C is a
separate five-year, unsecured long-term loan to the Company in the principal
amount of $300,000,000.
In addition to the above, the Company and Texas Utilities Fuel Company have
separate arrangements for uncommitted lines of credit. For more information
regarding short-term and long-term financings of the Company and TU Electric,
see Notes 2 and 3 to Condensed Consolidated Financial Statements.
The System Companies expect to issue additional debt and equity securities
as needed, including (i) the possible future sale by TU Electric of up to
$350,000,000 of First Mortgage Bonds currently registered with the Securities
and Exchange Commission (SEC) for offering pursuant to Rule 415 under the
Securities Act of 1933 and (ii) the possible future sale by TU Electric of
250,000 shares of Cumulative Preferred Stock ($100 liquidation value) similarly
registered. In addition, TU Electric has the ability to issue from time to time
up to $98,850,000 of First Mortgage Bonds designated as Medium-Term Notes,
Series D.
In order to remain competitive, the Company and TU Electric are aggressively
managing their operating costs and capital expenditures through streamlined
business processes and are developing and implementing strategies to address an
increasingly competitive environment. These strategies include initiatives to
improve their return on corporate assets and to maximize shareholder value
through new marketing programs, creative rate design, and new business
opportunities. Additional initiatives under consideration include the
potential disposition or alternative utilization of existing assets and the
restructuring of strategic business units.
The National Energy Policy Act of 1992 (Energy Act) addresses a wide range
of energy issues and is intended to increase competition in electric generation
and broaden access to electric transmission systems. In addition, the Public
Utility Regulatory Act of 1995, as amended (PURA), impacts the Public Utility
Commission of Texas (PUC) and its regulatory practices and encourages increased
competition in some aspects of the electric utility industry in Texas.
Although TU Electric and Southwestern Electric Service Company (SESCO) are
unable to predict the ultimate impact of the Energy Act, PURA and any related
regulations or legislation on their operations, they believe that such actions
are consistent with the trend toward increased competition in the energy
industry.
While TU Electric and SESCO have experienced competitive pressures in the
wholesale market resulting in a small loss of load for TU Electric since the
beginning of 1993, wholesale sales represented a relatively low percentage of
TU Electric's consolidated operating revenues for the three and twelve months
ended March 31, 1996. TU Electric and SESCO are unable to predict the extent
of future competitive developments in either the wholesale or retail markets or
what impact, if any, such developments may have on their operations.
18
<PAGE> 19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
For other information regarding Rate Proceedings, see Note 5 to Condensed
Consolidated Financial Statements.
Under the current regulatory environment, TU Electric and SESCO are subject
to the provisions of Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation" (SFAS 71). In the
event the companies no longer meet the criteria for application of SFAS 71 due
to significant changes in regulation or competition, the companies would
discontinue the application of SFAS 71. If a portion of either company's
operations continues to meet the criteria for application of SFAS 71, only that
portion would be subject to SFAS 71 treatment. Should significant changes in
regulation or competition occur, TU Electric and SESCO would be required to
assess the recoverability of other assets, including plant, and, if impaired,
to write down the assets to reflect their fair market value. Neither TU
Electric nor SESCO can predict the timing or extent of changes in the business
environment that may require the discontinuation of SFAS 71 application.
THE COMPANY
External funds of a permanent or long-term nature are obtained through the
sales of common stock, preferred stock, preferred securities and long-term debt
by the System Companies. The capitalization ratios of the Company and its
subsidiaries at March 31, 1996 consisted of approximately 56% long-term debt,
2% TU Electric obligated, mandatorily redeemable, preferred securities of
trusts, 5% preferred stock and 37% common stock equity.
To date in 1996, the System Companies redeemed, reacquired or made principal
payments of $184,944,000 (including $181,379,000 for TU Electric) on long-term
debt and preferred stock.
On April 26, 1996, the Company borrowed $300,000,000 pursuant to Facility C
of the Credit Agreements previously discussed. The proceeds were used to
refinance outstanding indebtedness of the Company. Facility C matures April
26, 2001. The Company may choose to use either or both of two methods of
calculating a variable interest rate for portions of the term loan. The
initial interest rate for the entire term loan, 5.95%, is based on a
three-month LIBOR rate.
TU ELECTRIC
The capitalization ratios of TU Electric at March 31, 1996 consisted of
approximately 50% long-term debt, 3% TU Electric obligated, mandatorily
redeemable, preferred securities of trusts, 5% preferred stock and 42% common
stock equity.
Long-term debt financings to date in 1996 by TU Electric consisted of the
issuance of pollution control revenue bonds in the amount of $133,010,000 and
maturing in 2026. Current interest rates on such issuance range from 3.95% to
4.00%. Proceeds from such financings were used for the early redemption or
reacquisition of debt and for general corporate purposes.
THE COMPANY
In October 1995, the Company announced a modification of its dividend
policy as a part of a financial strategy supporting the Company's overall
business plan. As a result, a quarterly dividend of $0.50 per share, payable
January 2, 1996, was declared by the Company's Board of Directors. The
previous quarterly dividend was $0.77 per share.
In December 1995, the Company's newly formed Australian subsidiary, Texas
Utilities Australia Pty. Ltd., acquired the common stock of Eastern Energy
Limited (Eastern Energy) for $1.55 billion. Eastern Energy is an Australian
electric distribution company serving approximately 475,000 customers,
including a portion of the Melbourne, Victoria metropolitan area. The
Company's equity investment is approximately $600 million. The remainder of
the acquisition cost was borrowed by Eastern Energy under a A$1.2 billion
(Australian dollar) term credit facility with a group of banks. Eastern Energy
also has a A$100 million facility with a group of banks used for working
capital purposes. Both facilities are non-recourse to the Company but are
secured by all of the property, assets and rights of Eastern Energy both
present and future.
19
<PAGE> 20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
In April 1996, the Company announced that it had entered into an agreement
with Dallas-based ENSERCH Corporation (ENSERCH). Under the terms of the
agreement, Lone Star Gas Company (Lone Star Gas) and Lone Star Pipeline Company
(Lone Star Pipeline), the local distribution and pipeline divisions of ENSERCH,
and other businesses, excluding Enserch Exploration Inc. (EEX), will be
acquired by the Company. Lone Star Gas is one of the largest gas distribution
companies in the United States and the largest in Texas, serving over 1.3
million customers and providing service through over 23,500 miles of
distribution mains. Lone Star Pipeline has one of the largest pipelines in the
United States and consists of 9,200 miles of gathering and transmission
pipelines in Texas. Also included in the acquisition are ENSERCH's
subsidiaries engaged in natural gas processing, natural gas marketing and
independent power production. The Company is expected to issue approximately
$550 million of the Company's common stock to ENSERCH shareholders and
approximately $1.15 billion of ENSERCH's debt and preferred stock would remain
in effect. The transaction is subject to certain conditions which include the
approval of ENSERCH's and EEX's shareholders and, under certain circumstances,
the Company's shareholders. The transaction will be reported to the Texas
Railroad Commission and is subject to approval by the SEC, review by the
Antitrust Division of the U.S. Department of Justice and receipt by ENSERCH of
a favorable ruling from the Internal Revenue Service (IRS).
THE COMPANY AND TU ELECTRIC
The re-evaluation of growth expectations, the effects of inflation,
additional regulatory requirements and the availability of fuel, labor,
materials and capital may result in changes to the estimated construction costs
and dates of completion in the Company's and TU Electric's construction
programs. Commitments in connection with the construction program are
generally revocable subject to reimbursement to manufacturers for expenditures
incurred or other cancellation penalties.
The Company and TU Electric each plans to seek new investment opportunities
from time to time when it concludes that such investments are consistent with
its business strategies and will likely enhance the long-term returns to
shareholders. Other than the ENSERCH acquisition discussed above, the timing
and amounts of any specific new business investment opportunities are presently
undetermined.
TU ELECTRIC
The PUC's final order in connection with TU Electric's January 1990 rate
increase request (Docket 9300) was reviewed by the 250th Judicial District
Court of Travis County, Texas and thereafter was appealed to the Court of
Appeals for the Third District of Texas (Court of Appeals) and to the Supreme
Court of Texas (Supreme Court). As a result of such review and appeals, an
aggregate of $909 million of disallowances with respect to TU Electric's
reacquisitions of minority owners' interests in Comanche Peak
nuclear-generating station (Comanche Peak) has been remanded to the PUC for
reconsideration on the basis of a prudent investment standard. On remand, the
PUC will also be required to reevaluate the appropriate level of TU Electric's
construction work in progress included in rate base in light of its financial
condition at the time of the initial hearing.
The Court of Appeals' holding that tax benefits generated by costs,
including capital costs, not allowed in rates must be used to reduce rates
charged to customers was reversed by the Supreme Court in a February 1996
decision. The Supreme Court's ruling eliminates the potential normalization
violation that two Private Letter Rulings issued by the IRS said would have
resulted from the treatment that previously had been ordered by the Court of
Appeals.
Although TU Electric cannot predict the outcome of any appeal or
reconsideration of the Docket 9300 rate decision, future regulatory actions or
any changes in economic and securities market conditions, no changes are
expected in trends or commitments which might significantly alter its basic
financial position or results of operation.
20
<PAGE> 21
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
RESULTS OF OPERATION
THE COMPANY AND TU ELECTRIC
For the three-month and twelve-month periods ended March 31, 1996,
consolidated net income for the Company increased approximately 67% and
decreased approximately 116% as compared to the respective periods ended March
31, 1995. For the Company and TU Electric, from which most of consolidated
earnings is derived, the major factors affecting earnings for the three-month
period were customer growth and a change in weather conditions as compared to
the prior period. For the twelve-months ended, the major factors affecting
earnings were cost control efforts, customer growth, a change to more normal
weather conditions and an after-tax asset impairment of approximately $802
million ($316 million for TU Electric).
TU ELECTRIC
For the three - and twelve - month periods, operating revenues increased
approximately 9% and 2%, respectively. The following table details the factors
contributing to these changes:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
-------------------------------------------
THREE MONTHS ENDED TWELVE MONTHS ENDED
---------------------- ----------------------
FACTORS THOUSANDS OF DOLLARS
---------
<S> <C> <C>
Base rate revenue (billed) . . . . . . . . . . . . . . . . . $ 68 ,222 $ 121,776
Fuel revenue . . . . . . . . . . . . . . . . . . . . . . . . 40,166 (31,175)
Power cost recovery factor revenue . . . . . . . . . . . . . (1,931) (6,153)
Unbilled revenue and other . . . . . . . . . . . . . . . . . 8 ,101 34,241
----------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . $ 114,558 $ 118,689
=========== =========
</TABLE>
Total energy sales (including unbilled energy sales) increased
approximately 9% for the three-month period and 4% for the twelve-month period.
The effect on billed energy sales and base rate revenue for both periods was
primarily a result of an increase in customers and a change to more normal
weather conditions as compared to the prior periods. The change in fuel
revenue for both periods was primarily due to fluctuations in gas prices. The
change in unbilled revenue and other for both periods resulted from warmer
weather conditions as compared to the prior periods.
Fuel and purchased power expense increased approximately 11% for the
three-month period primarily due to an increase in gas prices as compared to
the prior period.
Allowance for funds used during construction (AFUDC) decreased
approximately 12% for the three-month period due primarily to a reduction in
the rate used for capitalizing AFUDC.
Other income and deductions - net decreased for both periods due primarily
to a decrease in miscellaneous interest income and an increase in non-operating
expenses.
Total interest and other charges, excluding AFUDC, decreased approximately
2% and 4% for the three- and twelve-month periods, respectively. Interest on
mortgage bonds decreased over the prior period as a result of reduced interest
requirements due to the Company's refinancing efforts, partially offset by
increased interest requirements for new issues sold. The decrease in interest
on other long-term debt for both periods was affected by the prepayment of TU
Electric's promissory note to Brazos Electric Power Cooperative. For the
twelve-month period, other interest charges decreased due to decreased interest
on short-term borrowings and bonded rates, partially offset by increased
interest on unbilled fuel revenue. Preferred securities of trusts
distributions resulted from the issuance, in December 1995, of TU Electric
obligated, mandatorily redeemable, preferred securities of trusts.
For the three - and twelve-month periods, preferred stock dividends
decreased approximately 39% and 22%, respectively due primarily to the partial
redemption of certain series.
21
<PAGE> 22
PART II. OTHER INFORMATION
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
ITEM 5. OTHER INFORMATION
THE COMPANY
In April 1996, the Company announced that it had entered into an agreement
with Dallas-based ENSERCH Corporation (ENSERCH). Under the terms of the
agreement, Lone Star Gas Company (Lone Star Gas) and Lone Star Pipeline Company
(Lone Star Pipeline), the local distribution and pipeline divisions of ENSERCH,
and other businesses, excluding Enserch Exploration Inc. (EEX), will be
acquired by the Company. Lone Star Gas is one of the largest gas distribution
companies in the United States and the largest in Texas, serving over 1.3
million customers and providing service through over 23,500 miles of
distribution mains. Lone Star Pipeline has one of the largest pipelines in the
United States and consists of 9,200 miles of gathering and transmission
pipelines in Texas. Also included in the acquisition are ENSERCH's
subsidiaries engaged in natural gas processing, natural gas marketing and
independent power production. The Company is expected to issue approximately
$550 million of the Company's common stock to ENSERCH shareholders and
approximately $1.15 billion of ENSERCH's debt and preferred stock would remain
in effect. The transaction is subject to certain conditions which include the
approval of ENSERCH's and EEX's shareholders and, under certain circumstances,
the Company's shareholders. The transaction will be reported to the Texas
Railroad Commission and is subject to approval by the Securities and Exchange
Commission, review by the Antitrust Division of the U.S. Department of Justice
and receipt by ENSERCH of a favorable ruling from the Internal Revenue Service.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits filed as a part of Part II are:
4(a) - Fifty-fifth Supplemental Indenture, dated as of March 1,
1996, to the TU Electric Mortgage and Deed of Trust, dated as
of December 1, 1983, between TU Electric and Irving Trust
Company (now the Bank of New York), Trustee.
4(b) - Supplement No. 1, dated October 25, 1995, to Trust Indenture,
Security Agreement and Mortgage, dated as of December 1,
1989, among the Owner Trustee, TU Electric and the Indenture
Trustee.
4(c) - Supplement No. 1, dated October 19, 1995, to Amended and
Restated Participation Agreement, dated as of November 28,
1989, among the Owner Trustee, The First National Bank of
Chicago, as Original Indenture trustee, the Indenture
Trustee, the Owner Participant, Mesquite Power Corporation
and TU Electric.
15 - Letters from Deloitte & Touche LLP as to unaudited interim
financial information
15(a) Texas Utilities Company
15(b) Texas Utilities Electric Company
27 - Financial Data Schedules
27(a) Texas Utilities Company
27(b) Texas Utilities Electric Company
99(a) - Amended and Restated Competitive Advance and Revolving Credit
Facility Agreement, Facility A, dated as of April 26, 1996,
among the Company, TU Electric, certain banks and Chemical
Bank and Texas Commerce Bank National Association, as Agents.
22
<PAGE> 23
PART II. OTHER INFORMATION
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
99(b) - Amended and Restated Term Loan and Competitive Advance and
Revolving Credit Facility Agreement, Facilities B and C,
dated as of April 26, 1996, among the Company, TU Electric,
certain banks and Chemical Bank and Texas Commerce Bank
National Association, as Agents.
(b) Reports on Form 8-K filed since December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Date of Report Item Reported
-------------- -------------
<S> <C>
THE COMPANY
-----------
April 13, 1996 Item 5. OTHER EVENTS
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
</TABLE>
23
<PAGE> 24
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEXAS UTILITIES COMPANY
By /s/ Cathryn C. Hulen
--------------------------------------------
Cathryn C. Hulen
Controller and
Principal Accounting Officer
Date: May 7, 1996
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEXAS UTILITIES ELECTRIC COMPANY
By /s/ Cathryn C. Hulen
--------------------------------------------
Cathryn C. Hulen
Controller and
Principal Accounting Officer
Date: May 7, 1996
24
<PAGE> 25
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ -----------
<S> <C>
4(a) - Fifty-fifth Supplemental Indenture, dated as of March 1,
1996, to the TU Electric Mortgage and Deed of Trust, dated as
of December 1, 1983, between TU Electric and Irving Trust
Company (now the Bank of New York), Trustee.
4(b) - Supplement No. 1, dated October 25, 1995, to Trust Indenture,
Security Agreement and Mortgage, dated as of December 1,
1989, among the Owner Trustee, TU Electric and the Indenture
Trustee.
4(c) - Supplement No. 1, dated October 19, 1995, to Amended and
Restated Participation Agreement, dated as of November 28,
1989, among the Owner Trustee, The First National Bank of
Chicago, as Original Indenture trustee, the Indenture
Trustee, the Owner Participant, Mesquite Power Corporation
and TU Electric.
15 - Letters from Deloitte & Touche LLP as to unaudited interim
financial information
15(a) Texas Utilities Company
15(b) Texas Utilities Electric Company
27 - Financial Data Schedules
27(a) Texas Utilities Company
27(b) Texas Utilities Electric Company
99(a) - Amended and Restated Competitive Advance and Revolving Credit
Facility Agreement, Facility A, dated as of April 26, 1996,
among the Company, TU Electric, certain banks and Chemical
Bank and Texas Commerce Bank National Association, as Agents.
99(b) - Amended and Restated Term Loan and Competitive Advance and
Revolving Credit Facility Agreement, Facilities B and C,
dated as of April 26, 1996, among the Company, TU Electric,
certain banks and Chemical Bank and Texas Commerce Bank
National Association, as Agents.
</TABLE>
<PAGE> 1
EXHIBIT 4(a)
[CONFORMED COPY]
================================================================================
TEXAS UTILITIES ELECTRIC COMPANY
TO
THE BANK OF NEW YORK,
(FORMERLY IRVING TRUST COMPANY)
TRUSTEE UNDER THE TEXAS UTILITIES
ELECTRIC COMPANY MORTGAGE AND
DEED OF TRUST, DATED AS OF
DECEMBER 1, 1983
__________________
FIFTY-FIFTH SUPPLEMENTAL INDENTURE
PROVIDING AMONG OTHER THINGS FOR
FIRST MORTGAGE BONDS,
POLLUTION CONTROL SERIES Y,
FIRST MORTGAGE BONDS,
POLLUTION CONTROL SERIES Z,
FIRST MORTGAGE BONDS,
POLLUTION CONTROL SERIES AA
AND
FIRST MORTGAGE BONDS,
POLLUTION CONTROL SERIES AB
__________________
DATED AS OF MARCH 1, 1996
================================================================================
THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS
<PAGE> 2
THIS INSTRUMENT GRANTS A SECURITY INTEREST BY A UTILITY
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS
FIFTY-FIFTH SUPPLEMENTAL INDENTURE
_________________________________
INDENTURE, dated as of March 1, 1996, between TEXAS UTILITIES ELECTRIC
COMPANY, a corporation of the State of Texas, whose address is Energy Plaza,
1601 Bryan Street, Dallas, Texas 75201 (hereinafter sometimes called the
Company), and THE BANK OF NEW YORK (formerly Irving Trust Company), a
corporation of the State of New York, whose address is 101 Barclay Street, New
York, New York 10286 (hereinafter sometimes called the Trustee), Trustee under
the Mortgage and Deed of Trust, dated as of December 1, 1983 (hereinafter
called the Original Indenture, the Original Indenture and any and all
indentures and instruments supplemental thereto being hereinafter sometimes
collectively called the Mortgage), which Original Indenture was executed and
delivered by the Company to secure the payment of bonds issued or to be issued
under and in accordance with the provisions of the Mortgage, reference to which
Mortgage is made, this Indenture (hereinafter called the Fifty-fifth
Supplemental Indenture) being supplemental thereto;
WHEREAS, said Original Indenture was recorded or filed as required in
the State of Texas; and
WHEREAS, the Company executed and delivered to the Trustee the
following supplemental indentures:
<TABLE>
<CAPTION>
DESIGNATION DATED AS OF
----------- -----------
<S> <C>
First Supplemental Indenture . . . . . . . . . . . . . April 1, 1984
Second Supplemental Indenture . . . . . . . . . . . . . September 1, 1984
Third Supplemental Indenture . . . . . . . . . . . . . April 1, 1985
Fourth Supplemental Indenture . . . . . . . . . . . . . August 1, 1985
Fifth Supplemental Indenture . . . . . . . . . . . . . September 1, 1985
Sixth Supplemental Indenture . . . . . . . . . . . . . December 1, 1985
Seventh Supplemental Indenture . . . . . . . . . . . . March 1, 1986
Eighth Supplemental Indenture . . . . . . . . . . . . . May 1, 1986
Ninth Supplemental Indenture . . . . . . . . . . . . . October 1, 1986
Tenth Supplemental Indenture . . . . . . . . . . . . . December 1, 1986
Eleventh Supplemental Indenture . . . . . . . . . . . . December 1, 1986
Twelfth Supplemental Indenture . . . . . . . . . . . . February 1, 1987
Thirteenth Supplemental Indenture . . . . . . . . . . . March 1, 1987
Fourteenth Supplemental Indenture . . . . . . . . . . . April 1, 1987
Fifteenth Supplemental Indenture . . . . . . . . . . . July 1, 1987
Sixteenth Supplemental Indenture . . . . . . . . . . . September 1, 1987
Seventeenth Supplemental Indenture . . . . . . . . . . October 1, 1987
Eighteenth Supplemental Indenture . . . . . . . . . . . March 1, 1988
Nineteenth Supplemental Indenture . . . . . . . . . . . May 1, 1988
</TABLE>
<PAGE> 3
3
<TABLE>
<CAPTION>
DESIGNATION DATED AS OF
----------- -----------
<S> <C>
Twentieth Supplemental Indenture . . . . . . . . . . . September 1, 1988
Twenty-first Supplemental Indenture . . . . . . . . . . November 1, 1988
Twenty-second Supplemental Indenture . . . . . . . . . January 1, 1989
Twenty-third Supplemental Indenture . . . . . . . . . . August 1, 1989
Twenty-fourth Supplemental Indenture . . . . . . . . . November 1, 1989
Twenty-fifth Supplemental Indenture . . . . . . . . . . December 1, 1989
Twenty-sixth Supplemental Indenture . . . . . . . . . . February 1, 1990
Twenty-seventh Supplemental Indenture . . . . . . . . . September 1, 1990
Twenty-eighth Supplemental Indenture . . . . . . . . . October 1, 1990
Twenty-ninth Supplemental Indenture . . . . . . . . . . October 1, 1990
Thirtieth Supplemental Indenture . . . . . . . . . . . March 1, 1991
Thirty-first Supplemental Indenture . . . . . . . . . . May 1, 1991
Thirty-second Supplemental Indenture . . . . . . . . . July 1, 1991
Thirty-third Supplemental Indenture . . . . . . . . . . February 1, 1992
Thirty-fourth Supplemental Indenture . . . . . . . . . April 1, 1992
Thirty-fifth Supplemental Indenture . . . . . . . . . . April 1, 1992
Thirty-sixth Supplemental Indenture . . . . . . . . . . June 1, 1992
Thirty-seventh Supplemental Indenture . . . . . . . . . June 1, 1992
Thirty-eighth Supplemental Indenture . . . . . . . . . August 1, 1992
Thirty-ninth Supplemental Indenture . . . . . . . . . . October 1, 1992
Fortieth Supplemental Indenture . . . . . . . . . . . . November 1, 1992
Forty-first Supplemental Indenture . . . . . . . . . . December 1, 1992
Forty-second Supplemental Indenture . . . . . . . . . . March 1, 1993
Forty-third Supplemental Indenture . . . . . . . . . . April 1, 1993
Forty-fourth Supplemental Indenture . . . . . . . . . . April 1, 1993
Forty-fifth Supplemental Indenture . . . . . . . . . . May 1, 1993
Forty-sixth Supplemental Indenture . . . . . . . . . . July 1, 1993
Forty-seventh Supplemental Indenture . . . . . . . . . October 1, 1993
Forty-eighth Supplemental Indenture . . . . . . . . . . November 1, 1993
Forty-ninth Supplemental Indenture . . . . . . . . . . May 1, 1994
Fiftieth Supplemental Indenture . . . . . . . . . . . . May 1, 1994
Fifty-first Supplemental Indenture . . . . . . . . . . August 1, 1994
Fifty-second Supplemental Indenture . . . . . . . . . . April 1, 1995
Fifty-third Supplemental Indenture . . . . . . . . . . June 1, 1995
Fifty-fourth Supplemental Indenture . . . . . . . . . . October 1, 1995
</TABLE>
which supplemental indentures were or are to be recorded or filed as required
in the State of Texas; and
WHEREAS, by the Original Indenture, the Company covenanted that it
would execute and deliver such supplemental indenture or indentures and such
further instruments and do such further acts as may be necessary or proper to
carry out more effectually the purposes of the Mortgage and to make subject to
the Lien of the Mortgage any property thereafter acquired and intended to be
subject to the Lien thereof; and
WHEREAS, in addition to the property described in the Original
Indenture, the Company has acquired certain other property, rights and
interests in property; and
<PAGE> 4
4
WHEREAS, the Company has heretofore issued as of February 29, 1996, in
accordance with the provisions of the Original Indenture, as heretofore
supplemented, the following series of First Mortgage and Collateral Trust Bonds
and First Mortgage Bonds:
<TABLE>
<CAPTION>
Principal Principal
Amount Amount
Series Issued Outstanding
------ --------------- -----------
<S> <C> <C>
12% Series due March 1, 1985 . . . . . . . . . . . . . . $ 1,000,000 $ None
13 5/8% Series due April 1, 2014 . . . . . . . . . . . . 100,000,000 None
13 1/2% Series due September 1, 2014 . . . . . . . . . . 150,000,000 None
12 7/8% Series due April 1, 2015 . . . . . . . . . . . . 150,000,000 None
12% Series due August 1, 2015 . . . . . . . . . . . . . . 100,000,000 None
12% Series due September 1, 2015 . . . . . . . . . . . . 75,000,000 None
11 1/8% Series due December 1, 2015 . . . . . . . . . . . 150,000,000 None
9 3/8% Series due March 1, 2016 . . . . . . . . . . . . . 200,000,000 None
9 3/4% Series due May 1, 2016 . . . . . . . . . . . . . . 200,000,000 None
7 3/4% Pollution Control Series C . . . . . . . . . . . . 70,000,000 57,950,000
8 1/4% Pollution Control Series D . . . . . . . . . . . . 200,000,000 111,215,000
9 1/2% Series due December 1, 2016 . . . . . . . . . . . 300,000,000 None
9 1/4% Series due February 1, 2017 . . . . . . . . . . . 250,000,000 None
7 7/8% Pollution Control Series E . . . . . . . . . . . . 100,000,000 81,305,000
10 1/2% Series due April 1, 2017 . . . . . . . . . . . . 250,000,000 None
9 1/2% Series due July 1, 1997 . . . . . . . . . . . . . 150,000,000 None
10 1/2% Series due July 1, 2017 . . . . . . . . . . . . . 150,000,000 None
9% Pollution Control Series F . . . . . . . . . . . . . 55,000,000 51,525,000
9% Pollution Control Series G . . . . . . . . . . . . . 12,000,000 12,000,000
9 7/8% Pollution Control Series H . . . . . . . . . . . 112,000,000 28,765,000
9 1/4% Pollution Control Series I . . . . . . . . . . . 100,000,000 54,005,000
10 3/8% Series due May 1, 1998 . . . . . . . . . . . . . 150,000,000 None
11 3/8% Series due May 1, 2018 . . . . . . . . . . . . . 150,000,000 None
Secured Medium-Term Notes, Series A . . . . . . . . . . . 300,000,000 30,000,000
10.44% Series due November 1, 2008 . . . . . . . . . . . 150,000,000 150,000,000
8 1/4% Pollution Control Series J . . . . . . . . . . . 100,000,000 100,000,000
9 1/2% Series due August 1, 1999 . . . . . . . . . . . . 200,000,000 200,000,000
10% Series due August 1, 2019 . . . . . . . . . . . . . . 100,000,000 None
9 7/8% Series due November 1, 2019 . . . . . . . . . . . 150,000,000 None
Secured Medium-Term Notes, Series B . . . . . . . . . . . 150,000,000 120,000,000
8 1/8% Pollution Control Series K . . . . . . . . . . . 50,000,000 50,000,000
8 1/8% Pollution Control Series L . . . . . . . . . . . 40,000,000 40,000,000
10 5/8% Series due September 1, 2020 . . . . . . . . . . 250,000,000 None
Secured Medium-Term Notes, Series C . . . . . . . . . . . 150,000,000 36,000,000
8 1/4% Pollution Control Series due October 1, 2020 . . . 11,000,000 11,000,000
7 7/8% Pollution Control Series due March 1, 2021 . . . . 100,000,000 100,000,000
9 3/4% Series due May 1, 2021 . . . . . . . . . . . . . . 300,000,000 300,000,000
0% Pollution Control Series M due June 1, 2021 . . . . . 86,250,000 None
0% Pollution Control Series N due June 1, 2021 . . . . . 57,500,000 None
0% Pollution Control Series O due June 1, 2021 . . . . . 57,500,000 None
0% Pollution Control Series P due June 1, 2021 . . . . . 115,000,000 104,650,000
8 1/8% Series due February 1, 2002 . . . . . . . . . . . 150,000,000 150,000,000
8 7/8% Series due February 1, 2022 . . . . . . . . . . . 175,000,000 175,000,000
</TABLE>
<PAGE> 5
5
<TABLE>
<CAPTION>
Principal Principal
Amount Amount
Series Issued Outstanding
------ --------------- -----------
<S> <C> <C>
8 1/4% Series due April 1, 2004 . . . . . . . . . . . . . $100,000,000 $100,000,000
9% Series due April 1, 2022 . . . . . . . . . . . . . . . 100,000,000 100,000,000
6 3/4% Pollution Control Series due April 1, 2022 . . . . 50,000,000 50,000,000
7 1/8% Series due June 1, 1997 . . . . . . . . . . . . . 150,000,000 150,000,000
8% Series due June 1, 2002 . . . . . . . . . . . . . . . 147,000,000 147,000,000
6 5/8% Pollution Control Series due June 1, 2022 . . . . 33,000,000 33,000,000
6 3/8% Series due August 1, 1997 . . . . . . . . . . . . 175,000,000 175,000,000
7 3/8% Series due August 1, 2001 . . . . . . . . . . . . 150,000,000 150,000,000
8 1/2% Series due August 1, 2024 . . . . . . . . . . . . 175,000,000 175,000,000
6.70% Pollution Control Series due October 1, 2022 . . . 16,935,000 16,935,000
6.55% Pollution Control Series due October 1, 2022 . . . 40,000,000 40,000,000
7 3/8% Series due November 1, 1999 . . . . . . . . . . . 100,000,000 100,000,000
8 3/4% Series due November 1, 2023 . . . . . . . . . . . 200,000,000 200,000,000
6 1/2% Pollution Control Series due December 1, 2027 . . 46,660,000 46,660,000
6 3/4% Series due March 1, 2003 . . . . . . . . . . . . . 200,000,000 200,000,000
7 7/8% Series due March 1, 2023 . . . . . . . . . . . . . 300,000,000 300,000,000
6.05% Pollution Control Series due April 1, 2025 . . . . 90,000,000 90,000,000
6.10% Pollution Control Series due April 1, 2028 . . . . 50,000,000 50,000,000
5 7/8% Series due April 1, 1998 . . . . . . . . . . . . . 175,000,000 175,000,000
6 3/4% Series due April 1, 2003 . . . . . . . . . . . . . 100,000,000 100,000,000
7 7/8% Series due April 1, 2024 . . . . . . . . . . . . . 225,000,000 225,000,000
0% Pollution Control Series due June 1, 2023 . . . . . . 115,000,000 115,000,000
5 3/4% Series due July 1, 1998 . . . . . . . . . . . . . 150,000,000 150,000,000
6 3/4% Series due July 1, 2005 . . . . . . . . . . . . . 100,000,000 100,000,000
7 5/8% Series due July 1, 2025 . . . . . . . . . . . . . 250,000,000 250,000,000
5 1/2% Series due October 1, 1998 . . . . . . . . . . . . 125,000,000 125,000,000
6 1/4% Series due October 1, 2004 . . . . . . . . . . . . 125,000,000 125,000,000
7 3/8% Series due October 1, 2025 . . . . . . . . . . . . 300,000,000 300,000,000
5 1/2% Pollution Control Series due May 1, 2022 . . . . . 50,000,000 50,000,000
5.55% Pollution Control Series due May 1, 2022 . . . . . 75,000,000 75,000,000
5.85% Pollution Control Series due May 1, 2022 . . . . . 33,465,000 33,465,000
Floating Rate Series due May 1, 1999 . . . . . . . . . . 300,000,000 300,000,000
Pollution Control Series Q due May 1, 2029 . . . . . . . 45,045,500 45,045,500
Pollution Control Series R due May 1, 2029 . . . . . . . 45,045,500 45,045,500
0% Series due 1994 . . . . . . . . . . . . . . . . . . . 1,013,831,000 None
Pollution Control Series S due April 1, 2030 . . . . . . 58,270,500 58,270,500
Pollution Control Series T due April 1, 2030 . . . . . . 18,400,000 18,400,000
Pollution Control Series U . . . . . . . . . . . . . . . 136,108,250 136,108,250
Pollution Control Series V . . . . . . . . . . . . . . . 136,108,250 136,108,250
Pollution Control Series W . . . . . . . . . . . . . . . 13,857,500 13,857,500
Pollution Control Series X . . . . . . . . . . . . . . . 21,246,250 21,246,250
Secured Medium-Term Notes, Series D . . . . . . . . . . . 201,150,000 201,150,000
</TABLE>
<PAGE> 6
6
which bonds are also hereinafter sometimes called bonds of the First through
Eighty-fifth Series, respectively; and
WHEREAS, Section 2.01 of the Original Indenture provides that the form
of each series of bonds (other than the First Series) issued thereunder and of
the coupons to be attached to coupon bonds of such series shall be established
by Resolution of the Board of Directors of the Company, and that the form of
such series, as established by said Board of Directors, shall specify the
descriptive title of the bonds and various other terms thereof, and may also
have such omissions or modifications or contain such provisions not prohibited
by the provisions of the Mortgage as the Board of Directors may, in its
discretion, cause to be inserted therein expressing or referring to the terms
and conditions upon which such bonds are to be issued and/or secured under
the Mortgage; and
WHEREAS, Section 22.04 of the Original Indenture provides, among other
things, that any power, privilege or right expressly or impliedly reserved to
or in any way conferred upon the Company by any provision of the Mortgage,
whether such power, privilege or right is in any way restricted or is
unrestricted, may be in whole or in part waived or surrendered or subjected to
any restriction if at the time unrestricted, or to additional restriction if
already restricted, and the Company may enter into any further covenants,
limitations, restrictions or provisions for the benefit of any one or more
series of bonds issued thereunder, or the Company may cure any ambiguity
contained therein, or in any supplemental indenture, or may establish the terms
and provisions of any series of bonds other than the First Series, by an
instrument in writing executed and acknowledged by the Company in such manner
as would be necessary to entitle a conveyance of real estate to be recorded in
all of the states in which any property at the time subject to the Lien of the
Mortgage shall be situated; and
WHEREAS, the Company now desires to create four new series of bonds
and to add to its covenants and agreements contained in the Mortgage certain
other covenants and agreements to be observed by it and to alter and amend in
certain respects the covenants and provisions contained in the Mortgage; and
WHEREAS, the execution and delivery by the Company of this Fifty-fifth
Supplemental Indenture, and the terms of the bonds of the Eighty-sixth,
Eighty-seventh, Eighty-eighth and Eighty-ninth Series, hereinafter referred to,
have been duly authorized by the Board of Directors of the Company by
appropriate resolutions of said Board of Directors;
NOW, THEREFORE, THIS INDENTURE WITNESSETH: That the Company, in
consideration of the premises and of Ten Dollars to it duly paid by the Trustee
at or before the ensealing and delivery of these presents, the receipt whereof
is hereby acknowledged, and in order to secure the payment of both the
principal of and interest and premium, if any, on the bonds from time to time
issued under the Mortgage, according to their tenor and effect and the
performance of all the provisions of the Mortgage (including any instruments
supplemental thereto and any modification made as in the Mortgage provided)
<PAGE> 7
7
and of said bonds, hath granted, bargained, sold, released, conveyed, assigned,
transferred, mortgaged, hypothecated, affected, pledged, set over and confirmed
and granted a security interest in and by these presents doth grant, bargain,
sell, release, convey, assign, transfer, mortgage, hypothecate, affect, pledge,
set over and confirm and grant a security interest in (subject, however, to
Excepted Encumbrances as defined in Section 1.06 of the Original Indenture)
unto The Bank of New York, Trustee under the Mortgage, and to its successor or
successors in said trust, and to said Trustee and its successors and assigns
forever, all properties of the Company, real, personal and mixed, of the kind
or nature specifically mentioned in the Original Indenture, as heretofore
supplemented, or of any other kind or nature acquired by the Company on or
after the date of the execution and delivery of the Original Indenture (except
any herein or in the Original Indenture expressly excepted), now owned or,
subject to the provisions of Section 18.03 of the Original Indenture, hereafter
acquired by the Company (by purchase, consolidation, merger, donation,
construction, erection or in any other way) and wheresoever situated, including
(without in anywise limiting or impairing by the enumeration of the same, the
scope and intent of the foregoing or of any general description contained in
this Fifty- fifth Supplemental Indenture) all real estate, lands, easements,
servitudes, licenses, permits, franchises, privileges, rights of way and other
rights in or relating to real estate or the occupancy of the same; all power
sites, flowage rights, water rights, water locations, water appropriations,
ditches, flumes, reservoirs, reservoir sites, canals, raceways, waterways,
dams, dam sites, aqueducts, and all other rights or means for appropriating,
conveying, storing and supplying water; all rights of way and roads; all plants
for the generation of electricity by steam, water and/or other power; all power
houses, gas plants, street lighting systems, standards and other equipment
incidental thereto; all telephone, radio and television systems,
air-conditioning systems and equipment incidental thereto, water wheels, water
works, water systems, steam heat and hot water plants, substations, lines,
service and supply systems, bridges, culverts, tracks, ice or refrigeration
plants and equipment, offices, buildings and other structures and the equipment
thereof; all machinery, engines, boilers, dynamos, turbines, electric, gas and
other machines, prime movers, regulators, meters, transformers, generators
(including, but not limited to, engine driven generators and turbo-generator
units), motors, electrical, gas and mechanical appliances, conduits, cables,
water, steam heat, gas or other pipes, gas mains and pipes, service pipes,
fittings, valves and connections, pole and transmission lines, towers, overhead
conductors and devices, underground conduits, underground conductors and
devices, wires, cables, tools, implements, apparatus, storage battery
equipment, and all other fixtures and personalty; all municipal and other
franchises, consents or permits; all lines for the transmission and
distribution of electric current, gas, steam heat or water for any purpose
including towers, poles, wires, cables, pipes, conduits, ducts and all
apparatus for use in connection therewith and (except as herein or in the
Original Indenture expressly excepted) all the right, title and interest of the
Company in and to all other property of any kind or nature appertaining to
and/or used and/or occupied and/or enjoyed in connection with any property
hereinbefore or in the Original Indenture described.
TOGETHER WITH all and singular the tenements, hereditaments,
prescriptions, servitudes and appurtenances belonging or in anywise
appertaining to the aforesaid
<PAGE> 8
8
property or any part thereof, with the reversion and reversions, remainder and
remainders and (subject to the provisions of Section 13.01 of the Original
Indenture) the tolls, rents, revenues, issues, earnings, income, product and
profits thereof, and all the estate, right, title and interest and claim
whatsoever, at law as well as in equity, which the Company now has or may
hereafter acquire in and to the aforesaid property and franchises and every
part and parcel thereof.
IT IS HEREBY AGREED by the Company that, subject to the provisions of
Section 18.03 of the Original Indenture, all the property, rights and
franchises acquired by the Company (by purchase, consolidation, merger,
donation, construction, erection or in any other way) after the date hereof,
except any herein or in the Original Indenture expressly excepted, shall be and
are as fully granted and conveyed hereby and as fully embraced within the Lien
of the Original Indenture and the Lien hereof as if such property, rights and
franchises were now owned by the Company and were specifically described herein
and conveyed hereby.
PROVIDED that the following are not and are not intended to be now or
hereafter granted, bargained, sold, released, conveyed, assigned, transferred,
mortgaged, hypothecated, affected, pledged, set over or confirmed hereunder,
nor is a security interest therein hereby or by the Original Indenture, as
heretofore supplemented, granted or intended to be granted, and the same are
hereby expressly excepted from the Lien and operation of the Original
Indenture, as heretofore supplemented, and from the Lien and operation of this
Fifty-fifth Supplemental Indenture, viz.: (1) cash, shares of stock, bonds,
notes and other obligations and other securities not hereinbefore or hereafter
specifically pledged, paid, deposited, delivered or held under the Mortgage or
covenanted so to be; (2) merchandise, equipment, apparatus, materials or
supplies held for the purpose of sale or other disposition in the usual course
of business or for the purpose of repairing or replacing (in whole or in part)
any rolling stock, buses, motor coaches, automobiles or other vehicles or
aircraft or boats, ships, or other vessels and any fuel, oil and similar
materials and supplies consumable in the operation of any of the properties of
the Company; rolling stock, buses, motor coaches, automobiles and other
vehicles and all aircraft; boats, ships and other vessels; all timber,
minerals, mineral rights and royalties; (3) bills, notes and other instruments
and accounts receivable, judgments, demands, general intangibles and choses in
action, and all contracts, leases and operating agreements not specifically
pledged hereunder or under the Mortgage or covenanted so to be; (4) the last
day of the term of any lease or leasehold which may hereafter become subject to
the Lien of the Mortgage; (5) electric energy, gas, water, steam, ice, and
other materials or products generated, manufactured, produced, or purchased by
the Company for sale, distribution or use in the ordinary course of its
business; (6) any natural gas wells or natural gas leases or natural gas
transportation lines or other works or property used primarily and principally
in the production of natural gas or its transportation, primarily for the
purpose of sale to natural gas customers or to a natural gas distribution or
pipeline company, up to the point of connection with any distribution system;
and (7) the Company's franchise to be a corporation; provided, however, that
the property and rights expressly excepted from the Lien and operation of the
Original Indenture and this Fifty-fifth Supplemental Indenture in the above
subdivisions (2) and (3) shall (to the extent
<PAGE> 9
9
permitted by law) cease to be so excepted in the event and as of the date that
the Trustee or a receiver or trustee shall enter upon and take possession of
the Mortgaged and Pledged Property in the manner provided in Article XV of the
Original Indenture by reason of the occurrence of a Default.
TO HAVE AND TO HOLD all such properties, real, personal and mixed,
granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged,
hypothecated, affected, pledged, set over or confirmed or in which a security
interest has been granted by the Company as aforesaid, or intended so to be
(subject, however, to Excepted Encumbrances as defined in Section 1.06 of the
Original Indenture), unto The Bank of New York, Trustee, and its successors and
assigns forever.
IN TRUST NEVERTHELESS, for the same purposes and upon the same terms,
trusts and conditions and subject to and with the same provisos and covenants
as are set forth in the Original Indenture, as heretofore supplemented, this
Fifty- fifth Supplemental Indenture being supplemental to the Original
Indenture.
AND IT IS HEREBY COVENANTED by the Company that all the terms,
conditions, provisos, covenants and provisions contained in the Original
Indenture, as heretofore supplemented, shall affect and apply to the property
hereinbefore described and conveyed and to the estate, rights, obligations and
duties of the Company and the Trustee and the beneficiaries of the trust with
respect to said property, and to the Trustee and its successors as Trustee of
said property, in the same manner and with the same effect as if said property
had been owned by the Company at the time of the execution of the Original
Indenture, and had been specifically and at length described in and conveyed to
said Trustee by the Original Indenture as a part of the property therein stated
to be conveyed.
The Company further covenants and agrees to and with the Trustee and
its successors in said trust under the Mortgage, as follows:
ARTICLE I
EIGHTY-SIXTH SERIES OF BONDS
SECTION 1. There shall be a series of bonds designated "Pollution
Control Series Y" (herein sometimes referred to as the "Eighty-sixth Series"),
each of which shall also bear the descriptive title "First Mortgage Bond", and
the form thereof, which shall be established by Resolution of the Board of
Directors of the Company, shall contain suitable provisions with respect to the
matters hereinafter in this Section specified. Bonds of the Eighty-sixth
Series shall mature on March 1, 2026, shall not bear interest and shall be
issued as fully registered bonds in denominations of Five Hundred Dollars and,
at the option of the Company, in any multiple or multiples thereof (the
exercise of such option to be evidenced by the execution and delivery thereof);
the principal of each said bond to be payable at the office or agency of the
Company in the Borough of Manhattan, The City of New York, New York, or at the
office or agency of the Company in the City of Dallas,
<PAGE> 10
10
Texas, as the holder of any said bond may elect, in such coin or currency of
the United States of America as at the time of payment is legal tender for
public and private debts. Bonds of the Eighty-sixth Series shall be dated as
in Section 2.03 of the Original Indenture provided.
(I) The bonds of the Eighty-sixth Series shall be initially issued in
the aggregate principal amount of $28,819,000 to, and registered in the name
of, the trustee under the Trust Indenture, dated as of March 1, 1996
(hereinafter sometimes called the "1996A Brazos Bond Indenture"), of the Brazos
River Authority (hereinafter sometimes called the "Brazos Authority"), under
which its Collateralized Pollution Control Revenue Refunding Bonds (Texas
Utilities Electric Company Project) Series 1996A (hereinafter sometimes called
the "Series 1996A Brazos Revenue Bonds") are to be issued, in order to provide
the benefit of a lien to secure the obligation of the Company to make the
Installment Payments and Purchase Price payments pursuant to, and as such terms
are defined in, the Installment Sale and Bond Amortization Agreement, dated as
of March 1, 1996 (hereinafter sometimes called the "1996A Brazos Agreement"),
between the Brazos Authority and the Company.
The Company shall receive a credit against its obligation to make any
payment of the principal of the bonds of the Eighty-sixth Series, whether at
maturity, upon redemption or otherwise, in an amount equal to 115% of the sum
of (a) the amount, if any, on deposit in the Debt Service Fund maintained under
the 1996A Brazos Bond Indenture which reduces the corresponding Installment
Payment and (b) the amount, if any, paid by the Company pursuant to Section
5.04 of the 1996A Brazos Agreement in respect of the corresponding Installment
Payment.
The Trustee may conclusively presume that the obligation of the
Company to pay the principal of the bonds of the Eighty-sixth Series as the
same shall become due and payable shall have been fully satisfied and
discharged unless and until it shall have received a written notice from the
trustee under the 1996A Brazos Bond Indenture, signed by its President, a Vice
President, an Assistant Vice President or a Trust Officer, stating that the
corresponding Installment Payment or Purchase Price payment has become due and
payable and has not been fully paid and specifying the amount of funds required
to make such payment.
(II) In the event that any Series 1996A Brazos Revenue Bonds
outstanding under the 1996A Brazos Bond Indenture shall become immediately due
and payable pursuant to Section 6.02 of the 1996A Brazos Bond Indenture, upon
the occurrence of an Event of Default under Section 6.01(a) of the 1996A Brazos
Bond Indenture, all bonds of the Eighty- sixth Series, then Outstanding, shall
be redeemed by the Company, on the date such Series 1996A Brazos Revenue Bonds
shall have become immediately due and payable, at the principal amount thereof.
The Trustee may conclusively presume that no redemption of bonds of
the Eighty-sixth Series is required pursuant to the first paragraph of this
subsection (II) unless and until it shall have received a written notice from
the trustee under the 1996A Brazos Bond Indenture, signed by its President, a
Vice President, an Assistant Vice President or a Trust
<PAGE> 11
11
Officer, stating that Series 1996A Brazos Revenue Bonds have become immediately
due and payable pursuant to Section 6.02 of the 1996A Brazos Bond Indenture,
upon the occurrence of an Event of Default under Section 6.01(a) of the 1996A
Brazos Bond Indenture and specifying the principal amount thereof. Said notice
shall also contain a waiver of notice of such redemption by the trustee under
the 1996A Brazos Bond Indenture, as the holder of all bonds of the Eighty-sixth
Series then Outstanding.
(III) The Company hereby waives its right to have any notice of
redemption pursuant to subsection (II) of this Section 1 state that such notice
is subject to the receipt of the redemption moneys by the Trustee on or before
the date fixed for redemption. Notwithstanding the provisions of Section 12.02
of the Mortgage, any such notice under such subsection shall not be
conditional.
(IV) At the option of the registered owner, any bonds of the
Eighty-sixth Series, upon surrender thereof for cancellation at the office or
agency of the Company in the Borough of Manhattan, The City of New York, New
York, shall be exchangeable for a like aggregate principal amount of bonds of
the same series of other authorized denominations.
Bonds of the Eighty-sixth Series shall not be transferrable except to
any successor trustee under the 1996A Brazos Bond Indenture, any such transfer
to be made at the office or agency of the Company in the Borough of Manhattan,
The City of New York, New York.
The Company hereby waives any right to make a charge for any exchange
or transfer of bonds of the Eighty-sixth Series.
ARTICLE II
EIGHTY-SEVENTH SERIES OF BONDS
SECTION 2. There shall be a series of bonds designated "Pollution
Control Series Z" (herein sometimes referred to as the "Eighty-seventh
Series"), each of which shall also bear the descriptive title "First Mortgage
Bond", and the form thereof, which shall be established by Resolution of the
Board of Directors of the Company, shall contain suitable provisions with
respect to the matters hereinafter in this Section specified. Bonds of the
Eighty-seventh Series shall mature on March 1, 2026, shall not bear interest
and shall be issued as fully registered bonds in denominations of Five Hundred
Dollars and, at the option of the Company, in any multiple or multiples thereof
(the exercise of such option to be evidenced by the execution and delivery
thereof); the principal of each said bond to be payable at the office or agency
of the Company in the Borough of Manhattan, The City of New York, New York, or
at the office or agency of the Company in the City of Dallas, Texas, as the
holder of any said bond may elect, in such coin or currency of the United
States of America as at the time of payment is legal tender for public and
private debts.
<PAGE> 12
12
Bonds of the Eighty-seventh Series shall be dated as in Section 2.03 of the
Original Indenture provided.
(I) The bonds of the Eighty-seventh Series shall be initially issued
in the aggregate principal amount of $66,642,500 to, and registered in the name
of, the trustee under the Trust Indenture, dated as of March 1, 1996
(hereinafter sometimes called the "1996A Sabine Bond Indenture"), of the Sabine
River Authority of Texas (hereinafter sometimes called the "Sabine Authority"),
under which its Collateralized Pollution Control Revenue Refunding Bonds (Texas
Utilities Electric Company Project) Series 1996A (hereinafter sometimes called
the "Series 1996A Sabine Revenue Bonds") are to be issued, in order to provide
the benefit of a lien to secure the obligation of the Company to make the
Installment Payments and Purchase Price payments pursuant to, and as such terms
are defined in, the Installment Sale and Bond Amortization Agreement, dated as
of March 1, 1996 (hereinafter sometimes called the "1996A Sabine Agreement"),
between the Sabine Authority and the Company.
The Company shall receive a credit against its obligation to make any
payment of the principal of the bonds of the Eighty-seventh Series, whether at
maturity, upon redemption or otherwise, in an amount equal to 115% of the sum
of (a) the amount, if any, on deposit in the Debt Service Fund maintained under
the 1996A Sabine Bond Indenture which reduces the corresponding Installment
Payment and (b) the amount, if any, paid by the Company pursuant to Section
5.04 of the 1996A Sabine Agreement in respect of the corresponding Installment
Payment.
The Trustee may conclusively presume that the obligation of the
Company to pay the principal of the bonds of the Eighty-seventh Series as the
same shall become due and payable shall have been fully satisfied and
discharged unless and until it shall have received a written notice from the
trustee under the 1996A Sabine Bond Indenture, signed by its President, a Vice
President, an Assistant Vice President or a Trust Officer, stating that the
corresponding Installment Payment or Purchase Price payment has become due and
payable and has not been fully paid and specifying the amount of funds required
to make such payment.
(II) In the event that any Series 1996A Sabine Revenue Bonds
outstanding under the 1996A Sabine Bond Indenture shall become immediately due
and payable pursuant to Section 6.02 of the 1996A Sabine Bond Indenture, upon
the occurrence of an Event of Default under Section 6.01(a) of the 1996A Sabine
Bond Indenture, all bonds of the Eighty- seventh Series, then Outstanding,
shall be redeemed by the Company, on the date such Series 1996A Sabine Revenue
Bonds shall have become immediately due and payable, at the principal amount
thereof.
The Trustee may conclusively presume that no redemption of bonds of
the Eighty-seventh Series is required pursuant to the first paragraph of this
subsection (II) unless and until it shall have received a written notice from
the trustee under the 1996A Sabine Bond Indenture, signed by its President, a
Vice President, an Assistant Vice President or a Trust Officer, stating that
Series 1996A Sabine Revenue Bonds have become immediately due
<PAGE> 13
13
and payable pursuant to Section 6.02 of the 1996A Sabine Bond Indenture, upon
the occurrence of an Event of Default under Section 6.01(a) of the 1996A Sabine
Bond Indenture and specifying the principal amount thereof. Said notice shall
also contain a waiver of notice of such redemption by the trustee under the
1996A Sabine Bond Indenture, as the holder of all bonds of the Eighty-seventh
Series then Outstanding.
(III) The Company hereby waives its right to have any notice of
redemption pursuant to subsection (II) of this Section 2 state that such notice
is subject to the receipt of the redemption moneys by the Trustee on or before
the date fixed for redemption. Notwithstanding the provisions of Section 12.02
of the Mortgage, any such notice under such subsection shall not be
conditional.
(IV) At the option of the registered owner, any bonds of the
Eighty-seventh Series, upon surrender thereof for cancellation at the office or
agency of the Company in the Borough of Manhattan, The City of New York, New
York, shall be exchangeable for a like aggregate principal amount of bonds of
the same series of other authorized denominations.
Bonds of the Eighty-seventh Series shall not be transferrable except
to any successor trustee under the 1996A Sabine Bond Indenture, any such
transfer to be made at the office or agency of the Company in the Borough of
Manhattan, The City of New York, New York.
The Company hereby waives any right to make a charge for any exchange
or transfer of bonds of the Eighty- seventh Series.
ARTICLE III
EIGHTY-EIGHTH SERIES OF BONDS
SECTION 3. There shall be a series of bonds designated "Pollution
Control Series AA" (herein sometimes referred to as the "Eighty-eighth
Series"), each of which shall also bear the descriptive title "First Mortgage
Bond", and the form thereof, which shall be established by Resolution of the
Board of Directors of the Company, shall contain suitable provisions with
respect to the matters hereinafter in this Section specified. Bonds of the
Eighty-eighth Series shall mature on March 1, 2026, shall not bear interest and
shall be issued as fully registered bonds in denominations of Five Hundred
Dollars and, at the option of the Company, in any multiple or multiples thereof
(the exercise of such option to be evidenced by the execution and delivery
thereof); the principal of each said bond to be payable at the office or agency
of the Company in the Borough of Manhattan, The City of New York, New York, or
at the office or agency of the Company in the City of Dallas, Texas, as the
holder of any said bond may elect, in such coin or currency of the United
States of America as at the time of payment is legal tender for public and
private debts.
<PAGE> 14
14
Bonds of the Eighty-eighth Series shall be dated as in Section 2.03 of the
Original Indenture provided.
(I) The bonds of the Eighty-eighth Series shall be initially issued
in the aggregate principal amount of $28,750,000 to, and registered in the name
of, the trustee under the Trust Indenture, dated as of March 1, 1996
(hereinafter sometimes called the "1996B Sabine Bond Indenture"), of the Sabine
Authority, under which its Collateralized Pollution Control Revenue Bonds
(Texas Utilities Electric Company Project) Series 1996B (hereinafter sometimes
called the "Series 1996B Sabine Revenue Bonds") are to be issued, in order to
provide the benefit of a lien to secure the obligation of the Company to make
the Installment Payments and Purchase Price payments pursuant to, and as such
terms are defined in, the Installment Sale and Bond Amortization Agreement,
dated as of March 1, 1996 (hereinafter sometimes called the "1996B Sabine
Agreement"), between the Sabine Authority and the Company.
The Company shall receive a credit against its obligation to make any
payment of the principal of the bonds of the Eighty-eighth Series, whether at
maturity, upon redemption or otherwise, in an amount equal to 115% of the sum
of (a) the amount, if any, on deposit in the Debt Service Fund maintained under
the 1996B Sabine Bond Indenture which reduces the corresponding Installment
Payment and (b) the amount, if any, paid by the Company pursuant to Section
5.04 of the 1996B Sabine Agreement in respect of the corresponding Installment
Payment.
The Trustee may conclusively presume that the obligation of the
Company to pay the principal of the bonds of the Eighty-eighth Series as the
same shall become due and payable shall have been fully satisfied and
discharged unless and until it shall have received a written notice from the
trustee under the 1996B Sabine Bond Indenture, signed by its President, a Vice
President, an Assistant Vice President or a Trust Officer, stating that the
corresponding Installment Payment or Purchase Price payment has become due and
payable and has not been fully paid and specifying the amount of funds required
to make such payment.
(II) In the event that any Series 1996B Sabine Revenue Bonds
outstanding under the 1996B Sabine Bond Indenture shall become immediately due
and payable pursuant to Section 6.02 of the 1996B Sabine Bond Indenture, upon
the occurrence of an Event of Default under Section 6.01(a) of the 1996B Sabine
Bond Indenture, all bonds of the Eighty- eighth Series, then Outstanding, shall
be redeemed by the Company, on the date such Series 1996B Sabine Revenue Bonds
shall have become immediately due and payable, at the principal amount thereof.
The Trustee may conclusively presume that no redemption of bonds of
the Eighty-eighth Series is required pursuant to the first paragraph of this
subsection (II) unless and until it shall have received a written notice from
the trustee under the 1996B Sabine Bond Indenture, signed by its President, a
Vice President, an Assistant Vice President or a Trust Officer, stating that
Series 1996B Sabine Revenue Bonds have become immediately due and payable
pursuant to Section 6.02 of the 1996B Sabine Bond Indenture, upon the
<PAGE> 15
15
occurrence of an Event of Default under Section 6.01(a) of the 1996B Sabine
Bond Indenture and specifying the principal amount thereof. Said notice shall
also contain a waiver of notice of such redemption by the trustee under the
1996B Sabine Bond Indenture, as the holder of all bonds of the Eighty-eighth
Series then Outstanding.
(III) The Company hereby waives its right to have any notice of
redemption pursuant to subsection (II) of this Section 3 state that such notice
is subject to the receipt of the redemption moneys by the Trustee on or before
the date fixed for redemption. Notwithstanding the provisions of Section 12.02
of the Mortgage, any such notice under such subsection shall not be
conditional.
(IV) At the option of the registered owner, any bonds of the
Eighty-eighth Series, upon surrender thereof for cancellation at the office or
agency of the Company in the Borough of Manhattan, The City of New York, New
York, shall be exchangeable for a like aggregate principal amount of bonds of
the same series of other authorized denominations.
Bonds of the Eighty-eighth Series shall not be transferrable except to
any successor trustee under the 1996B Sabine Bond Indenture, any such transfer
to be made at the office or agency of the Company in the Borough of Manhattan,
The City of New York, New York.
The Company hereby waives any right to make a charge for any exchange
or transfer of bonds of the Eighty-eighth Series.
ARTICLE IV
EIGHTY-NINTH SERIES OF BONDS
SECTION 4. There shall be a series of bonds designated "Pollution
Control Series AB" (herein sometimes referred to as the "Eighty-ninth Series"),
each of which shall also bear the descriptive title "First Mortgage Bond", and
the form thereof, which shall be established by Resolution of the Board of
Directors of the Company, shall contain suitable provisions with respect to the
matters hereinafter in this Section specified. Bonds of the Eighty-ninth
Series shall mature on March 1, 2026, shall not bear interest and shall be
issued as fully registered bonds in denominations of Five Hundred Dollars and,
at the option of the Company, in any multiple or multiples thereof (the
exercise of such option to be evidenced by the execution and delivery thereof);
the principal of each said bond to be payable at the office or agency of the
Company in the Borough of Manhattan, The City of New York, New York, or at the
office or agency of the Company in the City of Dallas, Texas, as the holder of
any said bond may elect, in such coin or currency of the United States of
America as at the time of payment is legal tender for public and private debts.
Bonds of the Eighty- ninth Series shall be dated as in Section 2.03 of the
Original Indenture provided.
<PAGE> 16
16
(I) The bonds of the Eighty-ninth Series shall be initially issued in
the aggregate principal amount of $28,750,000 to, and registered in the name
of, the trustee under the Trust Indenture, dated as of March 1, 1996
(hereinafter sometimes called the "1996A Trinity Bond Indenture"), of the
Trinity River Authority of Texas (hereinafter sometimes called the "Trinity
Authority"), under which its Collateralized Pollution Control Revenue Bonds
(Texas Utilities Electric Company Project) Series 1996A (hereinafter sometimes
called the "Series 1996A Trinity Revenue Bonds") are to be issued, in order to
provide the benefit of a lien to secure the obligation of the Company to make
the Installment Payments and Purchase Price payments pursuant to, and as such
terms are defined in, the Installment Sale and Bond Amortization Agreement,
dated as of March 1, 1996 (hereinafter sometimes called the "1996A Trinity
Agreement"), between the Trinity Authority and the Company.
The Company shall receive a credit against its obligation to make any
payment of the principal of the bonds of the Eighty-ninth Series, whether at
maturity, upon redemption or otherwise, in an amount equal to 115% of the sum
of (a) the amount, if any, on deposit in the Debt Service Fund maintained under
the 1996A Trinity Bond Indenture which reduces the corresponding Installment
Payment and (b) the amount, if any, paid by the Company pursuant to Section
5.04 of the 1996A Trinity Agreement in respect of the corresponding Installment
Payment.
The Trustee may conclusively presume that the obligation of the
Company to pay the principal of the bonds of the Eighty-ninth Series as the
same shall become due and payable shall have been fully satisfied and
discharged unless and until it shall have received a written notice from the
trustee under the 1996A Trinity Bond Indenture, signed by its President, a Vice
President, an Assistant Vice President or a Trust Officer, stating that the
corresponding Installment Payment or Purchase Price payment has become due and
payable and has not been fully paid and specifying the amount of funds required
to make such payment.
(II) In the event that any Series 1996A Trinity Revenue Bonds
outstanding under the 1996A Trinity Bond Indenture shall become immediately due
and payable pursuant to Section 6.02 of the 1996A Trinity Bond Indenture, upon
the occurrence of an Event of Default under Section 6.01(a) of the 1996A
Trinity Bond Indenture, all bonds of the Eighty-ninth Series, then Outstanding,
shall be redeemed by the Company, on the date such Series 1996A Trinity Revenue
Bonds shall have become immediately due and payable, at the principal amount
thereof.
The Trustee may conclusively presume that no redemption of bonds of
the Eighty-ninth Series is required pursuant to the first paragraph of this
subsection (II) unless and until it shall have received a written notice from
the trustee under the 1996A Trinity Bond Indenture, signed by its President, a
Vice President, an Assistant Vice President or a Trust Officer, stating that
Series 1996A Trinity Revenue Bonds have become immediately due and payable
pursuant to Section 6.02 of the 1996A Trinity Bond Indenture, upon the
occurrence of an Event of Default under Section 6.01(a) of the 1996A Trinity
Bond Indenture and specifying the principal amount thereof. Said notice shall
also contain a
<PAGE> 17
17
waiver of notice of such redemption by the trustee under the 1996A Trinity Bond
Indenture, as the holder of all bonds of the Eighty-ninth Series then
Outstanding.
(III) The Company hereby waives its right to have any notice of
redemption pursuant to subsection (II) of this Section 4 state that such notice
is subject to the receipt of the redemption moneys by the Trustee on or before
the date fixed for redemption. Notwithstanding the provisions of Section 12.02
of the Mortgage, any such notice under such subsection shall not be
conditional.
(IV) At the option of the registered owner, any bonds of the
Eighty-ninth Series, upon surrender thereof for cancellation at the office or
agency of the Company in the Borough of Manhattan, The City of New York, New
York, shall be exchangeable for a like aggregate principal amount of bonds of
the same series of other authorized denominations.
Bonds of the Eighty-ninth Series shall not be transferrable except to
any successor trustee under the 1996A Trinity Bond Indenture, any such transfer
to be made at the office or agency of the Company in the Borough of Manhattan,
The City of New York, New York.
The Company hereby waives any right to make a charge for any exchange
or transfer of bonds of the Eighty-ninth Series.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5. Subject to the amendments provided for in this Fifty-fifth
Supplemental Indenture, the terms defined in the Original Indenture, as
heretofore supplemented, shall for all purposes of this Fifty-fifth
Supplemental Indenture have the meanings specified in the Original Indenture,
as heretofore supplemented.
SECTION 6. The Trustee hereby accepts the trusts herein declared,
provided, created or supplemented and agrees to perform the same upon the terms
and conditions herein and in the Original Indenture, as heretofore
supplemented, set forth and upon the following terms and conditions:
The Trustee shall not be responsible in any manner whatsoever for or
in respect of the validity or sufficiency of this Fifty-fifth Supplemental
Indenture or for or in respect of the recitals contained herein, all of which
recitals are made by the Company solely. In general, each and every term and
condition contained in Article XIX of the Original Indenture shall apply to and
form part of this Fifty-fifth Supplemental Indenture with the same force and
effect as if the same were herein set forth in full with such omissions,
<PAGE> 18
18
variations and insertions, if any, as may be appropriate to make the same
conform to the provisions of this Fifty-fifth Supplemental Indenture.
SECTION 7. Whenever in this Fifty-fifth Supplemental Indenture either
of the parties hereto is named or referred to, this shall, subject to the
provisions of Articles XVIII and XIX of the Original Indenture, be deemed to
include the successors and assigns of such party, and all the covenants and
agreements in this Fifty-fifth Supplemental Indenture contained, by or on
behalf of the Company, or by or on behalf of the Trustee, shall, subject as
aforesaid, bind and inure to the respective benefits of the respective
successors and assigns of such parties, whether so expressed or not.
SECTION 8. Nothing in this Fifty-fifth Supplemental Indenture
expressed or implied, is intended, or shall be construed to confer upon, or to
give to, any person, firm or corporation, other than the parties hereto and the
holders of the bonds and coupons Outstanding under the Mortgage, any right,
remedy or claim under or by reason of this Fifty- fifth Supplemental Indenture
or any covenant, condition, stipulation, promise or agreement hereof, and all
the covenants, conditions, stipulations, promises and agreements in this
Fifty-fifth Supplemental Indenture contained, by or on behalf of the Company,
shall be for the sole and exclusive benefit of the parties hereto, and of the
holders of the bonds and coupons Outstanding under the Mortgage.
SECTION 9. This Fifty-fifth Supplemental Indenture shall be executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
<PAGE> 19
19
IN WITNESS WHEREOF, TEXAS UTILITIES ELECTRIC COMPANY has caused its
corporate name to be hereunto affixed, and this instrument to be signed and
sealed by its Chairman of the Board and Chief Executive, President or one of
its Vice Presidents, and its corporate seal to be attested by its Secretary or
one of its Assistant Secretaries for and in its behalf, and THE BANK OF NEW
YORK has caused its corporate name to be hereunto affixed, and this instrument
to be signed and sealed by one of its Vice Presidents or Assistant Vice
Presidents and its corporate seal to be attested by one of its Assistant Vice
Presidents, Assistant Secretaries or Assistant Treasurers, all as of the day
and year first above written.
TEXAS UTILITIES ELECTRIC COMPANY
By /s/ RON SEIDEL
--------------------------------
RON SEIDEL
Vice President
Attest:
/s/ GLEN H. HIBBS [CORPORATE SEAL]
- -----------------------------------
GLEN H. HIBBS
Assistant Secretary
Executed, sealed and delivered by
TEXAS UTILITIES ELECTRIC COMPANY
in the presence of:
/s/ W. E. PATTERSON
- -----------------------------------
/s/ DONNA RAKESTRAW
- -----------------------------------
<PAGE> 20
20
THE BANK OF NEW YORK,
Trustee
By /s/ W. N. GITLIN
--------------------------------
W. N. GITLIN
Vice President
Attest:
/s/ STEPHEN J. GIURLANDO [CORPORATE SEAL]
- ----------------------------------
STEPHEN J. GIURLANDO
Assistant Vice President
Executed, sealed and delivered by
THE BANK OF NEW YORK
in the presence of:
/s/ JOYCELYN M. LYNCH
- ----------------------------------
/s/ MICHAEL GALLO
- ----------------------------------
<PAGE> 21
21
STATE OF TEXAS )
) SS.:
COUNTY OF DALLAS )
Before me, a Notary Public in and for said State, on this day
personally appeared RON SEIDEL, known to me to be the person whose name is
subscribed to the foregoing instrument and known to me to be a Vice President
of TEXAS UTILITIES ELECTRIC COMPANY, a Texas corporation, and acknowledged to
me that said person executed said instrument for the purposes and consideration
therein expressed, and as the act of said corporation.
Given under my hand and seal of office this 21st day of March, 1996.
[NOTARIAL SEAL] /s/ LENAE B. DAVIS
-------------------------------------
LENAE B. DAVIS
Notary Public, State of Texas
My Commission Expires June 23, 1996
<PAGE> 22
22
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
Before me, a Notary Public in and for said State, on this day
personally appeared W.N. GITLIN, known to me to be the person whose name is
subscribed to the foregoing instrument and known to me to be a Vice President
of THE BANK OF NEW YORK, a New York corporation, and acknowledged to me that
said person executed said instrument for the purposes and consideration therein
expressed, and as the act of said corporation.
Given under my hand and seal of office this 22nd day of March, 1996.
[NOTARIAL SEAL] /s/ WILLIAM J. CASSELS
--------------------------------------
WILLIAM J. CASSELS
Notary Public, State of New York
No. 01CA5027729
Qualified in Bronx County
Certificate filed in New York County
Commission Expires May 16, 1996
<PAGE> 23
23
SUMMARY OF RECORDING DATA
Fifty-fifth Supplemental Indenture
Filed March 28, 1996
Office of the Secretary of the State of Texas,
Utility Security Instrument File No. 83-281286
<PAGE> 1
EXHIBIT 4(b)
- --------------------------------------------------------------------------------
TRUST INDENTURE, SECURITY AGREEMENT AND MORTGAGE
SUPPLEMENT NO. 1
Dated as of October 25, 1995
Among
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION,
Not in its individual capacity,
except to the extent set forth in the Indenture, but
as Owner Trustee under the Trust Agreement
TEXAS UTILITIES ELECTRIC COMPANY
and
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
Indenture Trustee
- --------------------------------------------------------------------------------
MASTER FORM RECORDED
BY AMERICAN NATIONAL
BANK AND TRUST COMPANY OF CHICAGO,
INDENTURE TRUSTEE
<PAGE> 2
TRUST INDENTURE, SECURITY AGREEMENT AND MORTGAGE
SUPPLEMENT NO. 1
This Trust Indenture, Security Agreement and Mortgage
Supplement No. 1, dated as of October 25, 1995 ("Supplement No. 1"), among
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, a national banking association
(not in its individual capacity except to the extent set forth in the Indenture
(as defined below) but as owner trustee under the Trust Agreement dated as of
December 1, 1988, as amended and supplemented (the "Trust Agreement"), between
the Owner Participant and Shawmut Bank Connecticut, National Association, as
Owner Trustee (the "Owner Trustee"), and TEXAS UTILITIES ELECTRIC COMPANY ("TU
Electric"), and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, a national
banking association, as trustee for the benefit of the Holders of the Bonds
(the "Indenture Trustee").
RECITALS.
A. The Owner Trustee executed and delivered to the Indenture
Trustee the Trust Indenture, Security Agreement and Mortgage dated as of
December 1, 1989 (the "Original Indenture") filed of record in Vol. 1271
commencing on Page 566 of the Deed of Trust Records of Hood County, Texas and
in Vol. 163 commencing on Page 485 of the Official Public Records in Ward
County, Texas, (the Original Indenture as hereafter amended, modified or
supplemented from time to time, being hereinafter referred to as the
"Indenture"), the entirety of which is hereby incorporated by reference
pursuant to Section 12.009 of the Texas Property Code; and
B. Pursuant to the Indenture, the Owner Trustee granted,
conveyed, assigned, transferred, mortgaged and pledged to the Indenture Trustee
and its successors and assigns, and created a security interest in favor of the
Indenture Trustee and its successors and assigns in, the property, rights and
-2-
<PAGE> 3
privileges described in the Indenture to secure both the payment of all
indebtedness of the Owner Trustee as described in the Indenture and the
performance of all of the Owner Trustee's obligations described in the
Indenture; and
C. Sections 2.15 and 11.01 of the Indenture provide, among
other things, that the Owner Trustee, TU Electric and the Indenture Trustee may
enter into indentures supplemental to the Indenture for, among other things,
the purpose of establishing the form of Bonds of any series as permitted by
Sections 2.15 and 11.01 of the Indenture; and
D. On September 21, 1995, pursuant to a letter of instruction
dated September 20, 1995 from the Owner Participant to the Owner Trustee, the
Owner Trustee (i) exercised its option to redeem on October 25, 1995 all of the
$81,595,000 principal amount of Initial Series Bonds with a Stated Maturity of
January 1, 2018 and (ii) gave notice of such optional redemption to the
Indenture Trustee pursuant to Section 6.03 of the Indenture. On September 22,
1995, pursuant to Section 6.05 of the Indenture, the Indenture Trustee gave
notice of such optional redemption to each Holder of the Initial Series Bonds
with a Stated Maturity of January 1, 2018; and
E. The Owner Trustee desires to authorize the issuance of
$81,595,000 aggregate principal amount of its Bonds (the "1995 Series Bonds")
under the Indenture, including this Supplement No. 1.
NOW, THEREFORE, THIS SUPPLEMENT NO. 1 WITNESSETH that, in
order to establish the form and terms of and to authorize the authentication
and delivery of the 1995 Series Bonds, and in consideration of the acceptance
of the 1995 Series Bonds by the registered owners (the "Holders") thereof and
of the sum of one dollar duly paid to the Owner Trustee by the Indenture
Trustee at the execution of these presents, the receipt and sufficiency of
which are hereby acknowledged, the Owner Trustee covenants and agrees with the
Indenture Trustee, for the equal and proportionate benefit of the respective
Holders from time to time of the 1995 Series Bonds, as follows:
-3-
<PAGE> 4
ARTICLE ONE
1995 SERIES BONDS
SECTION 1.01. Terms of the 1995 Series Bonds.
There is hereby created a series of Bonds designated "Secured
Facility Bonds, 1995 Series". 1995 Series Bonds in the aggregate amount of
$81,595,000 may forthwith be executed by the Owner Trustee and delivered to the
Indenture Trustee in accordance with the provisions of Section 2.12 of the
Indenture in the principal amount of $81,595,000 with the Stated Maturity of
January 1, 2017 and at the interest rate of 7.48%.
The 1995 Series Bonds shall be payable, bear interest and have
and be subject to such other terms as provided in the form of 1995 Series Bond
attached as Exhibit A hereto and shall have and be subject to such other terms
as are provided in the Indenture. The term "Record Date" as used with respect
to any Interest Payment Date or Installment Payment Date (except a date for
payment of Defaulted Interest or Defaulted Installment) shall mean, with
respect to the 1995 Series Bonds, the December 15 or June 15 (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date or
Installment Payment Date, as the case may be. "Defaulted Installment" shall
mean any unpaid installment payment of principal of a 1995 Series Bond in
respect of which the Owner Trust shall default in the payment when due on an
Installment Payment Date.
All references in the Indenture to the principal amount of
Bonds shall, when used with respect to the 1995 Series Bonds, mean the unpaid
principal amount thereof, except that, for purposes of Section 2.06, and 2.07
and 6.08 of the Indenture, principal amount shall, when used with respect to
the 1995 Series Bonds, refer to Original Principal Amount.
SECTION 1.02. Mandatory Redemption of the 1995 Series Bonds.
(a) Mandatory Redemption - Obsolescence. The 1995 Series
Bonds shall be subject to redemption in whole but not in part, at 100% of the
unpaid principal amount thereof, together with interest accrued to the
Redemption Date, upon the receipt of payment of the applicable purchase price
or Termination Value
-4-
<PAGE> 5
resulting from a termination of the Lease pursuant to Section 7 thereof.
(b) Mandatory Redemption - Event of Loss. The 1995 Series
Bonds shall be subject to redemption, at 100% of the unpaid principal amount
thereof, together with interest accrued to the Redemption Date upon the receipt
of the applicable payment of Casualty Value resulting from an Event of Loss
under the Lease (unless, in connection with an Event of Loss described in
clause (e) of the definition thereof, TU Electric assumes the 1995
-5-
<PAGE> 6
Series Bonds then Outstanding pursuant to Section 2.16 of the Indenture), in
the principal amount equal to the product of (i) the aggregate unpaid principal
amount of 1995 Series Bonds then Outstanding and (ii) a fraction the numerator
of which is the Purchase Price of the Facility to which such Event of Loss
pertains and the denominator of which is the aggregate Purchase Price of the
Facilities then subject to the Lien of the Indenture. The aggregate amount
payable upon a partial redemption pursuant to this subsection 1.02(b) shall be
allocated among the Holders of 1995 Series Bonds pro rata, in proportion, as
nearly as practicable, to the respective unpaid principal amount of 1995 Series
Bonds held by such Holders, and upon payment of the applicable redemption price
to the Holders in accordance with the Indenture, the unpaid principal amount of
each 1995 Series Bond recorded on the Bond Register maintained by the Indenture
Trustees shall be controlling.
(c) Installment Payments. On each Installment Payment Date,
the Holder of a 1995 Series Bond will receive a payment of principal equal to
the Installment Payment Percentage for such Installment Payment Date multiplied
by the Original Principal Amount of such 1995 Series Bond. The payments of
principal installments pursuant to this subsection 1.02(c) shall not be deemed
to be subject to Article 6 or Article 7 of the Indenture.
-6-
<PAGE> 7
<TABLE>
<CAPTION>
Installment Installment
Payment Date Payment Percentage
------------ ------------------
<S> <C>
July 1, 2006 0.87505%
July 1, 2007 4.69759%
July 1, 2008 6.00895%
July 1, 2009 7.24187%
July 1, 2010 6.70139%
July 1, 2011 7.01146%
January 1, 2012 0.00735%
July 2012 11.17593%
January 1, 2013 0.92040%
July 1, 2013 11.50806%
January 1, 2014 1.50622%
July 1, 2014 11.87450%
January 1, 2015 2.12636%
July 1, 2015 12.27771%
January 1, 2016 2.78448%
July 1, 2016 12.72137%
January 1, 2017 0.56131%
</TABLE>
In the event that there shall have been any partial redemption
of 1995 Series Bonds (other than pursuant to principal installment payments),
each Installment Payment Amount for each 1995 Series Bond subsequent to such
redemption shall be reduced by an amount equal to the amount obtained by (i)
multiplying such Installment Payment Amount as in effect prior to such
redemption by a fraction of which the numerator shall be the aggregate
principal amount of 1995 Series Bonds redeemed pursuant to such partial
redemption, and the denominator shall be the aggregate unpaid principal amount
of 1995 Series Bonds Outstanding immediately prior to such redemption.
-7-
<PAGE> 8
ARTICLE TWO
AMENDMENT OF INDENTURE
SECTION 2.01. Amendments.
(a) Appendix A. Appendix A to the Indenture is hereby amended
to read, in its entirety, as set forth in Appendix A attached hereto.
(b) Section 2.09. The first sentence of the second paragraph
of Section 2.09 of the Indenture is hereby amended to read, in its entirety, as
follows: "Except as otherwise provided in a supplemental indenture creating a
series of Bonds or in the terms of such series of Bonds, principal of and
premium, if any, on Bonds shall be payable to the Holders of such bonds upon
presentation and surrender at the office or agency for payment of Bonds
maintained pursuant to Section 9.14."
(c) Section 3.01. Section 3.01 of the Indenture is
hereby amended by deleting such section in its entirety and inserting in lieu
thereof the following:
SECTION 3.01. Satisfaction and Discharge of Indenture.
With respect to Bonds of any series of a particular
Stated Maturity, if at any time (a) the principal of and premium (if any) and
interest on all of the Bonds of such series with such Stated Maturity
Outstanding hereunder shall have been paid or (b) all of the Bonds of such
series with such Stated Maturity theretofore authenticated (other than any such
Bonds which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.08 hereof) shall have been delivered
to the Indenture Trustee for cancellation or (c) there shall have been
irrevocably deposited with the Indenture Trustee as trust funds the entire
amount in cash (other than moneys repaid by the Indenture Trustee or any Paying
Agent to the Owner Trustee in accordance with Section 5.03 hereof) necessary to
pay, or direct obligations of the United States of America, backed by its full
faith and credit, maturing as to principal and premium (if any) and interest in
such amounts and at such times as will ensure the availability of cash
sufficient to pay, at the Stated Maturity and all mandatory
-8-
<PAGE> 9
Sinking Fund payment dates or Installment Payment Dates, if any, of principal
of, premium (if any) and interest thereon or upon redemption of all such Bonds
(the Owner Trustee hereby agreeing that it will deliver to the Indenture
Trustee, at the time such cash or obligations are deposited, an Owner Trustee
Certificate irrevocably specifying any such Redemption Date or Dates) not
theretofore delivered to the Indenture Trustee for cancellation, the principal
of, premium (if any) and interest due or to become due to such Stated Maturity
dates or Redemption Date or Redemption Dates, as the case may be (provided
that, with respect to the deposit specified in (c), there shall be delivered to
the Indenture Trustee an Opinion of Counsel satisfactory in form to the
Indenture Trustee, to the effect that the Holders of such Bonds will not
recognize income, gain or loss for Federal income tax purposes as a result of
such deposit of certain obligations and such defeasance and will be subject to
Federal income tax of the same amount and in the same manner and at the same
times, as would have been the case if such deposit and defeasance had not
occurred), and if, in any such case, all other sums payable hereunder with
respect to such Bonds shall have been paid, then this Indenture shall cease to
be of further effect with respect to such Bonds (except as to (i) rights of
registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Bonds, (iii) rights of Holders to receive payments of
principal thereof and premium (if any) and interest thereon upon the Stated
Maturity thereof, upon each Installment Payment Date, or upon such Redemption
Date or Redemption Dates, as the case may be (but not upon acceleration), (iv)
rights, obligations and immunities of the Indenture Trustee hereunder, (v)
rights of such Bondholders under this Article Three and (vi) the right, in the
case of such Bonds for which a Redemption Date has not been specified, of the
Owner Trustee to optionally redeem such Bonds pursuant to Article Six), and the
Indenture Trustee, on demand of and at the cost and expense of the Owner
Trustee and upon delivery to the Indenture Trustee of an Owner Trustee
Certificate and an Opinion of Counsel for the Owner Trustee, each containing
the statements provided for in Section 1.02 and stating that all conditions
precedent to the satisfaction and discharge of this Indenture have been
complied with, with respect to such Bonds, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture and the
Lien hereof (except as provided in this Article Three) with respect to such
Bonds except as aforesaid.
-9-
<PAGE> 10
If this Indenture is satisfied and discharged with respect to
the Bonds of any series of a particular Stated Maturity and such Bonds will not
become due and payable in full at Maturity or upon redemption (pursuant to a
notice of redemption duly given to the Holders of such Bonds) within 60 days
from the date of deposit pursuant to Section 3.01 hereof, the Indenture Trustee
shall, as soon as practicable after the date of such deposit and not more than
60 days or less than 30 days before each date of Maturity or Redemption Date,
mail notice by first-class mail, postage prepaid, to the Holders of such Bonds
at their last addresses as they shall appear upon the Bond Register, stating
that the deposit required by Section 3.01 hereof has been made with the
Indenture Trustee and that such Bonds are no longer entitled to the benefits of
and security provided by this Indenture except as provided above and with
respect to the cash and direct obligations deposited with the Indenture Trustee
and stating the Maturity, Installment Payment Dates, or Redemption Date or
Dates upon which moneys are to be available for the payment of the principal
of, premium (if any) and interest on such Bonds and stating that such Bond is
no longer otherwise mandatorily redeemable and stating that, in the case of
such Bonds for which a Redemption Date has not been specified, such Bonds
remain optionally redeemable.
(d) Section 6.04. The second paragraph of Section 6.04 of
the Indenture is hereby amended by adding the following sentence to the end
thereof: "Notwithstanding anything to the contrary contained in this paragraph,
a supplemental indenture creating a series of Bonds may specify that such Bonds
are subject to partial redemption on a pro rata basis without the necessity of
presentment and surrender of such Bond."
(e) Subsection 6.06(b). Subsection 6.06(b) of the Indenture
is hereby deleted in its entirety and the following inserted in its place: "(b)
[Intentionally Left Blank]".
-10-
<PAGE> 11
(f) Section 7.02. Section 7.02 of the Indenture is hereby
amended by deleting the proviso at the end of the first paragraph thereof.
(g) Section 7.03(b). Subsection 7.03(b) of the Indenture is
hereby deleted in its entirety and the following inserted in its place: "(b)
[Intentionally Left Blank]".
(h) Section 11.02. Section 11.02 of the Indenture is
hereby amended by deleting clause (1) of the proviso to the first paragraph
thereof in its entirety and inserting, in lieu thereof, the following:
change the Stated Maturity of the principal of, or any
installment of interest on, or any Installment Payment Date, or the dates or
circumstances of payment of premium (if any) on, any Bond, or reduce the
principal amount thereof or the interest thereon or any amount payable at
maturity, on any Installment Payment Date or upon the redemption thereof, or
change the circumstances for redemption or change the Place of Payment where,
or the coin or currency in which, any Bond or the premium (if any) or the
interest thereon is payable, or impair the right to institute suit for the
enforcement of any such payment of principal or interest on or after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date) or such payment of premium (if any) on or after the date such premium
becomes due and payable or change the dates or the amounts of any installment
payments of principal or payments to be made through the operation of the
Sinking Fund in respect of a Bond of any series, or
ARTICLE THREE
MISCELLANEOUS
SECTION 3.01. New York Contract.
THIS SUPPLEMENT NO. 1 AND THE 1995 SERIES BONDS SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 3.02. Provisions Binding on Successors.
-11-
<PAGE> 12
All the covenants, agreements, representations and warranties
in this Supplement No. 1 by the Indenture Trustee, TU Electric and the Owner
Trustee shall bind and, to the extent permitted by the Indenture shall inure to
the benefit of and be enforceable by their respective successors and assigns,
whether so expressed or not.
SECTION 3.03. Definitions.
Capitalized terms used herein without definition shall have
the respective meanings set forth in the Indenture.
SECTION 3.04. Counterparts.
This Supplement No. 1 may be executed in separate
counterparts, each of which when so executed and delivered is an original, but
all such counterparts shall together constitute but one and the same
supplement.
-12-
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this
Supplement No. 1 to be duly executed by their respective officers thereunto
duly authorized, as of the day and year first above written.
SHAWMUT BANK CONNECTICUT, NATIONAL
ASSOCIATION, not in its individual
capacity except to the extent set forth
in the Indenture, but as Owner Trustee
under the Trust Agreement
Attest: By: /s/Steven Cimalore
--------------------- ----------------------------
Name: Steven Cimalore
Title: Vice President
TEXAS UTILITIES ELECTRIC COMPANY
Attest: By: /s/H. Dan Farell
--------------------- ----------------------------
Name: H. Dan Farell
Title: Senior Vice President
AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO,
Indenture Trustee
Attest: By: /s/John P. Porzuczek
--------------------- ----------------------------
Name: John P. Porzuczek
Title: Trust Officer
<PAGE> 14
ACKNOWLEDGMENT
STATE OF CONNECTICUT )
) ss.:
COUNTY OF HARTFORD )
On this ___ day of ___________, 1995 before me, a Notary
Public duly commissioned, qualified and acting within and for the County and
State aforesaid, appeared in person the within named ______________________,
Vice President of SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION, to me
personally known, who stated that he was duly authorized in his capacity to
execute the foregoing instrument for and in its name and on its behalf, and
further stated and acknowledged that he had so signed, executed and delivered
the foregoing instrument, as Shawmut Bank Connecticut, National Association,
not in its individual capacity except as set forth in the Indenture, but as
Owner Trustee under the Trust Agreement, for the consideration, use and
purposes therein mentioned and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official
seal.
------------------------------
(Notary Public)
My Commission Expires:
(SEAL)
-14-
<PAGE> 15
ACKNOWLEDGMENT
STATE OF TEXAS )
) ss.:
COUNTY OF DALLAS )
On this __ day of ____, 1995 before me, a Notary Public duly
commissioned, qualified and acting within and for the County and State
aforesaid, appeared in person the within named __________________ of TEXAS
UTILITIES ELECTRIC COMPANY, to me personally known, who stated that he was duly
authorized in his capacity to execute the foregoing instrument for and in its
name and on its behalf, and further stated and acknowledged that he had so
signed, executed and delivered the foregoing instrument, as TEXAS UTILITIES
ELECTRIC COMPANY, for the consideration, uses and purposes therein mentioned
and set forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official
seal.
------------------------------
(Notary Public)
My Commission Expires:
(SEAL)
-15-
<PAGE> 16
ACKNOWLEDGMENT
STATE OF ILLINOIS )
) ss.:
COUNTY OF COOK )
On this ___ day of ___________, 1995 before me, a Notary
Public duly commissioned, qualified and acting within and for the County and
State aforesaid, appeared in person the within named ________________________
of AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, to me personally known,
who stated that he was duly authorized in his capacity to execute the foregoing
instrument for and in its name and on its behalf, and further stated and
acknowledged that he had so signed, executed and delivered the foregoing
instrument, as American National Bank and Trust Company of Chicago, Indenture
Trustee, for the consideration, uses and purposes therein mentioned and set
forth.
IN TESTIMONY WHEREOF, I have hereunto set my hand and official
seal.
------------------------------
(Notary Public)
My Commission Expires:
(SEAL)
-16-
<PAGE> 1
EXHIBIT 4(c)
- --------------------------------------------------------------------------------
SUPPLEMENT NO. 1 TO THE
AMENDED AND RESTATED PARTICIPATION AGREEMENT
AMONG
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION,
(FORMERLY THE CONNECTICUT NATIONAL BANK)
OWNER TRUSTEE
THE FIRST NATIONAL BANK OF CHICAGO,
ORIGINAL INDENTURE TRUSTEE
AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO,
INDENTURE TRUSTEE
HNB INVESTMENT CORP.
(AS TRANSFEREE FROM PHILIP MORRIS CREDIT CORPORATION),
OWNER PARTICIPANT
MESQUITE POWER CORPORATION,
SELLER
AND
TEXAS UTILITIES ELECTRIC COMPANY,
LESSEE
___________________
DATED AS OF OCTOBER 19, 1995
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. Obligations of the Owner Trustee in Respect of
1995 Series Bonds. . . . . . . . . . . . . . . . . . . . . . . 2
Section 3. Conditions Precedent to Obligations of the Owner Participant,
Lessee, the Owner Trustee and the Indenture Trustee on the
Refunding Date . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 4. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 5. Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 6. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 7. Supplement. . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 8. Instructions of the Owner Participant. . . . . . . . . . . . . 5
Section 9. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 10. Lease Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 5
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
APPENDIX A - Definitions
Schedule 1 - Assumptions
Annex A to Schedule 1 - Basic Rent
Annex B to Schedule 1 - Casualty Values
Annex C to Schedule 1 - Bond Amortization Schedules
EXHIBIT A - Lease Agreement Supplement No. 2
EXHIBIT B - Indenture Supplement No. 1
</TABLE>
<PAGE> 3
SUPPLEMENT NO. 1 TO THE PARTICIPATION AGREEMENT
THIS SUPPLEMENT NO. 1, dated as of October 19, 1995 to the
AMENDED AND RESTATED PARTICIPATION AGREEMENT, dated as of November 28, 1989, as
supplemented (the "Participation Agreement"), among SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION (FORMERLY THE CONNECTICUT NATIONAL BANK), a national
banking association, not in its individual capacity except to the extent set
forth herein but as trustee ("Owner Trustee"), AMERICAN NATIONAL BANK AND TRUST
COMPANY OF CHICAGO, a national banking association, as indenture trustee,
("Indenture Trustee"), THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association, as original indenture trustee, HNB INVESTMENT CORP., a Delaware
corporation (as Transferee from Philip Morris Credit Corporation)("Owner
Participant"), MESQUITE POWER CORPORATION, a Texas Corporation, as Seller and
TEXAS UTILITIES ELECTRIC COMPANY, a Texas corporation ("TU Electric" or
"Lessee").
RECITALS:
A. The Participation Agreement provides, among other things,
that the Owner Trustee will issue and sell Refunding Bonds for the purpose of
refunding the Initial Series Bonds (such term and the other capitalized terms
used herein without definition having the respective meanings specified in
Appendix A hereto).
C. The parties to the Participation Agreement wish to amend
and supplement in certain respects the Participation Agreement for the purpose,
among others, of providing for the refunding of the Initial Series Bonds, and
to set forth more fully their agreement with respect to the subject matter
hereof.
D. On September 21, 1995, pursuant to a letter of instruction
dated such date from the Owner Participant to the Owner Trustee, the Owner
Trustee (i) exercised its option to redeem on October 25, 1995 all of the
$81,595,000 principal amount of Initial Series Bonds with a Stated Maturity of
January 1, 2018 and (ii) gave notice of such optional redemption to the
Indenture Trustee pursuant to Section 6.03 of the Indenture. On September 22,
1995, pursuant to Section 6.05 of the Indenture, the Indenture Trustee gave
notice to each Holder of Initial
<PAGE> 4
Series Bonds of a Stated Maturity of January 1, 2018 of such optional
redemption.
Accordingly, in consideration of the premises and of other
good and valuable consideration, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Amendments. (a) Appendix A. Appendix A to the
Participation Agreement is hereby amended to read, in its entirety, as set
forth in Appendix A attached hereto.
(b) Schedule 1. Pursuant to Section 18(b) of the
Participation Agreement, Schedule 1 to the Participation Agreement is hereby
amended to read, in its entirety, as set forth in Schedule 1 hereto. The
parties hereto agree to enter into a further supplement to the Participation
Agreement, if necessary, to record any changes in the assumptions set forth in
Schedule 1 attached hereto as a result of an adjustment pursuant to Section 4.5
of the Lease if the assumptions set forth in Schedule 1 attached hereto at the
time of the pricing of the refinancing contemplated hereby shall thereafter
prove to be incorrect at the time of the closing of such refinancing.
(c) Amendments to Certain Operative Documents. As
contemplated by (1) Section 18(b) of the Participation Agreement, (2) in the
case of item (ii) below, Section 2.15 of the Indenture, and (3) in the case of
item (i) below, Sections 4.5 and 4.11 of the Lease, subject nevertheless to the
satisfaction or waiver of the conditions set forth in such Sections 18(b), 2.15
and 4.11 and Section 3 hereof, on or before the Refunding Date (i) the Owner
Trustee and Lessee shall execute and deliver Lease Agreement Supplement No. 2
(which shall be substantially in the form of Exhibit A hereto, the "Lease
Supplement") and the Owner Trustee and Lessee hereby request and instruct the
Indenture Trustee to consent to the Lease Supplement and the Owner Participant
and the Indenture Trustee shall consent to the Lease Supplement, and (ii) the
Owner Trustee, the Indenture Trustee and Lessee shall execute and deliver Trust
Indenture, Security Agreement and Mortgage Supplement No. 1, which shall be
substantially in the form of Exhibit B hereto, with such changes as the parties
hereto shall agree (the "Indenture Supplement").
- 2 -
<PAGE> 5
Section 2. Obligations of the Owner Trustee in Respect of
1995 Series Bonds. Subject to the terms and conditions of this Supplement No.
1 and in reliance on the representations and warranties of the other parties
hereto contained herein or made pursuant hereto, the Owner Trustee at the
direction of the Owner Participant, and at the request hereof of Lessee, on the
Refunding Date shall execute, and shall request the Indenture Trustee to
authenticate and deliver, the 1995 Series Bonds, in the aggregate principal
amount of $81,595,000. The proceeds of the sale of the 1995 Series Bonds shall
be deposited in immediately available funds with the Indenture Trustee for
prepayment of the Initial Series Bonds of a Stated Maturity of January 1, 2018
on the Refunding Date.
- 3 -
<PAGE> 6
Section 3. Conditions Precedent to Obligations of the Owner
Participant, Lessee, the Owner Trustee and the Indenture Trustee on the
Refunding Date. The obligations of the Owner Participant, Lessee, the Owner
Trustee and the Indenture Trustee to participate in the transactions
contemplated hereunder shall be subject to the fulfillment to the satisfaction
of, or waiver by, the Owner Participant, Lessee, the Owner Trustee and the
Indenture Trustee (acting directly or by authorization to its counsel but in no
event in the capacity as a fiduciary for any party to any Operative Document or
any holder of a 1995 Series Bond) (i) prior to or on the Refunding Date, of all
of the conditions precedent set forth in Section 18 the Participation
Agreement, as heretofore amended, and (ii) of the following conditions:
(a) On the Refunding Date, the following statements shall be true
and the Owner Participant, Lessee, the Owner Trustee and the
Indenture Trustee shall have received
(i) an Officers' Certificate of Lessee, dated the
Refunding Date, stating that (A) the
representations and warranties of Lessee
contained in Section 9.1 of the Participation
Agreement (except subsection 9.1.6 and except
that, with respect to subsection 9.1.7, TU
Electric has leased the Sites to Lessor
pursuant to the Ground Leases) are true and
accurate on and as of the Refunding Date as
though made on and as of the Refunding Date
except (I) to the extent that such
representations and warranties relate solely
to an earlier date (in which case such
representations and warranties shall have
been true and accurate on and as of such
earlier date), (II) any reference to "Funding
Date" in subsections 9.1.4, 9.1.10 and 9.1.11
shall be deemed to be a reference to the
Refunding Date; and (III) any references in
subsections 9.1.9 and 9.1.10 to "Lessee's
Annual Report on Form 10-K" shall be deemed
to be a reference to Lessee's Annual Report
on Form 10-K for the fiscal year ended
December 31, 1994, and any references to
- 4 -
<PAGE> 7
"Lessee's Quarterly Report on Form 10-Q"
shall be deemed to be a reference to Lessee's
Quarterly Reports on Form 10-Q for the fiscal
quarters ended March 31, 1995 and June 30,
1995; (B) no event or condition has occurred
and is continuing, or would result from the
consummation of any transaction contemplated
by the Operative Documents to which it is a
party, which constitutes a Lease Default or
Lease Event of Default, and no Event of Loss
has occurred; and (C) each of the Operative
Documents to which it is a party remains in
full force and effect with respect to it,
except as such enforceability may be limited
by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar
laws affecting the enforcement of creditor's
rights generally and by general principles of
equity; and
(ii) an Officer's Certificate of each of the Owner
Participant, the Owner Trustee and the
Indenture Trustee, each in its respective
individual capacity, which Officers'
Certificates shall be dated the Refunding
Date, stating that (A) the respective
representations and warranties of the Owner
Trustee, the Owner Participant (except
subsection 5.1.6) and the Indenture Trustee
contained in Sections 6.l, 5.l and 8.1,
respectively, of the Participation Agreement
are true and accurate on and as of the
Refunding Date as though made on and as of
the Refunding Date except to the extent that
such representations and warranties relate
solely to an earlier date (in which case such
representations and warranties shall have
been true and accurate on and as of such
earlier date) and (B) each Operative Document
to which it is a party remains in full force
and effect with respect to it, except as such
enforceability may be limited by applicable
bankruptcy, insolvency, reorganization,
- 5 -
<PAGE> 8
moratorium or other similar laws affecting
the enforcement of creditor's rights
generally and by general principles of
equity.
(b) Each of the parties hereto (other than the Person represented
by the following counsel) shall have received opinions of the
Owner Participant's in-house counsel, Worsham, Forsythe &
Wooldridge, L.L.P., Lessee's general counsel, Reid & Priest
LLP, Lessee's special counsel, Shipman & Goodwin, the Owner
Trustee's counsel, and the Indenture Trustee's in-house
counsel, each dated the Refunding Date, addressed to such
Persons and each in form and substance satisfactory to the
recipients thereof.
(c) The Lease Supplement and the Indenture Supplement shall have
each been validly executed and delivered.
Section 4. Waiver. By their execution hereof, the parties
hereto waive any notice requirement contained in Section 18(c) of the
Participation Agreement.
Section 5. Amendments. Neither this Supplement No. 1 nor the
Participation Agreement nor any of the terms hereof or thereof may be approved,
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which enforcement of such
change is sought.
Section 6. Counterparts. This Supplement No. 1 may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all of such counterparts shall
together constitute but one and the same instrument.
Section 7. Supplement. This Supplement No. 1 shall be
construed a supplemental to the Participation Agreement and shall form a part
thereof and the Participation Agreement is hereby incorporated by reference
herein and each is hereby ratified, approved and confirmed.
- 6 -
<PAGE> 9
Section 8. Instructions of the Owner Participant. In
accordance with the Trust Agreement, the Owner Participant hereby authorizes
and directs the Owner Trustee to execute and deliver this Supplement No. 1, the
Lease Supplement, the Indenture Supplement, and the Series 1995 Bonds, and any
letters, certificates or other writings contemplated by any of such documents.
Section 9. Governing Law. THIS SUPPLEMENT NO. 1 SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
Section 10. (a) Lease Indemnity. Lessee agrees, without
limitation as to time, to assume liability for, and to indemnify, defend,
protect, save and hold harmless (to the fullest extent permitted by law) Owner
Participant and Owner Trustee, and the officers, directors, agents and
employees of each of them and each Person who controls each of them (within the
meaning of Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act) (each an "Indemnified Party"), on an after-tax basis from and
against, any and all Claims of or against Owner Participant or Owner Trustee,
whether or not Owner Participant and Owner Trustee shall also be indemnified as
to any such Claim by any other Person, in any way relating to or arising in
connection with the offer or sale of the 1995 Series Bonds under the Securities
Act, or any other applicable law relating to the offering and sale of the 1995
Series Bonds including, without limitation, all Claims arising out of or based
upon any untrue or alleged untrue statement of a material fact contained in any
registration statement, prospectus or form of prospectus, or arising out of or
based upon, in the case of the registration statement, any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading and, in the case of any prospectus or
form of prospectus, any omission therein or alleged omission of material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading
except, in either case: (i) to the extent that the same arise out of or are
based upon information furnished in writing to Lessee by such Indemnified Party
expressly for use therein or otherwise in connection with the offer and sale of
the 1995 Series Bonds; and (ii) any Claim resulting solely from breach by Owner
Participant or Owner
- 7 -
<PAGE> 10
Trustee (which, in the case of Owner Trustee, shall have resulted from its
gross negligence or willful misconduct) of any of its representations,
warranties or covenants contained in any document or Certificate delivered by
the Owner Trustee or Owner Participant in connection with the issuance of the
1995 Series Bonds in any material respect. When an Indemnified Party has
received indemnification payments from Lessee in full satisfaction of the
indemnification provisions of this Supplement No. 1, Lessee shall be
subrogated, to the extent of such indemnity paid, to such Indemnified Party's
rights with respect to the transaction or event requiring or giving rise to
such indemnity, other than such rights against such Indemnified Party to the
extent they are indemnified hereunder. Nothing contained herein shall be
construed as a guaranty of (A) payment of any of the Bonds; or (B) the Useful
Life of the Facilities; or (C) the value of the Leased Assets upon termination
of the Basic Term or any Renewal Term.
(b) Conduct of Indemnification Proceedings. If any
Indemnified Party shall be entitled to indemnity hereunder, such Indemnified
Party shall give prompt notice to Lessee of the commencement of any proceeding
with respect to which such Indemnified Party seeks indemnification or
contribution pursuant to hereto; provided, however, that the failure so to
notify Lessee shall not relieve Lessee from any obligation or liability except
to the extent that Lessee has been prejudiced by such failure. Lessee shall
have the right, exercisable by giving written notice to such Indemnified Party
promptly after the receipt of written notice from such Indemnified Party of
such proceeding, to assume, at the Lessee's expense, the defense of any such
proceedings, with counsel reasonably satisfactory to such Indemnified Party;
provided, however, that an Indemnified Party or Parties (if more than one such
Indemnified Party is named in any proceeding) shall have the right to employ
separate counsel in any such proceedings and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party or Parties unless: (1) Lessee agrees in writing to pay
such fees and expenses; or (2) Lessee fails promptly to assume the defense of
such proceeding or fails to employ counsel reasonably satisfactory to such
Indemnified Party or Parties; or (3) the defendants in such proceeding shall
include both Lessee and the Indemnified Party or Parties and the Indemnified
Party or Parties shall have been
- 8 -
<PAGE> 11
advised by counsel in its reasonable judgement that there is reasonably likely
to be a conflict between the positions of Lessee or an Affiliate of Lessee and
such Indemnified Party or Parties in conducting the defense of such action or
proceeding or that there are reasonably likely to be legal defenses available
to such Indemnified Party or Parties different from or in addition to those
available to the Lessee or such Affiliate; or (4) the indemnified Party or
Parties shall have been advised by counsel that there exists a risk of criminal
liability to such Indemnified Party or Parties, in which case, if such
Indemnified Party or Parties notifies Lessee in writing that it elects to
employ separate counsel at the expense of Lessee, Lessee shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
and must be reasonably satisfactory to Lessee, it being understood, however,
that, unless there exists a conflict among Indemnified Parties, Lessee shall
not, in connection with any one such proceeding or separate but substantially
similar or related proceedings, arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (together with appropriate local counsel) at any time for
such Indemnified Party or Parities, or for fees and expenses that are not
reasonable. Whether or not such defense is assumed by Lessee, Lessee or
Indemnified Party or Parties will not be subject to any liability for any
settlement made without its or their consent (but such consent will not be
unreasonably withheld). Lessee shall not be liable for any settlement of any
such action or proceeding effected without its written consent, but if settled
with its written consent, or if there be a final judgment for the plaintiff in
any such action or proceeding, Lessee agrees subject to the exception and
limitations set forth above, to indemnify and hold harmless each Indemnified
Party from and against any loss or liability by reason of such settlement or
judgment. Lessee shall not consent to the entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party or Parties of a
release, in form and substance satisfactory to the Indemnified Party or
Parties, from all liability in respect of such proceeding for which such
Indemnified Party would be entitled to indemnification hereunder (whether or
not any Indemnified Party is a party thereto).
- 9 -
<PAGE> 12
(c) Contribution. If the indemnification provided for in
this Section 10 is unavailable to an Indemnified Party or is insufficient to
hold such Indemnified Party harmless for any Claims in respect of which this
would otherwise apply by its terms, then Lessee, in lieu of indemnifying such
Indemnified Party, to the fullest extent lawful shall have a joint and several
obligation to contribute to the amount paid or payable by such Indemnified
Party as a result of such Claims, in such proportion as is appropriate to
reflect the relative fault of Lessee, on the one hand, and such Indemnified
Party, on the other hand, in connection with the actions, statements or
omissions that resulted in such Claims as well as any other relevant equitable
considerations. The relative fault of Lessee, on the one hand, and such
Indemnified Party, on the other hand, shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been taken by, or relates to information supplied
by, Lessee or such Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent any such
action, statement or omission. The amount paid or payable by a party as a
result of any Claims shall be deemed to include any legal or other fees or
expenses incurred by such party in connection with any proceeding, to the
extent such party would have been indemnified for such expenses if the
indemnification provided for in Section 10(a) or 10(b) was available to such
party.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 10(c) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. The indemnity, contribution and expense reimbursement
obligations under this Section 10(c) shall be in addition to any liability
Lessee may otherwise have; provided that any excess payment made by Lessee
shall be refunded to Lessee by the Indemnified Party receiving such excess
payment.
- 10 -
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have each caused this
Supplement No. 1 to be duly executed as of the date first above written.
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity except to the
extent expressly provided herein but as Owner
Trustee pursuant to the Trust Agreement
By: /s/Steven Cimalore
--------------------------------
Name: Steven Cimalore
Title: Vice President
AMERICAN NATIONAL BANK AND TRUST COMPANY OF
CHICAGO, not in its individual capacity except
to the extent expressly provided herein
but as Indenture Trustee pursuant to
the Indenture
By: /s/Patricia B. Martirano
--------------------------------
Name: Patricia B. Martirano
Title: Second Vice President
HNB INVESTMENT CORP.,
Owner Participant
By: /s/Fran J. Vedder
--------------------------------
Name: Fran J. Vedder
Title: Director, NY Finance
TEXAS UTILITIES ELECTRIC COMPANY,
Lessee
By: /s/H. Dan Farell
----------------
H. Dan Farell
Senior Vice President
<PAGE> 14
SCHEDULE 1
[ASSUMPTIONS]
<PAGE> 15
ANNEX A TO SCHEDULE 1
[BASIC RENT]
<PAGE> 16
ANNEX B TO SCHEDULE 1
[CASUALTY VALUES]
<PAGE> 17
ANNEX C TO SCHEDULE 1
[BOND AMORTIZATION SCHEDULE]
<PAGE> 18
EXHIBIT A
[LEASE AGREEMENT SUPPLEMENT NO. 2]
<PAGE> 19
EXHIBIT B
[INDENTURE SUPPLEMENT NO. 1]
<PAGE> 1
EXHIBIT 15(a)
Texas Utilities Company:
We have reviewed, in accordance with standards established by the American
Institute of Certified Public Accountants, the unaudited condensed consolidated
interim financial information of Texas Utilities Company and subsidiaries for
the periods ended March 31, 1996 and 1995, as indicated in our report dated May
7, 1996; because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, is
incorporated by reference in Registration Statement No. 33-55931 on Form S-3
and Registration Statements No. 33-59575, 33-59759 and 33-59961 on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Dallas, Texas
May 7, 1996
<PAGE> 1
EXHIBIT 15(b)
Texas Utilities Electric Company:
We have reviewed, in accordance with standards established by the American
Institute of Certified Public Accountants, the unaudited condensed consolidated
interim financial information of Texas Utilities Electric Company and
subsidiaries for the periods ended March 31, 1996 and 1995, as indicated in
our report dated May 7, 1996; because we did not perform an audit, we expressed
no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, is
incorporated by reference in Registration Statements No. 33-68100 and 33-69554
on Form S-3.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Dallas, Texas
May 7, 1996
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TEH
CONDENSED STATEMENTS OF CONSOLIDATED INCOME, CONDENSED STATEMENTS OF
CONSOLIDATED CASH FLOWS, AND CONDENSED CONSOLIDATED BALANCE SHEETS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000097561
<NAME> TEXAS UTILITIES COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 17,733,933
<OTHER-PROPERTY-AND-INVEST> 1,118,287
<TOTAL-CURRENT-ASSETS> 753,916
<TOTAL-DEFERRED-CHARGES> 1,881,356
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 21,487,492
<COMMON> 4,808,958
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 971,452
<TOTAL-COMMON-STOCKHOLDERS-EQ> 5,780,410
644,824
489,695
<LONG-TERM-DEBT-NET> 8,877,670
<SHORT-TERM-NOTES> 343,469
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 235,000
<LONG-TERM-DEBT-CURRENT-PORT> 367,150
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,749,274
<TOT-CAPITALIZATION-AND-LIAB> 21,487,492
<GROSS-OPERATING-REVENUE> 1,463,900
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 1,408,962
<OPERATING-INCOME-LOSS> 414,938
<OTHER-INCOME-NET> 3,590
<INCOME-BEFORE-INTEREST-EXPEN> 418,528
<TOTAL-INTEREST-EXPENSE> 218,287
<NET-INCOME> 200,241
74,167
<EARNINGS-AVAILABLE-FOR-COMM> 126,074
<COMMON-STOCK-DIVIDENDS> 112,921
<TOTAL-INTEREST-ON-BONDS> 126,002
<CASH-FLOW-OPERATIONS> 337,010
<EPS-PRIMARY> .56
<EPS-DILUTED> .56
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED STATEMENTS OF INCOME, CONDENSED STATEMENTS OF CASH FLOWS, AND
CONDENSED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000710182
<NAME> TEXAS UTILITIES ELECTRIC
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 16,006,071
<OTHER-PROPERTY-AND-INVEST> 466,328
<TOTAL-CURRENT-ASSETS> 572,986
<TOTAL-DEFERRED-CHARGES> 1,838,190
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 18,883,575
<COMMON> 4,732,305
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,083,655
<TOTAL-COMMON-STOCKHOLDERS-EQ> 5,815,960
644,824
489,695
<LONG-TERM-DEBT-NET> 6,872,071
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 235,000
<LONG-TERM-DEBT-CURRENT-PORT> 349,287
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,476,738
<TOT-CAPITALIZATION-AND-LIAB> 18,883,575
<GROSS-OPERATING-REVENUE> 1,348,330
<INCOME-TAX-EXPENSE> 78,809
<OTHER-OPERATING-EXPENSES> 964,464
<TOTAL-OPERATING-EXPENSES> 1,043,273
<OPERATING-INCOME-LOSS> 305,057
<OTHER-INCOME-NET> 424
<INCOME-BEFORE-INTEREST-EXPEN> 305,481
<TOTAL-INTEREST-EXPENSE> 152,696
<NET-INCOME> 157,785
14,419
<EARNINGS-AVAILABLE-FOR-COMM> 138,366
<COMMON-STOCK-DIVIDENDS> 122,304
<TOTAL-INTEREST-ON-BONDS> 125,966
<CASH-FLOW-OPERATIONS> 382,770
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99(a)
CONFORMED COPY
================================================================================
TEXAS UTILITIES COMPANY
TEXAS UTILITIES ELECTRIC COMPANY
__________________________________________
AMENDED AND RESTATED
COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
"FACILITY A"
Dated as of April 26, 1996
__________________________________________
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent
and
CHEMICAL BANK,
as Competitive Advance Facility Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C> <C>
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1
1.02. Terms Generally . . . . . . . . . . . . . . . . . . . . . 17
II. THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . . 17
2.02. Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.03. Competitive Bid Procedure . . . . . . . . . . . . . . . . 20
2.04. Standby Borrowing Procedure . . . . . . . . . . . . . . . 23
2.05. Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.06. Repayment of Loans; Evidence of Indebtedness . . . . . . 25
2.07. Interest on Loans . . . . . . . . . . . . . . . . . . . . 25
2.08. Default Interest . . . . . . . . . . . . . . . . . . . . 26
2.09. Alternate Rate of Interest . . . . . . . . . . . . . . . 27
2.10. Termination and Reduction of Commitments . . . . . . . . . 27
2.11. Prepayment . . . . . . . . . . . . . . . . . . . . . . . 28
2.12. Reserve Requirements; Change in Circumstances . . . . . . 29
2.13. Change in Legality . . . . . . . . . . . . . . . . . . . 31
2.14. Pro Rata Treatment . . . . . . . . . . . . . . . . . . . 32
2.15. Sharing of Setoffs . . . . . . . . . . . . . . . . . . . 33
2.16. Payments . . . . . . . . . . . . . . . . . . . . . . . . 33
2.17. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 34
2.18. Assignment of Commitments Under Certain Circumstances . . 38
III. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 38
3.01. Organization; Powers . . . . . . . . . . . . . . . . . . 38
3.02. Authorization . . . . . . . . . . . . . . . . . . . . . . 39
3.03. Enforceability . . . . . . . . . . . . . . . . . . . . . 39
3.04. Governmental Approvals . . . . . . . . . . . . . . . . . 39
3.05. Financial Statements . . . . . . . . . . . . . . . . . . 39
</TABLE>
<PAGE> 3
Contents, p. 2
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C> <C>
3.06. Litigation; Compliance with Laws . . . . . . . . . . . . . . 40
3.07. Federal Reserve Regulations . . . . . . . . . . . . . . . . 40
3.08. Investment Company Act; Public Utility Holding Company Act . 40
3.09. No Material Misstatements . . . . . . . . . . . . . . . . . 41
3.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.11. Employee Benefit Plans . . . . . . . . . . . . . . . . . . 41
3.12. Significant Subsidiaries . . . . . . . . . . . . . . . . . 42
3.13. Environmental Matters . . . . . . . . . . . . . . . . . . . 42
IV. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . 43
4.01. All Borrowings . . . . . . . . . . . . . . . . . . . . . . 43
4.02. Effective Date . . . . . . . . . . . . . . . . . . . . . . 44
V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.01. Existence . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.02. Business and Properties . . . . . . . . . . . . . . . . . . 45
5.03. Financial Statements, Reports, Etc. . . . . . . . . . . . . 45
5.04. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.05. Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 48
5.06. Maintaining Records; Access to Properties and Inspections . 48
5.07. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.08. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 49
5.09. Consolidations, Mergers, and Sales of Assets . . . . . . . . 49
5.10. Limitations on Liens . . . . . . . . . . . . . . . . . . . 50
5.11. Fixed Charge Coverage . . . . . . . . . . . . . . . . . . . 52
5.12. Equity Capitalization Ratio . . . . . . . . . . . . . . . . 52
5.13. Indebtedness of TU . . . . . . . . . . . . . . . . . . . . 53
VI. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 53
VII. THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
<PAGE> 4
Contents, p. 3
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C> <C>
8.02. Survival of Agreement . . . . . . . . . . . . . . . . 61
8.03. Binding Effect . . . . . . . . . . . . . . . . . . . 61
8.04. Successors and Assigns . . . . . . . . . . . . . . . 61
8.05. Expenses; Indemnity . . . . . . . . . . . . . . . . . 65
8.06. Right of Setoff . . . . . . . . . . . . . . . . . . . 67
8.07. Applicable Law . . . . . . . . . . . . . . . . . . . 67
8.08. Waivers; Amendment . . . . . . . . . . . . . . . . . 67
8.09. Entire Agreement . . . . . . . . . . . . . . . . . . 68
8.10. Severability . . . . . . . . . . . . . . . . . . . . 68
8.11. Counterparts . . . . . . . . . . . . . . . . . . . . 68
8.12. Headings . . . . . . . . . . . . . . . . . . . . . . 69
8.13. Interest Rate Limitation . . . . . . . . . . . . . . 69
8.14. Jurisdiction; Venue . . . . . . . . . . . . . . . . . 69
8.15. Confidentiality . . . . . . . . . . . . . . . . . . . 70
8.16. Transition Period . . . . . . . . . . . . . . . . . . 71
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Competitive Bid Accept/Reject Letter
Exhibit A-5 Form of Standby Borrowing Request
Exhibit B Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D-1 Opinion of Reid & Priest LLP, special counsel to Texas Utilities
Company and Texas Utilities Electric Company
Exhibit D-2 Opinion of Worsham, Forsythe & Wooldridge, L.L.P., general
counsel for Texas Utilities Company and Texas Utilities
Electric Company
Schedule 2.01 Commitments
Schedule 3.06 Litigation
</TABLE>
<PAGE> 5
AMENDED AND RESTATED COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT (the "Agreement")
dated as of April 26, 1996, and effective as of the
Effective Date, among TEXAS UTILITIES COMPANY, a
Texas corporation ("TU"); TEXAS UTILITIES ELECTRIC
COMPANY, a Texas corporation and a wholly owned
subsidiary of TU ("TU Electric" and, together with
TU, the "Borrowers"); the lenders listed in Schedule
2.01 (together with their successors and assigns, the
"Lenders"); CHEMICAL BANK, a New York banking
corporation ("Chemical"), as Competitive Advance
Facility Agent (in such capacity, the "CAF Agent");
and TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a
national banking association ("TCB"), as
administrative agent for the Lenders (in such
capacity, the "Administrative Agent"; and, together
with the CAF Agent, the "Agents").
The Lenders have been requested to extend credit to the
Borrowers to enable them, upon the terms and subject to the conditions set
forth herein, to borrow on a standby revolving credit basis on and after the
Effective Date and at any time prior to the Maturity Date (as hereinafter
defined) an aggregate principal amount not in excess of $375,000,000 at any
time outstanding. The Lenders have also been requested to provide a procedure
pursuant to which the Borrowers may invite the Lenders to bid on an uncommitted
basis on short-term borrowings by the Borrowers. The proceeds of any such
borrowings are to be used for working capital and other corporate purposes,
including commercial paper back- up. The Lenders are willing to extend such
credit on the terms and subject to the conditions herein set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
<PAGE> 6
2
"ABR Loan" shall mean any Standby Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II or any Eurodollar Competitive Loan converted (pursuant
to Section 2.13(ii)) to a loan bearing interest at a rate determined by
reference to the Alternate Base Rate.
"Acquisition Date" shall mean the date as of which a person or
group of related persons first acquires more than 30% of the outstanding Voting
Shares of TU (within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended, and the applicable rules and regulations
thereunder).
"Administrative Fees" shall have the meaning assigned to such
term in Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit B hereto.
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly or indirectly controls or is controlled by
or is under common control with the person specified.
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%, (b) the Base CD Rate in effect on such day plus 1% and (c) the Prime
Rate in effect on such day. For purposes hereof, "Prime Rate" shall mean the
rate of interest per annum publicly announced from time to time by Chemical as
its prime rate in effect at its principal office in New York City; each change
in the Prime Rate shall be effective on the date such change is publicly
announced as effective; "Base CD Rate" shall mean the sum of (a) the product of
(i) the Three- Month Secondary CD Rate and (ii) Statutory Reserves and (b) the
Assessment Rate; "Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate will, under the
current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or, if such rate shall
not be so reported
<PAGE> 7
3
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 a.m., New York City
time, on such day (or, if such day shall not be a Business Day, on the next
preceding Business Day) by the CAF Agent from three New York City negotiable
certificate of deposit dealers of recognized standing selected by it;
"Assessment Rate" shall mean, for any day, the annual rate (rounded upwards to
the next 1/100 of 1%) most recently estimated by Chemical as the then current
net annual assessment rate that will be employed in determining amounts payable
by Chemical to the Federal Deposit Insurance Corporation (or any successor) for
insurance by such Corporation (or such successor) of time deposits made in US
dollars at Chemical's domestic offices; and "Federal Funds Effective Rate"
shall mean, for any day, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as released on the next succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so released for any
day which is a Business Day, the arithmetic average (rounded upwards to the
next 1/100th of 1%), as determined by Chemical, of the quotations for the day
of such transactions received by Chemical from three Federal funds brokers of
recognized standing selected by it. If for any reason Chemical shall have
determined (which determination shall be conclusive absent manifest error;
provided that Chemical, shall, upon request, provide to the applicable Borrower
a certificate setting forth in reasonable detail the basis for such
determination) that it is unable to ascertain the Federal Funds Effective Rate
for any reason, including the inability of Chemical to obtain sufficient
quotations in accordance with the terms thereof, the Alternate Base Rate shall
be determined without regard to clause (a) of the first sentence of this
definition until the circumstances giving rise to such inability no longer
exist. Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective on the effective date of
such change in the Prime Rate or the Federal Funds Effective Rate,
respectively.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee in the form of Exhibit C.
"Auction Fees" shall mean the competitive advance auction fees
provided for in the Letter Agreement dated April 29, 1994, between the
Borrowers and the CAF Agent (with
<PAGE> 8
4
references to the Credit Agreements and provisions referred to therein being
deemed to be references to this Agreement and the Facilities B and C Credit
Agreement, as applicable, and the analogous provisions herein and therein),
payable to the CAF Agent by the applicable Borrower at the time of each
competitive advance auction request made by such Borrower pursuant to Section
2.03.
"Board" shall mean the Board of Governors of the
Federal Reserve System of the United States.
"Board of Directors" shall mean the Board of Directors of a
Borrower or any duly authorized committee thereof.
"Borrower" shall have the meaning given such term in the
preamble hereto.
"Borrowing" shall mean a group of Loans of a single Type made
by the Lenders (or, in the case of a Competitive Borrowing, by the Lender or
Lenders whose Competitive Bids have been accepted pursuant to Section 2.03) on
a single date and as to which a single Interest Period is in effect.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York or the State of
Texas) on which banks are open for business in New York City and Houston;
provided, however, that, when used in connection with a Eurodollar Loan, the
term "Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"A Change in Control" shall be deemed to have occurred if (a)
any person or group of related persons (other than TU, any Subsidiary of TU, or
any pension, savings or other employee benefit plan for the benefit of
employees of TU and/or any Subsidiary of TU) shall have acquired beneficial
ownership of more than 30% of the outstanding Voting Shares of TU (within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended, and the applicable rules and regulations thereunder); provided that a
Change in Control shall not be deemed to have occurred if such acquisition has
been approved, prior to the Acquisition Date and the date on which any tender
offer for Voting Shares of TU was commenced, by a majority of the Disinterested
Directors of TU, or (b) during any period of 12 consecutive months, commencing
before or after the date of this Agreement,
<PAGE> 9
5
individuals who on the first day of such period were directors of TU (together
with any replacement or additional directors who were nominated or elected by a
majority of directors then in office) cease to constitute a majority of the
Board of Directors of TU.
"Code" shall mean the Internal Revenue Code of 1986, as the
same may be amended from time to time.
"Commission" shall mean the Public Utility Commission of the
State of Texas.
"Commitment" shall mean, with respect to each Lender, the
Commitment of such Lender set forth in Schedule 2.01 hereto, as such Commitment
may be permanently terminated or reduced from time to time pursuant to Section
2.10, subject to Section 8.04. The Commitment of each Lender shall
automatically and permanently terminate on the Maturity Date if not terminated
earlier pursuant to the terms hereof.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a
notification made by a Borrower pursuant to Section 2.03(d) in the form of
Exhibit A-4.
"Competitive Bid Margin" shall mean, as to any Eurodollar
Competitive Loan, the margin (expressed as a percentage rate per annum in the
form of a decimal to no more than four decimal places) to be added to or
subtracted from the LIBO Rate in order to determine the interest rate
applicable to such Loan, as specified in the Competitive Bid relating to such
Loan.
"Competitive Bid Rate" shall mean, as to any Competitive Bid,
(i) in the case of a Eurodollar Loan, the Competitive Bid Margin, and (ii) in
the case of a Fixed Rate Loan, the fixed rate of interest offered by the Lender
making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant
to Section 2.03 in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Lender or Lenders
whose Competitive Bids for
<PAGE> 10
6
such Borrowing have been accepted under the bidding procedure described in
Section 2.03.
"Competitive Loan" shall mean a Loan made pursuant to the
bidding procedure described in Section 2.03. Each Competitive Loan shall be a
Eurodollar Competitive Loan or a Fixed Rate Loan.
"Consolidated Earnings Available for Fixed Charges" for any
twelve-month period means (i) consolidated net income, calculated after
deducting preferred stock dividends and preferred securities distributions of
Subsidiaries, but before any extraordinary items and before the effect in such
twelve-month period of any change in accounting principles promulgated by the
Financial Accounting Standards Board becoming effective after December 31,
1995, less (ii) allowances for equity funds used during construction to the
extent that such allowances, taken as a whole, increased such consolidated net
income, plus (iii) provisions for Federal income taxes, to the extent that such
provisions, taken as a whole, decreased such consolidated net income, plus (iv)
Consolidated Fixed Charges, all determined for such twelve-month period with
respect to TU and its Consolidated Subsidiaries on a consolidated basis;
provided, however, that in computing Consolidated Earnings Available for Fixed
Charges for any twelve-month period (i) the effect of any regulatory
disallowances incurred in connection with the settlement agreement resolving
fuel and prudency issues in Docket 11735 of the Commission, (ii) the effect of
the recordation of an impairment of non-performing assets in September 1995 in
an amount, after taxes, equal to $802 million and (iii) the aggregate amount of
any other non-cash book losses during such twelve-month period relating to
assets which as of the date of this Agreement and as of the date of any sale or
writedown thereof were non-operating, non-earning assets, shall be excluded.
"Consolidated Fixed Charges" for any twelve-month period means
the sum of (i) interest on mortgage bonds, (ii) interest on other long-term
debt, (iii) other interest expense and (iv) preferred stock dividends and
preferred securities distributions of Subsidiaries, all determined for such
twelve-month period with respect to TU and its Consolidated Subsidiaries on a
consolidated basis.
"Consolidated Shareholders' Equity" means the sum of (i) total
common stock equity plus (ii) preferred stock not subject to mandatory
redemption, both determined with respect
<PAGE> 11
7
to TU and its Consolidated Subsidiaries on a consolidated basis.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of TU or TU
Electric, as the case may be, in its consolidated financial statements as of
such date.
"Consolidated Total Capitalization" means the sum of (i) total
common stock equity, (ii) preferred stock and preferred securities and (iii)
long-term debt (less amounts due currently), all determined with respect to TU
and its Consolidated Subsidiaries on a consolidated basis, but without giving
effect to any acceleration or potential acceleration of any long-term debt.
"Controlled Group" shall mean all members of a controlled
group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with TU, are treated as a
single employer under Section 414(b) or 414(c) of the Code.
"Default" shall mean any event or condition which upon notice,
lapse of time or both would constitute an Event of Default.
"Disinterested Director" shall mean any member of the Board of
Directors of TU who is not affiliated, directly or indirectly, with, or
appointed by, a person or group of related persons (other than TU, any
Subsidiary of TU, or any pension, savings or other employee benefit plan for
the benefit of employees of TU and/or any Subsidiary of TU) acquiring the
beneficial ownership of more than 30% of the outstanding Voting Shares of TU
(within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended, and the applicable rules and regulations thereunder) and who
either was a member of the Board of Directors of TU prior to the Acquisition
Date or was recommended for election by a majority of the Disinterested
Directors in office prior to the Acquisition Date.
"dollars" or "$" shall mean lawful money of the
United States of America.
"Effective Date" shall mean the date on which each condition
set forth in Section 4.02 has been satisfied.
<PAGE> 12
8
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that is a member of a group of (i) organizations described in
Section 414(b) or (c) of the Code and (ii) solely for purposes of the Lien
created under Section 412(n) of the Code, organizations described in Section
414(m) or (o) of the Code of which the relevant Borrower is a member.
"ERISA Event" shall mean (i) any "Reportable Event"; (ii) the
adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA;
(iii) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (iv) the filing pursuant to Section 412(d) of the Code
or Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (v) the incurrence of any liability
under Title IV of ERISA with respect to the termination of any Plan or the
withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates
from any Plan or Multiemployer Plan; (vi) the receipt by the Borrower or any
ERISA Affiliate from the PBGC of any notice relating to the intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan;
(vii) the receipt by the Borrower or any ERISA Affiliate of any notice
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; (viii) the occurrence of a "prohibited
transaction" with respect to which the Borrower or any of its subsidiaries
could be liable; and (ix) any other [similar] event or condition with respect
to a Plan or Multiemployer Plan that could result in liability of the Borrower
other than a liability to pay premiums or benefits when due.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan
bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
<PAGE> 13
9
"Eurodollar Loan" shall mean any Eurodollar Competitive Loan
or Eurodollar Standby Loan.
"Eurodollar Standby Loan" shall mean any Standby Loan bearing
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Event of Default" shall have the meaning assigned to such
term in Article VI.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Facilities B and C Credit Agreement" shall mean the Amended
and Restated $300,000,000 Term Loan and $875,000,000 Competitive Advance and
Revolving Credit Facility Agreement dated as of the date hereof among the
parties hereto.
"Facility Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Facility Fee Percentage" shall mean .10% per annum.
"Fee Letter" shall mean the letter among the Borrowers,
Chemical and TCB dated March 29, 1996.
"Fees" shall mean the Facility Fee, the Auction Fees and the
Administrative Fees.
"Fee Share" shall mean, at any time, the greater of (i) 75%
and (ii) the aggregate amount of outstanding Loans to TU Electric expressed as
a percentage of the Total Commitment.
"Financial Officer" of any corporation shall mean the chief
financial officer, principal accounting officer, treasurer, associate or
assistant treasurer, or any responsible officer designated by one of the
foregoing persons, of such corporation.
"First Mortgage" shall mean (i) the TU Electric Mortgage and
(ii) any Mortgage and Deed of Trust of TU Electric issued to refund, to replace
or in substitution for the TU Electric Mortgage.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of
Fixed Rate Loans.
<PAGE> 14
10
"Fixed Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (the "Fixed Rate") (expressed in
the form of a decimal to no more than four decimal places) specified by the
Lender making such Loan in its Competitive Bid.
"Fuel Company" shall mean Texas Utilities Fuel Company, a
Texas corporation, and its successors
"GAAP" shall mean generally accepted accounting principles,
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Indebtedness" of any corporation shall mean all indebtedness
representing money borrowed which is created, assumed, incurred or guaranteed
in any manner by such corporation or for which such corporation is responsible
or liable (whether by agreement to purchase indebtedness of, or to supply funds
to or invest in, others or otherwise).
"Interest Payment Date" shall mean, with respect to any Loan,
the last day of the Interest Period applicable thereto and, in the case of a
Eurodollar Loan with an Interest Period of more than three months' duration or
a Fixed Rate Loan with an Interest Period of more than 90 days' duration, each
day that would have been an Interest Payment Date for such Loan had successive
Interest Periods of three months' duration or 90 days' duration, as the case
may be, been applicable to such Loan and, in addition, the date of any
prepayment of each Loan.
"Interest Period" shall mean (a) as to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on
the numerically corresponding day (or, if there is no numerically corresponding
day, on the last day) in the calendar month that is 1, 2, 3 or 6 months
thereafter, or, in addition, in the case of any Eurodollar Borrowing made
during the 30-day period ending on the Maturity Date, the period commencing on
the date of such Borrowing and ending on the seventh or fourteenth day
thereafter, as the Borrower may elect, (b) as to any ABR Borrowing, the period
commencing on the date of such Borrowing and ending on the earliest of (i) the
next succeeding March 31, June 30, September 30 or December 31, (ii) the
Maturity Date, and (iii) the date such Borrowing is repaid or prepaid in
accordance with Section 2.06
<PAGE> 15
11
or Section 2.11 and (c) as to any Fixed Rate Borrowing, the period commencing
on the date of such Borrowing and ending on the date specified in the
Competitive Bids in which the offers to make the Fixed Rate Loans comprising
such Borrowing were extended, which shall not be earlier than seven days after
the date of such Borrowing or later than 360 days after the date of such
Borrowing; provided, however, that if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless, in the case of Eurodollar Loans only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the rate at which dollar
deposits approximately equal in principal amount to (i) in the case of a
Standby Borrowing, the Administrative Agent's portion of such Eurodollar
Borrowing and (ii) in the case of a Competitive Borrowing, a principal amount
that would have been the Administrative Agent's portion of such Competitive
Borrowing had such Competitive Borrowing been a Standby Borrowing, and for a
maturity comparable to such Interest Period are offered to the principal London
offices of Chemical in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect
of such asset. For the purposes of this Agreement, any person shall be deemed
to own subject to a Lien any asset which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Loan" shall mean a Competitive Loan or a Standby Loan,
whether made as a Eurodollar Loan, an ABR Loan or a Fixed Rate Loan, as
permitted hereby.
"Margin Regulations" shall mean Regulations G, T, U and X of
the Board as from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
<PAGE> 16
12
"Margin Stock" shall have the meaning given such term under
Regulation U of the Board.
"Material Adverse Change" shall mean a materially adverse
change in the business, assets, operations or financial condition of any
Borrower and its Subsidiaries taken as a whole.
"Maturity Date" shall mean April 25, 1997.
"Mining Company" shall mean Texas Utilities Mining Company, a
Texas corporation, and its successors.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which any Borrower or any ERISA
Affiliate is making, or accruing an obligation to make, contributions, or has
within any of the preceding five plan years made, or accrued an obligation to
make, contributions.
"Notice of Competitive Bid Request" shall mean a notification
made pursuant to Section 2.03 in the form of Exhibit A-2.
"Operating Agreements" shall mean the (i) Operating Agreement
dated April 28, 1978 between Mining Company and Dallas Power & Light Company,
Texas Electric Service Company and Texas Power & Light Company, as amended by
the Modification of Operating Agreement dated April 20, 1979 between the same
parties and (ii) the Operating Agreement dated December 15, 1976, between Fuel
Company and Dallas Power & Light Company, Texas Electric Service Company and
Texas Power & Light Company, as the same may be amended from time to time,
provided that any resulting amended agreement shall not increase the scope of
Liens permitted under Section 5.10(i).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means, as to any person at any date,
any of the following:
(a) Liens for taxes, assessments or governmental charges not
then delinquent and Liens for workers' compensation awards and similar
obligations not then
<PAGE> 17
13
delinquent and undetermined Liens or charges incidental to
construction, Liens for taxes, assessments or governmental charges
then delinquent but the validity of which is being contested at the
time by such person in good faith, Liens incurred or created in
connection with or to secure the performance of bids, tenders,
contracts (other than for the payment of money), leases, statutory
obligations, surety bonds or appeal bonds, and other Liens of like
nature incurred or created in the ordinary course of business;
(b) Liens securing indebtedness, neither assumed nor
guaranteed by such person nor on which it customarily pays interest,
existing upon real estate or rights in or relating to real estate
acquired by such person for any substation, transmission line,
transportation line, distribution line, right of way or similar
purpose;
(c) rights reserved to or vested in any municipality or public
authority by the terms of any right, power, franchise, grant, license
or permit, or by any provision of law, to terminate such right, power,
franchise, grant, license or permit or to purchase or recapture or to
designate a purchaser of any of the property of such person;
(d) rights reserved to or vested in others to take or receive
any part of the power, gas, oil, coal, lignite or other minerals or
timber generated, developed, manufactured or produced by, or grown on,
or acquired with, any property of such person;
(e) easements, restrictions, exceptions or reservations in any
property and/or rights of way of such person for the purpose of roads,
pipe lines, substations, transmission lines, transportation lines,
distribution lines, removal of oil, gas, lignite, coal or other
minerals or timber, and other like purposes, or for the joint or
common use of real property, rights of way, facilities and/or
equipment, and defects, irregularities and deficiencies in titles of
any property and/or rights of way, which do not materially impair the
use of such property and/or rights of way for the purposes for which
such property and/or rights of way are held by such person;
<PAGE> 18
14
(f) rights reserved to or vested in any municipality or public
authority to use, control or regulate any property of such person;
(g) any obligations or duties, affecting the property of such
person, to any municipality or public authority with respect to any
franchise, grant, license or permit;
(h) as of any particular time any controls, Liens,
restrictions, regulations, easements, exceptions or reservations of
any municipality or public authority applying particularly to space
satellites or nuclear fuel;
(i) any judgment Lien against such person securing a judgment
for an amount not exceeding 25% of Consolidated Shareholders' Equity,
so long as the finality of such judgment is being contested by
appropriate proceedings conducted in good faith and execution thereon
is stayed; or
(j) any Lien arising by reason of deposits with or giving of
any form of security to any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, for any purpose at any time as
required by law or governmental regulation as a condition to the
transaction of any business or the exercise of any privilege or
license, or to enable such person to maintain self-insurance or to
participate in any fund for liability on any insurance risks or in
connection with workers' compensation, unemployment insurance, old age
pensions or other social security or to share in the privileges or
benefits required for companies participating in such arrangements.
"person" shall mean any natural person, corporation, business
trust, joint venture, association, company, partnership or government, or any
agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan described
under Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA that is maintained by any Borrower or any ERISA
Affiliate.
<PAGE> 19
15
"Register" shall have the meaning given such term in Section
8.04(d).
"Reportable Event" shall mean any reportable event as defined
in Sections 4043(c)(1)-(8) of ERISA or the regulations issued thereunder (other
than a reportable event for which the 30 day notice requirement has been
waived) with respect to a Plan (other than a Plan maintained by an ERISA
Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Code Section 414).
"Required Lenders" shall mean, at any time, Lenders having
Commitments representing at least 66 2/3% of the Total Commitment or, for
purposes of acceleration pursuant to clause (ii) of Article VI, Lenders holding
Loans representing at least 66 2/3% of the aggregate principal amount of the
Loans outstanding.
"Responsible Officer" of any corporation shall mean any
executive officer or Financial Officer of such corporation and any other
officer or similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement.
"S&P" shall mean Standard and Poor's (a division of The McGraw
Hill Companies).
"SEC" shall mean the Securities and Exchange Commission.
"Significant Subsidiary" shall mean at any time a Subsidiary
of TU which as of such time satisfies the definition of a "significant
subsidiary" contained as of the date hereof in Regulation S-X of the SEC;
provided that TU Electric shall at all times be considered a Significant
Subsidiary.
"Standby Borrowing" shall mean a Borrowing consisting of
simultaneous Standby Loans from each of the Lenders.
"Standby Borrowing Request" shall mean a request made pursuant
to Section 2.04 in the form of Exhibit A-5.
"Standby Loans" shall mean the revolving loans made pursuant
to Section 2.04. Each Standby Loan shall be a Eurodollar Standby Loan or an
ABR Loan.
<PAGE> 20
16
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate (without duplication) of the maximum
reserve percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board and any other banking
authority to which the Administrative Agent is subject for new negotiable
nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Subsidiary" shall mean, with respect to any person (the
"parent"), any corporation or other entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the
time directly or indirectly owned by such parent.
"Substantial" shall mean an amount in excess of 10% of the
consolidated assets of TU and its Consolidated Subsidiaries taken as a whole.
"Total Commitment" shall mean, at any time, the aggregate
amount of Commitments of all the Lenders, as in effect at such time.
"Transactions" shall have the meaning assigned to such term in
Section 3.02.
"TU Applicable Margin" shall mean .350% per annum.
"TU Electric Applicable Margin" shall mean .275% per annum.
"TU Electric Mortgage" shall mean the Mortgage and Deed of
Trust dated as of December 1, 1983, from TU Electric to Irving Trust Company
(now The Bank of New York), Trustee, as amended or supplemented from time to
time.
"Type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate" shall
include the LIBO Rate, the Alternate Base Rate and the Fixed Rate.
<PAGE> 21
17
"Voting Shares" shall mean, as to shares of a particular
corporation, outstanding shares of stock of any class of such corporation
entitled to vote in the election of directors, excluding shares entitled so to
vote only upon the happening of some contingency.
"Wholly-Owned Subsidiary" shall mean any Consolidated
Subsidiary all the shares of common stock and other voting capital stock or
other voting ownership interests having ordinary voting power to vote in the
election of the board of directors or other governing body performing similar
functions (except directors' qualifying shares) of which are at the time
directly or indirectly owned by TU.
"Withdrawal Liability" shall mean liability of a Borrower
established under Section 4201 of ERISA as a result of a complete or partial
withdrawal from a Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section
1.01 shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation." All references herein to Articles, Sections, Exhibits
and Schedules shall be deemed references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as
in effect from time to time; provided, however, that for purposes of
determining compliance with any covenant set forth in Article V, such terms
shall be construed in accordance with GAAP as in effect on the date hereof
applied on a basis consistent with the application used in preparing the
Borrowers' audited financial statements referred to in Section 3.05.
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and
conditions and relying upon the representations and warranties herein set
forth, each Lender agrees, severally and not jointly, to make Standby Loans to
each Borrower, at any time and from time to time on and after the date hereof
and
<PAGE> 22
18
until the earlier of the Maturity Date and the termination of the Commitment of
such Lender, in an aggregate principal amount at any time outstanding not to
exceed such Lender's Commitment minus the amount by which the Competitive Loans
made to such Borrower and outstanding at such time shall be deemed to have used
such Commitment pursuant to Section 2.14, subject, however, to the conditions
that (i) at no time shall (A) the sum of (x) the outstanding aggregate
principal amount of all Standby Loans plus (y) the outstanding aggregate
principal amount of all Competitive Loans exceed (B) the Total Commitment, (ii)
at no time shall (A) the sum of (x) the outstanding aggregate principal amount
of all Standby Loans to TU plus (y) the outstanding aggregate principal amount
of all Competitive Loans to TU plus (z) the outstanding aggregate principal
amount of all Standby Loans and all Competitive Loans to TU under and as
defined in the Facilities B and C Credit Agreement exceed (B) 60% of the sum of
the Total Commitment hereunder and the Total Standby Commitment under and as
defined in the Facilities B and C Credit Agreement, (iii) at no time shall the
outstanding aggregate principal amount of all Standby Loans made by any Lender
exceed the amount of such Lender's Commitment and (iv) at all times, the
outstanding aggregate principal amount of all Standby Loans made by each Lender
to each Borrower shall equal the product of (A) the percentage which such
Lender's Commitment represents of the Total Commitment times (B) the
outstanding aggregate principal amount of all Standby Loans made to such
Borrower.
Within the foregoing limits, the Borrowers may borrow, pay or
prepay and reborrow Standby Loans hereunder, on and after the Effective Date
and prior to the Maturity Date, subject to the terms, conditions and
limitations set forth herein.
SECTION 2.02. Loans. (a) Each Standby Loan shall be made as
part of a Borrowing consisting of Loans made by the Lenders ratably in
accordance with their respective Commitments; provided, however, that the
failure of any Lender to make any Standby Loan shall not in itself relieve any
other Lender of its obligation to lend hereunder (it being understood, however,
that no Lender shall be responsible for the failure of any other Lender to make
any Loan required to be made by such other Lender). Each Competitive Loan
shall be made in accordance with the procedures set forth in Section 2.03. The
Standby Loans or Competitive Loans comprising any Borrowing shall be (i) in the
case of Competitive Loans, in an aggregate principal amount which is
<PAGE> 23
19
an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) in the
case of Standby Loans, in an aggregate principal amount which is an integral
multiple of $5,000,000 and not less than $10,000,000 (or an aggregate principal
amount equal to the remaining balance of the available Commitments).
(b) Each Competitive Borrowing shall be comprised entirely of
Eurodollar Competitive Loans or Fixed Rate Loans, and each Standby Borrowing
shall be comprised entirely of Eurodollar Standby Loans or ABR Loans, as the
Borrower may request pursuant to Section 2.03 or 2.04, as applicable. Each
Lender may at its option make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement. Borrowings of
more than one Type may be outstanding at the same time.
(c) Subject to paragraph (d) below, each Lender shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds to the Administrative Agent in Houston,
Texas, not later than 11:00 a.m., Houston time, and the Administrative Agent
shall by 2:00 p.m., Houston time, credit the amounts so received to the account
or accounts specified from time to time in one or more notices delivered by the
applicable Borrower to the Administrative Agent or, if a Borrowing shall not
occur on such date because any condition precedent herein specified shall not
have been met, return the amounts so received to the respective Lenders.
Competitive Loans shall be made by the Lender or Lenders whose Competitive Bids
therefor are accepted pursuant to Section 2.03 in the amounts so accepted.
Standby Loans shall be made by the Lenders pro rata in accordance with Section
2.14. Unless the Administrative Agent shall have received notice from a Lender
prior to the date of any Borrowing that such Lender will not make available to
the Administrative Agent such Lender's portion of such Borrowing, the
Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with this paragraph (c) and the Administrative Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Lender shall not have
made such portion available to the Administrative Agent, such Lender and such
Borrower (without waiving any claim against such Lender for
<PAGE> 24
20
such Lender's failure to make such portion available) severally agree to repay
to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Effective Rate. If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(d) A Borrower may refinance all or any part of any Standby
Borrowing with a Standby Borrowing of the same or a different Type, subject to
the conditions and limitations set forth in this Agreement. Any Standby
Borrowing or part thereof so refinanced shall be deemed to be repaid or prepaid
in accordance with Section 2.06 or 2.11, as applicable, with the proceeds of a
new Standby Borrowing, and the proceeds of the new Standby Borrowing, to the
extent they do not exceed the principal amount of the Standby Borrowing being
refinanced, shall not be paid by the Lenders to the Administrative Agent or by
the Administrative Agent to such Borrower pursuant to paragraph (c) above.
SECTION 2.03. Competitive Bid Procedure. (a) In order to
request Competitive Bids, a Borrower shall hand deliver or telecopy to the CAF
Agent a duly completed Competitive Bid Request in the form of Exhibit A-1
hereto, to be received by the CAF Agent (i) in the case of a Eurodollar
Competitive Borrowing, not later than 11:00 a.m., New York City time, four
Business Days before a proposed Competitive Borrowing and (ii) in the case of a
Fixed Rate Borrowing, not later than 11:00 a.m., New York City time, one
Business Day before a proposed Competitive Borrowing. No ABR Loan shall be
requested in, or made pursuant to, a Competitive Bid Request. A Competitive
Bid Request that does not conform substantially to the format of Exhibit A-1
may be rejected in the CAF Agent's sole discretion, and the CAF Agent shall
promptly notify the Borrower of such rejection by telecopy. Each Competitive
Bid Request shall refer to this Agreement and specify (w) whether the Borrowing
then being requested is to be a Eurodollar Borrowing or a Fixed Rate Borrowing,
(x) the date of such Borrowing (which shall be a Business Day) and the
aggregate principal amount thereof which shall be in a minimum principal amount
of $5,000,000 and in an integral multiple of $1,000,000, and (y) the Interest
Period with respect thereto
<PAGE> 25
21
(which may not end after the Maturity Date). Promptly after its receipt of a
Competitive Bid Request that is not rejected as aforesaid, the CAF Agent shall
telecopy to each Lender a Notice of Competitive Bid Request in the form of
Exhibit A-2 inviting the Lenders to bid, on the terms and conditions of this
Agreement, to make Competitive Loans.
(b) Each Lender invited to bid may, in its sole discretion,
make one or more Competitive Bids to the Borrower responsive to such Borrower's
Competitive Bid Request. Each Competitive Bid by a Lender must be received by
the CAF Agent by telecopy, in the form of Exhibit A-3 hereto, (i) in the case
of a Eurodollar Competitive Borrowing, not later than 9:30 a.m., New York City
time, three Business Days before a proposed Competitive Borrowing and (ii) in
the case of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City
time, on the day of a proposed Competitive Borrowing. Multiple bids will be
accepted by the CAF Agent. Competitive Bids that do not conform substantially
to the format of Exhibit A-3 may be rejected by the CAF Agent, and the CAF
Agent shall notify the Lender making such nonconforming bid of such rejection
as soon as practicable. Each Competitive Bid shall refer to this Agreement and
specify (x) the principal amount (which shall be in a minimum principal amount
of $5,000,000 and in an integral multiple of $1,000,000 and which may equal the
entire principal amount of the Competitive Borrowing requested by the
applicable Borrower) of the Competitive Loan or Loans that the Lender is
willing to make to such Borrower, (y) the Competitive Bid Rate or Rates at
which the Lender is prepared to make the Competitive Loan or Loans and (z) the
Interest Period and the last day thereof. If any Lender invited to bid shall
elect not to make a Competitive Bid, such Lender shall so notify the CAF Agent
by telecopy (I) in the case of Eurodollar Competitive Loans, not later than
9:30 a.m., New York City time, three Business Days before a proposed
Competitive Borrowing, and (II) in the case of Fixed Rate Loans, not later than
9:30 a.m., New York City time, on the day of a proposed Competitive Borrowing;
provided, however, that failure by any Lender to give such notice shall not
cause such Lender to be obligated to make any Competitive Loan as part of such
Competitive Borrowing. A Competitive Bid submitted by a Lender pursuant to
this paragraph (b) shall be irrevocable.
(c) The CAF Agent shall notify the Borrower by telecopy, of
all the Competitive Bids made, the Competitive Bid Rate and the principal
amount of each Competitive Loan in respect of which such Competitive Bid was
made and the
<PAGE> 26
22
identity of the Lender that made each such bid by (i) in the case of a
Eurodollar Competitive Borrowing, not later than 10:00 a.m., New York City
time, three Business Days before a proposed Competitive Borrowing and (ii) in
the case of a Fixed Rate Borrowing, not later than 10:00 a.m., New York City
time, on the day of a proposed Competitive Borrowing. The CAF Agent shall send
a copy of all Competitive Bids to the Borrower for its records as soon as
practicable after the completion of the bidding process set forth in this
Section 2.03.
(d) A Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d), accept or reject any or
all Competitive Bids referred to in paragraph (c) above. Such Borrower shall
notify the CAF Agent by telephone, confirmed by telecopy in the form of a
Competitive Bid Accept/Reject Letter, whether and to what extent it has decided
to accept or reject any of or all the bids referred to in paragraph (c) above
by (i) in the case of a Eurodollar Competitive Borrowing, not later than 10:30
a.m., New York City time, three Business Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 10:30
a.m., New York City time, on the day of a proposed Competitive Borrowing;
provided, however, that (i) the failure by such Borrower to give such notice
shall be deemed to be a rejection of all the bids referred to in paragraph (c)
above, (ii) such Borrower shall not accept a bid made at a particular
Competitive Bid Rate if it has decided to reject a bid made at a lower
Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids
accepted by such Borrower shall not exceed the principal amount specified in
the Competitive Bid Request, (iv) if such Borrower shall accept a bid or bids
made at a particular Competitive Bid Rate but the amount of such bid or bids
shall cause the total amount of bids to be accepted by such Borrower to exceed
the amount specified in the Competitive Bid Request, then such Borrower shall
accept a portion of such bid or bids in an amount equal to the amount specified
in the Competitive Bid Request less the amount of all other Competitive Bids
accepted with respect to such Competitive Bid Request, which acceptance, in the
case of multiple bids at such Competitive Bid Rate, shall be made pro rata in
accordance with the amount of each such bid at such Competitive Bid Rate, and
(v) except pursuant to clause (iv) above, no bid shall be accepted for a
Competitive Loan unless such Competitive Loan is in a minimum principal amount
of $5,000,000 and an integral multiple of $1,000,000; provided further,
however, that if a Competitive Loan must be in an amount less than $5,000,000
because of the provisions of clause (iv) above, such Competitive Loan may be
<PAGE> 27
23
for a minimum of $1,000,000 or any integral multiple thereof, and in
calculating the pro rata allocation of acceptances of portions of multiple bids
at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall
be rounded to integral multiples of $1,000,000 in a manner which shall be in
the discretion of the applicable Borrower. A notice given by a Borrower
pursuant to this paragraph (d) shall be irrevocable.
(e) The CAF Agent shall promptly notify each bidding Lender
(and the Administrative Agent), by telecopy, whether or not its Competitive Bid
has been accepted (and if so, in what amount and at what Competitive Bid Rate)
and each successful bidder will thereupon become bound, subject to the other
applicable conditions hereof, to make the Competitive Loan in respect of which
its bid has been accepted.
(f) No Competitive Borrowing shall be requested or made
hereunder if after giving effect thereto any of the conditions set forth in
paragraph (i) or (ii) of Section 2.01 would not be met.
(g) If either the Administrative Agent or CAF Agent shall
elect to submit a Competitive Bid in its capacity as a Lender, such party shall
submit such bid directly to the Borrower one quarter of an hour earlier than
the latest time at which the other Lenders are required to submit their bids to
the CAF Agent pursuant to paragraph (b) above.
(h) Each of the Borrowers and the CAF Agent shall deliver to
the Administrative Agent by telecopy copies of all notices delivered by it
pursuant to this Section 2.03 at the same times such notices are delivered
hereunder. All notices required by this Section 2.03 shall be given in
accordance with Section 8.01.
(i) A Competitive Bid Request shall not be made within five
Business Days after the date of any previous Competitive Bid which was accepted
by a Borrower pursuant to paragraph (d) above.
SECTION 2.04. Standby Borrowing Procedure. In order to
request a Standby Borrowing, a Borrower shall hand deliver or telecopy to the
Administrative Agent a duly completed Standby Borrowing Request in the form of
Exhibit A-5 (a) in the case of a Eurodollar Standby Borrowing, not later than
10:00 a.m., Houston time, three Business Days before such Borrowing, and (b) in
the case of an ABR Borrowing, not later
<PAGE> 28
24
than 10:00 a.m., Houston time, on the day of such Borrowing. No Fixed Rate
Loan shall be requested or made pursuant to a Standby Borrowing Request. Such
notice shall be irrevocable and shall in each case specify (i) whether the
Borrowing then being requested is to be a Eurodollar Standby Borrowing or an
ABR Borrowing; (ii) the date of such Standby Borrowing (which shall be a
Business Day) and the amount thereof; and (iii) if such Borrowing is to be a
Eurodollar Standby Borrowing, the Interest Period with respect thereto, which
shall not end after the Maturity Date. If no election as to the Type of
Standby Borrowing is specified in any such notice, then the requested Standby
Borrowing shall be an ABR Borrowing. If no Interest Period with respect to any
Eurodollar Standby Borrowing is specified in any such notice, then the Borrower
shall be deemed to have selected an Interest Period of one month's duration.
If a Borrower shall not have given notice in accordance with this Section 2.04
of its election to refinance a Standby Borrowing prior to the end of the
Interest Period in effect for such Borrowing, then such Borrower shall (unless
such Borrowing is repaid at the end of such Interest Period) be deemed to have
given notice of an election to refinance such Borrowing with an ABR Borrowing.
Notwithstanding any other provision of this Agreement to the contrary, no
Standby Borrowing shall be requested if the Interest Period with respect
thereto would end after the Maturity Date. The Administrative Agent shall
promptly advise the Lenders of any notice given pursuant to this Section 2.04
and of each Lender's portion of the requested Borrowing.
SECTION 2.05. Fees. (a) TU agrees to pay (and TU Electric
agrees to pay, to the extent that TU shall not have paid all such fees, up to
the amount of its Fee Share (without duplication) from time to time) to each
Lender, through the Administrative Agent, on each March 31, June 30, September
30 and December 31 (with the first payment being due on June 30, 1996) and on
each date on which the Commitment of such Lender shall be terminated as
provided herein, a facility fee (a "Facility Fee"), at a rate per annum equal
to the Facility Fee Percentage from time to time in effect on the amount of the
Commitment of such Lender, whether used or unused, during the preceding quarter
(or other period commencing on the Effective Date or ending with the Maturity
Date or any date on which the Commitment of such Lender shall be terminated).
All Facility Fees shall be computed on the basis of the actual number of days
elapsed in a year of 365 or 366 days, as the case may be. The Facility Fee due
to each Lender shall commence to accrue on the Effective Date, and shall cease
to accrue on the
<PAGE> 29
25
earlier of the Maturity Date and the termination of the Commitment of such
Lender as provided herein.
(b) TU agrees (and TU Electric agrees, to the extent that TU
shall not have paid such fees, up to the amount of its Fee Share from time to
time) to pay the Administrative Agent, for its own account, the administrative
and other fees provided for in the Fee Letter (the "Administrative Fees").
(c) Each Borrower agrees to pay the CAF Agent, for its own
account, the Auction Fees applicable to such Borrower.
(d) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders or to the CAF Agent. Once paid, none of the
Fees shall be refundable under any circumstances.
SECTION 2.06 Repayment of Loans; Evidence of Indebtedness.
(a) The outstanding principal balance of each Loan shall be due and payable on
the last day of the Interest Period applicable thereto and on the Maturity
Date.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which
it will record (i) the amount of each Loan made hereunder, the Type of each
Loan made and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from each
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from each Borrower and each Lender's share
thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) of this Section 2.06 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein
shall not in any manner affect the obligations of the Borrowers to repay the
Loans in accordance with their terms.
<PAGE> 30
26
SECTION 2.07. Interest on Loans. (a) Subject to the
provisions of Section 2.08, the Loans comprising each Eurodollar Borrowing
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to (i) in the case of each
Eurodollar Standby Loan made to TU, the LIBO Rate for the Interest Period in
effect for such Borrowing plus the TU Applicable Margin from time to time in
effect, (ii) in the case of each Eurodollar Standby Loan made to TU Electric,
the LIBO Rate for the Interest Period in effect for such Borrowing plus the TU
Electric Applicable Margin from time to time in effect and (iii) in the case of
each Eurodollar Competitive Loan, the LIBO Rate for the Interest Period in
effect for such Borrowing plus the Competitive Bid Margin offered by the Lender
making such Loan and accepted by the applicable Borrower pursuant to Section
2.03.
(b) Subject to the provisions of Section 2.08, the Loans
comprising each ABR Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be, for periods during which the Alternate Base Rate is determined by reference
to the Prime Rate and 360 days for other periods) at a rate per annum equal to
the Alternate Base Rate.
(c) Subject to the provisions of Section 2.08, each Fixed
Rate Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the fixed rate
of interest offered by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.03.
(d) The interest rate applicable to each Eurodollar Loan made
to TU shall be increased by 0.10% per annum for each day on which Indebtedness
of TU in excess of that permitted under Section 5.13 (without giving effect to
the proviso therein) shall be outstanding.
(e) Interest on each Loan shall be payable on each Interest
Payment Date applicable to such Loan except as otherwise provided in this
Agreement. The applicable LIBO Rate or Alternate Base Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be
determined by Chemical, and such determination shall be conclusive absent
manifest error; provided that Chemical shall, upon request, provide to the
applicable Borrower a certificate setting forth in reasonable detail the basis
for such determination.
<PAGE> 31
27
SECTION 2.08. Default Interest. If a Borrower shall default
in the payment of the principal of or interest on any Loan or any other amount
becoming due hereunder, whether by scheduled maturity, notice of prepayment,
acceleration or otherwise, such Borrower shall on demand from time to time from
the Administrative Agents pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed as provided in Section
2.07(b)) equal to the Alternate Base Rate plus 1%.
SECTION 2.09. Alternate Rate of Interest. In the event, and
on each occasion, that on the day two Business Days prior to the commencement
of any Interest Period for a Eurodollar Borrowing the Administrative Agent
shall have determined (i) that dollar deposits in the principal amounts of the
Eurodollar Loans comprising such Borrowing are not generally available in the
London interbank market or (ii) that reasonable means do not exist for
ascertaining the LIBO Rate, the Administrative Agent shall, as soon as
practicable thereafter, give telecopy notice of such determination to the
Borrowers and the Lenders. In the event of any such determination under
clauses (i) or (ii) above, until the Administrative Agent shall have advised
the Borrowers and the Lenders that the circumstances giving rise to such notice
no longer exist, (x) any request by a Borrower for a Eurodollar Competitive
Borrowing pursuant to Section 2.03 shall be of no force and effect and shall be
denied by the Administrative Agent and (y) any request by a Borrower for a
Eurodollar Standby Borrowing pursuant to Section 2.04 shall be deemed to be a
request for an ABR Borrowing. In the event the Required Lenders notify the
Administrative Agent that the rates at which dollar deposits are being offered
will not adequately and fairly reflect the cost to such Lenders of making or
maintaining Eurodollar Loans during such Interest Period, the Administrative
Agent shall notify the applicable Borrower of such notice and until the
Required Lenders shall have advised the Administrative Agent that the
circumstances giving rise to such notice no longer exist, any request by such
Borrower for a Eurodollar Standby Borrowing shall be deemed a request for an
ABR Borrowing. Each determination by the Administrative Agent hereunder shall
be made in good faith and shall be conclusive absent manifest error; provided
that the Administrative Agent, shall, upon request, provide to the applicable
Borrower a certificate setting forth in reasonable detail the basis for such
determination.
<PAGE> 32
28
SECTION 2.10. Termination and Reduction of Commitments. (a)
The Commitments shall be automatically terminated on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable
written notice to the Administrative Agent, the Borrowers, acting jointly, may
at any time in whole permanently terminate, or from time to time in part
permanently reduce, the Total Commitment; provided, however, that (i) each
partial reduction of the Total Commitment shall be in an integral multiple of
$5,000,000 and in a minimum principal amount of $5,000,000 and (ii) no such
termination or reduction shall be made which would reduce the Total Commitment
to an amount (1) less than the aggregate outstanding principal amount of all
Competitive Loans or (2) less than $50,000,000, unless the result of such
termination or reduction referred to in this clause (2) is to reduce the Total
Commitment to $0. The Administrative Agent shall advise the Lenders of any
notice given pursuant to this Section 2.10(b) and of each Lender's portion of
any such termination or reduction of the Term Loan Commitments or the Standby
Commitments.
(c) Each reduction in the Total Commitment hereunder shall be
made ratably among the Lenders in accordance with their respective Commitments.
The Borrowers shall pay to the Administrative Agent for the account of the
Lenders, on the date of each termination or reduction of the Total Commitment,
the Facility Fees on the amount of the Commitments so terminated or reduced
accrued through the date of such termination or reduction.
SECTION 2.11. Prepayment. (a) Each Borrower shall have the
right at any time and from time to time to prepay any Standby Borrowing, in
whole or in part, upon giving telecopy notice (or telephone notice promptly
confirmed by telecopy) to the Administrative Agent: (i) before 10:00 a.m.,
Houston time, three Business Days prior to prepayment, in the case of
Eurodollar Loans, and (ii) before 10:00 a.m., Houston time, one Business Day
prior to prepayment, in the case of ABR Loans; provided, however, that each
partial prepayment shall be in an amount which is an integral multiple of
$5,000,000 and not less than $5,000,000. No prepayment may be made in respect
of any Competitive Borrowing.
(b) On the date of any termination or reduction of the
Commitments pursuant to Section 2.10, the Borrowers shall pay or prepay so much
of the Standby Borrowings as shall be necessary in order that the aggregate
principal amount of the
<PAGE> 33
29
Competitive Loans and Standby Loans outstanding will not exceed the Total
Commitment, after giving effect to such termination or reduction.
(c) Each notice of prepayment shall specify the prepayment
date and the principal amount of each Borrowing (or portion thereof) to be
prepaid, shall be irrevocable and shall commit the Borrower to prepay such
Borrowing (or portion thereof) by the amount stated therein on the date stated
therein. All prepayments under this Section 2.11 shall be subject to Section
8.05 but otherwise without premium or penalty. All prepayments under this
Section 2.11 shall be accompanied by accrued interest on the principal amount
being prepaid to the date of payment.
SECTION 2.12. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation
or administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender hereunder
(except for changes in respect of taxes on the overall net income of such
Lender or its lending office imposed by the jurisdiction in which such Lender's
principal executive office or lending office is located), or shall result in
the imposition, modification or applicability of any reserve, special deposit
or similar requirement against assets of, deposits with or for the account of
or credit extended by any Lender, or shall result in the imposition on any
Lender or the London interbank market of any other condition affecting this
Agreement, such Lender's Commitment or any Eurodollar Loan or Fixed Rate Loan
made by such Lender, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan
or Fixed Rate Loan or to reduce the amount of any sum received or receivable by
such Lender hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender to be material, then the applicable Borrower or,
if the foregoing circumstances do not relate to a particular Borrowing, the
Borrowers shall, upon receipt of the notice and certificate provided for in
Section 2.12(c), promptly pay to such Lender such additional amount or amounts
as will compensate such Lender for such additional costs incurred or reduction
suffered. Notwithstanding the foregoing, no Lender shall be entitled to
request compensation under this paragraph with respect to any Competitive Loan
if the change giving rise to such request was
<PAGE> 34
30
applicable to such Lender at the time of submission of the Competitive Bid
pursuant to which such Competitive Loan was made.
(b) If any Lender shall have determined that the adoption of
any law, rule, regulation or guideline arising out of the July 1988 report of
the Basle Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards," or
the adoption after the date hereof of any other law, rule, regulation or
guideline regarding capital adequacy, or any change in any of the foregoing or
in the interpretation or administration of any of the foregoing by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Lender's holding company with any request
or directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's capital or on
the capital of such Lender's holding company, if any, as a consequence of this
Agreement, such Lender's Commitment or the Loans made by such Lender pursuant
hereto to a level below that which such Lender or such Lender's holding company
could have achieved but for such adoption, change or compliance (taking into
consideration such Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time such additional amount or amounts as will
compensate such Lender for any such reduction suffered will be paid by the
Borrowers to such Lender. It is acknowledged that this Agreement is being
entered into by the Lenders on the understanding that the Lenders will not be
required to maintain capital against their Commitments under currently
applicable laws, regulations and regulatory guidelines. In the event the
Lenders shall otherwise determine that such understanding is incorrect, it is
agreed that the Lenders will be entitled to make claims under this paragraph
(b) based upon market requirements prevailing on the date hereof for
commitments under comparable credit facilities against which capital is
required to be maintained.
(c) A certificate of each Lender setting forth such amount or
amounts as shall be necessary to compensate such Lender or its holding company
as specified in paragraph (a) or (b) above, as the case may be, and containing
an explanation in reasonable detail of the manner in which such amount or
<PAGE> 35
31
amounts shall have been determined, shall be delivered to the applicable
Borrower or the Borrowers, as the case may be, and shall be conclusive absent
manifest error. The Borrowers shall pay each Lender the amount shown as due on
any such certificate delivered by it within 10 days after its receipt of the
same. Each Lender shall give prompt notice to the applicable Borrower of any
event of which it has knowledge, occurring after the date hereof, that it has
determined will require compensation by such Borrower pursuant to this Section;
provided, however, that failure by such Lender to give such notice shall not
constitute a waiver of such Lender's right to demand compensation hereunder.
(d) Failure on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any period shall not constitute
a waiver of such Lender's right to demand compensation with respect to such
period or any other period; provided, however, that no Lender shall be entitled
to compensation under this Section 2.12 for any costs incurred or reductions
suffered with respect to any date unless it shall have notified the applicable
Borrower that it will demand compensation for such costs or reductions under
paragraph (c) above not more than 90 days after the later of (i) such date and
(ii) the date on which it shall have become aware of such costs or reductions.
The protection of this Section shall be available to each Lender regardless of
any possible contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition which shall have occurred or
been imposed.
(e) Each Lender agrees that it will designate a different
lending office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the reasonable judgment of such
Lender, be disadvantageous to such Lender.
SECTION 2.13. Change in Legality. (a) Notwithstanding any
other provision herein, if any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written
notice to the Borrowers and to the Agents, such Lender may:
<PAGE> 36
32
(i) declare that Eurodollar Loans will not thereafter be made
by such Lender hereunder, whereupon such Lender shall not submit a
Competitive Bid in response to a request for Eurodollar Competitive
Loans and any request for a Eurodollar Standby Borrowing shall, as to
such Lender only, be deemed a request for an ABR Loan unless such
declaration shall be subsequently withdrawn (any Lender delivering
such a declaration hereby agreeing to withdraw such declaration
promptly upon determining that such event of illegality no longer
exists); and
(ii) require that all outstanding Eurodollar Loans made by it
be converted to ABR Loans, in which event all such Eurodollar Loans
shall be automatically converted to ABR Loans as of the effective date
of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied
to repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.13, a notice by any Lender
shall be effective as to each Eurodollar Loan, if lawful, on the last day of
the Interest Period currently applicable to such Eurodollar Loan; in all other
cases such notice shall be effective on the date of receipt.
SECTION 2.14. Pro Rata Treatment. Except as required under
Sections 2.13 and 2.18, each Standby Borrowing, each payment or prepayment of
principal of any Standby Borrowing, each payment of interest on the Standby
Loans, each payment of the Facility Fees, each reduction of the Commitments and
each refinancing or conversion of any Borrowing with a Standby Borrowing of any
Type, shall be allocated pro rata among the Lenders in accordance with their
respective Commitments (or, if such Commitments shall have expired or been
terminated, in accordance with the respective principal amounts of their
outstanding Standby Loans). Each payment of principal of any Competitive
Borrowing shall be allocated pro rata among the Lenders participating in such
Borrowing in accordance with the respective principal amounts of their
outstanding Competitive Loans comprising such Borrowing. Each payment of
interest on any Competitive
<PAGE> 37
33
Borrowing shall be allocated pro rata among the Lenders participating in such
Borrowing in accordance with the respective amounts of accrued and unpaid
interest on their outstanding Competitive Loans comprising such Borrowing. For
purposes of determining the available Commitments of the Lenders at any time,
each outstanding Competitive Borrowing shall be deemed to have utilized the
Commitments of the Lenders (including those Lenders which shall not have made
Loans as part of such Competitive Borrowing) pro rata in accordance with such
respective Commitments. Each Lender agrees that in computing such Lender's
portion of any Borrowing to be made hereunder, the Administrative Agent may, in
its discretion, round each Lender's percentage of such Borrowing to the next
higher or lower whole dollar amount.
SECTION 2.15. Sharing of Setoffs. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, setoff or
counterclaim, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, obtain payment (voluntary or involuntary) in respect of any Standby Loan
or Loans as a result of which the unpaid principal portion of its Standby Loans
shall be proportionately less than the unpaid principal portion of the Standby
Loans of any other Lender, it shall be deemed simultaneously to have purchased
from such other Lender at face value, and shall promptly pay to such other
Lender the purchase price for, a participation in the Standby Loans of such
other Lender, so that the aggregate unpaid principal amount of the Standby
Loans and participations in the Standby Loans held by each Lender shall be in
the same proportion to the aggregate unpaid principal amount of all Standby
Loans then outstanding as the principal amount of its Standby Loans prior to
such exercise of banker's lien, setoff or counterclaim or other event was to
the principal amount of all Standby Loans outstanding prior to such exercise of
banker's lien, setoff or counterclaim or other event; provided, however, that,
if any such purchase or purchases or adjustments shall be made pursuant to this
Section 2.15 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored without
interest. Each Borrower expressly consents to the foregoing arrangements and
agrees that any Lender holding a participation in a Standby Loan deemed to have
been so purchased may exercise any and all
<PAGE> 38
34
rights of banker's lien, setoff or counterclaim with respect to any and all
moneys owing by such Borrower to such Lender by reason thereof as fully as if
such Lender had made a Standby Loan in the amount of such participation.
SECTION 2.16. Payments. (a) Each Borrower shall make each
payment (including principal of or interest on any Borrowing or any Fees or
other amounts) hereunder from an account in the United States not later than
10:00 a.m., Houston time, on the date when due in dollars to the Administrative
Agent at its offices at 1111 Fannin Street, 9th floor, MS 46, Houston, Texas
77002, in immediately available funds.
(b) Whenever any payment (including principal of or interest
on any Borrowing or any Fees or other amounts) hereunder shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.
SECTION 2.17. Taxes. (a) Any and all payments of principal
and interest on any Borrowings, or of any Fees or indemnity or expense
reimbursements by a Borrower hereunder ("Borrower Payments") shall be made, in
accordance with Section 2.16, free and clear of and without deduction for any
and all current or future United States Federal, state and local taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
to such Borrower Payments, but only to the extent reasonably attributable to
such Borrower Payments, excluding (i) income taxes imposed on the net income of
the Administrative Agent, the CAF Agent or any Lender (or any transferee or
assignee thereof, including a participation holder (any such entity a
"Transferee")) and (ii) franchise taxes imposed on the net income of the
Administrative Agent, the CAF Agent or any Lender (or Transferee), in each case
by the jurisdiction under the laws of which the Administrative Agent, the CAF
Agent or such Lender (or Transferee) is organized or doing business through
offices or branches located therein, or any political subdivision thereof (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities, collectively or individually, "Taxes"). If any Borrower shall be
required to deduct any Taxes from or in respect of any sum payable hereunder to
any Lender (or any Transferee) or the Agents, (i) the sum payable shall be
increased by the amount (an "additional amount") necessary so that after making
all
<PAGE> 39
35
required deductions (including deductions applicable to additional sums payable
under this Section 2.17) such Lender (or Transferee) or Agent (as the case may
be) shall receive an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions and (iii)
such Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, each Borrower shall pay to the relevant
United States Governmental Authority in accordance with applicable law any
current or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies that arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or the Fee Letter ("Other Taxes").
(c) Each Borrower shall indemnify each Lender (or Transferee
thereof) and each Agent for the full amount of Taxes and Other Taxes with
respect to Borrower Payments paid by such Lender (or Transferee) or such Agent,
as the case may be, and any liability (including penalties, interest and
expenses (including reasonable attorney's fees and expenses)) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted by the relevant United States Governmental
Authority. A certificate setting forth and containing an explanation in
reasonable detail of the manner in which such amount shall have been determined
and the amount of such payment or liability prepared by a Lender, the CAF
Agent, or the Administrative Agent on their behalf, absent manifest error,
shall be final, conclusive and binding for all purposes. Such indemnification
shall be made within 30 days after the date the Lender (or Transferee) or any
Agent, as the case may be, makes written demand therefor.
(d) If a Lender (or Transferee) or any Agent shall become
aware that it is entitled to claim a refund from a United States Governmental
Authority in respect of Taxes or Other Taxes as to which it has been
indemnified by a Borrower, or with respect to which a Borrower has paid
additional amounts, pursuant to this Section 2.17, it shall promptly notify
such Borrower of the availability of such refund claim and shall, within 30
days after receipt of a request by such Borrower, make a claim to such United
States Governmental Authority for such refund at such Borrower's expense. If a
Lender (or Transferee) or any Agent receives a refund
<PAGE> 40
36
(including pursuant to a claim for refund made pursuant to the preceding
sentence) in respect of any Taxes or Other Taxes as to which it has been
indemnified by a Borrower or with respect to which a Borrower had paid
additional amounts pursuant to this Section 2.17, it shall within 30 days from
the date of such receipt pay over such refund to such Borrower (but only to the
extent of indemnity payments made, or additional amounts paid, by such Borrower
under this Section 2.17 with respect to the Taxes or Other Taxes giving rise to
such refund), net of all out-of-pocket expenses of such Lender (or Transferee)
or such Agent and without interest (other than interest paid by the relevant
United States Governmental Authority with respect to such refund); provided,
however, that such Borrower, upon the request of such Lender (or Transferee) or
such Agent, agrees to repay the amount paid over to such Borrower (plus
penalties, interest or other charges) to such Lender (or Transferee) or such
Agent in the event such Lender (or Transferee) or such Agent is required to
repay such refund to such United States Governmental Authority.
(e) As soon as practicable, but in any event within 30 days,
after the date of any payment of Taxes or Other Taxes by a Borrower to the
relevant United States Governmental Authority, such Borrower will deliver to
the Administrative Agent, at its address referred to in Section 8.01, the
original or a certified copy of a receipt issued by such United States
Governmental Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.17
shall survive the payment in full of the principal of and interest on all Loans
made hereunder.
(g) Each Lender or Agent (or Transferee) that is organized
under the laws of a jurisdiction other than the United States, any State
thereof or the District of Columbia (a "Non-U.S. Lender" or "Non U.S. Agent",
as applicable) shall deliver to the Borrowers and the Administrative Agent two
copies of either United States Internal Revenue Service Form 1001 or Form 4224,
properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or reduced rate of, United States Federal withholding tax on
payments by any Borrower under this Agreement. Such forms shall be delivered
by each Non-U.S. Lender on or before the date it becomes a party to this
Agreement (or, in the case of
<PAGE> 41
37
a Transferee that is a participation holder, on or before the date such
participation holder becomes a Transferee hereunder) and on or before the date,
if any, such Non-U.S. Lender changes its applicable lending office by
designating a different lending office (a "New Lending Office"). In addition,
each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender.
Notwithstanding any other provision of this Section 2.17(g), a Non-U.S. Lender
shall not be required to deliver any form pursuant to this Section 2.17(g) that
such Non-U.S. Lender is not legally able to deliver.
(h) A Borrower shall not be required to indemnify any
Non-U.S. Lender or Non-U.S. Agent (including any Transferee), or to pay any
additional amounts to any Non-U.S. Lender or Non-U.S. Agent (including any
Transferee), in respect of United States Federal, state or local withholding
tax pursuant to paragraph (a) or (c) above to the extent that (i) the
obligation to withhold amounts with respect to United States Federal, state or
local withholding tax existed on the date such Non-U.S. Lender became a party
to this Agreement (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder)
or, with respect to payments to a New Lending Office, the date such Non-U.S.
Lender designated such New Lending Office with respect to a Loan; provided,
however, that this clause (i) shall not apply to any Transferee or New Lending
Office that becomes a Transferee or New Lending Office as a result of an
assignment, participation, transfer or designation made at the request of such
Borrower; and provided further, however, that this clause (i) shall not apply
to the extent the indemnity payment or additional amounts any Transferee, or
Lender (or Transferee) through a New Lending Office, would be entitled to
receive (without regard to this clause (i)) do not exceed the indemnity payment
or additional amounts that the person making the assignment, participation or
transfer to such Transferee, or Lender (or Transferee) making the designation
of such New Lending Office, would have been entitled to receive in the absence
of such assignment, participation, transfer or designation or (ii) the
obligation to pay such additional amounts or such indemnity payments would not
have arisen but for a failure by such Non-U.S. Lender (including any
Transferee) to comply with the provisions of paragraph (g) above and (i) below.
(i) Any Lender (or Transferee) claiming any indemnity payment
or additional amounts payable pursuant to
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38
this Section 2.17 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document reasonably
requested in writing by a Borrower or to change the jurisdiction of its
applicable lending office if the making of such a filing or change would avoid
the need for or reduce the amount of any such indemnity payment or additional
amounts that may thereafter accrue and would not, in the good faith
determination of such Lender (or Transferee), be otherwise disadvantageous to
such Lender (or Transferee).
(j) Nothing contained in this Section 2.17 shall require any
Lender (or Transferee) or any Agent to make available to such Borrower any of
its tax returns (or any other information) that it deems to be confidential or
proprietary.
(k) Notwithstanding anything herein to the contrary, the
indemnification obligations under this Section shall, to the extent
practicable, be allocated between the Borrowers based upon their relative
liability for the interest, fee or other payments in respect of which such
indemnification obligations arise.
SECTION 2.18. Assignment of Commitments Under Certain
Circumstances. In the event that any Lender shall have delivered a notice or
certificate pursuant to Section 2.12 or 2.13, or any Borrower shall be required
to make additional payments to any Lender under Section 2.17, the Borrowers
shall have the right, at their own expense, upon notice to such Lender and the
Agents, to require such Lender to transfer and assign without recourse (in
accordance with and subject to the restrictions contained in Section 8.04) all
such Lender's interests, rights and obligations contained hereunder to another
financial institution approved by the Agents and the Borrowers (which approval
shall not be unreasonably withheld) which shall assume such obligations;
provided that (i) no such assignment shall conflict with any law, rule or
regulation or order of any Governmental Authority and (ii) the assignee or the
Borrowers, as the case may be, shall pay to the affected Lender in immediately
available funds on the date of such assignment the principal of and interest
accrued to the date of payment on the Loans made by it hereunder and all other
amounts accrued for its account or owed to it hereunder.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
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39
Each Borrower represents and warrants to each of the Lenders
as follows (except in the case of the representations contained in Sections
3.05(a) and 3.12, which are made by TU only, and Section 3.05(b), which are
made by TU Electric only):
SECTION 3.01. Organization; Powers. Such Borrower (a) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (b) has all requisite power and
authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business in
every jurisdiction where such qualification is required, except where the
failure so to qualify would not result in a Material Adverse Change, and (d)
has the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and
performance by such Borrower of this Agreement and the Borrowings hereunder
(collectively, the "Transactions") (a) have been duly authorized by all
requisite corporate action and (b) will not (i) violate (A) any provision of
any law, statute, rule or regulation (including, without limitation, the Margin
Regulations) or of the certificate of incorporation or other constitutive
documents or by-laws of such Borrower or any of its Subsidiaries to which such
Borrower is subject, (B) any order of any Governmental Authority or (C) any
provision of any indenture, agreement or other instrument to which such
Borrower or any of its Subsidiaries is a party or by which it or any of its
property is or may be bound, (ii) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under any
such indenture, agreement or other instrument or (iii) result in the creation
or imposition of any Lien upon any property or assets of such Borrower.
SECTION 3.03. Enforceability. This Agreement constitutes a
legal, valid and binding obligation of such Borrower enforceable in accordance
with its terms.
SECTION 3.04. Governmental Approvals. No action, consent or
approval of, registration or filing with or other action by any Governmental
Authority is or will be required in connection with the Transactions, to the
extent they relate to such Borrower.
<PAGE> 44
40
SECTION 3.05. Financial Statements. (a) The consolidated
balance sheet of TU and its Consolidated Subsidiaries as of December 31, 1995
and the related consolidated statements of income, retained earnings and cash
flows for the fiscal year then ended, reported on by Deloitte & Touche LLP and
set forth in TU's 1995 Annual Report on Form 10-K, a copy of which has been
delivered to each of the Lenders, fairly present, in conformity with GAAP, the
consolidated financial position of TU and its Consolidated Subsidiaries as of
such date and their consolidated results of operations and cash flows for such
fiscal year.
(b) The consolidated balance sheet of TU Electric and its
Consolidated Subsidiaries as of December 31, 1995 and the related consolidated
statements of income, retained earnings and cash flows for the fiscal year then
ended, reported on by Deloitte & Touche LLP and set forth in TU Electric's 1995
Annual Report on Form 10-K, a copy of which has been delivered to each of the
Lenders, fairly present, in conformity with GAAP, the consolidated financial
position of TU Electric and its Consolidated Subsidiaries as of such date and
their consolidated results of operations and cash flows for such fiscal year.
(c) Since December 31, 1995, there has been no Material
Adverse Change with respect to such Borrower.
SECTION 3.06. Litigation; Compliance with Laws. Except as set
forth in the financial statements or other reports of the type referred to in
Section 5.03 hereof and which have been delivered to the Lenders on or prior to
the date hereof or as set forth on Schedule 3.06, there is no action, suit or
proceeding pending against, or to the knowledge of such Borrower threatened
against or affecting, TU or any of its Subsidiaries before any court or
arbitrator or any governmental body, agency or official in which there is a
reasonable possibility of an adverse decision which could materially adversely
affect the ability of such Borrower to pay its obligations hereunder or which
in any manner draws into question the validity of this Agreement.
SECTION 3.07. Federal Reserve Regulations. (a) Neither such
Borrower nor any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
<PAGE> 45
41
(b) No part of the proceeds of any Loan will be used by such
Borrower, whether directly or indirectly, and whether immediately, incidentally
or ultimately, to purchase or carry Margin Stock or to refund indebtedness
originally incurred for such purpose, or for any other purpose which entails a
violation of, or which is inconsistent with, the provisions of the Margin
Regulations.
SECTION 3.08. Investment Company Act; Public Utility Holding
Company Act. (a) Neither such Borrower nor any of its Subsidiaries is an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940.
(b) Such Borrower and each of its Subsidiaries is exempt from
all provisions of the Public Utility Holding Company Act of 1935 and rules and
regulations thereunder, except for Sections 9(a)(2) and 33 of such Act and the
rules and regulations thereunder, and the execution, delivery and performance
by the Borrowers of this Agreement and their respective obligations hereunder
do not violate any provision of such Act or any rule or regulation thereunder.
SECTION 3.09. No Material Misstatements. No report,
financial statement or other information furnished by or on behalf of such
Borrower to the Agents or any Lender pursuant to or in connection with this
Agreement contains or will contain any material misstatement of fact or omits
or will omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were or will be
made, not misleading.
SECTION 3.10. Taxes. Such Borrower and its Subsidiaries have
filed or caused to be filed within 3 days of the date on which due, all
Federal, state and material local tax returns which to their knowledge are
required to be filed by them, and have paid or caused to be paid all taxes
shown to be due and payable on such returns or on any assessments received by
them, other than any taxes or assessments the validity of which is being
contested in good faith by appropriate proceedings and with respect to which
appropriate accounting reserves have to the extent required by GAAP been set
aside.
SECTION 3.11. Employee Benefit Plans. With respect to each
Plan such Borrower and its ERISA Affiliates are in compliance in all material
respects with the applicable provisions of ERISA and the Code and the final
regulations and
<PAGE> 46
42
published interpretations thereunder. No ERISA Event has occurred in respect
of any Plan of such Borrower or any ERISA Affiliate that alone or together with
any other ERISA Event has resulted or could reasonably be expected to result in
a Material Adverse Change. The present value of all accrued benefit
obligations determined on a termination basis under each of its Plans (based on
those assumptions used to fund such Plans) did not, as of the last annual
valuation date applicable thereto, exceed by more than 5% of the amount of such
obligations the value of the assets of such Plan, and the present value of all
accrued benefit obligations of all underfunded Plans (based on those
assumptions used to fund each such Plan) did not, as of the last annual
valuation dates applicable thereto, exceed by more than the lesser of (i) 5% of
the amount of all such liabilities and (ii) $100,000,000, the value of the
assets of all such underfunded Plans. Neither such Borrower nor any ERISA
Affiliate has incurred any Withdrawal Liability that could result in a Material
Adverse Change. Neither such Borrower nor any ERISA Affiliate has received any
notification that any Multiemployer Plan is in reorganization or has been
terminated within the meaning of Title IV of ERISA, which such reorganization
or termination could result in a Material Adverse Change, and no Multiemployer
Plan is reasonably expected to be in reorganization or to be terminated where
such reorganization or termination has resulted or can reasonably be expected
to result, through an increase in the contributions required to be made to such
Plan or otherwise, in a Material Adverse Change.
SECTION 3.12. Significant Subsidiaries. Each of TU's
corporate Significant Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all corporate powers necessary to carry on its business
substantially as now conducted. TU's corporate Significant Subsidiaries have
all material governmental licenses, authorizations, consents and approvals
required to carry on the business of the corporate Significant Subsidiaries
substantially as now conducted.
SECTION 3.13. Environmental Matters. Except as set forth in
or contemplated by the financial statements or other reports of the type
referred to in Section 5.03 hereof and which have been delivered to the Lenders
on or prior to the date hereof, such Borrower and each of its Subsidiaries has
complied in all material respects with all Federal, state, local and other
statutes, ordinances, orders, judgments,
<PAGE> 47
43
rulings and regulations relating to environmental pollution or to environmental
or nuclear regulation or control, except to the extent that failure to so
comply could not reasonably be expected to result in a Material Adverse Change.
Except as set forth in or contemplated by such financial statements or other
reports, neither such Borrower nor any of its Subsidiaries has received notice
of any material failure so to comply, except where such failure could not
reasonably be expected to result in a Material Adverse Change. Except as set
forth in or contemplated by such financial statements or other reports, the
facilities of such Borrower or any of its Subsidiaries, as the case may be, are
not used to manage any hazardous wastes, hazardous substances, hazardous
materials, toxic substances, toxic pollutants or substances similarly
denominated, as those terms or similar terms are used in the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response
Compensation and Liability Act, the Hazardous Materials Transportation Act, the
Toxic Substance Control Act, the Clean Air Act, the Clean Water Act or any
other applicable law relating to environmental pollution, or any nuclear fuel
or other radioactive materials, in violation in any material respect of any law
or any regulations promulgated pursuant thereto, except to the extent that such
violations could not reasonably be expected to result in a Material Adverse
Change. Except as set forth in or contemplated by such financial statements or
other reports, such Borrower is aware of no events, conditions or circumstances
involving environmental pollution or contamination that could reasonably be
expected to result in a Material Adverse Change.
ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans hereunder are
subject to the satisfaction of the following conditions:
SECTION 4.01. All Borrowings. On the date of each Borrowing:
(a) The Agents shall have received a notice of such Borrowing
as required by Section 2.03 or Section 2.04, as applicable.
(b) The representations and warranties set forth in Article
III hereof (except, in the case of a refinancing of a Standby
Borrowing with a new Standby Borrowing that
<PAGE> 48
44
does not increase the aggregate principal amount of the Loans of any
Lender outstanding, the representations set forth in Sections 3.05(c),
3.06, 3.11 and 3.13) shall be true and correct in all material
respects on and as of the date of such Borrowing with the same effect
as though made on and as of such date, except to the extent such
representations and warranties expressly relate to an earlier date.
(c) At the time of and immediately after such Borrowing no
Event of Default or Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
each Borrower on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. Effective Date. On the Effective Date:
(a) The Agents shall have received favorable written opinions
of Reid & Priest LLP and Worsham, Forsythe & Wooldridge, L.L.P., dated
the Effective Date and addressed to the Lenders and satisfactory to
Cravath, Swaine & Moore, counsel for the Agents, to the effect set
forth in Exhibits D-1 and D-2 hereto.
(b) The Agents shall have received (i) a copy of the
certificate of incorporation, including all amendments thereto, of
each Borrower, certified as of a recent date by the Secretary of State
of its state of incorporation, and a certificate as to the good
standing of each Borrower as of a recent date from such Secretary of
State; (ii) a certificate of the Secretary or an Assistant Secretary
of each Borrower dated the Effective Date and certifying (A) that
attached thereto is a true and complete copy of the by-laws of such
Borrower as in effect on the Effective Date and at all times since a
date prior to the date of the resolutions described in clause (B)
below, (B) that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of such Borrower
authorizing the execution, delivery and performance of this Agreement
and the Borrowings hereunder, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect, (C)
that the certificate of incorporation referred to in clause (i) above
has not been amended since the date of the last amendment thereto
shown on the
<PAGE> 49
45
certificate of good standing furnished pursuant to such clause (i) and
(D) as to the incumbency and specimen signature of each officer
executing this Agreement or any other document delivered in connection
herewith on behalf of such Borrower; (iii) a certificate of another
officer of such Borrower as to the incumbency and specimen signature
of the Secretary or Assistant Secretary executing the certificate
pursuant to (ii) above; (iv) evidence satisfactory to the Agents that
the requisite approvals referred to in Section 3.04 hereof have been
obtained; and (v) such other documents as the Lenders or Cravath,
Swaine & Moore, counsel for the Agents, shall reasonably request.
(c) The Agents shall have received a certificate, dated the
Effective Date and signed by a Financial Officer of each Borrower,
confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 4.01.
(d) The Agents shall have received all Fees and other amounts
due and payable on or prior to the Effective Date.
(e) All the conditions to the effectiveness of the Facilities
B and C Credit Agreement (other than the condition set forth in
Section 4.02(f) thereof) shall have been satisfied.
ARTICLE V. COVENANTS
TU (and TU Electric, to the extent such covenants apply to it)
agrees that, so long as any Lender has any Commitment hereunder or any amount
payable hereunder remains unpaid:
SECTION 5.01. Existence. It will, and will cause each of its
Significant Subsidiaries to, do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and all
rights, licenses, permits, franchises and authorizations necessary or desirable
in the normal conduct of its business except as otherwise permitted pursuant to
Section 5.09.
SECTION 5.02. Business and Properties. It will, and will
cause each of its Subsidiaries to, comply with all applicable material laws,
rules, regulations and orders of any
<PAGE> 50
46
Governmental Authority, whether now in effect or hereafter enacted, except
where the validity or applicability of such laws, rules, regulations or orders
is being contested by appropriate proceedings in good faith; and at all times
maintain and preserve all property material to the conduct of its business and
keep such property in good repair, working order and condition and from time to
time make, or cause to be made, all needful and proper repairs, renewals,
additions, improvements and replacements thereto necessary in order that the
business carried on in connection therewith may be properly conducted at all
times.
SECTION 5.03. Financial Statements, Reports, Etc. TU (and TU
Electric, to the extent such information relates to TU Electric only) will
furnish to the Agents and each Lender:
(a) as soon as available and in any event within 120 days
after the end of each fiscal year of TU, a consolidated balance sheet
of TU and its Consolidated Subsidiaries as of the end of such fiscal
year and the related consolidated statements of income, retained
earnings and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all
reported on in a manner reasonably acceptable to the Securities and
Exchange Commission by Deloitte & Touche LLP or other independent
public accountants of nationally recognized standing;
(b) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each fiscal year of TU,
a consolidated balance sheet of TU and its Consolidated Subsidiaries
as of the end of such quarter and the related consolidated statements
of income for such quarter, for the portion of TU's fiscal year ended
at the end of such quarter, and for the twelve months ended at the end
of such quarter, and the related consolidated statement of cash flows
for the portion of TU's fiscal year ended at the end of such quarter,
setting forth comparative figures for previous dates and periods to
the extent required in Form 10-Q, all certified (subject to normal
year-end adjustments) as to fairness of presentation, GAAP and
consistency by a Financial Officer of TU;
(c) simultaneously with any delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, (i) an
unconsolidated balance sheet of TU and the related unconsolidated
statements of income, retained
<PAGE> 51
47
earnings and cash flows as of the same date and for the same periods
applicable to the statements delivered pursuant to paragraph (a) or
(b) above, as applicable, all certified (subject to normal year-end
adjustments in the case of quarterly statements) as to fairness of
presentation, GAAP and consistency by a Financial Officer of TU, and
(ii) a certificate of a Financial Officer of TU (A) setting forth in
reasonable detail the calculations required to establish whether TU
was in compliance with the requirements of Sections 5.11, 5.12 and
5.13 on the date of such financial statements, and (B) stating whether
any Default exists on the date of such certificate and, if any Default
then exists, setting forth the details thereof and the action which TU
is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in paragraph (a) above, a statement of the firm
of independent public accountants which reported on such statements
(i) stating whether anything has come to their attention to cause them
to believe that any Default existed on the date of such statements and
(ii) confirming the calculations set forth in the Financial Officer's
certificate delivered simultaneously therewith pursuant to paragraph
(c) above;
(e) forthwith upon the occurrence of any Default, a
certificate of a Financial Officer of TU setting forth the details
thereof and the action which TU is taking or proposes to take with
respect thereto;
(f) promptly upon the mailing thereof to the shareholders of
TU generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of each final
prospectus (other than a prospectus included in any registration
statement on Form S-8 or its equivalent or with respect to a dividend
reinvestment plan) and all reports on Forms 10-K, 10-Q and 8-K and
similar reports which TU or TU Electric shall have filed with the SEC,
or any Governmental Authority succeeding to any of or all the
functions of the SEC;
(h) if and when any member of the Controlled Group (i) gives
or is required to give notice to the PBGC of any Reportable Event with
respect to any Plan which might constitute grounds for a termination
of such Plan under
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48
Title IV of ERISA, or knows that the plan administrator of any Plan
has given or is required to give notice of any such Reportable Event,
a copy of the notice of such Reportable Event given or required to be
given to the PBGC; (ii) receives notice from a proper representative
of a Multiemployer Plan of complete or partial Withdrawal Liability
being imposed upon such member of the Controlled Group under Title IV
of ERISA, a copy of such notice; or (iii) receives notice from the
PBGC under Title IV of ERISA of an intent to terminate, or appoint a
trustee to administer, any Plan, a copy of such notice; and
(i) promptly, from time to time, such additional information
regarding the financial position or business of TU and its
Subsidiaries as the Agents, at the request of any Lender, may
reasonably request.
As promptly as practicable after delivering each set of financial statements as
required in paragraph (a) of this Section, TU shall make available a copy of
the consolidating workpapers used by TU in preparing such consolidated
statements to each Lender that shall have requested such consolidating
workpapers. Each Lender that receives such consolidating workpapers shall hold
them in confidence as required by Section 8.15; provided that no Lender may
disclose such consolidating workpapers to any other person pursuant to clause
(iv) of Section 8.15.
SECTION 5.04. Insurance. It will, and will cause each of its
Subsidiaries to, maintain such insurance or self insurance, to such extent and
against such risks, including fire and other risks insured against by extended
coverage, as is customary with companies similarly situated and in the same or
similar businesses.
SECTION 5.05. Taxes, Etc. It will, and will cause each of
its Subsidiaries to, pay and discharge promptly when due all material taxes,
assessments and governmental charges imposed upon it or upon its income or
profits or in respect of its property, as well as all other material
liabilities, in each case before the same shall become delinquent or in default
and before penalties accrue thereon, unless and to the extent that the same are
being contested in good faith by appropriate proceedings and adequate reserves
with respect thereto shall, to the extent required by GAAP, have been set
aside.
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49
SECTION 5.06. Maintaining Records; Access to Properties and
Inspections. It will, and will cause each of its Subsidiaries to, maintain
financial records in accordance with GAAP and, upon reasonable notice and at
reasonable times, permit authorized representatives designated by any Lender to
visit and inspect its properties and to discuss its affairs, finances and
condition with its officers.
SECTION 5.07. ERISA. (a) It will, and will cause each of
its Subsidiaries that are members of the Controlled Group to, comply in all
material respects with the applicable provisions of ERISA and the Code and (b)
furnish to the Agents (i) as soon as possible after, and in any event within 30
days after any Responsible Officer of such Borrower or any ERISA Affiliate
knows, or has reason to know, that any ERISA Event has occurred that alone or
together with any other ERISA Event could reasonably be expected to result in
liability of such Borrower in an aggregate amount exceeding $40,000,000 or
requires an increase in payments exceeding $20,000,000 in any year, a statement
of a Financial Officer setting forth details as to such ERISA Event and the
action that the Borrower proposes to take with respect thereto, together, in
the case of a Reportable Event, with a copy of the notice, if any, of such
Reportable Event given to the PBGC, (ii) promptly after receipt thereof, a copy
of any notice that such Borrower or any ERISA Affiliate may receive from the
PBGC relating to the intention of the PBGC to terminate any Plan or Plans
(other than a Plan maintained by an ERISA Affiliate that is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Code Section 414) or to
appoint a trustee to administer any such Plan (iii) within 10 days after the
due date for filing with the PBGC pursuant to Section 412(n) of the Code a
notice of failure to make a required installment or other payment with respect
to a Plan, a statement of a Financial Officer setting forth details as to such
failure and the action that such Borrower proposes to take with respect
thereto, together with a copy of any such notice given to the PBGC and (iv)
promptly and in any event within 30 days after receipt thereof by such Borrower
or any ERISA Affiliate from the sponsor of a Multiemployer Plan, a copy of each
notice received by such Borrower or any ERISA Affiliate concerning (A) the
imposition of Withdrawal Liability or (B) a determination that a Multiemployer
Plan is, or is expected to be, terminated or in reorganization, both within the
meaning of Title IV of ERISA.
SECTION 5.08. Use of Proceeds. It will not, and will not
cause or permit any of its Subsidiaries to, use the
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50
proceeds of the Loans for purposes other than those set forth in the recitals
hereto.
SECTION 5.09. Consolidations, Mergers, and Sales of Assets.
TU will not (a) consolidate or merge with or into any person unless (i) the
surviving corporation is incorporated under the laws of a State of the United
States of America and assumes or is responsible by operation of law for all the
obligations of TU hereunder and (ii) no Default or Event of Default shall have
occurred or be continuing at the time of or after giving effect to such
consolidation or merger or (b) sell, lease or otherwise transfer, in a single
transaction or in a series of transactions, all or any Substantial part of its
assets to any person or persons other than a Wholly-Owned Subsidiary. TU will
not permit any Significant Subsidiary to consolidate or merge with or into, or
sell, lease or otherwise transfer all or any Substantial part of its assets to,
any person other than TU or a Wholly-Owned Subsidiary (or a person which as a
result of such transaction becomes a Wholly-Owned Subsidiary), provided that in
the case of any merger or consolidation involving TU Electric, such person must
assume or be responsible by operation of law for all the obligations of TU
Electric hereunder, and TU will in no event permit any such consolidation,
merger, sale, lease or transfer if any Default or Event of Default shall have
occurred and be continuing at the time of or after giving effect to any such
transaction. Notwithstanding the foregoing, (a) TU and its Subsidiaries will
not engage to a Substantial extent in businesses other than those currently
conducted by them and other businesses reasonably related thereto and (b)
nothing in this Section shall prohibit (i) any sales of assets permitted by
Section 5.10(d) or (ii) any sales of assets referred to in clause (ii) of the
proviso in the definition of "Consolidated Earnings Available For Fixed
Charges".
SECTION 5.10. Limitations on Liens. Neither TU nor any
Significant Subsidiary will create or assume or permit to exist any Lien in
respect of any property or assets of any kind (real or personal, tangible or
intangible) of TU or any Significant Subsidiary, or sell any such property or
assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets, or sell, or permit any Significant
Subsidiary to sell, any accounts receivable; provided that the provisions of
this Section shall not prevent or restrict the creation, assumption or
existence of:
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51
(a) any Lien in respect of any such property or assets of any
Significant Subsidiary to secure indebtedness owing by it to TU or to
any Wholly-Owned Subsidiary of TU; or
(b) purchase money Liens (including capital leases) in respect
of property acquired by TU or any Significant Subsidiary, to secure
the purchase price of such property (or to secure indebtedness
incurred prior to, at the time of, or within 90 days after the
acquisition solely for the purpose of financing the acquisition of
such property), or Liens existing on any such property at the time of
acquisition of such property by TU or by such Significant Subsidiary,
whether or not assumed, or any Lien in respect of property of a
corporation existing at the time such corporation becomes a Subsidiary
of TU; or agreements to acquire any property or assets under
conditional sale agreements or other title retention agreements, or
capital leases in respect of any other property; provided that
(1) the aggregate principal amount of Indebtedness
secured by all Liens in respect of any such property shall not
exceed the cost or fair market value (both as determined by
the board of directors of TU or such Significant Subsidiary,
as the case may be), whichever shall be lower, of such
property at the time of acquisition thereof (or (x) in the
case of property covered by a capital lease, the fair market
value, as so determined, of such property at the time of such
transaction, or (y) in the case of a Lien in respect of
property existing at the time such corporation becomes a
Subsidiary of TU, the fair market value, as so determined of
such property at such time), and
(2) at the time of the acquisition of the property by
TU or by such Subsidiary, or at the time such corporation
becomes a Subsidiary of TU, as the case may be, every such
Lien shall apply and attach only to the property originally
subject thereto and fixed improvements constructed thereon; or
(c) refundings or extensions of any Lien permitted in the
foregoing paragraph (b) for amounts not exceeding the principal amount
of the Indebtedness so refunded or extended or the fair market value
(as determined by the board of directors of TU or such Significant
Subsidiary,
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52
as the case may be) of the property theretofore subject to such Lien,
whichever shall be lower, in each case at the time of such refunding
or extension; provided that such Lien shall apply only to the same
property theretofore subject to the same and fixed improvements
constructed thereon; or
(d) sales subject to understandings or agreements to
repurchase; provided that the aggregate sales price for all such sales
(other than sales to any governmental instrumentality in connection
with such instrumentality's issuance of indebtedness, including
without limitation industrial development bonds and pollution control
bonds, on behalf of TU or any Significant Subsidiary) made in any one
calendar year shall not exceed $50,000,000; or
(e) any production payment or similar interest which is
dischargeable solely out of natural gas, coal, lignite, oil or other
mineral to be produced from the property subject thereto and to be
sold or delivered by TU or any Significant Subsidiary; or
(f) any Lien including in connection with sale-leaseback
transactions created or assumed by any Significant Subsidiary on
natural gas, coal, lignite, oil or other mineral properties or nuclear
fuel owned or leased by such Subsidiary, to secure loans to such
Subsidiary in an aggregate amount not to exceed $400,000,000; provided
that neither TU nor any other Subsidiary shall assume or guarantee
such financings; or
(g) leases (other than capital leases) now or hereafter
existing and any renewals and extensions thereof under which TU or any
Significant Subsidiary may acquire or dispose of any of its property,
subject, however, to the terms of Section 5.09; or
(h) any Lien created or to be created by the First Mortgage of
TU Electric; or
(i) any Lien on the rights of the Mining Company or Fuel
Company existing under their respective Operating Agreements; or
(j) sales by TU Electric of its accounts receivable; or
(k) Permitted Encumbrances.
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SECTION 5.11. Fixed Charge Coverage. TU will not, as of the
end of each quarter of each fiscal year of TU, permit Consolidated Earnings
Available for Fixed Charges for the twelve months then ended to be less than or
equal to 150% of Consolidated Fixed Charges for the twelve months then ended.
SECTION 5.12. Equity Capitalization Ratio. TU will not
permit Consolidated Shareholders' Equity to be less than 35% of Consolidated
Total Capitalization.
SECTION 5.13. Indebtedness of TU. TU will not incur, create,
assume or permit to exist Indebtedness (other than guarantees existing as of
the date hereof and guarantees of any obligations of Subsidiaries) in an amount
at any time in excess of the sum at such time of (a) $1,500,000,000, (b) if
positive, the excess of (i) the cumulative consolidated net income of TU (from
which preferred stock dividends and preferred securities distributions have
been deducted) reduced by the combined net income (after preferred stock
dividends and preferred securities distributions) of the direct Subsidiaries of
TU to the extent such combined net income exceeds the cash dividends received
by TU from such Subsidiaries for each completed quarter commencing on or after
July 1, 1996, for which results have been reported to the Lenders pursuant to
Section 5.03 over (ii) the aggregate amount of dividends paid by TU after the
Effective Date and (c) the aggregate proceeds received by TU from issuances of
capital stock of TU after the Effective Date (to the extent such proceeds have
not been used to prepay Indebtedness (other than Indebtedness under this
Agreement or Competitive Loans or Standby Loans under the Facilities B and C
Credit Agreement or any other short-term debt)), provided that Indebtedness
(other than guarantees existing as of the date hereof and guarantees of any
obligations of Subsidiaries) in an amount in excess of such sum may be
incurred, created, assumed or permitted to exist for a period of up to 120 days
if TU shall have given the Lenders prior written notice of its intent to issue
capital stock within such 120-day period for net cash proceeds to TU sufficient
to eliminate such excess.
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ARTICLE VI. EVENTS OF DEFAULT
In case of the happening of any of the following events (each
an "Event of Default"):
(a) any representation or warranty made or deemed made by any
Borrower in or in connection with the execution and delivery of this
Agreement or the Borrowings hereunder shall prove to have been false
or misleading in any material respect when so made, deemed made or
furnished;
(b) default shall be made by any Borrower in the payment of
any principal of any Loan when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made by any Borrower in the payment of
any interest on any Loan or any Fee or any other amount (other than an
amount referred to in paragraph (b) above) due hereunder, when and as
the same shall become due and payable, and such default shall continue
unremedied for a period of five days;
(d) default shall be made by any Borrower in the due
observance or performance of any covenant, condition or agreement
contained in Section 5.01, 5.09, 5.10, 5.11, 5.12 or 5.13;
(e) default shall be made by any Borrower in the due
observance or performance of any covenant, condition or agreement
contained herein (other than those specified in (b), (c) or (d) above)
and such default shall continue unremedied for a period of 30 days
after notice thereof from the Administrative Agent at the request of
any Lender to such Borrower;
(f) TU shall no longer own, directly or indirectly, all the
outstanding common stock of TU Electric (or any successor);
(g) any Borrower or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $40,000,000, when and
as the same shall become due and payable, subject to any applicable
grace periods, or (ii) fail to observe or perform any other term,
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covenant, condition or agreement contained in any agreement or
instrument evidencing or governing any such Indebtedness if the effect
of any failure referred to in this clause (ii) is to cause, or to
permit the holder or holders of such Indebtedness or a trustee on its
or their behalf to cause, such Indebtedness to become due prior to its
stated maturity;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of TU or any Significant
Subsidiary, or of a substantial part of the property or assets of TU
or any Significant Subsidiary, under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other Federal or
state bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for TU or any Significant Subsidiary
or for a substantial part of the property or assets of TU or any
Significant Subsidiary or (iii) the winding up or liquidation of TU or
any Significant Subsidiary; and such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(i) TU or any Significant Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in (h) above, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for TU or any
Significant Subsidiary or for a substantial part of the property or
assets of it or such Significant Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any action
for the purpose of effecting any of the foregoing;
(j) a Change in Control shall occur;
<PAGE> 60
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(k) one or more judgments or orders for the payment of money
in an aggregate amount in excess of $40,000,000 shall be rendered
against TU or any Subsidiary thereof or any combination thereof and
such judgment or order shall remain undischarged or unstayed for a
period of 30 days, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of TU or any Subsidiary to
enforce any such judgment or order;
(l) an ERISA Event or ERISA Events shall have occurred with
respect to any Plan or Plans that reasonably could be expected to
result in liability of any Borrower to the PBGC or to such Plan or
Plans in an aggregate amount exceeding $40,000,000 or requiring an
increase in payments exceeding $20,000,000 in any year;
(m) (i) any Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan, (ii) such Borrower or
such ERISA Affiliate does not have reasonable grounds for contesting
such Withdrawal Liability or is not in fact contesting such Withdrawal
Liability in a timely and appropriate manner and (iii) the amount of
the Withdrawal Liability specified in such notice, when aggregated
with all other amounts required to be paid to Multiemployer Plans in
connection with Withdrawal Liabilities (determined as of the date or
dates of such notification), either (A) exceeds $40,000,000 or
requires payments exceeding $40,000,000 in any year or (B) is less
than $40,000,000 but any Withdrawal Liability payment remains unpaid
30 days after such payment is due;
(n) any Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV of ERISA, if solely as a result of such
reorganization or termination the aggregate annual contributions of
such Borrower and its ERISA Affiliates to all Multiemployer Plans that
are then in reorganization or have been or are being terminated have
been or will be increased over the amounts required to be contributed
to such Multiemployer Plans for their most recently completed plan
years by an amount exceeding $40,000,000;
then, and in every such event, and at any time thereafter during the
continuance of such event, the Administrative
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57
Agent, at the request of the Required Lenders, shall, by notice to the
Borrowers, take either or both of the following actions, at the same or
different times: (i) terminate forthwith the right of one or both of the
Borrowers to borrow pursuant to the Commitments and (ii) declare the Loans of
one or both of the Borrowers then outstanding to be forthwith due and payable
in whole or in part, whereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and any unpaid accrued Fees
and all other liabilities of such Borrower accrued hereunder, shall become
forthwith due and payable, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived, anything
contained herein to the contrary notwithstanding; provided that in the case of
any event described in paragraph (h) or (i) above with respect to any Borrower,
the Commitments of the Lenders with respect to such Borrower shall
automatically terminate and the principal of the Loans then outstanding of the
Borrower with respect to which such event has occurred, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of such
Borrower accrued hereunder shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by such Borrower, anything contained herein to the
contrary notwithstanding.
ARTICLE VII. THE AGENTS
In order to expedite the transactions contemplated by this
Agreement, Texas Commerce Bank National Association is hereby appointed to act
as Administrative Agent, and Chemical is hereby appointed to act as CAF Agent,
on behalf of the Lenders. Each of the Lenders hereby irrevocably authorizes
the Agents to take such actions on behalf of such Lender or holder and to
exercise such powers as are specifically delegated to the Agents by the terms
and provisions hereof, together with such actions and powers as are reasonably
incidental thereto. The Administrative Agent is hereby expressly authorized by
the Lenders and the CAF Agent, without hereby limiting any implied authority,
(a) to receive on behalf of the Lenders and the CAF Agent all payments of
principal of and interest on the Loans and all other amounts due to the Lenders
and the CAF Agent hereunder, and promptly to distribute to each Lender and the
CAF Agent its proper share of each payment so received; (b) to give notice on
behalf of each of the Lenders to the Borrowers of any Event of Default of which
the Administrative Agent has actual knowledge
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acquired in connection with its agency hereunder; and (c) to distribute to each
Lender copies of all notices, financial statements and other materials
delivered by the Borrowers pursuant to this Agreement as received by the
Administrative Agent.
No Agent or any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its or his or her own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by
the Borrowers of any of the terms, conditions, covenants or agreements
contained in this Agreement. The Agents shall not be responsible to the
Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or other instruments or agreements. The Agents
may deem and treat the Lender which makes any Loan as the holder of the
indebtedness resulting therefrom for all purposes hereof until it shall have
received notice from such Lender, given as provided herein, of the transfer
thereof. The Agents shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders and, except as otherwise specifically provided herein, such
instructions and any action or inaction pursuant thereto shall be binding on
all the Lenders. Each of the Agents shall, in the absence of knowledge to the
contrary, be entitled to rely on any instrument or document believed by it in
good faith to be genuine and correct and to have been signed or sent by the
proper person or persons. No Agent or any of its directors, officers,
employees or agents shall have any responsibility to the Borrowers on account
of the failure of or delay in performance or breach by the other Agent or any
Lender of any of its obligations hereunder or to the other Agent or any Lender
on account of the failure of or delay in performance or breach by any other
Lender, the other Agent or any Borrower of any of their respective obligations
hereunder or in connection herewith. Each of the Agents may execute any and
all duties hereunder by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by it with respect to all
matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Agents shall be under
no duty to take any discretionary action permitted to
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be taken by it pursuant to the provisions of this Agreement unless it shall be
requested in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent
as provided below, either Agent may resign at any time by notifying the Lenders
and the Borrowers. Upon any such resignation, the Required Lenders shall have
the right to appoint a successor Agent acceptable to the Borrowers. If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Agent gives notice
of its resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any Agent's resignation hereunder, the
provisions of this Article and Section 8.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
With respect to the Loans made by it hereunder, each of the
Agents, in its individual capacity and not as an Agent shall have the same
rights and powers as any other Lender and may exercise the same as though it
were not an Agent, and each of the Agents and their Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrowers or any Subsidiary or other Affiliate thereof as if it were not an
Agent.
Each Lender agrees (i) to reimburse the Agents, on demand, in
the amount of its pro rata share (based on its Commitment hereunder or, if the
Commitments shall have been terminated, the amount of its outstanding Loans) of
any expenses incurred for the benefit of the Lenders in its role as Agent,
including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, which shall not have been
reimbursed by the Borrowers and (ii) to indemnify and hold harmless each of the
Agents and any of its directors, officers, employees or agents, on demand, in
the amount of such pro rata share, from and against any and all liabilities,
taxes, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
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imposed on, incurred by or asserted against it in any way relating to or
arising out of this Agreement or any action taken or omitted by it under this
Agreement to the extent the same shall not have been reimbursed by the
Borrowers; provided that no Lender shall be liable to any Agent for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or willful misconduct of such Agent or any of its directors,
officers, employees or agents. Each Lender agrees that any allocation made in
good faith by the Agents of expenses or other amounts referred to in this
paragraph between this Agreement and the Facilities B and C Credit Agreement
shall be conclusive and binding for all purposes.
Each Lender acknowledges that it has, independently and
without reliance upon the Agents or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agents
or any other Lender and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement or any related
agreement or any document furnished hereunder or thereunder.
ARTICLE VIII. MISCELLANEOUS
SECTION 8.01. Notices. Notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed or sent by telecopy, as follows:
(a) if to either Borrower, to Texas Utilities Company, Energy
Plaza, 1601 Bryan Street, 33rd Floor, Dallas, TX 75201, Attention of
Richard Howard, Manager of Treasury Operations (Telecopy No.
214-812-2488);
(b) if to the CAF Agent, to Chemical Bank Agency Services
Corp., 140 East 45th Street, 29th Floor, New York, New York 10017,
Attention of Tara Kaplan (Telecopy No. 212-622-1308), with a copy to
Chemical Bank at 270 Park Avenue, New York, New York 10017, Attention
of Jaimin Patel (Telecopy No. 212-270-1354);
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(c) if to the Administrative Agent, to Texas Commerce Bank
National Association, 2200 Ross Avenue, 3rd Floor, Dallas, TX 75201,
Attention of Allen King (Telecopy No. 214-922-2997), with a copy to
Texas Commerce Bank, Loan Syndications Services, 1111 Fannin Street,
9th Floor, MS 46, Houston, TX 77002; and
(d) if to a Lender, to it at its address (or telecopy number)
set forth in the Administrative Questionnaire delivered to the
Administrative Agent by such Lender in connection with the execution
of this Agreement or previously or in the Assignment and Acceptance
pursuant to which such Lender became a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy to such party as provided in this Section or in accordance with the
latest unrevoked direction from such party given in accordance with this
Section.
SECTION 8.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrowers herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the Lenders and shall survive the making by the Lenders of the Loans regardless
of any investigation made by the Lenders or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any Fee or any other amount payable under this Agreement is
outstanding and unpaid or the Commitments have not been terminated.
SECTION 8.03. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrowers and each Agent and
when the Administrative Agent shall have received copies hereof (telecopied or
otherwise) which, when taken together, bear the signature of each Lender, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrowers shall
not have the right to assign any rights hereunder or any interest herein
without the prior consent of all the Lenders.
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SECTION 8.04. Successors and Assigns. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any party that are contained in this
Agreement shall bind and inure to the benefit of its successors and assigns.
(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it); provided, however, that (i) except in the case of an assignment to a
Lender or an Affiliate of such Lender or an assignment to a Federal Reserve
Bank, the Borrowers and the Agents must give their prior written consent to
such assignment (which consent shall not be unreasonably withheld), (ii) the
amount of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $10,000,000, (iii) each such assignment shall be of a constant,
and not a varying, percentage of all the assigning Lender's rights and
obligations under this Agreement, (iv) the parties to each such assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, and a processing and recordation fee of $3,000 (provided that, in
the case of simultaneous assignment of interests under one or more of this
Agreement and the Facilities B and C Agreement, the aggregate fee shall be
$3,000), and (v) the assignee, if it shall not be a Lender, shall deliver to
the Administrative Agent an Administrative Questionnaire. Upon acceptance and
recording pursuant to Section 8.04(e), from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least five Business Days after the execution thereof unless otherwise agreed by
the Administrative Agent (the Borrowers to be given reasonable notice of any
shorter period), (A) the assignee thereunder shall be a party hereto and, to
the extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and (B) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto (but shall continue to
be entitled to the
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benefits of Sections 2.12, 2.17 and 8.05 afforded to such Lender prior to its
assignment as well as to any Fees accrued for its account hereunder and not yet
paid)). Notwithstanding the foregoing, any Lender assigning its rights and
obligations under this Agreement may retain any Competitive Loans made by it
outstanding at such time, and in such case shall retain its rights hereunder in
respect of any Loans so retained until such Loans have been repaid in full in
accordance with this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim, (ii)
except as set forth in (i) above, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto or the financial condition of the Borrowers or the performance or
observance by the Borrowers of any obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.03 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (v) such assignee will
independently and without reliance upon the Agents, such assigning Lender or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (vi) such assignee appoints and
authorizes each Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to such Agent by the
terms hereof, together with such powers as are reasonably incidental thereto;
and (vii) such assignee agrees that it will perform in accordance with their
terms all the obligations which by the terms of this Agreement are required to
be performed by it as a Lender.
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(d) The Administrative Agent shall maintain at one of its
offices in the City of Houston a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitment of, and the principal amount of the Loans
owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive in the absence of
manifest error and the Borrowers, the Agents and the Lenders may treat each
person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by each party hereto, at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee together with an
Administrative Questionnaire completed in respect of the assignee (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) above and, if required, the written consent of
the Borrowers and the Agents to such assignment, the Administrative Agent shall
(i) accept such Assignment and Acceptance and (ii) record the information
contained therein in the Register.
(f) Each Lender may without the consent of the Borrowers or
the Agents sell participations to one or more banks or other entities in all or
a portion of its rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans owing to it); provided, however, that
(i) such Lender's obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) each participating bank or other entity
shall be entitled to the benefit of the cost protection provisions contained in
Sections 2.12, 2.17 and 8.05 to the same extent as if it were the selling
Lender (and limited to the amount that could have been claimed by the selling
Lender had it continued to hold the interest of such participating bank or
other entity), except that all claims made pursuant to such Sections shall be
made through such selling Lender, and (iv) the Borrowers, the Agents and the
other Lenders shall continue to deal solely and directly with such selling
Lender in connection with such Lender's rights and obligations under this
Agreement.
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(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender
by or on behalf of the Borrowers; provided that, prior to any such disclosure,
each such assignee or participant or proposed assignee or participant shall
execute an agreement whereby such assignee or participant shall agree (subject
to customary exceptions) to preserve the confidentiality of any such
information.
(h) The Borrowers shall not assign or delegate any rights and
duties hereunder without the prior written consent of all Lenders, and any
attempted assignment or delegation (except as a consequence of a transaction
expressly permitted under Section 5.09) by a Borrower without such consent
shall be void.
(i) Any Lender may at any time pledge all or any portion of
its rights under this Agreement to a Federal Reserve Bank; provided that no
such pledge shall release any Lender from its obligations hereunder or
substitute any such Bank for such Lender as a party hereto. In order to
facilitate such an assignment to a Federal Reserve Bank, each Borrower shall,
at the request of the assigning Lender, duly execute and deliver to the
assigning Lender a promissory note or notes evidencing the Loans made to such
Borrower by the assigning Lender hereunder.
SECTION 8.05. Expenses; Indemnity. (a) The Borrowers agree
to pay all reasonable out-of-pocket expenses incurred by the Agents in
connection with entering into this Agreement or in connection with any
amendments, modifications or waivers of the provisions hereof (but only if such
amendments, modifications or waivers are requested by a Borrower) (whether or
not the transactions hereby contemplated are consummated), or incurred by the
Agents or any Lender in connection with the enforcement of their rights in
connection with this Agreement or in connection with the Loans made hereunder,
including the reasonable fees and disbursements of counsel for the Agents or,
in the case of enforcement following an Event of Default, the Lenders.
(b) The Borrowers agree to indemnify each Lender against any
loss, calculated in accordance with the next sentence, or reasonable expense
which such Lender may sustain or incur as a consequence of (a) any failure by
such Borrower
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to borrow or to refinance, convert or continue any Loan hereunder (including as
a result of such Borrower's failure to fulfill any of the applicable conditions
set forth in Article IV) after irrevocable notice of such borrowing,
refinancing, conversion or continuation has been given pursuant to Section 2.03
or 2.04, (b) any payment, prepayment or conversion, or assignment of a
Eurodollar Loan or Fixed Rate Loan of such Borrower required by any other
provision of this Agreement or otherwise made or deemed made on a date other
than the last day of the Interest Period, if any, applicable thereto, (c) any
default in payment or prepayment of the principal amount of any Loan or any
part thereof or interest accrued thereon, as and when due and payable (at the
due date thereof, whether by scheduled maturity, acceleration, irrevocable
notice of prepayment or otherwise) or (d) the occurrence of any Event of
Default, including, in each such case, any loss or reasonable expense sustained
or incurred or to be sustained or incurred by such Lender in liquidating or
employing deposits from third parties, or with respect to commitments made or
obligations undertaken with third parties, to effect or maintain any Loan
hereunder or any part thereof as a Eurodollar Loan or a Fixed Rate Loan. Such
loss shall include an amount equal to the excess, if any, as reasonably
determined by such Lender, of (i) its cost of obtaining the funds for the Loan
being paid, prepaid, refinanced, converted or not borrowed (assumed to be the
LIBO Rate or, in the case of a Fixed Rate Loan, the fixed rate of interest
applicable thereto) for the period from the date of such payment, prepayment,
refinancing or failure to borrow or refinance to the last day of the Interest
Period for such Loan (or, in the case of a failure to borrow or refinance the
Interest Period for such Loan which would have commenced on the date of such
failure) over (ii) the amount of interest (as reasonably determined by such
Lender) that would be realized by such Lender in reemploying the funds so paid,
prepaid or not borrowed or refinanced for such period or Interest Period, as
the case may be.
(c) The Borrowers agree to indemnify the Agents, each Lender,
each of their Affiliates and the directors, officers, employees and agents of
the foregoing (each such person being called an "Indemnitee") against, and to
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against any Indemnitee arising out of (i) the
consummation of the transactions contemplated by this Agreement, (ii) the use
of the proceeds of the Loans or (iii) any claim, litigation,
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investigation or proceeding relating to any of the foregoing, whether or not
any Indemnitee is a party thereto; provided that such indemnity shall not, as
to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses (i) are determined by a final judgment
of a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of such Indemnitee or (ii) result from any litigation
brought by such Indemnitee against the Borrowers or by any Borrower against
such Indemnitee, in which a final, nonappealable judgment has been rendered
against such Indemnitee.
(d) The provisions of this Section shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term
or provision of this Agreement or any investigation made by or on behalf of any
Agent or any Lender. All amounts due under this Section shall be payable on
written demand therefor.
(e) A certificate of any Lender or Agent setting forth any
amount or amounts which such Lender or Agent is entitled to receive pursuant to
paragraph (b) of this Section and containing an explanation in reasonable
detail of the manner in which such amount or amounts shall have been determined
shall be delivered to the appropriate Borrower and shall be conclusive absent
manifest error.
SECTION 8.06. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of the relevant Borrower against any of and
all the obligations of such Borrower now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement and although such obligations may be
unmatured. The rights of each Lender under this Section are in addition to
other rights and remedies (including other rights of setoff) which such Lender
may have.
SECTION 8.07. Applicable Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
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SECTION 8.08. Waivers; Amendment. (a) No failure or delay
of either Agent or any Lender in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Agents
and the Lenders hereunder are cumulative and are not exclusive of any rights or
remedies which they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any Borrower or any Subsidiary in any
case shall entitle such party to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal payment date or date for the
payment of any interest on any Loan, or waive or excuse any such payment or any
part thereof, or decrease the rate of interest on any Loan, without the prior
written consent of each Lender affected thereby, (ii) increase any Commitment
or decrease the Facility Fee of any Lender without the prior written consent of
such Lender, (iii) increase the percentage set forth in clause (ii)(B) of
Section 2.01 without the prior written consent of each Lender or (iv) amend or
modify the provisions of Section 2.14 or Section 8.04(h), the provisions of
this Section or the definition of the "Required Lenders", without the prior
written consent of each Lender; provided further, however, that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent or the CAF Agent hereunder without the prior written
consent of the Administrative Agent or the CAF Agent, as the case may be. Each
Lender shall be bound by any waiver, amendment or modification authorized by
this Section and any consent by any Lender pursuant to this Section shall bind
any assignee of its rights and interests hereunder.
SECTION 8.09. Entire Agreement. This Agreement (including
the schedules and exhibits hereto) and the Fee Letter constitute a "Loan
Agreement" as defined in Section
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26.03(a) of the Texas Business and Commerce Code, and represent the entire
contract among the parties relative to the subject matter hereof and thereof.
Any previous agreement among the parties with respect to the subject matter
hereof is superseded by this Agreement and the Fee Letter. There are no
unwritten oral agreements between the parties. Nothing in this Agreement,
expressed or implied, is intended to confer upon any party other than the
parties hereto any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
SECTION 8.10. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 8.11. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall constitute an original but all
of which when taken together shall constitute but one contract, and shall
become effective as provided in Section 8.03.
SECTION 8.12. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting, this Agreement.
SECTION 8.13. Interest Rate Limitation. (a) Notwithstanding
anything herein to the contrary, if at any time the applicable interest rate,
together with all fees and charges which are treated as interest under
applicable law (collectively the "Charges"), as provided for herein or in any
other document executed in connection herewith, or otherwise contracted for,
charged, received, taken or reserved by any Lender, shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by such Lender in accordance with applicable law, the rate
of interest payable on the Loans of such Lender, together with all Charges
payable to such Lender, shall be limited to the Maximum Rate.
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(b) If the amount of interest, together with all Charges,
payable for the account of any Lender in respect of any interest computation
period is reduced pursuant to paragraph (a) of this Section and the amount of
interest, together with all Charges, payable for such Lender's account in
respect of any subsequent interest computation period, computed pursuant to
Section 2.07, would be less than the Maximum Rate, then the amount of interest,
together with all Charges, payable for such Lender's account in respect of such
subsequent interest computation period shall, to the extent permitted by
applicable law, be automatically increased to such Maximum Rate; provided that
at no time shall the aggregate amount by which interest paid for the account of
any Lender has been increased pursuant to this paragraph (b) exceed the
aggregate amount by which interest, together with all Charges, paid for its
account has theretofore been reduced pursuant to paragraph (a) of this Section.
SECTION 8.14. Jurisdiction; Venue. (a) Each Borrower hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Subject to the
foregoing and to paragraph (b) below, nothing in this Agreement shall affect
any right that any party hereto may otherwise have to bring any action or
proceeding relating to this Agreement against any other party hereto in the
courts of any jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or thereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
<PAGE> 75
71
SECTION 8.15. Confidentiality. Each Lender shall use its
best efforts to hold in confidence all information, memoranda, or extracts
furnished to such Lender (directly or through the Agents) by the Borrowers
hereunder or in connection with the negotiation hereof; provided that such
Lender may disclose any such information, memoranda or extracts (i) to its
accountants or counsel, (ii) to any regulatory agency having authority to
examine such Lender, (iii) as required by any legal or governmental process or
otherwise by law, (iv) except as provided in the last sentence of Section 5.03,
to any person to which such Lender sells or proposes to sell a participation in
its Loans hereunder, if such other person agrees for the benefit of the
Borrowers to comply with the provisions of this Section and (v) to the extent
that such information, memoranda or extracts shall be publicly available or
shall have become known to such Lender independently of any disclosure by any
Borrower hereunder or in connection with the negotiation hereof.
Notwithstanding the foregoing, any Lender may disclose the provisions of this
Agreement and the amounts, maturities and interest rates of its Loans to any
purchaser or potential purchaser of such Lender's interest in any Loan.
SECTION 8.16. Transition Period. At all times following
April 23, 1996, and prior to the Effective Date, the provisions of this
Agreement in effect prior to the amendment and restatement hereof executed and
delivered as of April 23, 1996, shall remain in effect without modification,
except that (i) the provisions of Section 8.05 shall apply to all parties
signatory hereto (in addition to all persons that are Lenders prior to giving
effect to such amendment and restatement) and to each Borrowing Request
delivered on April 23, 1996 and (ii) each Borrowing Request delivered on April
23, 1996 shall be deemed given solely to the parties signatory hereto and
subject to the provisions hereof as such provisions would be in effect after
the Effective Date.
<PAGE> 76
72
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
TEXAS UTILITIES COMPANY, as Borrower,
by
/s/ Peter B. Tinkham
----------------------------
Name: Peter B. Tinkham
Title: Treasurer and
Assistant Secretary
TEXAS UTILITIES ELECTRIC COMPANY,
as Borrower,
by
/s/ Robert S. Shapard
----------------------------
Name: Robert S. Shapard
Title: Treasurer and
Assistant Secretary
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually and as
Administrative Agent,
by
/s/ Allen King
----------------------------
Name: Allen King
Title: Vice President
CHEMICAL BANK, individually and as CAF
Agent,
by
/s/ Jane Ritchie
----------------------------
Name: Jane Ritchie
Title: Vice President
<PAGE> 77
73
ABN AMRO BANK N.V.,
by
/s/ Peter D. Gaw
----------------------------
Name: Peter D. Gaw
Title: Group Vice President
by
/s/ Kevin S. McFadden
----------------------------
Name: Kevin S. McFadden
Title: Assistant Vice
President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
by
/s/ Robert Eaton
----------------------------
Name: Robert Eaton
Title: Vice President
BANK OF MONTREAL,
by
/s/ Donald Skipper
----------------------------
Name: Donald Skipper
Title: Director
THE BANK OF NEW YORK,
by
/s/ Nathan S. Howard
----------------------------
Name: Nathan S. Howard
Title: Vice President
<PAGE> 78
74
THE BANK OF TOKYO-MITSUBISHI, LTD.,
by
/s/ John M. Mearns
----------------------------
Name: John M. Mearns
Title: Vice President and
Manager
CIBC INC.,
by
/s/ Robert S. Lyle
----------------------------
Name: Robert S. Lyle
Title: Director
CITIBANK, N.A.,
by
/s/ Sandip Sen
----------------------------
Name: Sandip Sen
Title: Vice President
COMMERZBANK AG, ATLANTA AGENCY,
by
/s/ Dempsey L. Gable
----------------------------
Name: Dempsey L. Gable
Title: Senior Vice President
by
/s/ Vincas P. Snipas
----------------------------
Name: Vincas P. Snipas
Title: Assistant Cashier
<PAGE> 79
75
CREDIT LYONNAIS,
by
/s/ Robert Ivosevich
----------------------------
Name: Robert Ivosevich
Title: Senior Vice President
CREDIT SUISSE,
by
/s/ David J. Worthington
----------------------------
Name: David J. Worthington
Title: Member of Senior
Management
by
/s/ Marilou Palenzuela
----------------------------
Name: Marilou Palenzuela
Title: Member of Senior
Management
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/ Madeleine N. Pember
----------------------------
Name: Madeleine N. Pember
Title: Corporate Banking
Officer
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
/s/ A. Yoshino
----------------------------
Name: Akijiro Yoshino
Title: Executive Vice
President
<PAGE> 80
76
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED,
by
/s/ S. Otsubo
------------------------
Name: Satoru Otsubo
Title: Joint General
Manager
MELLON BANK, N.A.,
by
/s/ A.J. Sabatelle
----------------------------
Name: A.J. Sabatelle
Title: First Vice
President
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY,
by
/s/ Shigeki Sakanoue
----------------------------
Name: Shigeki Sakanoue
Title: Manager & 1st Vice
President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK,
by
/s/ Carl J. Mehldau, Jr.
----------------------------
Name: Carl J. Mehldau, Jr.
Title: Associate
NATIONSBANK OF TEXAS, N.A.,
by
/s/ Bryan L. Diers
----------------------------
Name: Bryan L. Diers
Title: Senior Vice
President
<PAGE> 81
77
THE SANWA BANK, LIMITED, DALLAS AGENCY,
by
/s/ Robert S. Smith
----------------------------
Name: Robert S. Smith
Title: Assistant Vice
President
SOCIETE GENERALE, SOUTHWEST AGENCY,
by
/s/ Richard M. Lewis
----------------------------
Name: Richard M. Lewis
Title: Vice President
THE SUMITOMO BANK, LIMITED,
by
/s/ Harumitsu Seki
-----------------------------
Name: Harumitsu Seki
Title: General Manager
THE TOKAI BANK, LIMITED,
by
/s/ M. Muto
----------------------
Name: Masaharu Muto
Title: Deputy General
Manager
TORONTO DOMINION (TEXAS), INC.,
by
/s/ Linda A. Lavin
----------------------------
Name: Linda A. Lavin
Title: Director
<PAGE> 82
78
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH,
by
/s/ Karen Rottman
----------------------------
Name: Karen Rottman
Title: Assistant Vice
President
by
/s/ Paul R. Morrison
----------------------------
Name: Paul R. Morrison
Title: Vice President
WESTPAC BANKING CORPORATION,
by
/s/ R. Christopher Noble
----------------------------
Name: R. Christopher Noble
Title: Senior Vice
President
<PAGE> 83
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
Chemical Bank, as Competitive Advance Facility Agent
for the Lenders referred to below,
c/o Chemical Bank Agency Services Corp.
140 East 45th Street (29th Floor)
New York, NY 10017
Attention: Tara Kaplan
Telecopy:
Dear Ladies and Gentlemen:
The undersigned, [Texas Utilities Company][Texas Utilities
Electric Company] (the "Borrower"), refers to the Amended and Restated
Competitive Advance and Revolving Credit Facility Agreement dated as of April
26, 1996 (as it may hereafter be amended, modified, extended or restated from
time to time, the "Agreement"), among the Borrower, [Texas Utilities Company]
[Texas Utilities Electric Company], the Lenders named therein, Texas Commerce
Bank National Association, as Administrative Agent, and Chemical Bank, as
Competitive Advance Facility Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Agreement. The Borrower hereby gives you notice pursuant to Section 2.03(a) of
the Agreement that it requests a Competitive Borrowing under the Agreement, and
in that connection sets forth below the terms on which such Competitive
Borrowing is requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day)
------------------
(B) Principal amount of
Competitive Borrowing 1/
------------------
(C) Interest rate basis 2/
------------------
________________________
1/ Not less than $5,000,000 (and in integral multiples of $1,000,000) or
greater than the Total Commitment then available.
2/ Eurodollar Loan or Fixed Rate Loan.
<PAGE> 84
(D) Interest Period and the
last day thereof 3/
------------------
Upon acceptance of any or all of the Loans offered by the
Lenders in response to this request, the Borrower shall be deemed to have
represented and warranted that the conditions to lending specified in Section
4.01(b) and (c) of the Agreement have been satisfied.
Very truly yours,
[TEXAS UTILITIES COMPANY]
[TEXAS UTILITIES ELECTRIC COMPANY]
by
-------------------------
Name:
Title: [Financial Officer]
________________________
3/ Which shall be subject to the definition of "Interest Period" and end not
later than the Maturity Date.
<PAGE> 85
EXHIBIT A-2
FORM OF NOTICE OF COMPETITIVE BID REQUEST
[Name of Lender]
[Address]
New York, New York
[Date]
Attention: [ ]
Dear Ladies and Gentlemen:
Reference is made to the Amended and Restated Competitive
Advance and Revolving Credit Facility Agreement dated as of April 26, 1996 (as
it may hereafter be amended, modified, extended or restated from time to time,
the "Agreement"), among [Texas Utilities Company][Texas Utilities Electric
Company] (the "Borrower"), [Texas Utilities Company][Texas Utilities Electric
Company], the Lenders named therein, Texas Commerce Bank National Association,
as Administrative Agent, and Chemical Bank, as Competitive Advance Facility
Agent. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Agreement. The Borrower made a
Competitive Bid Request on __________, 19[ ], pursuant to Section 2.03(a) of
the Agreement, and in that connection you are invited to submit a Competitive
Bid by [Date]/[Time]. 1/ Your Competitive Bid must comply with Section 2.03(b)
of the Agreement and the terms set forth below on which the Competitive Bid
Request was made:
(A) Date of Competitive Borrowing
------------------
(B) Principal amount of
Competitive Borrowing
------------------
(C) Interest rate basis
------------------
(D) Interest Period and the
last day thereof.
------------------
Very truly yours,
CHEMICAL BANK,
as Competitive Advance Facility Agent,
by
----------------------------------
Name:
Title:
________________________
1/ The Competitive Bid must be received by the CAF Agent (i) in the case of
Eurodollar Loans, not later than 9:30 a.m., New York City time, three Business
Days before a proposed Competitive Borrowing, and (ii) in the case of Fixed Rate
Loans, not later than 9:30 a.m., New York City time, on the Business Day of a
proposed Competitive Borrowing.
<PAGE> 86
EXHIBIT A-3
FORM OF COMPETITIVE BID
Chemical Bank, as Competitive Advance Facility Agent
for the Lenders referred to below,
c/o Chemical Bank Agency Services Corp.
140 East 45th Street (29th Floor)
New York, NY 10017
Attention: Tara Kaplan
Telecopy:
[Date]
Attention: [ ]
Dear Ladies and Gentlemen:
The undersigned, [Name of Lender], refers to the Amended and
Restated Competitive Advance and Revolving Credit Facility Agreement dated as
of April 26, 1996 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Agreement"), among [Texas Utilities
Company][Texas Utilities Electric Company] (the "Borrower"), [Texas Utilities
Company][Texas Utilities Electric Company], the Lenders named therein, Texas
Commerce Bank National Association, as Administrative Agent, and Chemical Bank,
as Competitive Advance Facility Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Agreement. The undersigned hereby makes a Competitive Bid pursuant to Section
2.03(b) of the Agreement, in response to the Competitive Bid Request made by
the Borrower on ___________, 19[ ], and in that connection sets forth below the
terms on which such Competitive Bid is made:
(A) Principal Amount 1/
------------------
(B) Competitive Bid Rate 2/
------------------
________________________
1/ Not less than $5,000,000 or greater than the requested Competitive
Borrowing and in integral multiples of $1,000,000. Multiple bids will be
accepted by the CAF Agent.
2/ i.e., LIBO Rate + or - __%, in the case of Eurodollar Loans or ___%,
in the case of Fixed Rate Loans.
<PAGE> 87
(C) Interest Period and last
day thereof
------------------
The undersigned hereby confirms that it is prepared, subject
to the conditions set forth in the Agreement, to extend credit to the Borrower
upon acceptance by the Borrower of this bid in accordance with Section 2.03(d)
of the Agreement.
Very truly yours,
[NAME OF LENDER],
by
----------------------------------
Name:
Title:
<PAGE> 88
EXHIBIT A-4
FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
[Date]
Chemical Bank, as Competitive Advance Facility Agent
for the Lenders referred to below
c/o Chemical Bank Agency Services Corp.
140 East 45th Street (29th Floor)
New York, NY 10017
Attention: Tara Kaplan
Telecopy:
Dear Ladies and Gentlemen:
The undersigned, [Texas Utilities Company][Texas Utilities
Electric Company] (the "Borrower"), refers to the Amended and Restated
Competitive Advance and Revolving Credit Facility Agreement dated as of April
26, 1996 (as it may hereafter be amended, modified, extended or restated from
time to time, the "Agreement"), among the Borrower, [Texas Utilities
Company][Texas Utilities Electric Company], the Lenders named therein, Texas
Commerce Bank National Association, as Administrative Agent, and Chemical Bank,
as Competitive Advance Facility Agent for the Lenders.
In accordance with Section 2.03(c) of the Agreement, we have
received a summary of bids in connection with our Competitive Bid Request dated
_____________, 19[ ], and in accordance with Section 2.03(d) of the Agreement,
we hereby accept the following bids for maturity on [date]:
Principal Amount Fixed Rate/Margin Lender
- ---------------- ----------------- ------
$ [%]/[+/-. %]
$
We hereby reject the following bids:
Principal Amount Fixed Rate/Margin Lender
- ---------------- ----------------- ------
$ [%]/[+/-. %]
$
The $ should be deposited in Chemical Bank account
number [ ] on [date].
Very truly yours,
[TEXAS UTILITIES COMPANY]
[TEXAS UTILITIES ELECTRIC COMPANY],
by
--------------------------------
Name:
Title:
<PAGE> 89
EXHIBIT A-5
FORM OF STANDBY BORROWING REQUEST
Texas Commerce Bank National Association,
as Administrative Agent
for the Lenders referred to below,
2200 Ross Avenue, 3rd floor
Dallas, TX 77002
Attention: Allen King
Telecopy:
[Date]
Dear Ladies and Gentlemen:
The undersigned, [Texas Utilities Company][Texas Utilities
Electric Company] (the "Borrower"), refers to the Amended and Restated
Competitive Advance and Revolving Credit Facility Agreement dated as of April
26, 1996 (as it may hereafter be amended, modified, extended or restated from
time to time, the "Agreement"), among the Borrower, [Texas Utilities
Company][Texas Utilities Electric Company], the Lenders named therein, Texas
Commerce Bank National Association, as Administrative Agent, and Chemical Bank,
as Competitive Advance Facility Agent. Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Agreement. The Borrower hereby gives you notice pursuant to Section 2.04 of
the Agreement that it requests a Standby Borrowing under the Agreement, and in
that connection sets forth below the terms on which such Standby Borrowing is
requested to be made:
(A) Date of Standby Borrowing
(which is a Business Day)
------------------
(B) Principal amount of
Standby Borrowing 1/
------------------
(C) Interest rate basis 2/
------------------
________________________
1/ Not less than $10,000,000 (and in integral multiples of $5,000,000) or
greater than the Total Commitment then available.
2/ Eurodollar Loan or ABR Loan.
<PAGE> 90
(D) Interest Period and the
last day thereof 3/
------------------
Upon acceptance of any or all of the Loans made by the Lenders
in response to this request, the Borrower shall be deemed to have represented
and warranted that the conditions to lending specified in Section 4.01(b) and
(c) of the Agreement have been satisfied.
Very truly yours,
[TEXAS UTILITIES COMPANY]
[TEXAS UTILITIES ELECTRIC COMPANY],
by
-----------------------------------
Name:
Title: [Financial Officer]
________________________
3/ Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
<PAGE> 91
EXHIBIT B
ADMINISTRATIVE QUESTIONNAIRE
TEXAS UTILITIES COMPANY AND TEXAS UTILITIES ELECTRIC COMPANY
PLEASE FORWARD THIS COMPLETED
FORM AS SOON AS POSSIBLE TO:
Gina Hardwick FAX (713) 216-2291
PLEASE TYPE ALL INFORMATION.
Agent: Texas Commerce Bank National Association
712 Main Street 8 TCB-N 96
Houston, Texas 77002
Telex: 166-350 TCB HOU
Syndications
Telecopier: (713) 216-2291 / Alt. Fax (713) 216-2339
Syndications
Contacts: Preston Moore (713) 216-1010
Ann Krevis Baumgartner (713) 216-7582
Gina Hardwick (713) 216-2093
Operations: Gale Manning (713) 750-2784
Letters of Credit: Gale Manning (713) 750-2784
Competitive Auction
Contact: Chemical Bank New York
Janet M. Belden - Phone: (212) 622-0011
Fax: (212) 622-0854
Full Legal Name of
your Institution:
---------------------------------------------
Hard-copy documents, notices and periodic financial statements of the Borrower
should be sent to the following account officer designated by your bank:
Officer's Name:
---------------------------------------------
Title:
---------------------------------------------
Street Address (No
P.O. Boxes please):
---------------------------------------------
City, State, Zip:
---------------------------------------------
Phone #:
---------------------------------------------
Telefax #:
---------------------------------------------
<PAGE> 92
2
PRIMARY CONTACT INFORMATION
We will send all telecopies regarding time-critical information (drawdowns,
option changes, payments, etc.) to the Primary or Alternate Contact at the
banking location you designate.
1. Your bank's primary contact for telefaxes concerning borrowings,
options on interest rates, etc.:
<TABLE>
<CAPTION>
Primary Primary Primary Alternate Alternate
Name/ Telefax Telex No. & Telefax Telex No. &
Phone No. Department No. Answerback No. Answerback
--------- ---------- -------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
Primary Primary Primary Alternate Alternate
Name/ Telefax Telex No. & Telefax Telex No. &
Phone No. Department No. Answerback No. Answerback
--------- ---------- -------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
</TABLE>
If at any time any of the above information changes, please advise.
Publicity: Under what name would you prefer your institution to appear in
any future advertisements?
---------------------------------------------------------------
<PAGE> 93
3
Movement of Funds: TO US: Wire Fed Funds to:
Texas Commerce Bank N.A.
ABA #113000609
for account number #20730
Attention: Loan Syndication Svcs./ Gale Manning
Reference:
TO YOU: Wire Fed Funds to:
NAME:
-------------------------------------------------------
ABA #
-------------------------------------------------------
For Credit To:
-------------------------------------------------------
Attention:
-------------------------------------------------------
Reference:
-------------------------------------------------------
Other:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
If buyer is purchasing Letter of Credit facility as part of this
participation/syndication, please provide the information below:
L/C contact name:
-----------------------------------------------------
Street Address:
-----------------------------------------------------
City, State, Zip:
-----------------------------------------------------
Phone #:
-----------------------------------------------------
Telefax #:
-----------------------------------------------------
Wire Fed Funds to:
NAME:
----------------------------------------------------
ABA #
----------------------------------------------------
For Credit To:
----------------------------------------------------
Attention:
----------------------------------------------------
Reference:
----------------------------------------------------
<PAGE> 94
4
PLEASE COMPLETE THE FOLLOWING INFORMATION
FOR COMPETITIVE AUCTIONS ONLY
Primary Contact
Competitive Auctions
Bank Name:
--------------------------------------------------------------------
Address:
----------------------------------------------------------------------
Primary Contact:
--------------------------------------------------------------
Department:
-------------------------------------------------------------------
Telephone Number:
-------------------------------------------------------------
Telefax Number:
---------------------------------------------------------------
Alternate Contact
Competitive Auctions
Alternate Contact:
-------------------------------------------------------------
Department:
-------------------------------------------------------------------
Telephone Number:
-------------------------------------------------------------
Telefax Number:
---------------------------------------------------------------
<PAGE> 95
5
PLEASE COMPLETE THE FOLLOWING INFORMATION
FOR COMPETITIVE AUCTIONS ONLY
Primary Contact
Competitive Auctions
Bank Name:
--------------------------------------------------------------------
Address:
----------------------------------------------------------------------
Primary Contact:
--------------------------------------------------------------
Department:
-------------------------------------------------------------------
Telephone Number:
-------------------------------------------------------------
Telefax Number:
---------------------------------------------------------------
Alternate Contact
Competitive Auctions
Alternate Contact:
-------------------------------------------------------------
Department:
-------------------------------------------------------------------
Telephone Number:
-------------------------------------------------------------
Telefax Number:
---------------------------------------------------------------
<PAGE> 96
EXHIBIT C
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Dated: __________, 19__
Reference is made to the Amended and Restated Competitive
Advance and Revolving Credit Facility Agreement dated as of April 26, 1996 (as
amended, modified, extended or restated from time to time, the "Agreement"),
among Texas Utilities Company, Texas Utilities Electric Company (collectively,
the "Borrowers"), the lenders listed in Schedule 2.01 thereto (the "Lenders"),
Texas Commerce Bank National Association, as Administrative Agent, and Chemical
Bank, as Competitive Advance Facility Agent for the Lenders. Terms defined in
the Agreement are used herein with the same meanings.
1. The Assignor hereby sells and assigns, without recourse,
to the Assignee, and the Assignee hereby purchases and assumes, without
recourse, from the Assignor, effective as of the [Effective Date of Assignment
set forth below], the interests set forth on the reverse hereof (the "Assigned
Interest") in the Assignor's rights and obligations under the Agreement,
including, without limitation, the interests set forth on the reverse hereof in
the Commitment of the Assignor on the [Effective Date of Assignment] and the
Competitive Loans and Standby Loans owning to the Assignor which are
outstanding on the [Effective Date of Assignment], together with unpaid
interest accrued on the assigned Loans to the [Effective Date of Assignment]
and the amount, if any, set forth on the reverse hereof of the Fees accrued to
the [Effective Date of Assignment] for the account of the Assignor. Each of
the Assignor and the Assignee hereby makes and agrees to be bound by all the
representations, warranties and agreements set forth in Section 8.04 of the
Agreement, a copy of which has been received by each such party. From and
after the [Effective Date of Assignment], (i) the Assignee shall be a party to
and be bound by the provisions of the Agreement and, to the extent of the
interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
of the interests assigned by this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, the forms specified in
Section 2.17(g) of the Agreement, duly completed and executed by such Assignee,
(ii) if the Assignee is not already a Lender under the Agreement, an
Administrative Questionnaire in the form of Exhibit B to the Agreement and
(iii) a processing and recordation fee of $3,000.
3. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
Date of Assignment:
-----------------------------------------------------------
Legal Name of Assignor:
-------------------------------------------------------
Legal Name of Assignee:
-------------------------------------------------------
Assignee's Address for Notices:
-----------------------------------------------
<PAGE> 97
2
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment
unless otherwise agreed by the
Administrative Agent):
---------------------------------------------------------
<TABLE>
<CAPTION>
Percentage Assigned of Facility/Commitment
(set forth, to at least 8 decimals, as a
Principal Amount Assigned (and percentage of the Facility and the aggregate
identifying information as to individual Commitments of all
Facility Competitive Loans) Lenders thereunder)
-------- ---------------------------------------- --------------------------------------------
<S> <C> <C>
Commitment Assigned: $ %
------------- ----------
Standby Loans: $ %
------------- ----------
Competitive Loans: $ %
------------- ----------
Fees Assigned (if any): $ %
------------- ----------
</TABLE>
<PAGE> 98
3
The terms set forth and on the Accepted:
reverse side hereof are hereby TEXAS UTILITIES COMPANY,
agreed to:
, as by:
- ------------------------------- -----------------------------
Assignor, Name:
Title:
by:
-----------------------------
Name:
Title: TEXAS UTILITIES ELECTRIC COMPANY,
, as
- -------------------------------
Assignee, by:
-----------------------------
by: Name:
---------------------------- Title:
Name:
Title:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent,
by:
--------------------------------------
Name:
Title:
CHEMICAL BANK, as CAF Agent
by:
--------------------------------------
Name:
Title:
<PAGE> 99
EXHIBIT D-1
April 26, 1996
To the Lenders listed on
Schedule 2.01 of each
Credit Agreement referred to below
Ladies and Gentlemen:
We advise you that we have acted as counsel to Texas Utilities
Company, a Texas corporation (TU), and Texas Utilities Electric Company, a
Texas corporation (TU Electric), in connection with the Amended and Restated
Competitive Advance and Revolving Credit Facility Agreement and the Amended and
Restated Term Loan and Competitive Advance and Revolving Credit Facility
Agreement (Credit Agreements), each dated as of April 26, 1996, among TU, TU
Electric, Texas Commerce Bank National Association, as Administrative Agent,
Chemical Bank, as Competitive Advance Facility Agent, and the banks listed on
Schedule 2.01 thereof (Lenders), and have participated in the preparation of or
have examined and are familiar with (a) the current financial statements and
reports filed by TU and TU Electric with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, (b) the Credit
Agreements, (c) the articles of incorporation and by-laws of TU and TU Electric
and (d) such other records and documents as we have deemed necessary for the
purposes of this opinion.
Capitalized terms used in this opinion and not defined herein shall
have the respective meanings assigned thereto in the Credit Agreements. This
opinion is delivered to you pursuant to Section 4.02(a) of the Credit
Agreements.
As to those matters stated herein to be "to our knowledge" or "known
to us" such examination has been limited to discussions with and certificates
from officers of TU and TU Electric and we have not conducted any independent
investigation or verification or taken any action beyond such discussions and
certificates, nor made any search of the records of any Governmental Authority
with respect to such matters.
We are members of the New York Bar and do not hold ourselves out as
experts on the laws of the State of Texas. As to all matters of Texas law
(including incorporation of TU and TU Electric, titles to properties,
franchises, licenses and permits) we have, with your consent, relied upon an
opinion of even date herewith delivered to you by Worsham, Forsythe &
Wooldridge, L.L.P., general counsel for TU and TU Electric. While we represent
TU and TU Electric on a regular basis, our engagement has been limited to
specific matters as to which we were consulted.
<PAGE> 100
-2-
We have no direct knowledge of the day-to-day affairs of TU or TU Electric and
have not reviewed generally their business affairs. Accordingly, we are relying
upon representations of TU and TU Electric contained in the Credit Agreements,
in certificates furnished pursuant thereto, and in certificates furnished to
us by officers of TU and TU Electric.
For purposes of the opinions expressed below, we have assumed (i) the
authenticity of all documents submitted to us as originals, (ii) the conformity
to the originals of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such copies, (iii) the
genuineness of all signatures other than on behalf of TU and TU Electric, (iv)
the legal capacity of natural persons, (v) the power, corporate or otherwise,
of all parties other than TU and TU Electric to enter into and to perform all
of their obligations under such documents, and (vi) the due authorization,
execution and delivery of all documents by all parties other than TU and TU
Electric.
Based on the foregoing, we are of the opinion that:
1. Each of TU and TU Electric (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas, (ii) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted, (iii) is qualified to do
business in every jurisdiction within the United States where such
qualification is required, except where the failure so to qualify would not
result in a Material Adverse Change, and (iv) has all requisite corporate power
and authority to execute, deliver and perform its obligations under the Credit
Agreements and to borrow funds thereunder.
2. The execution, delivery and performance by each of TU and TU
Electric of the Credit Agreements and the Borrowings by each of them thereunder
(collectively, the "Transactions") (i) have been duly authorized by all
requisite corporate action and (ii) will not (a) violate (1) any law, statute,
rule or regulation presently binding on or applicable to either TU or TU
Electric, or the articles of incorporation, as amended, or by-laws of either TU
or TU Electric, (2) to our knowledge, any order of any Governmental Authority
presently applicable to either TU or TU Electric or (3) any provision of any
indenture, agreement or other instrument known to us to which either TU or TU
Electric is a party or by which either TU or TU Electric or its property is
bound, (b) be in conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any such indenture,
agreement or other instrument or (c) result in the creation or imposition of
any lien upon or with respect to any property or assets of either TU or TU
Electric.
3. The Credit Agreements have been duly executed and delivered by
TU and TU Electric and constitute legal, valid and binding obligations of TU
and TU Electric enforceable against each of them in accordance with their terms
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law.)
<PAGE> 101
-3-
4. No action, consent or approval of, registration or filing
with, or any other action by, any Governmental Authority (including pursuant to
the Public Utility Holding Company Act of 1935, as amended) is required on the
part of either TU or TU Electric in connection with the Transactions, except
such as have been made or obtained and are in full force and effect.
5. (a) Neither TU nor TU Electric nor any of their respective
Subsidiaries is an "investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940, as amended, and (b) TU, TU Electric
and each of their respective Subsidiaries is exempt from all provisions of the
Public Utility Holding Company Act of 1935, as amended, and the rules and
regulations thereunder, except for Sections 9(a)(2) and 33 of such Act and the
rules and regulations thereunder, and the execution, delivery and performance
by each of TU and TU Electric of the Credit Agreements do not violate any
provisions of such Act or any rule or regulation thereunder.
6. Except as described in the Annual Reports of TU and TU
Electric on Form 10-K for the year ended December 31, 1995 and as set forth in
Schedule 3.06 to the Credit Agreements, to our knowledge there is no action,
suit, or proceeding at law or in equity or by or before any Governmental
Authority now pending or threatened against or affecting either TU or TU
Electric (i) which involves the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, could, individually or in the aggregate, result in a Material
Adverse Change.
7. To our knowledge after due inquiry, the proposed use of the
proceeds of the Loans is in accordance with the Credit Agreements and, if so
used, will not violate the Margin Regulations.
This letter is solely for the benefit of the named addresses and may
not be quoted in whole or in part or otherwise referred to in any document or
report and may not be furnished to any person without our prior written
consent, except that Worsham, Forsythe & Wooldridge, L.L.P. may rely hereon in
connection with their opinion being rendered pursuant to Section 4.02(a) of the
Credit Agreements.
Very truly yours,
Reid & Priest LLP
<PAGE> 102
EXHIBIT D-2
April 26, 1996
To the Lenders listed on
Schedule 2.01 of each of the
Credit Agreements referred to below
Ladies and Gentlemen
We have acted as general counsel for Texas Utilities Company, a Texas
corporation (TU) and Texas Utilities Electric Company, a Texas corporation (TU
Electric), in connection with the execution and delivery of the Amended and
Restated Competitive Advance and Revolving Credit Facility Agreement and the
Amended and Restated Term Loan and Competitive Advance and Revolving Credit
Facility Agreement (Credit Agreements), each dated as of April 26, 1996, among
TU, TU Electric, the banks listed on Schedule 2.01 thereof (Lenders), Texas
Commerce Bank National Association, as Administrative Agent and Chemical Bank,
as Competitive Advance Facility Agent.
Capitalized terms used in this opinion and not defined herein shall
have the respective meanings assigned thereto in the Credit Agreements. This
opinion is delivered to you pursuant to Section 4.02(a) of the Credit
Agreements.
In connection with this opinion we have examined a counterpart of the
Credit Agreements executed by TU and TU Electric and have also made such
examination of other documents and of certificates of public officials and
corporate officers of TU and TU Electric, and have made such other legal and
factual examinations and inquiries as we have deemed necessary or advisable for
the purpose of rendering this opinion; but as to those matters stated herein to
be "to our knowledge" or "known to us" such examination has been limited to
discussions with and certificates from officers of TU and TU Electric and we
have not conducted any independent investigation or verification or taken any
action beyond such discussions and certificates, nor made any search of the
records of any Governmental Authority with respect to such matters.
<PAGE> 103
-2-
For purposes of the opinions expressed below, we have assumed (i) the
authenticity of all documents submitted to us as originals, (ii) the conformity
to the originals of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such copies, (iii) the
genuineness of all signatures other than on behalf of TU and TU Electric, (iv)
the legal capacity of natural persons, (v) the power, corporate or otherwise,
of all parties other than TU and TU Electric to enter into and to perform all
of their obligations under such documents, and (vi) the due authorization,
execution and delivery of all documents by all parties other than TU and TU
Electric.
Based upon, and subject to, the foregoing and to such further
limitations and qualifications stated below, we are of the opinion that:
1. Each of TU and TU Electric (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas, (ii) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted, (iii) is qualified to do
business in every jurisdiction within the United States where such
qualification is required, except where the failure so to qualify would not
result in a Material Adverse Change, and (iv) has all requisite corporate power
and authority to execute, deliver and perform its obligations under the Credit
Agreements and to borrow funds thereunder.
2. The execution, delivery and performance by each of TU and TU
Electric of the Credit Agreements and the Borrowings by each of them thereunder
(collectively, the Transactions") (i) have been duly authorized by all
requisite corporate action and (ii) will not (a) violate (1) any law, statute,
rule or regulation presently binding on or applicable to either TU or TU
Electric, or the articles of incorporation, as amended, or by-laws of either TU
or TU Electric, (2) to our knowledge, any order of any Governmental Authority
presently applicable to either TU or TU Electric or (3) any provision of any
indenture, agreement or other instrument known to us to which either TU or TU
Electric is a party or by which either TU or TU Electric or its property is
bound, (b) be in conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any such indenture,
agreement or other instrument or (c) result in the creation or imposition of
any lien upon or with respect to any property or assets now owned or hereafter
acquired by either TU or TU Electric.
3. The Credit Agreements have been duly executed and delivered by
TU and TU Electric and constitute legal, valid and binding obligations of TU
and TU Electric enforceable against each of them in accordance with their terms
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law.)
4. No action, consent or approval of, registration or filing
with, or any other action by, any Government Authority (including pursuant to
the Public Utility Holding Company Act of 1935, as amended) is or will be
required on the part of either TU or TU Electric in connection with the
Transactions, except such as have been made or obtained and are in full force
and effect.
<PAGE> 104
-3-
5. Neither TU nor TU Electric nor any of their respective
Subsidiaries is an "investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940, as amended. TU, TU Electric and each
of their respective Subsidiaries is exempt from all provisions of the Public
Utility Holding Company Act of 1935, as amended, and the rules and regulations
thereunder, except for Sections 9(a)(2) and 33 of such Act and the rules and
regulations thereunder, and the execution, delivery and performance by each of
TU and TU Electric of the Credit Agreements do not violate any provision of
such Act or any rule or regulation thereunder.
6. Except as described in the Annual Reports of TU and TU
Electric on Form 10-K for the year ended December 31, 1995 and as set forth in
Schedule 3.06 to the Credit Agreements, to our knowledge there is no action
suit, or proceeding at law or in equity or by or before any Governmental
Authority now pending or threatened against or affecting either TU or TU
Electric (i) which involves the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, result in a Material
Adverse change.
7. To our knowledge, TU and TU Electric are not in violation of
any law, rule or requlation, or in default with respect to any judgment, writ,
injunction or decree of any Governmental Authority, where such violation or
default would result in a Material Adverse Change.
8. To our knowledge, after due inquiry, the proposed use of the
proceeds of the Loans is in accordance with the Credit Agreements, and, if so
used, will not violate the Margin Regulations.
We are members of the State Bar of Texas and do not purport to be
experts on, nor do we opine as to, the laws of any jurisdiction other than the
State of Texas and the federal laws of the United States. To the extent that
the opinions hereinabove set forth involve the laws of the State of New York,
we have relied upon the opinion of even date herewith delivered by you by Reid
& Priest LLP, special counsel to TU and TU Electric.
The foregoing opinions are limited to existing laws and we undertake
no obligation or responsibility to update or supplement this letter in response
to subsequent changes in the law or future events or circumstances affecting
the Transactions. This letter is solely for the benefit of the names addressees
and may not be quoted in whole or in part or otherwise referred to in any
document or report and may not be furnished to any person without our prior
written consent, expect that Reid & Priest LLP may rely hereon in connection
with their opinion being rendered pursuant to Section 4.02(a) of the Credit
Agreements.
Very truly yours,
WORSHAM, FORSYTHE
& WOOLDRIDGE, L.L.P.
By:
---------------------
<PAGE> 105
Schedule 2.01
<TABLE>
<CAPTION>
================================================================================
Name Commitment
---- ----------
- --------------------------------------------------------------------------------
<S> <C>
ABN AMRO Bank N.V. $14,516,129.03
- --------------------------------------------------------------------------------
Bank of America National Trust and Savings $18,145,161.29
Association
- --------------------------------------------------------------------------------
Bank of Montreal $12,096,774.19
- --------------------------------------------------------------------------------
The Bank of New York $18,145,161.29
- --------------------------------------------------------------------------------
The Bank of Tokyo-Mitsubishi, Ltd. $18,145,161.29
- --------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce $14,516,129.03
- --------------------------------------------------------------------------------
Chemical Bank $11,491,935.51
- --------------------------------------------------------------------------------
Citibank, N.A. $12,096,774.19
- --------------------------------------------------------------------------------
Commerzbank, AG $18,145,161.29
- --------------------------------------------------------------------------------
Credit Lyonnais $12,096,774.19
- --------------------------------------------------------------------------------
Credit Suisse $12,096,774.19
- --------------------------------------------------------------------------------
The First National Bank of Chicago $18,145,161.29
- --------------------------------------------------------------------------------
The Industrial Bank of Japan Trust Company $18,145,161.29
- --------------------------------------------------------------------------------
The Long-Term Credit Bank of Japan, Limited $12,096,774.19
- --------------------------------------------------------------------------------
Mellon Bank, N.A. $12,096,774.19
- --------------------------------------------------------------------------------
</TABLE>
<PAGE> 106
2
<TABLE>
<CAPTION>
================================================================================
Name Commitment
---- ----------
- --------------------------------------------------------------------------------
<S> <C>
The Mitsubishi Trust and Banking Corporation, $14,516,129.03
Los Angeles Agency
- --------------------------------------------------------------------------------
Morgan Guaranty Trust Company of New York $14,516,129.03
- --------------------------------------------------------------------------------
NationsBank of Texas, N.A. $18,145,161.29
- --------------------------------------------------------------------------------
The Sanwa Bank Limited $14,516,129.03
- --------------------------------------------------------------------------------
Societe Generale $14,516,129.03
- --------------------------------------------------------------------------------
The Sumitomo Bank, Limited $14,516,129.03
- --------------------------------------------------------------------------------
Texas Commerce Bank National Association $11,491,935.51
- --------------------------------------------------------------------------------
The Tokai Bank, Limited $14,516,129.03
- --------------------------------------------------------------------------------
Toronto Dominion $12,096,774.19
- --------------------------------------------------------------------------------
Union Bank of Switzerland $12,096,774.19
- --------------------------------------------------------------------------------
Westpac Banking Corporation $12,096,774.19
================================================================================
</TABLE>
<PAGE> 107
SCHEDULE 3.06
TO THE
CREDIT AGREEMENT
Litigation
None
<PAGE> 1
EXHIBIT 99(b)
CONFORMED COPY
================================================================================
TEXAS UTILITIES COMPANY
TEXAS UTILITIES ELECTRIC COMPANY
__________________________________________
AMENDED AND RESTATED
TERM LOAN AND
COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
"FACILITIES B AND C"
Dated as of April 26, 1996
__________________________________________
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent
and
CHEMICAL BANK,
as Competitive Advance Facility Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Section Page
- ------- ------- ----
<S> <C> <C>
I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . 2
1.02. Terms Generally . . . . . . . . . . . . . . . . . . . 24
II. THE CREDITS . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . 24
2.02. Loans . . . . . . . . . . . . . . . . . . . . . . . . 25
2.03. Competitive Bid Procedure . . . . . . . . . . . . . . 29
2.04. Borrowing Procedure . . . . . . . . . . . . . . . . . 32
2.05. Fees . . . . . . . . . . . . . . . . . . . . . . . . . 33
2.06. Repayment of Loans; Evidence of Indebtedness . . . . . 34
2.07. Interest on Loans . . . . . . . . . . . . . . . . . . 35
2.08. Default Interest . . . . . . . . . . . . . . . . . . . 36
2.09. Alternate Rate of Interest . . . . . . . . . . . . . . 36
2.10. Termination and Reduction of Commitments . . . . . . . 37
2.11. Prepayment . . . . . . . . . . . . . . . . . . . . . . 37
2.12. Reserve Requirements; Change in Circumstances . . . . . 38
2.13. Change in Legality . . . . . . . . . . . . . . . . . . 40
2.14. Pro Rata Treatment . . . . . . . . . . . . . . . . . . 41
2.15. Sharing of Setoffs . . . . . . . . . . . . . . . . . . 42
2.16. Payments . . . . . . . . . . . . . . . . . . . . . . . 43
2.17. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 43
2.18. Assignment of Interests Under Certain Circumstances . . 47
III. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . 48
3.01. Organization; Powers . . . . . . . . . . . . . . . . . 48
3.02. Authorization . . . . . . . . . . . . . . . . . . . . 48
3.03. Enforceability . . . . . . . . . . . . . . . . . . . . 48
3.04. Governmental Approvals . . . . . . . . . . . . . . . . 49
3.05. Financial Statements . . . . . . . . . . . . . . . . . 49
3.06. Litigation; Compliance with Laws . . . . . . . . . . . 49
3.07. Federal Reserve Regulations . . . . . . . . . . . . . . 49
</TABLE>
<PAGE> 3
Contents, p. 2
<TABLE>
<S> <C> <C>
3.08. Investment Company Act; Public Utility Holding Company Act . . 50
3.09. No Material Misstatements . . . . . . . . . . . . . . . . . 50
3.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
3.11. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 51
3.12. Significant Subsidiaries . . . . . . . . . . . . . . . . . . 51
3.13. Environmental Matters . . . . . . . . . . . . . . . . . . . 51
IV. CONDITIONS OF LENDING . . . . . . . . . . . . . . . . . . . . . . . 52
4.01. All Borrowings . . . . . . . . . . . . . . . . . . . . . . . 52
4.02. Effective Date . . . . . . . . . . . . . . . . . . . . . . . 53
V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
5.01. Existence . . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.02. Business and Properties . . . . . . . . . . . . . . . . . . . 55
5.03. Financial Statements, Reports, Etc. . . . . . . . . . . . . . 55
5.04. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 57
5.05. Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 58
5.06. Maintaining Records; Access to Properties and Inspections . . 58
5.07. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
5.08. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 59
5.09. Consolidations, Mergers, and Sales of Assets . . . . . . . . 59
5.10. Limitations on Liens . . . . . . . . . . . . . . . . . . . . 60
5.11. Fixed Charge Coverage . . . . . . . . . . . . . . . . . . . . 62
5.12. Equity Capitalization Ratio . . . . . . . . . . . . . . . . 62
5.13. Indebtedness of TU . . . . . . . . . . . . . . . . . . . . . 62
VI. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . 63
VII. THE AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
8.02. Survival of Agreement . . . . . . . . . . . . . . . . . . . 70
8.03. Binding Effect . . . . . . . . . . . . . . . . . . . . . . . 70
</TABLE>
<PAGE> 4
Contents, p. 3
<TABLE>
<S> <C> <C>
8.04. Successors and Assigns . . . . . . . . . . . . 71
8.05. Expenses; Indemnity . . . . . . . . . . . . . 74
8.06. Right of Setoff . . . . . . . . . . . . . . . . 76
8.07. Applicable Law . . . . . . . . . . . . . . . . 76
8.08. Waivers; Amendment . . . . . . . . . . . . . . 77
8.09. Entire Agreement . . . . . . . . . . . . . . . 77
8.10. Severability . . . . . . . . . . . . . . . . . 78
8.11. Counterparts . . . . . . . . . . . . . . . . . 78
8.12. Headings . . . . . . . . . . . . . . . . . . . 78
8.13. Interest Rate Limitation . . . . . . . . . . . 78
8.14. Jurisdiction; Venue . . . . . . . . . . . . . . 79
8.15. Confidentiality . . . . . . . . . . . . . . . . 80
8.16. Transition Period . . . . . . . . . . . . . . . 80
EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Competitive Bid Accept/Reject Letter
Exhibit A-5 Form of Borrowing Request
Exhibit B Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D-1 Opinion of Reid & Priest LLP, special counsel to Texas Utilities
Company and Texas
Utilities Electric Company
Exhibit D-2 Opinion of Worsham, Forsythe & Wooldridge, L.L.P., general
counsel for Texas Utilities Company and Texas Utilities
Electric Company
Schedule 2.01 Commitments
Schedule 3.06 Litigation
</TABLE>
<PAGE> 5
AMENDED AND RESTATED TERM LOAN AND
COMPETITIVE ADVANCE AND REVOLVING CREDIT FACILITY
AGREEMENT (the "Agreement") dated as of April 26,
1996, and effective as of the Effective Date, among
TEXAS UTILITIES COMPANY, a Texas corporation ("TU");
TEXAS UTILITIES ELECTRIC COMPANY, a Texas corporation
and a wholly owned subsidiary of TU ("TU Electric"
and, together with TU, the "Borrowers"); the lenders
listed in Schedule 2.01 (together with their
successors and assigns, the "Lenders"); CHEMICAL
BANK, a New York banking corporation ("Chemical"), as
Competitive Advance Facility Agent (in such capacity,
the "CAF Agent"); and TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, a national banking association ("TCB"),
as administrative agent for the Lenders (in such
capacity, the "Administrative Agent"; and, together
with the CAF Agent, the "Agents").
The Lenders have been requested to extend credit to the
Borrowers to enable them, upon the terms and subject to the conditions set
forth herein (a) in the case of TU, to borrow term loans on the Effective Date,
in an aggregate principal amount not in excess of $300,000,000, and (b) in the
case of either Borrower, to borrow on a standby revolving credit basis on and
after the Effective Date and at any time prior to the Maturity Date (as
hereinafter defined), an aggregate principal amount not in excess of
$875,000,000 at any time outstanding. The Lenders have also been requested to
provide a procedure pursuant to which the Borrowers may invite the Lenders to
bid on an uncommitted basis on short-term borrowings by the Borrowers. The
proceeds of such term loans are to be used to refinance outstanding
indebtedness of TU, and the proceeds of any other borrowings are to be used for
working capital and other corporate purposes, including commercial paper
back-up. The Lenders are willing to extend such credit on the terms and
subject to the conditions herein set forth.
<PAGE> 6
2
Accordingly, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan or ABR Standby Loan or
any Eurodollar Competitive Loan converted (pursuant to Section 2.13(ii)) to a
loan bearing interest at a rate determined by reference to the Alternate Base
Rate.
"ABR Standby Loan" shall mean any Standby Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"ABR Term Borrowing" shall mean a Borrowing comprised of ABR
Term Loans.
"ABR Term Loan" shall mean any Term Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Acquisition Date" shall mean the date as of which a person or
group of related persons first acquires more than 30% of the outstanding Voting
Shares of TU (within the meaning of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended, and the applicable rules and regulations
thereunder).
"Administrative Fees" shall have the meaning assigned to such
term in Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit B hereto.
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly or indirectly controls or is controlled by
or is under common control with the person specified.
<PAGE> 7
3
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greatest of (a) the Federal Funds Effective Rate in effect on such day plus 1/2
of 1%, (b) the Base CD Rate in effect on such day plus 1% and (c) the Prime
Rate in effect on such day. For purposes hereof, "Prime Rate" shall mean the
rate of interest per annum publicly announced from time to time by Chemical as
its prime rate in effect at its principal office in New York City; each change
in the Prime Rate shall be effective on the date such change is publicly
announced as effective; "Base CD Rate" shall mean the sum of (a) the product of
(i) the Three- Month Secondary CD Rate and (ii) Statutory Reserves and (b) the
Assessment Rate; "Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit reported as being
in effect on such day (or, if such day shall not be a Business Day, the next
preceding Business Day) by the Board through the public information telephone
line of the Federal Reserve Bank of New York (which rate will, under the
current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or, if such rate shall
not be so reported on such day or such next preceding Business Day, the average
of the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 10:00 a.m.,
New York City time, on such day (or, if such day shall not be a Business Day,
on the next preceding Business Day) by the CAF Agent from three New York City
negotiable certificate of deposit dealers of recognized standing selected by
it; "Assessment Rate" shall mean, for any day, the annual rate (rounded upwards
to the next 1/100 of 1%) most recently estimated by Chemical as the then
current net annual assessment rate that will be employed in determining amounts
payable by Chemical to the Federal Deposit Insurance Corporation (or any
successor) for insurance by such Corporation (or such successor) of time
deposits made in US dollars at Chemical's domestic offices; and "Federal Funds
Effective Rate" shall mean, for any day, the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as released on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
released for any day which is a Business Day, the arithmetic average (rounded
upwards to the next 1/100th of 1%), as determined by Chemical, of the
quotations for the day of such transactions received by Chemical from three
Federal funds brokers of recognized standing selected by it. If for any reason
Chemical shall have determined (which determination
<PAGE> 8
4
shall be conclusive absent manifest error; provided that Chemical, shall, upon
request, provide to the applicable Borrower a certificate setting forth in
reasonable detail the basis for such determination) that it is unable to
ascertain the Federal Funds Effective Rate for any reason, including the
inability of Chemical to obtain sufficient quotations in accordance with the
terms thereof, the Alternate Base Rate shall be determined without regard to
clause (a) of the first sentence of this definition until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the effective date of such change in the Prime Rate or
the Federal Funds Effective Rate, respectively.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee in the form of Exhibit C.
"Auction Fees" shall mean the competitive advance auction fees
provided for in the Letter Agreement dated April 29, 1994, between the
Borrowers and the CAF Agent (with references to the Credit Agreements and
provisions referred to therein being deemed to be references to this Agreement
and the Facility A Credit Agreement, as applicable, and the analogous
provisions herein and therein), payable to the CAF Agent by the applicable
Borrower at the time of each competitive advance auction request made by such
Borrower pursuant to Section 2.03.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Board of Directors" shall mean the Board of Directors of a
Borrower or any duly authorized committee thereof.
"Borrower" shall have the meaning given such term in the
preamble hereto.
"Borrowing" shall mean a group of Loans of a single Type made
by the Lenders (or, in the case of a Competitive Borrowing, by the Lender or
Lenders whose Competitive Bids have been accepted pursuant to Section 2.03) on
a single date and as to which a single Interest Period is in effect.
"Borrowing Request" shall mean a request made pursuant to
Section 2.04 in the form of Exhibit A-5.
<PAGE> 9
5
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York or the State of
Texas) on which banks are open for business in New York City and Houston;
provided, however, that, when used in connection with a Eurodollar Loan, the
term "Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"A Change in Control" shall be deemed to have occurred if (a)
any person or group of related persons (other than TU, any Subsidiary of TU, or
any pension, savings or other employee benefit plan for the benefit of
employees of TU and/or any Subsidiary of TU) shall have acquired beneficial
ownership of more than 30% of the outstanding Voting Shares of TU (within the
meaning of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended, and the applicable rules and regulations thereunder); provided that a
Change in Control shall not be deemed to have occurred if such acquisition has
been approved, prior to the Acquisition Date and the date on which any tender
offer for Voting Shares of TU was commenced, by a majority of the Disinterested
Directors of TU, or (b) during any period of 12 consecutive months, commencing
before or after the date of this Agreement, individuals who on the first day of
such period were directors of TU (together with any replacement or additional
directors who were nominated or elected by a majority of directors then in
office) cease to constitute a majority of the Board of Directors of TU.
"Code" shall mean the Internal Revenue Code of 1986, as the
same may be amended from time to time.
"Commission" shall mean the Public Utility Commission of the
State of Texas.
"Commitments" shall mean, with respect to each Lender, the
Standby Commitment and Term Loan Commitment of such Lender set forth in
Schedule 2.01 hereto.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a
notification made by a Borrower pursuant to Section 2.03(d) in the form of
Exhibit A-4.
<PAGE> 10
6
"Competitive Bid Margin" shall mean, as to any Eurodollar
Competitive Loan, the margin (expressed as a percentage rate per annum in the
form of a decimal to no more than four decimal places) to be added to or
subtracted from the LIBO Rate in order to determine the interest rate
applicable to such Loan, as specified in the Competitive Bid relating to such
Loan.
"Competitive Bid Rate" shall mean, as to any Competitive Bid,
(i) in the case of a Eurodollar Loan, the Competitive Bid Margin, and (ii) in
the case of a Fixed Rate Loan, the fixed rate of interest offered by the Lender
making such Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant
to Section 2.03 in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Lender or Lenders
whose Competitive Bids for such Borrowing have been accepted under the bidding
procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan made pursuant to the
bidding procedure described in Section 2.03. Each Competitive Loan shall be a
Eurodollar Competitive Loan or a Fixed Rate Loan.
"Consolidated Earnings Available for Fixed Charges" for any
twelve-month period means (i) consolidated net income, calculated after
deducting preferred stock dividends and preferred securities distributions of
Subsidiaries, but before any extraordinary items and before the effect in such
twelve-month period of any change in accounting principles promulgated by the
Financial Accounting Standards Board becoming effective after December 31,
1995, less (ii) allowances for equity funds used during construction to the
extent that such allowances, taken as a whole, increased such consolidated net
income, plus (iii) provisions for Federal income taxes, to the extent that such
provisions, taken as a whole, decreased such consolidated net income, plus (iv)
Consolidated Fixed Charges, all determined for such twelve-month period with
respect to TU and its Consolidated Subsidiaries on a consolidated basis;
provided, however, that in computing Consolidated Earnings Available for Fixed
Charges for any twelve-month period (i) the effect of any regulatory
disallowances incurred in connection with the settlement agreement resolving
fuel and prudency issues in Docket 11735
<PAGE> 11
7
of the Commission, (ii) the effect of the recordation of an impairment of
non-performing assets in September 1995 in an amount, after taxes, equal to
$802 million and (iii) the aggregate amount of any other non-cash book losses
during such twelve-month period relating to assets which as of the date of this
Agreement and as of the date of any sale or writedown thereof were
non-operating, non-earning assets, shall be excluded.
"Consolidated Fixed Charges" for any twelve-month period means
the sum of (i) interest on mortgage bonds, (ii) interest on other long-term
debt, (iii) other interest expense and (iv) preferred stock dividends and
preferred securities distributions of Subsidiaries, all determined for such
twelve-month period with respect to TU and its Consolidated Subsidiaries on a
consolidated basis.
"Consolidated Shareholders' Equity" means the sum of (i) total
common stock equity plus (ii) preferred stock not subject to mandatory
redemption, both determined with respect to TU and its Consolidated
Subsidiaries on a consolidated basis.
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which would be consolidated with those of TU or TU
Electric, as the case may be, in its consolidated financial statements as of
such date.
"Consolidated Total Capitalization" means the sum of (i) total
common stock equity, (ii) preferred stock and preferred securities and (iii)
long-term debt (less amounts due currently), all determined with respect to TU
and its Consolidated Subsidiaries on a consolidated basis, but without giving
effect to any acceleration or potential acceleration of any long-term debt.
"Controlled Group" shall mean all members of a controlled
group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with TU, are treated as a
single employer under Section 414(b) or 414(c) of the Code.
"D&P" shall mean Duff & Phelps Credit Rating Agency Co.
"Default" shall mean any event or condition which upon notice,
lapse of time or both would constitute an Event of Default.
<PAGE> 12
8
"Disinterested Director" shall mean any member of the Board of
Directors of TU who is not affiliated, directly or indirectly, with, or
appointed by, a person or group of related persons (other than TU, any
Subsidiary of TU, or any pension, savings or other employee benefit plan for
the benefit of employees of TU and/or any Subsidiary of TU) acquiring the
beneficial ownership of more than 30% of the outstanding Voting Shares of TU
(within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended, and the applicable rules and regulations thereunder) and who
either was a member of the Board of Directors of TU prior to the Acquisition
Date or was recommended for election by a majority of the Disinterested
Directors in office prior to the Acquisition Date.
"dollars" or "$" shall mean lawful money of the
United States of America.
"Effective Date" shall mean the date on which each condition
set forth in Section 4.02 has been satisfied.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that is a member of a group of (i) organizations described in
Section 414(b) or (c) of the Code and (ii) solely for purposes of the Lien
created under Section 412(n) of the Code, organizations described in Section
414(m) or (o) of the Code of which the relevant Borrower is a member.
"ERISA Event" shall mean (i) any "Reportable Event"; (ii) the
adoption of any amendment to a Plan that would require the provision of
security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA;
(iii) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (iv) the filing pursuant to Section 412(d) of the Code
or Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (v) the incurrence of any liability
under Title IV of ERISA with respect to the termination of any Plan or the
withdrawal or partial withdrawal of the Borrower or any of its ERISA Affiliates
from any Plan or Multiemployer Plan; (vi) the receipt by the Borrower or any
ERISA Affiliate from the PBGC of any notice
<PAGE> 13
9
relating to the intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (vii) the receipt by the Borrower or any ERISA
Affiliate of any notice concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or
in reorganization, within the meaning of Title IV of ERISA; (viii) the
occurrence of a "prohibited transaction" with respect to which the Borrower or
any of its subsidiaries could be liable; and (ix) any other [similar] event or
condition with respect to a Plan or Multiemployer Plan that could result in
liability of the Borrower other than a liability to pay premiums or benefits
when due.
"Eurodollar Borrowing" shall mean a Borrowing comprised of
Eurodollar Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan
bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Competitive Loan,
Eurodollar Standby Loan or Eurodollar Term Loan.
"Eurodollar Standby Borrowing" shall mean a Borrowing
comprised of Eurodollar Standby Loans.
"Eurodollar Standby Loan" shall mean any Standby Loan bearing
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Eurodollar Term Borrowing" shall mean a Borrowing comprised
of Eurodollar Term Loans.
"Eurodollar Term Loan" shall mean any Term Loan bearing
interest at a rate determined by reference to the LIBO Rate in accordance with
the provisions of Article II.
"Event of Default" shall have the meaning assigned to such
term in Article VI.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Existing TU Credit Agreement" shall mean the Competitive
Advance and Revolving Credit Facility Agreement dated as of November 22, 1995,
among TU, the Banks listed
<PAGE> 14
10
therein (including their permitted successors and assigns), Chemical, as
Competitive Advance Facility Agent, and Texas Commerce Bank National
Association, as Administrative Agent.
"Facility A Credit Agreement" shall mean the $375,000,000
Amended and Restated Competitive Advance and Revolving Credit Facility
Agreement dated as of the date hereof among the parties hereto.
"Facility Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Facility Fee Percentage" shall mean on any date the
applicable percentage set forth below based upon the Ratings in effect on such
date:
<TABLE>
<CAPTION>
Facility Fee
Percentage
----------
<S> <C>
Category 1
----------
A- or higher by S&P; .1000%
A3 or higher by Moody's;
A- or higher by D&P or Fitch;
Category 2
----------
BBB+ by S&P; .1500%
Baa1 by Moody's;
BBB+ by D&P or Fitch;
Category 3
----------
BBB by S&P; .1750%
Baa2 by Moody's;
BBB by D&P or Fitch;
Category 4
----------
BBB- by S&P; .2000%
Baa3 by Moody's;
BBB- by D&P or Fitch;
Category 5
----------
BB+ or lower by S&P; .3125%
Ba1 or lower by Moody's;
BB+ or lower by D&P or Fitch;
</TABLE>
<PAGE> 15
11
For purposes of the foregoing, (i) if both D&P and Fitch have established
Ratings, only one of such Ratings shall be employed for purposes of determining
the Facility Fee Percentage and the Rating employed shall be the Rating from
the institution that has for the longest period of time had a Rating
established for TU Electric; (ii) if more than two Ratings exist and the
applicable Ratings established or deemed to have been established by the Rating
Agencies shall fall within different Categories, the Facility Fee Percentage
shall be based upon the Category in which the largest number of Ratings falls
or is deemed to fall, provided, that if there shall be no such Category, the
middle Category shall apply; (iii) if only two Ratings exist, the Facility Fee
Percentage shall, subject to clause (iv) below, be based upon the lower of such
Ratings; (iv) if neither S&P nor Moody's shall have a Rating in effect, then
the Facility Fee Percentage shall be based upon Category 5; and (v) if any
Rating established or deemed to have been established by any Rating Agency
shall be changed (other than as a result of a change in the rating system of
such Rating Agency), such change shall be effective as of the date on which
such change is first announced by the Rating Agency making such change. Each
such change shall apply during the period commencing on the effective date of
such change and ending on the date immediately preceding the effective date of
the next such change. If the rating system of any Rating Agency shall change,
or if any Rating Agency shall cease rating the first mortgage bonds of TU
Electric (other than by reason of any action or nonaction by TU Electric
following or in anticipation of a ratings downgrade), the parties hereto shall
negotiate in good faith to amend the references to specific ratings in this
definition (including by way of substituting another Rating Agency mutually
acceptable to the Borrowers and the Agents for the Rating Agency with respect
to which the rating system has changed or for which no Rating is then in
effect) to reflect such changed rating system or the nonavailability of Ratings
from such Rating Agency, and pending agreement on such amendment (but subject
to clause (iv) above), the Rating in effect immediately prior to such change or
cessation will be used in determining the Facility Fee Percentage. If any
Rating Agency shall not have a Rating in effect by reason of any action or
nonaction by TU Electric following or in anticipation of a ratings downgrade,
then such Rating Agency shall be deemed to have established a Rating in
Category 5.
"Fee Letter" shall mean the letter among the Borrowers,
Chemical, and TCB dated March 29, 1996.
<PAGE> 16
12
"Fee Share" shall mean, at any time, the greater of (i) 75%
and (ii) the aggregate amount of outstanding Standby Loans to TU Electric
expressed as a percentage of the Total Standby Commitment.
"Fees" shall mean the Facility Fee, the Auction Fees and the
Administrative Fees.
"Financial Officer" of any corporation shall mean the chief
financial officer, principal accounting officer, treasurer, associate or
assistant treasurer, or any responsible officer designated by one of the
foregoing persons, of such corporation.
"First Mortgage" shall mean (i) the TU Electric Mortgage and
(ii) any Mortgage and Deed of Trust of TU Electric issued to refund, to replace
or in substitution for the TU Electric Mortgage.
"Fitch" shall mean Fitch Investors Service, L.P.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of
Fixed Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (the "Fixed Rate") (expressed in
the form of a decimal to no more than four decimal places) specified by the
Lender making such Loan in its Competitive Bid.
"Fuel Company" shall mean Texas Utilities Fuel Company, a
Texas corporation, and its successors.
"GAAP" shall mean generally accepted accounting principles,
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Indebtedness" of any corporation shall mean all indebtedness
representing money borrowed which is created, assumed, incurred or guaranteed
in any manner by such corporation or for which such corporation is responsible
or liable (whether by agreement to purchase indebtedness of, or to supply funds
to or invest in, others or otherwise).
<PAGE> 17
13
"Interest Payment Date" shall mean, with respect to any Loan,
the last day of the Interest Period applicable thereto and, in the case of a
Eurodollar Loan with an Interest Period of more than three months' duration or
a Fixed Rate Loan with an Interest Period of more than 90 days' duration, each
day that would have been an Interest Payment Date for such Loan had successive
Interest Periods of three months' duration or 90 days' duration, as the case
may be, been applicable to such Loan and, in addition, the date of any
prepayment of each Loan or conversion of such Loan to a Loan of a different
Type.
"Interest Period" shall mean (a) as to any Eurodollar
Borrowing, the period commencing on the date of such Borrowing and ending on
the numerically corresponding day (or, if there is no numerically corresponding
day, on the last day) in the calendar month that is 1, 2, 3 or 6 months
thereafter, or, in addition, in the case of any Eurodollar Borrowing made
during the 30-day period ending on the Maturity Date, the period commencing on
the date of such Borrowing and ending on the seventh or fourteenth day
thereafter, as the Borrower may elect, (b) as to any ABR Borrowing, the period
commencing on the date of such Borrowing and ending on the earliest of (i) the
next succeeding March 31, June 30, September 30 or December 31, (ii) the
Maturity Date, and (iii) the date such Borrowing is converted to a Borrowing of
a different Type in accordance with Section 2.02(e) or repaid or prepaid in
accordance with Section 2.06 or Section 2.11 and (c) as to any Fixed Rate
Borrowing, the period commencing on the date of such Borrowing and ending on
the date specified in the Competitive Bids in which the offers to make the
Fixed Rate Loans comprising such Borrowing were extended, which shall not be
earlier than seven days after the date of such Borrowing or later than 360 days
after the date of such Borrowing; provided, however, that if any Interest
Period would end on a day other than a Business Day, such Interest Period shall
be extended to the next succeeding Business Day unless, in the case of
Eurodollar Loans only, such next succeeding Business Day would fall in the next
calendar month, in which case such Interest Period shall end on the next
preceding Business Day. Interest shall accrue from and including the first day
of an Interest Period to but excluding the last day of such Interest Period.
"LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the rate at which dollar
deposits approximately
<PAGE> 18
14
equal in principal amount to (i) in the case of a Standby Borrowing or a Term
Borrowing, the Administrative Agent's portion of such Eurodollar Borrowing and
(ii) in the case of a Competitive Borrowing, a principal amount that would have
been the Administrative Agent's portion of such Competitive Borrowing had such
Competitive Borrowing been a Standby Borrowing, and for a maturity comparable
to such Interest Period are offered to the principal London offices of Chemical
in immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
"Lien" shall mean, with respect to any asset, any mortgage,
lien, pledge, charge, security interest or encumbrance of any kind in respect
of such asset. For the purposes of this Agreement, any person shall be deemed
to own subject to a Lien any asset which it has acquired or holds subject to
the interest of a vendor or lessor under any conditional sale agreement,
capital lease or other title retention agreement relating to such asset.
"Loan" shall mean a Competitive Loan, a Standby Loan or a Term
Loan, whether made as a Eurodollar Loan, an ABR Loan or a Fixed Rate Loan, as
permitted hereby.
"Margin Regulations" shall mean Regulations G, T, U and X of
the Board as from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Margin Stock" shall have the meaning given such term under
Regulation U of the Board.
"Material Adverse Change" shall mean a materially adverse
change in the business, assets, operations or financial condition of any
Borrower and its Subsidiaries taken as a whole.
"Maturity Date" shall mean the fifth anniversary of the
Effective Date or if such anniversary does not occur on a Business Day, the
Business Day immediately preceding such anniversary.
"Mining Company" shall mean Texas Utilities Mining Company, a
Texas corporation, and its successors.
"Moody's" shall mean Moody's Investors Service, Inc.
<PAGE> 19
15
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which any Borrower or any ERISA
Affiliate is making, or accruing an obligation to make, contributions, or has
within any of the preceding five plan years made, or accrued an obligation to
make, contributions.
"Notice of Competitive Bid Request" shall mean a notification
made pursuant to Section 2.03 in the form of Exhibit A-2.
"Operating Agreements" shall mean the (i) Operating Agreement
dated April 28, 1978 between Mining Company and Dallas Power & Light Company,
Texas Electric Service Company and Texas Power & Light Company, as amended by
the Modification of Operating Agreement dated April 20, 1979 between the same
parties and (ii) the Operating Agreement dated December 15, 1976, between Fuel
Company and Dallas Power & Light Company, Texas Electric Service Company and
Texas Power & Light Company, as the same may be amended from time to time,
provided that any resulting amended agreement shall not increase the scope of
Liens permitted under Section 5.10(i).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
"Permitted Encumbrances" means, as to any person at any date,
any of the following:
(a) Liens for taxes, assessments or governmental charges not
then delinquent and Liens for workers' compensation awards and similar
obligations not then delinquent and undetermined Liens or charges
incidental to construction, Liens for taxes, assessments or
governmental charges then delinquent but the validity of which is
being contested at the time by such person in good faith, Liens
incurred or created in connection with or to secure the performance of
bids, tenders, contracts (other than for the payment of money),
leases, statutory obligations, surety bonds or appeal bonds, and other
Liens of like nature incurred or created in the ordinary course of
business;
(b) Liens securing indebtedness, neither assumed nor
guaranteed by such person nor on which it customarily pays interest,
existing upon real estate or rights in or relating to real estate
acquired by such person for any
<PAGE> 20
16
substation, transmission line, transportation line, distribution line,
right of way or similar purpose;
(c) rights reserved to or vested in any municipality or public
authority by the terms of any right, power, franchise, grant, license
or permit, or by any provision of law, to terminate such right, power,
franchise, grant, license or permit or to purchase or recapture or to
designate a purchaser of any of the property of such person;
(d) rights reserved to or vested in others to take or receive
any part of the power, gas, oil, coal, lignite or other minerals or
timber generated, developed, manufactured or produced by, or grown on,
or acquired with, any property of such person;
(e) easements, restrictions, exceptions or reservations in any
property and/or rights of way of such person for the purpose of roads,
pipe lines, substations, transmission lines, transportation lines,
distribution lines, removal of oil, gas, lignite, coal or other
minerals or timber, and other like purposes, or for the joint or
common use of real property, rights of way, facilities and/or
equipment, and defects, irregularities and deficiencies in titles of
any property and/or rights of way, which do not materially impair the
use of such property and/or rights of way for the purposes for which
such property and/or rights of way are held by such person;
(f) rights reserved to or vested in any municipality or public
authority to use, control or regulate any property of such person;
(g) any obligations or duties, affecting the property of such
person, to any municipality or public authority with respect to any
franchise, grant, license or permit;
(h) as of any particular time any controls, Liens,
restrictions, regulations, easements, exceptions or reservations of
any municipality or public authority applying particularly to space
satellites or nuclear fuel;
(i) any judgment Lien against such person securing a judgment
for an amount not exceeding 25% of Consolidated
<PAGE> 21
17
Shareholders' Equity, so long as the finality of such judgment is
being contested by appropriate proceedings conducted in good faith and
execution thereon is stayed; or
(j) any Lien arising by reason of deposits with or giving of
any form of security to any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, for any purpose at any time as
required by law or governmental regulation as a condition to the
transaction of any business or the exercise of any privilege or
license, or to enable such person to maintain self-insurance or to
participate in any fund for liability on any insurance risks or in
connection with workers' compensation, unemployment insurance, old age
pensions or other social security or to share in the privileges or
benefits required for companies participating in such arrangements.
"person" shall mean any natural person, corporation, business
trust, joint venture, association, company, partnership or government, or any
agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan described
under Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA that is maintained by any Borrower or any ERISA
Affiliate.
"Rating Agencies" shall mean Moody's, S&P, D&P and Fitch and
any substitute rating agencies agreed upon by the Borrowers and the Agents.
"Ratings" shall mean the ratings from time to time established
by the Rating Agencies for TU Electric's first mortgage bonds issued under the
TU Electric Mortgage.
"Register" shall have the meaning given such term in Section
8.04(d).
"Reportable Event" shall mean any reportable event as defined
in Sections 4043(c)(1)-(8) of ERISA or the regulations issued thereunder (other
than a reportable event for which the 30-day notice requirement has been
waived) with respect to a Plan (other than a Plan maintained by an ERISA
<PAGE> 22
18
Affiliate that is considered an ERISA Affiliate only pursuant to subsection (m)
or (o) of Code Section 414).
"Required Lenders" shall mean, at any time, Lenders having
Standby Commitments and Term Loans representing at least 66 2/3% of the sum at
such time of the Total Standby Commitment and all Term Loans outstanding or,
for purposes of acceleration pursuant to clause (ii) of Article VI, Lenders
holding Loans representing at least 66 2/3% of the aggregate principal amount
of the Loans outstanding.
"Responsible Officer" of any corporation shall mean any
executive officer or Financial Officer of such corporation and any other
officer or similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement.
"S&P" shall mean Standard and Poor's (a division of The McGraw
Hill Companies).
"SEC" shall mean the Securities and Exchange Commission.
"Significant Subsidiary" shall mean at any time a Subsidiary
of TU which as of such time satisfies the definition of a "significant
subsidiary" contained as of the date hereof in Regulation S-X of the SEC;
provided that TU Electric shall at all times be considered a Significant
Subsidiary.
"Standby Borrowing" shall mean a Borrowing consisting of
simultaneous Standby Loans from each of the Lenders.
"Standby Commitment" shall mean, with respect to each Lender,
the commitment of such Lender to make Standby Loans hereunder as set forth in
Schedule 2.01 hereto, as such Standby Commitment may be permanently terminated
or reduced from time to time pursuant to Section 2.10, subject to Section 8.04.
The Standby Commitment of each Lender shall automatically and permanently
terminate on the Maturity Date if not terminated earlier pursuant to the terms
hereof.
"Standby Loans" shall mean the revolving loans made pursuant
to Section 2.04. Each Standby Loan shall be a Eurodollar Standby Loan or an
ABR Standby Loan.
<PAGE> 23
19
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate (without duplication) of the maximum
reserve percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board and any other banking
authority to which the Administrative Agent is subject for new negotiable
nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Subsidiary" shall mean, with respect to any person (the
"parent"), any corporation or other entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the
board of directors or other persons performing similar functions are at the
time directly or indirectly owned by such parent.
"Substantial" shall mean an amount in excess of 10% of the
consolidated assets of TU and its Consolidated Subsidiaries taken as a whole.
"Term Borrowing" shall mean a Borrowing consisting of
simultaneous Term Loans from each of the Lenders.
"Term Loan Commitment" shall mean, with respect to each
Lender, the commitment of such Lender to make Term Loans hereunder as set forth
in Schedule 2.01 hereto, as such Term Loan Commitment may be permanently
terminated or reduced from time to time pursuant to Section 2.10, subject to
Section 8.04. The Term Loan Commitment of each Lender shall automatically and
permanently terminate at 5:00 p.m., New York City time, on the Effective Date.
"Term Loans" shall mean the term loans made pursuant to
Section 2.01. Each Term Loan shall be a Eurodollar Term Loan or an ABR Term
Loan.
"Total Standby Commitment" shall mean, at any time, the
aggregate amount of Standby Commitments of all the Lenders, as in effect at
such time.
"Transactions" shall have the meaning assigned to such term in
Section 3.02.
<PAGE> 24
20
"TU Applicable Margin" shall mean on any date, with respect to
Eurodollar Standby Loans or Eurodollar Term Loans, the applicable percentage
set forth below under the caption "Standby Loan Spread" or "Term Loan Spread",
as the case may be, based upon the Ratings in effect on such date:
<TABLE>
<CAPTION>
Standby Loan Spread Term Loan Spread
------------------- ----------------
<S> <C> <C>
Category 1
----------
A- or higher by S&P; .2500% .3500%
A3 or higher by Moody's;
A- or higher by D&P or Fitch;
Category 2
----------
BBB+ by S&P .3000% .4500%
Baa1 by Moody's;
BBB+ by D&P or Fitch;
Category 3
----------
BBB by S&P; .3750% .5500%
Baa2 by Moody's;
BBB by D&P or Fitch;
Category 4
----------
BBB- by S&P; .5000% .7000%
Baa3 by Moody's;
BBB- by D&P or Fitch;
Category 5
----------
BB+ or lower by S&P; .6375% .9500%
Ba1 or lower by Moody's;
BB+ or lower by D&P or Fitch;
</TABLE>
For purposes of the foregoing, (i) if both D&P and Fitch have established
Ratings, only one of such Ratings shall be employed for purposes of determining
the TU Applicable Margin and the Rating employed shall be the Rating from the
institution that has for the longest period of time had a Rating established
for TU Electric; (ii) if more than two
<PAGE> 25
21
Ratings exist and the applicable Ratings established or deemed to have been
established by the Rating Agencies shall fall within different Categories, the
TU Applicable Margin shall be based upon the Category in which the largest
number of Ratings falls or is deemed to fall, provided, that if there shall be
no such Category, the middle Category shall apply; (iii) if only two Ratings
exist, the TU Applicable Margin shall, subject to clause (iv) below, be based
upon the lower of such Ratings; (iv) if neither S&P nor Moody's shall have a
Rating in effect, then the TU Applicable Margin shall be based upon Category 5;
and (v) if any Rating established or deemed to have been established by any
Rating Agency shall be changed (other than as a result of a change in the
rating system of such Rating Agency), such change shall be effective as of the
date on which such change is first announced by the Rating Agency making such
change. Each change in the TU Applicable Margin shall apply to all Eurodollar
Standby Loans or Eurodollar Term Loans that are outstanding at any time during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change. If the
rating system of any Rating Agency shall change, or if any Rating Agency shall
cease rating the first mortgage bonds of TU Electric (other than by reason of
any action or nonaction by TU Electric following or in anticipation of a
ratings downgrade), the parties hereto shall negotiate in good faith to amend
the references to specific ratings in this definition (including by way of
substituting another Rating Agency mutually acceptable to the Borrowers and the
Agents for the Rating Agency with respect to which the rating system has
changed or for which no Rating is then in effect) to reflect such changed
rating system or the nonavailability of Ratings from such Rating Agency, and
pending agreement on such amendment (but subject to clause (iv) above), the
Rating in effect immediately prior to such change or cessation will be used in
determining the TU Applicable Margin. If any Rating Agency shall not have a
Rating in effect by reason of any action or nonaction by TU Electric following
or in anticipation of a ratings downgrade, then such Rating Agency shall be
deemed to have established a Rating in Category 5.
"TU Electric Applicable Margin" shall mean on any date, with
respect to Eurodollar Standby Loans, the applicable
<PAGE> 26
22
percentage set forth below based upon the Ratings in effect on such date:
<TABLE>
<CAPTION>
Category 1 Applicable Percentage
---------- ---------------------
<S> <C>
A- or higher by S&P; .2000%
A3 or higher by Moody's;
A- or higher by D&P or Fitch;
Category 2
----------
BBB+ by S&P; .2250%
Baa1 by Moody's;
BBB+ by D&P or Fitch;
Category 3
----------
BBB by S&P; .2750%
Baa2 by Moody's;
BBB by D&P or Fitch;
Category 4
----------
BBB- by S&P; .4000%
Baa3 by Moody's;
BBB- by D&P or Fitch;
Category 5
----------
BB+ or lower by S&P; .5375%
Ba1 or lower by Moody's;
BB+ or lower by D&P or Fitch;
</TABLE>
For purposes of the foregoing, (i) if both D&P and Fitch have established
Ratings, only one of such Ratings shall be employed for purposes of determining
the TU Electric Applicable Margin and the Rating employed shall be the Rating
from the institution that has for the longest period of time had a Rating
established for TU Electric; (ii) if more than two Ratings exist and the
applicable Ratings established or deemed to have been established by the Rating
Agencies shall fall within different Categories, the TU Electric Applicable
Margin shall be based upon the Category in which the largest number of Ratings
falls or is deemed to fall, provided, that if there shall be no such Category,
the middle Category shall apply; (iii) if only two Ratings exist, the TU
Electric Applicable Margin shall, subject to clause (iv) below, be based upon
the lower of such Ratings; (iv) if neither S&P nor
<PAGE> 27
23
Moody's shall have a Rating in effect, then the TU Electric Applicable Margin
shall be based upon Category 5; and (v) if any Rating established or deemed to
have been established by any Rating Agency shall be changed (other than as a
result of a change in the rating system of such Rating Agency), such change
shall be effective as of the date on which such change is first announced by
the Rating Agency making such change. Each change in the TU Electric
Applicable Margin shall apply to all Eurodollar Standby Loans or Eurodollar
Term Loans that are outstanding at any time during the period commencing on the
effective date of such change and ending on the date immediately preceding the
effective date of the next such change. If the rating system of any Rating
Agency shall change, or if any Rating Agency shall cease rating the first
mortgage bonds of TU Electric (other than by reason of any action or nonaction
by TU Electric following or in anticipation of a ratings downgrade), the
parties hereto shall negotiate in good faith to amend the references to
specific ratings in this definition (including by way of substituting another
Rating Agency mutually acceptable to the Borrowers and the Agents for the
Rating Agency with respect to which the rating system has changed or for which
no Rating is then in effect) to reflect such changed rating system or the
nonavailability of Ratings from such Rating Agency, and pending agreement on
such amendment (but subject to clause (iv) above), the Rating in effect
immediately prior to such change or cessation will be used in determining the
TU Electric Applicable Margin. If any Rating Agency shall not have a Rating in
effect by reason of any action or nonaction by TU Electric following or in
anticipation of a ratings downgrade, then such Rating Agency shall be deemed to
have established a Rating in Category 5.
"TU Electric Mortgage" shall mean the Mortgage and Deed of
Trust dated as of December 1, 1983, from TU Electric to Irving Trust Company
(now The Bank of New York), Trustee, as amended or supplemented from time to
time.
"Type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, "Rate" shall
include the LIBO Rate, the Alternate Base Rate and the Fixed Rate.
"Voting Shares" shall mean, as to shares of a particular
corporation, outstanding shares of stock of any class of such corporation
entitled to vote in the election of
<PAGE> 28
24
directors, excluding shares entitled so to vote only upon the happening of some
contingency.
"Wholly-Owned Subsidiary" shall mean any Consolidated
Subsidiary all the shares of common stock and other voting capital stock or
other voting ownership interests having ordinary voting power to vote in the
election of the board of directors or other governing body performing similar
functions (except directors' qualifying shares) of which are at the time
directly or indirectly owned by TU.
"Withdrawal Liability" shall mean liability of a Borrower
established under Section 4201 of ERISA as a result of a complete or partial
withdrawal from a Multiemployer Plan, as such terms are defined in Part I of
Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section
1.01 shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include,"
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation." All references herein to Articles, Sections, Exhibits
and Schedules shall be deemed references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as
in effect from time to time; provided, however, that for purposes of
determining compliance with any covenant set forth in Article V, such terms
shall be construed in accordance with GAAP as in effect on the date hereof
applied on a basis consistent with the application used in preparing the
Borrowers' audited financial statements referred to in Section 3.05.
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and
conditions and relying upon the representations and warranties herein set
forth, each Lender agrees, severally and not jointly, (a) to make a Term Loan
to TU on the Effective Date in a principal amount not to exceed its Term Loan
Commitment, and (b) to make Standby Loans to each Borrower, at any time and
from time to time on and after the date hereof and until the earlier of the
Maturity Date and the termination
<PAGE> 29
25
of the Standby Commitment of such Lender, in an aggregate principal amount at
any time outstanding not to exceed such Lender's Standby Commitment minus the
amount by which the Competitive Loans made to such Borrower and outstanding at
such time shall be deemed to have used such Standby Commitment pursuant to
Section 2.14, subject, however, to the conditions that (i) at no time shall (A)
the sum of (x) the outstanding aggregate principal amount of all Standby Loans
plus (y) the outstanding aggregate principal amount of all Competitive Loans
exceed (B) the Total Standby Commitment, (ii) at no time shall (A) the sum of
(x) the outstanding aggregate principal amount of all Standby Loans to TU plus
(y) the outstanding aggregate principal amount of all Competitive Loans to TU
plus (z) the outstanding aggregate principal amount of all Loans to TU under
and as defined in the Facility A Credit Agreement exceed (B) 60% of the sum of
the Total Standby Commitment hereunder and the Total Commitment under and as
defined in the Facility A Credit Agreement, (iii) at no time shall the
outstanding aggregate principal amount of all Standby Loans made by any Lender
exceed the amount of such Lender's Standby Commitment and (iv) at all times,
the outstanding aggregate principal amount of all Standby Loans made by each
Lender to each Borrower shall equal the product of (A) the percentage which
such Lender's Standby Commitment represents of the Total Standby Commitment
times (B) the outstanding aggregate principal amount of all Standby Loans made
to such Borrower.
Within the foregoing limits, the Borrowers may borrow, pay or
prepay and reborrow Standby Loans hereunder, on and after the Effective Date
and prior to the Maturity Date, subject to the terms, conditions and
limitations set forth herein. Amounts paid or prepaid in respect of Term Loans
may not be reborrowed.
SECTION 2.02. Loans. (a) Each Standby Loan or Term Loan
shall be made as part of a Borrowing consisting of Loans made by the Lenders
ratably in accordance with their respective Standby Commitments or Term Loan
Commitments, as the case may be; provided, however, that the failure of any
Lender to make any Standby Loan or Term Loan shall not in itself relieve any
other Lender of its obligation to lend hereunder (it being understood, however,
that no Lender shall be responsible for the failure of any other Lender to make
any Loan required to be made by such other Lender). Each Competitive Loan
shall be made in accordance with the procedures set forth in Section 2.03. The
Standby Loans, Term Loans or Competitive Loans comprising any Borrowing shall
be (i) in the case of Competitive Loans, in an aggregate
<PAGE> 30
26
principal amount which is an integral multiple of $1,000,000 and not less than
$5,000,000 and (ii) in the case of Standby Loans and Term Loans, in an
aggregate principal amount which is an integral multiple of $5,000,000 and not
less than $10,000,000 (or an aggregate principal amount equal to the remaining
balance of the available Standby Commitments or the outstanding Term Loans, as
the case may be).
(b) Each Competitive Borrowing shall be comprised entirely of
Eurodollar Competitive Loans or Fixed Rate Loans, and each other Borrowing
shall be comprised entirely of Eurodollar Loans or ABR Loans, as the applicable
Borrower may request pursuant to Section 2.03 or 2.04, as applicable. Each
Lender may at its option make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement. Borrowings of
more than one Type may be outstanding at the same time.
(c) Subject to paragraph (d) below, each Lender shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds to the Administrative Agent in Houston,
Texas, not later than 11:00 a.m., Houston time, and the Administrative Agent
shall by 2:00 p.m., Houston time, credit the amounts so received to the account
or accounts specified from time to time in one or more notices delivered by the
applicable Borrower to the Administrative Agent or, if a Borrowing shall not
occur on such date because any condition precedent herein specified shall not
have been met, return the amounts so received to the respective Lenders.
Competitive Loans shall be made by the Lender or Lenders whose Competitive Bids
therefor are accepted pursuant to Section 2.03 in the amounts so accepted.
Standby Loans and Term Loans shall be made by the Lenders pro rata in
accordance with Section 2.14. Unless the Administrative Agent shall have
received notice from a Lender prior to the date of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's
portion of such Borrowing, the Administrative Agent may assume that such Lender
has made such portion available to the Administrative Agent on the date of such
Borrowing in accordance with this paragraph (c) and the Administrative Agent
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If and to the extent that such Lender shall not
have made such portion available to the Administrative Agent, such
<PAGE> 31
27
Lender and such Borrower (without waiving any claim against such Lender for
such Lender's failure to make such portion available) severally agree to repay
to the Administrative Agent forthwith on demand such corresponding amount
together with interest thereon, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Effective Rate. If such Lender shall
repay to the Administrative Agent such corresponding amount, such amount shall
constitute such Lender's Loan as part of such Borrowing for purposes of this
Agreement.
(d) A Borrower may refinance all or any part of any Standby
Borrowing with a Standby Borrowing of the same or a different Type, subject to
the conditions and limitations set forth in this Agreement. Any Standby
Borrowing or part thereof so refinanced shall be deemed to be repaid or prepaid
in accordance with Section 2.06 or 2.11, as applicable, with the proceeds of a
new Standby Borrowing, and the proceeds of the new Standby Borrowing, to the
extent they do not exceed the principal amount of the Standby Borrowing being
refinanced, shall not be paid by the Lenders to the Administrative Agent or by
the Administrative Agent to such Borrower pursuant to paragraph (c) above.
(e) TU shall have the right at any time upon prior
irrevocable notice to the Administrative Agent (i) not later than 10:00 a.m.,
Houston time, on the day of conversion, to convert any Eurodollar Term
Borrowing into an ABR Term Borrowing, (ii) not later than 10:00 a.m., Houston
time, three Business Days prior to conversion or continuation, to convert any
ABR Term Borrowing into a Eurodollar Term Borrowing or to continue any
Eurodollar Term Borrowing as a Eurodollar Term Borrowing for an additional
Interest Period, and (iii) not later than 10:00 a.m., Houston time, three
Business Days prior to conversion, to convert the Interest Period with respect
to any Eurodollar Term Borrowing to another permissible Interest Period,
subject in each case to the following:
(i) each conversion or continuation shall be made pro rata
among the Lenders in accordance with the respective principal amounts
of the Term Loans comprising the converted or continued Term
Borrowing;
(ii) if less than all the outstanding principal amount of any
Term Borrowing shall be converted or
<PAGE> 32
28
continued, then each resulting Term Borrowing shall satisfy the
limitations specified in Section 2.02(a) regarding the principal
amount of Term Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and
the Administrative Agent by recording for the account of such Lender
the new Term Loan of such Lender resulting from such conversion and
reducing the Term Loan (or portion thereof) of such Lender being
converted by an equivalent principal amount; accrued interest on any
Eurodollar Term Loan (or portion thereof) being converted shall be
paid by TU at the time of conversion;
(iv) if any Eurodollar Term Borrowing is converted at a time
other than the end of the Interest Period applicable thereto, TU shall
pay, upon demand, any amounts due to the Lenders pursuant to Section
8.05;
(v) any portion of a Term Borrowing maturing in less than
seven days may not be converted into or continued as a Eurodollar Term
Borrowing;
(vi) any portion of a Eurodollar Term Borrowing that cannot be
converted into or continued as a Eurodollar Term Borrowing by reason
of the immediately preceding clause shall be automatically converted
at the end of the Interest Period in effect for such Term Borrowing
into an ABR Term Borrowing;
(vii) no Interest Period may be selected for any Eurodollar
Term Borrowing that would end later than the Maturity Date; and
(viii) upon notice to TU from the Administrative Agent given
at the request of the Required Lenders, after the occurrence and
during the continuance of a Default or Event of Default, no
outstanding Term Loan may be converted into, or continued as, a
Eurodollar Term Loan.
Each notice pursuant to this Section 2.02(e) shall be
irrevocable and shall refer to this Agreement and specify (i) the identity and
amount of the Term Borrowing that TU requests be converted or continued, (ii)
whether such Term Borrowing is to be converted to or continued as a Eurodollar
Term Borrowing or an ABR Term Borrowing, (iii) if such notice requests a
conversion, the date of such conversion (which shall be a Business Day) and
(iv) if such Term Borrowing is to
<PAGE> 33
29
be converted to or continued as a Eurodollar Term Borrowing, the Interest
Period with respect thereto. If no Interest Period is specified in any such
notice with respect to any conversion to or continuation as a Eurodollar Term
Borrowing, TU shall be deemed to have selected an Interest Period of one
month's duration. The Administrative Agent shall advise the Lenders of any
notice given pursuant to this Section 2.02(e) and of each Lender's portion of
any converted or continued Term Borrowing. If TU shall not have given notice
in accordance with this Section 2.02(e) to continue any Term Borrowing into a
subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.02(e) to convert such Term Borrowing), such Term
Borrowing shall, at the end of the Interest Period applicable thereto (unless
repaid pursuant to the terms hereof), automatically be continued into a new
Interest Period as an ABR Term Borrowing. TU shall not have the right to
continue or convert the Interest Period with respect to any Standby Borrowing
or Competitive Borrowing pursuant to this Section 2.02(e).
SECTION 2.03. Competitive Bid Procedure. (a) In order to
request Competitive Bids, a Borrower shall hand deliver or telecopy to the CAF
Agent a duly completed Competitive Bid Request in the form of Exhibit A-1
hereto, to be received by the CAF Agent (i) in the case of a Eurodollar
Competitive Borrowing, not later than 11:00 a.m., New York City time, four
Business Days before a proposed Competitive Borrowing and (ii) in the case of a
Fixed Rate Borrowing, not later than 11:00 a.m., New York City time, one
Business Day before a proposed Competitive Borrowing. No ABR Loan shall be
requested in, or made pursuant to, a Competitive Bid Request. A Competitive
Bid Request that does not conform substantially to the format of Exhibit A-1
may be rejected in the CAF Agent's sole discretion, and the CAF Agent shall
promptly notify the Borrower of such rejection by telecopy. Each Competitive
Bid Request shall refer to this Agreement and specify (w) whether the Borrowing
then being requested is to be a Eurodollar Borrowing or a Fixed Rate Borrowing,
(x) the date of such Borrowing (which shall be a Business Day) and the
aggregate principal amount thereof which shall be in a minimum principal amount
of $5,000,000 and in an integral multiple of $1,000,000, and (y) the Interest
Period with respect thereto (which may not end after the Maturity Date).
Promptly after its receipt of a Competitive Bid Request that is not rejected as
aforesaid, the CAF Agent shall telecopy to each Lender a Notice of Competitive
Bid Request, in the form of Exhibit A-2,
<PAGE> 34
30
inviting the Lenders to bid, on the terms and conditions of this Agreement, to
make Competitive Loans.
(b) Each Lender invited to bid may, in its sole discretion,
make one or more Competitive Bids to the Borrower responsive to such Borrower's
Competitive Bid Request. Each Competitive Bid by a Lender must be received by
the CAF Agent by telecopy, in the form of Exhibit A-3 hereto, (i) in the case
of a Eurodollar Competitive Borrowing, not later than 9:30 a.m., New York City
time, three Business Days before a proposed Competitive Borrowing and (ii) in
the case of a Fixed Rate Borrowing, not later than 9:30 a.m., New York City
time, on the day of a proposed Competitive Borrowing. Multiple bids will be
accepted by the CAF Agent. Competitive Bids that do not conform substantially
to the format of Exhibit A-3 may be rejected by the CAF Agent, and the CAF
Agent shall notify the Lender making such nonconforming bid of such rejection
as soon as practicable. Each Competitive Bid shall refer to this Agreement and
specify (x) the principal amount (which shall be in a minimum principal amount
of $5,000,000 and in an integral multiple of $1,000,000 and which may equal the
entire principal amount of the Competitive Borrowing requested by the
applicable Borrower) of the Competitive Loan or Loans that the Lender is
willing to make to such Borrower, (y) the Competitive Bid Rate or Rates at
which the Lender is prepared to make the Competitive Loan or Loans and (z) the
Interest Period and the last day thereof. If any Lender invited to bid shall
elect not to make a Competitive Bid, such Lender shall so notify the CAF Agent
by telecopy (I) in the case of Eurodollar Competitive Loans, not later than
9:30 a.m., New York City time, three Business Days before a proposed
Competitive Borrowing, and (II) in the case of Fixed Rate Loans, not later than
9:30 a.m., New York City time, on the day of a proposed Competitive Borrowing;
provided, however, that failure by any Lender to give such notice shall not
cause such Lender to be obligated to make any Competitive Loan as part of such
Competitive Borrowing. A Competitive Bid submitted by a Lender pursuant to
this paragraph (b) shall be irrevocable.
(c) The CAF Agent shall notify the Borrower by telecopy, of
all the Competitive Bids made, the Competitive Bid Rate and the principal
amount of each Competitive Loan in respect of which such Competitive Bid was
made and the identity of the Lender that made each such bid by (i) in the case
of a Eurodollar Competitive Borrowing, not later than 10:00 a.m., New York City
time, three Business Days before a proposed Competitive Borrowing and (ii) in
the case of a Fixed
<PAGE> 35
31
Rate Borrowing, not later than 10:00 a.m., New York City time, on the day of a
proposed Competitive Borrowing. The CAF Agent shall send a copy of all
Competitive Bids to the Borrower for its records as soon as practicable after
the completion of the bidding process set forth in this Section 2.03.
(d) A Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d), accept or reject any or
all Competitive Bids referred to in paragraph (c) above. Such Borrower shall
notify the CAF Agent by telephone, confirmed by telecopy in the form of a
Competitive Bid Accept/Reject Letter, whether and to what extent it has decided
to accept or reject any of or all the bids referred to in paragraph (c) above
by (i) in the case of a Eurodollar Competitive Borrowing, not later than 10:30
a.m., New York City time, three Business Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 10:30
a.m., New York City time, on the day of a proposed Competitive Borrowing;
provided, however, that (i) the failure by such Borrower to give such notice
shall be deemed to be a rejection of all the bids referred to in paragraph (c)
above, (ii) such Borrower shall not accept a bid made at a particular
Competitive Bid Rate if it has decided to reject a bid made at a lower
Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids
accepted by such Borrower shall not exceed the principal amount specified in
the Competitive Bid Request, (iv) if such Borrower shall accept a bid or bids
made at a particular Competitive Bid Rate but the amount of such bid or bids
shall cause the total amount of bids to be accepted by such Borrower to exceed
the amount specified in the Competitive Bid Request, then such Borrower shall
accept a portion of such bid or bids in an amount equal to the amount specified
in the Competitive Bid Request less the amount of all other Competitive Bids
accepted with respect to such Competitive Bid Request, which acceptance, in the
case of multiple bids at such Competitive Bid Rate, shall be made pro rata in
accordance with the amount of each such bid at such Competitive Bid Rate, and
(v) except pursuant to clause (iv) above, no bid shall be accepted for a
Competitive Loan unless such Competitive Loan is in a minimum principal amount
of $5,000,000 and an integral multiple of $1,000,000; provided further,
however, that if a Competitive Loan must be in an amount less than $5,000,000
because of the provisions of clause (iv) above, such Competitive Loan may be
for a minimum of $1,000,000 or any integral multiple thereof, and in
calculating the pro rata allocation of acceptances of portions of multiple bids
at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall
be rounded to
<PAGE> 36
32
integral multiples of $1,000,000 in a manner which shall be in the discretion
of the applicable Borrower. A notice given by a Borrower pursuant to this
paragraph (d) shall be irrevocable.
(e) The CAF Agent shall promptly notify each bidding Lender
(and the Administrative Agent), by telecopy, whether or not its Competitive Bid
has been accepted (and if so, in what amount and at what Competitive Bid Rate)
and each successful bidder will thereupon become bound, subject to the other
applicable conditions hereof, to make the Competitive Loan in respect of which
its bid has been accepted.
(f) No Competitive Borrowing shall be requested or made
hereunder if after giving effect thereto any of the conditions set forth in
paragraph (i) or (ii) of Section 2.01 would not be met.
(g) If either the Administrative Agent or CAF Agent shall
elect to submit a Competitive Bid in its capacity as a Lender, such party shall
submit such bid directly to the Borrower one quarter of an hour earlier than
the latest time at which the other Lenders are required to submit their bids to
the CAF Agent pursuant to paragraph (b) above.
(h) Each of the Borrowers and the CAF Agent shall deliver to
the Administrative Agent by telecopy copies of all notices delivered by it
pursuant to this Section 2.03 at the same times such notices are delivered
hereunder. All notices required by this Section 2.03 shall be given in
accordance with Section 8.01.
(i) A Competitive Bid Request shall not be made within five
Business Days after the date of any previous Competitive Bid which was accepted
by a Borrower pursuant to paragraph (d) above.
SECTION 2.04. Borrowing Procedure. In order to request a
Term Borrowing or a Standby Borrowing, a Borrower shall hand deliver or
telecopy to the Administrative Agent a duly completed Borrowing Request in the
form of Exhibit A-5 (a) in the case of a Eurodollar Borrowing, not later than
10:00 a.m., Houston time, three Business Days before such Borrowing, and (b) in
the case of an ABR Borrowing, not later than 10:00 a.m., Houston time, on the
day of such Borrowing. No Fixed Rate Loan shall be requested or made pursuant
to a Borrowing Request. Such notice shall be irrevocable and shall in each
case specify (i) whether the Borrowing then being
<PAGE> 37
33
requested is to be a Term Borrowing or a Standby Borrowing, and whether such
Borrowing is to be a Eurodollar Borrowing or an ABR Borrowing; (ii) the date of
such Standby Borrowing (which shall be a Business Day) and the amount thereof;
and (iii) if such Borrowing is to be a Eurodollar Borrowing, the Interest
Period with respect thereto, which shall not end after the Maturity Date. If
no election as to the Type of Borrowing is specified in any such notice, then
the requested Borrowing shall be an ABR Borrowing. If no Interest Period with
respect to any Eurodollar Borrowing is specified in any such notice, then the
Borrower shall be deemed to have selected an Interest Period of one month's
duration. If a Borrower shall not have given notice in accordance with this
Section 2.04 of its election to refinance a Standby Borrowing prior to the end
of the Interest Period in effect for such Borrowing, then such Borrower shall
(unless such Borrowing is repaid at the end of such Interest Period) be deemed
to have given notice of an election to refinance such Borrowing with an ABR
Borrowing. Notwithstanding any other provision of this Agreement to the
contrary, no Borrowing shall be requested if the Interest Period with respect
thereto would end after the Maturity Date. The Administrative Agent shall
promptly advise the Lenders of any notice given pursuant to this Section 2.04
and of each Lender's portion of the requested Borrowing.
SECTION 2.05. Fees. (a) TU agrees to pay (and TU Electric
agrees to pay, to the extent that TU shall not have paid all such fees, up to
the amount of its Fee Share (without duplication) from time to time) to each
Lender, through the Administrative Agent, on each March 31, June 30, September
30 and December 31 (with the first payment being due on June 30, 1996) and on
each date on which the Standby Commitment of such Lender shall be terminated as
provided herein, a facility fee (a "Facility Fee"), at a rate per annum equal
to the Facility Fee Percentage from time to time in effect on the amount of the
Standby Commitment of such Lender, whether used or unused, during the preceding
quarter (or other period commencing on the Effective Date or ending with the
Maturity Date or any date on which the Standby Commitment of such Lender shall
be terminated). All Facility Fees shall be computed on the basis of the actual
number of days elapsed in a year of 365 or 366 days, as the case may be. The
Facility Fee due to each Lender shall commence to accrue on the Effective Date,
and shall cease to accrue on the earlier of the Maturity Date and the
termination of the Standby Commitment of such Lender as provided herein.
<PAGE> 38
34
(b) TU agrees (and TU Electric agrees, to the extent that TU
shall not have paid such fees, up to the amount of its Fee Share from time to
time) to pay the Administrative Agent, for its own account, the administrative
and other fees provided for in the Fee Letter (the "Administrative Fees").
(c) Each Borrower agrees to pay the CAF Agent, for its own
account, the Auction Fees applicable to such Borrower.
(d) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders or to the CAF Agent. Once paid, none of the
Fees shall be refundable under any circumstances.
SECTION 2.06. Repayment of Loans; Evidence of Indebtedness.
(a) The outstanding principal balance of each Standby Loan and each
Competitive Loan shall be due and payable on the earlier of the last day of the
Interest Period applicable thereto and the Maturity Date and the outstanding
principal balance of each Term Loan shall be due and payable on the Maturity
Date.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which
it will record (i) the amount of each Loan made hereunder, the Type of each
Loan made and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from each
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from each Borrower and each Lender's share
thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) of this Section 2.06 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein
shall not in any manner affect the obligations of the Borrowers to repay the
Loans in accordance with their terms.
<PAGE> 39
35
SECTION 2.07. Interest on Loans. (a) Subject to the
provisions of Section 2.08, the Loans comprising each Eurodollar Borrowing
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to (i) in the case of each
Eurodollar Standby Loan and each Eurodollar Term Loan made to TU, the LIBO Rate
for the Interest Period in effect for such Borrowing plus the TU Applicable
Margin from time to time in effect, (ii) in the case of each Eurodollar Standby
Loan made to TU Electric, the LIBO Rate for the Interest Period in effect for
such Borrowing plus the TU Electric Applicable Margin from time to time in
effect and (iii) in the case of each Eurodollar Competitive Loan, the LIBO Rate
for the Interest Period in effect for such Borrowing plus the Competitive Bid
Margin offered by the Lender making such Loan and accepted by the applicable
Borrower pursuant to Section 2.03.
(b) Subject to the provisions of Section 2.08, the Loans
comprising each ABR Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be, for periods during which the Alternate Base Rate is determined by reference
to the Prime Rate and 360 days for other periods) at a rate per annum equal to
the Alternate Base Rate.
(c) Subject to the provisions of Section 2.08, each Fixed
Rate Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the fixed rate
of interest offered by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.03.
(d) The interest rate applicable to each Eurodollar Loan made
to TU shall be increased by 0.10% per annum for each day on which Indebtedness
of TU in excess of that permitted under Section 5.13 (without giving effect to
the proviso therein) shall be outstanding.
(e) Interest on each Loan shall be payable on each Interest
Payment Date applicable to such Loan except as otherwise provided in this
Agreement. The applicable LIBO Rate or Alternate Base Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be
determined by Chemical, and such determination shall be conclusive absent
manifest error; provided that Chemical shall, upon request, provide to the
applicable Borrower a
<PAGE> 40
36
certificate setting forth in reasonable detail the basis for such
determination.
SECTION 2.08. Default Interest. If a Borrower shall default
in the payment of the principal of or interest on any Loan or any other amount
becoming due hereunder, whether by scheduled maturity, notice of prepayment,
acceleration or otherwise, such Borrower shall on demand from time to time from
the Administrative Agent pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed as provided in Section
2.07(b)) equal to the Alternate Base Rate plus 1%.
SECTION 2.09. Alternate Rate of Interest. In the event, and
on each occasion, that on the day two Business Days prior to the commencement
of any Interest Period for a Eurodollar Borrowing the Administrative Agent
shall have determined (i) that dollar deposits in the principal amounts of the
Eurodollar Loans comprising such Borrowing are not generally available in the
London interbank market or (ii) that reasonable means do not exist for
ascertaining the LIBO Rate, the Administrative Agent shall, as soon as
practicable thereafter, give telecopy notice of such determination to the
Borrowers and the Lenders. In the event of any such determination under
clauses (i) or (ii) above, until the Administrative Agent shall have advised
the Borrowers and the Lenders that the circumstances giving rise to such notice
no longer exist, (x) any request by a Borrower for a Eurodollar Competitive
Borrowing pursuant to Section 2.03 shall be of no force and effect and shall be
denied by the Administrative Agent and (y) any request by a Borrower for a
Eurodollar Standby Borrowing or a Eurodollar Term Borrowing pursuant to Section
2.02 or 2.04 shall be deemed to be a request for an ABR Borrowing. In the
event the Required Lenders notify the Administrative Agent that the rates at
which dollar deposits are being offered will not adequately and fairly reflect
the cost to such Lenders of making or maintaining Eurodollar Loans during such
Interest Period, the Administrative Agent shall notify the applicable Borrower
of such notice and until the Required Lenders shall have advised the
Administrative Agent that the circumstances giving rise to such notice no
longer exist, any request by such Borrower for a Eurodollar Standby Borrowing
shall be deemed a request for an ABR Borrowing. Each determination by the
Administrative Agent hereunder shall be made in good faith and shall be
conclusive absent manifest error; provided that the Administrative Agent,
shall, upon request, provide to the
<PAGE> 41
37
applicable Borrower a certificate setting forth in reasonable detail the basis
for such determination.
SECTION 2.10. Termination and Reduction of Commitments. (a)
The Term Loan Commitments shall automatically terminate at 5:00 p.m., New York
City time, on the Effective Date. The Standby Commitments shall automatically
terminate at 5:00 p.m., New York City time, on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable
written notice to the Administrative Agent, the Borrowers, acting jointly, may
at any time in whole permanently terminate, or from time to time in part
permanently reduce, the Term Loan Commitments or the Standby Commitments;
provided, however, that (i) each partial reduction of the Term Loan Commitments
or the Standby Commitments shall be in an integral multiple of $5,000,000 and
in a minimum principal amount of $5,000,000 and (ii) no such termination or
reduction shall be made which would reduce the Total Standby Commitment to an
amount (1) less than the aggregate outstanding principal amount of all
Competitive Loans or (2) less than $50,000,000, unless the result of such
termination or reduction referred to in this clause (2) is to reduce the Total
Standby Commitment to $0. The Administrative Agent shall advise the Lenders of
any notice given pursuant to this Section 2.10(b) and of each Lender's portion
of any such termination or reduction of the Term Loan Commitments or the
Standby Commitments.
(c) Each reduction in the Term Loan Commitments or the
Standby Commitments hereunder shall be made ratably among the Lenders in
accordance with their respective applicable Commitments. The Borrowers shall
pay to the Administrative Agent for the account of the Lenders, on the date of
each termination or reduction, the Facility Fees on the amount of the
Commitments so terminated or reduced accrued through the date of such
termination or reduction.
SECTION 2.11. Prepayment. (a) Each Borrower shall have the
right at any time and from time to time to prepay any Standby Borrowing and any
Term Borrowing, in whole or in part, upon giving telecopy notice (or telephone
notice promptly confirmed by telecopy) to the Administrative Agent: (i) before
10:00 a.m., Houston time, three Business Days prior to prepayment, in the case
of Eurodollar Loans, and (ii) before 10:00 a.m., Houston time, one Business Day
prior to prepayment, in the case of ABR Loans; provided, however,
<PAGE> 42
38
that each partial prepayment shall be in an amount which is an integral
multiple of $5,000,000 and not less than $5,000,000. No prepayment may be made
in respect of any Competitive Borrowing.
(b) On the date of any termination or reduction of the
Standby Commitments pursuant to Section 2.10, the Borrowers shall pay or prepay
so much of the Standby Borrowings as shall be necessary in order that the
aggregate principal amount of the Competitive Loans and Standby Loans
outstanding will not exceed the Total Standby Commitment, after giving effect
to such termination or reduction.
(c) Each notice of prepayment shall specify the prepayment
date and the principal amount of each Borrowing (or portion thereof) to be
prepaid, shall be irrevocable and shall commit the Borrower to prepay such
Borrowing (or portion thereof) by the amount stated therein on the date stated
therein. All prepayments under this Section 2.11 shall be subject to Section
8.05 but otherwise without premium or penalty. All prepayments under this
Section 2.11 shall be accompanied by accrued interest on the principal amount
being prepaid to the date of payment.
SECTION 2.12. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation
or administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender hereunder
(except for changes in respect of taxes on the overall net income of such
Lender or its lending office imposed by the jurisdiction in which such Lender's
principal executive office or lending office is located), or shall result in
the imposition, modification or applicability of any reserve, special deposit
or similar requirement against assets of, deposits with or for the account of
or credit extended by any Lender, or shall result in the imposition on any
Lender or the London interbank market of any other condition affecting this
Agreement, such Lender's Commitment or any Eurodollar Loan or Fixed Rate Loan
made by such Lender, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Loan
or Fixed Rate Loan or to reduce the amount of any sum received or receivable by
such Lender hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender to be material, then the
<PAGE> 43
39
applicable Borrower or, if the foregoing circumstances do not relate to a
particular Borrowing, the Borrowers shall, upon receipt of the notice and
certificate provided for in Section 2.12(c), promptly pay to such Lender such
additional amount or amounts as will compensate such Lender for such additional
costs incurred or reduction suffered. Notwithstanding the foregoing, no Lender
shall be entitled to request compensation under this paragraph with respect to
any Competitive Loan if the change giving rise to such request was applicable
to such Lender at the time of submission of the Competitive Bid pursuant to
which such Competitive Loan was made.
(b) If any Lender shall have determined that the adoption of
any law, rule, regulation or guideline arising out of the July 1988 report of
the Basle Committee on Banking Regulations and Supervisory Practices entitled
"International Convergence of Capital Measurement and Capital Standards," or
the adoption after the date hereof of any other law, rule, regulation or
guideline regarding capital adequacy, or any change in any of the foregoing or
in the interpretation or administration of any of the foregoing by any
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or any Lender's holding company with any request
or directive regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's capital or on
the capital of such Lender's holding company, if any, as a consequence of this
Agreement, such Lender's Commitment or the Loans made by such Lender pursuant
hereto to a level below that which such Lender or such Lender's holding company
could have achieved but for such adoption, change or compliance (taking into
consideration such Lender's policies and the policies of such Lender's holding
company with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time such additional amount or amounts as will
compensate such Lender for any such reduction suffered will be paid by the
Borrowers to such Lender.
(c) A certificate of each Lender setting forth such amount or
amounts as shall be necessary to compensate such Lender or its holding company
as specified in paragraph (a) or (b) above, as the case may be, and containing
an explanation in reasonable detail of the manner in which such amount or
amounts shall have been determined, shall be delivered to the
<PAGE> 44
40
applicable Borrower or the Borrowers, as the case may be, and shall be
conclusive absent manifest error. The Borrowers shall pay each Lender the
amount shown as due on any such certificate delivered by it within 10 days
after its receipt of the same. Each Lender shall give prompt notice to the
applicable Borrower of any event of which it has knowledge, occurring after the
date hereof, that it has determined will require compensation by such Borrower
pursuant to this Section; provided, however, that failure by such Lender to
give such notice shall not constitute a waiver of such Lender's right to demand
compensation hereunder.
(d) Failure on the part of any Lender to demand compensation
for any increased costs or reduction in amounts received or receivable or
reduction in return on capital with respect to any period shall not constitute
a waiver of such Lender's right to demand compensation with respect to such
period or any other period; provided, however, that no Lender shall be entitled
to compensation under this Section 2.12 for any costs incurred or reductions
suffered with respect to any date unless it shall have notified the applicable
Borrower that it will demand compensation for such costs or reductions under
paragraph (c) above not more than 90 days after the later of (i) such date and
(ii) the date on which it shall have become aware of such costs or reductions.
The protection of this Section shall be available to each Lender regardless of
any possible contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition which shall have occurred or
been imposed.
(e) Each Lender agrees that it will designate a different
lending office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the reasonable judgment of such
Lender, be disadvantageous to such Lender.
SECTION 2.13. Change in Legality. (a) Notwithstanding any
other provision herein, if any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written
notice to the Borrowers and to the Agents, such Lender may:
<PAGE> 45
41
(i) declare that Eurodollar Loans will not thereafter be made
by such Lender hereunder (or be continued for additional Interest
Periods) and that ABR Loans will not thereafter be converted into
Eurodollar Loans, whereupon such Lender shall not submit a Competitive
Bid in response to a request for Eurodollar Competitive Loans and any
request for a Eurodollar Borrowing (or to convert an ABR Borrowing to
a Eurodollar Borrowing or to continue a Eurodollar Borrowing for an
additional Interest Period) shall, as to such Lender only, be deemed a
request for an ABR Loan (or a request to continue an ABR Loan as such
for an additional Interest Period or to convert a Eurodollar Loan into
an ABR Loan, as the case may be), unless such declaration shall be
subsequently withdrawn (any Lender delivering such a declaration
hereby agreeing to withdraw such declaration promptly upon determining
that such event of illegality no longer exists); and
(ii) require that all outstanding Eurodollar Loans made by it
be converted to ABR Loans, in which event all such Eurodollar Loans
shall be automatically converted to ABR Loans as of the effective date
of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal which would otherwise have been applied
to repay the Eurodollar Loans that would have been made by such Lender or the
converted Eurodollar Loans of such Lender shall instead be applied to repay the
ABR Loans made by such Lender in lieu of, or resulting from the conversion of,
such Eurodollar Loans.
(b) For purposes of this Section 2.13, a notice by any Lender
shall be effective as to each Eurodollar Loan, if lawful, on the last day of
the Interest Period currently applicable to such Eurodollar Loan; in all other
cases such notice shall be effective on the date of receipt.
SECTION 2.14. Pro Rata Treatment. Except as provided below
in this Section 2.14 with respect to Competitive Borrowings and as required
under Sections 2.13 and 2.18, each Borrowing, each payment or prepayment of
principal of any Borrowing, each payment of interest on the Loans, each payment
of the Facility Fees, each reduction of the Term Loan Commitments or the
Standby Commitments and each refinancing or conversion of any Borrowing to or
continuation of any Borrowing as a Borrowing of any Type, shall be
<PAGE> 46
42
allocated pro rata among the Lenders in accordance with their respective
applicable Commitments (or, if such Commitments shall have expired or been
terminated, in accordance with the respective principal amounts of their
applicable outstanding Loans). Each payment of principal of any Competitive
Borrowing shall be allocated pro rata among the Lenders participating in such
Borrowing in accordance with the respective principal amounts of their
outstanding Competitive Loans comprising such Borrowing. Each payment of
interest on any Competitive Borrowing shall be allocated pro rata among the
Lenders participating in such Borrowing in accordance with the respective
amounts of accrued and unpaid interest on their outstanding Competitive Loans
comprising such Borrowing. For purposes of determining the available Standby
Commitments of the Lenders at any time, each outstanding Competitive Borrowing
shall be deemed to have utilized the Standby Commitments of the Lenders
(including those Lenders which shall not have made Loans as part of such
Competitive Borrowing) pro rata in accordance with such respective Standby
Commitments. Each Lender agrees that in computing such Lender's portion of any
Borrowing to be made hereunder, the Administrative Agent may, in its
discretion, round each Lender's percentage of such Borrowing to the next higher
or lower whole dollar amount.
SECTION 2.15. Sharing of Setoffs. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, setoff or
counterclaim, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, obtain payment (voluntary or involuntary) in respect of any Loan or
Loans as a result of which the unpaid principal portion of its Term Loans and
Standby Loans shall be proportionately less than the unpaid principal portion
of the Term Loans and Standby Loans of any other Lender, it shall be deemed
simultaneously to have purchased from such other Lender at face value, and
shall promptly pay to such other Lender the purchase price for, a participation
in the Term Loans and Standby Loans, as the case may be, of such other Lender,
so that the aggregate unpaid principal amount of the Term Loans and Standby
Loans and participations in the Term Loans and Standby Loans held by each
Lender shall be in the same proportion to the aggregate unpaid principal amount
of all Term Loans and Standby Loans then outstanding as the principal amount of
its Term Loans and Standby Loans prior to such exercise of banker's lien,
setoff
<PAGE> 47
43
or counterclaim or other event was to the principal amount of all Term Loans
and Standby Loans outstanding prior to such exercise of banker's lien, setoff
or counterclaim or other event; provided, however, that, if any such purchase
or purchases or adjustments shall be made pursuant to this Section 2.15 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest. Each
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender holding a participation in a Term Loan or Standby Loan deemed to have
been so purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by such Borrower to such
Lender by reason thereof as fully as if such Lender had made a Term Loan or
Standby Loan in the amount of such participation.
SECTION 2.16. Payments. (a) Each Borrower shall make each
payment (including principal of or interest on any Borrowing or any Fees or
other amounts) hereunder from an account in the United States not later than
10:00 a.m., Houston time, on the date when due in dollars to the Administrative
Agent at its offices at 1111 Fannin Street, 9th floor, MS 46, Houston, Texas
77002, in immediately available funds.
(b) Whenever any payment (including principal of or interest
on any Borrowing or any Fees or other amounts) hereunder shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.
SECTION 2.17. Taxes. (a) Any and all payments of principal
and interest on any Borrowings, or of any Fees or indemnity or expense
reimbursements by a Borrower hereunder ("Borrower Payments") shall be made, in
accordance with Section 2.16, free and clear of and without deduction for any
and all current or future United States Federal, state and local taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
to such Borrower Payments, but only to the extent reasonably attributable to
such Borrower Payments, excluding (i) income taxes imposed on the net income of
the Administrative Agent, the CAF Agent or any Lender (or any transferee or
assignee thereof, including a participation holder (any such entity a
<PAGE> 48
44
"Transferee")) and (ii) franchise taxes imposed on the net income of the
Administrative Agent, the CAF Agent or any Lender (or Transferee), in each case
by the jurisdiction under the laws of which the Administrative Agent, the CAF
Agent or such Lender (or Transferee) is organized or doing business through
offices or branches located therein, or any political subdivision thereof (all
such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities, collectively or individually, "Taxes"). If any Borrower shall be
required to deduct any Taxes from or in respect of any sum payable hereunder to
any Lender (or any Transferee) or the Agents, (i) the sum payable shall be
increased by the amount (an "additional amount") necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.17) such Lender (or Transferee) or Agent (as the
case may be) shall receive an amount equal to the sum it would have received
had no such deductions been made, (ii) such Borrower shall make such deductions
and (iii) such Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, each Borrower shall pay to the relevant
United States Governmental Authority in accordance with applicable law any
current or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies that arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or the Fee Letter ("Other Taxes").
(c) Each Borrower shall indemnify each Lender (or Transferee
thereof) and each Agent for the full amount of Taxes and Other Taxes with
respect to Borrower Payments paid by such Lender (or Transferee) or such Agent,
as the case may be, and any liability (including penalties, interest and
expenses (including reasonable attorney's fees and expenses)) arising therefrom
or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted by the relevant United States Governmental
Authority. A certificate setting forth and containing an explanation in
reasonable detail of the manner in which such amount shall have been determined
and the amount of such payment or liability prepared by a Lender, the CAF
Agent, or the Administrative Agent on their behalf, absent manifest error,
shall be final, conclusive and binding for all purposes. Such indemnification
shall be made within 30 days after the date the Lender (or
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45
Transferee) or any Agent, as the case may be, makes written demand therefor.
(d) If a Lender (or Transferee) or any Agent shall become
aware that it is entitled to claim a refund from a United States Governmental
Authority in respect of Taxes or Other Taxes as to which it has been
indemnified by a Borrower, or with respect to which a Borrower has paid
additional amounts, pursuant to this Section 2.17, it shall promptly notify
such Borrower of the availability of such refund claim and shall, within 30
days after receipt of a request by such Borrower, make a claim to such United
States Governmental Authority for such refund at such Borrower's expense. If a
Lender (or Transferee) or any Agent receives a refund (including pursuant to a
claim for refund made pursuant to the preceding sentence) in respect of any
Taxes or Other Taxes as to which it has been indemnified by a Borrower or with
respect to which a Borrower had paid additional amounts pursuant to this
Section 2.17, it shall within 30 days from the date of such receipt pay over
such refund to such Borrower (but only to the extent of indemnity payments
made, or additional amounts paid, by such Borrower under this Section 2.17 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of such Lender (or Transferee) or such Agent and without
interest (other than interest paid by the relevant United States Governmental
Authority with respect to such refund); provided, however, that such Borrower,
upon the request of such Lender (or Transferee) or such Agent, agrees to repay
the amount paid over to such Borrower (plus penalties, interest or other
charges) to such Lender (or Transferee) or such Agent in the event such Lender
(or Transferee) or such Agent is required to repay such refund to such United
States Governmental Authority.
(e) As soon as practicable, but in any event within 30 days,
after the date of any payment of Taxes or Other Taxes by a Borrower to the
relevant United States Governmental Authority, such Borrower will deliver to
the Administrative Agent, at its address referred to in Section 8.01, the
original or a certified copy of a receipt issued by such United States
Governmental Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.17
shall survive the payment in
<PAGE> 50
46
full of the principal of and interest on all Loans made hereunder.
(g) Each Lender or Agent (or Transferee) that is organized
under the laws of a jurisdiction other than the United States, any State
thereof or the District of Columbia (a "Non-U.S. Lender" or "Non U.S. Agent",
as applicable) shall deliver to the Borrowers and the Administrative Agent two
copies of either United States Internal Revenue Service Form 1001 or Form 4224,
properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or reduced rate of, United States Federal withholding tax on
payments by any Borrower under this Agreement. Such forms shall be delivered
by each Non-U.S. Lender on or before the date it becomes a party to this
Agreement (or, in the case of a Transferee that is a participation holder, on
or before the date such participation holder becomes a Transferee hereunder)
and on or before the date, if any, such Non-U.S. Lender changes its applicable
lending office by designating a different lending office (a "New Lending
Office"). In addition, each Non-U.S. Lender shall deliver such forms promptly
upon the obsolescence or invalidity of any form previously delivered by such
Non-U.S. Lender. Notwithstanding any other provision of this Section 2.17(g),
a Non-U.S. Lender shall not be required to deliver any form pursuant to this
Section 2.17(g) that such Non-U.S. Lender is not legally able to deliver.
(h) A Borrower shall not be required to indemnify any
Non-U.S. Lender or Non-U.S. Agent (including any Transferee), or to pay any
additional amounts to any Non-U.S. Lender or Non-U.S. Agent (including any
Transferee), in respect of United States Federal, state or local withholding
tax pursuant to paragraph (a) or (c) above to the extent that (i) the
obligation to withhold amounts with respect to United States Federal, state or
local withholding tax existed on the date such Non-U.S. Lender became a party
to this Agreement (or, in the case of a Transferee that is a participation
holder, on the date such participation holder became a Transferee hereunder)
or, with respect to payments to a New Lending Office, the date such Non-U.S.
Lender designated such New Lending Office with respect to a Loan; provided,
however, that this clause (i) shall not apply to any Transferee or New Lending
Office that becomes a Transferee or New Lending Office as a result of an
assignment, participation, transfer or designation made at the request of such
Borrower; and provided further, however, that this clause (i) shall not apply
to the extent the indemnity payment or additional amounts any
<PAGE> 51
47
Transferee, or Lender (or Transferee) through a New Lending Office, would be
entitled to receive (without regard to this clause (i)) do not exceed the
indemnity payment or additional amounts that the person making the assignment,
participation or transfer to such Transferee, or Lender (or Transferee) making
the designation of such New Lending Office, would have been entitled to receive
in the absence of such assignment, participation, transfer or designation or
(ii) the obligation to pay such additional amounts or such indemnity payments
would not have arisen but for a failure by such Non-U.S. Lender (including any
Transferee) to comply with the provisions of paragraph (g) above and (i) below.
(i) Any Lender (or Transferee) claiming any indemnity payment
or additional amounts payable pursuant to this Section 2.17 shall use
reasonable efforts (consistent with legal and regulatory restrictions) to file
any certificate or document reasonably requested in writing by a Borrower or to
change the jurisdiction of its applicable lending office if the making of such
a filing or change would avoid the need for or reduce the amount of any such
indemnity payment or additional amounts that may thereafter accrue and would
not, in the good faith determination of such Lender (or Transferee), be
otherwise disadvantageous to such Lender (or Transferee).
(j) Nothing contained in this Section 2.17 shall require any
Lender (or Transferee) or any Agent to make available to such Borrower any of
its tax returns (or any other information) that it deems to be confidential or
proprietary.
(k) Notwithstanding anything herein to the contrary, the
indemnification obligations under this Section shall, to the extent
practicable, be allocated between the Borrowers based upon their relative
liability for the interest, fee or other payments in respect of which such
indemnification obligations arise.
SECTION 2.18. Assignment of Interests Under Certain
Circumstances. In the event that any Lender shall have delivered a notice or
certificate pursuant to Section 2.12 or 2.13, or any Borrower shall be required
to make additional payments to any Lender under Section 2.17, the Borrowers
shall have the right, at their own expense, upon notice to such Lender and the
Agents, to require such Lender to transfer and assign without recourse (in
accordance with and subject to the restrictions contained in Section 8.04) all
such Lender's
<PAGE> 52
48
interests, rights and obligations contained hereunder to another financial
institution approved by the Agents and the Borrowers (which approval shall not
be unreasonably withheld) which shall assume such obligations; provided that
(i) no such assignment shall conflict with any law, rule or regulation or order
of any Governmental Authority and (ii) the assignee or the Borrowers, as the
case may be, shall pay to the affected Lender in immediately available funds on
the date of such assignment the principal of and interest accrued to the date
of payment on the Loans made by it hereunder and all other amounts accrued for
its account or owed to it hereunder.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to each of the Lenders
as follows (except in the case of the representations contained in Sections
3.05(a) and 3.12, which are made by TU only, and Section 3.05(b), which are
made by TU Electric only):
SECTION 3.01. Organization; Powers. Such Borrower (a) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (b) has all requisite power and
authority to own its property and assets and to carry on its business as now
conducted and as proposed to be conducted, (c) is qualified to do business in
every jurisdiction where such qualification is required, except where the
failure so to qualify would not result in a Material Adverse Change, and (d)
has the corporate power and authority to execute, deliver and perform its
obligations under this Agreement and to borrow hereunder.
SECTION 3.02. Authorization. The execution, delivery and
performance by such Borrower of this Agreement and the Borrowings hereunder
(collectively, the "Transactions") (a) have been duly authorized by all
requisite corporate action and (b) will not (i) violate (A) any provision of
any law, statute, rule or regulation (including, without limitation, the Margin
Regulations) or of the certificate of incorporation or other constitutive
documents or by-laws of such Borrower or any of its Subsidiaries to which such
Borrower is subject, (B) any order of any Governmental Authority or (C) any
provision of any indenture, agreement or other instrument to which such
Borrower or any of its Subsidiaries is a party or by which it or any of its
property is or may be bound, (ii) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of
<PAGE> 53
49
time or both) a default under any such indenture, agreement or other instrument
or (iii) result in the creation or imposition of any Lien upon any property or
assets of such Borrower.
SECTION 3.03. Enforceability. This Agreement constitutes a
legal, valid and binding obligation of such Borrower enforceable in accordance
with its terms.
SECTION 3.04. Governmental Approvals. No action, consent or
approval of, registration or filing with or other action by any Governmental
Authority is or will be required in connection with the Transactions, to the
extent they relate to such Borrower.
SECTION 3.05. Financial Statements. (a) The consolidated
balance sheet of TU and its Consolidated Subsidiaries as of December 31, 1995
and the related consolidated statements of income, retained earnings and cash
flows for the fiscal year then ended, reported on by Deloitte & Touche LLP and
set forth in TU's 1995 Annual Report on Form 10-K, a copy of which has been
delivered to each of the Lenders, fairly present, in conformity with GAAP, the
consolidated financial position of TU and its Consolidated Subsidiaries as of
such date and their consolidated results of operations and cash flows for such
fiscal year.
(b) The consolidated balance sheet of TU Electric as of
December 31, 1995 and the related consolidated statements of income, retained
earnings and cash flows for the fiscal year then ended, reported on by Deloitte
& Touche LLP and set forth in TU Electric's 1995 Annual Report on Form 10-K, a
copy of which has been delivered to each of the Lenders, fairly present, in
conformity with GAAP, the consolidated financial position of TU Electric and
its Consolidated Subsidiaries as of such date and their consolidated results of
operations and cash flows for such fiscal year.
(c) Since December 31, 1995, there has been no Material
Adverse Change with respect to such Borrower.
SECTION 3.06. Litigation; Compliance with Laws. Except as set
forth in the financial statements or other reports of the type referred to in
Section 5.03 hereof and which have been delivered to the Lenders on or prior to
the date hereof or as set forth on Schedule 3.06, there is no action, suit or
proceeding pending against, or to the knowledge of such Borrower threatened
against or affecting, TU or any of its Subsidiaries before any court or
arbitrator or
<PAGE> 54
50
any governmental body, agency or official in which there is a reasonable
possibility of an adverse decision which could materially adversely affect the
ability of such Borrower to pay its obligations hereunder or which in any
manner draws into question the validity of this Agreement.
SECTION 3.07. Federal Reserve Regulations. (a)
Neither such Borrower nor any of its Subsidiaries is engaged principally, or as
one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used by such
Borrower, whether directly or indirectly, and whether immediately, incidentally
or ultimately, to purchase or carry Margin Stock or to refund indebtedness
originally incurred for such purpose, or for any other purpose which entails a
violation of, or which is inconsistent with, the provisions of the Margin
Regulations.
SECTION 3.08. Investment Company Act; Public Utility Holding
Company Act. (a) Neither such Borrower nor any of its Subsidiaries is an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940.
(b) Such Borrower and each of its Subsidiaries is exempt from
all provisions of the Public Utility Holding Company Act of 1935 and rules and
regulations thereunder, except for Sections 9(a)(2) and 33 of such Act and the
rules and regulations thereunder, and the execution, delivery and performance
by the Borrowers of this Agreement and their respective obligations hereunder
do not violate any provision of such Act or any rule or regulation thereunder.
SECTION 3.09. No Material Misstatements. No report,
financial statement or other information furnished by or on behalf of such
Borrower to the Agents or any Lender pursuant to or in connection with this
Agreement contains or will contain any material misstatement of fact or omits
or will omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were or will be
made, not misleading.
SECTION 3.10. Taxes. Such Borrower and its Subsidiaries have
filed or caused to be filed within 3 days of the date on which due, all
Federal, state and material local tax returns which to their knowledge are
required to be filed
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51
by them, and have paid or caused to be paid all taxes shown to be due and
payable on such returns or on any assessments received by them, other than any
taxes or assessments the validity of which is being contested in good faith by
appropriate proceedings and with respect to which appropriate accounting
reserves have to the extent required by GAAP been set aside.
SECTION 3.11. Employee Benefit Plans. With respect to each
Plan such Borrower and its ERISA Affiliates are in compliance in all material
respects with the applicable provisions of ERISA and the Code and the final
regulations and published interpretations thereunder. No ERISA Event has
occurred in respect of any Plan of such Borrower or any ERISA Affiliate that
alone or together with any other ERISA Event has resulted or could reasonably
be expected to result in a Material Adverse Change. The present value of all
accrued benefit obligations determined on a termination basis under each of its
Plans (based on those assumptions used to fund such Plans) did not, as of the
last annual valuation date applicable thereto, exceed by more than 5% of the
amount of such obligations the value of the assets of such Plan, and the
present value of all accrued benefit obligations of all underfunded Plans
(based on those assumptions used to fund each such Plan) did not, as of the
last annual valuation dates applicable thereto, exceed by more than the lesser
of (i) 5% of the amount all such liabilities and (ii) $100,000,000, the value
of the assets of all such underfunded Plans. Neither such Borrower nor any
ERISA Affiliate has incurred any Withdrawal Liability that could result in a
Material Adverse Change. Neither such Borrower nor any ERISA Affiliate has
received any notification that any Multiemployer Plan is in reorganization or
has been terminated within the meaning of Title IV of ERISA, which such
reorganization or termination could result in a Material Adverse Change, and no
Multiemployer Plan is reasonably expected to be in reorganization or to be
terminated where such reorganization or termination has resulted or can
reasonably be expected to result, through an increase in the contributions
required to be made to such Plan or otherwise, in a Material Adverse Change.
SECTION 3.12. Significant Subsidiaries. Each of TU's
corporate Significant Subsidiaries is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all corporate powers necessary to carry on its business
substantially as now conducted. TU's corporate Significant
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52
Subsidiaries have all material governmental licenses, authorizations, consents
and approvals required to carry on the business of the corporate Significant
Subsidiaries substantially as now conducted.
SECTION 3.13. Environmental Matters. Except as set forth in
or contemplated by the financial statements or other reports of the type
referred to in Section 5.03 hereof and which have been delivered to the Lenders
on or prior to the date hereof, such Borrower and each of its Subsidiaries has
complied in all material respects with all Federal, state, local and other
statutes, ordinances, orders, judgments, rulings and regulations relating to
environmental pollution or to environmental or nuclear regulation or control,
except to the extent that failure to so comply could not reasonably be expected
to result in a Material Adverse Change. Except as set forth in or contemplated
by such financial statements or other reports, neither such Borrower nor any of
its Subsidiaries has received notice of any material failure so to comply,
except where such failure could not reasonably be expected to result in a
Material Adverse Change. Except as set forth in or contemplated by such
financial statements or other reports, the facilities of such Borrower or any
of its Subsidiaries, as the case may be, are not used to manage any hazardous
wastes, hazardous substances, hazardous materials, toxic substances, toxic
pollutants or substances similarly denominated, as those terms or similar terms
are used in the Resource Conservation and Recovery Act, the Comprehensive
Environmental Response Compensation and Liability Act, the Hazardous Materials
Transportation Act, the Toxic Substance Control Act, the Clean Air Act, the
Clean Water Act or any other applicable law relating to environmental
pollution, or any nuclear fuel or other radioactive materials, in violation in
any material respect of any law or any regulations promulgated pursuant
thereto, except to the extent that such violations could not reasonably be
expected to result in a Material Adverse Change. Except as set forth in or
contemplated by such financial statements or other reports, such Borrower is
aware of no events, conditions or circumstances involving environmental
pollution or contamination that could reasonably be expected to result in a
Material Adverse Change.
<PAGE> 57
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ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans hereunder are
subject to the satisfaction of the following conditions:
SECTION 4.01. All Borrowings. On the date of each Borrowing:
(a) The Agents shall have received a notice of such Borrowing
as required by Section 2.03 or Section 2.04, as applicable.
(b) The representations and warranties set forth in Article
III hereof (except, in the case of a refinancing of a Standby
Borrowing with a new Standby Borrowing that does not increase the
aggregate principal amount of the Loans of any Lender outstanding, the
representations set forth in Sections 3.05(c), 3.06, 3.11 and 3.13)
shall be true and correct in all material respects on and as of the
date of such Borrowing with the same effect as though made on and as
of such date, except to the extent such representations and warranties
expressly relate to an earlier date.
(c) At the time of and immediately after such Borrowing no
Event of Default or Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
each Borrower on the date of such Borrowing as to the matters specified in
paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. Effective Date. On the Effective Date:
(a) The Agents shall have received favorable written opinions
of Reid & Priest LLP and Worsham, Forsythe & Wooldridge, L.L.P., dated
the Effective Date and addressed to the Lenders and satisfactory to
Cravath, Swaine & Moore, counsel for the Agents, to the effect set
forth in Exhibits D-1 and D-2 hereto.
(b) The Agents shall have received (i) a copy of the
certificate of incorporation, including all amendments thereto, of
each Borrower, certified as of a recent date by the Secretary of State
of its state of incorporation, and a certificate as to the good
standing
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of each Borrower as of a recent date from such Secretary of State;
(ii) a certificate of the Secretary or an Assistant Secretary of each
Borrower dated the Effective Date and certifying (A) that attached
thereto is a true and complete copy of the by-laws of such Borrower as
in effect on the Effective Date and at all times since a date prior to
the date of the resolutions described in clause (B) below, (B) that
attached thereto is a true and complete copy of resolutions duly
adopted by the Board of Directors of such Borrower authorizing the
execution, delivery and performance of this Agreement and the
Borrowings hereunder, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect, (C)
that the certificate of incorporation referred to in clause (i) above
has not been amended since the date of the last amendment thereto
shown on the certificate of good standing furnished pursuant to such
clause (i) and (D) as to the incumbency and specimen signature of each
officer executing this Agreement or any other document delivered in
connection herewith on behalf of such Borrower; (iii) a certificate of
another officer of such Borrower as to the incumbency and specimen
signature of the Secretary or Assistant Secretary executing the
certificate pursuant to (ii) above; (iv) evidence satisfactory to the
Agents that the requisite approvals referred to in Section 3.04 hereof
have been obtained; and (v) such other documents as the Lenders or
Cravath, Swaine & Moore, counsel for the Agents, shall reasonably
request.
(c) The Agents shall have received a certificate, dated the
Effective Date and signed by a Financial Officer of each Borrower,
confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 4.01.
(d) The Agents shall have received all Fees and other amounts
due and payable on or prior to the Effective Date.
(e) The Agents shall have received evidence satisfactory to
them that the Existing TU Credit Agreement has been terminated and
that all amounts outstanding thereunder have been repaid.
(f) All the conditions to the effectiveness of the Facility A
Credit Agreement (other than the condition set
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forth in Section 4.02(e) thereof) shall have been satisfied.
(g) All Standby Borrowings outstanding immediately prior to
the date hereof shall have been refinanced with the proceeds of
Borrowings made on the Effective Date simultaneously with the making
of such Borrowings on the Effective Date.
ARTICLE V. COVENANTS
TU (and TU Electric, to the extent such covenants apply to it)
agrees that, so long as any Lender has any Commitment hereunder or any amount
payable hereunder remains unpaid:
SECTION 5.01. Existence. It will, and will cause each of its
Significant Subsidiaries to, do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence and all
rights, licenses, permits, franchises and authorizations necessary or desirable
in the normal conduct of its business except as otherwise permitted pursuant to
Section 5.09.
SECTION 5.02. Business and Properties. It will, and will
cause each of its Subsidiaries to, comply with all applicable material laws,
rules, regulations and orders of any Governmental Authority, whether now in
effect or hereafter enacted, except where the validity or applicability of such
laws, rules, regulations or orders is being contested by appropriate
proceedings in good faith; and at all times maintain and preserve all property
material to the conduct of its business and keep such property in good repair,
working order and condition and from time to time make, or cause to be made,
all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
SECTION 5.03. Financial Statements, Reports, Etc. TU (and TU
Electric, to the extent such information relates to TU Electric only) will
furnish to the Agents and each Lender:
(a) as soon as available and in any event within 120 days
after the end of each fiscal year of TU, a consolidated balance sheet
of TU and its Consolidated Subsidiaries as of the end of such fiscal
year and the related consolidated statements of income, retained
<PAGE> 60
56
earnings and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all
reported on in a manner reasonably acceptable to the Securities and
Exchange Commission by Deloitte & Touche LLP or other independent
public accountants of nationally recognized standing;
(b) as soon as available and in any event within 60 days
after the end of each of the first three quarters of each fiscal year
of TU, a consolidated balance sheet of TU and its Consolidated
Subsidiaries as of the end of such quarter and the related
consolidated statements of income for such quarter, for the portion of
TU's fiscal year ended at the end of such quarter, and for the twelve
months ended at the end of such quarter, and the related consolidated
statement of cash flows for the portion of TU's fiscal year ended at
the end of such quarter, setting forth comparative figures for
previous dates and periods to the extent required in Form 10-Q, all
certified (subject to normal year-end adjustments) as to fairness of
presentation, GAAP and consistency by a Financial Officer of TU;
(c) simultaneously with any delivery of each set of financial
statements referred to in paragraphs (a) and (b) above, (i) an
unconsolidated balance sheet of TU and the related unconsolidated
statements of income, retained earnings and cash flows as of the same
date and for the same periods applicable to the statements delivered
pursuant to paragraph (a) or (b) above, as applicable, all certified
(subject to normal year-end adjustments in the case of quarterly
statements) as to fairness of presentation, GAAP and consistency by a
Financial Officer of TU, and (ii) a certificate of a Financial Officer
of TU (A) setting forth in reasonable detail the calculations required
to establish whether TU was in compliance with the requirements of
Sections 5.11, 5.12 and 5.13 on the date of such financial statements,
and (B) stating whether any Default exists on the date of such
certificate and, if any Default then exists, setting forth the details
thereof and the action which TU is taking or proposes to take with
respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in paragraph (a) above, a statement of the firm
of independent public accountants which reported on such statements
(i) stating whether anything has come to their attention to cause them
to
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57
believe that any Default existed on the date of such statements and
(ii) confirming the calculations set forth in the Financial Officer's
certificate delivered simultaneously therewith pursuant to paragraph
(c) above;
(e) forthwith upon the occurrence of any Default, a
certificate of a Financial Officer of TU setting forth the details
thereof and the action which TU is taking or proposes to take with
respect thereto;
(f) promptly upon the mailing thereof to the shareholders of
TU generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of each final
prospectus (other than a prospectus included in any registration
statement on Form S-8 or its equivalent or with respect to a dividend
reinvestment plan) and all reports on Forms 10-K, 10-Q and 8-K and
similar reports which TU or TU Electric shall have filed with the SEC,
or any Governmental Authority succeeding to any of or all the
functions of the SEC;
(h) if and when any member of the Controlled Group (i) gives
or is required to give notice to the PBGC of any Reportable Event with
respect to any Plan which might constitute grounds for a termination
of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Plan has given or is required to give notice of
any such Reportable Event, a copy of the notice of such Reportable
Event given or required to be given to the PBGC; (ii) receives notice
from a proper representative of a Multiemployer Plan of complete or
partial Withdrawal Liability being imposed upon such member of the
Controlled Group under Title IV of ERISA, a copy of such notice; or
(iii) receives notice from the PBGC under Title IV of ERISA of an
intent to terminate, or appoint a trustee to administer, any Plan, a
copy of such notice; and
(i) promptly, from time to time, such additional information
regarding the financial position or business of TU and its
Subsidiaries as the Agents, at the request of any Lender, may
reasonably request.
As promptly as practicable after delivering each set of financial statements as
required in paragraph (a) of this Section, TU shall make available a copy of
the consolidating
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workpapers used by TU in preparing such consolidated statements to each Lender
that shall have requested such consolidating workpapers. Each Lender that
receives such consolidating workpapers shall hold them in confidence as
required by Section 8.15; provided that no Lender may disclose such
consolidating workpapers to any other person pursuant to clause (iv) of Section
8.15.
SECTION 5.04. Insurance. It will, and will cause each of its
Subsidiaries to, maintain such insurance or self insurance, to such extent and
against such risks, including fire and other risks insured against by extended
coverage, as is customary with companies similarly situated and in the same or
similar businesses.
SECTION 5.05. Taxes, Etc. It will, and will cause each of
its Subsidiaries to, pay and discharge promptly when due all material taxes,
assessments and governmental charges imposed upon it or upon its income or
profits or in respect of its property, as well as all other material
liabilities, in each case before the same shall become delinquent or in default
and before penalties accrue thereon, unless and to the extent that the same are
being contested in good faith by appropriate proceedings and adequate reserves
with respect thereto shall, to the extent required by GAAP, have been set
aside.
SECTION 5.06. Maintaining Records; Access to Properties and
Inspections. It will, and will cause each of its Subsidiaries to, maintain
financial records in accordance with GAAP and, upon reasonable notice and at
reasonable times, permit authorized representatives designated by any Lender to
visit and inspect its properties and to discuss its affairs, finances and
condition with its officers.
SECTION 5.07. ERISA. (a) It will, and will cause each of
its Subsidiaries that are members of the Controlled Group to, comply in all
material respects with the applicable provisions of ERISA and the Code and (b)
furnish to the Agents (i) as soon as possible after, and in any event within 30
days after any Responsible Officer of such Borrower or any ERISA Affiliate
knows, or has reason to know, that any ERISA Event has occurred that alone or
together with any other ERISA Event could reasonably be expected to result in
liability of such Borrower in an aggregate amount exceeding $40,000,000 or
requires an increase in payments exceeding $20,000,000 in any year, a statement
of a Financial Officer setting forth details as to such ERISA Event and the
action that the Borrower
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proposes to take with respect thereto, together, in the case of a Reportable
Event, with a copy of the notice, if any, of such Reportable Event given to the
PBGC, (ii) promptly after receipt thereof, a copy of any notice that such
Borrower or any ERISA Affiliate may receive from the PBGC relating to the
intention of the PBGC to terminate any Plan or Plans (other than a Plan
maintained by an ERISA Affiliate that is considered an ERISA Affiliate only
pursuant to subsection (m) or (o) of Code Section 414) or to appoint a trustee
to administer any such Plan (iii) within 10 days after the due date for filing
with the PBGC pursuant to Section 412(n) of the Code a notice of failure to
make a required installment or other payment with respect to a Plan, a
statement of a Financial Officer setting forth details as to such failure and
the action that such Borrower proposes to take with respect thereto, together
with a copy of any such notice given to the PBGC and (iv) promptly and in any
event within 30 days after receipt thereof by such Borrower or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice
received by such Borrower or any ERISA Affiliate concerning (A) the imposition
of Withdrawal Liability or (B) a determination that a Multiemployer Plan is, or
is expected to be, terminated or in reorganization, both within the meaning of
Title IV of ERISA.
SECTION 5.08. Use of Proceeds. It will not, and will not
cause or permit any of its Subsidiaries to, use the proceeds of the Loans for
purposes other than those set forth in the recitals hereto.
SECTION 5.09. Consolidations, Mergers, and Sales of Assets.
TU will not (a) consolidate or merge with or into any person unless (i) the
surviving corporation is incorporated under the laws of a State of the United
States of America and assumes or is responsible by operation of law for all the
obligations of TU hereunder and (ii) no Default or Event of Default shall have
occurred or be continuing at the time of or after giving effect to such
consolidation or merger or (b) sell, lease or otherwise transfer, in a single
transaction or in a series of transactions, all or any Substantial part of its
assets to any person or persons other than a Wholly-Owned Subsidiary. TU will
not permit any Significant Subsidiary to consolidate or merge with or into, or
sell, lease or otherwise transfer all or any Substantial part of its assets to,
any person other than TU or a Wholly-Owned Subsidiary (or a person which as a
result of such transaction becomes a Wholly-Owned Subsidiary), provided that in
the case of any merger or consolidation involving TU Electric, such person must
assume
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or be responsible by operation of law for all the obligations of TU Electric
hereunder, and TU will in no event permit any such consolidation, merger, sale,
lease or transfer if any Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to any such transaction.
Notwithstanding the foregoing, (a) TU and its Subsidiaries will not engage to a
Substantial extent in businesses other than those currently conducted by them
and other businesses reasonably related thereto and (b) nothing in this Section
shall prohibit (i) any sales of assets permitted by Section 5.10(d) or (ii) any
sales of assets referred to in clause (ii) of the proviso in the definition of
"Consolidated Earnings Available For Fixed Charges".
SECTION 5.10. Limitations on Liens. Neither TU nor any
Significant Subsidiary will create or assume or permit to exist any Lien in
respect of any property or assets of any kind (real or personal, tangible or
intangible) of TU or any Significant Subsidiary, or sell any such property or
assets subject to an understanding or agreement, contingent or otherwise, to
repurchase such property or assets, or sell, or permit any Significant
Subsidiary to sell, any accounts receivable; provided that the provisions of
this Section shall not prevent or restrict the creation, assumption or
existence of:
(a) any Lien in respect of any such property or assets of any
Significant Subsidiary to secure indebtedness owing by it to TU or to
any Wholly-Owned Subsidiary of TU; or
(b) purchase money Liens (including capital leases) in respect
of property acquired by TU or any Significant Subsidiary, to secure
the purchase price of such property (or to secure indebtedness
incurred prior to, at the time of, or within 90 days after the
acquisition solely for the purpose of financing the acquisition of
such property), or Liens existing on any such property at the time of
acquisition of such property by TU or by such Significant Subsidiary,
whether or not assumed, or any Lien in respect of property of a
corporation existing at the time such corporation becomes a Subsidiary
of TU; or agreements to acquire any property or assets under
conditional sale agreements or other title retention agreements, or
capital leases in respect of any other property; provided that
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(1) the aggregate principal amount of Indebtedness
secured by all Liens in respect of any such property shall not
exceed the cost or fair market value (both as determined by
the board of directors of TU or such Significant Subsidiary,
as the case may be), whichever shall be lower, of such
property at the time of acquisition thereof (or (x) in the
case of property covered by a capital lease, the fair market
value, as so determined, of such property at the time of such
transaction, or (y) in the case of a Lien in respect of
property existing at the time such corporation becomes a
Subsidiary of TU, the fair market value, as so determined of
such property at such time), and
(2) at the time of the acquisition of the property by
TU or by such Subsidiary, or at the time such corporation
becomes a Subsidiary of TU, as the case may be, every such
Lien shall apply and attach only to the property originally
subject thereto and fixed improvements constructed thereon; or
(c) refundings or extensions of any Lien permitted in the
foregoing paragraph (b) for amounts not exceeding the principal amount
of the Indebtedness so refunded or extended or the fair market value
(as determined by the board of directors of TU or such Significant
Subsidiary, as the case may be) of the property theretofore subject to
such Lien, whichever shall be lower, in each case at the time of such
refunding or extension; provided that such Lien shall apply only to
the same property theretofore subject to the same and fixed
improvements constructed thereon; or
(d) sales subject to understandings or agreements to
repurchase; provided that the aggregate sales price for all such sales
(other than sales to any governmental instrumentality in connection
with such instrumentality's issuance of indebtedness, including
without limitation industrial development bonds and pollution control
bonds, on behalf of TU or any Significant Subsidiary) made in any one
calendar year shall not exceed $50,000,000; or
(e) any production payment or similar interest which is
dischargeable solely out of natural gas, coal, lignite, oil or other
mineral to be produced from the property subject thereto and to be
sold or delivered by TU or any Significant Subsidiary; or
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62
(f) any Lien including in connection with sale-leaseback
transactions created or assumed by any Significant Subsidiary on
natural gas, coal, lignite, oil or other mineral properties or nuclear
fuel owned or leased by such Subsidiary, to secure loans to such
Subsidiary in an aggregate amount not to exceed $400,000,000; provided
that neither TU nor any other Subsidiary shall assume or guarantee
such financings; or
(g) leases (other than capital leases) now or hereafter
existing and any renewals and extensions thereof under which TU or any
Significant Subsidiary may acquire or dispose of any of its property,
subject, however, to the terms of Section 5.09; or
(h) any Lien created or to be created by the First Mortgage of
TU Electric; or
(i) any Lien on the rights of the Mining Company or Fuel
Company existing under their respective Operating Agreements; or
(j) sales by TU Electric of its accounts receivable; or
(k) Permitted Encumbrances.
SECTION 5.11. Fixed Charge Coverage. TU will not, as of the
end of each quarter of each fiscal year of TU, permit Consolidated Earnings
Available for Fixed Charges for the twelve months then ended to be less than or
equal to 150% of Consolidated Fixed Charges for the twelve months then ended.
SECTION 5.12. Equity Capitalization Ratio. TU will not
permit Consolidated Shareholders' Equity to be less than 35% of Consolidated
Total Capitalization.
SECTION 5.13. Indebtedness of TU. TU will not incur, create,
assume or permit to exist Indebtedness (other than guarantees existing as of
the date hereof and guarantees of any obligations of Subsidiaries) in an amount
at any time in excess of the sum at such time of (a) $1,500,000,000, (b) if
positive, the excess of (i) the cumulative consolidated net income of TU (from
which preferred stock dividends and preferred securities distributions have
been deducted) reduced by the combined net income (after preferred stock
dividends and preferred securities distributions) of the direct
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Subsidiaries of TU to the extent such combined net income exceeds the cash
dividends received by TU from such Subsidiaries for each completed quarter
commencing on or after July 1, 1996, for which results have been reported to
the Lenders pursuant to Section 5.03 over (ii) the aggregate amount of
dividends paid by TU after the Effective Date and (c) the aggregate proceeds
received by TU from issuances of capital stock of TU after the Effective Date
(to the extent such proceeds have not been used to prepay Indebtedness (other
than Competitive Loans or Standby Loans or Indebtedness under the Facility A
Credit Agreement or any other short-term debt)), provided that Indebtedness
(other than guarantees existing as of the date hereof and guarantees of any
obligations of Subsidiaries) in an amount in excess of such sum may be
incurred, created, assumed or permitted to exist for a period of up to 120 days
if TU shall have given the Lenders prior written notice of its intent to issue
capital stock within such 120-day period for net cash proceeds to TU sufficient
to eliminate such excess.
ARTICLE VI. EVENTS OF DEFAULT
In case of the happening of any of the following events (each
an "Event of Default"):
(a) any representation or warranty made or deemed made by any
Borrower in or in connection with the execution and delivery of this
Agreement or the Borrowings hereunder shall prove to have been false
or misleading in any material respect when so made, deemed made or
furnished;
(b) default shall be made by any Borrower in the payment of
any principal of any Loan when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for
prepayment thereof or by acceleration thereof or otherwise;
(c) default shall be made by any Borrower in the payment of
any interest on any Loan or any Fee or any other amount (other than an
amount referred to in paragraph (b) above) due hereunder, when and as
the same shall become due and payable, and such default shall continue
unremedied for a period of five days;
(d) default shall be made by any Borrower in the due
observance or performance of any covenant, condition or
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agreement contained in Section 5.01, 5.09, 5.10, 5.11, 5.12, or
5.13;
(e) default shall be made by any Borrower in the due
observance or performance of any covenant, condition or agreement
contained herein (other than those specified in (b), (c) or (d) above)
and such default shall continue unremedied for a period of 30 days
after notice thereof from the Administrative Agent at the request of
any Lender to such Borrower;
(f) TU shall no longer own, directly or indirectly, all the
outstanding common stock of TU Electric (or any successor);
(g) any Borrower or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $40,000,000, when and
as the same shall become due and payable, subject to any applicable
grace periods, or (ii) fail to observe or perform any other term,
covenant, condition or agreement contained in any agreement or
instrument evidencing or governing any such Indebtedness if the effect
of any failure referred to in this clause (ii) is to cause, or to
permit the holder or holders of such Indebtedness or a trustee on its
or their behalf to cause, such Indebtedness to become due prior to its
stated maturity;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of TU or any Significant
Subsidiary, or of a substantial part of the property or assets of TU
or any Significant Subsidiary, under Title 11 of the United States
Code, as now constituted or hereafter amended, or any other Federal or
state bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for TU or any Significant Subsidiary
or for a substantial part of the property or assets of TU or any
Significant Subsidiary or (iii) the winding up or liquidation of TU or
any Significant Subsidiary; and such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
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(i) TU or any Significant Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under
Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal or state bankruptcy, insolvency,
receivership or similar law, (ii) consent to the institution of, or
fail to contest in a timely and appropriate manner, any proceeding or
the filing of any petition described in (h) above, (iii) apply for or
consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for TU or any
Significant Subsidiary or for a substantial part of the property or
assets of it or such Significant Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any action
for the purpose of effecting any of the foregoing;
(j) a Change in Control shall occur;
(k) one or more judgments or orders for the payment of money
in an aggregate amount in excess of $40,000,000 shall be rendered
against TU or any Subsidiary thereof or any combination thereof and
such judgment or order shall remain undischarged or unstayed for a
period of 30 days, or any action shall be legally taken by a judgment
creditor to levy upon assets or properties of TU or any Subsidiary to
enforce any such judgment or order;
(l) an ERISA Event or ERISA Events shall have occurred with
respect to any Plan or Plans that reasonably could be expected to
result in liability of any Borrower to the PBGC or to such Plan or
Plans in an aggregate amount exceeding $40,000,000 or requiring an
increase in payments exceeding $20,000,000 in any year;
(m) (i) any Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that it has incurred
Withdrawal Liability to such Multiemployer Plan, (ii) such Borrower or
such ERISA Affiliate does not have reasonable grounds for contesting
such Withdrawal Liability or is not in fact contesting such Withdrawal
Liability in a timely and appropriate manner and (iii) the amount of
the Withdrawal Liability specified in such notice, when aggregated
with all other
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66
amounts required to be paid to Multiemployer Plans in connection with
Withdrawal Liabilities (determined as of the date or dates of such
notification), either (A) exceeds $40,000,000 or requires payments
exceeding $40,000,000 in any year or (B) is less than $40,000,000 but
any Withdrawal Liability payment remains unpaid 30 days after such
payment is due;
(n) any Borrower or any ERISA Affiliate shall have been
notified by the sponsor of a Multiemployer Plan that such
Multiemployer Plan is in reorganization or is being terminated, within
the meaning of Title IV of ERISA, if solely as a result of such
reorganization or termination the aggregate annual contributions of
such Borrower and its ERISA Affiliates to all Multiemployer Plans that
are then in reorganization or have been or are being terminated have
been or will be increased over the amounts required to be contributed
to such Multiemployer Plans for their most recently completed plan
years by an amount exceeding $40,000,000;
then, and in every such event, and at any time thereafter during the
continuance of such event, the Administrative Agent, at the request of the
Required Lenders, shall, by notice to the Borrowers, take either or both of the
following actions, at the same or different times: (i) terminate forthwith the
right of one or both of the Borrowers to borrow pursuant to the Commitments and
(ii) declare the Loans of one or both of the Borrowers then outstanding to be
forthwith due and payable in whole or in part, whereupon the principal of the
Loans so declared to be due and payable, together with accrued interest thereon
and any unpaid accrued Fees and all other liabilities of such Borrower accrued
hereunder, shall become forthwith due and payable, without presentment, demand,
protest or any other notice of any kind, all of which are hereby expressly
waived, anything contained herein to the contrary notwithstanding; provided
that in the case of any event described in paragraph (h) or (i) above with
respect to any Borrower, the Commitments of the Lenders with respect to such
Borrower shall automatically terminate and the principal of the Loans then
outstanding of the Borrower with respect to which such event has occurred,
together with accrued interest thereon and any unpaid accrued Fees and all
other liabilities of such Borrower accrued hereunder shall automatically become
due and payable, without presentment, demand, protest or any other notice of
any kind, all of which are hereby expressly waived by such Borrower, anything
contained herein to the contrary notwithstanding.
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ARTICLE VII. THE AGENTS
In order to expedite the transactions contemplated by this
Agreement, Texas Commerce Bank National Association is hereby appointed to act
as Administrative Agent, and Chemical is hereby appointed to act as CAF Agent,
on behalf of the Lenders. Each of the Lenders hereby irrevocably authorizes
the Agents to take such actions on behalf of such Lender or holder and to
exercise such powers as are specifically delegated to the Agents by the terms
and provisions hereof, together with such actions and powers as are reasonably
incidental thereto. The Administrative Agent is hereby expressly authorized by
the Lenders and the CAF Agent, without hereby limiting any implied authority,
(a) to receive on behalf of the Lenders and the CAF Agent all payments of
principal of and interest on the Loans and all other amounts due to the Lenders
and the CAF Agent hereunder, and promptly to distribute to each Lender and the
CAF Agent its proper share of each payment so received; (b) to give notice on
behalf of each of the Lenders to the Borrowers of any Event of Default of which
the Administrative Agent has actual knowledge acquired in connection with its
agency hereunder; and (c) to distribute to each Lender copies of all notices,
financial statements and other materials delivered by the Borrowers pursuant to
this Agreement as received by the Administrative Agent.
No Agent or any of its directors, officers, employees or
agents shall be liable as such for any action taken or omitted by any of them
except for its or his or her own gross negligence or willful misconduct, or be
responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by
the Borrowers of any of the terms, conditions, covenants or agreements
contained in this Agreement. The Agents shall not be responsible to the
Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or other instruments or agreements. The Agents
may deem and treat the Lender which makes any Loan as the holder of the
indebtedness resulting therefrom for all purposes hereof until it shall have
received notice from such Lender, given as provided herein, of the transfer
thereof. The Agents shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders and, except as otherwise specifically provided herein, such
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instructions and any action or inaction pursuant thereto shall be binding on
all the Lenders. Each of the Agents shall, in the absence of knowledge to the
contrary, be entitled to rely on any instrument or document believed by it in
good faith to be genuine and correct and to have been signed or sent by the
proper person or persons. No Agent or any of its directors, officers,
employees or agents shall have any responsibility to the Borrowers on account
of the failure of or delay in performance or breach by the other Agent or any
Lender of any of its obligations hereunder or to the other Agent or any Lender
on account of the failure of or delay in performance or breach by any other
Lender, the other Agent or any Borrower of any of their respective obligations
hereunder or in connection herewith. Each of the Agents may execute any and
all duties hereunder by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by it with respect to all
matters arising hereunder and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Agents shall be under
no duty to take any discretionary action permitted to be taken by it pursuant
to the provisions of this Agreement unless it shall be requested in writing to
do so by the Required Lenders.
Subject to the appointment and acceptance of a successor Agent
as provided below, either Agent may resign at any time by notifying the Lenders
and the Borrowers. Upon any such resignation, the Required Lenders shall have
the right to appoint a successor Agent acceptable to the Borrowers. If no
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Agent gives notice
of its resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, having a combined capital and surplus of at least
$500,000,000 or an Affiliate of any such bank. Upon the acceptance of any
appointment as Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and the retiring Agent shall be discharged from its
duties and obligations hereunder. After any Agent's resignation hereunder, the
provisions of this Article and Section 8.05 shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
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With respect to the Loans made by it hereunder, each of the
Agents, in its individual capacity and not as an Agent shall have the same
rights and powers as any other Lender and may exercise the same as though it
were not an Agent, and each of the Agents and their Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrowers or any Subsidiary or other Affiliate thereof as if it were not an
Agent.
Each Lender agrees (i) to reimburse the Agents, on demand, in
the amount of its pro rata share (based on its Commitment hereunder or, if the
Commitments shall have been terminated, the amount of its outstanding Loans) of
any expenses incurred for the benefit of the Lenders in its role as Agent,
including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, which shall not have been
reimbursed by the Borrowers and (ii) to indemnify and hold harmless each of the
Agents and any of its directors, officers, employees or agents, on demand, in
the amount of such pro rata share, from and against any and all liabilities,
taxes, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by or asserted against it in any way relating to or
arising out of this Agreement or any action taken or omitted by it under this
Agreement to the extent the same shall not have been reimbursed by the
Borrowers; provided that no Lender shall be liable to any Agent for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or willful misconduct of such Agent or any of its directors,
officers, employees or agents. Each Lender agrees that any allocation made in
good faith by the Agents of expenses or other amounts referred to in this
paragraph between this Agreement and the Facility A Credit Agreement shall be
conclusive and binding for all purposes.
Each Lender acknowledges that it has, independently and
without reliance upon the Agents or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agents
or any other Lender and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or
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based upon this Agreement or any related agreement or any document furnished
hereunder or thereunder.
ARTICLE VIII. MISCELLANEOUS
SECTION 8.01. Notices. Notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed or sent by telecopy, as follows:
(a) if to either Borrower, to Texas Utilities Company, Energy
Plaza, 1601 Bryan Street, 33rd Floor, Dallas, TX 75201, Attention of
Richard Howard, Manager of Treasury Operations (Telecopy No.
214-812-2488);
(b) if to the CAF Agent, to Chemical Bank Agency Services
Corp., 140 East 45th Street, 29th Floor, New York, New York 10017,
Attention of Tara Kaplan (Telecopy No. 212-622-1308), with a copy to
Chemical Bank at 270 Park Avenue, New York, New York 10017, Attention
of Jaimin Patel (Telecopy No. 212-270-1354);
(c) if to the Administrative Agent, to Texas Commerce Bank
National Association, 2200 Ross Avenue, 3rd Floor, Dallas, TX 75201,
Attention of Allen King (Telecopy No. 214-922-2997), with a copy to
Texas Commerce Bank, Loan Syndications Services, 1111 Fannin Street,
9th Floor, MS 46, Houston, TX 77002; and
(d) if to a Lender, to it at its address (or telecopy number)
set forth in the Administrative Questionnaire delivered to the
Administrative Agent by such Lender in connection with the execution
of this Agreement or previously or in the Assignment and Acceptance
pursuant to which such Lender became a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy to such party as provided in this Section or in accordance with the
latest unrevoked direction from such party given in accordance with this
Section.
SECTION 8.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the
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Borrowers herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement shall be considered
to have been relied upon by the Lenders and shall survive the making by the
Lenders of the Loans regardless of any investigation made by the Lenders or on
their behalf, and shall continue in full force and effect as long as the
principal of or any accrued interest on any Loan or any Fee or any other amount
payable under this Agreement is outstanding and unpaid or the Commitments have
not been terminated.
SECTION 8.03. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Borrowers and each Agent and
when the Administrative Agent shall have received copies hereof (telecopied or
otherwise) which, when taken together, bear the signature of each Lender, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, except that the Borrowers shall
not have the right to assign any rights hereunder or any interest herein
without the prior consent of all the Lenders.
SECTION 8.04. Successors and Assigns. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any party that are contained in this
Agreement shall bind and inure to the benefit of its successors and assigns.
(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it); provided, however, that (i) except in the case of an assignment to a
Lender or an Affiliate of such Lender or an assignment to a Federal Reserve
Bank, the Borrowers and the Agents must give their prior written consent to
such assignment (which consent shall not be unreasonably withheld), (ii) the
amount of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $10,000,000, (iii) each such assignment shall be of a constant,
and not a varying, percentage of all the assigning Lender's rights and
obligations under this Agreement, (iv) the parties to each such assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, and a
<PAGE> 76
72
processing and recordation fee of $3,000 (provided that, in the case of
simultaneous assignment of interests under one or more of this Agreement and
the Facility A Agreement, the aggregate fee shall be $3,000), and (v) the
assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire. Upon acceptance and recording pursuant
to Section 8.04(e), from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five Business
Days after the execution thereof unless otherwise agreed by the Administrative
Agent (the Borrowers to be given reasonable notice of any shorter period), (A)
the assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and (B) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all or the remaining portion of
an assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto (but shall continue to be entitled to the
benefits of Sections 2.12, 2.17 and 8.05 afforded to such Lender prior to its
assignment as well as to any Fees accrued for its account hereunder and not yet
paid)). Notwithstanding the foregoing, any Lender assigning its rights and
obligations under this Agreement may retain any Competitive Loans made by it
outstanding at such time, and in such case shall retain its rights hereunder in
respect of any Loans so retained until such Loans have been repaid in full in
accordance with this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim, (ii)
except as set forth in (i) above, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto or the financial condition of the Borrowers or the performance or
observance by the Borrowers of any obligations under this Agreement or any
other instrument or
<PAGE> 77
73
document furnished pursuant hereto; (iii) such assignee represents and warrants
that it is legally authorized to enter into such Assignment and Acceptance;
(iv) such assignee confirms that it has received a copy of this Agreement,
together with copies of the most recent financial statements delivered pursuant
to Section 5.03 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (v) such assignee will independently and without
reliance upon the Agents, such assigning Lender or any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such assignee appoints and authorizes each Agent to take
such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to such Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and (vii) such assignee
agrees that it will perform in accordance with their terms all the obligations
which by the terms of this Agreement are required to be performed by it as a
Lender.
(d) The Administrative Agent shall maintain at one of its
offices in the City of Houston a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitment of, and the principal amount of the Loans
owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive in the absence of
manifest error and the Borrowers, the Agents and the Lenders may treat each
person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement. The Register shall be
available for inspection by each party hereto, at any reasonable time and from
time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee together with an
Administrative Questionnaire completed in respect of the assignee (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) above and, if required, the written consent of
the Borrowers and the Agents to such assignment, the Administrative Agent shall
(i) accept such Assignment and Acceptance and (ii) record the information
contained therein in the Register.
<PAGE> 78
74
(f) Each Lender may without the consent of the Borrowers or
the Agents sell participations to one or more banks or other entities in all or
a portion of its rights and obligations under this Agreement (including all or
a portion of its Commitment and the Loans owing to it); provided, however, that
(i) such Lender's obligations under this Agreement shall remain unchanged, (ii)
such Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) each participating bank or other entity
shall be entitled to the benefit of the cost protection provisions contained in
Sections 2.12, 2.17 and 8.05 to the same extent as if it were the selling
Lender (and limited to the amount that could have been claimed by the selling
Lender had it continued to hold the interest of such participating bank or
other entity), except that all claims made pursuant to such Sections shall be
made through such selling Lender, and (iv) the Borrowers, the Agents and the
other Lenders shall continue to deal solely and directly with such selling
Lender in connection with such Lender's rights and obligations under this
Agreement.
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender
by or on behalf of the Borrowers; provided that, prior to any such disclosure,
each such assignee or participant or proposed assignee or participant shall
execute an agreement whereby such assignee or participant shall agree (subject
to customary exceptions) to preserve the confidentiality of any such
information.
(h) The Borrowers shall not assign or delegate any rights and
duties hereunder without the prior written consent of all Lenders, and any
attempted assignment or delegation (except as a consequence of a transaction
expressly permitted under Section 5.09) by a Borrower without such consent
shall be void.
(i) Any Lender may at any time pledge all or any portion of
its rights under this Agreement to a Federal Reserve Bank; provided that no
such pledge shall release any Lender from its obligations hereunder or
substitute any such Bank for such Lender as a party hereto. In order to
facilitate such an assignment to a Federal Reserve Bank, each Borrower shall,
at the request of the assigning Lender, duly execute and deliver to the
assigning Lender a promissory note
<PAGE> 79
75
or notes evidencing the Loans made to such Borrower by the assigning Lender
hereunder.
SECTION 8.05. Expenses; Indemnity. (a) The Borrowers agree
to pay all reasonable out-of-pocket expenses incurred by the Agents in
connection with entering into this Agreement or in connection with any
amendments, modifications or waivers of the provisions hereof (but only if such
amendments, modifications or waivers are requested by a Borrower) (whether or
not the transactions hereby contemplated are consummated), or incurred by the
Agents or any Lender in connection with the enforcement of their rights in
connection with this Agreement or in connection with the Loans made hereunder,
including the reasonable fees and disbursements of counsel for the Agents or,
in the case of enforcement following an Event of Default, the Lenders.
(b) The Borrowers agree to indemnify each Lender against any
loss, calculated in accordance with the next sentence, or reasonable expense
which such Lender may sustain or incur as a consequence of (a) any failure by
such Borrower to borrow or to refinance, convert or continue any Loan hereunder
(including as a result of such Borrower's failure to fulfill any of the
applicable conditions set forth in Article IV) after irrevocable notice of such
borrowing, refinancing, conversion or continuation has been given pursuant to
Section 2.02(e), 2.03 or 2.04, (b) any payment, prepayment or conversion, or
assignment of a Eurodollar Loan or Fixed Rate Loan of such Borrower required by
any other provision of this Agreement or otherwise made or deemed made on a
date other than the last day of the Interest Period, if any, applicable
thereto, (c) any default in payment or prepayment of the principal amount of
any Loan or any part thereof or interest accrued thereon, as and when due and
payable (at the due date thereof, whether by scheduled maturity, acceleration,
irrevocable notice of prepayment or otherwise) or (d) the occurrence of any
Event of Default, including, in each such case, any loss or reasonable expense
sustained or incurred or to be sustained or incurred by such Lender in
liquidating or employing deposits from third parties, or with respect to
commitments made or obligations undertaken with third parties, to effect or
maintain any Loan hereunder or any part thereof as a Eurodollar Loan or a Fixed
Rate Loan. Such loss shall include an amount equal to the excess, if any, as
reasonably determined by such Lender, of (i) its cost of obtaining the funds
for the Loan being paid, prepaid, refinanced, converted or not borrowed
(assumed to be the LIBO Rate or, in the case of a Fixed Rate Loan, the fixed
<PAGE> 80
76
rate of interest applicable thereto) for the period from the date of such
payment, prepayment, refinancing or failure to borrow or refinance to the last
day of the Interest Period for such Loan (or, in the case of a failure to
borrow or refinance the Interest Period for such Loan which would have
commenced on the date of such failure) over (ii) the amount of interest (as
reasonably determined by such Lender) that would be realized by such Lender in
reemploying the funds so paid, prepaid or not borrowed or refinanced for such
period or Interest Period, as the case may be.
(c) The Borrowers agree to indemnify the Agents, each Lender,
each of their Affiliates and the directors, officers, employees and agents of
the foregoing (each such person being called an "Indemnitee") against, and to
hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees and
expenses, incurred by or asserted against any Indemnitee arising out of (i) the
consummation of the transactions contemplated by this Agreement, (ii) the use
of the proceeds of the Loans or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses (i) are determined by a final judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of such Indemnitee or (ii) result from any litigation brought by such
Indemnitee against the Borrowers or by any Borrower against such Indemnitee, in
which a final, nonappealable judgment has been rendered against such
Indemnitee.
(d) The provisions of this Section shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the invalidity or unenforceability of any term
or provision of this Agreement or any investigation made by or on behalf of any
Agent or any Lender. All amounts due under this Section shall be payable on
written demand therefor.
(e) A certificate of any Lender or Agent setting forth any
amount or amounts which such Lender or Agent is entitled to receive pursuant to
paragraph (b) of this Section and containing an explanation in reasonable
detail of the manner in which such amount or amounts shall have been
<PAGE> 81
77
determined shall be delivered to the appropriate Borrower and shall be
conclusive absent manifest error.
SECTION 8.06. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or the account of the relevant Borrower against any of and
all the obligations of such Borrower now or hereafter existing under this
Agreement held by such Lender, irrespective of whether or not such Lender shall
have made any demand under this Agreement and although such obligations may be
unmatured. The rights of each Lender under this Section are in addition to
other rights and remedies (including other rights of setoff) which such Lender
may have.
SECTION 8.07. Applicable Law. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.08. Waivers; Amendment. (a) No failure or delay
of either Agent or any Lender in exercising any power or right hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Agents
and the Lenders hereunder are cumulative and are not exclusive of any rights or
remedies which they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any Borrower or any Subsidiary in any
case shall entitle such party to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal payment date
<PAGE> 82
78
or date for the payment of any interest on any Loan, or waive or excuse any
such payment or any part thereof, or decrease the rate of interest on any Loan,
without the prior written consent of each Lender affected thereby, (ii)
increase any Commitment or decrease the Facility Fee of any Lender without the
prior written consent of such Lender, (iii) increase the percentage set forth
in clause (b)(ii)(B) of Section 2.01, without the prior written consent of each
Lender, or (iv) amend or modify the provisions of Section 2.14 or Section
8.04(h), the provisions of this Section or the definition of the "Required
Lenders", without the prior written consent of each Lender; provided further,
however, that no such agreement shall amend, modify or otherwise affect the
rights or duties of the Administrative Agent or the CAF Agent hereunder without
the prior written consent of the Administrative Agent or the CAF Agent, as the
case may be. Each Lender shall be bound by any waiver, amendment or
modification authorized by this Section and any consent by any Lender pursuant
to this Section shall bind any assignee of its rights and interests hereunder.
SECTION 8.09. Entire Agreement. This Agreement (including
the schedules and exhibits hereto) and the Fee Letter constitute a "Loan
Agreement" as defined in Section 26.03(a) of the Texas Business and Commerce
Code, and represent the entire contract among the parties relative to the
subject matter hereof and thereof. Any previous agreement among the parties
with respect to the subject matter hereof is superseded by this Agreement and
the Fee Letter. There are no unwritten oral agreements between the parties.
Nothing in this Agreement, expressed or implied, is intended to confer upon any
party other than the parties hereto any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
SECTION 8.10. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 8.11. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall
<PAGE> 83
79
constitute an original but all of which when taken together shall constitute
but one contract, and shall become effective as provided in Section 8.03.
SECTION 8.12. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting, this Agreement.
SECTION 8.13. Interest Rate Limitation. (a) Notwithstanding
anything herein to the contrary, if at any time the applicable interest rate,
together with all fees and charges which are treated as interest under
applicable law (collectively the "Charges"), as provided for herein or in any
other document executed in connection herewith, or otherwise contracted for,
charged, received, taken or reserved by any Lender, shall exceed the maximum
lawful rate (the "Maximum Rate") which may be contracted for, charged, taken,
received or reserved by such Lender in accordance with applicable law, the rate
of interest payable on the Loans of such Lender, together with all Charges
payable to such Lender, shall be limited to the Maximum Rate.
(b) If the amount of interest, together with all Charges,
payable for the account of any Lender in respect of any interest computation
period is reduced pursuant to paragraph (a) of this Section and the amount of
interest, together with all Charges, payable for such Lender's account in
respect of any subsequent interest computation period, computed pursuant to
Section 2.07, would be less than the Maximum Rate, then the amount of interest,
together with all Charges, payable for such Lender's account in respect of such
subsequent interest computation period shall, to the extent permitted by
applicable law, be automatically increased to such Maximum Rate; provided that
at no time shall the aggregate amount by which interest paid for the account of
any Lender has been increased pursuant to this paragraph (b) exceed the
aggregate amount by which interest, together with all Charges, paid for its
account has theretofore been reduced pursuant to paragraph (a) of this Section.
SECTION 8.14. Jurisdiction; Venue. (a) Each Borrower hereby
irrevocably and unconditionally submits, for itself and its property, to the
nonexclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of
<PAGE> 84
80
or relating to this Agreement, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Subject to the foregoing and to paragraph (b) below, nothing in this Agreement
shall affect any right that any party hereto may otherwise have to bring any
action or proceeding relating to this Agreement against any other party hereto
in the courts of any jurisdiction.
(b) Each Borrower hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or thereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in any
New York State or Federal court. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
SECTION 8.15. Confidentiality. Each Lender shall use its
best efforts to hold in confidence all information, memoranda, or extracts
furnished to such Lender (directly or through the Agents) by the Borrowers
hereunder or in connection with the negotiation hereof; provided that such
Lender may disclose any such information, memoranda or extracts (i) to its
accountants or counsel, (ii) to any regulatory agency having authority to
examine such Lender, (iii) as required by any legal or governmental process or
otherwise by law, (iv) except as provided in the last sentence of Section 5.03,
to any person to which such Lender sells or proposes to sell a participation in
its Loans hereunder, if such other person agrees for the benefit of the
Borrowers to comply with the provisions of this Section and (v) to the extent
that such information, memoranda or extracts shall be publicly available or
shall have become known to such Lender independently of any disclosure by any
Borrower hereunder or in connection with the negotiation hereof.
Notwithstanding the foregoing, any Lender may disclose the provisions of this
Agreement and the amounts, maturities and interest rates of its Loans to any
purchaser or potential purchaser of such Lender's interest in any Loan.
<PAGE> 85
81
SECTION 8.16. Transition Period. At all times following
April 23, 1996, and prior to the Effective Date, the provisions of this
Agreement in effect prior to the amendment and restatement hereof executed and
delivered as of April 23, 1996, shall remain in effect without modification,
except that (i) the provisions of Section 8.05 shall apply to all parties
signatory hereto (in addition to all persons that are Lenders prior to giving
effect to such amendment and restatement) and to each Borrowing Request
delivered on April 23, 1996 and (ii) each Borrowing Request delivered on April
23, 1996 shall be deemed given solely to the parties signatory hereto and
subject to the provisions hereof as such provisions would be in effect after
the Effective Date.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
TEXAS UTILITIES COMPANY, as Borrower,
by
/s/ Peter B. Tinkham
----------------------------
Name: Peter B. Tinkham
Title: Treasurer and
Assistant Secretary
TEXAS UTILITIES ELECTRIC COMPANY,
as Borrower,
by
/s/ Robert S. Shapard
----------------------------
Name: Robert S. Shapard
Title: Treasurer and
Assistant Secretary
<PAGE> 86
82
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually and as
Administrative Agent,
by
/s/ Allen King
----------------------------
Name: Allen King
Title: Vice President
CHEMICAL BANK, individually and as CAF
Agent,
by
/s/ Jane Ritchie
----------------------------
Name: Jane Ritchie
Title: Vice President
ABN AMRO BANK N.V.,
by
/s/ Peter D. Gaw
----------------------------
Name: Peter D. Gaw
Title: Group Vice President
by
/s/ Kevin S. McFadden
----------------------------
Name: Kevin S. McFadden
Title: Assistant Vice
President
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION,
by
/s/ Robert Eaton
----------------------------
Name: Robert Eaton
Title: Vice President
<PAGE> 87
83
BANK OF MONTREAL,
by
/s/ Donald Skipper
----------------------------
Name: Donald Skipper
Title: Director
THE BANK OF NEW YORK,
by
/s/ Nathan S. Howard
----------------------------
Name: Nathan S. Howard
Title: Vice President
THE BANK OF TOKYO-MITSUBISHI, LTD.,
by
/s/ John M. Mearns
----------------------------
Name: John M. Mearns
Title: Vice President and
Manager
CIBC INC.,
by
/s/ Robert S. Lyle
----------------------------
Name: Robert S. Lyle
Title: Director
CITIBANK, N.A.,
by
/s/ Sandip Sen
----------------------------
Name: Sandip Sen
Title: Vice President
<PAGE> 88
84
COMMERZBANK AG, ATLANTA AGENCY,
by
/s/ Dempsey L. Gable
----------------------------
Name: Dempsey L. Gable
Title: Senior Vice President
by
/s/ Vincas P. Snipas
----------------------------
Name: Vincas P. Snipas
Title: Assistant Cashier
CREDIT LYONNAIS,
by
/s/ Robert Ivosevich
----------------------------
Name: Robert Ivosevich
Title: Senior Vice President
CREDIT SUISSE,
by
/s/ David J. Worthington
----------------------------
Name: David J. Worthington
Title: Member of Senior
Management
by
/s/ Marilou Palenzuela
----------------------------
Name: Marilou Palenzuela
Title: Member of Senior
Management
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/ Madeleine N. Pember
----------------------------
Name: Madeleine N. Pember
Title: Corporate Banking
Officer
<PAGE> 89
85
THE INDUSTRIAL BANK OF JAPAN TRUST
COMPANY,
by
/s/ A. Yoshino
----------------------------
Name: Akijiro Yoshino
Title: Executive Vice
President
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED,
by
/s/ S. Otsubo
------------------------
Name: Satoru Otsubo
Title: Joint General
Manager
MELLON BANK, N.A.,
by
/s/ A.J. Sabatelle
----------------------------
Name: A.J. Sabatelle
Title: First Vice
President
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY,
by
/s/ Shigeki Sakanoue
----------------------------
Name: Shigeki Sakanoue
Title: Manager & 1st Vice
President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK,
by
/s/ Carl J. Mehldau, Jr.
----------------------------
Name: Carl J. Mehldau, Jr.
Title: Associate
<PAGE> 90
86
NATIONSBANK OF TEXAS, N.A.,
by
/s/ Bryan L. Diers
----------------------------
Name: Bryan L. Diers
Title: Senior Vice
President
THE SANWA BANK, LIMITED, DALLAS AGENCY,
by
/s/ Robert S. Smith
----------------------------
Name: Robert S. Smith
Title: Assistant Vice
President
SOCIETE GENERALE, SOUTHWEST AGENCY,
by
/s/ Richard M. Lewis
----------------------------
Name: Richard M. Lewis
Title: Vice President
THE SUMITOMO BANK, LIMITED,
by
/s/ Harumitsu Seki
-----------------------------
Name: Harumitsu Seki
Title: General Manager
THE TOKAI BANK, LIMITED,
by
/s/ M. Muto
----------------------
Name: Masaharu Muto
Title: Deputy General
Manager
<PAGE> 91
87
TORONTO DOMINION (TEXAS), INC.,
by
/s/ Linda A. Lavin
----------------------------
Name: Linda A. Lavin
Title: Director
UNION BANK OF SWITZERLAND,
NEW YORK BRANCH,
by
/s/ Karen Rottman
----------------------------
Name: Karen Rottman
Title: Assistant Vice
President
by
/s/ Paul R. Morrison
----------------------------
Name: Paul R. Morrison
Title: Vice President
WESTPAC BANKING CORPORATION,
by
/s/ R. Christopher Noble
----------------------------
Name: R. Christopher Noble
Title: Senior Vice
President
<PAGE> 92
EXHIBIT A-1
FORM OF COMPETITIVE BID REQUEST
Chemical Bank, as Competitive Advance Facility Agent
for the Lenders referred to below,
c/o Chemical Bank Agency Services Corp.
140 East 45th Street (29th Floor)
New York, NY 10017
Attention: Tara Kaplan
Telecopy:
Dear Ladies and Gentlemen:
The undersigned, [Texas Utilities Company][Texas Utilities
Electric Company] (the "Borrower"), refers to the Amended and Restated Term
Loan and Competitive Advance and Revolving Credit Facility Agreement dated as
of April 26, 1996 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Agreement"), among the Borrower, [Texas
Utilities Company] [Texas Utilities Electric Company], the Lenders named
therein, Texas Commerce Bank National Association, as Administrative Agent, and
Chemical Bank, as Competitive Advance Facility Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Agreement. The Borrower hereby gives you notice pursuant to
Section 2.03(a) of the Agreement that it requests a Competitive Borrowing under
the Agreement, and in that connection sets forth below the terms on which such
Competitive Borrowing is requested to be made:
(A) Date of Competitive Borrowing
(which is a Business Day)
------------------
(B) Principal amount of
Competitive Borrowing 1/
------------------
(C) Interest rate basis 2/
------------------
(D) Interest Period and the
last day thereof 3/
------------------
Upon acceptance of any or all of the Loans offered by the
Lenders in response to this request, the Borrower shall be deemed to have
represented and warranted that the conditions to lending specified in Section
4.01(b) and (c) of the Agreement have been satisfied.
Very truly yours,
[TEXAS UTILITIES COMPANY]
[TEXAS UTILITIES ELECTRIC COMPANY]
by
----------------------------------
Name:
Title: [Financial Officer]
____________________
1/ Not less than $5,000,000 (and in integral multiples of $1,000,000) or
greater than the Total Commitment then available.
2/ Eurodollar Loan or Fixed Rate Loan.
3/ Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
<PAGE> 93
EXHIBIT A-2
FORM OF NOTICE OF COMPETITIVE BID REQUEST
[Name of Lender]
[Address]
New York, New York
[Date]
Attention: [ ]
Dear Ladies and Gentlemen:
Reference is made to the Amended and Restated Term Loan and
Competitive Advance and Revolving Credit Facility Agreement dated as of April
26, 1996 (as it may hereafter be amended, modified, extended or restated from
time to time, the "Agreement"), among [Texas Utilities Company][Texas Utilities
Electric Company] (the "Borrower"), [Texas Utilities Company][Texas Utilities
Electric Company], the Lenders named therein, Texas Commerce Bank National
Association, as Administrative Agent, and Chemical Bank, as Competitive Advance
Facility Agent. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Agreement. The Borrower
made a Competitive Bid Request on __________, 19[ ], pursuant to Section
2.03(a) of the Agreement, and in that connection you are invited to submit a
Competitive Bid by [Date]/[Time]. 1/ Your Competitive Bid must comply with
Section 2.03(b) of the Agreement and the terms set forth below on which the
Competitive Bid Request was made:
(A) Date of Competitive Borrowing
------------------
(B) Principal amount of
Competitive Borrowing
------------------
(C) Interest rate basis
------------------
(D) Interest Period and the
last day thereof.
------------------
Very truly yours,
CHEMICAL BANK,
as Competitive Advance Facility Agent,
by
------------------------------
Name:
Title:
____________________
1/ The Competitive Bid must be received by the CAF Agent (i) in the case
of Eurodollar Loans, not later than 9:30 a.m., New York City time, three
Business Days before a proposed Competitive Borrowing, and (ii) in the case of
Fixed Rate Loans, not later than 9:30 a.m., New York City time, on the Business
Day of a proposed Competitive Borrowing.
<PAGE> 94
EXHIBIT A-3
FORM OF COMPETITIVE BID
Chemical Bank, as Competitive Advance Facility Agent
for the Lenders referred to below,
c/o Chemical Bank Agency Services Corp.
140 East 45th Street (29th Floor)
New York, NY 10017
Attention: Tara Kaplan
Telecopy:
[Date]
Attention: [ ]
Dear Ladies and Gentlemen:
The undersigned, [Name of Lender], refers to the Amended and
Restated Term Loan and Competitive Advance and Revolving Credit Facility
Agreement dated as of April 26, 1996 (as it may hereafter be amended, modified,
extended or restated from time to time, the "Agreement"), among [Texas
Utilities Company][Texas Utilities Electric Company] (the "Borrower"), [Texas
Utilities Company][Texas Utilities Electric Company], the Lenders named
therein, Texas Commerce Bank National Association, as Administrative Agent, and
Chemical Bank, as Competitive Advance Facility Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Agreement. The undersigned hereby makes a Competitive Bid
pursuant to Section 2.03(b) of the Agreement, in response to the Competitive
Bid Request made by the Borrower on ___________, 19[ ], and in that connection
sets forth below the terms on which such Competitive Bid is made:
(A) Principal Amount 1/
------------------
(B) Competitive Bid Rate 2/
------------------
(C) Interest Period and last
day thereof
------------------
The undersigned hereby confirms that it is prepared, subject
to the conditions set forth in the Agreement, to extend credit to the Borrower
upon acceptance by the Borrower of this bid in accordance with Section 2.03(d)
of the Agreement.
Very truly yours,
[NAME OF LENDER],
by
----------------------
Name:
Title:
____________________
1/ Not less than $5,000,000 or greater than the requested Competitive
Borrowing and in integral multiples of $1,000,000. Multiple bids will be
accepted by the CAF Agent.
2/ i.e., LIBO Rate + or - __%, in the case of Eurodollar Loans or ___%,
in the case of Fixed Rate Loans.
<PAGE> 95
EXHIBIT A-4
FORM OF COMPETITIVE BID ACCEPT/REJECT LETTER
[Date]
Chemical Bank, as Competitive Advance Facility Agent
for the Lenders referred to below
c/o Chemical Bank Agency Services Corp.
140 East 45th Street (29th Floor)
New York, NY 10017
Attention: Tara Kaplan
Telecopy:
Dear Ladies and Gentlemen:
The undersigned, [Texas Utilities Company][Texas Utilities
Electric Company] (the "Borrower"), refers to the Amended and Restated Term
Loan and Competitive Advance and Revolving Credit Facility Agreement dated as
of April 26, 1996 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Agreement"), among the Borrower, [Texas
Utilities Company][Texas Utilities Electric Company], the Lenders named
therein, Texas Commerce Bank National Association, as Administrative Agent, and
Chemical Bank, as Competitive Advance Facility Agent for the Lenders.
In accordance with Section 2.03(c) of the Agreement, we have
received a summary of bids in connection with our Competitive Bid Request dated
_____________, 19[ ], and in accordance with Section 2.03(d) of the Agreement,
we hereby accept the following bids for maturity on [date]:
Principal Amount Fixed Rate/Margin Lender
- ---------------- ----------------- ------
$ [%]/[+/-. %]
$
We hereby reject the following bids:
Principal Amount Fixed Rate/Margin Lender
- ---------------- ----------------- ------
$ [%]/[+/-. %]
$
The $ should be deposited in Chemical Bank account
number [ ] on [date].
Very truly yours,
[TEXAS UTILITIES COMPANY]
[TEXAS UTILITIES ELECTRIC COMPANY],
by
--------------------------------
Name:
Title:
<PAGE> 96
EXHIBIT A-5
FORM OF BORROWING REQUEST
Texas Commerce Bank National Association,
as Administrative Agent
for the Lenders referred to below,
2200 Ross Avenue, 3rd floor
Dallas, TX 77002
Attention: Allen King
Telecopy:
[Date]
Dear Ladies and Gentlemen:
The undersigned, [Texas Utilities Company][Texas Utilities
Electric Company] (the "Borrower"), refers to the Amended and Restated Term
Loan and Competitive Advance and Revolving Credit Facility Agreement dated as
of April 26, 1996 (as it may hereafter be amended, modified, extended or
restated from time to time, the "Agreement"), among the Borrower, [Texas
Utilities Company][Texas Utilities Electric Company], the Lenders named
therein, Texas Commerce Bank National Association, as Administrative Agent, and
Chemical Bank, as Competitive Advance Facility Agent. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
such terms in the Agreement. The Borrower hereby gives you notice pursuant to
Section 2.04 of the Agreement that it requests a [Standby][Term] Borrowing
under the Agreement, and in that connection sets forth below the terms on which
such [Standby][Term] Borrowing is requested to be made:
(A) Date of Borrowing
(which is a Business Day)
------------------
(B) Principal amount of
Borrowing 1/
------------------
(C) Interest rate basis 2/
------------------
(D) Interest Period and the
last day thereof 3/
------------------
Upon acceptance of any or all of the Loans made by the Lenders
in response to this request, the Borrower shall be deemed to
____________________
1/ Not less than $10,000,000 (and in integral multiples of $5,000,000) or
greater than, as applicable, the Total Standby Commitment or the aggregate
amount of the Term Loan Commitments then available.
2/ Specify (a) Term Borrowing or Standby Borrowing and (b) Eurodollar
Loan or ABR Loan.
3/ Which shall be subject to the definition of "Interest Period" and end
not later than the Maturity Date.
<PAGE> 97
have represented and warranted that the conditions to lending specified in
Section 4.01(b) and (c) of the Agreement have been satisfied.
Very truly yours,
[TEXAS UTILITIES COMPANY]
[TEXAS UTILITIES ELECTRIC COMPANY],
by
--------------------------
Name:
Title: [Financial Officer]
<PAGE> 98
EXHIBIT B
ADMINISTRATIVE QUESTIONNAIRE
TEXAS UTILITIES COMPANY AND TEXAS UTILITIES ELECTRIC COMPANY
PLEASE FORWARD THIS COMPLETED
FORM AS SOON AS POSSIBLE TO:
Gina Hardwick FAX (713) 216-2291
PLEASE TYPE ALL INFORMATION.
Agent: Texas Commerce Bank National Association 712 Main
Street 8 TCB-N 96 Houston, Texas 77002
Telex: 166-350 TCB HOU
Syndications
Telecopier: (713) 216-2291 / Alt. Fax (713) 216-2339
Syndications
Contacts: Preston Moore (713) 216-1010
Ann Krevis Baumgartner (713) 216-7582
Gina Hardwick (713) 216-2093
Operations: Gale Manning (713) 750-2784
Letters of Credit: Gale Manning (713) 750-2784
Competitive Auction
Contact: Chemical Bank New York
Janet M. Belden - Phone: (212) 622-0011
Fax: (212) 622-0854
Full Legal Name of
your Institution:
-------------------------------------------------
Hard-copy documents, notices and periodic financial statements of the Borrower
should be sent to the following account officer designated by your bank:
Officer's Name:
-------------------------------------------------
Title:
-------------------------------------------------
Street Address (No
P.O. Boxes please):
-------------------------------------------------
City, State, Zip:
-------------------------------------------------
Phone #:
-------------------------------------------------
Telefax #:
-------------------------------------------------
<PAGE> 99
2
PRIMARY CONTACT INFORMATION
We will send all telecopies regarding time-critical information (drawdowns,
option changes, payments, etc.) to the Primary or Alternate Contact at the
banking location you designate.
1. Your bank's primary contact for telefaxes concerning borrowings,
options on interest rates, etc.:
<TABLE>
<CAPTION>
PRIMARY PRIMARY PRIMARY ALTERNATE ALTERNATE
NAME/ TELEFAX TELEX NO. & TELEFAX TELEX NO. &
PHONE NO. DEPARTMENT NO. ANSWERBACK NO. ANSWERBACK
--------- ---------- -------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
</TABLE>
<TABLE>
<CAPTION>
PRIMARY PRIMARY PRIMARY ALTERNATE ALTERNATE
NAME/ TELEFAX TELEX NO. & TELEFAX TELEX NO. &
PHONE NO. DEPARTMENT NO. ANSWERBACK NO. ANSWERBACK
--------- ---------- -------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C>
</TABLE>
If at any time any of the above information changes, please advise.
Publicity: Under what name would you prefer your institution to appear in
any future advertisements?
--------------------------------------------------------------
<PAGE> 100
3
Movement of Funds: TO US: Wire Fed Funds to:
Texas Commerce Bank N.A.
ABA #113000609
for account number #20730
Attention: Loan Syndication Svcs./ Gale Manning
Reference:
TO YOU: Wire Fed Funds to:
NAME:
------------------------------------------------------
ABA #
------------------------------------------------------
For Credit To:
------------------------------------------------------
Attention:
------------------------------------------------------
Reference:
------------------------------------------------------
Other:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If buyer is purchasing Letter of Credit facility as part of this
participation/syndication, please provide the information below:
L/C contact name:
------------------------------------------------------
Street Address:
------------------------------------------------------
City, State, Zip:
------------------------------------------------------
Phone #:
------------------------------------------------------
Telefax #:
------------------------------------------------------
Wire Fed Funds to:
NAME:
--------------------------------------------
ABA #
--------------------------------------------
For Credit To:
--------------------------------------------
Attention:
--------------------------------------------
Reference:
--------------------------------------------
<PAGE> 101
4
PLEASE COMPLETE THE FOLLOWING INFORMATION
FOR COMPETITIVE AUCTIONS ONLY
Primary Contact
Competitive Auctions
Bank Name:
---------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
Primary Contact:
---------------------------------------------------------------
Department:
--------------------------------------------------------------------
Telephone Number:
--------------------------------------------------------------
Telefax Number:
----------------------------------------------------------------
Alternate Contact
Competitive Auctions
Alternate Contact:
-------------------------------------------------------------
Department:
--------------------------------------------------------------------
Telephone Number:
--------------------------------------------------------------
Telefax Number:
----------------------------------------------------------------
<PAGE> 102
5
PLEASE COMPLETE THE FOLLOWING INFORMATION
FOR COMPETITIVE AUCTIONS ONLY
Primary Contact
Competitive Auctions
Bank Name:
---------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
Primary Contact:
---------------------------------------------------------------
Department:
--------------------------------------------------------------------
Telephone Number:
--------------------------------------------------------------
Telefax Number:
----------------------------------------------------------------
Alternate Contact
Competitive Auctions
Alternate Contact:
-------------------------------------------------------------
Department:
--------------------------------------------------------------------
Telephone Number:
--------------------------------------------------------------
Telefax Number:
----------------------------------------------------------------
<PAGE> 103
EXHIBIT C
[FORM OF]
ASSIGNMENT AND ACCEPTANCE
Dated: __________, 19__
Reference is made to the Amended and Restated Term Loan and
Competitive Advance and Revolving Credit Facility Agreement dated as of April
26, 1996 (as amended, modified, extended or restated from time to time, the
"Agreement"), among Texas Utilities Company, Texas Utilities Electric Company
(collectively, the "Borrowers"), the lenders listed in Schedule 2.01 thereto
(the "Lenders"), Texas Commerce Bank National Association, as Administrative
Agent, and Chemical Bank, as Competitive Advance Facility Agent for the
Lenders. Terms defined in the Agreement are used herein with the same
meanings.
1. The Assignor hereby sells and assigns, without recourse,
to the Assignee, and the Assignee hereby purchases and assumes, without
recourse, from the Assignor, effective as of the [Effective Date of Assignment
set forth below], the interests set forth on the reverse hereof (the "Assigned
Interest") in the Assignor's rights and obligations under the Agreement,
including, without limitation, the interests set forth on the reverse hereof in
the Commitment of the Assignor on the [Effective Date of Assignment] and the
Competitive Loans and Standby Loans owning to the Assignor which are
outstanding on the [Effective Date of Assignment], together with unpaid
interest accrued on the assigned Loans to the [Effective Date of Assignment]
and the amount, if any, set forth on the reverse hereof of the Fees accrued to
the [Effective Date of Assignment] for the account of the Assignor. Each of
the Assignor and the Assignee hereby makes and agrees to be bound by all the
representations, warranties and agreements set forth in Section 8.04 of the
Agreement, a copy of which has been received by each such party. From and
after the [Effective Date of Assignment], (i) the Assignee shall be a party to
and be bound by the provisions of the Agreement and, to the extent of the
interests assigned by this Assignment and Acceptance, have the rights and
obligations of a Lender thereunder and (ii) the Assignor shall, to the extent
of the interests assigned by this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Agreement.
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (i) if the Assignee is organized under the
laws of a jurisdiction outside the United States, the forms specified in
Section 2.17(g) of the Agreement, duly completed and executed by such Assignee,
(ii) if the Assignee is not already a Lender under the Agreement, an
Administrative Questionnaire in the form of Exhibit B to the Agreement and
(iii) a processing and recordation fee of $3,000.
<PAGE> 104
2
3. This Assignment and Acceptance shall be governed by and
construed in accordance with the laws of the State of New York.
Date of Assignment:
-----------------------------------------------------------
Legal Name of Assignor:
-------------------------------------------------------
Legal Name of Assignee:
-------------------------------------------------------
Assignee's Address for Notices:
-----------------------------------------------
Effective Date of Assignment
(may not be fewer than 5 Business
Days after the Date of Assignment
unless otherwise agreed by the
Administrative Agent):
--------------------------------------------------------
<TABLE>
<CAPTION>
Percentage Assigned of
Facility/Commitment (set forth,
to at least 8 decimals, as a
Principal Amount Assigned (and percentage of the Facility and
identifying information as to individual the aggregate Commitments of all
Facility Competitive Loans) Lenders thereunder)
-------- ---------------------------------------- --------------------------------
<S> <C> <C>
Standby Commitment Assigned: $ %
------------- ----------
Term Loan Commitment Assigned: $ %
------------- ----------
Standby Loans: $ %
------------- ----------
Term Loans: $ %
------------- ----------
Competitive Loans: $ %
------------- ----------
Fees Assigned (if any): $ %
------------- ----------
</TABLE>
<PAGE> 105
The terms set forth and on the Accepted:
reverse side hereof are hereby TEXAS UTILITIES COMPANY,
agreed to:
, as by:
- ------------------------------- -----------------------------
Assignor, Name:
Title:
by:
-----------------------------
Name:
Title: TEXAS UTILITIES ELECTRIC COMPANY,
, as
- -------------------------------
Assignee, by:
-----------------------------
by: Name:
---------------------------- Title:
Name:
Title:
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent,
by:
--------------------------------------
Name:
Title:
CHEMICAL BANK, as CAF Agent
by:
--------------------------------------
Name:
Title:
3
<PAGE> 106
EXHIBIT D-1
April 26, 1996
To the Lenders listed on
Schedule 2.01 of each
Credit Agreement referred to below
Ladies and Gentlemen:
We advise you that we have acted as counsel to Texas Utilities
Company, a Texas corporation (TU), and Texas Utilities Electric Company, a
Texas corporation (TU Electric), in connection with the Amended and Restated
Competitive Advance and Revolving Credit Facility Agreement and the Amended and
Restated Term Loan and Competitive Advance and Revolving Credit Facility
Agreement (Credit Agreements), each dated as of April 26, 1996, among TU, TU
Electric, Texas Commerce Bank National Association, as Administrative Agent,
Chemical Bank, as Competitive Advance Facility Agent, and the banks listed on
Schedule 2.01 thereof (Lenders), and have participated in the preparation of or
have examined and are familiar with (a) the current financial statements and
reports filed by TU and TU Electric with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, (b) the Credit
Agreements, (c) the articles of incorporation and by-laws of TU and TU Electric
and (d) such other records and documents as we have deemed necessary for the
purposes of this opinion.
Capitalized terms used in this opinion and not defined herein shall
have the respective meanings assigned thereto in the Credit Agreements. This
opinion is delivered to you pursuant to Section 4.02(a) of the Credit
Agreements.
As to those matters stated herein to be "to our knowledge" or "known
to us" such examination has been limited to discussions with and certificates
from officers of TU and TU Electric and we have not conducted any independent
investigation or verification or taken any action beyond such discussions and
certificates, nor made any search of the records of any Governmental Authority
with respect to such matters.
We are members of the New York Bar and do not hold ourselves out as
experts on the laws of the State of Texas. As to all matters of Texas law
(including incorporation of TU and TU Electric, titles to properties,
franchises, licenses and permits) we have, with your consent, relied upon an
opinion of even date herewith delivered to you by Worsham, Forsythe &
Wooldridge, L.L.P., general counsel for TU and TU Electric. While we represent
TU and TU Electric on a regular basis, our engagement has been limited to
specific matters as to which we were consulted.
<PAGE> 107
-2-
We have no direct knowledge of the day-to-day affairs of TU or TU Electric and
have not reviewed generally their business affairs. Accordingly, we are relying
upon representations of TU and TU Electric contained in the Credit Agreements,
in certificates furnished pursuant thereto, and in certificates furnished to
us by officers of TU and TU Electric.
For purposes of the opinions expressed below, we have assumed (i) the
authenticity of all documents submitted to us as originals, (ii) the conformity
to the originals of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such copies, (iii) the
genuineness of all signatures other than on behalf of TU and TU Electric, (iv)
the legal capacity of natural persons, (v) the power, corporate or otherwise,
of all parties other than TU and TU Electric to enter into and to perform all
of their obligations under such documents, and (vi) the due authorization,
execution and delivery of all documents by all parties other than TU and TU
Electric.
Based on the foregoing, we are of the opinion that:
1. Each of TU and TU Electric (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas, (ii) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted, (iii) is qualified to do
business in every jurisdiction within the United States where such
qualification is required, except where the failure so to qualify would not
result in a Material Adverse Change, and (iv) has all requisite corporate power
and authority to execute, deliver and perform its obligations under the Credit
Agreements and to borrow funds thereunder.
2. The execution, delivery and performance by each of TU and TU
Electric of the Credit Agreements and the Borrowings by each of them thereunder
(collectively, the "Transactions") (i) have been duly authorized by all
requisite corporate action and (ii) will not (a) violate (1) any law, statute,
rule or regulation presently binding on or applicable to either TU or TU
Electric, or the articles of incorporation, as amended, or by-laws of either TU
or TU Electric, (2) to our knowledge, any order of any Governmental Authority
presently applicable to either TU or TU Electric or (3) any provision of any
indenture, agreement or other instrument known to us to which either TU or TU
Electric is a party or by which either TU or TU Electric or its property is
bound, (b) be in conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any such indenture,
agreement or other instrument or (c) result in the creation or imposition of
any lien upon or with respect to any property or assets of either TU or TU
Electric.
3. The Credit Agreements have been duly executed and delivered by
TU and TU Electric and constitute legal, valid and binding obligations of TU
and TU Electric enforceable against each of them in accordance with their terms
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law.)
<PAGE> 108
-3-
4. No action, consent or approval of, registration or filing
with, or any other action by, any Governmental Authority (including pursuant to
the Public Utility Holding Company Act of 1935, as amended) is required on the
part of either TU or TU Electric in connection with the Transactions, except
such as have been made or obtained and are in full force and effect.
5. (a) Neither TU nor TU Electric nor any of their respective
Subsidiaries is an "investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940, as amended, and (b) TU, TU Electric
and each of their respective Subsidiaries is exempt from all provisions of the
Public Utility Holding Company Act of 1935, as amended, and the rules and
regulations thereunder, except for Sections 9(a)(2) and 33 of such Act and the
rules and regulations thereunder, and the execution, delivery and performance
by each of TU and TU Electric of the Credit Agreements do not violate any
provisions of such Act or any rule or regulation thereunder.
6. Except as described in the Annual Reports of TU and TU
Electric on Form 10-K for the year ended December 31, 1995 and as set forth in
Schedule 3.06 to the Credit Agreements, to our knowledge there is no action,
suit, or proceeding at law or in equity or by or before any Governmental
Authority now pending or threatened against or affecting either TU or TU
Electric (i) which involves the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, could, individually or in the aggregate, result in a Material
Adverse Change.
7. To our knowledge after due inquiry, the proposed use of the
proceeds of the Loans is in accordance with the Credit Agreements and, if so
used, will not violate the Margin Regulations.
This letter is solely for the benefit of the named addresses and may
not be quoted in whole or in part or otherwise referred to in any document or
report and may not be furnished to any person without our prior written
consent, except that Worsham, Forsythe & Wooldridge, L.L.P. may rely hereon in
connection with their opinion being rendered pursuant to Section 4.02(a) of the
Credit Agreements.
Very truly yours,
Reid & Priest LLP
<PAGE> 109
EXHIBIT D-2
April 26, 1996
To the Lenders listed on
Schedule 2.01 of each of the
Credit Agreements referred to below
Ladies and Gentlemen
We have acted as general counsel for Texas Utilities Company, a Texas
corporation (TU) and Texas Utilities Electric Company, a Texas corporation (TU
Electric), in connection with the execution and delivery of the Amended and
Restated Competitive Advance and Revolving Credit Facility Agreement and the
Amended and Restated Term Loan and Competitive Advance and Revolving Credit
Facility Agreement (Credit Agreements), each dated as of April 26, 1996, among
TU, TU Electric, the banks listed on Schedule 2.01 thereof (Lenders), Texas
Commerce Bank National Association, as Administrative Agent and Chemical Bank,
as Competitive Advance Facility Agent.
Capitalized terms used in this opinion and not defined herein shall
have the respective meanings assigned thereto in the Credit Agreements. This
opinion is delivered to you pursuant to Section 4.02(a) of the Credit
Agreements.
In connection with this opinion we have examined a counterpart of the
Credit Agreements executed by TU and TU Electric and have also made such
examination of other documents and of certificates of public officials and
corporate officers of TU and TU Electric, and have made such other legal and
factual examinations and inquiries as we have deemed necessary or advisable for
the purpose of rendering this opinion; but as to those matters stated herein to
be "to our knowledge" or "known to us" such examination has been limited to
discussions with and certificates from officers of TU and TU Electric and we
have not conducted any independent investigation or verification or taken any
action beyond such discussions and certificates, nor made any search of the
records of any Governmental Authority with respect to such matters.
<PAGE> 110
-2-
For purposes of the opinions expressed below, we have assumed (i) the
authenticity of all documents submitted to us as originals, (ii) the conformity
to the originals of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such copies, (iii) the
genuineness of all signatures other than on behalf of TU and TU Electric, (iv)
the legal capacity of natural persons, (v) the power, corporate or otherwise,
of all parties other than TU and TU Electric to enter into and to perform all
of their obligations under such documents, and (vi) the due authorization,
execution and delivery of all documents by all parties other than TU and TU
Electric.
Based upon, and subject to, the foregoing and to such further
limitations and qualifications stated below, we are of the opinion that:
1. Each of TU and TU Electric (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas, (ii) has all requisite power and authority to own its property and
assets and to carry on its business as now conducted, (iii) is qualified to do
business in every jurisdiction within the United States where such
qualification is required, except where the failure so to qualify would not
result in a Material Adverse Change, and (iv) has all requisite corporate power
and authority to execute, deliver and perform its obligations under the Credit
Agreements and to borrow funds thereunder.
2. The execution, delivery and performance by each of TU and TU
Electric of the Credit Agreements and the Borrowings by each of them thereunder
(collectively, the Transactions") (i) have been duly authorized by all
requisite corporate action and (ii) will not (a) violate (1) any law, statute,
rule or regulation presently binding on or applicable to either TU or TU
Electric, or the articles of incorporation, as amended, or by-laws of either TU
or TU Electric, (2) to our knowledge, any order of any Governmental Authority
presently applicable to either TU or TU Electric or (3) any provision of any
indenture, agreement or other instrument known to us to which either TU or TU
Electric is a party or by which either TU or TU Electric or its property is
bound, (b) be in conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under any such indenture,
agreement or other instrument or (c) result in the creation or imposition of
any lien upon or with respect to any property or assets now owned or hereafter
acquired by either TU or TU Electric.
3. The Credit Agreements have been duly executed and delivered by
TU and TU Electric and constitute legal, valid and binding obligations of TU
and TU Electric enforceable against each of them in accordance with their terms
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law.)
4. No action, consent or approval of, registration or filing
with, or any other action by, any Government Authority (including pursuant to
the Public Utility Holding Company Act of 1935, as amended) is or will be
required on the part of either TU or TU Electric in connection with the
Transactions, except such as have been made or obtained and are in full force
and effect.
<PAGE> 111
-3-
5. Neither TU nor TU Electric nor any of their respective
Subsidiaries is an "investment company" as defined in, or subject to regulation
under, the Investment Company Act of 1940, as amended. TU, TU Electric and each
of their respective Subsidiaries is exempt from all provisions of the Public
Utility Holding Company Act of 1935, as amended, and the rules and regulations
thereunder, except for Sections 9(a)(2) and 33 of such Act and the rules and
regulations thereunder, and the execution, delivery and performance by each of
TU and TU Electric of the Credit Agreements do not violate any provision of
such Act or any rule or regulation thereunder.
6. Except as described in the Annual Reports of TU and TU
Electric on Form 10-K for the year ended December 31, 1995 and as set forth in
Schedule 3.06 to the Credit Agreements, to our knowledge there is no action
suit, or proceeding at law or in equity or by or before any Governmental
Authority now pending or threatened against or affecting either TU or TU
Electric (i) which involves the Transactions or (ii) as to which there is a
reasonable possibility of an adverse determination and which, if adversely
determined, would, individually or in the aggregate, result in a Material
Adverse change.
7. To our knowledge, TU and TU Electric are not in violation of
any law, rule or requlation, or in default with respect to any judgment, writ,
injunction or decree of any Governmental Authority, where such violation or
default would result in a Material Adverse Change.
8. To our knowledge, after due inquiry, the proposed use of the
proceeds of the Loans is in accordance with the Credit Agreements, and, if so
used, will not violate the Margin Regulations.
We are members of the State Bar of Texas and do not purport to be
experts on, nor do we opine as to, the laws of any jurisdiction other than the
State of Texas and the federal laws of the United States. To the extent that
the opinions hereinabove set forth involve the laws of the State of New York,
we have relied upon the opinion of even date herewith delivered by you by Reid
& Priest LLP, special counsel to TU and TU Electric.
The foregoing opinions are limited to existing laws and we undertake
no obligation or responsibility to update or supplement this letter in response
to subsequent changes in the law or future events or circumstances affecting
the Transactions. This letter is solely for the benefit of the names addressees
and may not be quoted in whole or in part or otherwise referred to in any
document or report and may not be furnished to any person without our prior
written consent, expect that Reid & Priest LLP may rely hereon in connection
with their opinion being rendered pursuant to Section 4.02(a) of the Credit
Agreements.
Very truly yours,
WORSHAM, FORSYTHE
& WOOLDRIDGE, L.L.P.
By:
-----------------------------------
<PAGE> 112
Schedule 2.01
<TABLE>
<CAPTION>
===================================================================================================
Name Standby Commitment Term Loan Commitment
---- ------------------ --------------------
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
ABN AMRO Bank N.V. $33,870,967.74 $11,612,903.23
- ---------------------------------------------------------------------------------------------------
Bank of America National Trust and Savings $42,338,709.68 $14,516,129.03
Association
- ---------------------------------------------------------------------------------------------------
Bank of Montreal $28,225,806.45 $ 9,677,419.36
- ---------------------------------------------------------------------------------------------------
The Bank of New York $42,338,709.68 $14,516,129.03
- ---------------------------------------------------------------------------------------------------
The Bank of Tokyo-Mitsubishi, Ltd. $42,338,709.68 $14,516,129.03
- ---------------------------------------------------------------------------------------------------
Canadian Imperial Bank of Commerce $33,870,967.74 $11,612,903.23
- ---------------------------------------------------------------------------------------------------
Chemical Bank $26,814,516.13 $ 9,193,548.35
- ---------------------------------------------------------------------------------------------------
Citibank, N.A. $28,225,806.45 $ 9,677,419.36
- ---------------------------------------------------------------------------------------------------
Commerzbank, AG $42,338,709.68 $14,516,129.03
- ---------------------------------------------------------------------------------------------------
Credit Lyonnais $28,225,806.45 $ 9,677,419.36
- ---------------------------------------------------------------------------------------------------
Credit Suisse $28,225,806.45 $ 9,677,419.36
- ---------------------------------------------------------------------------------------------------
The First National Bank of Chicago $42,338,709.68 $14,516,129.03
- ---------------------------------------------------------------------------------------------------
The Industrial Bank of Japan Trust Company $42,338,709.68 $14,516,129.03
- ---------------------------------------------------------------------------------------------------
The Long-Term Credit Bank of Japan, Limited $28,225,806.45 $ 9,677,419.36
- ---------------------------------------------------------------------------------------------------
Mellon Bank, N.A. $28,225,806.45 $ 9,677,419.36
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 113
2
<TABLE>
<CAPTION>
===================================================================================================
Name Standby Commitment Term Loan Commitment
---- ------------------ --------------------
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
The Mitsubishi Trust and Banking Corporation, $33,870,967.74 $11,612,903.23
Los Angeles Agency
- ---------------------------------------------------------------------------------------------------
Morgan Guaranty Trust Company of New York $33,870,967.74 $11,612,903.23
- ---------------------------------------------------------------------------------------------------
NationsBank of Texas, N.A. $42,338,709.68 $14,516,129.03
- ---------------------------------------------------------------------------------------------------
The Sanwa Bank Limited $33,870,967.74 $11,612,903.23
- ---------------------------------------------------------------------------------------------------
Societe Generale $33,870,967.74 $11,612,903.23
- ---------------------------------------------------------------------------------------------------
The Sumitomo Bank, Limited $33,870,967.74 $11,612,903.23
- ---------------------------------------------------------------------------------------------------
Texas Commerce Bank National Association $26,814,516.14 $ 9,193,548.36
- ---------------------------------------------------------------------------------------------------
The Tokai Bank, Limited $33,870,967.74 $11,612,903.23
- ---------------------------------------------------------------------------------------------------
Toronto Dominion $28,225,806.45 $ 9,677,419.36
- ---------------------------------------------------------------------------------------------------
Union Bank of Switzerland $28,225,806.45 $ 9,677,419.36
- ---------------------------------------------------------------------------------------------------
Westpac Banking Corporation $28,225,806.45 $ 9,677,419.36
===================================================================================================
</TABLE>
<PAGE> 114
SCHEDULE 3.06
TO THE
CREDIT AGREEMENT
Litigation
None
