Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Louisiana Power & Light Company
(Exact name of registrant as specified in its charter)
State of Louisiana 72-0245590
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
639 Loyola Avenue, New Orleans, Louisiana 70113
504-576-4000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
JOHN J. CORDARO STEVEN C. McNEAL
President Assistant Treasurer
Louisiana Power & Light Louisiana Power & Light
Company Company
639 Loyola Avenue 639 Loyola Avenue
New Orleans, Louisiana 70113 New Orleans, Louisiana 70113
504-576-4000 504-576-4000
McCHORD CARRICO, Esq. JOHN T. HOOD, Esq.
Monroe & Lemann Reid & Priest LLP
(A Professional Corporation) 40 West 57th Street
201 St. Charles Avenue New York, New York 10019
New Orleans, Louisiana 70170 212-603-2000
504-586-1900
(Names, addresses, including zip codes, and telephone numbers, including
area codes, of agents for service)
It is also respectfully requested that the Commission send copies of all
notices,
orders and communications to:
DAVID P. FALCK, Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
Approximate date of commencement of proposed sale to the public: From
time to time after this registration statement becomes effective when
warranted by market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. x
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _____
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Each Class Amount Offering Aggregate Amount of
of Securities to be Price Offering Registration
to be Registered Register Per Unit Price * Fee
Waterford 3 Secured
Lease Obligation $322,526,000 100% $322,526,000 $111,216
* Estimated solely for the purpose of calculating the registration fee,
pursuant to Rule 457(o).
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that
this registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the registration
statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time that a registration statement
becomes effective. This prospectus supplement and the accompanying prospectus
shall not constitute an offer to sell or the solicitation of an offer to buy nor
shall there be any sale of these securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
PROSPECTUS SUPPLEMENT (Subject to Completion, Dated February 29, 1996)
(To Prospectus dated ______________, 1996)
$
$ Waterford 3 Secured Lease Obligation Bonds, % Series due
$ Waterford 3 Secured Lease Obligation Bonds, % Series due
Interest Payable July 2 and January 2
The Waterford 3 Secured Lease Obligation Bonds, % Series due and %
Series due (the "Collateral Bonds") will be indirectly secured, as
described in the accompanying Prospectus, by liens on, and a security interest
in, certain ownership interests in and the respective Leases relating to Unit
No. 3 (nuclear) of the Waterford Steam Electric Generating Station
("Waterford 3"), an1d will be payable solely from basic rentals and certain
other amounts to be paid under such Leases by
LOUISIANA POWER & LIGHT COMPANY
The Collateral Bonds will be issued by W3A Funding Corporation ("Funding
Corporation"), a corporation created for the sole purpose of issuing the
Collateral Bonds as described in the accompanying Prospectus. Louisiana Power &
Light Company (the "Company") will be unconditionally obligated to make rental
payments in amounts which will be at least sufficient to pay in full, when due,
all scheduled payments of principal of and interest on the Collateral Bonds,
although the Collateral Bonds will not be direct obligations of, or guaranteed
by, the Company.
The Collateral Bonds of the % Series due (the "Series Collateral
Bonds") will mature on __________ and the Collateral Bonds of the % Series
due (the "Series Collateral Bonds") will mature on . The
principal of the Collateral Bonds will be payable from time to time in
installments. The Collateral Bonds will be redeemable, in whole or in part, on
not less than 30 days' notice, either upon certain terminations of the Leases,
or at the option of Funding Corporation at the redemption prices set forth
herein (including a Make-Whole Premium (as defined herein) if redemption occurs
at the option of Funding Corporation prior to ________ for the Series
Collateral Bonds and ____ for the Series Collateral Bonds), in each case
together with accrued interest to the date fixed for redemption. (See "Certain
Terms of the Collateral Bonds".)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
PRICE OF SERIES COLLATERAL BONDS_ % AND ACCRUED INTEREST, IF ANY
PRICE OF SERIES COLLATERAL BONDS_ % AND ACCRUED INTEREST, IF ANY
Price to Underwriting
Public(1) Commissions(2)(3) Proceeds(1)(2)
Per Series Collateral Bond % %
Total $ $ $
Per Series Collateral Bond % %
Total $ $ $
_______________________________
(1) Plus accrued interest, if any, from the date of original issuance.
(2) Expenses, estimated to be $________, and underwriting commissions will be
paid from the proceeds of the issuance and sale of the Collateral Bonds.
Expenses, estimated to be $ , will be paid by the Company.
(3) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
The Collateral Bonds will be issued in fully registered form and will be
initially registered only in the name of Cede & Co, as nominee of The Depository
Trust Company ("DTC"), which will act as securities depository for the
Collateral Bonds. Beneficial interests in the Collateral Bonds will be shown
on, and transfers thereof will be effected only through, records maintained by
DTC and its direct and indirect participants. Except in the limited
circumstances described herein, certificates representing interests in
Collateral Bonds will not be issued in exchange for beneficial interests in the
Collateral Bonds. Beneficial interests in the Collateral Bonds will trade in
DTC's Same-Day Funds Settlement System and secondary market trading in such
Collateral Bonds will therefore settle in immediately available funds.
The Collateral Bonds are offered by the Underwriters named herein subject to
prior sale, when, as and if accepted by the Underwriters, and subject to
approval of certain legal matters by Winthrop, Stimson, Putnam & Roberts,
counsel for the Underwriters, and certain other conditions. It is expected that
delivery of the Collateral Bonds will be made on or about ____________, 199_
through the book-entry facilities of DTC against payment therefor in immediately
available funds.
MORGAN STANLEY & CO. CITICORP SECURITIES, INC.
Incorporated
_____________, 199_
SELECTED INFORMATION
The following material, which is presented herein solely to furnish
limited introductory information regarding the Collateral Bonds, is
qualified in its entirety by reference to the detailed information
appearing elsewhere in this Prospectus Supplement and the accompanying
Prospectus. Certain capitalized terms used in this Prospectus Supplement
and the accompanying Prospectus are defined in the Glossary at the end of
the accompanying Prospectus.
Securities Offered; Interest
$ aggregate principal amount of Waterford 3 Secured Lease
Obligation Bonds, of which $___________ bear interest at the rate of %
per annum and mature on ("Series Collateral Bonds"), and
$___________ bear interest at the rate of % per annum and mature on
("Series Collateral Bonds").
Interest on the Collateral Bonds of each series will be payable on
January 2 and July 2 of each year, commencing 2, 199 .
Principal Installment Payments
The Supplemental Indenture relating to the Collateral Bonds
("Supplemental Indenture") provides for the payment of principal
installments on the Collateral Bonds on each of the Installment Payment
Dates set forth below, in an aggregate amount (subject to adjustment in
certain circumstances) equal to the Installment Payment Amounts (as defined
herein) set forth below, together with interest accrued to such Installment
Payment Date. The Outstanding Balance Factor set forth below for each
Installment Payment Date is for descriptive purposes only, and, unless
there has been a partial redemption or a default or other installment
payment adjustment, represents a factor that when multiplied by the
original principal amount of each Series Collateral Bond and Series
Collateral Bond will indicate the outstanding principal amount of such
Collateral Bond remaining unpaid after payment of the principal installment
due on such Installment Payment Date.
Installment Aggregate Installment Outstanding Balance
Payment Date Payment Amount Factor
Series Series Series Series
Collateral Collateral Collateral Collateral
Bonds Bonds Bonds Bonds
(See "Certain Terms of the Collateral Bonds_Principal Installment
Payments".)
Redemption
The Collateral Bonds will be redeemable, in whole or in part, on not less
than 30 days' notice, either (a) upon certain terminations of the Leases at
a redemption price of 100% of the unpaid principal amount thereof plus
accrued interest, if any, to the redemption date or (b) at the option of
Funding Corporation, at a redemption price of 100% of the unpaid principal
amount thereof plus accrued interest, if any, to the redemption date, plus
a Make-Whole Premium (as defined herein) if such redemption occurs at the
option of Funding Corporation prior to ____________ for the Series
Collateral Bonds and _________ for the Series Collateral Bonds. (See
"Certain Terms of the Collateral Bonds_Redemption".)
Security and Source of Payment
The Collateral Bonds will be indirectly secured, as described in the
accompanying Prospectus, by liens on, and a security interest in, certain
ownership interests in and the respective Leases relating to Waterford 3,
and will be payable solely from basic rentals and certain other amounts to
be paid under such Leases by the Company. Each Collateral Bond will be
secured by the Pledged Lessor Bonds, which will be held by the Trustee.
Each Pledged Lessor Bond will be secured by, among other things, (a) a lien
on and security interest in the Undivided Interest of the Lessor issuing
such Pledged Lessor Bond and (b) certain of the rights of such Lessor under
its Lease with the Company, including the right to receive basic rent and
certain other amounts payable by the Company thereunder. The Company is
unconditionally obligated to make payments under the Leases in amounts that
will be at least sufficient to provide for scheduled payments of the
principal of and interest on the Pledged Lessor Bonds which amounts, in
turn, will be sufficient to provide for scheduled payments of principal of
and interest on the Collateral Bonds when due. However, neither the
Collateral Bonds nor the Pledged Lessor Bonds will be direct obligations
of, or guaranteed by, the Company. (See "Security and Source of Payment
for the Collateral Bonds" in the accompanying Prospectus.)
Upon the occurrence and continuance of any Lease Indenture Event of
Default that results from a Lease Event of Default, the related Lessor will
control the exercise of remedies against the Company under the related
Lease, subject to the right of the Lease Indenture Trustee to cause such
Lessor to forbear from any proposed action which would have a material
adverse effect on the Holders of the related Lessor Bonds. There could be
circumstances, therefore, in which amounts due on the Collateral Bonds are
not paid and neither the Lease Indenture Trustee nor the Trustee would be
able to direct such Lessor's pursuit of remedies against the Company under
such Lease. The Lease Indenture Trustee would not be precluded, however,
from selling the related Lease Indenture Estate (including the Undivided
Interest) in a foreclosure or similar proceeding. If such sale occurs
prior to or simultaneously with the termination of the related Lease, such
Lessor must first be given an opportunity to purchase such Lease Indenture
Estate at the proposed sale price. In the event of a sale pursuant to a
foreclosure or similar proceeding (other than a sale to such Lessor), the
Lease Indenture Trustee would have the right to terminate such Lease in
connection with such sale. (See "Description of the Lease Indentures _
Notice; Waiver; Acceleration and Remedies" in the accompanying Prospectus.)
Under certain circumstances the Company (or jointly the Company and an
Affiliate thereof) may elect, or may be required, to assume the Lessor
Bonds issued under any Lease Indenture, in whole or in part, and all
obligations of the related Lessor under such Lease Indenture. (See
"Description of the Lease Indentures _ Assumption by the Company" in the
accompanying Prospectus.) In such cases, the Holders of the Collateral
Bonds would retain the benefit of the pledge and mortgage under the Lease
Indenture of the related Undivided Interest and the obligation to make
payments on the Pledged Lessor Bonds would become a direct obligation of
the Company.
The Holders of the Collateral Bonds will have no recourse against the
general credit of any of the institutions or individuals acting as Lessors
or against the general credit of the Owner Participant.
For a description of possible limitations on amounts payable as damages
if the Company were to reject the Leases in the context of a bankruptcy
proceeding, see "Security and Source of Payment for the Collateral Bonds"
in the accompanying Prospectus.
Waterford 3
Waterford 3 is a one-unit, nuclear-fueled electric generating plant
located in St. Charles Parish, Louisiana. Waterford 3, which was placed in
commercial operation in 1985, has a net generating capability of 1,075 MW.
Unit 3 excludes certain transmission, pollution control and other
facilities included in Waterford 3.
Use of Proceeds
The Company has determined, in light of prevailing economic and financial
circumstances, to cause a refinancing of the Initial Lessor Bonds which
were originally issued on September 28, 1989 and are currently outstanding.
As part of such refinancing, the Lessors will redeem all of the outstanding
Initial Lessor Bonds with the proceeds of the issuance and sale of the
Collateral Bonds and certain other funds as described herein. (See "The
Transactions and the Refinancing" in the accompanying Prospectus.)
W3A Funding Corporation
Funding Corporation was incorporated under the laws of the State of
Delaware for the purpose of facilitating the refinancing of the debt
associated with the Lessors' interests in Unit 3. The assets of Funding
Corporation will consist of the Pledged Lessor Bonds, which are payable
from basic rent and certain other payments which the Company is
unconditionally obligated to make under the Leases. (See "W3A Funding
Corporation" in the accompanying Prospectus.)
CERTAIN TERMS OF THE COLLATERAL BONDS
The following description of certain terms of the Collateral Bonds
offered hereby supplements, and should be read together with, the
statements under "Description of the Collateral Bonds and the Indenture" in
the accompanying Prospectus. Capitalized terms used in this Prospectus
Supplement have the same meanings as in the accompanying Prospectus.
Principal Amounts, Interest Rates, Stated Maturities and Payment
The Collateral Bonds will be issued in two separate series: $
principal amount of Waterford 3 Secured Lease Obligation Bonds, %
Series due (hereinafter sometimes called the "Series Collateral
Bonds") and $ principal amount of Waterford 3 Secured Lease
Obligation Bonds, % Series due (hereinafter sometimes called the
"Series Collateral Bonds"). The Series Collateral Bonds and the
Series Collateral Bonds are hereinafter sometimes referred to,
collectively, as the "Collateral Bonds".
The Series Collateral Bonds will mature , and the Series
Collateral Bonds will mature , . The Collateral Bonds of each
series will bear interest on the unpaid principal amount thereof from the
date of issuance at the rate per annum shown in its title, payable on
January 2 and July 2 of each year, commencing 2, 199 , to the
Holders thereof at the close of business on the December 15 or June 15, as
the case may be, next preceding such interest payment date. (Supplemental
Indenture)
The Collateral Bonds will be issued originally solely in book-entry form
to DTC or its nominee, Cede & Co., to be held in DTC's book-entry only
system. So long as the Collateral Bonds are held in the book-entry only
system, DTC (or a successor securities depositary) or its nominee will be
the registered owner or holder of the Collateral Bonds for all purposes of
the Indenture and of the Collateral Bonds. (See "_Book-Entry Only System"
below.) Except as described under "_Book-Entry Only System" below,
Beneficial Owners (as defined below) of the Collateral Bonds will not have
the right to have any Collateral Bonds registered in their names and will
not receive or have the right to receive physical delivery of certificates
representing their ownership interests in the Collateral Bonds. For so
long as any purchaser is the Beneficial Owner of a Collateral Bond, such
purchaser must maintain an account with a broker or dealer who is, or acts
through, a DTC Participant (as defined below) to receive payment of the
principal of and premium, if any, and interest on such Collateral Bond.
The laws of some states may require that certain purchasers of securities
take physical delivery of such securities. Such limits and laws may impair
the ability to transfer beneficial interests in Collateral Bonds.
So long as the Collateral Bonds are held in the book-entry only system,
the principal of and premium, if any, and interest on the Collateral Bonds
will be paid through the facilities of DTC (or a successor securities
depository). If the book-entry only system is discontinued, the principal
of and premium, if any, and interest payable at maturity on the Collateral
Bonds will be payable at the corporate trust office of any paying agent
designated by Funding Corporation from time to time; and interest and
Installment Payment Amounts (as defined below), other than such amounts
payable at maturity, will be paid by check drawn upon the paying agent and
mailed to the address of the person entitled thereto, as shown in the
securities register.
Because the principal of each Collateral Bond will be subject to payment
from time to time without surrender of, or notation on, the Collateral
Bond, the unpaid principal amount of each Collateral Bond as reflected in
the securities register maintained by the Trustee shall be controlling and
binding on each Holder with respect to the actual unpaid principal amount
of a Collateral Bond as of any date. In any case where any redemption
date, any Installment Payment Date or the stated maturity of principal of
or any installment of interest on any Collateral Bond, or any date on which
any defaulted interest or principal is proposed to be paid, is not a
business day, then (notwithstanding any other provision of the Indenture or
such Collateral Bond) payment of interest and/or principal and premium, if
any, shall be due and payable on the next succeeding business day with the
same force and effect as if made on or at such nominal redemption date, the
stated maturity, Installment Payment Date or date on which the defaulted
interest or principal is proposed to be paid, and no interest will accrue
on the amount so payable for the period from and after such redemption
date, stated maturity, Installment Payment Date or date for the payment of
defaulted interest or principal, as the case may be. If there has been a
default in the payment of interest or any Installment Payment Amount on any
Collateral Bond, such defaulted interest or principal may be payable to the
Holder of such Collateral Bond as of the close of business on a date
selected by the Trustee which is not more than 15 days and not less than 10
days prior to the date proposed by Funding Corporation for payment of such
defaulted interest or principal or in any other lawful manner not
inconsistent with the requirements of any securities exchange on which such
Collateral Bond may be listed, if the Trustee deems such manner of payment
practicable. (Indenture, Sections 1.13, 2.10 and 2.16)
Principal Installment Payments
On each Installment Payment Date (set forth below), Funding Corporation
will pay an installment of principal of each Collateral Bond of each series
equal (subject to adjustment as described below) in amount (an "Installment
Payment Amount") to the Installment Payment Percentage (set forth below)
for the Collateral Bonds of such series for such Installment Payment Date
multiplied by the original principal amount of such Collateral Bond.
Installment Payment Percentage
Series Collateral Bonds Series Collateral Bonds
Installment Payment Date
Upon the occurrence of certain changes in Federal income tax rates or
laws, the Company or the Owner Participant may cause the respective
principal amounts of Series Collateral Bonds and Series Collateral
Bonds that are to be paid in installments on the Installment Payment Dates
and the stated maturity to be adjusted to match any adjustment made to the
principal amortization schedules and maturity of the Pledged Lessor Bonds
in connection with a recalculation of basic rent under one or more of the
Leases, provided that such adjustments shall not increase or decrease the
average life of the Collateral Bonds of either such series (calculated in
accordance with generally accepted financial practice) by more than 6
months or extend the final maturity of such Collateral Bonds. The Trustee
shall send by mail to each Holder of affected Collateral Bonds at least 30
days before the first payment date with respect to which an adjustment is
to be made, a revised payment schedule of principal amounts of Collateral
Bonds.
In the event there shall have been any partial redemption of the
Collateral Bonds of either series (other than pursuant to principal
installment payments), each Installment Payment Amount for each Collateral
Bond of a series subsequent to such redemption shall be reduced by (i) in
the case of a partial redemption as described under "Redemption_Optional
Redemption", an amount equal to the amount obtained by multiplying such
Installment Payment Amount as in effect prior to such redemption by a
fraction of which the numerator shall be the aggregate principal amount of
Collateral Bonds of such series redeemed pursuant to such partial
redemption, and the denominator shall be the aggregate unpaid principal
amount of Collateral Bonds of such series outstanding immediately prior to
such redemption and (ii) in the case of a partial redemption as described
under "Redemption_Redemption upon Lease Termination", an amount such that
the aggregate of all principal installment payments to be made on the
Collateral Bonds of such series on the relevant Installment Payment Date
shall be equal to the amount of principal of the Pledged Lessor Bonds to be
paid on such date under the remaining Lease Indentures, any such reduction
to be made on a pro rata basis, as nearly as practicable, among the Holders
of the Collateral Bonds of such series.
(Supplemental Indenture)
Redemption
Redemption upon Lease Termination
If any Lease is to be terminated as described in the accompanying
Prospectus in "Description of the Leases_Purchase Option for Significant
Expenditures", "_Periodic Purchase Option" or "_Termination for
Obsolescence" or in "Other Agreements_Participation Agreement", and all
Lessor Bonds issued under the related Lease Indenture are to be prepaid,
Collateral Bonds, equal in principal amount to the Pledged Lessor Bonds
issued under such Lease Indenture, will be redeemed on the date on which
such Lessor Bonds are to be prepaid, at a redemption price of 100% of the
unpaid principal amount thereof plus accrued interest, if any, to the
redemption date, all subject, however, except in the case of a termination
for obsolescence, to the right of the Company to assume such Lessor Bonds
in which event there will be no redemption of Collateral Bonds as a
consequence of such termination.
Optional Redemption
The Collateral Bonds of each series will be subject to redemption, at the
option of Funding Corporation, in whole at any time or in part from time to
time, at the redemption price of 100% of the unpaid principal amount of
such Collateral Bonds to be so redeemed, plus accrued interest, if any, to
the redemption date, plus, if such redemption is made prior to the
applicable Premium Termination Date, the Make-Whole Premium, if any. The
"Premium Termination Date" is __________ for the Series ___ Collateral
Bonds and __________ for the Series ___ Collateral Bonds.
The Make-Whole Premium, if any, on the Collateral Bonds will be
determined by an independent investment banking institution of national
standing (the "Investment Banker") selected by the Company. The Investment
Bank will first determine the Treasury Rate with respect to any redemption
of Collateral Bonds. The Treasury Rate means, with respect to each
Collateral Bond to be redeemed, a per annum rate (expressed as a semiannual
equivalent and as a decimal and, in the case of United States Treasury
bills, converted to a bond equivalent yield) determined to be the per annum
rate equal to the semiannual yield to maturity of United States Treasury
securities maturing on the Average Life Date (as defined below) of such
Collateral Bond, as determined by interpolation between the most recent
weekly average yields to maturity for two series of United States Treasury
securities (A) one maturing as close as possible to, but earlier than, the
Average Life Date of such Collateral Bond and (B) the other maturing as
close as possible to, but later than, the Average Life Date of such
Collateral Bond, in each case as published in the most recent H.15(519)
(or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Collateral Bond is
reported in the most recent H.15(519), as published in H.15(519)).
"H.15(519)" means Statistical Release H.15(519), Selected Interest Rates,"
or any successor publication, published by the Board of Governors of the
Federal Reserve System. The "most recent H.15(519)" means the latest
H.15(519) which is published prior to the close of business on the third
business day prior to the applicable redemption date. The Average Life
Date for any Collateral Bond to be redeemed shall be the date which follows
the redemption date by a period equal to the Remaining Weighted Average
Life of such Collateral Bond. The Remaining Weighted Average Life of such
Collateral Bond with respect to the redemption of such Collateral Bond is
the number of days equal to the quotient obtained by dividing (A) the sum
of the products obtained by multiplying (1) the amount of each remaining
principal payment on such Collateral Bond by (2) the number of days from
and including the redemption date, to but excluding the scheduled payment
date of such principal payment by (B) the unpaid principal amount of such
Collateral Bond.
To determine the Make-Whole Premium for any Collateral Bond, the
Investment Banker then will determine, as of the third business day prior
to the redemption date, the sum of the present values of all of the
remaining scheduled payments of principal and interest from the redemption
date to maturity on such Collateral Bond computed on a semiannual basis by
discounting such payments (assuming a 360-day year consisting of twelve 30-
day months) using such Treasury Rate. If the sum of these present values
of the remaining payments as computed above exceeds the aggregate unpaid
principal amount of the Collateral Bond to be redeemed plus any accrued but
unpaid interest thereon, the difference will be payable as a premium upon
redemption of such Collateral Bonds. If the sum is equal to or less than
such principal amount plus accrued interest, there will be no premium
payable with respect to such Collateral Bond.
Procedure for and Notice of Redemption
If fewer than all of the Collateral Bonds shall be called for redemption,
the particular Collateral Bonds or portions thereof to be redeemed shall be
selected by the Trustee from the series and in the principal amount
designated by Funding Corporation except as otherwise required by the
Indenture by prorating, as nearly as practicable, the principal amount of
such Collateral Bonds to be redeemed among the Holders of such Collateral
Bonds. Any Collateral Bonds and portions of Collateral Bonds selected for
redemption which are deemed to be paid in accordance with the provisions of
the Indenture will cease to bear interest on the specified redemption date.
Notice of redemption shall be given by mail not less than 30 nor more than
60 days prior to the date fixed for redemption to the Holders of Collateral
Bonds to be redeemed (which, if the Collateral Bonds are held in the book-
entry only system, will be DTC or a successor depository); provided,
however, that failure to duly give such notice by mail, or any defect
therein, shall not affect the validity of any proceedings for the
redemption of Collateral Bonds as to which there shall have been no such
failure or defect.
With respect to notice of any redemption of the Collateral Bonds, such
notice will state that such redemption will be conditional upon the receipt
by the Trustee at or prior to the date fixed for such redemption of money
sufficient to pay the principal of and premium, if any, and interest on
such Collateral Bonds. If such money is not so received, such notice will
be of no force and effect, Funding Corporation will not redeem such
Collateral Bonds and the Trustee will give notice, in the manner in which
the notice of redemption was given, that such money was not so received,
and such redemption is not required to be made.
(Indenture, Article Six; Supplemental Indenture; and form of Collateral
Bond)
Book-Entry Only System
DTC will act as securities depository for the Collateral Bonds. The
Collateral Bonds will be issued as fully-registered securities registered
in the name of Cede & Co. (DTC's partnership nominee).
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code,
and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. DTC holds securities that its participants
("Direct Participants") deposit with DTC. DTC also facilitates the
settlement among Direct Participants of securities transactions, such as
transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Direct Participants' accounts, thereby
eliminating the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations. DTC is
owned by a number of its Participants (as defined below) and by the New
York Stock Exchange, Inc., the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the DTC system
is also available to others such as securities brokers and dealers, banks,
and trust companies that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly ("Indirect
Participants", and together with the Direct Participants, the
"Participants"). The Rules applicable to DTC and its Participants are on
file with the SEC.
Purchases of Collateral Bonds under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Collateral
Bonds on DTC's records. The ownership interest of each actual purchaser of
each Collateral Bond ("Beneficial Owner") is in turn to be recorded on the
Direct and Indirect Participants' respective records. Beneficial Owners
will not receive written confirmation from DTC of their purchase, but
Beneficial Owners are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the
Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Collateral Bonds are to be accomplished by entries made on
the books of Participants acting on behalf of Beneficial Owners and will be
settled in same-day funds. Beneficial Owners will not receive certificates
representing their ownership interests in the Collateral Bonds except in
the event that use of the book-entry system for the Collateral Bonds is
discontinued.
To facilitate subsequent transfers, all Collateral Bonds deposited by
Participants with DTC are registered in the name of DTC's partnership
nominee, Cede & Co. The deposit of the Collateral Bonds with DTC and their
registration in the name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual Beneficial Owners of the
Collateral Bonds; DTC's records reflect only the identity of the Direct
Participant to whose accounts such Collateral Bonds are credited, which may
or may not be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by
either Direct or Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time. Redemption notices
shall be sent by the Trustee to Cede & Co.
Neither DTC nor Cede & Co. will consent or vote with respect to
Collateral Bonds. Under its usual procedures, DTC mails an Omnibus Proxy
to the Trustee as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Collateral Bonds are credited on the
record date (identified in a listing attached to the Omnibus Proxy).
Principal, premium, if any, and interest payments on the Collateral Bonds
will be made to DTC. DTC's practice is to credit Direct Participants'
accounts on the payable date in accordance with their respective holdings
shown on DTC's records unless DTC has reason to believe that it will not
receive payment on the payable date. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of such Participants and not of DTC, the Company, Funding
Corporation, the Underwriters or the Trustee, subject to any statutory or
regulatory requirements as may be in effect from time to time.
Payment of principal, premium, if any, and interest to DTC is the
responsibility of the Trustee on behalf of Funding Corporation,
disbursement of such payments to Direct Participants is the responsibility
of DTC, and disbursement of such payments to the Beneficial Owners is the
responsibility of Participants. If DTC is at any time unwilling or unable
to continue as depositary and a successor depositary is not appointed,
Funding Corporation will issue to Beneficial Owners individual certificated
Collateral Bonds representing their ownership interests in Collateral
Bonds. In addition, the Company may at any time determine not to have any
particular series of Collateral Bonds held in the book-entry only system
and, in such event, Funding Corporation will issue to Beneficial Owners
individual certificated Collateral Bonds representing their ownership
interests in such Collateral Bonds. In any such instance, a Beneficial
Owner will be entitled to have such certificated Collateral Bonds
registered in its name. Individual certificated Collateral Bonds so issued
will be issued as registered Collateral Bonds in denominations of $1,000 or
any integral multiple thereof.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Company believes to be
reliable, including DTC, but none of the Company, Funding Corporation, the
Underwriters or the Trustee takes responsibility for the accuracy or
completeness thereof.
None of the Company, the Trustee, Funding Corporation, the Underwriters
or any agent for payment on or registration of transfer or exchange of the
Collateral Bonds will have any responsibility or liability for any aspect
of the records relating to or payments made on account of interests of
beneficial owners of any Collateral Bond or for maintaining, supervising or
reviewing any records relating to such interests.
USE OF PROCEEDS
Proceeds from the issuance of the Collateral Bonds will be used to make
loans to the Lessors, to be evidenced by the Pledged Lessor Bonds, in
amounts sufficient, together with amounts made available to the Lessors by
the Company as rent under the related Leases and, at the option of the
Owner Participant, from amounts made available by the Owner Participant as
an additional investment, to enable the Lessors to redeem the outstanding
Initial Lessor Bonds and to pay certain costs and expenses incurred in
connection with the Refinancing.
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement among
the Company, Funding Corporation and the Underwriters, the Underwriters
named below have severally agreed to purchase from Funding Corporation, and
Funding Corporation has agreed to sell to the Underwriters, severally, the
respective principal amounts of the Collateral Bonds set forth below.
Principal Amount Principal Amount
of Series of Series
Collateral Bonds Collateral Bonds
Morgan Stanley & Co. Incorporated $ $
Citicorp Securities, Inc.
Total
The Underwriting Agreement provides that the several obligations of the
Underwriters thereunder are subject to the approval of certain legal
matters by counsel and to various other conditions. The nature of the
Underwriters' obligations is such that they are committed to purchase all
of the Collateral Bonds if any are purchased; provided that the
Underwriting Agreement provides that under certain circumstances involving
a default of Underwriters, less than all of the Collateral Bonds may be
purchased.
The Company has been advised by the several Underwriters that the
Underwriters propose to offer the Series Collateral Bonds and the
Series Collateral Bonds directly to the public at the public offering
prices set forth on the cover page of this Prospectus Supplement and to
certain dealers at such prices less a concession of % of the principal
amount of the Series Collateral Bonds and % of the principal amount
of the Series Collateral Bonds. The Underwriters may allow, and such
dealers may re-allow, a concession not in excess of % of the principal
amount of the Series Collateral Bonds and % of the principal amount
of the Series Collateral Bonds to certain other dealers. After the
initial public offering, the offering prices and other selling terms may be
changed.
The Underwriting Agreement provides that, subject to certain conditions,
the Company will indemnify each Underwriter and its controlling persons
against certain liabilities, including certain liabilities under the
Securities Act of 1933, as amended, and will contribute to payments the
Underwriters may be required to make in respect thereof.
The Company does not intend to apply for listing of the Collateral Bonds
on a national securities exchange but has been advised by the Underwriters
that the Underwriters presently intend to make a market in the Collateral
Bonds, as permitted by applicable laws and regulations. The Underwriters
are not obligated, however, to make a market in the Collateral Bonds, and
such market making may be discontinued at any time at the sole discretion
of each Underwriter. Accordingly, no assurance can be given as to the
liquidity of, or trading markets for, the Collateral Bonds.
From time to time, the Underwriters and/or certain of their affiliates
engage in transactions with or perform services for the Company in the
ordinary course of business. In addition, an affiliate of Citicorp
Securities, Inc. is the Owner Participant.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor
may offers to buy be accepted prior to the time that the registration
statement becomes effective. This prospectus shall not constitute an offer
to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any jurisdiction in which such offer, solicitation
or sale would be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
PROSPECTUS
Subject to Completion
Dated February 29, 1996
$322,526,000
Waterford 3 Secured Lease Obligation Bonds
The Waterford 3 Secured Lease Obligation Bonds (the "Collateral Bonds")
will be issued at one time or from time to time, in one or more series, at
prices and on terms to be determined at the time of sale. The Collateral
Bonds will be indirectly secured, as described herein, by liens on, and
security interests in, certain ownership interests in, and by the Leases
relating to, Unit No. 3 (nuclear) of the Waterford Steam Electric
Generating Station ("Waterford 3") and will be payable solely from basic
rentals and certain other amounts payable under such Leases by
Louisiana Power & Light Company
The Collateral Bonds will be issued by W3A Funding Corporation ("Funding
Corporation"), a corporation created for the sole purpose of issuing the
Collateral Bonds as described herein. Louisiana Power & Light Company (the
"Company"), as Lessee under each Lease, will be unconditionally obligated
to make rental payments in amounts which will be at least sufficient to pay
in full, when due, all scheduled payments of principal of and interest on
the Collateral Bonds, although the Collateral Bonds will not be direct
obligations of, or guaranteed by, the Company. This Prospectus will be
supplemented by a prospectus supplement (the "Prospectus Supplement") which
will set forth, as applicable, the designation, the aggregate principal
amount, rate and time of payment of interest, maturity, purchase price,
initial public offering price, if any, any redemption or installment
payment provisions and other specific terms of each series of the
Collateral Bonds in respect of which this Prospectus is being delivered.
The Collateral Bonds will be secured by a pledge and assignment of certain
nonrecourse Lessor Bonds ("Pledged Lessor Bonds") issued by the Lessors
under the Lease Indentures described herein. Each Pledged Lessor Bond will
be secured by a lien on and security interest in the undivided ownership
interest in Waterford 3 of the Lessor which has issued such Pledged Lessor
Bonds and certain of the rights of such Lessor under its Lease with the
Company, including the right to receive the basic rentals and certain other
amounts payable by the Company thereunder. (See "Security and Source of
Payment for the Collateral Bonds," "Description of the Collateral Bonds and
the Indenture," "Description of the Lease Indentures" and "Description of
the Leases.")
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Collateral Bonds will be sold through an underwriting syndicate
including Morgan Stanley & Co. Incorporated and Citicorp Securities, Inc.
as set forth in the Prospectus Supplement. The net proceeds from the sale
of the Collateral Bonds, and any applicable commissions or discounts, are
set forth in the applicable Prospectus Supplement. This Prospectus may not
be used to consummate sales of the Collateral Bonds unless accompanied by
the Prospectus Supplement.
MORGAN STANLEY & CO. Incorporated CITICORP SECURITIES, INC.
, 199_
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
SECURITIES OFFERED HEREBY OR ANY OTHER SECURITIES OF THE COMPANY AT LEVELS
ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), and in
accordance therewith files reports and other information with the
Securities and Exchange Commission ("SEC"). Such reports include
information, as of particular dates, concerning the Company's directors and
officers, their remuneration, the principal holders of the Company's
securities and any material interest of such persons in transactions with
the Company. Such reports and other information can be inspected and
copied at the public reference facilities maintained by the SEC at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549; 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and Seven World Trade Center,
13th floor, New York, New York 10048. Copies of this material can also be
obtained at prescribed rates from the Public Reference Section of the SEC
at its principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company's series of 12.64% Preferred Stock and 9.68% Preferred Stock
are listed on the New York Stock Exchange. Reports and other information
concerning the Company can be inspected and copied at the office of such
Exchange at 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC pursuant to the Exchange Act
are incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended December
31, 1994.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995, June 30, 1995 and September 30, 1995.
ln addition, all documents subsequently filed by the Company pursuant to
Section 13, 14 or 15(d) of the Exchange Act prior to the termination of
this offering shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such
documents (such documents, and the documents enumerated above, being herein
referred to as "Incorporated Documents").
Any statement contained herein or in an Incorporated Document shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained in any other subsequently filed
Incorporated Document or in an accompanying Prospectus Supplement modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, on the written or oral request of any such person, a copy of any
or all of the Incorporated Documents, other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference
therein. Requests should be directed to Christopher T. Screen, P.O. Box
61000, New Orleans, Louisiana 70161, telephone number 504-576-4212. The
information relating to the Company contained in this Prospectus and any
accompanying Prospectus Supplement does not purport to be comprehensive and
should be read together with the information contained in the Incorporated
Documents.
No person has been authorized to give any information or to make any
representation not contained in this Prospectus or, with respect to any
series of the Collateral Bonds, the Prospectus Supplement relating thereto,
and, if given or made, such information or representation must not be
relied upon as having been authorized by the Company or any underwriter.
This Prospectus and any Prospectus Supplement do not constitute an offer to
sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make
such offer in such jurisdiction.
Neither the delivery of this Prospectus and a Prospectus Supplement nor
any sale made thereunder shall, under any circumstances, create any
implication that there has been no change in the affairs of the Company
since the date of that Prospectus Supplement.
THE COMPANY
The Company was incorporated under the laws of the State of Louisiana on
October 15, 1974 and is the successor by merger to a predecessor Louisiana
Power & Light Company, which was incorporated under the laws of the State
of Florida in 1927. The merger of such predecessor corporation into the
Company became effective on February 28, 1975. The Company's principal
executive office is located at 639 Loyola Avenue, New Orleans, Louisiana
70113. Its telephone number is (504) 576-4000.
The Company is an electric public utility company with all of its
operations in the State of Louisiana. All of the outstanding common stock
of the Company is owned by Entergy Corporation ("Entergy"), a Delaware
corporation. Entergy is a registered public utility holding company under
the Public Utility Holding Company Act of 1935, as amended. The Company,
Arkansas Power & Light Company ("AP&L"), Gulf States Utilities Company
("Gulf States"), Mississippi Power & Light Company ("MP&L") and New Orleans
Public Service Inc. ("NOPSI") are the principal operating electric utility
subsidiaries of Entergy. Entergy also owns, among other entities, all of
the common stock of System Energy Resources, Inc. ("System Energy"), a
generating company, and Entergy Operations, Inc., a nuclear management
services company that operates Waterford 3 as well as the nuclear units of
AP&L, Gulf States and System Energy.
The Company, AP&L, MP&L and NOPSI own all of the capital stock of System
Fuels, Inc., a special purpose company which implements and/or maintains
certain programs for the procurement, delivery and storage of fuel supplies
for certain Entergy subsidiaries.
The foregoing information relating to the Company does not purport to be
comprehensive and should be read together with the financial statements and
other information contained in the Incorporated Documents.
USE OF PROCEEDS
Unless the accompanying Prospectus Supplement provides otherwise, the
proceeds of the sale of the Collateral Bonds will be used to make loans to
the Lessors, to be evidenced by the Pledged Lessor Bonds, in amounts
sufficient, together with amounts made available to the Lessors by the
Company as rent under the related Leases and, at the option of the Owner
Participant, from amounts made available by the Owner Participant as an
additional investment, to enable the Lessors to redeem all the outstanding
Initial Lessor Bonds and to pay certain costs and expenses incurred in
connection with the Refinancing.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company has calculated ratios of earnings to fixed charges pursuant
to Item 503 of SEC Regulation S-K as follows:
Twelve Months Ended
DecembeR 31, September 30,
1990 1991 1992 1993 1994 1995
Ratio of Earnings to Fixed 2.32 2.40 2.79 3.06 2.91 3.26
Charges
THE TRANSACTIONS AND THE REFINANCING
On September 28, 1989, the Company sold, for an aggregate purchase price
of $353,600,000, and leased back, on a long-term net lease basis, three
undivided portions of its 100% ownership interest in Unit 3 in three
substantially identical, but entirely separate, Transactions, each such
Transaction being documented separately. Such Undivided Interests, which
represent, in the aggregate, approximately a 10.5% interest in Unit 3
(which is equivalent on a cost basis to approximately a 9.3% interest in
Waterford 3), were sold to First National Bank of Commerce, New Orleans,
Louisiana, as Owner Trustee under each of three separate trust agreements
(each such agreement with an institutional investor as an Owner
Participant) and as Lessor under each of three separate leases with the
Company. Unit 3 excludes certain transmission, pollution control and other
facilities included in Waterford 3. At the end of the terms of the Leases
and assuming the Company does not exercise any of its purchase options
under any Lease, the Lessors, together, as owners of the Undivided
Interests, will be entitled to approximately 10.5% of the capacity and
energy produced by Waterford 3; prior to such time such capacity and energy
remain available to the Company. After the term of a Lease, any person
(including a Lessor) other than the Company which has possession of the
related Undivided Interest would be required to compensate the Company for
the use of certain of such excluded facilities, at such levels that the sum
of such compensation (discounted to present value, where appropriate) and
the fair market value of such Undivided Interest, as of the end of the term
of such Lease, would approximate the fair market value, determined as of
such time, of an undivided ownership interest in Waterford 3 equal to such
person's entitlement share of the capacity of Waterford 3.
Approximately 87.7% of the aggregate consideration paid by the Lessors
for their respective interests in Unit 3 was provided to the Lessors from
the issuance and sale of the Waterford 3 Secured Lease Obligation Bonds
(the "Initial Lessor Bonds") in 1989. The balance of such consideration
was contributed to the Lessors by the Owner Participant. As of January 30,
1996, the outstanding Initial Lessor Bonds consist of (i) $77,840,000
aggregate principal amount of 10.30% Series A due January 2, 2005,
$38,922,000 aggregate principal amount of 10.30% Series B due January 2,
2005 and $20,861,000 aggregate principal amount of 10.30% Series C due
January 2, 2005, and (ii) $95,896,000 aggregate principal amount of 10.67%
Series A due January 2, 2017, $47,949,000 aggregate principal amount of
10.67% Series B due January 2, 2017 and $25,700,000 aggregate principal
amount of 10.67% Series C due January 2, 2017.
The Company has determined, in light of prevailing economic and financial
circumstances, to exercise its option pursuant to the Participation
Agreements to request the respective Lessors to refinance the Initial
Lessor Bonds which are currently outstanding (the "Refinancing"). The
Lessors will obtain the funds required to redeem the Initial Lessor Bonds
and to pay related expenses from non-recourse borrowings by them from
Funding Corporation and from rent payments which the Company has agreed to
make under the Leases with such Lessors and, at the option of the Owner
Participant, from amounts made available from the Owner Participant as an
additional investment. The loans by Funding Corporation to each Lessor
will be evidenced by one or more new series of Lessor Bonds (the "Pledged
Lessor Bonds") issued by such Lessor to Funding Corporation under the
related Lease Indenture. The Pledged Lessor Bonds of each Lessor will be
secured by, among other things, the basic rentals and certain other
payments which the Company is obligated to make under the relevant Lease.
Funding Corporation will obtain the funds to enable it to make the loans to
the Lessors through the offer and sale of the Collateral Bonds. (See
"Security and Source of Payment for the Collateral Bonds" and "Use of
Proceeds.")
FLOW OF FUNDS FOR DEBT SERVICE PAYMENTS ON THE COLLATERAL BONDS
LOUISIANA POWER & LIGHT COMPANY
(LESSEE)
Rental Payments Due
Under the Leases
(Assigned by the
Owner Trustees)
LEASE
INDENTURE
TRUSTEES
Debt Service for Rent Payments
the Pledged Lessor in Excess of
Bonds Debt Service
TRUSTEE FOR THE COLLATERAL BONDS
(Issued by W3A Funding Corporation)
Debt Service for
the Collateral Bonds
COLLATERAL BONDHOLDERS OWNER
TRUSTEES
(LESSORS)
Rental Payments
in Excess of
Debt Service
OWNER
PARTICIPANT
See "Security and Source of Payment for the Collateral Bonds."
SECURITY AND SOURCE OF PAYMENT FOR THE COLLATERAL BONDS
Concurrently with the initial authentication and delivery of the
Collateral Bonds of each series, Funding Corporation will cause to be
delivered to the Trustee Pledged Lessor Bonds (a) issued as separate series
under the Lease Indentures, (b) payable as to principal on such dates and
in such amounts that on the stated maturity of principal and each sinking
fund redemption date or principal installment payment date of such
Collateral Bonds there shall be payable on the Pledged Lessor Bonds an
amount in respect of principal equal to the principal amount of such
Collateral Bonds then to mature or to be payable in installments of
principal or be redeemed, (c) bearing interest at the same rate and payable
at the same times as the corresponding Collateral Bonds of such series, (d)
containing provisions for redemption, including redemption premiums,
correlative to the provisions for redemption (other than pursuant to a
sinking fund) of the corresponding Collateral Bonds of such series and (e)
registered in the name of the Trustee. (Indenture, Section 2.03)
The Pledged Lessor Bonds, which will be without recourse to the general
credit of the related Owner Trustee and the Owner Participant and will not
be direct obligations of, or guaranteed by, the Company, will be payable
from and secured by, among other things, a lien on and security interest in
the related Undivided Interest, and, subject to certain exceptions, the
rights of the Owner Trustee under the related Lease, including the right to
receive all basic rentals and certain other payments to be made by the
Company (subject in each case to certain permitted liens). Excluded from
the Lease Indenture Estate are any and all Excepted Payments and certain
other rights. The Leases provide that basic rent payments to be made by
the Company be calculated in such amounts as will be sufficient to provide
for the payment, when due, of scheduled payments of principal of and
interest on all of the related Lessor Bonds. (See "Description of the
Leases _ Term and Rentals.") Each Lease is a net lease pursuant to which
the Company will be unconditionally obligated to make all payments
thereunder. (See "Description of the Leases _ Net Lease.") If a Lease
Event of Default shall have occurred and be continuing under any Lease,
remedies under such Lease may be exercised as described in "Description of
the Leases _ Remedies."
If a Lease Indenture Event of Default shall have occurred and be
continuing, remedies may be exercised as described under "Description of
the Lease Indentures _ Notice; Waiver; Acceleration and Remedies." If a
Lease Indenture Event of Default shall have occurred and be continuing at a
time when there shall not have occurred and be continuing a Lease Event of
Default under the related Lease, the exercise of such remedies may not
disturb the Company's quiet use and possession of the related Undivided
Interest or require prepayment of basic rent, Casualty Value or Special
Casualty Value under such Lease.
In certain instances, the Company, or the Company and an Affiliate
thereof jointly, may elect or may be required to assume the obligations of
the Owner Trustee under the related Lease Indenture and on all or a portion
of the related Lessor Bonds (see "Description of the Lease
Indentures_Assumption by the Company"). Upon such an assumption, the Owner
Trustee would be released from its obligations under such Lease Indenture
and on the related Lessor Bonds. In such case, the Holders of such Lessor
Bonds would retain the benefit under the related Lease Indenture of the
Lien on and security interest in the related Undivided Interest, and the
obligation to make payments on such Lessor Bonds would become a direct
obligation of the Company, or the Company and an Affiliate thereof, as the
case may be.
Subject to certain conditions, additional Collateral Bonds may be issued
under the Indenture (a) for the purpose of redeeming all or any part of any
series of Collateral Bonds previously issued under such Indenture,
including the Collateral Bonds issued in connection with the Refinancing,
and of providing funds for the payment of certain expenses incurred in
connection with the issuance of such additional Securities and (b) to
provide funds for all or a portion of certain alterations, modifications,
additions or capital improvements to Unit 3, subject to certain
limitations. All additional Collateral Bonds issued under the Indenture
will be secured equally, together with the Collateral Bonds issued in
connection with the Refinancing, by all Lessor Bonds pledged by Funding
Corporation to the Trustee.
The Company has issued a new series of first mortgage bonds under its
first mortgage bond indenture to secure the payment to the Owner
Participant of the equity portion of amounts payable by the Company under
the respective Leases and other transaction documents. If prior to
maturity of such first mortgage bonds, there shall have occurred an Event
of Loss, Deemed Loss Event, Financial Event or Lease Event of Default in
respect of which the Lessee shall be obligated to prepay all or any portion
of the principal of the promissory note which was issued by the Company to
the Owner Participant as a condition to the issuance of the Initial Lessor
Bonds, then such first mortgage bonds shall be redeemed, on the date such
prepayment is to be made, in a principal amount equal to the portion of the
principal of the promissory note then to be prepaid. Neither the holders
of the Lessor Bonds (including the Trustee, as holder of the Pledged Lessor
Bonds) nor the Holders of the Collateral Bonds are entitled to the benefit
of any such financial support. (See "Other Agreements _ Participation
Agreement.")
If the Company were to enter into bankruptcy or reorganization
proceedings, the Company or its bankruptcy trustee could reject any Lease.
In such event, there could be no assurance that the amount of any claim for
damages under such Lease would be allowed in amounts sufficient to provide
for the repayment of the related Collateral Bonds. Under Section 502(b)(6)
of the United States Bankruptcy Code, as amended, a claim by a lessor for
damages resulting from the rejection of a lease of real property in
connection with bankruptcy proceedings affecting the lessee may be limited
to an amount equal to the rent reserved under the lease, without
acceleration, for the greater of 1 year or 15 percent (but not more than 3
years) of the remaining term of the lease, plus rent already due but
unpaid. Although there can be no assurances, Louisiana counsel to the
Company believes that it is likely that a bankruptcy court would find much
of the property covered by the Leases to be real property. If such
property were held to constitute personal property, the above limitation
would not apply. In any case, rejection of any Lease by the Company or its
bankruptcy trustee would not deprive the related Indenture Trustee of its
lien on and security interest in the related Undivided Interest. Rejection
of any Lease would deprive the Company of the benefit of the related
Undivided Interest and any revenues which could be derived from the sale of
the output thereof.
If the Owner Participant or any Lessor becomes subject to bankruptcy or
reorganization proceedings and, by reason of such proceedings, the Owner
Participant or any Lessor is held to have recourse liability to the Holder
of any Lessor Bond or the related Lease Indenture Trustee, and such Holder
or the related Lease Indenture Trustee actually receives payment on account
of such recourse liability, such Holder or the Indenture Trustee, as the
case may be, shall promptly refund to the Owner Participant or any Lessor,
as appropriate, any amount of such payment which exceeds the amount which
would have been received on or prior to the date of such payment by such
Holder or the Indenture Trustee if the Owner Participant or the Lessor had
not become subject to such recourse liability. (Participation Agreement,
Section 20(f))
For further information with respect to the source of payment for the
Collateral Bonds, the Indenture and the Lease Indentures relating to the
Lessor Bonds, see "Description of the Collateral Bonds and the Indenture"
and "Description of the Lease Indentures."
W3A FUNDING CORPORATION
Funding Corporation was incorporated under the laws of the state of
Delaware for the purpose of facilitating the Refinancing and has only
nominal equity capital. The only business of Funding Corporation will be
the issuance and sale of the Collateral Bonds and the lending of the
proceeds therefrom. (See "Use of Proceeds.") Funding Corporation may (but
is not required to) make loans in connection with any significant capital
improvements which may be installed at Unit 3 from time to time. The
assets of Funding Corporation will consist of any Lessor Bonds issued by
the Lessors to Funding Corporation from time to time and $1,000 in cash,
representing the equity capital contributed by its sole shareholder, NCR
Holding, Inc., which is a wholly-owned subsidiary of NCR Corporate
Research, Ltd. None of the Company, any Lessor or the Owner Participant
holds any ownership interest in Funding Corporation, NCR Holding, Inc. or
NCR Corporate Research, Ltd., and no person affiliated with the Company,
any Lessor or the Owner Participant is an officer, director or employee of
any such entity.
DESCRIPTION OF THE COLLATERAL BONDS AND THE INDENTURE
The statements contained under this caption are intended to briefly
summarize the Collateral Bonds; they do not purport to be complete and are
qualified in their entirety by reference to the Indenture, a copy of the
form of which has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part. A Prospectus Supplement will describe the
following terms of the series of Collateral Bonds to be issued: (1) the
designation of each series of the Collateral Bonds; (2) the aggregate
principal amount of each series; (3) the date on which each series will
mature; (4) the rate at which each series will bear interest and the date
from which such interest accrues; (5) the dates on which interest will be
payable; and (6) the prices, terms and conditions upon which each series
may be redeemed by the Company prior to maturity or upon which installment
payments of principal will become due and payable.
General
The Collateral Bonds are to be issued under the Collateral Trust
Indenture (the "Indenture") among Funding Corporation, the Company and
Bankers Trust Company, as Trustee, as supplemented by one or more
Supplemental Indentures, among such parties.
Unless otherwise indicated in a Prospectus Supplement, the Collateral
Bonds will be issued in fully registered form without coupons in
denominations of $1,000 or any integral multiple thereof. Collateral Bonds
may be surrendered for registration of transfer or exchange for Collateral
Bonds of the same series and maturity at the corporate trust office of
Bankers Trust Company, registrar and paying agent for the Collateral Bonds,
in New York, New York. The Trustee shall not be required to register the
transfer or exchange of any Collateral Bonds called for redemption or
during a period of 15 days preceding a mailing of notice of redemption. No
service charge will be required of any Bondholder participating in any
transfer or exchange of Collateral Bonds in respect of such transfer or
exchange, but, with certain exceptions, payment may be required of any tax
or other governmental charges that may be imposed in connection therewith.
(Indenture, Sections 2.05 and 2.08)
Additional Securities
The Indenture provides that the aggregate principal amount of
Securities (including the Collateral Bonds) which may be issued thereunder
is unlimited, provided that at least an equal aggregate principal amount of
Lessor Bonds must be pledged as security under the Indenture in support of
the payment of such Securities. A separate Supplemental Indenture will be
entered into among Funding Corporation, the Company and the Trustee
establishing the designation, interest rate, sinking fund, installment
payments of principal and redemption provisions, if any, and other specific
terms of any particular series of Securities. (Indenture, Section 2.03)
Any additional series of Securities will be secured pari passu with the
Collateral Bonds by the Pledged Lessor Bonds. (Indenture, Granting
Clauses)
Merger, Consolidation and Transfer of Assets by Funding Corporation
The certificate of incorporation of Funding Corporation provides that
Funding Corporation will not (a) dissolve or liquidate, in whole or in
part, or (b) merge into or consolidate with, or sell all or any part of its
assets to, any person, firm, corporation, partnership or other entity
unless the acquiring entity or the surviving corporation, as the case may
be, has a certificate of incorporation containing provisions identical to
those of Funding Corporation's certificate of incorporation restricting the
nature of its business and purposes and its ability to take certain action
and, in the case of a sale of assets, the acquiring entity shall have
assumed all the liabilities and obligations of Funding Corporation. In
addition, Funding Corporation has agreed in the Indenture that it will not
amend those provisions of its certificate of incorporation that restrict
the nature of its business, purposes and activities and that provide for
its capitalization. (Indenture, Section 5.08)
Events of Default
The following will be Events of Default under the Indenture:
(a) failure to pay any interest on any Security when it becomes due and
payable, and the continuation of such failure for a period of 10 days; or
(b) failure to pay any principal of or premium, if any, on any Security
when it becomes due and payable, whether at its stated maturity of
principal, on any applicable redemption date or any principal installment
payment date or at any other time, and the continuation of such failure
for a period of 10 days; or
(c) failure on the part of either Funding Corporation or the Company to
perform or observe any covenant or agreement in the Indenture to be
performed or observed by it, and the continuation of such failure for a
period of 30 days after notice has been given to Funding Corporation or
the Company, as the case may be, by the Trustee, or to the Company or
Funding Corporation, as the case may be, and the Trustee by the Holders
of at least 25% in principal amount of the outstanding Securities,
specifying such failure and requiring it to be remedied and stating that
such notice is a "Notice of Default" under the Indenture; provided,
however, that the continuation of such failure for a period of 30 days or
more after such notice has been so given (but in no event for a period
which is greater than one year after such notice has been given) shall
not constitute an Event of Default if (i) such failure can be remedied
but cannot be remedied within such 30 days; (ii) the Company or Funding
Corporation, as the case may be, is diligent in pursuing a remedy of such
failure and (iii) such failure does not impair in any respect the lien
and security interest created by the Indenture; or
(d) the occurrence of any Lease Indenture Event of Default; or
(e) the entry of a decree or order by a court having jurisdiction in the
premises adjudging Funding Corporation a bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of Funding
Corporation under the U.S. Bankruptcy Code or any other applicable
federal or state law or law of the District of Columbia, or appointing a
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official) of Funding Corporation or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and
the continuation of any such decree or order unstayed and in effect for a
period of 75 consecutive days; or
(f) the institution by Funding Corporation of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by the institution of
bankruptcy of insolvency proceedings against it, or the filing by it of a
petition or answer or consent seeking reorganization or relief under the
United States Bankruptcy Code or any other applicable federal or state
law or law of the District of Columbia, or the consent by it to the
filing of any such petition or the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or other similar official) of Funding
Corporation or of any substantial part of its property, or the making by
it of an assignment for the benefit of creditors, or the admission by it
in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by Funding Corporation in
furtherance of any such action.
(Indenture, Section 8.01)
The Company and Funding Corporation must file an annual certificate
with the Trustee as to compliance with the provisions of the Indenture.
(Indenture, Section 5.09)
Funding Corporation has agreed in the Indenture that it will not take
certain corporate action which could result in its being declared bankrupt
or insolvent. (Indenture, Section 5.08) The Company, the Lessors, the
Owner Participant and the Lease Indenture Trustees have each agreed in the
Participation Agreements that none of them will file, or participate in the
filing of, a petition seeking reorganization, arrangement, adjustment, or
composition of or in respect of Funding Corporation prior to the 181st day
following the payment in full of the Collateral Bonds and discharge of the
Indenture. (Participation Agreement, Sections 6(b), 7(b), 8(b) and 9(b))
Acceleration and Remedies
Upon the occurrence and continuance of an Event of Default, (i) if such
Event of Default is of the type specified in clause (a), (b), (c), (e) or
(f) of the first paragraph under "Events of Default" above, the Trustee may
and, upon the direction of the Holders of not less than a majority in
principal amount of the Securities outstanding the Trustee shall, and (ii)
if such Event of Default is of the type specified in clause (d) of the
first paragraph under "Events of Default" above (including without
limitation a Lease Event of Default which has resulted in a default of the
type specified in clause (a) or (b) of such paragraph) under circumstances
in which there has been an acceleration of a maturity of the related
Pledged Lessor Bonds, the Trustee shall, declare all the Securities to be
immediately due and payable; provided that no such declaration will be made
(and the Trustee will not take action to sell any property pledged to it
under the Indenture or to institute proceedings for payment on any
Securities or Pledged Lessor Bonds) in the case of a payment default of the
type specified in clause (a) or (b) of such paragraph which resulted
directly from a failure by the Company to make any payment of rent under a
Lease until such time as the Lessor under such Lease has been given the
opportunity to exercise its rights, if any, to cure such default under the
related Lease Indenture. (See "Description of the Lease Indentures -
Rights of Lessor to Cure and Purchase Lessor Bonds.") (Indenture, Section
8.02)
In addition, upon the occurrence of a Lease Indenture Event of Default,
Lease Indenture Default, Event of Loss, Deemed Loss Event or Financial
Event, if an officer of the Trustee has actual knowledge thereof, the
Trustee will give notice to all Holders of such fact in accordance with the
provisions of the Indenture and thereafter each Holder will have the right
to direct the Trustee, as the holder of the Pledged Lessor Bonds issued
under such Lease Indenture, to vote the principal amount of such Pledged
Lessor Bonds in proportion to the principal amount of Securities owned by
such Holder, or to direct the related Lease Indenture Trustee to take such
action, or refrain from taking such action, as it is permitted to take
under the terms of the related Lease Indenture. Under each Lease
Indenture, directions given to the Lease Indenture Trustee as described in
the preceding sentence will be dictated by (x) in the case of a Lease
Indenture Event of Default or a Lease Indenture Default, the holders of no
less than a majority in aggregate principal amount of the outstanding
Lessor Bonds of all series (considered as one class) and (y) in the case of
an Event of Loss, Deemed Loss Event or Financial Event, the holders of not
less than 5% in aggregate principal amount of the outstanding Lessor Bonds
of all series (considered as one class), which, in either case, will mean,
until such time, if any, as additional Lessor Bonds are issued under such
Lease Indenture, the Holders of not less than a majority or 5% respectively
in aggregate principal amount of the Collateral Bonds outstanding as a
result of the pass-through voting mechanism described above. (Indenture,
Section 3.03; Lease Indenture, Sections 2.16 and 7.07)
With certain exceptions, the request of the Holders of not less than a
majority in aggregate principal amount of Securities outstanding will be
necessary to require the Trustee to exercise any remedy under the
Indenture. (Indenture, Section 8.07) The Trustee will be entitled to
receive reasonable indemnity and under certain circumstances is not
required to act. (Indenture, Section 9.03) In addition, no Holder shall
have any right to pursue any remedy under the Indenture unless the Trustee
shall have been given written notice of an Event of Default, the Holders of
at least 25% in principal amount of all Securities then outstanding shall
have requested the Trustee to pursue a remedy, the Trustee shall have been
offered satisfactory indemnity, the Trustee shall have failed to comply
with such request within 60 days after receipt of such request and the
Trustee shall not have received during such 60 day period any direction
inconsistent with such request from Holders of a majority in principal
amount of outstanding Securities. (Indenture, Section 8.09)
Voting of Lessor Bonds
The Trustee, as holder of the Pledged Lessor Bonds, will have the right
to vote and give consents and waivers in respect of such Pledged Lessor
Bonds and the Lease Indentures only as described below. The Holders of the
Securities may instruct the Trustee as to action by the Trustee, as holder
of the Pledged Lessor Bonds, under any Lease Indenture, including the
voting of Pledged Lessor Bonds. Upon receiving from Holders any directions
as to the taking of any action, including the voting of any Pledged Lessor
Bond, the Trustee shall specify to the related Lease Indenture Trustee the
principal amount of the Pledged Lessor Bonds which is in favor of the
action or vote, the principal amount of the Pledged Lessor Bonds which is
opposed to the action or vote and the principal amount of the Pledged
Lessor Bonds which is not taking any position as to the action or vote.
Such principal amounts shall be determined by allocating to the total
principal amounts of the Pledged Lessor Bonds with respect to which
direction is to be given the proportionate principal amount of Securities
taking corresponding positions or not taking any position, based on the
aggregate principal amount of outstanding Securities. (Indenture, Section
3.03) Because the Lease Indentures permit additional Lessor Bonds to be
issued and secured thereunder, and do not require that such additional
Lessor Bonds be issued only to Funding Corporation, it is possible that at
some future time the Pledged Lessor Bonds would not constitute a majority
of the Lessor Bonds issued and outstanding under the Lease Indentures.
(See "Description of the Lease Indentures - Additional Lessor Bonds.")
Supplemental Indenture
Without the consent of the Holders of any Securities, Funding
Corporation, the Company and the Trustee may enter into supplemental
indentures for the following purposes:
(a) to establish the form and terms of any series of Securities;
(b) to evidence the succession of another corporation to the Company, and
the assumption by any such successor of the covenants of the Company
contained in the Indenture, or to evidence the succession of another
corporation to Funding Corporation, and the assumption by any such
successor of the covenants of Funding Corporation contained in the
Indenture and in the Securities;
(c) to evidence the succession of a new trustee or the appointment of a
co-trustee or a separate trustee under the Indenture;
(d) to add to the covenants of Funding Corporation or of the Company, for
the benefit of the Holders of the Securities, or to evidence the
surrender of any right or power conferred in the Indenture upon Funding
Corporation or the Company;
(e) to convey, transfer and assign to the Trustee, and to subject to the
lien of the Indenture, additional Pledged Lessor Bonds or additional
properties or assets, and to correct or amplify the description of any
property at any time subject to the lien of the Indenture or to assure,
convey and confirm unto the Trustee any property subject or required to
be subject to the lien of the Indenture;
(f) to permit or facilitate the issuance of Securities in uncertificated
form;
(g) to change or eliminate any provision of the Indenture; provided,
however, that if such change or elimination will adversely affect the
interests of the Holders of Securities of any series, such change or
elimination will become effective with respect to such series only when
no Security of such series remains outstanding; or
(h) to cure any ambiguity, to correct or supplement any provision in the
Indenture which may be defective or inconsistent with any other provision
in the Indenture, or to make any other provisions with respect to matters
or questions arising under the Indenture, provided such action shall not
adversely affect the interest of the Holders of the Securities in any
material respect.
Without limiting the generality of the foregoing, if the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), as in effect
at the date of the execution and delivery of the Indenture or at any time
thereafter shall be amended and
(x) if any such amendment shall require one or more changes to any
provisions of the Indenture or the inclusion in the Indenture of any
additional provisions, or shall by operation of law be deemed to effect
such changes or incorporate such provisions by reference or otherwise, or
(y) if any such amendment shall permit one or more changes to, or the
elimination of, any provisions of the Indenture which, at the date of the
execution and delivery of the Indenture or at any time thereafter, are
required by the Trust Indenture Act to be contained in the Indenture or
are contained in the Indenture to reflect any provisions of the Trust
Indenture Act as in effect on such date,
the Indenture shall be deemed to have been amended to conform to such
amendment to the Trust Indenture Act or to effect such changes or
elimination, and Funding Corporation, the Company and the Trustee may,
without the consent of any Holders, enter into a supplemental indenture to
evidence such amendment. (Indenture, Section 11.01)
With the consent of the Holders of not less than a majority in
aggregate principal amount of all Securities then outstanding considered as
one class, Funding Corporation, the Company and the Trustee may enter into
supplemental indentures for any purpose; provided that if there is more
than one series of Securities outstanding and if a proposed supplemental
indenture directly affects the Holders of at least one, but not all, of
such series, then only the consent of a majority in aggregate principal
amount of the Holders of the directly affected series of Securities will be
required; and provided, further, that without the consent of the Holders of
all the Securities then outstanding directly affected thereby no such
supplemental indenture may:
(a) change the stated maturity of the principal of, or any installment of
interest on, or the maturity date of any installment of principal of, or
the dates or circumstances of payment of premium, if any, on any Security
or reduce the principal amount of, or the interest on, or any premiums
payable upon any redemption of, any Security or change the place of
payment where, or the coin or currency in which, any Security or the
premium, if any, or interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment of principal or
interest on or after the stated maturity thereof (or, in the case of
redemption, on or after the redemption date) or such payment of premium,
if any, on or after the date such premium becomes due and payable or
change the dates or amounts of payments to be made through the operation
of a sinking fund (if any) or through installment payments of principal
(if any) in respect of such Securities;
(b) permit the creation of any lien prior or, except with respect to
additional Securities issued in accordance with the Indenture, equal to
the lien of the Indenture with respect to any of the Pledged Lessor
Bonds, terminate the lien of the Indenture on the Pledged Lessor Bonds
(except as permitted by the Indenture) or deprive any Holder of the
security afforded by the Indenture;
(c) reduce the percentage in principal amount of the Securities the
consent of whose Holders is required for any supplemental indenture or
the consent of whose Holders is required for any waiver provided for in
the Indenture or reduce the requirements of the Indenture relating to (1)
a quorum for meetings of Holders or (2) action taken by Holders pursuant
to the Indenture at meetings thereof; or
(d) modify any of the above provisions or the provisions of the Indenture
dealing with waivers of past defaults, except to increase the percentage
of the Holders whose consent is required for certain action or to provide
that certain other provisions of the Indenture cannot be modified or
waived without the consent of the Holders affected thereby.
(Indenture, Section 11.02)
Without the consent of the Holders of any Securities, the Trustee may
join in the execution of amendments of or supplements to, or waivers of the
provisions of, the Participation Agreement.
Defeasance
Securities of any series, or any portion of the principal amount
thereof, will, prior to the maturity thereof, be deemed to have been paid
for purposes of the Indenture (except as to any surviving rights of
registration of transfer or exchange expressly provided for in the
Indenture), and the entire indebtedness of Funding Corporation in respect
thereof will be deemed to have been satisfied and discharged, if (a) there
shall have been irrevocably deposited with the Trustee, in trust, money in
an amount which will be sufficient to pay when due the principal of and
premium, if any, and interest due and to become due on such Securities or
portions thereof on and prior to the stated maturity of principal or
redemption date or (b) the Pledged Lessor Bonds of the corresponding series
are deemed to have been paid in accordance with the Lease Indenture or
Lease Indentures under which such Pledged Lessor Bonds were issued.
(Indenture, Section 12.01) (See also "Description of the Lease Indentures
- - Defeasance.")
It is possible that for federal income tax purposes any deposit
contemplated in the preceding paragraph or any deeming of the Pledged
Lessor Bonds to have been paid as contemplated in such paragraph could be
treated as a taxable exchange of the related Collateral Bonds for an issue
of obligations of a trust or a direct interest in the cash and securities
held in a trust. In that case, Holders of such Collateral Bonds would
recognize gain or loss as if the trust obligations or the cash or
securities deposited or deemed paid, as the case may be, had actually been
received by them in exchange for their Collateral Bonds. Such gain or
loss, generally, would be capital in nature to Holders for whom the
Collateral Bonds are held as capital assets and any deductions for losses
would be subject to certain limitations. Such Holders would be required to
include in income a share of the income, gain or loss of the trust or the
income from the securities held in trust, as the case may be, in the
taxable year in which such event occurs. The amount so required to be
included in income could be different from the amount that would be
includable in the absence of such deposit. Neither the Company nor Funding
Corporation has any obligation to obtain a revenue ruling or other
authority as to the absence of adverse tax consequences arising from any
such event. Prospective investors are urged to consult their own tax
advisors as to the specific consequences to them of such deposit.
The Trustee
Bankers Trust Company will act as Trustee under the Indenture. As of
the date of the issuance of the Collateral Bonds, Bankers Trust Company
will also be Lease Indenture Trustee under each of the Lease Indentures
entered into in connection with the Transactions.
DESCRIPTION OF THE LEASE INDENTURES
The statements made under this caption are intended to summarize the
Lease Indentures as they relate to the Lessor Bonds; they do not purport to
be complete and are qualified in their entirety by reference to the Lease
Indentures, copies of which have been filed as exhibits to the Registration
Statement of which this Prospectus is a part. Each Lease Indenture is an
entirely separate indenture but contains substantially the same terms and
provisions as each other Lease Indenture. Unless the context requires
otherwise, in the following summary references to the Lease Indenture, the
Lease Indenture Estate, the Lease, the Lessor, the Owner Participant, the
Owner Trustee, the Lessor Bonds and the Pledged Lessor Bonds relate to each
Lease Indenture.
General
Lessor Bonds (including the Initial Lessor Bonds, Pledged Lessor Bonds
and other Lessor Bonds) may be issued under the Lease Indentures. The
Pledged Lessor Bonds will, at the direction of Funding Corporation, be
pledged and assigned to the Trustee for the benefit of the Holders of the
Securities (including the Collateral Bonds).
Lease Indenture Events of Default
The following are Lease Indenture Events of Default:
(a) any Lease Event of Default described in the following clauses of the
first paragraph in "Description of the Leases _ Lease Events of Default":
(i) clause (a)(x), except a failure of the Company to pay an amount which
constitutes an Excepted Payment or except in the case of a default in the
payment of Casualty Value, Special Casualty Value, or the payment of the
equity portion of Casualty Value or Special Casualty Value, where the
Owner Trustee has not rescinded or terminated the Lease or (ii) clause
(e) or (g);
(b) the rescission or termination of, or the taking of action by the
Owner Trustee or the Owner Participant, the effect of which would be to
rescind or terminate, the Lease;
(c) the exercise by the Owner Trustee or the Owner Participant of
certain remedies under the Lease, as a result of which the Company would
be obligated to pay liquidated damages, prior to the occurrence of any of
the events set forth in clause (b) above;
(d) any assignment, sublease or transfer by the Company of the Lease and
the other transaction documents in violation of the terms thereof;
(e) breach by the Company of the provisions of the related Participation
Agreement relating to the maintenance of its corporate existence and
relating to a merger by the Company into or consolidation of the Company
with another entity or the sale or transfer of all or substantially all
of the Company's assets by the Company (see "Other Agreements _
Participation Agreement");
(f)(x) failure by the Owner Trustee to make any payment in respect of
the principal of or premium, if any, or interest on the Lessor Bonds
within five business days after the same shall have become due (other
than by virtue of any failure by the Company to make any payment of rent
therefor); or (y) following the actual receipt by the Owner Participant
of proceeds of a partial draw upon a letter of credit in excess of the
amounts due to the Owner Participant at the time of such partial draw,
failure of such Owner Participant to cause such excess proceeds to be
delivered to the Lease Indenture Trustee within five business days after
the actual receipt of such proceeds;
(g)(x) failure by the Owner Trustee to perform or observe any covenant
or agreement in the Lease Indenture to be performed or observed by it
(other than any failure by the Owner Trustee to pay or cause to be paid
any payment of the principal of or premium, if any, or interest on the
Lessor Bonds when due), or (y) failure by the Owner Participant to
observe its covenant in the Participation Agreement not to create certain
liens on the Lease Indenture Estate or the trust estate and, in either
case, the continuation of such failure for a period of 30 days after
notice thereof has been given to the Owner Trustee, the Owner Participant
and the Company by the Lease Indenture Trustee or to the Lease Indenture
Trustee, the Company, the Owner Trustee and the Owner Participant by the
Holders of at least 25% in aggregate principal amount of the outstanding
Lessor Bonds of all series, considered as one class; provided, however,
that the continuation of such failure for a period of 30 days or more
after such notice has been so given (but in no event for a period which
is greater than one year after such notice has been given) shall not
constitute a Lease Indenture Event of Default if (i) such failure can be
remedied but cannot be remedied within such 30 days, (ii) the Owner
Trustee or the Owner Participant, as the case may be, is diligently
pursuing a remedy of such failure and (iii) such failure does not impair
in any material respect the mortgage and security interest created by the
Lease Indenture;
(h) any representation or warranty made by the Owner Trustee in the
Participation Agreement, or any representation or warranty made by the
Owner Participant in the Participation Agreement concerning liens against
the trust estate or the Lease Indenture Estate as a result of claims
against the Owner Participant unrelated to the Transactions shall prove
to have been incorrect in any material respect when such representation
or warranty was made or given and remains materially incorrect at the
time of discovery; provided, however, that such failure of such
representation or warranty to be correct shall not constitute a Lease
Indenture Event of Default if (i) the facts or circumstances making such
representation or warranty incorrect can be remedied or changed so that
such representation or warranty will henceforth be correct in all
material respects, (ii) the Owner Trustee or the Owner Participant, as
the case may be, is diligently pursuing such a remedy or change, (iii)
such remedy or change is, in fact, accomplished within a period of one
year from the time that the Owner Trustee or the Owner Participant, as
the case may be, has been notified of such misrepresentation or breach of
warranty and (iv) such facts or circumstances do not impair in any
material respect the mortgage and security interest created by the Lease
Indenture;
(i)(x) the Owner Trustee shall file any petition for dissolution or
liquidation of the trust created by the trust agreement or shall commence
a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or subsequently in effect, or the Owner Trustee shall
have consented to the entry of an order for relief with respect to the
trust in an involuntary case under any such law, or a receiver, custodian
or trustee (or other similar official) shall be appointed for the Owner
Trustee or shall take possession of any substantial part of its property
(other than at the instance of the Lease Indenture Trustee or the Holders
of Lessor Bonds), or the Owner Trustee shall make a general assignment
for the benefit of the trust's creditors, or shall enter into an
agreement of composition with the trust's creditors; or (y) there shall
be filed (other than at the instance of the Lease Indenture Trustee or
the Holders of Lessor Bonds) against the Owner Trustee an involuntary
petition in bankruptcy which results in an order for relief being entered
or, notwithstanding that an order for relief has not been entered, the
petition is not dismissed within 60 days after the date of the filing of
the petition, or there shall be filed (other than at the instance of the
Lease Indenture Trustee or the Holders of Lessor Bonds) under any Federal
or state law relating to bankruptcy, insolvency or relief of debtors any
petition against the Owner Trustee for reorganization, composition,
extension or arrangement with creditors which either (i) results in a
finding or adjudication of insolvency of the Owner Trustee or (ii) is not
dismissed within 60 days after the date of the filing of such petition;
(j)(x) the Owner Participant shall file any petition for dissolution or
liquidation of the Owner Participant, or shall commence a voluntary case,
under any applicable bankruptcy, insolvency or other similar law now or
subsequently in effect, or the Owner Participant shall have consented to
the entry of an order for relief in an involuntary case under any such
law, or shall fail generally to pay its debts as such debts become due
(within the meaning of the United States Bankruptcy Code, as amended), or
a receiver, custodian or trustee (or other similar official) shall be
appointed for the Owner Participant or shall take possession of any
substantial part of its property, or the Owner Participant shall make a
general assignment for the benefit of its creditors, or shall enter into
an agreement of composition with its creditors; or (y) there shall be
filed against the Owner Participant an involuntary petition in bankruptcy
which results in an order for relief being entered or, notwithstanding
that an order for relief has not been entered, the petition is not
dismissed within 60 days after the date of the filing of the petition, or
there shall be filed under any Federal or state law relating to
bankruptcy, insolvency or relief of debtors any petition against the
Owner Participant for reorganization, composition, extension or
arrangement with creditors which either (i) results in a finding or
adjudication of insolvency of the Owner Participant or (ii) is not
dismissed within 60 days after the filing of such petition and any such
event materially adversely affects the Holders of the Lessor Bonds; or
(k) after a Special Transfer has been effected and amounts payable to
the Owner Participant have been paid in full in accordance with the
Participation Agreement, any violation or breach of any covenant of the
Company concerning the Company's continuing obligation to pay rent under
the Lease or concerning its obligation to effectuate and evidence an
assumption as described in "Description of the Lease
Indentures_Assumption by the Company."
(Lease Indenture, Section 7.01)
Notice; Waiver; Acceleration and Remedies
The Lease Indenture Trustee, if it has knowledge of any Lease Indenture
Default or Lease Indenture Event of Default, is required to give notice
thereof (unless such Lease Indenture Default or Lease Indenture Event of
Default shall have been waived or cured) within 90 days thereof in writing
to the Holders of the outstanding Lessor Bonds of all series, the Owner
Trustee, the Owner Participant and the Company; provided that, except in
the case of a default in the payment of principal of or premium, if any, or
interest on any Lessor Bond, the Lease Indenture Trustee will be protected
in withholding such notice if in good faith it determines that the
withholding of such notice is in the interest of the Holders; and provided,
further, that in the case of a Lease Indenture Event of Default specified
in clause (g) above, no such notice will be given until at least 30 days
after the occurrence thereof. In the event the Lease Indenture Trustee has
knowledge of an Event of Loss, Deemed Loss Event or Financial Event, the
Lease Indenture Trustee shall give prompt notice thereof, and in any event,
within 90 days after occurrence thereof, to the Holders of the outstanding
Lessor Bonds. (Lease Indenture, Section 8.02) For all purposes of the Lease
Indenture, in the absence of actual knowledge of a Responsible Officer of
the Lease Indenture Trustee, the Lease Indenture Trustee will not be deemed
to have knowledge of any Lease Indenture Default or Lease Indenture Event
of Default (except the failure of the Company to pay any installment of
basic rent within 5 business days after the same has become due) unless
notified thereof in writing by any Holder, the Owner Trustee, the Owner
Participant or the Company. (Lease Indenture, Section 8.03)
The Holders of a majority in aggregate principal amount of the
outstanding Lessor Bonds of all series, considered as one class, may on
behalf of the Holders of all Lessor Bonds of all series waive any past
Lease Indenture Default or Lease Indenture Event of Default and its
consequences, except that only the Holders of all Lessor Bonds affected
thereby may waive a Lease Indenture Default or Lease Indenture Event of
Default (a) in the payment of the principal of or premium, if any, or
interest on such Lessor Bonds, or (b) in respect of a covenant or other
provision of the Lease Indenture which under the Lease Indenture cannot be
modified or amended without the consent of the Holder of each outstanding
Lessor Bond affected. (Lease Indenture, Section 7.09)
If a Lease Indenture Event of Default has occurred and is continuing, the
Lease Indenture Trustee may, and upon the written request of, and the
proffering of satisfactory indemnity by, the Holders of a majority in
aggregate principal amount of the outstanding Lessor Bonds of all series,
considered as one class, shall, declare the unpaid principal amount of all
outstanding Lessor Bonds, with accrued interest thereon, to be immediately
due and payable, but the Lease Indenture Trustee shall not make any such
declaration in the case of a Lease Indenture Event of Default which
resulted from a failure by the Company to make a payment of rent under the
Lease until the Owner Trustee and the Owner Participant have been given an
opportunity to cure such default as described below under "Rights of Lessor
to Cure and Purchase Lessor Bonds." (Lease Indenture, Sections 7.02, 7.16
and 8.03)
Upon the occurrence and during the continuance of a Lease Indenture Event
of Default, the Lease Indenture Trustee may, and upon the written request
of, and the proffering of satisfactory indemnity or security by, the
Holders of a majority in aggregate principal amount of the outstanding
Lessor Bonds of all series, considered as one class, shall, subject to the
Lessor's rights described under the following two paragraphs and under
"Rights of Lessor to Cure and Purchase Lessor Bonds" below, exercise any or
all of the rights and remedies available to it under the Lease Indenture
and applicable law, including (a) the institution of judicial proceedings,
either at law or in equity or otherwise, to protect its rights and those of
the Holders under the Lease Indenture or for foreclosure of the lien
thereof and (b) the sale in whole or in part of the Lease Indenture Estate.
(Lease Indenture, Sections 7.03 through 7.08 and Section 8.03) No Holder
shall have any right to pursue any remedy under the Lease Indenture unless
the Lease Indenture Trustee shall have been given written notice of a Lease
Indenture Event of Default, the Holders of at least 25% in principal amount
of all Lessor Bonds then outstanding shall have requested the Lease
Indenture Trustee to pursue a remedy, the Lease Indenture Trustee shall
have been offered satisfactory indemnity, the Lease Indenture Trustee shall
have failed to comply with such request within 60 days after receipt of
such request and the Lease Indenture Trustee shall not have received during
such 60 day period any direction inconsistent with such request from
Holders of a majority in principal amount of outstanding Lessor Bonds.
(Lease Indenture, Section 7.10)
Except in the case of Lease Indenture Events of Default (i) described in
clauses (f) through (k) under "Lease Indenture Events of Default" above and
(ii) occurring or continuing after a Special Transfer, an assumption of the
Lessor Bonds by the Company as described below under "_Assumption by the
Company" or any of certain drawings upon a letter of credit, and except as
described in the next paragraph, the exercise of remedies against the
Company under the Lease will be controlled by the Owner Trustee. In such
circumstances, however, the Owner Trustee will be required to consult with
the Lease Indenture Trustee as to any proposed exercise or pursuit of
remedies and the Lease Indenture Trustee will have the right to cause the
Owner Trustee to forbear from such action if the Lease Indenture Trustee
has determined that such action would have a material adverse effect on the
Holders of the Lessor Bonds. In addition, the Owner Trustee will not
exercise or pursue remedies in a manner which would unreasonably deprive
the Holders of the Lessor Bonds of a material right or remedy unless the
Owner Trustee is commensurately adversely affected. There could be
circumstances, therefore, in which amounts due on the Lessor Bonds are not
paid and the Lease Indenture Trustee is not able to direct the Owner
Trustee's pursuit of remedies against the Company under the Lease. (Lease
Indenture, Sections 7.03 and 7.17)
Although, as described above, the exercise of remedies will generally be
within the control of the Owner Trustee, the Lease Indenture Trustee will
have the right to sell the Lease Indenture Estate in foreclosure or similar
proceedings. However, if such sale occurs prior to or simultaneously with
the termination of the Lease, the Lease Indenture Trustee must have offered
to sell to the Owner Trustee the Lease Indenture Estate at a stated price
determined by the Lease Indenture Trustee. If the Owner Trustee does not,
within 60 days following receipt of such offer, elect to so purchase the
Lease Indenture Estate, the Lease Indenture Trustee may foreclose and sell
the Lease Indenture Estate within 180 days to any person (other than the
Lease Indenture Trustee or a Holder or Holders of more than 25% of the
outstanding Lessor Bonds (including, in each case, affiliates thereof) )
for not less than such stated price. In the event of a sale by the Lease
Indenture Trustee pursuant to a foreclosure or similar proceeding (other
than a sale to the Owner Trustee), the Lease Indenture Trustee will have
the right to terminate the Lease in connection with such sale subject,
however, to the Company's rights under the Lease. (See "Limitation on
Remedies" below.) (Lease Indenture, Section 7.17)
If a Lease Indenture Event of Default occurs and is continuing, and the
maturity of the Lessor Bonds has been accelerated, any sums held or
received by the Lease Indenture Trustee may be applied to reimburse the
Lease Indenture Trustee for any expense (to the extent not previously
reimbursed) incurred by it and to pay its fees and any other amounts due it
prior to any payments to Holders of the Lessor Bonds. (Lease Indenture,
Section 3.03)
In the event of a bankruptcy of the Owner Participant, it is possible
that, notwithstanding that the Undivided Interest is owned by the Owner
Trustee in trust, the Undivided Interest and the related Lease and Pledged
Lessor Bonds might become subject to bankruptcy proceedings. In such
event, payments under such Lease or on such Pledged Lessor Bonds might be
interrupted and the ability of the Lease Indenture Trustee to exercise its
remedies under the Lease Indenture might be restricted, although the Lease
Indenture Trustee would retain its status as a secured creditor in respect
of the Lease and the Undivided Interest.
Rights of Lessor to Cure and Purchase Lessor Bonds
The Lease Indenture provides that a Lease Indenture Event of Default is
to be deemed cured if such Lease Indenture Event of Default results from a
non-payment of rent under the Lease and the Owner Trustee or Owner
Participant has paid all principal of and interest on the Lessor Bonds due
(other than by acceleration) on the date such rent was payable within 15
days after receipt by the Owner Trustee of notice of such nonpayment.
However, such right of the Owner Trustee or Owner Participant to cure the
non-payment of rent is limited to not more than six basic rent payment
dates or two consecutive basic rent payment dates during the Lease term.
(Lease Indenture, Section 7.16)
If a Lease Indenture Event of Default has occurred and is continuing and
(a) the Lessor Bonds have been accelerated and (b) the Owner Trustee,
within 30 days after receiving notice thereof from the Lease Indenture
Trustee, has given written notice to the Lease Indenture Trustee of its
intention to purchase all the Lessor Bonds, then, upon receipt by the Lease
Indenture Trustee within 10 business days after such notice from the Owner
Trustee of an amount equal to the aggregate unpaid principal amount of and
interest on the Lessor Bonds then outstanding (as well as any interest on
overdue principal and, to the extent permitted by law, overdue interest),
each Holder of a Lessor Bond will be required to sell such Lessor Bond, and
its right, title and interest in and to the Lease Indenture and the Lease
Indenture Estate, to the Owner Trustee. (Lease Indenture, Section 7.16)
Limitation on Remedies
Notwithstanding any other provision of the Lease Indenture, so long as no
Lease Event of Default has occurred and is continuing, the Lease Indenture
Trustee may not take or cause to be taken any action (x) contrary to the
Company's rights under the Lease, including the right to quiet use,
enjoyment and possession of the Undivided Interest or (y) that would
require prepayment of any scheduled payment of rent thereunder. (Lease
Indenture, Section 7.20)
Assumption by the Company
Under certain circumstances and subject to the satisfaction of certain
conditions, the Company, or the Company and an Affiliate thereof jointly,
may elect, or may be required, to assume the obligations of the Owner
Trustee under the Lease Indenture and on all or a portion of the Lessor
Bonds. Upon such assumption, the Lease Indenture and the Lessor Bonds so
assumed will become direct obligations of the Company (and such Affiliate),
the Lease will terminate, the Undivided Interest of the Lessor in Unit 3
will be transferred to the Company (and/or any such Affiliate) and the
Owner Trustee will be released and discharged from all further obligations
and liabilities under the Lease Indenture and on the Lessor Bonds so
assumed. Although certain changes would be made to the Lease Indenture to
reflect the termination of the Lease, the lien on and security interest in
the Undivided Interest created by the Lease Indenture would not be affected
thereby. (Lease Indenture, Section 2.16)
Upon the occurrence of an Event of Loss, Deemed Loss Event, Financial
Event or Lease Event of Default, the Owner Participant can demand that the
Company pay the excess of Casualty Value (in the case of an Event of Loss
or Lease Event of Default) or Special Casualty Value (in the case of a
Deemed Loss Event or Financial Event, subject to certain exceptions) over
the principal of and accrued interest on the Lessor Bonds then outstanding.
(Participation Agreement, Sections 15 (a), (b) and (c) and Section 16(a))
At the time of the issuance of the Initial Lessor Bonds, the Company issued
and delivered to the Owner Participant a promissory note evidencing the
Company's obligation to pay such amounts. (Participation Agreement, Section
16(a)) In addition, upon the occurrence of any of such Events, the Owner
Participant can effect a Special Transfer of the beneficial interest in the
owner trust to the Company. (Participation Agreement, Section 15(d))
If an Event of Loss, Deemed Loss Event or Financial Event has occurred in
respect of which the Owner Participant has demanded payment as described
above or in response to which a Special Transfer has been effected, the
Company, in order to effectuate and evidence an assumption of the Owner
Trustee's obligations under the Lease Indenture and on the Lessor Bonds,
may, and upon the direction of the Lease Indenture Trustee (to be given at
the direction of the Holders of not less than 5% in aggregate principal
amount of the Lessor Bonds outstanding of all series, considered as one
class) or the Owner Trustee, shall promptly, commence and diligently pursue
all steps requisite to deliver to the Lease Indenture Trustee, among other
things, (a) a duly executed assumption agreement of the Company (and, if
applicable, any of its Affiliates), (b) an opinion of counsel as to, among
other things, compliance with the conditions of the assumption (including
the obtainment of any necessary governmental actions), (c) an indenture
supplemental to the Lease Indenture that, among other things, confirms the
release of the Owner Trustee and contains provisions amending the Lease
Indenture to delete references to the Lease and to reflect the fact that
the obligations of the Owner Trustee have been assumed by the Company (and,
if applicable, such Affiliate), (d) a certificate of responsible officers
of the Company (and, if applicable, such Affiliate) to the effect that (i)
to the best of such officers' knowledge, no Lease Indenture Default or
Lease Indenture Event of Default has occurred and is continuing, (ii) such
assumption is permitted by the provisions of the Company's (and, if
applicable, such Affiliate's) articles of incorporation and by-laws (or
similar corporate documents) and (iii) the Company (and, if applicable,
such Affiliate) is not insolvent at the time of such assumption and (e) a
certificate of a responsible officer of the Owner Trustee to the effect
that, to the best of such officer's knowledge, no Lease Indenture Default
or Lease Indenture Event of Default has occurred and is continuing (Lease
Indenture, Section 2.16); provided, however, that, upon the occurrence of a
Special Transfer, the Company, without further act, will be deemed to have
assumed the obligation, and will be obligated to pay the principal of and
premium, if any, and interest on the Lessor Bonds, notwithstanding (x) the
Lessor's coextensive obligation to pay the principal of and premium, if
any, and interest on the Lessor Bonds (which shall continue until the
documents listed above have been delivered to the Lease Indenture Trustee)
or (y) any provision of any transaction document to the contrary.
(Participation Agreement, Section 15(d)(4))
Upon satisfaction of the conditions and payment of the amounts described
in the preceding paragraph, the Lessor is required to transfer title to the
Undivided Interest to the Company as directed by the Company (or an
Affiliate of the Company), subject to the lien of the Lease Indenture.
(Lease, Sections 9(c) and (d))
If the Company makes the payments to the Owner Participant as described
above upon the occurrence of an Event of Loss, Deemed Loss Event, Financial
Event or Lease Event of Default, but has not yet delivered the documents
listed in the second preceding paragraph, then the Owner Participant must
make a Special Transfer. (Participation Agreement, Section 15(d))
Any of the following events will constitute "Events of Loss":
(a) a final shutdown of Unit 3 which could result from any of several
events, including, and in some cases, subject to certain grace periods,
certain NRC licensing problems with respect to Unit 3, direction by the
NRC or other governmental authority to suspend operation of Unit 3 for
reasons of radiological health and safety for a period exceeding or
reasonably expected (in the opinion of an independent expert) to exceed
24 consecutive months, cessation of operation of Unit 3 for such period
if resumption of operation would require concurrence of the NRC or other
governmental authority, the occurrence of certain Nuclear Incidents (as
defined in the Atomic Energy Act) with respect to Unit 3 as a result of
which Unit 3 ceases to operate for a period exceeding or reasonably
expected (in the opinion of an independent expert) to exceed 18
consecutive months, damage to Unit 3 and failure to restore Unit 3 within
the shorter of three years or the period from the occurrence of such
damage until the end of the Lease term, the destruction of Unit 3, or a
declaration by the NRC that an Extraordinary Nuclear Occurrence (as
defined in the Atomic Energy Act) has occurred with respect to Unit 3;
(b) a requisition of title of Unit 3 or the Undivided Interest or
certain shared facilities or the site of Unit 3 by a governmental
authority for a period of time which exceeds or is reasonably expected to
exceed the shorter of 60 months and the remaining Lease term, subject to
certain contest rights of the Company; or
(c) a requisition of the use of Unit 3 or the Undivided Interest or
certain shared facilities or the site of Unit 3 by a governmental
authority, other than a requisition of title, which would significantly
interfere with the use of Unit 3 or the Undivided Interest, and which
requisition is for a period of time which exceeds or is reasonably
expected to exceed the shorter of 60 months and the remaining Lease term,
subject to certain contest rights of the Company.
(Participation Agreement, Appendix A)
Any of the following events will constitute "Deemed Loss Events":
(a) the Lessor or Owner Participant becoming subject to adverse
regulation as a public utility solely as a result of the Transaction;
(b) certain changes and/or new interpretations by a governmental
authority regarding applicable law, including the Price-Anderson Act, the
Atomic Energy Act, the Nuclear Waste Act or NRC regulations, as a result
of which (i) the Lessor or Owner Participant would more likely than not
become liable or responsible in any capacity for payments owed in respect
of the nuclear waste fund or in respect of, among other things, the
handling or disposal of nuclear waste and other radioactive or hazardous
materials or (ii) the Lessor or the Owner Participant may be prohibited
from asserting the limitation on liability of lessors provided by the
1988 amendments to the Price-Anderson Act or is more likely than not to
be prohibited from asserting any other material right, protection or
defense available under applicable law as of the date of closing of the
Transactions with respect to civil or criminal actions brought in
connection with a nuclear incident;
(c) the Lessor or Owner Participant more likely than not being required
to become a licensee under the Atomic Energy Act or otherwise subject to
the Atomic Energy Act or otherwise subject to NRC or other significant
regulation relating to nuclear energy, environmental or safety matters
solely as a result of the Transaction; or
(d) any governmental action or change in applicable law the effect of
which is more likely than not to (i) cause the Lessor or Owner
Participant to become liable with respect to the decommissioning of Unit
3 or (ii) constitute an assertion that (x) the exercise of certain rights
of the Lessor or Owner Participant would constitute impermissible control
over Unit 3 or the licensees of Unit 3 or would violate certain NRC or
Atomic Energy Act regulations or (y) the acquisition or transfer of the
Undivided Interest would violate other provisions of applicable law.
(Participation Agreement, Appendix A)
Any of the following events will be deemed "Financial Events" if it
remains not cured following expiration of any applicable notice or cure
period (there being no such notice or cure period in the case of the events
described in clauses (f) and (g) below) and if the Company shall not have
timely provided the Owner Participant with a letter of credit:
(a) the Company shall have failed to maintain, as of the end of any
fiscal quarter, total equity capital (including preferred stock) at least
equal to 30% of the sum of total capitalization plus certain short-term
debt;
(b) the Company shall have failed to maintain, in respect of the twelve-
month period ending on the last day of any fiscal quarter, a fixed charge
coverage ratio of at least 1.50;
(c) except for certain permitted transactions, the Company shall have
sold, assigned, or otherwise disposed of any substantial part of its
assets other than in the ordinary course of business without the prior
approval of the Owner Participant, provided that the event described in
this clause (c) will not constitute a Financial Event if the Company has
delivered first mortgage bonds to the Owner Participant (see "Other
Agreements _ Participation Agreement");
(d) the Company shall have merged with or into or consolidated with or
into any other corporation or entity in violation of certain conditions
without the prior approval of the Owner Participant;
(e) the Company shall have created, assumed or suffered to exist liens
(except for certain permitted liens) upon its assets;
(f) subject to certain exceptions, the acceleration of certain
indebtedness of the Company for borrowed money or default in payment of
such indebtedness at maturity, if the total of all such indebtedness so
accelerated or defaulted exceeds $10,000,000;
(g) the occurrence of any of the events described in clause (e) under
"Description of the Leases_Lease Events of Default";
(h) certain events relating to termination of certain of the Company's
pension plans; or
(i) Entergy shall cease to own, directly or indirectly, all of the
common stock equity and all of the voting stock of the Company or its
permitted successors (other than preferred stock that has only limited
voting rights upon default in the payment of dividends).
In general, the cure periods in respect of Financial Events of the type
other than those described in clauses (f) and (g) above are 365 days.
(Participation Agreement, Appendix A)
The Company (or the Company and one of its Affiliates) may, at its
option, but is not required to, assume all or a portion of the Lessor Bonds
if it chooses to exercise any of certain purchase options described under
"Description of the Leases _ Purchase Option for Significant Expenditures"
or "_Periodic Purchase Option" or under "Other Agreements _ Participation
Agreement." Any such assumption would be conditioned upon the prior
delivery to the Lease Indenture Trustee of certain documents as described
under "_Assumption by the Company." (See Lease Indenture, Section 2.16(b);
Lease, Sections 13(f) and (g); and Participation Agreement, Section 16(d))
Defeasance
The Lessor Bonds of any series, or any portion of the principal amount
thereof, will, at or prior to the maturity thereof, be deemed to have been
paid for purposes of the Lease Indenture, and the entire indebtedness of
the Owner Trustee (or other obligor thereon) in respect thereof will be
deemed to have been satisfied and discharged, if there shall have been
irrevocably deposited with the Lease Indenture Trustee, in trust, either
(a) moneys in an amount which will be sufficient, or (b) Federal Securities
(as defined below), which do not contain provisions permitting the
redemption or other prepayment thereof at the option of the issuer thereof,
the principal of and the interest on which when due, without any regard to
reinvestment thereof, will provide moneys which, together with the moneys,
if any, deposited with or held by the Lease Indenture Trustee, will be
sufficient, to pay when due the principal of and premium, if any, and
interest due and to become due on such Lessor Bonds on and prior to the
maturity thereof. For this purpose, the term "Federal Securities" is
defined as direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America or certificates of an ownership interest in the principal of or
interest on such obligations. (Lease Indenture, Section 11.01)
Releases
The Lease Indenture Trustee will release from the lien of the Lease
Indenture any property subject to the lien thereof which is taken by any
governmental authority pursuant to a power of eminent domain or other right
to acquire such property (whether or not such taking constitutes an Event
of Loss) upon its receipt of, among other things, a written request from
the Owner Trustee or the Company requesting such release and the net
proceeds of any property so taken. (Lease Indenture, Section 13.01)
Subject to the following paragraph, the Owner Trustee or, with the Owner
Trustee's consent, the Company, may obtain the release from the lien of the
Lease Indenture of the Owner Trustee's interest in any component of Unit 3
the removal of which would not materially impair the operating capacity,
cost efficiency or value of Unit 3, and the Lease Indenture Trustee will
release from the lien of the Lease Indenture its interest in any such
component upon its receipt of, among other things, a written request from
the Owner Trustee or the Company requesting such release and a certificate
of an engineer or other expert (who in certain cases will be required to be
independent of the Owner Trustee and the Company and any Affiliate of
either thereof) certifying (x) the value of the property to be released and
(y) that, in the opinion of such expert, the proposed release will not
impair the security under the Lease Indenture in violation of the
provisions thereof. (Lease Indenture, Section 13.02)
In addition to the release provisions described above, the Owner Trustee
or, with the Owner Trustee's consent, the Company, may sell or otherwise
dispose of, free from the lien of the Lease Indenture and without obtaining
any release or other consent from the Lease Indenture Trustee, the Owner
Trustee's interest in any components of Unit 3 which have become obsolete
or otherwise permanently no longer useful for the operation of Unit 3. All
replacement components incorporated in Unit 3 will, to the extent of the
Owner Trustee's interest therein, immediately become subject to the lien of
the Lease Indenture. (Lease Indenture, Section 13.03)
Supplemental Indentures
Without the consent of the Holders of any Lessor Bonds, the Owner Trustee
and the Lease Indenture Trustee may enter into supplemental indentures for
the following purposes:
(a) to establish the form and terms of Lessor Bonds of any series;
(b) to evidence the succession of another bank or trust company to the
Owner Trustee and the assumption by any such successor of the covenants
of the Owner Trustee contained in the Lease Indenture and in the Lessor
Bonds or the appointment of a co-trustee pursuant to the terms of the
Trust Agreement;
(c) to evidence the succession of a new trustee or the appointment of a
co-trustee or a separate trustee under the Lease Indenture;
(d) to grant or confer upon the Lease Indenture Trustee for the benefit
of the Holders any additional rights, remedies, powers, authority or
security which may be lawfully so granted or conferred and which grant or
conferral is not contrary to or inconsistent with the Lease Indenture;
(e) to add to the covenants of the Owner Trustee for the benefit of the
Holders or to evidence the surrender of any right or power conferred in
the Lease Indenture upon the Owner Trustee;
(f) to convey, transfer and assign to the Lease Indenture Trustee, and
to subject to the lien of the Lease Indenture, additional properties or
assets, or to correct or amplify the description of any property at any
time subject to the lien of the Lease Indenture or to assure, convey and
confirm unto the Lease Indenture Trustee any property subject or required
to be subject to the lien of the Lease Indenture;
(g) to modify, eliminate or add to the provisions of the Lease Indenture
to the extent necessary to qualify or continue the qualification of the
Lease Indenture (including any supplemental indenture) under the Trust
Indenture Act, or under any similar federal statute subsequently enacted,
or to add to the Lease Indenture such other provisions as may be
expressly permitted by that Act;
(h) to permit or facilitate the issuance of Lessor Bonds in
uncertificated form;
(i) to change or eliminate any provision of the Lease Indenture;
provided, however, that if such change or elimination will adversely
affect the interests of the Holders of Lessor Bonds of any series, such
change or elimination will become effective with respect to such series
only when no Lessor Bond of such series remains outstanding;
(j) to evidence an assumption by the Company of the Lessor Bonds, and
the release of the Owner Trustee from its obligations thereon, and to
make the related changes in the Lease Indenture;
(k) to cure any ambiguity or to correct or supplement any provision in
the Lease Indenture which may be defective or inconsistent with any other
provision in the Lease Indenture; or
(l) to make any other provisions with respect to matters or questions
arising under the Lease Indenture, provided such action shall not
adversely affect the interests of the Holders of the Lessor Bonds in any
material respect.
(Lease Indenture, Section 10.01)
Subject to the foregoing paragraph, with the consent of the Holders of
not less than a majority in aggregate principal amount of the outstanding
Lessor Bonds of all series, considered as one class, the Owner Trustee may,
and the Lease Indenture Trustee shall, enter into supplemental indentures
for the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, the Lease Indenture; provided that if
there is more than one series of Lessor Bonds outstanding and if a proposed
supplemental indenture directly affects the Holders of at least one, but
not all, of such series, then only the consent of a majority in aggregate
principal amount of the outstanding Lessor Bonds of all series so directly
affected, considered as one class, will be required; and provided, further,
that without the consent of the Holder of each outstanding Lessor Bond
directly affected thereby no such supplemental indenture may:
(a) change the stated maturity of the principal of, or any installment
of interest on, or the date or circumstances of payment of premium, if
any, on, any Lessor Bond, or reduce the principal amount thereof or the
interest thereon or any premium payable upon the redemption thereof, or
change the place of payment where, or the coin or currency in which, any
Lessor Bond or the premium, if any, or the interest thereon is payable,
or impair the right to institute suit for the enforcement of any such
payment of principal or interest on or after the stated maturity thereof
(or, in the case of redemption, on or after the redemption date) or such
payment of premium, if any, on or after the date such premium becomes due
and payable or change the dates or amounts of payments to be made through
the operation of the sinking fund in respect of such Lessor Bonds;
(b) permit the creation of any lien prior to or, except with respect to
additional series of Lessor Bonds issued in accordance with the Lease
Indenture, equal to the lien of the Lease Indenture with respect to any
of the Lease Indenture Estate, or deprive any Holder of the benefit of
the lien of the Lease Indenture upon any part of the Lease Indenture
Estate for the security of its Lessor Bonds;
(c) reduce the percentage in principal amount of the outstanding Lessor
Bonds, the consent of whose Holders is required for any supplemental
indenture or for any waiver provided for in the Lease Indenture;
(d) modify the order of priorities in which distributions of income and
proceeds from the Lease Indenture Estate are to be made under the Lease
Indenture;
(e) modify the definitions of "Outstanding," "Lease Indenture Default"
or "Lease Indenture Event of Default";
(f) modify any of the above provisions or the provisions of the Lease
Indenture dealing with waivers of past defaults, except to increase the
percentage of the Holders whose consent is required for certain action or
to provide that certain other specified provisions of the Lease Indenture
cannot be modified or waived without the consent of the Holder of each
Lessor Bond affected thereby.
(Lease Indenture, Section 10.02)
Limitations on Amendments of Other Documents
The Lease Indenture Trustee, without the consent of the Holders of any
Lessor Bonds, (a) will, upon receipt of written instructions to such effect
from the Company and the Owner Trustee, consent to amendments of or
supplements to, or waivers of any provisions of, the Lease or any other
transaction document included in the Lease Indenture Estate and (b) may
join in the execution of amendments of or supplements to, or waivers of any
provisions of, the Participation Agreement, in each case for the purpose of
adding any provision to, or changing in any manner or waiving or
eliminating any provisions of, any such transaction document; provided,
however, that, without the consent of the Holders of not less than a
majority in aggregate principal amount of the outstanding Lessor Bonds of
all series, considered as one class, the Lease Indenture Trustee will not
consent to any such amendment, supplement or waiver which amends or waives
certain provisions of the Lease relating to, among other things, liens, the
right of the Company to assign or sublease its rights and obligations under
the Lease, certain Lease Events of Default or the exercise of remedies
under the Lease; provided, further, that, without the consent of the
Holders of the outstanding Lessor Bonds of all series, the Lease Indenture
Trustee will not consent to any such amendment, supplement or waiver which
will:
(1) amend or waive certain provisions of the Lease relating to, among
other things, the sufficiency of certain rental payments to provide funds
at least equal to scheduled amounts payable on the Lessor Bonds, the "net
lease" obligations of the Company thereunder and the Company's
unconditional obligation to make basic rental and certain other payments
under the Lease, the obligation of the Owner Trustee to redeem the Lessor
Bonds in the event of an obsolescence termination of the Lease by the
Company, or the Lease Event of Default occasioned by the failure of the
Company to pay basic rent when due;
(2) modify the definitions of "Lease Default" or "Lease Event of
Default"; or
(3) (A) release the Company from its obligation to pay basic rent,
Casualty Value, Special Casualty Value or any payment required to be made
by it pursuant to an exercise of remedies under the Lease or (B) reduce
the amount or change the timing of any payments of basic rent, Casualty
Value, Special Casualty Value or any payments required to be made by the
Company pursuant to an exercise of remedies under the Lease so that such
payments would be insufficient to pay the principal of, and interest on,
the outstanding Lessor Bonds of all series when due.
(Lease Indenture, Section 10.03)
Limitation of Liability
The Lessor Bonds will not be direct obligations of, or guaranteed by, the
Company, any Owner Participant, or any institution or individual acting as
Owner Trustee in its individual capacity. All payments to be made by the
Owner Trustee under the Lease Indenture or on the Lessor Bonds will be made
only from the Lease Indenture Estate or the income and proceeds received by
the Lease Indenture Trustee therefrom. Neither the Owner Participant, the
Lease Indenture Trustee nor the Owner Trustee in its individual capacity,
will be liable to any Holder for any amounts payable on any Lessor Bonds or
otherwise under the Lease Indenture. (Lease Indenture, Section 2.15)
Additional Bonds
The Lease Indenture permits the issuance of additional Lessor Bonds at
any time or from time to time, subject to certain conditions, for cash in
the original principal amount of such additional Lessor Bonds for the
following purposes: (a) refunding a previously issued series of Lessor
Bonds in whole or in part and providing funds for the payment of certain
expenses incurred in connection therewith and/or (b) providing funds for
all or any portion of the Owner Trustee's share of certain capital
improvements to Unit 3. (Lease Indenture, Section 2.05) All of the Lessor
Bonds issued and outstanding under the Lease Indenture will rank on a
parity with each other and will as to each other be secured equally and
ratably thereunder, without preference, priority or distinction of any
thereof over any other by reason of difference in time of issuance or
otherwise. (Lease Indenture. Section 2.03)
DESCRIPTION OF THE LEASES
The statements contained under this caption are intended to summarize the
Leases as they relate to the Collateral Bonds; they do not purport to be
complete and are qualified in their entirety by reference to the Leases,
copies of which have been filed as exhibits to the Registration Statement
of which this Prospectus is a part. Each Lease is an entirely separate
lease but contains substantially the same terms and provisions as each
other Lease. In the following summary, references to the Lease, the Lease
Indenture, the Owner Participant, the Undivided Interest, the Lessor and
the Lessor Bonds relate to each Lease.
Term and Rentals
The Lessor has acquired its Undivided Interest and has leased such
interest of the Company pursuant to the Lease, which has a term expiring on
July 1, 2017 unless earlier terminated or extended as described below.
Basic rent is required to be paid by the Company under the Lease in
immediately available funds on each January 2 and July 2, through July 2,
2017. (Lease, Sections 2(b) and 3(a)) The amount of basic rent payable
under the Lease on each basic rent payment date will be calculated to be at
least equal to the scheduled amount of principal of and interest then
payable on all Lessor Bonds then outstanding. (Lease, Section 3(g)) Each
payment of basic rent by the Company during such time as the Lease
Indenture is in effect will be made to the Lease Indenture Trustee and
applied first to the payment of principal and interest due from the Lessor
on the Lessor Bonds. Except in the case of an acceleration of Lessor Bonds
due to a continuing Lease Indenture Event of Default, the balance of any
payments of basic rent under the Lease, after payment of the scheduled
principal of and interest on the Lessor Bonds, will be distributed to the
Owner Trustee on behalf of the Owner Participant, as beneficial owner of
the trust which is the owner of the Undivided Interest. (Lease Indenture,
Sections 3.01, 3.03 and 3.06)
Net Lease
The obligations of the Company under the Lease are those of a lessee
under a "net lease", and the Company will be responsible under the Lease
for paying all insurance premiums, operating and maintenance costs and all
other similar costs associated with the Undivided Interest. Payments of
rent under the Lease by the Company are to be made without counterclaim,
set-off, defense, abatement, suspension or reduction except for certain
rights of set-off the exercise of which would not reduce the amount of rent
required to be paid by the Company to an amount insufficient to pay in full
the principal of, premium, if any, and interest on the Lessor Bonds then
due. (Lease, Section 4)
Capital Improvements
The Company may incur costs from time to time in connection with capital
improvements to Unit 3. Certain of such costs, based on the Owner
Trustee's proportionate interest in Unit 3, may be financed through a
supplemental financing. (See "Description of the Lease Indentures _
Additional Bonds.") In the event of such a supplemental financing, the
rent under the Lease will be increased to cover the additional debt
service. In addition, the Owner Participant may elect to make an
additional equity investment with respect to the cost of any capital
improvements on terms to be agreed upon. (Lease, Section 8(f))
Rights to Assign or Sublease
The Company is permitted to assign, sublease, encumber or transfer its
rights and obligations under the Lease and other documents related to the
Transactions subject to certain conditions, including that the Company
remain the primary obligor on the Lease. (Lease, Section 11)
Insurance
The Company is required under the Lease to carry and maintain, with
respect to the Undivided Interest, Unit 3 and the Unit 3 site, the
insurance described below:
(a) Provided that such insurance is commercially available at a
commercially reasonable cost, "all-risk" property insurance (excluding
flood and earthquake insurance) covering physical loss with respect to
Unit 3;
(b) Bodily injury and property damage liability insurance covering
claims arising out of the ownership, operation, maintenance, condition or
use of Unit 3; and
(c) Nuclear liability insurance.
With respect to each of the types of insurance described in (a) through
(c) above, the Company is required to maintain such insurance in such
amounts and with such terms as are consistent with the Company's normal
practice, and in any event in such amounts and with such terms as are
consistent with applicable law and prudent utility practice. The Company
is also required to maintain supplier's and transporter's insurance and
master workers policy coverages, in each case in amounts consistent with
prudent utility practice and applicable law.
In addition, subject to such insurance being commercially available at a
commercially reasonable cost, the Company is further required to maintain
replacement power insurance covering not less than 90 percent of the cost
of replacing power, as reasonably estimated by the Company in the event of
damage or destruction at the Unit 3 site. However, the Company shall not
be required to maintain such replacement power coverage if the Company
provides the Owner Participant with a letter of credit as described under
"Other Agreements _ Participation Agreement."
(Lease, Section 10)
Proceeds of property insurance received by the Lessor or the Company as a
result of the occurrence of an Event of Loss shall be applied in reduction
of the Company's obligation to make payment of the excess of Casualty Value
over the principal of and accrued interest on the Lessor Bonds to the Owner
Participant with the balance, if any, of such proceeds to be paid to the
Company, subject, however, to any priority allocation of such proceeds.
(Lease, Section 9(g)) In general, the Lease Indenture Trustee and the
Holders of the Lessor Bonds will have no rights in respect of the proceeds
of property insurance except for the assignment (to the extent, if any, of
amounts then due and owing in respect of the principal of and premium, if
any, and interest on the Lessor Bonds) by the Owner Trustee to the Lease
Indenture Trustee of the Owner Trustee's rights in respect of such proceeds
received as a result of the occurrence of an Event of Loss.
Purchase and Renewal Options at the End of the Lease Term
The Company has the option under the Lease to purchase at fair market
sales value the Lessor's Undivided Interest at the end of the term of the
Lease, or to renew the Lease for one or more periods of three years, at a
fair market rental value or, subject to receipt of a satisfactory appraisal
which will address certain tax matters, to renew the Lease at the end of
the initial Lease term at a fixed rate rental for a single period of at
least two years. (Lease, Sections 12 and 13) If the Company does not give
notice of its election to exercise the options to purchase the Undivided
Interest or renew the Lease not earlier than five but not later than two
years prior to the expiration of the Lease, the Lessor may, on at least one
year's prior written notice, terminate the Lease on the date specified in
the notice. Upon such termination, the Company must pay to the Lessor all
basic rent then due or accrued, together with any other amounts then
payable to the Owner Trustee, the Owner Participant and the Lease Indenture
Trustee. On or prior to such termination, the Lessor would be required to
deposit with the Lease Indenture Trustee cash in an amount equal to the
unpaid principal amount of all Lessor Bonds outstanding on such date, and
all premium, if any, and interest accrued or to accrue on and as of such
termination. (Lease, Section 14(c))
Purchase Option for Significant Expenditures
The Company has the option on any January 2 or July 2 on or after January
2, 2000 to terminate the Lease if the Company is planning or required to
make any significant expenditure for certain types of capital improvements
to Unit 3. On such January 2 or July 2, the Company must pay to the Lessor
an amount equal to the higher of the fair market sales value of the
Undivided Interest and Casualty Value determined as of such January 2 or
July 2 together with any other amounts then payable to the Owner Trustee,
the Owner Participant and the Lease Indenture Trustee and, assuming such
payment, the Lessor would be required to transfer the Undivided Interest to
the Company. If the Company has assumed all or a portion of the Lessor
Bonds then outstanding, such amount shall be reduced by the principal
amount of the Lessor Bonds so assumed. A "significant expenditure" is an
expenditure with respect to certain capital improvements to Unit 3 which
(i) for the period until and including September 28, 2009, shall have been
reasonably estimated by the Company to exceed $250,000,000 (as such amount
may be adjusted periodically in accordance with the Consumer Price Index)
and (ii) for the period from the day next succeeding the last day of the
period specified in clause (i) above until the end of the Lease term, shall
have been reasonably estimated by the Company to exceed $100,000,000 (as
such amount may be adjusted periodically in accordance with the Consumer
Price Index). (Lease, Section 13(f))
Periodic Purchase Option
The Company has the option on January 2 in each of the years 2000, 2005
and 2010 to terminate the Lease and to purchase the Undivided Interest. On
such January 2, the Company must pay to the Lessor an amount equal to the
higher of the fair market sales value of the Undivided Interest and
Casualty Value determined as of such January 2 together with any other
amounts then payable to the Owner Trustee, the Owner Participant and the
Lease Indenture Trustee. If the Company has assumed all or a portion of
the Lessor Bonds then outstanding, such amount shall be reduced by the
principal amount of the Lessor Bonds so assumed. (Lease, Section 13 (g))
Termination for Obsolescence
The Company has the option on any January 2 or July 2, on or after
January 2, 2000, to terminate the Lease if the Company's Board of Directors
determines that the Company's leasehold interest in the Undivided Interest
is uneconomic or obsolete for the Company's purposes. In such event, the
Lessor may elect to either retain the Undivided Interest or sell it to the
highest bidder. On the Lease termination date, if the Lessor has not
elected to retain the Undivided Interest, the Lessor will be required to
sell the Undivided Interest to the highest bidder (which may not be either
the Company or any Affiliate thereof) and the Company must pay to the
Lessor an amount equal to the excess, if any, of Special Casualty Value as
of the termination date over such net sale price, and any other amounts
then payable to the Owner Trustee, the Owner Participant and the Lease
Indenture Trustee; provided, however, that if the highest bid shall be less
than Special Casualty Value, the Lessee may reject the bid, in which case
no sale shall occur. If no such sale shall occur or if the Company shall
not have fulfilled its obligations in respect of such termination, the
Lease will continue in full force and effect. (Lease, Sections 14(a) and
14(b)) In the event of such a termination, the Lessor Bonds will be
redeemed. (Lease Indenture, Section 5.02(a))
Lease Events of Default
The following are Lease Events of Default:
(a) the Company shall fail to make or cause to be made, (x) any payment
of basic rent, Casualty Value, Special Casualty Value, or the payment of
the equity portion of Casualty Value or Special Casualty Value or any
other amount determined by reference to any of such amounts pursuant to
any of the transaction documents, within five business days after the
same shall become due or (y) any payment of supplemental rent (other than
Casualty Value, Special Casualty Value, or the payment of the equity
portion of Casualty Value or Special Casualty Value) including, without
limitation, any payments due under the Tax Indemnification Agreement,
within 20 days after the same shall become due or be demanded, as the
case may be; or
(b) the Company shall fail to perform or observe any covenant, condition
or agreement to be performed or observed by it under the Participation
Agreement relating to the maintenance of its corporate existence and
maintenance of certain of its material rights and franchises, and the
conditions under which it may merge, consolidate or dispose of all or
substantially all of its assets, or to comply with the return or the
assignment and sublease provisions of the Lease; or
(c) the Company shall fail to perform or observe any covenant, condition
or agreement (other than those referred to in clauses (a), (b), (f) and
(h) of this paragraph) to be performed or observed by it under the Lease
or any other transaction document (other than under the Tax
Indemnification Agreement or under the general tax indemnity provisions
of the Participation Agreement), and such failure shall continue for a
period of 30 days after there shall have been given to the Company by the
Lessor or the Owner Participant a notice specifying such failure and
requiring it to be remedied; provided, however, that the continuation of
such failure for a period of 30 days or more after such notice has been
so given (but in no event for a period which is greater than one year
after such notice has been given) shall not constitute a Lease Event of
Default if (a) such failure can be remedied but cannot be remedied within
such 30 days, (b) the Company is diligently pursuing a remedy of such
failure and (c) such failure does not impair in any material respect the
Company's ability to perform its obligations under any of the transaction
documents to which the Company is a party, or the Lessor's interest in
Unit 3 or the mortgage and security interest created by the Lease
Indenture; or
(d) any representation or warranty made by the Company in the Lease, any
other transaction document (other than the Tax Indemnification Agreement)
or any agreement, document or certificate delivered by the Company in
connection with the Transactions shall prove to have been incorrect in
any material respect when such representation or warranty was made or
given if such representation or warranty continues to be material and
remain materially incorrect at the time in question; provided, however,
that such failure of such representation or warranty to be correct shall
not constitute a Lease Event of Default if (i) the facts or circumstances
making such representation or warranty incorrect can be remedied or
changed so that such representation or warranty will thenceforth be
correct in all material respects, (ii) the Company is diligently pursuing
such a remedy or change, (iii) such remedy or change is, in fact,
accomplished within a period of one year from the time that the Company
has been notified or has knowledge of such misrepresentation or breach of
warranty and (iv) such facts or circumstances do not impair in any
material respect the Company's ability to perform its obligations under
any of the transaction documents to which the Company is a party or the
Lessor's interest in Unit 3 or the mortgage and security interest created
by the Lease Indenture; or
(e) (x) the Company shall (i) admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due, (ii) apply
for or consent to the appointment of, or the taking of possession by, a
receiver, custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (iii) make a general assignment for the
benefit of its creditors, (iv) commence a voluntary case under the United
States Bankruptcy Code, (v) file a petition seeking to take advantage of
any other law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or readjustment of debts, (vi) fail to
controvert in a timely and appropriate manner, or acquiesce in writing
to, any petition filed against it in an involuntary case under the United
States Bankruptcy Code, or (vii) take any corporate action for the
purpose of effecting any of the foregoing; or (y) a proceeding or case
shall be commenced, without the application or consent of the Company, in
any court of competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Company or of all or any
substantial part of its assets, or (iii) similar relief in respect of the
Company under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or readjustment of debts, and such proceeding
or case shall continue undismissed, or an order, judgment or decree
approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 or more days; or an order for
relief against the Company shall be entered in an involuntary case under
the United States Bankruptcy Code; or
(f) if the Company shall theretofore have provided a letter of credit to
the Owner Participant, the Company (A) shall fail, at any time, to
provide or maintain a letter of credit which complies with the terms and
conditions of the Participation Agreement, whether or not the Company has
used its best efforts to obtain and maintain such letter of credit or (B)
shall fail to provide a renewal or replacement letter of credit so
complying (l) by the tenth day prior to the stated termination date of an
existing letter of credit or (2) if the issuing bank of an existing
letter of credit shall have delivered notice, in accordance with the
terms thereof, that such existing letter of credit will be terminated
prior to its stated termination date, by the tenth day prior to the date
of such early termination; or
(g) the occurrence and continuance of an event of default under any
other lease, executed and delivered as of the same date as the Lease,
under which the Company is the lessee of an undivided interest in Unit 3,
and the declaration of such lease to be in default by any party thereto;
or
(h) any suspension, revocation or termination of the nuclear liability
insurance required to be maintained under the Lease; provided, however,
that such suspension, revocation or termination shall not constitute a
Lease Event of Default if the applicable insurer has failed to comply
with applicable notice termination provisions of the pertinent policy;
and provided, further, that the foregoing proviso shall cease to apply
upon the earlier of (x) five business days following receipt by the
Company of actual notice of such suspension, revocation or termination or
(y) the applicable termination date of such policy assuming that the
insurer had complied with its notice obligations under the pertinent
policy; or
(i) any material obligation of the Company under the Lease or any other
documents relating to the Transaction to which it is a party shall at any
time for any reason cease to be valid and binding on the Company, or
shall be declared to be null and void, or the validity or enforceability
thereof shall be contested by the Company or any governmental agency or
authority, or the Company shall assert that it has no further liability
or obligation under the Lease or any other document relating to the
Transactions to which it is a party; or
(j) final judgment for the payment of money in excess of $10,000,000
shall be rendered against the Company and the Company shall not have
discharged the same or provided for its discharge in accordance with its
terms or bonded the same or procured a stay of execution thereof within
60 days from the entry thereof; or
(k) the Company shall exercise, or commence any action or proceeding or
take any action seeking to exercise, any rights it may have under
Louisiana law to partition Unit 3.
(Lease, Section 15)
Remedies
Upon the occurrence and continuance of any Lease Event of Default, a
Lessor may exercise one or more of the remedies set forth in the Lease,
which include the following: (a) the Lessor may declare the Lease to be in
default or may terminate the Lease; (b) the Lessor may repossess the
Undivided Interest; (c) the Lessor may sell the Undivided Interest or any
part thereof; (d) the Lessor may hold, keep idle or lease to others all or
any part of the Undivided Interest; (e) the Lessor may demand any unpaid
rent plus, as liquidated damages, any of the following amounts which the
Lessor, in its sole discretion, shall specify: (i) an amount equal to the
excess of Casualty Value over the fair market rental value of the Undivided
Interest until the end of the remaining useful life of Unit 3 (discounted
to present value), (ii) an amount equal to the excess of Casualty Value
over the fair market sales value of the Undivided Interest, (iii) an amount
equal to the excess of the present value of all installments of basic rent
until the end of the Lease term over the present value of the fair market
rental value of the Undivided Interest until the end of such term, or (iv)
an amount equal to the highest of Casualty Value, such discounted fair
market rental value and such fair market sales value; and (f) if the Lessor
shall have sold all the Undivided Interest pursuant to clause (c) above,
the Lessor, in lieu of exercising its rights under clause (e) above may
demand that the Company pay to the Lessor, as liquidated damages, any
unpaid rent plus the amount of any deficiency between the sale proceeds and
Casualty Value together with interest on the amount of such rent and such
deficiency.
The remedies in the Lease are cumulative and in addition to any other
remedy available to the Lessor at law or in equity, and no exercise of any
remedy under the Lease will, except as specifically provided therein,
relieve the Company of any of its liabilities and obligations under the
Lease. (Lease, Section 16)
Quiet Enjoyment
The transaction documents provide that, unless a Lease Event of Default
has occurred and is continuing, the Company's use and possession of Unit 3,
including the Undivided Interest, shall not be interrupted by the Lessor or
any person claiming by, through or under the Lessor. (Lease, Section 6(a))
OTHER AGREEMENTS
The discussion of the Participation Agreements and Tax Indemnification
Agreements below is intended to merely summarize certain provisions of
those agreements as they relate to the Collateral Bonds and the
Transactions; it does not purport to be complete and is qualified in its
entirety by reference to those agreements, copies of which have been filed
as exhibits to the Registration Statement of which this Prospectus is a
part.
Participation Agreement
In each Participation Agreement the Company has agreed, among other
things, that it will at all times maintain its corporate existence and will
not consolidate with or merge into, or sell, transfer or otherwise dispose
of substantially all of its assets to, any person unless immediately after
giving effect to such transaction a number of conditions are met, including
the requirements that (a) the survivor be a corporation organized under the
laws of the United States of America, a State thereof or the District of
Columbia, (b) the survivor of such transaction assumes the obligations of
the Company under each of the other documents relating to the Transactions
to which the Company was a party, (c) such transaction does not permit the
early termination of any letter of credit prior to its scheduled expiration
date, (d) all governmental actions and corporate approvals have been
obtained for the transaction, (e) the transaction will not result in a
material violation of any provision of any agreement or financing
arrangement to which the Company is a party, and (f) the survivor delivers
to the Owner Participant, the Owner Trustee and the Lease Indenture Trustee
opinions and officers' certificates as to, among other things, compliance
with the transfer conditions above. (Participation Agreement, Section 9(b)
(3)) Reference is also made to the discussion above under "Description of
the Lease Indentures _ Assumption by the Company" for additional
restrictions in respect of certain mergers, consolidations or sales of
assets affecting the Company.
Pursuant to each Participation Agreement, the Company provided the Owner
Participant with financial support to secure the payment to the Owner
Participant of the equity portion of amounts payable by the Lessee under
the Lease and related documents in the form of a new series of first
mortgage bonds issued under the Company's first mortgage indenture. Upon
the occurrence of an Event of Loss, a Deemed Loss Event, a Financial Event
or a Lease Event of Default under the related Lease, an Owner Participant
would be entitled to demand payment on such first mortgage bonds in an
amount generally not exceeding Casualty Value less the aggregate principal
amount of and accrued interest on the related Lessor Bonds then
outstanding. The Holders of the Lessor Bonds (including the Trustee, as
holder of the Pledged Lessor Bonds) and Holders of the Collateral Bonds are
not entitled to the benefit of such first mortgage bonds. As an
alternative to the first mortgage bonds, the Company could supply such
financial support in the form of a letter of credit issued by a commercial
bank. Once a letter of credit has been provided to an Owner Participant,
the Company will be required to provide a letter of credit for such Owner
Participant for the remainder of the basic term of the related Lease. If a
letter of credit were about to expire or be terminated prior to the
scheduled expiration thereof, and the Company does not replace such letter
of credit with another letter of credit issued by an eligible bank, the
Company would have the right to purchase the related Undivided Interest
from the related Lessor, thereby terminating the related Lease, at a price
equal to the higher of fair market sales value and Casualty Value;
provided, however, that if the Company had assumed all or a portion of the
related Lessor Bonds then outstanding, the purchase price would be reduced
by the principal amount of such Lessor Bonds then outstanding.
(Participation Agreement, Section 16(d))
Subject to certain first refusal rights of the Company, any Owner
Participant may at any time assign, convey or otherwise transfer its
interest in, to and under any transaction document or its trust estate to a
person with a net worth at the time of such transfer of not less than $50
million or to a person whose obligations under the transaction documents
have been guaranteed by a person with such a net worth. The transferring
Owner Participant will, with certain limited exceptions, be released from
its obligations under the transaction documents and the transferee Owner
Participant shall succeed to such obligations and rights of the
transferring Owner Participant. (Participation Agreement, Section 14)
Tax Indemnification Agreement
Pursuant to separate Tax Indemnification Agreements for each Transaction
between the Company and the Owner Participant, the Company is obligated to
pay to the Owner Participant, among other things, amounts which, on an
after-tax basis, equal the amounts of additional federal income taxes
payable by the Owner Participant with respect to any current or prior
taxable year as a result of a Tax Loss and any interest, penalties or
additions to any tax imposed as a result of such Tax Loss or the contest
thereof. For purposes of each Tax Indemnification Agreement, "Tax Loss"
includes, subject to certain exceptions: (a) loss to the Owner Participant
of depreciation or analogous deductions with respect to the related
Undivided Interest or interest deductions with respect to the related
Lessor Bonds; (b) loss to the Owner Participant of foreign tax credits due
to the treatment of any item of income, gain, loss or deduction with
respect to the related Transaction as derived from, or allocable to,
foreign sources (in the case of either (a) or (b) as a result of, among
other things, (i) any act or failure to act by the Company, (ii) any
misrepresentation or breach of warranty or covenant in the transaction
documents by the Company, (iii) bankruptcy of the Company or any
disposition of the related Undivided Interest pursuant to the exercise of
remedies under the related Indenture or (iv) damage to or the taking of the
related Undivided Interest); or (c) unanticipated income of the Owner
Participant with respect to the related Undivided Interest.
PLAN OF DISTRIBUTION
The Prospectus Supplement relating to a series of Collateral Bonds will
set forth the terms of the offering of the Collateral Bonds, including the
names of underwriters, including Morgan Stanley & Co. Incorporated and
Citicorp Securities, Inc., the proceeds to Funding Corporation from such
sale, any items constituting underwriters' compensation, any initial public
offering price and any discounts or concessions allowed or reallowed to
dealers. Any initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers may be changed from
time to time. The Collateral Bonds will be acquired by the underwriters
for their own account and may be resold from time to time in one or more
transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of each resale. Unless
otherwise set forth in the Prospectus Supplement, the obligations of the
underwriters to purchase the Collateral Bonds will be subject to certain
conditions precedent, and the underwriters will be obligated to purchase
all such Collateral Bonds if any are purchased; provided that the agreement
between the Company and the underwriters providing for the sale of the
Collateral Bonds may provide that under certain circumstances involving a
default of underwriters, less than all of the Collateral Bonds may be
purchased.
Each Prospectus Supplement relating to a particular offering of
Collateral Bonds will contain a statement (1) as to whether or not the
existence of a secondary market for such securities can be predicted and,
if such existence is predicted, as to the extent of such secondary market,
and (2) as to whether or not the underwriter or underwriters intend to make
a market in such securities.
Subject to certain conditions, the Company may agree to indemnify the
underwriter or underwriters and their controlling persons against certain
civil liabilities, including liabilities under the Securities Act of 1933,
as amended.
EXPERTS AND LEGALITY
The Company's balance sheet as of December 31, 1994 and the statements of
income, retained earnings, and cash flows and the related financial
statement schedule for the year ended December 31, 1994, incorporated by
reference in this Prospectus, have been incorporated by reference herein in
reliance on the reports of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of that firm as experts in accounting
and auditing.
The financial statements and the related financial statement schedule as
of December 31, 1993 and for each of the two years in the period ended
December 31, 1993, incorporated in this Prospectus by reference to the
Company's Annual Report on Form 10-K for the year ended December 31, 1994,
have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their reports dated February 11, 1994 (which reports expressed an
unqualified opinion and included an explanatory paragraph relating to the
Company's change in method of accounting for income taxes) also
incorporated by reference herein, and have been so included in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
Legal matters in connection with the issuance of the Collateral Bonds
will be passed upon for the Company by Monroe & Lemann (A Professional
Corporation), New Orleans, Louisiana, and Reid & Priest LLP, New York, New
York, and for the underwriters by Winthrop, Stimson, Putnam & Roberts, New
York, New York. In rendering such opinions, Reid & Priest LLP and
Winthrop, Stimson, Putnam & Roberts will rely upon the opinion of Monroe &
Lemann (A Professional Corporation) as to matters of Louisiana law, and
Monroe & Lemann (A Professional Corporation) will rely upon the opinion of
Reid & Priest LLP as to matters of New York law. Certain matters with
respect to the legality of the Lessor Bonds will be passed upon for the
Owner Trustee by Haight, Gardner, Poor & Havens, New York, New York, and by
Liskow & Lewis, New Orleans, Louisiana.
GLOSSARY
Certain capitalized terms used in this Prospectus and the accompanying
Prospectus Supplement have the following meanings and such meanings shall
apply to terms both singular and plural unless the context clearly requires
otherwise:
"Affiliate" means with respect to the Company any other person directly
or indirectly controlling or controlled by, or under direct or indirect
common control with, the Company. For purposes of this definition, the
term "control" (including the correlative meanings of the terms "controlled
by" and "under common control with"), as used with respect to any person,
shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management policies of such person, whether
through the ownership of voting securities or by contract or otherwise.
"Atomic Energy Act" means the Atomic Energy Act of 1954, as amended, and
regulations from time to time issued, published or promulgated pursuant
thereto.
"Casualty Value" means an amount specified in each Lease which the
Company must pay to the Lessor under such Lease in certain circumstances,
which amount is, in general and among other things, calculated to preserve
the net economic return of the related Owner Participant.
"Collateral Bonds" mean bonds offered by this Prospectus.
"Company" means Louisiana Power & Light Company.
"Deemed Loss Event" means any of the events described as a Deemed Loss
Event in each Lease upon the occurrence of which the Company must (subject
to certain conditions) acquire the beneficial interest of the related Owner
Participant and/or assume the related Lessor Bonds. (See "Description of
the Lease Indentures _ Assumption by the Company.")
"Event of Loss" means any of the events described as an Event of Loss in
each Lease upon the occurrence of which the Company must (subject to
certain conditions) acquire the beneficial interest of the Owner
Participant and/or assume the related Lessor Bonds. (See "Description of
the Lease Indentures _ Assumption by the Company.")
"Excepted Payment" means (i) any indemnity payment (including payments
under the Tax Indemnification Agreement) payable to the Owner Trustee or
the Owner Participant, (ii) any amount payable under any transaction
document to reimburse the Lessor or the Owner Participant for performing or
complying with any of the obligations of the Company under and as permitted
by any transaction document, (iii) any insurance proceeds or other payments
received with respect to an Event of Loss in excess of amounts then due and
owing to reimburse the Lease Indenture Trustee for any of its expenses and
to pay the reasonable remuneration of the Lease Indenture Trustee plus
amounts then due and owing in respect of the principal of and premium, if
any, and interest on all Lessor Bonds outstanding, (iv) any insurance
proceeds under liability policies, replacement power insurance policies and
insurance policies not required by the Lease, (v) any payment of the equity
portion of Casualty Value or Special Casualty Value in respect of an Event
of Loss, Deemed Loss Event or Financial Event, (vi) amounts payable to the
Owner Trustee in connection with the exercise by the Company of its option
to purchase the Undivided Interest during the term of the Lease (subject,
in any event, to the condition that the Company shall have assumed all of
the Lessor Bonds then outstanding and none of such Lessor Bonds are then to
be redeemed), (vii) if a letter of credit has been terminated or has
expired, the portion, if any, of Casualty Value or Special Casualty Value
(before taking into account the effect of certain drawings on such letter
of credit) equal to the amount by which Casualty Value, reduced by the
principal amount of and accrued interest on the outstanding Lessor Bonds,
exceeds the sum of all amounts drawn under such letter of credit and not
reinstated, (viii) any amount payable to the Owner Participant by any
transferee as the purchase price of the Owner Participant's interest in the
trust estate, (ix) the ongoing fees and expenses of the Owner Trustee under
the transaction documents and (x) any payments in respect of interest to
the extent attributable to payments referred to in clauses (i) through
(vii) above.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financial Event" means any of the events described as a Financial Event
in each Lease upon the occurrence of which the Company must (subject to
certain conditions) acquire the beneficial interest of the related Owner
Participant and/or assume the related Lessor Bonds. (See "Description of
the Lease Indentures _ Assumption by the Company.")
"Funding Corporation" means W3A Funding Corporation, a Delaware
corporation.
"Holder", as used in "Description of the Collateral Bonds and the
Indenture," means the registered holder of Securities, as indicated on the
Security Register maintained under the Indenture, and, as used in
"Description of the Lease Indentures," means the registered holder of
Lessor Bonds under a Lease Indenture, as indicated on the Bond Register
maintained under such Lease Indenture.
"Indenture" means the Collateral Trust Indenture, among Funding
Corporation, the Company and the Trustee, as supplemented and amended,
pursuant to which the Collateral Bonds are issued.
"Initial Lessor Bonds" means Waterford 3 Secured Lease Obligation Bonds
issued in 1989 by the respective Lessors as three separate issues under
three separate Lease Indentures, each issue comprised of a series maturing
in 2005 and a series maturing in 2017.
"Lease" means each Facility Lease, dated as of September 1, 1989, as
supplemented, under which the Company leases an Undivided Interest in Unit
3 from a Lessor in connection with the Transactions. "Leases" means each
and every Lease.
"Lease Default" means an event or condition which, with the giving of
notice or lapse of time, or both, would constitute a Lease Event of
Default.
"Lease Event of Default" means an Event of Default as such term is
defined under a Lease. (See "Description of the Leases _ Lease Events of
Default.")
"Lease Indenture" means each Indenture of Mortgage and Deed of Trust,
dated as of September 1, 1989, as supplemented, between a Lessor and the
Lease Indenture Trustee, pursuant to which the Lessor Bonds are issued.
"Lease Indentures" means each and every Lease Indenture.
"Lease Indenture Default" means an event or condition which, with the
giving of notice or the lapse of time, or both, would constitute a Lease
Indenture Event of Default.
"Lease Indenture Estate" means the trust estate assigned, transferred and
pledged by a Lessor to the related Lease Indenture Trustee under its Lease
Indenture, for the ratable benefit of the holders of the Lessor Bonds
issued thereunder.
"Lease Indenture Event of Default" means an "Indenture Event of Default"
as defined in a Lease Indenture. (See "Description of the Lease Indentures
_ Lease Indenture Events of Default.")
"Lease Indenture Trustee" means each institution and/or individual acting
as an indenture trustee under each of the Lease Indentures. "Lease
Indenture Trustees" means each and every Lease Indenture Trustee.
"Lessor" means any institution and/or individual acting as Owner Trustee
under a trust agreement with an Owner Participant and as Lessor under a
Lease and which, in such capacity, has purchased an Undivided Interest in
Unit 3 as part of the Transactions. "Lessors" means each and every Lessor.
"Lessor Bonds" means the non-recourse bonds issued by a Lessor under its
Lease Indenture.
"NRC" means the Nuclear Regulatory Commission of the United States of
America or any successor agency.
"Nuclear Waste Act" means the Nuclear Waste Policy Act of 1982, as
amended, or any comparable successor law.
"Owner Participant" means a corporation which, in connection with the
Transactions, has acquired a beneficial interest in the owner trust which
is the owner and Lessor of an Undivided Interest.
"Owner Trustee" means each institution and/or individual acting as owner
trustee under a trust agreement with an Owner Participant in connection
with the Transactions.
"Participation Agreement" means each Participation Agreement, dated as of
September 1, 1989, as amended, entered into among the Company, Funding
Corporation, the Owner Participant, a Lessor, a Lease Indenture Trustee and
the Trustee, which relates to a Transaction and sets forth the terms and
conditions upon which a Transaction will be consummated. "Participation
Agreements" mean each and every Participation Agreement.
"Pledged Lessor Bonds" means the Lessor Bonds which are pledged by
Funding Corporation to Trustee as security for Securities (including the
Collateral Bonds).
"Price-Anderson Act" means the Price-Anderson Act (1957), as amended.
"Refinancing" means the series of transactions pursuant to which the
Initial Lessor Bonds will be refinanced.
"Responsible Officer" shall mean, with respect to the subject matter of
any covenant, agreement or obligation of any party contained in any
Transaction Document, the President, any Vice President, Assistant Vice
President, Account Officer, Treasurer, Assistant Treasurer or any other
officer who in the normal performance of his operational responsibility
would have knowledge of such matter and the requirements with respect
thereto.
"SEC" means Securities and Exchange Commission.
"Securities" means bonds, notes or other evidences of indebtedness which
may be issued under the Indenture.
"Special Casualty Value" means an amount specified in each Lease which
the Company must pay to the Lessor under such Lease in certain
circumstances, which amount is, in general and among other things,
calculated to preserve the net economic return of the related Owner
Participant.
"Special Transfer" means the assignment and transfer by an Owner
Participant of its beneficial interest in the related owner trust to the
Company or its designee upon the occurrence of an Event of Loss, a Deemed
Loss Event, Financial Event or a Lease Event of Default.
"Supplemental Financing" means the issuance of additional Lessor Bonds
under a Lease Indenture to finance the related Lessor's proportionate share
of capital improvements to Unit 3.
"Supplemental Indenture" means a supplemental indenture to the Indenture,
among Funding Corporation, the Company and the Trustee.
"Tax Indemnification Agreement" means each tax indemnification agreement
dated as of September 1, 1989, as amended, between the Company and an Owner
Participant.
"Transaction" means any of the three transactions pursuant to which the
Company sold the Undivided Interests in Unit 3 to the Lessors under three
separate owner trust agreements and leased back such interests pursuant to
three separate Leases. "Transactions" refers to all of such transactions.
"Trustee" means Bankers Trust Company, trustee under the Indenture.
"Undivided Interest" means any of the three undivided interests in Unit
3, which interests compose in aggregate an approximate 10.5% interest in
Unit 3 (as defined) (which is equivalent on a cost basis to an approximate
9.3% interest in Waterford 3) and each of which undivided interest was sold
by the Company to the Owner Trustee under three separate owner trust
agreements with the Owner Participant, and then leased back to the Company
on a long-term net lease basis.
"Unit 3" means Waterford 3, exclusive of certain transmission, pollution
control and other facilities, together with certain capital improvements
thereto.
"Waterford 3" means Unit No. 3 (nuclear) of the Waterford Steam Electric
Generating Station.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Filing Fees _ Securities and
Exchange Commission:
Registration Statement $111,216
Application - Declaration 2,000
*Rating Agencies' fees 100,000
*Trustees' fees 30,000
*Fees of Company's Counsel:
Monroe & Lemann (A Professional Corporation 25,000
Reid & Priest LLP 200,000
*Fees of Underwriters' Counsel 100,000
*Fees of Entergy Services, Inc. 50,000
*Accountants' fees 20,000
*Printing and engraving costs 75,000
*Miscellaneous expense (including blue-sky expense) 36,784
*Total Expenses $750,000
* Estimated
Item 15. Indemnification of Directors and Officers.
The Company has insurance covering its expenditures which might arise in
connection with its lawful indemnification of its directors and officers
for certain of their liabilities and expenses. Directors and officers of
the Company also have insurance which insures them against certain other
liabilities and expenses. The corporation laws of Louisiana permit
indemnification of directors and officers in a variety of circumstances,
which may include liabilities under the Securities Act of 1933, as amended
("Securities Act"), and, under the Company's Restated Articles of
Incorporation, as amended, its officers and directors may generally be
indemnified to the full extent of such laws.
Item 16. List of Exhibits*
1(a) _ Form of Underwriting Agreement among the
Company, Funding Corporation and the
Underwriters.
4(a) _ Form of Collateral Trust Indenture among
Funding Corporation, the Company and
Bankers Trust Company, as Trustee.
4(b) _ Form of Supplemental Indenture No. 1 to
Collateral Trust Indenture.
**4(c)-1 _ Indenture of Mortgage and Deed of Trust
No. 1 among the Owner Trustee, the
Company and Bankers Trust Company and
Stanley Burg as Indenture Trustee
("Indenture No. 1") (filed as Exhibit
4(a)-1 to Registration Statement No. 33-
30660).
**4(c)-2 _ Indenture of Mortgage and Deed of Trust
No. 2 among the Owner Trustee, the
Company and Bankers Trust Company of
California, National Association, and
Cecil D. Bobey as Indenture Trustee
("Indenture No. 2") (filed as Exhibit
4(a)-2 to Registration Statement No. 33-
30660).
**4(c)-3 _ Indenture of Mortgage and Deed of Trust
No. 3 among the Owner Trustee, the
Company and Security Pacific National
Trust Company (New York) and Kenneth T.
McGraw as Indenture Trustee ("Indenture
No. 3") (filed as Exhibit 4(a)-3 to
Registration Statement No. 33-30660).
**4(d)-1 _ Supplemental Indenture No. 1 to Indenture
No. 1 (filed as Exhibit A-2(b)(1) to Rule
24 Certificate in File No. 70-7653).
**4(d)-2 _ Supplemental Indenture No. 1 to Indenture
No. 2 (filed as Exhibit A-2(b)(2) to Rule
24 Certificate in File No. 70-7653).
**4(d)-3 _ Supplemental Indenture No. 1 to Indenture
No. 3 (filed as Exhibit A-2(b)(3) to Rule
24 Certificate in File No. 70-7653).
4(d)-4 _ Form of Supplemental Indenture No. 2 to
Lease Indenture.
**4(e)-1 _ Facility Lease No. 1 between the Owner
Trustee, as Lessor, and the Company, as
Lessee (filed as Exhibit 4(c)-1 to
Registration Statement No. 33-30660).
**4(e)-2 _ Facility Lease No. 2 between the Owner
Trustee, as Lessor, and the Company, as
Lessee (filed as Exhibit 4(c)-2 to
Registration Statement No. 33-30660).
**4(e)-3 _ Facility Lease No. 3 between the Owner
Trustee, as Lessor, and the Company, as
Lessee (filed as Exhibit 4(c)-3 to
Registration Statement No. 33-30660).
4(e)-4 _ Form of Lease Supplement No. 1 to
Facility Lease.
**4(f)-1 _ Participation Agreement No. 1 among the
Owner Participant, the Owner Trustee, the
Company and Bankers Trust Company and
Stanley Burg as Indenture Trustee (filed
as Exhibit 4(d)-1 to Registration
Statement No. 33-30660).
**4(f)-2 _ Participation Agreement No. 2 among the
Owner Participant, the Owner Trustee, the
Company and Bankers Trust Company of
California, National Association, and
Cecil D. Bobey as Indenture Trustee
(filed as Exhibit 4(d)-2 to Registration
Statement No. 33-30660).
**4(f)-3 _ Participation Agreement No. 3 among the
Owner Participant, the Owner Trustee, the
Company and Security Pacific National
Trust Company (New York) and Kenneth T.
McGraw as Indenture Trustee (filed as
Exhibit 4(d)-3 to Registration Statement
No. 33-30660).
4(f)-4 _ Form of Amendment No. 1 to Participation
Agreement.
**4(g)-1 _ Facilities Agreement No. 1 between the
Company and the Owner Trustee (filed as
Exhibit 4(e)-1 to Registration Statement
No. 33-30660).
**4(g)-2 _ Facilities Agreement No. 2 between the
Company and the Owner Trustee (filed as
Exhibit 4(e)-2 to Registration Statement
No. 33-30660).
**4(g)-3 _ Facilities Agreement No. 3 between the
Company and the Owner Trustee (filed as
Exhibit 4(e)-3 to Registration Statement
No. 33-30660)
**4(h)-1 _ Ground Lease No. 1 between the Company
and the Owner Trustee (filed as Exhibit
4(f)-1 to Registration Statement No. 33-
30660).
**4(h)-2 _ Ground Lease No. 2 between the Company
and the Owner Trustee (filed as Exhibit
4(f)-2 to Registration Statement No. 33-
30660).
**4(h)-3 _ Ground Lease No. 3 between the Company
and the Owner Trustee (filed as Exhibit
4(f)-3 to Registration Statement No. 33-
30660).
**4(i)-1 _ Tax Indemnification Agreement No. 1
between the Owner Participant and the
Company (filed as Exhibit 4(g)-1 to
Registration Statement No. 33-30660).
**4(i)-2 _ Tax Indemnification Agreement No. 2
between the Owner Participant and the
Company (filed as Exhibit 4(g)-2 to
Registration Statement No. 33-30660).
**4(i)-3 _ Tax Indemnification Agreement No. 3
between the Owner Participant and the
Company (filed as Exhibit 4(g)-3 to
Registration Statement No. 33-30660).
4(i)-4 _ Form of Amendment No. 1 to Tax
Indemnification Agreement.
**4(j) _ Ownership and Operating Agreement between
the Company and the Owner Trustee (filed
as Exhibit 4(h)-1 to Registration
Statement No. 33-30660).
4(k) _ Form of Refunding Agreement among Owner
Participant, Owner Trustee, Lease
Indenture Trustee and the Company.
5(a) _ Opinion of Reid & Priest LLP, counsel for
the Company.
5(b) _ Opinion of Monroe & Lemann (A
Professional Corporation), counsel for
the Company.
12 _ Company's Computation of Ratio of
Earnings to Fixed Charges.
23(a) _ Consent of Reid & Priest LLP (included in
Exhibit 5(a)).
23(b) _ Consent of Monroe & Lemann (A
Professional Corporation) (included in
Exhibit 5(b)).
23(c) _ Consent of Deloitte & Touche LLP is
contained herein at page II-8.
23(d) _ Consent of Coopers & Lybrand L.L.P. is
contained herein at page II-9.
24 _ A Power of Attorney is contained herein
at page II-6.
25(a) _ Form T-1 Statement of Eligibility under
the Trust Indenture Act of 1939 of
Bankers Trust Company, Trustee.
*Reference is made to a duplicate list of exhibits filed as part of this
Registration Statement, which list, prepared in accordance with Item 102
of Regulation S-T of the Securities and Exchange Commission, immediately
precedes the exhibits being filed with this Registration Statement.
**Incorporated herein by reference as indicated.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement: (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value
of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; (iii) to
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration statement; provided,
however, that (i) and (ii) do not apply if the information required to be
included in a post-effective amendment is contained in periodic reports
filed by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section
13(a) or 15(d) of the Exchange Act (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to
the securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(5) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered herein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant, the registrant has been advised that in the
opinion of the Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid by
a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
Exhibit 24
POWER OF ATTORNEY
Each director and/or officer of the registrant whose signature appears
below hereby appoints Gerald D. McInvale, William J. Regan, Jr., and
Laurence M. Hamric, and each of them severally, as his attorney-in-fact to
sign in his name and behalf, in any and all capacities stated below, and to
file with the Securities and Exchange Commission, any and all amendments,
including post-effective amendments, to this registration statement, and
the registrant hereby also appoints each such named person as its attorney-
in-fact with like authority to sign and file any such amendments in its
name and behalf.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3, and
has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City
of New Orleans, State of Louisiana, on the 29th day of February
1996.
LOUISIANA POWER & LIGHT COMPANY
By: /s/ John T. Cordaro
John J. Cordaro
President
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Edwin Lupberger Chairman of the February 29, 1996
Edwin Lupberger Board, Chief
Executive Officer
and Director
(Principal
Executive Officer)
/s/ Gerald D. McInvale Executive Vice
Gerald D. McInvale President, Chief February 29, 1996
Financial Officer,
and Director
(Principal
Financial Officer)
/s/ Louis E. Buck, Jr. Vice President,
Louis E. Buck, Jr. Chief Accounting February 29, 1996
Officer and
Assistant Secretary
(Principal
Accounting Officer)
/s/ Michael B. Bemis
Michael B. Bemis
/s/ John J. Cordaro
John J. Cordaro
/s/ Donald C. Hintz Directors February 29, 1996
Donald C. Hintz
/s/ Jerry D. Jackson
Jerry D. Jackson
/s/ Jerry L. Maulden
Jerry L. Maulden
EXHIBIT 23(c)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this
Registration Statement of Louisiana Power & Light Company on Form
S-3 of our reports dated February 11, 1994, appearing in the
Annual Report on Form 10-K of Louisiana Power & Light Company for
the year ended December 31, 1994 and to the references to us
under the heading "Experts and Legality" in the Prospectus, which
is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
New Orleans, Louisiana
February 28, 1996
EXHIBIT 23(d)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this
Registration Statement of Louisiana Power & Light Company on Form
S-3 of our reports dated February 21, 1995 on our audit of the
financial statements and financial statement schedule of
Louisiana Power & Light Company as of and for the year ended
December 31, 1994. We also consent to the reference to our firm
under the caption "Experts and Legality."
/s/ Coopers & Lybrand L.L.P.
New Orleans, Louisiana
February 22, 1996