EXHIBIT 1
---------
INSTALLMENT PAYMENT AGREEMENT
between
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ RIVER AUTHORITY
and
CENTRAL POWER AND LIGHT COMPANY
Relating to
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ River Authority
Pollution Control Revenue Refunding Bonds
(Central Power and Light Company Project)
Series 1995
TABLE OF CONTENTS
General Recitals and Findings. . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
Representations
Section 2.01.
Representations by Issuer . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.02.
Representations by Company . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE III
The Projects
Section 3.01.Intentionally Omitted . . . . . . . . . . . . . . . . . . 5
Section 3.02.Intentionally Omitted . . . . . . . . . . . . . . . . . . 5
Section 3.03.Intentionally Omitted . . . . . . . . . . . . . . . . . . 5
Section 3.04.
Maintenance and Repair . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.05.
Right to Discontinue Operation of Projects . . . . . . . . . . . . . 5
Section 3.06.
Insurance and Condemnation Awards . . . . . . . . . . . . . . . . . . 5
Section 3.07.
Taxation of Projects . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.08.
Issuer's Limited Liability . . . . . . . . . . . . . . . . . . . . . 6
Section 3.09.
Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV
Issuance of Bonds; Refunding the Prior Bonds;
Payments; Disbursements
Section 4.01.Issuance of Bonds . . . . . . . . . . . . . . . . . . . 6
Section ▇.▇▇.▇▇▇▇ Proceeds. . . . . . . . . . . . . . . . . . . . . . 6
Section ▇.▇▇.▇▇▇▇▇▇▇▇ for the Bonds . . . . . . . . . . . . . . . . . 7
Section ▇.▇▇.▇▇▇▇ Funds . . . . . . . . . . . . . . . . . . . . . . . 7
Section ▇.▇▇.▇▇▇▇▇▇▇ Required to Pay in Event Monies Held Pursuant
to the Prior Indentures are Insufficient . . . . . . . 7
ARTICLE V
The Company's Payments
Section 5.01.
Company Approval of Issuance of the Bonds . . . . . . . . . . . . . . . 7
Section 5.02.Refunding of Bonds . . . . . . . . . . . . . . . . . . . . 8
Section 5.03.
Payment Upon Redemption of Bonds . . . . . . . . . . . . . . . . . . . 8
Section 5.04.
Installment Payments . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 5.05.
Payments to Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.06.
Issuer's Rights Assigned to Trustee . . . . . . . . . . . . . . . . . . 9
Section 5.07.
Payments to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 5.08.
Payment to Remarketing Agent . . . . . . . . . . . . . . . . . . . . . 10
Section 5.09.
Company Option to Designate Interest Rate Determination . . . . . . . 10
Section 5.10.
Purchase of Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.11.
Usury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 5.12.
Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI
Defaults and Remedies
Section 6.01.
Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 6.02.
Remedies of Default . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 6.03.
Agreement to Pay Attorneys' Fees and Expenses . . . . . . . . . . . . 15
ARTICLE VII
Special Covenants
Section 7.01.
No Defense or Set-Off; Unconditional Obligation . . . . . . . . . . . 15
Section 7.02.
Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 7.03.
Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 7.04.
Tax-Exempt Status of the Bonds . . . . . . . . . . . . . . . . . . . . 16
Section 7.05.
Arbitrage Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.06.
Payment to Rebate Fund . . . . . . . . . . . . . . . . . . . . . . . 18
Section 7.07.
Qualification in Texas . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.08.
Recordation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.09
No Personal Liability . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.10.
Compliance with Rule 15c2-12. . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VII
General Provisions
Section 8.01.
General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 8.02.
Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.03.
Amendment of Agreement . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.04.
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.05.
Term of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8.06.
Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 8.07.
Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Section 8.08.
Execution of Counterparts . . . . . . . . . . . . . . . . . . . . . . .21
Section 8.09.
Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
Exhibit A . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A1
INSTALLMENT PAYMENT AGREEMENT
between
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ RIVER AUTHORITY
and
CENTRAL POWER AND LIGHT COMPANY
This Installment Payment Agreement dated as of October 1, 1995 (the
"Agreement"), by and between ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ RIVER AUTHORITY (the
"Issuer"),
and CENTRAL POWER AND LIGHT COMPANY (the "Company"):
W I T N E S S E T H:
GENERAL RECITALS AND FINDINGS
(a) The terms used in these recitals shall have the meanings assigned
to such terms in the Indenture of Trust dated as of October 1, 1995,
entered into by and between the Issuer and The Bank of New York, as
trustee.
(b) The Issuer is a governmental agency and body politic and corporate
of the State of Texas, created and existing as a conservation and
reclamation district and political subdivision of the State of Texas
pursuant to Article XVI, Section 59 of the Texas Constitution, and the
laws of the State of Texas, particularly the Issuer Act; and the Company
is a corporation organized and existing under and by virtue of the laws
of the State of Texas; and
(c) Pursuant to law, and particularly the Issuer Act, Article 717k,
Article 717q, Chapter 383, and Chapter 30, the Issuer, being a "river
authority" as defined in Chapter 383 and Chapter 30 and being an "issuer"
as defined in Article 717k and Article 717q, is empowered to acquire,
construct, and improve various air and water pollution control
facilities, and to issue revenue bonds for such purpose and for the
purpose of refunding any such bonds or obligations issued for such
purposes; and
(d) The Port and the Company and the Issuer and the Company have
previously entered into the Prior Agreements pursuant to which the Prior
Bonds were issued; and
(e) The Port and the Issuer entered into the Prior Indentures to
secure the Prior Bonds; and
(f) Pursuant to the terms of the Prior Agreements, the Company is
obligated to pay certain installment sale payments with respect to the
Projects, which payments shall be made in amounts which, together with
other moneys available therefor will be sufficient to pay the principal
of, redemption premium, if any, and interest on the respective Prior
Bonds as the same come due, with such payments to be made in funds which
will be immediately available on the date such principal of, redemption
premium, if any, and interest is due on such Prior Bonds; and
(g) The Company has requested that the Issuer issue its revenue bonds
for the purpose of refunding and retiring all of the outstanding Prior
Bonds; and
(h) The Company has agreed to make payments hereunder in lieu of its
obligations under the Prior Agreements; and
(i) This Agreement is authorized and executed pursuant to applicable
laws, including the Acts; and
(j) The Issuer and the Company have taken all action and have complied
with all provisions of law with respect to the execution, delivery and
performance of this Agreement and the due authorization of the
consummation of the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the covenants and agreements
herein made, and subject to the conditions herein set forth, the Issuer
and the Company contract and agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINITIONS. CAPITALIZED TERMS USED BUT NOT OTHERWISE
DEFINED HEREIN SHALL HAVE THE MEANINGS ASSIGNED TO SUCH TERMS IN THE
INDENTURE OF TRUST DATED AS OF OCTOBER 1, 1995, ENTERED INTO BY AND
BETWEEN THE ISSUER AND THE BANK OF NEW YORK, AS TRUSTEE (THE
"INDENTURE").
References in the singular number in this Agreement shall be
considered to include the plural, if and when appropriate. Any times
referred to herein shall be deemed to be references to New York City
time. Any accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles.
ARTICLE II
REPRESENTATIONS
Section 2.01. REPRESENTATIONS BY ISSUER. The Issuer makes the
following representations as the basis for the undertakings on its part
herein contained:
(a) The Issuer is a governmental agency, body politic and corporate
of the State of Texas, existing as a conservation and reclamation
district pursuant to the Issuer Act, and a "river authority" and an
"issuer" within the definitions set forth in the Acts.
(b) The Issuer has the legal power under the Acts to enter into the
transactions contemplated by this Agreement, the Indenture and the Bond
Resolution and to carry out its obligations hereunder and thereunder,
including the issuance and delivery of the Bonds, and to adopt and
perform the Bond Resolution; and each such instrument is a legal, valid
and binding obligation of the Issuer enforceable in accordance with its
terms, except to the extent that the enforcement thereof may be limited
by (i) bankruptcy, insolvency, reorganization, moratorium, or other laws
now or hereafter in effect relating to or affecting creditors' rights
generally, and (ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity). The
Issuer has been duly authorized to execute, deliver and perform its
obligations under this Agreement and the Indenture, and to adopt and
perform the Bond Resolution by proper action of the Board.
(c) The Issuer officially finds and determines that each Project
constitutes "control facilities" within the meaning of Chapter 383 and
"disposal systems" within the meaning of Chapter 30 and a "public
utility" within the meaning of Article 717q.
(d) The Issuer, by carrying out the purposes of the Acts as provided
in this Agreement, will be performing an essential public function under
the Texas Constitution.
(e) The Issuer is not in default under any of the provisions of the
laws of the State which would impair, interfere with, or otherwise
adversely affect the ability of the Issuer to make and perform the
provisions of this Agreement, the Indenture, or the Bonds.
(f) There are no actions, suits, proceedings, inquiries or
investigations pending or to the knowledge of the Issuer threatened,
against or affecting the Issuer in any court or before any governmental
authority or arbitration board or tribunal, which involve the possibility
of materially and adversely affecting the transactions contemplated by
this Agreement or the Indenture or which, in any way, would adversely
affect the validity or enforceability of the Bonds, the Indenture or this
Agreement or the ability of the Issuer to perform its obligations under
the Indenture or this Agreement.
(g) The adoption of the Bond Resolution, the issuance and sale of the
Bonds and the execution and delivery by the Issuer of this Agreement and
the Indenture, and the compliance by the Issuer with all of the
provisions of each thereof and of the Bonds (i) are within the powers and
authority of the Issuer, (ii) have been done in full compliance with the
provisions of the Acts, are legal and will not conflict with or
constitute on the part of the Issuer a violation of or a breach of or
default under, or result in the creation of any lien, charge or
encumbrance upon any property of the Issuer (other than as contemplated
by this Agreement and the Indenture) under the provisions of, any charter
instrument, by-law, indenture, mortgage, deed of trust, note agreement or
other agreement or instrument to which the Issuer is a party or by which
the Issuer is bound, or any license, judgment, decree, law, statute,
order, rule or regulation of any court or governmental agency or body
having jurisdiction over the Issuer or any of its activities or
properties, and (iii) have been duly authorized by all necessary action
on the part of the Issuer.
(h) Neither the nature of the Issuer nor any of its activities or
properties, nor any relationship between the Issuer and any other person,
nor any circumstance in connection with the offer, issue, sale or
delivery of any of the Bonds is such as to require the consent, approval
or authorization of, or the filing, registration or qualification with,
any governmental authority on the part of the Issuer in connection with
the execution, delivery and performance of this Agreement and the
Indenture or the offer, issue, sale or delivery of the Bonds, other than
those already obtained as of the date of issue of the Bonds; provided,
however, no representation is made herein as to compliance with the
securities or "blue sky" laws of any jurisdiction.
(i) No event has occurred and no condition exists with respect to the
Issuer which would constitute an "Event of Default" under this Agreement
or under the Indenture or which, with the lapse of time or with the
giving of notice or both, would become an "Event of Default" under this
Agreement or under the Indenture.
(j) Neither this Agreement nor the security for the Bonds has been
pledged or hypothecated in any manner or for any purpose other than as
provided in the Indenture as security for the payment of the Bonds.
(k) The Series 1977 Project is located within the boundaries of the
San Antonio River Authority, but is also located within the river basin
of the Issuer and the Series 1974A Project is located within the
boundaries of the Nueces River Authority.
(l) Pursuant to Chapter 30, the Issuer has obtained (i) the consent of
the San Antonio River Authority to the issuance of the Series 1977 Bonds
and the financing of the Series 1977 Project and (ii) the consent of the
Nueces River Authority to the refunding of the Series 1974A Bonds, which
were issued to finance the Series 1974A Project.
Section 2.02. REPRESENTATIONS BY COMPANY. The Company makes the
following representations as the basis for the undertakings on its part
herein contained:
(a) The Company (i) is a corporation duly incorporated and in good
standing in the State of Texas, (ii) is not in violation of any provision
of its restated articles of incorporation or its by-laws, (iii) has full
corporate power to own its properties and conduct its business, (iv) has
full legal right, power and authority to enter into this Agreement and
consummate all transactions contemplated by this Agreement and (v) by
proper corporate action has duly authorized the execution and delivery of
this Agreement.
(b) Neither the execution and delivery by the Company of this
Agreement nor the consummation by the Company of the transactions
contemplated by this Agreement conflicts with, will result in a breach of
or default under or will result in the imposition of any prohibited lien
on any property of the Company pursuant to the restated articles of
incorporation or by-laws of the Company or the terms, conditions or
provisions of any statute, order, rule, regulation, agreement or
instrument to which the Company is a party or by which it is bound.
(c) This Agreement has been duly authorized, executed and delivered by
the Company and constitutes the legal, valid and binding obligation of
the Company enforceable in accordance with its terms, except to the
extent that the enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium, or other laws now or hereafter in
effect relating or affecting creditors' rights generally, and (ii)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity).
(d) There is no material litigation or proceeding pending, or to the
knowledge of the Company threatened, against the Company which could
reasonably be expected to have a material adverse effect on the validity
of this Agreement or the ability of the Company to comply with its
obligations under this Agreement.
(e) The Company has requested the Issuer to refund the Prior Bonds.
(f) All statements of facts or other information furnished by the
Company to Bond Counsel in connection with Bond Counsel's opinion
relating to the Bonds, including particularly the Tax Letter of
Representation, were true and correct in all material respects when made
and nothing has come to the Company's attention that would change the
truth or correctness of such statements of facts or other information
furnished to Bond Counsel. Moreover, to the extent that such
representations and statements relate to future events, the Company
agrees, at all times while the Bonds are Outstanding, to take such action
to prevent, or to refrain from any action which would result in, such
representations and statements becoming false, inaccurate or incorrect.
(g) The representations of the Company stated in the Prior Agreements
were true and correct when made and nothing has come to the Company's
attention to make such representations untrue as of the date hereof.
ARTICLE III
THE PROJECTS
Section 3.01. INTENTIONALLY OMITTED.
Section 3.02. INTENTIONALLY OMITTED.
Section 3.03. INTENTIONALLY OMITTED.
Section 3.04. MAINTENANCE AND REPAIR. All costs of operating and
maintaining the Projects shall be paid by the Company, and the Issuer
shall have no obligation or liability in this regard. It is understood
and agreed that the Issuer shall have no duties or responsibilities
whatsoever with respect to the operation or maintenance of the Projects,
or the performance of the Projects for their designed purposes.
Section 3.05. RIGHT TO DISCONTINUE OPERATION OF PROJECTS. Although the
Company intends to operate, or cause to be operated, each Project for its
designed purposes until the date on which no Bonds are Outstanding, the
Company is not required by this Agreement to operate, or cause to be
operated, any portion of either Project after the Company shall deem in
its discretion that such continued operation is not advisable and in such
event it is not prohibited by this Agreement from selling, leasing or
retiring all or any such portion of such Project; provided, however,
that, prior to any such sale, lease, or retirement, the Company shall
have provided to the Issuer and the Trustee a Favorable Opinion. The net
proceeds from such sale, lease or other disposition, if any, shall belong
to, and may be used for any lawful purpose by, the Company.
Section 3.06. INSURANCE AND CONDEMNATION AWARDS. The net proceeds of
any insurance or condemnation award as a result of the destruction or
condemnation of any Project or any portion thereof shall belong to, and
may be used for any lawful purpose by, the Company.
Section 3.07. TAXATION OF PROJECTS. During the term of this Agreement,
the Company will promptly remit when due all taxes, including
specifically all sales taxes and ad valorem taxes, levied in respect of
the Projects or the Installment Payments payable hereunder to the
appropriate taxing body. The Company may, at its own expense and in its
own name, in good faith contest any such taxes, assessments and other
charges and, in the event of such contest, may permit the taxes,
assessments or other charges so contested to remain unpaid during the
period of such contest and any appeal therefrom. All taxes, assessments
and other charges levied or imposed with respect to the Projects shall be
the obligation of the Company, and the Issuer shall have no obligation or
liability in this regard.
Section 3.08. ISSUER'S LIMITED LIABILITY. It is recognized that the
Issuer's only source of funds with which to carry out its commitments
under this Agreement will be from the proceeds from the sale of the Bonds
or from any available income or earnings derived therefrom, or from any
funds which otherwise might be made available by the Company; and it is
expressly agreed that the Issuer shall have no financial liability,
obligation, or responsibility with respect to this Agreement or the
Projects except to the extent of funds available from such sources.
Section 3.09. GOVERNMENTAL REGULATION. The Company recognizes and
agrees that this Agreement and the issuance of the Bonds pursuant hereto
will not diminish or limit the authority of the United States
Environmental Protection Agency, the Texas Natural Resources Conservation
Commission, the Texas Water Development Board, or any other State agency
or local governments in performing any of the powers, functions and
duties vested in such entities by federal and state laws, and that all
applicable laws shall be enforced without regard to ownership of the
Projects; and that the Company will not be relieved of any responsibility
under any applicable federal or state laws or regulations pertaining to
pollution control, either now, or during, or after the acquisition,
construction and improvement of either of the Projects, and the Issuer
shall have no responsibility or obligation to take any action to comply
with such laws or regulations with respect to either of the Projects.
ARTICLE IV
ISSUANCE OF BONDS; REFUNDING THE PRIOR BONDS;
PAYMENTS; DISBURSEMENTS
Section 4.01. ISSUANCE OF BONDS. In order to provide funds for the
refunding of the Prior Bonds, the Issuer, concurrently with the execution
of this Agreement, will sell, issue and deliver to the initial purchasers
thereof the Bonds, all in accordance with the Indenture. The Issuer
agrees to pay, from the proceeds from the sale and delivery of the Bonds,
or from any available income or earnings derived therefrom, or from any
funds which otherwise might be made available to the Issuer for such
purpose by the Company, the cost of the Refunding of the Prior Bonds, to
the full extent provided in this Agreement and permitted by the Acts.
Section 4.02. BOND PROCEEDS. The Issuer shall, on the Issue Date,
cause to be deposited into the bond funds created pursuant to the Prior
Indentures for the Prior Bonds all proceeds from the sale of the Bonds as
set forth in Section 4.01 of the Indenture.
Section 4.03. SECURITY FOR THE BONDS. The obligations of the Company
under this Agreement, including specifically the obligation to make
Installment Payments as provided in Sections 5.01, 5.03 and 5.04 hereof,
shall be direct general obligations of the Company. Prior to or simulta-
neously with the issuance of the Bonds, the Issuer will assign to the
Trustee under the terms of the Indenture all of the Issuer's right,
title, and interest in and to the Installment Payments and certain other
rights under this Agreement as provided in the Indenture.
Section 4.04. BOND FUNDS. The Issuer has authorized and directed the
Trustee pursuant to the Indenture to transfer all of the proceeds from
the sale of the Bonds to the Prior Trustees, each as trustee and paying
agent for the respective series of the Prior Bonds. The Company agrees
(i) to direct the Prior Trustees to invest such proceeds, together with
amounts provided by the Company pursuant to Section 4.05 hereof, only in
direct obligations of the United States of America, including obligations
the principal of and interest on which are unconditionally guaranteed by
the United States of America, which may be in book-entry form, and which
mature on or before the redemption date for the Prior Bonds and (ii) that
any such funds which cannot be so invested shall remain uninvested.
Section 4.05. COMPANY REQUIRED TO PAY IN EVENT MONIES HELD PURSUANT TO
THE PRIOR INDENTURES ARE INSUFFICIENT. The Company shall, on the Issue
Date, cause to be deposited in the bond funds for the Prior Bonds held by
the Prior Trustees monies sufficient, together with the Bond proceeds so
transferred on the Issue Date, to pay the total redemption price of the
Prior Bonds on their redemption date, plus any fees and charges due the
Prior Trustees. In the event that monies held pursuant to either or both
of the Prior Indentures are not sufficient to accomplish the Refunding on
the redemption date for each series of Prior Bonds, the Company shall at
its own expense and without any right of reimbursement in respect thereof
immediately pay that portion of such costs as may be in excess of said
monies.
ARTICLE V
THE COMPANY'S PAYMENTS
Section 5.01. COMPANY APPROVAL OF ISSUANCE OF BONDS. (a)
Simultaneously with the authorization of this Agreement by the Board of
Directors of the Issuer, such Board has adopted the Bond Resolution. In
consideration of the covenants and agreements set forth in this
Agreement, and to enable the Issuer to issue the Bonds to carry out the
intents and purposes hereof, this Agreement is executed to assure the
issuance of such Bonds, and to provide for the due and punctual payment
by the Company to the Issuer, or to the Trustee under the Indenture, of
amounts not less than those required to pay, as and when due (whether at
stated maturity, upon redemption, acceleration of maturity, tender,
deemed tender, or otherwise), all of the principal of, redemption
premium, if any, and interest on, and Purchase Price of, the Bonds, and
all other payments required in connection with such Bonds, the Agreement,
or the Indenture. Each such payment is hereby designated as an
"Installment Payment", and collectively such payments are hereby
designated as "Installment Payments". The Company hereby agrees to make,
or cause to be made, each Installment Payment, as and when due, for the
benefit of the owners of the Bonds into the Bond Fund, or, in the case of
an Installment Payment in respect of Purchase Price, into the Bond
Purchase Fund, all as provided in the Indenture.
(b) By execution and delivery of this Agreement, the Company hereby
approves the Bond Resolution and the Indenture. It is hereby agreed that
the foregoing approval of the Bond Resolution and the Indenture consti-
tutes the acknowledgement and agreement of the Company that the Bonds,
when issued, sold, and delivered as provided in the Bond Resolution and
the Indenture, will be issued in accordance with and in compliance with
this Agreement, notwithstanding any other provisions of this Agreement or
any other contract or agreement to the contrary. Any Bondholder is
entitled to rely fully and unconditionally on the foregoing approval.
Notwithstanding any provisions of this Agreement or any other contract or
agreement to the contrary, the Company's approval of the Bond Resolution
and the Indenture shall be the Company's agreement that all covenants and
provisions in this Agreement and the Indenture affecting the Company
shall, upon the delivery of the Bonds and the Indenture, become uncondi-
tional, valid, and binding covenants and obligations of the Company so
long as the Bonds and the interest thereon are outstanding and unpaid.
Particularly, the obligation of the Company to make, promptly when due,
all Installment Payments specified in this Agreement and the Indenture
shall be absolute and unconditional, and said obligation may be enforced
as provided in this Agreement and the Indenture.
Section 5.02. REFUNDING OF BONDS. After the issuance of any Bonds, the
Issuer shall not refund any of the Bonds or change or modify the Bonds in
any way, except as provided for in the Indenture, without the prior
written approval of the Authorized Company Representative; nor shall the
Issuer redeem any Bonds prior to their scheduled maturities except upon
the request of the Authorized Company Representative, unless such
redemption is required by the Indenture.
Section 5.03. PAYMENT UPON REDEMPTION OF BONDS. The Issuer, upon the
written request of the Company (and provided that the affected Bonds are
subject to redemption or prepayment prior to maturity at the option of
the Issuer, or the Company, and provided that such request is received in
sufficient time prior to the date upon which such redemption or
prepayment is proposed), forthwith shall take or cause to be taken all
action that may be necessary under the applicable redemption provisions
of the Indenture to effect such redemption prior to maturity, to the full
extent of funds either made available for such purpose by the Company or
already on deposit under the Indenture and available for such purpose.
The redemption of any outstanding Bonds prior to maturity at any time
shall not relieve the Company of its absolute and unconditional
obligation to pay each remaining Installment Payment with respect to any
Outstanding Bonds, as specified in the Indenture. If a redemption of
Bonds is required pursuant to the provisions of the Indenture, the
Company agrees as provided herein to forthwith make Installment Payments
sufficient to pay the principal of, premium, if any, and interest on the
Bonds.
Section 5.04. INSTALLMENT PAYMENTS. Payment of all Installment
Payments shall be made and deposited so as to fund payment on the Bonds
as required by the Indenture, including all such payments which may come
due because of the acceleration of the maturity or maturities of the
Bonds upon default, call for redemption, purchase or deemed purchase, or
otherwise, under the provisions of the Indenture. If any available funds
in excess of current requirements are held on deposit in the Bond Fund or
the Bond Purchase Fund, as the case may be, at the time payment of any
Installment Payment is due, such payment of Installment Payment shall be
reduced by the amount of the available funds so held on deposit, to the
benefit of the Company. The Installment Payments, together with
available funds held on deposit in the Bond Fund or the Bond Purchase
Fund, as the case may be, except funds held therein for payment of
matured installments of principal on the Bonds or interest payable
thereon, shall be sufficient to pay when due all principal of, redemption
premium, if any, and interest on, and Purchase Price of, the Bonds. The
Company shall have the right to prepay or cause to be prepaid all or a
portion of each Installment Payment at any time, and shall be obligated
to do so in a timely manner if and to the extent the Company requests
redemption or prepayment of the Bonds. Any such prepayment by the
Company shall not relieve it of liability for each remaining Installment
Payment with respect to the Outstanding Bonds except as provided in this
Agreement and the Indenture. In the event the Company should fail to
make any of the payments required in this Section 5.04, the amount so in
default shall continue as an obligation of the Company until such amount
in default shall have been fully paid.
Section 5.05. PAYMENTS TO ISSUER. Out of funds provided by the
Company, there shall be paid all of the Issuer's reasonable actual out-
of-pocket expenses and Costs of Issuance in connection with the Bonds.
Also the Company agrees to pay directly to the Issuer on the Issue Date
an amount equal to 1/2 of 1% of the aggregate principal amount of the
Bonds. In addition, while any of the Bonds are outstanding, the Company
shall pay to the Issuer an amount sufficient to pay and reimburse the
Issuer for any of its actual costs reasonably and necessarily incurred in
connection with the Bonds and the Projects during the prior twelve month
period within 60 days of receiving a written ▇▇▇▇ or statement therefor.
Section 5.06. ISSUER'S RIGHTS ASSIGNED TO TRUSTEE. The Company is
advised and recognizes that as security for the payment of the Bonds, the
Issuer will assign to the Trustee the Issuer's rights under this
Agreement, including the right to receive payments hereunder (except the
right to receive payments, if any, under Section 5.05, 6.03, and 7.03
hereof), and hereby directs the Company to make said payments directly to
the Trustee. The Company herewith assents to such assignment and will
make such payments directly to the Trustee without defense or set-off by
reason of any dispute between the Company and the Issuer or the Trustee.
All rights against the Company arising under this Agreement or the Bond
Resolution or Indenture and assigned to the Trustee under the Indenture
may be enforced by the Trustee, or the owners of the Bonds, to the extent
provided in the Indenture, and the Trustee, or the owners of the Bonds,
shall be entitled to bring any suit, action, or proceeding against the
Company, to the extent provided in the Bond Resolution or Indenture, for
the enforcement of this Agreement, and it shall not be necessary in any
such suit, action, or proceeding to make the Issuer a party thereto.
Section 5.07. PAYMENTS TO TRUSTEE. The Company agrees to pay (1) the
initial acceptance fee of the Trustee and reasonable costs and expenses,
including reasonable attorneys fees, incurred by the Trustee in entering
into and executing the Indenture and the issuance of the Bonds and (2)
until the principal of, premium, if any, and interest on the Bonds shall
have been fully paid or provision for the payment thereof shall have been
made in accordance with the provisions of the Indenture, (i) the
reasonable annual fee of the Trustee for the ordinary services of the
Trustee, as trustee, rendered and its reasonable ordinary expenses
incurred under the Indenture, including reasonable attorneys fees, as and
when the same become due, (ii) the reasonable fees, charges and expenses
of the Trustee, as Bond Registrar and as Paying Agent, and any other Bond
Registrar or Paying Agent on the Bonds, as and when the same become due,
(iii) the reasonable fees, charges and expenses of the Trustee for the
necessary extraordinary services rendered by it and extraordinary
expenses incurred by it under the Indenture or this Agreement, as and
when the same become due, including reasonable attorneys fees; provided,
that the Company may, without creating a default hereunder, contest in
good faith the necessity for any such extraordinary services and
extraordinary expenses and the reasonableness of any such fees, charges,
or expenses, and (iv) the cost of printing any Bonds required to be
furnished by the Issuer. In the event the Company should fail to make
any of the payments required in this Section 5.07, the item or install-
ments so in default shall continue as an obligation of the Company until
the amount in default shall have been fully paid.
Section 5.08. PAYMENT TO REMARKETING AGENT. The Company agrees to pay
to the Remarketing Agent the reasonable fees, costs and expenses set
forth in the Remarketing Agreement.
Section 5.09. COMPANY OPTION TO DESIGNATE INTEREST RATE DETERMINATION
METHODS. The Company is hereby granted the option to designate from time
to time changes in interest rate determination methods in the manner and
to the extent set forth in Section 2.02 of the Indenture. In the event
the Company elects to exercise any such option, the Company agrees that
it shall cause notices of changes in interest rate determination methods
to be given to the Issuer, the Trustee, the Paying Agent, and the
Remarketing Agent in accordance with Section 2.02 of the Indenture.
Section 5.10. PURCHASE OF BONDS. (a) In consideration of the issuance
of the Bonds by the Issuer, but for the benefit of the owners of the
Bonds, the Company has agreed, and does hereby covenant, to cause the
necessary arrangements to be made and to be thereafter continued whereby
owners from time to time of the Bonds may deliver Bonds for purchase and
whereby such Bonds shall be so purchased. In furtherance of the
foregoing covenant of the Company, the Issuer, at the direction of the
Company, has set forth in Section 2.10 of the Indenture the terms and
conditions relating to the delivery of Bonds by the registered holders
thereof to the Remarketing Agent for purchase and has set forth in the
Indenture or the Remarketing Agreement the duties and responsibilities of
the Remarketing Agent with respect to the purchase and remarketing of
Bonds. The Company hereby authorizes and directs the Remarketing Agent
to purchase, offer, sell, and deliver Bonds in accordance with the
provisions of Section 2.10 of the Indenture.
Without limiting the generality of the foregoing covenant of the
Company or the other provisions of this Article V, the Company covenants,
for the benefit of the owners of the Bonds, to pay, or cause to be paid,
to the Trustee such amounts as shall be necessary to enable the Trustee
to pay the Purchase Price of the Bonds delivered to it for purchase or
deemed delivered for purchase, all as more particularly described in the
Indenture; provided, however, that the obligation of the Company to make,
or cause to be made, any such payment hereunder shall be satisfied only
by funds received by the Trustee or the Paying Agent from the remarketing
of the Bonds by the Remarketing Agent or, in the event sufficient funds
are not available from such remarketing, from the Company.
(b) The Issuer shall have no obligation or responsibility, financial
or otherwise, with respect to the purchase of Bonds or the making or
continuation of arrangements therefor other than as expressly set forth
in subsection (a) of this Section 5.10, except that the Issuer shall
generally cooperate with the Company and the Remarketing Agent as
contemplated by the Indenture.
Section 5.11. USURY. Anything herein to the contrary notwithstanding,
it is the intention of the parties hereto to conform strictly to the
usury laws in force that are applicable to this transaction.
Accordingly, all agreements among the parties hereto and beneficiaries
hereof and their assigns or any of them, whether now existing or
hereafter arising, and whether written or oral, are hereby limited so
that in no contingency, whether by reason of acceleration of amounts due
hereunder or any part thereof or otherwise, shall the interest (including
all sums that are deemed to be interest) contracted for, charged or
received hereunder and/or with respect to the purchase of the Project
exceed the maximum amount permissible under applicable law. The parties
hereto agree that to the extent interest is payable by the Company under
this Agreement, Article 5069-1.04, Vernon's Texas Civil Statutes, as
amended, shall apply, and, to the extent Article 5069-1.04 is applicable
to this Agreement, the indicated rate ceiling thereunder shall apply.
Section 5.12. LETTER OF CREDIT. (a) In order to further secure the
payment of principal of and interest on, and Purchase Price of, the
Bonds, when due, prior to the initial delivery of the Bonds the Company
shall secure and deliver to the Trustee, for the benefit of the owners of
the Bonds, the Letter of Credit. The Letter of Credit shall be in an
original aggregate amount specified in the Indenture, and the Letter of
Credit and any Alternate Letter of Credit shall conform to the
requirements set forth in the Indenture. After the initial delivery of
the Letter of Credit, and at all times thereafter while any of the Bonds
are Outstanding, except during any Multiannual or Fixed Rate Period, the
Company shall continuously secure the Bonds by either extensions of the
Letter of Credit or by the securing and delivery of an Alternate Letter
of Credit unless the Company has determined, pursuant to Section 10.05 of
the Indenture, not to secure payment of principal of and interest on, and
Purchase Price of, the Bonds with the Letter of Credit or an Alternate
Credit Facility. The Company hereby authorizes the Trustee to seek
payment under any Letter of Credit in accordance with its terms and the
terms of the Indenture. As long as the Letter of Credit is in effect and
the Bank is not in default thereunder, the Company's obligation to make
Installment Payments sufficient hereunder to pay principal of, premium,
if any, or interest on the Bonds or to pay Purchase Price of the Bonds
shall be satisfied solely from payments made by the Bank pursuant to the
Letter of Credit. Amounts drawn by the Trustee under any Letter of
Credit shall be credited against the obligation of the Company to make
Installment Payments hereunder.
(b) The Company shall notify the Trustee in writing at least forty-
five days prior to the expiration of an existing Letter of Credit whether
or not the Bank intends to extend such Letter of Credit or whether a
binding obligation to secure an Alternate Letter of Credit has been
entered into.
(c) The Company, the Trustee, and the Bank, with the written consent
of the Issuer, may, without the consent of the Bondholders, amend,
change, or modify any Letter of Credit (i) to cure any ambiguity, formal
defect, inconsistency, or minor omission, (ii) to conform to the
requirements of the Indenture or the Rating Agencies, or (iii) if such
amendment, change or modification is not prejudicial to the Bondholders
in any material respect and the Trustee receives a Favorable Opinion to
such effect..
(d) The Company shall pay all costs incurred by the Trustee and the
Issuer in connection with any reissuance, extension or substitution of
any Alternate Letter of Credit.
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01. EVENTS OF DEFAULT. The occurrence and continuation of
any one of the following shall constitute an "Event of Default" under
this Agreement (an "Event of Default"):
(a) failure by the Company to pay Installment Payments with
respect to principal of or premium on any Bond at the times specified
therein; or
(b) failure by the Company to pay Installment Payments with
respect to interest on any Bond at the times specified therein and (i)
if such Bond bears interest at a Flexible, Daily, Weekly, Monthly,
Quarterly or Semiannual Rate, the continuation of such failure for a
period of one Business Day or more or (ii) if such Bond bears interest
at a Multiannual or Fixed Rate, the continuation of such failure for a
period of sixty days or more; or
(c) failure by the Company to pay Installment Payments with
respect to the Purchase Price of any Bond at the times specified
therein and the continuation of such failure for a period of one
Business Day or more after notice thereof shall have been given by the
Trustee to the Company and the Issuer; or
(d) failure by the Company to observe and perform any covenant,
condition or agreement on its part required to be observed or
performed in this Agreement, other than as referred to in (a), (b) or
(c) above, for a period of 90 days after receipt by the Company of
written notice specifying such failure and requesting that it be
remedied, given to the Company by the Issuer or the Trustee, unless
the Issuer and the Trustee shall agree in writing to an extension of
such time prior to its expiration; provided, however, that if the
failure stated in the notice can, in the reasonable judgement of the
Company, be corrected, but cannot be corrected within the applicable
period, the Issuer and the Trustee will not unreasonably withhold
their consent to an extension of
such time if corrective action is instituted within the applicable
period and diligently pursued until the default is corrected; or
(e) if a Letter of Credit is in effect, receipt by the Trustee of
a written notice from the Bank of the occurrence and continuance of
an "Event of Default" (as defined in the Letter of Credit or Letter of
Credit Agreement); or
(f) the occurrence of an "Event of Default" under the Indenture.
The provisions of paragraph (d) of this Section 6.01 are subject to the
following limitations: if by reason of acts or God, strikes, lockouts or
other industrial disturbances; acts of public enemies; orders or
regulations of any kind of the government of the United States of America
or of the State of Texas or any of their departments, agencies, political
subdivisions, or officials, or any civil military authority;
insurrections; riots; epidemics; landslides; lightning; earthquakes;
tidal waves; fires; hurricanes; tornadoes; blue northers; other storms;
floods; washouts; droughts; arrests; restraints of government and people;
civil disturbances; explosions; breakage or accident to machinery,
transmission pipes, transmission facilities or canals; partial or entire
failure of utilities; shortages of labor, material, supplies or
transportation; or any other cause or event not reasonably within the
control of the Company (collectively, "events of force majeure"), the
Company is unable in whole or in part to carry out the agreements on the
Company's part herein contained, the Company shall not be deemed in
default during the continuance of such inability. The Company, however,
will use its best efforts to remedy with all reasonable dispatch the
cause or causes preventing the Company from carrying out such agreements;
provided, that the settlement of strikes, lockouts and other industrial
disturbances shall be entirely within the discretion of the Company, and
the Company shall not be required to make settlement of strikes,
lockouts, and other industrial disturbances by acceding to the demands of
the opposing party or parties when such course is, in the judgment of the
Company, unfavorable to the Company. The occurrence of any event of
force majeure shall not suspend or otherwise ▇▇▇▇▇, and the Company shall
not be relieved from, any obligation under this Agreement to the extent
that the failure of the Company to observe or perform any such obligation
would result in the failure to pay when due the principal of, premium, if
any, and interest on the Bonds or would result in the interest on any
Bonds becoming includable in the gross income of the owners thereof for
federal income tax purposes.
The above provisions, however, are subject to the condition that,
after any such Event of Default, subject to and as provided in Article VI
of the Indenture, the Trustee may waive such Event of Default and rescind
and annul any remedial step theretofore taken by it or by the Issuer with
respect to such default and its consequences; but no such waiver,
rescission or annulment shall extend to or affect any subsequent default
or impair any right or remedy consequent thereon.
Section 6.02. REMEDIES ON DEFAULT. Whenever any Event of Default shall
have occurred and is continuing, the Issuer, with the consent of the
Trustee, or the Trustee may take any one or more of the following
remedial steps, but only if acceleration of the principal amount of the
Bonds has been declared pursuant to Section 6.02 of the Indenture:
(a) By notice in writing to the Company, declare the unpaid
Installment Payments to be due and payable immediately, if
concurrently with or prior to such notice the unpaid principal amount
of the Bonds has been declared to be due and payable under the
Indenture, and upon any such declaration the amounts payable under
Sections 5.01 and 5.04 hereof shall become and shall be immediately
due and payable in the amount set forth in Section 6.02 of the
Indenture; provided, however, that an Event of Default shall be deemed
waived and a declaration accelerating payment of unpaid Installment
Payments payable under this Agreement shall be deemed rescinded
without further action on the part of the Trustee or the Issuer upon
any rescission by the Trustee of the corresponding declaration of
acceleration of the Bonds under Section 6.02 of the Indenture.
(b) Whatever action at law or in equity may appear necessary or
desirable to collect the payment and other amounts then due or to
enforce performance and observance of any obligation, agreement or
covenant of the Company under this Agreement.
In case the Issuer, with the consent of the Trustee, or the Trustee
shall have proceeded to enforce its rights under this Agreement and such
proceedings shall have been discontinued or abandoned for any reason or
shall have been determined adversely to the Issuer and/or the Trustee,
then and in every such case the Issuer, the Company and the Trustee shall
be restored respectively to their several positions and rights hereunder,
and all rights, remedies and powers of the Issuer, the Company and the
Trustee shall continue as though no such proceeding had been taken.
The Company covenants that, in case an Event of Default shall occur
with respect to the payment of any Installment Payment payable under
Sections 5.01 and 5.04 hereof, then, upon demand of the Trustee, the
Company will pay to the Trustee the whole amount that then shall have
become due and payable under said Sections 5.01 and 5.04, with interest
(to the extent permitted by law) on such amount at the rate of interest
borne by the Bonds at the time of such failure from the due date thereof
until paid.
In case the Company shall fail forthwith to pay such amounts upon such
demand, the Trustee shall be entitled and empowered to institute any
action or proceeding at law or in equity for the collection of the sums
so due and unpaid, and may prosecute any such action or proceeding to
judgment or final decree, and may enforce any such judgment or final
decree against the Company and collect in the manner provided by law out
of the property of the Company, the moneys adjudged or decreed to be
payable.
The remedies for any "Event of Default" under the Indenture shall be
as specified in Article VI of the Indenture and are in addition to any
remedies hereunder.
In acting or omitting to act pursuant to the provisions of this
Agreement, the Trustee shall be entitled to all of the rights,
protections and immunities accorded to the Trustee under the terms of the
Indenture, including but not limited to those set out in Article VII
thereof.
Section 6.03. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In the
event the Company defaults under any of the provisions of this Agreement
and the Issuer or the Trustee employs attorneys or incurs other expenses
for the collection of the payments due under this Agreement or the
enforcement of performance or observance of any obligation or agreement
on the part of the Company herein contained, the Company agrees that it
will on demand therefor, and upon presentation of an itemized ▇▇▇▇, pay
to the Issuer or the Trustee the reasonable fees of such attorneys and
such other expenses so incurred by the Issuer or the Trustee; provided,
however, the Company, without creating a default hereunder or under the
Indenture, may contest in good faith the necessity for and the
reasonableness of any such fees and expenses of the Trustee.
ARTICLE VII
SPECIAL COVENANTS
Section 7.01. NO DEFENSE OR SET-OFF; UNCONDITIONAL OBLIGATION. The
obligations of the Company to make the payments required by this
Agreement and to perform and observe the other agreements on its part
contained herein shall be absolute and unconditional, irrespective of
any defense or any rights of set-off, recoupment or counterclaim it might
otherwise have against the Issuer or any other person, and the Company
shall pay during the term of this Agreement the payments to be made as
prescribed in Sections 5.01, 5.03, 5.04, 5.05 or 5.10 and all other
payments required hereunder free of any deductions and without abatement,
diminution or set-off; and until such time as the principal of, premium,
if any, and interest on the Bonds shall have been fully paid, or
provision for the payment thereof shall have been made in accordance with
the Indenture, the Company: (i) will not suspend or discontinue any
payments provided for in Sections 5.01, 5.03, 5.04, 5.05 or 5.10 hereof;
(ii) will perform and observe all of its other agreements contained in
this Agreement; and (iii) except as permitted herein, will not terminate
this Agreement for any cause, including, without limiting the generality
of the foregoing, failure of the Company to approve, receive, accept or
use the Projects, destruction of or damage to the Projects, commercial
frustration of purpose, any change in the tax laws of the United States
of America or of the State or any political subdivision of either of
these, or any failure of the Issuer or the Trustee to perform and observe
any agreement, whether express or implied, or any duty, liability or
obligation arising out of or connected with this Agreement or the
Indenture, except to the extent permitted by this Agreement. Nothing
contained in this Section shall be construed to relieve the Issuer or the
Trustee from the performance of any agreements on their respective parts
contained herein and the Company shall be entitled to institute such
action against the Issuer or the Trustee as the Company shall deem
appropriate to compel performance of any such agreement, duty or
obligation; provided, however, that the Issuer shall not be required to
carry out any such agreement, duty or obligation unless it is reimbursed
for its costs and expenses.
Section 7.02. CORPORATE EXISTENCE. The Company agrees that it will not
dispose of all or substantially all of its assets as an entirety (whether
by liquidation, dissolution, or otherwise) and will not consolidate with
or merge into another corporation, or permit one or more corporations to
consolidate with or merge into it, unless the resulting, surviving, or
transferee corporation, as the case may be, if other than the Company,
irrevocably and unconditionally assumes, in an instrument delivered to
the Issuer and to the Trustee, the due and punctual performance of the
obligations of the Company under this Agreement. Upon the delivery of
such instrument, the Company shall thereupon be relieved of any further
obligation or liability under this Agreement or with respect to the
Bonds; and the resulting, surviving, or transferee corporation, as the
case may be, shall succeed to and be substituted for the Company under
this Agreement with the same effect as if such resulting or surviving
corporation or transferee had been named herein as the Company. If
consolidation, merger, or sale, or other transfer is made as provided in
this Section 7.02, the provisions of this Section 7.02 shall continue in
full force and effect and no further consolidation, merger, or sale or
other transfer shall be made except in compliance with the provisions of
this Section 7.02.
Section 7.03. INDEMNITIES. The Company releases the Issuer, its
officers, directors, employees, agents, and attorneys (collectively, the
"Indemnified Parties") from, and the Indemnified Parties shall not be
liable for, and the Company agrees, and shall be liable to protect,
indemnify, defend, and hold the Indemnified Parties harmless from any and
all liability, cost, expense, damage, or loss of whatever nature
(including, but not limited to, attorneys' fees, litigation and court
costs, amounts paid in settlement, and amounts paid to discharge
judgments) directly or indirectly resulting from, arising out of, in
connection with, or related to (i) the issuance, offering, sale or
delivery of the Bonds, the Indenture, this Agreement, and the obligations
imposed on Issuer hereby and thereby; or the design, construction,
installation, operation, use, occupancy, maintenance, or ownership of the
Projects; (ii) any written statements or representations made or given by
the Company, or any of its officers or employees, to the Indemnified
Parties, the Trustee, or any underwriters or purchasers of any of the
Bonds, with respect to the Issuer, the Company, the Projects, or the
Bonds, including, but not limited to, statements or representations of
facts, financial information, or corporate affairs; (iii) damage to
property or any injury to or death of any person that may be occasioned
by any cause whatsoever pertaining to the Projects; and (iv) any loss or
damage incurred by the Issuer as a result of violation by the Company of
the provisions of the Prior Agreements or Section 7.04 or 7.05 hereof.
The provisions of the preceding sentence shall remain and be in full
force and effect even if any such liability, cost, expense, damage, or
loss or claim therefor by any person, directly or indirectly results
from, arises out of, or relates to or is asserted to have resulted from,
arisen out of, or related to, in whole or in part, one or more negligent
acts or omissions of the Issuer or its officers, directors, employees,
agents, servants, or any other party acting for or on behalf of the
Issuer in connection with the matters set forth in clauses (i) through
(iv) of said sentence. The Company also agrees to indemnify and hold the
Trustee harmless from any loss or damage incurred by the Trustee as a
result of a violation by the Company or the Issuer of the provisions of
Section 7.04 or 7.05 hereof, or the provisions of Section 3.19, 4.09 or
4.10 of the Indenture.
Section 7.04. TAX-EXEMPT STATUS OF THE BONDS. It is the intention of
the Company and the Issuer that the interest on the Bonds be excludable
from the gross income of the holders thereof for federal income tax
purposes, except for any Bond for any period that such Bond is owned by a
person who is a "substantial user" of the Projects or a "related person"
within the meaning of Section 147(a) of the Code. To that end, the
Company and the Issuer (to the extent reasonably within the control of
the Issuer) covenant with each other, and with the Trustee for the
benefit of the Bondholders, to refrain from any action which would
adversely affect, and to take such action to assure, the treatment of the
Bonds as obligations described in Section 103 (a) of the Code, the
interest on which is not includable in the "gross income" of the holder
(other than the income of a "substantial user" of the Projects or a
"related person" within the meaning of Section 147(a) of the Code) for
purposes of federal income taxation. Furthermore, the Company hereby
covenants as follows:
(a) to use all of the proceeds of the Bonds for the payment of
principal on the Prior Bonds;
(b) to refrain from taking any action that would result in the
Bonds being "federally guaranteed" within the meaning of Section
149(b) of the Code;
(c) to refrain from using any portion of the proceeds of the
Bonds, directly or indirectly, to acquire or to replace funds which
were used, directly or indirectly, to acquire investment property (as
defined in Section 148(b)(2) of the Code) which produces a materially
higher Yield over the term of the Bonds than the Yield on the Bonds,
other than investment property acquired with --
(1)proceeds of the Bonds invested for a period of 90 days or
less until such proceeds are needed for the purpose for which the
Bonds are issued,
(2)amounts invested in a bona fide debt service fund, within
the meaning of Section 1.103-13(b)(12) of the Regulations, and
(3)amounts deposited in any reasonably required reserve or
replacement fund to the extent such amounts do not exceed 10
percent of the proceeds of the Bonds and to the extent that at no
time during any bond year will the aggregate amount so invested
exceed 150 percent of debt service on the Bonds for such year;
(d) to otherwise restrict the use or investment of the proceeds of
the Bonds or amounts treated as proceeds of the Bonds, as may be
necessary, to satisfy the requirements of Section 148 of the Code
(relating to arbitrage);
(e) to pay to the United State of America (to the extent not paid
by the Trustee pursuant to the Indenture) at least once during each
five-year period (beginning on the date of delivery of the Bonds) an
amount that is at least equal to 90 percent of the Excess Earnings,
and to pay to the United States of America, not later than 60 days
after the Bonds have been paid in full, 100 percent of the amount then
required to be paid as a result of Excess Earnings under Section
148(f) of the Code, unless the Bonds qualify for the exception to
rebate set forth in Section 148(f)(4)(B) of the Code;
(f) to remit immediately to the Trustee for deposit in the Rebate
Fund any deficiency as required by Section 4.10 of the Indenture; and
(g) to provide to the Trustee, at such time as required by the
Trustee, all information required by the Trustee with respect to
Nonpurpose Investments not held in any fund under the Indenture.
The terms Nonpurpose Investments, Excess Earnings, and Yield shall
have the meanings give to such terms in section 148 of the Code and the
Regulations promulgated pursuant to such section.
It is the understanding of the Issuer and the Company that the
covenants contained herein are intended to assure compliance with the
Code and any regulations or rulings promulgated by the United States
Department of the Treasury pursuant thereto. In the event that
regulations or rulings are hereafter promulgated which modify or expand
provisions of the Code, as applicable to the Bonds, the Issuer and the
Company will not be required to comply with any covenant contained herein
to the extent that such failure to comply, in the opinion of Bond Counsel
delivered to the Issuer, the Company, and the Trustee, will not adversely
affect the exclusion of interest on the Bonds from the gross income of
the owners of the Bonds for federal income tax purposes under Section 103
of the Code. In the event that regulations or rulings are hereafter
promulgated which impose additional requirements which are applicable to
the Bonds, the Company and the Issuer agree to comply with the additional
requirements to the extent necessary, in the opinion of Bond Counsel
delivered to the Issuer, the Company, and the Trustee, to preserve the
exclusion of interest on the Bonds from the gross income of the owners of
the Bonds for federal income tax purposes under Section 103 of the Code.
In furtherance of such intention, the Issuer hereby authorizes and
directs its General Manager or its Director of Finance to execute any
documents, certificates or reports required by the Code and to make such
elections, on behalf of the Issuer, which may be permitted by the Code as
are consistent with the purpose for the issuance of the Bonds.
Section 7.05. ARBITRAGE COVENANTS. The Issuer and the Company covenant
and agree, for the benefit of the Trustee and the owners of the Bonds,
that they will not knowingly take any action or omit from taking any
action, which would result in a loss of the exemption from federal income
taxation of interest on the Bonds by virtue of the Bonds being considered
"arbitrage bonds" within the meaning of Section 148 of the Code.
Section 7.06. PAYMENT TO REBATE FUND. The Company hereby covenants and
agrees to make the determinations and to pay any deficiency in the Rebate
Fund, at the times and as described in Section 4.10 of the Indenture. In
any event, if the amount of cash held in the Rebate Fund shall be
insufficient to permit Trustee to make payment to the United States of
any amount due under Section 148(f)(2) of the Code, the Company forthwith
shall pay the amount of such insufficiency on such date to Trustee in
immediately available funds. The obligations of the Company under this
Section 7.06 are direct obligations of the Company, acting under the
authorization of, and on behalf of, the Issuer and the Issuer shall have
no further obligation or duty with respect to the Rebate Fund.
Section 7.07. QUALIFICATION IN TEXAS. The Company agrees that, so long
as it owns and operates the Project, it will be incorporated under the
laws of the State or will be qualified to do business in the State.
Section 7.08. RECORDATION. The Company agrees that it will record and
file any of the financing statements and all supplements thereto, and
such other instruments as may be required from time to time to be
recorded or filed, in such manner and in such places as from time to time
may be required by law in order fully to preserve and protect the
securities of the Owners of the Bonds and the rights of the Trustee
hereunder and under the Indenture.
Section 7.09. NO PERSONAL LIABILITY. No officer, employee,
representative, or agent of the Issuer or the Company shall be personally
liable on this Agreement.
Section 7.10. COMPLIANCE WITH RULE 15C2-12. The Company hereby agrees
that it will comply with and perform its duties under the Rule 15c2-12
Undertakings dated as of October __, 1995 and attached to this Agreement
as Exhibit A and that the Issuer shall have no responsibility or
obligation with respect to compliance with Rule 15c2-12.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. GENERAL PROVISIONS. (a) The terms of this Agreement may
be enforced as to one or more breaches either separately or cumulatively.
(b) No remedy conferred upon or reserved to the Issuer, the Company,
the Trustee, or the owners of the Bonds in this Agreement is intended to
be exclusive of any other available remedy or remedies, but each and
every such remedy shall be cumulative and shall be in addition to every
other remedy now or hereafter existing at law or in equity or by statute.
No delay or omission to exercise any right or power accruing upon any
default, omission, or failure of performance hereunder shall impair any
such right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often as
may be deemed expedient. In the event any provision contained in this
Agreement should be breached by the Issuer or the Company and thereafter
duly waived, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach of this
Agreement. No waiver by either party of any breach by the other party of
any of the provisions of this Agreement shall be construed as a waiver of
any subsequent breach, whether of the same or of a different provision of
this Agreement.
(c) Headings of the Sections of this Agreement have been inserted for
convenience of reference only and in no way shall they affect the
interpretation of any of the provisions of this Agreement.
(d) This Agreement is made for the exclusive benefit of the Issuer,
the Trustee, the owners of the Bonds and the Company, and their
respective successors and assigns herein permitted, and not for any third
party or parties; and nothing in this Agreement, expressed or implied, is
intended to confer upon any party or parties other than the Issuer, the
Trustee, the owners of the Bonds and the Company, and their respective
successors and assigns herein permitted, any rights or remedies under or
by reason of this Agreement. In particular, but not by way of
limitation, the Trustee shall be a third-party beneficiary for purposes
of enforcing its rights and the Company's obligations under Sections 5.07
and 7.03 of this Agreement as fully as if the Trustee had been a party in
privity of contract with the Company hereunder.
Section 8.02. INTENTIONALLY OMITTED.
Section 8.03. AMENDMENT OF AGREEMENT. No amendment, change, addition
to, or waiver of any of the provisions of this Agreement shall be binding
upon the parties hereto unless in writing signed by the Authorized
Company Representative and the Authorized Issuer Representative and in
compliance with Section 9.05 of the Indenture. A copy of any such
amendment, change, addition to, or waiver shall be provided to the
Trustee. Notwithstanding any of the foregoing or anything in the
Indenture to the contrary, it is covenanted and agreed, for the benefit
of the holders of the Bonds and the Trustee, that the provisions of this
Agreement shall not be amended, changed, added to, or waived in any way
which would relieve, reduce or abrogate the obligations of the Company to
make or pay, or cause to be made or paid, when due, any and all Install-
ment Payments with respect to any then Outstanding Bonds, in the manner
and under the terms and conditions provided herein and in the Bond
Resolution or Indenture, or which would change or affect Article II,
Sections 5.01, 5.03, 5.04, 5.05, 5.06, 5.10, 6.01, 7.01, 7.02, 8.03, or
8.04 hereof or the provisions of this sentence unless, in the judgment of
the Trustee, such change or amendment would not materially adversely
affect the interests of the Bondholders.
Section 8.04. ASSIGNMENT. The Company may assign its interest in this
Agreement in whole or in part, provided, however, no such assignment
shall relieve the Company from primary liability for any of its
obligations hereunder, and without limiting the generality of the
foregoing, in the event of any such assignment, the Company shall
continue to remain primarily liable for its payments specified herein and
for performance and observance of the other covenants and agreements on
its part herein provided. In addition, the Company may also assign its
interest in this Agreement in connection with a consolidation with or
merger into another domestic corporation, or the sale or transfer of all
or substantially all of its assets as an entirety to another domestic
corporation, if such transaction complies with the requirements of
Section 7.02 hereof. Anything in this Agreement notwithstanding, no
assignment of the Company's interest in this Agreement shall be effective
unless the Company shall, on or prior to the effective date of any such
assignment, furnish or cause to be furnished to the Issuer and the
Trustee notice of such assignment, together with a Favorable Opinion.
Section 8.05. TERM OF AGREEMENT. The term of this Agreement shall be
from the date hereof until all payments and indemnities required to be
made by the Company pursuant hereto shall have been made.
Section 8.06. NOTICES. Any notice, request or other communication
under this Agreement shall be given in writing and shall be deemed to
have been given by either party to the other party at the addresses shown
below upon any of the following dates:
(a) The date of notice by Electronic Notice;
(b) Three Business Days after the date of the mailing thereof, as
shown by the post office receipt if mailed to the other party hereto
by registered or certified mail;
(c) The date of the receipt thereof by such other party if not
given pursuant to (a) or (b) above.
The address for notice for each of the parties shall be as
follows:
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ River Authority
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Director of Finance
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Central and South West Corporation as agent for:
Central Power and Light Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Director, Finance
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or the latest address specified by such other party in writing.
Section 8.07. SEVERABILITY. If any clause, provision or Section of
this Agreement should be held illegal or invalid by any court, the
invalidity of such clause, provision or Section shall not affect any of
the remaining clauses, provisions or Sections hereof and this Agreement
shall be construed and enforced as if such illegal or invalid clause,
provision or Section had not been contained herein. In case any
agreement or obligation contained in this Agreement should be held to be
in violation of law, then such agreement or obligation shall be deemed to
be the agreement or obligation of the Company or the Issuer, as the case
may be, to the full extent permitted by law.
Section 8.08. EXECUTION OF COUNTERPARTS. This Agreement may be
simultaneously executed in several counterparts, each of which shall be
an original and all of which shall constitute but one and the same
instrument.
Section 8.09. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
EXCLUSIVELY BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF
THE STATE OF TEXAS. VENUE FOR ANY ACTIONS BROUGHT HEREUNDER TO WHICH THE
ISSUER IS A PARTY SHALL LIE IN ▇▇▇▇▇▇▇▇▇ COUNTY, TEXAS.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed in multiple counterparts, each of which shall be considered an
original for all purposes, as of the day and year first set out above.
▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ RIVER AUTHORITY
By:____________________________
Chairman
ATTEST:
_____________________________
Secretary
(SEAL)
CENTRAL POWER AND LIGHT COMPANY
By:____________________________
Vice President
ATTEST:
_________________________________
Secretary
EXHIBIT A