TRUST INDENTURE

Exhibit 10.2

T RUST I NDENTURE

BETWEEN

G ULF C OAST I NDUSTRIAL D EVELOPMENT A UTHORITY

AND

W ELLS F ARGO B ANK , N ATIONAL A SSOCIATION , AS TRUSTEE

D ATED AS OF O CTOBER  1, 2006

$60,000,000

G ULF C OAST INDUSTRIAL DEVELOPMENT AUTHORITY

E NVIRONMENTAL F ACILITIES R EVENUE B ONDS

(M ICROGY H OLDINGS P ROJECT ) S ERIES 2006

 

TRUST INDENTURE

TABLE OF CONTENTS

 

EXHIBIT A Form of Bond

T RUST I NDENTURE

This T RUST I NDENTURE dated as of October 1, 2006, is by and between the GULF COAST INDUSTRIAL DEVELOPMENT AUTHORITY , a nonstock, nonprofit industrial development corporation existing under the laws of the State of Texas (herein called the “Issuer”) including particularly the Development Corporation Act of 1979, as amended, Article 5190.6, V.A.T.C.S. (the “Act”), and WELLS FARGO BANK , NATIONAL ASSOCIATION , a national banking association (in its capacity herein, together with any successors in such capacity, called the “Trustee”),

W ITNESSETH :

WHEREAS, pursuant to law, and particularly the Act, the Issuer is authorized to acquire, construct, and improve certain solid waste disposal facilities and to issue its revenue bonds for such purpose;

WHEREAS, a Loan Agreement, dated as of October 1, 2006 (the “Agreement”), relating to the Bonds (hereinafter defined) which has been duly executed between the Issuer and Microgy Holdings, LLC, a limited liability company organized and existing under and by virtue of the laws of the State of Delaware (the “Company”);

WHEREAS, the recitals and provisions of the Agreement are incorporated herein as if set forth in their entirety, and the capitalized terms of this Indenture not otherwise defined herein shall have the same meanings, and shall be defined, as set forth in the Agreement and the Bond Resolution (hereinafter defined);

WHEREAS, pursuant to the Agreement, the Board of Directors of the Issuer duly adopted a Resolution Authorizing Gulf Coast Industrial Development Authority Environmental Facilities Revenue Bonds (Microgy Holdings, LLC Project) Series 2006; the execution of a Trust Indenture, a Loan Agreement, and an Bond Purchase Agreement; approval of a Limited Offering Memorandum; and other matters in connection therewith (together with any amendment or supplement to such resolution as authorized therein, hereinafter called the “Bond Resolution”);

WHEREAS, the Bond Resolution authorized the issuance of Gulf Coast Industrial Development Authority Environmental Facilities Revenue Bonds (Microgy Holdings Project) Series 2006 (the “Bonds”) for the purpose of making a loan to the Company to pay the costs of acquiring, constructing, and improving certain solid waste disposal facilities described in Exhibit A to the Agreement;

WHEREAS, the Bonds, and the interest thereon, are and shall be payable from and secured by a first and superior lien on and pledge of the payments designated as “Loan Payments” to be made by the Company pursuant to the Agreement in amounts sufficient to pay and redeem, and provide for the payment of the principal of, premium, if any, and interest on the Bonds, when due, and the fees and expenses of and other amounts due to the Trustee and any paying agent for the Bonds, all as required by the Bond Resolution;

WHEREAS, pursuant to a Guarantee Agreement, dated as of October 1, 2006 (the “Guarantee”‘) the Company, MST Production Ltd., MST GP, LLC, MST Estates, LLC, Rio Leche Estates, L.L.C., Mission Biogas, L.L.C., and Hereford Biogas, L.L.C. (the “Subsidiary Guarantors”) have, jointly and severally, unconditionally guaranteed to the Trustee the payment, when due, of the principal of, redemption premium, if any, and interest on the Bonds.

WHEREAS, the Trustee has agreed to accept the trusts herein created upon the terms herein set forth; and

WHEREAS, all other things necessary to make the Bonds, when issued, executed and delivered by the Issuer and authenticated pursuant to this Indenture, the valid, legal and binding obligations of the Issuer, and to constitute this Indenture a valid pledge of the Revenues (as hereinafter defined) and other amounts pledged hereunder as security for the payment of the principal of, redemption premium, if any, and interest on the Bonds authenticated and delivered under this Indenture, have been performed, and the creation, execution and delivery of this Indenture and the creation, execution and issuance of the Bonds, subject to the terms hereof, have in all respects been duly authorized;

NOW, THEREFORE, THIS INDENTURE WITNESSETH that to provide for the payment of principal of, redemption premium, if any, and interest on all Bonds issued and outstanding under this Indenture, and in order to secure the rights of the Bondholders and the performance of the covenants contained in the Bonds, the Agreement, and herein, the Issuer does hereby pledge, transfer and assign unto the Trustee, its successors in the trust and its assigns forever (i) all of the right, title and interest of the Issuer in and to the Revenues, (ii) the Agreement and all right, title and interest of the Issuer under and pursuant to the Agreement, insofar as they relate to all Bonds issued and outstanding under this Indenture (except for the Unassigned Rights (as defined herein)), including, without limitation, all of the right, title, and interest of the Issuer in and to payments to be received under and pursuant to and subject to the provisions of the Agreement, and (iii) all amounts on deposit in the Bond Fund, the Construction Fund, the Debt Service Reserve Fund or other funds created under this Indenture other than the Rebate Fund which are not pledged hereunder and do not constitute security for the Bonds (collectively, the “Trust Estate”); provided, however, that nothing in the Bonds or in this Indenture shall be construed as pledging the general credit of the Issuer or the State of Texas, nor shall this Indenture or the Bonds give rise to a pecuniary liability of the Issuer.

TO HAVE AND TO HOLD all of the same hereby conveyed and assigned, or agreed or intended so to be, to the Trustee and its successors in said trust and to it and its assigns forever.

IN TRUST NEVERTHELESS, upon the terms and trusts herein set forth for the equal and proportionate benefit, security and protection of all holders and owners of the Bonds issued under and secured by this Indenture without privilege, preference, priority or distinction as to the lien or otherwise of any of the Bonds over any of the other Bonds.

PROVIDED, HOWEVER, that if the Issuer, its successors or assigns, shall well and truly pay, or cause to be paid, the principal of, redemption premium, if any, and interest on the Bonds due or to become due thereon, at the times and in the manner mentioned in the Bonds, according to the true intent and meaning thereof, and shall cause the payments to be made into the Bond Fund as required under Article VI hereof, or shall provide, as permitted hereby, for the payment thereof by depositing with the Trustee the entire amount due or to become due thereon, and shall well and truly keep, perform and observe all the covenants and conditions pursuant to the terms of this Indenture to be kept, performed and observed by it, and shall pay or cause to be paid to the Trustee all sums of money due or to become due in accordance with the terms and provisions hereof, then upon such final payments this Indenture and the rights hereby granted shall cease, terminate and be void; otherwise this Indenture to be and remain in full force and effect.

THIS INDENTURE FURTHER WITNESSETH, and it is expressly declared, that all Bonds issued and secured hereunder are to be issued, authenticated and delivered, and all said Revenues and receipts hereby pledged and assigned are to be dealt with and disposed of under, upon and subject to the terms, conditions, stipulations, covenants, agreements, trusts, uses and purposes hereinafter expressed, and the Issuer has agreed and covenanted, and does hereby agree and covenant, with the Trustee and with the respective holders and owners, from time to time, of the Bonds, as follows (provided that, in the performance of the agreements of the Issuer herein contained, any obligation it may thereby incur for the payment of

 

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money shall not be a general debt on its part or a charge against its general credit but shall be payable solely from the Trust Estate, including the Revenues):

ARTICLE I

DEFINITIONS

SECTION 1.1. Definitions . Unless otherwise defined herein, all words and phrases defined in the preamble hereto or in Article I of the Agreement shall have the same meaning in this Indenture. In this Indenture and any indenture supplemental hereto (except as otherwise expressly provided for or unless the context otherwise requires) the singular includes the plural, the masculine includes the feminine, and each of the following terms shall have the following meanings:

“Act” means the Development Corporation Act of 1979, Article 5190.6, Vernon’s Texas Civil Statutes, as amended.

“Administration Expenses” means amounts payable pursuant to Sections 5.04 and 5.07 of the Agreement.

“Affiliate” of any Person means any other Person who, directly or indirectly, controls or is controlled by or is under common control with such other Person.

“Agreement” means the Loan Agreement, dated as of October 1, 2006, between the Company and the Issuer which relates to the Bonds, as amended from time to time.

“Approval Certificate” means the certificate of the President or Secretary of the Issuer approving certain terms of the Bonds, which certificate is incorporated by reference herein for all purposes.

“Authenticating Agent” means the Trustee and any agent so designated in and appointed pursuant to Section 2.6 hereof.

“Authorized Company Representative” means the Company’s Chief Executive Officer, its President, its Chief Financial Officer, its Treasurer, or any Assistant Treasurer or persons at any time designated to act on behalf of the Company, such designation in each case, to be evidenced by a certificate furnished to the Issuer and the Trustee containing the specimen signature of such person or persons and signed on behalf of the Company by its Chief Executive Officer, its President, its Chief Financial Officer, its Treasurer, or any Assistant Treasurer authorized to act on behalf of the Company. Such certificate may designate an alternate or alternates.

“Authorized Denominations” means the denominations for the Bonds set forth in Section 2.2 hereof.

“Bond” means any bond or bonds authenticated and delivered under this Indenture.

“Bond Counsel” means McCall, Parkhurst & Horton L.L.P. or such other firm of attorneys of nationally recognized standing in the field of law relating to municipal bond law and the excludability of interest on state or local bonds from gross income of the owners of the Bonds for purposes of federal income taxation, selected by the Issuer and acceptable to the Trustee and the Company.

 

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“Bond Fund” means the trust fund so designated which is established pursuant to Section 6.2 hereof.

“Bond Owner,” “Bondowner,” “Owner,” “owner,” “Bondholder,” “bondholder, “ “holder,” “Registered Owner,” “registered owner,” or “owner of Bonds” means the person listed on the Bond Register as the registered owner of any Bond.

“Bond Register” and “Bond Registrar” shall have the respective meanings specified in Section 2.3 hereof.

“Business Day” or “business day” means any day other than (i) a Saturday or Sunday or legal holiday or a day on which banking institutions in the City of New York, New York or in the cities in which the Principal Offices of the Trustee or the Paying Agent are located are authorized or required by law or executive order to close or (ii) a day on which the New York Stock Exchange is closed.

“Code” means the Internal Revenue Code of 1986, as amended, and the rulings and regulations (including temporary and proposed regulations) promulgated thereunder or, to the extent applicable, under the Internal Revenue Code of 1954, as amended.

“Collateral Trust Agreement” means the Collateral Trust Agreement, dated as of October 1, 2006, among the Collateral Trustee, the Company, and the Subsidiary Guarantors, as amended from time to time.

“Collateral Trustee” means Wells Fargo Bank, National Association, as collateral trustee under the Collateral Trust Agreement, and any successor trustee or co-trustee thereunder.

“Company” means Microgy Holdings, LLC, a Delaware limited liability company, and its successors and assigns as permitted under the Agreement.

“Counsel” means an attorney at law or law firm (who may be counsel for the Issuer or the Company).

“Debt Service Reserve Fund” means the fund by that name created and established in Section 4.1 of this Indenture.

“Debt Service Reserve Requirement” means $5,151,500.

“Default” means any event which with the giving of notice or the lapse of time or both would constitute an Event of Default.

“ Division” means the Texas Economic Development and Tourism Office, an office within the Offices of the Governor of the State and any successor to its functions and duties.

“DTC” means The Depository Trust Company, New York, New York.

“DTC Letter of Representations” means the blanket letter of representations from the Issuer to DTC.

“DTC Participant” means (i) any person for which, from time to time, DTC, or, in the event that a successor Securities Depository to DTC is acting as such under Section 2.13 hereof, such successor

 

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Securities Depository effectuates book-entry transfers and pledges of securities pursuant to the book-entry system referred to in Section 2.13 hereof or (ii) any securities broker or dealer, bank, trust company or other person that clears through or maintains a custodial relationship with the person referred to in (i).

“Electronic Notice” means notice transmitted through a time-sharing terminal (promptly confirmed in writing) or facsimile machine, if operative as between any two parties, or if not operative, in writing or by telephone (promptly confirmed in writing).

“Event of Default” means any of the events specified in Section 11.1 hereof to be an Event of Default.

“Facility” or “Facilities” means one or more, as the case may be, of the solid waste disposal facilities identified on Exhibit A to the Agreement.

“Favorable Opinion” means an opinion of Bond Counsel addressed to the Issuer, the Company and the Trustee and stating, unless otherwise specified herein, that the action proposed to be taken is authorized or permitted by the Act and this Indenture and will not, in and of itself, adversely affect the excludability from gross income for federal income tax purposes of interest on the Bonds (other than as held by a “substantial user” of the Project or a “related person” within the meaning of the Code).

“Governmental Obligations” means (i) direct obligations of the United States of America, (ii) obligations the timely payment of the principal of and interest on which is fully and unconditionally guaranteed by the United States of America, and (iii) certificates, depositary receipts or other instruments which evidence a direct ownership interest in obligations described in clause (i) and (ii) above or in any specific interest or principal payments due in respect thereof; provided, however, that the custodian of such obligations or specific interest or principal payments shall be a bank or trust company organized under the laws of the United States of America or of any state or territory thereof or of the District of Columbia, with a combined capital stock, surplus and undivided profits of at least $50,000,000; and provided, further, that except as may be otherwise required by law, such custodian shall be obligated to pay to the holders of such certificates, depositary receipts or other instruments the full amount received by such custodian in respect of such obligations or specific payments and shall not be permitted to make any deduction therefrom.

“Governmental Unit” means the Gulf Coast Waste Disposal Authority and any successor to its functions and duties.

“Guarantee” means the Guarantee Agreement, dated as of October 1, 2006, among the Company, the Subsidiary Guarantors, and the Trustee.

“Indenture” means this Trust Indenture as amended or supplemented.

“Interest Payment Date” means each June 1 and December 1, commencing June 1, 2007.

“Issue Date” means the date on which the Bonds are first authenticated and delivered to the Underwriter against payment therefor.

“Issuer” means the Gulf Coast Industrial Development Authority, a nonstock, nonprofit industrial development corporation existing under the laws of the State of Texas, including particularly, the Act.

“Majority Holders” means the owners of a majority in principal amount of the Bonds Outstanding.

 

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“Maturity Date” or “Maturity Dates” means the date or dates specified as such in the Approval Certificate.

“Moody’s” means Moody’s Investors Service, Inc. or any successor thereto maintaining a rating on the Bonds.

“Outstanding” or “outstanding” , in connection with Bonds means, as of the time in question, all Bonds authenticated and delivered under this Indenture, except:

(i) Bonds theretofore cancelled or required to be cancelled under Section 2.11 hereof;

(ii) Bonds which are deemed to have been paid in accordance with Article XVI hereof;

(iii) Bonds in substitution for which other Bonds have been authenticated and delivered pursuant to Article II hereof and Bonds paid pursuant to Section 2.9(a) hereof;

(iv) Bonds registered in the name of the Issuer;

(v) For purposes of any consent, request, demand, authorization, direction, notice, waiver or other action to be taken by the holders of a specified percentage of outstanding Bonds hereunder, all Bonds held by or for the account of the Issuer or the Company, except that for purposes of any such consent, request, demand, authorization, direction, notice, waiver or action the Trustee shall be obligated to consider as not being outstanding only Bonds known by a Responsible Officer of the Trustee by actual notice thereof to be so held.

In determining whether the owners of a requisite aggregate principal amount of Bonds outstanding have concurred in any request, demand, authorization, direction, notice, consent or waiver under the provisions hereof, Bonds owned by the Company (unless all of the outstanding Bonds are then owned by the Company) shall be disregarded for the purpose of any such determination. Notwithstanding the foregoing, Bonds so owned which have been pledged in good faith shall not be disregarded as aforesaid if the pledgee has established to the satisfaction of the Bond Registrar the pledgee’s right so to act with respect to such Bonds and that the pledgee is not the Company or an Affiliate thereof.

“Paying Agent” or “paying agent” means any national banking association, bank and trust company or trust company appointed pursuant to Section 10.1 hereof.

“Person” means an individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization, a governmental body or a political subdivision, a municipal corporation, a public corporation or any other group or organization of individuals.

“Principal Office of the Paying Agent” means the office thereof designated in Section 17.5 or such other office as may be designated in writing to the Trustee.

“Principal Office of the Trustee” means the business address designated in writing to the Issuer and the Company as its principal office for its duties hereunder, and which initially shall be as specified in Section 17.5 hereof.

“Project” means all of the Facilities to the extent financed with proceeds of the Bonds.

 

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“Rating Service” means S&P and/or Moody’s, according to which of such rating agencies then rates the Bonds; and provided that if neither of such rating agencies then rates the Bonds, the term “Rating Service” shall refer to any national rating service (if any) which provides such rating

“Rebate Fund” means the fund by that name created and established in Section 8.5 of this Indenture.

“Record Date” means, as the case may be, the applicable Regular or Special Record Date.

“Regular Record Date” means the close of business on the fifteenth day (whether or not a Business Day) of the calendar month immediately preceding the Interest Payment Date.

“Responsible Officer” means an officer of the Trustee who customarily handles corporate trusts and is assigned to supervise this Indenture, and any other officer of the Trustee to whom a matter is referred because of his knowledge of and familiarity with the particular subject.

“Revenues” means (i) all amounts payable to the Trustee with respect to the principal of, redemption price, if any, and interest on the Bonds (A) on deposit in the Bond Fund, the Construction Fund, and the Debt Service Reserve Fund from the proceeds of the Bonds or obligations of the Issuer issued to refund the Bonds or from any other source and (B) paid by the Company as Loan Payments under the Agreement or to replenish any deficiency in the Debt Service Reserve Fund, (ii) all receipts of the Trustee credited under the provisions of this Indenture against amounts described in clause (i); (iii) investment income with respect to any moneys held by the Trustee in the Bond Fund, the Construction Fund, and the Debt Service Reserve Fund; (iv) amounts paid to the Trustee by the Company or the Subsidiary Guarantors pursuant to the Guarantee; and (v) amounts paid to the Trustee by the Collateral Trustee pursuant to the Collateral Trust Agreement.

“S&P” means Standard & Poor’s Credit Market Services, a division of The McGraw-Hill Companies, Inc. or any successor thereto maintaining a rating on the Bonds.

“Securities Depository” means any “clearing agency” registered under Section 17A of the Securities Exchange Act of 1934, as amended.

“Special Record Date” means such date as may be fixed for the payment of defaulted interest in accordance with Section 2.7 hereof.

“State” means the State of Texas.

“Subsidiary” means any corporation, partnership, association or other business entity of which 50% or more of the Voting Stock or other equity interests, as appropriate, is at the time directly or indirectly owned by the Company, by the Company and one or more other Subsidiaries, or by one or more other Subsidiaries.

“ Subsidiary Guarantors” mean each of MST Production Ltd., MST GP, LLC, MST Estates, LLC, Rio Leche Estates, L.L.C., Mission Biogas, L.L.C., and Hereford Biogas, L.L.C.

“Tax Letter of Representation” means the letter of representation regarding the use of the proceeds of the Bonds and other facts that are within the Company’s knowledge, furnished by the Company to the Issuer and Bond Counsel in connection with the issuance of the Bonds.

 

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“Trustee” means Wells Fargo Bank, National Association, and any successor trustee or co-trustee serving as such hereunder.

“Unassigned Rights” means the rights of the Issuer under Sections 5.04, 6.03 and 7.03(a) of the Agreement and the right to receive notices thereunder.

“Underwriter” means the initial underwriter of the Bonds, Ziegler Capital Markets Group.

“Voting Stock” means, with respect to any corporation, any class of shares of stock of such corporation having general voting power under ordinary circumstances to elect a majority of the board of directors of such corporation (irrespective of whether or not at the time stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency).

The words “hereof” , “herein” , “hereto” , “hereby” and “hereunder” (except in the form of Bond) refer to the entire Indenture. Unless otherwise noted, all Section and Article references are to sections and articles in this Indenture.

ARTICLE II

THE BONDS

SECTION 2.1. Amount, Terms, and Issuance of Bonds . The Bonds shall, except as provided in Section 2.9 hereof, be in the aggregate principal amount set forth in the Approval Certificate, but in no event to exceed $60,000,000 and shall contain substantially the terms recited in the form of bond attached hereto as Exhibit A with such changes and variations as may be necessary to conform to the provisions thereof. The Bonds shall be issued for the purpose of providing a portion of the funds necessary to pay the costs of acquiring, constructing, and improving the Project, as provided herein and in the Agreement. The Bonds may have such additional legends thereon as shall be customary in the industry. No bonds other than the Bonds may be issued under this Indenture. No Bonds may be issued under this Indenture except in accordance with this Article.

Pursuant to recommendations promulgated by the Committee on Uniform Security Identification Procedures, “CUSIP” numbers may be printed on the Bonds. The Bonds may bear such endorsement or legend satisfactory to the Trustee as may be required to conform to usage or law with respect thereto.

The Issuer may issue the Bonds upon the execution of this Indenture, and the Trustee shall, at the Issuer’s written direction, authenticate the Bonds and deliver them as specified in the direction.

SECTION 2.2. Designation, Denominations, Maturity and Form . The Bonds shall be designated “Gulf Coast Industrial Development Authority Environmental Facilities Revenue Bonds (Microgy Holdings Project) Series 2006”.

Unless otherwise directed by the Issuer, the Bonds shall be numbered from R-1 upward, unless otherwise determined by the Trustee. Temporary Bonds issued pursuant to Section 2.10 hereof shall be numbered from TR-1 upward, unless otherwise determined by the Trustee.

All Bonds shall be dated as of October 1, 2006, but shall initially bear interest from the Issue Date.

 

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The Bonds shall mature on their respective Maturity Dates.

All Bonds shall be issued in denominations of $100,000 and integral multiples of $5,000 in excess thereof.

SECTION 2.3. Registered Bonds Required; Bond Registrar and Bond Register . All Bonds shall be issued in fully registered form. The Bonds shall be registered upon original issuance and upon subsequent transfer or exchange as provided in this Indenture.

The Issuer shall designate, at the direction of the Company, one or more persons to act as “Bond Registrar” for the Bonds provided that the Bond Registrar appointed for the Bonds shall be either the Trustee, the Paying Agent or a person which would meet the requirements for qualification as a successor trustee imposed by Section 12.13. The Issuer hereby appoints the Trustee as the initial Bond Registrar. Any Person other than the Trustee undertaking to act as Bond Registrar shall first execute a written agreement, in form satisfactory to the Trustee and the Company, to perform the duties of a Bond Registrar under this Indenture, which agreement shall be filed with the Trustee and the Company. The Paying Agent and Bond Registrar, in performing their respective duties hereunder, shall be entitled to the same protective provisions in the performance of their respective duties as are specified in Article XII of this Indenture with respect to the Trustee hereunder to the same extent and as fully for all intents and purposes as though the Paying Agent and Bond Registrar had been expressly named therein in place of such Trustee and as though the applicable provisions of Article XII of this Indenture had been set forth herein at length.

The Bond Registrar shall act as registrar and transfer agent for the Bonds. The Issuer shall cause to be kept at an office of the Bond Registrar a register (herein sometimes referred to as the “Bond Register”) in which, subject to such reasonable regulations as it, the Trustee or the Bond Registrar may prescribe, the Issuer shall provide for the registration of the Bonds and for the registration of transfers of the Bonds. The Issuer shall cause the Bond Registrar to designate, by a written notification to the Trustee, a specific office location (which may be changed from time to time, upon similar notification) at which the Bond Register is kept.

The Bond Registrar shall at any time as reasonably requested by the Trustee, the Paying Agent, or the Company certify and furnish to the Trustee, the Paying Agent, the Company and any Paying Agent as the Trustee shall specify, the names, addresses, and holdings of Bondholders and any other relevant information reflected in the Bond Register, and the Trustee, the Remarketing Agent and any such Paying Agent shall for all purposes be fully entitled to rely upon the information so furnished to them and shall have no liability or responsibility in connection with the preparation thereof.

SECTION 2.4. Transfer and Exchange . Upon surrender for registration of transfer of any Bond at the designated office of the Bond Registrar, the Issuer shall execute and the Trustee or its Authenticating Agent shall authenticate and deliver in the name of the transferee or transferees, one or more new fully registered Bonds of authorized denomination for the aggregate principal amount which the Registered Owner is entitled to receive.

At the option of the owner, Bonds may be exchanged for other Bonds of any other authorized denomination, of a like aggregate principal amount and accruing interest at the same Interest Rate, upon surrender of the Bonds to be exchanged at the designated office of the Bond Registrar. Whenever any Bonds are so surrendered for exchange, the Issuer shall execute, and the Trustee or the Authenticating Agent shall authenticate and deliver, the Bonds which the Bondholder making the exchange is entitled to receive.

 

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All Bonds presented for registration of transfer or exchange shall be accompanied by a written instrument or instruments of transfer or authorization for exchange, in form and with guaranty of signature satisfactory to the Bond Registrar, duly executed by the owner or by his attorney duly authorized in writing, and such documentation as the Bond Registrar shall reasonably require.

No service charge shall be made to a Bondholder for any exchange or registration of transfer of Bonds, but the Issuer or the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto.

New Bonds delivered upon any registration of transfer or exchange shall be valid obligations of the Issuer, evidencing the same debt as the Bonds surrendered, shall be secured by this Indenture and shall be entitled to all of the security and benefits hereof to the same extent as the Bonds surrendered.

Except as provided above, the Trustee shall not be required to effect any transfer or exchange during the 15 days immediately preceding the date of mailing of any notice of redemption or at any time following the mailing of any such notice in the case of Bonds selected for such redemption.

SECTION 2.5. Execution . All the Bonds shall, from time to time, be executed on behalf of the Issuer by the manual or facsimile signature of the President of the Issuer, its seal (which may be in facsimile) shall be thereunto affixed (or printed or engraved or otherwise reproduced thereon if in facsimile), and attested by the manual or facsimile signature of the Secretary of the Issuer.

If any of the officers whose manual or facsimile signatures shall be upon the Bonds shall cease to be such officers of the Issuer before such Bonds shall have been actually authenticated by the Trustee or delivered by the Issuer, such Bonds nevertheless may be authenticated, issued and delivered with the same force and effect as though the person or persons whose signature shall be upon such Bonds had not ceased to be such officer or officers of the Issuer; and also any such Bonds may be signed and sealed on behalf of the Issuer by those persons who, at the actual date of the execution of such Bond, shall be the proper officers of the Issuer, although at the nominal date of such Bonds any such person shall not have been such officer of the Issuer.

SECTION 2.6. Authentication; Authenticating Agent . No Bond shall be valid for any purpose until either (i) the Certificate of Authentication substantially in the form set forth in Exhibit A attached hereto has been duly executed in accordance herewith by the Trustee or (ii) in the case of Bonds initially delivered to the Underwriter, a Comptroller’s Registration Certificate attached to or endorsed on such Bond has been duly executed. Such executed Certificate of Authentication or Comptroller’s Registration Certificate, as the case may be, shall be conclusive proof that such Bond has been duly authenticated and delivered under this Indenture and that the owner thereof is entitled to the benefit of the trust hereby created.

If the Bond Registrar is other than the Trustee, the Trustee may appoint the Bond Registrar as an Authenticating Agent with the power to act on the Trustee’s behalf and subject to its direction in the authentication and delivery of Bonds in connection with the registration of transfers and exchanges under Section 2.4 hereof, and the authentication and delivery of Bonds by an Authenticating Agent pursuant to this Section shall, for all purposes of this Indenture, be deemed to be the authentication and delivery “by the Trustee”.

Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the

 

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corporate trust business of any Authenticating Agent, shall be the successor of the Authenticating Agent hereunder, if such successor corporation is otherwise eligible as a Bond Registrar under Section 2.3, without the execution or filing or any further act on the part of the parties hereto or the Authenticating Agent or such successor corporation.

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee, the Issuer and the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent, the Issuer and the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section, the Trustee may, with the consent of the Company (which shall not be unreasonably withheld) appoint a successor Authenticating Agent, shall give written notice of such appointment to the Issuer, and shall mail notice of such appointment to all owners of Bonds as the names and addresses of such owners appear on the Bond Register.

SECTION 2.7. Payment of Principal and Interest; Interest Rights Preserved . (a) Subject to the provisions relating to book-entry only set forth in Section 2.13 hereof, the principal or redemption price of any Bond shall be payable upon presentation and surrender of such Bond to the Principal Office of the Paying Agent. The principal or redemption price of the Bonds shall be payable in immediately available funds. Such payments shall be made to the Registered Owner of the Bond so delivered, as shown in the Bond Register maintained by the Bond Registrar.

(b) Each Bond shall accrue interest and be payable as to interest as follows:

(i) The Bonds shall accrue interest until their respective Maturity Dates or prior redemption at the rate or rates set forth in the Approval Certificate initially from the Issue Date, and thereafter (A) from the date of authentication, if authenticated on an Interest Payment Date to which interest has been paid or duly provided for, or (B) from the last preceding Interest Payment Date to which interest has been paid in full or duly provided for (or the Issue Date if no interest thereon has been paid or duly provided for) in all other cases.

(ii) Subject to the provisions of paragraph (c) below, the interest due on any Bond on any Interest Payment Date shall be paid to the Registered Owner of such Bond as shown on the Bond Register as of the Regular Record Date. The amount of interest so payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months.

(iii) All payments of interest on the Bonds shall be paid to the Registered Owners entitled thereto in immediately available funds by wire transfer to a bank within the continental United States or deposited to a designated account if such account is maintained with the Paying Agent as directed by the Registered Owner in writing or as otherwise directed in writing by the Registered Owner at least five Business Days prior to each Interest Payment Date.

(iv) Interest due at the maturity or redemption of a Bond shall be paid only upon presentation and surrender of each Bond.

(v) Interest on any Bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name that Bond is registered on the Regular Record Date for such interest.

 

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(c) Any interest on any Bond which is payable, but is not punctually paid or provided for, on any Interest Payment Date and within any applicable grace period (herein called “Defaulted Interest”) shall forthwith cease to be payable to the owner of such Bond on the relevant Regular Record Date by virtue of having been such owner, and such Defaulted Interest shall be paid to the person in whose name the Bond is registered at the close of business on a Special Record Date to be fixed by the Trustee, such date to be no more than 15 nor fewer than 10 days prior to the date of proposed payment. The Trustee shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class postage prepaid, to each Bondholder at his address as it appears in the Bond Register, not fewer than 10 days prior to such Special Record Date.

(d) Subject to the foregoing provisions of this Section, each Bond delivered under this Indenture upon registration of transfer of or exchange for or in lieu of any other Bond shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Bond.

SECTION 2.8. Persons Deemed Owners . The Issuer, the Trustee, any Paying Agent, the Bond Registrar and any Authenticating Agent may deem and treat the person in whose name any Bond is registered in the Bond Register as the absolute owner thereof (whether or not such Bond shall be overdue and notwithstanding any notation of ownership or other writing thereon made by anyone other than the Issuer, the Trustee, any Paying Agent, the Bond Registrar or the Authenticating Agent) for the purpose of receiving payment of or on account of the principal of, redemption premium, if any, and (subject to Section 2.7) interest on, such Bond, and for all other purposes, and neither the Issuer, the Trustee, any Paying Agent, the Bond Registrar, nor the Authenticating Agent shall be affected by any notice to the contrary. All such payments so made to any such Registered Owner, or upon his order, shall be valid and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Bond.

SECTION 2.9. Mutilated, Destroyed, Lost or Stolen Bonds . (a) If any Bond shall become mutilated, lost, stolen or destroyed, the affected Bondholder shall be entitled to the issuance of a substitute Bond only as follows:

(i) in the case of a lost, stolen or destroyed Bond, the Bondholder shall (A) provide written notice of the loss, theft or destruction to the Trustee within a reasonable time after the Bondholder becomes aware of the loss, theft or destruction, (B) request the issuance of a substitute Bond and (C) provide evidence, satisfactory to the Trustee, of the ownership and the loss, theft or destruction of the affected Bond;

(ii) in the case of a mutilated Bond, the Bondholder shall surrender the Bond to the Trustee for cancellation;

(iii) in all cases, the Bondholder shall provide indemnity against any and all claims arising out of or otherwise related to the issuance of substitute Bonds pursuant to this Section 2.9 satisfactory to the Issuer, the Trustee and the Company; and

(iv) in all cases, upon payment by the affected Bondholder of the fees and expenses of the Trustee and the Issuer in connection with the issuance of any such substitute Bond.

Upon compliance with the foregoing, a substitute Bond of like tenor and denomination, executed by the Issuer, shall be authenticated by the Trustee or Authenticating Agent and delivered to the Bondholder.

 

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Notwithstanding the foregoing, the Trustee or Authenticating Agent shall not be required to authenticate and deliver any substitute Bond for a Bond which has been called for redemption or which has matured or is about to mature and, in any such case, the principal, redemption price or Purchase Price and interest then due or becoming due shall be paid by the Trustee or a Paying Agent in accordance with the terms of the mutilated, lost, stolen or destroyed Bond without substitution therefor.

(b) Every substituted Bond issued pursuant to this Section shall constitute an additional contractual obligation of the Issuer and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Bonds duly issued hereunder.

(c) All Bonds shall be held and owned upon the express condition that the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Bonds, and shall preclude any and all other rights or remedies, notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or investment or other securities without their surrender.

SECTION 2.10. Temporary Bonds . Pending preparation of definitive Bonds, or by agreement with the purchasers of all Bonds, the Issuer may issue, and, upon its request, the Trustee or Authenticating Agent shall authenticate, in lieu of definitive Bonds one or more temporary printed or typewritten Bonds of substantially the tenor recited above in any Authorized Denomination. Upon written request of the Issuer, the Trustee shall authenticate definitive Bonds in exchange for and upon surrender of an equal principal amount of temporary Bonds. Until so exchanged, temporary Bonds shall have the same rights, remedies and security hereunder as definitive Bonds.

SECTION 2.11. Cancellation of Surrendered Bonds . Bonds surrendered for payment, redemption, transfer or exchange and Bonds surrendered to the Trustee by the Issuer or by the Company for cancellation shall be cancelled by the Trustee and such cancelled Bonds shall be delivered to the Company.

SECTION 2.12. Limited Obligation . The Bonds are not and never shall become general obligations of the Issuer, but are limited obligations payable by the Issuer solely and only from the payments received under or with respect to the documents executed by the Company (except to the extent paid out of moneys attributable to the proceeds derived from the sale of the Bonds or income from the temporary investment of such funds or other funds held hereunder), which amounts, together with any other security provided herein, are hereby specifically assigned and pledged to such purposes, in the manner and to the extent provided herein. The Bonds shall be deemed not to constitute a debt of the State, the Governmental Unit, or of any other political corporation, subdivision, or agency of the State or a pledge of the faith and credit of any of them. No recourse shall be had for any claim based on the Agreement, the Indenture, or the Bonds against any member, officer or employee, past, present or future, of the Issuer, or of any successor body thereto, either directly or through the Issuer, or any such successor body, under any constitutional provision, statute or rule of law or by the enforcement of any assessment or penalty or otherwise. Neither the State, the Governmental Unit nor any political corporation, subdivision, or agent of the State shall be obligated to pay the Bonds and neither the faith and credit nor the taxing power of the State, the Governmental Unit, or any other political corporation, subdivision, or agency is pledged to the payment of the principal of, redemption premium, if any, or interest on the Bonds. The Bonds are special revenue obligations of the Issuer payable solely from the sources described herein and therein and the holder thereof shall never have the right to demand payment from moneys derived by taxation or any revenues of the Issuer except the funds pledged to the payment thereof.

 

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SECTION 2.13. Book Entry System . (a) DTC will act as the initial Securities Depository for the Bonds. The Bonds shall be initially issued in the form of a single fully registered Bond registered in the name of Cede & Co. (DTC’s nominee). So long as Cede & Co. is the Registered Owner of the Bonds, as nominee of DTC, references herein to Registered Owners, Bondholders or holders of the Bonds shall mean Cede & Co. and shall not mean the beneficial owners of the Bonds.

(b) While DTC is the Securities Depository, the ownership interest of each of the beneficial owners of the Bonds will be recorded through the records of a DTC Participant. Transfers of beneficial ownership interests in the Bonds which are registered in the name of Cede & Co. will be accompanied by book entries made by DTC and, in turn, by the DTC Participants who act on behalf of the beneficial owners of the Bonds.

(c) With respect to Bonds registered in the name of the Securities Depository, the Issuer, the Company, the Bond Registrar, the Paying Agent, and the Trustee shall have no responsibility or obligation to any person on behalf of whom such Securities Depository holds an interest in the Bonds, except as provided in this Indenture. Without limiting the immediately preceding sentence, the Issuer, the Bond Registrar, the Paying Agent, and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Securities Depository with respect to any ownership interest in the Bonds, (ii) the delivery to any person, other than a Bondholder, as shown on the Bond Register, of any notice with respect to the Bonds, including any notice of redemption, or (iii) the payment to any person, other than a Registered Owner, as shown in the Bond Register of any amount with respect to principal of, redemption premium, if any, or interest on, the Bonds.

(d) Notwithstanding any other provisions of this Indenture to the contrary, the Issuer, the Bond Registrar, the Paying Agent, and the Trustee shall be entitled to treat and consider the person in whose name each Bond is registered in the Bond Register as the absolute owner of such Bond for the purpose of payment of principal, redemption premium, if any, and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes whatsoever. The Paying Agent shall pay all principal of, redemption premium, if any, and interest on the Bonds only to or upon the order of the respective owners, as shown in the Bond Register as provided in this Indenture, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the Issuer’s obligations with respect to payment of principal of, redemption premium, if any, and interest on, the Bonds to the extent of the sum or sums so paid.

(e) No person other than a Registered Owner, as shown in the registration books, shall receive a Bond certificate evidencing the obligation of the Issuer to make payments of principal, redemption premium, if any, and interest, pursuant to this Indenture.

(f) Any provision of this Indenture permitting or requiring the delivery of Bonds shall, while the book-entry system is in effect, be satisfied by the notation on the books of the Securities Depository, of the transfer of the beneficial owner’s interest in such Bond.

(g) So long as the book-entry system is in effect, the Trustee, the Paying Agent and the Bond Registrar shall comply with the terms of the Letter of Representations.

(h) The Securities Depository may determine to discontinue providing its service with respect to the Bonds at any time by giving reasonable notice and all relevant information on the beneficial owners of the Bonds to the Issuer or the Trustee. If there is no successor Securities Depository appointed by the

 

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Issuer, the Trustee shall authenticate and deliver Bonds to the beneficial owners thereof. In the event that the Company determines that the Securities Depository is incapable of discharging its responsibilities described herein or in any agreement among the Issuer, the Trustee and the Securities Depository and that it is in the best interest of the beneficial owners of the Bonds that they be able to obtain certificated Bonds, the Issuer, at the direction of the Company, shall (i) appoint a successor securities depository, qualified to act as such under Section 17(a) of the securities and Exchange Act of 1934, as amended, notify the Securities Depository of the appointment of such successor securities depository and transfer one or more separate Bonds to such successor securities depository or (ii) notify the Securities Depository and owners, identified by the Securities Depository, of the availability through the Securities Depository of Bonds and transfer one or more separate Bonds to owners, identified by the Securities Depository, having Bonds credited to their accounts. In such event, the Bonds shall no longer be restricted to being registered in the Bond Register in the name of the Securities Depository, but may be registered in the name of the successor securities depository, or its nominee, or in whatever name or names Bondholders transferring or exchanging Bonds shall designate, in accordance with the provisions of this Indenture.

Upon the written consent of 100% of the beneficial owners of the Bonds, the Trustee, in accordance with any agreement among the Issuer, the Trustee, and the Securities Depository, shall withdraw the Bonds from the Securities Depository, and authenticate and deliver Bonds fully registered to the assignees of the Securities Depository or its nominee. If the request for such withdrawal is not the result of any Issuer action or inaction, such withdrawal, authentication and delivery shall be at the cost and expense (including costs of printing, preparing and delivering such Bonds) of the persons requesting such withdrawal, authentication and delivery.

SECTION 2.14. Payments to Securities Depository; Payments to Beneficial Owners . (a) Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of Cede & Co., as nominee of DTC, all payments with respect to principal of, redemption premium, if any, Purchase Price, and interest on, such Bond and all notices with respect to such Bond shall be made and given, respectively, pursuant to DTC’s rules and procedures, or in the case of a successor Securities Depository, pursuant to any agreement among the Issuer, the Trustee, the Bond Registrar, and the Securities Depository.

(b) With respect to Bonds registered in the name of a Securities Depository (or its nominee) neither the Trustee, the Issuer nor the Company shall have any obligation to any of its members or participants or to any person on behalf of whom an interest is held in the Bonds.

SECTION 2.15. CUSIP Numbers . The Issuer in issuing the Bonds may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption as a convenience to Bondholders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Bonds or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Bonds, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the “CUSIP” numbers.

 

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ARTICLE III

APPLICATION OF BOND PROCEEDS

SECTION 3.1. Application of Original Proceeds of Bonds . Proceeds received from the issuance and sale of the Bonds shall, on the Issue Date, be deposited by the Trustee as follows:

(a) an amount equal to the Debt Service Reserve Requirement to the Debt Service Reserve Fund; and

(b) the balance of such proceeds to the Construction Fund.

 

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ARTICLE IV

DEBT SERVICE RESERVE FUND

SECTION 4.1 Creation of Debt Service Reserve Fund . There is hereby created by the Issuer and ordered to be established with the Trustee a Debt Service Reserve Fund. The Debt Service Reserve Fund shall be used, and the Trustee is hereby authorized to use the Debt Service Reserve Fund, solely for the purposes of (i) finally retiring the last of the outstanding Bonds or (ii) paying principal of and interest on any outstanding Bonds when and to the extent the amount in the Bond Fund is insufficient for such purpose on the date such payment is due. In the event that on the Business Day prior to the due date thereof, amounts on deposit in the Bond Fund are insufficient to pay the principal and/or interest due on the Bonds, the Trustee shall draw upon the Debt Service Reserve Fund to the extent necessary to make such payments.

SECTION 4.2. Replenishment of Debt Service Reserve Fund . Out of proceeds of the Bonds, there shall be deposited to the credit of the Debt Service Reserve Fund an amount sufficient, together with other monies provided therefor, to result in there being on deposit in the Debt Service Reserve Fund money and/or investments at least equal in market value to the Debt Service Reserve Requirement. No deposits shall be made into the Debt Service Reserve Fund as long as the money and investments in the Debt Service Reserve Fund are at least equal in market value to the Debt Service Reserve Requirements; but if and whenever the market value of money and investments in the Debt Service Reserve Fund is reduced below the Debt Service Reserve Requirements for any reason, the Company shall pay, in accordance with the Agreement, to the Trustee for deposit into the Debt Service Reserve Fund amounts sufficient to replenish any such deficiency.

ARTICLE V

CONSTRUCTION FUND

SECTION 5.1. Creation of Construction Fund . There is hereby created and ordered to be established with the Trustee a Construction Fund.

SECTION 5.2. Disbursements from Construction Fund . Moneys in the Construction Fund shall be disbursed by the Trustee to pay Project Costs or to reimburse the Company for Project Costs paid by it, all in accordance with and pursuant to the provisions of the Agreement. The Trustee shall keep and maintain adequate records pertaining to the Construction Fund and all disbursements therefrom and shall file an accounting thereof if and when requested by the Issuer or the Company.

SECTION 5.3. Balance in Construction Fund . Any amounts remaining in the Construction Fund after delivery of the Completion Certificate (as defined in the Agreement) for the Project shall be used by the Trustee as provided in Section 3.03(e) of the Agreement.

SECTION 5.4. Acceleration of Bonds . In the event that the principal of the Bonds shall have become due and payable pursuant to Section 11.2 hereof, subject to Section 8.5(e) hereof, any amounts held in or on deposit in the Construction Fund shall be transferred by the Trustee to the Bond Fund.

 

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ARTICLE VI

BOND FUND

SECTION 6.1. Revenues to be Paid Over to the Trustee . The Issuer has caused the Revenues to be paid directly to the Trustee.

SECTION 6.2. Bond Fund . (a) There is hereby created and ordered to be established with the Trustee a Bond Fund.

(b) The Trustee shall maintain the Bond Fund as follows:

(i) The Trustee shall deposit into the Bond Fund (A) all Loan Payments; (B) amounts received from the Collateral Trustee under the Collateral Trust Agreement; (C) amounts paid by the Guarantors pursuant to the Guarantee; and (D) and, when accompanied by directions from the Person depositing such moneys that such moneys are to be paid into the Bond Fund, all other amounts received by the Trustee from the Company or for the account of the Company pursuant to the Agreement and all payments under and pursuant to the provisions of this Indenture or any of the provisions of the Agreement.

(ii) Moneys in the Bond Fund shall be applied solely to the payment when due of principal of, redemption premium, if any, and interest on the Bonds.

(iii) In the event of an annulment pursuant to Section 11.2 hereof, any amounts transferred by the Trustee from the Construction Fund to the Bond Fund pursuant to Section 5.4 hereof shall be transferred by the Trustee back to the Construction Fund.

SECTION 6.3. Revenues to Be Held for All Bondholders; Certain Exceptions . Until applied as provided in this Indenture to the payment of Bonds or transferred to the Company pursuant to Section 6.4 or Section 17.2, Revenues shall be held by the Trustee in trust in the Bond Fund for the benefit of the owners of all Outstanding Bonds, except that any portion of the Revenues representing principal or redemption price, and interest on any Bonds previously matured or called for redemption in accordance with Article IX of this Indenture, shall be held for the benefit of the owners or the former owners of such Bonds only.

SECTION 6.4. Amounts Remaining in Bond Fund . Any amounts remaining in the Bond Fund after payment in full of (i) the Bonds (or the provision for payment thereof having been made in accordance with the provisions hereof), (ii) all Administration Expenses, and (iii) all other amounts required to be paid under the Agreement and this Indenture, subject to any applicable provisions of Texas law, including Title 6 of the Texas Property Code, shall be paid to the Company pursuant to its written instructions.

ARTICLE VII

[RESERVED]

 

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ARTICLE VIII

INVESTMENT OR DEPOSIT OF MONEYS

SECTION 8.1. Deposits . (a) All moneys received by the Trustee under this Indenture shall be deposited with the Trustee, until or unless invested or deposited as provided in Sections 8.2 or 8.3, as applicable, or as otherwise provided herein. All deposits with the Trustee shall be secured as required by applicable law for such trust deposits. The Trustee may deposit such moneys with any other depository which is authorized to receive them and is subject to supervision by public banking authorities.

(b) Obligations purchased as an investment of moneys in any fund or account shall be deemed at all times a part of such fund or account. Any profit and income realized from such investments shall be credited to such fund or account and any loss shall be charged to such fund or account.

SECTION 8.2. Investment of Bond Fund and Debt Service Reserve Fund . At the written direction of the Authorized Company Representative, the Trustee shall invest moneys held in the Bond Fund and the Debt Service Reserve Fund, in Governmental Obligations, specified by the Authorized Company Representative in such direction, maturing not later than the date or dates when the payments for which such moneys are held are to become due. Any such investments shall be held by or under the control of the Trustee and shall be deemed at all times a part of the Bond Fund or the Debt Service Reserve Fund, as the case may be. Upon the occurrence of, and during the continuation of, an Event of Default, the Trustee shall no longer take investment instructions from the Company, but from a representative of the Majority Holders.

The interest and income received upon such investments of the Bond Fund and any interest paid by the Trustee or any other depository and any profit or loss resulting from the sale of any investment shall be added or charged to the extent received or paid and available for payment of amounts due on the Bonds, to the payment of the next-succeeding payment due on account of the Bonds and to the extent so applied, shall constitute payment in respect of the Agreement (notice of which payment shall be given by the Trustee to the Company), and any realized loss shall be made up by the Company (the direction of the Company to make investments as aforesaid to include an agreement so to do). The interest and income received upon such investments of the Debt Service Reserve Fund shall be credited to the Debt Service Reserve Fund.

SECTION 8.3. Investment of Moneys in the Construction Fund . (a) Moneys held for the credit of the Construction Fund shall, upon written direction by the Authorized Company Representative, be invested and reinvested by the Trustee as specified by the Authorized Company Representative in any one or more of the following obligations or securities, to the extent permitted by State law, on which neither the Company nor any of its Affiliates is the obligor: (i) Governmental Obligations; (ii) debt obligations which are (a) issued by any state or political subdivision thereof or any agency or instrumentality of such state or political subdivision, and (b) at the time of purchase, rated “AAA” by S&P and rated “Aaa” by Moody’s; (iii) any bond, debenture, note, participation certificate or other similar obligation which is either (a) issued or guaranteed by the Federal National Mortgage Association, the Federal Home Loan Bank System, the Federal Home Loan Mortgage Corporation, the federal Farm Credit Bank or the Student Loan Marketing Association, or (b) backed by the full faith and credit of the United States of America; (iv) U.S. denominated deposit account, certificates of deposit and banker’s acceptances with domestic commercial banks, which have a rating on their short-term certificates of deposit on the date of purchase of “A-1” by S&P or “P-1” by Moody’s, without regard to gradation, and which matures not more than 360 days after the date of purchase; (v) commercial paper which is rated at the time of purchase within the classification or higher, “A-1” by S&P or “P-1” by Moody’s, without regard to gradation, and which matures not more than 270 days after the date of purchase; (vi) investment agreements with banks that at the time such agreement is executed are rated by S&P or Moody’s in one of the two highest rating categories assigned by S&P or Moody’s (without regard to

 

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any refinement or gradation of rating category by numerical modifier or otherwise) or investment agreements with non-bank financial institutions which, (1) all of the unsecured, direct long-term debt of either the non-banking financial institution or the related guarantor of such non-bank financial institution is rated by S&P or Moody’s at the time such agreement is executed in one of the two highest rating categories (without regard to any refinement or gradation of rating category by numerical modifier or otherwise) for obligations of that nature; or (2) if such non-bank financial institutions have no outstanding long-term debt that is rated, all of the short-term debt of either the non-banking financial institution or the related guarantor of such non-bank financial institution