<PAGE> 1
FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Fiscal Year Ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
<TABLE>
<S> <C> <C>
Commission Exact name of registrant as specified in its charter; I.R.S. Employer
File Number address of principal executive offices; and telephone number Identification Number
- ----------- ------------------------------------------------------------ ---------------------
1-3591 TEXAS UTILITIES COMPANY 75-0705930
ENERGY PLAZA, 1601 BRYAN STREET, DALLAS, TEXAS 75201
TELEPHONE NUMBER (214) 812-4600
0-11442 TEXAS UTILITIES ELECTRIC COMPANY 75-1837355
ENERGY PLAZA, 1601 BRYAN STREET, DALLAS, TEXAS 75201
TELEPHONE NUMBER (214) 812-4600
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
</TABLE>
<TABLE>
<CAPTION>
Registrant Title of each class Name of each exchange on which registered
---------- ------------------- -----------------------------------------
<S> <C> <C>
Texas Utilities Company Common Stock, without par value New York Stock Exchange
The Chicago Stock Exchange
The Pacific Stock Exchange
Texas Utilities Electric Company Depositary Shares, each representing New York Stock Exchange
1/4 of a share of $8.20 Cumulative
Preferred Stock, without par value
Texas Utilities Electric Company Depositary Shares, Series A, each New York Stock Exchange
representing 1/4 of a share of $7.50
Cumulative Preferred Stock, without par
value
Texas Utilities Electric Company Depositary Shares, Series B, each New York Stock Exchange
representing 1/4 of a share of $7.22
Cumulative Preferred Stock, without par
value
TU Electric Capital I, a subsidiary 8.25% Trust Originated Preferred Securities New York Stock Exchange
of Texas Utilities Electric Company
TU Electric Capital II, a subsidiary 9.00% Trust Originated Preferred Securities New York Stock Exchange
of Texas Utilities Electric Company
TU Electric Capital III, a subsidiary 8.00% Quarterly Income Preferred Securities New York Stock Exchange
of Texas Utilities Electric Company
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
PREFERRED STOCK OF TEXAS UTILITIES ELECTRIC COMPANY, WITHOUT PAR VALUE
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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
Aggregate market value of Texas Utilities Company Common Stock held by
non-affiliates, based on the last reported sale price on the composite tape on
February 29, 1996: $9,118,331,869
Aggregate market value of Texas Utilities Electric Company Common Stock held
by non-affiliates: None
Common Stock outstanding at February 29, 1996:
Texas Utilities Company - 225,841,037 shares, without par value
Texas Utilities Electric Company - 156,800,000 shares, without par value
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the definitive proxy statement pursuant to Regulation 14A, which
will be mailed to the Commission for filing on or about April 1, 1996, are
incorporated by reference into Part III of this report.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ITEM DESCRIPTION PAGE
- ---- ----------- --------
<S> <C> <C>
PART I
1 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Texas Utilities Company and Subsidiaries . . . . . . . . . . . 1
TU Electric . . . . . . . . . . . . . . . . . . . . . . . . . 2
Peak Load and Capability . . . . . . . . . . . . . . . . . . . 3
Fuel Supply and Purchased Power . . . . . . . . . . . . . . . 4
Regulation and Rates . . . . . . . . . . . . . . . . . . . . . 7
Competition . . . . . . . . . . . . . . . . . . . . . . . . . 10
Environmental Matters . . . . . . . . . . . . . . . . . . . . 12
2 Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Capital Expenditures . . . . . . . . . . . . . . . . . . . . . 16
3 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . 17
4 Submission of Matters to a Vote of Security Holders . . . . . . . 17
Executive Officers of the Company . . . . . . . . . . . . . . . . 17
PART II
5 Market for Each Registrant's Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . 18
6 Selected Financial Data . . . . . . . . . . . . . . . . . . . . . 19
7 Management's Discussion and Analysis of Financial Condition and
Results of Operation . . . . . . . . . . . . . . . . . . . . . 23
8 Financial Statements and Supplementary Data . . . . . . . . . . . 28
9 Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure . . . . . . . . . . . . . . . . . . . 65
PART III
10 Directors and Executive Officers of Each Registrant . . . . . . . 65
11 Executive Compensation . . . . . . . . . . . . . . . . . . . . . . 67
12 Security Ownership of Certain Beneficial Owners and Management . . 73
13 Certain Relationships and Related Transactions . . . . . . . . . . 73
PART IV
14 Exhibits, Financial Statement Schedules and Reports on Form 8-K . . 74
</TABLE>
<PAGE> 3
This combined Form 10-K 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 financial statements of Texas Utilities Electric Company, is filed by each
of Texas Utilities Electric Company and Texas Utilities Company. Neither Texas
Utilities Company nor Texas Utilities Electric Company makes any representation
as to information filed by the other registrant.
PART I
ITEM 1. BUSINESS
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
Texas Utilities Company (Company) was incorporated under the laws of the
State of Texas in 1945 and has perpetual existence under the provisions of the
Texas Business Corporation Act. The Company is a holding company which owns
all of the outstanding common stock of Texas Utilities Electric Company (TU
Electric), the principal subsidiary of the Company, Southwestern Electric
Service Company (SESCO), and Texas Utilities Australia Pty. Ltd. (TU
Australia). The Company also has seven other wholly-owned subsidiaries which
perform specialized functions within the Texas Utilities Company system. The
Company and all of its subsidiaries are referred to herein as "System
Companies". References herein to TU Electric include its financing
subsidiaries, TU Electric Capital I, TU Electric Capital II and TU Electric
Capital III.
The Company holds no franchises other than its corporate franchise. TU
Electric, SESCO and TU Australia possess all of the necessary franchises,
licenses and certificates required to enable them to conduct their respective
businesses (see Regulation and Rates).
For information concerning TU Electric, the principal subsidiary of the
Company, see TU Electric below.
In December 1995, the Company's newly formed subsidiary, TU Australia,
acquired the common stock of Eastern Energy Limited (Eastern Energy), a major
Australian electricity distribution company. Eastern Energy is engaged in the
purchase, distribution and sale of electric energy to approximately 475,000
customers in a service area in Australia extending from the outer eastern
suburbs of the Melbourne metropolitan area to the eastern coastal areas of
Victoria and the New South Wales border to the north. Eastern Energy generates
no electric energy. All financial and operational information with respect to
TU Australia is as of December 31, 1995 and for the period from December 1,
1995 (date of acquisition) to December 31, 1995. References herein to TU
Australia include its subsidiary, Eastern Energy.
SESCO is engaged in the purchase, transmission, distribution and sale of
electric energy in ten counties in the eastern and central parts of Texas with
a population estimated at 125,000. SESCO generates no electric energy.
For consolidated energy sales and operating revenues contributed by TU
Electric, SESCO and TU Australia for each customer classification, see Item 6.
Selected Financial Data - Texas Utilities Company and Subsidiaries --
Consolidated Operating Statistics.
Texas Utilities Fuel Company (Fuel Company) owns a natural gas pipeline
system, acquires, stores and delivers fuel gas and provides other fuel services
at cost for the generation of electric energy by TU Electric.
Texas Utilities Mining Company (Mining Company) owns, leases and operates
fuel production facilities for the surface mining and recovery of lignite at
cost for the generation of electric energy by TU Electric.
Texas Utilities Services Inc. (TU Services) provides financial, accounting,
information technology, customer services, procurement, personnel and other
administrative services at cost to the System Companies. TU Services acts as
transfer agent, registrar and dividend paying agent with respect to the common
stock of the Company and the preferred stock and preferred securities of TU
Electric and as agent for participants under the Company's Automatic Dividend
Reinvestment and Common Stock Purchase Plan.
Texas Utilities Properties Inc. owns, leases and manages real and personal
properties, primarily the Company's corporate headquarters.
<PAGE> 4
ITEM 1. BUSINESS (CONTINUED)
TEXAS UTILITIES COMPANY AND SUBSIDIARIES -- (CONCLUDED)
In March 1995, Texas Utilities Communications Inc. (TU Communications), was
incorporated under the laws of the State of Delaware. TU Communications was
organized to provide access to advanced telecommunications technology,
primarily for the System Companies' expected expansion of the energy services
business.
Basic Resources Inc. was organized for the purpose of developing natural
resources, primarily energy sources and other business opportunities.
Chaco Energy Company (Chaco) was organized to own and operate facilities for
the acquisition, production, sale and delivery of coal and other fuels and
currently leases extensive coal reserves.
At December 31, 1995, the System Companies had 11,729 full-time employees.
TU ELECTRIC
TU Electric was incorporated under the laws of the State of Texas in 1982
and has perpetual existence under the provisions of the Texas Business
Corporation Act. TU Electric is an electric utility engaged in the generation,
purchase, transmission, distribution and sale of electric energy wholly within
the State of Texas. TU Electric possesses all of the necessary franchises and
certificates required to enable it to conduct its business (see Regulation and
Rates). TU Electric is the principal subsidiary of the Company.
TU Electric's service area is located in the north central, eastern and
western parts of Texas, with a population estimated at 5,820,000 -- about
one-third of the population of Texas. Electric service is provided in 91
counties and 372 incorporated municipalities, including Dallas, Fort Worth,
Arlington, Irving, Plano, Waco, Mesquite, Grand Prairie, Wichita Falls, Odessa,
Midland, Carrollton, Tyler, Richardson and Killeen. The area is a diversified
commercial and industrial center with substantial banking, insurance,
communications, electronics, aerospace, petrochemical and specialized steel
manufacturing, and automotive and aircraft assembly. The territory served
includes major portions of the oil and gas fields in the Permian Basin and East
Texas, as well as substantial farming and ranching sections of the State. It
also includes the Dallas-Forth Worth International Airport and the Alliance
Airport. For energy sales and operating revenues contributed by each customer
classification, see Item 6. Selected Financial Data -- Texas Utilities Electric
Company and Subsidiaries -- Consolidated Operating Statistics.
At December 31, 1995, TU Electric had 7,425 full-time employees.
2
<PAGE> 5
ITEM 1. BUSINESS (CONTINUED)
PEAK LOAD AND CAPABILITY
THE COMPANY AND TU ELECTRIC
The peak load and capability for the System Companies includes the
information for TU Electric contained in the chart below along with peak loads
for SESCO and TU Australia. Peak load was 253 MW on July 28, 1995 for SESCO
and 974 MW on July 10, 1995 for TU Australia. SESCO and TU Australia generate
no electricity.
TU Electric's net capability, peak load and reserve, in megawatts (MW), at
the time of peak were as follows during the years indicated:
<TABLE>
<CAPTION>
PEAK LOAD (A)
--------------------
INCREASE
(DECREASE) FIRM
NET OVER PEAK
YEAR CAPABILITY AMOUNT PRIOR YEAR LOAD RESERVE(B)
- ---- ------------ ------ ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
1995 . . . . . . . . 22,250(c)(d) 19,180 6.4 % 18,631 3,619
1994 . . . . . . . . 22,350(d)(e) 18,030 (1.6) 17,515 4,835
1993 . . . . . . . . 21,697(d)(f) 18,324 4.6 17,852 3,845
</TABLE>
- -------------------------
(a) The 1995 peak load occurred on July 28. TU Electric's peak load includes
interruptible load at the time of peak of 744 MW in 1995, 656 MW in 1994
and 499 MW in 1993.
(b) Amount of net capability in excess of firm peak load at the time of peak.
(c) Included in net capability was 1,244 MW of firm purchased capacity, of
which 1,164 MW was cogeneration and small power production.
(d) In November 1993, the emissions chimney serving Unit 3 (750 MW) of the
Monticello lignite-fueled generating station collapsed, rendering the
unit inoperable. The unit was rebuilt and returned to service in June
1995. Such unit is included in net capability.
(e) Included in net capability was 1,344 MW of firm purchased capacity, of
which 1,264 MW was cogeneration and small power production. In 1994, one
70 MW natural gas-fueled unit was retired.
(f) Included in net capability was 1,771 MW of firm purchased capacity, of
which 1,691 MW was cogeneration and small power production, and excluded
was Comanche Peak Unit 2 (1,150 MW) which was placed into commercial
service after the 1993 peak load.
TU ELECTRIC
The peak load changes from 1994 to 1995 resulted primarily from customer
growth and warmer temperatures than the prior year. The peak load changes in
the prior periods resulted primarily from customer growth in the service area
and weather factors. TU Electric expects to continue to purchase capacity in
the future from various sources. (See Fuel Supply and Purchased Power and Note
14 to Consolidated Financial Statements.) Firm peak load increases over the
next ten years are expected to average approximately 2% annually, after
consideration of load management programs (including interruptible contracts).
Changes in utility regulation and legislation at the federal and state
levels such as the Public Utility Regulatory Policy Act of 1978 (PURPA), the
National Energy Policy Act of 1992 (Energy Policy Act), the 1995 amendments to
the Public Utility Regulatory Act (PURA) in Texas, and the Federal Energy
Regulatory Commission (FERC) Notice of Proposed Rulemaking have significantly
changed the way in which utilities plan for new resources. TU Electric
believes the results of competitive resource solicitations will be a major
factor in determining future resource additions to serve customer loads. Thus,
for planning purposes, TU Electric can no longer readily identify the ownership
and types of resources to include in its plan before the actual solicitation
and selection of those resources. TU Electric has decided to reflect this
uncertainty through the use of the term "Unspecified Resources." Except for
known contracts, all potential new resource needs will be designated as
"Unspecified Resources." The primary change in the current resource plan is
the designation of "Unspecified Resources" in the place of specified resources.
In October 1994, TU Electric filed an application for approval by the
Public Utility Commission of Texas (PUC) of certain aspects of its Integrated
Resource Plan (IRP) for the ten year period 1995 - 2004. The IRP, developed as
an experimental pilot project in conjunction with regulatory and customer
groups, includes initiatives that address demand-side management resources,
purchased power, combustion turbine resources, lignite/coal resources, and
renewable resources. Hearings on this application were concluded in March
1995. In August 1995, the PUC remanded the case for development of a
solicitation plan and to conform the TU Electric 1995 IRP to new state
legislation that requires the PUC to adopt a state-wide integrated resource
planning rule by September 1, 1996. In January 1996, TU Electric filed an
updated IRP with the PUC along with a proposed plan for the solicitation
3
<PAGE> 6
ITEM 1. BUSINESS (CONTINUED)
PEAK LOAD AND CAPABILITY-- (CONCLUDED)
of resources through a competitive bidding process. The PUC's decision on the
solicitation plan is expected in July 1996. The resource needs identified in
the updated IRP are as follows:
<TABLE>
<CAPTION>
INTEGRATED
RESOURCE PLAN
1996-2005
-----------------------
FIRM
CAPABILITY
RESOURCE ADDITIONS (MW) PERCENT
------------------ ---------- --------
<S> <C> <C>
Load Management(a)(c) . . . . . . . . . . . . . . 638 13.1%
Renewable Resources(b) . . . . . . . . . . . . . 4 0.1
Unspecified Resources . . . . . . . . . . . . . . 4,223 86.8
----- -----
Total . . . . . . . . . . . . . . . . . . . . 4,865 100.0%
===== =====
</TABLE>
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(a) TU Electric has negotiated and signed contracts with eight suppliers of
demand side management services designed to displace a total of 72 MW by
2004.
(b) TU Electric has negotiated and signed one purchased power contract for 40
MW (4 MW firm) of wind-powered resources to be placed in service by 1997.
(c) Subject to the approval by the PUC.
FUEL SUPPLY AND PURCHASED POWER
THE COMPANY AND TU ELECTRIC
Net input for the Company's systems for 1995 totalled 95,761 million
kilowatt-hours (kWh) of which 83,877 million kWh were generated by TU Electric.
Average fuel and purchased power cost (excluding capacity charges) per kWh of
net input for the Company and TU Electric were 1.64 and 1.62 cents for 1995,
1.76 and 1.76 cents for 1994 and 1.92 and 1.92 cents for 1993, respectively.
The decrease for 1995 primarily reflects the reduction in natural gas costs and
increased nuclear generation. A comparison of TU Electric's resource mix for
net kWh input and the unit cost per million British thermal units (Btu) of
fuel during the last three years is as follows:
<TABLE>
<CAPTION>
MIX FOR NET UNIT COST
KWH INPUT PER MILLION BTU
------------------------ ---------------------------
1995 1994 1993 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
Fuel for Electric Generation:
Gas/Oil (a) . . . . . . . . . . . . . . . . 33.4% 34.5% 33.7% $2.31 $2.53 $2.81
Lignite/Coal (b) . . . . . . . . . . . . . . 37.4 37.3 40.3 1.02 1.04 1.10
Nuclear . . . . . . . . . . . . . . . . . . 17.9 15.7 12.4 0.59 0.67 0.71 (c)
----- ----- ----- ----- ----- -----
Total/Weighted Average Fuel Cost . . . . . . 88.7 87.5 86.4 $1.43 $1.58 $1.73
Purchased Power (d) . . . . . . . . . . . . . . 11.3 12.5 13.6
----- ----- -----
Total . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0%
===== ===== =====
</TABLE>
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(a) Fuel oil was an insignificant component of total fuel and purchased power
requirements.
(b) Lignite cost per ton to the Company was $13.05 in 1995, $13.34 in 1994 and
$13.98 in 1993.
(c) Unit cost per million Btu in 1993 includes avoided cost of fuel during
trial operations. The 1993 cost, excluding costs associated with Comanche
Peak Unit 2 while in trial operations, was $0.62.
(d) Excludes SESCO and TU Australia purchased power of 865 million and 335
million kWh, respectively for 1995.
4
<PAGE> 7
ITEM 1. BUSINESS (CONTINUED)
FUEL SUPPLY AND PURCHASED POWER -- (CONTINUED)
GENERAL
TU Electric, SESCO and TU Australia are unable to predict: (i) whether or
not problems may be encountered in the future in obtaining the fuel and
purchased power they will require, (ii) the effect upon their operations of any
difficulty they may experience in protecting their rights to fuel and purchased
power now under contract, or (iii) the cost of fuel and purchased power. The
reasonable costs of fuel and purchased power of TU Electric and SESCO are
generally recoverable subject to the rules of the PUC. (See Regulation and
Rates for information pertaining to the method of recovery of purchased power
and fuel costs.)
GAS/OIL
THE COMPANY AND TU ELECTRIC
Fuel gas for units at nineteen of the principal generating stations of TU
Electric, having an aggregate net gas/oil capability of 13,100 MW, was provided
during 1995 by Fuel Company. Fuel Company supplied approximately 29% of such
fuel gas requirements under contracts with producers at the wellhead and under
other contracts with dedicated reserves and 71% under contracts with commercial
suppliers.
Fuel Company has acquired under contracts expiring at intervals through
2008, with producers at the wellhead, supplies of gas which are generally
expected to be produced over a ten to fifteen year period. As gas production
under contract declines and contracts expire, new contracts are expected to be
negotiated to replenish or augment such supplies. Fuel Company has negotiated
gas purchase contracts, with terms ranging from one to twenty years, with a
number of commercial suppliers. Additionally, Fuel Company has entered into a
number of short-term gas purchase contracts with other commercial suppliers at
spot market prices; however, these contracts typically do not provide for a
firm supply obligation from the seller or a firm purchase obligation from Fuel
Company. In the past, curtailments of gas deliveries have been experienced
during periods of winter peak gas demand; however, such curtailments have been
of relatively short duration, have had a minimal impact on operations and have
generally required utilization of fuel oil and gas storage inventories to
replace the gas curtailed. During 1995, no curtailments were experienced.
Fuel Company owns and operates an intrastate natural gas pipeline system
which extends from the gas-producing area of the Permian Basin in West Texas to
the East Texas gas fields and southward to the Gulf Coast area. This system
includes a one-half interest in a 36-inch pipeline which extends 395 miles from
the Permian Basin area of West Texas to a point of termination south of the
Dallas- Fort Worth area and has a total estimated capacity of 885 million cubic
feet per day with existing compression facilities. Additionally, Fuel Company
owns a 39% undivided interest in another 36-inch pipeline connecting to this
pipeline and extending 58 miles eastward to one of Fuel Company's underground
gas storage facilities. Fuel Company also owns and operates approximately
1,600 miles of various smaller capacity lines which are used to gather and
transport natural gas from other gas-producing areas. The pipeline facilities
of Fuel Company form an integrated network through which fuel gas is gathered
and transported to certain TU Electric generating stations for use in the
generation of electric energy.
Fuel Company also owns and operates three underground gas storage facilities
with a usable capacity of 27.2 billion cubic feet with approximately 19.8
billion cubic feet of gas in inventory at December 31, 1995. Gas stored in
these facilities currently can be withdrawn for use during periods of peak
demand, to meet seasonal and other fluctuations or curtailment of deliveries by
gas suppliers. Under normal operating conditions, up to 400 million cubic feet
can be withdrawn each day for a ten-day period, with withdrawals at lower rates
thereafter.
Fuel oil is stored at eighteen of the principally gas-fueled generating
stations. At December 31, 1995, the System Companies had fuel oil storage
capacity sufficient to accommodate approximately 6.2 million barrels of oil,
with approximately 2.3 million barrels of oil in inventory.
5
<PAGE> 8
ITEM 1. BUSINESS (CONTINUED)
FUEL SUPPLY AND PURCHASED POWER -- (CONTINUED)
LIGNITE/COAL
TU ELECTRIC
Lignite is used as the primary fuel in two units at the Big Brown generating
station (Big Brown), three units at Monticello generating station (Monticello),
three units at the Martin Lake generating station (Martin Lake), and one unit
at the Sandow generating station (Sandow), having an aggregate net capability
of 5,825 MW. TU Electric's lignite units have been constructed adjacent to
surface minable lignite reserves. At the present time, TU Electric owns in fee
or has under lease an estimated 567 million tons of proven reserves dedicated
to the Big Brown, Monticello, and Martin Lake generating stations. TU Electric
also owns in fee or has under lease in excess of 271 million tons of proven
reserves not dedicated to specific generating stations. Mining Company
operates owned and/or leased equipment to remove the overburden and recover the
lignite. One of TU Electric's lignite units, Sandow Unit 4, is fueled from
lignite deposits owned by Alcoa, which furnishes fuel at no cost to TU Electric
for that portion of energy generated from such unit which is equal to the
amount of energy delivered to Alcoa (see Item 6. Selected Financial Data -
Consolidated Operating Statistics).
Lignite production operations at Big Brown, Monticello, and Martin Lake are
accompanied by an extensive reclamation program which returns the land to
productive uses such as wildlife habitats, commercial timberland, and pasture
land. For information concerning federal and state laws with respect to
surface mining, see Environmental Matters.
TU Electric supplemented TU Electric-owned lignite fuel at its Monticello,
Martin Lake and Big Brown plants with western coal from the Powder River Basin
(PRB) in Wyoming. The coal was purchased and transported on an "as available,
as required" basis. Because current mine capacity in the PRB is greater than
demand, ample amounts of western coal are presently available at favorable
prices. Fuel requirements at Monticello were reduced as a result of the
November 1993 collapse of the emissions chimney at Unit 3. Consequently,
deliveries of western coal were discontinued and lignite mining operations at
the Monticello mines were reduced. With the return to service of Monticello
Unit 3 in June 1995, lignite mining operations have resumed and western coal
deliveries to Monticello will take place in 1996. TU Electric is also
considering the use of western coal as a supplemental fuel at its other
existing lignite-fueled plants and as a long-term alternative fuel. For
information concerning applicable air quality standards, see Environmental
Matters.
THE COMPANY
Chaco has rights to sub-bituminous coal reserves totaling more than 120
million recoverable tons located in the Star Lake region of San Juan and
McKinley counties in northwest New Mexico. In 1990, Chaco entered into a
revised lease agreement with a major mineral interest owner, Hospah Coal
Company (Hospah), a subsidiary of Santa Fe Industries, Inc. (Santa Fe),
estimated to cover more than 300 million additional tons of recoverable coal in
the same area of New Mexico. Chaco and Santa Fe also entered into a separate
agreement providing for the transportation of coal mined from both of these
deposits. In 1993, Santa Fe transferred the coal-related assets of Hospah to
Hanson Natural Resources Company. This transfer of assets includes the lease
agreement between Chaco and Hospah. This agreement will continue in accordance
with its terms. Because of the present ample availability of western coal at
favorable prices from other mines, Chaco has delayed plans to commence mining
operations, and accordingly, is reassessing its alternatives with respect to
its coal properties including seeking other purchasers thereof. (See Item 2.
Properties and Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operation and Note 14 to Consolidated Financial
Statements.)
NUCLEAR
TU ELECTRIC
TU Electric owns and operates two nuclear-fueled generating units at the
Comanche Peak nuclear generating station (Comanche Peak), each of which is
designed for a net capability of 1,150 MW. (See Peak Load and Capability.)
6
<PAGE> 9
ITEM 1. BUSINESS (CONTINUED)
FUEL SUPPLY AND PURCHASED POWER -- (CONCLUDED)
The nuclear fuel cycle requires the mining and milling of uranium ore to
provide uranium oxide concentrate (U(3)O(8)), the conversion of U(3) O(8) to
uranium hexafluoride (UF (6)), the enrichment of the UF(6) and the fabrication
of the enriched uranium into fuel assemblies. TU Electric has on hand, or has
contracted for, the raw materials and services it expects to need for its
nuclear units through future years as follows: uranium (2001), conversion
(2003), enrichment (2014), and fabrication (2002). Although TU Electric cannot
predict the future availability of uranium and nuclear fuel services, TU
Electric does not currently expect to have difficulty obtaining U(3)O(8) and
the services necessary for its conversion, enrichment and fabrication into
nuclear fuel for years later than those shown above.
The Energy Policy Act has provisions for the recovery of a portion of the
costs associated with the decommissioning and decontamination of the gaseous
diffusion plants used to enrich uranium for fuel. These costs are being
recovered in fees paid to the Department of Energy as determined by the
Secretary of Energy. The total annual assessment for all domestic utilities is
capped at $150 million per federal fiscal year assessable for fifteen years.
TU Electric's share, as established by the Department of Energy, is estimated
to be about $1,556,000 per year.
The Nuclear Waste Policy Act of 1982, as amended (NWPA), provides for the
development by the federal government of interim storage and permanent disposal
facilities for spent nuclear fuel and/or high level radioactive waste
materials. TU Electric is unable to predict when the federal government will
be able to provide such storage and disposal facilities. Under provisions of
the NWPA, funding for the program is provided by a one-mill per kWh fee
currently levied on electricity generated and sold from nuclear reactors,
including the Comanche Peak units. Onsite storage capability for spent fuel
is sufficient to accommodate the operation of Comanche Peak through the year
2001. TU Electric is currently pursuing options for increasing its storage
capability, subject to approval by the Nuclear Regulatory Commission (NRC).
PURCHASED POWER
THE COMPANY AND TU ELECTRIC
In 1995, the Company purchased an aggregate of 11,884 million kWh or
approximately 12% of the Company's energy requirements. TU Electric and SESCO
had available 1,362 MW of firm purchased capacity under contract. As a result
of the renewable resources solicitation that was part of the IRP filing, TU
Electric has negotiated a 15-year contract with a developer for the
purchase of energy produced from wind turbines equivalent to approximately 40
MW (or approximately 4 MW of firm capacity at peak) beginning in 1997. The
Company may also acquire purchased power capacity in the future to accommodate
a portion of system load and continues to investigate potential available
sources. For information concerning the IRP, see Peak Load and Capability and
Note 12 to Consolidated Financial Statements.
TU Australia and the other distribution companies in Victoria purchase their
power from a competitive power pool operated by a statutory, independent
corporation. While the price of power from the pool can vary substantially, TU
Australia attempts to manage price fluctuations with other contracts. TU
Australia also has arrangements with a number of cogenerators under which it is
required to purchase approximately 52 MW of capacity.
REGULATION AND RATES
REGULATION
THE COMPANY AND TU ELECTRIC
The Company is a holding company as defined in the Public Utility Holding
Company Act of 1935. However, the Company and all of its subsidiary companies
are exempt from the provisions of such Act, except Section 9(a)(2) which
relates to the acquisition of securities of public utility companies.
TU Electric and SESCO do not transmit electric energy in interstate commerce
or sell electric energy at wholesale in interstate commerce, or own or operate
facilities therefor, and their facilities are not connected directly or
indirectly to other systems which are involved in such interstate
activities, except during the continuance of
7
<PAGE> 10
ITEM 1. BUSINESS (CONTINUED)
REGULATION AND RATES -- (CONTINUED)
emergencies permitting temporary or permanent connections or under order of the
FERC exempting TU Electric and SESCO from jurisdiction under the Federal Power
Act. In view thereof, TU Electric and SESCO believe that they are not public
utilities as defined in the Federal Power Act and have been advised by their
counsel that they are not subject to general regulation under such Act.
The PUC has original jurisdiction over electric rates and service in
unincorporated areas and those municipalities that have ceded original
jurisdiction to the PUC and has exclusive appellate jurisdiction to review the
rate and service orders and ordinances of municipalities. Generally, PURA
prohibits the collection of any rates or charges (including charges for fuel)
by a public utility that does not have the prior approval of the PUC.
The construction of new production facilities owned by TU Electric is
subject to PUC certification. TU Electric filed and received approval of
Notice of Intent (NOI) applications in connection with its IRP for 1,802 MW of
combustion turbine capacity and 100 MW of renewable resources (wind turbines).
Prior to the enactment of revisions in PURA, an NOI was the first step in the
process leading to PUC approval for construction of utility plant. However,
because PURA now requires the utilities to use solicitations to procure new
resources, the NOI requirement was eliminated. Thus, TU Electric's updated
1995 IRP does not specifically include the combustion turbine or the renewable
resources. Instead, all new resource additions (except known contracts) are
designated as "Unspecified Resources" that will be "specified" upon completion
of the required solicitations. (See Peak Load and Capabilities and Item 2.
Properties - Capital Expenditures.)
TU Electric is subject to the jurisdiction of the NRC with respect to
nuclear power plants. NRC regulations govern the granting of licenses for the
construction and operation of nuclear power plants and subject such plants to
continuing review and regulation.
TU Australia is subject to regulation by the Office of the Regulator General
(ORG). The ORG has the power to issue licenses for the supply, distribution
and sale of electricity within Victoria and regulates tariffs for the use of
the transmission system, distribution system, and other ancillary services.
The existing tariff under which TU Australia operates is in effect through
December 31, 2000.
The System Companies are also subject to various other federal, state and
local regulations. (See Environmental Matters.)
FUEL COST RECOVERY RULE
TU ELECTRIC
Pursuant to a PUC rule governing the recovery of fuel costs, the recovery of
TU Electric's eligible fuel costs is provided through fixed fuel factors. The
rule allows a utility's fuel factor to be revised upward or downward every six
months, according to a specified schedule. A utility is required to petition
to make either surcharges or refunds to ratepayers, together with interest
based on a twelve month average of prime commercial rates, for any material, as
defined by the PUC, cumulative under- or over-recovery of fuel costs. If the
cumulative difference of the under- or over-recovery, plus interest, is in
excess of 4% of the annual estimated fuel costs most recently approved by the
PUC, it will be deemed to be material. TU Electric filed a petition with the
PUC in November 1995 to refund to customers approximately $65 million,
including interest, in over-collected fuel costs for the period June 1995
through September 1995. PUC approval was granted in January 1996 and refunds
were included in February 1996 billings. In June 1995, TU Electric petitioned
the PUC for approval of a fuel refund to customers of approximately $89
million, including interest, in over-collected fuel costs for the period June
1994 through May 1995. PUC approval was granted in August 1995 and refunds
were included in September 1995 billings. These over-collections were
primarily due to lower natural gas prices than previously anticipated. In
August 1994, TU Electric petitioned the PUC for a recovery of approximately $93
million, including interest, in under-collected fuel costs for the period July
1993 through June 1994. The PUC approved the recovery of this amount through a
surcharge to customers over a six-month period beginning in January 1995. The
PUC's approval of this surcharge and a previously approved $147.5 million
surcharge for fuel cost recovery for a prior period have been appealed by
certain intervenors to the district courts of Travis County, Texas. In those
appeals, those parties are contending that the PUC is without authority to
allow a fuel cost surcharge without a hearing and resultant findings that the
costs are reasonable and
8
<PAGE> 11
ITEM 1. BUSINESS (CONTINUED)
REGULATION AND RATES -- (CONTINUED)
necessary and that the prices charged to TU Electric by supplying affiliates
are no higher than the prices charged by those affiliates to others for the
same item or class of items. TU Electric is vigorously defending its position
in these appeals but is unable to predict their outcome.
The fuel cost recovery rule also contains a procedure for an expedited
change in the fixed fuel factor in the event of an emergency. Final
reconciliation of fuel costs must be made either in a reconciliation
proceeding, which may cover no more than three years and no less than one year,
or in a general rate case. In a final reconciliation, a utility has the burden
of proving that fuel costs under review were reasonable and necessary to
provide reliable electric service, that it has properly accounted for its
fuel-related revenues, and that fuel prices charged to the utility by an
affiliate were reasonable and necessary and not higher than prices charged for
similar items by such affiliate to other affiliates or nonaffiliates. In
addition, for generating utilities like TU Electric, the rule provides for
recovery of purchased power capacity costs through a power cost recovery factor
(PCRF) with respect to purchases from qualifying facilities, to the extent such
costs are not otherwise included in base rates. The energy-related costs of
such purchases are included in the fixed fuel factor. For non-generating
utilities like SESCO, the rule provides for the recovery of all costs of power
purchased at wholesale chargeable under rate schedules approved by a federal or
state regulatory authority and all amounts paid to qualifying facilities for
the purchase of capacity and/or energy, to the extent such costs are not
otherwise included in base rates. Penalties of up to 10% will be imposed in
the event an emergency increase has been granted when there was no emergency or
when collections under the PCRF exceed PCRF costs by 10% in any month or 5% in
the most recent twelve months.
FUEL RECONCILIATION
On December 29, 1995, in accordance with the PUC rules, TU Electric filed a
petition with the PUC seeking final reconciliation of all eligible fuel and
purchased power expenses incurred during the reconciliation period of July 1,
1992 through June 30, 1995, amounting to a total of $4.7 billion. TU Electric
is unable to predict the outcome of such proceeding.
In addition, and as permitted by the PUC rules, TU Electric is also seeking
an accounting order from the PUC that will allow certain costs incurred, and to
be incurred, to facilitate the use of coal as a supplemental fuel at its
Monticello plant to be treated as eligible fuel costs and billed pursuant to TU
Electric's fuel cost factor. By incurring these expenses, TU Electric believes
that it can significantly improve the reliability of the supply of fuel to
Monticello and can, at the same time, lower the fuel expense that would be
incurred in the absence of these investments.
FLEXIBLE RATE INITIATIVES
TU ELECTRIC
TU Electric continues to offer flexible rates in over 160 cities with
original regulatory jurisdiction within its service territory (including the
cities of Dallas and Fort Worth), to existing non-residential retail and
wholesale customers that have viable alternative sources of supply and would
otherwise leave the system. TU Electric also continues to offer an economic
development rider to attract new businesses and to encourage existing customers
to expand their facilities as well as an environmental technology rider to
encourage qualifying customers to convert to technologies that conserve energy
or improve the environment. To date, TU Electric has contracted to serve 91
commercial, industrial and municipal flexibly-priced loads, eight economic
development loads, and one environmental technology load under these rates. TU
Electric will continue to pursue the expanded use of flexible rates when such
rates are necessary to be price-competitive.
As a result of recent legislation, flexible retail and wholesale pricing may
be approved by the PUC at levels lower than the utility's approved rates but
higher than the 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 includes
provisions for a five-year term of service. If approved by the PUC, the
proposed rate will enable TU Electric to retain a combined load of
approximately 23 MW. The cooperatives have informed TU Electric that they will
transfer their load to alternative suppliers if the proposed rate is not
approved.
9
<PAGE> 12
ITEM 1. BUSINESS (CONTINUED)
REGULATION AND RATES -- (CONCLUDED)
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.
DOCKET 11735
In July 1994, TU Electric filed a petition in the 200th Judicial District
Court of Travis County, Texas to seek judicial review of the final order of the
PUC granting a $449 million, or 9.0%, rate increase in connection with TU
Electric's January 1993 rate increase request of $760 million, or 15.3%
(Docket 11735). Other parties to the PUC proceedings also filed appeals with
respect to various portions of the order. TU Electric is unable to predict the
outcome of such appeals.
DOCKET 9300
The PUC's final order (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 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 9, 1996
decision. The Supreme Court's ruling eliminates the potential normalization
violation that two Private Letter Rulings issued by the Internal Revenue
Service said would have resulted from the treatment that previously had been
ordered by the Court of Appeals.
TU Electric cannot predict the outcome of any possible rehearing of the
Supreme Court decision or the reconsideration of this Order on remand by the
PUC.
COMPETITION
GENERAL
THE COMPANY AND TU ELECTRIC
As legislative, regulatory, economic and technological changes occur, the
energy and utility industries are faced with increasing pressure to become more
competitive while adhering to regulatory requirements. The level of
competition is affected by a number of variables, including price, reliability
of service, the cost of energy alternatives, new technologies and governmental
regulations.
Federal legislation such as the PURPA and, more recently, the Energy Policy
Act, as well as initiatives in various states, encourage wholesale competition
among electric utility and non-utility power producers. Together with
increasing customer demand for lower-priced electricity and other energy
services, these measures have accelerated the industry's movement toward a more
competitive pricing and cost structure. Competition in the electric utility
industry was also addressed in the 1995 session of the Texas legislature. PURA
was amended to encourage greater wholesale competition and flexible retail
pricing. PURA amendments also require the PUC to report to the legislature,
during each legislative session, on competition in electric markets. The PUC's
report is to include recommendations for legislation to promote "the public
interest in the context of a partially competitive electric market." In
addition, PURA requires the PUC to report to the 1997 legislature on methods
for quantifying, allocating and recovering costs that may be stranded as a
result of competition. In preparation for its January 1997 reports, the PUC
has initiated an investigation of utility industry restructuring. TU Electric
is an active participant in this proceeding.
10
<PAGE> 13
ITEM 1. BUSINESS (CONTINUED)
COMPETITION -- (CONTINUED)
As a result of the shift in emphasis toward greater competition, large and
small industry participants are attempting to penetrate wholesale, industrial
and commercial markets by offering energy services and energy-related products
that are both economically and environmentally attractive to customers. In
Texas, aggressive marketing of competitive prices by rural electric
cooperatives, municipally-owned electric systems, and other energy providers
who are not subject to the traditional governmental regulation experienced by
the energy and utility industries has intensified competition within the
state's wholesale markets and, in multi-certificated areas, retail customer
markets.
Furthermore, there is increasing pressure on utilities to reduce costs,
including the cost of power, and to tailor energy services to the specific
needs of customers. Such competitive pressures among electric utility and
non-utility power producers could result in the loss of customers and the cost
of certain assets becoming stranded costs (i.e., costs of assets which may not
be recoverable from customers as a result of competitive pricing). To the
extent stranded costs cannot be recovered from customers, it may be necessary
for such costs to be borne partially or entirely by shareholders. In response
to these competitive pressures, many utilities are implementing significant
restructuring and re-engineering initiatives designed to make them more
competitive. Since the implementation of an Operations Review and Cost
Reduction program in April 1992, the System Companies continue to take steps to
reduce costs by streamlining business processes and operating practices. (For
information pertaining to the effects of competition on the treatment of
certain regulatory assets and liabilities, see Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operation and Note 1 to
Consolidated Financial Statements.)
WHOLESALE MARKET AND TRANSMISSION ACCESS
In the wholesale power market, TU Electric competes with a variety of
utilities and other suppliers, some of which are willing and able to sell at
rates below TU Electric's standard wholesale power service rate as approved by
the PUC. As a result, TU Electric has lost approximately 327 MW of wholesale
load since the beginning of 1993 and received notifications of possible
termination of approximately 610 MW through 1999. In 1995, wholesale revenues
represented only about 2% of TU Electric's total consolidated operating
revenues.
Amendments to PURA made during the 1995 session of the Texas legislature
allow for wholesale pricing flexibility. While wholesale rates for electric
utilities are not deregulated, wholesale tariffs or contracts with charges less
than approved rates but greater than the utility's marginal cost may be
approved by the regulatory authority upon application by the utility. TU
Electric is responding to wholesale load losses by competitively pricing its
wholesale power so as to retain existing customers and attract new wholesale
business. Competitive wholesale power contracts have been successfully
negotiated with two existing customers, Lyntegar Electric Cooperative and
Taylor Electric Cooperative. TU Electric has applied for approval of these
contracts by the PUC. TU Electric also entered into a wholesale power contract
with the City of College Station to serve a load of approximately 125 MW. TU
Electric began serving this load on January 1, 1996.
PURA, as amended, provides the PUC with the authority to require a utility
to provide transmission services at wholesale to another utility, a qualifying
facility, an exempt wholesale generator or a power marketer at rates, terms and
conditions that are comparable to the utility's own use of it's system.
According to PURA, rules governing comparable open-access wholesale
transmission services must be in place within 180 days of September 1, 1995.
As a result, the PUC has initiated a generic rulemaking proceeding to address
wholesale transmission issues within Texas that will require transmission
owners to file wholesale open-access transmission tariffs. Final adoption of
the rule is expected by the end of February 1996 and tariffs pursuant to the
rule will be filed within 60 days of the effective date of the rule.
At the federal level, the Energy Policy Act empowers the FERC to require
utilities to provide transmission service for the delivery of wholesale power
from other power producers to qualified resellers, such as municipalities,
cooperatives, and other utilities. The FERC has issued a Notice of Proposed
Rulemaking (NOPR)
11
<PAGE> 14
ITEM 1. BUSINESS (CONTINUED)
COMPETITION -- (CONCLUDED)
with respect to open-access transmission service and the recovery of stranded
costs resulting from open-access. The proposed rules would require FERC
jurisdictional utilities to file tariffs for open-access transmission service.
Utilities would be required to use these same tariffs for their own wholesale
sales. Although the NOPR provides a framework for recovery of "legitimate,
prudent and verifiable stranded costs" resulting from the implementation of the
new tariffs, it is expected that the recovery of stranded investment will be
implemented at the state level. The FERC is expected to issue final rules on
this issue in 1996.
RETAIL MARKET
TU Electric and SESCO are experiencing competition for retail load in areas
that are multi-certificated with rural electric cooperatives or municipal
utilities. Except in areas where there is multi-certification by the PUC, TU
Electric and SESCO currently have the exclusive right to provide electric
service to the public within their service areas.
Legislatures and regulatory commissions in several states have begun to
examine the possibility of mandated "retail wheeling", the required delivery by
an electric utility over its transmission and distribution facilities of energy
produced by another entity to retail customers in such utility's service
territory. If implemented, such access could allow a retail customer to
purchase electric service from any other electric service provider, subject to
the practical constraints of long distance transmission. This issue was
pursued in the 1995 session of the Texas legislature during its review of PURA
as required by state law; however, retail wheeling has not been implemented in
Texas.
In addition, some energy consumers have the ability to produce their own
electricity or to use alternative forms of energy. Industrial customers may
also be able to relocate their facilities to a lower cost service area. To
some degree, there is competition among utilities with defined service areas to
attract and retain large customers. TU Electric and SESCO are pursuing efforts
to remain competitive through competitive pricing, economic development and
other initiatives. (See Regulation and Rates.)
TU Australia's retail distribution business is gradually being exposed to
competition. As a result of rules promulgated by the ORG, the level of
competition experienced by TU Australia is expected to increase after December
31, 2000. TU Australia is currently required to offer distribution of
electricity in its service area on behalf of other distribution businesses. In
addition, the ORG may issue further licenses to operate a separate distribution
network in some or all of TU Australia's distribution area.
TU Electric, TU Australia, and SESCO are not able to predict the extent of
future competitive developments or what impact, if any, such developments may
have on their operations.
ENVIRONMENTAL MATTERS
THE COMPANY AND TU ELECTRIC
The System Companies are subject to various federal, state and local
regulations dealing with air and water quality and related environmental
matters. (See Item 2. Properties -- Capital Expenditures and Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operation for environmental expenditures.)
AIR
Under the Texas Clean Air Act, the Texas Natural Resource Conservation
Commission (TNRCC) has jurisdiction over the permissible level of air
contaminant emissions from generating facilities located within the State of
Texas. In addition, the new source performance standards of the Environmental
Protection Agency (EPA) promulgated under the federal Clean Air Act, as amended
(Clean Air Act), which have also been adopted by the TNRCC, are applicable to
generating units, the construction of which commenced after September 18, 1978.
TU
12
<PAGE> 15
ITEM 1. BUSINESS (CONTINUED)
ENVIRONMENTAL MATTERS -- (CONTINUED)
Electric's generating units have been constructed to operate in compliance with
current regulations and emission standards promulgated pursuant to these Acts;
however, due to variations in the quality of the lignite fuel, operation of
certain of the lignite-fueled generating units at reduced loads is required
from time to time in order to maintain compliance with these standards.
The Clean Air Act includes provisions which, among other things, place
limits on the sulfur dioxide emissions produced by generating units. In
addition to the new source performance standards applicable to sulfur dioxide,
the Clean Air Act required that fossil-fueled plants meet certain sulfur
dioxide emission allowances by 1995 (Phase I) and will require additional
sulfur dioxide emission allowances by 2000 (Phase II). TU Electric's
generating units were not affected by the Phase I requirements. The applicable
Phase II requirements currently are met by 52 out of the 56 of TU Electric's
generating units to which those requirements apply. Because the sulfur dioxide
emissions from the other four units are relatively low and alternatives are
available to enable these units to reduce sulfur dioxide emissions or utilize
compensatory reduction allowances achieved in other units, compliance with the
applicable Phase II sulfur dioxide requirements is not expected to have a
significant impact on TU Electric. In January 1993, the EPA issued its "core"
regulations to implement the sulfur dioxide reduction program. TU Electric is
preparing compliance plans in accordance with these regulations and expects
these plans to be implemented by January 1, 2000.
To meet these sulfur dioxide requirements, the Clean Air Act provides for
the annual allocation of sulfur dioxide emission allowances to utilities.
Under the Clean Air Act, utilities are permitted to transfer allowances within
their own systems and to buy or sell allowances from or to other utilities.
The EPA grants a maximum number of allowances annually to TU Electric based on
the amount of emissions from units in operation during the period 1985-1987.
The Clean Air Act also provides that TU Electric will be granted additional
annual allowances for Unit 1 of the Twin Oak facility. TU Electric intends to
utilize internal allocation of emission allowances within its system and, if
cost effective, may purchase additional emission allowances to enable both
existing and future electric generating units to meet the requirements of the
Clean Air Act. TU Electric may also sell excess emission allowances. TU
Electric is unable to predict the extent to which it may generate excess
allowances or will be able to acquire allowances from others if needed but does
not anticipate any significant problems in keeping emissions within its
allotted allowances.
TU Electric's lignite-fired generating units meet the nitrogen oxide limits
currently required by the Clean Air Act. The TNRCC and the EPA have determined
that the requirements of the Clean Air Act for ozone nonattainment areas will
not require nitrogen oxide emission reductions at TU Electric's natural
gas-fired units in the Dallas-Fort Worth area. The Clean Air Act also requires
studies, which began in 1991, by the EPA to assess the potential for toxic
emissions from utility boilers. TU Electric is unable to predict either the
results of such studies or the effects of any subsequent regulations.
Only certain parts of the regulations implementing the Clean Air Act have
been published as final rules. Until more of these regulations have been
promulgated and specific state requirements developed, TU Electric will not be
able to fully determine the cost or method of compliance with these
requirements. TU Electric believes that it can meet the requirements necessary
to be in compliance with these provisions as they are developed. Estimates for
the capital requirements related to the Clean Air Act are included in TU
Electric's estimated construction expenditures. Any additional required
capital costs, as well as any increased operating costs associated with new
requirements or compliance measures, are expected to be recoverable through
rates, as similar costs have been recovered in the past.
WATER
The TNRCC and the EPA have jurisdiction over all water discharges (including
storm water) from all System Companies' facilities. The Company's facilities
are presently in compliance with applicable state and federal requirements
relating to discharge of pollutants into the water. TU Electric, Fuel Company,
and Mining Company
13
<PAGE> 16
ITEM 1. BUSINESS (CONCLUDED)
ENVIRONMENTAL MATTERS -- (CONCLUDED)
have obtained all required waste water discharge permits from the TNRCC and the
EPA for facilities in operation and have applied for or obtained necessary
permits for facilities under construction. TU Electric, Fuel Company, and
Mining Company believe they can satisfy the requirements necessary to obtain
any required permits or renewals.
OTHER
Diversion, impoundment and withdrawal of water for cooling and other
purposes are subject to the jurisdiction of the TNRCC. The Company possesses
all necessary permits for these activities from the TNRCC for its present
operations.
Federal legislation regulating surface mining was enacted in August 1977 and
regulations implementing the law have been issued. Mining Company's lignite
mining operations are currently regulated at the state level by the Railroad
Commission of Texas, with oversight by the United States Department of the
Interior's Office of Surface Mining, Reclamation and Enforcement. Surface
mining permits have been issued for current Mining Company operations that
provide fuel for Big Brown, Monticello and Martin Lake.
Treatment, storage and disposal of solid and hazardous waste are regulated
at the state level under the Texas Solid Waste Disposal Act (Texas Act) and at
the federal level under the Resource Conservation and Recovery Act of 1976, as
amended (RCRA). The EPA has issued regulations under the RCRA and the TNRCC
has issued regulations under the Texas Act applicable to System Companies'
facilities. The Company has registered its solid waste disposal sites and has
obtained or applied for such permits as are required by such regulations.
Under the federal Low-Level Radioactive Waste Policy Act of 1980, as
amended, the State of Texas is required to provide, either on its own or
jointly with other states in a compact, for the disposal of all low-level
radioactive waste generated within the state. The State of Texas is taking
steps to site, construct and operate a low-level radioactive waste disposal
site by 1997 and submitted a license application in March 1992 for such a
facility. The license application has been revised and the TNRCC is charged
with processing the application and granting the permit. The State of Texas
has agreed to a compact with the States of Maine and Vermont, which is subject
to ratification by Congress, for such a facility. Low-level waste material
will continue to be shipped off-site as long as an alternate disposal site is
available. Otherwise the low-level waste material will be stored on-site. TU
Electric's on-site storage capacity is expected to be adequate until other
facilities are available.
TU Australia is subject to various Australian federal and Victorian state
environmental regulations, the most significant of which is the Victorian
Environmental Protection Act of 1970 (VEPA). VEPA regulates, in particular,
the discharge of waste into air, land and water, site contamination, the
emission of noise and the storage, recycling and disposal of solid and
industrial waste. VEPA establishes the Environmental Protection Authority
(Authority) and grants this Authority a wide range of powers to control and
prevent environmental pollution. These powers include issuing approvals for
construction of works which may cause noise or emissions to air, water or land,
waste discharge licenses and pollution abatement notices. No licenses or works
approvals from this Authority are currently required for activities undertaken
by TU Australia.
14
<PAGE> 17
ITEM 2. PROPERTIES
THE COMPANY AND TU ELECTRIC
The Company owns no utility plant or real property. At December 31, 1995,
TU Electric owned or leased and operated the following generating units:
<TABLE>
<CAPTION>
ELECTRIC NET
GENERATING CAPABILITY
UNITS FUEL SOURCE (MW) %
- ---------- ----------- ---------- -----
<S> <C> <C> <C>
46 Natural Gas (a) . . . . . . . . . . . . . . . . . 12,105(d) 57.0%
9 Lignite/Coal (b) . . . . . . . . . . . . . . . . . 5,825(d) 27.5
2 Nuclear . . . . . . . . . . . . . . . . . . . . . 2,300 10.8
15 Combustion Turbines (c) . . . . . . . . . . . . . 975 4.6
10 Diesel . . . . . . . . . . . . . . . . . . . . . . 20 0.1
------- ------
Total . . . . . . . . . . . . . . . . . . . . 21,225 100.0%
======= ======
</TABLE>
- -------------------------
(a) Thirty-seven natural gas units are designed to operate on fuel oil for
short periods when gas supplies are interrupted or curtailed. Five
natural gas units are designed to operate on fuel oil for extended
periods.
(b) Includes the Monticello Unit 3 (750 MW), which was returned to service
in June 1995 (see Item 1. Business - Peak Load and Capability).
(c) Natural gas units leased and operated by TU Electric. Such units are
designed to operate on fuel oil for extended periods.
(d) In December 1995, TU Electric adjusted the net generating capabilities
of its existing fossil-fueled generating units to more closely reflect
actual operating capability. Natural gas-fueled unit capability
increased 239 MW and lignite-fueled unit capability decreased 20 MW for
a net increase of 219 MW.
The principal generating facilities and load centers of TU Electric and
SESCO are connected by 3,861 circuit miles of 345,000 volt transmission lines
and 9,324 circuit miles of 138,000 and 69,000 volt transmission lines.
TU Electric is connected by six 345,000 volt lines to Houston Lighting &
Power Company; by three 345,000 volt, eight 138,000 volt and nine 69,000 volt
lines to West Texas Utilities Company; by two 345,000 volt, seven 138,000 volt
and one 69,000 volt lines to the Lower Colorado River Authority; by four
345,000 volt and eight 138,000 volt lines to the Texas Municipal Power Agency;
and at several points with smaller systems operating wholly within Texas.
SESCO is connected to TU Electric by three 138,000 volt lines, ten 69,000 volt
lines and three lines at distribution voltage. TU Electric and SESCO are
members of the Electric Reliability Council of Texas (ERCOT), an intrastate
network of investor-owned entities, cooperatives and public entities. ERCOT is
the regional reliability coordinating organization for member electric power
systems in Texas.
TU Australia's distribution network is comprised primarily of
subtransmission and distribution assets. It owns no generating or transmission
facilities. TU Australia's distribution system is interconnected with an
intrastate power network comprised of the operator of the electric energy pool,
Victorian Power Exchange, and each of the other distribution companies within
Victoria. TU Australia has entered into distribution system agreements with
each of the distribution businesses which share the boundaries of its
distribution area to provide for wheeling of electricity on behalf of those
distribution businesses and for the reciprocal provision of other distribution
services.
The generating stations and other important units of property of TU
Electric and SESCO are located on lands owned primarily in fee simple. The
greater portion of the transmission and distribution lines of TU Electric and
SESCO, and of the gas gathering and transmission lines of Fuel Company, has
been constructed over lands of others pursuant to easements or along public
highways and streets as permitted by law. The rights of the System Companies
in the realty on which their properties are located are considered by them to
be adequate for their use in the conduct of their business. Minor defects and
irregularities customarily found in titles to properties of like size and
character may exist, but any such defects and irregularities do not materially
impair the use of the properties affected thereby. TU Electric, SESCO, Fuel
Company and TU Australia have the right of eminent domain whereby they may, if
necessary, perfect or secure titles to privately held land used or to be used
in their operations. Utility plant of TU Electric, SESCO and TU Australia is
generally subject to the liens of their respective mortgages.
15
<PAGE> 18
ITEM 2. PROPERTIES (CONCLUDED)
CAPITAL EXPENDITURES
THE COMPANY AND TU ELECTRIC
The Company has taken steps to aggressively manage its construction
expenditures. Such construction expenditures for utility related activities,
excluding allowance for funds used during construction (see Note 1 to
Consolidated Financial Statements) are presently estimated at $457 million,
$445 million and $448 million for the Company and $399 million, $388 million
and $389 million for TU Electric for each of the years 1996, 1997, and 1998,
respectively. The System Companies are subject to federal, state and local
regulations dealing with environmental protection. (See Item 1. Business -
Environmental Matters.) Such expenditures for construction to meet the
requirements of environmental regulations at existing generating units are
estimated to be $16 million for 1996 (included in the 1996 construction
estimates noted above) and were approximately $64 million in 1995, $40 million
in 1994 and $34 million for 1993. Expenditures for non-utility property are
presently estimated to be $60 million, $40 million, and $26 million for the
Company for each of the years 1996, 1997 and 1998, respectively. Expenditures
for nuclear fuel are presently estimated to be $55 million, $47 million and $60
million for the Company and TU Electric for each of the years 1996, 1997 and
1998, respectively.
In September 1995, the Company determined that the Twin Oak and Forest
Grove lignite-fueled facilities of TU Electric are not necessary to satisfy TU
Electric's capacity requirements as currently projected due to changes in load
growth patterns and availability of alternative generation. The Company
determined that Chaco's coal reserves in New Mexico will no longer be developed
through traditional means due to ample availability of alternative fuels at
favorable prices. Impairment of the Company's assets, including partially
completed Twin Oak and Forest Grove lignite-fueled facilities and Chaco coal
reserves, as well as several minor assets, aggregated $802 million after tax.
Impairment of TU Electric's assets, including its partially completed Twin Oak
and Forest Grove lignite-fueled facilities, as well as several minor assets,
aggregated $316 million after tax. Such impairment has been measured based on
management's current expectations that these assets will either be sold or
constructed outside the traditional regulated utility business. (See Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operation and Note 13 to Consolidated Financial Statements.)
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 in estimated construction costs and
dates of completion. Commitments in connection with the construction program
are generally revocable subject to reimbursement to manufacturers for
expenditures incurred or other cancellation penalties. (See Item 1. Business -
Peak Load and Capability.)
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. The timing and amounts of any specific new business investment
opportunities are presently undetermined.
For information regarding the financing of capital expenditures, see Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operation.
16
<PAGE> 19
ITEM 3. LEGAL PROCEEDINGS
THE COMPANY
The Antitrust Division of the U.S. Department of Justice submitted to the
Company a civil investigative demand (CID) in October 1995. This CID appears
to request documents and information relating to an investigation of whether
alleged tying arrangements or other actions that unreasonably deny or condition
access to TU Electric's transmission system by others have occurred in
violation of certain antitrust laws. While the Company intends to comply with
requests within the appropriate purview of the Department of Justice, it
believes that it has not violated such antitrust laws. The Company is unable
to predict the outcome of any such investigation and does not expect it to have
any material effect on the Company's results of operation or financial
position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
THE COMPANY AND TU ELECTRIC
None.
- -------------------------
EXECUTIVE OFFICERS OF THE COMPANY
<TABLE>
<CAPTION>
POSITIONS AND OFFICES DATE FIRST
PRESENTLY HELD (CURRENT TERM ELECTED TO PRESENT BUSINESS EXPERIENCE
NAME OF OFFICER AGE EXPIRES MAY 17, 1996) OFFICE(S) (PRECEDING FIVE YEARS)
- ---------------- --- ---------------------------- ----------------- ----------------------
<S> <C> <C> <C> <C>
J. S. Farrington 61 Chairman and Director February 20, 1987 Same and Chief Executive of the
Company.
Erle Nye 58 President, Chief Executive May 19, 1995 Same and Chief Executive of
and Director TU Electric.
</TABLE>
There is no family relationship between any of the above named executive
officers.
17
<PAGE> 20
PART II
ITEM 5. MARKET FOR EACH REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
THE COMPANY
The Company's common stock is listed on the New York, Chicago and Pacific
stock exchanges (symbol: TXU).
The price range of the common stock of the Company on the composite tape,
as reported by The Wall Street Journal, and the dividends paid, for each of the
calendar quarters of 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
Price Range Dividends Paid
---------------------------------------- --------------
Quarter Ended 1995 1994 1995 1994
------------- ------------------ ------------------- ----- -----
High Low High Low
------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
March 31 . . . . . . . . . . . . . . . . . . $35 $30 1/8 $43 1/8 $36 1/2 $0.77 $0.77
June 30 . . . . . . . . . . . . . . . . . . . 36 1/8 31 5/8 38 29 7/8 0.77 0.77
September 30 . . . . . . . . . . . . . . . . 35 32 5/8 34 1/8 29 5/8 0.77 0.77
December 31 . . . . . . . . . . . . . . . . . 41 1/4 34 1/4 34 1/8 30 3/4 0.77 0.77
----- -----
$3.08 $3.08
===== =====
</TABLE>
The Company has declared common stock dividends payable in cash in each
year since its incorporation in 1945. The Board of Directors of the Company,
at its February 1996 meeting, declared a quarterly dividend of $0.50 a share,
payable April 1, 1996 to shareholders of record on March 7, 1996. For
information concerning the Company's dividend policy, see Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operation.
Future dividends may vary depending upon the Company's profit levels and
capital requirements as well as financial and other conditions existing at the
time. Reference is made to Note 5 to Consolidated Financial Statements
regarding limitations upon payment of dividends on common stock of TU Electric
and SESCO.
The number of record holders of the common stock of the Company as of
February 29, 1996 was 97,348.
TU ELECTRIC
All of TU Electric's common stock is owned by the Company.
Reference is made to Note 5 to Consolidated Financial Statements regarding
limitations upon payment of dividends on common stock of TU Electric.
18
<PAGE> 21
Item 6. SELECTED FINANCIAL DATA
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATISTICS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1995* 1994 1993*
---- ---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
Total assets -- end of year .................................. $ 21,535,851 $ 20,893,408 $ 21,518,128
- ----------------------------------------------------------------------------------------------------------------
Utility plant - gross -- end of year ......................... $ 24,911,787 $ 24,206,351 $ 23,836,729
Accumulated depreciation and amortization -- end of year.. 5,857,580 5,228,423 4,710,398
Reserve for regulatory disallowances -- end of year ...... 1,308,460 1,308,460 1,308,460
Construction expenditures (including allowance for
funds used during construction) ........................ 434,338 444,245 871,450
- ----------------------------------------------------------------------------------------------------------------
Capitalization -- end of year
Long-term debt ........................................... $ 9,174,575 $ 7,888,413 $ 8,379,826
TU Electric obligated, mandatorily redeemable, preferred
securities of trusts ................................... 381,476 -- --
Preferred stock:
Not subject to mandatory redemption .................... 489,695 870,190 1,083,008
Subject to mandatory redemption ........................ 263,196 387,482 396,917
Common stock equity ...................................... 5,731,753 6,490,047 6,570,993
------------ ------------ ------------
Total ........................................... $ 16,040,695 $ 15,636,132 $ 16,430,744
============ ============ ============
Capitalization ratios -- end of year
Long-term debt ........................................... 57.2% 50.5% 51.0%
TU Electric obligated, mandatorily redeemable, preferred
securities of trusts ................................... 2.4 -- --
Preferred stock .......................................... 4.7 8.0 9.0
Common stock equity ...................................... 35.7 41.5 40.0
------------ ------------ ------------
Total ........................................... 100.0% 100.0% 100.0%
============ ============ ============
- ----------------------------------------------------------------------------------------------------------------
Embedded interest cost on long-term debt-- end of year ....... 8.4% 8.7% 8.7%
Embedded interest cost on TU Electric obligated, mandatorily
redeemable, preferred securities of trusts-- end of year . 8.5% -- --
Embedded dividend cost on preferred stock-- end of year ...... 6.9% 7.5% 7.6%
- ----------------------------------------------------------------------------------------------------------------
Income (loss) before cumulative effect of a change
in accounting principle .................................. $ (138,645) $ 542,799 $ 368,660
Cumulative effect of a change in accounting for unbilled
revenue (Net of taxes of $41,679,000) .................... -- -- --
------------ ------------ ------------
Consolidated net income (loss) ............................... $ (138,645) $ 542,799 $ 368,660
============ ============ ============
Dividends declared on common stock ........................... $ 634,613 $ 695,590 $ 682,438
- ----------------------------------------------------------------------------------------------------------------
Common stock data
Shares outstanding-- average ............................. 225,841,037 225,833,659 221,555,218
Shares outstanding-- end of year ......................... 225,841,037 225,841,037 224,345,422
Earnings (loss) per share (on average shares outstanding):
Before cumulative effect of a change in accounting ..... $ (0.61) $ 2.40 $ 1.66
Cumulative effect of a change in accounting
for unbilled revenue ................................. -- -- --
------------ ------------ ------------
Total earnings (loss) per average share ......... $ (0.61) $ 2.40 $ 1.66
============ ============ ============
Dividends declared per share ............................. $ 2.81 $ 3.08 $ 3.08
Book value per share-- end of year ....................... $ 25.38 $ 28.74 $ 29.29
Return on average common stock equity .................... (2.3)% 8.3% 5.6%
- ----------------------------------------------------------------------------------------------------------------
Ratio of earnings to fixed charges:
Pre-tax .................................................. 0.8 2.3 1.9
After-tax ................................................ 0.9 1.9 1.6
Allowance for funds used during construction as
percent of consolidated net income ....................... -- 4.1% 71.4%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1992 1991*
---- ----
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C>
Total assets -- end of year .................................. $ 19,428,568 $ 18,792,782
- ---------------------------------------------------------------------------------------------------------------
Utility plant - gross -- end of year ......................... $ 23,043,778 $ 21,927,788
Accumulated depreciation and amortization -- end of year.. 4,251,002 3,851,330
Reserve for regulatory disallowances -- end of year ...... 1,308,460 1,308,460
Construction expenditures (including allowance for
funds used during construction) ........................ 1,136,971 1,232,239
- ---------------------------------------------------------------------------------------------------------------
Capitalization -- end of year
Long-term debt ........................................... $ 7,931,981 $ 7,951,086
TU Electric obligated, mandatorily redeemable, preferred
securities of trusts ................................... -- --
Preferred stock:
Not subject to mandatory redemption .................... 909,564 1,007,728
Subject to mandatory redemption ........................ 418,748 425,758
Common stock equity ...................................... 6,590,537 6,283,675
------------ ------------
Total ........................................... $ 15,850,830 $ 15,668,247
============ ============
Capitalization ratios -- end of year
Long-term debt ........................................... 50.0% 50.8%
TU Electric obligated, mandatorily redeemable, preferred
securities of trusts ................................... -- --
Preferred stock .......................................... 8.4 9.1
Common stock equity ...................................... 41.6 40.1
------------ ------------
Total ........................................... 100.0% 100.0%
============ ============
- ---------------------------------------------------------------------------------------------------------------
Embedded interest cost on long-term debt -- end of year ...... 9.2% 9.7%
Embedded interest cost on TU Electric obligated, mandatorily
redeemable, preferred securities of trusts -- end
of year .................................................. -- --
Embedded dividend cost on preferred stock-- end of year ...... 8.4% 8.5%
- ---------------------------------------------------------------------------------------------------------------
Income (loss) before cumulative effect of a change
in accounting principle .................................. $ 619,204 $ (409,964)
Cumulative effect of a change in accounting for unbilled
revenue (Net of taxes of $41,679,000) .................... 80,907 --
------------ ------------
Consolidated net income (loss) ............................... $ 700,111 $ (409,964)
============ ============
Dividends declared on common stock ........................... $ 653,146 $ 624,261
- ---------------------------------------------------------------------------------------------------------------
Common stock data
Shares outstanding-- average ............................. 214,850,225 207,357,881
Shares outstanding-- end of year ......................... 217,316,054 210,700,373
Earnings (loss) per share (on average shares outstanding):
Before cumulative effect of a change in accounting ..... $ 2.88 $ (1.98)
Cumulative effect of a change in accounting
for unbilled revenue ................................. 0.38 --
------------ ------------
Total earnings (loss) per average share ......... $ 3.26 $ (1.98)
============ ============
Dividends declared per share ............................. $ 3.04 $ 3.00
Book value per share-- end of year ....................... $ 30.33 $ 29.82
Return on average common stock equity .................... 10.9% (6.3)%
- ---------------------------------------------------------------------------------------------------------------
Ratio of earnings to fixed charges:
Pre-tax .................................................. 2.3 0.4
After-tax ................................................ 2.0 0.7
Allowance for funds used during construction as
percent of consolidated net income ....................... 43.5% --
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* Certain financial statistics for 1995 were affected by the recording of the
impairment of certain assets (see Note 13 to Consolidated Financial
Statements) and the acquisition of Eastern Energy, and for the years 1993 and
1991, were affected by TU Electric recording regulatory disallowances in rate
orders issued by the Public Utility Commission of Texas in Dockets 11735 and
9300, respectively (see Note 12 to Consolidated Financial Statements).
19
<PAGE> 22
Item 6. SELECTED FINANCIAL DATA (Continued)
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
CONSOLIDATED OPERATING STATISTICS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
ELECTRIC ENERGY GENERATED AND
PURCHASED (MWh)
Generated-- net station output ............................ 83,876,565 81,320,922 79,105,495
Purchased and net interchange ............................. 11,883,965 12,551,167 12,785,246
----------- ----------- -----------
Total generated and purchased ........................... 95,760,530 93,872,089 91,890,741
Company use, losses and unaccounted for ................... 5,657,489 5,246,480 5,631,085
----------- ----------- -----------
Total electric energy sales ............................. 90,103,041 88,625,609 86,259,656
=========== =========== ===========
ELECTRIC ENERGY SALES (MWh)
Residential ............................................... 31,280,920 30,471,009 30,492,453
Commercial ................................................ 25,893,275 25,082,497 24,259,480
Industrial ................................................ 23,596,406 23,138,750 21,607,606
Government and municipal .................................. 5,753,515 5,621,110 5,425,206
----------- ----------- -----------
Total general business .................................. 86,524,116 84,313,366 81,784,745
Other electric utilities .................................. 3,578,925 4,312,243 4,474,911
----------- ----------- -----------
Total electric energy sales ............................. 90,103,041 88,625,609 86,259,656
=========== =========== ===========
OPERATING REVENUES (thousands)
Base rate:
Residential ............................................. $ 1,919,195 $ 1,871,226 $ 1,703,894
Commercial .............................................. 1,218,918 1,189,286 1,063,519
Industrial .............................................. 603,745 597,737 535,685
Government and municipal ................................ 287,825 285,108 245,394
----------- ----------- -----------
Total general business ............................... 4,029,683 3,943,357 3,548,492
Other electric utilities ................................ 114,293 148,889 144,385
----------- ----------- -----------
Total base rate revenues ............................. 4,143,976 4,092,246 3,692,877
Fuel revenue (including over/under-recovered) ............. 1,421,861 1,521,030 1,690,061
Other operating revenues* ................................. 72,851 50,267 51,574
----------- ----------- -----------
Total operating revenues ............................. $ 5,638,688 $ 5,663,543 $ 5,434,512
=========== =========== ===========
ELECTRIC CUSTOMERS (end of year)
Residential ............................................... 2,504,128 2,053,235 2,020,667
Commercial ................................................ 267,579 225,479 221,422
Industrial ................................................ 49,558 21,673 21,954
Government and municipal .................................. 30,458 29,437 29,034
----------- ----------- -----------
Total general business .................................. 2,851,723 2,329,824 2,293,077
Other electric utilities .................................. 165 212 220
----------- ----------- -----------
Total electric customers ................................ 2,851,888 2,330,036 2,293,297
=========== =========== ===========
RESIDENTIAL STATISTICS (excludes master-metered
customers, kWh sales and revenues)
Average kWh per customer ................................ 12,002 14,283 15,210
Average revenue per kWh ................................. 8.18(cent) 8.23(cent) 7.59(cent)
Industrial classification includes service to Alcoa-Sandow:
Electric energy sales (MWh) ............................. 3,764,658 3,886,258 3,166,797
Operating revenues (thousands) .......................... $ 47,739 $ 54,699 $ 53,352
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1992 1991
---- ----
<S> <C> <C>
ELECTRIC ENERGY GENERATED AND
PURCHASED (MWh)
Generated-- net station output ............................ 74,652,339 76,326,601
Purchased and net interchange ............................. 11,417,251 11,027,061
----------- -----------
Total generated and purchased ........................... 86,069,590 87,353,662
Company use, losses and unaccounted for ................... 5,747,156 4,996,123
----------- -----------
Total electric energy sales ............................. 80,322,434 82,357,539
=========== ===========
ELECTRIC ENERGY SALES (MWh)
Residential ............................................... 27,266,411 28,505,885
Commercial ................................................ 22,959,464 23,012,114
Industrial ................................................ 21,108,894 21,482,750
Government and municipal .................................. 5,032,780 5,056,868
----------- -----------
Total general business .................................. 76,367,549 78,057,617
Other electric utilities .................................. 3,954,885 4,299,922
----------- -----------
Total electric energy sales ............................. 80,322,434 82,357,539
=========== ===========
OPERATING REVENUES (thousands)
Base rate:
Residential ............................................. $ 1,464,227 $ 1,505,386
Commercial .............................................. 963,175 957,190
Industrial .............................................. 513,358 521,480
Government and municipal ................................ 207,368 208,060
----------- -----------
Total general business ............................... 3,148,128 3,192,116
Other electric utilities ................................ 135,709 149,489
----------- -----------
Total base rate revenues ............................. 3,283,837 3,341,605
Fuel revenue (including over/under-recovered) ............. 1,540,667 1,498,595
Other operating revenues* ................................. 83,372 52,973
----------- -----------
Total operating revenues ............................. $ 4,907,876 $ 4,893,173
=========== ===========
ELECTRIC CUSTOMERS (end of year)
Residential ............................................... 1,952,916 1,921,119
Commercial ................................................ 210,185 205,555
Industrial ................................................ 21,969 22,156
Government and municipal .................................. 28,204 27,719
----------- -----------
Total general business .................................. 2,213,274 2,176,549
Other electric utilities .................................. 243 247
----------- -----------
Total electric customers ................................ 2,213,517 2,176,796
=========== ===========
RESIDENTIAL STATISTICS (excludes master-metered
customers, kWh sales and revenues)
Average kWh per customer ................................ 13,329 14,099
Average revenue per kWh ................................. 7.41(cent) 7.26(cent)
Industrial classification includes service to Alcoa-Sandow:
Electric energy sales (MWh) ............................. 3,157,852 3,359,824
Operating revenues (thousands) .......................... $ 56,043 $ 55,987
</TABLE>
* In 1992, other operating revenues do not include $122,586,000 of unbilled
base rate revenues which were reclassified as a cumulative effect of a change
in accounting principle effective January 1, 1992.
20
<PAGE> 23
Item 6. SELECTED FINANCIAL DATA (CONTINUED)
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATISTICS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1995* 1994 1993*
---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Total assets -- end of year ..................................... $ 19,003,374 $ 19,446,998 $ 19,870,990
- ----------------------------------------------------------------------------------------------------------------
Electric plant - gross -- end of year ........................... $ 22,747,860 $ 23,063,436 $ 22,680,508
Accumulated depreciation and amortization-- end of year ....... 5,370,818 4,765,474 4,233,720
Reserve for regulatory disallowances-- end of year ............ 1,308,460 1,308,460 1,308,460
Construction expenditures (including allowance for
funds used during construction) ............................. 407,305 415,290 841,181
- ----------------------------------------------------------------------------------------------------------------
Capitalization -- end of year
Long-term debt ................................................ $ 7,212,070 $ 7,220,641 $ 7,607,090
TU Electric obligated, mandatorily redeemable, preferred
securities of trusts ........................................ 381,476 -- --
Preferred stock:
Not subject to mandatory redemption ......................... 489,695 870,190 1,083,008
Subject to mandatory redemption ............................. 263,196 387,482 396,917
Common stock equity ........................................... 5,799,898 6,114,261 6,029,217
------------ ------------ ------------
Total ................................................. $ 14,146,335 $ 14,592,574 $ 15,116,232
============ ============ ============
- ----------------------------------------------------------------------------------------------------------------
Embedded interest cost on long-term debt -- end of year ......... 8.4% 8.7% 8.8%
Embedded interest cost on TU Electric obligated, mandatorily
redeemable, preferred securities of trusts-- end of year ...... 8.5% -- --
Embedded dividend cost on preferred stock -- end of year ........ 6.9% 7.5% 7.6%
- ----------------------------------------------------------------------------------------------------------------
Consolidated income (loss) before cumulative effect of a change
in accounting principle ....................................... $ 454,432 $ 658,192 $ 476,526
Cumulative effect of a change in accounting for unbilled
revenue (Net of taxes of $41,679,000) ......................... -- -- --
------------ ------------ ------------
Consolidated net income (loss) .................................. $ 454,432 $ 658,192 $ 476,526
============ ============ ============
Dividends declared on common stock .............................. $ 682,080 $ 715,760 $ 707,382
- ----------------------------------------------------------------------------------------------------------------
Ratio of earnings to fixed charges:
Pre-tax ..................................................... 2.0 2.5 2.0
After-tax ................................................... 1.7 2.0 1.7
Allowance for funds used during construction as a percent of
consolidated net income available for common stock ............ 6.0% 4.0% 72.9%
Return on average common stock equity ........................... 6.2% 9.2% 5.9%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1992 1991*
---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Total assets -- end of year ..................................... $ 17,962,812 $ 17,093,474
- ------------------------------------------------------------------------------------------------
Electric plant - gross -- end of year ........................... $ 21,957,681 $ 20,865,047
Accumulated depreciation and amortization-- end of year ....... 3,790,626 3,417,856
Reserve for regulatory disallowances-- end of year ............ 1,308,460 1,308,460
Construction expenditures (including allowance for
funds used during construction) ............................. 1,107,555 1,195,680
- ------------------------------------------------------------------------------------------------
Capitalization -- end of year
Long-term debt ................................................ $ 7,280,301 $ 7,253,626
TU Electric obligated, mandatorily redeemable, preferred
securities of trusts ........................................ -- --
Preferred stock:
Not subject to mandatory redemption ......................... 909,564 1,007,728
Subject to mandatory redemption ............................. 418,748 425,758
Common stock equity ........................................... 6,198,208 5,741,437
------------ ------------
Total ................................................. $ 14,806,821 $ 14,428,549
============ ============
- ------------------------------------------------------------------------------------------------
Embedded interest cost on long-term debt -- end of year ......... 9.2% 9.7%
Embedded interest cost on TU Electric obligated, mandatorily
redeemable, preferred securities of trusts -- end of year ..... -- --
Embedded dividend cost on preferred stock -- end of year ........ 8.4% 8.5%
- ------------------------------------------------------------------------------------------------
Consolidated income (loss) before cumulative effect of a change
in accounting principle ....................................... $ 740,216 $ (289,173)
Cumulative effect of a change in accounting for unbilled
revenue (Net of taxes of $41,679,000) ......................... 80,907 --
------------ ------------
Consolidated net income (loss) .................................. $ 821,123 $ (289,173)
============ ============
Dividends declared on common stock .............................. $ 645,260 $ 650,940
- ------------------------------------------------------------------------------------------------
Ratio of earnings to fixed charges:
Pre-tax ..................................................... 2.5 0.3
After-tax ................................................... 2.1 0.6
Allowance for funds used during construction as a percent of
consolidated net income available for common stock ............ 43.3% --
Return on average common stock equity ........................... 11.8% (6.7)%
- ------------------------------------------------------------------------------------------------
</TABLE>
* Certain financial statistics for 1995 were affected by the recording of the
impairment of certain assets (see Note 13 to Consolidated Financial
Statements), and for the years 1993 and 1991, were affected by TU Electric
recording regulatory disallowances in rate orders issued by the Public
Utility Commission of Texas in Dockets 11735 and 9300, respectively (see Note
12 to Consolidated Financial Statements).
21
<PAGE> 24
Item 6. SELECTED FINANCIAL DATA (CONCLUDED)
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED OPERATING STATISTICS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
ELECTRIC ENERGY GENERATED AND
PURCHASED (MWh)
Generated -- net station output ........................... 83,876,565 81,320,922 79,105,495
Purchased and net interchange ............................. 10,683,722 11,663,148 12,431,763
----------- ----------- -----------
Total generated and purchased ........................... 94,560,287 92,984,070 91,537,258
Company use, losses and unaccounted for ................... 5,532,031 5,131,173 5,572,916
----------- ----------- -----------
Total electric energy sales ............................. 89,028,256 87,852,897 85,964,342
=========== =========== ===========
ELECTRIC ENERGY SALES (MWh)
Residential ............................................... 30,716,945 30,076,510 30,265,559
Commercial ................................................ 25,553,954 24,824,741 24,129,019
Industrial ................................................ 23,300,922 22,968,710 21,527,656
Government and municipal .................................. 5,615,843 5,507,265 5,363,570
----------- ----------- -----------
Total general business .................................. 85,187,664 83,377,226 81,285,804
Other electric utilities .................................. 3,840,592 4,475,671 4,678,538
----------- ----------- -----------
Total electric energy sales ............................. 89,028,256 87,852,897 85,964,342
=========== =========== ===========
OPERATING REVENUES (thousands)
Base rate:
Residential ............................................. $ 1,875,306 $ 1,832,735 $ 1,685,885
Commercial .............................................. 1,193,558 1,165,611 1,051,723
Industrial .............................................. 586,152 585,758 532,655
Government and municipal ................................ 279,802 276,883 241,484
----------- ----------- -----------
Total general business ............................... 3,934,818 3,860,987 3,511,747
Other electric utilities .................................. 133,362 163,021 157,341
----------- ----------- -----------
Total from base rate revenues ........................ 4,068,180 4,024,008 3,669,088
Fuel revenues (including over/under-recovered) ........... 1,421,861 1,521,030 1,690,061
Other operating revenues* ................................ 70,421 68,137 50,007
----------- ----------- -----------
Total operating revenues ................................ $ 5,560,462 $ 5,613,175 $ 5,409,156
=========== =========== ===========
ELECTRIC CUSTOMERS (end of year)
Residential ............................................... 2,061,273 2,019,025 1,986,946
Commercial ................................................ 225,183 219,604 215,621
Industrial ................................................ 21,253 21,445 21,716
Government and municipal .................................. 29,429 28,949 28,555
----------- ----------- -----------
Total general business .................................. 2,337,138 2,289,023 2,252,838
Other electric utilities .................................. 177 219 228
----------- ----------- -----------
Total electric customers ................................ 2,337,315 2,289,242 2,253,066
=========== =========== ===========
RESIDENTIAL STATISTICS (excludes master-metered
customers, kWh sales and revenues)
Average kWh per customer ................................ 14,336 14,328 14,459
Average revenue per kWh ................................. 8.18(cent) 8.24(cent) 7.59(cent)
- --------------------
Industrial classification includes service to Alcoa-Sandow:
Electric energy sales (MWh) ............................. 3,764,658 3,886,258 3,166,797
Operating revenues (thousands) .......................... $ 47,739 $ 54,699 $ 53,352
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1992 1991
---- ----
<S> <C> <C>
ELECTRIC ENERGY GENERATED AND
PURCHASED (MWh)
Generated -- net station output ........................... 74,652,339 76,326,601
Purchased and net interchange ............................. 11,417,251 11,027,061
----------- -----------
Total generated and purchased ........................... 86,069,590 87,353,662
Company use, losses and unaccounted for ................... 5,747,156 4,996,123
----------- -----------
Total electric energy sales ............................. 80,322,434 82,357,539
=========== ===========
ELECTRIC ENERGY SALES (MWh)
Residential ............................................... 27,266,411 28,505,885
Commercial ................................................ 22,959,464 23,012,114
Industrial ................................................ 21,108,894 21,482,750
Government and municipal .................................. 5,032,780 5,056,868
----------- -----------
Total general business .................................. 76,367,549 78,057,617
Other electric utilities .................................. 3,954,885 4,299,922
----------- -----------
Total electric energy sales ............................. 80,322,434 82,357,539
=========== ===========
OPERATING REVENUES (thousands)
Base rate:
Residential ............................................. $ 1,464,227 $ 1,505,386
Commercial .............................................. 963,175 957,190
Industrial .............................................. 513,358 521,480
Government and municipal ................................ 207,368 208,060
----------- -----------
Total general business ............................... 3,148,128 3,192,116
Other electric utilities .................................. 135,709 149,489
----------- -----------
Total from base rate revenues ........................ 3,283,837 3,341,605
Fuel revenues (including over/under-recovered) ........... 1,540,667 1,498,585
Other operating revenues* ................................ 82,191 51,322
----------- -----------
Total operating revenues ................................ $ 4,906,695 $ 4,891,522
=========== ===========
ELECTRIC CUSTOMERS (end of year)
Residential ............................................... 1,952,916 1,921,119
Commercial ................................................ 210,185 205,555
Industrial ................................................ 21,969 22,156
Government and municipal .................................. 28,204 27,719
----------- -----------
Total general business .................................. 2,213,274 2,176,549
Other electric utilities .................................. 243 247
----------- -----------
Total electric customers ................................ 2,213,517 2,176,796
=========== ===========
RESIDENTIAL STATISTICS (excludes master-metered
customers, kWh sales and revenues)
Average kWh per customer ................................ 13,329 14,099
Average revenue per kWh ................................. 7.41(cent) 7.26(cent)
- --------------------
Industrial classification includes service to Alcoa-Sandow:
Electric energy sales (MWh) ............................. 3,157,852 3,359,824
Operating revenues (thousands) .......................... $ 56,043 $ 55,987
</TABLE>
* In 1992, other operating revenues do not include $122,586,000 of unbilled
base rate revenues which were reclassified as a cumulative effect of a
change in accounting principle effective January 1, 1992.
22
<PAGE> 25
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
THE COMPANY AND TU ELECTRIC
The primary capital requirements of Texas Utilities Company and its
subsidiaries (System Companies) in 1995 and as estimated for 1996 through 1998
are as follows:
<TABLE>
<CAPTION>
1995 1996 1997 1998
---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
Cash construction expenditures (excluding
allowance for funds used during construction)... $ 421,000 $457,000 $ 445,000 $ 448,000
Nuclear fuel (excluding allowance for funds used
during construction) ........................... 49,000 55,000 47,000 60,000
Non-utility property ................................ 70,000 60,000 40,000 26,000
Maturities and redemptions of long-term debt,
sinking fund requirements and redemptions
of preferred stock ............................. 1,392,000 86,000 681,000 487,000
---------- -------- ---------- ----------
Total ...................................... $1,932,000 $658,000 $1,213,000 $1,021,000
========== ======== ========== ==========
</TABLE>
The primary capital requirements of Texas Utilities Electric Company and
its subsidiaries (TU Electric) in 1995 and as estimated for 1996 through 1998
are as follows:
<TABLE>
<CAPTION>
1995 1996 1997 1998
---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
Cash construction expenditures (excluding
allowance for funds used during construction)... $ 394,000 $399,000 $ 388,000 $ 389,000
Nuclear fuel (excluding allowance for funds used
during construction) ........................... 49,000 55,000 47,000 60,000
Maturities and redemptions of long-term debt,
sinking fund requirements and redemptions
of preferred stock ............................. 1,373,000 68,000 663,000 468,000
---------- -------- ---------- ----------
Total ...................................... $1,816,000 $522,000 $1,098,000 $ 917,000
========== ======== ========== ==========
</TABLE>
See Item 2. Properties -- Capital Expenditures and Note 14 to Consolidated
Financial Statements.
The System Companies have generated cash from operations sufficient to meet
operating needs, pay dividends on capital stock and finance capital
requirements. For 1995, all of the cash needed for construction expenditures was
generated from operations by the System Companies. Factors affecting the
continued ability of TU Electric to fund its capital requirements from
operations include responsive regulatory practices allowing recovery of capital
investment through adequate depreciation rates, recovery of the cost of fuel and
purchased power and the opportunity to earn competitive rates of return required
in the capital markets.
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 include the potential disposition
or alternative utilization of existing assets and the restructuring of strategic
business units. The Company and TU Electric are studying alternative uses for
their investment in certain assets, including TU Electric's partially completed
Twin Oak and Forest Grove lignite-fueled facilities and the New Mexico coal
reserves of Chaco Energy Company (Chaco), which, based upon management's current
expectations, might include sale of the reserves or facilities or construction
outside the traditional regulated business. In September 1995, the Company and
TU Electric determined that the partially completed Twin Oak and Forest Grove
lignite-fueled facilities are not necessary to satisfy TU Electric's capacity
requirements due to continuing changes in load growth patterns and availability
of alternative generation. Also, the Company determined that the Chaco coal
reserves would no longer be developed through traditional means due to
availability of ample alternative fuels at favorable prices. A variety of
options are being considered with respect to the Chaco coal reserves. The total
impairment of the Company's assets, including the partially completed Twin Oak
and Forest Grove lignite-fueled facilities and Chaco's coal reserves, as well as
several minor assets, aggregated $802 million after-tax (see Note 13 to
Consolidated Financial Statements).
23
<PAGE> 26
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES -- (CONTINUED)
Under the current regulatory environment, TU Electric and Southwestern
Electric Service Company (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 also 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. (See Note 1 to Consolidated Financial Statements.) 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 Public Utility Commission of Texas' (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 9, 1996
decision. The Supreme Court's ruling eliminates the potential normalization
violation that two Private Letter Rulings issued by the Internal Revenue Service
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 Dockets 9300 and 11735 rate decisions, future regulatory
actions or any changes in economic and securities market conditions, no changes
are expected in trends or commitments, other than those discussed in this Form
10-K, which might significantly alter its basic financial position or results of
operation. (See Note 12 to Consolidated Financial Statements.)
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 December 31, 1995, consisted of approximately 57% long-term
debt, 2% TU Electric obligated, mandatorily redeemable, preferred securities of
trusts, 5% preferred stock and 36% common stock equity.
The capitalization ratios of TU Electric at December 31, 1995 consisted of
approximately 51% long-term debt, 3% TU Electric obligated, mandatorily
redeemable, preferred securities of trusts, 5% preferred stock and 41% common
stock equity.
Proceeds from TU Electric financings in 1995 were used primarily for the
early redemption or reacquisition of debt and preferred stock. These financings
consisted of:
<TABLE>
<CAPTION>
PRINCIPAL CURRENT
DESCRIPTION AMOUNT INTEREST RATES MATURITY
----------- -------------- ----------------- ---------
<S> <C> <C> <C>
Term credit agreement ......................................................... $ 300,000,000 6.050% and 6.113% 1997
Pollution control revenue bonds (backed by first mortgage bonds) ............. 333,905,000 3.50% to 3.60% 2030
First mortgage bonds (designated medium-term notes) ........................... 201,150,000 6.25% to 6.58% Various
TU Electric obligated, mandatorily redeemable, preferred securities of trusts.. 381,476,000 8.00% to 9.00% 2030-2035
--------------
Total .................................................................... $1,216,531,000
==============
</TABLE>
24
<PAGE> 27
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES -- (CONTINUED)
Since December 31, 1994, the System Companies redeemed, reacquired or made
principal payments of $1,443,364,000 (including $1,424,803,000 for TU Electric)
on long-term debt and preferred stock. Early redemptions of long-term debt and
preferred stock may occur from time to time in amounts presently undetermined.
(See Notes 6 and 8 to Consolidated Financial Statements.)
The System Companies expect to sell 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 for offering pursuant to Rule 415 under the Securities
Act of 1933 and (ii) the possible future sale by TU Electric of up to 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
an additional $98,850,000 of First Mortgage Bonds designated as Medium-Term
Notes, Series D.
The Company and TU Electric have credit facility agreements (Agreements)
with a group of commercial banks. The Agreements have two facilities, for each
of which the Company pays a fee. Facility A provides for borrowings up to
$300,000,000 and terminates April 26, 1996. The Company and TU Electric intend
to negotiate an extension or replacement of this facility. Facility B provides
for borrowings up to $700,000,000 and terminates April 28, 2000. The Company's
borrowings under the Agreements are limited to $600,000,000. Borrowings under
the Agreements are used for working capital and other corporate purposes,
including commercial paper backup.
In November 1995, the Company entered into a Competitive Advance and
Revolving Credit Facility Agreement with a group of commercial banks. This
facility, for which the Company pays a fee, provides for borrowings, on a
standby basis, up to $200,000,000 and terminates April 26, 1996. Borrowings
under this facility are used for corporate purposes. In addition to the above,
the Company and Fuel Company have separate arrangements for uncommitted lines of
credit. For more information regarding short-term financings of the Company and
TU Electric, see Note 3 to Consolidated Financial Statements.
TU Electric's capital requirements have not been significantly affected by
the requirements of the federal Clean Air Act, as amended (Clean Air Act).
Although TU Electric is unable to fully determine the cost of compliance with
the Clean Air Act, it is not expected to have a significant impact on TU
Electric. Any additional required capital costs, as well as any increased
operating costs, associated with these requirements or compliance measures are
expected to be recoverable through rates, as similar costs have been recovered
in the past. Environmental expenditures for 1996 are estimated to be $16
million.
The National Energy Policy Act of 1992 (Energy Policy 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 PUC and
its regulatory practices and encourages increased competition in some aspects of
the electric utility industry in Texas. Although TU Electric and SESCO are
unable to predict the ultimate impact of the Energy Policy 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 in 1995. 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. (See Item 1. Business - Competition.)
25
<PAGE> 28
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES -- (CONCLUDED)
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.
RESULTS OF OPERATION
THE COMPANY AND TU ELECTRIC
For the year ended December 31, 1995, consolidated net income for the
Company (excluding the after-tax effect of the September 1995 asset impairment)
increased approximately 23% over the prior period. For the Company and TU
Electric, from which most of consolidated earnings is derived, the major factors
affecting earnings for the twelve-month period were continuing cost reduction
efforts and customer growth, partially offset by mild weather conditions.
In September 1995, the Company recorded an impairment of several
non-performing assets, including the partially completed Twin Oak and Forest
Grove lignite-fueled facilities of TU Electric, and Chaco's coal reserves in New
Mexico, as well as several minor assets. Such impairment, on an after-tax basis,
amounted to $802 million. (See Note 13 to Consolidated Financial Statements.)
TU ELECTRIC
Operating revenues decreased approximately 1% and increased approximately 4%
for the years ended December 31, 1995 and 1994, respectively. The following
table details the factors contributing to these changes:
<TABLE>
<CAPTION>
INCREASE (DECREASE)
--------------------------
FACTORS 1995 1994
------- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C>
Base rate revenue ................................. $ 31,635 $ 427,217
Fuel revenue ...................................... (91,425) (130,077)
Power cost recovery factor revenue ................ (7,744) (38,955)
Unbilled revenue and other ........................ 14,821 (54,166)
--------- ---------
Total ......................................... $ (52,713) $ 204,019
========= =========
</TABLE>
Energy sales (including unbilled sales) increased approximately 1% and 4% for
1995 and 1994, respectively. The increase in energy sales for 1995 was generally
a result of customer growth and increased usage, partially offset by mild
weather conditions. The increase in energy sales in 1994 was due primarily to an
increase in commercial and industrial usage, partially offset by milder than
normal weather. Fuel revenue decreased in 1995 and 1994 due primarily to a
reduction in gas prices and increased nuclear generation. The decrease in
unbilled revenue and other in 1994 resulted from milder than normal weather in
December 1994 and an increase in the number of billing days in 1994.
26
<PAGE> 29
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION (CONTINUED)
RESULTS OF OPERATION -- (CONCLUDED)
With respect to operating expenses, fuel and purchased power expense
decreased approximately 6% and approximately 8% for 1995 and 1994, respectively.
The decrease in 1995 was due to continued reduction in gas prices and purchased
power commitments and increased utilization of nuclear fuel. Fuel and purchased
power expense decreased in 1994 primarily due to a reduction in gas prices,
lignite requirements and purchase power commitments, and an increased
utilization of nuclear fuel. (See Item 1. Business -- Fuel Supply and Purchased
Power and Item 6. Selected Financial Data -- Consolidated Operating Statistics.)
Total operating expenses, excluding fuel and purchased power, decreased
approximately 1% and increased approximately 9% for 1995 and 1994, respectively.
Operation and maintenance expense decreased in 1995 due primarily to a decrease
in uncollectible accounts expense and employee benefit expenses. Operation and
depreciation expenses increased in 1994 primarily as a result of a full year's
operation of Comanche Peak Unit 2, and increases in uncollectible accounts
expense and demand-side management expenses. Taxes other than income decreased
in 1995 as a result of a reduction in TU Electric's ad valorem tax obligation
due primarily to a reduction in property valuations and increased in 1994 due
primarily to increased local gross receipts taxes, an increase in ad valorem
taxes charged to operation which were previously capitalized, and a refund of
franchise taxes in the prior period.
Allowance for funds used during construction (AFUDC) decreased approximately
92% in 1994. Such decrease was primarily due to the discontinuation of the
accrual of AFUDC on Comanche Peak Unit 2 when such unit achieved commercial
operation in August 1993.
Federal income taxes -- other income decreased in 1995 due to the effect of
recording the taxes associated with the asset impairment, and increased in 1994
due primarily to the effect of recording the taxes associated with the
regulatory disallowance in 1993. (See Note 9 to Consolidated Financial
Statements.)
Total interest charges, excluding AFUDC, decreased approximately 5% and 3%
for 1995 and 1994, 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. Interest on other long-term debt increased in 1995 due to
borrowings on the term credit agreement and decreased in the prior period due to
the continuing retirement of debt incurred on the purchases of the minority
ownership interests in Comanche Peak. Other interest expense in 1995 was
affected by decreased interest on bonded rates over the prior period, increased
average short-term borrowings, and increased amortization of debt issuance
expenses and redemption premiums. For 1994, other interest expense increased
over the prior period due primarily to interest on bond rates refunded, an
increase in short-term rates, and increased amortization of debt issuance
expenses and redemption premiums.
Preferred stock dividends decreased approximately 17% and 12% for 1995 and
1994, respectively, primarily due to the redemption of certain series.
POSSIBLE CHANGE IN ACCOUNTING STANDARDS
THE COMPANY AND TU ELECTRIC
The Financial Accounting Standards Board (FASB) is currently deliberating a
new accounting standard addressing the accounting for liabilities related to
closure and removal of long-lived assets, which would include nuclear
decommissioning (see Note 14 to Consolidated Financial Statements). Such new
standard is not expected to be effective before calendar year 1997. Based upon
FASB's exposure draft, which is subject to change, any new standard would likely
prescribe a methodology for measuring and recognizing liabilities related to
closure and removal of long-lived assets. Any liability required to be
recognized would have a corresponding asset recognized as an addition to plant
and depreciation of the long-lived asset would be revised prospectively. If such
new standard were adopted, the application of such statement would increase
total assets and liabilities for the Company and TU Electric. Such requirements
are not expected to have a material effect on the Company's and TU Electric's
financial position or results of operations.
27
<PAGE> 30
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
OPERATING REVENUES ..................................................... $ 5,638,688 $ 5,663,543 $ 5,434,512
----------- ----------- -----------
OPERATING EXPENSES
Fuel and purchased power ............................................ 1,640,990 1,729,091 1,858,054
Operation ........................................................... 819,633 872,272 812,555
Maintenance ......................................................... 290,011 304,941 350,004
Depreciation and amortization ....................................... 563,819 549,539 439,548
Taxes other than income ............................................. 536,608 559,144 465,307
----------- ----------- -----------
Total operating expenses ......................................... 3,851,061 4,014,987 3,925,468
----------- ----------- -----------
OPERATING INCOME ....................................................... 1,787,627 1,648,556 1,509,044
OTHER INCOME AND (DEDUCTIONS)-- NET .................................... 24,583 38,379 183,643
----------- ----------- -----------
TOTAL INCOME ........................................................... 1,812,210 1,686,935 1,692,687
----------- ----------- -----------
INTEREST AND OTHER CHARGES
Interest ............................................................ 706,182 726,876 752,803
Allowance for borrowed funds used during construction ............... (15,327) (11,261) (113,108)
Impairment of assets ................................................ 1,233,320 -- --
Regulatory disallowances ............................................ -- -- 359,556
TU Electric obligated, mandatorily redeemable, preferred securities
of trusts distributions .......................................... 1,801 -- --
Preferred stock dividends of subsidiary ............................. 84,914 101,883 115,232
----------- ----------- -----------
Total interest and other charges ................................. 2,010,890 817,498 1,114,483
----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAXES ...................................... (198,680) 869,437 578,204
INCOME TAXES ........................................................... (60,035) 326,638 209,544
----------- ----------- -----------
CONSOLIDATED NET INCOME (LOSS) ......................................... $ (138,645) $ 542,799 $ 368,660
=========== =========== ===========
Average shares of common stock outstanding (thousands) ................. 225,841 225,834 221,555
Earnings (loss) and dividends per share of common stock:
Earnings (loss) (on average shares outstanding) ..................... $ (0.61) $ 2.40 $ 1.66
Dividends declared per share of common stock ........................ $ 2.81 $ 3.08 $ 3.08
</TABLE>
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------
1995 1994 1993
---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR ........................................... $ 1,691,250 $ 1,842,413 $ 2,171,018
ADD -- Consolidated net income (loss) .................................. (138,645) 542,799 368,660
LESOP dividend deduction tax benefit ............................ 6,452 6,733 6,975
DEDUCT -- Dividends declared on common stock (for amounts per
share, see Statements of Consolidated Income) .............. 634,613 695,590 682,438
Preferred stock redemption costs -- net ...................... -- 5,105 21,802
----------- ----------- -----------
BALANCE AT END OF YEAR ................................................. $ 924,444 $ 1,691,250 $ 1,842,413
=========== =========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
28
<PAGE> 31
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income (loss) ........................................ $ (138,645) $ 542,799 $ 368,660
Adjustments to reconcile consolidated net income (loss) to cash
provided by operating activities:
Depreciation and amortization (including amounts charged to fuel).... 725,646 710,196 543,441
Deferred federal income taxes -- net ................................ (204,550) 261,452 82,290
Federal investment tax credits -- net ............................... (22,774) (26,427) (22,383)
Allowance for equity funds used during construction ................. (6,680) (10,774) (150,125)
Impairment of assets ................................................ 1,233,320 -- --
Regulatory disallowances ............................................ -- -- 359,556
Changes in assets and liabilities:
Receivables ....................................................... (22,898) 10,408 (90,561)
Inventories ....................................................... 18,701 2,673 11,112
Accounts payable .................................................. 48,079 (43,684) 2,797
Interest and taxes accrued ........................................ (94,158) (77,795) 14,449
Other working capital ............................................. (25,932) (131,506) 126,919
Over/(under) - recovered fuel revenue -- net of deferred taxes .... 94,717 113,693 (83,501)
Other -- net ...................................................... 5,902 68,549 29,751
----------- ----------- -----------
Cash provided by operating activities ........................... 1,610,728 1,419,584 1,192,405
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of securities:
First mortgage bonds ................................................ 535,055 378,340 2,448,465
Other long-term debt ................................................ 300,000 -- 325,000
TU Electric obligated, mandatorily redeemable, preferred securities
of trusts ........................................................ 381,476 -- --
Preferred stock ..................................................... -- 123 731,342
Common stock ........................................................ -- 62,102 240,971
Retirement of long-term debt and preferred stock ...................... (1,391,686) (1,176,023) (2,944,339)
Change in notes payable ............................................... 615,929 363,886 (253,100)
Common stock dividends paid ........................................... (695,656) (694,355) (674,869)
Debt premium, discount, financing and reacquisition expenses .......... (123,668) (21,799) (141,545)
----------- ----------- -----------
Cash used in financing activities ............................... (378,550) (1,087,726) (268,075)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures ............................................. (434,338) (444,245) (871,450)
Allowance for equity funds used during construction (excluding
amount for nuclear fuel) ............................................ 3,952 4,802 138,950
Change in construction receivables/payables -- net .................... 2,140 3,897 (32,847)
Non-utility property -- net ........................................... (69,949) (14,967) (10,171)
Nuclear fuel (excluding allowance for equity funds used
during construction) ................................................ (55,013) (62,655) (16,889)
Acquisition of Eastern Energy ......................................... (616,865) -- --
Other investments ..................................................... (41,226) (23,848) (17,213)
----------- ----------- -----------
Cash used in investing activities ............................... (1,211,299) (537,016) (809,620)
----------- ----------- -----------
(DECREASE) IN CASH DUE TO EXCHANGE RATE CHANGES ......................... (3,452) -- --
----------- ----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS ................................. 17,427 (205,158) 114,710
CASH AND CASH EQUIVALENTS -- BEGINNING BALANCE .......................... 7,426 212,584 97,874
----------- ----------- -----------
CASH AND CASH EQUIVALENTS -- ENDING BALANCE ............................. $ 24,853 $ 7,426 $ 212,584
=========== =========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
29
<PAGE> 32
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
---- ----
THOUSANDS OF DOLLARS
<S> <C> <C>
UTILITY PLANT
In service:
Production ......................................................... $ 16,661,053 $ 16,516,326
Transmission ....................................................... 1,592,610 1,573,634
Distribution ....................................................... 5,333,396 4,048,867
General ............................................................ 466,474 456,212
------------ ------------
Total ............................................................ 24,053,533 22,595,039
Less accumulated depreciation ...................................... 5,562,190 5,023,003
------------ ------------
Utility plant in service less accumulated depreciation ........... 18,491,343 17,572,036
Construction work in progress ........................................ 271,033 1,060,731
Nuclear fuel (net of accumulated amortization: 1995 -- $295,390,000;
1994 -- $205,420,000) ............................................ 266,735 298,964
Held for future use .................................................. 25,096 46,197
------------ ------------
Utility plant less accumulated depreciation and amortization ..... 19,054,207 18,977,928
Less reserve for regulatory disallowances ............................ 1,308,460 1,308,460
------------ ------------
Net utility plant ................................................ 17,745,747 17,669,468
------------ ------------
INVESTMENTS
Non-utility property ................................................. 422,421 569,337
Other investments .................................................... 617,583 122,906
------------ ------------
Total investments ................................................ 1,040,004 692,243
------------ ------------
CURRENT ASSETS
Cash in banks ........................................................ 24,853 7,426
Special deposits ..................................................... 19,455 1,002
Accounts receivable:
Customers .......................................................... 275,275 201,687
Other .............................................................. 51,735 38,712
Allowance for uncollectible accounts ............................... (5,965) (5,095)
Inventories -- at average cost:
Materials and supplies ............................................. 200,145 194,271
Fuel stock ......................................................... 128,028 145,662
Prepaid taxes ........................................................ 18,696 21,629
Other prepayments .................................................... 36,832 41,871
Deferred federal income taxes ........................................ 84,410 37,113
Other current assets ................................................. 14,924 11,216
------------ ------------
Total current assets ............................................. 848,388 695,494
------------ ------------
DEFERRED DEBITS
Unamortized regulatory assets ........................................ 1,828,625 1,769,441
Under-recovered fuel revenue ......................................... -- 29,860
Other deferred debits ................................................ 73,087 36,902
------------ ------------
Total deferred debits ............................................ 1,901,712 1,836,203
------------ ------------
Total .................................................... $ 21,535,851 $ 20,893,408
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
30
<PAGE> 33
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
---- ----
THOUSANDS OF DOLLARS
<S> <C> <C>
CAPITALIZATION
Common stock without par value -- net:
Authorized shares -- 500,000,000
Outstanding shares -- 225,841,037 .......................................... $ 4,806,912 $ 4,798,797
Retained earnings ............................................................. 924,444 1,691,250
Cumulative currency translation adjustment .................................... 397 --
----------- -----------
Total common stock equity ................................................. 5,731,753 6,490,047
Preferred stock:
Not subject to mandatory redemption ......................................... 489,695 870,190
Subject to mandatory redemption ............................................. 263,196 387,482
TU Electric obligated, mandatorily redeemable, preferred securities of trusts.. 381,476 --
Long-term debt, less amounts due currently .................................... 9,174,575 7,888,413
----------- -----------
Total capitalization ...................................................... 16,040,695 15,636,132
----------- -----------
CURRENT LIABILITIES
Notes payable:
Commercial paper ............................................................ 321,990 363,886
Banks ....................................................................... 275,000 --
Long-term debt due currently .................................................. 61,321 74,610
Accounts payable .............................................................. 300,726 219,661
Dividends declared ............................................................ 125,929 197,564
Customers' deposits ........................................................... 76,963 56,391
Taxes accrued ................................................................. 167,951 243,753
Interest accrued .............................................................. 165,277 183,545
Over-recovered fuel revenue ................................................... 115,858 --
Other current liabilities ..................................................... 101,566 95,329
--------- ---------
Total current liabilities ................................................. 1,712,581 1,434,739
--------- ---------
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES
Accumulated deferred federal income taxes ..................................... 2,669,808 2,852,462
Unamortized federal investment tax credits .................................... 622,786 679,104
Other deferred credits and noncurrent liabilities ............................. 489,981 290,971
----------- -----------
Total deferred credits and other noncurrent liabilities ................... 3,782,575 3,822,537
COMMITMENTS AND CONTINGENCIES (Note 14)
----------- -----------
Total ............................................................. $21,535,851 $20,893,408
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
31
<PAGE> 34
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
OPERATING REVENUES ........................................... $ 5,560,462 $ 5,613,175 $ 5,409,156
----------- ----------- -----------
OPERATING EXPENSES
Fuel and purchased power .................................. 1,697,091 1,798,493 1,946,049
Operation ................................................. 767,750 813,057 756,596
Maintenance ............................................... 281,284 295,758 341,840
Depreciation and amortization ............................. 549,611 540,535 427,992
Federal income taxes ...................................... 382,315 338,465 343,485
Taxes other than income ................................... 512,045 534,430 445,220
----------- ----------- -----------
Total operating expenses ............................... 4,190,096 4,320,738 4,261,182
----------- ----------- -----------
OPERATING INCOME ............................................. 1,370,366 1,292,437 1,147,974
----------- ----------- -----------
OTHER INCOME (LOSS)
Allowance for equity funds used during construction ....... 6,658 10,743 150,115
Impairment of assets ...................................... (486,350) -- --
Regulatory disallowances .................................. -- -- (359,556)
Other income and deductions -- net ........................ 8,625 10,160 9,114
Federal income taxes ...................................... 169,362 (4,222) 101,745
----------- ----------- -----------
Total other income (loss) .............................. (301,705) 16,681 (98,582)
----------- ----------- -----------
TOTAL INCOME ................................................. 1,068,661 1,309,118 1,049,392
----------- ----------- -----------
INTEREST CHARGES
Interest on mortgage bonds ................................ 526,977 567,363 610,999
Interest on other long-term debt .......................... 44,071 32,183 45,787
Other interest ............................................ 58,500 62,631 29,186
Allowance for borrowed funds used during construction...... (15,319) (11,251) (113,106)
----------- ----------- -----------
Total interest charges ................................. 614,229 650,926 572,866
----------- ----------- -----------
CONSOLIDATED NET INCOME ...................................... 454,432 658,192 476,526
TU ELECTRIC OBLIGATED, MANDATORILY REDEEMABLE,
PREFERRED SECURITIES OF TRUSTS DISTRIBUTIONS .............. 1,801 -- --
PEFERRED STOCK DIVIDENDS ..................................... 84,914 101,883 115,232
----------- ----------- -----------
CONSOLIDATED NET INCOME AVAILABLE FOR
COMMON STOCK ............................................... $ 367,717 $ 556,309 $ 361,294
=========== =========== ===========
</TABLE>
STATEMENTS OF CONSOLIDATED RETAINED EARNINGS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
BALANCE AT BEGINNING OF YEAR.................................. $ 948,136 $ 1,112,692 $ 1,480,582
ADD -- Consolidated net income .............................. 454,432 658,192 476,526
Transfer from common stock............................ 433,820 -- --
DEDUCT -- TU Electric obligated, mandatorily redeemable,
preferred securities of trusts distributions.... 1,801 -- --
Preferred stock dividends........................... 84,914 101,883 115,232
Common stock dividends (per share: 1995 -$4.35;
1994 - $4.60; 1993 - $4.68)....................... 682,080 715,760 707,382
Preferred stock redemption costs -- net............. -- 5,105 21,802
----------- ----------- -----------
BALANCE AT END OF YEAR........................................ $ 1,067,593 $ 948,136 $ 1,112,692
=========== =========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
32
<PAGE> 35
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Consolidated net income ................................................ $ 454,432 $ 658,192 $ 476,526
Adjustments to reconcile consolidated net income to cash
provided by operating activities:
Depreciation and amortization ........................................ 685,693 675,351 512,195
Deferred federal income taxes -- net ................................. 83,621 280,971 118,368
Federal investment tax credits -- net ................................ (21,201) (23,698) (19,698)
Allowance for equity funds used during construction .................. (6,658) (10,743) (150,115)
Impairment of assets ................................................. 427,478 -- --
Regulatory disallowances ............................................. -- -- 359,556
Changes in assets and liabilities:
Receivables ........................................................ (24,807) 10,827 (88,104)
Inventories ........................................................ 612 5,777 10,557
Accounts payable ................................................... 1,842 (40,009) (5,763)
Interest and taxes accrued ......................................... (110,455) (60,637) 16,471
Other working capital .............................................. 4,917 (140,210) 123,918
Over/(under) - recovered fuel revenue -- net of deferred taxes ..... 94,717 113,693 (83,501)
Other -- net ....................................................... (2,580) 54,877 10,025
----------- ----------- -----------
Cash provided by operating activities ............................ 1,587,611 1,524,391 1,280,435
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of securities:
First mortgage bonds ................................................. 535,055 378,340 2,448,465
Other long-term debt ................................................. 300,000 -- --
TU Electric obligated, mandatorily redeemable, preferred
securities of trusts ................................................. 381,476 -- --
Preferred stock ...................................................... -- 123 731,342
Common stock ......................................................... -- 249,600 198,900
Retirement of long-term debt and preferred stock ....................... (1,373,113) (1,083,306) (2,702,847)
Change in notes receivable - affiliates ................................ 26,238 (28,594) --
Change in notes payable - parent ....................................... -- (88,434) 36,684
Change in notes payable - other ........................................ (41,896) 363,886 (250,000)
TU Electric obligated, mandatorily redeemable, preferred securities of
trusts distributions paid ............................................ (1,801) -- --
Preferred stock dividends paid ......................................... (95,304) (105,572) (114,933)
Common stock dividends paid ............................................ (682,080) (715,760) (707,382)
Debt premium, discount, financing and reacquisition expenses ........... (123,393) (21,931) (132,366)
----------- ----------- -----------
Cash used in financing activities ................................ (1,074,818) (1,051,648) (492,137)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Construction expenditures .............................................. (407,305) (415,290) (841,181)
Allowance for equity funds used during construction (excluding
amount for nuclear fuel) ............................................. 3,929 4,771 138,941
Change in construction receivables/payables -- net ..................... (1,305) 1,343 (33,976)
Non-utility property -- net ............................................ 21 (4) (6)
Nuclear fuel (excluding allowance for equity funds used
during construction) ................................................. (55,013) (62,655) (16,889)
Other investments ...................................................... (37,186) (22,138) (12,944)
----------- ----------- -----------
Cash used in investing activities ................................ (496,859) (493,973) (766,055)
----------- ----------- -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS .................................. 15,934 (21,230) 22,243
CASH AND CASH EQUIVALENTS -- BEGINNING BALANCE ........................... 6,699 27,929 5,686
----------- ----------- -----------
CASH AND CASH EQUIVALENTS -- ENDING BALANCE .............................. $ 22,633 $ 6,699 $ 27,929
=========== =========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
33
<PAGE> 36
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1995 1994
---- ----
THOUSANDS OF DOLLARS
<S> <C> <C>
ELECTRIC PLANT
In service:
Production .......................................................... $ 15,699,488 $ 15,553,422
Transmission ........................................................ 1,586,547 1,567,617
Distribution ........................................................ 4,229,794 3,997,061
General ............................................................. 407,897 425,973
------------ ------------
Total ............................................................. 21,923,726 21,544,073
Less accumulated depreciation ....................................... 5,075,428 4,560,054
------------ ------------
Electric plant in service less accumulated depreciation ........... 16,848,298 16,984,019
Construction work in progress ........................................ 236,913 971,429
Nuclear fuel (net of accumulated amortization: 1995 -- $295,390,000;
1994 -- $205,420,000) ............................................... 266,735 298,964
Held for future use .................................................. 25,096 43,550
------------ ------------
Electric plant less accumulated depreciation and amortization ..... 17,377,042 18,297,962
Less reserve for regulatory disallowances ............................ 1,308,460 1,308,460
------------ ------------
Net electric plant ................................................ 16,068,582 16,989,502
------------ ------------
INVESTMENTS
Non-utility property ................................................. 332,234 4,383
Other investments .................................................... 103,888 66,702
------------ ------------
Total investments ................................................. 436,122 71,085
------------ ------------
CURRENT ASSETS
Cash in banks ........................................................ 22,633 6,699
Special deposits ..................................................... 527 527
Notes receivable -- affiliates ....................................... 2,356 28,594
Accounts receivable:
Customers ........................................................... 212,165 196,507
Other ............................................................... 34,906 26,869
Allowance for uncollectible accounts ................................ (3,914) (5,026)
Inventories -- at average cost:
Materials and supplies .............................................. 179,001 178,977
Fuel stock .......................................................... 82,889 83,525
Prepaid taxes ........................................................ 18,664 21,614
Deferred federal income taxes ........................................ 79,629 37,202
Other current assets ................................................. 14,016 16,379
------------ ------------
Total current assets .............................................. 642,872 591,867
------------ ------------
DEFERRED DEBITS
Unamortized regulatory assets ........................................ 1,806,684 1,741,818
Under-recovered fuel revenue ......................................... -- 29,860
Other deferred debits ................................................ 49,114 22,866
------------ ------------
Total deferred debits ............................................. 1,855,798 1,794,544
------------ ------------
Total ......................................................... $ 19,003,374 $ 19,446,998
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
34
<PAGE> 37
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------
1995 1994
---- ----
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 $ 5,166,125
Retained earnings ............................................................. 1,067,593 948,136
----------- -----------
Total common stock equity .............................................. 5,799,898 6,114,261
Preferred stock:
Not subject to mandatory redemption ......................................... 489,695 870,190
Subject to mandatory redemption ............................................. 263,196 387,482
TU Electric obligated, mandatorily redeemable, preferred securities of trusts.. 381,476 --
Long-term debt, less amounts due currently .................................... 7,212,070 7,220,641
----------- -----------
Total capitalization ................................................... 14,146,335 14,592,574
----------- -----------
CURRENT LIABILITIES
Notes payable -- commercial paper ............................................. 321,990 363,886
Long-term debt due currently .................................................. 43,458 56,037
Accounts payable:
Affiliates .................................................................. 101,722 97,443
Other ....................................................................... 109,402 113,144
Dividends declared ............................................................ 13,210 23,600
Customers' deposits ........................................................... 63,564 55,726
Taxes accrued ................................................................. 142,364 234,840
Interest accrued .............................................................. 141,815 159,794
Over-recovered fuel revenue ................................................... 115,858 --
Other current liabilities ..................................................... 63,716 71,950
----------- -----------
Total current liabilities .............................................. 1,117,099 1,176,420
----------- -----------
DEFERRED CREDITS AND OTHER NONCURRENT LIABILITIES
Accumulated deferred federal income taxes ..................................... 2,869,049 2,761,772
Unamortized federal investment tax credits .................................... 609,466 664,209
Other deferred credits and noncurrent liabilities ............................. 261,425 252,023
----------- -----------
Total deferred credits and other noncurrent liabilities ................ 3,739,940 3,678,004
COMMITMENTS AND CONTINGENCIES (Note 14)
----------- -----------
Total ................................................................ $19,003,374 $19,446,998
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
35
<PAGE> 38
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY
General -- Texas Utilities Company (Company) is a holding company which
owns all of the outstanding common stock of Texas Utilities Electric Company and
its subsidiaries (TU Electric), Southwestern Electric Service Company (SESCO),
Texas Utilities Australia Pty. Ltd. (TU Australia) and seven other wholly-owned
subsidiaries which perform specialized functions within the Texas Utilities
Company system. TU Electric, the largest subsidiary of the Company, representing
88% of the total assets, is engaged in the generation, purchase, transmission,
distribution and sale of electric energy wholly within Texas.
Consolidation -- The consolidated financial statements include the Company
and all of its subsidiaries (System Companies). All significant intercompany
items and transactions have been eliminated in consolidation. Certain financial
statement items have been reclassified to conform to the current year
presentation.
In March 1995, Texas Utilities Communications Inc. (TU Communications), a
new wholly-owned subsidiary of the Company, was incorporated under the laws of
the State of Delaware. TU Communications was organized to provide access to
advanced telecommunications technology, primarily for the System Companies'
expected expansion of the energy services business.
Business Acquisition -- In December 1995, the Company's newly formed
subsidiary, TU Australia, acquired the common stock of Eastern Energy Limited
(Eastern Energy), a major Australian electricity distribution company. Eastern
Energy is engaged in the purchase, distribution and sale of electric energy to
approximately 475,000 customers in a service area in Australia extending from
the outer eastern suburbs of the Melbourne metropolitan area to the eastern
coastal areas of Victoria and the New South Wales border to the north. Eastern
Energy generates no electric energy. The acquisition by TU Australia was
accounted for as a purchase business combination. Accordingly, a portion of the
purchase price has been tentatively allocated to the assets acquired and
liabilities assumed based on their estimated fair values. The excess of the
purchase price over the estimated fair values of the assets acquired is being
amortized over 40 years. The operations of Eastern Energy after December 1,
1995, the date of acquisition, have been reflected in the consolidated
financial statements. The acquisition of Eastern Energy did not have a material
effect on the Company's 1995 results of operation or financial position.
Income Taxes on Undistributed Earnings of Foreign Subsidiary -- The Company
intends to invest the undistributed earnings of its foreign subsidiary back into
the foreign subsidiary's business. Accordingly, no provision has been made for
taxes which would be payable if such earnings were repatriated to the United
States.
Other Investments -- The difference of $348,517,000 between the amount at
which the investments in subsidiaries is carried by the Company and the
underlying book equity of such subsidiaries at the respective dates of
acquisition is included in other investments.
Foreign Currency Translation -- The assets and liabilities of TU
Australia's operations denominated in the Australian dollar are translated at
rates in effect at year end. Revenues and expenses have been translated at
average rates for the applicable periods. Local currencies are considered to be
the functional currency, and adjustments resulting from such translation are
included in the cumulative currency translation adjustment, a separate component
of common stock equity.
TU ELECTRIC
System of Accounts -- The accounting records of TU Electric are maintained
in accordance with the Federal Energy Regulatory Commission's Uniform System of
Accounts as adopted by the Public Utility Commission of Texas (PUC).
36
<PAGE> 39
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Consolidation -- The consolidated financial statements of TU Electric
include all of its business trusts. All significant intercompany items and
transactions have been eliminated in consolidation. Certain financial statement
items have been reclassified to conform to the current year presentation.
In September and October 1995, TU Electric established three financing
subsidiaries, TU Electric Capital I, TU Electric Capital II, and TU Electric
Capital III, in the form of Delaware statutory business trusts, for the purpose
of issuing securities and holding Junior Subordinated Debentures issued by TU
Electric. (See Note 7.)
Amortization of Nuclear Fuel and Refueling Outage Costs -- The amortization
of nuclear fuel in the reactors (net of regulatory disallowances) is calculated
on the units of production method and, subsequent to commercial operation, is
included in nuclear fuel expense. TU Electric accrues a provision for costs
anticipated to be incurred during the next scheduled Comanche Peak refueling
outage.
THE COMPANY AND TU ELECTRIC
Use of Estimates -- The preparation of TU Company's and TU Electric's
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. In the event
estimates and/or assumptions prove to be different from actual amounts,
appropriate adjustments will be made in subsequent periods.
Utility Plant -- Utility plant is stated at original cost. The cost of
property additions to utility plant includes labor and materials, applicable
overhead and payroll-related costs and an allowance for funds used during
construction.
Allowance For Funds Used During Construction -- Allowance for funds used
during construction (AFUDC) is a cost accounting procedure whereby amounts based
upon interest charges on borrowed funds and a return on equity capital used to
finance construction are added to utility plant. The accrual of AFUDC is in
accordance with generally accepted accounting principles for the industry, but
does not represent current cash income.
TU Electric is capitalizing AFUDC, compounded semi-annually, on
expenditures for ongoing construction work in progress (CWIP) and nuclear fuel
in process not otherwise allowed in rate base by regulatory authorities. For
1995, 1994 and 1993, TU Electric used gross rates of 7.7%, 8.6% and 10.4%,
respectively. Rates were determined on the basis of, but are less than, the cost
of capital used to finance the construction program.
Depreciation of Utility Plant -- Depreciation is generally based upon an
amortization of the original cost of depreciable properties (net of regulatory
disallowances) on a straight-line basis over the estimated service lives of the
properties. Depreciation as a percent of average depreciable property for the
Company and System Companies approximated 2.6%, 2.6% and 2.5% for 1995, 1994 and
1993, respectively. For TU Electric, depreciation as a percent of average
depreciable property approximated 2.6%, 2.6% and 2.4% for 1995, 1994 and 1993,
respectively. Depreciation also includes an amount for TU Electric's Comanche
Peak nuclear generating station (Comanche Peak) decommissioning costs which is
being accrued over the lives of the units and deposited to external trust funds.
(See Note 14.)
Revenues -- Revenues include billings under approved rates (including a
fixed fuel factor) applied to meter readings each month on a cycle basis and an
accrual of base rate revenue for energy provided after cycle billing but not
billed through the end of each month. Revenues also include an amount for under-
or over-recovery of fuel revenue representing the difference between actual fuel
cost and billings under the approved fixed fuel factor and a provision that
generally allows recovery through a Power Cost Recovery Factor, on a monthly
basis, of the capacity portion of purchased power cost and wheeling cost from
qualifying facilities not included in base rates. The fuel portion of purchased
power cost is included in the fixed fuel factor. A utility's fuel factor can be
revised
37
<PAGE> 40
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
upward or downward every six months, according to a specified schedule. A
utility is required to petition to make either surcharges or refunds to
ratepayers, together with interest based on a twelve month average of prime
commercial rates, for any material cumulative under- or over-recovery of fuel
costs. If the cumulative difference of the under- or over-recovery, plus
interest, is in excess of 4% of the annual estimated fuel costs most recently
approved by the PUC, it will be deemed to be material. A procedure exists for an
expedited change in fuel factors in the event of an emergency. Final
reconciliation of fuel costs must be made either in a reconciliation proceeding,
which may cover no more than three years and no less than one year, or in a
general rate case. In December 1995, TU Electric filed for a fuel reconciliation
proceeding for the reconciliation period of July 1992 through June 1995. (See
Note 12.)
Federal Income Taxes -- The Company and System Companies, excluding TU
Australia, file a consolidated federal income tax return and federal income
taxes are allocated to System Companies based upon their taxable income or loss.
Investment tax credits are normally amortized to income over the estimated
service lives of the properties. Deferred federal income taxes are currently
provided for temporary differences between the book and tax basis of assets and
liabilities (including the provision for regulatory disallowances). In January
1993, the Company and TU Electric adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" (SFAS 109), which among other
things, requires the liability method of recognition for all temporary
differences, requires that deferred tax liabilities and assets be adjusted for
an enacted change in tax laws or rates and prohibits net-of-tax accounting and
reporting. Certain provisions of SFAS 109 provide that regulated enterprises are
permitted to recognize such adjustments as regulatory assets or liabilities if
it is probable that such amounts will be recovered from or returned to customers
in future rates. Accordingly, at December 31, 1995, the consolidated balance
sheets include a regulatory asset of approximately $1.2 billion net of an
approximate $0.6 billion regulatory liability.
Consolidated Cash Flows -- For purposes of reporting cash flows, temporary
cash investments purchased with a remaining maturity of three months or less are
considered to be cash equivalents.
The supplemental schedule below details the Company's cash payments and
noncash investing and financing activities:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1994 1993
---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
CASH PAYMENTS
Interest (net of amounts capitalized)................................ $ 677,415 $678,682 $637,186
Income taxes......................................................... 208,326 220,316 74,756
NON-CASH INVESTING AND FINANCING ACTIVITIES
Acquisition of Eastern Energy - 1995
and SESCO - 1993:
Book value of assets acquired..................................... $1,329,158 $ -- $ 69,521
Goodwill acquired................................................. 302,497 -- 32,059
Less: Liabilities incurred........................................ 8,503 -- --
Liabilities assumed......................................... 1,006,848 -- 39,991
Stock issued................................................ -- -- 59,976
---------- -------- --------
Cash paid...................................................... 616,304 -- 1,613
Less: Cash acquired............................................... 7,943 -- 376
Currency translation adjustment................................... 53 -- --
---------- -------- --------
Net cash....................................................... $ 608,414 $ -- $ 1,237
========== ======== ========
</TABLE>
38
<PAGE> 41
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. SIGNIFICANT ACCOUNTING POLICIES -- (CONCLUDED)
The supplemental schedule below details TU Electric's cash payments:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
CASH PAYMENTS
Interest (net of amounts capitalized)............................... $602,524 $616,254 $572,208
Income taxes........................................................ 213,690 198,267 76,933
</TABLE>
Regulatory Assets and Liabilities -- 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). This statement applies to utilities which have
cost-based rates established by a regulator and charged to and collected from
customers. In accordance with this statement, these companies may defer the
recognition of certain costs (regulatory assets) and certain obligations
(regulatory liabilities) that, as a result of the ratemaking process, have
probable corresponding increases or decreases in future revenues. Future
significant changes in regulation or competition could affect these companies'
ability to meet the criteria for continued application of SFAS 71, and may
affect these companies' ability to recover these regulatory assets from, or
refund these regulatory liabilities to customers. These regulatory assets and
liabilities, which are being amortized over various periods (5 to 40 years), are
currently included in rates, or are expected to be included in future rates. In
the event all or a portion of these companies' operations fail to meet the
criteria for application of SFAS 71, these companies' would be required to
write-off all or a portion of their regulatory assets and liabilities.
Significant net regulatory assets are as follows:
<TABLE>
<CAPTION>
THE COMPANY TU ELECTRIC
DECEMBER 31, DECEMBER 31,
------------ ------------
ITEM 1995 1994 1995 1994
---- ---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
Securities reacquisition costs.......................... $ 387,493 $ 284,563 $ 385,287 $ 281,023
Cancelled lignite unit costs............................ 15,266 18,049 15,266 18,049
Rate case costs......................................... 62,211 64,862 62,211 64,862
Litigation and settlement costs......................... 72,685 72,685 72,685 72,685
Voluntary retirement/severance program.................. 156,339 184,340 132,641 156,397
Recoverable deferred federal income taxes - net (Note 9) 1,192,959 1,201,688 1,199,552 1,208,833
Other regulatory assets................................. 14,357 15,939 11,727 12,654
---------- ---------- ---------- ----------
Unamortized regulatory assets ...................... 1,901,310 1,842,126 1,879,369 1,814,503
Less-- Reserve for regulatory disallowances............ 72,685 72,685 72,685 72,685
Unamortized federal investment tax credits....... 622,786 679,104 609,466 664,209
---------- ---------- ---------- ----------
Unamortized regulatory assets-- net........... $1,205,839 $1,090,337 $1,197,218 $1,077,609
========== ========== ========== ==========
</TABLE>
Should significant changes in regulation or competition occur, TU Electric
and SESCO would also be required to assess the recoverability of other assets,
including plant, and, if impaired, write down the assets to reflect their fair
market value.
2. AFFILIATES
TU ELECTRIC
The Company provides common stock capital and partial requirements for
short-term financing to TU Electric. The Company has three other subsidiaries
which perform specialized services for the System Companies, including TU
Electric: Texas Utilities Services Inc. which provides financial, accounting,
information technology, customer services, procurement, personnel, shareholder
services and other administrative services at cost; Texas Utilities
39
<PAGE> 42
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
2. AFFILIATES -- (CONCLUDED)
Fuel Company (Fuel Company) which owns a natural gas pipeline system, acquires,
stores and delivers fuel gas and provides other fuel services at cost for the
generation of electric energy by TU Electric; and Texas Utilities Mining Company
(Mining Company) which owns, leases and operates fuel production facilities for
the surface mining and recovery of lignite at cost for use at TU Electric's
generating stations. TU Electric provided services such as energy sales,
wheeling and scheduling to SESCO which is engaged in the purchase, transmission,
distribution and sale of electric energy in ten counties in the eastern and
central parts of Texas with a population estimated at 125,000. SESCO generates
no electric energy.
TU Electric has entered into agreements with Fuel Company for the
procurement of certain fuels and related services and with Mining Company for
the procurement and production of lignite. Payments are at cost for the services
received and are required by the agreements to be "at least equivalent in the
aggregate to the annual charge to income on the books" of Fuel Company and of
Mining Company. TU Electric is, in effect, obligated for the principal,
$410,714,000 at December 31, 1995, and interest on long-term notes of Mining
Company through payments described above. Such notes mature at various dates
through 2005 and have interest rates ranging from 6.50% to 9.42%. At December
31, 1995, TU Electric had extended $2,356,000 of operating funds to the Fuel
Company recorded as a note receivable on the balance sheet.
The schedule below details TU Electric's billings to and from affiliates
for services rendered and interest on short-term financings:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
Billings from:
The Company................................................... $ 123 $ 1,074 $ 1,122
TU Services................................................... 182,334 184,537 162,735
Fuel Company.................................................. 763,346 850,825 901,761
Mining Company................................................ 327,856 329,108 374,464
Billings to:
SESCO......................................................... $ 20,657 $ 21,869 $38,286
Fuel Company.................................................. 5,669 3,205 --
</TABLE>
3. SHORT-TERM FINANCING
THE COMPANY
The schedule below details the Company's amounts outstanding to banks for
borrowings at December 31, 1995:
<TABLE>
<CAPTION>
THOUSANDS OF DOLLARS
<S> <C>
Credit facility agreements..................................................... $320,000
Revolving credit facility...................................................... 200,000
Uncommitted bank lines:
The Company................................................................ 90,000
Fuel Company............................................................... 85,000
--------
Total................................................................... $695,000
========
</TABLE>
At December 31, 1995, the Company and TU Electric had joint lines of credit
aggregating $1,000,000,000 under credit facility agreements (Agreements) with a
group of commercial banks. The Agreements have two facilities, for each of which
the Company pays a fee. Facility A provides for borrowings up to $300,000,000
and terminates April 26, 1996. The Company and TU Electric intend to negotiate
an extension or replacement of this
40
<PAGE> 43
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. SHORT-TERM FINANCING -- (CONCLUDED)
facility. Facility B provides for borrowings up to $700,000,000 and terminates
April 28, 2000. The Company's borrowings under the Agreements are limited to
$600,000,000. Borrowings under the Agreements are used for working capital and
other corporate purposes, including commercial paper backup.
In November 1995, the Company entered into a Competitive Advance and
Revolving Credit Facility Agreement with a group of commercial banks. This
facility, for which the Company pays a fee, provides for borrowings, on a
standby basis, up to $200,000,000 and terminates April 26, 1996. Borrowings
under this facility are used for corporate purposes. In addition to the above,
the Company and Fuel Company have separate arrangements for uncommitted lines of
credit.
During the years 1995, 1994 and 1993, the Company's average amounts
outstanding to banks for borrowings were $149,806,000, $66,042,000 and
$84,934,000, respectively. Weighted average interest rates to banks for
borrowings during such periods were 6.33%, 4.92% and 3.84%, respectively. At
December 31, 1995, the total of short-term borrowings authorized by the Board of
Directors of the Company from banks or other lenders was $1,075,000,000.
The Company intends to refinance up to $420,000,000 of its current
$695,000,000 short-term borrowings from banks beyond one year of the balance
sheet date of December 31, 1995. As a result, such amount has been reclassified
from notes payable - banks to long-term debt on the Company's 1995 Balance
Sheet. (See Note 8.)
TU ELECTRIC
At December 31, 1995, TU Electric had $321,990,000 of commercial paper
outstanding with interest rates ranging from 5.85% to 6.35%. During the years
1995, 1994 and 1993, average amounts outstanding to banks for borrowings were
$11,667,000, $32,292,000 and $55,611,000, respectively and to holders of
commercial paper were $340,579,000, $238,401,000 and $54,401,000, respectively.
During such periods, weighted average interest rates to banks for borrowings
were 6.51%, 4.60% and 3.92%, respectively, and to holders of commercial paper
were 6.10%, 4.94% and 3.72%, respectively.
4. COMMON STOCK
THE COMPANY
The Company issued shares of its authorized but unissued common stock as
follows:
<TABLE>
<CAPTION>
AUTOMATIC DIVIDEND EMPLOYEES' THRIFT PLAN
REINVESTMENT AND COMMON AND EMPLOYEE
PUBLIC OFFERING STOCK PURCHASE PLAN STOCK OWNERSHIP PLAN TOTAL
------------------ -------------------- -------------------- -----------------
YEAR SHARES* AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ---- ------- ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1995 -- -- -- -- -- -- -- --
1994 -- -- 1,364,690 $ 56,671,000 130,925 $ 5,431,000 1,495,615 $ 62,102,000
1993 1,420,316 $59,976,000 5,163,587 220,848,000 445,465 20,123,000 7,029,368 300,947,000
</TABLE>
- -------------
* Shares issued for public offering in 1993 were used in connection with the
acquisition of SESCO.
At December 31, 1995, 1,997,005 shares of the authorized but unissued
common stock of the Company were reserved for issuance and sale pursuant to the
above plans.
41
<PAGE> 44
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. COMMON STOCK -- (CONCLUDED)
In February 1994, the Company amended its Automatic Dividend Reinvestment
and Common Stock Purchase Plan. The amendments included, among other things, the
option to purchase common stock in the open market through an independent broker
to meet share requirements under the plan. Since March 1994, requirements under
the Automatic Dividend Reinvestment and Common Stock Purchase Plan and the
Employees' Thrift Plan of the Texas Utilities Company System (Thrift Plan) have
been met through open market purchases of common stock.
In 1990, the Thrift Plan borrowed $250,000,000 in the form of a note
payable from an outside lender 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 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 in 1995, 1994 and 1993 increased common
stock equity by $8,115,000, $8,115,000 and $8,114,000, respectively.
The Company has 50,000,000 authorized shares of serial preference stock
having a par value of $25 a share, none of which has been issued.
TU ELECTRIC
TU Electric issued shares of its authorized but unissued common stock to
the Company as follows:
<TABLE>
<CAPTION>
NET
YEAR SHARES PROCEEDS
---- ------ --------
<S> <C> <C>
1995.................................... -- --
1994.................................... 4,800,000 $249,600,000
1993.................................... 3,400,000 198,900,000
</TABLE>
No shares of TU Electric's common stock are held by or for its own account,
nor are any shares of such capital stock reserved for its officers and employees
or for options, warrants, conversions and other rights in connection therewith.
5. 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 December 31, 1995,
$94,283,000 of retained earnings of TU Electric and $13,969,000 of retained
earnings of SESCO were thus restricted as a result of such provisions.
In 1995, TU Electric transferred approximately $433,820,000 from its common
stock account to retained earnings. Such amount represented the Company's equity
in undistributed earnings, since acquisition, included in previous transfers by
TU Electric.
42
<PAGE> 45
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. PREFERRED STOCK OF TU ELECTRIC (CUMULATIVE, WITHOUT PAR VALUE, ENTITLED
UPON LIQUIDATION TO $100 A SHARE; AUTHORIZED 17,000,000 SHARES)
<TABLE>
<CAPTION>
REDEMPTION PRICE PER SHARE
(BEFORE ADDING ACCUMULATED DIVIDENDS)
SHARES OUTSTANDING AMOUNT -------------------------------------
DIVIDEND RATE DECEMBER 31, DECEMBER 31, DECEMBER 31,1995 EVENTUAL MINIMUM
------------- ------------ ------------ ---------------- ----------------
1995 1994 1995 1994
---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C> <C> <C>
NOT SUBJECT TO MANDATORY REDEMPTION
$ 4.50 series..................... 74,367 74,367 $ 7,440 $ 7,440 $110.00 $110.00
4.00 series (Dallas Power)...... 70,000 70,000 7,049 7,049 103.56 103.56
4.56 series (Texas Power)....... 133,628 133,628 13,371 13,371 112.00 112.00
4.00 series (Texas Electric).... 110,000 110,000 11,000 11,000 102.00 102.00
4.56 series (Texas Electric).... 64,947 64,947 6,560 6,560 112.00 112.00
4.24 series..................... 100,000 100,000 10,081 10,081 103.50 103.50
4.64 series..................... 100,000 100,000 10,016 10,016 103.25 103.25
4.84 series..................... 70,000 70,000 7,000 7,000 101.79 101.79
4.00 series (Texas Power)....... 70,000 70,000 7,000 7,000 102.00 102.00
4.76 series..................... 100,000 100,000 10,000 10,000 102.00 102.00
5.08 series..................... 80,000 80,000 8,004 8,004 103.60 103.60
4.80 series..................... 100,000 100,000 10,009 10,009 102.79 102.79
4.44 series..................... 150,000 150,000 15,061 15,061 102.61 102.61
7.20 series..................... 200,000 200,000 20,044 20,044 103.21 103.21
6.84 series..................... 200,000 200,000 20,023 20,023 103.05 103.05
7.24 series..................... 247,862 249,800 24,905 25,100 103.42 103.42
8.20 series (a)................. 338,872 1,250,000 32,704 120,637 (b) 100.00
7.98 series..................... 500,000 500,000 49,361 49,361 (b) 100.00
7.50 series (a)................. 392,234 2,000,000 38,062 194,048 (b) 100.00
7.22 series (a)................. 308,632 1,715,925 29,909 166,290 (b) 100.00
Adjustable rate series A (c)...... 1,000,000 1,000,000 98,200 98,200 100.00 100.00
Adjustable rate series B (c)...... 548,561 548,561 53,896 53,896 103.00 100.00
--------- --------- -------- --------
Total...................... 4,959,103 8,887,228 $489,695 $870,190
========= ========= ======== ========
SUBJECT TO MANDATORY REDEMPTION (D)
$ 9.64 series (e)................ 650,000 900,000 $ 64,950 $ 89,902 (f) (f)
10.375 series................... -- 750,000 -- 74,656
9.875 series................... -- 250,000 -- 24,843
6.98 series.................... 1,000,000 1,000,000 99,123 99,047 (b) 100.00
6.375 series................... 1,000,000 1,000,000 99,123 99,034 (b) 100.00
--------- --------- -------- --------
Total........................ 2,650,000 3,900,000 $263,196 $387,482
========= ========= ======== ========
</TABLE>
- --------------------
(a) The preferred stock series is the underlying preferred stock for depositary
shares that were issued to the public. Each depositary share represents one
quarter of a share of underlying preferred stock.
(b) Preferred stock series is not redeemable at December 31, 1995.
(c) Adjustable rate series A bears a dividend rate for the period ended January
31, 1996, of $6.50 per annum and adjustable rate series B bears a dividend
rate for the period ended December 31, 1995, of $7.00 per annum.
(d) TU Electric is required to redeem at a price of $100 per share plus
accumulated dividends a specified minimum number of shares annually or
semi-annually on the initial/next dates shown below. These redeemable shares
may be called, purchased or otherwise acquired. Certain issues may not be
redeemed at the option of TU Electric prior to 2003. TU Electric may
annually call for redemption, at its option, an aggregate of up to twice the
number of shares shown below for each series at a price of $100 per share
plus accumulated dividends, except for the $9.64 series which may be
redeemed in a minimum amount of 10,000 shares at any time at a price of $100
per share plus accumulated dividends plus a component at a variable price
per share which is designed to maintain the expected yield at issuance:
<TABLE>
<CAPTION>
MINIMUM REDEEMABLE INITIAL/NEXT DATE OF
SERIES SHARES MANDATORY REDEMPTION
------ ------ --------------------
<S> <C> <C>
$ 9.64 125,000 semi-annually 5/1/96
6.98 50,000 annually 7/1/03
6.375 50,000 annually 10/1/03
</TABLE>
Preferred stock mandatory redemption requirements for the next five years
are $25 million in 1996, $25 million in 1997, $15 million in 1998 and none
thereafter. The carrying value of preferred stock subject to mandatory
redemption is being increased periodically to equal the redemption amounts
at the mandatory redemption dates with a corresponding increase in
preferred stock dividends.
(e) Under certain circumstances relating to a change in federal tax law
governing the dividends received deduction applicable to eligible
corporations, the dividend rate of the $9.64 series may increase to a
maximum of $10.74.
(f) The redemption price is calculated on the business day next preceding the
settlement date at a price of $100 per share plus accumulated dividends
plus a component which is designed to maintain the expected yield at
issuance.
43
<PAGE> 46
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. TU ELECTRIC OBLIGATED, MANDATORILY REDEEMABLE, PREFERRED SECURITIES OF
TRUSTS (LIQUIDATION PREFERENCE, $25 PER UNIT)
Three statutory business trusts, TU Electric Capital I, TU Electric Capital
II and TU Electric Capital III (each a TU Electric Trust), were established in
1995 as financing subsidiaries of TU Electric for the purposes, in each case, of
issuing common and preferred trust securities and holding Junior Subordinated
Debentures issued by TU Electric (Debentures). The Debentures held by each TU
Electric Trust are its only assets. Each TU Electric Trust will use interest
payments received on the Debentures it holds to make cash distributions on the
trust securities.
The combination of the obligations of TU Electric pursuant to agreements to
pay the expenses of each TU Electric Trust and TU Electric's guarantees of
distributions with respect to trust securities, to the extent a TU Electric
Trust has funds available therefor, constitute a full and unconditional
guarantee by TU Electric of the obligations of each TU Electric Trust under the
trust securities it has issued. TU Electric is the owner of all the common trust
securities of each TU Electric Trust, which constitutes 3% or more of the
liquidation amount of all the trust securities issued by such TU Electric Trust.
At December 31, 1995, the following Trust Originated Preferred Securities
of TU Electric Capital I and II and Quarterly Income Preferred Securities of TU
Electric Capital III were outstanding:
<TABLE>
<CAPTION>
COMPANY UNITS AMOUNT DESCRIPTION OF DEBENTURES
------- ----- ------ -------------------------
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
TU Electric Capital I. (series 8.25%)......... 5,871,044 $140,880 $154,869,150 Series A, 8.25% due 9/30/30
TU Electric Capital II. (series 9.00%)........ 1,991,253 47,374 $51,418,575 Series B, 9.00% due 9/30/30
TU Electric Capital III. (series 8.00%)....... 8,000,000 193,222 $206,185,575 Series C, 8.00% due 12/31/35
---------- --------
Total............................. 15,862,297 $381,476
========== ========
</TABLE>
The preferred trust securities are subject to mandatory redemption upon
payment of the Debentures at maturity or upon redemption. The Debentures are
subject to redemption, in whole or in part at the option of TU Electric, at 100%
of their principal amount plus accrued interest, after an initial period during
which they may not be redeemed and at any time upon the occurrence of certain
events.
44
<PAGE> 47
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. LONG-TERM DEBT, LESS AMOUNTS DUE CURRENTLY
<TABLE>
<CAPTION>
THE COMPANY TU ELECTRIC
DECEMBER 31, DECEMBER 31,
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
First mortgage bonds:
6-3/8% series due 1997.................... $175,000 $175,000 $175,000 $175,000
7-1/8% series due 1997.................... 150,000 150,000 150,000 150,000
5-1/2% series due 1998.................... 125,000 125,000 125,000 125,000
5-3/4% series due 1998.................... 150,000 150,000 150,000 150,000
5-7/8% series due 1998.................... 175,000 175,000 175,000 175,000
6-1/2% series due 1998.................... 1,080 1,095 -- --
7-3/8% series due 1999.................... 100,000 100,000 100,000 100,000
Floating rate series due 1999 (a) .......... 300,000 300,000 300,000 300,000
9-1/2% series due 1999.................... 200,000 200,000 200,000 200,000
7-3/8% series due 2001.................... 150,000 150,000 150,000 150,000
7.95 % series due 2002.................... 912 924 -- --
8 % series due 2002.................... 147,000 147,000 147,000 147,000
8-1/8% series due 2002.................... 150,000 150,000 150,000 150,000
6-3/4% series due 2003.................... 200,000 200,000 200,000 200,000
6-3/4% series due 2003.................... 100,000 100,000 100,000 100,000
6-1/4% series due 2004.................... 125,000 125,000 125,000 125,000
8-1/4% series due 2004.................... 100,000 100,000 100,000 100,000
6-3/4% series due 2005.................... 100,000 100,000 100,000 100,000
10.44% series due 2008.................... 150,000 150,000 150,000 150,000
9-7/8% series due 2019.................... -- 111,150 -- 111,150
10-5/8% series due 2020.................... -- 250,000 -- 250,000
9-3/4% series due 2021.................... 300,000 300,000 300,000 300,000
8-7/8% series due 2022.................... 175,000 175,000 175,000 175,000
9 % series due 2022.................... 100,000 100,000 100,000 100,000
7-7/8% series due 2023.................... 300,000 300,000 300,000 300,000
8-3/4% series due 2023.................... 200,000 200,000 200,000 200,000
7-7/8% series due 2024.................... 225,000 225,000 225,000 225,000
8-1/2% series due 2024.................... 175,000 175,000 175,000 175,000
7-3/8% series due 2025.................... 300,000 300,000 300,000 300,000
7-5/8% series due 2025.................... 250,000 250,000 250,000 250,000
Pollution control series:
Brazos River Authority
8-1/4% series due 2016.................... 111,215 200,000 111,215 200,000
7-7/8% series due 2017.................... 81,305 100,000 81,305 100,000
9-7/8% series due 2017.................... 28,765 112,000 28,765 112,000
9-1/4% series due 2018.................... 54,005 100,000 54,005 100,000
8-1/4% series due 2019.................... 100,000 100,000 100,000 100,000
8-1/8% series due 2020.................... 50,000 50,000 50,000 50,000
7-7/8% series due 2021.................... 100,000 100,000 100,000 100,000
Taxable series due 2021 (b).............. 91,000 100,000 91,000 100,000
5-1/2% series due 2022.................... 50,000 50,000 50,000 50,000
6-5/8% series due 2022.................... 33,000 33,000 33,000 33,000
6.70 % series due 2022.................... 16,935 16,935 16,935 16,935
6-3/4% series due 2022.................... 50,000 50,000 50,000 50,000
Taxable series due 2023 (b).............. 100,000 100,000 100,000 100,000
6.05 % series due 2025.................... 90,000 90,000 90,000 90,000
6-1/2% series due 2027 ................... 46,660 46,660 46,660 46,660
6.10 % series due 2028 ................... 50,000 50,000 50,000 50,000
Series 1994A due 2029(c).................... 39,170 39,170 39,170 39,170
Series 1994B due 2029(c).................... 39,170 39,170 39,170 39,170
Series 1995A due 2030(d).................... 50,670 -- 50,670 --
Series 1995B due 2030(d).................... 118,355 -- 118,355 --
Series 1995C due 2030(d).................... 118,355 -- 118,355 --
Sabine River Authority of Texas
9 % series due 2007.................... 51,525 55,000 51,525 55,000
7-3/4% series due 2016.................... 57,950 70,000 57,950 70,000
8-1/8% series due 2020.................... 40,000 40,000 40,000 40,000
8-1/4% series due 2020.................... 11,000 11,000 11,000 11,000
</TABLE>
45
<PAGE> 48
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. LONG-TERM DEBT, LESS AMOUNTS DUE CURRENTLY -- (CONTINUED)
<TABLE>
<CAPTION>
THE COMPANY TU ELECTRIC
DECEMBER 31, DECEMBER 31,
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
Sabine River Authority of Texas
5.55 % series due 2022....................... $ 75,000 $ 75,000 $ 75,000 $ 75,000
6.55 % series due 2022....................... 40,000 40,000 40,000 40,000
5.85 % series due 2022....................... 33,465 33,465 33,465 33,465
Series 1995A due 2030(d)..................... 16,000 -- 16,000 --
Series 1995B due 2030(d)..................... 12,050 -- 12,050 --
Series 1995C due 2030(d)..................... 18,475 -- 18,475 --
Trinity River Authority of Texas
9 % series due 2007....................... 12,000 12,000 12,000 12,000
Secured medium-term notes, series A............. 30,000 30,000 30,000 30,000
Secured medium-term notes, series B............. 125,000 130,000 125,000 130,000
Secured medium-term notes, series C............. 47,000 95,000 47,000 95,000
Secured medium-term notes, series D............. 201,150 -- 201,150 --
---------- ---------- ---------- ----------
Total first mortgage bonds................ 6,813,212 6,953,569 6,811,220 6,951,550
General obligation bonds........................... 10,000 10,000 -- --
Promissory note and debt assumed for
purchase of utility plant (e)................. 158,595 338,963 158,595 338,963
Senior notes....................................... 639,328 657,164 -- --
Term credit facilities (f) ........................ 1,612,200 -- 300,000 --
Unamortized premium and discount................... (58,760) (71,283) (57,745) (69,872)
---------- ---------- ---------- ----------
Total long-term debt, less amounts
due currently.................. $9,174,575 $7,888,413 $7,212,070 $7,220,641
========== ========== ========== ==========
</TABLE>
- --------------------
(a) Floating rate series due May 1, 1999 bears an interest rate for the
period November 1, 1995 to January 31, 1996 of 6.3828%. Such interest
rate is reset on a quarterly basis.
(b) Taxable pollution control series consist of two series: $91,000,000 of
flexible rate series 1991D due 2021 with interest rates on December 31,
1995 ranging from 5.72% to 5.76% and $100,000,000 of flexible rate
series 1993 due 2023 at 5.65% on December 31, 1995. Series 1991D bonds
were remarketed on June 1, 1995 in a flexible mode for rate periods up
to 180 days and are secured by an irrevocable letter of credit with
maturities in excess of one year. Series 1993 bonds are in a flexible
mode and, while in such mode, will be remarketed for periods of less
than 270 days and are secured by an irrevocable letter of credit with
maturities in excess of one year.
(c) Series 1994A and Series 1994B due 2029 are in a flexible mode with
interest rates on December 31, 1995 ranging from 3.50% to 4.00% and,
while in such mode, will be remarketed for periods of less than 270 days
and are secured by an irrevocable letter of credit with maturities in
excess of one year.
(d) Series 1995A, Series 1995B and Series 1995C due 2030 are in a daily mode
with interest rates on December 31, 1995 ranging from 5.50% to 6.15% and
are secured by an irrevocable letter of credit with maturities in excess of
one year.
(e) In 1990, TU Electric purchased the ownership interest in Comanche Peak
of Tex-La Electric Cooperative of Texas, Inc. (Tex-La) and assumed debt
of Tex-La payable over approximately 32 years. The assumption is secured
by a mortgage on the acquired interest. The Company has guaranteed these
various payments.
(f) Includes TU Electric's $300,000,000 Term Credit Agreement due 1997 with
interest rates on December 31, 1995 ranging from 6.050% to 6.1125%, the
Company's $420,000,000 reclassified short-term debt (see Note 3) and
Eastern Energy's $892,200,000 (including a notional principal amount of
$535,320,000 under an interest rate swap agreement expiring 2002 with a
fixed interest rate of 8.4475% per annum) Term Credit Facility due 2002
with a floating interest rate of 7.5114% on December 31, 1995.
Long-term debt of the Company and TU Electric does not include junior
subordinated debentures held by each TU Electric Trust. (See Note 7.)
Sinking fund and maturity requirements for the years 1996 through 2000 under
long-term debt instruments in effect at December 31, 1995, were as follows:
<TABLE>
<CAPTION>
THE COMPANY TU ELECTRIC
---------------------------------- -----------------------------------
SINKING MINIMUM CASH SINKING MINIMUM CASH
YEAR FUND MATURITY REQUIREMENT FUND MATURITY REQUIREMENT
- ---- ---- -------- ----------- ---- -------- -----------
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C> <C> <C>
1996......................... $ 20,053 $ 41,000 $ 61,053 $ 2,190 $ 41,000 $ 43,190
1997......................... 20,276 635,800 656,076 2,413 635,800 638,213
1998......................... 21,216 451,065 472,281 2,645 450,000 452,645
1999......................... 73,715 630,000 703,715 17,906 630,000 647,906
2000......................... 313,075 576,150 889,225 18,199 156,150 174,349
</TABLE>
46
<PAGE> 49
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. LONG-TERM DEBT, LESS AMOUNTS DUE CURRENTLY -- (CONCLUDED)
TU Electric's first mortgage bonds are secured by the Mortgage and Deed of
Trust dated as of December 1, 1983, as supplemented, between TU Electric and
Irving Trust Company (now The Bank of New York), Trustee. SESCO's first mortgage
bonds are secured by the Mortgage and Deed of Trust dated as of May 1, 1945, as
supplemented, between SESCO and BankOne, Texas, NA, successor Trustee. Electric
plant of TU Electric and SESCO is generally subject to the liens of their
respective mortgages.
9. FEDERAL INCOME TAXES
The components of the Company's federal income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1995 1994 1993
---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
Charged (credited) to consolidated net income (loss):
Current.................................................................. $222,358 $152,833 $103,466
Deferred-- Domestic ..................................................... (259,445) 200,232 128,461
Foreign....................................................... (174) -- --
Investment tax credits................................................... (22,774) (26,427) (22,383)
-------- -------- --------
Total to consolidated net income (loss)................................ (60,035) 326,638 209,544
Charged (credited) to consolidated retained earnings........................ (6,452) (6,733) (6,975)
-------- -------- --------
Total federal income taxes........................................... $(66,487) $319,905 $202,569
======== ======== ========
</TABLE>
The components of TU Electric's federal income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------
1995 1994 1993
---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C>
Charged (credited) to operating expenses:
Current.................................................................. $260,988 $182,107 $127,169
-------- -------- --------
Deferred:
Depreciation differences and capitalized construction costs............ 205,280 222,762 241,573
Over/under-recovered fuel revenue...................................... (49,798) (59,224) 43,436
Alternative minimum tax................................................ (30,937) (121,948) (88,529)
Other.................................................................. 17,983 138,466 39,534
-------- -------- --------
Total deferred - net................................................. 142,528 180,056 236,014
-------- -------- --------
Investment tax credit.................................................... (21,201) (23,698) (19,698)
-------- -------- --------
Total to operating expenses....................................... 382,315 338,465 343,485
-------- -------- --------
Charged (credited) to other income:
Current.................................................................. (59,454) (35,474) (30,218)
-------- -------- --------
Deferred:
Impairment of assets................................................... (149,617) -- --
Regulatory disallowance................................................ -- -- (102,034)
Other.................................................................. 39,709 39,696 30,507
-------- -------- --------
Total deferred - net................................................. (109,908) 39,696 (71,527)
-------- -------- --------
Total to other income............................................. (169,362) 4,222 (101,745)
-------- -------- --------
Total federal income taxes...................................... $212,953 $342,687 $241,740
======== ======== ========
</TABLE>
47
<PAGE> 50
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. FEDERAL INCOME TAXES -- (CONTINUED)
The significant components of deferred federal income tax assets and
liabilities reflected net in the balance sheets are as follows:
<TABLE>
<CAPTION>
THE COMPANY TU ELECTRIC
DECEMBER 31, DECEMBER 31,
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
DEFERRED TAX ASSETS
Current:
Unbilled revenues............................................ $ 27,323 $ 27,552 $ 27,323 $ 27,552
Over-recovered fuel revenue.................................. 40,550 -- 40,550 --
Foreign operations........................................... 4,832 -- -- --
Other........................................................ 11,705 9,561 11,756 9,650
---------- ---------- ---------- ----------
Total current deferred tax assets........................ $ 84,410 $ 37,113 $ 79,629 $ 37,202
========== ========== ========== ==========
Non-Current:
Unamortized ITC.............................................. $ 329,994 $ 359,839 $ 323,685 $ 352,732
Impairment of assets......................................... 174,003 -- 71,968 --
Regulatory disallowances..................................... 237,521 276,717 237,521 276,717
Alternative minimum tax...................................... 611,934 566,707 454,222 425,290
Tax rate differences......................................... 83,111 89,289 82,108 88,111
Net operating loss carryforward.............................. -- 30,474 -- 22,589
Other........................................................ 59,604 55,295 33,982 34,977
---------- ---------- ---------- ----------
Total non-current deferred tax assets.................... 1,496,167 1,378,321 1,203,486 1,200,416
---------- ---------- ---------- ----------
DEFERRED TAX LIABILITIES
Non-Current:
Depreciation differences and capitalized construction costs . 3,920,888 3,845,677 3,850,545 3,772,752
Foreign operations........................................... 593 -- -- --
Other........................................................ 244,494 385,106 221,990 189,436
---------- ---------- ---------- ----------
Total non-current deferred tax liabilities............... 4,165,975 4,230,783 4,072,535 3,962,188
---------- ---------- ---------- ----------
NET TOTAL NON-CURRENT DEFERRED TAX LIABILITY....................... $2,669,808 $2,852,462 $2,869,049 $2,761,772
========== ========== ========== ==========
</TABLE>
Federal income taxes were less than the amount computed by applying the
federal statutory rate to pre-tax book income as follows:
<TABLE>
<CAPTION>
THE COMPANY TU ELECTRIC
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
------------------------- ------------------------
1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C> <C> <C>
Federal income taxes at statutory rate (35%) ...... $(39,188) $339,962 $242,703 $233,585 $350,308 $251,393
-------- -------- -------- -------- -------- --------
Increases(decreases) in federal income taxes
resulting from:
Allowance for funds used during construction . (2,330) (3,760) (52,540) (2,330) (3,760) (52,540)
Depletion allowance........................... (23,564) (23,361) (22,696) (23,564) (23,361) (22,696)
Amortization of investment tax credits ....... (23,036) (24,213) (22,336) (21,463) (21,484) (19,698)
LESOP dividend deduction...................... (7,700) (7,700) (7,675) -- -- --
Amortization of tax rate differences ......... (9,648) (9,732) (2,420) (9,288) (9,143) 17,316
Reversal of prior book/tax differences:
Regulatory disallowances................... -- -- 21,553 -- -- 21,553
Other...................................... 38,974 43,157 27,811 38,630 42,899 27,454
Foreign operations............................ 283 -- -- -- -- --
Other......................................... (278) 5,552 18,169 (2,617) 7,228 18,958
-------- -------- -------- -------- -------- --------
Total increase (decrease).................. (27,299) (20,057) (40,134) (20,632) (7,621) (9,653)
-------- -------- -------- -------- -------- --------
Total federal income taxes......................... $(66,487) $319,905 $202,569 $212,953 $342,687 $241,740
======== ======== ======== ======== ======== ========
Effective tax rate................................. 59.4% 32.9% 29.2% 31.9% 34.2% 33.7%
</TABLE>
48
<PAGE> 51
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. FEDERAL INCOME TAXES -- (CONCLUDED)
The System Companies and TU Electric have approximately $612 million and
$454 million, respectively, of alternative minimum tax credit carryforwards
which are available to offset future taxes.
As a part of its ongoing large case audit program, the Internal Revenue
Service (IRS) has audited the consolidated Federal income tax returns of the
System Companies for the years 1987 through 1990. During the course of the
audit, the IRS proposed a number of adjustments to the returns as filed, the
most significant of which relates to a proposed reclassification of certain
costs incurred in connection with the construction of Comanche Peak as costs
incurred to procure a nuclear operating license. The Company is unable to
predict the ultimate resolution of the issues raised in the audit and therefor
is unable to predict at this time the amount of any additional tax payment which
may be required. While the making of additional tax payments would have an
impact on the Company's cash position, the Company does not expect the outcome
of the audit to have a material effect on its financial position or results of
operation.
10. RETIREMENT PLANS AND OTHER POSTRETIREMENT BENEFITS
The System Companies and TU Electric have defined benefit pension plans
covering substantially all employees. Generally, plan benefits are based on
years of accredited service and average annual earnings received during the
three years of highest earnings. Contributions to the domestic plans were
determined using the frozen attained age method which is one of several
actuarial methods allowed by the Employee Retirement Income Security Act of
1974. The costs of the plans were determined by independent actuaries. For
financial reporting purposes, pension cost has been determined using the
projected unit credit actuarial method. The cumulative difference between
pension cost as determined for financial reporting purposes and contributions to
the plans is recorded either as prepaid pension cost or as accrued pension
liability.
Total pension cost including amounts charged to fuel cost, deferred and
capitalized, were comprised of the following components:
<TABLE>
<CAPTION>
THE COMPANY TU ELECTRIC
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
-------------------------- -------------------------
1995 1994 1993 1995 1994 1993
---- ---- ---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C> <C> <C>
Service cost-- benefits earned during the period ... $ 23,515 $27,185 $23,872 $ 16,047 $18,667 $17,764
Interest cost on projected benefit obligation....... 65,675 64,142 62,017 53,684 52,907 52,695
Actual return on plan assets........................ (241,887) 5,641 (93,850) (199,436) 4,772 (80,495)
Net amortization and deferral....................... 160,198 (72,700) 37,722 132,147 (60,560) 32,465
-------- ------- ------- -------- ------- -------
Net periodic pension cost........................ $ 7,501 $24,268 $29,761 $ 2,442 $15,786 $22,429
======== ======= ======= ======== ======= =======
</TABLE>
49
<PAGE> 52
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. RETIREMENT PLANS AND OTHER POSTRETIREMENT BENEFITS -- (CONTINUED)
The table below details the plans' funded status and amount recognized in
the balance sheets:
<TABLE>
<CAPTION>
THE COMPANY TU ELECTRIC
DECEMBER 31, DECEMBER 31,
------------ ------------
1995 1994 1995 1994
---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
Actuarial present value of accumulated benefits:
Accumulated benefit obligation (including vested benefits for the System
Companies of $809,869,000 for 1995 and $599,439,000 for 1994; and for TU
Electric of $629,679,000 for 1995 and $514,418,000 for 1994)............ $ (874,345) $(646,967) $(676,236) $(549,416)
=========== ========= ========= =========
Projected benefit obligation for service rendered to date................ $(1,062,619) $(782,446) $(803,815) $(644,205)
Plan assets at fair value-- primarily equity investments,
government bonds and corporate bonds..................................... 1,139,688 845,881 881,014 704,510
----------- --------- --------- ---------
Plan assets in excess of projected benefit obligation........................ 77,069 63,435 77,199 60,305
Unrecognized net gain from past experience different from
that assumed and effects of changes in assumptions....................... (180,444) (193,802) (168,104) (171,535)
Prior service cost not yet recognized in net periodic pension expense ....... 17,061 18,616 17,015 18,543
Unrecognized plan assets in excess of projected benefit obligation at
application.............................................................. (6,375) (7,042) (3,765) (4,203)
----------- --------- --------- ---------
Accrued pension cost..................................................... $ (92,689) $(118,793) $ (77,655) $ (96,890)
=========== ========= ========= =========
</TABLE>
Assumptions used in determination of the projected benefit obligation for
System Companies (excluding Eastern Energy) include a discount rate of 7.25% for
1995 and 8.75% for 1994 and an increase in compensation levels of 4.3% for 1995
and 4.7% for 1994. The assumed long-term rate of return on plan assets was 9.0%
for 1995 and 1994 and 8.75% for 1993.
Eastern Energy's employees participate in the Victorian Electricity
Industry Superannuation Fund (Eastern Plan). The Eastern Plan meets the
definition of a single-employer defined benefit pension plan and is included
above in the Company's plan. The Company's net periodic pension cost and accrued
pension cost for 1995 include $175,000 and $3,018,000, respectively,
representing Eastern Energy's December 1995 pension costs. Assumptions for
the Eastern Plan used in the determination of the projected benefit obligation
include a discount rate of 7.50% for 1995 and an increase in compensation levels
of 6.0% for 1995. The assumed long-term rate of return on plan assets for the
Eastern Plan was 8.5% for 1995.
In addition to the retirement plans, the System Companies, excluding
Eastern Energy, offer certain health care and life insurance benefits to
substantially all its employees and their eligible dependents at retirement
which normally is age 65 but may be as early as age 55 with 15 years of service.
Retirees currently pay a portion of the cost of providing such benefits and are
expected to continue to do so in the future. In January 1993, the Company
adopted Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions", which requires a
change in the accounting for a company's obligation to provide health care and
certain other benefits to its retirees from the "pay-as-you-go" method to an
accrual method and requires the cost of the obligation to be recognized in the
period from employment date until full eligibility for benefits.
50
<PAGE> 53
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
10. RETIREMENT PLANS AND OTHER POSTRETIREMENT BENEFITS -- (CONCLUDED)
Net periodic postretirement benefits cost other than pensions, including
amounts charged to fuel cost, deferred and capitalized, were comprised of the
following components:
<TABLE>
<CAPTION>
THE COMPANY TU ELECTRIC
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
Service cost-- benefits earned during the period.................... $ 9,771 $11,525 $ 6,559 $ 7,669
Interest cost on the accumulated postretirement benefit obligation . 38,842 33,120 31,109 26,063
Amortization of the transition obligation........................... 16,978 16,900 13,633 13,557
Actual return on plan assets........................................ (6,096) 44 (4,520) 34
Net amortization and deferral....................................... 4,646 1,313 3,662 977
------- ------- ------- -------
Net postretirement benefits cost................................ $64,141 $62,902 $50,443 $48,300
======= ======= ======= =======
</TABLE>
The table below details the funded status for other postretirement
benefits and amount recognized by the System Companies (excluding Eastern
Energy) and TU Electric:
<TABLE>
<CAPTION>
THE COMPANY TU ELECTRIC
YEAR ENDED DECEMBER 31, YEAR ENDED DECEMBER 31,
----------------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
Accumulated postretirement benefit obligation (APBO):
Retirees............................................... $(344,045) $(295,910) $(296,996) $(257,706)
Fully eligible active employees........................ (27,779) (16,150) (17,241) (9,635)
Other active employees................................. (193,407) (145,766) (133,783) (100,332)
--------- --------- --------- ---------
Total APBO................................................. (565,231) (457,826) (448,020) (367,673)
Plan assets at fair value.................................. 56,786 21,577 43,969 16,453
--------- --------- --------- ---------
APBO in excess of plan assets......................... (508,445) (436,249) (404,051) (351,220)
Unrecognized net loss...................................... 144,833 78,082 119,216 70,314
Unrecognized prior service cost............................ 902 986 -- --
Unrecognized transition obligation......................... 288,627 305,605 231,759 245,392
--------- --------- --------- ---------
Accrued postretirement benefits cost................... $ (74,083) $ (51,576) $ (53,076) $ (35,514)
========= ========= ========= =========
</TABLE>
The expected increase in costs of future benefits covered by the plan is
projected using a health care cost trend rate of 5.5% in 1996 and 5.0% in 1997
and thereafter. A one percentage point increase in the assumed health care cost
trend rate in each future year would increase the APBO at December 31, 1995 by
approximately $79.4 million for the System Companies and $62.9 million for TU
Electric, and other postretirement benefits cost for 1995 by approximately $6.9
million for System Companies and $5.4 million for TU Electric. The assumed
discount rate used to measure the APBO is 7.25% for 1995 and 8.75% for 1994.
11.SALES OF ACCOUNTS RECEIVABLE
TU ELECTRIC
TU Electric has a facility with financial institutions whereby it is
entitled to sell and such financial institutions may purchase, on an ongoing
basis, undivided interests in customer accounts receivable representing up to an
aggregate of $350,000,000. Additional receivables are continually sold to
replace those collected. At December 31, 1995 and 1994, accounts receivable was
reduced by $300,000,000 to reflect the sales of such receivables to financial
institutions under such agreements.
51
<PAGE> 54
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12.RATE PROCEEDINGS
TU ELECTRIC
DOCKET 11735
In July 1994, TU Electric filed a petition in the 200th Judicial District
Court of Travis County, Texas to seek judicial review of the final order of the
PUC granting a $449 million, or 9.0%, rate increase in connection with TU
Electric's January 1993 rate increase request of $760 million, or 15.3% (Docket
11735). Other parties to the PUC proceedings also filed appeals with respect to
various portions of the order. TU Electric is unable to predict the outcome of
such appeals.
DOCKET 9300
The PUC's final order (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 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 CWIP 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 9, 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.
TU Electric cannot predict the outcome of any possible rehearing of the
Supreme Court decision or the reconsideration of this Order on remand by the
PUC.
FUEL COST RECOVERY RULE
TU Electric filed a petition with the PUC in November 1995 to refund to
customers approximately $65 million, including interest, in over-collected fuel
costs for the period June 1995 through September 1995. PUC approval was granted
in January 1996 and refunds were included in February 1996 billings. In June
1995, TU Electric petitioned the PUC for approval of a fuel refund to customers
of approximately $89 million, including interest, in over-collected fuel costs
for the period June 1994 through May 1995. PUC approval was granted in August
1995 and refunds were included in September 1995 billings. These
over-collections were primarily due to lower natural gas prices than previously
anticipated. In August 1994, TU Electric petitioned the PUC for a recovery of
approximately $93 million, including interest, in under-collected fuel costs for
the period July 1993 through June 1994. The PUC approved the recovery of this
amount through a surcharge to customers over a six-month period beginning in
January 1995. The PUC's approval of this surcharge and a previously approved
$147.5 million surcharge for fuel cost recovery for a prior period have been
appealed by certain intervenors to the district courts of Travis County, Texas.
In those appeals, those parties are contending that the PUC is without authority
to allow a fuel cost surcharge without a hearing and resultant findings that the
costs are reasonable and necessary and that the prices charged to TU Electric by
supplying affiliates are no higher than the prices charged by those affiliates
to others for the same item or class of items. TU Electric is vigorously
defending its position in these appeals but is unable to predict their outcome.
52
<PAGE> 55
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. RATE PROCEEDINGS -- (CONCLUDED)
FUEL RECONCILIATION
On December 29, 1995, in accordance with the PUC rules, TU Electric filed
a petition with the PUC seeking final reconciliation of all eligible fuel and
purchased power expenses incurred during the reconciliation period of July 1,
1992 through June 30, 1995, amounting to a total of $4.7 billion. TU Electric is
unable to predict the outcome of such proceeding.
In addition, and as permitted by the PUC rules, TU Electric is also
seeking an accounting order from the PUC that will allow certain costs incurred,
and to be incurred, to facilitate the use of coal as a supplemental fuel at its
Monticello lignite-fueled generating station (Monticello) to be treated as
eligible fuel costs and billed pursuant to TU Electric's fuel cost factor. By
incurring these expenses, TU Electric believes that it can significantly improve
the reliability of the supply of fuel to Monticello and can, at the same time,
lower the fuel expense that would be incurred in the absence of these
investments.
FLEXIBLE RATE INITIATIVES
TU Electric continues to offer flexible rates in over 160 cities with
original regulatory jurisdiction within its service territory (including the
cities of Dallas and Fort Worth), to existing non-residential retail and
wholesale customers that have viable alternative sources of supply and would
otherwise leave the system. TU Electric also continues to offer an economic
development rider to attract new businesses and to encourage existing customers
to expand their facilities as well as an environmental technology rider to
encourage qualifying customers to convert to technologies that conserve energy
or improve the environment. To date, TU Electric has contracted to serve 91
commercial, industrial and municipal flexibly-priced loads, eight economic
development loads, and one environmental technology load under these rates. TU
Electric will continue to pursue the expanded use of flexible rates when such
rates are necessary to be price-competitive.
As a result of recent legislation, flexible retail and wholesale pricing
may be approved by the PUC at levels lower than the utility's approved rates but
higher than the 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 includes
provisions for a five-year term of service. If approved by the PUC, the proposed
rate will enable TU Electric to retain a combined load of approximately 23
megawatts. The cooperatives have informed TU Electric that they will transfer
their load to alternative suppliers if the proposed rate is not approved. 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.
INTEGRATED RESOURCE PLAN
In October 1994, TU Electric filed an application for approval by the PUC
of certain aspects of its Integrated Resource Plan (IRP) for the ten-year period
1995-2004. The IRP, developed as an experimental pilot project in conjunction
with regulatory and customer groups, includes initiatives that address
demand-side management resources, purchased power, combustion turbine resources,
lignite/coal resources and renewable resources. Hearings on this application
were concluded in March 1995. In August 1995, the PUC remanded the case for
development of a solicitation plan and to conform the TU Electric 1995 IRP to
new state legislation that requires the PUC to adopt a state-wide integrated
resource planning rule by September 1, 1996. In January 1996, TU Electric filed
an updated IRP with the PUC along with a proposed plan for the solicitation of
resources through a competitive bidding process. The PUC's decision on the
solicitation plan is expected in July 1996.
53
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TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. IMPAIRMENT OF ASSETS
THE COMPANY AND TU ELECTRIC
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.
THE COMPANY
The total impairment of the Company's assets, including the partially
completed Twin Oak and Forest Grove lignite-fueled facilities of TU Electric,
and Chaco Energy Company's (Chaco's) coal reserves in New Mexico, as well as
several minor assets, aggregated $802 million after tax. The Company has
determined that the Twin Oak and Forest Grove lignite-fueled facilities are not
necessary to satisfy TU Electric's capacity requirements as currently projected
due to changes in load growth patterns and availability of alternative
generation. The impairment of TU Electric's lignite-fueled facilities has been
measured based on management's current expectations that these assets will
either be sold or constructed outside the traditional regulated utility
business. The Company has determined that the Chaco coal reserves will no longer
be developed through traditional means due to ample availability of alternative
fuels at favorable prices. Chaco's impairment has been measured based on a
significant decrease in the market value of the coal reserves as determined by
an external study performed and completed in the quarter ended September 30,
1995. The external study was precipitated by a third party inquiry regarding the
possible sale of the coal reserves. A variety of options are being considered
with respect to the Chaco coal reserves. (See Note 14.) The impairment of these
assets involved a write-down to their estimated fair values using a valuation
study based on the discounted expected future cash flows from the respective
assets' use. With respect to the other assets impaired, fair values were
determined based on current market values of similar assets.
TU ELECTRIC
The total impairment of TU Electric's assets, including its partially
completed Twin Oak and Forest Grove lignite-fueled facilities, as well as
several minor assets, aggregated $316 million after tax. TU Electric has
determined that the Twin Oak and Forest Grove lignite-fueled facilities are not
necessary to satisfy its capacity requirements as currently projected due to
changes in load growth patterns and availability of alternative generation. Such
impairment has been measured based on management's current expectations that
these assets will either be sold or constructed outside the traditional
regulated utility business. The impairment of these assets involved a write-down
to their estimated fair values using a valuation study based on the discounted
expected future cash flows from the respective assets' use. With respect to the
other assets impaired, fair values were determined based on current market
values of similar assets.
14. COMMITMENTS AND CONTINGENCIES
CAPITAL EXPENDITURES
THE COMPANY
The Company's construction expenditures for utility related activities,
excluding AFUDC, are presently estimated at $457 million, $445 million and $448
million for 1996, 1997 and 1998, respectively. Expenditures for non-utility
property are presently estimated at $60 million for 1996, $40 million for 1997
and $26 million for 1998. Expenditures for nuclear fuel are presently estimated
at $55 million for 1996, $47 million for 1997 and $60 million for 1998.
54
<PAGE> 57
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
TU ELECTRIC
TU Electric's construction expenditures for utility related activities,
excluding AFUDC, are presently estimated at $399 million, $388 million and $389
million for 1996, 1997 and 1998, respectively. Expenditures for nuclear fuel are
presently estimated at $55 million for 1996, $47 million for 1997, and $60
million for 1998.
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 in estimated construction costs and
dates of completion. 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. The timing and amounts of any specific new business
investment opportunities are presently undetermined.
OAK KNOLL AND MONUMENT DRAW CONSTRUCTION CANCELLATION
In 1995, the Company and TU Electric announced the cancellation and
abandonment of the previously planned Oak Knoll and Monument Draw generating
stations which had been scheduled for service beyond the IRP's ten-year period
of 1995-2004. This cancellation did not have a material effect on the Company's
or TU Electric's financial position or results of operation.
CLEAN AIR ACT
TU ELECTRIC
The federal Clean Air Act, as amended (Clean Air Act) includes provisions
which, among other things, place limits on the sulfur dioxide emissions produced
by generating units. To meet these sulfur dioxide requirements, the Clean Air
Act provides for the annual allocation of sulfur dioxide emission allowances to
utilities. Under the Clean Air Act, utilities are permitted to transfer
allowances within their own systems and to buy or sell allowances from or to
other utilities. The Environmental Protection Agency grants a maximum number of
allowances annually to TU Electric based on the amount of emissions from units
in operation during the period 1985 through 1987. TU Electric's capital
requirements have not been significantly affected by the requirements of the
Clean Air Act. Although TU Electric is unable to fully determine the cost of
compliance with the Clean Air Act, it is not expected to have a significant
impact on the company. During 1995, installation of continuous emissions
monitoring systems was completed at a total cost of approximately $41 million.
Any additional capital costs, as well as any increased operating costs,
associated with these new requirements are expected to be recoverable through
rates, as similar costs have been recovered in the past.
PURCHASED POWER CONTRACTS
THE COMPANY AND TU ELECTRIC
The System Companies have entered into purchased power contracts to
purchase portions of the generating output of certain qualifying cogenerators
and qualifying small power producers through the year 2005. These contracts
provide for capacity payments subject to a facility meeting certain operating
standards and energy payments based on the actual power taken under the
contracts. The cost of these and other purchased power contracts is recovered
currently through base rates, power cost and fuel recovery factors applied to
customer billings. Capacity payments under these contracts for the years ended
December 31, 1995, 1994 and 1993 were
55
<PAGE> 58
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
$229,340,000, $236,991,000 and $251,610,000, respectively, for the Company, and
$223,910,000, $231,081,000 and $249,110,000, respectively, for TU Electric.
Assuming operating standards are achieved, future capacity payments under
the agreements are estimated as follows:
<TABLE>
<CAPTION>
THE COMPANY TU ELECTRIC
----------- -----------
YEARS THOUSANDS OF DOLLARS
-----
<S> <C> <C>
1996............................................................... $ 232,915 $ 228,337
1997............................................................... 240,812 237,014
1998............................................................... 246,536 244,796
1999............................................................... 199,963 199,963
2000............................................................... 134,784 134,784
Thereafter......................................................... 319,895 319,895
---------- ----------
Total capacity payments........................................ $1,374,905 $1,364,789
========== ==========
</TABLE>
LEASES
THE COMPANY AND TU ELECTRIC
The System Companies have entered into operating leases covering various
facilities and properties including combustion turbines, transportation, mining
and data processing equipment, and office space. Lease costs charged to
operation expense for the years ended December 31, 1995, 1994 and 1993 were
$141,775,000, $140,370,000 and $138,184,000, respectively, for the Company, and
$60,156,000, $62,704,000 and $66,219,000, respectively, for TU Electric.
Future minimum lease commitments under such operating leases that have
initial or remaining noncancellable lease terms in excess of one year as of
December 31, 1995, were as follows:
<TABLE>
<CAPTION>
THE COMPANY TU ELECTRIC
----------- -----------
YEARS THOUSANDS OF DOLLARS
<S> <C> <C>
1996................................................................ $ 73,980 $ 29,986
1997................................................................ 67,101 30,519
1998................................................................ 54,700 29,544
1999................................................................ 49,933 30,202
2000................................................................ 50,859 30,606
Thereafter.......................................................... 650,790 511,089
-------- --------
Total minimum lease commitments................................... $947,363 $661,946
======== ========
</TABLE>
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 December 31, 1995, 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, for the years 1996 through 2000 as follows: $4,430,000 for 1996;
$4,435,000 for 1997; $4,435,000 for 1998; $4,435,000 for 1999 and $4,419,000 for
2000. Payments made by TU Electric, net of amounts assumed by a third party
under such contracts, for 1995, 1994 and
56
<PAGE> 59
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
1993 were $3,628,000, $3,615,000 and $2,954,000, respectively. 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 December 31, 1995, 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.
CHACO COAL PROPERTIES
THE COMPANY
Chaco has a coal lease agreement for the rights to certain surface
mineable coal reserves located in New Mexico. The agreement provides for minimum
advance royalty payments of approximately $16 million per year through 2017,
covering approximately 228 million tons of coal. The Company has entered into a
surety agreement to assure the performance by Chaco with respect to this
agreement. In addition, Chaco has under lease with the federal government
certain coal reserves. A provision in this lease requires that substantial
mining be completed by September 1997. Chaco is currently reviewing its options
with regard to this provision. Because of the present ample availability of
western coal at favorable prices from other mines, Chaco has delayed plans to
commence mining operations, and accordingly, is reassessing its alternatives
with respect to its coal properties, including seeking other purchasers thereof.
(See Note 13.)
NUCLEAR INSURANCE
TU ELECTRIC
With regard to liability coverage, the Price-Anderson Act (Act) provides
financial protection for the public in the event of a significant nuclear power
plant incident. The Act sets the statutory limit of public liability for a
single nuclear incident currently at $8.9 billion and requires nuclear power
plant operators to provide financial protection for this amount. As required, TU
Electric provides this financial protection for a nuclear incident at Comanche
Peak resulting in public bodily injury and property damage through a combination
of private insurance and industry-wide retrospective payment plans. As the first
layer of financial protection, TU Electric has purchased $200 million of
liability insurance from American Nuclear Insurers (ANI), which provides such
insurance on behalf of two major stock and mutual insurance pools, Nuclear
Energy Liability Insurance Association and Mutual Atomic Energy Liability
Underwriters. The second layer of financial protection is provided under an
industry-wide retrospective payment program called Secondary Financial
Protection (SFP). Under the SFP, each operating licensed reactor in the United
States is subject to an assessment of up to $79.275 million, subject to
increases for inflation every five years, in the event of a nuclear incident at
any nuclear plant in the United States. Assessments are limited to $10 million
per operating licensed reactor per year per incident. All assessments under the
SFP are subject to a 3% insurance premium tax which is not included in the
amounts above.
With respect to nuclear decontamination and property damage insurance,
Nuclear Regulatory Commission (NRC) regulations require that nuclear plant
license-holders maintain not less than $1.06 billion of such insurance and
require the proceeds thereof to be used to place a plant in a safe and stable
condition, to decontaminate it pursuant to a plan submitted to and approved by
the NRC before the proceeds can be used for plant repair or restoration or to
provide for premature decommissioning. TU Electric maintains nuclear
decontamination and property damage insurance for Comanche Peak in the amount of
$3.85 billion, above which TU Electric is self-insured. The primary layer of
coverage of $500 million is provided by Nuclear Mutual Limited (NML), a nuclear
electric utility industry mutual insurance company. The remaining coverage
includes premature decommissioning coverage and is provided by ANI in the amount
of $1.1 billion and Nuclear Electric Insurance Limited (NEIL), another nuclear
electric utility industry mutual insurance company, in the amount of $2.25
billion. TU Electric is subject to a maximum annual assessment from NML of $14
million and NEIL of $27 million in the event NML's
57
<PAGE> 60
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. COMMITMENTS AND CONTINGENCIES -- (CONCLUDED)
and/or NEIL's losses under this type of insurance for major incidents at nuclear
plants participating in these programs exceed the respective mutual's
accumulated funds and reinsurance.
TU Electric maintains Extra Expense Insurance through NEIL to cover the
additional costs of obtaining replacement power from another source if one or
both of the units at Comanche Peak are out of service for more than twenty-one
weeks as a result of covered direct physical damage. The coverage provides for
weekly payments of $3.5 million for the first and $2.8 million for the second
and third fifty-two week periods of each outage, respectively, after the initial
twenty-one week period. The total maximum coverage is $473 million per unit. The
coverage amounts applicable to each unit will be reduced to 80% if both units
are out of service at the same time as a result of the same accident. Under this
coverage, TU Electric is subject to a maximum assessment of $9 million per year.
GAS PURCHASE CONTRACTS
THE COMPANY
Fuel Company buys gas under long-term intrastate contracts in order to
assure reliable supply to its customers. Many of these contracts require minimum
purchases ("take-or-pay") of gas. Based on Fuel Company's estimated gas demand,
which assumes normal weather conditions, requisite gas purchases are expected to
substantially satisfy purchase obligations for the year 1996 and thereafter.
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,
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 December 31, 1995, such reserve totaled $76,363,000 which
includes an accrual of $18,179,000 for the year ended December 31, 1995. As of
December 31, 1995, the market value of deposits in the external trust for
decommissioning of Comanche Peak was $88,094,000. 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 the rates
placed in effect under Docket 11735 (see Note 12).
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.
58
<PAGE> 61
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
THE COMPANY AND TU ELECTRIC
The following information represents the Company's and TU Electric's
respective estimates of the amount at which their financial instruments could be
exchanged in a current transaction between willing parties, other than in a
forced sale.
The amounts reflected in the balance sheets for cash, temporary cash
investments and special deposits approximate fair value due to the short
maturity of such instruments. The fair values of financial instruments for which
estimated fair values have not been specifically presented is not materially
different than their related book value.
Other investments includes amounts principally for nuclear decommissioning
fund assets and funds invested pursuant to certain incentive and compensation
agreements. The fair values of the nuclear decommissioning assets and incentive
and compensation assets are estimated based on quoted market prices at year-end
for the instruments in which such funds are invested.
The fair values of long-term debt and preferred stock subject to mandatory
redemption are estimated at the lesser of the call price or the present value of
future cash flows discounted at rates consistent with comparable maturities
adjusted for credit risk.
The carrying amount of other financial liabilities classified as current
on the consolidated balance sheets, such as notes payable and long-term debt due
currently, approximates fair value due to the short maturity of such
instruments. Customer deposits have no defined maturities and, therefore, are
reflected at the amount payable on demand at the date of the balance sheets.
TU Electric has agreed, in effect, to guarantee the principal and interest
on bonds used to finance the reservoirs from which TU Electric uses cooling
water for certain generating units. TU Electric is also the guarantor for the
principal amount of certain bonds issued for similar purposes which were
assigned to a municipality. The outstanding principal at December 31, 1995 and
1994 of the bonds for which TU Electric is contingently liable is approximately
$114,000,000 and $121,000,000, respectively. The fair value of the bonds,
approximately $121,000,000 and $115,000,000 for December 31, 1995 and 1994,
respectively, is based on the present value of the instruments' approximate cash
flows discounted at the year-end risk free rate for issues of comparable
maturities adjusted for credit risk.
THE COMPANY
Common stock -- net has been reduced by the note receivable from the
trustee of the leveraged employee stock ownership provision of the Thrift Plan.
The fair values of such note, long-term debt and preferred stock subject to
mandatory redemption are estimated at the lesser of the Company's call price or
the present value of future cash flows discounted at rates consistent with
comparable maturities adjusted for credit risk.
The estimated fair value of the System Companies' significant financial
instruments are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------ ----- ------ -----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
Long-term debt....................................... $9,174,575 $9,875,881 $7,888,413 $7,688,189
TU Electric obligated, mandatorily redeemable,
preferred securities of trusts.................... 381,476 405,729 -- --
Preferred stock subject to mandatory redemption...... 263,196 280,106 387,482 377,621
LESOP note receivable................................ 250,000 280,713 250,000 235,392
Other investments.................................... 118,526 134,949 77,443 77,522
</TABLE>
59
<PAGE> 62
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
15. FAIR VALUE OF FINANCIAL INSTRUMENTS -- (CONCLUDED)
TU ELECTRIC
The estimated fair value of TU Electric's significant financial instruments
are as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
----------------- -----------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------ ----- ------ -----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C>
Long-term debt....................................... $7,212,070 $7,836,861 $7,220,641 $7,030,321
TU Electric obligated, mandatorily redeemable,
preferred securities of trusts................... 381,476 405,729 -- --
Preferred stock subject to mandatory redemption...... 263,196 280,106 387,482 377,621
Other investments.................................... 103,888 118,415 66,702 66,798
</TABLE>
16. SUPPLEMENTARY FINANCIAL INFORMATION (UNAUDITED)
THE COMPANY AND TU ELECTRIC
In the opinion of the Company and TU Electric, respectively, the
information below includes all adjustments (constituting only normal recurring
accruals) necessary to a fair statement of such amounts. Quarterly results 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
(see Note 1) and the charges for regulatory disallowances. Certain quarterly
information has been reclassified to conform to the current year presentation.
For additional information regarding the charges for regulatory disallowances,
see Note 12.
THE COMPANY
<TABLE>
<CAPTION>
EARNINGS PER
CONSOLIDATED SHARE OF
OPERATING REVENUES OPERATING INCOME NET INCOME COMMON STOCK*
------------------ ---------------- ---------- -------------
QUARTER ENDED 1995 1994 1995 1994 1995 1994 1995 1994
- ------------- ---- ---- ---- ---- ---- ---- ---- ----
THOUSANDS OF DOLLARS (EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
March 31................. $1,244,265 $1,304,098 $ 311,344 $ 313,071 $ 75,411 $ 66,746 $0.33 $0.30
June 30.................. 1,353,998 1,436,738 422,305 427,120 148,432 146,227 0.66 0.65
September 30............. 1,775,669 1,702,019 742,699 652,033 (441,716) 294,250 (1.96) 1.30
December 31.............. 1,264,756 1,220,688 311,279 256,332 79,228 35,576 0.35 0.16
---------- ---------- ---------- ---------- --------- --------
$5,638,688 $5,663,543 $1,787,627 $1,648,556 $(138,645) $542,799
========== ========== ========== ========== ========= ========
</TABLE>
* The sum of the quarters may not equal annual earnings per share due to
rounding.
TU ELECTRIC
<TABLE>
<CAPTION>
CONSOLIDATED
OPERATING REVENUES OPERATING INCOME NET INCOME
------------------ ---------------- ----------
QUARTER ENDED 1995 1994 1995 1994 1995 1994
- ------------- ---- ---- ---- ---- ---- ----
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C> <C> <C>
March 31................. $1,233,772 $1,290,615 $ 255,391 $ 262,118 $101,758 $ 98,761
June 30.................. 1,341,245 1,417,175 328,621 335,583 174,219 174,352
September 30............. 1,761,378 1,687,405 534,167 478,538 68,172 321,146
December 31.............. 1,224,067 1,217,980 252,187 216,198 110,283 63,933
---------- ---------- ---------- ---------- -------- --------
$5,560,462 $5,613,175 $1,370,366 $1,292,437 $454,432 $658,192
========== ========== ========== ========== ======== ========
</TABLE>
60
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TEXAS UTILITIES COMPANY AND SUBSIDIARIES
STATEMENT OF RESPONSIBILITY
The management of Texas Utilities Company is responsible for the
preparation, integrity and objectivity of the consolidated financial statements
of the Company and its subsidiaries and other information included in this
report. The consolidated financial statements have been prepared in conformity
with generally accepted accounting principles. As appropriate, the statements
include amounts based on informed estimates and judgments of management.
The management of the Company has established and maintains a system of
internal control designed to provide reasonable assurance, on a cost-effective
basis, that assets are safeguarded, transactions are executed in accordance with
management's authorization and financial records are reliable for preparing
consolidated financial statements. Management believes that the system of
control provides reasonable assurance that errors or irregularities that could
be material to the consolidated financial statements are prevented or would be
detected within a timely period. Key elements in this system include the
effective communication of established written policies and procedures,
selection and training of qualified personnel and organizational arrangements
that provide an appropriate division of responsibility. This system of control
is augmented by an ongoing internal audit program designed to evaluate its
adequacy and effectiveness. Management considers the recommendations of the
internal auditors and independent certified public accountants concerning the
Company's system of internal control and takes appropriate actions which are
cost-effective in the circumstances. Management believes that, as of December
31, 1995, the Company's system of internal control was adequate to accomplish
the objectives discussed herein.
The Board of Directors of the Company addresses its oversight
responsibility for the consolidated financial statements through its Audit
Committee, which is composed of directors who are not employees of the Company.
The Audit Committee meets regularly with the Company's management, internal
auditors and independent certified public accountants to review matters relating
to financial reporting, auditing and internal control. To ensure auditor
independence, both the internal auditors and independent certified public
accountants have full and free access to the Audit Committee.
The independent certified public accounting firm of Deloitte & Touche LLP
is engaged to audit, in accordance with generally accepted auditing standards,
the consolidated financial statements of the Company and its subsidiaries and to
issue their report thereon.
/s/ J. S. FARRINGTON
-------------------------------
J. S. Farrington, Chairman of the Board
/s/ ERLE NYE
-------------------------------
Erle Nye, President and Chief Executive
/s/ PETER B. TINKHAM
-------------------------------
Peter B. Tinkham, Treasurer and Assistant
Secretary and Principal Financial Officer
/s/ CATHRYN C. HULEN
-------------------------------
Cathryn C. Hulen, Controller
and Principal Accounting Officer
61
<PAGE> 64
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
STATEMENT OF RESPONSIBILITY
The management of Texas Utilities Electric Company is responsible for the
preparation, integrity and objectivity of the financial statements of TU
Electric and its subsidiaries and other information included in this report. The
financial statements have been prepared in conformity with generally accepted
accounting principles. As appropriate, the statements include amounts based on
informed estimates and judgments of management.
The management of TU Electric has established and maintains a system of
internal control designed to provide reasonable assurance, on a cost-effective
basis, that assets are safeguarded, transactions are executed in accordance with
management's authorization and financial records are reliable for preparing
financial statements. Management believes that the system of control provides
reasonable assurance that errors or irregularities that could be material to the
financial statements are prevented or would be detected within a timely period.
Key elements in this system include the effective communication of established
written policies and procedures, selection and training of qualified personnel
and organizational arrangements that provide an appropriate division of
responsibility. This system of control is augmented by an ongoing internal audit
program designed to evaluate its adequacy and effectiveness. Management
considers the recommendations of the internal auditors and independent certified
public accountants concerning TU Electric's system of internal control and takes
appropriate actions which are cost-effective in the circumstances. Management
believes that, as of December 31, 1995, TU Electric's system of internal control
was adequate to accomplish the objectives discussed herein.
The independent certified public accounting firm of Deloitte & Touche LLP
is engaged to audit, in accordance with generally accepted auditing standards,
the financial statements of TU Electric and to issue their report thereon.
/s/ ERLE NYE
-------------------------------
Erle Nye, Chairman of the Board
and Chief Executive
/s/ ROBERT S. SHAPARD
-------------------------------
Robert S. Shapard, Treasurer and Assistant
Secretary and Principal Financial Officer
/s/ CATHRYN C. HULEN
-------------------------------
Cathryn C. Hulen, Controller
and Principal Accounting Officer
62
<PAGE> 65
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheets of Texas Utilities
Company and subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, retained earnings and cash flows for each of
the three years in the period ended December 31, 1995. Our audits also included
the financial statement schedule listed in Item 14.(a)2. These financial
statements and the financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and the financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Texas Utilities Company and
subsidiaries at December 31, 1995 and 1994, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1995, in conformity with generally accepted accounting principles. Also, in
our opinion, such financial statement schedule, when considered in relation to
the basic consolidated financial statements taken as a whole, presents fairly in
all material respects the information set forth therein.
As discussed in Note 13 to the consolidated financial statements, in 1995, the
Company changed its method of accounting for the impairment of long-lived assets
and for long-lived assets to be disposed of to conform with Statement of
Financial Accounting Standards No. 121.
DELOITTE & TOUCHE LLP
Dallas, Texas
February 29, 1996
63
<PAGE> 66
INDEPENDENT AUDITORS' REPORT
We have audited the accompanying consolidated balance sheets of Texas Utilities
Electric Company and subsidiaries (TU Electric) as of December 31, 1995 and
1994, and the related consolidated statements of income, retained earnings and
cash flows for each of the three years in the period ended December 31, 1995.
Our audits also included the financial statement schedule listed in Item
14.(a)4. These financial statements and the financial statement schedule are the
responsibility of TU Electric's management. Our responsibility is to express an
opinion on these financial statements and the financial statement schedule based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of TU Electric at December 31, 1995
and 1994, and the results of their operations and their cash flows for each of
the three years in the period ended December 31, 1995, in conformity with
generally accepted accounting principles. Also, in our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.
As discussed in Note 13 to the consolidated financial statements, in 1995, TU
Electric changed its method of accounting for the impairment of long-lived
assets and for long-lived assets to be disposed of to conform with Statement of
Financial Accounting Standards No. 121.
DELOITTE & TOUCHE LLP
Dallas, Texas
February 29, 1996
64
<PAGE> 67
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
THE COMPANY AND TU ELECTRIC
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF EACH REGISTRANT
THE COMPANY
Information with respect to this item is found under the heading Election
of Directors in the definitive proxy statement to be filed by the Company with
the Commission on or about April 1, 1996.
TU ELECTRIC
Identification of directors, business experience and other directorships:
<TABLE>
<CAPTION>
OTHER POSITIONS AND OFFICES PRESENT PRINCIPAL OCCUPATION
PRESENTLY HELD WITH TU OR EMPLOYMENT AND PRINCIPAL
ELECTRIC (CURRENT TERM EXPIRES DATE FIRST ELECTED BUSINESS (PRECEDING 5 YRS.),
NAME OF DIRECTOR AGE MAY 19, 1996) AS DIRECTOR OTHER DIRECTORSHIPS
- ---------------- --- ------------------------------ ------------------ ----------------------------
<S> <C> <C> <C> <C>
T. L. Baker 50 President, Electric Service February 20, 1987 Executive Vice President of TU
Division Electric; prior thereto, Senior Vice
President of TU Electric.
J. S. Farrington 61 None September 17, 1982 Chairman of the Board and prior
thereto, Chief Executive of the
Company, other directorships: the
Company.
H. Jarrell Gibbs 58 President May 24, 1989 Vice President and Principal Financial
Officer of the Company and President
of TU Services; and prior thereto,
Executive Vice President of TU
Electric; prior thereto, Executive Vice
President of Texas Electric Service
Division; prior thereto, Vice President
of TU Electric.
Michael J. McNally 41 President, Transmission February 16, 1996 Executive Vice President of TU Electric;
Division prior thereto, Principal of Enron
Development Corporation and prior
thereto, Managing Director of Industrial
Services (Enron Capital and Trade
Resources); President of Houston Pipe
Line; President of Enron Gas Liquids,
Inc. Vice President of Marketing for
Houston Pipe Line Company.
Erle Nye 58 Chairman and September 17, 1982 President and Chief Executive of the
Chief Executive Company; other directorships: the
Company.
W. M. Taylor 53 President, Generation May 20, 1986 Executive Vice President of TU
Division Electric; prior thereto, President of
Dallas Power Division.
E. L. Watson 61 Vice Chairman February 20, 1987 Executive Vice President of TU
Electric; prior thereto, Senior Vice
President of TU Electric.
</TABLE>
Directors of TU Electric receive no compensation in their capacity as
directors of TU Electric.
65
<PAGE> 68
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF EACH REGISTRANT -- (CONTINUED)
Identification of executive officers and business experience:
<TABLE>
<CAPTION>
POSITIONS AND OFFICES
PRESENTLY HELD (CURRENT
TERM EXPIRES MAY 19, 1996) DATE FIRST ELECTED BUSINESS EXPERIENCE
NAME OF OFFICER AGE -------------------------- TO PRESENT OFFICES (PRECEDING FIVE YEARS)
- --------------- --- ------------------ ----------------------
<S> <C> <C> <C> <C>
Erle Nye 58 Chairman and February 20, 1987 Same and President and Chief
Chief Executive Executive of the Company.
H. Jarrell Gibbs 58 President February 16, 1996 Vice President and Principal
Financial Officer of the Company and
President of TU Services; and prior
thereto, Executive Vice President of
TU Electric; prior thereto, Executive
Vice President of Texas Electric
Service Division; prior thereto, Vice
President of TU Electric.
T. L. Baker 50 President, Electric Service February 16, 1996 Executive Vice President of TU
Division Electric; prior thereto, Senior Vice
President of TU Electric.
Michael J. McNally 41 President, Transmission February 16, 1996 Executive Vice President of TU
Division Electric; prior thereto, Principal of
Enron Development Corporation and prior
thereto, Managing Director of Industrial
Services (Enron Capital and Trade
Resources); President of Houston Pipe
Line; President of Enron Gas Liquids,
Inc.; and Vice President of Marketing
for Houston Pipe Line Company.
W. M. Taylor 53 President, Generation February 16, 1996 Executive Vice President of TU
Division Electric; prior thereto, President of
Dallas Power Division.
E. L. Watson 61 Vice Chairman November 1, 1992 Executive Vice President of TU
Electric; prior thereto, Senior Vice
President of TU Electric.
</TABLE>
There is no family relationship between any of the above named executive
officers.
66
<PAGE> 69
ITEM 11. EXECUTIVE COMPENSATION
THE COMPANY
Information with respect to this item is found under the heading
Executive Compensation of the Company in the definitive proxy statement to be
filed by the Company with the Commission on or about April 1, 1996.
TU ELECTRIC
TU Electric and its affiliates have paid or awarded compensation
during the last three calendar years to the following executive officers for
services in all capacities:
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Annual Compensation Long Term Compensation (3)
------------------------------------------ --------------------------
Awards Payouts
-------- -------
Name and Other Annual Restricted All Other
Principal Compensation Stock LTIP Compensa-
Position Year Salary ($) Bonus($)(2) ($) Awards ($) Payouts ($) tion ($) (4)
-------- ---- ---------- ----------- ----------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Erle Nye, 1995 679,167 140,000 -- 266,000 25,602 87,810
Chairman of the 1994 618,750 0 -- 217,000 0 67,275
Board and Chief 1993 554,167 100,000 -- 203,500 61,938 63,907
Executive of
TU Electric (1)
H. Jarrell Gibbs, 1995 282,917 67,200 -- 120,300 9,102 38,702
President of 1994 245,167 40,000 -- 97,880 0 29,017
TU Electric 1993 203,083 45,000 -- 58,880 15,989 25,070
W. M. Taylor, 1995 282,917 64,700 -- 117,800 10,809 38,278
President, Generation 1994 249,333 40,000 -- 97,880 0 30,333
Division - 1993 217,250 65,000 -- 60,680 28,815 21,296
TU Electric
T. L. Baker, 1995 261,667 44,900 -- 93,500 11,947 34,465
President, Electric 1994 245,833 25,000 -- 80,000 0 28,183
Service Division - 1993 237,083 25,000 -- 58,200 29,720 26,042
TU Electric
E. L. Watson, 1995 243,000 51,380 -- 95,120 11,606 35,746
Vice Chairman - TU 1994 238,417 25,000 -- 68,740 0 29,242
Electric 1993 227,000 27,000 -- 56,760 29,682 28,944
</TABLE>
(1) Amounts reported in the table for Mr. Nye consist entirely of
compensation paid by the Company.
(2) Amounts reported as Bonus in the Summary Compensation
Table are attributable, beginning in 1995, to the named officer's
participation in the Annual Incentive Plan (AIP). Officers of the
Company and its subsidiaries with a title of Vice President or above
are eligible to participate in the AIP. Under the terms of the AIP,
target incentive awards ranging from 35% to 50% of base salary, and a
maximum award of 100% of base salary, are established. The percentage
of the target or the maximum actually awarded, if any, is dependent
upon the attainment of per share net income goals established in
advance by the Organization and Compensation Committee (Committee) as
well as the Committee's evaluation of the participants' and the
Company's performance. One-half of each such award is paid in cash and
is reflected as Bonus in the Summary Compensation Table. Payment of the
remainder of the award is deferred under the Deferred and Incentive
Compensation Plan (DICP) discussed below.
(3) Amounts reported as Long-Term Compensation are
attributable to the named officer's participation in the DICP. Officers
of the Company and its subsidiaries with the title of Vice President or
above are eligible to participate in the DICP. Participants in the DICP
may defer a percentage of their base salary not to exceed a maximum
percentage determined by the Committee for each Plan year and in any
event not to exceed 15% of the participant's base salary. The Company
makes a matching award (Matching Award) equal to 150% of the
participant's deferred salary. In addition, the deferred portion of
any AIP award (Incentive Award) is invested under the DICP. The
Matching Awards and Incentive Awards are subject to forfeiture under
certain circumstances. Under the DICP, a trustee purchases Company
common stock with an amount of cash equal to each participant's
deferred salary, Matching Award and Incentive Award and accounts are
established for each participant containing
67
<PAGE> 70
ITEM 11. EXECUTIVE COMPENSATION - (CONTINUED)
performance units (Units) equal to such number of common shares. DICP
investments, including reinvested dividends, are restricted to Company
common stock. On the expiration of the applicable maturity period
(three years for the Incentive Awards and five years for deferred
salary and Matching Awards) the values of the participant's accounts
are paid in cash based upon the then current value of the Units;
provided, however, that in no event will a participant's account be
deemed to have a cash value which is less than the sum of such
participant's deferred salary together with a 6% per annum (compounded
annually) interest equivalent thereon. The maturity period is waived
if the participant dies or becomes totally and permanently disabled
and may be extended under certain circumstances.
Salary deferred under the DICP is included in amounts
reported as Salary in the Summary Compensation Table. Amounts shown in
the table below represent the number of shares purchased under the DICP
with such deferred salaries for 1995:
<TABLE>
<CAPTION>
LONG-TERM INCENTIVE PLAN - AWARDS IN LAST FISCAL YEAR
PERFORMANCE
OR OTHER
NUMBER OF PERIOD UNTIL
SHARES, UNITS OR MATURATION
NAME OTHER RIGHTS (#) OR PAYOUT
---- ---------------- ------------
<S> <C> <C>
Erle Nye 2,447 5 Years
H. Jarrell Gibbs 1,031 5 Years
W. M. Taylor 1,031 5 Years
T. L. Baker 944 5 Years
E. L. Watson 849 5 Years
</TABLE>
Incentive Awards and Matching Awards that have been made
under the DICP are included under Restricted Stock Awards in the
Summary Compensation Table. As a result of these awards, undistributed
Incentive Awards and Matching Awards made under the Plan in prior
years, and dividends reinvested thereon, at December 31, 1995 the
number and market value of Units (each of which is equal to one share
of common stock) held in the DICP accounts for Messrs. Nye, Gibbs,
Taylor, Baker and Watson were 24,006 ($984,260), 9,662 ($396,149),
9,752 ($399,861), 8,500 ($348,509) and 8,039 ($329,603), respectively.
Amounts reported as LTIP Payouts in the Summary Compensation
Table represent payouts maturing during such years of earnings on
salary deferred under the DICP in prior years.
(4) Amounts reported as All Other Compensation are attributable
to the named officer's participation in certain plans described
hereinafter in this footnote:
Under the Employees' Thrift Plan of the Texas Utilities
Company System (Thrift Plan) all employees with at least six months of
eligible service with the Company or any of its subsidiaries may invest
up to 16% of their regular salary or wages in common stock of the
Company, or in a variety of selected mutual funds. Under the Thrift
Plan, the Company matches a portion of an employee's savings in an
amount equal to 40%, 50% or 60% (depending on the employee's length of
service) of the first 6% of such employee's savings. All matching
amounts are invested in common stock of the Company. The amounts
reported under All Other Compensation in the Summary Compensation
Table includes these matching amounts which, for Messrs. Nye, Gibbs,
Taylor, Baker and Watson totaled $5,400, $4,500, $5,400, $3,686 and
$5,400, respectively, during 1995.
The Company has a Salary Deferral Program (Program) under
which each employee of the Company and its subsidiaries whose annual
salary is $80,000 ($89,510 for the Program Year beginning April 1995)
or more may elect to defer a percentage of annual salary for a period
of seven years, a period ending with the retirement of such employee,
or for a combination thereof. Such deferrals may not exceed in the
aggregate 10% of such annual salary. Salary deferred under the program
is included in amounts reported under Salary in the Summary
Compensation Table. The Company makes a matching award, subject to
forfeiture under certain circumstances, equal to 100% of the deferred
salary. A trustee will distribute at the end of the applicable maturity
period cash equal to the greater of the actual earnings of Program
assets, or the average yield during the applicable maturity period of
U.S. Treasury Notes with a maturity of ten years. The
68
<PAGE> 71
ITEM 11. EXECUTIVE COMPENSATION -- (CONTINUED)
distribution of the amounts due under the Program will be in a lump sum
if the maturity period is seven years or, if the retirement option is
elected, in twenty annual installments. The Company is financing the
retirement portion of the Program through the purchase of
corporate-owned life insurance on the lives of the participants. The
proceeds from such insurance are expected to allow the Company to fully
recover the cost of the retirement option. During 1995, matching
awards, which are included under All Other Compensation in the Summary
Compensation Table, were made for Messrs. Nye, Gibbs, Taylor, Baker and
Watson in the amount of $67,917, $28,292, $28,292, $26,167 and $24,300,
respectively.
Under the Split-Dollar Life Insurance Program (Insurance
Program) of the Texas Utilities Company System, split-dollar life
insurance policies are purchased for officers of the Company and its
subsidiaries with a title of Vice President or above, with a death
benefit equal to four times their annual compensation. The Company pays
the premiums for these policies and has received a collateral
assignment of the policies equal in value to the sum of all of its
insurance premium payments. Although the Insurance Program is
terminable at any time, it is designed so that if it is continued, the
Company will fully recover all of the insurance premium payments it has
made either upon the death of the participant or, if the assumptions
made as to policy yield are realized, upon the later of fifteen years
of participation or the participant's attainment of age sixty-five.
During 1995, the economic benefit derived by Messrs. Nye, Gibbs,
Taylor, Baker and Watson from the term insurance coverage provided and
the foregone interest on the remainder of the insurance premiums paid
by the Company amounted to $14,493, $5,910, $4,586, $4,612 and $6,046.
<TABLE>
<CAPTION>
PENSION PLAN TABLE
YEARS OF SERVICE
---------------------------------------------------------------------------------------
Remuneration 20 25 30 35 40
------------ -- -- -- -- --
<S> <C> <C> <C> <C> <C>
$ 100,000 $ 29,688 $ 37,110 $ 44,532 $ 51,954 $ 59,376
200,000 59,688 74,610 89,532 104,454 119,376
400,000 119,688 149,610 179,532 209,454 239,376
800,000 239,688 299,610 359,532 419,454 479,376
1,000,000 299,688 374,610 449,532 524,454 599,376
1,400,000 419,688 524,610 629,532 734,454 839,376
</TABLE>
The Company and its subsidiaries maintain retirement plans (Plans)
which are qualified under applicable provisions of the Internal Revenue Code of
1986, as amended (Code). Annual retirement benefits are computed as follows: for
each year of accredited service up to a total of 40 years of service, 1.3% of
the first $7,800, plus 1.5% of the excess over $7,800 of the participant's
average annual earnings during his or her three years of highest earnings.
Amounts reported under Salary for the named officers in the Summary Compensation
Table approximate earnings as defined by the Plans. Benefits paid under the
Plans are not subject to any reduction for Social Security payments but are
limited by provisions of the Code. The Company maintains a Supplemental
Retirement Plan (Supplemental Plan) which provides for the payment of retirement
benefits which would otherwise be limited by the Code or by the definition of
earnings in the Plans. Under the Supplemental Plan, retirement benefits are
calculated in accordance with the same formula used under the Plans, except that
earnings also include AIP awards. One-half of the AIP award is reported under
Bonus for the named officers in the Summary Compensation Table. As of February
29, 1996, years of accredited service under the plans for Messrs. Nye, Gibbs,
Taylor, Baker and Watson were 33, 33, 28, 25 and 36, respectively. The above
table illustrates the total annual benefit payable at retirement under the Plans
and Supplemental Plan prior to any reduction for a contingent beneficiary option
which may be selected by the participant.
69
<PAGE> 72
ITEM 11. EXECUTIVE COMPENSATION -- (CONTINUED)
The following report and performance graph are presented herein for
informational purposes only. This information is not required to be included
herein and shall not be deemed to form a part of this report or be "filed" with
the Securities and Exchange Commission. The report set forth hereinafter is the
report of the Organization and Compensation Committee of the Board of Directors
of the Company and is illustrative of the methodology utilized in establishing
the compensation of executive officers of the Company and TU Electric.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Organization and Compensation Committee of the Board of Directors
is responsible for reviewing and establishing the compensation of the executive
officers of the Company. The Committee consists of all of the nonemployee
directors of the Company and is chaired by James A. Middleton. The Committee has
directed the preparation of this report and has approved its contents and
submission to the shareholders.
As a matter of policy, the Committee believes that levels of executive
compensation should be based upon an evaluation of the performance of the
Company and its officers generally, as well as in comparison to persons with
comparable responsibilities in similar business enterprises. Compensation plans
should align executive compensation with returns to shareholders with due
consideration accorded to balancing both long-term and short-term objectives.
The Committee has determined that, as a matter of policy to be implemented over
time, the base salaries of the officers will be established at the median, or
50th percentile, of the top ten electric utilities and that opportunities for
total direct compensation to reach the 75th percentile, or above, of such
utilities will be provided through performance-based compensation plans. Such
compensation principles and practices have allowed, and should continue to
allow, the Company to attract, retain and motivate its key executives.
As previously reported, a nationally recognized compensation consultant
was retained, in late 1994, to conduct a comprehensive review of the
compensation and benefits provided by the Company to its officers. The
consultant's report included recommended revisions to the Company's compensation
and benefits program principally so as to place a greater emphasis on
performance-based incentive compensation and to provide, thereby, for an
appropriate and competitive balance between base salaries, annual incentives and
long-term incentives. The consultant's recommendations, including the Annual
Incentive Plan (referred to as the AIP and described in footnote 2 to the
Summary Compensation Table) as well as improvements in life insurance coverage
and retirement benefits, have generally been implemented.
The compensation of the officers of the Company consists principally of
base salaries, the opportunity to participate in the Deferred and Incentive
Compensation Plan (referred to as the DICP and described in footnote 3 to the
Summary Compensation Table) and the opportunity to earn an incentive award under
the AIP. Benefits provided under the DICP and the AIP represent a substantial
portion of officers' compensation; and the value of future payments under the
DICP, as well as the value of the deferred portion of any award under the AIP,
is directly related to the future performance of the Company's common stock. It
is anticipated that performance-based incentive awards under the AIP will, in
future years, constitute an increasing percentage of officers' total
compensation.
The AIP, as approved by shareholders at the annual meeting in May 1995,
is administered by the Committee and provides an objective framework within
which Company and individual performance can be evaluated by the Committee.
Depending on the results of such performance evaluations, and the attainment of
the per share net income goals established in advance, the Committee may provide
annual incentive compensation awards to eligible officers. The evaluation of
each individual participant's performance is based upon the attainment of
individual and business unit objectives. The Company's performance is evaluated,
compared to the ten largest electric utilities and/or the electric utility
industry, based upon its total return to shareholders and return on invested
capital as well as other measures relating to competitiveness, service quality
and employee safety. The combination of individual and Company performance
results, together with the Committee's evaluation of the competitive level of
compensation which is appropriate for such results, determines the amount, if
any, actually awarded.
In establishing levels of executive compensation at its May 1995
meeting, the Committee reviewed various performance and compensation data
including the performance measures under the AIP and the report of its
compensation consultant. Information was also gathered from industry sources and
other published and private materials which provided a basis for comparing the
largest electric and gas utilities and other survey groups
70
<PAGE> 73
ITEM 11. EXECUTIVE COMPENSATION -- (CONTINUED)
representing a large variety of business organizations. Included in the data
considered was that, in 1994, TU Electric, the Company's principal subsidiary,
was the largest electric utility in the United States as measured by megawatt
hour sales and, compared to other electric utilities in the United States, was
sixth in electric revenues, sixth in total assets, third in net generating
capability, ninth in number of customers and fifteenth in number of employees.
This information provided a basis for comparing the Company with the largest
electric and gas utilities, including companies generally comparable in size
represented in the Moody's 24 utilities whose comparative investment return is
depicted in the graph herein. Compensation amounts were established by the
Committee based upon its subjective evaluation of Company and individual
performance at levels consistent with the Committee's policy relating to total
direct compensation.
In May 1995, Mr. J.S. Farrington, formerly Chairman of the Board and
Chief Executive, was elected Chairman of the Board and Mr. Nye, formerly
President, was elected President and Chief Executive. In connection with this
change, Mr. Farrington's compensation was provided for pursuant to a management
transition agreement described in Footnote 4 [to the Summary Compensation Table
set forth in the Company's 1996 proxy statement]. Based upon the Committee's
subjective evaluation of the information described herein, the Committee also
provided Mr. Farrington with an AIP award of $330,000 compared to the prior
year's incentive award under the DICP of $125,000. The Committee established
Mr. Nye's base salary as Chief Executive at the annual rate of $700,000,
representing a $50,000, or 7.7%, increase over the amount established for Mr.
Nye in May 1994. The Committee also provided Mr. Nye with an AIP award of
$280,000 compared to the prior year's incentive award under the DICP of
$100,000. This amount of compensation was established in recognition of Mr.
Nye's election as Chief Executive and was based upon the Committee's subjective
evaluation of the information described herein.
In discharging its responsibilities with respect to establishing
executive compensation, the Committee normally considers such matters at its May
meeting held in conjunction with the Annual Meeting of Shareholders. Although
Company management may be present during Committee discussions of officers'
compensation, Committee decisions with respect to the compensation of the
President and Chief Executive and the Chairman of the Board are reached in
private session without the presence of any member of Company management.
Section 162(m) of the Code limits the deductibility of compensation
which a publicly traded corporation provides to its most highly compensated
officers. As a general policy, the Company does not intend to provide
compensation which is not deductible for federal income tax purposes. Awards
under the AIP in 1996 and subsequent years are expected to be fully deductible,
and the DICP and the Salary Deferral Program have been amended to require the
deferral of distributions of amounts earned in 1995 and subsequent years until
the time when such amounts would be deductible. Awards provided under the AIP in
1995 and distributions under the DICP and the Salary Deferral Program which were
earned in plan years prior to 1995, may not be fully deductible but such amounts
are not expected to be material.
Shareholder comments to the Committee are welcomed and should be
addressed to the Corporate Secretary of the Company at the Company's offices.
Organization and Compensation Committee
James A. Middleton, Chair Kerney Laday
Jack W. Evans Margaret N. Maxey
Bayard H. Friedman Charles R. Perry
William M. Griffin Herbert H. Richardson
71
<PAGE> 74
ITEM 11. EXECUTIVE COMPENSATION -- (CONCLUDED)
PERFORMANCE GRAPH
The following graph compares the performance of the Company's common
stock to the S&P 500 Index and to the Moody's 24 Utilities for the last five
years. The graph assumes the investment of $100 at December 31, 1990 and that
all dividends were reinvested. The amount of the investment at the end of each
year is shown in the graph and in the table which follows.
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C> <C>
Texas Utilities 100 123 135 147 119 166
S&P 500 Index 100 131 140 154 156 216
Moody's 24 Utilities 100 129 135 149 126 166
</TABLE>
72
<PAGE> 75
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
THE COMPANY
Information with respect to this item is found under the heading Beneficial
Ownership of Common Stock of the Company in the definitive proxy statement to
be filed by the Company with the Commission on or about April 1, 1996.
Additional information with respect to Executive Officers of the Registrant is
found at the end of Part I.
TU ELECTRIC
Security ownership of certain beneficial owners at February 29, 1996:
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME AND ADDRESS OF BENEFICIAL
TITLE OF CLASS OF BENEFICIAL OWNER OWNERSHIP PERCENT OF CLASS
-------------- ------------------- --------- ----------------
<S> <C> <C> <C>
Common Stock, Texas Utilities Company 156,800,000 shares 100.0%
without par value, Energy Plaza, 1601 Bryan Street sole voting and
of TU Electric Dallas, Texas 75201 investment power
</TABLE>
Security ownership of management at February 29 ,1996:
The following lists the common stock of the Company owned by the Directors
and Executive Officers of TU Electric. The named individuals have sole voting
and investment power for the shares of common stock reported. Ownership of such
common stock constituted less than 1% of the outstanding shares for each
individual. None of the named individuals own any of the preferred stock of TU
Electric.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME OF COMMON STOCK
---- ---------------
<S> <C>
T. L. Baker 2,749
J. S. Farrington 18,575
H. Jarrell Gibbs 6,254
Michael J. McNally 5,250
Erle Nye 19,053
W. M. Taylor 7,807
E. L. Watson 7,698
All Directors and Executive
Officers as a group (7) 67,386
</TABLE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
THE COMPANY
Information with respect to this item is found under the heading Beneficial
Ownership of Common Stock of the Company in the definitive proxy statement to be
filed by the Company with the Commission on or about April 1, 1996. Additional
information with respect to Executive Officers of the Registrant is found at the
end of Part I.
TU ELECTRIC
None.
73
<PAGE> 76
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
Page
----
<S> <C>
(a) Documents filed as part of this Report:
THE COMPANY
1. Financial Statements (included in Item 8, Financial Statements
and Supplementary Data):
Statements of Consolidated Income for each of the three years in the
period ended December 31, 1995............................................. 28
Statements of Consolidated Retained Earnings for each of the three
years in the period ended December 31, 1995................................ 28
Statements of Consolidated Cash Flows for each of the three years in
the period ended December 31, 1995......................................... 29
Consolidated Balance Sheets, December 31, 1995 and 1994....................... 30
Notes to Consolidated Financial Statements.................................... 36
Statement of Responsibility................................................... 61
Independent Auditors' Report.................................................. 63
2. Financial Statement Schedule -
For each of the three years in the period ended December 31, 1995:
Schedule II-Valuation and Qualifying Accounts................................. 80
TU ELECTRIC
3. Financial Statements (included in Item 8, Financial Statements
and Supplementary Data):
Statements of Consolidated Income for each of the three years in the
period ended December 31, 1995............................................. 32
Statements of Consolidated Retained Earnings for each of the three
years in the period ended December 31, 1995................................ 32
Statements of Consolidated Cash Flows for each of the three years in
the period ended December 31, 1995......................................... 33
Consolidated Balance Sheets, December 31, 1995 and 1994....................... 34
Notes to Consolidated Financial Statements.................................... 36
Statement of Responsibility................................................... 62
Independent Auditors' Report.................................................. 64
4. Financial Statement Schedule -
For each of the three years in the period ended December 31, 1995:
Schedule II-Valuation and Qualifying Accounts................................. 80
</TABLE>
All other financial statement schedules are omitted because of the
absence of the conditions under which they are required or because the required
information is included in the Financial Statements or notes thereto.
74
<PAGE> 77
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K --
(CONTINUED)
(b) Reports on Form 8-K:
Reports on Form 8-K filed since September 30, 1995, are as follows:
THE COMPANY
<TABLE>
<CAPTION>
Date of Report Item Reported
-------------- -------------
<S> <C>
October 17, 1995 Item 5. OTHER EVENTS
</TABLE>
TU ELECTRIC
<TABLE>
<CAPTION>
Date of Report Item Reported
-------------- -------------
<S> <C>
October 17, 1995 Item 5. OTHER EVENTS
October 26, 1995 Item 5. FINANCIAL STATEMENTS AND EXHIBITS
</TABLE>
(c) Exhibits:
THE COMPANY AND TU ELECTRIC
<TABLE>
<CAPTION>
PREVIOUSLY FILED*
---------------------------
WITH
FILE AS
EXHIBITS NUMBER EXHIBIT NUMBER DATED
- -------- ------ ------- ------ -----
<S> <C> <C> <C>
3(a) 33-48880 4(a) - Restated Articles of Incorporation of the Company.
3(b) 33-48880 4(b) - Bylaws, as amended, of the Company.
3(c) 0-11442 3(a) - Restated Articles of Incorporation of TU Electric.
Form 10-K
(1993)
3(d) 33-64694 4(c) - Bylaws of TU Electric, as amended.
4(a) 2-90185 4(a) - 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(a)(1) - Supplemental Indentures to Mortgage and Deed of Trust:
2-90185 4(b) First April 1, 1984
2-92738 4(a)-1 Second September 1, 1984
2-97185 4(a)-1 Third April 1, 1985
2-99940 4(a)-1 Fourth August 1, 1985
2-99940 4(a)-2 Fifth September 1, 1985
33-01744 4(a)-2 Sixth December 1, 1985
33-9583 4(a)-1 Seventh March 1, 1986
33-9583 4(a)-2 Eighth May 1, 1986
33-11376 4(a)-1 Ninth October 1, 1986
33-11376 4(a)-2 Tenth December 1, 1986
33-11376 4(a)-3 Eleventh December 1, 1986
33-14584 4(a)-1 Twelfth February 1, 1987
33-14584 4(a)-2 Thirteenth March 1, 1987
33-14584 4(a)-3 Fourteenth April 1, 1987
33-24089 4(a)-1 Fifteenth July 1, 1987
33-24089 4(a)-2 Sixteenth September 1, 1987
33-24089 4(a)-3 Seventeenth October 1, 1987
33-24089 4(a)-4 Eighteenth March 1, 1988
33-24089 4(a)-5 Nineteenth May 1, 1988
33-30141 4(a)-1 Twentieth September 1, 1988
33-30141 4(a)-2 Twenty-first November 1, 1988
33-30141 4(a)-3 Twenty-second January 1, 1989
33-35614 4(a)-1 Twenty-third August 1, 1989
33-35614 4(a)-2 Twenty-fourth November 1, 1989
33-35614 4(a)-3 Twenty-fifth December 1, 1989
33-35614 4(a)-4 Twenty-six February 1, 1990
33-39493 4(a)-1 Twenty-seventh September 1, 1990
33-39493 4(a)-2 Twenty-eighth October 1, 1990
33-39493 4(a)-3 Twenty-ninth October 1, 1990
33-39493 4(a)-4 Thirtieth March 1, 1991
33-45104 4(a)-1 Thirty-first May 1, 1991
33-45104 4(a)-2 Thirty-second July 1, 1991
</TABLE>
75
<PAGE> 78
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K --
(CONTINUED)
<TABLE>
<CAPTION>
PREVIOUSLY FILED*
---------------------------
WITH
FILE AS
EXHIBITS NUMBER EXHIBIT NUMBER DATED
- -------- ------ ------- ------ -----
<S> <C> <C> <C>
33-46293 4(a)-1 Thirty-third February 1, 1992
33-49710 4(a)-1 Thirty-fourth April 1, 1992
33-49710 4(a)-2 Thirty-fifth April 1, 1992
33-49710 4(a)-3 Thirty-sixth June 1, 1992
33-49710 4(a)-4 Thirty-seventh June 1, 1992
33-57576 4(a)-1 Thirty-eighth August 1, 1992
33-57576 4(a)-2 Thirty-ninth October 1, 1992
33-57576 4(a)-3 Fortieth November 1, 1992
33-57576 4(a)-4 Forty-first December 1, 1992
33-60528 4(a)-1 Forty-second March 1, 1993
33-64692 4(a)-1 Forty-third April 1, 1993
33-64692 4(a)-2 Forty-fourth April 1, 1993
33-64692 4(a)-3 Forty-fifth May 1, 1993
33-68100 4(a)-1 Forty-sixth July 1, 1993
33-68100 4(a)-3 Forty-seventh October 1, 1993
33-68100 4(a)-4 Forty-eighth November 1, 1993
33-68100 4(a)-5 Forty-ninth May 1, 1994
33-68100 4(a)-6 Fiftieth May 1, 1994
33-68100 4(a)-7 Fifty-first August 1, 1994
33-68100 4(a)-8 Fifty-second April 1, 1995
33-68100 4(a)-9 Fifty-third June 1, 1995
4(b)(1) - Agreement to furnish certain debt instruments (the Company).
4(b)(2) - Agreement to furnish certain debt instruments (TU Electric).
4(c) 33-68104 4(b)-16 - Deposit Agreement between TU Electric and Chemical Bank, dated
as of January 11, 1993.
4(d) 33-68104 4(b)-17 - Deposit Agreement between TU Electric and Chemical Bank, dated
as of August 4, 1993.
4(e) 0-11442 4(h) - Deposit Agreement between TU Electric and Chemical Bank, dated
Form 10-K as of October 14, 1993.
(1993)
4(f) - Indenture (For Unsecured Subordinated Debt Securities relating
to Trust Securities), dated as of December 12, 1995, between TU
Electric and The Bank of New York, as Trustee.
4(g) - Amended and Restated Trust Agreement, dated as of December
12, 1995, between TU Electric, as Depositor, and The Bank of
New York, The Bank of New York (Delaware) and the
Administrative Trustees thereunder, as Trustees for TU Electric
Capital I.
4(h) - Guarantee Agreement with respect to TU Electric Capital I, dated
as of December 12, 1995, between TU Electric, as Guarantor,
and The Bank of New York, as Trustee.
4(i) - Agreement as to Expenses and Liabilities, dated as of December
12, 1995, between TU Electric and TU Electric Capital I.
4(j) - Amended and Restated Trust Agreement, dated as of December
12, 1995, between TU Electric, as Depositor, and The Bank of
New York, The Bank of New York (Delaware) and the
Administrative Trustees thereunder, as Trustees for TU Electric
Capital II.
4(k) - Guarantee Agreement with respect to TU Electric Capital II,
dated as of December 12, 1995, between TU Electric, as
Guarantor, and The Bank of New York, as Trustee.
</TABLE>
76
<PAGE> 79
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K --
(CONTINUED)
<TABLE>
<CAPTION>
PREVIOUSLY FILED*
---------------------------
WITH
FILE AS
EXHIBITS NUMBER EXHIBIT NUMBER DATED
- -------- ------ ------- ------ -----
<S> <C> <C> <C>
4(l) - Agreement as to Expenses and Liabilities, dated as of December
12, 1995, between TU Electric and TU Electric Capital II.
4(m) - Amended and Restated Trust Agreement, dated as of December
13, 1995, between TU Electric, as Depositor, and The Bank of
New York, The Bank of New York (Delaware), and the
Administrative Trustees thereunder, as Trustees for TU Electric
Capital III.
4(n) - Guarantee Agreement with respect to TU Electric Capital III,
dated as of December 13, 1995, between TU Electric. as
Guarantor, and The Bank of New York, as Trustee.
4(o) - Agreement as to Expenses and Liabilities, dated as of December
13, 1995, between TU Electric and TU Electric Capital III.
10(a)** 1-3591 10(a) - Deferred and Incentive Compensation Plan of the Texas Utilities
Form 10-Q Company System, as amended January 1, 1995.
(Quarter ended
June 30, 1995)
10(b)** 1-3591 10(f) - Salary Deferral Program of the Texas Utilities Company System
Form 10-Q as amended January 1, 1995.
(Quarter ended
June 30, 1995)
10(c)** 1-3591 10(c) - Restated Supplemental Retirement Plan for Employees of the
Form 10-Q Texas Utilities Company System, as restated effective January 1,
(Quarter ended 1995.
June 30, 1995)
10(d)** 1-3591 10(b) - Deferred Compensation Plan for Outside Directors of the
Form 10-Q Company, effective as of July 1, 1995.
(Quarter ended
June 30, 1995)
10(e)** 1-3591 10(d) - Annual Incentive Plan of the Texas Utilities Company System,
Form 10-Q dated as of May 19, 1995.
(Quarter ended
June 30, 1995)
10(f)** 1-3591 10(e) - Management Transition Agreement, dated as of May 19, 1995
Form 10-Q between the Company and J.S. Farrington.
(Quarter ended
June 30, 1995)
12 - Computation of Ratio of Earnings to Fixed Charges for TU
Electric.
21 - Subsidiaries of the Company.
23(a) - Consent of Counsel to the Company.
23(b) - Consent of Counsel to TU Electric.
23(c) - Independent Auditor's Consent for the Company.
23(d) - Independent Auditor's Consent for TU Electric.
27(a) - Financial Data Schedule for the Company.
27(b) - Financial Data Schedule for TU Electric.
27(c) - Restated Financial Data Schedule of the Company, 09-30-94.
27(d) - Restated Financial Data Schedule of the Company, 12-31-94.
27(e) - Restated Financial Data Schedule of the Company, 03-31-95.
27(f) - Restated Financial Data Schedule of the Company, 06-30-95.
27(g) - Restated Financial Data Schedule of the Company, 09-30-95.
</TABLE>
77
<PAGE> 80
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K --
(CONTINUED)
<TABLE>
<CAPTION>
PREVIOUSLY FILED*
---------------------------
WITH
FILE AS
EXHIBITS NUMBER EXHIBIT NUMBER DATED
- -------- ------ ------- ------ -----
<S> <C> <C> <C>
99(a) 1-3591 28(b) - Agreement, dated as of February 12, 1988, between TU Electric
Form 10-K and Texas Municipal Power Agency.
(1987)
99(b) 33-55408 99(a) - Agreement, dated as of July 5, 1988, between TU Electric and
the Brazos Electric Power Cooperative, Inc.
99(c) 33-55408 99(b) - Agreement, dated as of January 30, 1990, between TU Electric
and Tex-La Electric Cooperative of Texas, Inc.
99(d) 33-59988 2 - Agreement and plan of merger, dated as of January 25, 1993, by
and among the Company, TUA, Inc., and Southwestern Electric
Service Company.
99(e) 33-23532 4(c)(i) - Trust Indenture, Security Agreement and Mortgage, dated as of
December 1, 1987, as supplemented by Supplement No. 1 thereto
dated as of May 1, 1988 among the Lessor, TU Electric and the
Trustee.
99(f) 33-24089 4(c)-1 - Supplement No. 2 to Trust Indenture, Security Agreement and
Mortgage, dated as of August 1, 1988.
99(g) 33-24089 4(e)-1 - Supplement No. 3 to Trust Indenture, Security Agreement and
Mortgage, dated as of August 1, 1988.
99(h) 0-11442 99(c) - Supplement No. 4 to Trust Indenture, Security Agreement and
Form 10-Q Mortgage, including form of Secured Facility Bond, 1993 Series.
(Quarter ended
June 30, 1993)
99(i) 33-23532 4(d) - Lease Agreement, dated as of December 1, 1987 between the
Lessor and TU Electric as supplemented by Supplement No. 1
thereto dated as of May 20, 1988 between the Lessor and TU
Electric.
99(j) 33-24089 4(f) - Lease Agreement Supplement No. 2, dated as of August 18,
1988.
99(k) 33-24089 4(f)-1 - Lease Agreement Supplement No. 3, dated as of August 25,
1988.
99(l) 33-63434 4(d)(iv) - Lease Agreement Supplement No. 4, dated as of December 1,
1988.
99(m) 33-63434 4(d)(v) - Lease Agreement Supplement No. 5, dated as of June 1, 1989.
99(n) 0-11442 99(d) - Lease Agreement Supplement No. 6, dated as of July 1, 1993.
Form 10-Q
(Quarter ended
June 30, 1993)
99(o) 33-23532 4(e) - Participation Agreement dated as of December 1, 1987, as
amended by a Consent to Amendment of the Participation
Agreement, dated as of May 20, 1988, each among the Lessor,
the Trustee, the Owner Participant, certain banking institutions,
Capcorp, Inc. and TU Electric.
99(p) 33-24089 4(g) - Consent to Amendment of the Participation Agreement, dated as
of August 18, 1988.
99(q) 33-24089 4(g)-1 - Supplement No. 1 to the Participation Agreement, dated as of
August 18, 1988.
99(r) 33-24089 4(g)-2 - Supplement No. 2 to the Participation Agreement, dated as of
August 18, 1988.
99(s) 33-63434 4(e)(v) - Supplement No. 3 to the Participation Agreement, dated as of
December 1, 1988.
</TABLE>
78
<PAGE> 81
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K --
(CONCLUDED)
<TABLE>
<CAPTION>
PREVIOUSLY FILED*
---------------------------
WITH
FILE AS
EXHIBITS NUMBER EXHIBIT NUMBER DATED
- -------- ------ ------- ------ -----
<S> <C> <C> <C>
99(t) 0-11442 99(e) - Supplement No. 4 to the Participation Agreement, dated as of
Form 10-Q June 17, 1993.
(Quarter ended
June 30, 1993)
99(u) 0-11442 99(t) - Competitive Advance and Revolving Credit Facility Agreement,
Form 10-Q "Facility A", dated as of April 29, 1994, among the Company, TU
(Quarter ended Electric, certain banks and Chemical Bank, Agent (Facility A).
September 31, 1994)
99(v) 0-11442 99(a) - Amendment, dated as of April 28, 1995, to Facility A.
(Form 10-Q
Quarter ended
March 31, 1995)
99(w) - Second Amendment, dated as of November 24, 1995, to Facility
A.
99(x) 0-11442 99(u) - Competitive Advance and Revolving Credit Facility Agreement,
Form 10-Q "Facility B", dated as of April 29, 1994, among the Company,
(Quarter ended TU Electric, certain banks and Chemical Bank, Agent (Facility
September 31, 1994) B).
99(y) 0-11442 99(b) - Amendment, dated as of April 28, 1995, to Facility B.
Form 10-Q
(Quarter ended
March 31, 1995)
99(z) - Second Amendment, dated as of November 24, 1995, to Facility B.
99(aa) 0-11442 99(v) - Credit Agreement, dated as of February 24, 1995, among TU
Form 10-K Electric, Bank of America and The Bank of New York.
(1994)
99(bb) - Competitive Advance and Revolving Credit Facility Agreement,
dated as of November 22, 1995, among the Company and
Chemical Bank and Texas Commerce Bank National Association,
as Agents.
</TABLE>
- ---------------
* Incorporated herein by reference.
** Management contract or compensation plan or arrangement required to be
filed as an exhibit to this report pursuant to Item 14(c) of Form 10-K.
79
<PAGE> 82
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
TEXAS UTILITIES COMPANY AND SUBSIDIARIES
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
============================================================================================================
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------------------------------------
ADDITIONS
--------------------
BALANCE AT CHARGED TO CHARGED
BEGINNING COSTS AND TO OTHER BALANCE AT
CLASSIFICATION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS (a) END OF YEAR
- ------------------------------------------------------------------------------------------------------------
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C> <C>
VALUATION ACCOUNT, DEDUCTED FROM RELATED
ASSET ON THE BALANCE SHEET --
Year Ended December 31, 1995
Reserve for regulatory disallowance.... $1,381,145 -- -- -- $1,381,145
Allowance for uncollectible accounts... 5,095 20,335 12 19,477 5,965
Year Ended December 31, 1994
Reserve for regulatory disallowances... $1,381,145 -- -- -- $1,381,145
Allowance for uncollectible accounts... 6,394 $30,020 -- $31,319 5,095
Year Ended December 31, 1993
Reserve for regulatory disallowances... $1,381,145 -- -- -- $1,381,145
Allowance for uncollectible accounts... 1,613 $21,607 -- $16,826 6,394
</TABLE>
TEXAS UTILITIES ELECTRIC COMPANY AND SUBSIDIARIES
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
============================================================================================================
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ------------------------------------------------------------------------------------------------------------
ADDITIONS
--------------------
BALANCE AT CHARGED TO CHARGED
BEGINNING COSTS AND TO OTHER BALANCE AT
CLASSIFICATION OF YEAR EXPENSES ACCOUNTS DEDUCTIONS (a) END OF YEAR
- ------------------------------------------------------------------------------------------------------------
THOUSANDS OF DOLLARS
<S> <C> <C> <C> <C> <C>
VALUATION ACCOUNT, DEDUCTED FROM RELATED
ASSET ON THE BALANCE SHEET --
Year Ended December 31, 1995
Reserve for regulatory disallowance.... $1,381,145 -- -- -- $1,381,145
Allowance for uncollectible accounts... 5,026 $18,163 -- $19,275 3,914
Year Ended December 31, 1994
Reserve for regulatory disallowances... $1,381,145 -- -- -- $1,381,145
Allowance for uncollectible accounts... 6,304 $29,854 -- $31,132 5,026
Year Ended December 31, 1993
Reserve for regulatory disallowances... $1,381,145 -- -- -- $1,381,145
Allowance for uncollectible accounts... 1,613 $21,430 -- $16,739 6,304
</TABLE>
- -------------------
(a) Deductions represents uncollectible accounts written off net of recoveries
of amounts previously written off.
80
<PAGE> 83
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, TEXAS UTILITIES COMPANY HAS DULY CAUSED THIS REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
TEXAS UTILITIES COMPANY
Date: March 5, 1996 By: /s/ J.S. FARRINGTON
-----------------------------------------
(J. S. FARRINGTON, CHAIRMAN OF THE BOARD)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF TEXAS
UTILITIES COMPANY AND IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ J. S. FARRINGTON Chairman of the Board March 5, 1996
- ---------------------------------------------------------
(J. S. Farrington, Chairman of the Board)
/s/ ERLE NYE Principal Executive March 5, 1996
- --------------------------------------------------------- Officer and Director
(Erle Nye, President and Chief Executive)
/s/ PETER B. TINKHAM Principal Financial March 5, 1996
- --------------------------------------------------------- Officer
(Peter B. Tinkham, Treasurer and Assistant Secretary)
/s/ CATHRYN C. HULEN Principal Accounting March 5, 1996
- --------------------------------------------------------- Officer
(Cathryn C. Hulen, Controller)
/s/ BAYARD H. FRIEDMAN Director March 5, 1996
- ---------------------------------------------------------
(Bayard H. Friedman)
/s/ WILLIAM M. GRIFFIN Director March 5, 1996
- ---------------------------------------------------------
(William M. Griffin)
/s/ KERNEY LADAY Director March 5, 1996
- ---------------------------------------------------------
(Kerney Laday)
/s/ MARGARET N. MAXEY Director March 5, 1996
- ---------------------------------------------------------
(Margaret N. Maxey)
/s/ JAMES A. MIDDLETON Director March 5, 1996
- ---------------------------------------------------------
(James A. Middleton)
/s/ J. E. OESTERREICHER Director March 5, 1996
- ---------------------------------------------------------
(J. E. Oesterreicher)
/s/ CHARLES R. PERRY Director March 5, 1996
- ---------------------------------------------------------
(Charles R. Perry)
/s/ HERBERT H. RICHARDSON Director March 5, 1996
- ---------------------------------------------------------
(Herbert H. Richardson)
</TABLE>
81
<PAGE> 84
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
TEXAS UTILITIES ELECTRIC COMPANY
Date: March 5, 1996 By: /s/ ERLE NYE
------------------------------------
(ERLE NYE, CHAIRMAN OF THE BOARD
AND CHIEF EXECUTIVE)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATE INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ERLE NYE Principal Executive March 5, 1996
- --------------------------------------------------------- Officer and Director
(Erle Nye, Chairman of the Board and Chief Executive)
/s/ ROBERT S. SHAPARD Principal Financial March 5, 1996
- --------------------------------------------------------- Officer
(Robert S. Shapard, Treasurer and Assistant Secretary)
/s/ CATHRYN C. HULEN Principal Accounting March 5, 1996
- --------------------------------------------------------- Officer
(Cathryn C. Hulen, Controller)
/s/ T. L. BAKER Director March 5, 1996
- ---------------------------------------------------------
(T. L. Baker)
/s/ J. S. FARRINGTON Director March 5, 1996
- ---------------------------------------------------------
(J.S. Farrington)
/s/ H. JARRELL GIBBS Director March 5, 1996
- ---------------------------------------------------------
(H. Jarrell Gibbs)
/s/ MICHAEL J. MCNALLY Director March 5, 1996
- ---------------------------------------------------------
(Michael J. McNally)
/s/ W. M. TAYLOR Director March 5, 1996
- ---------------------------------------------------------
(W. M. Taylor)
/s/ E. L. WATSON Director March 5, 1996
- ---------------------------------------------------------
(E. L. Watson)
</TABLE>
82
<PAGE> 85
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------- ---------------------------------
<S> <C> <C>
4(b)(1) - Agreement to furnish certain debt instruments (the Company).
4(b)(2) - Agreement to furnish certain debt instruments (TU Electric).
4(f) - Indenture (For Unsecured Subordinated Debt Securities relating
to Trust Securities), dated as of December 12, 1995, between
TU Electric and The Bank of New York, as Trustee.
4(g) - Amended and Restated Trust Agreement, dated as of December 12,
1995, between TU Electric, as Depositor, and The Bank of New
York, The Bank of New York (Delaware) and the Administrative
Trustees thereunder, as Trustees for TU Electric Capital I.
4(h) - Guarantee Agreement with respect to TU Electric Capital I,
dated as of December 12, 1995, between TU Electric, as
Guarantor, and The Bank of New York, as Trustee.
4(i) - Agreement as to Expenses and Liabilities, dated as of December
12, 1995, between TU Electric and TU Electric Capital I.
4(j) - Amended and Restated Trust Agreement, dated as of December 12,
1995, between TU Electric, as Depositor, and The Bank of New
York, The Bank of New York (Delaware) and the Administrative
Trustees thereunder, as Trustees for TU Electric Capital II.
4(k) - Guarantee Agreement with respect to TU Electric Capital II,
dated as of December 12, 1995, between TU Electric, as
Guarantor, and The Bank of New York, as Trustee.
4(l) - Agreement as to Expenses and Liabilities, dated as of December
12, 1995, between TU Electric and TU Electric Capital II.
4(m) - Amended and Restated Trust Agreement, dated as of December 13,
1995, between TU Electric, as Depositor, and The Bank of New
York, The Bank of New York (Delaware), and the Administrative
Trustees thereunder, as Trustees for TU Electric Capital III.
4(n) - Guarantee Agreement with respect to TU Electric Capital III,
dated as of December 13, 1995, between TU Electric. as
Guarantor, and The Bank of New York, as Trustee.
4(o) - Agreement as to Expenses and Liabilities, dated as of December
13, 1995, between TU Electric and TU Electric Capital III.
12 - Computation of Ratio of Earnings to Fixed Charges for TU
Electric.
21 - Subsidiaries of the Company.
23(a) - Consent of Counsel to the Company.
23(b) - Consent of Counsel to TU Electric.
23(c) - Independent Auditor's Consent for the Company.
23(d) - Independent Auditor's Consent for TU Electric.
27(a) - Financial Data Schedule for the Company.
27(b) - Financial Data Schedule for TU Electric.
27(c) - Restated Financial Data Schedule for the Company, 09-30-94
27(d) - Restated Financial Data Schedule for the Company, 12-31-94
27(e) - Restated Financial Data Schedule for the Company, 03-31-95
27(f) - Restated Financial Data Schedule for the Company, 06-30-95
27(g) - Restated Financial Data Schedule for the Company, 09-30-95
99(w) - Second Amendment, dated as of November 24, 1995, to Facility A.
99(z) - Second Amendment, dated as of November 24, 1995, to Facility B.
99(bb) - Competitive Advance and Revolving Credit Facility Agreement,
dated as of November 22, 1995, among the Company and Chemical
Bank and Texas Commerce Bank National Association, as Agents.
</TABLE>
<PAGE> 1
Exhibit 4(b)(1)
March 5, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Texas Utilities Company
1995 Annual Report on Form 10-K
Gentlemen:
Pursuant to the exemption afforded by Item 601(b)(4)(iii)(A) of
Regulation S-K, Texas Utilities Company (Company) is not filing as exhibits to
its Annual Report on Form 10-K for 1995 instruments with respect to its
long-term debt of the Company and/or its subsidiaries. These instruments
include (i) agreements with respect to pollution control revenue bonds and (ii)
agreements with respect to senior notes. Each item of long-term debt
referenced above does not exceed 10% of the total assets of the Company and its
subsidiaries on a consolidated basis. Reference is made to Note 8 to
Consolidated Financial Statements (Item 8 of the Company's Annual Report on
Form 10-K for 1995).
The Company agrees to furnish a copy of the above instruments to the
Securities and Exchange Commission upon request.
Sincerely,
/s/ Peter B. Tinkham
______________________________________________
Peter B. Tinkham
Treasurer and Assistant Secretary
and Principal Financial Officer
PBT:tr
<PAGE> 1
Exhibit 4(b)(2)
March 5, 1996
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Texas Utilities Electric Company
1995 Annual Report on Form 10-K
Gentlemen:
Pursuant to the exemption afforded by Item 601(b)(4)(iii)(A) of
Regulation S-K, Texas Utilities Electric Company (Company) is not filing as
exhibits to its Annual Report on Form 10-K for 1995 instruments with respect to
its long-term debt consisting of pollution control revenue bonds, as the
aggregate amounts represented thereby do not exceed 10% of the total assets of
the Company and its subsidiaries on a consolidated basis. Reference is made to
Note 8 to Consolidated Financial Statements (Item 8 of the Company's Annual
Report on Form 10-K for 1995).
The Company agrees to furnish a copy of the above instruments to the
Securities and Exchange Commission upon request.
Sincerely,
/s/ Robert S. Shapard
______________________________________________
Robert S. Shapard
Treasurer and Assistant Secretary
and Principal Financial Officer
RSS:tr
<PAGE> 1
Exhibit 4(f)
------------------------------------------
TEXAS UTILITIES ELECTRIC COMPANY
TO
THE BANK OF NEW YORK
TRUSTEE
---------
INDENTURE
(FOR UNSECURED SUBORDINATED DEBT SECURITIES
RELATING TO TRUST SECURITIES)
DATED AS OF DECEMBER 1, 1995
------------------------------------------
<PAGE> 2
i
TABLE OF CONTENTS
<TABLE>
<S> <C>
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITAL OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Definitions and Other Provisions of General Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 101. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Additional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Authorized Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Company Request or Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Dollar or $ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Governmental Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Government Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Interest Payment Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Place of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Predecessor Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Regular Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be
part of the Indenture.
<PAGE> 3
ii
<TABLE>
<S> <C>
Security Register and Security Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 102. Compliance Certificates and Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 103. Form of Documents Delivered to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 104. Acts of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 105. Notices, etc. to Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 106. Notice to Holders of Securities; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 107. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 110. Separability Clause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 111. Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 112. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE TWO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Security Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 201. Forms Generally . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 202. Form of Trustee's Certificate of Authentication . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE THREE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
The Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 301. Amount Unlimited; Issuable in Series . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 302. Denominations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 304. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 305. Registration, Registration of Transfer and Exchange . . . . . . . . . . . . . . . . . . . . . 20
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 308. Persons Deemed Owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 309. Cancellation by Security Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 310. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 311. Extension of Interest Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 312. Additional Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
<PAGE> 4
iii
<TABLE>
<S> <C>
ARTICLE FOUR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Redemption of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 401. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 402. Election to Redeem; Notice to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 403. Selection of Securities to Be Redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 404. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 405. Securities Payable on Redemption Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 406. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE FIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Sinking Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 501. Applicability of Article . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 502. Satisfaction of Sinking Fund Payments with Securities . . . . . . . . . . . . . . . . . . . . 28
SECTION 503. Redemption of Securities for Sinking Fund . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE SIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 601. Payment of Principal, Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 602. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 603. Money for Securities Payments to Be Held in Trust . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 604. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 605. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 606. Annual Officer's Certificate as to Compliance. . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 607. Waiver of Certain Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 608. Restriction on Payment of Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 609. Maintenance of Trust Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 610. Rights of Holders of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE SEVEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Satisfaction and Discharge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 701. Satisfaction and Discharge of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 702. Satisfaction and Discharge of Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 703. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE EIGHT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Events of Default; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 801. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 802. Acceleration of Maturity; Rescission and Annulment . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 803. Collection of Indebtedness and Suits for Enforcement by Trustee . . . . . . . . . . . . . . . 40
SECTION 804. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 805. Trustee May Enforce Claims Without Possession of Securities . . . . . . . . . . . . . . . . . 41
SECTION 806. Application of Money Collected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
</TABLE>
<PAGE> 5
iv
<TABLE>
<S> <C>
SECTION 807. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 808. Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 809. Restoration of Rights and Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 810. Rights and Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 811. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 812. Control by Holders of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 813. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 814. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 815. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE NINE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
The Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 901. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 902. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 903. Certain Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 904. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . . 47
SECTION 905. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 906. Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 907. Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 908. Disqualification; Conflicting Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 909. Corporate Trustee Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 910. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 911. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 912. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . 53
SECTION 913. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 914. Co-trustees and Separate Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 915. Appointment of Authenticating Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE TEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Holders' Lists and Reports by Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 1001. Lists of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 1002. Reports by Trustee and Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE ELEVEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Consolidation, Merger, Conveyance or Other Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 1101. Company May Consolidate, etc., Only on Certain Terms . . . . . . . . . . . . . . . . . . . . 57
SECTION 1102. Successor Corporation Substituted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE TWELVE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1201. Supplemental Indentures Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . 58
SECTION 1202. Supplemental Indentures With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . 60
</TABLE>
<PAGE> 6
v
<TABLE>
<S> <C>
SECTION 1203. Execution of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1204. Effect of Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1205. Conformity With Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1206. Reference in Securities to Supplemental Indentures . . . . . . . . . . . . . . . . . . . . . 62
SECTION 1207. Modification Without Supplemental Indenture . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE THIRTEEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Meetings of Holders; Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1301. Purposes for Which Meetings May Be Called . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1302. Call, Notice and Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 1303. Persons Entitled to Vote at Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1304. Quorum; Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
SECTION 1305. Attendance at Meetings; Determination of Voting Rights;
Conduct and Adjournment of Meetings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 1306. Counting Votes and Recording Action of Meetings . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 1307. Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE FOURTEEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Immunity of Incorporators, Stockholders, Officers and Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 1401. Liability Solely Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ARTICLE FIFTEEN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Subordination of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 1501. Securities Subordinate to Senior Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 1502. Payment Over of Proceeds of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 1503. Disputes with Holders of Certain Senior Indebtedness . . . . . . . . . . . . . . . . . . . . 70
SECTION 1504. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 1505. Obligation of the Company Unconditional . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 1506. Priority of Senior Indebtedness Upon Maturity . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 1507. Trustee as Holder of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 1508. Notice to Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 1509. Modification, Extension, etc. of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . 72
SECTION 1510. Trustee Has No Fiduciary Duty to Holders of Senior Indebtedness . . . . . . . . . . . . . . . 72
SECTION 1511. Paying Agents Other Than the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 1512. Rights of Holders of Senior Indebtedness Not Impaired . . . . . . . . . . . . . . . . . . . . 72
SECTION 1513. Effect of Subordination Provisions; Termination . . . . . . . . . . . . . . . . . . . . . . . 73
Testimonium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Signatures and Seals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
</TABLE>
<PAGE> 7
TEXAS UTILITIES ELECTRIC COMPANY
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939
AND INDENTURE, DATED AS OF DECEMBER 1, 1995
<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION INDENTURE SECTION
<S> <C> <C>
Section 310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 909
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 909
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 914
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 908
910
Section 311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 913
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 913
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 913
Section 312 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1001
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1001
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1001
Section 313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1002
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1002
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1002
Section 314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1002
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 606
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 315 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 901
903
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 902
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 901
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 901
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 814
Section 316 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 812
813
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 802
812
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 813
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 808
Section 317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 803
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 804
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 603
Section 318 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
</TABLE>
<PAGE> 8
INDENTURE, dated as of December 1, 1995, between TEXAS
UTILITIES ELECTRIC COMPANY, a corporation duly organized and existing under the
laws of the State of Texas (herein called the "Company"), having its principal
office at Energy Plaza, 1601 Bryan Street, Dallas, Texas 75201, and THE BANK
OF NEW YORK, a corporation of the State of New York, having its principal
corporate trust office at 101 Barclay Street, New York, New York 10286, as
Trustee (herein called the "Trustee").
RECITAL OF THE COMPANY
The Company has duly authorized the execution and
delivery of this Indenture to provide for the issuance from time to time of its
unsecured subordinated debentures, notes or other evidences of indebtedness
(herein called the "Securities"), in an unlimited aggregate principal amount to
be issued in one or more series as contemplated herein; and all acts necessary
to make this Indenture a valid agreement of the Company have been performed.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires, capitalized terms
used herein shall have the meanings assigned to them in Article One of this
Indenture.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders of the Securities
or of any series thereof, as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. DEFINITIONS.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well
as the singular;
(b) all terms used herein without definition which are
defined in the Trust Indenture Act, either directly or by
reference therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally
accepted accounting principles in the United States, and, except
as otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States at the
date of such
<PAGE> 9
-2-
computation or, at the election of the Company from time to time,
at the date of the execution and delivery of this Indenture;
provided, however, that in determining generally accepted
accounting principles applicable to the Company, the Company
shall, to the extent required, conform to any order, rule or
regulation of any administrative agency, regulatory authority or
other governmental body having jurisdiction over the Company; and
(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision.
Certain terms, used principally in Article Nine, are
defined in that Article.
"ACT", when used with respect to any Holder of a Security, has
the meaning specified in Section 104.
"ADDITIONAL INTEREST" has the meaning specified in Section 312.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "CONTROL" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or through
one or more intermediaries, whether through the ownership of voting securities,
by contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
"AUTHENTICATING AGENT" means any Person (other than the Company
or an Affiliate of the Company) authorized by the Trustee pursuant to Section
915 to act on behalf of the Trustee to authenticate one or more series of
Securities.
"AUTHORIZED OFFICER" means the Chairman of the Board, the
President, any Vice President, the Treasurer, any Assistant Treasurer, or any
other officer or agent of the Company duly authorized by the Board of Directors
to act in respect of matters relating to this Indenture.
"BOARD OF DIRECTORS" means either the board of directors of the
Company or any committee thereof duly authorized to act in respect of matters
relating to this Indenture.
"BOARD RESOLUTION" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"BUSINESS DAY", when used with respect to a Place of Payment or
any other particular location specified in the Securities or this Indenture,
means any day, other than a Saturday or Sunday, which is not a day on which
banking institutions or trust companies in such Place of Payment or other
location are generally authorized or required by law, regulation or
<PAGE> 10
-3-
executive order to remain closed, except as may be otherwise specified as
contemplated by Section 301.
"COMMISSION" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, as amended, or, if at any time after the date of execution and delivery
of this Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body, if any, performing
such duties at such time.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"COMPANY REQUEST" or "COMPANY ORDER" means a written request or
order signed in the name of the Company by an Authorized Officer and delivered
to the Trustee.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered, which office at the date of execution and delivery of this
Indenture is located at 101 Barclay Street, New York, New York 10286.
"CORPORATION" means a corporation, association, company, joint
stock company or business trust.
"DEFAULTED INTEREST" has the meaning specified in Section 307.
"DOLLAR" or "$" means a dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"EVENT OF DEFAULT" has the meaning specified in Section 801.
"GOVERNMENTAL AUTHORITY" means the government of the United
States or of any State or Territory thereof or of the District of Columbia or
of any county, municipality or other political subdivision of any of the
foregoing, or any department, agency, authority or other instrumentality of any
of the foregoing.
"GOVERNMENT OBLIGATIONS" means:
(a) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by, the
United States and entitled to the benefit of the full faith and
credit thereof; and
(b) certificates, depositary receipts or other
instruments which evidence a direct ownership interest in
obligations described in clause (a) above or in any specific
interest or principal payments due in respect thereof; provided,
however, that the
<PAGE> 11
-4-
custodian of such obligations or specific interest or principal
payments shall be a bank or trust company (which may include the
Trustee or any Paying Agent) subject to Federal or state
supervision or examination with a combined capital and surplus of
at least $50,000,000; and provided, further, that except as may
be otherwise required by law, such custodian shall be obligated
to pay to the holders of such certificates, depositary receipts
or other instruments the full amount received by such custodian
in respect of such obligations or specific payments and shall not
be permitted to make any deduction therefrom.
"GUARANTEE" means the guarantee agreement delivered from the
Company to a Trust, for the benefit of the holders of Preferred Securities
issued by such Trust.
"HOLDER" means a Person in whose name a Security is registered in
the Security Register.
"INDENTURE" means this instrument as originally executed and
delivered and as it may from time to time be supplemented or amended by one or
more indentures supplemental hereto entered into pursuant to the applicable
provisions hereof and shall include the terms of a particular series of
Securities established as contemplated by Section 301.
"INTEREST PAYMENT DATE", when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
"MATURITY", when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as provided in such Security or in this Indenture,
whether at the Stated Maturity, by declaration of acceleration, upon call for
redemption or otherwise.
"OFFICER'S CERTIFICATE" means a certificate signed by an
Authorized Officer and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may
be counsel for the Company, or other counsel acceptable to the Trustee.
"OUTSTANDING", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) Securities deemed to have been paid in accordance
with Section 701; and
(c) Securities which have been paid pursuant to Section
306 or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant
<PAGE> 12
-5-
to this Indenture, other than any such Securities in respect of
which there shall have been presented to the Trustee proof
satisfactory to it and the Company that such Securities are held
by a bona fide purchaser or purchasers in whose hands such
Securities are valid obligations of the Company;
provided, however, that in determining whether or not the Holders of the
requisite principal amount of the Securities Outstanding under this Indenture,
or the Outstanding Securities of any series, have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or whether or not
a quorum is present at a meeting of Holders of Securities, Securities owned by
the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor (unless the Company, such Affiliate or such
obligor owns all Securities Outstanding under this Indenture, or all
Outstanding Securities of each such series, as the case may be, determined
without regard to this provision) shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver or upon any such determination as to the presence of a
quorum, only Securities which the Trustee knows to be so owned shall be so
disregarded; provided, however, that Securities so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect
to such Securities and that the pledgee is not the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such other obligor;
and provided, further, that, in the case of any Security the principal of which
is payable from time to time without presentment or surrender, the principal
amount of such Security that shall be deemed to be Outstanding at any time for
all purposes of this Indenture shall be the original principal amount thereof
less the aggregate amount of principal thereof theretofore paid.
"PAYING AGENT" means any Person, including the Company,
authorized by the Company to pay the principal of, and premium, if any, or
interest, if any, on any Securities on behalf of the Company.
"PERSON" means any individual, corporation, partnership, joint
venture, trust or unincorporated organization or any Governmental Authority.
"PLACE OF PAYMENT", when used with respect to the Securities of
any series, means the place or places, specified as contemplated by Section
301, at which, subject to Section 602, principal of and premium, if any, and
interest, if any, on the Securities of such series are payable.
"PREDECESSOR SECURITY" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that
evidenced by such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security
shall be deemed (to the extent lawful) to evidence the same debt as the
mutilated, destroyed, lost or stolen Security.
<PAGE> 13
-6-
"PREFERRED SECURITIES" means any preferred trust interests issued
by a Trust or similar securities issued by permitted successors to such Trust
in accordance with the Trust Agreement pertaining to such Trust.
"REDEMPTION DATE", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"REDEMPTION PRICE", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"RESPONSIBLE OFFICER", when used with respect to the Trustee,
means any officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
"SECURITIES" has the meaning stated in the first recital of this
Indenture and more particularly means any securities authenticated and
delivered under this Indenture.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305.
"SENIOR INDEBTEDNESS" means all obligations (other than
non-recourse obligations and the indebtedness issued under this Indenture) of,
or guaranteed or assumed by, the Company for borrowed money, including both
senior and subordinated indebtedness for borrowed money (other than the
Securities), or for the payment of money relating to any lease which is
capitalized on the consolidated balance sheet of the Company and its
subsidiaries in accordance with generally accepted accounting principles as in
effect from time to time, or evidenced by bonds, debentures, notes or other
similar instruments, and in each case, amendments, renewals, extensions,
modifications and refundings of any such indebtedness or obligations, whether
existing as of the date of this Indenture or subsequently incurred by the
Company unless, in the case of any particular indebtedness, renewal, extension
or refunding, the instrument creating or evidencing the same or the assumption
or guarantee of the same expressly provides that such indebtedness, renewal,
extension or refunding is not superior in right of payment to or is pari passu
with the Securities; provided that the Company's obligations under the Guaranty
shall not be deemed to be Senior Indebtedness.
"SPECIAL RECORD DATE" for the payment of any Defaulted Interest
on the Securities of any series means a date fixed by the Trustee pursuant to
Section 307.
"STATED MATURITY", when used with respect to any obligation or
any installment of principal thereof or interest thereon, means the date on
which the principal of such obligation or such installment of principal or
interest is stated to be due and payable (without regard to any provisions for
redemption, prepayment, acceleration, purchase or extension).
<PAGE> 14
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"TRUST" means TU Electric Capital I, TU Electric Capital II, or
TU Electric Capital III, each a statutory business trust formed under the laws
of the State of Delaware, or any other Trust designated pursuant to Section 301
hereof or any permitted successor under the Trust Agreement pertaining to such
Trust.
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement,
dated as of December 1, 1995, relating to TU Electric Capital I, the Amended
and Restated Trust Agreement, dated as of December 1, 1995, relating to TU
Electric Capital II, the Amended and Restated Trust Agreement, dated as of
December 1, 1995, relating to TU Electric Capital III or an Amended and
Restated Trust Agreement relating to a Trust designated pursuant to Section 301
hereof, in each case, among the Company, as Depositor, the trustees named
therein and several holders referred to therein as they may be amended from
time to time.
"TRUST INDENTURE ACT" means, as of any time, the Trust Indenture
Act of 1939, or any successor statute, as in effect at such time.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean or include
each Person who is then a Trustee hereunder, and if at any time there is more
than one such Person, "Trustee" as used with respect to the Securities of any
series shall mean the Trustee with respect to Securities of that series.
"UNITED STATES" means the United States of America, its
Territories, its possessions and other areas subject to its political
jurisdiction.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided in this Indenture,
upon any application or request by the Company to the Trustee to take any
action under any provision of this Indenture, the Company shall, if requested
by the Trustee, furnish to the Trustee an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to
the proposed action (including any covenants compliance with which constitutes
a condition precedent) have been complied with and an Opinion of Counsel
stating that in the opinion of such counsel all such conditions precedent, if
any, have been complied with, except that in the case of any such application
or request as to which the furnishing of such documents is specifically
required by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(a) a statement that each Person signing such
certificate or opinion has read such covenant or condition and
the definitions herein relating thereto;
<PAGE> 15
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(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
Person, such Person has made such examination or investigation as
is necessary to enable such Person to express an informed opinion
as to whether or not such covenant or condition has been complied
with; and
(d) a statement as to whether, in the opinion of each
such Person, such condition or covenant has been complied with.
SECTION 103. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents.
Any certificate or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such Officer's
Certificate or opinion are based are erroneous. Any such certificate or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Company stating that the information with respect to such factual matters
is in the possession of the Company, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two
or more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
Whenever, subsequent to the receipt by the Trustee of any
Board Resolution, Officer's Certificate, Opinion of Counsel or other document
or instrument, a clerical, typographical or other inadvertent or unintentional
error or omission shall be discovered therein, a new document or instrument may
be substituted therefor in corrected form with the same force and effect as if
originally filed in the corrected form and, irrespective of the date or dates
of the actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered as of the
date or dates required with respect to the document or instrument for which it
is substituted. Anything in this Indenture to the contrary notwithstanding, if
any such corrective document or instrument
<PAGE> 16
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indicates that action has been taken by or at the request of the Company which
could not have been taken had the original document or instrument not contained
such error or omission, the action so taken shall not be invalidated or
otherwise rendered ineffective but shall be and remain in full force and
effect, except to the extent that such action was a result of willful
misconduct or bad faith. Without limiting the generality of the foregoing, any
Securities issued under the authority of such defective document or instrument
shall nevertheless be the valid obligations of the Company entitled to the
benefits of this Indenture equally and ratably with all other Outstanding
Securities, except as aforesaid.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction,
notice, consent, election, waiver or other action provided by
this Indenture to be made, given or taken by Holders may be
embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing or, alternatively, may be
embodied in and evidenced by the record of Holders voting in
favor thereof, either in person or by proxies duly appointed in
writing, at any meeting of Holders duly called and held in
accordance with the provisions of Article Thirteen, or a
combination of such instruments and any such record. Except as
herein otherwise expressly provided, such action shall become
effective when such instrument or instruments or record or both
are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments and any
such record (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments and so voting at
any such meeting. Proof of execution of any such instrument or
of a writing appointing any such agent, or of the holding by any
Person of a Security, shall be sufficient for any purpose of this
Indenture and (subject to Section 901) conclusive in favor of the
Trustee and the Company, if made in the manner provided in this
Section. The record of any meeting of Holders shall be proved in
the manner provided in Section 1306.
(b) The fact and date of the execution by any Person of
any such instrument or writing may be proved by the affidavit of
a witness of such execution or by a certificate of a notary
public or other officer authorized by law to take acknowledgments
of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof or may be
proved in any other manner which the Trustee and the Company deem
sufficient. Where such execution is by a signer acting in a
capacity other than his individual capacity, such certificate or
affidavit shall also constitute sufficient proof of his
authority.
(c) The principal amount and serial numbers of
Securities held by any Person, and the date of holding the same,
shall be proved by the Security Register.
(d) Any request, demand, authorization, direction,
notice, consent, election, waiver or other Act of a Holder shall
bind every future Holder of the same Security
<PAGE> 17
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and the Holder of every Security issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the
Trustee or the Company in reliance thereon, whether or not
notation of such action is made upon such Security.
(e) Until such time as written instruments shall have
been delivered to the Trustee with respect to the requisite
percentage of principal amount of Securities for the action
contemplated by such instruments, any such instrument executed
and delivered by or on behalf of a Holder may be revoked with
respect to any or all of such Securities by written notice by
such Holder or any subsequent Holder, proven in the manner in
which such instrument was proven.
(f) Securities of any series authenticated and delivered
after any Act of Holders may, and shall if required by the
Trustee, bear a notation in form approved by the Trustee as to
any action taken by such Act of Holders. If the Company shall so
determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Company, to such
action may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series.
(g) If the Company shall solicit from Holders any
request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, fix in
advance a record date for the determination of Holders entitled
to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no
obligation to do so. If such a record date is fixed, such
request, demand, authorization, direction, notice, consent,
waiver or other Act may be given before or after such record
date, but only the Holders of record at the close of business on
the record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of the
Outstanding Securities have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent,
waiver or other Act, and for that purpose the Outstanding
Securities shall be computed as of the record date.
SECTION 105. NOTICES, ETC. TO TRUSTEE AND COMPANY.
Any request, demand, authorization, direction, notice,
consent, election, waiver or Act of Holders or other document provided or
permitted by this Indenture to be made upon, given or furnished to, or filed
with, the Trustee by any Holder or by the Company, or the Company by the
Trustee or by any Holder, shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if in writing and delivered
personally to an officer or other responsible employee of the addressee, or
transmitted by facsimile transmission or other direct written electronic means
to such telephone number or other electronic communications address as the
parties hereto shall from time to time designate, or transmitted by certified
or registered mail, charges prepaid, to the applicable
<PAGE> 18
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address set opposite such party's name below or to such other address as either
party hereto may from time to time designate:
If to the Trustee, to:
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Vice President, Corporate Trust Administration
Telephone: (212) 815-5375
Telecopy: (212) 815-5915
If to the Company, to:
Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
Attention: Treasurer
Telephone: (214) 812-4600
Telecopy: (214) 812-3366
Any communication contemplated herein shall be deemed to
have been made, given, furnished and filed if personally delivered, on the date
of delivery, if transmitted by facsimile transmission or other direct written
electronic means, on the date of transmission, and if transmitted by registered
mail, on the date of receipt.
SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER.
Except as otherwise expressly provided herein, where this
Indenture provides for notice to Holders of any event, such notice shall be
sufficiently given, and shall be deemed given, to Holders if in writing and
mailed, first-class postage prepaid, to each Holder affected by such event, at
the address of such Holder as it appears in the Security Register, not later
than the latest date, if any, and not earlier than the earliest date, if any,
prescribed for the giving of such notice.
In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable to give such
notice to Holders by mail, then such notification as shall be made with the
approval of the Trustee shall constitute a sufficient notification for every
purpose hereunder. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so
mailed, to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders.
<PAGE> 19
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Any notice required by this Indenture may be waived in
writing by the Person entitled to receive such notice, either before or after
the event otherwise to be specified therein, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with
the Trustee, but such filing shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision of this Indenture limits, qualifies or
conflicts with another provision hereof which is required or deemed to be
included in this Indenture by, or is otherwise governed by, any of the
provisions of the Trust Indenture Act, such other provision shall control; and
if any provision hereof otherwise conflicts with the Trust Indenture Act, the
Trust Indenture Act shall control.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings in this Indenture and
the Table of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the
Company and Trustee shall bind their respective successors and assigns, whether
so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or the Securities, express or
implied, shall give to any Person, other than the parties hereto, their
successors hereunder, the Holders and, so long as the notice described in
Section 1513 hereof has not been given, the holders of Senior Indebtedness, any
benefit or any legal or equitable right, remedy or claim under this Indenture;
provided, however, that for so long as any Preferred Securities remain
outstanding, the holders of such Preferred Securities, subject to certain
limitations set forth in this Indenture, may enforce the Company's obligations
hereunder directly against the Company as third party beneficiaries of this
Indenture without first proceeding against the Trust issuing such Preferred
Securities.
<PAGE> 20
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SECTION 112. GOVERNING LAW.
THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO
THE EXTENT THAT THE LAW OF ANY OTHER JURISDICTION SHALL BE MANDATORILY
APPLICABLE.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption
Date or Stated Maturity of any Security shall not be a Business Day at any
Place of Payment, then (notwithstanding any other provision of this Indenture
or of the Securities other than a provision in Securities of any series, or in
the Board Resolution or Officer's Certificate which establishes the terms of
the Securities of such series, which specifically states that such provision
shall apply in lieu of this Section) payment of interest or principal and
premium, if any, need not be made at such Place of Payment on such date, but
may be made on the next succeeding Business Day at such Place of Payment,
except that if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect, and in the same amount, as if made on the
Interest Payment Date or Redemption Date, or at the Stated Maturity, as the
case may be, and, if such payment is made or duly provided for on such Business
Day, no interest shall accrue on the amount so payable for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be, to such Business Day.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The definitive Securities of each series shall be in
substantially the form or forms thereof established in the indenture
supplemental hereto establishing such series or in a Board Resolution
establishing such series, or in an Officer's Certificate pursuant to such
supplemental indenture or Board Resolution, in each case with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by this Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Securities,
as evidenced by their execution of the Securities. If the form or forms of
Securities of any series are established in a Board Resolution or in an
Officer's Certificate pursuant to a Board Resolution, such Board Resolution and
Officer's Certificate, if any, shall be delivered to the Trustee at or prior to
the delivery of the Company Order contemplated by Section 303 for the
authentication and delivery of such Securities.
<PAGE> 21
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Unless otherwise specified as contemplated by Section
301, the Securities of each series shall be issuable in registered form without
coupons. The definitive Securities shall be produced in such manner as shall
be determined by the officers executing such Securities, as evidenced by their
execution thereof.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in
substantially the form set forth below:
This is one of the Securities of the series
designated therein referred to in the within-
mentioned Indenture.
----------------------------------------
as Trustee
By:
------------------------------------
Authorized Signatory
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited; provided,
however, that all Securities shall be issued to a Trust in exchange for
securities of the Company or to evidence loans by a Trust of the proceeds of
the issuance of Preferred Securities of such Trust plus the amount deposited by
the Company with such Trust from time to time.
The Securities may be issued in one or more series.
Prior to the authentication and delivery of Securities of any series there
shall be established by specification in a supplemental indenture or in a Board
Resolution, or in an Officer's Certificate pursuant to a supplemental indenture
or a Board Resolution:
(a) the title of the Securities of such series (which
shall distinguish the Securities of such series from Securities
of all other series);
(b) any limit upon the aggregate principal amount of the
Securities of such series which may be authenticated and
delivered under this Indenture (except for
<PAGE> 22
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Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities
of such series pursuant to Section 304, 305, 306, 406 or 1206 and
except for any Securities which, pursuant to Section 303, are
deemed never to have been authenticated and delivered hereunder);
(c) the Person or Persons (without specific
identification) to whom interest on Securities of such series
shall be payable on any Interest Payment Date, if other than the
Persons in whose names such Securities (or one or more
Predecessor Securities) are registered at the close of business
on the Regular Record Date for such interest;
(d) the date or dates on which the principal of the
Securities of such series is payable or any formulary or other
method or other means by which such date or dates shall be
determined, by reference or otherwise (without regard to any
provisions for redemption, prepayment, acceleration, purchase or
extension);
(e) the rate or rates at which the Securities of such
series shall bear interest, if any (including the rate or rates
at which overdue principal shall bear interest, if different from
the rate or rates at which such Securities shall bear interest
prior to Maturity, and, if applicable, the rate or rates at which
overdue premium or interest shall bear interest, if any), or any
formulary or other method or other means by which such rate or
rates shall be determined, by reference or otherwise; the date or
dates from which such interest shall accrue; the Interest Payment
Dates on which such interest shall be payable and the Regular
Record Date, if any, for the interest payable on such Securities
on any Interest Payment Date; the right of the Company, if any,
to extend the interest payment periods and the duration of any
such extension as contemplated by Section 311; and the basis of
computation of interest, if other than as provided in Section
310;
(f) the place or places at which or methods by which (1)
the principal of and premium, if any, and interest, if any, on
Securities of such series shall be payable, (2) registration of
transfer of Securities of such series may be effected, (3)
exchanges of Securities of such series may be effected and (4)
notices and demands to or upon the Company in respect of the
Securities of such series and this Indenture may be served; the
Security Registrar for such series; and if such is the case, that
the principal of such Securities shall be payable without
presentment or surrender thereof;
(g) the period or periods within which, or the date or
dates on which, the price or prices at which and the terms and
conditions upon which the Securities of such series may be
redeemed, in whole or in part, at the option of the Company and
any restrictions on such redemptions, including but not limited
to a restriction on a partial redemption by the Company of the
Securities of any series, resulting in delisting of such
Securities from any national exchange;
<PAGE> 23
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(h) the obligation or obligations, if any, of the
Company to redeem or purchase the Securities of such series
pursuant to any sinking fund or other mandatory redemption
provisions or at the option of a Holder thereof and the period or
periods within which or the date or dates on which, the price or
prices at which and the terms and conditions upon which such
Securities shall be redeemed or purchased, in whole or in part,
pursuant to such obligation, and applicable exceptions to the
requirements of Section 404 in the case of mandatory redemption
or redemption at the option of the Holder;
(i) the denominations in which Securities of such series
shall be issuable if other than denominations of $25 and any
integral multiple thereof;
(j) the currency or currencies, including composite
currencies, in which payment of the principal of and premium, if
any, and interest, if any, on the Securities of such series shall
be payable (if other than in Dollars);
(k) if the principal of or premium, if any, or interest,
if any, on the Securities of such series are to be payable, at
the election of the Company or a Holder thereof, in a coin or
currency other than that in which the Securities are stated to be
payable, the period or periods within which and the terms and
conditions upon which, such election may be made;
(l) if the principal of or premium, if any, or interest,
if any, on the Securities of such series are to be payable, or
are to be payable at the election of the Company or a Holder
thereof, in securities or other property, the type and amount of
such securities or other property, or the formulary or other
method or other means by which such amount shall be determined,
and the period or periods within which, and the terms and
conditions upon which, any such election may be made;
(m) if the amount payable in respect of principal of or
premium, if any, or interest, if any, on the Securities of such
series may be determined with reference to an index or other fact
or event ascertainable outside this Indenture, the manner in
which such amounts shall be determined to the extent not
established pursuant to clause (e) of this paragraph;
(n) if other than the principal amount thereof, the
portion of the principal amount of Securities of such series
which shall be payable upon declaration of acceleration of the
Maturity thereof pursuant to Section 802;
(o) any Events of Default, in addition to those
specified in Section 801, with respect to the Securities of such
series, and any covenants of the Company for the benefit of the
Holders of the Securities of such series, in addition to those
set forth in Article Six;
<PAGE> 24
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(p) the terms, if any, pursuant to which the Securities
of such series may be converted into or exchanged for shares of
capital stock or other securities of the Company or any other
Person;
(q) the obligations or instruments, if any, which shall
be considered to be Government Obligations in respect of the
Securities of such series denominated in a currency other than
Dollars or in a composite currency, and any additional or
alternative provisions for the reinstatement of the Company's
indebtedness in respect of such Securities after the satisfaction
and discharge thereof as provided in Section 701;
(r) if the Securities of such series are to be issued in
global form, (i) any limitations on the rights of the Holder or
Holders of such Securities to transfer or exchange the same or to
obtain the registration of transfer thereof, (ii) any limitations
on the rights of the Holder or Holders thereof to obtain
certificates therefor in definitive form in lieu of temporary
form and (iii) any and all other matters incidental to such
Securities;
(s) if the Securities of such series are to be issuable
as bearer securities, any and all matters incidental thereto
which are not specifically addressed in a supplemental indenture
as contemplated by clause (g) of Section 1201;
(t) to the extent not established pursuant to clause (r)
of this paragraph, any limitations on the rights of the Holders
of the Securities of such Series to transfer or exchange such
Securities or to obtain the registration of transfer thereof; and
if a service charge will be made for the registration of transfer
or exchange of Securities of such series the amount or terms
thereof;
(u) any exceptions to Section 113, or variation in the
definition of Business Day, with respect to the Securities of
such series;
(v) the designation of the Trust to which Securities
of such series are to be issued; and
(w) any other terms of the Securities of such series
not inconsistent with the provisions of this Indenture.
All Securities of any one series shall be substantially
identical, except as to principal amount and date of issue and except as may be
set forth in the terms of such series as contemplated above. The Securities of
each series shall be subordinated in right of payment to Senior Indebtedness as
provided in Article Fifteen.
<PAGE> 25
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SECTION 302. DENOMINATIONS.
Unless otherwise provided as contemplated by Section 301
with respect to any series of Securities, the Securities of each series shall
be issuable in denominations of $25 and any integral multiple thereof.
SECTION 303. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Unless otherwise provided as contemplated by Section 301
with respect to any series of Securities, the Securities shall be executed on
behalf of the Company by an Authorized Officer and may have the corporate seal
of the Company affixed thereto or reproduced thereon attested by any other
Authorized Officer or by the Secretary or an Assistant Secretary of the
Company. The signature of any or all of these officers on the Securities may
be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at the time of execution Authorized Officers or the
Secretary or an Assistant Secretary of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Securities or did not
hold such offices at the date of such Securities.
The Trustee shall authenticate and deliver Securities of
a series, for original issue, at one time or from time to time in accordance
with the Company Order referred to below, upon receipt by the Trustee of:
(a) the instrument or instruments establishing the form
or forms and terms of such series, as provided in Sections 201
and 301;
(b) a Company Order requesting the authentication and
delivery of such Securities and, to the extent that the terms of
such Securities shall not have been established in an indenture
supplemental hereto or in a Board Resolution, or in an Officer's
Certificate pursuant to a supplemental indenture or Board
Resolution, all as contemplated by Sections 201 and 301,
establishing such terms;
(c) the Securities of such series, executed on behalf of
the Company by an Authorized Officer;
(d) an Opinion of Counsel to the effect that:
(i) the form or forms of such Securities have
been duly authorized by the Company and have been
established in conformity with the provisions of this
Indenture;
<PAGE> 26
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(ii) the terms of such Securities have been
duly authorized by the Company and have been established
in conformity with the provisions of this Indenture; and
(iii) such Securities, when authenticated and
delivered by the Trustee and issued and delivered by the
Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will have been duly
issued under this Indenture and will constitute valid and
legally binding obligations of the Company, entitled to
the benefits provided by this Indenture, and enforceable
in accordance with their terms, subject, as to
enforcement, to laws relating to or affecting generally
the enforcement of creditors' rights, including, without
limitation, bankruptcy and insolvency laws and to general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or
at law).
If the form or terms of the Securities of any series have
been established by or pursuant to a Board Resolution or an Officer's
Certificate as permitted by Sections 201 or 301, the Trustee shall not be
required to authenticate such Securities if the issuance of such Securities
pursuant to this Indenture will materially or adversely affect the Trustee's
own rights, duties or immunities under the Securities and this Indenture or
otherwise in a manner which is not reasonably acceptable to the Trustee.
Unless otherwise specified as contemplated by Section 301
with respect to any series of Securities, each Security shall be dated the date
of its authentication.
Unless otherwise specified as contemplated by Section 301
with respect to any series of Securities, no Security shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose unless
there appears on such Security a certificate of authentication substantially in
the form provided for herein executed by the Trustee or an Authenticating Agent
by manual signature, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security shall have been authenticated
and delivered hereunder to the Company, or any Person acting on its behalf, but
shall never have been issued and sold by the Company, and the Company shall
deliver such Security to the Trustee for cancellation as provided in Section
309 together with a written statement (which need not comply with Section 102
and need not be accompanied by an Opinion of Counsel) stating that such
Security has never been issued and sold by the Company, for all purposes of
this Indenture such Security shall be deemed never to have been authenticated
and delivered hereunder and shall never be entitled to the benefits hereof.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any
series, the Company may execute, and upon Company Order the Trustee shall
authenticate and deliver, temporary
<PAGE> 27
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Securities which are printed, lithographed, typewritten, mimeographed or
otherwise produced, in any authorized denomination, substantially of the tenor
of the definitive Securities in lieu of which they are issued, with such
appropriate insertions, omissions, substitutions and other variations as the
officers executing such Securities may determine, as evidenced by their
execution of such Securities; provided, however, that temporary Securities need
not recite specific redemption, sinking fund, conversion or exchange
provisions.
Unless otherwise specified as contemplated by Section 301
with respect to the Securities of any series, after the preparation of
definitive Securities of such series, the temporary Securities of such series
shall be exchangeable, without charge to the Holder thereof, for definitive
Securities of such series upon surrender of such temporary Securities at the
office or agency of the Company maintained pursuant to Section 602 in a Place
of Payment for such Securities. Upon such surrender of temporary Securities
for such exchange, the Company shall, except as aforesaid, execute and the
Trustee shall authenticate and deliver in exchange therefor definitive
Securities of the same series, of authorized denominations and of like tenor
and aggregate principal amount.
Until exchanged in full as hereinabove provided, the
temporary Securities of any series shall in all respects be entitled to the
same benefits under this Indenture as definitive Securities of the same series
and of like tenor authenticated and delivered hereunder.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept in each office
designated pursuant to Section 602, with respect to the Securities of each
series, a register (all registers kept in accordance with this Section being
collectively referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities of such series and the registration of transfer
thereof. The Company shall designate one Person to maintain the Security
Register for the Securities of each series on a consolidated basis, and such
Person is referred to herein, with respect to such series, as the "Security
Registrar." Anything herein to the contrary notwithstanding, the Company may
designate one or more of its offices as an office in which a register with
respect to the Securities of one or more series shall be maintained, and the
Company may designate itself the Security Registrar with respect to one or more
of such series. The Security Register shall be open for inspection by the
Trustee and the Company at all reasonable times.
Except as otherwise specified as contemplated by Section
301 with respect to the Securities of any series, upon surrender for
registration of transfer of any Security of such series at the office or agency
of the Company maintained pursuant to Section 602 in a Place of Payment for
such series, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of the same series, of authorized denominations and of like
tenor and aggregate principal amount.
<PAGE> 28
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Except as otherwise specified as contemplated by Section
301 with respect to the Securities of any series, any Security of such series
may be exchanged at the option of the Holder, for one or more new Securities of
the same series, of authorized denominations and of like tenor and aggregate
principal amount, upon surrender of the Securities to be exchanged at any such
office or agency. Whenever any Securities are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the
Securities which the Holder making the exchange is entitled to receive.
All Securities delivered upon any registration of
transfer or exchange of Securities shall be valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of transfer or
exchange.
Every Security presented or surrendered for registration
of transfer or for exchange shall (if so required by the Company, the Trustee
or the Security Registrar) be duly endorsed or shall be accompanied by a
written instrument of transfer in form satisfactory to the Company, the Trustee
or the Security Registrar, as the case may be, duly executed by the Holder
thereof or his attorney duly authorized in writing.
Unless otherwise specified as contemplated by Section 301
with respect to Securities of any series, no service charge shall be made for
any registration of transfer or exchange of Securities, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Securities, other than exchanges pursuant to Section 304, 406 or
1206 not involving any transfer.
The Company shall not be required to execute or to
provide for the registration of transfer of or the exchange of (a) Securities
of any series during a period of 15 days immediately preceding the date notice
is to be given identifying the serial numbers of the Securities of such series
called for redemption or (b) any Security so selected for redemption in whole
or in part, except the unredeemed portion of any Security being redeemed in
part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee,
the Company shall execute and the Trustee shall authenticate and deliver in
exchange therefor a new Security of the same series, and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the
Trustee (a) evidence to their satisfaction of the ownership of and the
destruction, loss or theft of any Security and (b) such security or indemnity
as may be reasonably required by them to save each of them and any agent of
either of them harmless, then, in the absence of notice to the Company or the
Trustee that such Security is held by a Person purporting to be the owner of
such Security,
<PAGE> 29
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the Company shall execute and the Trustee shall authenticate and deliver, in
lieu of any such destroyed, lost or stolen Security, a new Security of the same
series, and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
Notwithstanding the foregoing, in case any such
mutilated, destroyed, lost or stolen Security has become or is about to become
due and payable, the Company in its discretion may, instead of issuing a new
Security, pay such Security.
Upon the issuance of any new Security under this Section,
the Company may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Trustee) connected
therewith.
Every new Security of any series issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security shall constitute an
original additional contractual obligation of the Company, whether or not the
destroyed, lost or stolen Security shall be at any time enforceable by anyone
other than the Holder of such new Security, and any such new Security shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities of such series duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Unless otherwise specified as contemplated by Section 301
with respect to the Securities of any series, interest on any Security which is
payable, and is punctually paid or duly provided for, on any Interest Payment
Date shall be paid to the Person in whose name that Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest.
Subject to Section 311, any interest on any Security of
any series which is payable, but is not punctually paid or duly provided for,
on any Interest Payment Date (herein called "Defaulted Interest") shall
forthwith cease to be payable to the Holder on the related Regular Record Date
by virtue of having been such Holder, and such Defaulted Interest may be paid
by the Company, at its election in each case, as provided in clause (a) or (b)
below:
(a) The Company may elect to make payment of any
Defaulted Interest to the Persons in whose names the Securities
of such series (or their respective Predecessor Securities) are
registered at the close of business on a date (herein called a
"Special Record Date") for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of
Defaulted Interest proposed to be paid on each Security of such
series and the date of the proposed payment, and at the same time
the Company shall deposit with the
<PAGE> 30
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Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Defaulted Interest or shall make
arrangements satisfactory to the Trustee for such deposit on or
prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons
entitled to such Defaulted Interest as in this clause provided.
Thereupon the Trustee shall fix a Special Record Date for the
payment of such Defaulted Interest which shall be not more than
15 days and not less than 10 days prior to the date of the
proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee
shall promptly notify the Company of such Special Record Date
and, in the name and at the expense of the Company, shall
promptly cause notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder of Securities of such
series at the address of such Holder as it appears in the
Security Register, not less than 10 days prior to such Special
Record Date. Notice of the proposed payment of such Defaulted
Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in
whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business
on such Special Record Date.
(b) The Company may make payment of any Defaulted
Interest on the Securities of any series in any other lawful
manner not inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice
given by the Company to the Trustee of the proposed payment
pursuant to this clause, such manner of payment shall be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section and
Section 305, each Security delivered under this Indenture upon registration of
transfer of or in exchange for or in lieu of any other Security shall carry the
rights to interest accrued and unpaid, and to accrue, which were carried by
such other Security.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to due presentment of a Security for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name such Security is registered as the
absolute owner of such Security for the purpose of receiving payment of
principal of and premium, if any, and (subject to Sections 305 and 307)
interest, if any, on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and neither the Company, the Trustee
nor any agent of the Company or the Trustee shall be affected by notice to the
contrary.
SECTION 309. CANCELLATION BY SECURITY REGISTRAR.
All Securities surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Security Registrar, be delivered
<PAGE> 31
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to the Security Registrar and, if not theretofore canceled, shall be promptly
canceled by the Security Registrar. The Company may at any time deliver to the
Security Registrar for cancellation any Securities previously authenticated and
delivered hereunder which the Company may have acquired in any manner
whatsoever or which the Company shall not have issued and sold, and all
Securities so delivered shall be promptly canceled by the Security Registrar.
No Securities shall be authenticated in lieu of or in exchange for any
Securities canceled as provided in this Section, except as expressly permitted
by this Indenture. All canceled Securities held by the Security Registrar
shall be disposed of in accordance with a Company Order delivered to the
Security Registrar and the Trustee, and the Security Registrar shall promptly
deliver a certificate of disposition to the Trustee and the Company unless, by
a Company Order, similarly delivered, the Company shall direct that canceled
Securities be returned to it. The Security Registrar shall promptly deliver
evidence of any cancellation of a Security in accordance with this Section 309
to the Trustee and the Company.
SECTION 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section
301 for Securities of any series, interest on the Securities of each series
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months and for any period shorter than a full month, on the basis of the actual
number of days elapsed in such period.
SECTION 311. EXTENSION OF INTEREST PAYMENT.
The Company shall have the right at any time, so long as
the Company is not in default in the payment of interest on the Securities of
any series hereunder, to extend interest payment periods on all Securities of
one or more series, if so specified as contemplated by Section 301 with respect
to such Securities and upon such terms as may be specified as contemplated by
Section 301 with respect to such Securities.
SECTION 312. ADDITIONAL INTEREST.
So long as any Preferred Securities remain outstanding,
if the Trust which issued such Preferred Securities shall be required to pay,
with respect to its income derived from the interest payments on the Securities
of any series, any amounts for or on account of any taxes, duties, assessments
or governmental charges of whatever nature imposed by the United States, or any
other taxing authority, then, in any such case, the Company will pay as
interest on such series such additional interest ("Additional Interest") as may
be necessary in order that the net amounts received and retained by such Trust
after the payment of such taxes, duties, assessments or governmental charges
shall result in such Trust's having such funds as it would have had in the
absence of the payment of such taxes, duties, assessments or governmental
charges.
<PAGE> 32
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ARTICLE FOUR
REDEMPTION OF SECURITIES
SECTION 401. APPLICABILITY OF ARTICLE.
Securities of any series which are redeemable before
their Stated Maturity shall be redeemable in accordance with their terms and
(except as otherwise specified as contemplated by Section 301 for Securities of
such series) in accordance with this Article.
SECTION 402. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities
shall be evidenced by a Board Resolution or an Officer's Certificate. The
Company shall, at least 45 days prior to the Redemption Date fixed by the
Company (unless a shorter notice shall be satisfactory to the Trustee), notify
the Trustee in writing of such Redemption Date and of the principal amount of
such Securities to be redeemed. In the case of any redemption of Securities
(a) prior to the expiration of any restriction on such redemption provided in
the terms of such Securities or elsewhere in this Indenture or (b) pursuant to
an election of the Company which is subject to a condition specified in the
terms of such Securities, the Company shall furnish the Trustee with an
Officer's Certificate evidencing compliance with such restriction or condition.
SECTION 403. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series are to be
redeemed, the particular Securities to be redeemed shall be selected by the
Trustee from the Outstanding Securities of such series not previously called
for redemption, by such method as shall be provided for any particular series,
or, in the absence of any such provision, by such method as the Trustee shall
deem fair and appropriate and which may provide for the selection for
redemption of portions (equal to the minimum authorized denomination for
Securities of such series or any integral multiple thereof) of the principal
amount of Securities of such series of a denomination larger than the minimum
authorized denomination for Securities of such series; provided, however, that
if, as indicated in an Officer's Certificate, the Company shall have offered to
purchase all or any principal amount of the Securities then Outstanding of any
series, and less than all of such Securities as to which such offer was made
shall have been tendered to the Company for such purchase, the Trustee, if so
directed by Company Order, shall select for redemption all or any principal
amount of such Securities which have not been so tendered.
The Trustee shall promptly notify the Company and the
Security Registrar in writing of the Securities selected for redemption and, in
the case of any Securities selected to be redeemed in part, the principal
amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of Securities
shall relate, in the case of any Securities
<PAGE> 33
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redeemed or to be redeemed only in part, to the portion of the principal amount
of such Securities which has been or is to be redeemed.
SECTION 404. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner
provided in Section 106 to the Holders of the Securities to be redeemed not
less than 30 nor more than 60 days prior to the Redemption Date.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Securities of any series are to
be redeemed, the identification of the particular Securities to
be redeemed and the portion of the principal amount of any
Security to be redeemed in part,
(d) that on the Redemption Date the Redemption Price,
together with accrued interest, if any, to the Redemption Date,
will become due and payable upon each such Security to be
redeemed and, if applicable, that interest thereon will cease to
accrue on and after said date,
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued
interest, if any, unless it shall have been specified as
contemplated by Section 301 with respect to such Securities that
such surrender shall not be required,
(f) that the redemption is for a sinking or other fund,
if such is the case, and
(g) such other matters as the Company shall deem
desirable or appropriate.
Unless otherwise specified with respect to any Securities
in accordance with Section 301, with respect to any notice of redemption of
Securities at the election of the Company, unless, upon the giving of such
notice, such Securities shall be deemed to have been paid in accordance with
Section 701, such notice may state that such redemption shall be conditional
upon the receipt by the Paying Agent or Agents for such Securities, on or prior
to the date fixed for such redemption, of money sufficient to pay the principal
of and premium, if any, and interest, if any, on such Securities and that if
such money shall not have been so received such notice shall be of no force or
effect and the Company shall not be required to redeem such Securities. In the
event that such notice of redemption contains such a condition and such money
is not so received, the redemption shall not be made and within a reasonable
time thereafter notice shall be given, in the manner in which the notice of
redemption was given, that such money was not so received and such redemption
was not
<PAGE> 34
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required to be made, and the Paying Agent or Agents for the Securities
otherwise to have been redeemed shall promptly return to the Holders thereof
any of such Securities which had been surrendered for payment upon such
redemption.
Notice of redemption of Securities to be redeemed at the
election of the Company, and any notice of non-satisfaction of a condition for
redemption as aforesaid, shall be given by the Company or, at the Company's
request, by the Security Registrar in the name and at the expense of the
Company. Notice of mandatory redemption of Securities shall be given by the
Security Registrar in the name and at the expense of the Company.
SECTION 405. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, and
the conditions, if any, set forth in such notice having been satisfied, the
Securities or portions thereof so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified, and from and
after such date (unless, in the case of an unconditional notice of redemption,
the Company shall default in the payment of the Redemption Price and accrued
interest, if any) such Securities or portions thereof, if interest-bearing,
shall cease to bear interest. Upon surrender of any such Security for
redemption in accordance with such notice, such Security or portion thereof
shall be paid by the Company at the Redemption Price, together with accrued
interest, if any, to the Redemption Date; provided, however, that no such
surrender shall be a condition to such payment if so specified as contemplated
by Section 301 with respect to such Security; and provided, further, that
except as otherwise specified as contemplated by Section 301 with respect to
such Security, any installment of interest on any Security the Stated Maturity
of which installment is on or prior to the Redemption Date shall be payable to
the Holder of such Security, or one or more Predecessor Securities, registered
as such at the close of business on the related Regular Record Date according
to the terms of such Security and subject to the provisions of Section 307.
SECTION 406. SECURITIES REDEEMED IN PART.
Upon the surrender of any Security which is to be
redeemed only in part at a Place of Payment therefor (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Company and the Trustee duly executed by,
the Holder thereof or his attorney duly authorized in writing), the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security, without service charge, a new Security or Securities of the same
series, of any authorized denomination requested by such Holder and of like
tenor and in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
<PAGE> 35
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ARTICLE FIVE
SINKING FUNDS
SECTION 501. APPLICABILITY OF ARTICLE.
The provisions of this Article shall be applicable to any
sinking fund for the retirement of the Securities of any series, except as
otherwise specified as contemplated by Section 301 for Securities of such
series.
The minimum amount of any sinking fund payment provided
for by the terms of Securities of any series is herein referred to as a
"mandatory sinking fund payment", and any payment in excess of such minimum
amount provided for by the terms of Securities of any series is herein referred
to as an "optional sinking fund payment". If provided for by the terms of
Securities of any series, the cash amount of any sinking fund payment may be
subject to reduction as provided in Section 502. Each sinking fund payment
shall be applied to the redemption of Securities of the series in respect of
which it was made as provided for by the terms of such Securities.
SECTION 502. SATISFACTION OF SINKING FUND PAYMENTS WITH SECURITIES.
The Company (a) may deliver to the Trustee Outstanding
Securities (other than any previously called for redemption) of a series in
respect of which a mandatory sinking fund payment is to be made and (b) may
apply as a credit Securities of such series which have been redeemed either at
the election of the Company pursuant to the terms of such Securities or through
the application of permitted optional sinking fund payments pursuant to the
terms of such Securities or Outstanding Securities purchased by the Company, in
each case in satisfaction of all or any part of such mandatory sinking fund
payment with respect to the Securities of such series; provided, however, that
no Securities shall be applied in satisfaction of a mandatory sinking fund
payment if such Securities shall have been previously so applied. Securities
so applied shall be received and credited for such purpose by the Trustee at
the Redemption Price specified in such Securities for redemption through
operation of the sinking fund and the amount of such mandatory sinking fund
payment shall be reduced accordingly.
SECTION 503. REDEMPTION OF SECURITIES FOR SINKING FUND.
Not less than 45 days prior to each sinking fund payment
date for the Securities of any series, the Company shall deliver to the Trustee
an Officer's Certificate specifying:
(a) the amount of the next succeeding mandatory sinking
fund payment for such series;
(b) the amount, if any, of the optional sinking fund
payment to be made together with such mandatory sinking fund
payment;
<PAGE> 36
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(c) the aggregate sinking fund payment;
(d) the portion, if any, of such aggregate sinking fund
payment which is to be satisfied by the payment of cash;
(e) the portion, if any, of such aggregate sinking fund
payment which is to be satisfied by delivering and crediting
Securities of such series pursuant to Section 502 and stating the
basis for such credit and that such Securities have not
previously been so credited, and the Company shall also deliver
to the Trustee any Securities to be so delivered. If the Company
shall not deliver such Officer's Certificate, the next succeeding
sinking fund payment for such series shall be made entirely in
cash in the amount of the mandatory sinking fund payment. Not
less than 30 days before each such sinking fund payment date the
Trustee shall select the Securities to be redeemed upon such
sinking fund payment date in the manner specified in Section 403
and cause notice of the redemption thereof to be given in the
name of and at the expense of the Company in the manner provided
in Section 404. Such notice having been duly given, the
redemption of such Securities shall be made upon the terms and in
the manner stated in Sections 405 and 406.
ARTICLE SIX
COVENANTS
SECTION 601. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST.
The Company shall pay the principal of and premium, if
any, and interest, if any (including Additional Interest), on the Securities of
each series in accordance with the terms of such Securities and this Indenture.
SECTION 602. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in each Place of Payment for
the Securities of each series an office or agency where payment of such
Securities shall be made, where the registration of transfer or exchange of
such Securities may be effected and where notices and demands to or upon the
Company in respect of such Securities and this Indenture may be served. The
Company shall give prompt written notice to the Trustee of the location, and
any change in the location, of each such office or agency and prompt notice to
the Holders of any such change in the manner specified in Section 106. If at
any time the Company shall fail to maintain any such required office or agency
in respect of Securities of any series, or shall fail to furnish the Trustee
with the address thereof, payment of such Securities shall be made,
registration of transfer or exchange thereof may be effected and notices and
demands in respect thereof may be served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent for all such
purposes in any such event.
<PAGE> 37
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The Company may also from time to time designate one or
more other offices or agencies with respect to the Securities of one or more
series, for any or all of the foregoing purposes and may from time to time
rescind such designations; provided, however, that, unless otherwise specified
as contemplated by Section 301 with respect to the Securities of such series,
no such designation or rescission shall in any manner relieve the Company of
its obligation to maintain an office or agency for such purposes in each Place
of Payment for such Securities in accordance with the requirements set forth
above. The Company shall give prompt written notice to the Trustee, and prompt
notice to the Holders in the manner specified in Section 106, of any such
designation or rescission and of any change in the location of any such other
office or agency.
Anything herein to the contrary notwithstanding, any
office or agency required by this Section may be maintained at an office of the
Company, in which event the Company shall perform all functions to be performed
at such office or agency.
SECTION 603. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying
Agent with respect to the Securities of any series, it shall, on or before each
due date of the principal of and premium, if any, and interest, if any, on any
of such Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal and premium or interest
so becoming due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided. The Company shall promptly notify the Trustee
of any failure by the Company (or any other obligor on such Securities) to make
any payment of principal of or premium, if any, or interest, if any, on such
Securities.
Whenever the Company shall have one or more Paying Agents
for the Securities of any series, it shall, on or before each due date of the
principal of and premium, if any, and interest, if any, on such Securities,
deposit with such Paying Agents sums sufficient (without duplication) to pay
the principal and premium or interest so becoming due, such sum to be held in
trust for the benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company shall
promptly notify the Trustee of any failure by it so to act.
The Company shall cause each Paying Agent for the
Securities of any series, other than the Company or the Trustee, to execute and
deliver to the Trustee an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent shall:
(a) hold all sums held by it for the payment of the
principal of and premium, if any, or interest, if any, on such
Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided;
<PAGE> 38
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(b) give the Trustee notice of any failure by the
Company (or any other obligor upon such Securities) to make any
payment of principal of or premium, if any, or interest, if any,
on such Securities; and
(c) at any time during the continuance of any such
default, upon the written request of the Trustee, forthwith pay
to the Trustee all sums so held in trust by such Paying Agent and
furnish to the Trustee such information as it possesses regarding
the names and addresses of the Persons entitled to such sums.
The Company may at any time pay, or by Company Order
direct any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by the Company or such Paying
Agent and, if so stated in a Company Order delivered to the Trustee, in
accordance with the provisions of Article Seven; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Any money deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the principal of and
premium, if any, or interest, if any, on any Security and remaining unclaimed
for two years after such principal and premium, if any, or interest has become
due and payable shall be paid to the Company on Company Request, or, if then
held by the Company, shall be discharged from such trust; and, upon such
payment or discharge, the Holder of such Security shall, as an unsecured
general creditor and not as a Holder of an Outstanding Security, look only to
the Company for payment of the amount so due and payable and remaining unpaid,
and all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof, shall
thereupon cease; provided, however, that the Trustee or such Paying Agent,
before being required to make any such payment to the Company, may at the
expense of the Company cause to be mailed, on one occasion only, notice to such
Holder that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such mailing,
any unclaimed balance of such money then remaining will be paid to the Company.
SECTION 604. CORPORATE EXISTENCE.
Subject to the rights of the Company under Article
Eleven, the Company shall do or cause to be done all things necessary to
preserve and keep in full force and effect its corporate existence.
SECTION 605. MAINTENANCE OF PROPERTIES.
The Company shall cause (or, with respect to property
owned in common with others, make reasonable effort to cause) all its
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order and shall cause (or, with
respect to property owned in common with others, make reasonable effort to
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cause) to be made all necessary repairs, renewals, replacements, betterments
and improvements thereof, all as, in the judgment of the Company, may be
necessary so that the business carried on in connection therewith may be
properly conducted; provided, however, that nothing in this Section shall
prevent the Company from discontinuing, or causing the discontinuance of, the
operation and maintenance of any of its properties if such discontinuance is,
in the judgment of the Company, desirable in the conduct of its business.
SECTION 606. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
Not later than September 15 in each year, commencing
September 15, 1996, the Company shall deliver to the Trustee an Officer's
Certificate which need not comply with Section 102, executed by the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company, as to such officer's knowledge of the Company's
compliance with all conditions and covenants under this Indenture, such
compliance to be determined without regard to any period of grace or
requirement of notice under this Indenture.
SECTION 607. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply
with any term, provision or condition set forth in (a) Section 602 or any
additional covenant or restriction specified with respect to the Securities of
any series, as contemplated by Section 301, if before the time for such
compliance the Holders of at least a majority in aggregate principal amount of
the Outstanding Securities of all series with respect to which compliance with
Section 602 or such additional covenant or restriction is to be omitted,
considered as one class, shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance with such term,
provision or condition and (b) Section 604, 605 or Article Eleven if before the
time for such compliance the Holders of at least a majority in principal amount
of Securities Outstanding under this Indenture shall, by Act of such Holders,
either waive such compliance in such instance or generally waive compliance
with such term, provision or condition; but, in the case of (a) or (b), no such
waiver shall extend to or affect such term, provision or condition except to
the extent so expressly waived, and, until such waiver shall become effective,
the obligations of the Company and the duties of the Trustee in respect of any
such term, provision or condition shall remain in full force and effect;
provided, however, so long as a Trust holds Securities of any series, such
Trust may not waive compliance or waive any default in compliance by the
Company with any covenant or other term contained in this Indenture or the
Securities of such series without the approval of the holders of at least a
majority in aggregate liquidation preference of the outstanding Preferred
Securities issued by such Trust affected, obtained as provided in the Trust
Agreement pertaining to such Trust.
SECTION 608. RESTRICTION ON PAYMENT OF DIVIDENDS.
So long as any Preferred Securities of any series remain
outstanding, the Company shall not declare or pay any dividend on, or redeem,
purchase, acquire or make a
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liquidation payment with respect to, any of the Company's capital stock, or
make any guarantee payments with respect to the foregoing (other than payments
under the Guarantee relating to such Preferred Securities) if at such time (a)
the Company shall be in default with respect to its payment or other
obligations under the Guarantee relating to such Preferred Securities, (b)
there shall have occurred and be continuing a payment default (whether before
or after expiration of any period of grace) or an Event of Default hereunder or
(c) the Company shall have elected to extend any interest payment period as
provided in Section 311, and any such period, or any extension thereof, shall
be continuing.
SECTION 609. MAINTENANCE OF TRUST EXISTENCE.
So long as Preferred Securities of any series remain
outstanding, the Company shall (i) maintain direct or indirect ownership of all
interests in the Trust which issued such Preferred Securities, other than such
Preferred Securities, (ii) not voluntarily (to the extent permitted by law)
dissolve, liquidate or wind up such Trust, except in connection with a
distribution of the Securities to the holders of the Preferred Securities in
liquidation of such Trust, (iii) remain the sole Depositor under the Trust
Agreement (the "Depositor") of such Trust and timely perform in all material
respects all of its duties as Depositor of such Trust, and (iv) use reasonable
efforts to cause such Trust to remain a business trust and otherwise continue
to be treated as a grantor trust for Federal income tax purposes provided that
any permitted successor to the Company under this Indenture may succeed to the
Company's duties as Depositor of such Trust; and provided further that the
Company may permit such Trust to consolidate or merge with or into another
business trust or other permitted successor under the Trust Agreement
pertaining to such Trust so long as the Company agrees to comply with this
Section 609 with respect to such successor business trust or other permitted
successor.
SECTION 610. RIGHTS OF HOLDERS OF PREFERRED SECURITIES.
The Company agrees that, for so long as any Preferred
Securities remain outstanding, its obligations under this Indenture will also
be for the benefit of the holders from time to time of Preferred Securities,
and the Company acknowledges and agrees that such holders will be entitled to
enforce this Indenture, as third party beneficiaries, directly against the
Company to the same extent as if such holders of Preferred Securities held a
principal amount of Securities equal to the stated liquidation amount of the
Preferred Securities held by such holders.
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ARTICLE SEVEN
SATISFACTION AND DISCHARGE
SECTION 701. SATISFACTION AND DISCHARGE OF SECURITIES.
Any Security or Securities, or any portion of the
principal amount thereof, shall be deemed to have been paid for all purposes of
this Indenture, and the entire indebtedness of the Company in respect thereof
shall be deemed to have been satisfied and discharged, if there shall have been
irrevocably deposited with the Trustee or any Paying Agent (other than the
Company), in trust:
(a) money in an amount which shall be sufficient, or
(b) in the case of a deposit made prior to the Maturity
of such Securities or portions thereof, Government Obligations,
which shall not contain provisions permitting the redemption or
other prepayment thereof at the option of the issuer thereof, the
principal of and the interest on which when due, without any
regard to reinvestment thereof, will provide moneys which,
together with the money, if any, deposited with or held by the
Trustee or such Paying Agent, shall be sufficient, or
(c) a combination of (a) or (b) which shall be
sufficient,
to pay when due the principal of and premium, if any, and interest, if any, due
and to become due on such Securities or portions thereof on or prior to
Maturity; provided, however, that in the case of the provision for payment or
redemption of less than all the Securities of any series, such Securities or
portions thereof shall have been selected by the Trustee as provided herein
and, in the case of a redemption, the notice requisite to the validity of such
redemption shall have been given or irrevocable authority shall have been given
by the Company to the Trustee to give such notice, under arrangements
satisfactory to the Trustee; and provided, further, that the Company shall have
delivered to the Trustee and such Paying Agent:
(x) if such deposit shall have been made prior
to the Maturity of such Securities, a Company Order
stating that the money and Government Obligations
deposited in accordance with this Section shall be held
in trust, as provided in Section 703; and
(y) if Government Obligations shall have been
deposited, an Opinion of Counsel that the obligations so
deposited constitute Government Obligations and do not
contain provisions permitting the redemption or other
prepayment at the option of the issuer thereof, and an
opinion of an independent public accountant of nationally
recognized standing, selected by the Company, to the
effect that the requirements set forth in clause (b)
above have been satisfied; and
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(z) if such deposit shall have been made prior
to the Maturity of such Securities, an Officer's
Certificate stating the Company's intention that, upon
delivery of such Officer's Certificate, its indebtedness
in respect of such Securities or portions thereof will
have been satisfied and discharged as contemplated in
this Section.
Upon the deposit of money or Government Obligations, or
both, in accordance with this Section, together with the documents required by
clauses (x), (y) and (z) above, the Trustee shall, upon receipt of a Company
Request, acknowledge in writing that the Security or Securities or portions
thereof with respect to which such deposit was made are deemed to have been
paid for all purposes of this Indenture and that the entire indebtedness of the
Company in respect thereof has been satisfied and discharged as contemplated in
this Section. In the event that all of the conditions set forth in the
preceding paragraph shall have been satisfied in respect of any Securities or
portions thereof except that, for any reason, the Officer's Certificate
specified in clause (z) shall not have been delivered, such Securities or
portions thereof shall nevertheless be deemed to have been paid for all
purposes of this Indenture, and the Holders of such Securities or portions
thereof shall nevertheless be no longer entitled to the benefits of this
Indenture or of any of the covenants of the Company under Article Six (except
the covenants contained in Sections 602 and 603) or any other covenants made in
respect of such Securities or portions thereof as contemplated by Section 301,
but the indebtedness of the Company in respect of such Securities or portions
thereof shall not be deemed to have been satisfied and discharged prior to
Maturity for any other purpose, and the Holders of such Securities or portions
thereof shall continue to be entitled to look to the Company for payment of the
indebtedness represented thereby; and, upon Company Request, the Trustee shall
acknowledge in writing that such Securities or portions thereof are deemed to
have been paid for all purposes of this Indenture.
If payment at Stated Maturity of less than all of the
Securities of any series is to be provided for in the manner and with the
effect provided in this Section, the Security Registrar shall select such
Securities, or portions of principal amount thereof, in the manner specified by
Section 403 for selection for redemption of less than all the Securities of a
series.
In the event that Securities which shall be deemed to
have been paid for purposes of this Indenture, and, if such is the case, in
respect of which the Company's indebtedness shall have been satisfied and
discharged, all as provided in this Section do not mature and are not to be
redeemed within the 60 day period commencing with the date of the deposit of
moneys or Government Obligations, as aforesaid, the Company shall, as promptly
as practicable, give a notice, in the same manner as a notice of redemption
with respect to such Securities, to the Holders of such Securities to the
effect that such deposit has been made and the effect thereof.
Notwithstanding that any Securities shall be deemed to
have been paid for purposes of this Indenture, as aforesaid, the obligations of
the Company and the Trustee in respect of such Securities under Sections 304,
305, 306, 404, 503 (as to notice of redemption), 602, 603, 907 and 915 and this
Article Seven shall survive.
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The Company shall pay, and shall indemnify the Trustee or
any Paying Agent with which Government Obligations shall have been deposited as
provided in this Section against, any tax, fee or other charge imposed on or
assessed against such Government Obligations or the principal or interest
received in respect of such Government Obligations, including, but not limited
to, any such tax payable by any entity deemed, for tax purposes, to have been
created as a result of such deposit.
Anything herein to the contrary notwithstanding, (a) if,
at any time after a Security would be deemed to have been paid for purposes of
this Indenture, and, if such is the case, the Company's indebtedness in respect
thereof would be deemed to have been satisfied or discharged, pursuant to this
Section (without regard to the provisions of this paragraph), the Trustee or
any Paying Agent, as the case may be, shall be required to return the money or
Government Obligations, or combination thereof, deposited with it as aforesaid
to the Company or its representative under any applicable Federal or State
bankruptcy, insolvency or other similar law, such Security shall thereupon be
deemed retroactively not to have been paid and any satisfaction and discharge
of the Company's indebtedness in respect thereof shall retroactively be deemed
not to have been effected, and such Security shall be deemed to remain
Outstanding and (b) any satisfaction and discharge of the Company's
indebtedness in respect of any Security shall be subject to the provisions of
the last paragraph of Section 603.
SECTION 702. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of
further effect (except as hereinafter expressly provided), and the Trustee, at
the expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) no Securities remain Outstanding hereunder; and
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company;
provided, however, that if, in accordance with the last paragraph of Section
701, any Security, previously deemed to have been paid for purposes of this
Indenture, shall be deemed retroactively not to have been so paid, this
Indenture shall thereupon be deemed retroactively not to have been satisfied
and discharged, as aforesaid, and to remain in full force and effect, and the
Company shall execute and deliver such instruments as the Trustee shall
reasonably request to evidence and acknowledge the same.
Notwithstanding the satisfaction and discharge of this
Indenture as aforesaid, the obligations of the Company and the Trustee under
Sections 304, 305, 306, 404, 503 (as to notice of redemption), 602, 603, 907
and 915 and this Article Seven shall survive.
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Upon satisfaction and discharge of this Indenture as
provided in this Section, the Trustee shall assign, transfer and turn over to
the Company, subject to the lien provided by Section 907, any and all money,
securities and other property then held by the Trustee for the benefit of the
Holders of the Securities other than money and Government Obligations held by
the Trustee pursuant to Section 703.
SECTION 703. APPLICATION OF TRUST MONEY.
Neither the Government Obligations nor the money
deposited pursuant to Section 701, nor the principal or interest payments on
any such Government Obligations, shall be withdrawn or used for any purpose
other than, and shall be held in trust for, the payment of the principal of and
premium, if any, and interest, if any, on the Securities or portions of
principal amount thereof in respect of which such deposit was made, all
subject, however, to the provisions of Section 603; provided, however, that, so
long as there shall not have occurred and be continuing an Event of Default any
cash received from such principal or interest payments on such Government
Obligations, if not then needed for such purpose, shall, to the extent
practicable, be invested in Government Obligations of the type described in
clause (b) in the first paragraph of Section 701 maturing at such times and in
such amounts as shall be sufficient to pay when due the principal of and
premium, if any, and interest, if any, due and to become due on such Securities
or portions thereof on and prior to the Maturity thereof, and interest earned
from such reinvestment shall be paid over to the Company as received, free and
clear of any trust, lien or pledge under this Indenture except the lien
provided by Section 907; and provided, further, that, so long as there shall
not have occurred and be continuing an Event of Default, any moneys held in
accordance with this Section on the Maturity of all such Securities in excess
of the amount required to pay the principal of and premium, if any, and
interest, if any, then due on such Securities shall be paid over to the Company
free and clear of any trust, lien or pledge under this Indenture except the
lien provided by Section 907; and provided, further, that if an Event of
Default shall have occurred and be continuing, moneys to be paid over to the
Company pursuant to this Section shall be held until such Event of Default
shall have been waived or cured.
ARTICLE EIGHT
EVENTS OF DEFAULT; REMEDIES
SECTION 801. EVENTS OF DEFAULT.
"Event of Default", wherever used herein with respect to
Securities of any series, means any one of the following events:
(a) failure to pay interest, if any, including any
Additional Interest, on any Security of such series within 30
days after the same becomes due and payable (whether or not
payment is prohibited by the provisions of Article Fifteen
hereof); provided, however, that a valid extension of the
interest payment period by the
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Company as contemplated in Section 311 of this Indenture shall
not constitute a failure to pay interest for this purpose; or
(b) failure to pay the principal of or premium, if any,
on any Security of such series at its Maturity (whether or not
payment is prohibited by the provisions of Article Fifteen
hereof); or
(c) failure to perform or breach of any covenant or
warranty of the Company in this Indenture (other than a covenant
or warranty a default in the performance of which or breach of
which is elsewhere in this Section specifically dealt with or
which has expressly been included in this Indenture solely for
the benefit of one or more series of Securities other than such
series) for a period of 60 days after there has been given, by
registered or certified mail, to the Company by the Trustee, or
to the Company and the Trustee by the Holders of at least 33% in
principal amount of the Outstanding Securities of such series, a
written notice specifying such default or breach and requiring it
to be remedied and stating that such notice is a "Notice of
Default" hereunder, unless the Trustee, or the Trustee and the
Holders of a principal amount of Securities of such series not
less than the principal amount of Securities the Holders of which
gave such notice, as the case may be, shall agree in writing to
an extension of such period prior to its expiration; provided,
however, that the Trustee, or the Trustee and the Holders of such
principal amount of Securities of such series, as the case may
be, shall be deemed to have agreed to an extension of such period
if corrective action is initiated by the Company within such
period and is being diligently pursued; or
(d) the entry by a court having jurisdiction in the
premises of (1) a decree or order for relief in respect of the
Company in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or (2) a decree or order adjudging the Company a
bankrupt or insolvent, or approving as properly filed a petition
by one or more Persons other than the Company seeking
reorganization, arrangement, adjustment or composition of or in
respect of the Company under any applicable Federal or State law,
or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official for the Company
or for any substantial part of its property, or ordering the
winding up or liquidation of its affairs, and any such decree or
order for relief or any such other decree or order shall have
remained unstayed and in effect for a period of 90 consecutive
days; or
(e) the commencement by the Company of a voluntary case
or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or of any other
case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in
respect of the Company in a case or proceeding under any
applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or to the commencement
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of any bankruptcy or insolvency case or proceeding against it, or
the filing by it of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State
law, or the consent by it to the filing of such petition or to
the appointment of or taking possession by a custodian, receiver,
liquidator, assignee, trustee, sequestrator or similar official
of the Company or of any substantial part of its property, or the
making by it of an assignment for the benefit of creditors, or
the admission by it in writing of its inability to pay its debts
generally as they become due, or the authorization of such action
by the Board of Directors; or
(f) any other Event of Default specified with respect to
Securities of such series.
SECTION 802. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default due to the default in payment of
principal of, or interest on, any series of Securities or due to the default in
the performance or breach of any other covenant or warranty of the Company
applicable to the Securities of such series but not applicable to all
outstanding Securities shall have occurred and be continuing, either the
Trustee or the Holders of not less than 33% in principal amount of the
Securities of such series may then declare the principal of all Securities of
such series and interest accrued thereon to be due and payable immediately
(provided that the payment of principal and interest on such Securities shall
remain subordinated to the extent provided in Article Fifteen hereof). If an
Event of Default due to default in the performance of any other of the
covenants or agreements herein applicable to all Outstanding Securities or an
Event of Default specified in Section 801(d) or (e) shall have occurred and be
continuing, either the Trustee or the Holders of not less than 33% in principal
amount of all Securities then Outstanding (considered as one class), and not
the Holders of the Securities of any one of such series, may declare the
principal of all Securities and interest accrued thereon to be due and payable
immediately (provided that the payment of principal and interest on such
Securities shall remain subordinated to the extent provided in the Indenture).
At any time after such a declaration of acceleration with
respect to Securities of any series shall have been made and before a judgment
or decree for payment of the money due shall have been obtained by the Trustee
as hereinafter in this Article provided, the Event or Events of Default giving
rise to such declaration of acceleration shall, without further act, be deemed
to have been waived, and such declaration and its consequences shall, without
further act, be deemed to have been rescinded and annulled, if
(a) the Company shall have paid or deposited with the
Trustee a sum sufficient to pay
(1) all overdue interest on all Securities of
such series;
(2) the principal of and premium, if any, on
any Securities of such series which have become due
otherwise than by such declaration of
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acceleration and interest thereon at the rate or rates
prescribed therefor in such Securities;
(3) to the extent that payment of such interest
is lawful, interest upon overdue interest, if any, at the
rate or rates prescribed therefor in such Securities;
(4) all amounts due to the Trustee under
Section 907;
and
(b) any other Event or Events of Default with respect to
Securities of such series, other than the nonpayment of the
principal of Securities of such series which shall have become
due solely by such declaration of acceleration, shall have been
cured or waived as provided in Section 813.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 803. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
If an Event of Default described in clause (a) or (b) of
Section 801 shall have occurred and be continuing, the Company shall, upon
demand of the Trustee, pay to it, for the benefit of the Holders of the
Securities of the series with respect to which such Event of Default shall have
occurred, the whole amount then due and payable on such Securities for
principal and premium, if any, and interest, if any, and, to the extent
permitted by law, interest on premium, if any, and on any overdue principal and
interest, at the rate or rates prescribed therefor in such Securities, and, in
addition thereto, such further amount as shall be sufficient to cover any
amounts due to the Trustee under Section 907.
If the Company shall fail to pay such amounts forthwith
upon such demand, the Trustee, in its own name and as trustee of an express
trust, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon such
Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or any other obligor
upon such Securities, wherever situated.
If an Event of Default with respect to Securities of any
series shall have occurred and be continuing, the Trustee may in its discretion
proceed to protect and enforce its rights and the rights of the Holders of
Securities of such series by such appropriate judicial proceedings as the
Trustee shall deem most effectual to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy.
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SECTION 804. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Company or any other obligor upon
the Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal, premium, if any, and interest, if any, owing and
unpaid in respect of the Securities and to file such other papers
or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for amounts due to
the Trustee under Section 907) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute the
same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amounts due it under Section 907.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting
the Securities or the rights of any Holder thereof or to authorize the Trustee
to vote in respect of the claim of any Holder in any such proceeding.
SECTION 805. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or
the Securities may be prosecuted and enforced by the Trustee without the
possession of any of the Securities or the production thereof in any proceeding
relating thereto, and any such proceeding instituted by the Trustee shall be
brought in its own name as trustee of an express trust, and any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders in respect of which such judgment has
been recovered.
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SECTION 806. APPLICATION OF MONEY COLLECTED.
Subject to the provisions of Article Fifteen, any money
collected by the Trustee pursuant to this Article shall be applied in the
following order, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal or premium, if any, or
interest, if any, upon presentation of the Securities in respect of which or
for the benefit of which such money shall have been collected and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee
under Section 907;
SECOND: To the payment of the amounts then due and
unpaid upon the Securities for principal of and premium, if any,
and interest, if any, in respect of which or for the benefit of
which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable
on such Securities for principal, premium, if any, and interest,
if any, respectively; and
THIRD: To the payment of the remainder, if any, to the
Company or to whomsoever may be lawfully entitled to receive the
same or as a court of competent jurisdiction may direct.
SECTION 807. LIMITATION ON SUITS.
No Holder shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder,
unless:
(a) such Holder shall have previously given written
notice to the Trustee of a continuing Event of Default with
respect to the Securities of such series;
(b) the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of all series in
respect of which an Event of Default shall have occurred and be
continuing, considered as one class, shall have made written
request to the Trustee to institute proceedings in respect of
such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders shall have offered to the
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in compliance with such request;
(d) the Trustee for 60 days after its receipt of such
notice, request and offer of indemnity shall have failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request
shall have been given to the Trustee during such 60-day period by
the Holders of a majority in aggregate
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principal amount of the Outstanding Securities of all series in
respect of which an Event of Default shall have occurred and be
continuing, considered as one class;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 808. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture,
the Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and premium, if any, and
(subject to Section 307 and 311) interest, if any, on such Security on the
Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption, on the Redemption Date) and to institute suit for the enforcement
of any such payment, and such rights shall not be impaired without the consent
of such Holder.
SECTION 809. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture and such
proceeding shall have been discontinued or abandoned for any reason, or shall
have been determined adversely to the Trustee or to such Holder, then and in
every such case, subject to any determination in such proceeding, the Company,
and Trustee and such Holder shall be restored severally and respectively to
their former positions hereunder and thereafter all rights and remedies of the
Trustee and such Holder shall continue as though no such proceeding had been
instituted.
SECTION 810. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
SECTION 811. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder to
exercise any right or remedy accruing upon any Event of Default shall impair
any such right or remedy or constitute a waiver of any such Event of Default or
an acquiescence therein. Every right and
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remedy given by this Article or by law to the Trustee or to the Holders may be
exercised from time to time, and as often as may be deemed expedient, by the
Trustee or by the Holders, as the case may be.
SECTION 812. CONTROL BY HOLDERS OF SECURITIES.
If an Event of Default shall have occurred and be
continuing in respect of a series of Securities, the Holders of a majority in
principal amount of the Outstanding Securities of such series shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the Securities of such series; provided, however,
that if an Event of Default shall have occurred and be continuing with respect
to more than one series of Securities, the Holders of a majority in aggregate
principal amount of the Outstanding Securities of all such series, considered
as one class, shall have the right to make such direction, and not the Holders
of the Securities of any one of such series; and provided, further, that such
direction shall not be in conflict with any rule of law or with this Indenture.
Before proceeding to exercise any right or power hereunder at the direction of
such Holders, the Trustee shall be entitled to receive from such Holders
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with any such direction.
SECTION 813. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in principal
amount of the Outstanding Securities of any series may on behalf of the Holders
of all the Securities of such series waive any past default hereunder with
respect to such series and its consequences, except a default
(a) in the payment of the principal of or premium, if
any, or interest, if any, on any Security of such series, or
(b) in respect of a covenant or provision hereof which
under Section 1202 cannot be modified or amended without the
consent of the Holder of each Outstanding Security of such series
affected;
provided, however, that so long as a Trust holds the Securities of any series,
such Trust may not waive any past default without the consent of at least a
majority in aggregate liquidation preference of the outstanding Preferred
Securities issued by such Trust affected, obtained as provided in the Trust
Agreement pertaining to such Trust.
Upon any such waiver, such default shall cease to exist,
and any and all Events of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Indenture; but no such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.
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SECTION 814. UNDERTAKING FOR COSTS.
The Company and the Trustee agree, and each Holder by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may
in its discretion assess reasonable costs, including reasonable attorneys'
fees, against any party litigant in such suit, having due regard to the merits
and good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% in
aggregate principal amount of the Outstanding Securities of all series in
respect of which such suit may be brought, considered as one class, or to any
suit instituted by any Holder for the enforcement of the payment of the
principal of or premium, if any, or interest, if any, on any Security on or
after the Stated Maturity or Maturities expressed in such Security (or, in the
case of redemption, on or after the Redemption Date).
SECTION 815. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully
do so) that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law
wherever enacted, now or at any time hereafter in force, which may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage of
any such law and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law had been
enacted.
ARTICLE NINE
THE TRUSTEE
SECTION 901. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The Trustee shall have and be subject to all the
duties and responsibilities specified with respect to an
indenture trustee in the Trust Indenture Act and no implied
covenants or obligations shall be read into this Indenture
against the Trustee.
(b) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if
it shall
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have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(c) Notwithstanding anything contained in this
Indenture to the contrary, the duties and responsibilities of the
Trustee under this Indenture shall be subject to the protections,
exculpations and limitations on liability afforded to the Trustee
under the provisions of the Trust Indenture Act.
(d) Whether or not therein expressly so provided,
every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section.
SECTION 902. NOTICE OF DEFAULTS.
The Trustee shall give notice of any default hereunder
with respect to the Securities of any series to the Holders of Securities of
such series in the manner and to the extent required to do so by the Trust
Indenture Act, unless such default shall have been cured or waived; provided,
however, that in the case of any default of the character specified in Section
801(c), no such notice to Holders shall be given until at least 45 days after
the occurrence thereof. For the purpose of this Section, the term "default"
means any event which is, or after notice or lapse of time, or both, would
become, an Event of Default.
SECTION 903. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 901 and to the
applicable provisions of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in
acting or refraining from acting in good faith upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document
reasonably believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or
Company Order, or as otherwise expressly provided herein, and any
resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officer's Certificate;
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(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the
request or direction of any Holder pursuant to this Indenture,
unless such Holder shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or
direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other
evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and,
if the Trustee shall determine to make such further inquiry or
investigation, it shall (subject to applicable legal
requirements) be entitled to examine, during normal business
hours, the books, records and premises of the Company, personally
or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by
or through agents or attorneys and the Trustee shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney appointed with due care by it hereunder; and
(h) the Trustee shall not be charged with knowledge of
any default or Event of Default, as the case may be, with respect
to the Securities of any series for which it is acting as Trustee
unless either (1) a Responsible Officer of the Trustee shall have
actual knowledge of the default or Event of Default, as the case
may be, or (2) written notice of such default or Event of
Default, as the case may be, shall have been given to the Trustee
by the Company, any other obligor on such Securities or by any
Holder of such Securities.
SECTION 904. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities
(except the Trustee's certificates of authentication) shall be taken as the
statements of the Company, and neither the Trustee nor any Authenticating Agent
assumes responsibility for their correctness. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Securities. Neither the Trustee nor any Authenticating Agent shall be
accountable for the use or application by the Company of Securities or the
proceeds thereof.
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SECTION 905. MAY HOLD SECURITIES.
Each of the Trustee, any Authenticating Agent, any Paying
Agent, any Security Registrar or any other agent of the Company, in its
individual or any other capacity, may become the owner or pledgee of Securities
and, subject to Sections 908 and 913, may otherwise deal with the Company with
the same rights it would have if it were not the Trustee, Authenticating Agent,
Paying Agent, Security Registrar or such other agent.
SECTION 906. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds, except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as expressly provided herein or otherwise agreed with, and for the sole
benefit of, the Company.
SECTION 907. COMPENSATION AND REIMBURSEMENT.
The Company shall
(a) pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein,
reimburse the Trustee upon its request for all reasonable
expenses, disbursements and advances reasonably incurred or made
by the Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except to the extent
that any such expense, disbursement or advance may be
attributable to the Trustee's negligence, wilful misconduct or
bad faith; and
(c) indemnify the Trustee for, and hold it harmless from
and against, any loss, liability or expense reasonably incurred
by it arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder or the
performance of its duties hereunder, including the reasonable
costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any
of its powers or duties hereunder, except to the extent any such
loss, liability or expense may be attributable to its negligence,
wilful misconduct or bad faith.
As security for the performance of the obligations of the
Company under this Section, the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee as such
other than property and funds held in trust under Section 703 (except as
otherwise provided in Section 703). "Trustee" for purposes of this Section
shall include any predecessor Trustee; provided, however, that the negligence,
wilful
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misconduct or bad faith of any Trustee hereunder shall not affect the rights of
any other Trustee hereunder.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 801(d) or Section
801(e), the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable Federal or State bankruptcy,
insolvency or other similar law.
SECTION 908. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee shall have or acquire any conflicting
interest within the meaning of the Trust Indenture Act, it shall either
eliminate such conflicting interest or resign to the extent, in the manner and
with the effect, and subject to the conditions, provided in the Trust Indenture
Act and this Indenture. For purposes of Section 310(b)(1) of the Trust
Indenture Act and to the extent permitted thereby, the Trustee, in its capacity
as trustee in respect of the Securities of any series, shall not be deemed to
have a conflicting interest arising from its capacity as trustee in respect of
the Securities of any other series. The Trust Agreement and the Guarantee
Agreement pertaining to each Trust shall be deemed to be specifically described
in this Indenture for the purposes of clause (i) of the first proviso contained
in Section 310(b) of the Trust Indenture Act.
SECTION 909. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which
shall be
(a) a corporation organized and doing business under the
laws of the United States, any State or Territory thereof or the
District of Columbia, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of
at least $50,000,000 and subject to supervision or examination by
Federal or State authority, or
(b) if and to the extent permitted by the Commission by
rule, regulation or order upon application, a corporation or
other Person organized and doing business under the laws of a
foreign government, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of
at least $50,000,000 or the Dollar equivalent of the applicable
foreign currency and subject to supervision or examination by
authority of such foreign government or a political subdivision
thereof substantially equivalent to supervision or examination
applicable to United States institutional trustees,
and, in either case, qualified and eligible under this Article and the Trust
Indenture Act. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of such supervising or
examining authority, then for the purposes of this Section, the combined
capital and surplus of such corporation shall be deemed to be its combined
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capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 910. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no
appointment of a successor Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the
successor Trustee in accordance with the applicable requirements
of Section 911.
(b) The Trustee may resign at any time with respect to
the Securities of one or more series by giving written notice
thereof to the Company. If the instrument of acceptance by a
successor Trustee required by Section 911 shall not have been
delivered to the Trustee within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a
successor Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect
to the Securities of any series by Act of the Holders of a
majority in principal amount of the Outstanding Securities of
such series delivered to the Trustee and to the Company; provided
that so long as any Preferred Securities remain outstanding, the
Trust which issued such Preferred Securities shall not execute
any Act to remove the Trustee without the consent of the holders
of a majority in aggregate liquidation preference of Preferred
Securities issued by such Trust outstanding, obtained as provided
in the Trust Agreement pertaining to such Trust.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 908
after written request therefor by the Company or by any Holder
who has been a bona fide Holder for at least six months, or
(2) the Trustee shall cease to be eligible under Section
909 and shall fail to resign after written request therefor by
the Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (x) the Company by a Board Resolution may remove the
Trustee with respect to all Securities or (y) subject to Section 814, any
Holder who has been a bona fide Holder for at least six months may, on behalf
of himself and all others similarly situated,
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petition any court of competent jurisdiction for the removal of the Trustee
with respect to all Securities and the appointment of a successor Trustee or
Trustees.
(e) If the Trustee shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of
Trustee for any cause (other than as contemplated in clause (y)
in subsection (d) of this Section), with respect to the
Securities of one or more series, the Company, by a Board
Resolution, shall promptly appoint a successor Trustee or
Trustees with respect to the Securities of that or those series
(it being understood that any such successor Trustee may be
appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee
with respect to the Securities of any particular series) and
shall comply with the applicable requirements of Section 911.
If, within one year after such resignation, removal or
incapability, or the occurrence of such vacancy, a successor
Trustee with respect to the Securities of any series shall be
appointed by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series delivered to the
Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of
Section 911, become the successor Trustee with respect to the
Securities of such series and to that extent supersede the
successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have
been so appointed by the Company or the Holders and accepted
appointment in the manner required by Section 911, any Holder who
has been a bona fide Holder of a Security of such series for at
least six months may, on behalf of itself and all others
similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Trustee with respect to the
Securities of such series.
(f) So long as no event which is, or after notice or
lapse of time, or both, would become, an Event of Default shall
have occurred and be continuing, and except with respect to a
Trustee appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities pursuant to
subsection (e) of this Section, if the Company shall have
delivered to the Trustee (i) a Board Resolution appointing a
successor Trustee, effective as of a date specified therein, and
(ii) an instrument of acceptance of such appointment, effective
as of such date, by such successor Trustee in accordance with
Section 911, the Trustee shall be deemed to have resigned as
contemplated in subsection (b) of this Section, the successor
Trustee shall be deemed to have been appointed by the Company
pursuant to subsection (e) of this Section and such appointment
shall be deemed to have been accepted as contemplated in Section
911, all as of such date, and all other provisions of this
Section and Section 911 shall be applicable to such resignation,
appointment and acceptance except to the extent inconsistent with
this subsection (f).
(g) The Company shall give notice of each resignation
and each removal of the Trustee with respect to the Securities of
any series and each appointment of a successor Trustee with
respect to the Securities of any series by mailing written notice
of such event by first-class mail, postage prepaid, to all
Holders of Securities of such series as their names and addresses
appear in the Security Register. Each notice shall
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include the name of the successor Trustee with respect to the
Securities of such series and the address of its corporate trust
office.
SECTION 911. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of all series, every such
successor Trustee so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or
removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance,
shall become vested with all the rights, powers, trusts and
duties of the retiring Trustee; but, on the request of the
Company or the successor Trustee, such retiring Trustee shall,
upon payment of all sums owed to it, execute and deliver an
instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and
money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor
Trustee with respect to the Securities of one or more (but not
all) series, the Company, the retiring Trustee and each successor
Trustee with respect to the Securities of one or more series
shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and
which (1) shall contain such provisions as shall be necessary or
desirable to transfer and confirm to, and to vest in, each
successor Trustee all the rights, powers, trusts and duties of
the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee
relates, (2) if the retiring Trustee is not retiring with respect
to all Securities, shall contain such provisions as shall be
deemed necessary or desirable to confirm that all the rights,
powers, trusts and duties of the retiring Trustee with respect to
the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the
retiring Trustee and (3) shall add to or change any of the
provisions of this Indenture as shall be necessary to provide for
or facilitate the administration of the trusts hereunder by more
than one Trustee, it being understood that nothing herein or in
such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be
trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such
Trustee; and upon the execution and delivery of such supplemental
indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each
such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee with respect to the
Securities of that or those series to which the appointment of
such successor Trustee relates; but, on request of the Company or
any successor Trustee, such retiring Trustee, upon payment of all
sums owed to it, shall duly assign, transfer and deliver to such
successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those
series to which the appointment of such successor Trustee
relates.
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(c) Upon request of any such successor Trustee, the
Company shall execute any instruments which fully vest in and
confirm to such successor Trustee all such rights, powers and
trusts referred to in subsection (a) or (b) of this Section, as
the case may be.
(d) No successor Trustee shall accept its appointment
unless at the time of such acceptance such successor Trustee
shall be qualified and eligible under this Article.
SECTION 912. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 913. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If the Trustee shall be or become a creditor of the
Company or any other obligor upon the Securities (other than by reason of a
relationship described in Section 311(b) of the Trust Indenture Act), the
Trustee shall be subject to any and all applicable provisions of the Trust
Indenture Act regarding the collection of claims against the Company or such
other obligor. For purposes of Section 311(b) of the Trust Indenture Act:
(a) the term "cash transaction" means any
transaction in which full payment for goods or securities sold is
made within seven days after delivery of the goods or securities
in currency or in checks or other orders drawn upon banks or
bankers and payable upon demand;
(b) the term "self-liquidating paper" means any
draft, bill of exchange, acceptance or obligation which is made,
drawn, negotiated or incurred by the Company for the purpose of
financing the purchase, processing, manufacturing, shipment,
storage or sale of goods, wares or merchandise and which is
secured by documents evidencing title to, possession of, or a
lien upon, the goods, wares or merchandise or the receivables or
proceeds arising from the sale of the goods, wares or merchandise
previously constituting the security, provided the security is
received by the Trustee simultaneously with the creation of the
creditor relationship with the
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Company arising from the making, drawing, negotiating or
incurring of the draft, bill of exchange, acceptance or
obligation.
SECTION 914. CO-TRUSTEES AND SEPARATE TRUSTEES.
At any time or times, for the purpose of meeting the
legal requirements of any applicable jurisdiction, the Company and the Trustee
shall have power to appoint, and, upon the written request of the Trustee or of
the Holders of at least 33% in principal amount of the Securities then
Outstanding, the Company shall for such purpose join with the Trustee in the
execution and delivery of all instruments and agreements necessary or proper to
appoint, one or more Persons approved by the Trustee either to act as
co-trustee, jointly with the Trustee, or to act as separate trustee, in either
case with such powers as may be provided in the instrument of appointment, and
to vest in such Person or Persons, in the capacity aforesaid, any property,
title, right or power deemed necessary or desirable, subject to the other
provisions of this Section. If the Company does not join in such appointment
within 15 days after the receipt by it of a request so to do, or if an Event of
Default shall have occurred and be continuing, the Trustee alone shall have
power to make such appointment.
Should any written instrument or instruments from the
Company be required by any co-trustee or separate trustee so appointed to more
fully confirm to such co-trustee or separate trustee such property, title,
right or power, any and all such instruments shall, on request, be executed,
acknowledged and delivered by the Company.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following conditions:
(a) the Securities shall be authenticated and delivered,
and all rights, powers, duties and obligations hereunder in
respect of the custody of securities, cash and other personal
property held by, or required to be deposited or pledged with,
the Trustee hereunder, shall be exercised solely, by the Trustee;
(b) the rights, powers, duties and obligations hereby
conferred or imposed upon the Trustee in respect of any property
covered by such appointment shall be conferred or imposed upon
and exercised or performed either by the Trustee or by the
Trustee and such co-trustee or separate trustee jointly, as shall
be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the
Trustee shall be incompetent or unqualified to perform such act,
in which event such rights, powers, duties and obligations shall
be exercised and performed by such co-trustee or separate
trustee;
(c) the Trustee at any time, by an instrument in writing
executed by it, with the concurrence of the Company, may accept
the resignation of or remove any co-trustee or separate trustee
appointed under this Section, and, if an Event of Default shall
have occurred and be continuing, the Trustee shall have power to
accept the
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resignation of, or remove, any such co-trustee or separate
trustee without the concurrence of the Company. Upon the written
request of the Trustee, the Company shall join with the Trustee
in the execution and delivery of all instruments and agreements
necessary or proper to effectuate such resignation or removal. A
successor to any co-trustee or separate trustee so resigned or
removed may be appointed in the manner provided in this Section;
(d) no co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the
Trustee, or any other such trustee hereunder; and
(e) any Act of Holders delivered to the Trustee shall be
deemed to have been delivered to each such co-trustee and
separate trustee.
SECTION 915. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents
with respect to the Securities of one or more series, which shall be authorized
to act on behalf of the Trustee to authenticate Securities of such series
issued upon original issuance and upon exchange, registration of transfer or
partial redemption thereof or pursuant to Section 306, and Securities so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Securities by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall at all
times be a corporation organized and doing business under the laws of the
United States, any State or territory thereof or the District of Columbia,
authorized under such laws to act as Authenticating Agent, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating
Agent shall cease to be eligible in accordance with the provisions of this
Section, such Authenticating Agent shall resign immediately in the manner and
with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be
merged or converted or with which it may be consolidated, or any corporation
resulting from any merger, conversion or consolidation to which such
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating
Agent.
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An Authenticating Agent may resign at any time by giving
written notice thereof to the Trustee and to the Company. The Trustee may at
any time terminate the agency of an Authenticating Agent by giving written
notice thereof to such Authenticating Agent and to the Company. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
such Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent
from time to time reasonable compensation for its services under this Section,
and the Trustee shall be entitled to be reimbursed for such payments, in
accordance with, and subject to the provisions of Section 907.
The provisions of Sections 308, 904 and 905 shall be
applicable to each Authenticating Agent.
If an appointment with respect to the Securities of one
or more series shall be made pursuant to this Section, the Securities of such
series may have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication substantially in the
following form:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
----------------------------------------
As Trustee
By
-------------------------------------
As Authenticating
Agent
By
-------------------------------------
Authorized Signatory
If all of the Securities of a series may not be
originally issued at one time, and if the Trustee does not have an office
capable of authenticating Securities upon original issuance located in a Place
of Payment where the Company wishes to have Securities of such series
authenticated upon original issuance, the Trustee, if so requested by the
Company in writing (which writing need not comply with Section 102 and need not
be accompanied by an Opinion of Counsel), shall appoint, in accordance with
this Section and in accordance with such procedures as shall be acceptable to
the Trustee, an Authenticating Agent having an
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office in a Place of Payment designated by the Company with respect to such
series of Securities.
ARTICLE TEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 1001. LISTS OF HOLDERS.
Semiannually, not later than June 1 and December 1 in
each year, commencing June 1, 1996, and at such other times as the Trustee may
request in writing, the Company shall furnish or cause to be furnished to the
Trustee information as to the names and addresses of the Holders, and the
Trustee shall preserve such information and similar information received by it
in any other capacity and afford to the Holders access to information so
preserved by it, all to such extent, if any, and in such manner as shall be
required by the Trust Indenture Act; provided, however, that no such list need
be furnished so long as the Trustee shall be the Security Registrar.
SECTION 1002. REPORTS BY TRUSTEE AND COMPANY.
Not later than November 1 in each year, commencing
November 1, 1996, the Trustee shall transmit to the Holders and the Commission
a report, dated as of the next preceding September 15, with respect to any
events and other matters described in Section 313(a) of the Trust Indenture
Act, in such manner and to the extent required by the Trust Indenture Act. The
Trustee shall transmit to the Holders and the Commission, and the Company shall
file with the Trustee (within 30 days after filing with the Commission in the
case of reports which pursuant to the Trust Indenture Act must be filed with
the Commission and furnished to the Trustee) and transmit to the Holders, such
other information, reports and other documents, if any, at such times and in
such manner, as shall be required by the Trust Indenture Act.
ARTICLE ELEVEN
CONSOLIDATION, MERGER, CONVEYANCE OR OTHER TRANSFER
SECTION 1101. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any
other corporation, or convey or otherwise transfer or lease its properties and
assets substantially as an entirety to any Person, unless
(a) the corporation formed by such consolidation or into
which the Company is merged or the Person which acquires by
conveyance or transfer, or which leases,
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the properties and assets of the Company substantially as an
entirety shall be a Person organized and validly existing under
the laws of the United States, any State thereof or the District
of Columbia, and shall expressly assume, by an indenture
supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, the due and punctual payment of
the principal of and premium, if any, and interest, if any, on
all Outstanding Securities and the performance of every covenant
of this Indenture on the part of the Company to be performed or
observed;
(b) immediately after giving effect to such transaction
no Event of Default, and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have
occurred and be continuing; and
(c) the Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, conveyance, or other transfer or
lease and such supplemental indenture comply with this Article
and that all conditions precedent herein provided for relating to
such transactions have been complied with.
SECTION 1102. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation by the Company with or merger by
the Company into any other corporation or any conveyance, or other transfer or
lease of the properties and assets of the Company substantially as an entirety
in accordance with Section 1101, the successor corporation formed by such
consolidation or into which the Company is merged or the Person to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every right and power of, the Company under this Indenture
with the same effect as if such successor Person had been named as the Company
herein, and thereafter, except in the case of a lease, the predecessor Person
shall be relieved of all obligations and covenants under this Indenture and the
Securities Outstanding hereunder.
ARTICLE TWELVE
SUPPLEMENTAL INDENTURES
SECTION 1201. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company and the
Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Trustee, for any of
the following purposes:
(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants
of the Company herein and in the Securities, all as provided in
Article Eleven; or
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(b) to add one or more covenants of the Company or other
provisions for the benefit of all Holders or for the benefit of
the Holders of, or to remain in effect only so long as there
shall be Outstanding, Securities of one or more specified series,
or to surrender any right or power herein conferred upon the
Company; or
(c) to add any additional Events of Default with respect
to all or any series of Securities Outstanding hereunder; or
(d) to change or eliminate any provision of this
Indenture or to add any new provision to this Indenture;
provided, however, that if such change, elimination or addition
shall adversely affect the interests of the Holders of Securities
of any series Outstanding on the date of such indenture
supplemental hereto in any material respect, such change,
elimination or addition shall become effective with respect to
such series only pursuant to the provisions of Section 1202
hereof or when no Security of such series remains Outstanding; or
(e) to provide collateral security for all but not part
of the Securities; or
(f) to establish the form or terms of Securities of any
series as contemplated by Sections 201 and 301; or
(g) to provide for the authentication and delivery of
bearer securities and coupons appertaining thereto representing
interest, if any, thereon and for the procedures for the
registration, exchange and replacement thereof and for the giving
of notice to, and the solicitation of the vote or consent of, the
holders thereof, and for any and all other matters incidental
thereto; or
(h) to evidence and provide for the acceptance of
appointment hereunder by a separate or successor Trustee with
respect to the Securities of one or more series and to add to or
change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the
requirements of Section 911(b); or
(i) to provide for the procedures required to permit the
Company to utilize, at its option, a noncertificated system of
registration for all, or any series of, the Securities; or
(j) to change any place or places where (1) the
principal of and premium, if any, and interest, if any, on all or
any series of Securities shall be payable, (2) all or any series
of Securities may be surrendered for registration of transfer,
(3) all or any series of Securities may be surrendered for
exchange and (4) notices and demands to or upon the Company in
respect of all or any series of Securities and this Indenture may
be served; or
<PAGE> 67
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(k) to cure any ambiguity, to correct or supplement any
provision herein which may be defective or inconsistent with any
other provision herein, or to make any other changes to the
provisions hereof or to add other provisions with respect to
matters or questions arising under this Indenture, provided that
such other changes or additions shall not adversely affect the
interests of the Holders of Securities of any series in any
material respect.
Without limiting the generality of the foregoing, if the
Trust Indenture Act as in effect at the date of the execution and delivery of
this Indenture or at any time thereafter shall be amended and
(x) if any such amendment shall require one or
more changes to any provisions hereof or the inclusion
herein of any additional provisions, or shall by
operation of law be deemed to effect such changes or
incorporate such provisions by reference or otherwise,
this Indenture shall be deemed to have been amended so as
to conform to such amendment to the Trust Indenture Act,
and the Company and the Trustee may, without the consent
of any Holders, enter into an indenture supplemental
hereto to effect or evidence such changes or additional
provisions; or
(y) if any such amendment shall permit one or
more changes to, or the elimination of, any provisions
hereof which, at the date of the execution and delivery
hereof or at any time thereafter, are required by the
Trust Indenture Act to be contained herein, this
Indenture shall be deemed to have been amended to effect
such changes or elimination, and the Company and the
Trustee may, without the consent of any Holders, enter
into an indenture supplemental hereto to evidence such
amendment hereof.
SECTION 1202. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a
majority in aggregate principal amount of the Securities of all series then
Outstanding under this Indenture, considered as one class, by Act of said
Holders delivered to the Company and the Trustee, the Company, when authorized
by a Board Resolution, and the Trustee may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or modifying in any manner the rights of the Holders of Securities of such
series under the Indenture; provided, however, that if there shall be
Securities of more than one series Outstanding hereunder and if a proposed
supplemental indenture shall directly affect the rights of the Holders of
Securities of one or more, but less than all, of such series, then the consent
only of the Holders of a majority in aggregate principal amount of the
Outstanding Securities of
<PAGE> 68
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all series so directly affected, considered as one class, shall be required;
and provided, further, that no such supplemental indenture shall:
(a) change the Stated Maturity of the principal of, or
any installment of principal of or interest on (except as
provided in Section 311 hereof), any Security, or reduce the
principal amount thereof or the rate of interest thereon (or the
amount of any installment of interest thereon) or change the
method of calculating such rate or reduce any premium payable
upon the redemption thereof, or change the coin or currency (or
other property), in which any Security or any premium or the
interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the
Stated Maturity of any Security (or, in the case of redemption,
on or after the Redemption Date), without, in any such case, the
consent of the Holder of such Security, or
(b) reduce the percentage in principal amount of the
Outstanding Securities of any series (or, if applicable, in
liquidation preference of any series of Preferred Securities),
the consent of the Holders of which is required for any such
supplemental indenture, or the consent of the Holders of which is
required for any waiver of compliance with any provision of this
Indenture or of any default hereunder and its consequences, or
reduce the requirements of Section 1304 for quorum or voting,
without, in any such case, the consent of the Holders of each
Outstanding Security of such series, or
(c) modify any of the provisions of this Section,
Section 607 or Section 813 with respect to the Securities of any
series, except to increase the percentages in principal amount
referred to in this Section or such other Sections or to provide
that other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding
Security affected thereby; provided, however, that this clause
shall not be deemed to require the consent of any Holder with
respect to changes in the references to "the Trustee" and
concomitant changes in this Section, or the deletion of this
proviso, in accordance with the requirements of Sections 911(b)
and 1201(h).
Notwithstanding the foregoing, so long as any of the Preferred Securities
remain outstanding, the Trustee may not consent to a supplemental indenture
under this Section 1202 without the prior consent, obtained as provided in a
Trust Agreement pertaining to a Trust which issued such Preferred Securities,
of the holders of not less than a majority in aggregate liquidation preference
of all Preferred Securities issued by such Trust affected, considered as one
class, or, in the case of changes described in clauses (a), (b) and (c) above,
100% in aggregate liquidation preference of all such Preferred Securities then
outstanding which would be affected thereby, considered as one class. A
supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such
covenant or other
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provision, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof. A waiver by a Holder of such Holder's right to consent under this
Section shall be deemed to be a consent of such Holder.
SECTION 1203. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created
by, any supplemental indenture permitted by this Article or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and (subject to Section 901) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
shall not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties, immunities or liabilities under this
Indenture or otherwise.
SECTION 1204. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under
this Article, this Indenture shall be modified in accordance therewith, and
such supplemental indenture shall form a part of this Indenture for all
purposes; and every Holder of Securities theretofore or thereafter
authenticated and delivered hereunder shall be bound thereby. Any supplemental
indenture permitted by this Article may restate this Indenture in its entirety,
and, upon the execution and delivery thereof, any such restatement shall
supersede this Indenture as theretofore in effect for all purposes.
SECTION 1205. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act as then in
effect.
SECTION 1206. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series authenticated and delivered
after the execution of any supplemental indenture pursuant to this Article may,
and shall if required by the Trustee, bear a notation in form approved by the
Trustee as to any matter provided for in such supplemental indenture. If the
Company shall so determine, new Securities of any series so modified as to
conform, in the opinion of the Trustee and the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for Outstanding
Securities of such series.
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SECTION 1207. MODIFICATION WITHOUT SUPPLEMENTAL INDENTURE.
If the terms of any particular series of Securities shall
have been established in a Board Resolution or an Officer's Certificate as
contemplated by Section 301, and not in an indenture supplemental hereto,
additions to, changes in or the elimination of any of such terms may be
effected by means of a supplemental Board Resolution or Officer's Certificate,
as the case may be, delivered to, and accepted by, the Trustee; provided,
however, that such supplemental Board Resolution or Officer's Certificate shall
not be accepted by the Trustee or otherwise be effective unless all conditions
set forth in this Indenture which would be required to be satisfied if such
additions, changes or elimination were contained in a supplemental indenture
shall have been appropriately satisfied. Upon the acceptance thereof by the
Trustee, any such supplemental Board Resolution or Officer's Certificate shall
be deemed to be a "supplemental indenture" for purposes of Section 1204 and
1206.
ARTICLE THIRTEEN
MEETINGS OF HOLDERS; ACTION WITHOUT MEETING
SECTION 1301. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders of Securities of one or more, or
all, series may be called at any time and from time to time pursuant to this
Article to make, give or take any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this Indenture to be made,
given or taken by Holders of Securities of such series.
SECTION 1302. CALL, NOTICE AND PLACE OF MEETINGS.
(a) The Trustee may at any time call a meeting of
Holders of Securities of one or more, or all, series for any
purpose specified in Section 1301, to be held at such time and at
such place in the Borough of Manhattan, The City of New York, as
the Trustee shall determine, or, with the approval of the
Company, at any other place. Notice of every such meeting,
setting forth the time and the place of such meeting and in
general terms the action proposed to be taken at such meeting,
shall be given, in the manner provided in Section 106, not less
than 21 nor more than 180 days prior to the date fixed for the
meeting.
(b) If the Trustee shall have been requested to call a
meeting of the Holders of Securities of one or more, or all,
series by the Company or by the Holders of 33% in aggregate
principal amount of all of such series, considered as one class,
for any purpose specified in Section 1301, by written request
setting forth in reasonable detail the action proposed to be
taken at the meeting, and the Trustee shall not have given the
notice of such meeting within 21 days after receipt of such
request or shall not thereafter proceed to cause the meeting to
be held as provided herein, then the Company or the Holders of
Securities of such series in the amount above specified,
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as the case may be, may determine the time and the place in the
Borough of Manhattan, The City of New York, or in such other
place as shall be determined or approved by the Company, for such
meeting and may call such meeting for such purposes by giving
notice thereof as provided in subsection (a) of this Section.
(c) Any meeting of Holders of Securities of one or more,
or all, series shall be valid without notice if the Holders of
all Outstanding Securities of such series are present in person
or by proxy and if representatives of the Company and the Trustee
are present, or if notice is waived in writing before or after
the meeting by the Holders of all Outstanding Securities of such
series, or by such of them as are not present at the meeting in
person or by proxy, and by the Company and the Trustee.
SECTION 1303. PERSONS ENTITLED TO VOTE AT MEETINGS.
To be entitled to vote at any meeting of Holders of
Securities of one or more, or all, series a Person shall be (a) a Holder of one
or more Outstanding Securities of such series, or (b) a Person appointed by an
instrument in writing as proxy for a Holder or Holders of one or more
Outstanding Securities of such series by such Holder or Holders. The only
Persons who shall be entitled to attend any meeting of Holders of Securities of
any series shall be the Persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
SECTION 1304. QUORUM; ACTION.
The Persons entitled to vote a majority in aggregate
principal amount of the Outstanding Securities of the series with respect to
which a meeting shall have been called as hereinbefore provided, considered as
one class, shall constitute a quorum for a meeting of Holders of Securities of
such series; provided, however, that if any action is to be taken at such
meeting which this Indenture expressly provides may be taken by the Holders of
a specified percentage, which is less than a majority, in principal amount of
the Outstanding Securities of such series, considered as one class, the Persons
entitled to vote such specified percentage in principal amount of the
Outstanding Securities of such series, considered as one class, shall
constitute a quorum. In the absence of a quorum within one hour of the time
appointed for any such meeting, the meeting shall, if convened at the request
of Holders of Securities of such series, be dissolved. In any other case the
meeting may be adjourned for such period as may be determined by the chairman
of the meeting prior to the adjournment of such meeting. In the absence of a
quorum at any such adjourned meeting, such adjourned meeting may be further
adjourned for such period as may be determined by the chairman of the meeting
prior to the adjournment of such adjourned meeting. Except as provided by
Section 1305(e), notice of the reconvening of any meeting adjourned for more
than 30 days shall be given as provided in Section 1302(a) not less than 10
days prior to the date on which the meeting is scheduled to be reconvened.
Notice of the reconvening of an adjourned meeting shall state expressly the
percentage, as provided above, of the principal amount of the Outstanding
Securities of such series which shall constitute a quorum.
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Except as limited by Section 1202, any resolution
presented to a meeting or adjourned meeting duly reconvened at which a quorum
is present as aforesaid may be adopted only by the affirmative vote of the
Holders of a majority in aggregate principal amount of the Outstanding
Securities of the series with respect to which such meeting shall have been
called, considered as one class; provided, however, that, except as so limited,
any resolution with respect to any action which this Indenture expressly
provides may be taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Securities of such
series, considered as one class, may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of such specified percentage in principal
amount of the Outstanding Securities of such series, considered as one class.
Any resolution passed or decision taken at any meeting of
Holders of Securities duly held in accordance with this Section shall be
binding on all the Holders of Securities of the series with respect to which
such meeting shall have been held, whether or not present or represented at the
meeting.
SECTION 1305. ATTENDANCE AT MEETINGS; DETERMINATION OF VOTING RIGHTS;
CONDUCT AND ADJOURNMENT OF MEETINGS.
(a) Attendance at meetings of Holders of Securities may
be in person or by proxy; and, to the extent permitted by law,
any such proxy shall remain in effect and be binding upon any
future Holder of the Securities with respect to which it was
given unless and until specifically revoked by the Holder or
future Holder of such Securities before being voted.
(b) Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it
may deem advisable for any meeting of Holders of Securities in
regard to proof of the holding of such Securities and of the
appointment of proxies and in regard to the appointment and
duties of inspectors of votes, the submission and examination of
proxies, certificates and other evidence of the right to vote,
and such other matters concerning the conduct of the meeting as
it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Securities shall
be proved in the manner specified in Section 104 and the
appointment of any proxy shall be proved in the manner specified
in Section 104. Such regulations may provide that written
instruments appointing proxies, regular on their face, may be
presumed valid and genuine without the proof specified in Section
104 or other proof.
(c) The Trustee shall, by an instrument in writing,
appoint a temporary chairman of the meeting, unless the meeting
shall have been called by the Company or by Holders as provided
in Section 1302(b), in which case the Company or the Holders of
Securities of the series calling the meeting, as the case may be,
shall in like manner appoint a temporary chairman. A permanent
chairman and a permanent secretary of the meeting shall be
elected by vote of the Persons entitled to vote a
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majority in aggregate principal amount of the Outstanding
Securities of all series represented at the meeting, considered
as one class.
(d) At any meeting each Holder or proxy shall be
entitled to one vote for each $1 principal amount of Securities
held or represented by him; provided, however, that no vote shall
be cast or counted at any meeting in respect of any Security
challenged as not Outstanding and ruled by the chairman of the
meeting to be not Outstanding. The chairman of the meeting shall
have no right to vote, except as a Holder of a Security or proxy.
(e) Any meeting duly called pursuant to Section 1302 at
which a quorum is present may be adjourned from time to time by
Persons entitled to vote a majority in aggregate principal amount
of the Outstanding Securities of all series represented at the
meeting, considered as one class; and the meeting may be held as
so adjourned without further notice.
SECTION 1306. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of
Holders shall be by written ballots on which shall be subscribed the signatures
of the Holders or of their representatives by proxy and the principal amounts
and serial numbers of the Outstanding Securities, of the series with respect to
which the meeting shall have been called, held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and who
shall make and file with the secretary of the meeting their verified written
reports of all votes cast at the meeting. A record of the proceedings of each
meeting of Holders shall be prepared by the secretary of the meeting and there
shall be attached to said record the original reports of the inspectors of
votes on any vote by ballot taken thereat and affidavits by one or more persons
having knowledge of the facts setting forth a copy of the notice of the meeting
and showing that said notice was given as provided in Section 1302 and, if
applicable, Section 1304. Each copy shall be signed and verified by the
affidavits of the permanent chairman and secretary of the meeting and one such
copy shall be delivered to the Company, and another to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting. Any record so signed and verified shall be conclusive evidence
of the matters therein stated.
SECTION 1307. ACTION WITHOUT MEETING.
In lieu of a vote of Holders at a meeting as hereinbefore
contemplated in this Article, any request, demand, authorization, direction,
notice, consent, waiver or other action may be made, given or taken by Holders
by written instruments as provided in Section 104.
<PAGE> 74
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ARTICLE FOURTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS
SECTION 1401. LIABILITY SOLELY CORPORATE.
No recourse shall be had for the payment of the principal
of or premium, if any, or interest, if any, on any Securities, or any part
thereof, or for any claim based thereon or otherwise in respect thereof, or of
the indebtedness represented thereby, or upon any obligation, covenant or
agreement under this Indenture, against any incorporator, stockholder, officer
or director, as such, past, present or future of the Company or of any
predecessor or successor corporation (either directly or through the Company or
a predecessor or successor corporation), whether by virtue of any
constitutional provision, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and understood
that this Indenture and all the Securities are solely corporate obligations,
and that no personal liability whatsoever shall attach to, or be incurred by,
any incorporator, stockholder, officer or director, past, present or future, of
the Company or of any predecessor or successor corporation, either directly or
indirectly through the Company or any predecessor or successor corporation,
because of the indebtedness hereby authorized or under or by reason of any of
the obligations, covenants or agreements contained in this Indenture or in any
of the Securities or to be implied herefrom or therefrom, and that any such
personal liability is hereby expressly waived and released as a condition of,
and as part of the consideration for, the execution of this Indenture and the
issuance of the Securities.
ARTICLE FIFTEEN
SUBORDINATION OF SECURITIES
SECTION 1501. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company, for itself, its successors and assigns,
covenants and agrees, and each Holder of the Securities of each series, by its
acceptance thereof, likewise covenants and agrees, that the payment of the
principal of and premium, if any, and interest, if any, on each and all of the
Securities is hereby expressly subordinated and subject to the extent and in
the manner set forth in this Article, in right of payment to the prior payment
in full of all Senior Indebtedness.
Each Holder of the Securities of each series, by its
acceptance thereof, authorizes and directs the Trustee on its behalf to take
such action as may be necessary or appropriate to effectuate the subordination
as provided in this Article, and appoints the Trustee its attorney-in-fact for
any and all such purposes.
<PAGE> 75
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SECTION 1502. PAYMENT OVER OF PROCEEDS OF SECURITIES.
In the event (a) of any insolvency or bankruptcy
proceedings or any receivership, liquidation, reorganization or other similar
proceedings in respect of the Company or a substantial part of its property, or
of any proceedings for liquidation, dissolution or other winding up of the
Company, whether or not involving insolvency or bankruptcy, or (b) subject to
the provisions of Section 1503, that (i) a default shall have occurred with
respect to the payment of principal of or interest on or other monetary amounts
due and payable on any Senior Indebtedness, or (ii) there shall have occurred a
default (other than a default in the payment of principal or interest or other
monetary amounts due and payable) in respect of any Senior Indebtedness, as
defined therein or in the instrument under which the same is outstanding,
permitting the holder or holders thereof to accelerate the maturity thereof
(with notice or lapse of time, or both), and such default shall have continued
beyond the period of grace, if any, in respect thereof, and, in the cases of
subclauses (i) and (ii) of this clause (b), such default shall not have been
cured or waived or shall not have ceased to exist, or (c) that the principal of
and accrued interest on the Securities of any series shall have been declared
due and payable pursuant to Section 801 and such declaration shall not have
been rescinded and annulled as provided in Section 802, then:
(1) the holders of all Senior Indebtedness shall
first be entitled to receive payment of the full amount
due thereon, or provision shall be made for such payment
in money or money's worth, before the Holders of any of
the Securities are entitled to receive a payment on
account of the principal of or interest on the
indebtedness evidenced by the Securities, including,
without limitation, any payments made pursuant to
Articles Four and Five;
(2) any payment by, or distribution of assets of,
the Company of any kind or character, whether in cash,
property or securities, to which any Holder or the
Trustee would be entitled except for the provisions of
this Article, shall be paid or delivered by the person
making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of such Senior
Indebtedness or their representative or representatives
or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to
the aggregate amounts remaining unpaid on account of such
Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full of all Senior
Indebtedness remaining unpaid after giving effect to any
concurrent payment or distribution (or provision
therefor) to the holders of such Senior Indebtedness,
before any payment or distribution is made to the Holders
of the indebtedness evidenced by the Securities or to the
Trustee under this Indenture; and
<PAGE> 76
-69-
(3) in the event that, notwithstanding the
foregoing, any payment by, or distribution of assets of,
the Company of any kind or character, whether in cash,
property or securities, in respect of principal of or
interest on the Securities or in connection with any
repurchase by the Company of the Securities, shall be
received by the Trustee or any Holder before all Senior
Indebtedness is paid in full, or provision is made for
such payment in money or money's worth, such payment or
distribution in respect of principal of or interest on
the Securities or in connection with any repurchase by
the Company of the Securities shall be paid over to the
holders of such Senior Indebtedness or their
representative or representatives or to the trustee or
trustees under any indenture under which any instruments
evidencing any such Senior Indebtedness may have been
issued, ratably as aforesaid, for application to the
payment of all Senior Indebtedness remaining unpaid until
all such Senior Indebtedness shall have been paid in
full, after giving effect to any concurrent payment or
distribution (or provision therefor) to the holders of
such Senior Indebtedness.
Notwithstanding the foregoing, at any time after the
123rd day following the date of deposit of cash or Government Obligations
pursuant to Section 701 (provided all conditions set out in such Section shall
have been satisfied), the funds so deposited and any interest thereon will not
be subject to any rights of holders of Senior Indebtedness including, without
limitation, those arising under this Article Fifteen; provided that no event
described in clauses (d) and (e) of Section 801 with respect to the Company has
occurred during such 123-day period.
For purposes of this Article only, the words "cash,
property or securities" shall not be deemed to include shares of stock of the
Company as reorganized or readjusted, or securities of the Company or any other
corporation provided for by a plan or reorganization or readjustment which are
subordinate in right of payment to all Senior Indebtedness which may at the
time be outstanding to the same extent as, or to a greater extent than, the
Securities are so subordinated as provided in this Article. The consolidation
of the Company with, or the merger of the Company into, another corporation or
the liquidation or dissolution of the Company following the conveyance or
transfer of its property as an entirety, or substantially as an entirety, to
another corporation upon the terms and conditions provided for in Article
Eleven hereof shall not be deemed a dissolution, winding-up, liquidation or
reorganization for the purposes of this Section 1502 if such other corporation
shall, as a part of such consolidation, merger, conveyance or transfer, comply
with the conditions stated in Article Eleven hereof. Nothing in Section 1501
or in this Section 1502 shall apply to claims of, or payments to, the Trustee
under or pursuant to Section 907.
<PAGE> 77
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SECTION 1503. DISPUTES WITH HOLDERS OF CERTAIN SENIOR INDEBTEDNESS.
Any failure by the Company to make any payment on or
perform any other obligation in respect of Senior Indebtedness, other than any
indebtedness incurred by the Company or assumed or guaranteed, directly or
indirectly, by the Company for money borrowed (or any deferral, renewal,
extension or refunding thereof) or any other obligation as to which the
provisions of this Section shall have been waived by the Company in the
instrument or instruments by which the Company incurred, assumed, guaranteed or
otherwise created such indebtedness or obligation, shall not be deemed a
default under clause (b) of Section 1502 if (i) the Company shall be disputing
its obligation to make such payment or perform such obligation and (ii) either
(A) no final judgment relating to such dispute shall have been issued against
the Company which is in full force and effect and is not subject to further
review, including a judgment that has become final by reason of the expiration
of the time within which a party may seek further appeal or review, or (B) in
the event that a judgment that is subject to further review or appeal has been
issued, the Company shall in good faith be prosecuting an appeal or other
proceeding for review and a stay or execution shall have been obtained pending
such appeal or review.
SECTION 1504. SUBROGATION.
Senior Indebtedness shall not be deemed to have been paid
in full unless the holders thereof shall have received cash (or securities or
other property satisfactory to such holders) in full payment of such Senior
Indebtedness then outstanding. Subject to the prior payment in full of all
Senior Indebtedness, the rights of the Holders of the Securities shall be
subrogated to the rights of the holders of Senior Indebtedness to receive any
further payments or distributions of cash, property or securities of the
Company applicable to the holders of the Senior Indebtedness until all amounts
owing on the Securities shall be paid in full; and such payments or
distributions of cash, property or securities received by the Holders of the
Securities, by reason of such subrogation, which otherwise would be paid or
distributed to the holders of such Senior Indebtedness shall, as between the
Company, its creditors other than the holders of Senior Indebtedness, and the
Holders, be deemed to be a payment by the Company to or on account of Senior
Indebtedness, it being understood that the provisions of this Article are and
are intended solely for the purpose of defining the relative rights of the
Holders, on the one hand, and the holders of the Senior Indebtedness, on the
other hand.
SECTION 1505. OBLIGATION OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article or elsewhere in this
Indenture or in the Securities is intended to or shall impair, as among the
Company, its creditors other than the holders of Senior Indebtedness and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of and interest on the Securities as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of Senior Indebtedness, nor shall anything
herein or therein prevent the Trustee or any Holder from exercising all
remedies otherwise permitted by applicable law
<PAGE> 78
-71-
upon default under this Indenture, subject to the rights, if any, under this
Article of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets or securities
of the Company referred to in this Article, the Trustee and the Holders shall
be entitled to rely upon any order or decree of a court of competent
jurisdiction in which such dissolution, winding up, liquidation or
reorganization proceedings are pending for the purpose of ascertaining the
persons entitled to participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon, and all
other facts pertinent thereto or to this Article.
SECTION 1506. PRIORITY OF SENIOR INDEBTEDNESS UPON MATURITY.
Upon the maturity of the principal of any Senior
Indebtedness by lapse of time, acceleration or otherwise, all matured principal
of Senior Indebtedness and interest and premium, if any, thereon shall first be
paid in full before any payment of principal or premium, if any, or interest,
if any, is made upon the Securities or before any Securities can be acquired by
the Company or any sinking fund payment is made with respect to the Securities
(except that required sinking fund payments may be reduced by Securities
acquired before such maturity of such Senior Indebtedness).
SECTION 1507. TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all rights set forth in
this Article with respect to any Senior Indebtedness at any time held by it, to
the same extent as any other holder of Senior Indebtedness. Nothing in this
Article shall deprive the Trustee of any of its rights as such holder.
SECTION 1508. NOTICE TO TRUSTEE TO EFFECTUATE SUBORDINATION.
Notwithstanding the provisions of this Article or any
other provision of the Indenture, the Trustee shall not be charged with
knowledge of the existence of any facts which would prohibit the making of any
payment of moneys to or by the Trustee unless and until the Trustee shall have
received written notice thereof from the Company, from a Holder or from a
holder of any Senior Indebtedness or from any representative or representatives
of such holder and, prior to the receipt of any such written notice, the
Trustee shall be entitled, subject to Section 901, in all respects to assume
that no such facts exist; provided, however, that, if prior to the fifth
Business Day preceding the date upon which by the terms hereof any such moneys
may become payable for any purpose, or in the event of the execution of an
instrument pursuant to Section 702 acknowledging satisfaction and discharge of
this Indenture, then if prior to the second Business Day preceding the date of
such execution, the Trustee shall not have received with respect to such moneys
the notice provided for in this Section, then, anything herein contained to the
contrary notwithstanding, the Trustee may, in its discretion, receive such
moneys and/or apply the same to the purpose for which they were
<PAGE> 79
-72-
received, and shall not be affected by any notice to the contrary, which may be
received by it on or after such date; provided, however, that no such
application shall affect the obligations under this Article of the persons
receiving such moneys from the Trustee.
SECTION 1509. MODIFICATION, EXTENSION, ETC. OF SENIOR INDEBTEDNESS.
The holders of Senior Indebtedness may, without affecting
in any manner the subordination of the payment of the principal of and premium,
if any, and interest, if any, on the Securities, at any time or from time to
time and in their absolute discretion, agree with the Company to change the
manner, place or terms of payment, change or extend the time of payment of, or
renew or alter, any Senior Indebtedness, or amend or supplement any instrument
pursuant to which any Senior Indebtedness is issued, or exercise or refrain
from exercising any other of their rights under the Senior Indebtedness
including, without limitation, the waiver of default thereunder, all without
notice to or assent from the Holders or the Trustee.
SECTION 1510. TRUSTEE HAS NO FIDUCIARY DUTY TO HOLDERS OF SENIOR INDEBTEDNESS.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its covenants and
objectives as are specifically set forth in this Indenture, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness
shall be read into this Indenture against the Trustee. The Trustee shall not
be deemed to owe any fiduciary duty to the holders of Senior Indebtedness, and
shall not be liable to any such holders if it shall mistakenly pay over or
deliver to the Holders or the Company or any other Person, money or assets to
which any holders of Senior Indebtedness shall be entitled by virtue of this
Article or otherwise.
SECTION 1511. PAYING AGENTS OTHER THAN THE TRUSTEE.
In case at any time any Paying Agent other than the
Trustee shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article shall in such case (unless the
context shall otherwise require) be construed as extending to and including
such Paying Agent within its meaning as fully for all intents and purposes as
if such Paying Agent were named in this Article in addition to or in place of
the Trustee; provided, however, that Sections 1507, 1508 and 1510 shall not
apply to the Company if it acts as Paying Agent.
SECTION 1512. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED.
No right of any present or future holder of Senior
Indebtedness to enforce the subordination herein shall at any time or in any
way be prejudiced or impaired by any act or failure to act on the part of the
Company or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any such
holder may have or be otherwise charged with.
<PAGE> 80
-73-
SECTION 1513. EFFECT OF SUBORDINATION PROVISIONS; TERMINATION.
Notwithstanding anything contained herein to the
contrary, other than as provided in the immediately succeeding sentence, all
the provisions of this Indenture shall be subject to the provisions of this
Article, so far as the same may be applicable thereto.
Notwithstanding anything contained herein to the
contrary, the provisions of this Article Fifteen shall be of no further effect,
and the Securities shall no longer be subordinated in right of payment to the
prior payment of Senior Indebtedness, if the Company shall have delivered to
the Trustee a notice to such effect. Any such notice delivered by the Company
shall not be deemed to be a supplemental indenture for purposes of Article
Twelve.
-------------------------
This instrument may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
instrument.
<PAGE> 81
-74-
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the day and year first above written.
TEXAS UTILITIES ELECTRIC COMPANY
By: /s/ Cathryn Hulen
------------------------------------
Treasurer
<PAGE> 82
-75-
THE BANK OF NEW YORK, Trustee
By: /s/ W.N. Gitlin
------------------------------------
W.N. GITLIN
Vice President
<PAGE> 83
-76-
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 8th day of December, 1995, before me personally
came Cathryn Hulen, to me known, who, being by me duly sworn, did depose and
say that she is the Treasurer of Texas Utilities Electric Company, one of the
corporations described in and which executed the foregoing instrument; that she
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation, and that she signed her name thereto by like
authority.
/s/ Susan Fields
--------------------------------
Susan Fields
Notary Public, State of New York
No. 31-4980055
Qualified in New York County
Commission Expires April 8, 1997
<PAGE> 84
-77-
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 12th day of December, 1995, before me personally
came W.N. Gitlin, to me known, who, being by me duly sworn, did depose and say
that he is a Vice Presdient of The Bank of New York, one of the corporations
described in and which executed the foregoing instrument; that he knows the
seal of said corporation; that the seal affixed to said instrument is such
corporate seal; that it was so affixed by authority of the Board of Directors
of said corporation, and that he signed his name thereto by like authority.
/s/ Moira Feeney
--------------------------------
Moira Feeney
Notary Public, State of New York
No. 24-4991961
Qualified in Kings County
Commission Expires February 18, 1996
<PAGE> 1
Exhibit 4(g)
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
between
TEXAS UTILITIES ELECTRIC COMPANY, as Depositor
and
THE BANK OF NEW YORK
THE BANK OF NEW YORK (DELAWARE),
Wayne Patterson,
Cathryn Hulen,
Laura Anderson,
John Casey
and
Michael Perkins, as Trustees
Dated as of December 1, 1995
TU ELECTRIC CAPITAL I
================================================================================
<PAGE> 2
TU Electric Capital I
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
- --------------- ---------------
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.07
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.07
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.09
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.08
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(a)
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(a), 8.14(b)
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.02, 8.14(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01, 8.03
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.09
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.10
</TABLE>
Note: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Trust Agreement.
<PAGE> 4
TABLE OF CONTENTS
ARTICLE I.
Defined Terms
<TABLE>
<S> <C> <C>
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II.
Establishment of the Trust
Section 2.01. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.02. Office of the Delaware Trustee; Principal Place of Business . . . . . . . . . . . . . . . . . 11
Section 2.03. Initial Contribution of Trust Property; Organizational Expenses . . . . . . . . . . . . . . . 11
Section 2.04. Issuance of the Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.05. Subscription and Purchase of Debentures; Issuance of the Common Securities . . . . . . . . . 11
Section 2.06. Declaration of Trust; Appointment of Additional Administrative Trustees . . . . . . . . . . . 12
Section 2.07. Authorization to Enter into Certain Transactions . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.08. Assets of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.09. Title to Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III.
Payment Account
Section 3.01. Payment Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV.
Distributions; Redemption
Section 4.01. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.02. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.03. Subordination of Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.04. Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.05. Tax Returns and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
<PAGE> 5
ARTICLE V.
Trust Securities Certificates
<TABLE>
<S> <C> <C>
Section 5.01. Initial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.02. The Trust Securities Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.03. Execution and Delivery of Trust Securities Certificates . . . . . . . . . . . . . . . . . . . 21
Section 5.04. Registration of Transfer and Exchange of Preferred Securities Certificates . . . . . . . . . 22
Section 5.05. Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates . . . . . . . . . . . . . 22
Section 5.06. Persons Deemed Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.07. Access to List of Securityholders' Names and Addresses . . . . . . . . . . . . . . . . . . . 23
Section 5.08. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.09. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.10. Ownership of Common Securities by Depositor . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.11. Definitive Preferred Securities Certificates . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.12. Book-Entry System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.13. Rights of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI.
Acts of Securityholders; Meetings; Voting
Section 6.01. Limitations on Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.02. Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.03. Meetings of Holders of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.04. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.05. Proxies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.06. Securityholder Action by Written Consent . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.07. Record Date for Voting and Other Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.08. Acts of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.09. Inspection of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII.
Representations and Warranties of the Property
Trustee and the Delaware Trustee
Section 7.01. Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.02. Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
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<PAGE> 6
ARTICLE VIII.
The Trustees
<TABLE>
<S> <C> <C>
Section 8.01. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.02. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.03. Certain Rights of Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.04. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . 35
Section 8.05. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.06. Compensation; Fees; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.07. Certain Trustees Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.08. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.09. Co-Trustees and Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.10. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.11. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.12. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . 41
Section 8.13. Preferential Collection of Claims Against Depositor or Trust . . . . . . . . . . . . . . . . 41
Section 8.14. Reports by Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.15. Reports to the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.16. Evidence of Compliance With Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.17. Number of Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.18. Delegation of Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.19. Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX.
Termination and Liquidation
Section 9.01. Termination Upon Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.02. Early Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.03. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.04. Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE X.
Miscellaneous Provisions
Section 10.01. Guarantee by the Depositor and Assumption of Obligations . . . . . . . . . . . . . . . . . . 47
Section 10.02. Limitation of Rights of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.04. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.05. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.06. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.07. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
</TABLE>
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<TABLE>
<S> <C> <C>
Section 10.08. Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.09. Agreement Not to Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.10. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
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<PAGE> 8
Draft of August 16, 1995
AMENDED AND RESTATED TRUST AGREEMENT, dated as of December 1,
1995, between (i) Texas Utilities Electric Company, a Texas corporation (the
"Depositor"), (ii) The Bank of New York, a banking corporation duly organized
and existing under the laws of New York, as trustee (the "Property Trustee"
and, in its separate capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) The Bank of New York (Delaware), a banking corporation duly
organized under the laws of Delaware, as Delaware trustee (the "Delaware
Trustee") (iv) Wayne Patterson, Cathryn Hulen, Laura Anderson, John Casey and
Michael Perkins, each an individual, and each of whose address is c/o Texas
Utilities Services Inc., 1601 Bryan Street, Dallas, Texas 75201 (each, an
"Administrative Trustee" and collectively the "Administrative Trustees") (the
Property Trustee, the Delaware Trustee and the Administrative Trustees referred
to collectively as the "Trustees") and (v) the several Holders, as hereinafter
defined.
W I T N E S S E T H:
WHEREAS, the Depositor, the Property Trustee, the Delaware
Trustee and Wayne Patterson, as the Administrative Trustee, have heretofore
duly declared and established a business trust pursuant to the Delaware
Business Trust Act by the entering into of that certain Trust Agreement, dated
as of September 28, 1995 (the "Original Trust Agreement"), and by the execution
by the Property Trustee, the Delaware Trustee and Wayne Patterson, as
Administrative Trustee and filing with the Secretary of State of the State of
Delaware of the Certificate of Trust, dated September 28, 1995, a copy of which
is attached as Exhibit A; and
WHEREAS, the Depositor, the Property Trustee, Delaware Trustee
and Wayne Patterson, as Administrative Trustee, desire to amend and restate the
Original Trust Agreement in its entirety as set forth herein to provide for,
among other things, (i) the acquisition by the Trust from the Depositor of all
of the right, title and interest in the Debentures, (ii) the issuance of the
Common Securities by the Trust to the Depositor, (iii) the issuance of the
Preferred Securities by the Trust;
NOW THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, each party, for the benefit of the
other party and for the benefit of the Securityholders, hereby amends and
restates the Original Trust Agreement in its entirety and agrees as follows:
<PAGE> 9
ARTICLE I.
DEFINED TERMS
SECTION 1.01. DEFINITIONS. For all purposes of this Trust
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article and include the
plural as well as the singular;
(b) all other terms used herein that are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(c) unless the context otherwise requires, any
reference to an "Article" or a "Section" refers to an Article
or a Section, as the case may be, of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Trust Agreement as
a whole and not to any particular Article, Section or other
subdivision.
"Act" has the meaning specified in Section 6.08.
"Additional Amount" means, with respect to Trust Securities of
a given Liquidation Amount and/or a given period, the amount of Additional
Interest (as defined in the Subordinated Indenture) paid by the Depositor on a
Like Amount of Debentures for such period.
"Administrative Trustee" means each of the individuals
identified as an "Administrative Trustee" in the preamble to this Trust
Agreement solely in their capacities as Administrative Trustees of the Trust
formed hereunder and not in their individual capacities, or such trustee's
successor in interest in such capacity, or any successor trustee appointed as
herein provided.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
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<PAGE> 10
"Bankruptcy Event" means, with respect to any Person:
(i) the entry of a decree or order by a court having
jurisdiction in the premises judging such Person a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjudication or composition of or
in respect of such Person under Federal bankruptcy law or any
other applicable Federal or State law, or appointing a
receiver, liquidator, assignee, trustee sequestrator or other
similar official of such Person or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(ii) the institution by such Person of proceedings to
be adjudicated a bankrupt or insolvent, or of the consent by
it to the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or
consent seeking reorganization or relief under Federal
bankruptcy law or any other applicable Federal or State law,
or the consent by it to the filing of such petition or to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator or similar official of such Person or of any
substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by
it in writing of its inability to pay its debts generally as
they become due.
"Bankruptcy Laws" has the meaning specified in Section 10.09.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Depositor to have been duly
adopted by the Depositor's Board of Directors or a duly authorized committee
thereof and to be in full force and effect on the date of such certification,
and delivered to the appropriate Trustee.
"Business Day" means a day other than (x) a Saturday or a
Sunday, (y) a day on which banks in New York, New York are authorized or
obligated by law or executive order to remain closed or (z) a day on which the
Property Trustee's Corporate Trust Office or the Debenture Trustee's principal
corporate trust office is closed for business.
"Certificate of Trust" has the meaning specified in Section
2.07(d).
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository Trust Company will be the initial Clearing
Agency.
"Closing Date" means the First Time of Delivery as defined in
the Dealer Manager Agreement, which date is also the date of execution and
delivery of this Trust Agreement.
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<PAGE> 11
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Securities Exchange Act of
1934, or, if at any time after the execution of this instrument such Commission
is not existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body performing such duties at such time.
"Common Security" means an undivided beneficial interest in
the Trust having a Liquidation Amount of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive Distributions
and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit
C.
"Corporate Trust Office" means the principal office of the
Property Trustee located in New York, New York.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of the Trust or
the Trust's Affiliates; and (b) any Holder of Trust Securities.
"Dealer Manager Agreement" means the Dealer Manager Agreement,
dated as of November 7, 1995, among the Trust, the Depositor and the dealer
manager named therein.
"Debenture Event of Default" means an "Event of Default" as
defined in the Subordinated Indenture.
"Debenture Issuer" means Texas Utilities Electric Company, a
Texas corporation, in its capacity as issuer of the Debentures.
"Debenture Redemption Date" means "Redemption Date" as defined
in the Subordinated Indenture with respect to the Debentures.
"Debenture Trustee" means The Bank of New York, as trustee
under the Subordinated Indenture.
"Debentures" means the $154,869,150 aggregate principal amount
of the Depositor's 8.25% Junior Subordinated Debentures, Series A, Due
September 30, 2030, issued pursuant to the Subordinated Indenture.
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<PAGE> 12
"Definitive Preferred Securities Certificates" means Preferred
Securities Certificates issued in certificated, fully registered form as
provided in Section 5.11.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time.
"Delaware Trustee" means the banking corporation identified as
the "Delaware Trustee" in the preamble to this Trust Agreement solely in its
capacity as Delaware Trustee of the Trust formed hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this
Trust Agreement and includes Texas Utilities Electric Company in its capacity
as Holder of the Common Securities.
"Depositary Shares" means the Texas Utilities Electric Company
Depositary Shares, Series A, each representing 1/4 share of $7.50 Cumulative
Preferred Stock and Depositary Shares, Series B, each representing 1/4 share of
$7.22 Cumulative Preferred Stock.
"Distribution Date" has the meaning specified in Section
4.01(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.01.
"Early Termination Event" has the meaning specified in Section
9.02.
"Exchange" has the meaning specified in Section 2.07(b).
"Exchange Act" has the meaning specified in Section 2.07(c).
"Expiration Date" shall have the meaning specified in Section
9.01.
"Event of Default" means any one of the following events
(whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default; or
(ii) default by the Trust in the payment of any
Distribution when it becomes due and payable, and continuation
of such default for a period of 30 days; or
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<PAGE> 13
(iii) default by the Trust in the payment of any
Redemption Price of any Trust Security when it becomes due and
payable; or
(iv) default in the performance, or breach, of any
covenant or warranty of the Trustees in this Trust Agreement
(other than a covenant or warranty a default in whose
performance or breach is dealt with in clause (ii) or (iii),
above) and continuation of such default or breach for a period
of 60 days after there has been given, by registered or
certified mail, to the defaulting Trustee or Trustees by the
Holders of at least 10% in Liquidation Amount of the
Outstanding Preferred Securities a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder;
or
(v) the occurrence of a Bankruptcy Event with respect
to the Trust.
"Expense Agreement" means the Agreement as to Expenses and
Liabilities between the Depositor and the Trust, substantially in the form
attached as Exhibit C, as amended from time to time.
"Guarantee" means the Guarantee Agreement executed and
delivered by the Depositor and The Bank of New York, a New York banking
corporation, as trustee, contemporaneously with the execution and delivery of
this Trust Agreement, for the benefit of the Holders of the Preferred
Securities, as amended from time to time.
"Indemnified Person" means any Trustee, any Affiliate of any
Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee, or any employee or agent
of the Trust or its Affiliates.
"Lien" means any lien, pledge, charge, encumbrance, mortgage,
deed of trust, adverse ownership interest, hypothecation, assignment, security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
"Like Amount" means (i) Trust Securities having a Liquidation
Amount equal to the principal amount of Debentures to be contemporaneously
redeemed in accordance with the Subordinated Indenture and the proceeds of
which will be used to pay the Redemption Price of such Trust Securities plus
accumulated and unpaid Distributions to the date of such payment and (ii)
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the Holder to whom such Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust
Security.
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<PAGE> 14
"Liquidation Date" means the date on which Debentures are to
be distributed to Holders of Trust Securities in connection with a dissolution
and liquidation of the Trust pursuant to Section 9.04(a).
"Liquidation Distribution" has the meaning specified in
Section 9.04(d).
"No Recognition Opinion" has the meaning specified in Section
9.02(b).
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Depositor, and delivered to the appropriate
Trustee. One of the officers signing an Officers' Certificate given pursuant
to Section 8.16 shall be the principal executive, financial or accounting
officer of the Depositor. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Agreement
shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Trust, the Property Trustee, the Delaware Trustee or the
Depositor, but not an employee of the Trust, the Property Trustee, or the
Delaware Trustee or the Depositor, and who shall be reasonably acceptable to
the Property Trustee.
"Original Trust Agreement" has the meaning specified in the
recitals to this Trust Agreement.
"Outstanding," when used with respect to Preferred Securities,
means, as of the date of determination, all Preferred Securities theretofore
delivered under this Trust Agreement, except:
(i) Preferred Securities theretofore canceled by the
Administrative Trustees or delivered to the Administrative
Trustees for cancellation;
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<PAGE> 15
(ii) Preferred Securities for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Property Trustee or any Paying Agent for
the Holders of such Preferred Securities; provided that, if
such Preferred Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Trust
Agreement; and
(iii) Preferred Securities in exchange for or in lieu of
which other Preferred Securities have been delivered pursuant
to this Trust Agreement, including pursuant to Section 5.05;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Preferred Securities owned by the Depositor, any Trustee or any Affiliate of
the Depositor or any Trustee shall be disregarded and deemed not to be
Outstanding, except that (a) in determining whether any Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Preferred Securities which such Trustee knows
to be so owned shall be so disregarded and (b) the foregoing shall not apply at
any time when all of the outstanding Preferred Securities are owned by the
Depositor, one or more of the Trustees and/or any such Affiliate. Preferred
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Administrative Trustee the pledgee's right so to act with respect to such
Preferred Securities and that the pledgee is not the Depositor or any Affiliate
of the Depositor.
"Owner" means each Person who is the owner of a Preferred
Securities Certificate as reflected in the Securities Register.
"Paying Agent" means any paying agent or co-paying agent
appointed pursuant to Section 5.09 and shall initially be Texas Utilities
Services Inc.
"Payment Account" means a segregated non-interest-bearing
corporate trust account maintained by the Property Trustee with Chemical Bank,
or such other banking institution as the Depositor shall select in its trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Paying Agent,
pursuant to Section 5.09, shall make payments to the Securityholders in
accordance with Sections 4.01 and 4.02.
"Person" means any individual, corporation, partnership, joint
venture, trust, limited liability company or corporation, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Security" means a trust originated preferred
security representing an undivided beneficial interest in the assets of the
Trust having a Liquidation Amount of $25
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<PAGE> 16
and having rights provided therefor in this Trust Agreement, including the
right to receive Distributions and a Liquidation Distribution as provided
herein.
"Preferred Securities Certificate" means a certificate
evidencing ownership of Preferred Securities, substantially in the form
attached as Exhibit E.
"Property Trustee" means the commercial bank or trust company
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust formed and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to
be redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date shall be a Redemption
Date for a Like Amount of Trust Securities.
"Redemption Price" means, with respect to any date fixed for
redemption of any Trust Security, the Liquidation Amount of such Trust
Security.
"Redemption Tax Opinion" has the meaning specified in Section
9.04(d).
"Relevant Trustee" shall have the meaning specified in Section
8.10.
"Responsible Officer," when used with respect to the Property
Trustee means an officer of the Property Trustee assigned by the Property
Trustee to administer its corporate trust matters.
"Securities Depositary" shall have the meaning specified in
Section 5.12.
"Securities Register" shall mean the Securities Register
described in Section 5.04.
"Securityholder" or "Holder" means a Person in whose name a
Trust Security or Securities is registered in the Securities Register; any such
Person shall be deemed to be a beneficial owner within the meaning of the
Delaware Business Trust Act.
"Subordinated Indenture" means the Indenture, dated as of
December 1, 1995, between the Depositor and the Debenture Trustee, as trustee,
as amended or supplemented from time to time.
"Tax Event" means the receipt by the Trust of an opinion of
nationally recognized independent tax counsel experienced in such matters to
the effect that, as a result of (a) any amendment to, clarification of, or
change (including any announced prospective
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change) in, the laws or treaties (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein
affecting taxation, (b) any judicial decision or any official administrative
pronouncement, ruling, regulatory procedure, notice or announcement (including
any notice or announcement of intent to issue or adopt any such administrative
pronouncement, ruling, regulatory procedure or regulation) (each, for purposes
of this definition, an "Administrative Action"), or (c) any amendment to,
clarification of, or change in the official position or the interpretation of
any such Administrative Action or judicial decision or any interpretation or
pronouncement that provides for a position with respect to such Administrative
Action or judicial decision that differs from the theretofore generally
accepted position, in each case by any legislative body, court, governmental
authority or regulatory body, irrespective of the manner in which such
amendment, clarification or change is made known, which amendment,
clarification, or change is effective, which Administrative Action is taken or
which judicial decision is issued, in each case on or after the date of
issuance of the Preferred Securities, there is more than an insubstantial risk
that (i) the Trust is, or will be, subject to United States federal income tax
with respect to interest received on the Debentures, (ii) interest payable by
the Depositor on the Debentures is not, or will not be, fully deductible by the
Depositor for United States federal income tax purposes, or (iii) the Trust is,
or will be, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Transfer Agent and Registrar" shall mean the transfer agent
and registrar for the Preferred Securities appointed by the Trust and shall be
initially Texas Utilities Services Inc.
"Trust" means the Delaware business trust created by the
Original Trust and continued hereby and identified on the cover page to this
Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust
Agreement, as the same may be modified, amended or supplemented in accordance
with the applicable provisions hereof, including all exhibits hereto,
including, for all purposes of this Amended and Restated Trust Agreement and
any such modification, amendment or supplement, the provisions of the Trust
Indenture Act that are deemed to be a part of and govern this Amended and
Restated Trust Agreement and any such modification, amendment or supplement,
respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Property" means (i) the Debentures, (ii) any cash on
deposit in, or owing to, the Payment Account and (iii) all proceeds and rights
in respect of the foregoing and any other property and assets for the time
being held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
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"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Trust Securities Certificate" means any one of the Common
Securities Certificates or the Preferred Securities Certificates.
ARTICLE II.
ESTABLISHMENT OF THE TRUST
SECTION 2.01. NAME. The Trust created hereby shall be known
as "TU Electric Capital I", in which name the Trustees may conduct the business
of the Trust, make and execute contracts and other instruments on behalf of the
Trust and sue and be sued.
SECTION 2.02. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE
OF BUSINESS. The office of the Delaware Trustee in the State of Delaware is
White Clay Center, Route 273, Newark, Delaware 19711, or at such other address
in Delaware as the Delaware Trustee may designate by written notice to the
Securityholders and the Depositor. The principal place of business of the
Trust is c/o Texas Utilities Electric Company, Energy Plaza, 1601 Bryan Street,
Dallas, Texas 75201.
SECTION 2.03. INITIAL CONTRIBUTION OF TRUST PROPERTY;
ORGANIZATIONAL EXPENSES. The Property Trustee acknowledges receipt in trust
from the Depositor in connection with the Original Trust Agreement of the sum
of $1, which constituted the initial Trust Property. The Depositor shall pay
organizational expenses of the Trust as they arise or shall, upon request of
any Trustee, promptly reimburse such Trustee for any such expenses paid by such
Trustee. The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
SECTION 2.04. ISSUANCE OF THE PREFERRED SECURITIES. On
November 7, 1995 the Depositor, on behalf of the Trust, executed and delivered
the Dealer Manager Agreement. Contemporaneously with the execution and
delivery of this Trust Agreement, one of the Administrative Trustees, on behalf
of the Trust in accordance with Section 5.02, executed by facsimile and caused
to be countersigned and delivered Preferred Securities having an aggregate
Liquidation Amount of $150,223,075.
SECTION 2.05. SUBSCRIPTION AND PURCHASE OF DEBENTURES;
ISSUANCE OF THE COMMON SECURITIES. Contemporaneously with the execution and
delivery of this Trust Agreement, the Administrative Trustees, on behalf of the
Trust, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Property Trustee and having an aggregate
principal amount equal to $154,869,150, and, in satisfaction of the purchase
price for such Debentures, one of the Administrative Trustees, on behalf of the
Trust in accordance with Section 5.02, shall execute and deliver to the
Depositor Common
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Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of 185,843 Common Securities having an aggregate Liquidation
Amount of $4,646,075 and Preferred Securities Certificates registered, in the
name of the Depositor, having an aggregate Liquidation Amount of $150,223,075.
SECTION 2.06. DECLARATION OF TRUST; APPOINTMENT OF ADDITIONAL
ADMINISTRATIVE TRUSTEES. (a) The exclusive purposes and functions of the
Trust are (i) to issue Trust Securities to the Depositor in exchange for the
Debentures, and (ii) to engage in those activities necessary, convenient or
incidental thereto. The Depositor hereby appoints the Trustees as trustees of
the Trust, to have all the rights, powers and duties to the extent set forth
herein. The Property Trustee hereby declares that it will hold the Trust
Property in trust upon and subject to the conditions set forth herein for the
benefit of the Securityholders. The Trustees shall have all rights, powers and
duties set forth herein and in accordance with applicable law with respect to
accomplishing the purposes of the Trust. Anything in this Trust Agreement to
the contrary notwithstanding the Delaware Trustee shall not be entitled to
exercise any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrative Trustees set
forth herein. The Delaware Trustee shall be one of the Trustees of the Trust
for the sole and limited purpose of fulfilling the requirements of Section 3807
of the Delaware Business Trust Act.
SECTION 2.07. AUTHORIZATION TO ENTER INTO CERTAIN
TRANSACTIONS. (a) The Trustees shall conduct the affairs of the Trust in
accordance with the terms of this Trust Agreement. Subject to the limitations
set forth in paragraph (b) of this Section and Article VIII and in accordance
with the following provisions (A) and (B), the Trustees shall have the
authority to enter into all transactions and agreements determined by the
Trustees to be appropriate in exercising the authority, express or implied,
otherwise granted to the Trustees under this Trust Agreement, and to perform
all acts in furtherance thereof, including without limitation, the following:
(A) As among the Trustees, the Administrative Trustees shall have the
power, duty and authority to act on behalf of the Trust with respect to the
following matters:
(i) the issuance and sale of the Trust Securities;
(ii) without the consent of any Person, to cause the
Trust to enter into and to execute, deliver and perform on
behalf of the Trust, the Expense Agreement, the Dealer Manager
Agreement and the Certificate Depository Agreement and such
other agreements as may be necessary or desirable in
connection with the consummation hereof (such execution to be
by the Administrative Trustees or any one of them);
(iii) to qualify the Trust to do business in any
jurisdiction as may be necessary or desirable;
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(iv) the collection of interest, principal and any
other payments made in respect of the Debentures in the
Payment Account;
(v) the filing of an Issuer Tender Offer Statement on
Schedule 13E-4 and any other tender offer statement required
to be filed with the Securities and Exchange Commission and
the conduct of the Exchange Offer as described therein and in
the Dealer Manager Agreement;
(vi) the registration of the Preferred Securities under
the Securities Act of 1933, as amended, and under state
securities or blue sky laws, and the qualification of this
Trust Agreement as a trust indenture under the Trust Indenture
Act;
(vii) the listing of the Preferred Securities upon such
securities exchange or exchanges as shall be determined by the
Depositor and the registration of the Preferred Securities
under the Securities Exchange Act of 1934, as amended, and the
preparation and filing of all periodic and other reports and
other documents pursuant to the foregoing;
(viii) the appointment of a Paying Agent and Transfer
Agent and Registrar in accordance with this Trust Agreement;
(ix) registering transfers of the Trust Securities in
accordance with this Trust Agreement;
(x) unless otherwise determined by the Depositor or
the Property Trustee or as otherwise required by the Delaware
Business Trust Act or the Trust Indenture Act, to execute and
deliver on behalf of the Trust (either acting alone or
together with any or all of the Administrative Trustees) any
documents that the Administrative Trustees have the power to
execute pursuant to this Trust Agreement;
(xi) to the extent provided in this Trust Agreement,
the winding up of the affairs of and liquidation of the Trust
and the preparation, execution and filing of the certificate
of cancellation with the Secretary of State of Delaware; and
(xii) the taking of any action incidental to the
foregoing as the Administrative Trustees may from time to time
determine is necessary or advisable to protect and conserve
the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder).
(B) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to the following
matters:
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(i) the establishment of the Payment Account;
(ii) the receipt of the Debentures;
(iii) the deposit of interest, principal and any other
payments made in respect of the Debentures in the Payment
Account;
(iv) the distribution of amounts owed to the
Securityholders in respect of the Trust Securities in
accordance with the terms of this Trust Agreement;
(v) the sending of notices of default and other
information regarding the Trust Securities and the Debentures
to the Securityholders in accordance with the terms of this
Trust Agreement;
(vi) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
(vii) as provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Trust and the
execution of the certificate of cancellation to be prepared
and filed by the Administrative Trustees with the Secretary of
State of the State of Delaware; and
(viii) the taking of any action incidental to the
foregoing as the Property Trustee may from time to time
determine is necessary or advisable to protect and conserve
the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder).
Subject to this Section 2.07(a)(B), the Property Trustee shall
have none of the duties, powers or authority of the Administrative Trustee set
forth in Section 2.07(a)(A) or the Depositor set forth in Section 2.07(c). The
Property Trustee shall have the power and authority to exercise all of the
rights, powers and privileges of a holder of Debentures under the Subordinated
Indenture and, if an Event of Default occurs and is continuing, the Property
Trustee may, for the benefit of Holders of the Trust Securities, in its
discretion proceed to protect and enforce its rights as holder of the
Debentures subject to the rights of the Holder pursuant to the terms of this
Trust Agreement.
(b) So long as this Trust Agreement remains in effect, the
Trust (or the Trustees acting on behalf of the Trust) shall not undertake any
business, activities or transaction except as expressly provided herein or
contemplated hereby. In particular, the Trustees shall not (i) acquire any
investments or engage in any activities not authorized by this Trust Agreement,
(ii) sell, assign, transfer, exchange, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein, (iii) take any action that would cause the
Trust to fail or cease to qualify as a "grantor trust" for United States
federal income tax purposes and not as an
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association taxable as a corporation, (iv) incur any indebtedness for borrowed
money or (v) take or consent to any action that would result in the placement
of a Lien on any of the Trust Property. The Trustees shall defend all claims
and demands of all Persons at any time claiming any Lien on any of the Trust
Property adverse to the interest of the Trust or the Securityholders in their
capacity as Securityholders.
(c) In connection with the issue of the Preferred Securities,
the Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of
this Trust Agreement are hereby ratified and confirmed in all respects):
(i) to prepare for filing by the Trust with the
Commission and to execute a registration statement on Form S-4
in relation to the Preferred Securities, including any
amendments thereto;
(ii) to determine the States in which to take
appropriate action to qualify or register for sale all or part
of the Preferred Securities and to do any and all such acts,
other than actions which must be taken by or on behalf of the
Trust, and advise the Trustees of actions they must take on
behalf of the Trust, and prepare for execution and filing any
documents to be executed and filed by the Trust or on behalf
of the Trust, as the Depositor deems necessary or advisable in
order to comply with the applicable laws of any such States;
(iii) to prepare for filing by the Trust an application
to the New York Stock Exchange or any other national stock
exchange or the Nasdaq National Market for listing upon notice
of issuance of any Preferred Securities;
(iv) to prepare for filing by the Trust with the
Commission and to execute a registration statement on Form 8-A
relating to the registration of the Preferred Securities under
Section 12(b) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), including any amendments thereto;
(v) to select the investment banker or bankers to act
as dealer managers with respect to the exchange by the
Depositor of Preferred Securities for Depositary Shares
("Exchange") and negotiate the terms of a Dealer Manager
Agreement and pricing agreement providing for the Exchange;
(vi) to take any other actions necessary or desirable
to carry out any of the foregoing activities; and
(vii) to designate itself or an affiliate to be the
Transfer Agent and Registrar.
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(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the affairs of
the Trust and to operate the Trust so that the Trust will not be deemed to be
an "investment company" required to be registered under the Investment Company
Act of 1940, as amended, or classified other than as a "grantor trust" for
United States federal income tax purposes and not as an association taxable as
a corporation and so that the Debentures will be treated as indebtedness of the
Depositor for United States federal income tax purposes. In this connection,
the Depositor and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust filed
with the Secretary of State of the state of Delaware with respect to the Trust
or this Trust Agreement (the "Certificate of Trust"), that each of the
Depositor and the Administrative Trustees determines in its discretion to be
necessary or desirable for such purposes, as long as such action does not
materially adversely affect the interests of the holders of the Preferred
Securities.
SECTION 2.08. ASSETS OF TRUST. The assets of the Trust shall
consist of the Trust Property.
SECTION 2.09. TITLE TO TRUST PROPERTY. Legal title to all
Trust Property shall be vested at all times in the Property Trustee (in its
capacity as such) and shall be held and administered by the Property Trustee
for the benefit of the Securityholders in accordance with this Trust Agreement.
ARTICLE III.
PAYMENT ACCOUNT
SECTION 3.01. PAYMENT ACCOUNT.
(a) On or prior to the Closing Date, the Property Trustee
shall establish the Payment Account. The Property Trustees and the Paying
Agent appointed by the Administrative Trustee which shall initially be Texas
Utilities Services, Inc. shall have exclusive control and sole right of
withdrawal with respect to the Payment Account for the purpose of making
deposits in and withdrawals from the Payment Account in accordance with this
Trust Agreement. All monies and other property deposited or held from time to
time in the Payment Account shall be held by the Property Trustee in the
Payment Account for the exclusive benefit of the holders of Trust Securities
and for distribution as herein provided, including (and subject to) any
priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment
Account, promptly upon receipt, all payments of principal or interest on, and
any other payments or proceeds with respect to, the Debentures. Amounts held
in the Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
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ARTICLE IV.
DISTRIBUTIONS; REDEMPTION
SECTION 4.01. DISTRIBUTIONS.
(a) Distributions on the Trust Securities shall be
cumulative, and will accumulate whether or not there are funds of the Trust
available for the payment of Distributions. Distributions shall accrue from
the Closing Date, and, except in the event that the Depositor exercises its
right to extend the interest payment period for the Debentures pursuant to
Section 311 of the Subordinated Indenture, shall be payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year,
commencing on December 31, 1995. If any date on which Distributions are
otherwise payable on the Trust Securities is not a Business Day, then the
payment of such Distribution shall be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding
calendar year, payment of such distribution shall be made on the immediately
preceding Business Day, in each case, with the same force and effect as if made
on such date (each date on which distributions are payable in accordance with
this Section 4.01(a) a "Distribution Date").
(b) Distributions payable on the Trust Securities shall be
fixed at a rate of 8.25% per annum of the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any full quarterly period
shall be computed on the basis of twelve 30-day months and a 360-day year and
for any period shorter than a full month, on the basis of the actual number of
days elapsed. If the interest payment period for the Debentures is extended
pursuant to Section 311 of the Subordinated Indenture, then Distributions on
the Preferred Securities will be deferred for the period equal to the extension
of the interest payment period for the Debentures and the rate per annum at
which Distributions on the Trust Securities accumulate shall be increased by an
amount such that the aggregate amount of Distributions that accumulate on all
Trust Securities during any such extended interest payment period is equal to
the aggregate amount of interest (including, to the extent permitted by law,
interest payable on unpaid interest at the percentage rate per annum set forth
above, compounded quarterly) that accrues during any such extended interest
payment period on the Debentures. The amount of Distributions payable for any
period shall include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made and
shall be deemed payable on each Distribution Date only to the extent that the
Trust has funds available in the Payment Account for the payment of such
Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust
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Securities on the relevant record date, which shall be 15 days prior to the
relevant Distribution Date, or if such date is not a Business Day, the next
succeeding Business Day.
SECTION 4.02. REDEMPTION. (a) On each Debenture Redemption
Date and at the maturity date for the Debentures (as defined in the
Subordinated Indenture), the Trustee will be required to redeem a Like Amount
of Trust Securities at the Redemption Price plus accumulated and unpaid
Distributions to the date of such payment.
(b) Notice of redemption shall be given by the Trustee by
first-class mail, postage prepaid, mailed not less than 30 nor more than 60
days prior to the Redemption Date to each Holder of Trust Securities to be
redeemed, at such Holder's address appearing in the Security Register. All
notices of redemption or liquidation shall state:
(i) the Redemption Date;
(ii) the Redemption Price and the amount of accumulated
and unpaid Dividends to be paid on the Redemption Date;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities
are to be redeemed, the identification and the total
Liquidation Amount of the particular Trust Securities to be
redeemed; and
(v) that on the Redemption Date the Redemption Price
plus accumulated and unpaid Distributions to the date of such
payment will become due and payable upon each such Trust
Security to be redeemed and that interest thereon will cease
to accrue on and after said date.
(c) The Trust Securities redeemed on each Redemption Date
shall be redeemed at the Redemption Price plus accumulated and unpaid
Distributions to the date of such payment with the proceeds from the
contemporaneous redemption of Debentures. Redemptions of the Trust Securities
shall be made and the Redemption Price plus accumulated and unpaid
Distributions to the date of such payment shall be deemed payable on each
Redemption Date only to the extent that the Trust has funds immediately
available in the Payment Account for such payment.
(d) If the Property Trustee gives a notice of redemption in
respect of any Preferred Securities, then, by 12:00 noon, New York time, on the
Redemption Date, subject to Section 4.02(c), the Property Trustee shall
irrevocably deposit with the Paying Agent funds sufficient to pay the
applicable Redemption Price plus accumulated and unpaid Distributions to the
date of such payment and will give the Paying Agent irrevocable instructions to
pay the Redemption Price plus accumulated and unpaid Distributions to the date
of such payment to the holders thereof upon surrender of their Preferred
Securities
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Certificates. Notwithstanding the foregoing, Distributions payable on or prior
to the redemption date for any Trust Securities called for redemption shall be
payable to the Holders of such Trust Securities as they appear on the
Securities Register for the Trust Securities on the relevant record dates for
the related Distribution Dates. If notice of redemption shall have been given
and funds deposited as required, then upon the date of such deposit, all rights
of Securityholders holding Trust Securities so called for redemption will
cease, except the right of such Securityholders to receive the Redemption Price
plus accumulated and unpaid Distributions to the date of such payment, but
without interest, and such Trust Securities will cease to be outstanding. In
the event that any date on which any Redemption Price is payable is not a
Business Day, then payment of the Redemption Price payable on such date plus
accumulated and unpaid Distributions to such date shall be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, payment of such distribution shall be made
on the immediately preceding Business Day, in each case, with the same force
and effect as if made on such date. In the event that payment of the
Redemption Price plus accumulated and unpaid Distributions in respect of any
Trust Securities called for redemption is improperly withheld or refused and
not paid either by the Trust or by the Depositor pursuant to the Guarantee,
Distributions on such Trust Securities will continue to accrue, at the then
applicable rate, from the Redemption Date originally established by the Trust
for such Trust Securities to the date such Redemption Price plus accumulated
and unpaid Distributions is actually paid, in which case the actual payment
date will be the date fixed for redemption for purposes of calculating the
Redemption Price plus accumulated and unpaid Distributions to such date.
(e) Payment of the Redemption Price on the Trust Securities
shall be made to the Holders thereof as they appear on the Securities Register
for the Trust Securities on the relevant record date, which shall be the
fifteenth day prior to the Redemption Date.
(f) If less than all the Outstanding Trust Securities are to
be redeemed on a Redemption Date, then the aggregate Liquidation Amount of
Trust Securities to be redeemed shall be allocated 3% to the Common Securities
and 97% to the Preferred Securities. The particular Preferred Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Trustee from the Outstanding Preferred Securities not previously called
for redemption, by such method as the Property Trustee shall deem fair and
appropriate and which may provide for the selection for a redemption of
portions (equal to $25 or integral multiples thereof) of the Liquidation Amount
of Preferred Securities of a denomination larger than $25. The Property
Trustee shall promptly notify the Transfer Agent and Registrar in writing of
the Preferred Securities selected for redemption and, in the case of any
Preferred Securities selected for partial redemption, the Liquidation Amount
thereof to be redeemed. For all purposes of this Trust Agreement, unless the
context otherwise requires, all provisions relating to the redemption of
Preferred Securities shall relate, in the case of any Preferred Securities
redeemed or to be redeemed only in part, to the portion of the Liquidation
Amount of Preferred Securities which has been or is to be redeemed.
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SECTION 4.03. SUBORDINATION OF COMMON SECURITIES. (a)
Payment of Distributions (including Additional Amounts, if applicable) on, and
the Redemption Price of, the Trust Securities, as applicable, shall be made pro
rata based on the Liquidation Amount of the Trust Securities; provided,
however, that if on any Distribution Date or Redemption Date a Debenture Event
of Default shall have occurred and be continuing, no payment of any
Distribution (including Additional Amounts, if applicable) on, or Redemption
Price of, any Common Security, and no other payment on account of the
redemption, liquidation or other acquisition of Common Securities, shall be
made unless payment in full in cash of all accumulated and unpaid Distributions
(including Additional Amounts, if applicable) on all Outstanding Preferred
Securities for all distribution periods terminating on or prior thereto, or in
the case of payment of the Redemption Price plus accumulated and unpaid
Distributions the full amount of such Redemption Price plus accumulated and
unpaid Distributions on all Outstanding Preferred Securities, shall have been
made or provided for, and all funds immediately available to the Property
Trustee shall first be applied to the payment in full in cash of all
Distributions (including Additional Amounts, if applicable) on, or Redemption
Price of plus accumulated and unpaid Distributions, Preferred Securities then
due and payable.
(b) In the case of the occurrence of any Debenture Event of
Default, the Holder of Common Securities will be deemed to have waived any such
Event of Default under this Trust Agreement until the effect of all such Events
of Default with respect to the Preferred Securities have been cured, waived or
otherwise eliminated. Until any such Events of Default under the Trust
Agreement with respect to the Preferred Securities have been so cured, waived
or otherwise eliminated, the Property Trustee shall act solely on behalf of the
Holders of the Preferred Securities and not the Holder of the Common
Securities, and only the Holders of the Preferred Securities will have the
right to direct the Property Trustee to act on their behalf.
SECTION 4.04. PAYMENT PROCEDURES. Payments in respect of the
Preferred Securities shall be made by check mailed to the address of the Person
entitled thereto as such address shall appear on the Register or, if the
Preferred Securities are held by a Clearing Agency, such Distributions shall be
made to the Clearing Agency, which shall credit the relevant Persons' accounts
at such Clearing Agency on the applicable distribution dates. Payments in
respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Trustee and the Holder of the Common Securities.
SECTION 4.05. TAX RETURNS AND REPORTS. The Administrative
Trustees shall prepare (or cause to be prepared), at the Depositor's expense
and direction, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared or filed) the Internal Revenue Service Form 1041 (or
any successor form) required to be filed in respect of the Trust in each
taxable year of the Trust and (b) prepare and furnish (or cause to be prepared
and furnished) to each Securityholder the related Internal Revenue Service Form
1099, or any successor form or the
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information required to be provided on such form. The Administrative Trustees
shall provide the Depositor with a copy of all such returns, reports and
schedules promptly after such filing or furnishing. The Trustees shall comply
with United States federal withholding and backup withholding tax laws and
information reporting requirements with respect to any payments to
Securityholders under the Trust Securities.
ARTICLE V.
TRUST SECURITIES CERTIFICATES
SECTION 5.01. INITIAL OWNERSHIP. Upon the formation of the
Trust by the contribution by the Depositor pursuant to Section 2.03 and until
the issuance of the Trust Securities, and at any time during which no Trust
Securities are outstanding, the Depositor shall be the sole beneficial owner of
the Trust.
SECTION 5.02. THE TRUST SECURITIES CERTIFICATES. The Trust
Securities Certificates shall be issued in denominations of $25 Liquidation
Amount and integral multiples thereof. The Trust Securities Certificates shall
be executed on behalf of the Trust by manual or facsimile signature of at least
one Administrative Trustee and, if executed on behalf of the Trust by facsimile
signature, countersigned by the Transfer Agent and Registrar or its agent.
Trust Securities Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust and, if executed on behalf of the
Trust by facsimile signature countersigned by the Transfer Agent and Registrar
or its agent, shall be validly issued and entitled to the benefits of this
Trust Agreement, notwithstanding that such individuals or any of them shall
have ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.04.
SECTION 5.03. EXECUTION AND DELIVERY OF TRUST SECURITIES
CERTIFICATES. On the Closing Date, the Administrative Trustees shall cause
Trust Securities Certificates, in an aggregate Liquidation Amount as provided
in Sections 2.04 and 2.05, to be executed on behalf of the Trust, and in the
case of Preferred Securities executed by facsimile signature, countersigned by
the Transfer Agent and Registrar, or The Bank of New York as its agent, and
delivered to or upon the written order of the Depositor signed by its chairman
of the board, any of its vice presidents or its Treasurer, without further
corporate action by the Depositor, in authorized denominations. The Depositor
agrees to indemnify, defend and hold The Bank of New York harmless against any
and all costs and liabilities incurred without negligence arising out of or in
connection with any such countersigning by it.
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SECTION 5.04. REGISTRATION OF TRANSFER AND EXCHANGE OF
PREFERRED SECURITIES CERTIFICATES. The Transfer Agent and Registrar shall keep
or cause to be kept, at the office or agency maintained pursuant to Section
5.08, a Securities Register in which, subject to such reasonable regulations as
it may prescribe, the Transfer Agent and Registrar shall provide for the
registration of Preferred Securities Certificates and the Common Securities
Certificates (subject to Section 5.10 in the case of the Common Securities
Certificates) and registration of transfers and exchanges of Preferred
Securities Certificates as herein provided. Texas Utilities Services Inc.
shall be the initial Transfer Agent and Registrar.
Upon surrender for registration of transfer of any Preferred
Securities Certificate at the office or agency maintained pursuant to Section
5.08, the Administrative Trustees, or any one of them, shall execute on behalf
of the Trust by manual or facsimile signature and, if executed on behalf of the
Trust by facsimile signature, shall cause the Transfer Agent and Registrar or
its agent to countersign and deliver, in the name of the designated transferee
or transferees, one or more new Preferred Securities Certificates in authorized
denominations of a like aggregate Liquidation Amount. At the option of a
Holder, Preferred Securities Certificates may be exchanged for other Preferred
Securities Certificates in authorized denominations of the same class and of a
like aggregate Liquidation Amount upon surrender of the Preferred Securities
Certificates to be exchanged at the office or agency maintained pursuant to
Section 5.08.
Every Preferred Securities Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form satisfactory to the Administrative
Trustees and the Transfer Agent and Registrar duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Preferred Securities
Certificate surrendered for registration of transfer or exchange shall be
canceled and subsequently disposed of by the Administrative Trustees in
accordance with customary practice. The Trust shall not be required to (i)
issue, register the transfer of, or exchange any Preferred Securities during a
period beginning at the opening of business 15 calendar days before the day of
mailing of a notice of redemption of any Preferred Securities called for
redemption and ending at the close of business on the day of such mailing or
(ii) register the transfer of or exchange any Preferred Securities so selected
for redemption, in whole or in part, except the unredeemed portion of any such
Preferred Securities being redeemed in part.
No service charge shall be made for any registration of
transfer or exchange of Preferred Securities Certificates, but the Transfer
Agent and Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Preferred Securities Certificates.
SECTION 5.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST
SECURITIES CERTIFICATES. If (a) any mutilated Trust Securities Certificate
shall be surrendered to the Transfer Agent and Registrar, or if the Transfer
Agent and Registrar shall receive evidence
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to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate and (b) there shall be delivered to Transfer Agent and Registrar
and the Administrative Trustees such security or indemnity as may be required
by them to save each of them and the Depositor harmless, then in the absence of
notice that such Trust Securities Certificate shall have been acquired by a
bona fide purchaser, the Administrative Trustees, or any one of them, on behalf
of the Trust shall execute by manual or facsimile signature and the
Administrative Trustees, or any one of them, and, if executed on behalf of the
Trust by facsimile signature, countersigned by the Transfer Agent and Registrar
shall make available for delivery, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust
Securities Certificate of like class, tenor and denomination. In connection
with the issuance of any new Trust Securities Certificate under this Section,
the Administrative Trustees or the Transfer Agent and Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Trust Securities
Certificate issued pursuant to this Section shall constitute conclusive
evidence of an ownership interest in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Trust Securities Certificate shall
be found at any time.
SECTION 5.06. PERSONS DEEMED SECURITYHOLDERS. Prior to due
presentation of a Trust Securities Certificate for registration of transfer,
the Trustees and the Transfer Agent and Registrar shall be entitled to treat
the Person in whose name any Trust Securities Certificate shall be registered
in the Securities Register as the owner of such Trust Securities Certificate
for the purpose of receiving distributions and for all other purposes
whatsoever, and neither the Trustee nor the Transfer Agent and Registrar shall
be bound by any notice to the contrary.
SECTION 5.07. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND
ADDRESSES. The Administrative Trustees shall furnish or cause to be furnished
(x) to the Depositor, within 15 days after receipt by any Administrative
Trustee of a request therefor from the Depositor in writing and (y) to the
Property Trustee, promptly after receipt by any Administrative Trustee of a
request therefor from the Property Trustee in writing in order to enable the
Property Trustee to discharge its obligations under this Trust Agreement, a
list, in such form as the Depositor may reasonably require, of the names and
addresses of the Securityholders as of the most recent Record Date. If Holders
of Trust Securities Certificates evidencing ownership at such time and for the
previous six months not less than 25% of the outstanding aggregate Liquidation
Amount apply in writing to any Administrative Trustee, and such application
states that the applicants desire to communicate with other Securityholders
with respect to their rights under this Trust Agreement or under the Trust
Securities Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Administrative
Trustees shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to the
current list of Securityholders. Each Holder, by receiving and holding a Trust
Securities Certificate, shall be deemed to have agreed not to hold either the
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Depositor or the Administrative Trustees accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 5.08. MAINTENANCE OF OFFICE OR AGENCY. The
Administrative Trustees shall maintain in the Borough of Manhattan, The City of
New York, an office or offices or agency or agencies where Preferred Securities
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustees in respect of the Trust
Securities Certificates may be served. The Administrative Trustees initially
designate Midwest Clearing Corporation, 40 Broad Street, New York, New York
10004 as its principal corporate trust office for such purposes. The
Administrative Trustees shall give prompt written notice to the Depositor, the
Property Trustee and to the Securityholders of any change in the location of
the Securities Register or any such office or agency.
SECTION 5.09. APPOINTMENT OF PAYING AGENT. The Paying Agent
shall make distributions to Securityholders from the Payment Account and shall
report the amounts of such distributions to the Administrative Trustees and the
Property Trustee. Any Paying Agent shall have the revocable power to withdraw
funds from the Payment Account for the purpose of making the distributions
referred to above. The Property Trustee shall be entitled to rely upon a
certificate of the Paying Agent stating in effect the amount of such funds so
to be withdrawn and that same are to be applied by the Paying Agent in
accordance with this Section 5.09. The Administrative Trustees or any one of
them may revoke such power and remove the Paying Agent if the Administrative
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect.
The Paying Agent shall initially be the Bank, and it may choose any co-paying
agent that is acceptable to the Administrative Trustees and the Depositor. The
Paying Agent shall be permitted to resign upon 30 days' written notice to the
Administrative Trustees and the Depositor. In the event that Texas Utilities
Services Inc. shall no longer be the Paying Agent, the Administrative Trustees
shall appoint a successor that is reasonably acceptable to the Property Trustee
and the Depositor to act as Paying Agent (which shall be a bank, trust company
or an affiliate of the Company). The Administrative Trustees shall cause such
successor Paying Agent or any additional Paying Agent appointed by the
Administrative Trustees to execute and deliver to the Trustees an instrument in
which such successor Paying Agent or additional Paying Agent shall agree with
the Trustees that as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Securityholders in trust for the benefit of the Securityholders entitled
thereto until such sums shall be paid to such Securityholders. The Paying
Agent shall return all unclaimed funds to the Property Trustee and upon
resignation or removal of a Paying Agent such Paying Agent shall also return
all funds in its possession to the Property Trustee. The provisions of
Sections 8.01, 8.03 and 8.06 shall apply to the Bank in its role as Paying
Agent, for so long as the Bank shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder, and the Paying Agent
shall be bound by the requirements with respect to paying agents of securities
issued pursuant
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to the Trust Indenture Act. Any reference in this Trust Agreement to the
Paying Agent shall include any co-paying agent unless the context requires
otherwise.
SECTION 5.10. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.
On the Closing Date and on each other date provided for in Section 2.05, the
Depositor shall acquire, and thereafter retain, beneficial and record ownership
of the Common Securities. Any attempted transfer of the Common Securities
shall be void. The Administrative Trustees shall cause each Common Securities
Certificate issued to the Depositor to contain a legend stating "THIS
CERTIFICATE IS NOT TRANSFERABLE".
SECTION 5.11. DEFINITIVE PREFERRED SECURITIES CERTIFICATES.
Upon initial issuance of the Preferred Securities the Definitive Preferred
Securities Certificates shall be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Administrative
Trustees, as evidenced by the execution thereof by the Administrative Trustees,
or any one of them. The Administrative Trustees, or any one of them, shall
execute on behalf of the Trust by manual or facsimile signature, and if
executed by facsimile signature on behalf of the Trust, countersigned by the
Transfer Agent or its Agent the Definitive Preferred Securities Certificates
initially in accordance with the instructions of the Depositor. Neither the
Transfer Agent and Registrar nor any of the Administrative Trustees shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions.
SECTION 5.12. BOOK-ENTRY SYSTEM. The Preferred Securities
may be issued in the name of a securities depository ("Securities Depository")
or a nominee therefor, and held in the custody of the Securities Depository.
In such event, a single certificate will be issued and delivered to the
Securities Depository for the Preferred Securities, in which case the
beneficial owners will not receive physical delivery of certificates for
Preferred Securities except as provided herein, all transfers of beneficial
ownership interests will be made by book-entry only, and no investor or other
party purchasing, selling or otherwise transferring beneficial ownership of the
Preferred Securities will receive, hold or deliver any certificate for
Preferred Securities. The Authority, the Depositor, the Trustee and the Paying
Agent will recognize the Securities Depository or its nominee as the Holder of
Preferred Securities for all purposes, including notices and voting.
The Administrative Trustees, at the direction and expense of
the Depositor, may from time to time appoint a Securities Depository or a
successor thereto and enter into a letter of representation or other agreement
with such Securities Depository to establish procedures with respect to the
Preferred Securities. Any Securities Depository shall be a Clearing Agency.
The Authority and the Trustee covenant and agree to meet the
requirements of a Securities Depository for the Preferred Securities with
respect to required notices and other provisions of the letter of
representations or agreement executed with respect to such Preferred
Securities.
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Whenever the beneficial ownership of the Preferred Securities
is determined through the books of a Securities Depository, the requirements in
this Trust Agreement of holding, delivering or transferring such Preferred
Securities shall be deemed modified to meet the requirements of the Securities
Depository with respect to actions of the Trustees, the Depositor and the
Paying Agent. Any provisions hereof permitting or requiring delivery of such
Preferred Securities shall, while such Preferred Securities are in a Book-Entry
System, be satisfied by the notation on the books of the Securities Depository
in accordance with applicable state law.
SECTION 5.13. RIGHTS OF SECURITYHOLDERS. The legal title to
the Trust Property is vested exclusively in the Property Trustee (in its
capacity as such) in accordance with Section 2.09, and the Securityholders
shall not have any right or title therein other than an undivided beneficial
interest in the assets of the Trust conferred by their Trust Securities and
they shall have no right to call for any partition or division of property,
profits or rights of the Trust except as described below. The Trust Securities
shall be personal property giving only the rights specifically set forth
therein and in this Trust Agreement. The Preferred Securities shall have no
preemptive rights and when issued and delivered to Securityholders against
payment of the purchase price therefor will be fully paid and nonassessable by
the Trust.
ARTICLE VI.
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 6.01. LIMITATIONS ON VOTING RIGHTS. (a) Except as
provided in this Section 6.01, in Section 10.03 and as otherwise required by
law, no Holder of Preferred Securities shall have any right to vote or in any
manner otherwise control the administration, operation and management of the
Trust or the obligations of the parties hereto, nor shall anything herein set
forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association.
(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with respect to
such Debentures, (ii) waive any past default which is waivable under Section
813 of the Subordinated Indenture, (iii) exercise any right to rescind or annul
a declaration that the principal of all the Debentures shall be due and payable
or (iv) consent to any amendment, modification or termination of the
Subordinated Indenture or the Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the Holders of at least
a 66 2/3 in Liquidation Amount of the Preferred Securities; provided, however,
that where a consent under the Subordinated Indenture would require the consent
of each holder of Debentures affected thereby, no such consent shall be
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given by any Trustee without the prior written consent of each holder of
Preferred Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Preferred Securities, except pursuant
to a subsequent vote of the Preferred Securities. The Property Trustees shall
notify all Holders of the Preferred Securities of any notice of default
received from the Debenture Trustee with respect to the Debentures. In
addition to obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Property Trustee
shall, at the expense of the Depositor, obtain an Opinion of Counsel
experienced in such matters to the effect that the Trust will not be classified
other than a "grantor trust" for United States federal income tax purposes on
account of such action.
(c) If any proposed amendment to the Trust Agreement provides
for, or the Trustees otherwise propose to effect, (i) any action that would
materially adversely affect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise, or (ii) the dissolution, winding- up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
outstanding Preferred Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least 66 2/3 in Liquidation
Amount of the outstanding Preferred Securities. No amendment to this Trust
Agreement may be made if, as a result of such amendment, the Trust would be
classified other than a "grantor trust" for United States federal income tax
purposes.
SECTION 6.02. NOTICE OF MEETINGS. Notice of all meetings of
the Holders of Preferred Securities, stating the time, place and purpose of the
meeting, shall be given by the Administrative Trustees pursuant to Section
10.08 to each Holder of a Preferred Security, at his registered address, at
least 15 days and not more than 90 days before the meeting. At any such
meeting, any business properly before the meeting may be so considered whether
or not stated in the notice of the meeting. Any adjourned meeting may be held
as adjourned without further notice.
SECTION 6.03. MEETINGS OF HOLDERS OF PREFERRED SECURITIES.
No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Securityholders to
vote on any matter upon the written request of the Holders of 25% of the then
outstanding Preferred Securities (based upon their aggregate Liquidation
Amount) and may, at any time in their discretion, call a meeting of Holders of
Preferred Securities to vote on any matters as to which the Holders of
Preferred Securities are entitled to vote.
Holders of 50% of the then outstanding Preferred Securities
(based upon their aggregate Liquidation Amount), present in person or by proxy,
shall constitute a quorum at any meeting of Securityholders.
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If a quorum is present at a meeting, an affirmative vote by
the Holders of Preferred Securities present, in person or by proxy, holding
more than the lesser of (x) 66 2/3% of the then outstanding Preferred
Securities (based upon their aggregate Liquidation Amount) held by the Holders
of then outstanding Preferred Securities present, either in person or by proxy,
at such meeting and (y) 50% of the outstanding Preferred Securities (based upon
their aggregate liquidation amount) shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
SECTION 6.04. VOTING RIGHTS. Securityholders shall be
entitled to one vote for each $25 of Liquidation Amount represented by their
Trust Securities in respect of any matter as to which such Securityholders are
entitled to vote.
SECTION 6.05. PROXIES, ETC. At any meeting of
Securityholders, any Securityholder entitled to vote thereat may vote by proxy,
provided that no proxy shall be voted at any meeting unless it shall have been
placed on file with the Administrative Trustees, or with such other officer or
agent of the Trust as the Administrative Trustee may direct, for verification
prior to the time at which such vote shall be taken. Only Securityholders of
record shall be entitled to vote. When Trust Securities are held jointly by
several persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be
executed by or on behalf of a Securityholder shall be deemed valid unless
challenged at or prior to its exercise, or, if earlier, until eleven months
after it is sent and the burden of proving invalidity shall rest on the
challenger.
SECTION 6.06. SECURITYHOLDER ACTION BY WRITTEN CONSENT. Any
action which may be taken by Securityholders at a meeting may be taken without
a meeting if Securityholders holding more than a majority of all outstanding
Trust Securities entitled to vote in respect of such action (or such larger
proportion thereof as shall be required by any express provision of this Trust
Agreement) shall consent to the action in writing (based upon their aggregate
Liquidation Amount).
SECTION 6.07. RECORD DATE FOR VOTING AND OTHER PURPOSES. For
the purposes of determining the Securityholders who are entitled to notice of
and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrative Trustees may from time to time fix a date, not more
than 90 days prior to the date of any meeting of Securityholders or the payment
of distribution or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes.
SECTION 6.08. ACTS OF SECURITYHOLDERS. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Trust
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Agreement to be given, made or taken by Securityholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Securityholders in person or by an agent duly appointed in writing; and,
except as otherwise expressly provided herein, such action shall become
effective when such instrument or instruments are delivered to the
Administrative Trustees. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Securityholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Trust Agreement and (subject to
Section 8.01) conclusive in favor of the Trustees, if made in the manner
provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Trustee deems sufficient.
The ownership of Preferred Securities shall be proved by the
Securities Register.
Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Securityholder of any Trust Security shall
bind every future Securityholder of the same Trust Security and the
Securityholder of every Trust Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustees or the Trust in reliance
thereon, whether or not notation of such action is made upon such Trust
Security.
Without limiting the foregoing, a Securityholder entitled
hereunder to take any action hereunder with regard to any particular Trust
Security may do so with regard to all or any part of the Liquidation Amount of
such Trust Security or by one or more duly appointed agents each of which may
do so pursuant to such appointment with regard to all or any part of such
liquidation amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder
or Trustee under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
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SECTION 6.09. INSPECTION OF RECORDS. Subject to Section 5.07
concerning access to the list of Securityholders, upon reasonable notice to the
Administrative Trustees and the Property Trustee, the other records of the
Trust shall be open to inspection by Securityholders during normal business
hours for any purpose reasonably related to such Securityholder's interest as a
Securityholder.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF THE PROPERTY
TRUSTEE AND THE DELAWARE TRUSTEE
SECTION 7.01. PROPERTY TRUSTEE. The Property Trustee hereby
represents and warrants for the benefit of the Depositor and the
Securityholders that:
(a) the Property Trustee is a banking corporation or trust
company duly organized, validly existing and in good standing under the laws of
the State of New York;
(b) the Property Trustee has full corporate power, authority
and legal right to execute, deliver and perform its obligations under this
Trust Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed
and delivered by the Property Trustee and constitutes the valid and legally
binding agreement of the Property Trustee enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles;
(d) the execution, delivery and performance by the Property
Trustee of this Trust Agreement will not violate, conflict with or constitute a
breach of the Property Trustee's charter or by-laws; and
(e) neither the authorization, execution or delivery by the
Property Trustee of this Trust Agreement nor the consummation of any of the
transactions by the Property Trustee contemplated herein require the consent or
approval of, the giving of notice to, the registration with or the taking of
any other action with respect to any governmental authority or agency under any
existing Federal or New York law governing the banking or trust powers of the
Property Trustee.
SECTION 7.02. DELAWARE TRUSTEE. The Delaware Trustee
represents and warrants for the benefit of the Depositor and the
Securityholders that:
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(a) the Delaware Trustee is a banking corporation or trust
company duly organized, validly existing and in good standing under the laws of
the State of Delaware;
(b) the Delaware Trustee has full corporate power, authority
and legal right to execute, deliver and perform its obligations under this
Trust Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed
and delivered by the Delaware Trustee and constitutes the valid and legally
binding agreement of the Delaware Trustee enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles;
(d) the execution, delivery and performance by the Delaware
Trustee of this Trust Agreement will not violate the Delaware Trustee's charter
or by-laws; and
(e) neither the authorization, execution or delivery by the
Delaware Trustee of this Trust Agreement nor the consummation of any of the
transactions by the Delaware Trustee contemplated herein require the consent or
approval of, the giving of notice to, the registration with or the taking of
any other action with respect to any governmental authority or agency under any
existing Federal or Delaware law governing the banking or trust powers of the
Delaware Trustee.
ARTICLE VIII.
THE TRUSTEES
SECTION 8.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The duties and responsibilities of the Trustees shall be
as provided by this Trust Agreement and, in the case of the Property Trustee,
the Trust Indenture Act, and no implied covenants or obligations shall be read
into this Trust Agreement against any of the Trustees. Notwithstanding the
foregoing, no provision of this Trust Agreement shall require any of the
Trustees to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. Notwithstanding anything
contained in this Trust Agreement to the contrary, the duties and
responsibilities of the Property Trustee under this Trust Agreement shall be
subject to the protections, exculpations and limitations on liability afforded
to the Property Trustee under the provisions of the Trust Indenture Act and, to
the extent applicable, Rule 3A-7 under the 1940 Act, or any successor rule
thereunder. Whether or not therein expressly so provided,
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every provision of this Trust Agreement relating to the conduct or affecting
the liability of or affording protection to the Trustees shall be subject to
the provisions of this Section.
(b) All payments made by the Property Trustee or a Paying
Agent in respect of the Trust Securities shall be made only from the income and
proceeds from the Trust Property and only to the extent that there shall be
sufficient income or proceeds from the Trust Property to enable the Property
Trustee or Paying Agent to make payments in accordance with the terms hereof.
Each Securityholder, by its acceptance of a Trust Security, agrees that it will
look solely to the income and proceeds from the Trust Property to the extent
available for distribution to it as herein provided and that the Trustees are
not personally liable to it for any amount distributable in respect of any
Trust Security or for any other liability in respect of any Trust Security.
This Section 8.01(b) does not limit the liability of the Trustees expressly set
forth elsewhere in this Trust Agreement or, in the case of the Property
Trustee, in the Trust Indenture Act.
(c) All duties and responsibilities of the Property Trustee
contained in this Trust Agreement are subject to the following:
(i) the Property Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the
Trust Property shall be to deal with such property in a
similar manner as the Property Trustee deals with similar
property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee
under this Trust Agreement, the Trust Indenture Act and Rule
3a-7 thereunder;
(ii) the Property Trustee shall have no duty or
liability for or with respect to the value, genuineness,
existence or sufficiency of the Trust Property or the payment
of any taxes or assessments levied thereon or in connection
therewith;
(iii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may
otherwise agree with the Depositor. Money held by the
Property Trustee need not be segregated from other funds held
by it except in relation to the Payment Account established by
the Property Trustee pursuant to Section 2.07(a)(B)(i) and
except to the extent otherwise required by law;
(iv) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or
the Depositor with their respective duties under this Trust
Agreement, nor shall the Property Trustee be liable for the
default or misconduct of the Administrative Trustees or the
Depositor.
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SECTION 8.02. NOTICE OF DEFAULTS. Within five Business Days
after the occurrence of any Event of Default, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 10.08, notice of
any default known to the Property Trustee to the Securityholders and the
Depositor, unless such default shall have been cured or waived. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default.
SECTION 8.03. CERTAIN RIGHTS OF PROPERTY TRUSTEE. Subject to
the provisions of Section 8.01 and except as provided by law:
(i) the Property Trustee may rely and shall be
protected in acting or refraining from acting in good faith
upon any resolution, Opinion of Counsel, certificate, written
representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
appraisal, bond debenture, note, other evidence of
indebtedness or other paper or document reasonably believed by
it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) if (A) in performing its duties under this Trust
Agreement the Property Trustee is required to decide between
alternative courses of action or (B) in construing any of the
provisions in this Trust Agreement the Property Trustee finds
the same ambiguous or inconsistent with any other provisions
contained herein or (C) the Property Trustee is unsure of the
application of any provision of this Trust Agreement, then,
except as to any matter as to which the Preferred
Securityholders are entitled to vote under the terms of this
Trust Agreement, the Property Trustee shall deliver a notice
to the Depositor requesting written instructions of the
Depositor as to the course of action to be taken. The
Property Trustee shall take such action, or refrain from
taking such action, as the Property Trustee shall be
instructed in writing to take, or to refrain from taking, by
the Depositor; provided, however, that if the Property Trustee
does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such
reasonably shorter period of time set forth in such notice
(which to the extent practicable shall not be less than two
Business Days), it may, but shall be under no duty to, take or
refrain from taking such action not inconsistent with this
Trust Agreement as it shall deem advisable and in the best
interests of the Securityholders, in which event the Property
Trustee shall have no liability except for its own bad faith,
negligence or willful misconduct;
(iii) whenever in the administration of this Trust
Agreement the Property Trustee shall deem it desirable that a
matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Property Trustee (unless
other evidence be herein specifically prescribed) may, in the
absence of
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bad faith on its part, request and rely upon an Officers'
Certificate which, upon receipt of such request, shall be
promptly delivered by the Depositor or the Administrative
Trustees;
(iv) the Property Trustee may consult with counsel of
its selection and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(v) the Property Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this
Trust Agreement at the request or direction of any of the
Securityholders pursuant to this Trust Agreement, unless such
Securityholders shall have offered to the Property Trustee
reasonable security or indemnity against the costs, expenses
(including reasonable attorneys' fees and expenses) and
liabilities which might be incurred by it in compliance with
such request or direction;
(vi) the Property Trustee shall not be bound to make
any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, approval,
bond debenture, note or other evidence of indebtedness or
other paper or document reasonably believed by it to be
genuine, unless requested in writing to do so by one or more
Securityholders, but the Property Trustee, in its discretion,
may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Property Trustee
shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and
premises of the Depositor personally or by agent or attorney;
(vii) the Property Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either
directly or by or through its agents or attorneys, and the
Property Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed
with due care by it hereunder, provided that the Property
Trustee shall be responsible for its own negligence or
recklessness with respect to selection of any agent or
attorney appointed by it hereunder.
(viii) the Property Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good
faith and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Trust Agreement;
(ix) the Property Trustee shall not be charged with
knowledge of any default or Event of Default with respect to
the Trust Securities unless either (1) a Responsible Officer
of the Property Trustee shall have actual knowledge
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of the default or Event of Default or (2) written notice of
such default or Event of Default shall have been given to the
Property Trustee by the Depositor, the Administrative Trustees
or by any Holder of the Trust Securities;
(x) no provision of this Trust Agreement shall be
deemed to impose any duty or obligation on the Property
Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the
Property Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or
acts or to exercise any such right, power, duty or obligation;
and no permissive or discretionary power or authority
available to the Property Trustee shall be construed to be a
duty; and
(xi) no provision of this Trust Agreement shall require
the Property Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if the Property Trustee shall have
reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Trust Agreement or adequate indemnity against
such risk or liability is not reasonably assured to it;
(xii) the Property Trustee shall have no duty to see to
any recording, filing or registration of any instrument
(including any financing or continuation statement or any tax
or securities) (or any rerecording, refiling or registration
thereof);
(xiii) the Property Trustee shall have the right at any
time to seek instructions concerning the administration of
this Trust Agreement from any court of competent jurisdiction;
and
(xiv) whenever in the administration of this Trust
Agreement the Property Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder the Property
Trustee (i) may request instructions from the Holders of the
Trust Securities, which instructions may only be given by the
Holders of the same proportion of liquidation amount of the
Trust Securities as would be entitled to direct the Property
Trustee under the terms of this Trust Agreement in respect of
such remedies, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be
protected in acting in accordance with such instructions.
SECTION 8.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES. The recitals contained herein and in the Trust Securities
Certificates shall be taken as the statements of the Trust, and the Trustees do
not assume any responsibility for their
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correctness. The Trustees make no representations as to the value or condition
of the property of the Trust or any part thereof, nor as to the validity or
sufficiency of this Trust Agreement or the Trust Securities. The Trustees
shall not be accountable for the use or application by the Trust of the
proceeds of the Trust Securities in accordance with Section 2.05.
SECTION 8.05. MAY HOLD SECURITIES. Except as provided in the
definition of the term "Outstanding" in Article I, any Trustee or any other
agent of any Trustee or the Trust, in its individual or any other capacity, may
become the owner or pledgee of Trust Securities and may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such other
agent.
SECTION 8.06. COMPENSATION; FEES; INDEMNITY.
The Depositor agrees
(1) to pay to the Trustees from time to time reasonable
compensation for all services rendered by the Trustees hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustees
in accordance with any provision of this Trust Agreement (including
the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence, bad faith or willful
misconduct; and
(3) to indemnify each Trustee for, and to hold each Trustee
harmless against, any and all loss, damage, claims, liability or
expense incurred without negligence, bad faith or willful misconduct
on its part, arising out of or in connection with the acceptance or
administration of this Trust Agreement, including the reasonable costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
As security for the performance of the obligations of the
Depositor under this Section, each of the Trustees shall have a lien prior to
the Trust Securities upon all property and funds held or collected by such
Trustee as such, except funds held in trust for the payment of Distributions on
the Trust Securities.
The provisions of this Section shall survive the termination
of this Trust Agreement.
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SECTION 8.07. CERTAIN TRUSTEES REQUIRED; ELIGIBILITY. (a)
There shall at all times be a Property Trustee hereunder with respect to the
Trust Securities. The Property Trustee shall be a Person that has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Person shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Property Trustee with respect to
the Trust Securities shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article VIII.
(b) There shall at all times be one or more Administrative
Trustees hereunder with respect to the Trust Securities. Each
Administrative Trustee shall be either a natural person who is at
least 21 years of age or a legal entity that shall act through one or
more persons authorized to bind such entity.
(c) There shall at all times be a Delaware Trustee with
respect to the Trust Securities. The Delaware Trustee shall either be
(i) a natural person who is at least 21 years of age and a resident of
the State of Delaware or (ii) a legal entity with its principal place
of business in the State of Delaware that otherwise meets the
requirements of applicable Delaware law and that shall act through one
or more persons authorized to bind such entity.
SECTION 8.08. CONFLICTING INTERESTS.
If the Property Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Property Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Indenture. The Subordinated Indenture and the Guarantee Agreement shall be
deemed to be specifically described in this Trust Agreement for the purposes of
clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
SECTION 8.09. CO-TRUSTEES AND SEPARATE TRUSTEE.
Unless an Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any
part of the Trust Property may at the time be located, the Depositor and the
Property Trustees shall have power to appoint, and upon the written request of
the Administrative Trustees, the Depositor shall for such purpose join with the
Property Trustee in the execution, delivery, and performance of all instruments
and agreements necessary or proper to appoint, one or more Persons approved by
the Administrative Trustees either to act as co-trustee, jointly with the
Property Trustee, of all or any part of such Trust Property, or to act as
separate trustee of any such property, in either
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case with such powers as may be provided in the instrument of appointment, and
to vest in such Person or Persons in the capacity aforesaid, any property,
title, right or power deemed necessary or desirable, subject to the other
provisions of this Section. If the Depositor does not join in such appointment
within 15 days after the receipt by it of a request so to do, or in case an
Event of Default under the Subordinated Indenture has occurred and is
continuing, the Administrative Trustees alone shall have power to make such
appointment.
Should any written instrument from the Depositor be required
by any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right, or power, any
and all such instruments shall, on request, be executed, acknowledged, and
delivered by the Depositor.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following terms, namely:
(1) The Trust Securities shall be executed and delivered and
all rights, powers, duties, and obligations hereunder in respect of
the custody of securities, cash and other personal property held by,
or required to be deposited or pledged with, the Trustees designated
for such purpose hereunder, shall be exercised, solely by such
Trustees.
(2) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Property Trustee in respect of any
property covered by such appointment shall be conferred or imposed
upon and exercised or performed by the Property Trustee or by the
Property Trustee and such co-trustee or separate trustee jointly, as
shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the
Property Trustee shall be incompetent or unqualified to perform such
Act, in which event such rights, powers, duties, and obligations shall
be exercised and performed by such co-trustee or separate trustee.
(3) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the Depositor,
may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section 8.09, and, in case an Event of
Default under the Subordinated Indenture has occurred and is
continuing, the Property Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee
without the concurrence of the Depositor. Upon the written request of
the Property Trustee, the Depositor shall join with the Property
Trustee in the execution, delivery, and performance of all instruments
and agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided in this
Section.
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(4) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Trustee, or
any other such trustee hereunder.
(5) The Property Trustee shall not be liable by reason of any
act of a co-trustee or separate trustee.
(6) Any Act of Holders delivered to the Property Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
SECTION 8.10. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR. No resignation or removal of any Trustee (as the case may be, the
"Relevant Trustee") and no appointment of a successor Relevant Trustee pursuant
to this Article shall become effective until the acceptance of appointment by
the successor Relevant Trustee in accordance with the applicable requirements
of Section 8.11.
The Relevant Trustee may resign at any time with respect to
the Trust Securities by giving written notice thereof to the Securityholders.
If the instrument of acceptance by a successor Relevant Trustee required by
Section 8.11 shall not have been delivered to the Relevant Trustee within 30
days after the giving of such notice of resignation, the resigning Relevant
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Relevant Trustee with respect to the Trust Securities.
Unless an Event of Default shall have occurred and be
continuing, the Relevant Trustee may be removed at any time by Act of the
Common Securityholder. If an Event of Default shall have occurred and be
continuing, the Relevant Trustee may be removed at such time by Act of the
Securityholders of a majority in Liquidation Amounts of the Preferred
Securities Certificates, delivered to the Relevant Trustee (in its individual
capacity and on behalf of the Trust).
If the Relevant Trustee shall resign, be removed or become
incapable of continuing to act as Relevant Trustee at a time when no Event of
Default shall have occurred and be continuing, the Common Securityholder, by
Act of the Common Securityholder delivered to the retiring Relevant Trustee,
shall promptly appoint a successor Relevant Trustee or Trustees with respect to
the Trust Securities and the Trust, and the retiring Relevant Trustee shall
comply with the applicable requirements of Section 8.11. If the Relevant
Trustee shall resign, be removed or become incapable of continuing to act as
the Relevant Trustee at a time when an Event of Default shall have occurred and
be continuing, the Preferred Securityholders, by Act of the Preferred
Securityholders of a majority in Liquidation Amount of the Preferred Securities
then outstanding delivered to the retiring Relevant Trustee, shall promptly
appoint a successor Relevant Trustee or Trustees with respect to the Trust
Securities and the Trust, and the Relevant Trustee shall comply with the
applicable requirements of Section 8.11. If no successor Relevant Trustee with
respect to the Trust Securities shall have been so appointed by the Common
Securityholders or the Preferred Securityholders and accepted appointment in
the manner required by Section 8.11,
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any Securityholder who has been a Securityholder of Trust Securities for at
least six months may, on behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the appointment of a successor
Relevant Trustee with respect to the Trust Securities.
The retiring Relevant Trustee shall give notice of each
resignation and each removal of the Relevant Trustee with respect to the Trust
Securities and the Trust and each appointment of a successor Trustee with
respect to the Trust Securities and the Trust to all Securityholders in the
manner provided in Section 10.08 and shall give notice to the Depositor. Each
notice shall include the name and address of the successor Relevant Trustee
with respect to the Trust Securities and the Trust and, in the case of the
Property Trustee, the address of its Corporate Trust Office.
Notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee
who is a natural person dies or becomes incompetent or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by (i)
the unanimous act of remaining Administrative Trustees if there are at least
two of them or (ii) otherwise by the Depositor (with the successor in each case
being an individual who satisfies the eligibility requirement for
Administrative Trustees or Delaware Trustee, as the case may be, set forth in
Section 8.07). Additionally, notwithstanding the foregoing or any other
provision of this Trust Agreement, in the event the Depositor reasonably
believes that any Administrative Trustee who is a natural person has become
incompetent or incapacitated, the Depositor, by notice to the remaining
Trustees, may terminate the status of such Person as an Administrative Trustee
(in which case the vacancy so created will be filled in accordance with the
preceding sentence).
SECTION 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. In
case of the appointment hereunder of a successor Relevant Trustee with respect
to all Trust Securities and the Trust, every such successor Relevant Trustee so
appointed shall execute, acknowledge and deliver to the Trust and to the
retiring Relevant Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Relevant Trustee shall
become effective and such successor Relevant Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Relevant Trustee; but, on the request of the Depositor
or the successor Relevant Trustee, such retiring Relevant Trustee shall, upon
payment of its charges by the Depositor, execute and deliver an instrument
transferring to such successor Relevant Trustee all the rights, powers and
trusts of the retiring Relevant Trustee and shall duly assign, transfer and
deliver to such successor Relevant Trustee all property and money held by such
retiring Relevant Trustee hereunder, subject, nevertheless, to the retiring
Trustee's prior lien provided for in Section 8.06.
In case of the appointment hereunder of a successor Relevant
Trustee with respect to the Trust Securities and the Trust, the retiring
Relevant Trustee and each successor Trustee with respect to the Trust
Securities shall execute and deliver an amendment hereto
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wherein each successor Relevant Trustee shall accept such appointment and which
(1) shall contain such provisions as shall be necessary or desirable to
transfer and confirm to, and to vest in, each successor Relevant Trustee all
the rights, powers, trusts and duties of the retiring Relevant Trustee with
respect to the Trust Securities and the Trust and (2) shall add to or change
any of the provisions of this Trust Agreement as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by more than one
Relevant Trustee, it being understood that nothing herein or in such amendment
shall constitute such Relevant Trustees co-trustees of the same trust and that
each such Relevant Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Relevant Trustee and upon the execution and delivery of such amendment the
resignation or removal of the retiring Relevant Trustee shall become effective
to the extent provided therein and each such successor Relevant Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Relevant Trustee with respect
to the Trust Securities and the Trust; but, on request of the Trust or any
successor Relevant Trustee such retiring Relevant Trustee shall duly assign,
transfer and deliver to such successor Trustee all Trust Property, all proceeds
thereof and money held by such retiring Relevant Trustee hereunder with respect
to the Trust Securities and the Trust.
Upon request of any such successor Relevant Trustee, the
retiring Relevant Trustee shall execute any and all instruments for more fully
and certainly vesting in and confirming to such successor Relevant Trustee all
such rights, powers and trusts referred to in the first or second preceding
paragraph, as the case may be.
No successor Relevant Trustee shall accept its appointment
unless at the time of such acceptance such successor Relevant Trustee shall be
qualified and eligible under this Article VIII.
SECTION 8.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS. Any Person into which the Property Trustee or the Delaware
Trustee or any Administrative Trustee that is not a natural person may be
merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Relevant
Trustee shall be a party, or any Person succeeding to all or substantially all
the corporate trust business of such Relevant Trustee, shall be the successor
of such Relevant Trustee hereunder, provided such Person shall be otherwise
qualified and eligible under this Article VIII, without the execution or filing
of any paper or any further act on the part of any of the parties hereto.
SECTION 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
DEPOSITOR OR TRUST. If and when the Property Trustee or the Delaware Trustee
shall be or become a creditor of the Depositor or the Trust (or any other
obligor upon the Debentures or the Trust Securities), the Property Trustee or
the Delaware Trustee, as the case may be, shall be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the
Depositor or Trust (or any such other obligor).
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SECTION 8.14. REPORTS BY PROPERTY TRUSTEE. (a) The Property
Trustee shall transmit to Securityholders such reports concerning the Property
Trustee and its actions under this Trust Agreement as may be required pursuant
to the Trust Indenture Act at the times and in the manner provided pursuant
thereto. Such of those reports as are required to be transmitted by the
Property Trustee pursuant to Section 313(a) of the Trust Indenture Act shall be
so transmitted within 60 days after July 31 of each year, commencing July 31,
1996.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with each stock
exchange upon which the Trust Securities are listed, with the Commission and
with the Depositor. The Depositor will notify the Property Trustee when any
Trust Securities are listed on any stock exchange.
SECTION 8.15. REPORTS TO THE PROPERTY TRUSTEE. The Depositor
and the Administrative Trustees on behalf of the Trust shall provide to the
Property Trustee such documents, reports and information as required by Section
314 (if any) and the compliance certificate required by Section 314 of the
Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.
SECTION 8.16. EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT. Each of the Depositor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Trust Agreement
(including any covenants compliance with which constitutes a condition
precedent) that relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) of the Trust Indenture Act may be given
in the form of an Officers' Certificate.
SECTION 8.17. NUMBER OF TRUSTEES.
(a) The number of Trustees (exclusive of any Special
Administrative Trustee) shall be five, provided that Depositor, by written
instrument may increase or decrease the number of Administrative Trustees.
(b) If a Trustee ceases to hold office for any reason and the
number of Administrative Trustees is not reduced pursuant to Section 8.17(a),
or if the number of Trustees is increased pursuant to Section 8.17(a), a
vacancy shall occur. The vacancy shall be filled with a Trustee appointed in
accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to annul the Trust. Whenever a vacancy in the number of Administrative
Trustees shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 8.10, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
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provision of this Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.
SECTION 8.18. DELEGATION OF POWER.
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 2.07(a), including any registration statement or
amendment thereto filed with the Commission, or making any other governmental
filing; and
(b) the Administrative Trustees shall have power to delegate
from time to time to such of their number the doing of such things and the
execution of such instruments either in the name of the Trust or the names of
the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.
SECTION 8.19. FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Trust Agreement shall not be liable to the Trust or to any other Covered
Person for its good faith reliance on the provisions of this Trust Agreement.
The provisions of this Trust Agreement, to the extent that they restrict the
duties and liabilities of an Indemnified Person otherwise existing at law or in
equity (other than the duties imposed on the Property Trustee under the Trust
Indenture Act), are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnified Person;
(b) Unless otherwise expressly provided herein and subject to
the provisions of the Trust Indenture Act:
(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered Person; or
(ii) whenever this Trust Agreement or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or provides
terms that are, fair and reasonable to the Trust or any Holder
of Trust Securities, the Indemnified Person shall resolve such
conflict of interest, take such action or provide such terms,
considering in each case the relative interest of each party
(including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating
to such interests, any customary or accepted industry
practices, and any
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applicable generally accepted accounting practices or
principles. In the absence of bad faith by the Indemnified
Person, the resolution, action or term so made, taken or
provided by the Indemnified Person shall not constitute a
breach of this Trust Agreement or any other agreement
contemplated herein or of any duty or obligation of the
Indemnified Person at law or in equity or otherwise; and
(c) Whenever in this Trust Agreement an Indemnified Person is
permitted or required to make a decision
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires, including
its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting
the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Trust Agreement or by applicable law.
ARTICLE IX.
TERMINATION AND LIQUIDATION
SECTION 9.01. TERMINATION UPON EXPIRATION DATE. The Trust
shall automatically terminate on December 31, 2035 (the "Expiration Date") and
the Trust Property shall be distributed in accordance with Section 9.04.
SECTION 9.02. EARLY TERMINATION. (a) Upon the first to
occur of any of the following events (such first occurrence, an "Early
Termination Event"):
(i) the occurrence of a Bankruptcy Event, in respect
of, or the dissolution or liquidation of the Depositor;
(ii) the redemption of all of the Preferred Securities;
(iii) the occurrence of a Tax Event;
(iv) an order for judicial termination of the Trust
having been entered by a court of competent jurisdiction;
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the Trust shall terminate and the Trustees shall take such action as is
required by Section 9.04.
SECTION 9.03. TERMINATION. The respective obligations and
responsibilities of the Trust and the Trustees created hereby shall terminate
upon the latest to occur of the following: (i) the distribution by the Property
Trustee to Securityholders upon the liquidation of the Trust pursuant to
Section 9.04, or upon the redemption of all of the Trust Securities pursuant to
Section 4.02 or 9.04(d), of all amounts required to be distributed hereunder
upon the final payment of the Trust Securities; (ii) the payment of any
expenses owed by the Trust; and (iii) the discharge of all administrative
duties of the Administrative Trustees, including the performance of any tax
reporting obligations with respect to the Trust or the Securityholders.
SECTION 9.04. LIQUIDATION. (a) If an Early Termination
Event specified in clause (i) or (iv) of Section 9.02 occurs, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, the Trust shall be liquidated by the Trustees as expeditiously as the
Trustees determine to be appropriate by distributing to each Securityholder a
Like Amount of Debentures, subject to Section 9.04(e). Notice of liquidation
shall be given by the Administrative Trustees by first-class mail, postage
prepaid, mailed not later than 30 nor more than 60 days prior to the
Liquidation Date to each Holder of Trust Securities at such Holder's address
appearing in the Security Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date,
the Trust Securities will no longer be deemed to be
outstanding and any Trust Securities Certificates not
surrendered for exchange will be deemed to represent a Like
Amount of Debentures; and
(iii) provide such information with respect to the
mechanics by which Holders may exchange Trust Securities
Certificates for Debentures, or if Section 9.04(d) applies
receive a Liquidation Distribution, as the Administrative
Trustee or the Property Trustee shall deem appropriate.
(b) Except where Section 9.02(ii), the penultimate sentence
of 9.04(d) or (e) applies, in order to affect the liquidation of the Trust and
distribution of the Debentures to Securityholders, the Property Trustee shall
establish a record date for such distribution (which shall be not more than 45
days prior to the Liquidation Date) and, either itself acting as exchange agent
or through the appointment of a separate exchange agent, shall establish such
procedures as it shall deem appropriate to effect the distribution of
Debentures in exchange for the Outstanding Trust Securities Certificates.
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<PAGE> 53
(c) Except where Section 9.02(ii), the penultimate sentence
of 9.04(d) or (e) applies, after the Liquidation Date, (i) the Trust Securities
will no longer be deemed to be Outstanding, (ii) certificates representing a
Like Amount of Debentures will be issued to Holders of Trust Securities
Certificates, upon surrender of such certificates to the Administrative
Trustees or their agent for exchange, (iii) any Trust Securities Certificates
not so surrendered for exchange will be deemed to represent a Like Amount of
Debentures, accruing interest at the rate provided for in the Debentures from
the last Distribution Date on which a Distribution was made on such Trust
Certificates until such certificates are so surrendered (and until such
certificates are so surrendered, no payments or interest or principal will be
made to Holders of Trust Securities Certificates with respect to such
Debentures) and (iv) all rights of Securityholders holding Trust Securities
will cease, except the right of such Securityholders to receive Debentures upon
surrender of Trust Securities Certificates.
(d) If at any time, a Tax Event shall occur and be
continuing, the Administrative Trustees shall, unless the Debentures are
redeemed in the limited circumstances described below, terminate the Trust and,
after satisfaction of creditors of the Trust, if any, cause Debentures held by
the Property Trustee having a Like Amount of the Preferred Securities and the
Common Securities to be distributed to the Holders of the Preferred Securities
and the Common Securities on a pro rata basis in liquidation of such Holders'
interests in the Trust, within 90 days following the occurrence of such Tax
Event; provided, however, that as a condition of such termination and
distribution, the Administrative Trustees shall have received an opinion of
nationally recognized independent tax counsel experienced in such matters (a
"No Recognition Opinion"), which opinion may rely on any then applicable
published revenue rulings of the Internal Revenue Service, to the effect that
the Holders of the Preferred Securities will not recognize any gain or loss for
United States federal income tax purposes as a result of the termination of the
Trust and distribution of Debentures; and, provided, further, that, if and as
long as at the time there is available to the Trust the opportunity to
eliminate, within such 90-day period, the Tax Event by taking some ministerial
action, such as filing a form or making an election, or pursuing some other
similar reasonable measure which has no adverse effect on the Trust or the
Holders of the Preferred Securities, the Trust will pursue such measure in lieu
of termination. Furthermore, if (i) the Administrative Trustees have received
an opinion of nationally recognized independent tax counsel experienced in such
matters (a "Redemption Tax Opinion") that, as a result of a Tax Event, there is
more than an insubstantial risk that the Depositor would be precluded from
deducting the interest on the Debentures for United States federal income tax
purposes even if the Debentures were distributed to the Holders of Preferred
Securities and Common Securities in liquidation of such Holders' interests in
the Trust as described above or (ii) the Administrative Trustees shall have
been informed by such tax counsel that a No Recognition Opinion cannot be
delivered to the Trust, the Depositor shall have the right, upon not less than
30 nor more than 60 days' notice, to redeem the Debentures in whole or in part
for cash at the Redemption Price plus accumulated and unpaid Distributions to
the date of such payment within 90 days following the occurrence of such Tax
Event, and promptly following such redemption Preferred Securities and
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<PAGE> 54
Common Securities with an aggregate liquidation preference amount equal to the
aggregate principal amount of the Debentures so redeemed will be redeemed by
the Trust (in the manner set forth in Section 4.02 hereof) at the Redemption
Price plus accumulated and unpaid Distributions on a pro rata basis, provided,
however, that if at the time there is available to the Depositor or the
Administrative Trustees on behalf of the Trust the opportunity to eliminate,
within such 90-day period, the Tax Event by taking some ministerial action,
such as filing a form or making an election, or pursuing some other similar
reasonable measure, which has no adverse effect on the Trust, the Depositor or
the Holders of the Preferred Securities, the Depositor or the Administrative
Trustees on behalf of the Trust will pursue such measure in lieu of redemption
and provided further that the Depositor shall have no right to redeem the
Debentures while the Administrative Trustees on behalf of the Trust are
pursuing any such ministerial action. The Common Securities will be redeemed
on a pro rata basis with the Preferred Securities, except that if an Event of
Default has occurred and is continuing, the Preferred Securities will have a
priority over the Common Securities with respect to payment of the Redemption
Price and accumulated and unpaid Distributions to the date of such payment.
(e) In the event that, notwithstanding the other provisions
of this Section 9.04, whether because of an order for dissolution entered by a
court of competent jurisdiction or otherwise, distribution of the Debentures in
the manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Property Trustee in such manner as
the Property Trustee determines. In such event, on the date of the
dissolution, winding-up or other termination of the Trust, Securityholders will
be entitled to receive out of the assets of the Trust available for
distribution to Securityholders, after satisfaction of liabilities to creditors
of the Trust as provided by applicable law, an amount equal to the Liquidation
Amount per Trust Security plus accrued and unpaid Distributions thereon to the
date of payment (such amount being the "Liquidation Distribution"). If, upon
any such dissolution, winding up or termination, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available to
pay in full the aggregate Liquidation Distribution, then, subject to the next
succeeding sentence, the amounts payable by the Trust on the Trust Securities
shall be paid on a pro rata basis (based upon Liquidation Amounts). The
Depositor will be entitled to receive Liquidation Distributions upon any such
dissolution, winding-up or termination pro rata (determined as aforesaid) with
Holders of Preferred Securities, except that, if an Event of Default has
occurred and is continuing or if an Event of Default has not occurred solely by
reason of a requirement that time lapse before or notice be given, the
Preferred Securities shall have a priority over the Common Securities.
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<PAGE> 55
ARTICLE X.
MISCELLANEOUS PROVISIONS
SECTION 10.01. GUARANTEE BY THE DEPOSITOR AND ASSUMPTION OF
OBLIGATIONS. Subject to the terms and conditions hereof, the Depositor
irrevocably and unconditionally guarantees to each Person to whom the Trust is
now or hereafter becomes indebted or liable (the "Beneficiaries"), and agrees
to assume liability for, the full payment, when and as due, of any and all
Obligations (as hereinafter defined) to such Beneficiaries. As used herein,
"Obligations" means any indebtedness, expenses or liabilities of the Trust,
other than obligations of the Trust to pay to Holders or other similar
interests in the Trust the amounts due such Holders pursuant to the terms of
the Preferred Securities or such other similar interests, as the case may be.
This guarantee and assumption is intended to be for the benefit, of, and to be
enforceable by, all such Beneficiaries, whether or not such Beneficiaries have
received notice hereof.
SECTION 10.02. LIMITATION OF RIGHTS OF SECURITYHOLDERS. The
death or incapacity of any person having an interest, beneficial or otherwise,
in a Trust Security shall not operate to terminate this Trust Agreement, nor
entitle the legal representatives or heirs of such person or any Securityholder
for such person, to claim an accounting, take any action or bring any
proceeding in any court for a partition or winding up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
SECTION 10.03. AMENDMENT.
(a) This Trust Agreement may be amended from time to time (on
approval of a majority of the Administrative Trustees of the Trust and the
Depositor, without the consent of any Securityholders, (i) to cure any
ambiguity, correct or supplement any provision herein or therein which may be
inconsistent with any other provision herein or therein, or to make any other
provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of this
Trust Agreement, provided, however, that any such amendment shall not adversely
affect in any material respect the interests of any Securityholder or (ii) to
modify, eliminate or add to any provisions of this Trust Agreement to such
extent as shall be necessary to ensure that the Trust will not be classified
for United States federal income tax purposes other than as a "grantor trust"
and not as an association taxable as a corporation at any time that any Trust
Securities are outstanding or to ensure the Trust's exemption from the status
of an "investment company" under the Investment Company Act of 1940, as
amended; provided, however, that, except in the case of clause (ii), such
action shall not adversely affect in any material respect the interests of any
Securityholder and, in the case of clause (i), any amendments of this Trust
Agreement shall become effective when notice thereof is given to the
Securityholders.
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<PAGE> 56
(b) Except as provided in Section 10.03(c), any provision of
this Trust Agreement may be amended by the Trustees and the Depositor with (i)
the consent of Holders of Trust Securities representing not less than a
majority (based upon Liquidation Amounts) of the Trust Securities then
outstanding and (ii) receipt by the Trustees of an Opinion of Counsel to the
effect that such amendment or the exercise of any power granted to the Trustee
in accordance with such amendment will not affect the Trust's status as a
grantor trust for federal income tax purposes or the Trust's exemption from
status of an "investment company" under the Investment Company Act of 1940, as
amended.
(c) In addition to and notwithstanding any other provision in
this Trust Agreement, without the consent of each affected Securityholder (such
consent being obtained in accordance with Section 6.03 or 6.06), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount
of any Distribution required to be made in respect of the Trust Securities as
of a specified date or (ii) restrict the right of a Securityholder to institute
suit for the enforcement of any such payment on or after such date.
(d) Notwithstanding any other provisions of this Trust
Agreement, no Trustee shall enter into or consent to any amendment to this
Trust Agreement which would cause the Trust to fail or cease to qualify for the
exemption from status of an "investment company" under the Investment Company
Act of 1940, as amended, afforded by Rule 3a-5 thereunder.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor, this Trust Agreement may not be
amended in a manner which imposes any additional obligation on the Depositor.
(f) In the event that any amendment to this Trust Agreement
is made, the Administrative Trustees shall promptly provide to the Depositor a
copy of such amendment.
SECTION 10.04. SEPARABILITY. In case any provision in this
Trust Agreement or in the Trust Securities Certificates shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.05. GOVERNING LAW. THIS TRUST AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND THE
TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE
(WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).
SECTION 10.06. SUCCESSORS. This Trust Agreement shall be
binding upon and shall inure to the benefit of any successor to the Trust or
the Relevant Trustees or any of them, including any successor by operation of
law.
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<PAGE> 57
SECTION 10.07. HEADINGS. The Article and Section headings
are for convenience only and shall not affect the construction of this Trust
Agreement.
SECTION 10.08. NOTICE AND DEMAND. Any notice, demand or
other communication which by any provision of this Trust Agreement is required
or permitted to be given or served to or upon any Securityholder or the
Depositor may be given or served in writing by deposit thereof, postage
prepaid, in the United States mail, hand delivery or facsimile transmission, in
each case, addressed, (i) in the case of a Preferred Securityholder, to such
Preferred Securityholder as such Securityholder's name and address may appear
on the Securities Register and (ii) in the case of the Common Securityholder or
the Depositor, to Texas Utilities Electric Company, Energy Plaza, 1601 Bryan
Street, Dallas, Texas 75201, Attention: Treasurer, facsimile no. 214-812-2488,
with a copy to the Secretary, facsimile no. 214-812-2488. Such notice, demand
or other communication to or upon a Securityholder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission.
Any notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or
served to or upon the Trust, the Property Trustee, the Delaware Trustee or the
Administrative Trustees shall be given in writing addressed (until another
address is published by the Trust) as follows: (i) with respect to the
Property Trustee or the Delaware Trustee, The Bank of New York, 101 Barclay
Street, 21 West, New York, NY 10286, Attention: Corporate Trust Department with
a copy to: The Bank of New York (Delaware), White Clay Center, Route 273,
Newark, Delaware 19711, Attention: Corporate Trust Department and (ii) with
respect to the Administrative Trustees, at the address above for notice to the
Depositor, marked "Attention: Administrative Trustees for TU Electric Capital
I". Such notice, demand or other communication to or upon the Trust or the
Property Trustee shall be deemed to have been sufficiently given or made only
upon actual receipt of the writing by the Trust or the Property Trustee.
SECTION 10.09. AGREEMENT NOT TO PETITION. Each of the
Trustees and the Depositor agrees for the benefit of the Securityholders that,
until at least one year and one day after the Trust has been terminated in
accordance with Article IX, it shall not file, or join in the filing of, a
petition against the Trust under any bankruptcy, reorganization, arrangement,
insolvency, liquidation or other similar law (including, without limitation,
the United States Bankruptcy Code) (collectively, "Bankruptcy Laws") or
otherwise join in the commencement of any proceeding against the Trust under
any Bankruptcy Law. In the event the Depositor takes action in violation of
this Section 10.09, the Property Trustee agrees, for the benefit of
Securityholders, that it shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor against
the Trust or the commencement of such action and raise the defense that the
Depositor has agreed in writing not to take such action and should be stopped
and precluded therefrom and such other defenses, if any, as counsel for the
Property Trustee or the Trust may assert. The provisions of this Section 10.09
shall survive the termination of this Trust Agreement.
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<PAGE> 58
SECTION 10.10. CONFLICT WITH TRUST INDENTURE ACT. (a) This
Trust Agreement is subject to the provisions of the Trust Indenture Act that
are required to be part of this Trust Agreement and shall, to the extent
applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts
with another provision hereof which is required to be included in this Trust
Agreement by any of the provisions of the Trust Indenture Act, such required
provision shall control.
(d) The application of the Trust Indenture Act to this Trust
Agreement shall not affect the nature of the Securities as equity securities
representing interests in the Trust.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON
BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST
SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND THE
AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THOSE TERMS
AND PROVISIONS SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST
AND SUCH SECURITYHOLDER AND SUCH OTHERS.
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<PAGE> 59
IN WITNESS WHEREOF, the parties have caused this Amended and Restated Trust
Agreement to be duly executed, all as of the day and year first above written.
TEXAS UTILITIES ELECTRIC COMPANY
By: /s/ Cathryn Hulen
-----------------------------------------
Title: Treasurer and Assistant Secretary
THE BANK OF NEW YORK,
as Property Trustee
By: /s/ Walter N. Gitlin
-----------------------------------------
Title: Vice President
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Joseph F. Leary
-----------------------------------------
Title: Vice President
/s/ Wayne Patterson
-----------------------------------------
Wayne Patterson
solely in his capacity as Administrative
Trustee
/s/ Cathryn Hulen
-----------------------------------------
Cathryn Hulen
solely in her capacity as Administrative
Trustee
/s/ Michael Perkins
-----------------------------------------
Michael Perkins
solely in his capacity as Administrative
Trustee
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<PAGE> 60
/s/ Laura Anderson
-----------------------------------------
Laura Anderson
solely in her capacity as Administrative
Trustee
/s/ John Casey
-----------------------------------------
John Casey
solely in his capacity as Administrative
Trustee
-53-
<PAGE> 61
EXHIBIT A
CERTIFICATE OF TRUST
OF
TU ELECTRIC CAPITAL I
THIS CERTIFICATE OF TRUST of TU Electric Capital I (the
"Trust"), dated as of September __, 1995, is being duly executed and filed by
the undersigned, as trustees, to form a business trust under the Delaware
Business Trust Act (12 Del. C. Section 3801, et seq.).
1. Name. The name of the business trust being formed hereby
is TU Electric Capital I.
2. Delaware Trustee. The name and business address of the
trustee of the Trust with a principal place of business in the State of
Delaware are The Bank of New York (Delaware), White Clay Center, Route 273,
Newark, New Castle County, Delaware 19711.
3. Effective Date. This Certificate of Trust shall be
effective as of its filing.
IN WITNESS WHEREOF, the undersigned, being the only trustees
of the Trust, have executed this Certificate of Trust as of the date first
above written.
THE BANK OF NEW YORK (DELAWARE), WAYNE PATTERSON,
not in its individual capacity not in his individual capacity
but solely as Trustee but solely as Trustee
By: By:
------------------------------ ---------------------------
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee
By:
------------------------------
Name:
Title:
A-1
<PAGE> 62
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate Number Number of Common Securities
C-1
Certificate Evidencing Common Securities
of
TU Electric Capital I
Common Securities
(liquidation amount $25 per Common Security)
TU Electric Capital I, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), hereby certifies that Texas
Utilities Electric Company (the "Holder") is the registered owner of _____
(_____) common securities of the Trust representing undivided beneficial
interests in the assets of the Trust and designated the Common Securities
(liquidation amount $25 per Common Security) (the "Common Securities"). In
accordance with Section 5.10 of the Trust Agreement (as defined below) the
Common Securities are not transferable and any attempted transfer hereof shall
be void. The designations, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities are set forth in, and this
certificate and the Common Securities represented hereby are issued and shall
in all respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Trust dated as of _______ ___, 1995, as the
same may be amended from time to time (the "Trust Agreement"), including the
designation of the terms of the Common Securities as set forth therein. The
Trust will furnish a copy of the Trust Agreement to the Holder without charge
upon written request to the Trust at its principal place of business or
registered office.
Upon receipt of this certificate, the Holder is bound by the
Trust Agreement and is entitled to the benefits thereunder.
B-1
<PAGE> 63
IN WITNESS WHEREOF, an Administrative Trustee of the Trust has
executed this certificate this ____ day of _________, 1995.
TU Electric Capital I
By:
-----------------------------------------
not in his (her) individual capacity, but
solely as Administrative Trustee
B-2
<PAGE> 64
EXHIBIT C
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of ________ ___, 1995, between Texas
Utilities Electric Company, a Texas corporation ("TU Electric"), and TU
Electric Capital I, a Delaware business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the
"Common Securities") to and receive Debentures from TU Electric and to issue
its ___% Trust Originated Preferred Securities, Series A (the "Preferred
Securities") with such powers, preferences and special rights and restrictions
as are set forth in the Amended and Restated Trust Agreement of the Trust dated
as of ________ __, 1995 as the same may be amended from time to time (the
"Trust Agreement");
WHEREAS, TU Electric is the issuer of the Debentures;
NOW, THEREFORE, in consideration of the acceptance by each
holder of the Preferred Securities, which acceptance TU Electric hereby agrees
shall benefit TU Electric and which acceptance TU Electric acknowledges will be
made in reliance upon the execution and delivery of this Agreement, TU
Electric, including in its capacity as holder of the Common Securities, and the
Trust hereby agree as follows:
ARTICLE I
Section 1.01. Assumption by TU Electric. Subject to the
terms and conditions hereof, TU Electric hereby irrevocably and unconditionally
assumes the full payment, when and as due, of any and all Obligations (as
hereinafter defined) to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries"). As used herein,
"Obligations" means any indebtedness, expenses or liabilities of the Trust,
other than (i) obligations of the Trust to pay to holders of any Preferred
Securities or other similar interests in the Trust the amounts due such holders
pursuant to the terms of the Preferred Securities or such other similar
interests, as the case may be and (ii) obligations arising out of the
negligence, willful misconduct or bad faith of the Trustees of the Trust. This
Agreement is intended to be for the benefit of, and to be enforceable by, all
such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.
Section 1.02. Term of Agreement. This Agreement shall
terminate and be of no further force and effect upon the date on which there
are no Beneficiaries remaining; provided, however, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of Preferred Securities or any Beneficiary must restore payment
of any sums paid under the Preferred Securities, under any Obligation, under
the Guarantee Agreement dated the date hereof by TU Electric and The Bank of
New York, as guarantee trustee, or under this Agreement for any reason
whatsoever. This Agreement is continuing, irrevocable, unconditional and
absolute.
C-1
<PAGE> 65
Section 1.03. Waiver of Notice. TU Electric hereby waives
notice of acceptance of this Agreement and of any Obligation to which it
applies or may apply, and TU Electric hereby waives presentment, demand for
payment, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
Section 1.04. No Impairment. The obligations, covenants,
agreements and duties of TU Electric under this Agreement shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
(a) the extension of time for the payment by the Trust of all
or any portion of the Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the Obligations
or any action on the part of the Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt or, or other similar proceedings affecting, the Trust or
any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, TU Electric with respect to the happening of any of the
foregoing.
Section 1.05. Enforcement. A Beneficiary may enforce this
Agreement directly against TU Electric and TU Electric waives any right or
remedy to require that any action be brought against the Trust or any other
person or entity before proceeding against TU Electric.
ARTICLE II
Section 2.01. Binding Effect. All guarantees and agreements
contained in this Agreement shall bind the successors, assigns, receivers,
trustees and representatives of TU Electric and shall inure to the benefit of
the Beneficiaries.
Section 2.02. Amendment. So long as there remains any
Beneficiary or any Preferred Securities of any series are outstanding, this
Agreement shall not be modified or amended in any manner adverse to such
Beneficiary or to the holders of the Preferred Securities.
Section 2.03. Notices. Any notice, request or other
communication required or permitted to be given hereunder shall be given in
writing by delivering the same against
C-2
<PAGE> 66
receipt therefor by facsimile transmission (confirmed by mail), telex or by
registered or certified mail, addressed as follows (and if so given, shall be
deemed given when mailed or upon receipt of an answer-back, if sent by telex),
to wit:
TU Electric Capital I
c/o [Trustee]
Facsimile No.:
Attention:
Texas Utilities Electric Company
Facsimile No.:
Attention:
Section 2.04 THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).
THIS AGREEMENT is executed as of the day and year first above
written.
TEXAS UTILITIES ELECTRIC COMPANY
By:
-------------------------------------------
Name:
Title:
TU ELECTRIC CAPITAL I
By:
-------------------------------------------
Wayne Patterson
not in his individual capacity, but solely
as Administrative Trustee
-------------------------------------------
Cathryn Hulen
not in her individual capacity, but solely
as Administrative Trustee
-------------------------------------------
Michael Perkins
not in his individual capacity, but solely
as Administrative Trustee
C-3
<PAGE> 67
-------------------------------------------
Laura Anderson
not in her individual capacity, but solely
as Administrative Trustee
-------------------------------------------
John Casey
not in his individual capacity, but solely
as Administrative Trustee
C-4
<PAGE> 68
EXHIBIT D
Certificate Number Number of Preferred Securities
TP- CUSIP NO. 87305D 20 9
Certificate Evidencing Preferred Securities
of
TU Electric Capital I
8.25% Trust Originated Preferred Securities
liquidation amount $25 per Preferred Security)
TU Electric Capital I, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), hereby certifies that
____________ (the "Holder") is the registered owner of _____ (_____) preferred
securities of the Trust representing an undivided beneficial interest in the
assets of the Trust and designated the TU Electric Capital I 9.00% Trust
Originated Preferred Securities, Series A (liquidation amount $25 per Preferred
Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in Section 5.04 of the Trust Agreement (as
defined below). The designations, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities represented hereby
are issued and shall in all respects be subject to the terms and provisions of,
the Amended and Restated Trust Agreement of the Trust dated as of December 1,
1995, as the same may be amended from time to time (the "Trust Agreement")
including the designation of the terms of Preferred Securities as set forth
therein. The holder of this certificate is entitled to the benefits of the
Guarantee Agreement of Texas Utilities Electric Company, a Texas corporation,
and The Bank of New York, as guarantee trustee, dated as of December 1, 1995
(the "Guarantee") to the extent provided therein. The Trust will furnish a
copy of the Trust Agreement and the Guarantee to the holder of this certificate
without charge upon written request to the Trust at its principal place of
business or registered office.
Upon receipt of this certificate, the holder of this
certificate is bound by the Trust Agreement and is entitled to the benefits
thereunder.
D-1
<PAGE> 69
IN WITNESS WHEREOF, one of the Administrative Trustees of the
Trust has executed this certificate for and on behalf of the Trust.
Dated:
TU ELECTRIC CAPITAL I
By:
---------------------------------------
Cathryn Hulen
not in his (her) individual capacity,
but solely as Administrative Trustee
Countersigned and Registered:
TEXAS UTILITIES SERVICES INC.,
Transfer Agent and Registrar
By:
---------------------------------------
(Authorized Signature)
THE BANK OF NEW YORK, as agent
for the Transfer Agent and Registrar
By:
---------------------------------------
(Authorized Signature)
D-2
<PAGE> 70
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
of the Preferred Securities represented by this Certificate and irrevocably
appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
attorney to transfer such Preferred Securities on the books of the Trust. The
attorney may substitute another to act for him or her.
Date:
------------------
Signature:
------------------------
(Sign exactly as your name appears on the other side of this Preferred
Securities Certificate)
Signature:
------------------------
(Sign exactly as your name appears on the other side of this Preferred
Securities Certificate)
D-3
<PAGE> 1
Exhibit 4(h)
GUARANTEE AGREEMENT
Between
Texas Utilities Electric Company
(as Guarantor)
and
The Bank of New York
(as Trustee)
dated as of
December 1, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.01 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02 Lists of Holders of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.03 Reports by the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.04 Periodic Reports to Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.05 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.06 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.07 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.08 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.01 Powers and Duties of the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.02 Certain Rights of Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.01 Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.02 Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.02 Appointment, Removal and Resignation of
Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.01 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.02 Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.03 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.04 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.05 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.06 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.07 Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.01 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.01 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.02 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.04 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.05 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 8.06 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 4
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
- ------------------- ----------
<S> <C>
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01(c), 2.08
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01, 2.05, 3.02
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01, 3.02
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(d)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.07
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(d)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.04(a), 2.06
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.03
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(b)
318(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
318(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(a)
</TABLE>
_____________
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms
or provisions.
<PAGE> 5
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of
December 1, 1995, is executed and delivered by Texas Utilities Electric
Company, a Texas corporation (the "Guarantor"), and The Bank of New York, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Securities (as defined herein) of TU
Electric Capital I, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement
(the "Trust Agreement"), dated as of December 1, 1995 between the Trustees of
the Issuer named therein, Texas Utilities Electric Company, as Depositor and
the several Holders (as defined therein) the Issuer is issuing as of the date
hereof $150,223,075 aggregate liquidation amount of its 8.20% Trust Originated
Preferred Securities (the "Preferred Securities") representing ownership
interests in the Issuer and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities are to be issued by the
Issuer to the Depositor (as defined in the Trust Agreement) in exchange for
$154,869,150 principal amount of Debentures (as defined in the Trust
Agreement); and
WHEREAS, the Preferred Securities are to be offered by the
Depositor in exchange for certain securities of the Depositor, and
WHEREAS, in order to enhance the value of the Preferred
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the purchase of
Debentures, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders from time to time.
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. As used in this Guarantee
Agreement, the terms set forth below shall, unless the context otherwise
requires, have the following meanings. Capitalized or otherwise defined terms
used but not otherwise defined herein shall have the meanings assigned to such
terms in the Trust Agreement as in effect on the date hereof.
<PAGE> 6
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Common Securities" means the securities representing common
ownership interests in the assets of the Issuer.
"Event of Default" means a default by the Guarantor on any of
its payment obligations under this Guarantee Agreement.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by or on behalf of the Issuer: (i) any accrued
and unpaid Distributions that are required to be paid on such Preferred
Securities but only if and to the extent that the Property Trustee has
available in the Payment Account funds sufficient to make such payment, (ii)
the redemption price (the "Redemption Price"), and all accrued and unpaid
Distributions to the date of redemption, with respect to the Preferred
Securities called for redemption by the Issuer but only if and to the extent
that the Property Trustee has available in the Payment Account funds sufficient
to make such payment, (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with a
redemption of all of the Preferred Securities), the lesser of (a) the aggregate
of the Liquidation Amount and all accrued and unpaid Distributions on the
Preferred Securities to the date of payment but only if and to the extent that
the Property Trustee has available in the Payment Account funds sufficient to
make such payment, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Guarantee Agreement and thereafter
means each such Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities then outstanding; provided,
however, that in determining whether the holders of the requisite percentage of
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include the Guarantor or any Affiliate of the
Guarantor.
-2-
<PAGE> 7
"Indenture" means the Indenture dated as of December 1, 1995,
among the Guarantor (the "Debenture Issuer") and The Bank of New York, as
trustee pursuant to which the Debentures are issued.
"Majority in liquidation amount of the Preferred Securities"
means a vote by Holders, voting separately as a class, of more than 50% of the
aggregate liquidation amount of all Preferred Securities.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Guarantor, and delivered to the Guarantee Trustee.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Responsible Officer" means, with respect to the Guarantee
Trustee, any vice-president, any assistant vice-president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or assistant trust officer or any other officer of the Corporate Trust
Department of the Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under Section
4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
-3-
<PAGE> 8
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01 TRUST INDENTURE ACT; APPLICATION.
(a) This Guarantee Agreement is subject to the provisions of
the Trust Indenture Act that are required or deemed to be part of this
Guarantee Agreement and shall, to the extent applicable, be governed by such
provisions; and
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.02 LISTS OF HOLDERS OF PREFERRED SECURITIES.
(a) The Guarantor shall furnish or cause to be furnished to
the Guarantee Trustee (a) semiannually, not later than December 31 and June 30
in each year, a list, in such form as the Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") as of a
date not more than 15 days prior to the delivery thereof, and (b) at such other
times as the Guarantee Trustee may request in writing, within 30 days after the
receipt by the Guarantor of any such request, a List of Holders as of a date
not more than 15 days prior to the time such list is furnished; provided that,
the Guarantor shall not be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent List of Holders
given to the Guarantee Trustee by the Guarantor. The Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Guarantee Trustee shall comply with its obligations
under Section 311(a) of the Trust Indenture Act (subject to the provisions of
Section 311(b) of the Trust Indenture Act) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.03 REPORTS BY THE GUARANTEE TRUSTEE. Within 60
days after December 31 of each year, commencing December 31, 1996, the
Guarantee Trustee shall provide to the Holders such reports, if any, as are
required by Section 313(a) of the Trust Indenture Act in the form and in the
manner provided by Section 313(a) of the Trust Indenture Act. The Guarantee
Trustee shall also comply with the requirements of Sections 313(b), (c) and (d)
of the Trust Indenture Act.
SECTION 2.04 PERIODIC REPORTS TO GUARANTEE TRUSTEE. The
Guarantor shall provide to the Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust
-4-
<PAGE> 9
Indenture Act in the form, in the manner and at the times required by Section
314 of the Trust Indenture Act.
SECTION 2.05 EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT. The Guarantor shall provide to the Guarantee Trustee such evidence
of compliance with any conditions precedent provided for in this Guarantee
Agreement as and to the extent required by Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) of the Trust Indenture Act may be given in the
form of an Officers' Certificate.
SECTION 2.06 EVENTS OF DEFAULT; WAIVER. The Holders of a
Majority in liquidation amount of Preferred Securities may, by vote, on behalf
of all of the Holders, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Guarantee Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.07 EVENT OF DEFAULT; NOTICE.
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default known to the
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided that, the Guarantee Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors or Responsible Officers of the
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Guarantee Trustee shall have
received written notice, or a Responsible Officer charged with the
administration of the Trust Agreement shall have obtained written notice, of
such Event of Default.
SECTION 2.08 CONFLICTING INTERESTS. The Trust Agreement
and the Indenture shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.01 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.
-5-
<PAGE> 10
(a) This Guarantee Agreement shall be held by the Guarantee
Trustee for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee Agreement or any rights hereunder to any Person except
a Holder exercising his or her rights pursuant to Section 5.04 or to a
Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee
of its appointment to act as Successor Guarantee Trustee. The right, title and
interest of the Guarantee Trustee shall automatically vest in any Successor
Guarantee Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Guarantee Trustee.
(b) The Guarantee Trustee, prior to the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Guarantee Agreement, and no implied covenants or obligations
shall be read into this Guarantee Agreement against the Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.06), the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(c) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of Default
that may have occurred:
(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the
express provisions of this Guarantee Agreement, and
the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement;
and
(B) in the absence of bad faith on the part
of the Guarantee Trustee, the Guarantee Trustee may
conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished
to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the
case of any such certificates or opinions that by any
provision hereof are specifically required to be
furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Guarantee Agreement;
-6-
<PAGE> 11
(ii) the Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer of the Guarantee Trustee, unless it shall be proved
that the Guarantee Trustee or such Responsible Officer was
negligent in ascertaining the pertinent facts upon which such
judgment was made;
(iii) the Guarantee Trustee shall not be liable
with respect to any action taken or omitted to be taken by it
in good faith in accordance with the direction of the Holders
of a Majority in liquidation amount of the Preferred
Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the
Guarantee Trustee, or exercising any trust or power conferred
upon the Guarantee Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement
shall require the Guarantee Trustee to expend or risk its own
funds or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity
against such risk or liability is not reasonably assured to
it.
SECTION 3.02 CERTAIN RIGHTS OF GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.01:
(i) the Guarantee Trustee may rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document reasonably believed by it to be genuine and to
have been signed, sent or presented by the proper party or
parties;
(ii) any direction or act of the Guarantor
contemplated by this Guarantee Agreement shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever, in the administration of this
Guarantee Agreement, the Guarantee Trustee shall deem it
desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the
Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly
delivered by the Guarantor;
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<PAGE> 12
(iv) the Guarantee Trustee may consult with counsel
of its choice, and the written advice or opinion of such
counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion; such counsel may be
counsel to the Guarantor or any of its Affiliates and may
include any of its employees; the Guarantee Trustee shall have
the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of
competent jurisdiction;
(v) the Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Guarantee Agreement at the request or direction of
any Holder, unless such Holder shall have provided to the
Guarantee Trustee such adequate security and indemnity as
would satisfy a reasonable person in the position of the
Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Guarantee Trustee; provided that, nothing contained in this
Section 3.02(a)(v) shall be taken to relieve the Guarantee
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Guarantee Agreement;
(vi) the Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document reasonably believed by it to be genuine, but the
Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may
see fit;
(vii) the Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys, and the
Guarantee Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(viii) whenever in the administration of this
Guarantee Agreement the Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder, the
Guarantee Trustee (1) may request instructions from the
Holders, (2) may refrain from enforcing such remedy or right
or taking such other action until such instructions are
received, and (3) shall be protected in acting in accordance
with such instructions; and
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<PAGE> 13
(ix) the Guarantee Trustee shall not be liable for
any action taken, suffered, or omitted to be taken by it in
good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by
this Guarantee.
(b) No provision of this Guarantee Agreement shall be deemed
to impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee
Trustee shall be construed to be a duty.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01 GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000), and subject
to supervision or examination by Federal, State, Territorial
or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining
authority referred to above, then, for the purposes of this
Section 4.01(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.01(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in
Section 4.03(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Guarantee
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<PAGE> 14
Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.02 COMPENSATION AND REIMBURSEMENT.
The Guarantor agrees:
(a) to pay the Guarantee Trustee from time to time such
reasonable compensation as the Guarantor and the Guarantee Trustee shall from
time to time agree in writing for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Guarantee Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Guarantee Trustee in
accordance with the provisions of this Guarantee (including the reasonable
compensation and expenses of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(c) to indemnify each of the Guarantee Trustee and any
predecessor Guarantee Trustee for, and to hold it harmless from and against,
any and all loss, damage, claim, liability or expense, including taxes (other
than taxes based upon the income of the Guarantee Trustee) incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance of the administration of this Guarantee Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any its powers or duties
hereunder.
As security for the performance of the obligations of the
Guarantor under this Section, the Guarantee Trustee shall have a lien prior to
the Preferred Securities upon all the property and funds held or collected by
the Guarantee Trustee as such, except funds held in trust for the payment of
principal of, and premium (if any) or interest on, particular obligations of
the Guarantor under this Guarantee Agreement.
The provisions of this Section shall survive the termination
of this Guarantee Agreement.
SECTION 4.03 APPOINTMENT, REMOVAL AND RESIGNATION OF
GUARANTEE TRUSTEE.
(a) Subject to Section 4.03(b), unless an Event of Default
shall have occurred and be continuing, the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
-10-
<PAGE> 15
(b) The Guarantee Trustee shall not be removed until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Guarantee Trustee
and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold
office until a Successor Guarantee Trustee shall have been appointed or until
its removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
executed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by instrument in writing executed
by such Successor Guarantee Trustee and delivered to the Guarantor and the
resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.03 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Guarantee Trustee may petition any court of competent jurisdiction
for appointment of a Successor Guarantee Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper, appoint a
Successor Guarantee Trustee.
(e) The Guarantor shall give notice of each resignation and
each removal of the Guarantee Trustee and each appointment of a successor
Guarantee Trustee to all Holders in the manner provided in Section 8.03 hereof.
Each notice shall include the name of the successor Guarantee Trustee and the
address of its Corporate Trust Office.
ARTICLE V
GUARANTEE
SECTION 5.01 GUARANTEE. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by the Issuer), as and when
due, regardless of any defense, right of set-off or counterclaim which the
Issuer may have or assert. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.
SECTION 5.02 WAIVER OF NOTICE AND DEMAND. The Guarantor
hereby waives notice of acceptance of this Guarantee Agreement and of any
liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
-11-
<PAGE> 16
SECTION 5.03 OBLIGATIONS NOT AFFECTED. The obligation of
the Guarantor to make the Guarantee Payments under this Guarantee Agreement
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of
all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the
Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Preferred Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Preferred Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 5.03 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04 RIGHTS OF HOLDERS. The Guarantor expressly
acknowledges that: (i) this Guarantee Agreement will be deposited with the
Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee
Trustee has the right to enforce this
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<PAGE> 17
Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority
in liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee Agreement
without first instituting a legal proceeding against the Issuer or any other
person or entity.
SECTION 5.05 GUARANTEE OF PAYMENT. This Guarantee
Agreement creates a guarantee of payment and not of collection. This Guarantee
Agreement will not be discharged except by payment of the Guarantee Payments in
full (without duplication).
SECTION 5.06 SUBROGATION. The Guarantor shall be
subrogated to all (if any) rights of the Holders against the Issuer in respect
of any amounts paid to the Holders by the Guarantor under this Guarantee
Agreement; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee Agreement, if, at the time of any such payment,
any amounts of Guarantee Payments are due and unpaid under this Guarantee
Agreement. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
SECTION 5.07 INDEPENDENT OBLIGATIONS. The Guarantor
acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Preferred Securities and that the Guarantor
shall be liable as principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee Agreement notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 5.03.
ARTICLE VI
SUBORDINATION
SECTION 6.01 SUBORDINATION. This Guarantee Agreement will
constitute an unsecured obligation of the Guarantor and will rank (i)
subordinate and junior in right of payment to all other liabilities of the
Guarantor, including the Debentures, except those made pari passu or
subordinate by their terms, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Guarantor and with any
guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor, and (iii)
senior to all common stock of the Guarantor. Nothing in
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<PAGE> 18
this Section 6.01 shall apply to claims of, or payments to, the Guarantee
Trustee under or pursuant to Section 4.02 hereof.
ARTICLE VII
TERMINATION
SECTION 7.01 TERMINATION. This Guarantee Agreement shall
terminate and be of no further force and effect upon: (i) full payment of the
Redemption Price of all Preferred Securities, and all accrued and unpaid
Distributions to the date of redemption, (ii) the distribution of Debentures to
Holders in exchange for all of the Preferred Securities or (iii) full payment
of the amounts payable in accordance with the Trust Agreement upon liquidation
of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid with respect to Preferred
Securities or under this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 SUCCESSORS AND ASSIGNS. All guarantees and
agreements contained in this Guarantee Agreement shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Preferred Securities then
outstanding. Except in connection with a consolidation, merger or sale
involving the Guarantor that is permitted under Article Eleven of the
Indenture, the Guarantor shall not assign its obligations hereunder.
SECTION 8.02 AMENDMENTS. This Guarantee Agreement may be
amended only by an instrument in writing entered into by the Guarantor and the
Guarantee Trustee. Except with respect to any changes which do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Guarantee Agreement may only be amended with the prior approval
of the Holders of not less than 66 2/3% in aggregate liquidation amount of all
the outstanding Preferred Securities. The provisions of Article VI of the
Trust Agreement concerning meetings of Holders shall apply to the giving of
such approval. Nothing herein contained shall be deemed to require that the
Guarantee Trustee enter into any amendment of this Guarantee Agreement.
SECTION 8.03 NOTICES. Any notice, request or other
communication required or permitted to be given hereunder shall be in writing,
duly signed by the party giving such notice, and delivered, telecopied or
mailed by first class mail as follows:
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<PAGE> 19
(a) if given to the Guarantor, to the address set forth below
or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities:
Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
Facsimile No: 214-812-2488
Attention: Treasurer
(b) if given to the Issuer, in care of the Administrative
Trustees, at the Issuer's (and the Administrative Trustee's) address
set forth below or such other address as the Administrative Trustees
on behalf of the Issuer may give notice of to the Holders:
TU Electric Capital I
c/o Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
Facsimile No: 214-812-2488
Attention: Administrative Trustees
(c) if given to the Guarantee Trustee, to the address set
forth below or such other address as the Guarantee Trustee may give
notice of to the Holders of the Preferred Securities:
The Bank of New York
101 Barclay Street
21 West
New York, New York 10286
Facsimile No: (212) 815-5915
Attention: Corporate Trust Trustee Administration
(d) if given to any Holder, at the address set forth on the
books and records of the Issuer.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
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<PAGE> 20
SECTION 8.04 BENEFIT. This Guarantee Agreement is solely
for the benefit of the Holders and, subject to Section 3.01(a), is not
separately transferable from the Preferred Securities.
SECTION 8.05 INTERPRETATION. In this Guarantee Agreement,
unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but
not defined in the preamble hereto have the respective meanings
assigned to them in Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement has
the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified,
supplemented or amended from time to time;
(d) all references in this Guarantee Agreement to Articles
and Sections are to Articles and Sections of this Guarantee Agreement
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined
in this Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa; and
(g) the masculine, feminine or neuter genders used herein
shall include the masculine, feminine and neuter genders.
SECTION 8.06 GOVERNING LAW. THIS GUARANTEE AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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<PAGE> 21
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
Texas Utilities Electric Company
By: /s/ Cathryn Hulen
------------------------------------
Name: Cathryn Hulen
Title: Treasurer and Assistant
Secretary
The Bank of New York,
as Guarantee Trustee
By: /s/ Walter N. Gitlin
------------------------------------
Name: Walter N. Gitlin
Title: Vice President
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<PAGE> 1
Exhibit 4(i)
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of December 1, 1995, between Texas
Utilities Electric Company, a Texas corporation ("TU Electric"), and TU
Electric Capital I, a Delaware business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the
"Common Securities") to and receive Debentures from TU Electric and to issue
its 8.25% Trust Originated Preferred Securities (the "Preferred Securities")
with such powers, preferences and special rights and restrictions as are set
forth in the Amended and Restated Trust Agreement of the Trust dated as of
December 1, 1995 as the same may be amended from time to time (the "Trust
Agreement");
WHEREAS, TU Electric is the issuer of the Debentures;
NOW, THEREFORE, in consideration of the acceptance by each
holder of the Preferred Securities, which acceptance TU Electric hereby agrees
shall benefit TU Electric and which acceptance TU Electric acknowledges will be
made in reliance upon the execution and delivery of this Agreement, TU
Electric, including in its capacity as holder of the Common Securities, and the
Trust hereby agree as follows:
ARTICLE I
Section 1.01. Assumption by TU Electric. Subject to the
terms and conditions hereof, TU Electric hereby irrevocably and unconditionally
assumes the full payment, when and as due, of any and all Obligations (as
hereinafter defined) to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries"). As used herein,
"Obligations" means any indebtedness, expenses or liabilities of the Trust,
other than (i) obligations of the Trust to pay to holders of any Preferred
Securities or other similar interests in the Trust the amounts due such holders
pursuant to the terms of the Preferred Securities or such other similar
interests, as the case may be and (ii) obligations arising out of the
negligence, willful misconduct or bad faith of the Trustees of the Trust. This
Agreement is intended to be for the benefit of, and to be enforceable by, all
such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.
Section 1.02. Term of Agreement. This Agreement shall
terminate and be of no further force and effect upon the date on which there
are no Beneficiaries remaining; provided, however, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of Preferred Securities or any Beneficiary must restore payment
of any sums paid under the Preferred Securities, under any Obligation, under
the Guarantee Agreement dated the date hereof by TU Electric and The Bank of
New
<PAGE> 2
York, as guarantee trustee, or under this Agreement for any reason whatsoever.
This Agreement is continuing, irrevocable, unconditional and absolute.
Section 1.03. Waiver of Notice. TU Electric hereby waives
notice of acceptance of this Agreement and of any Obligation to which it
applies or may apply, and TU Electric hereby waives presentment, demand for
payment, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
Section 1.04. No Impairment. The obligations, covenants,
agreements and duties of TU Electric under this Agreement shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
(a) the extension of time for the payment by the Trust of all
or any portion of the Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the Obligations
or any action on the part of the Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust or
any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, TU Electric with respect to the happening of any of the
foregoing.
Section 1.05. Enforcement. A Beneficiary may enforce this
Agreement directly against TU Electric and TU Electric waives any right or
remedy to require that any action be brought against the Trust or any other
person or entity before proceeding against TU Electric.
ARTICLE II
Section 2.01. Binding Effect. All guarantees and agreements
contained in this Agreement shall bind the successors, assigns, receivers,
trustees and representatives of TU Electric and shall inure to the benefit of
the Beneficiaries.
Section 2.02. Amendment. So long as there remains any
Beneficiary or any Preferred Securities of any series are outstanding, this
Agreement shall not be modified or
<PAGE> 3
amended in any manner adverse to such Beneficiary or to the holders of the
Preferred Securities.
Section 2.03. Notices. Any notice, request or other
communication required or permitted to be given hereunder shall be given in
writing by delivering the same against receipt therefor by facsimile
transmission (confirmed by mail), telex or by registered or certified mail,
addressed as follows (and if so given, shall be deemed given when mailed or
upon receipt of an answer-back, if sent by telex), to wit:
TU Electric Capital I
c/o Wayne Patterson, Administrative Trustee
1601 Bryan Street
Dallas, Texas 75201
Facsimile No.: 214-812-2488
Texas Utilities Electric Company
1601 Bryan Street
Dallas, Texas 75201
Facsimile No.: 214-812-2488
Attention: Treasurer
Section 2.04 THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).
<PAGE> 4
THIS AGREEMENT is executed as of the day and year first above
written.
TEXAS UTILITIES ELECTRIC COMPANY
By: /s/ Cathryn Hulen
------------------------------------------
Name: Cathryn Hulen
Title: Treasurer and Assistant Secretary
TU ELECTRIC CAPITAL I
By: /s/ Laura Anderson
------------------------------------------
Laura Anderson
not in her individual capacity, but solely
as Administrative Trustee
<PAGE> 1
Exhibit 4(j)
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
between
TEXAS UTILITIES ELECTRIC COMPANY, as Depositor
and
THE BANK OF NEW YORK,
THE BANK OF NEW YORK (DELAWARE),
Wayne Patterson,
Cathryn Hulen,
Laura Anderson,
John Casey
and
Michael Perkins, as Trustees
Dated as of December 1, 1995
TU ELECTRIC CAPITAL II
================================================================================
<PAGE> 2
TU Electric Capital II
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
- --------------- ---------------
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.07
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.07
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.09
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.08
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(a)
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(a), 8.14(b)
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.02, 8.14(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01, 8.03
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.09
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.10
</TABLE>
- ---------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Trust Agreement.
<PAGE> 4
TABLE OF CONTENTS
ARTICLE I.
Defined Terms
<TABLE>
<S> <C> <C>
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II.
Establishment of the Trust
Section 2.01. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.02. Office of the Delaware Trustee; Principal Place of Business . . . . . . . . . . . . . . . . . 11
Section 2.03. Initial Contribution of Trust Property; Organizational Expenses . . . . . . . . . . . . . . . 11
Section 2.04. Issuance of the Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.05. Subscription and Purchase of Debentures; Issuance of
the Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.06. Declaration of Trust; Appointment of
Additional Administrative Trustees . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.07. Authorization to Enter into Certain Transactions . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.08. Assets of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.09. Title to Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III.
Payment Account
Section 3.01. Payment Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE IV.
Distributions; Redemption
Section 4.01. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.02. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.03. Subordination of Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 4.04. Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.05. Tax Returns and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
ARTICLE V.
Trust Securities Certificates
<PAGE> 5
<TABLE>
<S> <C> <C>
Section 5.01. Initial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 5.02. The Trust Securities Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.03. Execution and Delivery of Trust Securities Certificates . . . . . . . . . . . . . . . . . . . 21
Section 5.04. Registration of Transfer and Exchange of Preferred
Securities Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.05. Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.06. Persons Deemed Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 5.07. Access to List of Securityholders' Names and Addresses . . . . . . . . . . . . . . . . . . . 23
Section 5.08. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.09. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.10. Ownership of Common Securities by Depositor . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.11. Definitive Preferred Securities Certificates . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.12. Book-Entry System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.13. Rights of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI.
Acts of Securityholders; Meetings; Voting
Section 6.01. Limitations on Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 6.02. Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.03. Meetings of Holders of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.04. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.05. Proxies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.06. Securityholder Action by Written Consent . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.07. Record Date for Voting and Other Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.08. Acts of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.09. Inspection of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII.
Representations and Warranties of the Property
Trustee and the Delaware Trustee
Section 7.01. Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 7.02. Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VIII.
The Trustees
Section 8.01. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 8.02. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
-ii-
<PAGE> 6
<TABLE>
<S> <C> <C>
Section 8.03. Certain Rights of Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.04. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . 35
Section 8.05. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 8.06. Compensation; Fees; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.07. Certain Trustees Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.08. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.09. Co-Trustees and Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.10. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.11. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.12. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . 41
Section 8.13. Preferential Collection of Claims Against Depositor or Trust . . . . . . . . . . . . . . . . 41
Section 8.14. Reports by Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.15. Reports to the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.16. Evidence of Compliance With Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.17. Number of Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.18. Delegation of Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.19. Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX.
Termination and Liquidation
Section 9.01. Termination Upon Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.02. Early Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.03. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.04. Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE X.
Miscellaneous Provisions
Section 10.01. Guarantee by the Depositor and Assumption of Obligations . . . . . . . . . . . . . . . . . . 47
Section 10.02. Limitation of Rights of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.04. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.05. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.06. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.07. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.08. Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.09. Agreement Not to Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.10. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
-iii-
<PAGE> 7
AMENDED AND RESTATED TRUST AGREEMENT, dated as of December 1,
1995, between (i) Texas Utilities Electric Company, a Texas corporation (the
"Depositor"), (ii) The Bank of New York, a banking corporation duly organized
and existing under the laws of New York, as trustee (the "Property Trustee"
and, in its separate capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) The Bank of New York (Delaware), a banking corporation duly
organized under the laws of Delaware, as Delaware trustee (the "Delaware
Trustee") (iv) Wayne Patterson, Cathryn Hulen, Laura Anderson, John Casey and
Michael Perkins, each an individual, and each of whose address is c/o Texas
Utilities Services Inc., 1601 Bryan Street, Dallas, Texas 75201 (each, an
"Administrative Trustee" and collectively the "Administrative Trustees") (the
Property Trustee, the Delaware Trustee and the Administrative Trustees referred
to collectively as the "Trustees") and (v) the several Holders, as hereinafter
defined.
W I T N E S S E T H:
WHEREAS, the Depositor, the Property Trustee, the Delaware
Trustee and Wayne Patterson, as the Administrative Trustee, have heretofore
duly declared and established a business trust pursuant to the Delaware
Business Trust Act by the entering into of that certain Trust Agreement, dated
as of September 28, 1995 (the "Original Trust Agreement"), and by the execution
by the Property Trustee, the Delaware Trustee and Wayne Patterson, as
Administrative Trustee and filing with the Secretary of State of the State of
Delaware of the Certificate of Trust, dated September 28, 1995, a copy of which
is attached as Exhibit A; and
WHEREAS, the Depositor, the Property Trustee, Delaware Trustee
and Wayne Patterson, as Administrative Trustee, desire to amend and restate the
Original Trust Agreement in its entirety as set forth herein to provide for,
among other things, (i) the acquisition by the Trust from the Depositor of all
of the right, title and interest in the Debentures, (ii) the issuance of the
Common Securities by the Trust to the Depositor and (iii) the issuance of the
Preferred Securities by the Trust;
NOW THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, each party, for the benefit of the
other party and for the benefit of the Securityholders, hereby amends and
restates the Original Trust Agreement in its entirety and agrees as follows:
<PAGE> 8
ARTICLE I.
DEFINED TERMS
SECTION 1.01. DEFINITIONS. For all purposes of this Trust
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article and include the
plural as well as the singular;
(b) all other terms used herein that are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(c) unless the context otherwise requires, any
reference to an "Article" or a "Section" refers to an Article
or a Section, as the case may be, of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Trust Agreement as
a whole and not to any particular Article, Section or other
subdivision.
"Act" has the meaning specified in Section 6.08.
"Additional Amount" means, with respect to Trust Securities of
a given Liquidation Amount and/or a given period, the amount of Additional
Interest (as defined in the Subordinated Indenture) paid by the Depositor on a
Like Amount of Debentures for such period.
"Administrative Trustee" means each of the individuals
identified as an "Administrative Trustee" in the preamble to this Trust
Agreement solely in their capacities as Administrative Trustees of the Trust
formed hereunder and not in their individual capacities, or such trustee's
successor in interest in such capacity, or any successor trustee appointed as
herein provided.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Bank" has the meaning specified in the preamble to this
Trust Agreement.
-2-
<PAGE> 9
"Bankruptcy Event" means, with respect to any Person:
(i) the entry of a decree or order by a court having
jurisdiction in the premises judging such Person a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjudication or composition of or
in respect of such Person under Federal bankruptcy law or any
other applicable Federal or State law, or appointing a
receiver, liquidator, assignee, trustee, sequestrator or other
similar official of such Person or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(ii) the institution by such Person of proceedings to
be adjudicated a bankrupt or insolvent, or of the consent by
it to the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or
consent seeking reorganization or relief under Federal
bankruptcy law or any other applicable Federal or State law,
or the consent by it to the filing of such petition or to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator or similar official of such Person or of any
substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by
it in writing of its inability to pay its debts generally as
they become due.
"Bankruptcy Laws" has the meaning specified in Section 10.09.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Depositor to have been duly
adopted by the Depositor's Board of Directors or a duly authorized committee
thereof and to be in full force and effect on the date of such certification,
and delivered to the appropriate Trustee.
"Business Day" means a day other than (x) a Saturday or a
Sunday, (y) a day on which banks in New York, New York are authorized or
obligated by law or executive order to remain closed or (z) a day on which the
Property Trustee's Corporate Trust Office or the Debenture Trustee's principal
corporate trust office is closed for business.
"Certificate of Trust" has the meaning specified in Section
2.07(d).
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository Trust Company will be the initial Clearing
Agency.
"Closing Date" means the date of execution and delivery of
this Trust Agreement.
-3-
<PAGE> 10
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Security" means an undivided beneficial interest in
the assets of the Trust having a Liquidation Amount of $25 and having the
rights provided therefor in this Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit
B.
"Corporate Trust Office" means the principal corporate trust
office of the Property Trustee located in New York, New York.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of the Trust or
the Trust's Affiliates; and (b) any Holder of Trust Securities.
"Dealer Manager Agreement" means the Dealer Manager Agreement,
dated as of November 7, 1995, among the Trust, the Depositor and the dealer
managers named therein.
"Debenture Event of Default" means an "Event of Default" as
defined in the Subordinated Indenture.
"Debenture Issuer" means Texas Utilities Electric Company, a
Texas corporation, in its capacity as issuer of the Debentures.
"Debenture Redemption Date" means "Redemption Date" as defined
in the Subordinated Indenture with respect to the Debentures.
"Debenture Trustee" means The Bank of New York, as trustee
under the Subordinated Indenture.
"Debentures" means the $51,418,575 aggregate principal amount
of the Depositor's 9.00% Junior Subordinated Debentures, Series B, Due
September 30, 2030, issued pursuant to the Subordinated Indenture.
"Definitive Preferred Securities Certificates" means Preferred
Securities Certificates issued in certificated, fully registered form as
provided in Section 5.11.
-4-
<PAGE> 11
"Delaware Business Trust Act" means Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time.
"Delaware Trustee" means the banking corporation identified as
the "Delaware Trustee" in the preamble to this Trust Agreement solely in its
capacity as Delaware Trustee of the Trust formed hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this
Trust Agreement and includes Texas Utilities Electric Company in its capacity
as Holder of the Common Securities.
"Depositary Shares" means the Texas Utilities Electric Company
Depositary Shares each representing 1/4 share of $8.20 Cumulative Preferred
Stock.
"Distribution Date" has the meaning specified in Section
4.01(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.01.
"Early Termination Event" has the meaning specified in Section
9.02.
"Event of Default" means any one of the following events
(whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default; or
(ii) default by the Trust in the payment of any
Distribution when it becomes due and payable, and continuation
of such default for a period of 30 days; or
(iii) default by the Trust in the payment of any
Redemption Price, plus accumulated and unpaid distributions of
any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any
material respect of any covenant or warranty of the Trustees
in this Trust Agreement (other than a covenant or warranty a
default in whose performance or breach is specifically dealt
with in clause (ii) or (iii), above) and continuation of such
default or breach for a period of 60 days after there has been
given, by registered or certified mail, to the Trust by the
Holders of at least 10% in Liquidation Amount of the
Outstanding Preferred Securities a written notice specifying
-5-
<PAGE> 12
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder;
or
(v) the occurrence of a Bankruptcy Event with respect
to the Trust.
"Exchange" has the meaning specified in Section 2.07(b).
"Exchange Act" has the meaning specified in Section 2.07(c).
"Expense Agreement" means the Agreement as to Expenses and
Liabilities between the Depositor and the Trust, substantially in the form
attached as Exhibit C, as amended from time to time.
"Expiration Date" shall have the meaning specified in Section
9.01.
"Guarantee" means the Guarantee Agreement executed and
delivered by the Depositor and The Bank of New York, a New York banking
corporation, as trustee, contemporaneously with the execution and delivery of
this Trust Agreement, for the benefit of the Holders of the Preferred
Securities, as amended from time to time.
"Indemnified Person" means any Trustee, any Affiliate of any
Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee, or any employee or agent
of the Trust or its Affiliates.
"Lien" means any lien, pledge, charge, encumbrance, mortgage,
deed of trust, adverse ownership interest, hypothecation, assignment, security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
"Like Amount" means (i) Trust Securities having a Liquidation
Amount equal to the principal amount of Debentures to be contemporaneously
redeemed in accordance with the Subordinated Indenture and the proceeds of
which will be used to pay the Redemption Price of such Trust Securities plus
accumulated and unpaid Distributions to the date of such payment and (ii)
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the Holder to whom such Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust
Security.
"Liquidation Date" means the date on which Debentures are to
be distributed to Holders of Trust Securities in connection with a termination
and liquidation of the Trust pursuant to Section 9.04(a).
"Liquidation Distribution" has the meaning specified in
Section 9.04(e).
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"No Recognition Opinion" has the meaning specified in Section
9.04(d).
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Depositor, and delivered to the appropriate
Trustee. One of the officers signing an Officers' Certificate given pursuant
to Section 8.16 shall be the principal executive, financial or accounting
officer of the Depositor. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Agreement
shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Trust, the Property Trustee, the Delaware Trustee or the
Depositor, but not an employee of the Trust, the Property Trustee, the Delaware
Trustee or the Depositor, and who shall be reasonably acceptable to the
Property Trustee.
"Original Trust Agreement" has the meaning specified in the
recitals to this Trust Agreement.
"Outstanding," when used with respect to Preferred Securities,
means, as of the date of determination, all Preferred Securities theretofore
delivered under this Trust Agreement, except:
(i) Preferred Securities theretofore canceled by the
Administrative Trustees or delivered to the Administrative
Trustees for cancellation;
(ii) Preferred Securities for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Property Trustee or any Paying Agent for
the Holders of such Preferred Securities; provided that, if
such Preferred Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Trust
Agreement; and
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(iii) Preferred Securities in exchange for or in lieu of
which other Preferred Securities have been delivered pursuant
to this Trust Agreement, including pursuant to Sections 5.04,
5.05 or 5.11;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Preferred Securities owned by the Depositor, any Trustee or any Affiliate of
the Depositor or any Trustee shall be disregarded and deemed not to be
Outstanding, except that (a) in determining whether any Trustee shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Preferred Securities which such Trustee knows
to be so owned shall be so disregarded and (b) the foregoing shall not apply at
any time when all of the outstanding Preferred Securities are owned by the
Depositor, one or more of the Trustees and/or any such Affiliate. Preferred
Securities so owned which have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the
Administrative Trustee the pledgee's right so to act with respect to such
Preferred Securities and that the pledgee is not the Depositor or any Affiliate
of the Depositor.
"Owner" means each Person who is the owner of a Preferred
Securities Certificate as reflected in the Securities Register.
"Paying Agent" means any paying agent or co-paying agent
appointed pursuant to Section 5.09 and shall initially be Texas Utilities
Services Inc.
"Payment Account" means a segregated non-interest-bearing
corporate trust account maintained by the Property Trustee with Chemical Bank,
or such other banking institution as the Depositor shall select in its trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Paying Agent,
pursuant to Section 5.09, shall make payments to the Securityholders in
accordance with Sections 4.01 and 4.02.
"Person" means any individual, corporation, partnership, joint
venture, trust, limited liability company or corporation, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Security" means a trust originated preferred
security representing an undivided beneficial interest in the assets of the
Trust having a Liquidation Amount of $25 and having rights provided therefor in
this Trust Agreement, including the right to receive Distributions and a
Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate
evidencing ownership of Preferred Securities, substantially in the form
attached as Exhibit D.
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"Property Trustee" means the commercial bank or trust company
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust formed and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor trustee appointed as herein provided.
"Redemption Date" means, with respect to any Trust Security to
be redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date shall be a Redemption
Date for a Like Amount of Trust Securities.
"Redemption Price" means, with respect to any date fixed for
redemption of any Trust Security, the Liquidation Amount of such Trust
Security.
"Redemption Tax Opinion" has the meaning specified in Section
9.04(d).
"Relevant Trustee" shall have the meaning specified in Section
8.10.
"Responsible Officer," when used with respect to the Property
Trustee means an officer of the Property Trustee assigned by the Property
Trustee to administer its corporate trust matters.
"Securities Depository" shall have the meaning specified in
Section 5.12.
"Securities Register" shall mean the Securities Register and
described in Section 5.04.
"Securityholder" or "Holder" means a Person in whose name a
Trust Security or Securities is registered in the Securities Register; any such
Person shall be deemed to be a beneficial owner of such security within the
meaning of the Delaware Business Trust Act.
"Subordinated Indenture" means the Indenture, dated as of
December 1, 1995, between the Depositor and the Debenture Trustee, as trustee,
as amended or supplemented from time to time.
"Tax Event" means the receipt by the Trust of an opinion of
nationally recognized independent tax counsel experienced in such matters to
the effect that, as a result of (a) any amendment to, clarification of, or
change (including any announced prospective change) in, the laws or treaties
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein affecting taxation, (b) any
judicial decision or any official administrative pronouncement, ruling,
regulatory procedure, notice or announcement (including any notice or
announcement of intent to issue or adopt any such administrative pronouncement,
ruling, regulatory procedure or regulation) (each, for purposes of this
definition, an "Administrative Action"), or (c) any amendment to,
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clarification of, or change in the official position or the interpretation of
any such Administrative Action or judicial decision or any interpretation or
pronouncement that provides for a position with respect to such Administrative
Action or judicial decision that differs from the theretofore generally
accepted position, in each case by any legislative body, court, governmental
authority or regulatory body, irrespective of the manner in which such
amendment, clarification or change is made known, which amendment,
clarification, or change is effective, which Administrative Action is taken or
which judicial decision is issued, in each case on or after the date of
issuance of the Preferred Securities, there is more than an insubstantial risk
that (i) the Trust is, or will be, subject to United States federal income tax
with respect to interest received on the Debentures, (ii) interest payable by
the Depositor on the Debentures is not, or will not be, fully deductible by the
Depositor for United States federal income tax purposes, or (iii) the Trust is,
or will be, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Transfer Agent and Registrar" shall mean the transfer agent
and registrar for the Preferred Securities appointed by the Trust and shall be
initially Texas Utilities Services Inc.
"Trust" means the Delaware business trust created by the
Original Trust Agreement and continued hereby and identified on the cover page
to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust
Agreement, as the same may be modified, amended or supplemented in accordance
with the applicable provisions hereof, including all exhibits hereto,
including, for all purposes of this Amended and Restated Trust Agreement and
any such modification, amendment or supplement, the provisions of the Trust
Indenture Act that are deemed to be a part of and govern this Amended and
Restated Trust Agreement and any such modification, amendment or supplement,
respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Property" means (i) the Debentures, (ii) any cash on
deposit in, or owing to, the Payment Account and (iii) all proceeds and rights
in respect of the foregoing and any other property and assets for the time
being held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Trust Securities Certificate" means any one of the Common
Securities Certificates or the Preferred Securities Certificates.
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ARTICLE II.
ESTABLISHMENT OF THE TRUST
SECTION 2.01. NAME. The Trust created hereby shall be known
as "TU Electric Capital II", in which name the Trustees may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.02. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE
OF BUSINESS. The office of the Delaware Trustee in the State of Delaware is
White Clay Center, Route 273, Newark, Delaware 19711, or at such other address
in Delaware as the Delaware Trustee may designate by written notice to the
Securityholders and the Depositor. The principal place of business of the
Trust is c/o Texas Utilities Electric Company, Energy Plaza, 1601 Bryan Street,
Dallas, Texas 75201.
SECTION 2.03. INITIAL CONTRIBUTION OF TRUST PROPERTY;
ORGANIZATIONAL EXPENSES. The Property Trustee acknowledges receipt in trust
from the Depositor in connection with the Original Trust Agreement of the sum
of $10, which constituted the initial Trust Property. The Depositor shall pay
organizational expenses of the Trust as they arise or shall, upon request of
any Trustee, promptly reimburse such Trustee for any such expenses paid by such
Trustee. The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
SECTION 2.04. ISSUANCE OF THE PREFERRED SECURITIES. On
November 7, 1995 the Depositor, on behalf of the Trust, executed and delivered
the Dealer Manager Agreement. Contemporaneously with the execution and
delivery of this Trust Agreement, one of the Administrative Trustees, on behalf
of the Trust in accordance with Section 5.02, executed by facsimile and caused
to be countersigned and delivered Preferred Securities having an aggregate
Liquidation Amount of $49,876,000.
SECTION 2.05. SUBSCRIPTION AND PURCHASE OF DEBENTURES;
ISSUANCE OF THE COMMON SECURITIES. Contemporaneously with the execution and
delivery of this Trust Agreement, the Administrative Trustees, on behalf of the
Trust, shall deliver and exchange for Debentures, registered in the name of the
Property Trustee and having an aggregate principal amount equal to $51,418,575,
Common Securities Certificates, registered in the name of the Depositor, in an
aggregate amount of 61,703 Common Securities having an aggregate Liquidation
Amount of $1,542,575 and Preferred Securities Certificates registered, in the
name of the Depositor, having an aggregate Liquidation amount of $49,876,000.
SECTION 2.06. DECLARATION OF TRUST; APPOINTMENT OF ADDITIONAL
ADMINISTRATIVE TRUSTEES. The exclusive purposes and functions of the Trust are
(i) to issue Trust Securities to the Depositor in exchange for the Debentures,
and (ii) to engage in those activities necessary, convenient or incidental
thereto. The Depositor hereby appoints the Trustees as trustees of the Trust,
to have all the rights, powers and duties to the extent set
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forth herein. The Property Trustee hereby declares that it will hold the Trust
Property in trust upon and subject to the conditions set forth herein for the
benefit of the Securityholders. The Trustees shall have all rights, powers and
duties set forth herein and in accordance with applicable law with respect to
accomplishing the purposes of the Trust. Anything in this Trust Agreement to
the contrary notwithstanding the Delaware Trustee shall not be entitled to
exercise any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrative Trustees set
forth herein. The Delaware Trustee shall be one of the Trustees of the Trust
for the sole and limited purpose of fulfilling the requirements of Section 3807
of the Delaware Business Trust Act.
SECTION 2.07. AUTHORIZATION TO ENTER INTO CERTAIN
TRANSACTIONS. (a) The Trustees shall conduct the affairs of the Trust in
accordance with the terms of this Trust Agreement. Subject to the limitations
set forth in paragraph (b) of this Section and Article VIII and in accordance
with the following provisions (A) and (B), the Trustees shall have the
authority to enter into all transactions and agreements determined by the
Trustees to be appropriate in exercising the authority, express or implied,
otherwise granted to the Trustees under this Trust Agreement, and to perform
all acts in furtherance thereof, including without limitation, the following:
(A) As among the Trustees, the Administrative Trustees shall have the
power, duty and authority to act on behalf of the Trust with respect to the
following matters:
(i) the issuance and sale of the Trust Securities;
(ii) without the consent of any Person, to cause the
Trust to enter into and to execute, deliver and perform on
behalf of the Trust, the Expense Agreement, the Dealer Manager
Agreement and such other agreements as may be necessary or
desirable in connection with the consummation hereof (such
execution to be by the Administrative Trustees or any one of
them);
(iii) to qualify the Trust to do business in any
jurisdiction as may be necessary or desirable;
(iv) the collection of interest, principal and any
other payments made in respect of the Debentures in the
Payment Account;
(v) the filing of an Issuer Tender Offer Statement on
Schedule 13E-4 and any other tender offer statement required
to be filed with the Securities and Exchange Commission and
the conduct of the Exchange Offer as described therein and in
the Dealer Manager Agreement;
(vi) the registration of the Preferred Securities under
the Securities Act of 1933, as amended, and under state
securities or blue sky laws, and the
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qualification of this Trust Agreement as a trust indenture
under the Trust Indenture Act;
(vii) the listing of the Preferred Securities upon such
securities exchange or exchanges as shall be determined by the
Depositor and the registration of the Preferred Securities
under the Exchange Act, as amended, and the preparation and
filing of all periodic and other reports and other documents
pursuant to the foregoing;
(viii) the appointment of a Paying Agent and Transfer
Agent and Registrar in accordance with this Trust Agreement;
(ix) registering transfers of the Trust Securities in
accordance with this Trust Agreement;
(x) to the extent provided in this Trust Agreement,
the winding up of the affairs of and liquidation of the Trust
and the preparation, execution and filing of the certificate
of cancellation with the Secretary of State of Delaware; and
(xi) the taking of any action incidental to the
foregoing as the Administrative Trustees may from time to time
determine is necessary or advisable to protect and conserve
the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder).
(B) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to the following
matters:
(i) the establishment of the Payment Account;
(ii) the receipt of the Debentures;
(iii) the deposit of interest, principal and any other
payments made in respect of the Debentures in the Payment
Account;
(iv) the distribution of amounts owed to the
Securityholders in respect of the Trust Securities in
accordance with the terms of this Trust Agreement;
(v) the sending of notices of default and other
information regarding the Trust Securities and the Debentures
to the Securityholders in accordance with the terms of this
Trust Agreement;
(vi) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
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(vii) as provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Trust and the
execution of the certificate of cancellation to be prepared
and filed by the Administrative Trustees with the Secretary of
State of the State of Delaware; and
(viii) the taking of any action incidental to the
foregoing as the Property Trustee may from time to time
determine is necessary or advisable to protect and conserve
the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder).
Subject to this Section 2.07(a)(B), the Property Trustee shall
have none of the duties, powers or authority of the Administrative Trustee set
forth in Section 2.07(a)(A) or the Depositor set forth in Section 2.07(c). The
Property Trustee shall have the power and authority to exercise all of the
rights, powers and privileges of a holder of Debentures under the Subordinated
Indenture and, if an Event of Default occurs and is continuing, the Property
Trustee may, for the benefit of Holders of the Trust Securities, in its
discretion proceed to protect and enforce its rights as holder of the
Debentures subject to the rights of the Holder pursuant to the terms of this
Trust Agreement.
(b) So long as this Trust Agreement remains in effect, the
Trust (or the Trustees acting on behalf of the Trust) shall not undertake any
business, activities or transaction except as expressly provided herein or
contemplated hereby. In particular, the Trustees shall not (i) acquire any
investments or engage in any activities not authorized by this Trust Agreement,
(ii) sell, assign, transfer, exchange, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein, (iii) take any action that would cause the
Trust to fail or cease to qualify as a "grantor trust" for United States
federal income tax purposes and not as an association taxable as a corporation,
(iv) incur any indebtedness for borrowed money or (v) take or consent to any
action that would result in the placement of a Lien on any of the Trust
Property. The Trustees shall defend all claims and demands of all Persons at
any time claiming any Lien on any of the Trust Property adverse to the interest
of the Trust or the Securityholders in their capacity as Securityholders.
(c) In connection with the issue of the Preferred Securities,
the Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of
this Trust Agreement are hereby ratified and confirmed in all respects):
(i) to prepare for filing by the Trust with the
Commission and to execute a registration statement on Form S-4
in relation to the Preferred Securities, including any
amendments thereto;
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(ii) to determine the States in which to take
appropriate action to qualify or register for sale all or part
of the Preferred Securities and to do any and all such acts,
other than actions which must be taken by or on behalf of the
Trust, and advise the Trustees of actions they must take on
behalf of the Trust, and prepare for execution and filing any
documents to be executed and filed by the Trust or on behalf
of the Trust, as the Depositor deems necessary or advisable in
order to comply with the applicable laws of any such States;
(iii) to prepare for filing by the Trust an application
to the New York Stock Exchange or any other national stock
exchange or the Nasdaq National Market for listing upon notice
of issuance of any Preferred Securities;
(iv) to prepare for filing by the Trust with the
Commission and to execute a registration statement on Form 8-A
relating to the registration of the Preferred Securities under
Section 12(b) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), including any amendments thereto;
(v) to select the investment banker or bankers to act
as dealer managers with respect to the exchange by the
Depositor of Preferred Securities for Depositary Shares
("Exchange") and negotiate the terms of a Dealer Manager
Agreement and pricing agreement providing for the Exchange;
(vi) to take any other actions necessary or desirable
to carry out any of the foregoing activities; and
(vii) to designate itself or an Affiliate to be the
Transfer Agent and Registrar.
(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the affairs of
the Trust and to operate the Trust so that the Trust will not be deemed to be
an "investment company" required to be registered under the Investment Company
Act of 1940, as amended, or classified other than as a "grantor trust" for
United States federal income tax purposes and not as an association taxable as
a corporation and so that the Debentures will be treated as indebtedness of the
Depositor for United States federal income tax purposes. In this connection,
the Depositor and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust filed
with the Secretary of State of the State of Delaware with respect to the Trust
(the "Certificate of Trust") or this Trust Agreement, that each of the
Depositor and the Administrative Trustees determines in its discretion to be
necessary or desirable for such purposes, as long as such action does not
materially adversely affect the interests of the holders of the Preferred
Securities.
SECTION 2.08. ASSETS OF TRUST. The assets of the Trust shall
consist of the Trust Property.
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SECTION 2.09. TITLE TO TRUST PROPERTY. Legal title to all
Trust Property shall be vested at all times in the Property Trustee (in its
capacity as such) and shall be held and administered by the Property Trustee
for the benefit of the Securityholders in accordance with this Trust Agreement.
ARTICLE III.
PAYMENT ACCOUNT
SECTION 3.01. PAYMENT ACCOUNT.
(a) On or prior to the Closing Date, the Property Trustee
shall establish the Payment Account. The Property Trustees and the Paying
Agent appointed by the Administrative Trustees shall have exclusive control and
sole right of withdrawal with respect to the Payment Account for the purpose of
making deposits in and withdrawals from the Payment Account in accordance with
this Trust Agreement. All monies and other property deposited or held from
time to time in the Payment Account shall be held by the Property Trustee in
the Payment Account for the exclusive benefit of the holders of Trust
Securities and for distribution as herein provided, including (and subject to)
any priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment
Account, promptly upon receipt, all payments of principal or interest on, and
any other payments or proceeds with respect to, the Debentures. Amounts held
in the Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV.
DISTRIBUTIONS; REDEMPTION
SECTION 4.01. DISTRIBUTIONS.
(a) Distributions on the Trust Securities shall be
cumulative, and will accumulate whether or not there are funds of the Trust
available for the payment of Distributions. Distributions shall accrue from
the Closing Date, and, except in the event that the Depositor exercises its
right to extend the interest payment period for the Debentures pursuant to
Section 311 of the Subordinated Indenture, shall be payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year,
commencing on December 31, 1995. If any date on which Distributions are
otherwise payable on the Trust Securities is not a Business Day, then the
payment of such Distribution shall be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding
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calendar year, payment of such distribution shall be made on the immediately
preceding Business Day, in each case, with the same force and effect as if made
on such date (each date on which distributions are payable in accordance with
this Section 4.01(a) a "Distribution Date").
(b) Distributions payable on the Trust Securities shall be
fixed at a rate of 9.00% per annum of the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any full quarterly period
shall be computed on the basis of twelve 30-day months and a 360-day year and
for any period shorter than a full month, on the basis of the actual number of
days elapsed. If the interest payment period for the Debentures is extended
pursuant to Section 311 of the Subordinated Indenture, then Distributions on
the Preferred Securities will be deferred for the period equal to the extension
of the interest payment period for the Debentures and the rate per annum at
which Distributions on the Trust Securities accumulate shall be increased by an
amount such that the aggregate amount of Distributions that accumulate on all
Trust Securities during any such extended interest payment period is equal to
the aggregate amount of interest (including, to the extent permitted by law,
interest payable on unpaid interest at the percentage rate per annum set forth
above, compounded quarterly) that accrues during any such extended interest
payment period on the Debentures. The amount of Distributions payable for any
period shall include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made and
shall be deemed payable on each Distribution Date only to the extent that the
Trust has funds available in the Payment Account for the payment of such
Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date, which
shall be 15 days prior to the relevant Distribution Date.
SECTION 4.02. REDEMPTION. (a) On each Debenture Redemption
Date and at the maturity date for the Debentures (as defined in the
Subordinated Indenture), the Property Trustee will be required to redeem a Like
Amount of Trust Securities at the Redemption Price plus accumulated and unpaid
Distributions to the date of such payment.
(b) Notice of redemption shall be given by the Property
Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date to each Holder of Trust Securities to
be redeemed, at such Holder's address appearing in the Security Register. All
notices of redemption or liquidation shall state:
(i) the Redemption Date;
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(ii) the Redemption Price and the amount of accumulated
and unpaid Dividends to be paid on the Redemption Date;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities
are to be redeemed, the identification and the total
Liquidation Amount of the particular Trust Securities to be
redeemed; and
(v) that on the Redemption Date the Redemption Price
plus accumulated and unpaid Distributions to the date of such
payment will become due and payable upon each such Trust
Security to be redeemed and that interest thereon will cease
to accrue on and after said date.
(c) The Trust Securities redeemed on each Redemption Date
shall be redeemed at the Redemption Price plus accumulated and unpaid
Distributions to the date of such payment with the proceeds from the
contemporaneous redemption of Debentures. Redemptions of the Trust Securities
shall be made and the Redemption Price plus accumulated and unpaid
Distributions to the date of such payment shall be deemed payable on each
Redemption Date only to the extent that the Trust has funds immediately
available in the Payment Account for such payment.
(d) If the Property Trustee gives a notice of redemption in
respect of any Preferred Securities, then, by 12:00 noon, New York time, on the
Redemption Date, subject to Section 4.02(c), the Property Trustee shall
irrevocably deposit with the Paying Agent funds sufficient to pay the
applicable Redemption Price plus accumulated and unpaid Distributions to the
date of such payment and will give the Paying Agent irrevocable instructions
and authority to pay the Redemption Price plus accumulated and unpaid
Distributions to the date of such payment to the holders thereof upon surrender
of their Preferred Securities Certificates. Notwithstanding the foregoing,
Distributions payable on or prior to the redemption date for any Trust
Securities called for redemption shall be payable to the Holders of such Trust
Securities as they appear on the Securities Register for the Trust Securities
on the relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then on the
Redemption Date, all rights of Securityholders holding Trust Securities so
called for redemption will cease, except the right of such Securityholders to
receive the Redemption Price plus accumulated and unpaid Distributions to the
date of such payment, but without interest thereon, and such Trust Securities
will cease to be outstanding. In the event that any Redemption Date is not a
Business Day, then payment of the Redemption Price payable on such date plus
accumulated and unpaid Distributions to such date shall be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay). In the event that payment of the
Redemption Price plus accumulated and unpaid Distributions in respect of any
Trust Securities called for redemption is improperly withheld or refused and
not paid either by the Trust or by the Depositor
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pursuant to the Guarantee, Distributions on such Trust Securities will continue
to accrue, at the then applicable rate, from the Redemption Date originally
established by the Trust for such Trust Securities to the date such Redemption
Price plus accumulated and unpaid Distributions is actually paid, in which case
the actual payment date will be deemed the date fixed for redemption for
purposes of calculating the Redemption Price plus accumulated and unpaid
Distributions to such date.
(e) Payment of the Redemption Price on the Trust Securities
shall be made to the Holders thereof as they appear on the Securities Register
for the Trust Securities on the relevant record date, which shall be the
fifteenth day prior to the Redemption Date.
(f) If less than all the Outstanding Trust Securities are to
be redeemed on a Redemption Date, then the aggregate Liquidation Amount of
Trust Securities to be redeemed shall be allocated 3% to the Common Securities
and 97% to the Preferred Securities. The particular Preferred Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Property Trustee from the Outstanding Preferred Securities not
previously called for redemption, by such method as the Property Trustee shall
deem fair and appropriate and which may provide for the selection for a
redemption of portions (equal to $25 or integral multiples thereof) of the
Liquidation Amount of Preferred Securities of a denomination larger than $25.
The Property Trustee shall promptly notify the Transfer Agent and Registrar in
writing of the Preferred Securities selected for redemption and, in the case of
any Preferred Securities selected for partial redemption, the Liquidation
Amount thereof to be redeemed. For all purposes of this Trust Agreement,
unless the context otherwise requires, all provisions relating to the
redemption of Preferred Securities shall relate, in the case of any Preferred
Securities redeemed or to be redeemed only in part, to the portion of the
Liquidation Amount of Preferred Securities which has been or is to be redeemed.
SECTION 4.03. SUBORDINATION OF COMMON SECURITIES. (a)
Payment of Distributions (including Additional Amounts, if applicable) on, and
the Redemption Price plus accumulated and unpaid distributions of, the Trust
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of the Trust Securities; provided, however, that if on any Distribution
Date or Redemption Date a Debenture Event of Default shall have occurred and be
continuing, no payment of any Distribution (including Additional Amounts, if
applicable) on, or Redemption Price of, any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of
Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions (including Additional Amounts, if
applicable) on all Outstanding Preferred Securities for all distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price plus accumulated and unpaid Distributions the full amount of
such Redemption Price plus accumulated and unpaid Distributions on all
Outstanding Preferred Securities, shall have been made or provided for, and all
funds immediately available to the Property Trustee shall first be applied to
the payment in full in cash of all Distributions (including Additional Amounts,
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if applicable) on, or Redemption Price of plus accumulated and unpaid
Distributions of, Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default
resulting from a Debenture Event of Default, the Holder of Common Securities
will be deemed to have waived any such Event of Default under this Trust
Agreement until the effect of all such Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated. Until
any such Events of Default under this Trust Agreement with respect to the
Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the Holders of the Preferred
Securities and not the Holder of the Common Securities, and only the Holders of
the Preferred Securities will have the right to direct the Property Trustee to
act on their behalf.
SECTION 4.04. PAYMENT PROCEDURES. Payments in respect of the
Preferred Securities shall be made by check mailed to the address of the Person
entitled thereto as such address shall appear on the Register or, if the
Preferred Securities are held by a Clearing Agency, such Distributions shall be
made to the Clearing Agency, which shall credit the relevant Persons' accounts
at such Clearing Agency on the applicable distribution dates. Payments in
respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Administrative Trustees and the Holder of the
Common Securities.
SECTION 4.05. TAX RETURNS AND REPORTS. The Administrative
Trustees shall prepare (or cause to be prepared), at the Depositor's expense
and direction, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared or filed) the Internal Revenue Service Form 1041 (or
any successor form) required to be filed in respect of the Trust in each
taxable year of the Trust and (b) prepare and furnish (or cause to be prepared
and furnished) to each Securityholder the related Internal Revenue Service Form
1099, or any successor form or the information required to be provided on such
form. The Administrative Trustees shall provide the Depositor and the Property
Trustee with a copy of all such returns, reports and schedules promptly after
such filing or furnishing. The Trustees shall comply with United States
federal withholding and backup withholding tax laws and information reporting
requirements with respect to any payments to Securityholders under the Trust
Securities.
ARTICLE V.
TRUST SECURITIES CERTIFICATES
SECTION 5.01. INITIAL OWNERSHIP. Upon the formation of the
Trust by the contribution by the Depositor pursuant to Section 2.03 and until
the issuance of the Trust
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Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the Trust.
SECTION 5.02. THE TRUST SECURITIES CERTIFICATES. The Trust
Securities Certificates shall be issued in denominations of $25 Liquidation
Amount and integral multiples thereof. The Trust Securities Certificates shall
be executed on behalf of the Trust by manual or facsimile signature of at least
one Administrative Trustee and, if executed on behalf of the Trust by facsimile
signature, countersigned by the Transfer Agent and Registrar or its agent.
Trust Securities Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust and, if executed on behalf of the
Trust by facsimile signature, countersigned by the Transfer Agent and Registrar
or its agent, shall be validly issued and entitled to the benefits of this
Trust Agreement, notwithstanding that such individuals or any of them shall
have ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.04 or
5.11.
SECTION 5.03. EXECUTION AND DELIVERY OF TRUST SECURITIES
CERTIFICATES. On the Closing Date, the Administrative Trustees shall cause
Trust Securities Certificates, in an aggregate Liquidation Amount as provided
in Sections 2.04 and 2.05, to be executed on behalf of the Trust, and in the
case of Preferred Securities executed by facsimile signature, countersigned by
the Transfer Agent and Registrar, or The Bank of New York as its agent, and
delivered to or upon the written order of the Depositor signed by its chairman
of the board, any of its vice presidents or its Treasurer, without further
corporate action by the Depositor, in authorized denominations. The Depositor
agrees to indemnify, defend and hold The Bank of New York harmless against any
and all costs and liabilities incurred without negligence arising out of or in
connection with any such countersigning by it.
SECTION 5.04. REGISTRATION OF TRANSFER AND EXCHANGE OF
PREFERRED SECURITIES CERTIFICATES. The Transfer Agent and Registrar shall keep
or cause to be kept, at the office or agency maintained pursuant to Section
5.08, a Securities Register in which, subject to such reasonable regulations as
it may prescribe, the Transfer Agent and Registrar shall provide for the
registration of Preferred Securities Certificates and the Common Securities
Certificates (subject to Section 5.10 in the case of the Common Securities
Certificates) and registration of transfers and exchanges of Preferred
Securities Certificates as herein provided. Texas Utilities Services Inc.
shall be the initial Transfer Agent and Registrar.
Upon surrender for registration of transfer of any Preferred
Securities Certificate at the office or agency maintained pursuant to Section
5.08, the Administrative Trustees, or any one of them, shall execute on behalf
of the Trust by manual or facsimile
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signature and, if executed on behalf of the Trust by facsimmile signature,
shall cause the Transfer Agent and Registrar or its agent to countersign and
deliver, in the name of the designated transferee or transferees, one or more
new Preferred Securities Certificates in authorized denominations of a like
aggregate Liquidation Amount. At the option of a Holder, Preferred Securities
Certificates may be exchanged for other Preferred Securities Certificates in
authorized denominations of the same class and of a like aggregate Liquidation
Amount upon surrender of the Preferred Securities Certificates to be exchanged
at the office or agency maintained pursuant to Section 5.08.
Every Preferred Securities Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form satisfactory to the Administrative
Trustees and the Transfer Agent and Registrar duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Preferred Securities
Certificate surrendered for registration of transfer or exchange shall be
canceled and subsequently disposed of by the Administrative Trustees in
accordance with customary practice. The Trust shall not be required to (i)
issue, register the transfer of, or exchange any Preferred Securities during a
period beginning at the opening of business 15 calendar days before the day of
mailing of a notice of redemption of any Preferred Securities called for
redemption and ending at the close of business on the day of such mailing or
(ii) register the transfer of or exchange any Preferred Securities so selected
for redemption, in whole or in part, except the unredeemed portion of any such
Preferred Securities being redeemed in part.
No service charge shall be made for any registration of
transfer or exchange of Preferred Securities Certificates, but the Transfer
Agent and Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Preferred Securities Certificates.
SECTION 5.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST
SECURITIES CERTIFICATES. If (a) any mutilated Trust Securities Certificate
shall be surrendered to the Transfer Agent and Registrar, or if the Transfer
Agent and Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Trust Securities Certificate and (b) there
shall be delivered to the Transfer Agent and Registrar and the Administrative
Trustees such security or indemnity as may be required by them to save each of
them and the Depositor harmless, then in the absence of notice that such Trust
Securities Certificate shall have been acquired by a bona fide purchaser, the
Administrative Trustees, or any one of them, on behalf of the Trust shall
execute by manual or facsimile signature and the Administrative Trustees, or
any one of them, and, if executed on behalf of the Trust by facsimile
signature, countersigned by the Transfer Agent and Registrar shall make
available for delivery, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities
Certificate of like class, tenor and denomination. In connection with the
issuance of any new Trust Securities Certificate under this Section, the
Administrative Trustees or the Transfer Agent and Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be
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imposed in connection therewith. Any duplicate Trust Securities Certificate
issued pursuant to this Section shall constitute conclusive evidence of an
ownership interest in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Trust Securities Certificate shall be found at any
time.
SECTION 5.06. PERSONS DEEMED SECURITYHOLDERS. Prior to due
presentation of a Trust Securities Certificate for registration of transfer,
the Trustees and the Transfer Agent and Registrar shall be entitled to treat
the Person in whose name any Trust Securities Certificate shall be registered
in the Securities Register as the owner of such Trust Securities Certificate
for the purpose of receiving distributions and for all other purposes
whatsoever, and neither the Trustee nor the Transfer Agent and Registrar shall
be bound by any notice to the contrary.
SECTION 5.07. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND
ADDRESSES. The Administrative Trustees shall furnish or cause to be furnished
(x) to the Depositor, within 15 days after receipt by any Administrative
Trustee of a request therefor from the Depositor in writing and (y) to the
Property Trustee, promptly after receipt by any Administrative Trustee of a
request therefor from the Property Trustee in writing in order to enable the
Property Trustee to discharge its obligations under this Trust Agreement, a
list, in such form as the Depositor may reasonably require, of the names and
addresses of the Securityholders as of the most recent Record Date. If Holders
of Trust Securities Certificates evidencing ownership at such time and for the
previous six months not less than 25% of the outstanding aggregate Liquidation
Amount apply in writing to any Administrative Trustee, and such application
states that the applicants desire to communicate with other Securityholders
with respect to their rights under this Trust Agreement or under the Trust
Securities Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Administrative
Trustees shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to the
current list of Securityholders. Each Holder, by receiving and holding a Trust
Securities Certificate, shall be deemed to have agreed not to hold either the
Depositor or the Administrative Trustees accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 5.08. MAINTENANCE OF OFFICE OR AGENCY. The
Administrative Trustees shall maintain in the Borough of Manhattan, The City of
New York, an office or offices or agency or agencies where Preferred Securities
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustees in respect of the Trust
Securities Certificates may be served. The Administrative Trustees initially
designate Midwest Clearing Corporation, 40 Broad Street, New York, New York
10004 at its principal corporate trust office for such purposes. The
Administrative Trustees shall give prompt written notice to the Depositor, the
Property Trustee and to the Securityholders of any change in the location of
the Securities Register or any such office or agency.
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SECTION 5.09. APPOINTMENT OF PAYING AGENT. The Paying Agent
shall make distributions to Securityholders from the Payment Account and shall
report the amounts of such distributions to the Administrative Trustees and the
Property Trustee. Any Paying Agent shall have the revocable power to withdraw
funds from the Payment Account for the purpose of making the distributions
referred to above. The Property Trustee shall be entitled to rely upon a
certificate of the Paying Agent stating in effect the amount of such funds so
to be withdrawn and that same are to be applied by the Paying Agent in
accordance with this Section 5.09. The Administrative Trustees or any one of
them may revoke such power and remove the Paying Agent if the Administrative
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect.
The Paying Agent shall initially be Texas Utilities Services Inc., and it may
choose any co-paying agent that is acceptable to the Administrative Trustees
and the Depositor. The Paying Agent shall be permitted to resign upon 30 days'
written notice to the Administrative Trustees and the Depositor. In the event
that Texas Utilities Services Inc. shall no longer be the Paying Agent, the
Administrative Trustees shall appoint a successor that is reasonably acceptable
to the Property Trustee and the Depositor to act as Paying Agent (which shall
be a bank, trust company or an affiliate of the Company). The Administrative
Trustees shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Administrative Trustees to execute and deliver to the Trustees
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment
to the Securityholders in trust for the benefit of the Securityholders entitled
thereto until such sums shall be paid to such Securityholders. The Paying
Agent shall return all unclaimed funds to the Property Trustee and upon
resignation or removal of a Paying Agent such Paying Agent shall also return
all funds in its possession to the Property Trustee. The provisions of
Sections 8.01, 8.03 and 8.06 shall apply to the paying agent appointed
hereunder, and the Paying Agent shall be bound by the requirements with respect
to paying agents of securities issued pursuant to the Trust Indenture Act. Any
reference in this Trust Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise.
SECTION 5.10. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.
On the Closing Date and on each other date provided for in Section 2.05, the
Depositor shall acquire, and thereafter retain, beneficial and record ownership
of the Common Securities. Any attempted transfer of the Common Securities
shall be void. The Administrative Trustees shall cause each Common Securities
Certificate issued to the Depositor to contain a legend stating "THIS
CERTIFICATE IS NOT TRANSFERABLE". Common Securities Certificates representing
the Common Securities shall be issued to the Depositor in the form of a
typewritten or definitive Common Securities Certificate.
SECTION 5.11. DEFINITIVE PREFERRED SECURITIES CERTIFICATES.
Upon initial issuance of the Preferred Securities the Definitive Preferred
Securities Certificates shall be typewritten, printed, lithographed or engraved
or may be produced in any other manner as is reasonably acceptable to the
Administrative Trustees, as evidenced by the execution thereof
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by the Administrative Trustees, or any one of them. The Administrative
Trustees, or any one of them, shall execute on behalf of the Trust by manual or
facsimile signature, and if executed by facsimile on behalf of the Trust,
countersigned by the Transfer Agent or its agent the Definitive Preferred
Securities Certificates initially in accordance with the instructions of the
Depositor. Neither the Transfer Agent and Registrar nor any of the
Administrative Trustees shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions.
SECTION 5.12. BOOK-ENTRY SYSTEM. Some or all of the
Preferred Securities may be registered in the name of a securities depository
("Securities Depository") or a nominee therefor, and held in the custody of the
Securities Depository. In such event, a single certificate will be issued and
delivered to the Securities Depository for such Preferred Securities, in which
case the beneficial owners of such Preferred Securities will not receive
physical delivery of certificates for Preferred Securities. Except as provided
herein, all transfers of beneficial ownership interests in such Preferred
Securities will be made by book-entry only, and no investor or other party
purchasing, selling or otherwise transferring beneficial ownership of the
Preferred Securities will receive, hold or deliver any certificate for
Preferred Securities. The Depositor, the Trustees and the Paying Agent will
recognize the Securities Depository or its nominee as the Holder of Preferred
Securities for all purposes, including notices and voting.
The Administrative Trustees, at the direction and expense of
the Depositor, may from time to time appoint a Securities Depository or a
successor thereto and enter into a letter of representations or other agreement
with such Securities Depository to establish procedures with respect to the
Preferred Securities. Any Securities Depository shall be a Clearing Agency.
The Depositor and the Trustees covenant and agree to meet the
requirements of a Securities Depository for the Preferred Securities with
respect to required notices and other provisions of the letter of
representations or agreement executed with respect to such Preferred
Securities.
Whenever the beneficial ownership of any Preferred Securities
is determined through the books of a Securities Depository, the requirements in
this Trust Agreement of holding, delivering or transferring such Preferred
Securities shall be deemed modified with respect to such Preferred Securities
to meet the requirements of the Securities Depository with respect to actions
of the Trustees, the Depositor and the Paying Agent. Any provisions hereof
permitting or requiring delivery of such Preferred Securities shall, while such
Preferred Securities are in a Book-Entry System, be satisfied by the notation
on the books of the Securities Depository in accordance with applicable state
law.
SECTION 5.13. RIGHTS OF SECURITYHOLDERS. The legal title to
the Trust Property is vested exclusively in the Property Trustee (in its
capacity as such) in accordance with Section 2.09, and the Securityholders
shall not have any right or title therein other than
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an undivided beneficial interest in the assets of the Trust conferred by their
Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Preferred
Securities shall have no preemptive rights and when issued and delivered to
Securityholders against payment of the purchase price therefor will be fully
paid and nonassessable by the Trust.
ARTICLE VI.
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 6.01. LIMITATIONS ON VOTING RIGHTS. (a) Except as
provided in this Section 6.01, in Section 10.03 and as otherwise required by
law, no Holder of Preferred Securities shall have any right to vote or in any
manner otherwise control the administration, operation and management of the
Trust or the obligations of the parties hereto, nor shall anything herein set
forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association.
(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with respect to
such Debentures, (ii) waive any past default which is waivable under Section
813 of the Subordinated Indenture, (iii) exercise any right to rescind or annul
a declaration that the principal of all the Debentures shall be due and payable
or (iv) consent to any amendment, modification or termination of the
Subordinated Indenture or the Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the Holders of at least
66 2/3% of the aggregate Liquidation Amount of the Preferred Securities;
provided, however, that where a consent under the Subordinated Indenture would
require the consent of each holder of Debentures affected thereby, no such
consent shall be given by any Trustee without the prior written consent of each
holder of Preferred Securities. The Trustees shall not revoke any action
previously authorized or approved by a vote of the Preferred Securities, except
pursuant to a subsequent vote of the Preferred Securities. The Property
Trustee shall notify all Holders of the Preferred Securities of any notice of
default received from the Debenture Trustee with respect to the Debentures. In
addition to obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Property Trustee
shall, at the expense of the Depositor, obtain an Opinion of Counsel
experienced in such matters to the effect that the Trust will be classified as
a "grantor trust" and not as an association taxable as a corporation for United
States federal income tax purposes on account of such action.
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(c) If any proposed amendment to the Trust Agreement provides
for, or the Trustees otherwise propose to effect, (i) any action that would
materially adversely affect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise, or (ii) the dissolution, winding- up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
outstanding Preferred Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least 66 2/3 in Liquidation
Amount of the outstanding Preferred Securities. No amendment to this Trust
Agreement may be made if, as a result of such amendment, the Trust would be
classified as a "grantor trust" and not as an association taxable as a
corporation for United States federal income tax purposes.
SECTION 6.02. NOTICE OF MEETINGS. Notice of all meetings of
the Holders of Preferred Securities, stating the time, place and purpose of the
meeting, shall be given by the Administrative Trustees pursuant to Section
10.08 to each Holder of a Preferred Security, at his registered address, at
least 15 days and not more than 90 days before the meeting. At any such
meeting, any business properly before the meeting may be so considered whether
or not stated in the notice of the meeting. Any adjourned meeting may be held
as adjourned without further notice.
SECTION 6.03. MEETINGS OF HOLDERS OF PREFERRED SECURITIES.
No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Securityholders to
vote on any matter upon the written request of the Holders of 25% of the then
outstanding Preferred Securities (based upon their aggregate Liquidation
Amount) and may, at any time in their discretion, call a meeting of Holders of
Preferred Securities to vote on any matters as to which the Holders of
Preferred Securities are entitled to vote.
Holders of 50% of the then outstanding Preferred Securities
(based upon their aggregate Liquidation Amount), present in person or by proxy,
shall constitute a quorum at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by
the Holders of Preferred Securities present, in person or by proxy, holding
more than the lesser of (x) 66 2/3% of the then outstanding Preferred
Securities (based upon their aggregate Liquidation Amount) held by the Holders
of then outstanding Preferred Securities present, either in person or by proxy,
at such meeting and (y) 50% of the outstanding Preferred Securities (based upon
their aggregate liquidation amount) shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
SECTION 6.04. VOTING RIGHTS. Securityholders shall be
entitled to one vote for each $25 of Liquidation Amount represented by their
Trust Securities in respect of any matter as to which such Securityholders are
entitled to vote.
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SECTION 6.05. PROXIES, ETC. At any meeting of
Securityholders, any Securityholder entitled to vote thereat may vote by proxy,
provided that no proxy shall be voted at any meeting unless it shall have been
placed on file with the Administrative Trustees, or with such other officer or
agent of the Trust as the Administrative Trustee may direct, for verification
prior to the time at which such vote shall be taken. Only Securityholders of
record shall be entitled to vote. When Trust Securities are held jointly by
several Persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be
executed by or on behalf of a Securityholder shall be deemed valid unless
challenged at or prior to its exercise, or, if earlier, until eleven months
after it is sent and the burden of proving invalidity shall rest on the
challenger.
SECTION 6.06. SECURITYHOLDER ACTION BY WRITTEN CONSENT. Any
action which may be taken by Securityholders at a meeting may be taken without
a meeting if Securityholders holding more than a majority of all outstanding
Trust Securities entitled to vote in respect of such action (or such larger
proportion thereof as shall be required by any express provision of this Trust
Agreement) shall consent to the action in writing (based upon their aggregate
Liquidation Amount).
SECTION 6.07. RECORD DATE FOR VOTING AND OTHER PURPOSES. For
the purposes of determining the Securityholders who are entitled to notice of
and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrative Trustees may from time to time fix a date, not more
than 90 days prior to the date of any meeting of Securityholders or the payment
of distribution or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes.
SECTION 6.08. ACTS OF SECURITYHOLDERS. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Trust Agreement to be given, made or taken by Securityholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Securityholders in person or by an agent duly
appointed in writing; and, except as otherwise expressly provided herein, such
action shall become effective when such instrument or instruments are delivered
to the Administrative Trustees. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Securityholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Trust Agreement and (subject to
Section 8.01) conclusive in favor of the Trustees, if made in the manner
provided in this Section.
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The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Trustee deems sufficient.
The ownership of Preferred Securities shall be proved by the
Securities Register.
Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Securityholder of any Trust Security shall
bind every future Securityholder of the same Trust Security and the
Securityholder of every Trust Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustees or the Trust in reliance
thereon, whether or not notation of such action is made upon such Trust
Security.
Without limiting the foregoing, a Securityholder entitled
hereunder to take any action hereunder with regard to any particular Trust
Security may do so with regard to all or any part of the Liquidation Amount of
such Trust Security or by one or more duly appointed agents each of which may
do so pursuant to such appointment with regard to all or any part of such
liquidation amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder
or Trustee under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
SECTION 6.09. INSPECTION OF RECORDS. Subject to Section 5.07
concerning access to the list of Securityholders, upon reasonable notice to the
Administrative Trustees and the Property Trustee, the other records of the
Trust shall be open to inspection by Securityholders during normal business
hours for any purpose reasonably related to such Securityholder's interest as a
Securityholder.
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ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF THE PROPERTY
TRUSTEE AND THE DELAWARE TRUSTEE
SECTION 7.01. PROPERTY TRUSTEE. The Property Trustee hereby
represents and warrants for the benefit of the Depositor and the
Securityholders that:
(a) the Property Trustee is a banking corporation or trust
company duly organized, validly existing and in good standing under the laws of
the State of New York;
(b) the Property Trustee has full corporate power, authority
and legal right to execute, deliver and perform its obligations under this
Trust Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed
and delivered by the Property Trustee and constitutes the valid and legally
binding agreement of the Property Trustee enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles;
(d) the execution, delivery and performance by the Property
Trustee of this Trust Agreement will not violate, conflict with or constitute a
breach of the Property Trustee's charter or by-laws; and
(e) neither the authorization, execution or delivery by the
Property Trustee of this Trust Agreement nor the consummation of any of the
transactions by the Property Trustee contemplated herein require the consent or
approval of, the giving of notice to, the registration with or the taking of
any other action with respect to any governmental authority or agency under any
existing Federal or New York law governing the banking or trust powers of the
Property Trustee.
SECTION 7.02. DELAWARE TRUSTEE. The Delaware Trustee
represents and warrants for the benefit of the Depositor and the
Securityholders that:
(a) the Delaware Trustee is a banking corporation or trust
company duly organized, validly existing and in good standing under the laws of
the State of Delaware;
(b) the Delaware Trustee has full corporate power, authority
and legal right to execute, deliver and perform its obligations under this
Trust Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
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(c) this Trust Agreement has been duly authorized, executed
and delivered by the Delaware Trustee and constitutes the valid and legally
binding agreement of the Delaware Trustee enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles;
(d) the execution, delivery and performance by the Delaware
Trustee of this Trust Agreement will not violate the Delaware Trustee's charter
or by-laws; and
(e) neither the authorization, execution or delivery by the
Delaware Trustee of this Trust Agreement nor the consummation of any of the
transactions by the Delaware Trustee contemplated herein require the consent or
approval of, the giving of notice to, the registration with or the taking of
any other action with respect to any governmental authority or agency under any
existing Federal or Delaware law governing the banking or trust powers of the
Delaware Trustee.
ARTICLE VIII.
THE TRUSTEES
SECTION 8.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The duties and responsibilities of the Trustees shall be
as provided by this Trust Agreement and, in the case of the Property Trustee,
the Trust Indenture Act, and no implied covenants or obligations shall be read
into this Trust Agreement against any of the Trustees. Notwithstanding the
foregoing, no provision of this Trust Agreement shall require any of the
Trustees to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. Notwithstanding anything
contained in this Trust Agreement to the contrary, the duties and
responsibilities of the Property Trustee under this Trust Agreement shall be
subject to the protections, exculpations and limitations on liability afforded
to the Property Trustee under the provisions of the Trust Indenture Act and, to
the extent applicable, Rule 3A-7 under the Investment Company Act of 1940, or
any successor rule thereunder. Whether or not therein expressly so provided,
every provision of this Trust Agreement relating to the conduct or affecting
the liability of or affording protection to the Trustees shall be subject to
the provisions of this Section.
(b) All payments made by the Property Trustee or a Paying
Agent in respect of the Trust Securities shall be made only from the income and
proceeds from the Trust Property and only to the extent that there shall be
sufficient income or proceeds from the Trust Property to enable the Property
Trustee or Paying Agent to make payments in
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accordance with the terms hereof. Each Securityholder, by its acceptance of a
Trust Security, agrees that it will look solely to the income and proceeds from
the Trust Property to the extent available for distribution to it as herein
provided and that the Trustees are not personally liable to it for any amount
distributable in respect of any Trust Security or for any other liability in
respect of any Trust Security. This Section 8.01(b) does not limit the
liability of the Trustees expressly set forth elsewhere in this Trust Agreement
or, in the case of the Property Trustee, in the Trust Indenture Act.
(c) All duties and responsibilities of the Property Trustee
contained in this Trust Agreement are subject to the following:
(i) the Property Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the
Trust Property shall be to deal with such property in a
similar manner as the Property Trustee deals with similar
property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee
under this Trust Agreement, the Trust Indenture Act and Rule
3a-7 thereunder;
(ii) the Property Trustee shall have no duty or
liability for or with respect to the value, genuineness,
existence or sufficiency of the Trust Property or the payment
of any taxes or assessments levied thereon or in connection
therewith;
(iii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may
otherwise agree with the Depositor. Money held by the
Property Trustee need not be segregated from other funds held
by it except in relation to the Payment Account established by
the Property Trustee pursuant to this Trust Agreement and
except to the extent otherwise required by law; and
(iv) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or
the Depositor with their respective duties under this Trust
Agreement, nor shall the Property Trustee be liable for the
default or misconduct of the Administrative Trustees or the
Depositor.
SECTION 8.02. NOTICE OF DEFAULTS. Within five Business Days
after the occurrence of any Event of Default, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 10.08, notice of
any default known to the Property Trustee to the Securityholders and the
Depositor, unless such default shall have been cured or waived. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default.
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SECTION 8.03. CERTAIN RIGHTS OF PROPERTY TRUSTEE. Subject to
the provisions of Section 8.01 and except as provided by law:
(i) the Property Trustee may rely and shall be
protected in acting or refraining from acting in good faith
upon any resolution, Opinion of Counsel, certificate, written
representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
appraisal, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably believed by
it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) if (A) in performing its duties under this Trust
Agreement the Property Trustee is required to decide between
alternative courses of action or (B) in construing any of the
provisions in this Trust Agreement the Property Trustee finds
the same ambiguous or inconsistent with any other provisions
contained herein or (C) the Property Trustee is unsure of the
application of any provision of this Trust Agreement, then,
except as to any matter as to which the Preferred
Securityholders are entitled to vote under the terms of this
Trust Agreement, the Property Trustee shall deliver a notice
to the Depositor requesting written instructions of the
Depositor as to the course of action to be taken. The
Property Trustee shall take such action, or refrain from
taking such action, as the Property Trustee shall be
instructed in writing to take, or to refrain from taking, by
the Depositor; provided, however, that if the Property Trustee
does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such
reasonably shorter period of time set forth in such notice
(which to the extent practicable shall not be less than two
Business Days), it may, but shall be under no duty to, take or
refrain from taking such action not inconsistent with this
Trust Agreement as it shall deem advisable and in the best
interests of the Securityholders, in which event the Property
Trustee shall have no liability except for its own bad faith,
negligence or willful misconduct;
(iii) whenever in the administration of this Trust
Agreement the Property Trustee shall deem it desirable that a
matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Property Trustee (unless
other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, request and rely upon an
Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Depositor or the
Administrative Trustees;
(iv) the Property Trustee may consult with counsel of
its selection and the written advice of such counsel or any
Opinion of Counsel shall be full and
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complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and
in reliance thereon;
(v) the Property Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this
Trust Agreement at the request or direction of any of the
Securityholders pursuant to this Trust Agreement, unless such
Securityholders shall have offered to the Property Trustee
reasonable security or indemnity against the costs, expenses
(including reasonable attorneys' fees and expenses) and
liabilities which might be incurred by it in compliance with
such request or direction;
(vi) the Property Trustee shall not be bound to make
any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, approval,
bond, debenture, note or other evidence of indebtedness or
other paper or document reasonably believed by it to be
genuine, unless requested in writing to do so by one or more
Securityholders, but the Property Trustee, in its discretion,
may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Property Trustee
shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and
premises of the Depositor personally or by agent or attorney;
(vii) the Property Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either
directly or by or through its agents or attorneys, and the
Property Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed
with due care by it hereunder, provided that the Property
Trustee shall be responsible for its own negligence or
recklessness with respect to selection of any agent or
attorney appointed by it hereunder.
(viii) the Property Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good
faith and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Trust Agreement;
(ix) the Property Trustee shall not be charged with
knowledge of any default or Event of Default with respect to
the Trust Securities unless either (1) a Responsible Officer
of the Property Trustee shall have actual knowledge of the
default or Event of Default or (2) written notice of such
default or Event of Default shall have been given to the
Property Trustee by the Depositor, the Administrative Trustees
or by any Holder of the Trust Securities;
(x) no provision of this Trust Agreement shall be
deemed to impose any duty or obligation on the Property
Trustee to perform any act or acts or
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exercise any right, power, duty or obligation conferred or
imposed on it in any jurisdiction in which it shall be
illegal, or in which the Property Trustee shall be unqualified
or incompetent in accordance with applicable law, to perform
any such act or acts or to exercise any such right, power,
duty or obligation; and no permissive or discretionary power
or authority available to the Property Trustee shall be
construed to be a duty; and
(xi) no provision of this Trust Agreement shall require
the Property Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if the Property Trustee shall have
reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Trust Agreement or adequate indemnity against
such risk or liability is not reasonably assured to it;
(xii) the Property Trustee shall have no duty to see to
any recording, filing or registration of any instrument
(including any financing or continuation statement or any tax
or securities) (or any rerecording, refiling or registration
thereof);
(xiii) the Property Trustee shall have the right at any
time to seek instructions concerning the administration of
this Trust Agreement from any court of competent jurisdiction;
and
(xiv) whenever in the administration of this Trust
Agreement the Property Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder the Property
Trustee (i) may request instructions from the Holders of the
Trust Securities, which instructions may only be given by the
Holders of the same proportion of liquidation amount of the
Trust Securities as would be entitled to direct the Property
Trustee under the terms of this Trust Agreement in respect of
such remedies, rights or actions, (ii) may refrain from
enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be
protected in acting in accordance with such instructions.
SECTION 8.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES. The recitals contained herein and in the Trust Securities
Certificates shall be taken as the statements of the Trust, and the Trustees do
not assume any responsibility for their correctness. The Trustees make no
representations as to the value or condition of the property of the Trust or
any part thereof, nor as to the validity or sufficiency of this Trust Agreement
or the Trust Securities. The Trustees shall not be accountable for the use or
application by the Trust of the proceeds of the Trust Securities in accordance
with Section 2.05.
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SECTION 8.05. MAY HOLD SECURITIES. Except as provided in the
definition of the term "Outstanding" in Article I, any Trustee or any other
agent of any Trustee or the Trust, in its individual or any other capacity, may
become the owner or pledgee of Trust Securities and may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such other
agent.
SECTION 8.06. COMPENSATION; FEES; INDEMNITY.
The Depositor agrees
(1) to pay to the Trustees from time to time reasonable
compensation for all services rendered by the Trustees hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustees
in accordance with any provision of this Trust Agreement (including
the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence (gross negligence, in the
case of any Administrative Trustee), bad faith or willful misconduct;
and
(3) to indemnify each Trustee for, and to hold each Trustee
harmless against, any and all loss, damage, claims, liability or
expense incurred without negligence (gross negligence, in the case of
any Administrative Trustee), bad faith or willful misconduct on its
part, arising out of or in connection with the acceptance or
administration of this Trust Agreement, including the reasonable costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
As security for the performance of the obligations of the
Depositor under this Section, each of the Trustees shall have a lien prior to
the Trust Securities upon all property and funds held or collected by such
Trustee as such, except funds held in trust for the payment of Distributions on
the Trust Securities.
The provisions of this Section shall survive the termination
of this Trust Agreement.
SECTION 8.07. CERTAIN TRUSTEES REQUIRED; ELIGIBILITY. (a)
There shall at all times be a Property Trustee hereunder with respect to the
Trust Securities. The Property Trustee shall be a Person that has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this
Section,
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the combined capital and surplus of such Person shall be deemed to be its
combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Property Trustee with respect to
the Trust Securities shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article VIII.
(b) There shall at all times be one or more Administrative
Trustees hereunder with respect to the Trust Securities. Each
Administrative Trustee shall be either a natural person who is at
least 21 years of age or a legal entity that shall act through one or
more persons authorized to bind such entity.
(c) There shall at all times be a Delaware Trustee with
respect to the Trust Securities. The Delaware Trustee shall either be
(i) a natural person who is at least 21 years of age and a resident of
the State of Delaware or (ii) a legal entity with its principal place
of business in the State of Delaware that otherwise meets the
requirements of applicable Delaware law and that shall act through one
or more persons authorized to bind such entity.
SECTION 8.08. CONFLICTING INTERESTS.
If the Property Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Property Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Indenture. The Subordinated Indenture and the Guarantee Agreement shall be
deemed to be specifically described in this Trust Agreement for the purposes of
clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
SECTION 8.09. CO-TRUSTEES AND SEPARATE TRUSTEE.
Unless an Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any
part of the Trust Property may at the time be located, the Depositor and the
Property Trustee shall have power to appoint, and upon the written request of
the Property Trustee, the Depositor shall for such purpose join with the
Property Trustee in the execution, delivery, and performance of all instruments
and agreements necessary or proper to appoint, one or more Persons approved by
the Property Trustee either to act as co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to act as separate
trustee of any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If
the Depositor does not join in such appointment within 15 days after the
receipt by it of a request so to do, or in case an Event of Default under the
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Subordinated Indenture has occurred and is continuing, the Property Trustee
alone shall have power to make such appointment.
Should any written instrument from the Depositor be required
by any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right, or power, any
and all such instruments shall, on request, be executed, acknowledged, and
delivered by the Depositor.
Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following terms, namely:
(1) The Trust Securities shall be executed and delivered and
all rights, powers, duties, and obligations hereunder in respect of
the custody of securities, cash and other personal property held by,
or required to be deposited or pledged with, the Trustees designated
for such purpose hereunder, shall be exercised, solely by such
Trustees.
(2) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Property Trustee in respect of any
property covered by such appointment shall be conferred or imposed
upon and exercised or performed by the Property Trustee or by the
Property Trustee and such co-trustee or separate trustee jointly, as
shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the
Property Trustee shall be incompetent or unqualified to perform such
act, in which event such rights, powers, duties, and obligations shall
be exercised and performed by such co-trustee or separate trustee.
(3) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the Depositor,
may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section 8.09, and, in case an Event of
Default under the Subordinated Indenture has occurred and is
continuing, the Property Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee
without the concurrence of the Depositor. Upon the written request of
the Property Trustee, the Depositor shall join with the Property
Trustee in the execution, delivery, and performance of all instruments
and agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided in this
Section.
(4) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Trustee, or
any other such trustee hereunder.
(5) The Property Trustee shall not be liable by reason of any
act of a co-trustee or separate trustee.
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(6) Any Act of Holders delivered to the Property Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
SECTION 8.10. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR. No resignation or removal of any Trustee (as the case may be, the
"Relevant Trustee") and no appointment of a successor Relevant Trustee pursuant
to this Article shall become effective until the acceptance of appointment by
the successor Relevant Trustee in accordance with the applicable requirements
of Section 8.11.
The Relevant Trustee may resign at any time with respect to
the Trust Securities by giving written notice thereof to the Securityholders.
If the instrument of acceptance by a successor Relevant Trustee required by
Section 8.11 shall not have been delivered to the Relevant Trustee within 30
days after the giving of such notice of resignation, the resigning Relevant
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Relevant Trustee with respect to the Trust Securities.
Unless an Event of Default shall have occurred and be
continuing, the Relevant Trustee may be removed at any time by Act of the
Common Securityholder. If an Event of Default shall have occurred and be
continuing, the Relevant Trustee may be removed at such time by Act of the
Securityholders of a majority of the aggregate Liquidation Amount of the
Preferred Securities Certificates, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust).
If the Relevant Trustee shall resign, be removed or become
incapable of continuing to act as Relevant Trustee at a time when no Event of
Default shall have occurred and be continuing, the Common Securityholder, by
Act of the Common Securityholder delivered to the retiring Relevant Trustee,
shall promptly appoint a successor Relevant Trustee or Trustees with respect to
the Trust Securities and the Trust, and the retiring Relevant Trustee shall
comply with the applicable requirements of Section 8.11. If the Relevant
Trustee shall resign, be removed or become incapable of continuing to act as
the Relevant Trustee at a time when an Event of Default shall have occurred and
be continuing, the Preferred Securityholders, by Act of the Preferred
Securityholders of a majority in Liquidation Amount of the Preferred Securities
then outstanding delivered to the retiring Relevant Trustee, shall promptly
appoint a successor Relevant Trustee or Trustees with respect to the Trust
Securities and the Trust, and the Relevant Trustee shall comply with the
applicable requirements of Section 8.11. If no successor Relevant Trustee with
respect to the Trust Securities shall have been so appointed by the Common
Securityholders or the Preferred Securityholders and accepted appointment in
the manner required by Section 8.11, any Securityholder who has been a
Securityholder of Trust Securities for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Relevant Trustee with respect
to the Trust Securities.
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The retiring Relevant Trustee shall give notice of each
resignation and each removal of the Relevant Trustee with respect to the Trust
Securities and the Trust and each appointment of a successor Trustee with
respect to the Trust Securities and the Trust to all Securityholders in the
manner provided in Section 10.08 and shall give notice to the Depositor. Each
notice shall include the name and address of the successor Relevant Trustee
with respect to the Trust Securities and the Trust and, in the case of the
Property Trustee, the address of its Corporate Trust Office.
Notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee
who is a natural person dies or becomes incompetent or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by (i)
the unanimous act of remaining Administrative Trustees if there are at least
two of them or (ii) otherwise by the Depositor (with the successor in each case
being an individual who satisfies the eligibility requirement for
Administrative Trustees or Delaware Trustee, as the case may be, set forth in
Section 8.07). Additionally, notwithstanding the foregoing or any other
provision of this Trust Agreement, in the event the Depositor reasonably
believes that any Administrative Trustee who is a natural person has become
incompetent or incapacitated, the Depositor, by notice to the remaining
Trustees, may terminate the status of such Person as an Administrative Trustee
(in which case the vacancy so created will be filled in accordance with the
preceding sentence).
SECTION 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. In
case of the appointment hereunder of a successor Relevant Trustee with respect
to all Trust Securities and the Trust, every such successor Relevant Trustee so
appointed shall execute, acknowledge and deliver to the Trust and to the
retiring Relevant Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Relevant Trustee shall
become effective and such successor Relevant Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Relevant Trustee; but, on the request of the Depositor
or the successor Relevant Trustee, such retiring Relevant Trustee shall, upon
payment of its charges by the Depositor, execute and deliver an instrument
transferring to such successor Relevant Trustee all the rights, powers and
trusts of the retiring Relevant Trustee and shall duly assign, transfer and
deliver to such successor Relevant Trustee all property and money held by such
retiring Relevant Trustee hereunder, subject, nevertheless, to the retiring
Trustee's prior lien provided for in Section 8.06.
In case of the appointment hereunder of a successor Relevant
Trustee with respect to the Trust Securities and the Trust, the retiring
Relevant Trustee and each successor Trustee with respect to the Trust
Securities shall execute and deliver an amendment hereto wherein each successor
Relevant Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and
to vest in, each successor Relevant Trustee all the rights, powers, trusts and
duties of the retiring Relevant Trustee with respect to the Trust Securities
and the Trust and (2) shall add to or change any of the provisions of this
Trust Agreement as shall be necessary to provide
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for or facilitate the administration of the trusts hereunder by more than one
Relevant Trustee, it being understood that nothing herein or in such amendment
shall constitute such Relevant Trustees co-trustees of the same trust and that
each such Relevant Trustee shall be trustee of a trust or trusts hereunder
separate and apart from any trust or trusts hereunder administered by any other
such Relevant Trustee and upon the execution and delivery of such amendment the
resignation or removal of the retiring Relevant Trustee shall become effective
to the extent provided therein and each such successor Relevant Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Relevant Trustee with respect
to the Trust Securities and the Trust; but, on request of the Trust or any
successor Relevant Trustee such retiring Relevant Trustee shall duly assign,
transfer and deliver to such successor Trustee all Trust Property, all proceeds
thereof and money held by such retiring Relevant Trustee hereunder with respect
to the Trust Securities and the Trust.
Upon request of any such successor Relevant Trustee, the
retiring Relevant Trustee shall execute any and all instruments for more fully
and certainly vesting in and confirming to such successor Relevant Trustee all
such rights, powers and trusts referred to in the first or second preceding
paragraph, as the case may be.
No successor Relevant Trustee shall accept its appointment
unless at the time of such acceptance such successor Relevant Trustee shall be
qualified and eligible under this Article VIII.
SECTION 8.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS. Any Person into which the Property Trustee or the Delaware
Trustee or any Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Relevant Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Relevant Trustee, shall be the successor of such Relevant Trustee
hereunder, provided such Person shall be otherwise qualified and eligible under
this Article VIII, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
SECTION 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
DEPOSITOR OR TRUST. If and when the Property Trustee shall be or become a
creditor of the Depositor or the Trust (or any other obligor upon the
Debentures or the Trust Securities), the Property Trustee shall be subject to
the provisions of the Trust Indenture Act regarding the collection of claims
against the Depositor or Trust (or any such other obligor).
SECTION 8.14. REPORTS BY PROPERTY TRUSTEE. (a) The Property
Trustee shall transmit to Securityholders such reports concerning the Property
Trustee and its actions under this Trust Agreement as may be required pursuant
to the Trust Indenture Act at the times and in the manner provided pursuant
thereto. Such of those reports as are required to
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be transmitted by the Property Trustee pursuant to Section 313(a) of the Trust
Indenture Act shall be so transmitted within 60 days after July 31 of each
year, commencing July 31, 1996.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with each stock
exchange upon which the Trust Securities are listed, with the Commission and
with the Depositor. The Depositor will notify the Property Trustee when any
Trust Securities are listed on any stock exchange.
SECTION 8.15. REPORTS TO THE PROPERTY TRUSTEE. The Depositor
and the Administrative Trustees on behalf of the Trust shall provide to the
Property Trustee such documents, reports and information as required by Section
314 (if any) and the compliance certificate required by Section 314 of the
Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.
SECTION 8.16. EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT. Each of the Depositor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Trust Agreement
(including any covenants compliance with which constitutes a condition
precedent) that relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) of the Trust Indenture Act may be given
in the form of an Officers' Certificate.
SECTION 8.17. NUMBER OF TRUSTEES.
(a) The number of Trustees shall be five, provided that
Depositor, by written instrument may increase or decrease the number of
Administrative Trustees.
(b) If a Trustee ceases to hold office for any reason and the
number of Administrative Trustees is not reduced pursuant to Section 8.17(a),
or if the number of Trustees is increased pursuant to Section 8.17(a), a
vacancy shall occur. The vacancy shall be filled with a Trustee appointed in
accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to annul the Trust. Whenever a vacancy in the number of Administrative
Trustees shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 8.10, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.
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SECTION 8.18. DELEGATION OF POWER.
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 2.07(a), including any registration statement or
amendment thereto filed with the Commission, or making any other governmental
filing; and
(b) the Administrative Trustees shall have power to delegate
from time to time to such of their number the doing of such things and the
execution of such instruments either in the name of the Trust or the names of
the Administrative Trustees or otherwise as the Administrative Trustees may
deem expedient, to the extent such delegation is not prohibited by applicable
law or contrary to the provisions of the Trust, as set forth herein.
SECTION 8.19. FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Trust Agreement shall not be liable to the Trust or to any other Covered
Person for its good faith reliance on the provisions of this Trust Agreement.
The provisions of this Trust Agreement, to the extent that they restrict the
duties and liabilities of an Indemnified Person otherwise existing at law or in
equity (other than the duties imposed on the Property Trustee under the Trust
Indenture Act), are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnified Person;
(b) Unless otherwise expressly provided herein and subject to
the provisions of the Trust Indenture Act:
(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered Person; or
(ii) whenever this Trust Agreement or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or provides
terms that are, fair and reasonable to the Trust or any Holder
of Trust Securities, the Indemnified Person shall resolve such
conflict of interest, take such action or provide such terms,
considering in each case the relative interest of each party
(including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating
to such interests, any customary or accepted industry
practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the
Indemnified Person, the resolution, action or term so made,
taken or provided by the Indemnified Person shall not
constitute a breach of this Trust Agreement or any other
agreement contemplated herein or
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of any duty or obligation of the Indemnified Person at law or
in equity or otherwise; and
(c) Whenever in this Trust Agreement an Indemnified Person is
permitted or required to make a decision
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires, including
its own interests, and shall have no duty or obligation to
give any consideration to any interest of or factors affecting
the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Trust Agreement or by applicable law.
ARTICLE IX.
TERMINATION AND LIQUIDATION
SECTION 9.01. TERMINATION UPON EXPIRATION DATE. The Trust
shall automatically terminate on December 31, 2035 (the "Expiration Date") and
the Trust Property shall be distributed in accordance with Section 9.04.
SECTION 9.02. EARLY TERMINATION. Upon the first to occur of
any of the following events (such first occurrence, an "Early Termination
Event"):
(i) the occurrence of a Bankruptcy Event in respect
of, or the dissolution or liquidation of, the Depositor;
(ii) the redemption of all of the Preferred Securities;
(iii) the occurrence of a Tax Event;
(iv) an order for judicial termination of the Trust
having been entered by a court of competent jurisdiction;
the Trust shall terminate and the Trustees shall take such action as is
required by Section 9.04.
SECTION 9.03. TERMINATION. The respective obligations and
responsibilities of the Trust and the Trustees created hereby shall terminate
upon the latest to occur of the
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following: (i) the distribution by the Property Trustee to Securityholders upon
the liquidation of the Trust pursuant to Section 9.04, or upon the redemption
of all of the Trust Securities pursuant to Section 4.02 or 9.04(d), of all
amounts required to be distributed hereunder upon the final payment of the
Trust Securities; (ii) the payment of any expenses owed by the Trust; and (iii)
the discharge of all administrative duties of the Administrative Trustees,
including the performance of any tax reporting obligations with respect to the
Trust or the Securityholders.
SECTION 9.04. LIQUIDATION. (a) If an Early Termination
Event specified in clause (i) or (iv) of Section 9.02 occurs, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, the Trust shall be liquidated by the Property Trustee as expeditiously as
the Property Trustee determines to be appropriate by distributing to each
Securityholder a Like Amount of Debentures, subject to Section 9.04(e). Notice
of liquidation shall be given by the Administrative Trustees by first-class
mail, postage prepaid, mailed not later than 30 nor more than 60 days prior to
the Liquidation Date to each Holder of Trust Securities at such Holder's
address appearing in the Security Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date,
the Trust Securities will no longer be deemed to be
outstanding and any Trust Securities Certificates not
surrendered for exchange will be deemed to represent a Like
Amount of Debentures; and
(iii) provide such information with respect to the
mechanics by which Holders may exchange Trust Securities
Certificates for Debentures, or if Section 9.04(e) applies
receive a Liquidation Distribution, as the Administrative
Trustee or the Property Trustee shall deem appropriate.
(b) Except where Section 9.02(ii), the penultimate sentence
of 9.04(d) or (e) applies, in order to affect the liquidation of the Trust, if
any, and distribution of the Debentures to Securityholders, the Property
Trustee shall establish a record date for such distribution (which shall be not
more than 45 days prior to the Liquidation Date) and, either itself acting as
exchange agent or through the appointment of a separate exchange agent, shall
establish such procedures as it shall deem appropriate to effect the
distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 9.02(ii), the penultimate sentence
of 9.04(d) or (e) applies, after the Liquidation Date, (i) the Trust Securities
will no longer be deemed to be Outstanding, (ii) certificates representing a
Like Amount of Debentures will be issued to Holders of Trust Securities
Certificates, upon surrender of such certificates to the Administrative
Trustees or their agent for exchange, (iii) any Trust Securities Certificates
not so surrendered for exchange will be deemed to represent a Like Amount of
Debentures,
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accruing interest at the rate provided for in the Debentures from the last
Distribution Date on which a Distribution was made on such Trust Certificates
until such certificates are so surrendered (and until such certificates are so
surrendered, no payments or interest or principal will be made to Holders of
Trust Securities Certificates with respect to such Debentures) and (iv) all
rights of Securityholders holding Trust Securities will cease, except the right
of such Securityholders to receive Debentures upon surrender of Trust
Securities Certificates.
(d) If at any time, a Tax Event shall occur and be
continuing, the Administrative Trustees shall, unless the Debentures are
redeemed in the limited circumstances described below, terminate the Trust and,
after satisfaction of creditors of the Trust, if any, as provided by applicable
law cause Debentures held by the Property Trustee having a Like Amount of the
Preferred Securities and the Common Securities to be distributed to the Holders
of the Preferred Securities and the Common Securities on a pro rata basis in
liquidation of such Holders' interests in the Trust, within 90 days following
the occurrence of such Tax Event; provided, however, that as a condition of
such termination and distribution, the Administrative Trustees shall have
received an opinion of nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may
rely on any then applicable published revenue rulings of the Internal Revenue
Service, to the effect that the Holders of the Preferred Securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of the termination of the Trust and distribution of Debentures; and,
provided, further, that, if and as long as at the time there is available to
the Trust the opportunity to eliminate, within such 90-day period, the Tax
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure which has no
adverse effect on the Trust, the Depositor or the Holders of the Preferred
Securities, the Trust will pursue such measure in lieu of termination.
Furthermore, if (i) the Administrative Trustees have received an opinion of
nationally recognized independent tax counsel experienced in such matters (a
"Redemption Tax Opinion") that, as a result of a Tax Event, there is more than
an insubstantial risk that the Depositor would be precluded from deducting the
interest on the Debentures for United States federal income tax purposes even
if the Debentures were distributed to the Holders of Preferred Securities and
Common Securities in liquidation of such Holders' interests in the Trust as
described above or (ii) the Administrative Trustees shall have been informed by
such tax counsel that a No Recognition Opinion cannot be delivered to the
Trust, the Depositor shall have the right, upon not less than 30 nor more than
60 days' notice, to redeem the Debentures in whole or in part for cash at the
Redemption Price plus accumulated and unpaid Distributions to the date of such
payment within 90 days following the occurrence of such Tax Event, and promptly
following such redemption Preferred Securities and Common Securities with an
aggregate liquidation preference amount equal to the aggregate principal amount
of the Debentures so redeemed will be redeemed by the Trust (in the manner set
forth in Section 4.02 hereof) at the Redemption Price plus accumulated and
unpaid Distributions on a pro rata basis, provided, however, that if at the
time there is available to the Depositor or the Administrative Trustees on
behalf of the Trust the opportunity to eliminate, within such 90-day period,
the Tax Event
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by taking some ministerial action, such as filing a form or making an election,
or pursuing some other similar reasonable measure, which has no adverse effect
on the Trust, the Depositor or the Holders of the Preferred Securities, the
Depositor or the Administrative Trustees on behalf of the Trust will pursue
such measure in lieu of redemption and provided further that the Depositor
shall have no right to redeem the Debentures while the Administrative Trustees
on behalf of the Trust are pursuing any such ministerial action. The Common
Securities will be redeemed on a pro rata basis with the Preferred Securities,
except that if an Event of Default has occurred and is continuing, the
Preferred Securities will have a priority over the Common Securities with
respect to payment of the Redemption Price and accumulated and unpaid
Distributions to the date of such payment.
(e) In the event that, notwithstanding the other provisions
of this Section 9.04, whether because of an order for termination entered by a
court of competent jurisdiction or otherwise, distribution of the Debentures in
the manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Property Trustee in such manner as
the Property Trustee determines. In such event, on the date of the
dissolution, winding-up or other termination of the Trust, Securityholders will
be entitled to receive out of the assets of the Trust available for
distribution to Securityholders, after satisfaction of liabilities to creditors
of the Trust, if any, as provided by applicable law, an amount equal to the
Liquidation Amount per Trust Security plus accumulated and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If, upon any such dissolution, winding up or termination, the
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then, subject to the next succeeding sentence, the amounts
payable by the Trust on the Trust Securities shall be paid on a pro rata basis
(based upon Liquidation Amounts). The Depositor will be entitled to receive
Liquidation Distributions upon any such dissolution, winding-up or termination
pro rata (determined as aforesaid) with Holders of Preferred Securities, except
that, if an Event of Default has occurred and is continuing or if an Event of
Default has not occurred solely by reason of a requirement that time lapse or
notice be given, the Preferred Securities shall have a priority over the Common
Securities.
ARTICLE X.
MISCELLANEOUS PROVISIONS
SECTION 10.01. GUARANTEE BY THE DEPOSITOR AND ASSUMPTION OF
OBLIGATIONS. Subject to the terms and conditions hereof, the Depositor
irrevocably and unconditionally guarantees to each Person to whom the Trust is
now or hereafter becomes indebted or liable (the "Beneficiaries"), and agrees
to assume liability for, the full payment, when and as due, of any and all
Obligations (as hereinafter defined) to such Beneficiaries. As used herein,
"Obligations" means any indebtedness, expenses or liabilities of the Trust,
other than obligations of the Trust to pay to Holders or other similar
interests in the Trust the
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amounts due such Holders pursuant to the terms of the Preferred Securities or
such other similar interests, as the case may be. This guarantee and
assumption is intended to be for the benefit, of, and to be enforceable by, all
such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.
SECTION 10.02. LIMITATION OF RIGHTS OF SECURITYHOLDERS. The
death or incapacity of any person having an interest, beneficial or otherwise,
in a Trust Security shall not operate to terminate this Trust Agreement, nor
entitle the legal representatives or heirs of such person or any Securityholder
for such person, to claim an accounting, take any action or bring any
proceeding in any court for a partition or winding up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
SECTION 10.03. AMENDMENT.
(a) This Trust Agreement may be amended from time to time by
the Trust on approval of a majority of the Administrative Trustees and the
Depositor, without the consent of any Securityholders, (i) to cure any
ambiguity, correct or supplement any provision herein or therein which may be
inconsistent with any other provision herein or therein, or to make any other
provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of this
Trust Agreement or (ii) to modify, eliminate or add to any provisions of this
Trust Agreement to such extent as shall be necessary to ensure that the Trust
will not be classified for United States federal income tax purposes other than
as a "grantor trust" and not as an association taxable as a corporation at any
time that any Trust Securities are outstanding or to ensure the Trust's
exemption from the status of an "investment company" under the Investment
Company Act of 1940, as amended; provided, however, that, except in the case of
clause (ii), such action shall not adversely affect in any material respect the
interests of any Securityholder and, in the case of clause (i), any amendments
of this Trust Agreement shall become effective when notice thereof is given to
the Securityholders.
(b) Except as provided in Section 10.03(c), any provision of
this Trust Agreement may be amended by the Administrative Trustees and the
Depositor with (i) the consent of Holders of Trust Securities representing not
less than a majority (based upon Liquidation Amounts) of the Trust Securities
then outstanding and (ii) receipt by the Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect the Trust's status
as a grantor trust for federal income tax purposes or the Trust's exemption
from status of an "investment company" under the Investment Company Act of
1940, as amended.
(c) In addition to and notwithstanding any other provision in
this Trust Agreement, without the consent of each affected Securityholder (such
consent being obtained in accordance with Section 6.03 or 6.06), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise
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adversely affect the amount of any Distribution required to be made in respect
of the Trust Securities as of a specified date or (ii) restrict the right of a
Securityholder to institute suit for the enforcement of any such payment on or
after such date.
(d) Notwithstanding any other provisions of this Trust
Agreement, no Trustee shall enter into or consent to any amendment to this
Trust Agreement which would cause the Trust to fail or cease to qualify for the
exemption from status of an "investment company" under the Investment Company
Act of 1940, as amended, afforded by Rule 3a-5 thereunder.
(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor and the Trustees, this Trust
Agreement may not be amended in a manner which imposes any additional
obligation on the Depositor or any Trustee.
(f) In the event that any amendment to this Trust Agreement
is made, the Administrative Trustees shall promptly provide to the Depositor a
copy of such amendment.
(g) The Property Trustee is entitled to receive an Opinion of
Counsel as conclusive evidence that any amendment to this Trust Agreement
executed pursuant to this Section 10.03 is authorized or permitted by, and
conforms to, the terms of this Section 10.03, has been duly authorized by and
lawfully executed and delivered on behalf of the other requisite parties, and
that it is proper for the Property Trustee under the provisions of this Section
10.03 to join in the execution thereof.
SECTION 10.04. SEPARABILITY. In case any provision in this
Trust Agreement or in the Trust Securities Certificates shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.05. GOVERNING LAW. THIS TRUST AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND THE
TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE
(WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).
SECTION 10.06. SUCCESSORS. This Trust Agreement shall be
binding upon and shall inure to the benefit of any successor to the Trust or
the Relevant Trustees or any of them, including any successor by operation of
law.
SECTION 10.07. HEADINGS. The Article and Section headings
are for convenience only and shall not affect the construction of this Trust
Agreement.
SECTION 10.08. NOTICE AND DEMAND. Any notice, demand or
other communication which by any provision of this Trust Agreement is required
or permitted to
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be given or served to or upon any Securityholder or the Depositor may be given
or served in writing by deposit thereof, postage prepaid, in the United States
mail, hand delivery or facsimile transmission, in each case, addressed, (i) in
the case of a Preferred Securityholder, to such Preferred Securityholder as
such Securityholder's name and address may appear on the Securities Register
and (ii) in the case of the Common Securityholder or the Depositor, to Texas
Utilities Electric Company, Energy Plaza, 1601 Bryan Street, Dallas, Texas
75201, Attention: Treasurer, facsimile no. 214-812- 2488, with a copy to the
Secretary, facsimile no. 214-812-2488. Such notice, demand or other
communication to or upon a Securityholder shall be deemed to have been
sufficiently given or made, for all purposes, upon hand delivery, mailing or
transmission.
Any notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or
served to or upon the Trust, the Property Trustee, the Delaware Trustee or the
Administrative Trustees shall be given in writing addressed (until another
address is published by the Trust) as follows: (i) with respect to the
Property Trustee or the Delaware Trustee, The Bank of New York, 101 Barclay
Street, Floor 21 West, New York, NY 10286, Attention: Corporate Trust
Department with a copy to: The Bank of New York (Delaware), White Clay Center,
Route 273, Newark, Delaware 19711, Attention: Corporate Trust Department and
(ii) with respect to the Trust or the Administrative Trustees, at the address
above for notice to the Depositor, marked "Attention: Administrative Trustees
for TU Electric Capital II". Such notice, demand or other communication to or
upon the Trust or the Property Trustee shall be deemed to have been
sufficiently given or made only upon actual receipt of the writing by the Trust
or the Property Trustee.
SECTION 10.09. AGREEMENT NOT TO PETITION. Each of the
Trustees and the Depositor agrees for the benefit of the Securityholders that,
until at least one year and one day after the Trust has been terminated in
accordance with Article IX, it shall not file, or join in the filing of, a
petition against the Trust under any bankruptcy, reorganization, arrangement,
insolvency, liquidation or other similar law (including, without limitation,
the United States Bankruptcy Code) (collectively, "Bankruptcy Laws") or
otherwise join in the commencement of any proceeding against the Trust under
any Bankruptcy Law. In the event the Depositor takes action in violation of
this Section 10.09, the Property Trustee agrees, for the benefit of
Securityholders, that it shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor against
the Trust or the commencement of such action and raise the defense that the
Depositor has agreed in writing not to take such action and should be stopped
and precluded therefrom and such other defenses, if any, as counsel for the
Property Trustee or the Trust may assert. The provisions of this Section 10.09
shall survive the termination of this Trust Agreement.
SECTION 10.10. CONFLICT WITH TRUST INDENTURE ACT. (a) This
Trust Agreement is subject to the provisions of the Trust Indenture Act that
are required to be part of this Trust Agreement and shall, to the extent
applicable, be governed by such provisions.
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(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts
with another provision hereof which is required or deemed to be included in
this Trust Agreement by any of the provisions of the Trust Indenture Act, such
required or deemed provision shall control.
(d) The application of the Trust Indenture Act to this Trust
Agreement shall not affect the nature of the Securities as equity securities
representing interests in the Trust.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON
BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST
SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND THE
AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THOSE TERMS
AND PROVISIONS SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST
AND SUCH SECURITYHOLDER AND SUCH OTHERS.
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IN WITNESS WHEREOF, the parties have caused this Amended and Restated Trust
Agreement to be duly executed, all as of the day and year first above written.
TEXAS UTILITIES ELECTRIC COMPANY
By: /s/ Cathryn Hulen
-------------------------------------------
Title: Treasurer and Assistant Secretary
THE BANK OF NEW YORK,
as Property Trustee
By: /s/ Walter N. Gitlin
-------------------------------------------
Title: Vice President
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Joseph F. Leary
-------------------------------------------
Title: Vice President
/s/ Wayne Patterson
-----------------------------------------
Wayne Patterson
solely in his capacity as Administrative
Trustee
/s/ Cathryn Hulen
-------------------------------------------
Cathryn Hulen
solely in her capacity as Administrative
Trustee
/s/ Michael Perkins
-------------------------------------------
Michael Perkins
solely in his capacity as Administrative
Trustee
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<PAGE> 59
/s/ Laura Anderson
-------------------------------------------
Laura Anderson
solely in her capacity as Administrative
Trustee
/s/ John Casey
-------------------------------------------
John Casey
solely in his capacity as Administrative
Trustee
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EXHIBIT A
CERTIFICATE OF TRUST
OF
TU ELECTRIC CAPITAL II
THIS CERTIFICATE OF TRUST of TU Electric Capital II (the
"Trust"), dated as of September 28, 1995, is being duly executed and filed by
the undersigned, as trustees, to form a business trust under the Delaware
Business Trust Act (12 Del. C. Section 3801, et seq.).
1. Name. The name of the business trust being formed hereby
is TU Electric Capital II.
2. Delaware Trustee. The name and business address of the
trustee of the Trust with a principal place of business in the State of
Delaware are The Bank of New York (Delaware), White Clay Center, Route 273,
Newark, New Castle County, Delaware 19711.
3. Effective Date. This Certificate of Trust shall be
effective as of its filing.
IN WITNESS WHEREOF, the undersigned, being the only trustees
of the Trust, have executed this Certificate of Trust as of the date first
above written.
THE BANK OF NEW YORK (DELAWARE), WAYNE PATTERSON,
not in its individual capacity not in his individual
but solely as Trustee but solely as Trustee
By: By:
---------------------------- --------------------------
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee
By:
----------------------------
Name:
Title:
A-1
<PAGE> 61
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate Number Number of Common Securities
C-[ ]
Certificate Evidencing Common Securities
of
TU Electric Capital II
Common Securities
(liquidation amount $25 per Common Security)
TU Electric Capital II, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Texas Utilities Electric Company (the "Holder") is the registered owner of
_____ (_____) common securities of the Trust representing undivided beneficial
interests in the assets of the Trust and designated the Common Securities
(liquidation amount $25 per Common Security) (the "Common Securities"). In
accordance with Section 5.10 of the Trust Agreement (as defined below) the
Common Securities are not transferable and any attempted transfer hereof shall
be void. The designations, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities are set forth in, and this
certificate and the Common Securities represented hereby are issued and shall
in all respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Trust dated as of December 1, 1995, as the same
may be amended from time to time (the "Trust Agreement"), including the
designation of the terms of the Common Securities as set forth therein. The
Trust will furnish a copy of the Trust Agreement to the Holder without charge
upon written request to the Trust at its principal place of business or
registered office.
Upon receipt of this certificate, the Holder is bound by the
Trust Agreement and is entitled to the benefits thereunder.
B-1
<PAGE> 62
IN WITNESS WHEREOF, an Administrative Trustee of the Trust has
executed this certificate for and on behalf of the Trust this ____ day of
_________, 1995.
TU Electric Capital II
By:
-----------------------------------------
not in his (her) individual capacity, but
solely as Administrative Trustee
B-2
<PAGE> 63
EXHIBIT C
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of ________ ___, 1995, between Texas
Utilities Electric Company, a Texas corporation ("TU Electric"), and TU
Electric Capital II, a Delaware business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the
"Common Securities") to and receive Debentures from TU Electric and to issue
its ___% Trust Originated Preferred Securities, Series A (the "Preferred
Securities") with such powers, preferences and special rights and restrictions
as are set forth in the Amended and Restated Trust Agreement of the Trust dated
as of ________ __, 1995 as the same may be amended from time to time (the
"Trust Agreement");
WHEREAS, TU Electric is the issuer of the Debentures;
NOW, THEREFORE, in consideration of the acceptance by each
holder of the Preferred Securities, which acceptance TU Electric hereby agrees
shall benefit TU Electric and which acceptance TU Electric acknowledges will be
made in reliance upon the execution and delivery of this Agreement, TU
Electric, including in its capacity as holder of the Common Securities, and the
Trust hereby agree as follows:
ARTICLE I
Section 1.01. Assumption by TU Electric. Subject to the
terms and conditions hereof, TU Electric hereby irrevocably and unconditionally
assumes the full payment, when and as due, of any and all Obligations (as
hereinafter defined) to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries"). As used herein,
"Obligations" means any indebtedness, expenses or liabilities of the Trust,
other than (i) obligations of the Trust to pay to holders of any Preferred
Securities or other similar interests in the Trust the amounts due such holders
pursuant to the terms of the Preferred Securities or such other similar
interests, as the case may be and (ii) obligations arising out of the
negligence, willful misconduct or bad faith of the Trustees of the Trust. This
Agreement is intended to be for the benefit of, and to be enforceable by, all
such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.
Section 1.02. Term of Agreement. This Agreement shall
terminate and be of no further force and effect upon the date on which there
are no Beneficiaries remaining; provided, however, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of Preferred Securities or any Beneficiary must restore payment
of any sums paid under the Preferred Securities, under any Obligation, under
the Guarantee Agreement dated the date hereof by TU Electric and The Bank of
New York, as guarantee trustee, or under this Agreement for any reason
whatsoever. This Agreement is continuing, irrevocable, unconditional and
absolute.
C-1
<PAGE> 64
Section 1.03. Waiver of Notice. TU Electric hereby waives
notice of acceptance of this Agreement and of any Obligation to which it
applies or may apply, and TU Electric hereby waives presentment, demand for
payment, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
Section 1.04. No Impairment. The obligations, covenants,
agreements and duties of TU Electric under this Agreement shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
(a) the extension of time for the payment by the Trust of all
or any portion of the Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the Obligations
or any action on the part of the Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust or
any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, TU Electric with respect to the happening of any of the
foregoing.
Section 1.05. Enforcement. A Beneficiary may enforce this
Agreement directly against TU Electric and TU Electric waives any right or
remedy to require that any action be brought against the Trust or any other
person or entity before proceeding against TU Electric.
ARTICLE II
Section 2.01. Binding Effect. All guarantees and agreements
contained in this Agreement shall bind the successors, assigns, receivers,
trustees and representatives of TU Electric and shall inure to the benefit of
the Beneficiaries.
Section 2.02. Amendment. So long as there remains any
Beneficiary or any Preferred Securities of any series are outstanding, this
Agreement shall not be modified or amended in any manner adverse to such
Beneficiary or to the holders of the Preferred Securities.
Section 2.03. Notices. Any notice, request or other
communication required or permitted to be given hereunder shall be given in
writing by delivering the same against
C-2
<PAGE> 65
receipt therefor by facsimile transmission (confirmed by mail), telex or by
registered or certified mail, addressed as follows (and if so given, shall be
deemed given when mailed or upon receipt of an answer-back, if sent by telex),
to wit:
TU Electric Capital II
c/o [Trustee]
Facsimile No.:
Attention:
Texas Utilities Electric Company
Facsimile No.:
Attention:
Section 2.04 THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).
THIS AGREEMENT is executed as of the day and year first above
written.
TEXAS UTILITIES ELECTRIC COMPANY
By:
-------------------------------------
Name:
Title:
TU ELECTRIC CAPITAL II
By:
-------------------------------------
Wayne Patterson
not in his individual capacity, but
solely as Administrative Trustee
-------------------------------------
Cathryn Hulen
not in her individual capacity, but
solely as Administrative Trustee
-------------------------------------
Michael Perkins
not in his individual capacity, but
solely as Administrative Trustee
C-3
<PAGE> 66
-------------------------------------
Laura Anderson
not in her individual capacity, but
solely as Administrative Trustee
-------------------------------------
John Casey
not in his individual capacity, but
solely as Administrative Trustee
C-4
<PAGE> 67
[Clearing Agency Legend]
EXHIBIT D
Certificate Number Number of Preferred Securities
TP- CUSIP NO. 87305 D
Certificate Evidencing Preferred Securities
of
TU Electric Capital II
9.00% Trust Originated Preferred Securities
(liquidation amount $25 per Preferred Security)
TU Electric Capital II, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
____________ (the "Holder") is the registered owner of _____ (_____) preferred
securities of the Trust representing an undivided beneficial interest in the
assets of the Trust and designated the TU Electric Capital II 9.00% Trust
Originated Preferred Securities (liquidation amount $25 per Preferred Security)
(the "Preferred Securities"). The Preferred Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for
transfer as provided in Section 5.04 of the Trust Agreement (as defined below).
The designations, rights, privileges, restrictions, preferences and other terms
and provisions of the Preferred Securities are set forth in, and this
certificate and the Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended
and Restated Trust Agreement of the Trust dated as of December 1, 1995, as the
same may be amended from time to time (the "Trust Agreement") including the
designation of the terms of Preferred Securities as set forth therein. The
holder of this certificate is entitled to the benefits of the Guarantee
Agreement of Texas Utilities Electric Company, a Texas corporation, and The
Bank of New York, as guarantee trustee, dated as of December 1, 1995 (the
"Guarantee") to the extent provided therein. The Trust will furnish a copy of
the Trust Agreement and the Guarantee to the holder of this certificate without
charge upon written request to the Trust at its principal place of business or
registered office.
Upon receipt of this certificate, the holder of this
certificate is bound by the Trust Agreement and is entitled to the benefits
thereunder.
IN WITNESS WHEREOF, one of the Administrative Trustees of the
Trust has executed this certificate for and on behalf of the Trust.
C-1
<PAGE> 68
Dated:
TU ELECTRIC CAPITAL II
By:
-------------------------------------------
Cathryn Hulen
not in his (her) individual capacity, but
solely as Administrative Trustee
Countersigned and Registered:
TEXAS UTILITIES SERVICES INC.,
Transfer Agent and Registrar
By:
-------------------------------------------
(Authorized Signature)
THE BANK OF NEW YORK, as agent
for the Transfer Agent and Registrar
By:
-------------------------------------------
(Authorized Signature)
D-2
<PAGE> 69
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
of the Preferred Securities represented by this Certificate and irrevocably
appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
attorney to transfer such Preferred Securities on the books of the
Trust. The attorney may substitute another to act for him or her.
Date:
------------------
Signature:
------------------------
(Sign exactly as your name appears on the other side of this Preferred
Securities Certificate)
Signature:
------------------------
(Sign exactly as your name appears on the other side of this Preferred
Securities Certificate)
D-3
<PAGE> 1
Exhibit 4(k)
GUARANTEE AGREEMENT
Between
Texas Utilities Electric Company
(as Guarantor)
and
The Bank of New York
(as Trustee)
dated as of
December 1, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.01 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02 Lists of Holders of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.03 Reports by the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.04 Periodic Reports to Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.05 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.06 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.07 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.08 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.01 Powers and Duties of the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.02 Certain Rights of Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.01 Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.02 Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.03 Appointment, Removal and Resignation of
Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.01 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.02 Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.03 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.04 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.05 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.06 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.07 Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.01 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.01 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.02 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.04 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.05 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 8.06 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 4
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
- ------------------- ----------
<S> <C>
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01(c), 2.08
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01, 2.05, 3.02
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01, 3.02
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(d)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.07
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(d)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.04(a), 2.06
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.03
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(b)
318(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
318(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(a)
</TABLE>
_____________
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms
or provisions.
<PAGE> 5
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of
December 1, 1995, is executed and delivered by Texas Utilities Electric
Company, a Texas corporation (the "Guarantor"), and The Bank of New York, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Securities (as defined herein) of TU
Electric Capital II, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement
(the "Trust Agreement"), dated as of December 1, 1995 between the Trustees of
the Issuer named therein, Texas Utilities Electric Company, as Depositor, and
the several Holders (as defined therein) the Issuer is issuing as of the date
hereof $49,876,000 aggregate liquidation amount of its 9.00% Trust Originated
Preferred Securities (the "Preferred Securities") representing ownership
interests in the Issuer and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities are to be issued by the
Issuer to the Depositor (as defined in the Trust Agreement) in exchange for
$51,418,575 principal amount of Debentures (as defined in the Trust Agreement);
and
WHEREAS, the Preferred Securities are to be offered by the
Depositor in exchange for certain securities of the Depositor; and
WHEREAS, in order to enhance the value of the Preferred
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the purchase of
Debentures, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders from time to time.
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. As used in this Guarantee
Agreement, the terms set forth below shall, unless the context otherwise
requires, have the following meanings. Capitalized or otherwise defined terms
used but not otherwise defined herein shall have the meanings assigned to such
terms in the Trust Agreement as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such
<PAGE> 6
specified Person. For the purposes of this definition, "control" when used
with respect to any specified Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Common Securities" means the securities representing common
ownership interests in the assets of the Issuer.
"Event of Default" means a default by the Guarantor on any of
its payment obligations under this Guarantee Agreement.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by or on behalf of the Issuer: (i) any accrued
and unpaid Distributions that are required to be paid on such Preferred
Securities but only if and to the extent that the Property Trustee has
available in the Payment Account funds sufficient to make such payment, (ii)
the redemption price (the "Redemption Price"), and all accrued and unpaid
Distributions to the date of redemption, with respect to the Preferred
Securities called for redemption by the Issuer but only if and to the extent
that the Property Trustee has available in the Payment Account funds sufficient
to make such payment, (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with a
redemption of all of the Preferred Securities), the lesser of (a) the aggregate
of the Liquidation Amount and all accrued and unpaid Distributions on the
Preferred Securities to the date of payment but only if and to the extent that
the Property Trustee has available in the Payment Account funds sufficient to
make such payment, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Guarantee Agreement and thereafter
means each such Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities then outstanding; provided,
however, that in determining whether the holders of the requisite percentage of
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include the Guarantor or any Affiliate of the
Guarantor.
"Indenture" means the Indenture dated as of December 1, 1995,
among the Guarantor (the "Debenture Issuer") and The Bank of New York, as
trustee pursuant to which the Debentures are issued.
-2-
<PAGE> 7
"Majority in liquidation amount of the Preferred Securities"
means a vote by Holders, voting separately as a class, of more than 50% of the
aggregate liquidation amount of all Preferred Securities.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Guarantor, and delivered to the Guarantee Trustee.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Responsible Officer" means, with respect to the Guarantee
Trustee, any vice-president, any assistant vice-president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or assistant trust officer or any other officer of the Corporate Trust
Department of the Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under Section
4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
-3-
<PAGE> 8
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01 TRUST INDENTURE ACT; APPLICATION.
(a) This Guarantee Agreement is subject to the provisions of
the Trust Indenture Act that are required or deemed to be part of this
Guarantee Agreement and shall, to the extent applicable, be governed by such
provisions; and
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.02 LISTS OF HOLDERS OF PREFERRED SECURITIES.
(a) The Guarantor shall furnish or cause to be furnished to
the Guarantee Trustee (a) semiannually, not later than December 31 and June 30
in each year, a list, in such form as the Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") as of a
date not more than 15 days prior to the delivery thereof, and (b) at such other
times as the Guarantee Trustee may request in writing, within 30 days after the
receipt by the Guarantor of any such request, a List of Holders as of a date
not more than 15 days prior to the time such list is furnished; provided that,
the Guarantor shall not be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent List of Holders
given to the Guarantee Trustee by the Guarantor. The Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Guarantee Trustee shall comply with its obligations
under Section 311(a) of the Trust Indenture Act (subject to the provisions of
Section 311(b) of the Trust Indenture Act) and Section 312(b) of the Trust
Indenture Act.
SECTION 2.03 REPORTS BY THE GUARANTEE TRUSTEE. Within 60
days after December 31 of each year, commencing December 31, 1996, the
Guarantee Trustee shall provide to the Holders such reports, if any, as are
required by Section 313(a) of the Trust Indenture Act in the form and in the
manner provided by Section 313(a) of the Trust Indenture Act. The Guarantee
Trustee shall also comply with the requirements of Sections 313(b), (c) and (d)
of the Trust Indenture Act.
SECTION 2.04 PERIODIC REPORTS TO GUARANTEE TRUSTEE. The
Guarantor shall provide to the Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.
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SECTION 2.05 EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT. The Guarantor shall provide to the Guarantee Trustee evidence of
compliance with any conditions precedent provided for in this Guarantee
Agreement as and to the extent required by Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) of the Trust Indenture Act may be given in the
form of an Officers' Certificate.
SECTION 2.06 EVENTS OF DEFAULT; WAIVER. The Holders of a
Majority in liquidation amount of Preferred Securities may, by vote, on behalf
of all of the Holders, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Guarantee Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.07 EVENT OF DEFAULT; NOTICE.
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default known to the
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided that, the Guarantee Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors or Responsible Officers of the
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Guarantee Trustee shall have
received written notice, or a Responsible Officer charged with the
administration of the Trust Agreement shall have obtained written notice, of
such Event of Default.
SECTION 2.08 CONFLICTING INTERESTS. The Trust Agreement
and the Indenture shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.01 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Guarantee
Trustee for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee
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Agreement or any rights hereunder to any Person except a Holder exercising his
or her rights pursuant to Section 5.04 or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee. The right, title and interest of the Guarantee
Trustee shall automatically vest in any Successor Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Guarantee Trustee.
(b) The Guarantee Trustee, prior to the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Guarantee Agreement, and no implied covenants or obligations
shall be read into this Guarantee Agreement against the Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.06), the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(c) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of Default
that may have occurred:
(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the
express provisions of this Guarantee Agreement, and
the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement;
and
(B) in the absence of bad faith on the part
of the Guarantee Trustee, the Guarantee Trustee may
conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished
to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the
case of any such certificates or opinions that by any
provision hereof are specifically required to be
furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer of the Guarantee Trustee, unless
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it shall be proved that the Guarantee Trustee or such
Responsible Officer was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of
a Majority in liquidation amount of the Preferred Securities
relating to the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee,
or exercising any trust or power conferred upon the Guarantee
Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall
require the Guarantee Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity
against such risk or liability is not reasonably assured to
it.
SECTION 3.02 CERTAIN RIGHTS OF GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.01:
(i) the Guarantee Trustee may rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document reasonably believed by it to be genuine and to
have been signed, sent or presented by the proper party or
parties;
(ii) any direction or act of the Guarantor
contemplated by this Guarantee Agreement shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever, in the administration of this
Guarantee Agreement, the Guarantee Trustee shall deem it
desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the
Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly
delivered by the Guarantor;
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(iv) the Guarantee Trustee may consult with counsel
of its choice, and the written advice or opinion of such
counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion; such counsel may be
counsel to the Guarantor or any of its Affiliates and may
include any of its employees; the Guarantee Trustee shall have
the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of
competent jurisdiction;
(v) the Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Guarantee Agreement at the request or direction of
any Holder, unless such Holder shall have provided to the
Guarantee Trustee such adequate security and indemnity as
would satisfy a reasonable person in the position of the
Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Guarantee Trustee; provided that, nothing contained in this
Section 3.02(a)(v) shall be taken to relieve the Guarantee
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Guarantee Agreement;
(vi) the Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document reasonably believed by it to be genuine, but the
Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may
see fit;
(vii) the Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys, and the
Guarantee Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(viii) whenever in the administration of this
Guarantee Agreement the Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder, the
Guarantee Trustee (1) may request instructions from the
Holders, (2) may refrain from enforcing such remedy or right
or taking such other action until such instructions are
received, and (3) shall be protected in acting in accordance
with such instructions; and
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(ix) the Guarantee Trustee shall not be liable for
any action taken, suffered or omitted to be taken by it in
good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by
this Guarantee.
(b) No provision of this Guarantee Agreement shall be deemed
to impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee
Trustee shall be construed to be a duty.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01 GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000), and subject
to supervision or examination by Federal, State, Territorial
or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining
authority referred to above, then, for the purposes of this
Section 4.01(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.01(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in
Section 4.03(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Guarantee
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Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.02 COMPENSATION AND REIMBURSEMENT.
The Guarantor agrees:
(a) to pay the Guarantee Trustee from time to time such
reasonable compensation as the Guarantor and the Guarantee Trustee shall from
time to time agree in writing for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Guarantee Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Guarantee Trustee in
accordance with the provisions of this Guarantee (including the reasonable
compensation and expenses of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(c) to indemnify each of the Guarantee Trustee and any
predecessor Guarantee Trustee for, and to hold it harmless from and against,
any and all loss, damage, claim, liability or expense, including taxes (other
than taxes based upon the income of the Guarantee Trustee) incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance of the administration of this Guarantee Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder.
As security for the performance of the obligations of the
Guarantor under this Section, the Guarantee Trustee shall have a lien prior to
the Preferred Securities upon all the property and funds held or collected by
the Guarantee Trustee as such, except funds held in trust for the payment of
principal of, and premium (if any) or interest on, particular obligations of
the Guarantor under this Guarantee Agreement.
The provisions of this Section shall survive the termination
of this Guarantee Agreement.
SECTION 4.03 APPOINTMENT, REMOVAL AND RESIGNATION OF
GUARANTEE TRUSTEE.
(a) Subject to Section 4.03(b), unless an Event of Default
shall have occurred and be continuing, the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
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(b) The Guarantee Trustee shall not be removed until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Guarantee Trustee
and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold
office until a Successor Guarantee Trustee shall have been appointed or until
its removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
executed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by instrument in writing executed
by such Successor Guarantee Trustee and delivered to the Guarantor and the
resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.03 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Guarantee Trustee may petition any court of competent jurisdiction
for appointment of a Successor Guarantee Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper, appoint a
Successor Guarantee Trustee.
(e) The Guarantor shall give notice of each resignation and
each removal of the Guarantee Trustee and each appointment of a successor
Guarantee Trustee to all Holders in the manner provided in Section 8.03 hereof.
Each notice shall include the name of the successor Guarantee Trustee and the
address of its Corporate Trust Office.
ARTICLE V
GUARANTEE
SECTION 5.01 GUARANTEE. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by the Issuer), as and when
due, regardless of any defense, right of set-off or counterclaim which the
Issuer may have or assert. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.
SECTION 5.02 WAIVER OF NOTICE AND DEMAND. The Guarantor
hereby waives notice of acceptance of this Guarantee Agreement and of any
liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
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SECTION 5.03 OBLIGATIONS NOT AFFECTED. The obligation of
the Guarantor to make the Guarantee Payments under this Guarantee Agreement
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of
all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the
Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Preferred Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Preferred Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 5.03 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04 RIGHTS OF HOLDERS. The Guarantor expressly
acknowledges that: (i) this Guarantee Agreement will be deposited with the
Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee
Trustee has the right to enforce this
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Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority
in liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee Agreement
without first instituting a legal proceeding against the Issuer or any other
person or entity.
SECTION 5.05 GUARANTEE OF PAYMENT. This Guarantee
Agreement creates a guarantee of payment and not of collection. This Guarantee
Agreement will not be discharged except by payment of the Guarantee Payments in
full (without duplication).
SECTION 5.06 SUBROGATION. The Guarantor shall be
subrogated to all (if any) rights of the Holders against the Issuer in respect
of any amounts paid to the Holders by the Guarantor under this Guarantee
Agreement; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee Agreement, if, at the time of any such payment,
any amounts of Guarantee Payments are due and unpaid under this Guarantee
Agreement. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
SECTION 5.07 INDEPENDENT OBLIGATIONS. The Guarantor
acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Preferred Securities and that the Guarantor
shall be liable as principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee Agreement notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 5.03.
ARTICLE VI
SUBORDINATION
SECTION 6.01 SUBORDINATION. This Guarantee Agreement will
constitute an unsecured obligation of the Guarantor and will rank (i)
subordinate and junior in right of payment to all other liabilities of the
Guarantor, including the Debentures, except those made pari passu or
subordinate by their terms, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Guarantor and with any
guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor, and (iii)
senior to all common stock of the Guarantor. Nothing in
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this Section 6.01 shall apply to claims of, or payments to, the Guarantee
Trustee under or pursuant to Section 4.02 hereof.
ARTICLE VII
TERMINATION
SECTION 7.01 TERMINATION. This Guarantee Agreement shall
terminate and be of no further force and effect upon: (i) full payment of the
Redemption Price of all Preferred Securities, and all accrued and unpaid
Distributions to the date of redemption, (ii) the distribution of Debentures to
Holders in exchange for all of the Preferred Securities or (iii) full payment
of the amounts payable in accordance with the Trust Agreement upon liquidation
of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid with respect to Preferred
Securities or under this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 SUCCESSORS AND ASSIGNS. All guarantees and
agreements contained in this Guarantee Agreement shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Preferred Securities then
outstanding. Except in connection with a consolidation, merger or sale
involving the Guarantor that is permitted under Article Eleven of the
Indenture, the Guarantor shall not assign its obligations hereunder.
SECTION 8.02 AMENDMENTS. This Guarantee Agreement may be
amended only by an instrument in writing entered into by the Guarantor and the
Guarantee Trustee. Except with respect to any changes which do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Guarantee Agreement may only be amended with the prior approval
of the Holders of not less than 66 2/3% in aggregate liquidation amount of all
the outstanding Preferred Securities. The provisions of Article VI of the
Trust Agreement concerning meetings of Holders shall apply to the giving of
such approval. Nothing herein contained shall be deemed to require that the
Guarantee Trustee enter into any amendment of this Guarantee Agreement.
SECTION 8.03 NOTICES. Any notice, request or other
communication required or permitted to be given hereunder shall be in writing,
duly signed by the party giving such notice, and delivered, telecopied or
mailed by first class mail as follows:
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(a) if given to the Guarantor, to the address set forth below
or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities:
Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
Facsimile No: 214-812-2488
Attention: Treasurer
(b) if given to the Issuer, in care of the Administrative
Trustees, at the Issuer's (and the Administrative Trustee's) address
set forth below or such other address as the Administrative Trustees
on behalf of the Issuer may give notice of to the Holders:
TU Electric Capital II
c/o Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
Facsimile No: 214-812-2488
Attention: Administrative Trustees
(c) if given to the Guarantee Trustee, to the address set
forth below or such other address as the Guarantee Trustee may give
notice of to the Holders of the Preferred Securities:
The Bank of New York
101 Barclay Street
21 West
New York, New York 10286
Facsimile No: (212) 815-5915
Attention: Corporate Trust Trustee Administration
(d) if given to any Holder, at the address set forth on the
books and records of the Issuer.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
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SECTION 8.04 BENEFIT. This Guarantee Agreement is solely
for the benefit of the Holders and, subject to Section 3.01(a), is not
separately transferable from the Preferred Securities.
SECTION 8.05 INTERPRETATION. In this Guarantee Agreement,
unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but
not defined in the preamble hereto have the respective meanings
assigned to them in Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement has
the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified,
supplemented or amended from time to time;
(d) all references in this Guarantee Agreement to Articles
and Sections are to Articles and Sections of this Guarantee Agreement
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined
in this Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa; and
(g) the masculine, feminine or neuter genders used herein
shall include the masculine, feminine and neuter genders.
SECTION 8.06 GOVERNING LAW. THIS GUARANTEE AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
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THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
Texas Utilities Electric Company
By: /s/ Cathryn Hulen
---------------------------------
Name: Cathryn Hulen
Title: Treasurer and Assistant
Secretary
The Bank of New York,
as Guarantee Trustee
By: /s/ Walter N. Gitlin
---------------------------------
Name: Walter N. Gitlin
Title: Vice President
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Exhibit 4(l)
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of December 1, 1995, between Texas
Utilities Electric Company, a Texas corporation ("TU Electric"), and TU
Electric Capital II, a Delaware business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the
"Common Securities") to and receive Debentures from TU Electric and to issue
its 9.00% Trust Originated Preferred Securities (the "Preferred Securities")
with such powers, preferences and special rights and restrictions as are set
forth in the Amended and Restated Trust Agreement of the Trust dated as of
December 1, 1995 as the same may be amended from time to time (the "Trust
Agreement");
WHEREAS, TU Electric is the issuer of the Debentures;
NOW, THEREFORE, in consideration of the acceptance by each
holder of the Preferred Securities, which acceptance TU Electric hereby agrees
shall benefit TU Electric and which acceptance TU Electric acknowledges will be
made in reliance upon the execution and delivery of this Agreement, TU
Electric, including in its capacity as holder of the Common Securities, and the
Trust hereby agree as follows:
ARTICLE I
Section 1.01. Assumption by TU Electric. Subject to the
terms and conditions hereof, TU Electric hereby irrevocably and unconditionally
assumes the full payment, when and as due, of any and all Obligations (as
hereinafter defined) to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries"). As used herein,
"Obligations" means any indebtedness, expenses or liabilities of the Trust,
other than (i) obligations of the Trust to pay to holders of any Preferred
Securities or other similar interests in the Trust the amounts due such holders
pursuant to the terms of the Preferred Securities or such other similar
interests, as the case may be and (ii) obligations arising out of the
negligence, willful misconduct or bad faith of the Trustees of the Trust. This
Agreement is intended to be for the benefit of, and to be enforceable by, all
such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.
Section 1.02. Term of Agreement. This Agreement shall
terminate and be of no further force and effect upon the date on which there
are no Beneficiaries remaining; provided, however, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of Preferred Securities or any Beneficiary must restore payment
of any sums paid under the Preferred Securities, under any Obligation, under
the Guarantee Agreement dated the date hereof by TU Electric and The Bank of
New
<PAGE> 2
York, as guarantee trustee, or under this Agreement for any reason whatsoever.
This Agreement is continuing, irrevocable, unconditional and absolute.
Section 1.03. Waiver of Notice. TU Electric hereby waives
notice of acceptance of this Agreement and of any Obligation to which it
applies or may apply, and TU Electric hereby waives presentment, demand for
payment, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
Section 1.04. No Impairment. The obligations, covenants,
agreements and duties of TU Electric under this Agreement shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
(a) the extension of time for the payment by the Trust of all
or any portion of the Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the Obligations
or any action on the part of the Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust or
any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, TU Electric with respect to the happening of any of the
foregoing.
Section 1.05. Enforcement. A Beneficiary may enforce this
Agreement directly against TU Electric and TU Electric waives any right or
remedy to require that any action be brought against the Trust or any other
person or entity before proceeding against TU Electric.
ARTICLE II
Section 2.01. Binding Effect. All guarantees and agreements
contained in this Agreement shall bind the successors, assigns, receivers,
trustees and representatives of TU Electric and shall inure to the benefit of
the Beneficiaries.
Section 2.02. Amendment. So long as there remains any
Beneficiary or any Preferred Securities of any series are outstanding, this
Agreement shall not be modified or
<PAGE> 3
amended in any manner adverse to such Beneficiary or to the holders of the
Preferred Securities.
Section 2.03. Notices. Any notice, request or other
communication required or permitted to be given hereunder shall be given in
writing by delivering the same against receipt therefor by facsimile
transmission (confirmed by mail), telex or by registered or certified mail,
addressed as follows (and if so given, shall be deemed given when mailed or
upon receipt of an answer-back, if sent by telex), to wit:
TU Electric Capital II
c/o Wayne Patterson, Administrative Trustee
1601 Bryan Street
Dallas, Texas 75201
Facsimile No.: 214-812-2488
Texas Utilities Electric Company
1601 Bryan Street
Dallas, Texas 75201
Facsimile No.: 214-812-2488
Attention: Treasurer
Section 2.04 THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).
<PAGE> 4
THIS AGREEMENT is executed as of the day and year first above
written.
TEXAS UTILITIES ELECTRIC COMPANY
By: /s/ Cathryn Hulen
------------------------------------------
Name: Cathryn Hulen
Title: Treasurer and Assistant Secretary
TU ELECTRIC CAPITAL II
By: /s/ Laura Anderson
------------------------------------------
Laura Anderson
not in her individual capacity, but solely
as Administrative Trustee
<PAGE> 1
Exhibit 4(m)
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
between
TEXAS UTILITIES ELECTRIC COMPANY, as Depositor
and
THE BANK OF NEW YORK,
THE BANK OF NEW YORK (DELAWARE),
Wayne Patterson,
Cathryn Hulen,
Laura Anderson,
John Casey
and
Michael Perkins, as Trustees
Dated as of December 1, 1995
TU ELECTRIC CAPITAL III
================================================================================
<PAGE> 2
TU Electric Capital III
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
- --------------- ---------------
<S> <C>
Section 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.07
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.07
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.09
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.08
Section 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.13
Section 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.07
Section 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(a)
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(b)
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.14(a), 8.14(b)
Section 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.02, 8.14(b)
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01(a)
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01, 8.03
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
Section 316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
Section 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.09
Section 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.10
</TABLE>
- -----------------
Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Trust Agreement.
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I.
Defined Terms
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II.
Establishment of the Trust
Section 2.01. Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.02. Office of the Delaware Trustee; Principal Place of Business . . . . . . . . . . . . . . . . . 12
Section 2.03. Initial Contribution of Trust Property; Organizational Expenses . . . . . . . . . . . . . . . 12
Section 2.04. Issuance of the Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.05. Subscription and Purchase of Debentures; Issuance of the Common Securities . . . . . . . . . 12
Section 2.06. Declaration of Trust; Appointment of Additional Administrative Trustees . . . . . . . . . . . 12
Section 2.07. Authorization to Enter into Certain Transactions . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.08. Assets of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.09. Title to Trust Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE III.
Payment Account
Section 3.01. Payment Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE IV.
Distributions; Redemption
Section 4.01. Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.02. Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 4.03. Subordination of Common Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.04. Payment Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.05. Tax Returns and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE V.
Trust Securities Certificates
Section 5.01. Initial Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.02. The Trust Securities Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.03. Execution and Delivery of Trust Securities Certificates . . . . . . . . . . . . . . . . . . . 22
Section 5.04. Registration of Transfer and Exchange of Preferred Securities Certificates . . . . . . . . . 22
Section 5.05. Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates . . . . . . . . . . . . . 23
Section 5.06. Persons Deemed Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 5.07. Access to List of Securityholders' Names and Addresses . . . . . . . . . . . . . . . . . . . 24
Section 5.08. Maintenance of Office or Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.09. Appointment of Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.10. Ownership of Common Securities by Depositor . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.11. Definitive Preferred Securities Certificates . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.12. Book-Entry System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.13. Rights of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI.
Acts of Securityholders; Meetings; Voting
Section 6.01. Limitations on Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.02. Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.03. Meetings of Holders of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.04. Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.05. Proxies, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 6.06. Securityholder Action by Written Consent . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.07. Record Date for Voting and Other Purposes . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.08. Acts of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 6.09. Inspection of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VII.
Representations and Warranties of the Property
Trustee and the Delaware Trustee
Section 7.01. Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 7.02. Delaware Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
-ii-
<PAGE> 6
<TABLE>
<S> <C> <C>
ARTICLE VIII.
The Trustees
Section 8.01. Certain Duties and Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.02. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.03. Certain Rights of Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 8.04. Not Responsible for Recitals or Issuance of Securities . . . . . . . . . . . . . . . . . . . 36
Section 8.05. May Hold Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.06. Compensation; Fees; Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 8.07. Certain Trustees Required; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 8.08. Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.09. Co-Trustees and Separate Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 8.10. Resignation and Removal; Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . 39
Section 8.11. Acceptance of Appointment by Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.12. Merger, Conversion, Consolidation or Succession to Business . . . . . . . . . . . . . . . . . 42
Section 8.13. Preferential Collection of Claims Against Depositor or Trust . . . . . . . . . . . . . . . . 42
Section 8.14. Reports by Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.15. Reports to the Property Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.16. Evidence of Compliance With Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.17. Number of Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.18. Delegation of Power. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.19. Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX.
Termination and Liquidation
Section 9.01. Termination Upon Expiration Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.02. Early Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.03. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.04. Liquidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE X.
Miscellaneous Provisions
Section 10.01. Guarantee by the Depositor and Assumption of Obligations . . . . . . . . . . . . . . . . . . 48
Section 10.02. Limitation of Rights of Securityholders . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.04. Separability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.05. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.06. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.07. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
-iii-
<PAGE> 7
<TABLE>
<S> <C> <C>
Section 10.08. Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 10.09. Agreement Not to Petition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.10. Conflict with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
</TABLE>
-iv-
<PAGE> 8
AMENDED AND RESTATED TRUST AGREEMENT, dated as of December 1,
1995, between (i) Texas Utilities Electric Company, a Texas corporation (the
"Depositor"), (ii) The Bank of New York, a banking corporation duly organized
and existing under the laws of New York, as trustee (the "Property Trustee"
and, in its separate capacity and not in its capacity as Property Trustee, the
"Bank"), (iii) The Bank of New York (Delaware), a banking corporation duly
organized under the laws of Delaware, as Delaware trustee (the "Delaware
Trustee") (iv) Wayne Patterson, Cathryn Hulen, Laura Anderson, John Casey and
Michael Perkins, each an individual, and each of whose address is c/o Texas
Utilities Services Inc., 1601 Bryan Street, Dallas, Texas 75201 (each, an
"Administrative Trustee" and collectively the "Administrative Trustees") (the
Property Trustee, the Delaware Trustee and the Administrative Trustees referred
to collectively as the "Trustees") and (v) the several Holders, as hereinafter
defined.
W I T N E S S E T H:
WHEREAS, the Depositor, the Property Trustee, the Delaware
Trustee and Wayne Patterson, as the Administrative Trustee, have heretofore
duly declared and established a business trust pursuant to the Delaware
Business Trust Act by the entering into of that certain Trust Agreement, dated
as of October 17, 1995 (the "Original Trust Agreement"), and by the execution
by the Property Trustee, the Delaware Trustee and Wayne Patterson, as
Administrative Trustee and filing with the Secretary of State of the State of
Delaware of the Certificate of Trust, dated October 17, 1995, a copy of which
is attached as Exhibit A; and
WHEREAS, the Depositor, the Property Trustee, Delaware Trustee
and Wayne Patterson, as Administrative Trustee, desire to amend and restate the
Original Trust Agreement in its entirety as set forth herein to provide for,
among other things, (i) the acquisition by the Trust from the Depositor of all
of the right, title and interest in the Debentures, (ii) the issuance of the
Common Securities by the Trust to the Depositor, (iii) the issuance of the
Preferred Securities by the Trust;
NOW THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, each party, for the benefit of the
other party and for the benefit of the Securityholders, hereby amends and
restates the Original Trust Agreement in its entirety and agrees as follows:
<PAGE> 9
ARTICLE I.
DEFINED TERMS
SECTION 1.01. DEFINITIONS. For all purposes of this Trust
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article and include the
plural as well as the singular;
(b) all other terms used herein that are defined in
the Trust Indenture Act, either directly or by reference
therein, have the meanings assigned to them therein;
(c) unless the context otherwise requires, any
reference to an "Article" or a "Section" refers to an Article
or a Section, as the case may be, of this Trust Agreement; and
(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Trust Agreement as
a whole and not to any particular Article, Section or other
subdivision.
"Act" has the meaning specified in Section 6.08.
"Additional Amount" means, with respect to Trust Securities of
a given Liquidation Amount and/or a given period, the amount of Additional
Interest (as defined in the Subordinated Indenture) paid by the Depositor on a
Like Amount of Debentures for such period.
"Administrative Trustee" means each of the individuals
identified as an "Administrative Trustee" in the preamble to this Trust
Agreement solely in their capacities as Administrative Trustees of the Trust
formed hereunder and not in their individual capacities, or such trustee's
successor in interest in such capacity, or any successor trustee appointed as
herein provided.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Bank" has the meaning specified in the preamble to this Trust
Agreement.
-2-
<PAGE> 10
"Bankruptcy Event" means, with respect to any Person:
(i) the entry of a decree or order by a court having
jurisdiction in the premises judging such Person a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjudication or composition of or
in respect of such Person under Federal bankruptcy law or any
other applicable Federal or State law, or appointing a
receiver, liquidator, assignee, trustee sequestrator or other
similar official of such Person or of any substantial part of
its property, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or
(ii) the institution by such Person of proceedings to
be adjudicated a bankrupt or insolvent, or of the consent by
it to the institution of bankruptcy or insolvency proceedings
against it, or the filing by it of a petition or answer or
consent seeking reorganization or relief under Federal
bankruptcy law or any other applicable Federal or State law,
or the consent by it to the filing of such petition or to the
appointment of a receiver, liquidator, assignee, trustee,
sequestrator or similar official of such Person or of any
substantial part of its property, or the making by it of an
assignment for the benefit of creditors, or the admission by
it in writing of its inability to pay its debts generally as
they become due.
"Bankruptcy Laws" has the meaning specified in Section 10.09.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Depositor to have been duly
adopted by the Depositor's Board of Directors or a duly authorized committee
thereof and to be in full force and effect on the date of such certification,
and delivered to the appropriate Trustee.
"Business Day" means a day other than (x) a Saturday or a
Sunday, (y) a day on which banks in New York, New York are authorized or
obligated by law or executive order to remain closed or (z) a day on which the
Property Trustee's Corporate Trust Office or the Debenture Trustee's principal
corporate trust office is closed for business.
"Certificate of Trust" has the meaning specified in Section
2.07(d).
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Securities Exchange Act of
1934, as amended. The Depository Trust Company will be the initial Clearing
Agency.
"Closing Date" means the date of execution and delivery of
this Trust Agreement.
-3-
<PAGE> 11
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then
the body performing such duties at such time.
"Common Security" means an undivided beneficial interest in
the assets of the Trust having a Liquidation Amount of $25 and having the
rights provided therefor in this Trust Agreement, including the right to
receive Distributions and a Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing
ownership of Common Securities, substantially in the form attached as Exhibit
B.
"Corporate Trust Office" means the principal corporate trust
office of the Property Trustee located in New York, New York.
"Covered Person" means: (a) any officer, director,
shareholder, partner, member, representative, employee or agent of the Trust or
the Trust's Affiliates; and (b) any Holder of Trust Securities.
"Debenture Event of Default" means an "Event of Default" as
defined in the Subordinated Indenture.
"Debenture Issuer" means Texas Utilities Electric Company, a
Texas corporation, in its capacity as issuer of the Debentures.
"Debenture Redemption Date" means "Redemption Date" as defined
in the Subordinated Indenture with respect to the Debentures.
"Debenture Trustee" means The Bank of New York, as trustee
under the Subordinated Indenture.
"Debentures" means the $206,185,575 aggregate principal amount
of the Depositor's 8.00% Junior Subordinated Debentures, Series C, Due December
31, 2035, issued pursuant to the Subordinated Indenture.
"Definitive Preferred Securities Certificates" means Preferred
Securities Certificates issued in certificated, fully registered form as
provided in Section 5.11.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of
the Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from
time to time.
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"Delaware Trustee" means the banking corporation identified as
the "Delaware Trustee" in the preamble to this Trust Agreement solely in its
capacity as Delaware Trustee of the Trust formed hereunder and not in its
individual capacity, or its successor in interest in such capacity, or any
successor trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this
Trust Agreement and includes Texas Utilities Electric Company in its capacity
as Holder of the Common Securities.
"Distribution Date" has the meaning specified in Section 4.01(a).
"Distributions" means amounts payable in respect of the Trust
Securities as provided in Section 4.01.
"Early Termination Event" has the meaning specified in Section
9.02.
"Event of Default" means any one of the following events
(whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default; or
(ii) default by the Trust in the payment of any
Distribution when it becomes due and payable, and continuation
of such default for a period of 30 days; or
(iii) default by the Trust in the payment of any
Redemption Price, plus accumulated and unpaid distributions of
any Trust Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any
material respect of any covenant or warranty of the Trustees
in this Trust Agreement (other than a covenant or warranty a
default in whose performance or breach is specifically dealt
with in clause (ii) or (iii), above) and continuation of such
default or breach for a period of 60 days after there has been
given, by registered or certified mail, to the Trust by the
Holders of at least 10% in Liquidation Amount of the
Outstanding Preferred Securities a written notice specifying
such default or breach and requiring it to be remedied and
stating that such notice is a "Notice of Default" hereunder;
or
(v) the occurrence of a Bankruptcy Event with respect
to the Trust.
"Exchange Act" has the meaning specified in Section 2.07(c).
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"Expense Agreement" means the Agreement as to Expenses and
Liabilities between the Depositor and the Trust, substantially in the form
attached as Exhibit C, as amended from time to time.
"Expiration Date" shall have the meaning specified in Section
9.01.
"Guarantee" means the Guarantee Agreement executed and
delivered by the Depositor and The Bank of New York, a New York banking
corporation, as trustee, contemporaneously with the execution and delivery of
this Trust Agreement, for the benefit of the Holders of the Preferred
Securities, as amended from time to time.
"Indemnified Person" means any Trustee, any Affiliate of any
Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee, or any employee or agent
of the Trust or its Affiliates.
"Lien" means any lien, pledge, charge, encumbrance, mortgage,
deed of trust, adverse ownership interest, hypothecation, assignment, security
interest or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever.
"Like Amount" means (i) Trust Securities having a Liquidation
Amount equal to the principal amount of Debentures to be contemporaneously
redeemed in accordance with the Subordinated Indenture and the proceeds of
which will be used to pay the Redemption Price of such Trust Securities plus
accumulated and unpaid Distributions to the date of such payment and (ii)
Debentures having a principal amount equal to the Liquidation Amount of the
Trust Securities of the Holder to whom such Debentures are distributed.
"Liquidation Amount" means the stated amount of $25 per Trust
Security.
"Liquidation Date" means the date on which Debentures are to
be distributed to Holders of Trust Securities in connection with a termination
and liquidation of the Trust pursuant to Section 9.04(a).
"Liquidation Distribution" has the meaning specified in
Section 9.04(e).
"No Recognition Opinion" has the meaning specified in Section
9.04(d).
"Offer" has the meaning specified in Section 2.07(c).
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Depositor, and delivered to the appropriate
Trustee. One of the officers signing an Officers' Certificate given pursuant
to Section 8.16 shall be the principal executive, financial or accounting
officer
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of the Depositor. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Trust Agreement
shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who
may be counsel for the Trust, the Property Trustee, the Delaware Trustee or the
Depositor, but not an employee of the Trust, the Property Trustee, the Delaware
Trustee or the Depositor, and who shall be reasonably acceptable to the
Property Trustee.
"Original Trust Agreement" has the meaning specified in the
recitals to this Trust Agreement.
"Outstanding," when used with respect to Preferred Securities,
means, as of the date of determination, all Preferred Securities theretofore
delivered under this Trust Agreement, except:
(i) Preferred Securities theretofore canceled by the
Administrative Trustees or delivered to the Administrative
Trustees for cancellation;
(ii) Preferred Securities for whose payment or
redemption money in the necessary amount has been theretofore
deposited with the Property Trustee or any Paying Agent for
the Holders of such Preferred Securities; provided that, if
such Preferred Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Trust
Agreement; and
(iii) Preferred Securities in exchange for or in lieu of
which other Preferred Securities have been delivered pursuant
to this Trust Agreement, including pursuant to Sections 5.04,
5.05 or 5.11;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand,
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authorization, direction, notice, consent or waiver hereunder, Preferred
Securities owned by the Depositor, any Trustee or any Affiliate of the
Depositor or any Trustee shall be disregarded and deemed not to be Outstanding,
except that (a) in determining whether any Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Preferred Securities which such Trustee knows to be so
owned shall be so disregarded and (b) the foregoing shall not apply at any time
when all of the outstanding Preferred Securities are owned by the Depositor,
one or more of the Trustees and/or any such Affiliate. Preferred Securities so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Administrative Trustee the
pledgee's right so to act with respect to such Preferred Securities and that
the pledgee is not the Depositor or any Affiliate of the Depositor.
"Owner" means each Person who is the owner of a Preferred
Securities Certificate as reflected in the Securities Register.
"Paying Agent" means any paying agent or co-paying agent
appointed pursuant to Section 5.09 and shall initially be Texas Utilities
Services Inc.
"Payment Account" means a segregated non-interest-bearing
corporate trust account maintained by the Property Trustee with Chemical Bank,
or such other banking institution as the Depositor shall select in its trust
department for the benefit of the Securityholders in which all amounts paid in
respect of the Debentures will be held and from which the Paying Agent,
pursuant to Section 5.09, shall make payments to the Securityholders in
accordance with Sections 4.01 and 4.02.
"Person" means any individual, corporation, partnership, joint
venture, trust, limited liability company or corporation, unincorporated
organization or government or any agency or political subdivision thereof.
"Preferred Security" means a quarterly income preferred
security representing an undivided beneficial interest in the assets of the
Trust having a Liquidation Amount of $25 and having rights provided therefor in
this Trust Agreement, including the right to receive Distributions and a
Liquidation Distribution as provided herein.
"Preferred Securities Certificate" means a certificate
evidencing ownership of Preferred Securities, substantially in the form
attached as Exhibit D.
"Property Trustee" means the commercial bank or trust company
identified as the "Property Trustee" in the preamble to this Trust Agreement
solely in its capacity as Property Trustee of the Trust formed and continued
hereunder and not in its individual capacity, or its successor in interest in
such capacity, or any successor trustee appointed as herein provided.
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"Redemption Date" means, with respect to any Trust Security to
be redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date shall be a Redemption
Date for a Like Amount of Trust Securities.
"Redemption Price" means, with respect to any date fixed for
redemption of any Trust Security, the Liquidation Amount of such Trust
Security.
"Redemption Tax Opinion" has the meaning specified in Section
9.04(d).
"Relevant Trustee" shall have the meaning specified in Section 8.10.
"Responsible Officer," when used with respect to the Property
Trustee means an officer of the Property Trustee assigned by the Property
Trustee to administer its corporate trust matter.
"Securities Depository" shall have the meaning specified in
Section 5.12.
"Securities Register" shall mean the Securities Register and
described in Section 5.04.
"Securityholder" or "Holder" means a Person in whose name a
Trust Security or Securities is registered in the Securities Register; any such
Person shall be deemed to be a beneficial owner of such security within the
meaning of the Delaware Business Trust Act.
"Subordinated Indenture" means the Indenture, dated as of
December 1, 1995, between the Depositor and the Debenture Trustee, as trustee,
as amended or supplemented from time to time.
"Tax Event" means the receipt by the Trust of an opinion of
nationally recognized independent tax counsel experienced in such matters to
the effect that, as a result of (a) any amendment to, clarification of, or
change (including any announced prospective change) in, the laws or treaties
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein affecting taxation, (b) any
judicial decision or any official administrative pronouncement, ruling,
regulatory procedure, notice or announcement (including any notice or
announcement of intent to issue or adopt any such administrative pronouncement,
ruling, regulatory procedure or regulation) (each, for purposes of this
definition, an "Administrative Action"), or (c) any amendment to, clarification
of, or change in the official position or the interpretation of any such
Administrative Action or judicial decision or any interpretation or
pronouncement that provides for a position with respect to such Administrative
Action or judicial decision that differs from the theretofore generally
accepted position, in each case by any legislative body, court, governmental
authority or regulatory body, irrespective of the manner in which such
amendment, clarification or change is made known, which amendment,
clarification, or
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change is effective, which Administrative Action is taken or which judicial
decision is issued, in each case on or after the date of issuance of the
Preferred Securities, there is more than an insubstantial risk that (i) the
Trust is, or will be, subject to United States federal income tax with respect
to interest received on the Debentures, (ii) interest payable by the Depositor
on the Debentures is not, or will not be, fully deductible by the Depositor for
United States federal income tax purposes, or (iii) the Trust is, or will be,
subject to more than a de minimis amount of other taxes, duties or other
governmental charges.
"Transfer Agent and Registrar" shall mean the transfer agent
and registrar for the Preferred Securities appointed by the Trust and shall be
initially Texas Utilities Services Inc.
"Trust" means the Delaware business trust created by the
Original Trust Agreement and continued hereby and identified on the cover page
to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust
Agreement, as the same may be modified, amended or supplemented in accordance
with the applicable provisions hereof, including all exhibits hereto,
including, for all purposes of this Amended and Restated Trust Agreement and
any such modification, amendment or supplement, the provisions of the Trust
Indenture Act that are deemed to be a part of and govern this Amended and
Restated Trust Agreement and any such modification, amendment or supplement,
respectively.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as
in force at the date as of which this instrument was executed; provided,
however, that in the event the Trust Indenture Act of 1939 is amended after
such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Property" means (i) the Debentures, (ii) any cash on
deposit in, or owing to, the Payment Account and (iii) all proceeds and rights
in respect of the foregoing and any other property and assets for the time
being held by the Property Trustee pursuant to the trusts of this Trust
Agreement.
"Trust Security" means any one of the Common Securities or the
Preferred Securities.
"Trust Securities Certificate" means any one of the Common
Securities Certificates or the Preferred Securities Certificates.
"Underwriting Agreement" means the Underwriting Agreement,
dated as of December 6, 1995, among the Trust, the Depositor and the
underwriters named therein.
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ARTICLE II.
ESTABLISHMENT OF THE TRUST
SECTION 2.01. NAME. The Trust created hereby shall be known
as "TU Electric Capital III", in which name the Trustees may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.02. OFFICE OF THE DELAWARE TRUSTEE; PRINCIPAL PLACE
OF BUSINESS. The office of the Delaware Trustee in the State of Delaware is
White Clay Center, Route 273, Newark, Delaware 19711, or at such other address
in Delaware as the Delaware Trustee may designate by written notice to the
Securityholders and the Depositor. The principal place of business of the
Trust is c/o Texas Utilities Electric Company, Energy Plaza, 1601 Bryan Street,
Dallas, Texas 75201.
SECTION 2.03. INITIAL CONTRIBUTION OF TRUST PROPERTY;
ORGANIZATIONAL EXPENSES. The Property Trustee acknowledges receipt in trust
from the Depositor in connection with the Original Trust Agreement of the sum
of $10, which constituted the initial Trust Property. The Depositor shall pay
organizational expenses of the Trust as they arise or shall, upon request of
any Trustee, promptly reimburse such Trustee for any such expenses paid by such
Trustee. The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
SECTION 2.04. ISSUANCE OF THE PREFERRED SECURITIES. On
December 6, 1995 the Depositor, on behalf of the Trust, executed and delivered
the Underwriting Agreement. Contemporaneously with the execution and delivery
of this Trust Agreement, one of the Administrative Trustees, on behalf of the
Trust in accordance with Section 5.02, executed manually and delivered a
Preferred Securities Certificate, registered in the name of the nominee of The
Depositary Trust Company, having an aggregate Liquidation Amount of
$200,000,000.
SECTION 2.05. SUBSCRIPTION AND PURCHASE OF DEBENTURES;
ISSUANCE OF THE COMMON SECURITIES. Contemporaneously with the execution and
delivery of this Trust Agreement, the Administrative Trustees, on behalf of the
Trust, shall subscribe to and purchase from the Depositor Debentures,
registered in the name of the Property Trustee and having an aggregate
principal amount equal to $206,185,575, and, in satisfaction of the purchase
price for such Debentures, (x) the Administrative Trustees, on behalf of the
Trust, shall execute and deliver to the Depositor Common Securities
Certificates, registered in the name of the Depositor, in an aggregate amount
of 247,423 Common Securities having an aggregate Liquidation Amount of
$6,185,575, and (y) the Property Trustee, on behalf of the Trust, shall deliver
to the Depositor the sum of $200,000,000.
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SECTION 2.06. DECLARATION OF TRUST; APPOINTMENT OF ADDITIONAL
ADMINISTRATIVE TRUSTEES. (a) The exclusive purposes and functions of the
Trust are (i) to issue Trust Securities and invest the proceeds thereof in
Debentures, and (ii) to engage in those activities necessary, convenient or
incidental thereto. The Depositor hereby appoints the Trustees as trustees of
the Trust, to have all the rights, powers and duties to the extent set forth
herein. The Property Trustee hereby declares that it will hold the Trust
Property in trust upon and subject to the conditions set forth herein for the
benefit of the Securityholders. The Trustees shall have all rights, powers and
duties set forth herein and in accordance with applicable law with respect to
accomplishing the purposes of the Trust. Anything in this Trust Agreement to
the contrary notwithstanding the Delaware Trustee shall not be entitled to
exercise any powers, nor shall the Delaware Trustee have any of the duties and
responsibilities, of the Property Trustee or the Administrative Trustees set
forth herein. The Delaware Trustee shall be one of the Trustees of the Trust
for the sole and limited purpose of fulfilling the requirements of Section 3807
of the Delaware Business Trust Act.
SECTION 2.07. AUTHORIZATION TO ENTER INTO CERTAIN
TRANSACTIONS. (a) The Trustees shall conduct the affairs of the Trust in
accordance with the terms of this Trust Agreement. Subject to the limitations
set forth in paragraph (b) of this Section and Article VIII and in accordance
with the following provisions (A) and (B), the Trustees shall have the
authority to enter into all transactions and agreements determined by the
Trustees to be appropriate in exercising the authority, express or implied,
otherwise granted to the Trustees under this Trust Agreement, and to perform
all acts in furtherance thereof, including without limitation, the following:
(A) As among the Trustees, the Administrative Trustees shall have the
power, duty and authority to act on behalf of the Trust with respect to the
following matters:
(i) the issuance and sale of the Trust Securities;
(ii) without the consent of any Person, to cause the
Trust to enter into and to execute, deliver and perform on
behalf of the Trust, the Expense Agreement, the Underwriting
Agreement and such other agreements as may be necessary or
desirable in connection with the consummation hereof (such
execution to be by the Administrative Trustees or any one of
them);
(iii) to qualify the Trust to do business in any
jurisdiction as may be necessary or desirable;
(iv) the collection of interest, principal and any
other payments made in respect of the Debentures in the
Payment Account;
(v) the registration of the Preferred Securities under
the Securities Act of 1933, as amended, and under state
securities or blue sky laws, and the
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qualification of this Trust Agreement as a trust indenture
under the Trust Indenture Act;
(vi) the listing of the Preferred Securities upon such
securities exchange or exchanges as shall be determined by the
Depositor and the registration of the Preferred Securities
under the Exchange Act, as amended, and the preparation and
filing of all periodic and other reports and other documents
pursuant to the foregoing;
(vii) the appointment of a Paying Agent and Transfer
Agent and Registrar in accordance with this Trust Agreement;
(viii) registering transfers of the Trust Securities in
accordance with this Trust Agreement;
(ix) to the extent provided in this Trust Agreement,
the winding up of the affairs of and liquidation of the Trust
and the preparation, execution and filing of the certificate
of cancellation with the Secretary of State of Delaware; and
(x) the taking of any action incidental to the
foregoing as the Administrative Trustees may from time to time
determine is necessary or advisable to protect and conserve
the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder).
(B) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to the following
matters:
(i) the establishment of the Payment Account;
(ii) the receipt of the Debentures;
(iii) the deposit of interest, principal and any other
payments made in respect of the Debentures in the Payment
Account;
(iv) the distribution of amounts owed to the
Securityholders in respect of the Trust Securities in
accordance with the terms of this Trust Agreement;
(v) the sending of notices of default and other
information regarding the Trust Securities and the Debentures
to the Securityholders in accordance with the terms of this
Trust Agreement;
(vi) the distribution of the Trust Property in
accordance with the terms of this Trust Agreement;
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(vii) as provided in this Trust Agreement, the winding
up of the affairs of and liquidation of the Trust and the
execution of the certificate of cancellation to be prepared
and filed by the Administrative Trustees with the Secretary of
State of the State of Delaware; and
(viii) the taking of any action incidental to the
foregoing as the Property Trustee may from time to time
determine is necessary or advisable to protect and conserve
the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder).
Subject to this Section 2.07(a)(B), the Property Trustee shall
have none of the duties, powers or authority of the Administrative Trustee set
forth in Section 2.07(a)(A) or the Depositor set forth in Section 2.07(c). The
Property Trustee shall have the power and authority to exercise all of the
rights, powers and privileges of a holder of Debentures under the Subordinated
Indenture and, if an Event of Default occurs and is continuing, the Property
Trustee may, for the benefit of Holders of the Trust Securities, in its
discretion proceed to protect and enforce its rights as holder of the
Debentures subject to the rights of the Holder pursuant to the terms of this
Trust Agreement.
(b) So long as this Trust Agreement remains in effect, the
Trust (or the Trustees acting on behalf of the Trust) shall not undertake any
business, activities or transaction except as expressly provided herein or
contemplated hereby. In particular, the Trustees shall not (i) acquire any
investments or engage in any activities not authorized by this Trust Agreement,
(ii) sell, assign, transfer, exchange, pledge, set-off or otherwise dispose of
any of the Trust Property or interests therein, including to Securityholders,
except as expressly provided herein, (iii) take any action that would cause the
Trust to fail or cease to qualify as a "grantor trust" for United States
federal income tax purposes and not as an association taxable as a corporation,
(iv) incur any indebtedness for borrowed money or (v) take or consent to any
action that would result in the placement of a Lien on any of the Trust
Property. The Trustees shall defend all claims and demands of all Persons at
any time claiming any Lien on any of the Trust Property adverse to the interest
of the Trust or the Securityholders in their capacity as Securityholders.
(c) In connection with the issue of the Preferred Securities,
the Depositor shall have the right and responsibility to assist the Trust with
respect to, or effect on behalf of the Trust, the following (and any actions
taken by the Depositor in furtherance of the following prior to the date of
this Trust Agreement are hereby ratified and confirmed in all respects):
(i) to prepare for filing by the Trust with the
Commission and to execute a registration statement on Form S-3
in relation to the Preferred Securities, including any
amendments thereto;
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(ii) to determine the States in which to take
appropriate action to qualify or register for sale all or part
of the Preferred Securities and to do any and all such acts,
other than actions which must be taken by or on behalf of the
Trust, and advise the Trustees of actions they must take on
behalf of the Trust, and prepare for execution and filing any
documents to be executed and filed by the Trust or on behalf
of the Trust, as the Depositor deems necessary or advisable in
order to comply with the applicable laws of any such States;
(iii) to prepare for filing by the Trust an application
to the New York Stock Exchange or any other national stock
exchange or the Nasdaq National Market for listing upon notice
of issuance of any Preferred Securities;
(iv) to prepare for filing by the Trust with the
Commission and to execute a registration statement on Form 8-A
relating to the registration of the Preferred Securities under
Section 12(b) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"), including any amendments thereto;
(v) to select the investment banker or bankers to act
as underwriters with respect to the offer and sale by the
Trust of Preferred Securities ("Offer") and negotiate the
terms of an Underwriting Agreement and pricing agreement
providing for the Offer;
(vi) to take any other actions necessary or desirable
to carry out any of the foregoing activities; and
(vii) to designate itself or an Affiliate to be the
Transfer Agent and Registrar.
(d) Notwithstanding anything herein to the contrary, the
Administrative Trustees are authorized and directed to conduct the affairs of
the Trust and to operate the Trust so that the Trust will not be deemed to be
an "investment company" required to be registered under the Investment Company
Act of 1940, as amended, or classified other than as a "grantor trust" for
United States federal income tax purposes and not as an association taxable as
a corporation and so that the Debentures will be treated as indebtedness of the
Depositor for United States federal income tax purposes. In this connection,
the Depositor and the Administrative Trustees are authorized to take any
action, not inconsistent with applicable law, the certificate of trust filed
with the Secretary of State of the State of Delaware with respect to the Trust
(the "Certificate of Trust") or this Trust Agreement, that each of the
Depositor and the Administrative Trustees determines in its discretion to be
necessary or desirable for such purposes, as long as such action does not
materially adversely affect the interests of the holders of the Preferred
Securities.
SECTION 2.08. ASSETS OF TRUST. The assets of the Trust shall
consist of the Trust Property.
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SECTION 2.09. TITLE TO TRUST PROPERTY. Legal title to all
Trust Property shall be vested at all times in the Property Trustee (in its
capacity as such) and shall be held and administered by the Property Trustee
for the benefit of the Securityholders in accordance with this Trust Agreement.
ARTICLE III.
PAYMENT ACCOUNT
SECTION 3.01. PAYMENT ACCOUNT.
(a) On or prior to the Closing Date, the Property Trustee
shall establish the Payment Account. The Property Trustees and the Paying
Agent appointed by the Administrative Trustees shall have exclusive control and
sole right of withdrawal with respect to the Payment Account for the purpose of
making deposits in and withdrawals from the Payment Account in accordance with
this Trust Agreement. All monies and other property deposited or held from
time to time in the Payment Account shall be held by the Property Trustee in
the Payment Account for the exclusive benefit of the holders of Trust
Securities and for distribution as herein provided, including (and subject to)
any priority of payments provided for herein.
(b) The Property Trustee shall deposit in the Payment
Account, promptly upon receipt, all payments of principal or interest on, and
any other payments or proceeds with respect to, the Debentures. Amounts held
in the Payment Account shall not be invested by the Property Trustee pending
distribution thereof.
ARTICLE IV.
DISTRIBUTIONS; REDEMPTION
SECTION 4.01. DISTRIBUTIONS.
(a) Distributions on the Trust Securities shall be
cumulative, and will accumulate whether or not there are funds of the Trust
available for the payment of Distributions. Distributions shall accrue from
the Closing Date, and, except in the event that the Depositor exercises its
right to extend the interest payment period for the Debentures pursuant to
Section 311 of the Subordinated Indenture, shall be payable quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year,
commencing on December 31, 1995. If any date on which Distributions are
otherwise payable on the Trust Securities is not a Business Day, then the
payment of such Distribution shall be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any
such delay) except that, if such Business Day is in the next succeeding
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calendar year, payment of such distribution shall be made on the immediately
preceding Business Day, in each case, with the same force and effect as if made
on such date (each date on which distributions are payable in accordance with
this Section 4.01(a) a "Distribution Date").
(b) Distributions payable on the Trust Securities shall be
fixed at a rate of 8.00% per annum of the Liquidation Amount of the Trust
Securities. The amount of Distributions payable for any full quarterly period
shall be computed on the basis of twelve 30-day months and a 360-day year and
for any period shorter than a full month, on the basis of the actual number of
days elapsed. If the interest payment period for the Debentures is extended
pursuant to Section 311 of the Subordinated Indenture, then Distributions on
the Preferred Securities will be deferred for the period equal to the extension
of the interest payment period for the Debentures and the rate per annum at
which Distributions on the Trust Securities accumulate shall be increased by an
amount such that the aggregate amount of Distributions that accumulate on all
Trust Securities during any such extended interest payment period is equal to
the aggregate amount of interest (including, to the extent permitted by law,
interest payable on unpaid interest at the percentage rate per annum set forth
above, compounded quarterly) that accrues during any such extended interest
payment period on the Debentures. The amount of Distributions payable for any
period shall include the Additional Amounts, if any.
(c) Distributions on the Trust Securities shall be made and
shall be deemed payable on each Distribution Date only to the extent that the
Trust has funds available in the Payment Account for the payment of such
Distributions.
(d) Distributions on the Trust Securities with respect to a
Distribution Date shall be payable to the Holders thereof as they appear on the
Securities Register for the Trust Securities on the relevant record date, which
shall be 15 days prior to the relevant Distribution Date.
SECTION 4.02. REDEMPTION. (a) On each Debenture Redemption
Date and at the maturity date for the Debentures (as defined in the
Subordinated Indenture), the Property Trustee will be required to redeem a Like
Amount of Trust Securities at the Redemption Price plus accumulated and unpaid
Distributions to the date of such payment.
(b) Notice of redemption shall be given by the Property
Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date to each Holder of Trust Securities to
be redeemed, at such Holder's address appearing in the Security Register. All
notices of redemption or liquidation shall state:
(i) the Redemption Date;
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(ii) the Redemption Price and the amount of accumulated
and unpaid Dividends to be paid on the Redemption Date;
(iii) the CUSIP number;
(iv) if less than all the Outstanding Trust Securities
are to be redeemed, the identification and the total
Liquidation Amount of the particular Trust Securities to be
redeemed; and
(v) that on the Redemption Date the Redemption Price
plus accumulated and unpaid Distributions to the date of such
payment will become due and payable upon each such Trust
Security to be redeemed and that interest thereon will cease
to accrue on and after said date.
(c) The Trust Securities redeemed on each Redemption Date
shall be redeemed at the Redemption Price plus accumulated and unpaid
Distributions to the date of such payment with the proceeds from the
contemporaneous redemption of Debentures. Redemptions of the Trust Securities
shall be made and the Redemption Price plus accumulated and unpaid
Distributions to the date of such payment shall be deemed payable on each
Redemption Date only to the extent that the Trust has funds immediately
available in the Payment Account for such payment.
(d) If the Property Trustee gives a notice of redemption in
respect of any Preferred Securities, then, by 12:00 noon, New York time, on the
Redemption Date, subject to Section 4.02(c), the Property Trustee shall
irrevocably deposit with the Paying Agent funds sufficient to pay the
applicable Redemption Price plus accumulated and unpaid Distributions to the
date of such payment and will give the Paying Agent irrevocable instructions
and authority to pay the Redemption Price plus accumulated and unpaid
Distributions to the date of such payment to the holders thereof upon surrender
of their Preferred Securities Certificates. Notwithstanding the foregoing,
Distributions payable on or prior to the redemption date for any Trust
Securities called for redemption shall be payable to the Holders of such Trust
Securities as they appear on the Securities Register for the Trust Securities
on the relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds deposited as required, then on the
Redemption Date, all rights of Securityholders holding Trust Securities so
called for redemption will cease, except the right of such Securityholders to
receive the Redemption Price plus accumulated and unpaid Distributions to the
date of such payment, but without interest thereon, and such Trust Securities
will cease to be outstanding. In the event that any Redemption Date is not a
Business Day, then payment of the Redemption Price payable on such date plus
accumulated and unpaid Distributions to such date shall be made on the next
succeeding day which is a Business Day (and without any interest or other
payment in respect of any such delay). In the event that payment of the
Redemption Price plus accumulated and unpaid Distributions in respect of any
Trust Securities called for redemption is improperly withheld or refused and
not paid either by the Trust or by the Depositor
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pursuant to the Guarantee, Distributions on such Trust Securities will continue
to accrue, at the then applicable rate, from the Redemption Date originally
established by the Trust for such Trust Securities to the date such Redemption
Price plus accumulated and unpaid Distributions is actually paid, in which case
the actual payment date will be deemed the date fixed for redemption for
purposes of calculating the Redemption Price plus accumulated and unpaid
Distributions to such date.
(e) Payment of the Redemption Price on the Trust Securities
shall be made to the Holders thereof as they appear on the Securities Register
for the Trust Securities on the relevant record date, which shall be the
fifteenth day prior to the Redemption Date.
(f) If less than all the Outstanding Trust Securities are to
be redeemed on a Redemption Date, then the aggregate Liquidation Amount of
Trust Securities to be redeemed shall be allocated 3% to the Common Securities
and 97% to the Preferred Securities. The particular Preferred Securities to be
redeemed shall be selected not more than 60 days prior to the Redemption Date
by the Property Trustee from the Outstanding Preferred Securities not
previously called for redemption, by such method as the Property Trustee shall
deem fair and appropriate and which may provide for the selection for a
redemption of portions (equal to $25 or integral multiples thereof) of the
Liquidation Amount of Preferred Securities of a denomination larger than $25.
The Property Trustee shall promptly notify the Transfer Agent and Registrar in
writing of the Preferred Securities selected for redemption and, in the case of
any Preferred Securities selected for partial redemption, the Liquidation
Amount thereof to be redeemed. For all purposes of this Trust Agreement,
unless the context otherwise requires, all provisions relating to the
redemption of Preferred Securities shall relate, in the case of any Preferred
Securities redeemed or to be redeemed only in part, to the portion of the
Liquidation Amount of Preferred Securities which has been or is to be redeemed.
SECTION 4.03. SUBORDINATION OF COMMON SECURITIES. (a)
Payment of Distributions (including Additional Amounts, if applicable) on, and
the Redemption Price plus accumulated and unpaid distributions of, the Trust
Securities, as applicable, shall be made pro rata based on the Liquidation
Amount of the Trust Securities; provided, however, that if on any Distribution
Date or Redemption Date a Debenture Event of Default shall have occurred and be
continuing, no payment of any Distribution (including Additional Amounts, if
applicable) on, or Redemption Price of, any Common Security, and no other
payment on account of the redemption, liquidation or other acquisition of
Common Securities, shall be made unless payment in full in cash of all
accumulated and unpaid Distributions (including Additional Amounts, if
applicable) on all Outstanding Preferred Securities for all distribution
periods terminating on or prior thereto, or in the case of payment of the
Redemption Price plus accumulated and unpaid Distributions the full amount of
such Redemption Price plus accumulated and unpaid Distributions on all
Outstanding Preferred Securities, shall have been made or provided for, and all
funds immediately available to the Property Trustee shall first be applied to
the payment in full in cash of all Distributions (including Additional Amounts,
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if applicable) on, or Redemption Price of plus accumulated and unpaid
Distributions of, Preferred Securities then due and payable.
(b) In the case of the occurrence of any Event of Default
resulting from a Debenture Event of Default, the Holder of Common Securities
will be deemed to have waived any such Event of Default under this Trust
Agreement until the effect of all such Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated. Until
any such Events of Default under this Trust Agreement with respect to the
Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee shall act solely on behalf of the Holders of the Preferred
Securities and not the Holder of the Common Securities, and only the Holders of
the Preferred Securities will have the right to direct the Property Trustee to
act on their behalf.
SECTION 4.04. PAYMENT PROCEDURES. Payments in respect of the
Preferred Securities shall be made by check mailed to the address of the Person
entitled thereto as such address shall appear on the Register or, if the
Preferred Securities are held by a Clearing Agency, such Distributions shall be
made to the Clearing Agency, which shall credit the relevant Persons' accounts
at such Clearing Agency on the applicable distribution dates. Payments in
respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Administrative Trustees and the Holder of the
Common Securities.
SECTION 4.05. TAX RETURNS AND REPORTS. The Administrative
Trustees shall prepare (or cause to be prepared), at the Depositor's expense
and direction, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. In this regard, the Administrative Trustees shall (a) prepare and file
(or cause to be prepared or filed) the Internal Revenue Service Form 1041 (or
any successor form) required to be filed in respect of the Trust in each
taxable year of the Trust and (b) prepare and furnish (or cause to be prepared
and furnished) to each Securityholder the related Internal Revenue Service Form
1099, or any successor form or the information required to be provided on such
form. The Administrative Trustees shall provide the Depositor and the Property
Trustee with a copy of all such returns, reports and schedules promptly after
such filing or furnishing. The Trustees shall comply with United States
federal withholding and backup withholding tax laws and information reporting
requirements with respect to any payments to Securityholders under the Trust
Securities.
ARTICLE V.
TRUST SECURITIES CERTIFICATES
SECTION 5.01. INITIAL OWNERSHIP. Upon the formation of the
Trust by the contribution by the Depositor pursuant to Section 2.03 and until
the issuance of the Trust
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Securities, and at any time during which no Trust Securities are outstanding,
the Depositor shall be the sole beneficial owner of the Trust.
SECTION 5.02. THE TRUST SECURITIES CERTIFICATES. The Trust
Securities Certificates shall be issued in denominations of $25 Liquidation
Amount and integral multiples thereof. The Trust Securities Certificates shall
be executed on behalf of the Trust by manual or facsimile signature of at least
one Administrative Trustee and, if executed on behalf of the Trust by facsimile
signature, countersigned by the Transfer Agent and Registrar or its agent.
Trust Securities Certificates bearing the manual signatures of individuals who
were, at the time when such signatures shall have been affixed, authorized to
sign on behalf of the Trust and, if executed on behalf of the Trust by
facsimile signature, countersigned by the Transfer Agent and Registrar or its
agent, shall be validly issued and entitled to the benefits of this Trust
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.04 or
5.11.
SECTION 5.03. EXECUTION AND DELIVERY OF TRUST SECURITIES
CERTIFICATES. On the Closing Date, the Administrative Trustees shall cause
Trust Securities Certificates, in an aggregate Liquidation Amount as provided
in Sections 2.04 and 2.05, to be executed on behalf of the Trust, and in the
case of Preferred Securities executed by facsimile signature, countersigned by
the Transfer Agent and Registrar, or The Bank of New York as its agent, and
delivered to or upon the written order of the Depositor signed by its chairman
of the board, any of its vice presidents or its Treasurer, without further
corporate action by the Depositor, in authorized denominations. The Depositor
agrees to indemnify, defend and hold The Bank of New York harmless against any
and all costs and liabilities incurred without negligence arising out of or in
connection with any such countersigning by it.
SECTION 5.04. REGISTRATION OF TRANSFER AND EXCHANGE OF
PREFERRED SECURITIES CERTIFICATES. The Transfer Agent and Registrar shall keep
or cause to be kept, at the office or agency maintained pursuant to Section
5.08, a Securities Register in which, subject to such reasonable regulations as
it may prescribe, the Transfer Agent and Registrar shall provide for the
registration of Preferred Securities Certificates and the Common Securities
Certificates (subject to Section 5.10 in the case of the Common Securities
Certificates) and registration of transfers and exchanges of Preferred
Securities Certificates as herein provided. Texas Utilities Services Inc.
shall be the initial Transfer Agent and Registrar.
Upon surrender for registration of transfer of any Preferred
Securities Certificate at the office or agency maintained pursuant to Section
5.08, the Administrative Trustees, or any one of them, shall execute on behalf
of the Trust by manual or facsimile
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signature and, if executed on behalf of the Trust by facsimile signature, cause
the Transfer Agent and Registrar or its agent to countersign and deliver, in
the name of the designated transferee or transferees, one or more new Preferred
Securities Certificates in authorized denominations of a like aggregate
Liquidation Amount. At the option of a Holder, Preferred Securities
Certificates may be exchanged for other Preferred Securities Certificates in
authorized denominations of the same class and of a like aggregate Liquidation
Amount upon surrender of the Preferred Securities Certificates to be exchanged
at the office or agency maintained pursuant to Section 5.08.
Every Preferred Securities Certificate presented or
surrendered for registration of transfer or exchange shall be accompanied by a
written instrument of transfer in form satisfactory to the Administrative
Trustees and the Transfer Agent and Registrar duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Preferred Securities
Certificate surrendered for registration of transfer or exchange shall be
canceled and subsequently disposed of by the Administrative Trustees in
accordance with customary practice. The Trust shall not be required to (i)
issue, register the transfer of, or exchange any Preferred Securities during a
period beginning at the opening of business 15 calendar days before the day of
mailing of a notice of redemption of any Preferred Securities called for
redemption and ending at the close of business on the day of such mailing or
(ii) register the transfer of or exchange any Preferred Securities so selected
for redemption, in whole or in part, except the unredeemed portion of any such
Preferred Securities being redeemed in part.
No service charge shall be made for any registration of
transfer or exchange of Preferred Securities Certificates, but the Transfer
Agent and Registrar may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Preferred Securities Certificates.
SECTION 5.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST
SECURITIES CERTIFICATES. If (a) any mutilated Trust Securities Certificate
shall be surrendered to the Transfer Agent and Registrar, or if the Transfer
Agent and Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Trust Securities Certificate and (b) there
shall be delivered to the Transfer Agent and Registrar and the Administrative
Trustees such security or indemnity as may be required by them to save each of
them and the Depositor harmless, then in the absence of notice that such Trust
Securities Certificate shall have been acquired by a bona fide purchaser, the
Administrative Trustees, or any one of them, on behalf of the Trust shall
execute by manual or facsimile signature and the Administrative Trustees, or
any one of them, and, if executed on behalf of the Trust by facsimile
signature, countersigned by the Transfer Agent and Registrar shall make
available for delivery, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities
Certificate of like class, tenor and denomination. In connection with the
issuance of any new Trust Securities Certificate under this Section, the
Administrative Trustees or the Transfer Agent and Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be
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imposed in connection therewith. Any duplicate Trust Securities Certificate
issued pursuant to this Section shall constitute conclusive evidence of an
ownership interest in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Trust Securities Certificate shall be found at any
time.
SECTION 5.06. PERSONS DEEMED SECURITYHOLDERS. Prior to due
presentation of a Trust Securities Certificate for registration of transfer,
the Trustees and the Transfer Agent and Registrar shall be entitled to treat
the Person in whose name any Trust Securities Certificate shall be registered
in the Securities Register as the owner of such Trust Securities Certificate
for the purpose of receiving distributions and for all other purposes
whatsoever, and neither the Trustee nor the Transfer Agent and Registrar shall
be bound by any notice to the contrary.
SECTION 5.07. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND
ADDRESSES. The Administrative Trustees shall furnish or cause to be furnished
(x) to the Depositor, within 15 days after receipt by any Administrative
Trustee of a request therefor from the Depositor in writing and (y) to the
Property Trustee, promptly after receipt by any Administrative Trustee of a
request therefor from the Property Trustee in writing in order to enable the
Property Trustee to discharge its obligations under this Trust Agreement, a
list, in such form as the Depositor may reasonably require, of the names and
addresses of the Securityholders as of the most recent Record Date. If Holders
of Trust Securities Certificates evidencing ownership at such time and for the
previous six months not less than 25% of the outstanding aggregate Liquidation
Amount apply in writing to any Administrative Trustee, and such application
states that the applicants desire to communicate with other Securityholders
with respect to their rights under this Trust Agreement or under the Trust
Securities Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Administrative
Trustees shall, within five Business Days after the receipt of such
application, afford such applicants access during normal business hours to the
current list of Securityholders. Each Holder, by receiving and holding a Trust
Securities Certificate, shall be deemed to have agreed not to hold either the
Depositor or the Administrative Trustees accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 5.08. MAINTENANCE OF OFFICE OR AGENCY. The
Administrative Trustees shall maintain in the Borough of Manhattan, The City of
New York, an office or offices or agency or agencies where Preferred Securities
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustees in respect of the Trust
Securities Certificates may be served. The Administrative Trustees initially
designate Midwest Clearing Corporation, 40 Broad Street, New York, New York
10004 at its principal corporate trust office for such purposes. The
Administrative Trustees shall give prompt written notice to the Depositor, the
Property Trustee and to the Securityholders of any change in the location of
the Securities Register or any such office or agency.
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SECTION 5.09. APPOINTMENT OF PAYING AGENT. The Paying Agent
shall make distributions to Securityholders from the Payment Account and shall
report the amounts of such distributions to the Administrative Trustees and the
Property Trustee. Any Paying Agent shall have the revocable power to withdraw
funds from the Payment Account for the purpose of making the distributions
referred to above. The Property Trustee shall be entitled to rely upon a
certificate of the Paying Agent stating in effect the amount of such funds so
to be withdrawn and that same are to be applied by the Paying Agent in
accordance with this Section 5.09. The Administrative Trustees or any one of
them may revoke such power and remove the Paying Agent if the Administrative
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect.
The Paying Agent shall initially be Texas Utilities Services Inc., and it may
choose any co-paying agent that is acceptable to the Administrative Trustees
and the Depositor. The Paying Agent shall be permitted to resign upon 30 days'
written notice to the Administrative Trustees and the Depositor. In the event
that Texas Utilities Services, Inc. shall no longer be the Paying Agent, the
Administrative Trustees shall appoint a successor that is reasonably acceptable
to the Property Trustee and the Depositor to act as Paying Agent (which shall
be a bank, trust company or an affiliate of the Company). The Administrative
Trustees shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Administrative Trustees to execute and deliver to the Trustees
an instrument in which such successor Paying Agent or additional Paying Agent
shall agree with the Trustees that as Paying Agent, such successor Paying Agent
or additional Paying Agent will hold all sums, if any, held by it for payment
to the Securityholders in trust for the benefit of the Securityholders entitled
thereto until such sums shall be paid to such Securityholders. The Paying
Agent shall return all unclaimed funds to the Property Trustee and upon
resignation or removal of a Paying Agent such Paying Agent shall also return
all funds in its possession to the Property Trustee. The provisions of
Sections 8.01, 8.03 and 8.06 shall apply to the paying agent appointed
hereunder, and the Paying Agent shall be bound by the requirements with respect
to paying agents of securities issued pursuant to the Trust Indenture Act. Any
reference in this Trust Agreement to the Paying Agent shall include any
co-paying agent unless the context requires otherwise.
SECTION 5.10. OWNERSHIP OF COMMON SECURITIES BY DEPOSITOR.
On the Closing Date and on each other date provided for in Section 2.05, the
Depositor shall acquire, and thereafter retain, beneficial and record ownership
of the Common Securities. Any attempted transfer of the Common Securities
shall be void. The Administrative Trustees shall cause each Common Securities
Certificate issued to the Depositor to contain a legend stating "THIS
CERTIFICATE IS NOT TRANSFERABLE". Common Securities Certificates representing
the Common Securities shall be issued to the Depositor in the form of a
typewritten or definitive Common Securities Certificate.
SECTION 5.11. DEFINITIVE PREFERRED SECURITIES CERTIFICATES.
Upon initial issuance of the Preferred Securities the Definitive Preferred
Securities Certificates shall be typewritten, printed, lithographed or engraved
or may be produced in any other manner as is reasonably acceptable to the
Administrative Trustees, as evidenced by the execution thereof
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by the Administrative Trustees, or any one of them. The Administrative
Trustees, or any one of them, shall execute on behalf of the Trust by manual or
facsimile signature, and, if executed by facsimile on behalf of the Trust,
countersigned by the Transfer Agent or its agent the Definitive Preferred
Securities Certificates initially in accordance with the instructions of the
Depositor. Neither the Transfer Agent and Registrar nor any of the
Administrative Trustees shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying
on, such instructions.
SECTION 5.12. BOOK-ENTRY SYSTEM. Some or all of the
Preferred Securities may be registered in the name of a securities depository
("Securities Depository") or a nominee therefor, and held in the custody of the
Securities Depository. In such event, a single certificate will be issued and
delivered to the Securities Depository for such Preferred Securities, in which
case the beneficial owners of such Preferred Securities will not receive
physical delivery of certificates for Preferred Securities. Except as provided
herein, all transfers of beneficial ownership interests in such Preferred
Securities will be made by book-entry only, and no investor or other party
purchasing, selling or otherwise transferring beneficial ownership of the
Preferred Securities will receive, hold or deliver any certificate for
Preferred Securities. The Depositor, the Trustees and the Paying Agent will
recognize the Securities Depository or its nominee as the Holder of Preferred
Securities for all purposes, including notices and voting.
The Administrative Trustees, at the direction and expense of
the Depositor, may from time to time appoint a Securities Depository or a
successor thereto and enter into a letter of representations or other agreement
with such Securities Depository to establish procedures with respect to the
Preferred Securities. Any Securities Depository shall be a Clearing Agency.
The Depositor and the Trustees covenant and agree to meet the
requirements of a Securities Depository for the Preferred Securities with
respect to required notices and other provisions of the letter of
representations or agreement executed with respect to such Preferred
Securities.
Whenever the beneficial ownership of any Preferred Securities
is determined through the books of a Securities Depository, the requirements in
this Trust Agreement of holding, delivering or transferring such Preferred
Securities shall be deemed modified with respect to such Preferred Securities
to meet the requirements of the Securities Depository with respect to actions
of the Trustees, the Depositor and the Paying Agent. Any provisions hereof
permitting or requiring delivery of such Preferred Securities shall, while such
Preferred Securities are in a Book-Entry System, be satisfied by the notation
on the books of the Securities Depository in accordance with applicable state
law.
SECTION 5.13. RIGHTS OF SECURITYHOLDERS. The legal title to
the Trust Property is vested exclusively in the Property Trustee (in its
capacity as such) in accordance with Section 2.09, and the Securityholders
shall not have any right or title therein other than
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an undivided beneficial interest in the assets of the Trust conferred by their
Trust Securities and they shall have no right to call for any partition or
division of property, profits or rights of the Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Trust Agreement. The Preferred
Securities shall have no preemptive rights and when issued and delivered to
Securityholders against payment of the purchase price therefor will be fully
paid and nonassessable by the Trust.
ARTICLE VI.
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 6.01. LIMITATIONS ON VOTING RIGHTS. (a) Except as
provided in this Section 6.01, in Section 10.03 and as otherwise required by
law, no Holder of Preferred Securities shall have any right to vote or in any
manner otherwise control the administration, operation and management of the
Trust or the obligations of the parties hereto, nor shall anything herein set
forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association.
(b) So long as any Debentures are held by the Property
Trustee, the Trustees shall not (i) direct the time, method and place of
conducting any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on the Debenture Trustee with respect to
such Debentures, (ii) waive any past default which is waivable under Section
813 of the Subordinated Indenture, (iii) exercise any right to rescind or annul
a declaration that the principal of all the Debentures shall be due and payable
or (iv) consent to any amendment, modification or termination of the
Subordinated Indenture or the Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the Holders of at least
66 2/3% of the aggregate Liquidation Amount of the Preferred Securities;
provided, however, that where a consent under the Subordinated Indenture would
require the consent of each holder of Debentures affected thereby, no such
consent shall be given by any Trustee without the prior written consent of each
holder of Preferred Securities. The Trustees shall not revoke any action
previously authorized or approved by a vote of the Preferred Securities, except
pursuant to a subsequent vote of the Preferred Securities. The Property
Trustee shall notify all Holders of the Preferred Securities of any notice of
default received from the Debenture Trustee with respect to the Debentures. In
addition to obtaining the foregoing approvals of the Holders of the Preferred
Securities, prior to taking any of the foregoing actions, the Property Trustee
shall, at the expense of the Depositor, obtain an Opinion of Counsel
experienced in such matters to the effect that the Trust will be classified as
a "grantor trust" and not as an association taxable as a corporation for United
States federal income tax purposes on account of such action.
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(c) If any proposed amendment to the Trust Agreement provides
for, or the Trustees otherwise propose to effect, (i) any action that would
materially adversely affect the powers, preferences or special rights of the
Preferred Securities, whether by way of amendment to the Trust Agreement or
otherwise, or (ii) the dissolution, winding- up or termination of the Trust,
other than pursuant to the terms of this Trust Agreement, then the Holders of
outstanding Preferred Securities as a class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least 66 2/3 in Liquidation
Amount of the outstanding Preferred Securities. No amendment to this Trust
Agreement may be made if, as a result of such amendment, the Trust would be
classified as a "grantor trust" and not as an association taxable as a
corporation for United States federal income tax purposes.
SECTION 6.02. NOTICE OF MEETINGS. Notice of all meetings of
the Holders of Preferred Securities, stating the time, place and purpose of the
meeting, shall be given by the Administrative Trustees pursuant to Section
10.08 to each Holder of a Preferred Security, at his registered address, at
least 15 days and not more than 90 days before the meeting. At any such
meeting, any business properly before the meeting may be so considered whether
or not stated in the notice of the meeting. Any adjourned meeting may be held
as adjourned without further notice.
SECTION 6.03. MEETINGS OF HOLDERS OF PREFERRED SECURITIES.
No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Securityholders to
vote on any matter upon the written request of the Holders of 25% of the then
outstanding Preferred Securities (based upon their aggregate Liquidation
Amount) and may, at any time in their discretion, call a meeting of Holders of
Preferred Securities to vote on any matters as to which the Holders of
Preferred Securities are entitled to vote.
Holders of 50% of the then outstanding Preferred Securities
(based upon their aggregate Liquidation Amount), present in person or by proxy,
shall constitute a quorum at any meeting of Securityholders.
If a quorum is present at a meeting, an affirmative vote by
the Holders of Preferred Securities present, in person or by proxy, holding
more than the lesser of (x) 66 2/3% of the then outstanding Preferred
Securities (based upon their aggregate Liquidation Amount) held by the Holders
of then outstanding Preferred Securities present, either in person or by proxy,
at such meeting and (y) 50% of the outstanding Preferred Securities (based upon
their aggregate liquidation amount) shall constitute the action of the
Securityholders, unless this Trust Agreement requires a greater number of
affirmative votes.
SECTION 6.04. VOTING RIGHTS. Securityholders shall be
entitled to one vote for each $25 of Liquidation Amount represented by their
Trust Securities in respect of any matter as to which such Securityholders are
entitled to vote.
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SECTION 6.05. PROXIES, ETC. At any meeting of
Securityholders, any Securityholder entitled to vote thereat may vote by proxy,
provided that no proxy shall be voted at any meeting unless it shall have been
placed on file with the Administrative Trustees, or with such other officer or
agent of the Trust as the Administrative Trustee may direct, for verification
prior to the time at which such vote shall be taken. Only Securityholders of
record shall be entitled to vote. When Trust Securities are held jointly by
several Persons, any one of them may vote at any meeting in person or by proxy
in respect of such Trust Securities, but if more than one of them shall be
present at such meeting in person or by proxy, and such joint owners or their
proxies so present disagree as to any vote to be cast, such vote shall not be
received in respect of such Trust Securities. A proxy purporting to be
executed by or on behalf of a Securityholder shall be deemed valid unless
challenged at or prior to its exercise, or, if earlier, until eleven months
after it is sent and the burden of proving invalidity shall rest on the
challenger.
SECTION 6.06. SECURITYHOLDER ACTION BY WRITTEN CONSENT. Any
action which may be taken by Securityholders at a meeting may be taken without
a meeting if Securityholders holding more than a majority of all outstanding
Trust Securities entitled to vote in respect of such action (or such larger
proportion thereof as shall be required by any express provision of this Trust
Agreement) shall consent to the action in writing (based upon their aggregate
Liquidation Amount).
SECTION 6.07. RECORD DATE FOR VOTING AND OTHER PURPOSES. For
the purposes of determining the Securityholders who are entitled to notice of
and to vote at any meeting or by written consent, or to participate in any
distribution on the Trust Securities in respect of which a record date is not
otherwise provided for in this Trust Agreement, or for the purpose of any other
action, the Administrative Trustees may from time to time fix a date, not more
than 90 days prior to the date of any meeting of Securityholders or the payment
of distribution or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes.
SECTION 6.08. ACTS OF SECURITYHOLDERS. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided or
permitted by this Trust Agreement to be given, made or taken by Securityholders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Securityholders in person or by an agent duly
appointed in writing; and, except as otherwise expressly provided herein, such
action shall become effective when such instrument or instruments are delivered
to the Administrative Trustees. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of the Securityholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Trust Agreement and (subject to
Section 8.01) conclusive in favor of the Trustees, if made in the manner
provided in this Section.
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The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgements of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate or affidavit shall also constitute sufficient proof
of his authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Trustee deems sufficient.
The ownership of Preferred Securities shall be proved by the
Securities Register.
Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Securityholder of any Trust Security shall
bind every future Securityholder of the same Trust Security and the
Securityholder of every Trust Security issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustees or the Trust in reliance
thereon, whether or not notation of such action is made upon such Trust
Security.
Without limiting the foregoing, a Securityholder entitled
hereunder to take any action hereunder with regard to any particular Trust
Security may do so with regard to all or any part of the Liquidation Amount of
such Trust Security or by one or more duly appointed agents each of which may
do so pursuant to such appointment with regard to all or any part of such
liquidation amount.
If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder
or Trustee under this Article VI, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
SECTION 6.09. INSPECTION OF RECORDS. Subject to Section 5.07
concerning access to the list of Securityholders, upon reasonable notice to the
Administrative Trustees and the Property Trustee, the other records of the
Trust shall be open to inspection by Securityholders during normal business
hours for any purpose reasonably related to such Securityholder's interest as a
Securityholder.
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF THE PROPERTY
TRUSTEE AND THE DELAWARE TRUSTEE
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SECTION 7.01. PROPERTY TRUSTEE. The Property Trustee hereby
represents and warrants for the benefit of the Depositor and the
Securityholders that:
(a) the Property Trustee is a banking corporation or trust
company duly organized, validly existing and in good standing under the laws of
the State of New York;
(b) the Property Trustee has full corporate power, authority
and legal right to execute, deliver and perform its obligations under this
Trust Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed
and delivered by the Property Trustee and constitutes the valid and legally
binding agreement of the Property Trustee enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles;
(d) the execution, delivery and performance by the Property
Trustee of this Trust Agreement will not violate, conflict with or constitute a
breach of the Property Trustee's charter or by-laws; and
(e) neither the authorization, execution or delivery by the
Property Trustee of this Trust Agreement nor the consummation of any of the
transactions by the Property Trustee contemplated herein require the consent or
approval of, the giving of notice to, the registration with or the taking of
any other action with respect to any governmental authority or agency under any
existing Federal or New York law governing the banking or trust powers of the
Property Trustee.
SECTION 7.02. DELAWARE TRUSTEE. The Delaware Trustee
represents and warrants for the benefit of the Depositor and the
Securityholders that:
(a) the Delaware Trustee is a banking corporation or trust
company duly organized, validly existing and in good standing under the laws of
the State of Delaware;
(b) the Delaware Trustee has full corporate power, authority
and legal right to execute, deliver and perform its obligations under this
Trust Agreement and has taken all necessary action to authorize the execution,
delivery and performance by it of this Trust Agreement;
(c) this Trust Agreement has been duly authorized, executed
and delivered by the Delaware Trustee and constitutes the valid and legally
binding agreement of the Delaware Trustee enforceable against it in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles;
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(d) the execution, delivery and performance by the Delaware
Trustee of this Trust Agreement will not violate the Delaware Trustee's charter
or by-laws; and
(e) neither the authorization, execution or delivery by the
Delaware Trustee of this Trust Agreement nor the consummation of any of the
transactions by the Delaware Trustee contemplated herein require the consent or
approval of, the giving of notice to, the registration with or the taking of
any other action with respect to any governmental authority or agency under any
existing Federal or Delaware law governing the banking or trust powers of the
Delaware Trustee.
ARTICLE VIII.
THE TRUSTEES
SECTION 8.01. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) The duties and responsibilities of the Trustees shall be
as provided by this Trust Agreement and, in the case of the Property Trustee,
the Trust Indenture Act, and no implied covenants or obligations shall be read
into this Trust Agreement against any of the Trustees. Notwithstanding the
foregoing, no provision of this Trust Agreement shall require any of the
Trustees to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise
of any of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against such risk
or liability is not reasonably assured to it. Notwithstanding anything
contained in this Trust Agreement to the contrary, the duties and
responsibilities of the Property Trustee under this Trust Agreement shall be
subject to the protections, exculpations and limitations on liability afforded
to the Property Trustee under the provisions of the Trust Indenture Act and, to
the extent applicable, Rule 3A-7 under the Investment Company Act of 1940, or
any successor rule thereunder. Whether or not therein expressly so provided,
every provision of this Trust Agreement relating to the conduct or affecting
the liability of or affording protection to the Trustees shall be subject to
the provisions of this Section.
(b) All payments made by the Property Trustee or a Paying
Agent in respect of the Trust Securities shall be made only from the income and
proceeds from the Trust Property and only to the extent that there shall be
sufficient income or proceeds from the Trust Property to enable the Property
Trustee or Paying Agent to make payments in accordance with the terms hereof.
Each Securityholder, by its acceptance of a Trust Security, agrees that it will
look solely to the income and proceeds from the Trust Property to the extent
available for distribution to it as herein provided and that the Trustees are
not personally liable to it for any amount distributable in respect of any
Trust Security or for any other liability in respect of any Trust Security.
This Section 8.01(b) does not limit the
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liability of the Trustees expressly set forth elsewhere in this Trust Agreement
or, in the case of the Property Trustee, in the Trust Indenture Act.
(c) All duties and responsibilities of the Property Trustee
contained in this Trust Agreement are subject to the following:
(i) the Property Trustee's sole duty with respect to
the custody, safe keeping and physical preservation of the
Trust Property shall be to deal with such property in a
similar manner as the Property Trustee deals with similar
property for its own account, subject to the protections and
limitations on liability afforded to the Property Trustee
under this Trust Agreement, the Trust Indenture Act and Rule
3a-7 thereunder;
(ii) the Property Trustee shall have no duty or
liability for or with respect to the value, genuineness,
existence or sufficiency of the Trust Property or the payment
of any taxes or assessments levied thereon or in connection
therewith;
(iii) the Property Trustee shall not be liable for any
interest on any money received by it except as it may
otherwise agree with the Depositor. Money held by the
Property Trustee need not be segregated from other funds held
by it except in relation to the Payment Account established by
the Property Trustee pursuant to this Trust Agreement and
except to the extent otherwise required by law; and
(iv) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or
the Depositor with their respective duties under this Trust
Agreement, nor shall the Property Trustee be liable for the
default or misconduct of the Administrative Trustees or the
Depositor.
SECTION 8.02. NOTICE OF DEFAULTS. Within five Business Days
after the occurrence of any Event of Default, the Property Trustee shall
transmit, in the manner and to the extent provided in Section 10.08, notice of
any default known to the Property Trustee to the Securityholders and the
Depositor, unless such default shall have been cured or waived. For the
purpose of this Section, the term "default" means any event which is, or after
notice or lapse of time or both would become, an Event of Default.
SECTION 8.03. CERTAIN RIGHTS OF PROPERTY TRUSTEE. Subject to
the provisions of Section 8.01 and except as provided by law:
(i) the Property Trustee may rely and shall be
protected in acting or refraining from acting in good faith
upon any resolution, Opinion of Counsel, certificate, written
representation of a Holder or transferee, certificate of
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auditors or any other certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
appraisal, bond, debenture, note, other evidence of
indebtedness or other paper or document reasonably believed by
it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) if (A) in performing its duties under this Trust
Agreement the Property Trustee is required to decide between
alternative courses of action or (B) in construing any of the
provisions in this Trust Agreement the Property Trustee finds
the same ambiguous or inconsistent with any other provisions
contained herein or (C) the Property Trustee is unsure of the
application of any provision of this Trust Agreement, then,
except as to any matter as to which the Preferred
Securityholders are entitled to vote under the terms of this
Trust Agreement, the Property Trustee shall deliver a notice
to the Depositor requesting written instructions of the
Depositor as to the course of action to be taken. The
Property Trustee shall take such action, or refrain from
taking such action, as the Property Trustee shall be
instructed in writing to take, or to refrain from taking, by
the Depositor; provided, however, that if the Property Trustee
does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such
reasonably shorter period of time set forth in such notice
(which to the extent practicable shall not be less than two
Business Days), it may, but shall be under no duty to, take or
refrain from taking such action not inconsistent with this
Trust Agreement as it shall deem advisable and in the best
interests of the Securityholders, in which event the Property
Trustee shall have no liability except for its own bad faith,
negligence or willful misconduct;
(iii) whenever in the administration of this Trust
Agreement the Property Trustee shall deem it desirable that a
matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Property Trustee (unless
other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, request and rely upon an
Officers' Certificate which, upon receipt of such request,
shall be promptly delivered by the Depositor or the
Administrative Trustees;
(iv) the Property Trustee may consult with counsel of
its selection and the written advice of such counsel or any
Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(v) the Property Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this
Trust Agreement at the request or direction of any of the
Securityholders pursuant to this Trust Agreement, unless such
Securityholders shall have offered to the Property Trustee
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reasonable security or indemnity against the costs, expenses
(including reasonable attorneys' fees and expenses) and
liabilities which might be incurred by it in compliance with
such request or direction;
(vi) the Property Trustee shall not be bound to make
any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, approval,
bond, debenture, note or other evidence of indebtedness or
other paper or document reasonably believed by it to be
genuine, unless requested in writing to do so by one or more
Securityholders, but the Property Trustee, in its discretion,
may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Property Trustee
shall determine to make such further inquiry or investigation,
it shall be entitled to examine the books, records and
premises of the Depositor personally or by agent or attorney;
(vii) the Property Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either
directly or by or through its agents or attorneys, and the
Property Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed
with due care by it hereunder, provided that the Property
Trustee shall be responsible for its own negligence or
recklessness with respect to selection of any agent or
attorney appointed by it hereunder.
(viii) the Property Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good
faith and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Trust Agreement;
(ix) the Property Trustee shall not be charged with
knowledge of any default or Event of Default with respect to
the Trust Securities unless either (1) a Responsible Officer
of the Property Trustee shall have actual knowledge of the
default or Event of Default or (2) written notice of such
default or Event of Default shall have been given to the
Property Trustee by the Depositor, the Administrative Trustees
or by any Holder of the Trust Securities;
(x) no provision of this Trust Agreement shall be
deemed to impose any duty or obligation on the Property
Trustee to perform any act or acts or exercise any right,
power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the
Property Trustee shall be unqualified or incompetent in
accordance with applicable law, to perform any such act or
acts or to exercise any such right, power, duty or obligation;
and no permissive or discretionary power or authority
available to the Property Trustee shall be construed to be a
duty; and
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(xi) no provision of this Trust Agreement shall require
the Property Trustee to expend or risk its own funds or
otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if the Property Trustee shall have
reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Trust Agreement or adequate indemnity against
such risk or liability is not reasonably assured to it;
(xii) the Property Trustee shall have no duty to see to
any recording, filing or registration of any instrument
(including any financing or continuation statement or any tax
or securities) (or any rerecording, refiling or registration
thereof);
(xiii) the Property Trustee shall have the right at any
time to seek instructions concerning the administration of
this Trust Agreement from any court of competent jurisdiction;
and
(xiv) whenever in the administration of this Trust
Agreement the Property Trustee shall deem it desirable to
receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder the Property
Trustee (i) may request instructions from the Holders of the
Trust Securities, which instructions may only be given by the
Holders of the same proportion of liquidation amount of the
Trust Securities as would be entitled to direct the Property
Trustee under the terms of this Trust Agreement in respect of
such remedies, rights or actions, (ii) may refrain from
enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be
protected in acting in accordance with such instructions.
SECTION 8.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES. The recitals contained herein and in the Trust Securities
Certificates shall be taken as the statements of the Trust, and the Trustees do
not assume any responsibility for their correctness. The Trustees make no
representations as to the value or condition of the property of the Trust or
any part thereof, nor as to the validity or sufficiency of this Trust Agreement
or the Trust Securities. The Trustees shall not be accountable for the use or
application by the Trust of the proceeds of the Trust Securities in accordance
with Section 2.05.
SECTION 8.05. MAY HOLD SECURITIES. Except as provided in the
definition of the term "Outstanding" in Article I, any Trustee or any other
agent of any Trustee or the Trust, in its individual or any other capacity, may
become the owner or pledgee of Trust Securities and may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such other
agent.
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SECTION 8.06. COMPENSATION; FEES; INDEMNITY.
The Depositor agrees
(1) to pay to the Trustees from time to time reasonable
compensation for all services rendered by the Trustees hereunder
(which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to
reimburse the Trustees upon request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the Trustees
in accordance with any provision of this Trust Agreement (including
the reasonable compensation and the expenses and disbursements of its
agents and counsel), except any such expense, disbursement or advance
as may be attributable to its negligence (gross negligence, in the
case of any Administrative Trustee), bad faith or willful misconduct;
and
(3) to indemnify each Trustee for, and to hold each Trustee
harmless against, any and all loss, damage, claims, liability or
expense incurred without negligence (gross negligence, in the case of
any Administrative Trustee), bad faith or willful misconduct on its
part, arising out of or in connection with the acceptance or
administration of this Trust Agreement, including the reasonable costs
and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder.
As security for the performance of the obligations of the
Depositor under this Section, each of the Trustees shall have a lien prior to
the Trust Securities upon all property and funds held or collected by such
Trustee as such, except funds held in trust for the payment of Distributions on
the Trust Securities.
The provisions of this Section shall survive the termination
of this Trust Agreement.
SECTION 8.07. CERTAIN TRUSTEES REQUIRED; ELIGIBILITY. (a)
There shall at all times be a Property Trustee hereunder with respect to the
Trust Securities. The Property Trustee shall be a Person that has a combined
capital and surplus of at least $50,000,000. If any such Person publishes
reports of condition at least annually, pursuant to law or to the requirements
of its supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such Person shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time the Property Trustee with respect to
the Trust Securities shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article VIII.
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(b) There shall at all times be one or more Administrative
Trustees hereunder with respect to the Trust Securities. Each
Administrative Trustee shall be either a natural person who is at
least 21 years of age or a legal entity that shall act through one or
more persons authorized to bind such entity.
(c) There shall at all times be a Delaware Trustee with
respect to the Trust Securities. The Delaware Trustee shall either be
(i) a natural person who is at least 21 years of age and a resident of
the State of Delaware or (ii) a legal entity with its principal place
of business in the State of Delaware that otherwise meets the
requirements of applicable Delaware law and that shall act through one
or more persons authorized to bind such entity.
SECTION 8.08. CONFLICTING INTERESTS.
If the Property Trustee has or shall acquire a conflicting
interest within the meaning of the Trust Indenture Act, the Property Trustee
shall either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Indenture. The Subordinated Indenture and the Guarantee Agreement shall be
deemed to be specifically described in this Trust Agreement for the purposes of
clause (i) of the first proviso contained in Section 310(b) of the Trust
Indenture Act.
SECTION 8.09. CO-TRUSTEES AND SEPARATE TRUSTEE.
Unless an Event of Default shall have occurred and be
continuing, at any time or times, for the purpose of meeting the legal
requirements of the Trust Indenture Act or of any jurisdiction in which any
part of the Trust Property may at the time be located, the Depositor and the
Property Trustee shall have power to appoint, and upon the written request of
the Property Trustee, the Depositor shall for such purpose join with the
Property Trustee in the execution, delivery, and performance of all instruments
and agreements necessary or proper to appoint, one or more Persons approved by
the Property Trustee either to act as co-trustee, jointly with the Property
Trustee, of all or any part of such Trust Property, or to act as separate
trustee of any such property, in either case with such powers as may be
provided in the instrument of appointment, and to vest in such Person or
Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If
the Depositor does not join in such appointment within 15 days after the
receipt by it of a request so to do, or in case an Event of Default under the
Subordinated Indenture has occurred and is continuing, the Property Trustee
alone shall have power to make such appointment.
Should any written instrument from the Depositor be required
by any co-trustee or separate trustee so appointed for more fully confirming to
such co-trustee or separate trustee such property, title, right, or power, any
and all such instruments shall, on request, be executed, acknowledged, and
delivered by the Depositor.
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Every co-trustee or separate trustee shall, to the extent
permitted by law, but to such extent only, be appointed subject to the
following terms, namely:
(1) The Trust Securities shall be executed and delivered and
all rights, powers, duties, and obligations hereunder in respect of
the custody of securities, cash and other personal property held by,
or required to be deposited or pledged with, the Trustees designated
for such purpose hereunder, shall be exercised, solely by such
Trustees.
(2) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Property Trustee in respect of any
property covered by such appointment shall be conferred or imposed
upon and exercised or performed by the Property Trustee or by the
Property Trustee and such co-trustee or separate trustee jointly, as
shall be provided in the instrument appointing such co-trustee or
separate trustee, except to the extent that under any law of any
jurisdiction in which any particular act is to be performed, the
Property Trustee shall be incompetent or unqualified to perform such
Act, in which event such rights, powers, duties, and obligations shall
be exercised and performed by such co-trustee or separate trustee.
(3) The Property Trustee at any time, by an instrument in
writing executed by it, with the written concurrence of the Depositor,
may accept the resignation of or remove any co-trustee or separate
trustee appointed under this Section 8.09, and, in case an Event of
Default under the Subordinated Indenture has occurred and is
continuing, the Property Trustee shall have power to accept the
resignation of, or remove, any such co-trustee or separate trustee
without the concurrence of the Depositor. Upon the written request of
the Property Trustee, the Depositor shall join with the Property
Trustee in the execution, delivery, and performance of all instruments
and agreements necessary or proper to effectuate such resignation or
removal. A successor to any co-trustee or separate trustee so
resigned or removed may be appointed in the manner provided in this
Section.
(4) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the Trustee, or
any other such trustee hereunder.
(5) The Property Trustee shall not be liable by reason of any
act of a co-trustee or separate trustee.
(6) Any Act of Holders delivered to the Property Trustee
shall be deemed to have been delivered to each such co-trustee and
separate trustee.
SECTION 8.10. RESIGNATION AND REMOVAL; APPOINTMENT OF
SUCCESSOR. No resignation or removal of any Trustee (as the case may be, the
"Relevant Trustee") and no appointment of a successor Relevant Trustee pursuant
to this Article shall become effective
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until the acceptance of appointment by the successor Relevant Trustee in
accordance with the applicable requirements of Section 8.11.
The Relevant Trustee may resign at any time with respect to
the Trust Securities by giving written notice thereof to the Securityholders.
If the instrument of acceptance by a successor Relevant Trustee required by
Section 8.11 shall not have been delivered to the Relevant Trustee within 30
days after the giving of such notice of resignation, the resigning Relevant
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Relevant Trustee with respect to the Trust Securities.
Unless an Event of Default shall have occurred and be
continuing, the Relevant Trustee may be removed at any time by Act of the
Common Securityholder. If an Event of Default shall have occurred and be
continuing, the Relevant Trustee may be removed at such time by Act of the
Securityholders of a majority of the aggregate Liquidation Amount of the
Preferred Securities Certificates, delivered to the Relevant Trustee (in its
individual capacity and on behalf of the Trust).
If the Relevant Trustee shall resign, be removed or become
incapable of continuing to act as Relevant Trustee at a time when no Event of
Default shall have occurred and be continuing, the Common Securityholder, by
Act of the Common Securityholder delivered to the retiring Relevant Trustee,
shall promptly appoint a successor Relevant Trustee or Trustees with respect to
the Trust Securities and the Trust, and the retiring Relevant Trustee shall
comply with the applicable requirements of Section 8.11. If the Relevant
Trustee shall resign, be removed or become incapable of continuing to act as
the Relevant Trustee at a time when an Event of Default shall have occurred and
be continuing, the Preferred Securityholders, by Act of the Preferred
Securityholders of a majority in Liquidation Amount of the Preferred Securities
then outstanding delivered to the retiring Relevant Trustee, shall promptly
appoint a successor Relevant Trustee or Trustees with respect to the Trust
Securities and the Trust, and the Relevant Trustee shall comply with the
applicable requirements of Section 8.11. If no successor Relevant Trustee with
respect to the Trust Securities shall have been so appointed by the Common
Securityholders or the Preferred Securityholders and accepted appointment in
the manner required by Section 8.11, any Securityholder who has been a
Securityholder of Trust Securities for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Relevant Trustee with respect
to the Trust Securities.
The retiring Relevant Trustee shall give notice of each
resignation and each removal of the Relevant Trustee with respect to the Trust
Securities and the Trust and each appointment of a successor Trustee with
respect to the Trust Securities and the Trust to all Securityholders in the
manner provided in Section 10.08 and shall give notice to the Depositor. Each
notice shall include the name and address of the successor Relevant Trustee
with respect to the Trust Securities and the Trust and, in the case of the
Property Trustee, the address of its Corporate Trust Office.
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Notwithstanding the foregoing or any other provision of this
Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee
who is a natural person dies or becomes incompetent or incapacitated, the
vacancy created by such death, incompetence or incapacity may be filled by (i)
the unanimous act of remaining Administrative Trustees if there are at least
two of them or (ii) otherwise by the Depositor (with the successor in each case
being an individual who satisfies the eligibility requirement for
Administrative Trustees or Delaware Trustee, as the case may be, set forth in
Section 8.07). Additionally, notwithstanding the foregoing or any other
provision of this Trust Agreement, in the event the Depositor reasonably
believes that any Administrative Trustee who is a natural person has become
incompetent or incapacitated, the Depositor, by notice to the remaining
Trustees, may terminate the status of such Person as an Administrative Trustee
(in which case the vacancy so created will be filled in accordance with the
preceding sentence).
SECTION 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR. In
case of the appointment hereunder of a successor Relevant Trustee with respect
to all Trust Securities and the Trust, every such successor Relevant Trustee so
appointed shall execute, acknowledge and deliver to the Trust and to the
retiring Relevant Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Relevant Trustee shall
become effective and such successor Relevant Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts and
duties of the retiring Relevant Trustee; but, on the request of the Depositor
or the successor Relevant Trustee, such retiring Relevant Trustee shall, upon
payment of its charges by the Depositor, execute and deliver an instrument
transferring to such successor Relevant Trustee all the rights, powers and
trusts of the retiring Relevant Trustee and shall duly assign, transfer and
deliver to such successor Relevant Trustee all property and money held by such
retiring Relevant Trustee hereunder, subject, nevertheless, to the retiring
Trustee's prior lien provided for in Section 8.06.
In case of the appointment hereunder of a successor Relevant
Trustee with respect to the Trust Securities and the Trust, the retiring
Relevant Trustee and each successor Trustee with respect to the Trust
Securities shall execute and deliver an amendment hereto wherein each successor
Relevant Trustee shall accept such appointment and which (1) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and
to vest in, each successor Relevant Trustee all the rights, powers, trusts and
duties of the retiring Relevant Trustee with respect to the Trust Securities
and the Trust and (2) shall add to or change any of the provisions of this
Trust Agreement as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Relevant Trustee, it
being understood that nothing herein or in such amendment shall constitute such
Relevant Trustees co- trustees of the same trust and that each such Relevant
Trustee shall be trustee of a trust or trusts hereunder separate and apart from
any trust or trusts hereunder administered by any other such Relevant Trustee
and upon the execution and delivery of such amendment the resignation or
removal of the retiring Relevant Trustee shall become effective to the extent
provided therein and each such successor Relevant Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the
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retiring Relevant Trustee with respect to the Trust Securities and the Trust;
but, on request of the Trust or any successor Relevant Trustee such retiring
Relevant Trustee shall duly assign, transfer and deliver to such successor
Trustee all Trust Property, all proceeds thereof and money held by such
retiring Relevant Trustee hereunder with respect to the Trust Securities and
the Trust.
Upon request of any such successor Relevant Trustee, the
retiring Relevant Trustee shall execute any and all instruments for more fully
and certainly vesting in and confirming to such successor Relevant Trustee all
such rights, powers and trusts referred to in the first or second preceding
paragraph, as the case may be.
No successor Relevant Trustee shall accept its appointment
unless at the time of such acceptance such successor Relevant Trustee shall be
qualified and eligible under this Article VIII.
SECTION 8.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS. Any Person into which the Property Trustee or the Delaware
Trustee or any Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Relevant Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Relevant Trustee, shall be the successor of such Relevant Trustee
hereunder, provided such Person shall be otherwise qualified and eligible under
this Article VIII, without the execution or filing of any paper or any further
act on the part of any of the parties hereto.
SECTION 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST
DEPOSITOR OR TRUST. If and when the Property Trustee shall be or become a
creditor of the Depositor or the Trust (or any other obligor upon the
Debentures or the Trust Securities), the Property Trustee shall be subject to
the provisions of the Trust Indenture Act regarding the collection of claims
against the Depositor or Trust (or any such other obligor).
SECTION 8.14. REPORTS BY PROPERTY TRUSTEE. (a) the Property
Trustee shall transmit to Securityholders such reports concerning the Property
Trustee and its actions under this Trust Agreement as may be required pursuant
to the Trust Indenture Act at the times and in the manner provided pursuant
thereto. Such of those reports as are required to be transmitted by the
Property Trustee pursuant to Section 313(a) of the Trust Indenture Act shall be
so transmitted within 60 days after July 31 of each year, commencing July 31,
1996.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Property Trustee with each stock
exchange upon which the Trust Securities are listed, with the Commission and
with the Depositor. The Depositor will notify the Property Trustee when any
Trust Securities are listed on any stock exchange.
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SECTION 8.15. REPORTS TO THE PROPERTY TRUSTEE. The Depositor
and the Administrative Trustees on behalf of the Trust shall provide to the
Property Trustee such documents, reports and information as required by Section
314 (if any) and the compliance certificate required by Section 314 of the
Trust Indenture Act in the form, in the manner and at the times required by
Section 314 of the Trust Indenture Act.
SECTION 8.16. EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT. Each of the Depositor and the Administrative Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Trust Agreement
(including any covenants compliance with which constitutes a condition
precedent) that relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) of the Trust Indenture Act may be given
in the form of an Officers' Certificate.
SECTION 8.17. NUMBER OF TRUSTEES.
(a) The number of Trustees shall be five, provided that
Depositor, by written instrument may increase or decrease the number of
Administrative Trustees.
(b) If a Trustee ceases to hold office for any reason and the
number of Administrative Trustees is not reduced pursuant to Section 8.17(a),
or if the number of Trustees is increased pursuant to Section 8.17(a), a
vacancy shall occur. The vacancy shall be filled with a Trustee appointed in
accordance with Section 8.10.
(c) The death, resignation, retirement, removal, bankruptcy,
incompetence or incapacity to perform the duties of a Trustee shall not operate
to annul the Trust. Whenever a vacancy in the number of Administrative
Trustees shall occur, until such vacancy is filled by the appointment of an
Administrative Trustee in accordance with Section 8.10, the Administrative
Trustees in office, regardless of their number (and notwithstanding any other
provision of this Agreement), shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Trust Agreement.
SECTION 8.18. DELEGATION OF POWER.
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 2.07(a), including any registration statement or
amendment thereto filed with the Commission, or making any other governmental
filing; and
(b) the Administrative Trustees shall have power to delegate
from time to time to such of their number the doing of such things and the
execution of such instruments
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either in the name of the Trust or the names of the Administrative Trustees or
otherwise as the Administrative Trustees may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary to the provisions of
the Trust, as set forth herein.
SECTION 8.19. FIDUCIARY DUTY.
(a) To the extent that, at law or in equity, an Indemnified
Person has duties (including fiduciary duties) and liabilities relating thereto
to the Trust or to any other Covered Person, an Indemnified Person acting under
this Trust Agreement shall not be liable to the Trust or to any other Covered
Person for its good faith reliance on the provisions of this Trust Agreement.
The provisions of this Trust Agreement, to the extent that they restrict the
duties and liabilities of an Indemnified Person otherwise existing at law or in
equity (other than the duties imposed on the Property Trustee under the Trust
Indenture Act), are agreed by the parties hereto to replace such other duties
and liabilities of such Indemnified Person;
(b) Unless otherwise expressly provided herein and subject to
the provisions of the Trust Indenture Act:
(i) whenever a conflict of interest exists or arises
between an Indemnified Person and any Covered Person; or
(ii) whenever this Trust Agreement or any other
agreement contemplated herein or therein provides that an
Indemnified Person shall act in a manner that is, or provides
terms that are, fair and reasonable to the Trust or any Holder
of Trust Securities, the Indemnified Person shall resolve such
conflict of interest, take such action or provide such terms,
considering in each case the relative interest of each party
(including its own interest) to such conflict, agreement,
transaction or situation and the benefits and burdens relating
to such interests, any customary or accepted industry
practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the
Indemnified Person, the resolution, action or term so made,
taken or provided by the Indemnified Person shall not
constitute a breach of this Trust Agreement or any other
agreement contemplated herein or of any duty or obligation of
the Indemnified Person at law or in equity or otherwise; and
(c) Whenever in this Trust Agreement an Indemnified Person is
permitted or required to make a decision
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to
consider such interests and factors as it desires, including
its own interests, and shall have no duty or obligation to
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give any consideration to any interest of or factors affecting
the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express
standard and shall not be subject to any other or different
standard imposed by this Trust Agreement or by applicable law.
ARTICLE IX.
TERMINATION AND LIQUIDATION
SECTION 9.01. TERMINATION UPON EXPIRATION DATE. The Trust
shall automatically terminate on December 31, 2040 (the "Expiration Date") and
the Trust Property shall be distributed in accordance with Section 9.04.
SECTION 9.02. EARLY TERMINATION. Upon the first to occur of
any of the following events (such first occurrence, an "Early Termination
Event"):
(i) the occurrence of a Bankruptcy Event, in respect
of, or the dissolution or liquidation of the Depositor;
(ii) the redemption of all of the Preferred Securities;
(iii) the occurrence of a Tax Event;
(iv) an order for judicial termination of the Trust
having been entered by a court of competent jurisdiction;
the Trust shall terminate and the Trustees shall take such action as is
required by Section 9.04.
SECTION 9.03. TERMINATION. The respective obligations and
responsibilities of the Trust and the Trustees created hereby shall terminate
upon the latest to occur of the following: (i) the distribution by the Property
Trustee to Securityholders upon the liquidation of the Trust pursuant to
Section 9.04, or upon the redemption of all of the Trust Securities pursuant to
Section 4.02 or 9.04(d), of all amounts required to be distributed hereunder
upon the final payment of the Trust Securities; (ii) the payment of any
expenses owed by the Trust; and (iii) the discharge of all administrative
duties of the Administrative Trustees, including the performance of any tax
reporting obligations with respect to the Trust or the Securityholders.
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SECTION 9.04. LIQUIDATION. (a) If an Early Termination
Event specified in clause (i) or (iv) of Section 9.02 occurs, after
satisfaction of liabilities to creditors of the Trust as provided by applicable
law, the Trust shall be liquidated by the Property Trustee as expeditiously as
the Property Trustee determines to be appropriate by distributing to each
Securityholder a Like Amount of Debentures, subject to Section 9.04(e). Notice
of liquidation shall be given by the Administrative Trustees by first-class
mail, postage prepaid, mailed not later than 30 nor more than 60 days prior to
the Liquidation Date to each Holder of Trust Securities at such Holder's
address appearing in the Security Register. All notices of liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date,
the Trust Securities will no longer be deemed to be
outstanding and any Trust Securities Certificates not
surrendered for exchange will be deemed to represent a Like
Amount of Debentures; and
(iii) provide such information with respect to the
mechanics by which Holders may exchange Trust Securities
Certificates for Debentures, or if Section 9.04(e) applies
receive a Liquidation Distribution, as the Administrative
Trustee or the Property Trustee shall deem appropriate.
(b) Except where Section 9.02(ii), the penultimate sentence
of 9.04(d) or (e) applies, in order to affect the liquidation of the Trust, if
any, and distribution of the Debentures to Securityholders, the Property
Trustee shall establish a record date for such distribution (which shall be not
more than 45 days prior to the Liquidation Date) and, either itself acting as
exchange agent or through the appointment of a separate exchange agent, shall
establish such procedures as it shall deem appropriate to effect the
distribution of Debentures in exchange for the Outstanding Trust Securities
Certificates.
(c) Except where Section 9.02(ii), the penultimate sentence
of 9.04(d) or (e) applies, after the Liquidation Date, (i) the Trust Securities
will no longer be deemed to be Outstanding, (ii) certificates representing a
Like Amount of Debentures will be issued to Holders of Trust Securities
Certificates, upon surrender of such certificates to the Administrative
Trustees or their agent for exchange, (iii) any Trust Securities Certificates
not so surrendered for exchange will be deemed to represent a Like Amount of
Debentures, accruing interest at the rate provided for in the Debentures from
the last Distribution Date on which a Distribution was made on such Trust
Certificates until such certificates are so surrendered (and until such
certificates are so surrendered, no payments or interest or principal will be
made to Holders of Trust Securities Certificates with respect to such
Debentures) and (iv) all rights of Securityholders holding Trust Securities
will cease, except the right of such Securityholders to receive Debentures upon
surrender of Trust Securities Certificates.
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(d) If at any time, a Tax Event shall occur and be
continuing, the Administrative Trustees shall, unless the Debentures are
redeemed in the limited circumstances described below, terminate the Trust and,
after satisfaction of creditors of the Trust, if any, as provided by applicable
law cause Debentures held by the Property Trustee having a Like Amount of the
Preferred Securities and the Common Securities to be distributed to the Holders
of the Preferred Securities and the Common Securities on a pro rata basis in
liquidation of such Holders' interests in the Trust, within 90 days following
the occurrence of such Tax Event; provided, however, that as a condition of
such termination and distribution, the Administrative Trustees shall have
received an opinion of nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may
rely on any then applicable published revenue rulings of the Internal Revenue
Service, to the effect that the Holders of the Preferred Securities will not
recognize any gain or loss for United States federal income tax purposes as a
result of the termination of the Trust and distribution of Debentures; and,
provided, further, that, if and as long as at the time there is available to
the Trust the opportunity to eliminate, within such 90-day period, the Tax
Event by taking some ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure which has no
adverse effect on the Trust, the Depositor or the Holders of the Preferred
Securities, the Trust will pursue such measure in lieu of termination.
Furthermore, if (i) the Administrative Trustees have received an opinion of
nationally recognized independent tax counsel experienced in such matters (a
"Redemption Tax Opinion") that, as a result of a Tax Event, there is more than
an insubstantial risk that the Depositor would be precluded from deducting the
interest on the Debentures for United States federal income tax purposes even
if the Debentures were distributed to the Holders of Preferred Securities and
Common Securities in liquidation of such Holders' interests in the Trust as
described above or (ii) the Administrative Trustees shall have been informed by
such tax counsel that a No Recognition Opinion cannot be delivered to the
Trust, the Depositor shall have the right, upon not less than 30 nor more than
60 days' notice, to redeem the Debentures in whole or in part for cash at the
Redemption Price plus accumulated and unpaid Distributions to the date of such
payment within 90 days following the occurrence of such Tax Event, and promptly
following such redemption Preferred Securities and Common Securities with an
aggregate liquidation preference amount equal to the aggregate principal amount
of the Debentures so redeemed will be redeemed by the Trust (in the manner set
forth in Section 4.02 hereof) at the Redemption Price plus accumulated and
unpaid Distributions on a pro rata basis, provided, however, that if at the
time there is available to the Depositor or the Administrative Trustees on
behalf of the Trust the opportunity to eliminate, within such 90-day period,
the Tax Event by taking some ministerial action, such as filing a form or
making an election, or pursuing some other similar reasonable measure, which
has no adverse effect on the Trust, the Depositor or the Holders of the
Preferred Securities, the Depositor or the Administrative Trustees on behalf of
the Trust will pursue such measure in lieu of redemption and provided further
that the Depositor shall have no right to redeem the Debentures while the
Administrative Trustees on behalf of the Trust are pursuing any such
ministerial action. The Common Securities will be redeemed on a pro rata basis
with the Preferred Securities, except that if an Event of Default has occurred
and is continuing, the Preferred Securities will have
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a priority over the Common Securities with respect to payment of the Redemption
Price and accumulated and unpaid Distributions to the date of such payment.
(e) In the event that, notwithstanding the other provisions
of this Section 9.04, whether because of an order for termination entered by a
court of competent jurisdiction or otherwise, distribution of the Debentures in
the manner provided herein is determined by the Property Trustee not to be
practical, the Trust Property shall be liquidated, and the Trust shall be
dissolved, wound-up or terminated, by the Property Trustee in such manner as
the Property Trustee determines. In such event, on the date of the
dissolution, winding-up or other termination of the Trust, Securityholders will
be entitled to receive out of the assets of the Trust available for
distribution to Securityholders, after satisfaction of liabilities to creditors
of the Trust, if any, as provided by applicable law, an amount equal to the
Liquidation Amount per Trust Security plus accumulated and unpaid Distributions
thereon to the date of payment (such amount being the "Liquidation
Distribution"). If, upon any such dissolution, winding up or termination, the
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate Liquidation
Distribution, then, subject to the next succeeding sentence, the amounts
payable by the Trust on the Trust Securities shall be paid on a pro rata basis
(based upon Liquidation Amounts). The Depositor will be entitled to receive
Liquidation Distributions upon any such dissolution, winding-up or termination
pro rata (determined as aforesaid) with Holders of Preferred Securities, except
that, if an Event of Default has occurred and is continuing or if an Event of
Default has not occurred solely by reason of a requirement that time lapse or
notice be given, the Preferred Securities shall have a priority over the Common
Securities.
ARTICLE X.
MISCELLANEOUS PROVISIONS
SECTION 10.01. GUARANTEE BY THE DEPOSITOR AND ASSUMPTION OF
OBLIGATIONS. Subject to the terms and conditions hereof, the Depositor
irrevocably and unconditionally guarantees to each Person to whom the Trust is
now or hereafter becomes indebted or liable (the "Beneficiaries"), and agrees
to assume liability for, the full payment, when and as due, of any and all
Obligations (as hereinafter defined) to such Beneficiaries. As used herein,
"Obligations" means any indebtedness, expenses or liabilities of the Trust,
other than obligations of the Trust to pay to Holders or other similar
interests in the Trust the amounts due such Holders pursuant to the terms of
the Preferred Securities or such other similar interests, as the case may be.
This guarantee and assumption is intended to be for the benefit, of, and to be
enforceable by, all such Beneficiaries, whether or not such Beneficiaries have
received notice hereof.
SECTION 10.02. LIMITATION OF RIGHTS OF SECURITYHOLDERS. The
death or incapacity of any person having an interest, beneficial or otherwise,
in a Trust Security shall not operate to terminate this Trust Agreement, nor
entitle the legal representatives or heirs of
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such person or any Securityholder for such person, to claim an accounting, take
any action or bring any proceeding in any court for a partition or winding up
of the arrangements contemplated hereby, nor otherwise affect the rights,
obligations and liabilities of the parties hereto or any of them.
SECTION 10.03. AMENDMENT.
(a) This Trust Agreement may be amended from time to time by
the Trust (on approval of a majority of the Administrative Trustees and the
Depositor, without the consent of any Securityholders), (i) to cure any
ambiguity, correct or supplement any provision herein or therein which may be
inconsistent with any other provision herein or therein, or to make any other
provisions with respect to matters or questions arising under this Trust
Agreement, which shall not be inconsistent with the other provisions of this
Trust Agreement or (ii) to modify, eliminate or add to any provisions of this
Trust Agreement to such extent as shall be necessary to ensure that the Trust
will not be classified for United States federal income tax purposes other than
as a "grantor trust" and not as an association taxable as a corporation at any
time that any Trust Securities are outstanding or to ensure the Trust's
exemption from the status of an "investment company" under the Investment
Company Act of 1940, as amended; provided, however, that, except in the case of
clause (ii), such action shall not adversely affect in any material respect the
interests of any Securityholder and, in the case of clause (i), any amendments
of this Trust Agreement shall become effective when notice thereof is given to
the Securityholders.
(b) Except as provided in Section 10.03(c), any provision of
this Trust Agreement may be amended by the Administrative Trustees and the
Depositor with (i) the consent of Holders of Trust Securities representing not
less than a majority (based upon Liquidation Amounts) of the Trust Securities
then outstanding and (ii) receipt by the Trustees of an Opinion of Counsel to
the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect the Trust's status
as a grantor trust for federal income tax purposes or the Trust's exemption
from status of an "investment company" under the Investment Company Act of
1940, as amended.
(c) In addition to and notwithstanding any other provision in
this Trust Agreement, without the consent of each affected Securityholder (such
consent being obtained in accordance with Section 6.03 or 6.06), this Trust
Agreement may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount
of any Distribution required to be made in respect of the Trust Securities as
of a specified date or (ii) restrict the right of a Securityholder to institute
suit for the enforcement of any such payment on or after such date.
(d) Notwithstanding any other provisions of this Trust
Agreement, no Trustee shall enter into or consent to any amendment to this
Trust Agreement which would cause the Trust to fail or cease to qualify for the
exemption from status of an "investment company" under the Investment Company
Act of 1940, as amended, afforded by Rule 3a-5 thereunder.
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(e) Notwithstanding anything in this Trust Agreement to the
contrary, without the consent of the Depositor and the Trustees, this Trust
Agreement may not be amended in a manner which imposes any additional
obligation on the Depositor or any Trustee.
(f) In the event that any amendment to this Trust Agreement
is made, the Administrative Trustees shall promptly provide to the Depositor a
copy of such amendment.
(g) The Property Trustee is entitled to receive an Opinion of
Counsel as conclusive evidence that any amendment to this Trust Agreement
executed pursuant to this Section 10.03 is authorized or permitted by, and
conforms to, the terms of this Section 10.03, has been duly authorized by and
lawfully executed and delivered on behalf of the other requisite parties, and
that it is proper for the Property Trustee under the provisions of this Section
10.03 to join in the execution thereof.
SECTION 10.04. SEPARABILITY. In case any provision in this
Trust Agreement or in the Trust Securities Certificates shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.05. GOVERNING LAW. THIS TRUST AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND THE
TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE
(WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).
SECTION 10.06. SUCCESSORS. This Trust Agreement shall be
binding upon and shall inure to the benefit of any successor to the Trust or
the Relevant Trustees or any of them, including any successor by operation of
law.
SECTION 10.07. HEADINGS. The Article and Section headings
are for convenience only and shall not affect the construction of this Trust
Agreement.
SECTION 10.08. NOTICE AND DEMAND. Any notice, demand or
other communication which by any provision of this Trust Agreement is required
or permitted to be given or served to or upon any Securityholder or the
Depositor may be given or served in writing by deposit thereof, postage
prepaid, in the United States mail, hand delivery or facsimile transmission, in
each case, addressed, (i) in the case of a Preferred Securityholder, to such
Preferred Securityholder as such Securityholder's name and address may appear
on the Securities Register and (ii) in the case of the Common Securityholder or
the Depositor, to Texas Utilities Electric Company, Energy Plaza, 1601 Bryan
Street, Dallas, Texas 75201, Attention: Treasurer, facsimile no. 214-812-2488,
with a copy to the Secretary, facsimile no. 214-812-2488. Such notice, demand
or other communication to or upon a Securityholder
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shall be deemed to have been sufficiently given or made, for all purposes, upon
hand delivery, mailing or transmission.
Any notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or
served to or upon the Trust, the Property Trustee, the Delaware Trustee or the
Administrative Trustees shall be given in writing addressed (until another
address is published by the Trust) as follows: (i) with respect to the
Property Trustee or the Delaware Trustee, The Bank of New York, 101 Barclay
Street, Floor 21 West, New York, NY 10286, Attention: Corporate Trust
Department with a copy to: The Bank of New York (Delaware), White Clay Center,
Route 273, Newark, Delaware 19711, Attention: Corporate Trust Department and
(ii) with respect to the Trust or the Administrative Trustees, at the address
above for notice to the Depositor, marked "Attention: Administrative Trustees
for TU Electric Capital III". Such notice, demand or other communication to or
upon the Trust or the Property Trustee shall be deemed to have been
sufficiently given or made only upon actual receipt of the writing by the Trust
or the Property Trustee.
SECTION 10.09. AGREEMENT NOT TO PETITION. Each of the
Trustees and the Depositor agrees for the benefit of the Securityholders that,
until at least one year and one day after the Trust has been terminated in
accordance with Article IX, it shall not file, or join in the filing of, a
petition against the Trust under any bankruptcy, reorganization, arrangement,
insolvency, liquidation or other similar law (including, without limitation,
the United States Bankruptcy Code) (collectively, "Bankruptcy Laws") or
otherwise join in the commencement of any proceeding against the Trust under
any Bankruptcy Law. In the event the Depositor takes action in violation of
this Section 10.09, the Property Trustee agrees, for the benefit of
Securityholders, that it shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Depositor against
the Trust or the commencement of such action and raise the defense that the
Depositor has agreed in writing not to take such action and should be stopped
and precluded therefrom and such other defenses, if any, as counsel for the
Property Trustee or the Trust may assert. The provisions of this Section 10.09
shall survive the termination of this Trust Agreement.
SECTION 10.10. CONFLICT WITH TRUST INDENTURE ACT. (a) This
Trust Agreement is subject to the provisions of the Trust Indenture Act that
are required to be part of this Trust Agreement and shall, to the extent
applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts
with another provision hereof which is required or deemed to be included in
this Trust Agreement by any of the provisions of the Trust Indenture Act, such
required or deemed provision shall control.
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(d) The application of the Trust Indenture Act to this Trust
Agreement shall not affect the nature of the Securities as equity securities
representing interests in the Trust.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON
BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR
FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE
BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST
SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND THE
AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THOSE TERMS
AND PROVISIONS SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST
AND SUCH SECURITYHOLDER AND SUCH OTHERS.
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IN WITNESS WHEREOF, the parties have caused this Amended and Restated Trust
Agreement to be duly executed, all as of the day and year first above written.
TEXAS UTILITIES ELECTRIC COMPANY
By: /s/ Cathryn Hulen
------------------------------------------
Title: Treasurer and Assistant Secretary
THE BANK OF NEW YORK,
as Property Trustee
By: /s/ Walter N. Gitlin
------------------------------------------
Title: Vice President
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Joseph F. Leary
------------------------------------------
Title: Vice President
/s/ Wayne Patterson
------------------------------------------
Wayne Patterson
solely in his capacity as Administrative
Trustee
/s/ Cathryn Hulen
------------------------------------------
Cathryn Hulen
solely in her capacity as Administrative
Trustee
/s/ Michael Perkins
------------------------------------------
Michael Perkins
solely in his capacity as Administrative
Trustee
-52-
<PAGE> 60
/s/ Laura Anderson
------------------------------------------
Laura Anderson
solely in her capacity as Administrative
Trustee
/s/ John Casey
------------------------------------------
John Casey
solely in his capacity as Administrative
Trustee
-53-
<PAGE> 61
EXHIBIT A
CERTIFICATE OF TRUST
OF
TU ELECTRIC CAPITAL III
THIS CERTIFICATE OF TRUST of TU Electric Capital III (the
"Trust"), dated as of October 17, 1995, is being duly executed and filed by the
undersigned, as trustees, to form a business trust under the Delaware Business
Trust Act (12 Del. C. Section 3801, et seq.).
1. Name. The name of the business trust being formed hereby
is TU Electric Capital III.
2. Delaware Trustee. The name and business address of the
trustee of the Trust with a principal place of business in the State of
Delaware are The Bank of New York (Delaware), White Clay Center, Route 273,
Newark, New Castle County, Delaware 19711.
3. Effective Date. This Certificate of Trust shall be
effective as of its filing.
IN WITNESS WHEREOF, the undersigned, being the only trustees
of the Trust, have executed this Certificate of Trust as of the date first
above written.
THE BANK OF NEW YORK (DELAWARE), WAYNE PATTERSON,
not in its individual capacity not in his individual
but solely as Trustee but solely as Trustee
By: By:
---------------------------- ------------------------------
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee
By:
----------------------------
Name:
Title:
A-1
<PAGE> 62
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE
Certificate Number Number of
Common Securities
C-[ ]
Certificate Evidencing Common Securities
of
TU Electric Capital III
Common Securities
(liquidation amount $25 per Common Security)
TU Electric Capital III, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Texas Utilities Electric Company (the "Holder") is the registered owner of
_____ (_____) common securities of the Trust representing undivided beneficial
interests in the assets of the Trust and designated the Common Securities
(liquidation amount $25 per Common Security) (the "Common Securities"). In
accordance with Section 5.10 of the Trust Agreement (as defined below) the
Common Securities are not transferable and any attempted transfer hereof shall
be void. The designations, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities are set forth in, and this
certificate and the Common Securities represented hereby are issued and shall
in all respects be subject to the terms and provisions of, the Amended and
Restated Trust Agreement of the Trust dated as of _______ ___, 1995, as the
same may be amended from time to time (the "Trust Agreement"), including the
designation of the terms of the Common Securities as set forth therein. The
Trust will furnish a copy of the Trust Agreement to the Holder without charge
upon written request to the Trust at its principal place of business or
registered office.
Upon receipt of this certificate, the Holder is bound by the
Trust Agreement and is entitled to the benefits thereunder.
B-1
<PAGE> 63
IN WITNESS WHEREOF, an Administrative Trustee of the Trust has
executed this certificate for and on behalf of the Trust this ____ day of
_________, 199_.
TU Electric Capital III
By:
-----------------------------------------
not in his (her) individual capacity, but
solely as Administrative Trustee
B-2
<PAGE> 64
EXHIBIT C
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of ________ ___, 1995, between Texas
Utilities Electric Company, a Texas corporation ("TU Electric"), and TU
Electric Capital III, a Delaware business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the
"Common Securities") to and receive Debentures from TU Electric and to issue
its ___% Quarterly Income Preferred Securities, Series A (the "Preferred
Securities") with such powers, preferences and special rights and restrictions
as are set forth in the Amended and Restated Trust Agreement of the Trust dated
as of ________ __, 199_ as the same may be amended from time to time (the
"Trust Agreement");
WHEREAS, TU Electric is the issuer of the Debentures;
NOW, THEREFORE, in consideration of the acceptance by each
holder of the Preferred Securities, which acceptance TU Electric hereby agrees
shall benefit TU Electric and which acceptance TU Electric acknowledges will be
made in reliance upon the execution and delivery of this Agreement, TU
Electric, including in its capacity as holder of the Common Securities, and the
Trust hereby agree as follows:
ARTICLE I
Section 1.01. Assumption by TU Electric. Subject to the
terms and conditions hereof, TU Electric hereby irrevocably and unconditionally
assumes the full payment, when and as due, of any and all Obligations (as
hereinafter defined) to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries"). As used herein,
"Obligations" means any indebtedness, expenses or liabilities of the Trust,
other than (i) obligations of the Trust to pay to holders of any Preferred
Securities or other similar interests in the Trust the amounts due such holders
pursuant to the terms of the Preferred Securities or such other similar
interests, as the case may be and (ii) obligations arising out of the
negligence, willful misconduct or bad faith of the Trustees of the Trust. This
Agreement is intended to be for the benefit of, and to be enforceable by, all
such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.
Section 1.02. Term of Agreement. This Agreement shall
terminate and be of no further force and effect upon the date on which there
are no Beneficiaries remaining; provided, however, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of Preferred Securities or any Beneficiary must restore payment
of any sums paid under the Preferred Securities, under any Obligation, under
the Guarantee Agreement dated the date hereof by TU Electric and The Bank of
New York, as guarantee trustee, or under this Agreement for any reason
whatsoever. This Agreement is continuing, irrevocable, unconditional and
absolute.
C-1
<PAGE> 65
Section 1.03. Waiver of Notice. TU Electric hereby waives
notice of acceptance of this Agreement and of any Obligation to which it
applies or may apply, and TU Electric hereby waives presentment, demand for
payment, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
Section 1.04. No Impairment. The obligations, covenants,
agreements and duties of TU Electric under this Agreement shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
(a) the extension of time for the payment by the Trust of all
or any portion of the Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the Obligations
or any action on the part of the Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust or
any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, TU Electric with respect to the happening of any of the
foregoing.
Section 1.05. Enforcement. A Beneficiary may enforce this
Agreement directly against TU Electric and TU Electric waives any right or
remedy to require that any action be brought against the Trust or any other
person or entity before proceeding against TU Electric.
ARTICLE II
Section 2.01. Binding Effect. All guarantees and agreements
contained in this Agreement shall bind the successors, assigns, receivers,
trustees and representatives of TU Electric and shall inure to the benefit of
the Beneficiaries.
Section 2.02. Amendment. So long as there remains any
Beneficiary or any Preferred Securities of any series are outstanding, this
Agreement shall not be modified or amended in any manner adverse to such
Beneficiary or to the holders of the Preferred Securities.
Section 2.03. Notices. Any notice, request or other
communication required or permitted to be given hereunder shall be given in
writing by delivering the same against
C-2
<PAGE> 66
receipt therefor by facsimile transmission (confirmed by mail), telex or by
registered or certified mail, addressed as follows (and if so given, shall be
deemed given when mailed or upon receipt of an answer-back, if sent by telex),
to wit:
TU Electric Capital III
c/o [Trustee]
Facsimile No.:
Attention:
Texas Utilities Electric Company
Facsimile No.:
Attention:
Section 2.04 THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).
THIS AGREEMENT is executed as of the day and year first above
written.
TEXAS UTILITIES ELECTRIC COMPANY
By:
-------------------------------------
Name:
Title:
TU ELECTRIC CAPITAL III
By:
-------------------------------------
Wayne Patterson
not in his individual capacity, but
solely as Administrative Trustee
-------------------------------------
Cathryn Hulen
not in her individual capacity, but
solely as Administrative Trustee
-------------------------------------
Michael Perkins
not in his individual capacity, but
solely as Administrative Trustee
C-3
<PAGE> 67
-------------------------------------
Laura Anderson
not in her individual capacity, but
solely as Administrative Trustee
-------------------------------------
John Casey
not in his individual capacity, but
solely as Administrative Trustee
C-4
<PAGE> 68
[Clearing Agency Legend]
EXHIBIT D
Certificate Number Number of Preferred Securities
P- CUSIP NO.
Certificate Evidencing Preferred Securities
of
TU Electric Capital III
% Quarterly Income Preferred Securities
(liquidation amount $25 per Preferred Security)
TU Electric Capital III, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
____________ (the "Holder") is the registered owner of _____ (_____) preferred
securities of the Trust representing an undivided beneficial interest in the
assets of the Trust and designated the TU Electric Capital III 9.00% Quarterly
Income Preferred Securities (liquidation amount $25 per Preferred Security)
(the "Preferred Securities"). The Preferred Securities are transferable on the
books and records of the Trust, in person or by a duly authorized attorney,
upon surrender of this certificate duly endorsed and in proper form for
transfer as provided in Section 5.04 or 5.11 of the Trust Agreement (as defined
below). The designations, rights, privileges, restrictions, preferences and
other terms and provisions of the Preferred Securities are set forth in, and
this certificate and the Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended
and Restated Trust Agreement of the Trust dated as of December 1, 1995, as the
same may be amended from time to time (the "Trust Agreement") including the
designation of the terms of Preferred Securities as set forth therein. The
holder of this certificate is entitled to the benefits of the Guarantee
Agreement of Texas Utilities Electric Company, a Texas corporation, and The
Bank of New York, as guarantee trustee, dated as of December 1, 1995 (the
"Guarantee") to the extent provided therein. The Trust will furnish a copy of
the Trust Agreement and the Guarantee to the holder of this certificate without
charge upon written request to the Trust at its principal place of business or
registered office.
Upon receipt of this certificate, the holder of this
certificate is bound by the Trust Agreement and is entitled to the benefits
thereunder.
C-1
<PAGE> 69
IN WITNESS WHEREOF, one of the Administrative Trustees of the
Trust has executed this certificate for and on behalf of the Trust.
Dated:
TU ELECTRIC CAPITAL III
By:
----------------------------------------
Cathryn Hulen
not in his (her) individual capacity,
but solely as Administrative Trustee
Countersigned and Registered:
TEXAS UTILITIES SERVICES INC.,
Transfer Agent and Registrar
By:
---------------------------------------
THE BANK OF NEW YORK, as agent
for the Transfer Agent and Registrar
By:
---------------------------------------
(Authorized Signature)
D-2
<PAGE> 70
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
of the Preferred Securities represented by this Certificate and irrevocably
appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
attorney to transfer such Preferred Securities Certificate on the books of the
Trust. The attorney may substitute another to act for him or her.
Date:
------------------
Signature:
------------------------
(Sign exactly as your name appears on the other side of this Preferred
Securities Certificate)
Signature:
------------------------
(Sign exactly as your name appears on the other side of this Preferred
Securities Certificate)
D-3
<PAGE> 1
Exhibit 4(n)
GUARANTEE AGREEMENT
Between
Texas Utilities Electric Company
(as Guarantor)
and
The Bank of New York
(as Trustee)
dated as of
December 1, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.01 Trust Indenture Act; Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.02 Lists of Holders of Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.03 Reports by the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.04 Periodic Reports to Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2.05 Evidence of Compliance with Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.06 Events of Default; Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.07 Event of Default; Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.08 Conflicting Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.01 Powers and Duties of the Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.02 Certain Rights of Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV GUARANTEE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.01 Guarantee Trustee; Eligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.02 Compensation and Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 4.03 Appointment, Removal and Resignation of
Guarantee Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.01 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.02 Waiver of Notice and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.03 Obligations Not Affected . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.04 Rights of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.05 Guarantee of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.06 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 5.07 Independent Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI SUBORDINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 6.01 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.01 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.02 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.03 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 8.04 Benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SECTION 8.05 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
SECTION 8.06 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
</TABLE>
<PAGE> 4
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
- ------------------- ----------
<S> <C>
310(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01(a)
310(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.01(c), 2.08
310(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
314(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
314(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.01, 2.05, 3.02
314(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01, 3.02
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(d)
315(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.07
315(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01
315(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(d)
316(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.04(a), 2.06
316(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.03
316(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.02
317(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
317(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(b)
318(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01
318(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.01(a)
</TABLE>
_____________
* This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms
or provisions.
<PAGE> 5
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of
December 1, 1995, is executed and delivered by Texas Utilities Electric
Company, a Texas corporation (the "Guarantor"), and The Bank of New York, as
trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Preferred Securities (as defined herein) of TU
Electric Capital III, a Delaware statutory business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Trust Agreement
(the "Trust Agreement"), dated as of December 1, 1995 between the Trustees of
the Issuer named therein, Texas Utilities Electric Company, as Depositor, and
the several Holders (as defined therein) the Issuer is issuing as of the date
hereof $200,000,000 aggregate liquidation amount of its 8.00% Quarterly Income
Preferred Securities (the "Preferred Securities") representing ownership
interests in the Issuer and having the terms set forth in the Trust Agreement;
WHEREAS, the Preferred Securities are to be issued for sale by
the Issuer and the proceeds are to be invested in $200,000,000 principal amount
of Debentures (as defined in the Trust Agreement); and
WHEREAS, in order to enhance the value of the Preferred
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the purchase of
Debentures, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Guarantee Agreement for the
benefit of the Holders from time to time.
ARTICLE I
DEFINITIONS
SECTION 1.01 DEFINITIONS. As used in this Guarantee
Agreement, the terms set forth below shall, unless the context otherwise
requires, have the following meanings. Capitalized or otherwise defined terms
used but not otherwise defined herein shall have the meanings assigned to such
terms in the Trust Agreement as in effect on the date hereof.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any specified Person means the
power to direct the management and policies of such Person,
<PAGE> 6
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Common Securities" means the securities representing common
ownership interests in the assets of the Issuer.
"Event of Default" means a default by the Guarantor on any of
its payment obligations under this Guarantee Agreement.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by or on behalf of the Issuer: (i) any accrued
and unpaid Distributions that are required to be paid on such Preferred
Securities but only if and to the extent that the Property Trustee has
available in the Payment Account funds sufficient to make such payment, (ii)
the redemption price (the "Redemption Price"), and all accrued and unpaid
Distributions to the date of redemption, with respect to the Preferred
Securities called for redemption by the Issuer but only if and to the extent
that the Property Trustee has available in the Payment Account funds sufficient
to make such payment, (iii) upon a voluntary or involuntary dissolution,
winding-up or termination of the Issuer (other than in connection with a
redemption of all of the Preferred Securities), the lesser of (a) the aggregate
of the Liquidation Amount and all accrued and unpaid Distributions on the
Preferred Securities to the date of payment but only if and to the extent that
the Property Trustee has available in the Payment Account funds sufficient to
make such payment, and (b) the amount of assets of the Issuer remaining
available for distribution to Holders in liquidation of the Issuer (in either
case, the "Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Guarantee Agreement and thereafter
means each such Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities then outstanding; provided,
however, that in determining whether the holders of the requisite percentage of
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include the Guarantor or any Affiliate of the
Guarantor.
"Indenture" means the Indenture dated as of December 1, 1995,
among the Guarantor (the "Debenture Issuer") and The Bank of New York, as
trustee pursuant to which the Debentures are issued.
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"Majority in liquidation amount of the Preferred Securities"
means a vote by Holders, voting separately as a class, of more than 50% of the
aggregate liquidation amount of all Preferred Securities.
"Officers' Certificate" means a certificate signed by the
Chairman of the Board, a Vice Chairman of the Board, the President or a Vice
President, and by the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary, of the Guarantor, and delivered to the Guarantee Trustee.
Any Officers' Certificate delivered with respect to compliance with a condition
or covenant provided for in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering
the Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is
necessary to enable such officer to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Responsible Officer" means, with respect to the Guarantee
Trustee, any vice-president, any assistant vice-president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust officer
or assistant trust officer or any other officer of the Corporate Trust
Department of the Guarantee Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Successor Guarantee Trustee" means a successor Guarantee
Trustee possessing the qualifications to act as Guarantee Trustee under Section
4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended.
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ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01 TRUST INDENTURE ACT; APPLICATION.
(a) This Guarantee Agreement is subject to the provisions of
the Trust Indenture Act that are required or deemed to be part of this
Guarantee Agreement and shall, to the extent applicable, be governed by such
provisions; and
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.02 LISTS OF HOLDERS OF PREFERRED SECURITIES.
(a) The Guarantor shall furnish or cause to be furnished to
the Guarantee Trustee (a) semiannually, not later than December 31 and June 30
in each year, a list, in such form as the Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") as of a
date not more than 15 days prior to the delivery thereof, and (b) at such other
times as the Guarantee Trustee may request in writing, within 30 days after the
receipt by the Guarantor of any such request, a List of Holders as of a date
not more than 15 days prior to the time such list is furnished; provided that,
the Guarantor shall not be obligated to provide such List of Holders at any
time the List of Holders does not differ from the most recent List of Holders
given to the Guarantee Trustee by the Guarantor. The Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.
(b) The Guarantee Trustee shall comply with its obligations
under Section 311(a) of the Trust Indenture Act, subject to the provisions of
Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.03 REPORTS BY THE GUARANTEE TRUSTEE. Within 60
days after December 31 of each year, commencing December 31, 1996, the
Guarantee Trustee shall provide to the Holders such reports, if any, as are
required by Section 313(a) of the Trust Indenture Act in the form and in the
manner provided by Section 313(a) of the Trust Indenture Act. The Guarantee
Trustee shall also comply with the requirements of Sections 313(b), (c) and (d)
of the Trust Indenture Act.
SECTION 2.04 PERIODIC REPORTS TO GUARANTEE TRUSTEE. The
Guarantor shall provide to the Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.
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SECTION 2.05 EVIDENCE OF COMPLIANCE WITH CONDITIONS
PRECEDENT. The Guarantor shall provide to the Guarantee Trustee such evidence
of compliance with any conditions precedent provided for in this Guarantee
Agreement as and to the extent required by Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) of the Trust Indenture Act may be given in the
form of an Officers' Certificate.
SECTION 2.06 EVENTS OF DEFAULT; WAIVER. The Holders of a
Majority in liquidation amount of Preferred Securities may, by vote, on behalf
of all of the Holders, waive any past Event of Default and its consequences.
Upon such waiver, any such Event of Default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Guarantee Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
SECTION 2.07 EVENT OF DEFAULT; NOTICE.
(a) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the Holders, notices of all Events of Default known to the
Guarantee Trustee, unless such defaults have been cured before the giving of
such notice, provided that, the Guarantee Trustee shall be protected in
withholding such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors or Responsible Officers of the
Guarantee Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders.
(b) The Guarantee Trustee shall not be deemed to have
knowledge of any Event of Default unless the Guarantee Trustee shall have
received written notice, or a Responsible Officer charged with the
administration of the Trust Agreement shall have obtained written notice, of
such Event of Default.
SECTION 2.08 CONFLICTING INTERESTS. The Trust Agreement
and the Indenture shall be deemed to be specifically described in this
Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.01 POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Guarantee
Trustee for the benefit of the Holders, and the Guarantee Trustee shall not
transfer this Guarantee
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Agreement or any rights hereunder to any Person except a Holder exercising his
or her rights pursuant to Section 5.04 or to a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Successor Guarantee Trustee. The right, title and interest of the Guarantee
Trustee shall automatically vest in any Successor Guarantee Trustee, and such
vesting and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of such
Successor Guarantee Trustee.
(b) The Guarantee Trustee, prior to the occurrence of any
Event of Default and after the curing of all Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Guarantee Agreement, and no implied covenants or obligations
shall be read into this Guarantee Agreement against the Guarantee Trustee. In
case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.06), the Guarantee Trustee shall exercise such of the
rights and powers vested in it by this Guarantee Agreement, and use the same
degree of care and skill in its exercise thereof, as a prudent person would
exercise or use under the circumstances in the conduct of his or her own
affairs.
(c) No provision of this Guarantee Agreement shall be
construed to relieve the Guarantee Trustee from liability for its own negligent
action, its own negligent failure to act, or its own willful misconduct, except
that:
(i) prior to the occurrence of any Event of Default
and after the curing or waiving of all such Events of Default
that may have occurred:
(A) the duties and obligations of the
Guarantee Trustee shall be determined solely by the
express provisions of this Guarantee Agreement, and
the Guarantee Trustee shall not be liable except for
the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement;
and
(B) in the absence of bad faith on the part
of the Guarantee Trustee, the Guarantee Trustee may
conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished
to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the
case of any such certificates or opinions that by any
provision hereof are specifically required to be
furnished to the Guarantee Trustee, the Guarantee
Trustee shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for
any error of judgment made in good faith by a Responsible
Officer of the Guarantee Trustee, unless
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it shall be proved that the Guarantee Trustee or such
Responsible Officer was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in
good faith in accordance with the direction of the Holders of
a Majority in liquidation amount of the Preferred Securities
relating to the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee,
or exercising any trust or power conferred upon the Guarantee
Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall
require the Guarantee Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the
performance of any of its duties or in the exercise of any of
its rights or powers, if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the
terms of this Guarantee Agreement or adequate indemnity
against such risk or liability is not reasonably assured to
it.
SECTION 3.02 CERTAIN RIGHTS OF GUARANTEE TRUSTEE.
(a) Subject to the provisions of Section 3.01:
(i) the Guarantee Trustee may rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document reasonably believed by it to be genuine and to
have been signed, sent or presented by the proper party or
parties;
(ii) any direction or act of the Guarantor
contemplated by this Guarantee Agreement shall be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever, in the administration of this
Guarantee Agreement, the Guarantee Trustee shall deem it
desirable that a matter be proved or established before
taking, suffering or omitting any action hereunder, the
Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly
delivered by the Guarantor;
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(iv) the Guarantee Trustee may consult with counsel
of its choice, and the written advice or opinion of such
counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action
taken, suffered or omitted by it hereunder in good faith and
in accordance with such advice or opinion; such counsel may be
counsel to the Guarantor or any of its Affiliates and may
include any of its employees; the Guarantee Trustee shall have
the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of
competent jurisdiction;
(v) the Guarantee Trustee shall be under no
obligation to exercise any of the rights or powers vested in
it by this Guarantee Agreement at the request or direction of
any Holder, unless such Holder shall have provided to the
Guarantee Trustee such adequate security and indemnity as
would satisfy a reasonable person in the position of the
Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the
Guarantee Trustee; provided that, nothing contained in this
Section 3.02(a)(v) shall be taken to relieve the Guarantee
Trustee, upon the occurrence of an Event of Default, of its
obligation to exercise the rights and powers vested in it by
this Guarantee Agreement;
(vi) the Guarantee Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document reasonably believed by it to be genuine, but the
Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may
see fit;
(vii) the Guarantee Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys, and the
Guarantee Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed
with due care by it hereunder;
(viii) whenever in the administration of this
Guarantee Agreement the Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing
any remedy or right or taking any other action hereunder, the
Guarantee Trustee (1) may request instructions from the
Holders, (2) may refrain from enforcing such remedy or right
or taking such other action until such instructions are
received, and (3) shall be protected in acting in accordance
with such instructions; and
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(ix) the Guarantee Trustee shall not be liable for
any action taken, suffered or omitted to be taken by it in
good faith and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by
this Guarantee.
(b) No provision of this Guarantee Agreement shall be deemed
to impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on
it in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee
Trustee shall be construed to be a duty.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.01 GUARANTEE TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Guarantee Trustee which
shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a
corporation or Person permitted by the Securities and Exchange
Commission to act as an institutional trustee under the Trust
Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus
of at least 50 million U.S. dollars ($50,000,000), and subject
to supervision or examination by Federal, State, Territorial
or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining
authority referred to above, then, for the purposes of this
Section 4.01(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.01(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in
Section 4.03(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the
Trust Indenture Act, the Guarantee
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Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.02 COMPENSATION AND REIMBURSEMENT.
The Guarantor agrees:
(a) to pay the Guarantee Trustee from time to time such
reasonable compensation as the Guarantor and the Guarantee Trustee shall from
time to time agree in writing for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to
reimburse the Guarantee Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Guarantee Trustee in
accordance with the provisions of this Guarantee (including the reasonable
compensation and expenses of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad faith;
and
(c) to indemnify each of the Guarantee Trustee and any
predecessor Guarantee Trustee for, and to hold it harmless from and against,
any and all loss, damage, claim, liability or expense, including taxes (other
than taxes based upon the income of the Guarantee Trustee) incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance of the administration of this Guarantee Agreement, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any its powers or duties
hereunder.
As security for the performance of the obligations of the
Guarantor under this Section, the Guarantee Trustee shall have a lien prior to
the Preferred Securities upon all the property and funds held or collected by
the Guarantee Trustee as such, except funds held in trust for the payment of
principal of, and premium (if any) or interest on, particular obligations of
the Guarantor under this Guarantee Agreement.
The provisions of this Section shall survive the termination
of this Guarantee Agreement.
SECTION 4.03 APPOINTMENT, REMOVAL AND RESIGNATION OF
GUARANTEE TRUSTEE.
(a) Subject to Section 4.03(b), unless an Event of Default
shall have occurred and be continuing, the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
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(b) The Guarantee Trustee shall not be removed until a
Successor Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Guarantee Trustee
and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold
office until a Successor Guarantee Trustee shall have been appointed or until
its removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent accounting) by an instrument in writing
executed by the Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Guarantee Trustee has been
appointed and has accepted such appointment by instrument in writing executed
by such Successor Guarantee Trustee and delivered to the Guarantor and the
resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been
appointed and accepted appointment as provided in this Section 4.03 within 60
days after delivery to the Guarantor of an instrument of resignation, the
resigning Guarantee Trustee may petition any court of competent jurisdiction
for appointment of a Successor Guarantee Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper, appoint a
Successor Guarantee Trustee.
(e) The Guarantor shall give notice of each resignation and
each removal of the Guarantee Trustee and each appointment of a successor
Guarantee Trustee to all Holders in the manner provided in Section 8.03 hereof.
Each notice shall include the name of the successor Guarantee Trustee and the
address of its Corporate Trust Office.
ARTICLE V
GUARANTEE
SECTION 5.01 GUARANTEE. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by the Issuer), as and when
due, regardless of any defense, right of set-off or counterclaim which the
Issuer may have or assert. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing the Issuer to pay such amounts to the
Holders.
SECTION 5.02 WAIVER OF NOTICE AND DEMAND. The Guarantor
hereby waives notice of acceptance of this Guarantee Agreement and of any
liability to which it applies or may apply, presentment, demand for payment,
any right to require a proceeding first against the Issuer or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
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SECTION 5.03 OBLIGATIONS NOT AFFECTED. The obligation of
the Guarantor to make the Guarantee Payments under this Guarantee Agreement
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise,
of the performance or observance by the Issuer of any express or
implied agreement, covenant, term or condition relating to the
Preferred Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of
all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the
Preferred Securities or the extension of time for the performance of
any other obligation under, arising out of, or in connection with, the
Preferred Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period
on the Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the
part of the Holders to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Holders pursuant to the
terms of the Preferred Securities, or any action on the part of the
Issuer granting indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, arrangement,
composition or readjustment of debt of, or other similar proceedings
affecting, the Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the
Preferred Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor,
it being the intent of this Section 5.03 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04 RIGHTS OF HOLDERS. The Guarantor expressly
acknowledges that: (i) this Guarantee Agreement will be deposited with the
Guarantee Trustee to be held for the benefit of the Holders; (ii) the Guarantee
Trustee has the right to enforce this
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Guarantee Agreement on behalf of the Holders; (iii) the Holders of a Majority
in liquidation amount of the Preferred Securities have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Guarantee Trustee in respect of this Guarantee Agreement or exercising any
trust or power conferred upon the Guarantee Trustee under this Guarantee
Agreement; and (iv) any Holder may institute a legal proceeding directly
against the Guarantor to enforce its rights under this Guarantee Agreement
without first instituting a legal proceeding against the Issuer or any other
person or entity.
SECTION 5.05 GUARANTEE OF PAYMENT. This Guarantee
Agreement creates a guarantee of payment and not of collection. This Guarantee
Agreement will not be discharged except by payment of the Guarantee Payments in
full (without duplication).
SECTION 5.06 SUBROGATION. The Guarantor shall be
subrogated to all (if any) rights of the Holders against the Issuer in respect
of any amounts paid to the Holders by the Guarantor under this Guarantee
Agreement; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Guarantee Agreement, if, at the time of any such payment,
any amounts of Guarantee Payments are due and unpaid under this Guarantee
Agreement. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
SECTION 5.07 INDEPENDENT OBLIGATIONS. The Guarantor
acknowledges that its obligations hereunder are independent of the obligations
of the Issuer with respect to the Preferred Securities and that the Guarantor
shall be liable as principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Guarantee Agreement notwithstanding the
occurrence of any event referred to in subsections (a) through (g), inclusive,
of Section 5.03.
ARTICLE VI
SUBORDINATION
SECTION 6.01 SUBORDINATION. This Guarantee Agreement will
constitute an unsecured obligation of the Guarantor and will rank (i)
subordinate and junior in right of payment to all other liabilities of the
Guarantor, including the Debentures, except those made pari passu or
subordinate by their terms, (ii) pari passu with the most senior preferred or
preference stock now or hereafter issued by the Guarantor and with any
guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or preference stock of any Affiliate of the Guarantor, and (iii)
senior to all common stock of the Guarantor. Nothing in
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this Section 6.01 shall apply to claims of, or payments to, the Guarantee
Trustee under or pursuant to Section 4.02 hereof.
ARTICLE VII
TERMINATION
SECTION 7.01 TERMINATION. This Guarantee Agreement shall
terminate and be of no further force and effect upon: (i) full payment of the
Redemption Price of all Preferred Securities, and all accrued and unpaid
Distributions to the date of redemption, (ii) the distribution of Debentures to
Holders in exchange for all of the Preferred Securities or (iii) full payment
of the amounts payable in accordance with the Trust Agreement upon liquidation
of the Issuer. Notwithstanding the foregoing, this Guarantee Agreement will
continue to be effective or will be reinstated, as the case may be, if at any
time any Holder must restore payment of any sums paid with respect to Preferred
Securities or under this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01 SUCCESSORS AND ASSIGNS. All guarantees and
agreements contained in this Guarantee Agreement shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Preferred Securities then
outstanding. Except in connection with a consolidation, merger or sale
involving the Guarantor that is permitted under Article Eleven of the
Indenture, the Guarantor shall not assign its obligations hereunder.
SECTION 8.02 AMENDMENTS. This Guarantee Agreement may be
amended only by an instrument in writing entered into by the Guarantor and the
Guarantee Trustee. Except with respect to any changes which do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Guarantee Agreement may only be amended with the prior approval
of the Holders of not less than 66 2/3% in aggregate liquidation amount of all
the outstanding Preferred Securities. The provisions of Article VI of the
Trust Agreement concerning meetings of Holders shall apply to the giving of
such approval. Nothing herein contained shall be deemed to require that the
Guarantee Trustee enter into any amendment of this Guarantee Agreement.
SECTION 8.03 NOTICES. Any notice, request or other
communication required or permitted to be given hereunder shall be in writing,
duly signed by the party giving such notice, and delivered, telecopied or
mailed by first class mail as follows:
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(a) if given to the Guarantor, to the address set forth below
or such other address as the Guarantor may give notice of to the
Holders of the Preferred Securities:
Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
Facsimile No: 214-812-2488
Attention: Treasurer
(b) if given to the Issuer, in care of the Administrative
Trustees, at the Issuer's (and the Administrative Trustee's) address
set forth below or such other address as the Administrative Trustees
on behalf of the Issuer may give notice of to the Holders:
TU Electric Capital III
c/o Texas Utilities Electric Company
Energy Plaza
1601 Bryan Street
Dallas, Texas 75201
Facsimile No: 214-812-2488
Attention: Administrative Trustees
(c) if given to the Guarantee Trustee, to the address set
forth below or such other address as the Guarantee Trustee may give
notice of to the Holders of the Preferred Securities:
The Bank of New York
101 Barclay Street
21 West
New York, New York 10286
Facsimile No: (212) 815-5915
Attention: Corporate Trust Trustee Administration
(d) if given to any Holder, at the address set forth on the
books and records of the Issuer.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first class
mail, postage prepaid except that if a notice or other document is refused
delivery or cannot be delivered because of a changed address of which no notice
was given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
-15-
<PAGE> 20
SECTION 8.04 BENEFIT. This Guarantee Agreement is solely
for the benefit of the Holders and, subject to Section 3.01(a), is not
separately transferable from the Preferred Securities.
SECTION 8.05 INTERPRETATION. In this Guarantee Agreement,
unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement but
not defined in the preamble hereto have the respective meanings
assigned to them in Section 1.01;
(b) a term defined anywhere in this Guarantee Agreement has
the same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified,
supplemented or amended from time to time;
(d) all references in this Guarantee Agreement to Articles
and Sections are to Articles and Sections of this Guarantee Agreement
unless otherwise specified;
(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined
in this Guarantee Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice
versa; and
(g) the masculine, feminine or neuter genders used herein
shall include the masculine, feminine and neuter genders.
SECTION 8.06 GOVERNING LAW. THIS GUARANTEE AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
-16-
<PAGE> 21
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
Texas Utilities Electric Company
By: /s/ Cathryn Hulen
------------------------------
Name: Cathryn Hulen
Title: Treasurer and Assistant
Secretary
The Bank of New York,
as Guarantee Trustee
By: /s/ Walter N. Gitlin
------------------------------
Name: Walter N. Gitlin
Title: Vice President
-17-
<PAGE> 1
Exhibit 4(o)
AGREEMENT AS TO EXPENSES AND LIABILITIES
AGREEMENT dated as of December 1, 1995, between Texas
Utilities Electric Company, a Texas corporation ("TU Electric"), and TU
Electric Capital III, a Delaware business trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the
"Common Securities") to and receive Debentures from TU Electric and to issue
its 8.00% Quarterly Income Preferred Securities (the "Preferred Securities")
with such powers, preferences and special rights and restrictions as are set
forth in the Amended and Restated Trust Agreement of the Trust dated as of
December 1, 1995 as the same may be amended from time to time (the "Trust
Agreement");
WHEREAS, TU Electric is the issuer of the Debentures;
NOW, THEREFORE, in consideration of the acceptance by each
holder of the Preferred Securities, which acceptance TU Electric hereby agrees
shall benefit TU Electric and which acceptance TU Electric acknowledges will be
made in reliance upon the execution and delivery of this Agreement, TU
Electric, including in its capacity as holder of the Common Securities, and the
Trust hereby agree as follows:
ARTICLE I
Section 1.01. Assumption by TU Electric. Subject to the
terms and conditions hereof, TU Electric hereby irrevocably and unconditionally
assumes the full payment, when and as due, of any and all Obligations (as
hereinafter defined) to each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries"). As used herein,
"Obligations" means any indebtedness, expenses or liabilities of the Trust,
other than (i) obligations of the Trust to pay to holders of any Preferred
Securities or other similar interests in the Trust the amounts due such holders
pursuant to the terms of the Preferred Securities or such other similar
interests, as the case may be and (ii) obligations arising out of the
negligence, willful misconduct or bad faith of the Trustees of the Trust. This
Agreement is intended to be for the benefit of, and to be enforceable by, all
such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.
Section 1.02. Term of Agreement. This Agreement shall
terminate and be of no further force and effect upon the date on which there
are no Beneficiaries remaining; provided, however, that this Agreement shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any holder of Preferred Securities or any Beneficiary must restore payment
of any sums paid under the Preferred Securities, under any Obligation, under
the Guarantee Agreement dated the date hereof by TU Electric and The Bank of
New
<PAGE> 2
York, as guarantee trustee, or under this Agreement for any reason whatsoever.
This Agreement is continuing, irrevocable, unconditional and absolute.
Section 1.03. Waiver of Notice. TU Electric hereby waives
notice of acceptance of this Agreement and of any Obligation to which it
applies or may apply, and TU Electric hereby waives presentment, demand for
payment, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
Section 1.04. No Impairment. The obligations, covenants,
agreements and duties of TU Electric under this Agreement shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
(a) the extension of time for the payment by the Trust of all
or any portion of the Obligations or for the performance of any other
obligation under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the Obligations
or any action on the part of the Trust granting indulgence or extension of any
kind; or
(c) the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust or
any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, TU Electric with respect to the happening of any of the
foregoing.
Section 1.05. Enforcement. A Beneficiary may enforce this
Agreement directly against TU Electric and TU Electric waives any right or
remedy to require that any action be brought against the Trust or any other
person or entity before proceeding against TU Electric.
ARTICLE II
Section 2.01. Binding Effect. All guarantees and agreements
contained in this Agreement shall bind the successors, assigns, receivers,
trustees and representatives of TU Electric and shall inure to the benefit of
the Beneficiaries.
Section 2.02. Amendment. So long as there remains any
Beneficiary or any Preferred Securities of any series are outstanding, this
Agreement shall not be modified or
<PAGE> 3
amended in any manner adverse to such Beneficiary or to the holders of the
Preferred Securities.
Section 2.03. Notices. Any notice, request or other
communication required or permitted to be given hereunder shall be given in
writing by delivering the same against receipt therefor by facsimile
transmission (confirmed by mail), telex or by registered or certified mail,
addressed as follows (and if so given, shall be deemed given when mailed or
upon receipt of an answer-back, if sent by telex), to wit:
TU Electric Capital III
c/o Wayne Patterson, Administrative Trustee
1601 Bryan Street
Dallas, Texas 75201
Facsimile No.: 214-812-2488
Texas Utilities Electric Company
1601 Bryan Street
Dallas, Texas 75201
Facsimile No.: 214-812-2488
Attention: Treasurer
Section 2.04 THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).
<PAGE> 4
THIS AGREEMENT is executed as of the day and year first above
written.
TEXAS UTILITIES ELECTRIC COMPANY
By: /s/ Cathryn Hulen
--------------------------------------------
Name: Cathryn Hulen
Title: Treasurer and Assistant Secretary
TU ELECTRIC CAPITAL III
By: /s/ Laura Anderson
--------------------------------------------
Laura Anderson
not in her individual capacity, but
solely as Administrative Trustee
<PAGE> 1
EXHIBIT 12
TEXAS UTILITIES ELECTRIC COMPANY
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
THOUSANDS OF DOLLARS, EXCEPT RATIOS
<S> <C> <C> <C> <C> <C>
FIXED CHARGES:
Interest on mortgage bonds $ 526,977 $ 567,363 $ 610,999 $ 598,235 $ 608,729
Interest on other long-term debt 44,071 32,183 45,787 54,379 61,822
Amortization of debt discount, (premium)
and expenses 9,959 8,615 6,493 4,778 4,111
Amortization of loss on reaquired debt 19,547 17,608 12,471 9,301 5,052
Other interest charges 28,994 36,408 10,222 22,123 52,948
Rentals representative of the interest
factor 24,931 26,017 29,637 30,828 28,737
----------- ----------- ----------- ----------- ----------
Total fixed charges $ 654,479 $ 688,194 $ 715,609 $ 719,644 $ 761,399
=========== =========== =========== =========== ==========
EARNINGS:
Net income $ 454,432 $ 658,192 $ 476,526 $ 821,123 $ (289,173)
Add:
Federal income taxes, 201,534 146,633 96,951 29,049 76,073
Deferred federal income taxes - net 32,620 219,752 164,487 233,125 (232,464)
Federal investment tax credits - net (21,201) (23,698) (19,698) (20,322) (53,498)
Fixed charges 654,479 688,194 715,609 719,644 761,399
----------- ----------- ---------- ----------- -----------
Total earnings $ 1,321,864 $ 1,689,073 $1,433,875 $ 1,782,619 $ 262,337
=========== =========== ========== =========== ===========
RATIO OF EARNINGS TO FIXED CHARGES 2.02 2.45 2.00 2.48 0.34*
==== ==== ==== ==== ====
</TABLE>
* The Company's earnings were inadequate to cover fixed charges for the
twelve months ended December 31, 1991. The deficiency was $499,062,000.
The computation of the ratio of earnings to fixed charges does not include
interest payments made by affiliated companies on senior notes, which are
recovered currently through the fuel component of rates.
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF TEXAS UTILITIES COMPANY
<TABLE>
<CAPTION>
STATE OR COUNTRY OF INCORPORATION
<S> <C>
Texas Utilities Electric Company Texas
Southwestern Electric Service Company Texas
Texas Utilities Australia Pty. Ltd. Australia
Texas Utilities Fuel Company Texas
Texas Utilities Mining Company Texas
Texas Utilities Services, Inc. Texas
Basic Resources Inc. Texas
Chaco Energy Company New Mexico
Texas Utilities Properties Inc. Texas
Texas Utilities Communications Inc. Texas
</TABLE>
<PAGE> 1
Exhibit 23(a)
CONSENT OF COUNSEL TO THE COMPANY
We hereby consent to the incorporation by reference of the statements
made as to matters of law and legal conclusions contained in this Annual Report
on Form 10-K of Texas Utilities Company and Texas Utilities Electric Company
for the fiscal year ended December 31, 1995, under Part I, Item
1--Business--Regulation and Rates and Environmental Matters, in Texas Utilities
Company's Registration Statement on Form S-3 (No. 33-55931).
WORSHAM, FORSYTHE
& WOOLDRIDGE, L.L.P.
By: /s/ Neil D. Anderson
-----------------------------
A Partner
March 4, 1996
Dallas, Texas
<PAGE> 1
Exhibit 23(b)
CONSENT OF COUNSEL TO TU ELECTRIC
We hereby consent to the incorporation by reference of the statements
made as to matters of law and legal conclusions contained in this Annual Report
on Form 10-K of Texas Utilities Company and Texas Utilities Electric Company
for the fiscal year ended December 31, 1995, under Part I, Item
1--Business--Regulation and Rates and Environmental Matters, in Texas Utilities
Electric Company's Registration Statements on Form S-3 (Nos. 33-83976 and
33-69554).
WORSHAM, FORSYTHE
& WOOLDRIDGE, L.L.P.
By: /s/ Neil D. Anderson
-----------------------------
A Partner
March 4, 1996
Dallas, Texas
<PAGE> 1
EXHIBIT 23(c)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Texas Utilities Company's
Registration Statement No. 33-55931 on Form S-3 and Registration Statements No.
33-59575, 33-59759 and 33-59961 on Form S-8 of our report dated February 29,
1996, which report includes an explanatory paragraph concerning the Company's
change during 1995 in its method of accounting for the impairment of long-lived
assets and for long-lived assets to be disposed of to conform with Statement of
Financial Accounting Standards No. 121, appearing in this Annual Report on Form
10-K of Texas Utilities Company for the year ended December 31, 1995.
DELOITTE & TOUCHE LLP
Dallas, Texas
February 29, 1996
<PAGE> 1
EXHIBIT 23(d)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements No.
33-68100 and 33-69554 of Texas Utilities Electric Company on Form S-3 of our
report dated February 29, 1996, which report includes an explanatory paragraph
concerning Texas Utilities Electric Company's change during 1995 in its method
of accounting for the impairment of long-lived assets and for long-lived assets
to be disposed of to conform with Statement of Financial Accounting Standards
No. 121, appearing in this Annual Report on Form 10-K of Texas Utilities
Electric Company for the year ended December 31, 1995.
DELOITTE & TOUCHE LLP
Dallas, Texas
February 29, 1996
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED STATEMENTS OF CONSOLIDATED INCOME, CONDENSED STATEMENT 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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 17,745,747
<OTHER-PROPERTY-AND-INVEST> 1,040,004
<TOTAL-CURRENT-ASSETS> 848,388
<TOTAL-DEFERRED-CHARGES> 1,901,712
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 21,535,851
<COMMON> 4,806,912
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 924,841
<TOTAL-COMMON-STOCKHOLDERS-EQ> 5,731,753
644,672
489,695
<LONG-TERM-DEBT-NET> 9,174,575
<SHORT-TERM-NOTES> 275,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 321,990
<LONG-TERM-DEBT-CURRENT-PORT> 61,321
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,836,845
<TOT-CAPITALIZATION-AND-LIAB> 21,535,851
<GROSS-OPERATING-REVENUE> 5,638,688
<INCOME-TAX-EXPENSE> (60,035)
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 3,851,061
<OPERATING-INCOME-LOSS> 1,787,627
<OTHER-INCOME-NET> 24,583
<INCOME-BEFORE-INTEREST-EXPEN> 1,812,210
<TOTAL-INTEREST-EXPENSE> 2,010,890
<NET-INCOME> (198,680)
0
<EARNINGS-AVAILABLE-FOR-COMM> (138,645)
<COMMON-STOCK-DIVIDENDS> 695,656
<TOTAL-INTEREST-ON-BONDS> 527,131
<CASH-FLOW-OPERATIONS> 1,610,728
<EPS-PRIMARY> (.61)
<EPS-DILUTED> (.61)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENED
STATMENTS 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> 0000710182
<NAME> TEXAS UTILITIES ELECTRIC COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 16,068,582
<OTHER-PROPERTY-AND-INVEST> 436,122
<TOTAL-CURRENT-ASSETS> 642,872
<TOTAL-DEFERRED-CHARGES> 1,855,798
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 19,003,374
<COMMON> 4,732,305
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,067,593
<TOTAL-COMMON-STOCKHOLDERS-EQ> 5,799,898
644,672
489,695
<LONG-TERM-DEBT-NET> 7,212,070
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 321,990
<LONG-TERM-DEBT-CURRENT-PORT> 43,458
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,491,591
<TOT-CAPITALIZATION-AND-LIAB> 19,003,374
<GROSS-OPERATING-REVENUE> 5,560,462
<INCOME-TAX-EXPENSE> 382,315
<OTHER-OPERATING-EXPENSES> 3,807,781
<TOTAL-OPERATING-EXPENSES> 4,190,096
<OPERATING-INCOME-LOSS> 1,370,366
<OTHER-INCOME-NET> (301,705)
<INCOME-BEFORE-INTEREST-EXPEN> 1,068,661
<TOTAL-INTEREST-EXPENSE> 614,229
<NET-INCOME> 454,432
86,715
<EARNINGS-AVAILABLE-FOR-COMM> 367,717
<COMMON-STOCK-DIVIDENDS> 682,080
<TOTAL-INTEREST-ON-BONDS> 526,977
<CASH-FLOW-OPERATIONS> 1,587,611
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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>
<RESTATED>
<CIK> 0000097561
<NAME> TEXAS UTILITIES COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 17,689,949
<OTHER-PROPERTY-AND-INVEST> 686,969
<TOTAL-CURRENT-ASSETS> 835,126
<TOTAL-DEFERRED-CHARGES> 1,932,672
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 21,144,716
<COMMON> 4,796,751
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,827,919
<TOTAL-COMMON-STOCKHOLDERS-EQ> 6,624,670
387,234
870,220
<LONG-TERM-DEBT-NET> 7,953,421
<SHORT-TERM-NOTES> 50,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 308,015
<LONG-TERM-DEBT-CURRENT-PORT> 58,475
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,892,681
<TOT-CAPITALIZATION-AND-LIAB> 21,144,716
<GROSS-OPERATING-REVENUE> 4,442,855
<INCOME-TAX-EXPENSE> 294,543
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 3,050,631
<OPERATING-INCOME-LOSS> 1,392,224
<OTHER-INCOME-NET> 31,876
<INCOME-BEFORE-INTEREST-EXPEN> 1,424,100
<TOTAL-INTEREST-EXPENSE> 622,334
<NET-INCOME> 801,766
0
<EARNINGS-AVAILABLE-FOR-COMM> 507,223
<COMMON-STOCK-DIVIDENDS> 520,524
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 1,065,094
<EPS-PRIMARY> 2.25
<EPS-DILUTED> 2.25
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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>
<RESTATED>
<CIK> 0000097561
<NAME> TEXAS UTILITIES COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 17,669,468
<OTHER-PROPERTY-AND-INVEST> 692,243
<TOTAL-CURRENT-ASSETS> 695,494
<TOTAL-DEFERRED-CHARGES> 1,836,203
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 20,893,408
<COMMON> 4,798,797
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,691,250
<TOTAL-COMMON-STOCKHOLDERS-EQ> 6,490,047
387,482
870,190
<LONG-TERM-DEBT-NET> 7,888,413
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 363,886
<LONG-TERM-DEBT-CURRENT-PORT> 74,610
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,818,780
<TOT-CAPITALIZATION-AND-LIAB> 20,893,408
<GROSS-OPERATING-REVENUE> 5,663,543
<INCOME-TAX-EXPENSE> 326,638
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 4,014,987
<OPERATING-INCOME-LOSS> 1,648,556
<OTHER-INCOME-NET> 38,379
<INCOME-BEFORE-INTEREST-EXPEN> 1,686,935
<TOTAL-INTEREST-EXPENSE> 817,498
<NET-INCOME> 869,437
0
<EARNINGS-AVAILABLE-FOR-COMM> 542,799
<COMMON-STOCK-DIVIDENDS> 694,355
<TOTAL-INTEREST-ON-BONDS> 567,543
<CASH-FLOW-OPERATIONS> 1,419,584
<EPS-PRIMARY> 2.40
<EPS-DILUTED> 2.40
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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>
<RESTATED>
<CIK> 0000097561
<NAME> TEXAS UTILITIES COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 17,607,645
<OTHER-PROPERTY-AND-INVEST> 714,012
<TOTAL-CURRENT-ASSETS> 628,360
<TOTAL-DEFERRED-CHARGES> 1,777,577
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 20,727,594
<COMMON> 4,800,843
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,593,582
<TOTAL-COMMON-STOCKHOLDERS-EQ> 6,394,425
312,891
855,869
<LONG-TERM-DEBT-NET> 8,155,328
<SHORT-TERM-NOTES> 60,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 132,000
<LONG-TERM-DEBT-CURRENT-PORT> 58,740
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,758,341
<TOT-CAPITALIZATION-AND-LIAB> 20,727,594
<GROSS-OPERATING-REVENUE> 1,244,265
<INCOME-TAX-EXPENSE> 45,717
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 932,921
<OPERATING-INCOME-LOSS> 311,344
<OTHER-INCOME-NET> 4,681
<INCOME-BEFORE-INTEREST-EXPEN> 316,025
<TOTAL-INTEREST-EXPENSE> 194,897
<NET-INCOME> 121,128
0
<EARNINGS-AVAILABLE-FOR-COMM> 75,411
<COMMON-STOCK-DIVIDENDS> 173,872
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 307,542
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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>
<RESTATED>
<CIK> 0000097561
<NAME> TEXAS UTILITIES COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 17,560,663
<OTHER-PROPERTY-AND-INVEST> 768,122
<TOTAL-CURRENT-ASSETS> 775,090
<TOTAL-DEFERRED-CHARGES> 1,839,570
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 20,943,445
<COMMON> 4,802,844
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 1,569,738
<TOTAL-COMMON-STOCKHOLDERS-EQ> 6,372,582
300,457
855,869
<LONG-TERM-DEBT-NET> 8,130,245
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 299,105
<LONG-TERM-DEBT-CURRENT-PORT> 58,126
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,927,061
<TOT-CAPITALIZATION-AND-LIAB> 20,943,445
<GROSS-OPERATING-REVENUE> 2,598,263
<INCOME-TAX-EXPENSE> 130,296
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 1,864,614
<OPERATING-INCOME-LOSS> 733,649
<OTHER-INCOME-NET> 9,076
<INCOME-BEFORE-INTEREST-EXPEN> 742,725
<TOTAL-INTEREST-EXPENSE> 388,586
<NET-INCOME> 354,139
0
<EARNINGS-AVAILABLE-FOR-COMM> 223,843
<COMMON-STOCK-DIVIDENDS> 347,861
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 634,150
<EPS-PRIMARY> .99
<EPS-DILUTED> .99
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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>
<RESTATED>
<CIK> 0000097561
<NAME> TEXAS UTILITIES COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 16,666,168
<OTHER-PROPERTY-AND-INVEST> 577,019
<TOTAL-CURRENT-ASSETS> 794,088
<TOTAL-DEFERRED-CHARGES> 1,806,661
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 19,843,936
<COMMON> 4,804,867
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 954,900
<TOTAL-COMMON-STOCKHOLDERS-EQ> 5,759,767
275,645
855,869
<LONG-TERM-DEBT-NET> 7,884,711
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 241,797
<LONG-TERM-DEBT-CURRENT-PORT> 59,297
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4,766,850
<TOT-CAPITALIZATION-AND-LIAB> 19,843,936
<GROSS-OPERATING-REVENUE> 4,373,932
<INCOME-TAX-EXPENSE> (102,690)
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 2,897,584
<OPERATING-INCOME-LOSS> 1,476,348
<OTHER-INCOME-NET> 14,283
<INCOME-BEFORE-INTEREST-EXPEN> 1,490,631
<TOTAL-INTEREST-EXPENSE> 1,811,194
<NET-INCOME> (320,563)
0
<EARNINGS-AVAILABLE-FOR-COMM> (217,873)
<COMMON-STOCK-DIVIDENDS> 521,759
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 1,304,475
<EPS-PRIMARY> (.96)
<EPS-DILUTED> (.96)
</TABLE>
<PAGE> 1
EXHIBIT 99(w)
SECOND AMENDMENT dated as of November 24,
1995, (this "Amendment") to the Competitive Advance
and Revolving Credit Facility Agreement "Facility A"
(the "Agreement"), dated as of April 29, 1994, as
amended by the Amendment dated as of April 28, 1995,
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 to the Agreement
(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").
A. The Borrowers have requested that the Lenders agree to
increase the Borrowing Percentage (such term and each other capitalized term
used but not defined herein having the meaning assigned thereto in the
Agreement) of TU.
B. The Lenders are willing, on the terms, subject to the
conditions and to the extent set forth below, to agree to such amendments.
In consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto hereby agree, on
the terms and subject to the conditions set forth herein, as follows:
SECTION 1. Amendment. Section 1.01 of the Agreement is
hereby amended by deleting therefrom the definition of "Borrowing Percentage"
and replacing it with the following definition:
"Borrowing Percentage" shall mean (a) in the case of TU, 60%,
and (b) in the case of TU Electric, 100%.
SECTION 2. Representations and Warranties. Each Borrower
represents and warrants as of the Amendment Effective Date to each of the
Lenders and the Agents that:
(a) Before and after giving effect to this Amendment, the
representations and warranties set forth in Section 3 of the Agreement
are true and correct in
<PAGE> 2
2
all material respects with the same effect as if made on the date
hereof, except to the extent such representations and warranties
expressly relate to an earlier date.
(b) Before and after giving effect to this Amendment, no
Event of Default or Default has occurred and is continuing.
SECTION 3. Condition to Effectiveness. This Amendment shall
become effective as of the date hereof when the Administrative Agent shall have
received counterparts of this Amendment that, when taken together, bear the
signatures of the Borrowers, the Required Lenders and the Agents.
SECTION 4. Agreement. Except as specifically stated herein,
the provisions of the Agreement are and shall remain in full force and effect.
As used therein, the terms "Agreement", "herein", "hereunder", "hereinafter",
"hereto", "hereof" and words of similar import shall, unless the context
otherwise requires, refer to the Agreement as amended hereby.
SECTION 5. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. Counterparts. This Amendment 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.
SECTION 7. Expenses. The Borrower agrees to reimburse the
Agents for all out-of-pocket expenses incurred by them in connection with this
Amendment, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Agents.
<PAGE> 3
3
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first written above.
TEXAS UTILITIES COMPANY,
as Borrower,
by /s/ PETER B. TINKHAM
--------------------------
Name: Peter B. Tinkham
Title: Secretary and Assistant
Treasurer
TEXAS UTILITIES ELECTRIC COMPANY,
as Borrower,
by /s/ PETER B. TINKHAM
--------------------------
Name: Peter B. Tinkham
Title: Secretary and Assistant
Treasurer
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
BANK OF AMERICA NT & SA,
by /s/ ROBERT EATON
--------------------------
Name: ROBERT EATON
Title: Vice President
<PAGE> 4
4
THE BANK OF NEW YORK,
by /s/ NATHAN S. HOWARD
--------------------------
Name: Nathan S. Howard
Title: Vice President
THE BANK OF TOKYO, LTD.,
DALLAS AGENCY
by /s/ JOHN M. MEARNS
--------------------------
Name: J. MEARNS
Title: VP & MANAGER
THE CHASE MANHATTAN BANK, N.A.,
by /s/ THOMAS L. CASEY
--------------------------
Name: THOMAS L. CASEY
Title: VICE PRESIDENT
CIBC INC.,
by /s/ ROBERT S. LYLE
--------------------------
Name: Robert S. Lyle
Title: Vice President
CITIBANK, N.A.,
by /s/ SANDIP SEN
--------------------------
Name: Sandip Sen
Title: ATTORNEY-IN-FACT
CREDIT LYONNAIS, NEW YORK BRANCH,
by /s/ ROBERT IVOSEVICH
--------------------------
Name: ROBERT IVOSEVICH
Title: SENIOR VICE PRESIDENT
<PAGE> 5
5
THE FIRST NATIONAL BANK OF
CHICAGO,
by /s/ MICHAEL J. JOHNSON
--------------------------
Name: Michael J. Johnson
Title: Authorized Agent
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY,
by /s/ TAKESHI KAWANO
--------------------------
Name: Takeshi Kawano
Title: Senior Vice President
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED,
by /s/ JOHN J. SULLIVAN
--------------------------
Name: John J. Sullivan
Title: Joint General manager
MELLON BANK, N.A.,
by /s/ A. GARY CHACE
--------------------------
Name: A. Gary Chace
Title: Senior Vice President
THE MITSUBISHI BANK, LTD.,
HOUSTON AGENCY,
by /s/ SHOJI HONDA
--------------------------
Name: Shoji Honda
Title: General Manager
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY,
by /s/ S. C. SCHUMACHER
--------------------------
Name: S. Chad Schumacher
Title: Sr. Vice President and
Chief Manager
<PAGE> 6
6
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/ MATTHEW PATRICK
--------------------------
Name: Matthew Patrick
Title: Vice President
SOCIETE GENERALE, SOUTHWEST
AGENCY,
by /s/ CHRISTOPHER J. SPELTZ
--------------------------
Name: CHRISTOPHER J. SPELTZ
Title: VICE PRESIDENT
THE SUMITOMO BANK, LIMITED,
by /s/ HARUMITSU SEKI
--------------------------
Name: Harumitsu Seki
Title: General Manager
THE TOKAI BANK, LIMITED,
by /s/ AKIRA TSUNEKAWA
--------------------------
Name: Akira Tsunekawa
Title: Joint General Manager
<PAGE> 7
7
UNION BANK OF SWITZERLAND,
by /s/ ALFRED IMHOLZ
--------------------------
Name: Alfred Imholz
Title: Managing Director
by /s/ GEORGE KUBOVE
--------------------------
Name: George Kubove
Title: Assistant Vice President
<PAGE> 1
EXHIBIT 99(z)
SECOND AMENDMENT dated as of November 24,
1995 (this "Amendment") to the Competitive Advance and
Revolving Credit Facility Agreement "Facility B" (the
"Agreement"), dated as of April 29, 1994, as amended by
the Amendment dated as of April 28, 1995, 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 to the Agreement (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").
A. The Borrowers have requested that the Lenders agree to
increase the Borrowing Percentage (such term and each other capitalized term
used but not defined herein having the meaning assigned thereto in the
Agreement) of TU.
B. The Lenders are willing, on the terms, subject to the
conditions and to the extent set forth below, to agree to such amendments.
In consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto hereby agree, on
the terms and subject to the conditions set forth herein, as follows:
SECTION 1. Amendment. Section 1.01 of the Agreement is
hereby amended by deleting therefrom the definition of "Borrowing Percentage"
and replacing it with the following definition:
"Borrowing Percentage" shall mean (a) in the case of
TU, 60%, and (b) in the case of TU Electric, 100%.
SECTION 2. Representations and Warranties. Each Borrower
represents and warrants as of the Amendment Effective Date to each of the
Lenders and the Agents that:
(a) Before and after giving effect to this Amendment, the
representations and warranties set forth
<PAGE> 2
in Section 3 of the Agreement are true and correct in all material
respects with the same effect as if made on the date hereof, except to
the extent such representations and warranties expressly relate to an
earlier date.
(b) Before and after giving effect to this Amendment, no
Event of Default or Default has occurred and is continuing.
SECTION 3. Condition to Effectiveness. This Amendment shall
become effective as of the date hereof when the Administrative Agent shall have
received counterparts of this Amendment that, when taken together, bear the
signatures of the Borrowers, the Required Lenders and the Agents.
SECTION 4. Agreement. Except as specifically stated herein,
the provisions of the Agreement are and shall remain in full force and effect.
As used therein, the terms "Agreement", "herein", "hereunder", "hereinafter",
"hereto", "hereof" and words of similar import shall, unless the context
otherwise requires, refer to the Agreement as amended hereby.
SECTION 5. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. Counterparts. This Amendment 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.
SECTION 7. Expenses. The Borrower agrees to reimburse the
Agents for all out-of-pocket expenses incurred by them in connection with this
Amendment, including the reasonable fees, charges and disbursements of Cravath,
Swaine & Moore, counsel for the Agents.
<PAGE> 3
3
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first written above.
TEXAS UTILITIES COMPANY,
as Borrower,
by /s/ PETER B. TINKHAM
--------------------------
Name: Peter B. Tinkham
Title: Secretary and Assistant
Treasurer
TEXAS UTILITIES ELECTRIC COMPANY,
as Borrower,
by /s/ PETER B. TINKHAM
--------------------------
Name: Peter B. Tinkham
Title: Secretary and Assistant
Treasurer
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, individually and
as Administrative Agent,
by /s/ ALLEN K. KING
--------------------------
Name: Allen K. King
Title: Vice President
CHEMICAL BANK, individually
and as CAF Agent,
by /s/ JANE RITCHIE
--------------------------
Name: JANE RITCHIE
Title: VICE PRESIDENT
BANK OF AMERICA NT & SA,
by /s/ ROBERT EATON
--------------------------
Name: ROBERT EATON
Title: Vice President
<PAGE> 4
4
THE BANK OF NEW YORK,
by /s/ NATHAN S. HOWARD
--------------------------
Name: Nathan S. Howard
Title: Vice President
THE BANK OF TOKYO, LTD.,
DALLAS AGENCY
by /s/ JOHN M. MEARNS
--------------------------
Name: J. MEARNS
Title: VP & MANAGER
THE CHASE MANHATTAN BANK, N.A.,
by /s/ THOMAS L. CASEY
--------------------------
Name: THOMAS L. CASEY
Title: VICE PRESIDENT
CIBC INC.,
by /s/ ROBERT S. LYLE
--------------------------
Name: Robert S. Lyle
Title: Vice President
CITIBANK, N.A.,
by /s/ SANDIP SEN
--------------------------
Name: Sandip Sen
Title: ATTORNEY-IN-FACT
CREDIT LYONNAIS, NEW YORK BRANCH,
by /s/ ROBERT IVOSEVICH
--------------------------
Name: ROBERT IVOSEVICH
Title: SENIOR VICE PRESIDENT
<PAGE> 5
5
THE FIRST NATIONAL BANK OF
CHICAGO,
by /s/ MICHAEL J. JOHNSON
--------------------------
Name: Michael J. Johnson
Title: Authorized Agent
THE INDUSTRIAL BANK OF JAPAN
TRUST COMPANY,
by /s/ ROBERT W. RAMAGE, JR.
--------------------------
Name: ROBERT W. RAMAGE, JR.
Title: SENIOR VICE PRESIDENT
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED,
by /s/ JOHN J. SULLIVAN
--------------------------
Name: John J. Sullivan
Title: Joint General manager
MELLON BANK, N.A.,
by /s/ A. GARY CHACE
--------------------------
Name: A. Gary Chace
Title: Senior Vice President
THE MITSUBISHI BANK, LTD.,
HOUSTON AGENCY,
by /s/ SHOJI HONDA
--------------------------
Name: Shoji Honda
Title: General Manager
THE MITSUBISHI TRUST AND BANKING
CORPORATION, LOS ANGELES AGENCY,
by /s/ S. C. SCHUMACHER
--------------------------
Name: S. Chad Schumacher
Title: Sr. Vice President and
Chief Manager
<PAGE> 6
6
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 SMITH
--------------------------
Name: Robert Smith
Title: Assistant Vice President
SOCIETE GENERALE, SOUTHWEST
AGENCY,
by /s/ CHRISTOPHER J. SPELTZ
--------------------------
Name: CHRISTOPHER J. SPELTZ
Title: VICE PRESIDENT
THE SUMITOMO BANK, LIMITED,
by /s/ HARUMITSU SEKI
--------------------------
Name: Harumitsu Seki
Title: General Manager
THE TOKAI BANK, LIMITED,
by /s/ AKIRA TSUNEKAWA
--------------------------
Name: Akira Tsunekawa
Title: Joint General Manager
<PAGE> 7
7
UNION BANK OF SWITZERLAND,
by /s/ ALFRED IMHOLZ
--------------------------
Name: Alfred Imholz
Title: Managing Director
by /s/ GEORGE KUBOVE
--------------------------
Name: George Kubove
Title: Assistant Vice President
<PAGE> 1
EXHIBIT 99(bb)
EXECUTION COPY
================================================================================
TEXAS UTILITIES COMPANY
_____________________________________
COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
Dated as of November 22, 1995
_____________________________________
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Administrative Agent
and
CHEMICAL BANK,
as Competitive Advance Facility Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
Definition
----------
SECTION 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Terms Generally . . . . . . . . . . . . . . . . . . . . 16
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.02. Loans . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.03. Competitive Bid Procedure . . . . . . . . . . . . . . . 19
SECTION 2.04. Standby Borrowing Procedure . . . . . . . . . . . . . . 23
SECTION 2.05. Fees . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 2.06. Repayment of Loans; Evidence of Indebtedness . . . . . 24
SECTION 2.07. Interest on Loans . . . . . . . . . . . . . . . . . . . 25
SECTION 2.08. Default Interest . . . . . . . . . . . . . . . . . . . 26
SECTION 2.09. Alternate Rate of Interest . . . . . . . . . . . . . . 26
SECTION 2.10. Termination and Reduction of Commitments . . . . . . . 27
SECTION 2.11. Prepayment . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.12. Reserve Requirements; Change in Circumstances . . . . . 28
SECTION 2.13. Change in Legality . . . . . . . . . . . . . . . . . . 30
SECTION 2.14. Pro Rata Treatment . . . . . . . . . . . . . . . . . . 31
SECTION 2.15. Sharing of Setoffs . . . . . . . . . . . . . . . . . . 32
SECTION 2.16. Payments . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.17. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 2.18. Assignment of Commitments Under Certain Circumstances . 37
ARTICLE III
Representations and Warranties
------------------------------
SECTION 3.01. Organization; Powers . . . . . . . . . . . . . . . . . 38
SECTION 3.02. Authorization . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.03. Enforceability . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.04. Governmental Approvals . . . . . . . . . . . . . . . . 38
</TABLE>
<PAGE> 3
2
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 3.05. Financial Statements . . . . . . . . . . . . . . . . . 39
SECTION 3.06. Litigation; Compliance with Laws . . . . . . . . . . . 39
SECTION 3.07. Federal Reserve Regulations . . . . . . . . . . . . . . 39
SECTION 3.08. Investment Company Act; Public Utility Holding Company
Act . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.09. No Material Misstatements . . . . . . . . . . . . . . . 40
SECTION 3.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.11. Employee Benefit Plans . . . . . . . . . . . . . . . . 40
SECTION 3.12. Significant Subsidiaries . . . . . . . . . . . . . . . 41
SECTION 3.13. Environmental Matters . . . . . . . . . . . . . . . . . 41
ARTICLE IV
Conditions of Lending
---------------------
SECTION 4.01. All Borrowings . . . . . . . . . . . . . . . . . . . . 42
SECTION 4.02. Effective Date . . . . . . . . . . . . . . . . . . . . 43
ARTICLE V
Covenants
---------
SECTION 5.01. Existence . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 5.02. Business and Properties . . . . . . . . . . . . . . . . 44
SECTION 5.03. Financial Statements, Reports, Etc. . . . . . . . . . . 45
SECTION 5.04. Insurance . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.05. Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.06. Maintaining Records; Access to Properties and
Inspections . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.07. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.08. Use of Proceeds . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.09. Consolidations, Mergers, and Sales of Assets . . . . . 48
SECTION 5.10. Limitations on Liens . . . . . . . . . . . . . . . . . 49
SECTION 5.11. Fixed Charge Coverage . . . . . . . . . . . . . . . . . 51
SECTION 5.12. Equity Capitalization Ratio . . . . . . . . . . . . . . 51
ARTICLE VI
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
<PAGE> 4
3
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VII
The Agents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE VIII
Miscellaneous
-------------
SECTION 8.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 8.02. Survival of Agreement . . . . . . . . . . . . . . . . . 60
SECTION 8.03. Binding Effect . . . . . . . . . . . . . . . . . . . . 60
SECTION 8.04. Successors and Assigns . . . . . . . . . . . . . . . . 60
SECTION 8.05. Expenses; Indemnity . . . . . . . . . . . . . . . . . . 64
SECTION 8.06. Right of Setoff . . . . . . . . . . . . . . . . . . . . 66
SECTION 8.07. Applicable Law . . . . . . . . . . . . . . . . . . . . 66
SECTION 8.08. Waivers; Amendment . . . . . . . . . . . . . . . . . . 66
SECTION 8.09. Entire Agreement . . . . . . . . . . . . . . . . . . . 67
SECTION 8.10. Severability . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.11. Counterparts . . . . . . . . . . . . . . . . . . . . . 67
SECTION 8.12. Headings . . . . . . . . . . . . . . . . . . . . . . . 68
SECTION 8.13. Interest Rate Limitation . . . . . . . . . . . . . . . 68
SECTION 8.14. Jurisdiction; Venue . . . . . . . . . . . . . . . . . . 68
SECTION 8.15. Confidentiality . . . . . . . . . . . . . . . . . . . . 69
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
Exhibit A-5 Form of Standby Borrowing Request
Exhibit B Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D-1 Form of Opinion of Reid & Priest LLP, of counsel to Texas
Utilities Company
Exhibit D-2 Form of Opinion of Worsham, Forsythe, & Wooldridge, L.L.P.,
general counsel for Texas Utilities Company
Schedule 2.01 Commitments
Schedule 3.06 Litigation
</TABLE>
<PAGE> 5
COMPETITIVE ADVANCE AND REVOLVING CREDIT
FACILITY AGREEMENT (the "Agreement") dated as of
November 22, 1995, and effective as of the Effective
Date, among TEXAS UTILITIES COMPANY, a Texas
corporation ("TU" or the "Borrower"); the lenders
listed in Schedule 2.01 (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
Borrower to enable it, 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 $200,000,000 at any
time outstanding. The Lenders have also been requested to provide a procedure
pursuant to which the Borrower may invite the Lenders to bid on an uncommitted
basis on short-term borrowings by the Borrower. 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.
"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 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.
"Agent Fees" shall have the meaning assigned to such term in
Section 2.05(b).
"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
Bank 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
<PAGE> 7
3
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 Chemical from three New
York City negotiable certificate of deposit dealers of recognized standing
selected by it. "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 Bank, of the quotations for the day of such transactions
received by Chemical Bank from three Federal funds brokers of recognized
standing selected by it. If for any reason Chemical Bank shall have determined
(which determination shall be conclusive absent manifest error; provided that
Chemical Bank, shall, upon request, provide to the 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 Bank 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.
"Applicable Margin" shall mean .275% per annum.
"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
Borrower, TU Electric and the CAF Agent (with references to the Credit
Agreements and provisions referred to therein being deemed to be references to
this Credit Agreement and the analogous provisions herein), payable to the CAF
Agent by the Borrower at the time of each competitive advance auction request
made by the Borrower pursuant to Section 2.03.
<PAGE> 8
4
"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 the
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, 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.
<PAGE> 9
5
"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. The Commitment of each Lender shall automatically and permanently
terminate on the Maturity Date if not terminated earlier pursuant to the terms
hereof.
"Commitment Letter" shall mean the letter between the
Borrower, Chemical and TCB dated November 13, 1995.
"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 the 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 such Borrowing have been accepted under the bidding
procedure described in Section 2.03.
<PAGE> 10
6
"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
12-month period means (i) consolidated net income, calculated after deducting
preferred stock dividends of Subsidiaries, but before any extraordinary items
and before the effect in such 12-month period of any change in accounting
principles promulgated by the Financial Accounting Standards Board becoming
effective after December 31, 1994, 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 12-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 12-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 and (ii) the aggregate amount of any noncash book losses during such
12-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 nonoperating, nonearning
assets, shall be excluded.
"Consolidated Fixed Charges" for any 12-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 of Subsidiaries
all determined for such 12-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 in
its consolidated financial statements as of such date.
<PAGE> 11
7
"Consolidated Total Capitalization" means the sum of (i) total
common stock equity, (ii) preferred stock 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.
"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 potential
liability under Section 412(c)(ii) of the Code and the Lien created
<PAGE> 12
8
under Section 412(n) of the Code, organizations described in Section 414(m) or
(o) of the Code of which the Borrower is a member.
"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
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.
"Facility Fee" shall have the meaning assigned to such term
in Section 2.05(a).
"Facility Fee Percentage" shall mean .125% per annum.
"Fees" shall mean the Facility Fee, the Auction Fees and the
Agent 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.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of
Fixed Rate Loans.
<PAGE> 13
9
"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 3 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 3 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 at any time, 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 (i)
made during the 18 day period following the Effective Date, the period
commencing on the date of such Borrowing and ending on the seventh day
thereafter or (ii) made at any time on or prior to November 28, 1995, the
period commencing on the date of such Borrowing and ending on the 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
<PAGE> 14
10
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 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 7 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 Bank 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.
<PAGE> 15
11
"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.
"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 the
Borrower and its Subsidiaries taken as a whole.
"Maturity Date" shall mean April 26, 1996.
"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 the 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.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.
<PAGE> 16
12
"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 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
<PAGE> 17
13
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 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.
<PAGE> 18
14
"Plan" shall mean any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of ERISA that
is maintained for current or former employees, or any beneficiary thereof, of
the Borrower or any ERISA Affiliate.
"Register" shall have the meaning given such term in Section
8.04(d).
"Reportable Event" shall mean any reportable event as defined
in Section 4043(b) of ERISA or the regulations issued thereunder 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 Corporation.
"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.
<PAGE> 19
15
"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.
"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 Electric" shall mean Texas Utilities Electric Company, a
Texas corporation and a Wholly-Owned Subsidiary of TU.
"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
<PAGE> 20
16
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 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 to a Multiemployer
Plan as a result of a complete or partial withdrawal from such 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
Borrower's audited financial statements referred to in Section 3.05.
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17
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
the 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 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 the 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 the outstanding aggregate principal
amount of all Standby Loans made by any Lender exceed the amount of such
Lender's Commitment and (iii) at all times, the outstanding aggregate principal
amount of all Standby Loans made by each Lender to the 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 the Borrower.
Within the foregoing limits, the Borrower 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
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the case of Competitive Loans, in an aggregate 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, 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
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
<PAGE> 23
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Administrative Agent, such Lender and the 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) The 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 the Borrower pursuant to paragraph (c) above.
SECTION 2.03. Competitive Bid Procedure. (a) In order to
request Competitive Bids, the 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
<PAGE> 24
20
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 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 the 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 Borrower)
of the Competitive Loan or Loans that the Lender is willing to make to the
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.
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(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 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) The 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. The 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 the Borrower to give such notice
shall be deemed to be a rejection of all the bids referred to in paragraph (c)
above, (ii) the 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 the Borrower shall not exceed the principal amount specified in the
Competitive Bid Request, (iv) if the 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 the Borrower to exceed the
amount specified in the Competitive Bid Request, then the 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
<PAGE> 26
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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 integral multiples of $1,000,000 in a manner
which shall be in the discretion of the Borrower. A notice given by the
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) The Borrower 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
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Competitive Bid which was accepted by the Borrower pursuant to paragraph (d)
above.
SECTION 2.04. Standby Borrowing Procedure. In order to
request a Standby Borrowing, the 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 than 10:00 a.m., Houston time, on the
day of such Borrowing. No Fixed Rate Loan shall be requested in 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 the 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 the 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 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 December 31, 1995) 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
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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 earlier of the Maturity Date and the termination of the Commitment of such
Lender as provided herein.
(b) TU agrees to pay the Administrative Agent, for its own
account, the fees provided for in the Commitment Letter (the "Agent Fees").
(c) The Borrower agrees to pay the CAF Agent, for its own
account, the Auction Fees applicable to the 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 the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
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(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 Borrower to repay the
Loans in accordance with their terms.
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, the LIBO Rate for the Interest Period in effect for
such Borrowing plus the Applicable Margin from time to time in effect and (ii)
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 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) 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 Bank, and such determination shall be conclusive absent
manifest error; provided that Chemical Bank, shall, upon request, provide to
the Borrower a
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certificate setting forth in reasonable detail the basis for such
determination.
SECTION 2.08. Default Interest. If the 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, the 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
Borrower and the Lenders. In the event of any such determination under clauses
(i) or (ii) above, until the Administrative Agent shall have advised the
Borrower and the Lenders that the circumstances giving rise to such notice no
longer exist, (x) any request by the 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 the 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 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 the 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,
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shall, upon request, provide to the Borrower a certificate setting forth in
reasonable detail the basis for such determination.
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 Borrower, 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
(A) less than the aggregate outstanding principal amount of all Competitive
Loans or (B) less than $50,000,000, unless the result of such termination or
reduction referred to in this clause (B) is to reduce the Total Commitment to
$0.
(c) Each reduction in the Total Commitment hereunder shall be
made ratably among the Lenders in accordance with their respective Commitments.
The Borrower 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) The 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 Borrower shall pay or prepay so much
of the Standby Borrowings as
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shall be necessary in order that the aggregate principal amount of the
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 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 Borrower 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
<PAGE> 33
29
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 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
Borrower 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
<PAGE> 34
30
containing an explanation in reasonable detail of the manner in which such
amount or amounts shall have been determined, shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower 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 Borrower of any event of which it has knowledge, occurring after
the date hereof, that it has determined will require compensation by the
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 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
<PAGE> 35
31
respect to any Eurodollar Loan, then, by written notice to the Borrower and to
the Agents, such Lender may:
(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
<PAGE> 36
32
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
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
<PAGE> 37
33
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest. The
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 rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the 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) The 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 the Borrower hereunder 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 thereto,
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, or any political subdivision
thereof (all such nonexcluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities, collectively or individually, "Taxes"). If the
Borrower
<PAGE> 38
34
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 taking 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) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.
(b) In addition, the 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 Commitment Letter ("Other Taxes").
(c) The Borrower shall indemnify each Lender (or Transferee
thereof) and each Agent for the full amount of Taxes and Other Taxes paid by
such Lender (or Transferee) or such Agent, as the case may be, and any
liability (including penalties, interest and expenses (including reasonable
attorneys 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 the Borrower, or with respect to which the Borrower has paid
additional amounts, pursuant to this Section 2.17, it shall promptly notify the
Borrower of the availability of such
<PAGE> 39
35
refund claim and shall, within 30 days after receipt of a request by the
Borrower, make a claim to such United States Governmental Authority for such
refund at the 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 the Borrower or with respect to which the 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 the Borrower (but only to
the extent of indemnity payments made, or additional amounts paid, by the
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 the Borrower, upon the request of such Lender (or
Transferee) or such Agent, agrees to repay the amount paid over to the 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 the Borrower to the
relevant United States Governmental Authority, the 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 Borrower 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
<PAGE> 40
36
reduced rate of, United States Federal withholding tax on payments by the
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) The 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 the
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
<PAGE> 41
37
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 the 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 the Borrower any of
its tax returns (or any other information) that it deems to be confidential or
proprietary.
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 the Borrower shall be required
to make additional payments to any Lender under Section 2.17, the Borrower
shall have the right, at its 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 Borrower (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
Borrower, 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.
<PAGE> 42
38
ARTICLE III
Representations and Warranties
The Borrower represents and warrants to each of the Lenders as
follows :
SECTION 3.01. Organization; Powers. The 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 the 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 the Borrower or any of its Subsidiaries to which the
Borrower is subject, (B) any order of any Governmental Authority or (C) any
provision of any indenture, agreement or other instrument to which the 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 the Borrower.
SECTION 3.03. Enforceability. This Agreement constitutes a
legal, valid and binding obligation of the 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
<PAGE> 43
39
in connection with the Transactions, to the extent they relate to the Borrower.
SECTION 3.05. Financial Statements. (a) The consolidated
balance sheets of TU and its Consolidated Subsidiaries as of December 31, 1994,
and September 30, 1995, and the related consolidated statements of income,
retained earnings and cash flows for the fiscal year and period then ended,
reported on and reviewed, respectively, by Deloitte & Touche L.L.P. and set
forth in the TU 1994 Form 10-K and the TU Form 10-Q for the quarterly period
ended September 30, 1995, copies of which have 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 and
period, respectively.
(b) Since September 30, 1995, there has been no Material
Adverse Change with respect to the 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, including the Form 10-Q for the quarterly period ended
September 30, 1995, or as set forth on Schedule 3.06, there is no action, suit
or proceeding pending against, or to the knowledge of the 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 the 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 the
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 the
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
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40
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 the Borrower nor any of its Subsidiaries is an
"investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 (the "1940 Act").
(b) The Borrower and each of its Subsidiaries is exempt from
all provisions of the Public Utility Holding Company Act of 1935 and rules
thereunder, except for Section 9(a)(2) of such Act, and the execution, delivery
and performance by the Borrower of this Agreement and its 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 the
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. The Borrower and its Subsidiaries have
filed or caused to be filed within three 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. The Borrower and its
ERISA Affiliates are in compliance in all material respects with the applicable
provisions of ERISA and the Code and the regulations and published
interpretations thereunder. No Reportable Event has occurred in respect of any
Plan of the Borrower or any ERISA Affiliate that alone or together with any
other Reportable Event has resulted or could reasonably be expected to result
in a Material Adverse Change. The present value of all benefit liabilities
under each of its Plans (based on those
<PAGE> 45
41
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
liabilities the value of the assets of such Plan, and the present value of all
benefit liabilities 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 the Borrower nor any ERISA Affiliate has incurred
any Withdrawal Liability that could result in a Material Adverse Change.
Neither the 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, 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
recruited 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, the 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 the Borrower nor any of
its Subsidiaries has received notice of any material failure so to comply,
except where such failure
<PAGE> 46
42
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 the 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, the 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 does not increase the aggregate principal amount of
the Loans of any Lender outstanding, the representations set forth in Sections
3.05(b), 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
<PAGE> 47
43
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
the 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 the
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 the Borrower as
of a recent date from such Secretary of State; (ii) a certificate of the
Secretary or an Assistant Secretary of the Borrower dated the Effective Date
and certifying (A) that attached thereto is a true and complete copy of the
by-laws of the 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 the 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 the Borrower; (iii) a certificate
of another officer of the
<PAGE> 48
44
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 the 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.
ARTICLE V
Covenants
The Borrower 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
<PAGE> 49
45
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 will
furnish to the Agents and each Lender:
(a) as soon as available and in any event within 100 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 L.L.P. or other independent
public accountants of nationally recognized standing;
(b) as soon as available and in any event within 55 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 12 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 paragraph (a) and (b) above, a certificate
of a Financial Officer of TU (i) setting forth in reasonable detail
the calculations required to establish whether TU was in compliance
with the requirements of Sections 5.11 and 5.12 on the date of such
financial statements, and (ii) 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;
<PAGE> 50
46
(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 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
of complete or partial withdrawal liability 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
<PAGE> 51
47
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.
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 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 the
Borrower or any ERISA Affiliate knows or has reason to
<PAGE> 52
48
know that, any Reportable Event has occurred that alone or together with any
other Reportable Event could reasonably be expected to result in liability of
the Borrower to the PBGC in an aggregate amount exceeding $40,000,000, a
statement of a Financial Officer setting forth details as to such Reportable
Event and the action that the Borrower proposes to take with respect thereto,
together 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 the
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 the 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 the Borrower or any ERISA
Affiliate from the sponsor of a Multiemployer Plan, a copy of each notice
received by the 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
<PAGE> 53
49
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 the Borrower
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
<PAGE> 54
50
sale agreements or other title retention agreements, or capital leases
in respect of any other property; provided that
(i) 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
(ii) 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
<PAGE> 55
51
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 saleleaseback
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 12 months then ended to be less than or
equal to 150% of Consolidated Fixed Charges for the 12 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.
<PAGE> 56
52
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 the
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 the 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 the 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 the Borrower in the due
observance or performance of any covenant, condition or agreement
contained in Section 5.01, 5.09, 5.10, 5.11 or 5.12;
(e) default shall be made by the 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 the Borrower;
(f) TU shall no longer own, directly or indirectly, all the
outstanding common stock of TU Electric (or any successor);
(g) the 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
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53
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;
(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
<PAGE> 58
54
(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;
(1) a Reportable Event or Reportable Events, or a failure to
make a required installment or other payment (within the meaning of
Section 412(n)(1) of the Code), shall have occurred with respect to
any Plan or Plans that reasonably could be expected to result in
liability of the Borrower to the PBGC or to such Plan or Plans in an
aggregate amount exceeding $40,000,000 and, within 30 days after the
reporting of any such Reportable Event to the Administrative Agent or
after the receipt by the Administrative Agent of the statement
required pursuant to Section 5.05, the Administrative Agent shall have
notified the Borrower in writing that (i) the Required Lenders have
made a determination that, on the basis of such Reportable Event or
Reportable Events or the failure to make a required payment, there are
reasonable grounds (A) for the termination of such Plan and Plans by
the PBGC, (B) for the appointment by the appropriate United States
District Court of a trustee to administer such Plan or Plans or (C)
for the imposition of a lien in favor of a Plan and (ii) as a result
thereof an Event of Default exists hereunder; or a trustee shall be
appointed by a United States District Court to administer any such
Plan or Plans; or the PBGC shall institute proceedings (including
giving notice of intent thereof) to terminate any Plan or Plans;
(m) (i) the 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) the Borrower or
such ERISA Affiliate does not have reasonable grounds for contesting
such Withdrawal Liability or is not in fact
<PAGE> 59
55
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) the 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
the 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 Borrower, take either or both of the
following actions, at the same or different times: (i) terminate forthwith the
right of the Borrower to borrow pursuant to the Commitments and (ii) declare
the Loans 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 the 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 the Commitments of the Lenders shall
automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and any unpaid accrued Fees and all
other liabilities of the Borrower accrued hereunder shall automatically become
due and payable, without presentment, demand, protest or any other notice of
any kind, all of
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56
which are hereby expressly waived by the 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 Bank 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 Borrower 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 Borrower 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 then
except for its or his or her own gross negligence or wilful 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 Borrower 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
<PAGE> 61
57
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 Borrower 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 the 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 Borrower. Upon any such resignation, the Required Lenders shall have
the right to appoint a successor Agent acceptable to the Borrower. 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
<PAGE> 62
58
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 Borrower 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 Borrower 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
Borrower; 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 wilful misconduct of such Agent or any of its directors,
officers, employees or agents.
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
<PAGE> 63
59
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 the 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 Terri Reilly, (Telecopy No. 212-622-0002), 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 National Association, 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 Schedule 2.01 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.
<PAGE> 64
60
SECTION 8.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrower 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 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 Borrower 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 Borrower 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 Borrower 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) the parties to
<PAGE> 65
61
each such assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance, and a processing and recordation fee of $3,000 and
(iv) 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, (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 Borrower or the performance or
observance by the Borrower 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
<PAGE> 66
62
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 Borrower, 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 Borrower 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 Borrower or
the Agents sell participations to one or more
<PAGE> 67
63
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 Borrower, 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 Borrower furnished to such Lender
by or on behalf of the Borrower; 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 Borrower 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 the 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, the Borrower shall, at
the request of the assigning Lender, duly execute and deliver to the assigning
Lender a promissory
<PAGE> 68
64
note or notes evidencing the Loans made to the Borrower by the assigning Lender
hereunder.
SECTION 8.05. Expenses; Indemnity. (a) The Borrower agrees
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 (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 Borrower agrees 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
the Borrower to borrow or to refinance, convert or continue any Loan hereunder
(including as a result of the 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 the 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
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65
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 Borrower agrees 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 wilful misconduct of
such Indemnitee or (ii) result from any litigation brought by such Indemnitee
against the Borrower or by the 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
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66
of the manner in which such amount or amounts shall have been determined shall
be delivered to the 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 Borrower against any of and all the
obligations of the 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 or each Lender under this Section are in addition to other rights
and remedies (including other rights or 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 the 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 Borrower and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount
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67
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 the Commitment or decrease the Facility Fee of any Lender without the
prior written consent of such Lender, or (iii) 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 Commitment 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 Commitment 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
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68
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) The 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
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69
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) The 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 Borrower
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,
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70
(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 Borrower 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 the 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.
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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/ H. JARRELL GIBBS
--------------------------
Name: H. Jarrell Gibbs
Title: Vice President
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
