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Exhibit 10(c)(1)
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INSTALLMENT PAYMENT
AND
BOND AMORTIZATION AGREEMENT
BETWEEN
BRAZOS RIVER AUTHORITY
AND
TXU ENERGY COMPANY LLC
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BRAZOS RIVER AUTHORITY
POLLUTION CONTROL REVENUE REFUNDING BONDS
(TXU ENERGY COMPANY LLC PROJECT)
SERIES 2003D
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
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<C>
ARTICLE I:
DEFINITIONS...........................................................................................5
Section 1.01.
Definitions..........................................................................5
ARTICLE II:
REPRESENTATIONS......................................................................................5
Section 2.01.
Representations By
Authority.........................................................5
Section 2.02.
Representations By
Company...........................................................6
ARTICLE III: THE
FACILITIES......................................................................................7
Section 3.01.
Operation and Assignment, Sale or Lease of
Facilities................................7
Section 3.02.
Governmental
Regulation..............................................................7
ARTICLE IV: REFUNDING THE REFUNDED BONDS;
DISBURSEMENTS..........................................................7
Section 4.01.
Disbursement of Bond Proceeds and Other
Funds........................................7
Section 4.02. Lien
on Deposited
Funds..............................................................8
Section 4.03.
Company Required to Pay in Event Funds are Insufficient for
Refunding................8
ARTICLE V: THE
BONDS..............................................................................................8
Section 5.01.
Issuance of the
Bonds................................................................8
Section 5.02.
Refunding of
Bonds...................................................................9
Section 5.03.
Redemption of
Bonds..................................................................9
Section 5.04.
Installment
Payments.................................................................9
Section 5.05.
Payments to Authority;
Indemnification..............................................11
Section 5.06.
Tax-Exempt Status of the
Bonds......................................................11
Section 5.07.
Purchase Price
Payments.............................................................14
Section 5.08.
Further
Assurances..................................................................14
ARTICLE VI: COVENANTS AND
REMEDIES..............................................................................14
Section 6.01.
Covenant............................................................................14
Section 6.02.
Trustee.............................................................................14
Section 6.03.
General
Provisions..................................................................15
Section 6.04.
Amendment of
Agreement..............................................................16
ARTICLE VII: SPECIAL
COVENANTS..................................................................................17
Section 7.01.
Company to Maintain its Legal Existence; Conditions Under Which
Exceptions
Permitted..........................................................................17
Section 7.02.
Assignment..........................................................................17
Section 7.03.
Assumption..........................................................................17
Section 7.04. No
Arbitrage........................................................................18
Section 7.05.
Financial
Reports...................................................................19
Section 7.06. Term
of
Agreement...................................................................19
Section 7.07.
Termination of
Agreement............................................................19
Section 7.08.
Notices.............................................................................19
Section 7.09.
Severability........................................................................20
Section 7.10.
Usury Not
Intended..................................................................20
Section 7.11.
Successors and Permitted
Assigns....................................................20
</TABLE>
<PAGE>
INSTALLMENT PAYMENT AND BOND AMORTIZATION AGREEMENT
between
BRAZOS RIVER AUTHORITY
and
TXU ENERGY COMPANY LLC
This Installment
Payment and Bond Amortization Agreement, dated as of
October 1, 2003 (the "Agreement"), by and
between BRAZOS RIVER AUTHORITY (the
"Authority") and TXU ENERGY COMPANY LLC
(the "Company"):
WITNESS:
GENERAL RECITALS AND FINDINGS
(a) The Authority is a governmental agency and body politic and
corporate, created as a conservation and
reclamation district, and political
subdivision of the State of Texas, pursuant
to and functioning under the
Constitution and laws of the State of
Texas, including particularly Article XVI,
Section 59 of the Texas Constitution and
Chapter 221, Texas Water Code (formerly
compiled as Article 8280-101, V.A.T.C.S.,
as amended) (the "Authority Act"); and
the Company is a limited liability company
formed and existing under and by
virtue of the laws of the State of Delaware
and is fully qualified to transact
business in the State of Texas.
(b) This Agreement is authorized and executed pursuant to
applicable
laws, including the Authority Act, Chapter
30 of the Texas Water Code ("Chapter
30"), and Chapter 383 of the Texas Health
and Safety Code ("Chapter 383"),
Chapter 1371, Texas Government Code
("Chapter 1371"), and Chapter 1207, Texas
Government Code ("Chapter 1207")
(collectively, the "Acts").
(c) The Company or one or more of its wholly-owned subsidiaries own
and
operate an electric generating station
called Sandow Unit No. 4, in Milam
County, Texas (the "Plant"), and the
Authority and the Company have previously
entered into an Installment Payment and
Bond Amortization Agreement dated as of
December 1, 2001 (the "Original Agreement")
in accordance with which the
Authority has issued its Pollution Control
Revenue Refunding Bonds (TXU Electric
Company Project) Taxable Series 2001H (the
"Refunded Bonds") in the aggregate
principal amount of $30,820,000, for the
purpose of providing funds for the
acquisition, construction and improvement
of an undivided interest in certain
air pollution control facilities and solid
waste disposal facilities (the
"Facilities") located at the Plant.
(d) All of the outstanding Refunded Bonds are being refunded
with
proceeds of the Bonds (as defined below)
and moneys provided by the Company.
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(e) The Authority has previously determined, in the public
interest,
that it would acquire, construct and
improve or cause to be acquired,
constructed and improved the Facilities,
and would sell the Facilities to the
predecessor to the Company in the manner
provided in the Acts.
(f) Pursuant to the terms of the Original Agreement and the
trust
indenture and bond resolution pursuant to
which the Refunded Bonds were issued
(such trust indenture and bond resolution
are collectively referred to as the
"Refunded Bonds Indenture"), the Company is
obligated to pay or cause to be paid
amounts due with respect to the Refunded
Bonds (the "Prior Installment
Payments"), which Prior Installment
Payments are to be timely made to the
trustee under the Refunded Bonds Indenture
(the "Refunded Bonds Trustee"), in
amounts that, together with other moneys
available therefor, will be sufficient
to pay the principal of, and redemption
premium, if any, and interest on, the
Refunded Bonds when due.
(g) At the request of the Company, the Authority has determined, in
the
public interest, that it will issue a
series of its bonds designated as follows:
Pollution Control Revenue Refunding Bonds
(TXU Energy Company LLC Project)
Series 2003D (the "Bonds") for the purpose
of refunding the Refunded Bonds in
the manner provided in the Acts and this
Agreement.
(h) The Authority has entered into a Trust Indenture dated as
of
October 1, 2003 with The Bank of New York,
as trustee (with such successors in
that capacity, the "Trustee") thereunder
(the "Indenture"), for the purpose of
issuing the Bonds for the purposes stated
above.
(i) The Company has agreed to make payments hereunder in
consideration
of the Authority's issuance of the Bonds
and the application of the proceeds
from the sale of the Bonds to refund the
Refunded Bonds, thereby satisfying its
debt service obligations under the Original
Agreement.
(j) The Legislature of the State of Texas, through the Acts,
has
provided and determined that it is the
policy of the State of Texas and the
purpose of the Acts that the resources of
the State of Texas be safeguarded from
pollution. In the Original Agreement and in
this Agreement, the Company has
represented and is representing that the
Facilities have been designed for the
purpose of protecting the public from
pollution. The Authority, by carrying out
the purposes of the Acts, as provided in
this Agreement and in the Original
Agreement, finds that such purposes
constitute an essential public function
under the Texas Constitution. The Authority
further officially finds and
determines (and reconfirms its findings in
the Original Agreement) that the
control of pollution is and will be for the
specific purpose of conservation and
development of the natural resources of the
State of Texas, within the meaning
of Article XVI, Section 59(a) of the Texas
Constitution, through the prevention
of damage to or destruction of the
environment, resulting in the conservation
and development of such natural
resources.
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NOW, THEREFORE, in consideration of the covenants and agreements
herein
made, and subject to the conditions herein
set forth, the Authority and the
Company contract and agree as follows:
ARTICLE I:
DEFINITIONS
Section 1.01. Definitions. In addition to all other words and
terms
defined in the recitals hereto and
elsewhere herein, and unless a different
meaning or intent clearly appears from the
context, capitalized terms used
herein, and not otherwise defined herein,
shall have the meanings set forth in
the Indenture, whenever they are used in
this Agreement. References in the
singular number in this Agreement shall be
considered to include the plural, if
and when appropriate.
ARTICLE II: REPRESENTATIONS
Section 2.01.
Representations By
Authority. The
Authority makes the
following representations and findings as the basis for the
undertakings on
its part herein contained:
(a) The Authority is a governmental agency and body politic and
corporate of the State of Texas, a "river
authority" within the definition set
forth in Chapter 30, an "issuer" within the
definition set forth in Chapter 1371
and an "issuer" within the meaning of
Chapter 1207.
(b) The Authority has the legal power under the Acts to enter into
the
transactions contemplated by this Agreement
and to carry out its obligations
hereunder, including the issuance and
delivery of the Bonds, and to adopt and
perform the Bond Resolution. The Authority
has been duly authorized to execute
and deliver this Agreement and the
Indenture, and to adopt and perform the Bond
Resolution by proper action of the
Board.
(c) The Authority hereby confirms, and in all respects reaffirms,
its
findings and determinations with respect to
the financing of the Facilities
under the Authority Act, Chapter 30 and
Chapter 383, all as set forth in the
Original Agreement.
(d) The Authority is not in default under any of the provisions of
the
laws of the State of Texas that would
impair, interfere with or otherwise
adversely affect the ability of the
Authority to make and perform the provisions
of this Agreement or the Indenture.
(e) There is no litigation pending, or to the knowledge of the
Authority threatened, in any court, either
state or federal, calling into
question the creation, organization or
existence of the Authority, the validity
or enforceability of this Agreement or the
authority of the Authority to make or
perform this Agreement or the Indenture or
to issue the Bonds or to adopt or
perform the Bond Resolution.
(f) The execution and delivery of this Agreement, the Indenture and
the
Bonds, the adoption of the Bond Resolution
and the performance of the
transactions contemplated thereby do not
and will not violate any provision of
law or regulation, or of any decree, writ,
order or injunction or the organic
documents of the Authority, and do not and
will not contravene the provisions of
or constitute a default under any
agreement, indenture, bond resolution or other
instrument to which the Authority is a
party or by which the Authority is bound.
5
<PAGE>
(g) All consents, authorizations and approvals of governmental
bodies
or agencies, including the Attorney General
of the State of Texas, required in
connection with the execution and delivery
of this Agreement, the Indenture and
the Bonds, the adoption of the Bond
Resolution and with the carrying out by the
Authority of its obligations under this
Agreement, the Indenture, the Bonds and
the Bond Resolution will be duly obtained
or waived prior to the initial
delivery of the Bonds to the purchasers
thereof.
(h) All requirements and conditions specified in the Acts and all
other
laws and regulations applicable to the
adoption of the Bond Resolution, the
execution and delivery of this Agreement
and the Indenture and the issuance and
delivery of the Bonds will be fulfilled
prior to the initial delivery of the
Bonds to the purchasers thereof.
Section 2.02. Representations By Company. The Company makes the
following representations and findings as
the basis for the undertakings on its
part herein contained:
(a) The Company is a limited liability company duly formed under
the
laws of the State of Delaware and fully
qualified to transact business in the
State of Texas; it is not in violation of
any provisions of the laws of the
State of Texas in a manner that materially
and adversely impairs the Company's
ability to perform its obligations
hereunder or under its Certificate of
Formation; it is fully empowered to enter
into and perform all agreements on its
part herein contained; and the execution
and delivery by it of this Agreement
does not contravene any provision of its
Certificate of Formation, or its
limited liability company agreement, or
other requirements of law or constitute
a default under any existing agreement,
indenture, mortgage, loan agreement,
commitment or any other existing agreement
for borrowed money to which it is a
party or by which it is or may be
bound.
(b) The Company will perform its obligations and agreements
contained
in that certain tax letter of
representation addressed to Bond Counsel and
delivered in connection with the delivery
of the Bonds (the "Tax Letter of
Representation") as if they were set forth
herein. All representations of the
Company in the Tax Letter of Representation
shall be treated as if they were set
forth herein. Any covenants, agreements or
representations made by the Company
or any transferee of the Facilities in
connection with such a transfer shall be
performed and treated as if set forth
herein.
(c) The Company will not default under, misperform or fail to
perform
with respect to any representation,
covenant or undertaking of the Company
contained in this Agreement which would
result in interest on any Bond becoming
includible in the gross income of the
holder thereof for federal income tax
purposes except during any period for which
such Bond is held by any person who
is a "substantial user" of the Facilities
or a "related person" as defined in
the Code.
(d) The Company has requested the Authority to refund the
Refunded
Bonds.
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(e) The Company hereby reconfirms (except to the extent, if
any,
modified hereby), the findings,
representations and covenants of its predecessor
contained in the Original Agreement
relating to the acquisition, ownership and
use of the Facilities.
ARTICLE III: THE
FACILITIES
Section 3.01. Operation and Assignment, Sale or Lease of
Facilities.
The Company represents and covenants that
the Facilities constitute air
pollution control facilities within the
meaning of the laws of the State of
Texas and (excepting any portion of the
Facilities paid for from a portion of
the proceeds of the Refunded Bonds other
than "substantially all" of such
proceeds within the meaning of the
applicable Regulations) pollution control or
solid waste disposal facilities within the
meaning of the Code and the
applicable Regulations. Subject to Section
5.06(a)(viii) of this Agreement, the
Company shall have the right, at its
discretion, to assign, sell or lease the
Facilities or any discrete facility
thereof. Subject to the preceding sentence
of this Section 3.01, the Company covenants
that it will continue to operate and
maintain the Facilities, or cause the
Facilities to be operated and maintained,
and that it will pay, or cause to be paid,
all costs and expenses of operation
and maintenance of the Facilities,
including all applicable taxes, and that it
will keep, or cause to be kept, in force
adequate insurance, including self
insurance, on the Facilities as is
customarily carried by the Company with
respect to facilities like the Facilities.
Notwithstanding the foregoing,
neither the Company nor any vendee,
assignee or lessee of the Facilities shall
be required under this Agreement to
continue the operation and/or maintenance of
the Facilities, or any part thereof, if the
Company or any such vendee, assignee
or lessee determines that the operation
and/or maintenance of the Facilities or
any part thereof is unnecessary or
undesirable. Other than as provided in the
Original Agreement, it is understood and
agreed that the Authority shall have no
duties or responsibilities whatsoever with
respect to the operation or
maintenance of the Facilities, or the
performance of the Facilities for their
designed purposes.
Section 3.02. 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 Commission on
Environmental Quality or any other
state agency or local government 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 Facilities;
and that the Company will not be relieved
of any responsibility under any
applicable federal or state laws or
regulations pertaining to pollution control.
ARTICLE IV: REFUNDING
THE REFUNDED BONDS; DISBURSEMENTS
Section 4.01. Disbursement of Bond Proceeds and Other Funds.
The
proceeds of the Bonds (except for any
accrued interest on the Bonds, which shall
be deposited to the Company Debt Service
Account of the Bond Fund in accordance
with Section 6.2 of the Indenture), which
shall be received by the Trustee and
disbursed by the Trustee to the Refunded
Bonds Trustee, together with such
moneys as may be deposited with the
Refunded Bonds Trustee by or on behalf of
the Company, shall be disbursed by the
Refunded Bonds Trustee as specified in a
certificate of the Issuer Representative
(the "Certificate of Issuer
Representative"). Such disbursement shall
be made on the date of delivery of the
Bonds and shall be for the purpose of
redeeming and retiring the Refunded Bonds.
7
<PAGE>
Section 4.02. Lien on Deposited Funds. Proceeds of the Bonds
disbursed
by the Trustee in accordance with the
Certificate of Issuer Representative shall
be applied to redeem and retire the
Refunded Bonds in accordance with the
directions set forth in the Certificate of
Issuer Representative and the terms
of the Refunded Bonds Indenture. The Bond
proceeds so disbursed as aforesaid
shall, until used to redeem and retire the
Refunded Bonds, be subject to the
lien of the Refunded Bonds Indenture, and
the Company shall have no right, title
or interest therein.
Section 4.03. Company Required to Pay in Event Funds are
Insufficient
for Refunding. In the event that moneys
administered in accordance with Section
4.01 of this Agreement are not sufficient
to accomplish the refunding of the
Refunded Bonds, the Company shall at its
own expense immediately pay such
additional amounts as may be required to
effect such refunding.
ARTICLE V: THE BONDS
Section 5.01. Issuance of the
Bonds.
(a) In consideration of the covenants and agreements set forth in
this
Agreement, and to enable the Authority to
issue the Bonds and to carry out the
intents and purposes hereof, this Agreement
is executed to ensure the issuance
of the Bonds, and to provide for and
guarantee the due and punctual payment by
the Company to the Authority, or to the
Trustee under the Indenture, of the
Installment Payments relating thereto, and
to the Paying Agent, of the Purchase
Price relating thereto. Such Installment
Payments shall be made for the benefit
of the holders of the Bonds and shall be
deposited into the Company Debt Service
Account of the Bond Fund, and the Purchase
Price payments shall be made to the
Paying Agent for the benefit of the
Bondholders of the applicable tendered
bonds, all as provided in the
Indenture.
(b) Simultaneously with the authorization of this Agreement by
the
Board, the Board has adopted the Bond
Resolution. The Company has reviewed and
hereby approves the Bond Resolution,
including the Indenture authorized therein.
It is hereby agreed that the approval set
forth above constitutes the
acknowledgment and agreement of the Company
that the Bonds, when issued, sold
and delivered as provided in the Bond
Resolution, 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 holder
of the Bonds is entitled to rely fully and
unconditionally on such approval.
Notwithstanding any provisions of this
Agreement or any other contract or
agreement to the contrary, this approval of
the Bond Resolution (including the
Indenture authorized therein) is the
Company's agreement that all covenants and
provisions in such Bond Resolution and
Indenture affecting the Company shall,
upon the delivery of the Bonds and the
Indenture, become absolute,
unconditional, valid and binding covenants
and obligations of the Company so
long as any portion of the principal amount
of the Bonds or interest thereon are
8
<PAGE>
outstanding and unpaid. Particularly, the
obligation of the Company to make,
promptly when due, all Installment Payments
specified in the Bond Resolution and
the Indenture shall be absolute and
unconditional, and said obligation may,
subject to the provisions of Section 7.10
of this Agreement, be enforced as
provided in the Bond Resolution and
Indenture, regardless of any other
provisions of this Agreement (other than
said Section 7.10) or any other
contract or agreement to the contrary
(other than any provision similar to said
Section 7.10 and of like import). It is
further the intention of this Agreement
that this approval of the Bond Resolution
and Indenture shall constitute and be
the equivalent of the approval of the Bond
Resolution and Indenture by the
Company and its board of directors. The
provisions of the Bond Resolution and
Indenture affecting the Company shall
constitute the absolute and unconditional
obligations of, and be binding upon, the
Company with the effect described
above.
Section 5.02. Refunding of
Bonds.
After the issuance of the Bonds, the Authority shall not refund
the
Bonds or change or modify the Bonds in any
way, except as provided for in the
Bond Resolution or the Indenture, without
the prior written approval of the
Company; nor shall the Authority redeem the
Bonds prior to their scheduled
maturities, or change or modify the Bond
Resolution, without the prior written
approval of the Company, unless such
redemption is required by the Bond
Resolution or the Indenture.
Section 5.03. Redemption of Bonds. The Authority, upon the
written
request of the Company (and provided that
the Bonds are subject to redemption or
prepayment prior to maturity at the option
of the Authority and 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 or prepayment
provisions to effect such redemption or
prepayment prior to maturity, to the
full extent of funds made available for
such purpose by the Company. The
redemption or prepayment of the Bonds
