Exhibit 10.2
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ENSERCH EXPLORATION, INC.
and
THE BANK OF NEW YORK,
as Trustee
PASS THROUGH TRUST AGREEMENT
Dated as of November 15, 1996
$178,320,000
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Enserch Exploration, Inc.
1996 Pass Through Trust
7.54% Pass Through Certificates,
Series 1996
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TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS 2
Section 1.01. Definitions 2
Section 1.02. Compliance Certificates and Opinions 15
Section 1.03. Form of Documents Delivered to Trustee 16
Section 1.04. Acts of Holders 17
ARTICLE II ACQUISITION OF SECURED NOTES; ORIGINAL ISSUANCE OF CERTIFICATES 18
Section 2.01. Issuance of Certificates; Acquisition of Secured Notes 18
Section 2.02. Acceptance by Trustee 19
Section 2.03. Limitation of Powers 19
ARTICLE III THE CERTIFICATES 20
Section 3.01. Form, Denomination and Execution of Certificates 20
Section 3.02. Authentication of Certificates 24
Section 3.03. Temporary Certificates 25
Section 3.04. Registration of Transfer and Exchange of Certificates 25
Section 3.05. Mutilated, Destroyed, Lost or Stolen Certificates 26
Section 3.06. Persons Deemed Owners 27
Section 3.07. Cancellation 27
Section 3.08. Limitation of Liability for Payments 27
Section 3.09. Book-Entry Provisions for Global Certificates 28
Section 3.10. Restrictions on Transfer and Exchange of Certificates 30
Section 3.11. CUSIP Numbers 36
ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS 36
Section 4.01. Certificate Account and Special Payments Account 36
Section 4.02. Distributions from Certificate Account and Special Payments Account 37
Section 4.03. Statements to Certificateholders 39
Section 4.04. Investment of Special Payment Moneys 40
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ARTICLE V ENSERCH EXPLORATION 40
Section 5.01. Maintenance of Corporate Existence 40
Section 5.02. Consolidation, Merger or Sale of Assets Permitted 41
Section 5.03. Annual Statements as to Compliance by Enserch Exploration 41
Section 5.04. Availability of Certain Information Concerning Enserch Exploration 42
Section 5.05. Notification of Certain Enserch Exploration Acquisitions of Certificates 42
Section 5.06. Representations and Warranties of Enserch Exploration 42
ARTICLE VI DEFAULT 44
Section 6.01. Events of Default 44
Section 6.02. Incidents of Sale of Secured Notes 45
Section 6.03. Judicial Proceedings Instituted by Trustee 46
Section 6.04. Control by Certificateholders 47
Section 6.05. Waiver of Defaults 48
Section 6.06. Undertaking to Pay Court Costs 48
Section 6.07. Right of Certificateholders to Receive Payments Not to Be Impaired 49
Section 6.08. Certificateholders May Not Bring Suit Except Under Certain Conditions 49
Section 6.09. Remedies Cumulative 50
ARTICLE VII THE TRUSTEE 51
Section 7.01. Certain Duties and Responsibilities 51
Section 7.02. Notice of Defaults 52
Section 7.03. Certain Rights of Trustee 53
Section 7.04. Not Responsible for Recitals or Issuance of Certificates 54
Section 7.05. May Hold Certificates 54
Section 7.06. Money Held in Trust 54
Section 7.07. Compensation and Reimbursement 54
Section 7.08. Corporate Trustee Required; Eligibility 56
Section 7.09. Resignation and Removal; Appointment of Successor 56
Section 7.10. Acceptance of Appointment by Successor 58
Section 7.11. Merger, Conversion, Consolidation or Succession to Business 59
Section 7.12. Maintenance of Agencies 60
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Section 7.13. Money for Certificate Payments to Be Held in Trust 61
Section 7.14. Registration of Secured Notes in Trustee's Name 62
Section 7.15. Representations and Warranties of Trustee 62
Section 7.16. Withholding Taxes; Information Reporting 63
Section 7.17. Trustee's Liens 64
Section 7.18. Availability of Certain Information Concerning the Trust 64
ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE 65
Section 8.01. Enserch Exploration to Furnish Trustee with Names and Addresses of
Certificateholders 65
Section 8.02. Preservation of Information; Communication to Certificateholders 65
Section 8.03. Reports by Enserch Exploration 67
ARTICLE IX SUPPLEMENTAL TRUST AGREEMENTS 67
Section 9.01. Supplemental Trust Agreement Without Consent of Certificateholders 67
Section 9.02. Supplemental Trust Agreements with Consent of Certificateholders 68
Section 9.03. Documents Affecting Immunity or Indemnity 69
Section 9.04. Execution of Supplemental Trust Agreements 69
Section 9.05. Effect of Supplemental Trust Agreements 70
Section 9.06. Reference in Certificates to Supplemental Trust Agreements 70
ARTICLE X AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS 70
Section 10.01. Amendments and Supplements to Indenture and Other Note Documents 70
ARTICLE XI TERMINATION OF TRUST 71
Section 11.01. Termination of the Trust 71
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ARTICLE XII MISCELLANEOUS PROVISIONS 73
Section 12.01. Limitation on Rights of Certificateholders 73
Section 12.02. Certificates Nonassessable and Fully Paid 73
Section 12.03. Notices 73
Section 12.04. Governing Law 74
Section 12.05. Severability of Provisions 74
Section 12.06. Effect of Headings and Table of Contents 74
Section 12.07. Successors and Assigns 74
Section 12.08. Benefits of Trust Agreement 74
Section 12.09. Legal Holidays 75
Section 12.10. Counterparts 75
iv
EXHIBIT A - Form of Pass Through Certificate
EXHIBIT B - Form of Regulation S Transfer Restriction Certificate
EXHIBIT C - Form of DTC Letter of Representations
EXHIBIT D - Form of Certificate to be Delivered in Connection with Transfers
Pursuant to Regulation S
EXHIBIT E - Form of Transfer Certificate for Restricted Securities
EXHIBIT F - Form of Accredited Investor Letter
Schedule 1 - Form of Secured Notes (1996-A) to be Purchased
Schedule 2 - Form of Secured Notes (1996-B) to be Purchased
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This PASS THROUGH TRUST AGREEMENT, as it may be amended, supplemented
or otherwise modified from time to time (the "Trust Agreement"), dated as of
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November 15, 1996 is made with respect to the formation of the Enserch
Exploration 1996 Pass Through Trust, between Enserch Exploration, Inc., a Texas
corporation ("Enserch Exploration"), and The Bank of New York, a New York
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banking corporation, as Trustee.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Grantor Trustees (as such term and certain other
capitalized terms used herein are defined below), acting on behalf of the Owner
Participants, will lease the Undivided Interests from Enserch Holdings pursuant
to the Head Leases;
WHEREAS, the Grantor Trustees will issue, on a non-recourse basis,
Secured Notes under the Indentures in order to pay Enserch Holdings its
consideration under the Head Leases;
WHEREAS, Enserch Exploration is contemporaneously herewith purchasing
all right, title and interest of Enserch Holdings in and to the Head Leases
pursuant to the Assignment and Assumption and Security Agreements;
WHEREAS, the Grantor Trustees will sublease the Undivided Interests to
Enserch Exploration pursuant to the Lease Transactions;
WHEREAS, pursuant to the terms and conditions of this Trust Agreement
and the Participation Agreements to be entered into by the Trustee
simultaneously with the execution and delivery of this Trust Agreement, the
Secured Notes are to be sold to the Trustee by each of the Grantor Trustees, and
the Trustee shall purchase the Secured Notes and shall hold the Secured Notes in
trust for the benefit of the Certificateholders;
WHEREAS, the Trustee, upon the execution and delivery of this Trust
Agreement, hereby declares the creation of this Trust for the benefit of the
Certificateholders, and the initial Certificateholders as the grantors of the
Trust and by their respective acceptances of the Certificates join in the
creation of this Trust with the Trustee; and
WHEREAS, to facilitate the sale of the Secured Notes to the Trustee
and the purchase of the Secured Notes by the Trustee, Enserch Exploration is
undertaking to perform certain administrative and ministerial duties hereunder
and is also undertaking to pay the fees and expenses of the Trustee.
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and of the other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. (a) For all purposes of this Trust
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Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms used herein that are defined in this Article have the
meanings assigned to them in this Article, and include the plural as well
as the singular;
(2) all references in this Trust Agreement to designated "Articles",
"Sections" and other subdivisions are to the designated Articles, Sections
and other subdivisions of this Trust Agreement; and
(3) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
(b) For all purposes of this Trust Agreement, the following
capitalized terms have the following respective meanings:
"Act": when used with respect to any Holder, has the meaning
---
specified in Section 1.04.
"Affiliate": of any specified Person, means any other Person which
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directly or indirectly controls or is controlled by, or is under common
control with, such specified Person. For the purposes of this definition,
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Agent Member": has the meaning specified in Section 3.09.
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"Applicable Procedures": has the meaning specified in Section 3.10.
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2
"Assignment and Assumption and Security Agreements": means,
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collectively, the Assignment and Assumption Agreement, Mortgage and
Security Agreement (1996-A) dated as of November 15, 1996 between Enserch
Holdings and Enserch Exploration and the Assignment and Assumption
Agreement, Mortgage and Security Agreement (1996-B) dated as of November
15, 1996 between Enserch Holdings and Enserch Exploration.
"Authorized Agent": means any Paying Agent or Registrar.
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"Business Day": means any day other than a Saturday, a Sunday, or a
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day on which commercial banking institutions are authorized or obligated by
law, executive order, or governmental decree to be closed in New York, New
York, the city and state in which the Corporate Trust Office of the
Indenture Trustee is located or the city and state in which the Corporate
Trust Office of the Trustee is located.
"Cedel": has the meaning specified in Section 3.01(f).
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"Certificate": means any one of the certificates executed and
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authenticated by the Trustee, substantially in the form of Exhibit A
hereto.
"Certificate Account (1996-A)": has the meaning assigned to such term
----------------------------
in Section 4.01(a).
"Certificate Account (1996-B)": has the meaning assigned to such term
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in Section 4.01(a).
"Certificate Accounts": means, collectively, the Certificate Account
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(1996-A) and the Certificate Account (1996-B).
"Certificateholder or Holder": means the Person in whose name a
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Certificate is registered in the Register.
"Closing Date": has the meaning specified in Section 2.4 of the
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Participation Agreements.
"Commission": means the Securities and Exchange Commission, as from
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time to time constituted, created under the Securities Exchange Act of
1934.
"Consideration": has the meaning specified in Section 2.01.
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3
"Corporate Trust Office": with respect to the Trustee, the Grantor
----------------------
Trustees and the Indenture Trustee, means the office of such trustee in the
city at which at any particular time its corporate trust business shall be
principally administered.
"Default": means any event which is, or after notice or lapse of time
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or both would become, an Event of Default.
"Depository": means an organization registered as a "clearing agency"
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pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
"Direction": has the meaning specified in Section 1.04(c).
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"Distribution Date": with respect to distributions of Scheduled
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Payments, means each January 2 and July 2, commencing January 2, 1997 until
payment of all the Scheduled Payments to be made under the Secured Notes
has been made.
"DTC": means The Depository Trust Company and any successor
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Depository.
"Enserch Exploration": means Enserch Exploration, Inc., a Texas
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corporation, or its successor in interest pursuant to Section 5.02.
"Enserch Holdings": means Enserch Exploration Holdings, Inc., a
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Delaware corporation.
"Euroclear": has the meaning specified in Section 3.01.
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"Event of Default": means, collectively, an Indenture Event of
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Default (1996-A) and an Indenture Event of Default (1996-B).
"Fractional Undivided Interest": means the fractional undivided
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interest in the Trust that is evidenced by a Certificate.
"Global Certificate": means the Restricted Global Certificate, any
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Regulation S Global Certificate and any Unrestricted Global Certificate.
"Grantor Trustee (1996-A)": means Wilmington Trust Company, not in
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its individual capacity but solely as Corporate Grantor Trustee and Thomas
P. Laskaris, not in his individual capacity but solely as Individual
Grantor Trustee, collectively, under the Trust Agreement (1996-A) dated as
of November 15,
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1996, between Wilmington Trust Company and the Owner Participant (1996-A);
and any successor to the Grantor Trustee (1996-A) as such trustee.
"Grantor Trustee (1996-B)": means Wilmington Trust Company, not in
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its individual capacity but solely as Corporate Grantor Trustee and Thomas
P. Laskaris, not in his individual capacity but solely as Individual
Grantor Trustee, collectively, under the Trust Agreement (1996-B) dated as
of November 15, 1996, between Wilmington Trust Company and the Owner
Participant (1996-B); and any successor to the Grantor Trustee (1996-B) as
such trustee.
"Grantor Trustees": means, collectively, the Grantor Trustee (1996-A)
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and the Grantor Trustee (1996-B).
"Head Lease (1996-A)": means the Head Lease Agreement (1996-A) dated
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as of November 15, 1996, between Enserch Exploration and the Grantor
Trustee (1996-A).
"Head Lease (1996-B)": means the Head Lease Agreement (1996-B) dated
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as of November 15, 1996, between Enserch Exploration and the Grantor
Trustee (1996-B).
"Head Leases": means, collectively, the Head Lease (1996-A) and the
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Head Lease (1996-B).
"Holder": See Certificateholder.
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"Initial Securities": means the Certificates originally issued on the
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date hereof and any Certificates issued in exchange or replacement thereof
pursuant to the terms of this Trust Agreement.
"Indenture (1996-A)": means the Trust Indenture, Mortgage, Assignment
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of Lease and Security Agreement (1996-A) dated as of November 15, 1996,
between the Grantor Trustee (1996-A) and the Indenture Trustee (1996-A), as
such Indenture may be amended or supplemented in accordance with its terms.
"Indenture (1996-B)": means the Trust Indenture, Mortgage, Assignment
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of Lease and Security Agreement (1996-B) dated as of November 15, 1996,
between the Grantor Trustee (1996-B) and the Indenture Trustee (1996-B), as
such Indenture may be amended or supplemented in accordance with its terms.
"Indenture Event of Default (1996-A)": means any Indenture Event of
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Default (1996-A) (as such term is defined in the Indenture (1996-A)).
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"Indenture Event of Default (1996-B)": means any Indenture Event of
-----------------------------------
Default (1996-B) (as such term is defined in the Indenture (1996-B)).
"Indenture Events of Default": means, collectively, the Indenture
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Events of Default (1996-A) and the Indenture Events of Default (1996-B).
"Indenture Trustee (1996-A)": means The Bank of New York, a New York
--------------------------
banking corporation, as Corporate Indenture Trustee under the Indenture
(1996-A) and Frederick W. Clark, not in his individual capacity except as
expressly provided in the Indenture (1996-A) but solely as Individual
Indenture Trustee, and any successor to any such Indenture Trustee as such
trustee.
"Indenture Trustee (1996-B)": means The Bank of New York, a New York
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banking corporation, as Corporate Indenture Trustee under the Indenture
(1996-B) and Frederick W. Clark, not in his individual capacity except as
expressly provided in the Indenture (1996-B) but solely as Individual
Indenture Trustee, and a successor to such Indenture Trustee as such
trustee.
"Indenture Trustees": means, collectively, the Indenture Trustee
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(1996-A) and the Indenture Trustee (1996-B).
"Indentures": means, collectively, the Indenture (1996-A) and the
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Indenture (1996-B).
"Lease (1996-A)": means the Production System Lease Agreement dated
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as of November 15, 1996, between the Grantor Trustee (1996-A), as the
lessor, and Enserch Exploration, as the lessee, as such Lease may be
amended or supplemented in accordance with its terms.
"Lease (1996-B)": means the Production System Lease Agreement dated
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as of November 15, 1996, between the Grantor Trustee (1996-B), as the
lessor, and Enserch Exploration, as the lessee, as such Lease may be
amended or supplemented in accordance with its terms.
"Leases": means, collectively, the Lease (1996-A) and the Lease
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(1996-B).
"Lease Transaction": means the lease-leaseback transaction in respect
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of the Undivided Interests between Enserch Exploration and the Grantor
Trustee provided for in the Participation Agreements.
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"Letter of Representations": means the agreement among Enserch
-------------------------
Exploration, the Trustee and DTC substantially in the form attached hereto
as Exhibit C.
"Note Documents": means, with respect to any Secured Note, such
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Secured Note and the Indenture, the Participation Agreement, the Lease and
the other Operative Documents (as defined in the Indenture under which such
Secured Note was issued).
"Officer's Certificate": means a certificate signed (i) in the case
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of a corporation by the President, any Vice President or the Treasurer, of
such corporation, (ii) in the case of a partnership by the Chairman of the
Board, the President or any Vice President, the Treasurer or an Assistant
Treasurer of a corporate general partner, and (iii) in the case of any
Grantor Trustee or any Indenture Trustee, a certificate signed by a
Responsible Officer of such Grantor Trustee or Indenture Trustee.
"Opinion of Counsel": means an opinion in writing, signed by legal
------------------
counsel, who may be (a) the General Counsel, Assistant General Counsel or
other appropriate internal counsel of Enserch Exploration or (b) such other
counsel designated by Enserch Exploration, the Grantor Trustee or the
Indenture Trustee, whether or not such counsel is an employee of any of
them and who shall be reasonably acceptable to the Trustee.
"Outstanding": when used with respect to the Certificates, means, as
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of the date of determination, all Certificates theretofore authenticated
and delivered under this Trust Agreement, except:
(i) Certificates theretofore canceled by the Registrar or
delivered to the Trustee or the Registrar for cancellation;
(ii) Certificates for which money in the full amount has
been theretofore deposited with the Trustee or any Paying Agent in
trust for the Holders of such Certificates as provided in Section 4.01
pending distribution of such money to the Certificateholders pursuant
to the final distribution payment to be made pursuant to Section 11.01
hereof; and
(iii) Certificates in exchange for or in lieu of which
other Certificates have been authenticated and delivered pursuant to
this Trust Agreement.
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"Owner Participant (1996-A)": means the Owner Participant referred to
--------------------------
in the Participation Agreement (1996-A) and any permitted successors and
assigns.
"Owner Participant (1996-B)": means the Owner Participant referred to
--------------------------
in the Participation Agreement (1996-B) and any permitted successors and
assigns.
"Owner Participants": means, collectively, the Owner Participant
------------------
(1996-A) and the Owner Participant (1996-B).
"Participation Agreement (1996-A)": means the Participation Agreement
--------------------------------
(1996-A) dated as of November 15, 1996, among Enserch Exploration, the
Owner Participant (1996-A), the Grantor Trustee (1996-A), the Indenture
Trustee (1996-A) and the Trustee.
"Participation Agreement (1996-B)": means the Participation Agreement
--------------------------------
(1996-B) dated as of November 15, 1996 among Enserch Exploration, the Owner
Participant (1996-B), the Grantor Trustee (1996-B), the Indenture Trustee
(1996-B) and the Trustee.
"Participation Agreements": means, collectively, the Participation
------------------------
Agreement (1996-A) and the Participation Agreement (1996-B).
"Paying Agent": means the paying agent maintained and appointed
------------
pursuant to Section 7.12.
"Permanent Regulation S Global Certificate": has the meaning assigned
-----------------------------------------
in Section 3.01(f).
"Permitted Government Investment": means obligations of the United
-------------------------------
States of America for the payment of which the full faith and credit of the
United States of America is pledged, maturing in not more than 60 days or
such lesser time as is necessary for payment of any Special Payments on a
Special Distribution Date.
"Person": means any individual, corporation, limited liability
------
company, partnership, association, trust, unincorporated organization, or
government or any agency or political subdivision thereof.
"Physical Certificate": has the meaning assigned in Section 3.10.
--------------------
8
"Pool Balance": means, as of any date, the aggregate unpaid and
------------
undistributed principal amount of the Secured Notes on such date plus the
amount of the principal payments on the Secured Notes held by the Trustee
and not yet distributed. The Pool Balance as of any Distribution Date or
Special Distribution Date, if any, shall be computed after giving effect to
the payment of principal, if any, on the Secured Notes and distribution
thereof to be made on that date.
"Pool Factor": means, as of any date, the quotient (rounded to the
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seventh decimal place) computed by dividing (i) the Pool Balance by (ii)
the aggregate original principal amount of the Certificates. The Pool
Factor, as of any Distribution Date or Special Distribution Date, if any,
shall be computed after giving effect to the payment of principal, if any,
on the Secured Notes and distribution thereof to be made on that date.
"QIB": means a "qualified institutional buyer," as defined in Rule
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144A under the Securities Act.
"Record Date": means (i) for Scheduled Payments to be distributed on
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any Distribution Date, other than the final distribution, the day (whether
or not a Business Day) which is 15 days preceding such Distribution Date,
and (ii) for Special Payments to be distributed on any Special Distribution
Date, if any, other than the final distribution, the day (whether or not a
Business Day) which is 15 days preceding such Special Distribution Date.
"Register and Registrar": means the register maintained and the
----------------------
registrar appointed pursuant to Sections 3.04 and 7.12.
"Regulation S Certificates Exchange Date": has the meaning provided
---------------------------------------
in Section 3.01.
"Regulation S Global Certificate": has the meaning specified in
-------------------------------
Section 3.01.
"Responsible Officer": When used with respect to the initial Trustee,
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an initial Indenture Trustee or a Grantor Trustee means any officer in the
Corporate Trust Office; when used with respect to any successor Trustee, or
successor Indenture Trustee, means the chairman or vice-chairman of the
board of directors or trustees, the chairman or vice-chairmen of the
executive or standing committee of the board of directors or trustees, the
president, the chairman of the committee on trust matters, any vice-
president, any second vice-president, the secretary, any assistant
secretary, the treasurer, any assistant treasurer, any
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trust officer or assistant trust officer, the comptroller and any assistant
comptroller; and, when used with respect to any Trustees and Indenture
Trustees, also means any other officer of such Trustee or such Indenture
Trustee customarily performing functions similar to those performed by any
of the above designated officers and also means, when used with respect to
the Trustees, Indenture Trustees or Grantor Trustees with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of his knowledge of and familiarity with the particular
subject.
"Restricted Global Security": has the meaning specified in Section
--------------------------
3.01.
"Restricted Period": has the meaning specified in Section 3.01.
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"Restricted Securities": has the meaning specified in Section 3.10.
---------------------
"Restricted Securities Legend": has the meaning specified in Section
----------------------------
3.10.
"Scheduled Payment": with respect to a Distribution Date, means any
-----------------
payment (other than a Special Payment) of principal and interest on a
Secured Note, due from the Grantor Trustee that issued such Secured Note,
which payment represents the payment of a regularly scheduled installment
of principal then due on such Secured Note, or the payment of regularly
scheduled interest accrued on such Secured Note.
"Secured Note (1996-A)": means any one of the Secured Notes (as
---------------------
defined in the Indenture (1996-A)) described on Schedule 1 attached hereto,
including any Secured Note (as so defined) issued under such Indenture in
replacement or substitution therefor, held by the Trustee.
"Secured Note (1996-B)": means any one of the Secured Notes (as
---------------------
defined in the Indenture (1996-B)) described on Schedule 2 attached hereto,
including any Secured Note (as so defined) issued under such Indenture in
replacement or substitution therefor, held by the Trustee.
"Secured Notes": means, collectively, the Secured Notes (1996-A) and
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the Secured Notes (1996-B).
"Securities Act": means the Securities Act of 1933, as amended from
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time to time.
10
"Securities Exchange Act": means the Securities Exchange Act of 1934,
-----------------------
as amended from time to time.
"Special Distribution Date (1996-A)": means (i) with respect to the
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prepayment of any Secured Notes (1996-A), the 2nd day of the month on which
such prepayment is scheduled to occur pursuant to the terms of the
Indenture (1996-A) and (ii) with respect to any Special Payment (1996-A)
relating to a Secured Note (1996-A) other than as described in clause (i)
of the definition of Special Payment (1996-A), the earliest 2nd day of a
month for which it is practicable for the Trustee to give notice pursuant
to Section 4.02(c) 20 days prior thereto.
"Special Distribution Date (1996-B)": means (i) with respect to the
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prepayment of any Secured Notes (1996-B), the 2nd day of the month on which
such prepayment is scheduled to occur pursuant to the terms of the
Indenture (1996-B) and (ii) with respect to any Special Payment (1996-B)
relating to a Secured Note (1996-B) other than as described in clause (i)
of the definition of Special Payment (1996-B), the earliest 2nd day of a
month for which it is practicable for the Trustee to give notice pursuant
to Section 4.02(c) 20 days prior thereto.
"Special Distribution Dates": means, collectively, the Special
--------------------------
Distribution Date (1996-A) and the Special Distribution Date (1996-B).
"Special Payment (1996-A)": with respect to a Secured Note (1996-A),
------------------------
means (i) any payment of principal, Make-Whole Amount, if any, and interest
on such Secured Note resulting from
the prepayment of such Secured Note pursuant to Sections 3.02, 3.03, 3.05
or 3.06 of the Indenture (1996-A), (ii) any payment of principal and
interest (including any interest accruing upon default) on, or any other
amount in respect of, such Secured Note upon an Indenture Event of Default
(1996-A) in respect thereof or upon the exercise of remedies under the
Indenture (1996-A) relating to such Secured Note, (iii) any Scheduled
Payment (1996-A) or any Special Payment (1996-A) referred to in clause (i)
of this definition which is not in fact paid within five days of the
Distribution Date (1996-A) or Special Distribution Date (1996-A) applicable
thereto, or (iv) any proceeds from the sale of any Secured Note (1996-A) by
the Trustee pursuant to Article VI hereof; and Special Payments (1996-A)
means all of such Special Payments.
"Special Payment (1996-B)": with respect to a Secured Note (1996-B),
------------------------
means (i) any payment of principal, Make-Whole Amount, if any, and interest
on such Secured Note resulting from
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the prepayment of such Secured Note pursuant to Sections 3.02, 3.03, 3.05
or 3.06 of the Indenture (1996-B), (ii) any payment of principal and
interest (including any interest accruing upon default) on, or any other
amount in respect of, such Secured Note upon an Indenture Event of Default
(1996-B) in respect thereof or upon the exercise of remedies under the
Indenture (1996-B) relating to such Secured Note, (iii) any Scheduled
Payment (1996-B) or any Special Payment (1996-B) referred to in clause (i)
of this definition which is not in fact paid within five days of the
Distribution Date (1996-B) or Special Distribution Date (1996-B) applicable
thereto, or (iv) any proceeds from the sale of any Secured Note (1996-B) by
the Trustee pursuant to Article VI hereof; and Special Payments (1996-B)
means all of such Special Payments.
"Special Payments": means, collectively, the Special Payment (1996-A)
----------------
and the Special Payment (1996-B).
"Special Payments Account (1996-A)": means the account or accounts
---------------------------------
created and maintained pursuant to Section 4.01(b).
"Special Payments Account (1996-B)": means the account or accounts
---------------------------------
created and maintained pursuant to Section 4.01(b).
"Special Payments Accounts": means, collectively, the Special
-------------------------
Payments Account (1996-A) and the Special Payment Account (1996-B).
"Specified Investments": means (i) direct obligations of the United
---------------------
States of America and agencies thereof for which the full faith and credit
of the United States is pledged, (ii) obligations fully guaranteed by the
United States of America, (iii) certificates of deposit issued by, or
bankers' acceptances of, or time deposits with, any bank, trust company or
national banking association incorporated or doing business under the laws
of the United States of America or one of the States thereof having
combined capital and surplus and retained earnings of at least $500,000,000
(including the Indenture Trustee or Grantor Trustee if such conditions are
met), (iv) commercial paper of companies, banks, trust companies or
national banking associations incorporated or doing business under the laws
of the United States of America or one of the States thereof and in each
case having a rating assigned to such commercial paper by Standard & Poor's
Corporation or Moody's Investors Services, Inc. (or, if neither such
organization shall rate such commercial paper at any time, by any
nationally recognized rating organization in the United States of America)
equal to the highest rating assigned by such organization, and (v) purchase
agreements with any financial institution having a
12
combined capital and surplus of at least $750,000,000 fully collateralized
by obligations of the type described in clauses (i) through (iv) above;
provided that if all of the above investments are unavailable, the entire
amount to be invested may be used to purchase Federal Funds from an entity
described in (iii) above; and provided further that no investment shall be
eligible as a "Specified Investment" unless the final maturity or date of
return of such investment is 91 days or less from the date of purchase
thereof.
"Temporary Regulation S Global Certificate": has the meaning provided
-----------------------------------------
in Section 3.01.
"Transfer Date": means the Closing Date as the term is defined in the
-------------
Participation Agreement scheduled to occur on December 2, 1996, or if
postponed in accordance with the Participation Agreement, the rescheduled
Closing Date.
"Trust": means the trust created by this Trust Agreement, the estate
-----
of which consists of the Trust Property.
"Trust Indenture Act": means the Trust Indenture Act of 1939, as
-------------------
amended from time to time.
"Trust Property": means the Secured Notes held as the property of the
--------------
Trust created hereby and all monies at any time paid thereon and all monies
due and to become due thereunder, funds from time to time deposited in the
Certificate Account and the Special Payments Accounts and any proceeds of
any of the foregoing, including without limitation from the sale by the
Trustee pursuant to Article VI hereof of any Secured Note.
"Trustee": means the institution executing this Trust Agreement as
-------
Trustee, or its successor in interest, and any successor trustee appointed
as provided herein.
"Unrestricted Global Certificate": has the meaning provided in
-------------------------------
Section 3.01.
"Undivided Interests": means each of the Undivided Interests
-------------------
described in the Participation Agreement (1996-A) and the Participation
Agreement (1996-B).
(c) Capitalized terms used but not defined herein shall have the
meanings specified in the Participation Agreements.
13
Section 1.02. Compliance Certificates and Opinions. Upon any
------------------------------------
application or request by Enserch Exploration, any Grantor Trustee or any
Indenture Trustee to the Trustee to take any action under any provision of this
Trust Agreement, Enserch Exploration, such Grantor Trustee or such Indenture
Trustee, as the case may be, shall furnish to the Trustee an Officers'
Certificate stating that, in the opinion of the signers, all conditions
precedent, if any, provided for in this Trust Agreement relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Trust Agreement relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Trust Agreement shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case
--------------------------------------
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any Opinion of Counsel stated to be based on the opinion of other
counsel shall be accompanied by a copy of such other opinion.
14
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Trust Agreement, they may, but need not, be consolidated
and form one instrument.
Section 1.04. Acts of Holders. (a) Any direction, consent, waiver
---------------
or other action provided by this Trust Agreement to be given or taken by Holders
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by an agent duly appointed in
writing; and, except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are delivered to the
Trustee and, where it is herein expressly required, to Enserch Exploration or
the Indenture Trustees. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Trust Agreement and (subject to Section 7.01) conclusive
in favor of the Trustee, Enserch Exploration and the Indenture Trustees, if made
in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.
(c) In determining whether the Holders of the requisite Fractional
Undivided Interests of Certificates Outstanding have given any direction,
consent or waiver (a "Direction"), under this Trust Agreement, Certificates
owned by Enserch Exploration, the Grantor Trustees, the Owner Participants or
any Affiliate of any such Persons shall be disregarded and deemed not to be
Outstanding under this Trust Agreement for purposes of any such determination.
In determining whether the Trustee shall be protected in relying upon any such
Direction, only Certificates which the Trustee knows to be so owned shall be so
disregarded. Notwithstanding the foregoing, (i) if any such Person owns 100% of
the Certificates Outstanding, such Certificates shall not be so disregarded as
aforesaid, and (ii) if any amount of Certificates so owned
15
by any such Person have been pledged in good faith, such Certificates shall not
be disregarded as aforesaid if the pledgee establishes to the satisfaction of
the Trustee the pledgee's right so to act with respect to such Certificates and
that the pledgee is not Enserch Exploration, the Grantor Trustees, the Owner
Participants or any Affiliate of any such Persons.
(d) Any direction, consent, waiver or other action by the Holder of
any Certificate shall bind the Holder of every Certificate issued upon the
transfer thereof or in exchange therefor or in lieu thereof, whether or not
notation of such action is made upon such Certificate.
(e) Except as otherwise provided in Section 1.04(c), Certificates
owned by or pledged to any Person shall have an equal and proportionate benefit
under the provisions of this Trust Agreement, without preference, priority, or
distinction as among all of the Certificates.
ARTICLE II
ACQUISITION OF SECURED NOTES; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Issuance of Certificates; Acquisition of Secured Notes.
------------------------------------------------------
The Trustee, simultaneously with the execution and delivery of this Trust
Agreement, shall also execute and deliver the Participation Agreements, in the
form delivered to the Trustee on or prior to the date of the execution and
delivery hereof. Upon request of Enserch Exploration and the satisfaction of
the closing conditions with respect to the Undivided Interests to be leased on
the Transfer Date specified in the Participation Agreements, on the Transfer
Date the Trustee shall execute, deliver and authenticate Certificates equaling
in the aggregate the total aggregate principal amount of the Secured Notes
purchased by the Trustee pursuant to the Participation Agreements on the
Transfer Date and evidencing the entire ownership of the Trust; provided, that,
--------
notwithstanding Section 1.02 hereof, such request need not be accompanied by an
Opinion of Counsel. The Trustee shall issue and sell such Certificates on the
Transfer Date, in authorized denominations and in such Fractional Undivided
Interests, so as to result in the receipt of consideration in an amount equal to
the aggregate principal amount of the Secured Notes to be purchased on the
Transfer Date (the "Consideration"). The Trustee shall purchase, pursuant to
the terms and conditions of the Participation Agreements, the Secured Notes on
the Transfer Date at an aggregate purchase price equal to the amount of the
Consideration so received. Except as provided in Section 3.05 hereof,
16
the Trustee shall not execute or deliver Certificates in excess of the aggregate
amount specified in this paragraph.
Section 2.02. Acceptance by Trustee. The Trustee, upon the execution
---------------------
and delivery of this Trust Agreement, acknowledges its acceptance of all right,
title, and interest in and to the Secured Notes acquired pursuant to Section
2.01 hereof and the Participation Agreements and declares that the Trustee holds
and will hold such right, title, and interest, together with all other property
constituting the Trust Property, for the benefit of all present and future
Certificateholders, upon the trusts herein set forth. By its payment for and
acceptance of each Certificate issued to it hereunder, each initial
Certificateholder as grantor of the Trust thereby joins in the creation and
declaration of the Trust.
Section 2.03. Limitation of Powers. The Trust is constituted solely
--------------------
for the purpose of making the investment in the Secured Notes, and, except as
set forth herein, the Trustee is not authorized or empowered to acquire any
other investments or engage in any other activities and, in particular, the
Trustee is not authorized or empowered to do anything that would cause the Trust
to fail to qualify as a "grantor trust" for federal income tax purposes
(including, as subject to this restriction, acquiring the Undivided Interests by
bidding the Secured Notes or otherwise, or taking any action with respect to the
Undivided Interests once acquired).
ARTICLE III
THE CERTIFICATES
Section 3.01. Form, Denomination and Execution of Certificates. (a)
------------------------------------------------
The Certificates shall be in fully registered form without interest coupons
substantially in the form of Exhibit A hereto and shall contain such additional
provisions, omissions, variations and insertions as are permitted by this Trust
Agreement, and may have such letters, numbers or other marks of identification
and such legends or endorsements printed, lithographed or engraved thereon, as
may be required to comply with the securities laws of any jurisdiction, the
rules of any Depository or any securities exchange on which the Certificates may
be listed or to conform to any usage in respect thereof, or as may, consistently
herewith, be prescribed by Enserch Exploration, the Trustee or by the officer
executing such Certificates, such determination to be evidenced by the execution
of the Certificates. The Certificates also shall be subject to the terms and
conditions contained in this Trust Agreement. References herein to the
"Certificates" shall be deemed to include the Restricted Global Certificate, the
Temporary Regulation S Global Certificate, the Permanent Regulation S Global
Certificate, any
17
Unrestricted Global Certificate and any Physical Certificates (each as defined
below) along with any Certificates issued in exchange therefor, unless the
context requires otherwise.
(b) Definitive Certificates shall be printed, lithographed or
engraved or produced by any combination of these methods or may be produced in
any other manner permitted by the rules of any Depository or any securities
exchange on which the Certificates may be listed, all as determined by the
officer executing such Certificates, as evidenced by his execution of such
Certificates.
(c) The Certificates shall be initially issued in minimum
denominations of $250,000, or integral multiples of $1,000 in excess thereof.
At such time as the transfer restrictions contained in the Certificates and this
Article III, are no longer applicable to a Certificate, the minimum denomination
of such Certificate shall be reduced to $1,000, or integral multiples of $1,000
in excess thereof.
(d) The Certificates shall be executed on behalf of the Trustee by
manual or facsimile signature of a Responsible Officer of the Trustee.
Certificates bearing the manual or facsimile signature of an individual who was,
at the time when such signature was affixed, authorized to sign on behalf of the
Trustee shall be valid and binding obligations of the Trustee, notwithstanding
that such individual has ceased to be so authorized prior to the authentication
and delivery of such Certificates or did not hold such office at the date of
such Certificates. No Certificate shall be entitled to any benefit under this
Trust Agreement, or be valid for any purposes, unless there appears on such
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A hereto executed by the Trustee by manual signature, and such
certificate of authentication upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of their
authentication.
(e) Certificates offered and sold in their initial distribution in
reliance upon Rule 144A under the Securities Act shall be represented by a
single, permanent global Certificate (the "Restricted Global Certificate") in
-----------------------------
fully registered form, without interest coupons, substantially in the form
required by this Article and in Exhibit A, with such Restricted Securities
Legend and other legends as are provided for in Exhibit A. The Restricted
Global Certificate shall be registered in the name of the Depository or a
nominee of the Depository in the United States and shall represent the
beneficial interests of Persons purchasing the Certificates in reliance on Rule
144A under the Securities Act. The Restricted Global Certificate shall be
deposited on behalf of the purchasers of such Certificate with the Trustee, at
its Corporate Trust Office, as custodian for the Depository. So long as the
Depository or
18
its nominee is the registered owner of the Restricted Global Certificate, it
shall be considered the Holder of the Certificate represented thereby for all
purposes hereunder and under such Certificate. Neither Enserch Exploration nor
any Paying Agent shall have any responsibility or liability for any aspect of
the records relating to or payments made by the Depository on account of
beneficial interests in the Restricted Global Certificate. Beneficial interests
in the Restricted Global Certificate shall be transferred on the Depository's
book-entry settlement system. The aggregate principal amount of the Restricted
Global Certificate may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depository
or its nominee, as the case may be, as herein provided. In the event that an
interest in the Restricted Global Certificate shall be transferred in accordance
with Rule 144 or Regulation S under the Securities Act or pursuant to an
effective registration statement under the Securities Act (unless the Holder
thereof is Enserch Exploration or an "affiliate" of Enserch Exploration within
the meaning of Rule 144) or pursuant to another available exemption under the
Securities Act and in accordance with the provisions of this Trust Agreement,
the Certificate representing such interest after such transfer shall no longer
be required to bear the Restricted Securities Legend or be a Restricted Security
and shall be and be referred to herein as an "Unrestricted Global Certificate."
(f) Certificates offered and sold in their initial distribution in
reliance on Regulation S under the Securities Act shall be issued initially in
the form of a single temporary global Certificate in fully registered form,
without coupons, substantially in the form set forth in Exhibit A, with such
applicable legends as are provided for in Exhibit A (the "Temporary Regulation S
----------------------
Global Certificate"). Such Global Certificate shall be registered in the name
- ------------------
of the Depository or its nominee and deposited with the Trustee, at its
Corporate Trust Office, as custodian for such Depository, duly executed and
authenticated by the Trustee as herein provided, for credit initially and during
the Restricted Period (hereinafter defined) to the respective accounts of
beneficial owners of interests in such Certificate (or to such other accounts as
they may direct) at Morgan Guaranty Trust Company of New York, Brussels office,
as operator of the Euroclear System ("Euroclear") or the depository for Centrale
---------
de Livraison de Valeurs Mobilieres S.A. ("Cedel"). As used herein, the term
-----
"Restricted Period," with respect to Global Certificates offered and sold in
reliance on Regulation S, means the period of 40 consecutive days beginning on
and including the later of (i) the day on which the Certificates are first
offered to persons other than distributors (as defined in Regulation S) in
reliance on Regulation S (according to a notice to Enserch Exploration and the
Trustee by the underwriter, if any, of the offering of such Certificates and
(ii) the Transfer Date. Except as otherwise provided herein or agreed by
Enserch Exploration, no Regulation S Global Certificate shall be issued except
as provided in this paragraph to
19
evidence Certificates offered and sold in their initial distribution in
reliance on Regulation S under the Securities Act. At any time following
the last day of the Restricted Period (the "Regulation S Certificates Exchange
----------------------------------
Date"), upon receipt by the Trustee and Enserch Exploration of a certificate
- ----
substantially in the form of Exhibit B, a single permanent global Certificate in
fully registered form substantially in the form set forth in Exhibit A (the
"Permanent Regulation S Global Certificate;" and, together with the Temporary
-----------------------------------------
Regulation S Global Certificate, the "Regulation S Global Certificate") duly
-------------------------------
executed and authenticated by the Trustee as hereinafter provided shall be
deposited on behalf of the beneficial owners thereof with a custodian for the
Depository and will be registered in the name of the Depository or a nominee of
the Depository located in a jurisdiction approved by Enserch Exploration for
credit to the beneficial owners' respective accounts (or to such other accounts
as they may direct) at Morgan Guaranty Trust Company of New York, Brussels
office, as operator of Euroclear or the depository for Cedel or any other
participant in the Depository. The Permanent Regulation S Global Certificate and
any Certificates issued upon registration of transfer of or exchange for such
Permanent Regulation S Global Security shall not be a Restricted Security and
shall also be referred to herein as an "Unrestricted Global Certificate". The
-------------------------------
aggregate principal amount of the Regulation S Global Certificate may from time
to time be increased and decreased by adjustments made on the records of the
Depository or its nominee, as the case may be, as herein provided.
(g) Beneficial interests in the Regulation S Global Certificate may
be (i) held through Euroclear or Cedel as participants in the Depository or (ii)
subject to the rules and procedures of Euroclear or Cedel and the Depository,
exchanged for, or transferred to a Person who takes delivery in the form of, an
interest in the Restricted Global Certificate. Beneficial interests in the
Restricted Global Certificate may be, subject to the rules and procedures of the
Depository, exchanged for, or transferred to a Person who takes delivery in the
form of an interest in an Unrestricted Global Certificate, only upon receipt by
the Trustee of a written certification from the transferor substantially in the
form of Exhibit E to the effect that such transfer is being made in accordance
with Regulation S or Rule 144 under the Securities Act. Any beneficial interest
in any Global Certificate that is transferred to a Person who takes delivery in
the form of an interest in the other Global Certificate will, upon transfer,
cease to be an interest in such Global Certificate and become an interest in the
other Global Certificate and, accordingly, will thereafter be subject to all
transfer restrictions and other procedures applicable to beneficial interests in
such other Global Certificate for as long as it remains such an interest.
Pass Through Certificates offered and sold in their initial
distribution to a limited number of institutions that are accredited
20
investors (which are not qualified institutional buyers, as defined under Rule
144A) within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities
Act (and institutions in which all the equity owners are such accredited
investors) (together referred to as "Institutional Accredited Investors") in
----------------------------------
transactions exempt from registration under the Securities Act shall be issued
in definitive physical and fully registered form without interest coupons,
substantially in the form set forth in this Article and in Exhibit A, with such
applicable legends as are provided for in Exhibit A. Such Securities shall be
delivered to such Institutional Accredited Investors only upon the execution and
delivery to the Company and the underwriter(s), if any, of the offering of such
Securities of a purchaser's letter, substantially in the form of Exhibit F
hereto. Such Securities may not be exchanged for interests in a Global Security
except as provided in Section 3.10.
Section 3.02. Authentication of Certificates. The Trustee on the
------------------------------
Transfer Date will cause to be authenticated and make available for delivery,
simultaneously with the sale, assignment, and transfer to the Trustee of the
Secured Notes pursuant to Section 2.01 hereof and the Participation Agreement,
Certificates duly authenticated by the Trustee, in authorized denominations
equaling in the aggregate the aggregate principal amount of the Secured Notes so
purchased and evidencing the entire ownership of the Trust.
Section 3.03. Temporary Certificates. (a) Pending the preparation of
----------------------
definitive Certificates, the Trustee may execute, authenticate and deliver
temporary Certificates which are printed, lithographed, typewritten, or
otherwise produced, in any denomination, of the tenor of the definitive
Certificates in lieu of which they are issued, with such appropriate insertions,
omissions, substitutions and other variations relating to their temporary nature
as the officer executing such temporary Certificates may determine, as evidenced
by their execution of such temporary Certificates.
(b) If temporary Certificates are issued, the Trustee will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the Corporate Trust Office of the Trustee, or at the office or
agency of the Trustee maintained in accordance with Section 7.12, without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute, authenticate and deliver in exchange
therefor definitive Certificates of authorized denominations of a like aggregate
Fractional Undivided Interest. Until so exchanged, such temporary Certificates
shall in all respects be entitled to the same benefits under this Trust
Agreement as definitive Certificates.
21
Section 3.04. Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a) The Trustee shall cause to be kept at the office or agency to be
maintained by it in accordance with the provisions of Section 7.12 a register
(the "Register") in which, subject to the provisions of this Section 3.04 and
the Certificates, the Trustee shall provide for the registration of Certificates
and of transfers and exchanges of Certificates as herein provided. The Trustee
shall initially be the registrar (the "Registrar") for the purpose of
registering Certificates and transfers and exchanges of Certificates as herein
provided.
(b) Subject to the other provisions of Article III, upon surrender
for registration of transfer of any Certificate at the Corporate Trust Office or
such other office or agency, the Trustee shall execute, authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates in authorized denominations of a like aggregate Fractional
Undivided Interest. At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of authorized denominations of a like aggregate
Fractional Undivided Interest, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any Certificates are so
surrendered for exchange, the Trustee shall execute, authenticate and deliver
the Certificates that the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Registrar
duly executed by the Holder thereof or his attorney duly authorized in writing.
(c) Subject to the other provisions of Article III, when Certificates
are presented to the Registrar or a co-Registrar with a request to register the
transfer or to exchange them for an equal principal amount of Certificates of
other authorized denominations, the Registrar shall register the transfer or
make the exchange as requested if its requirements for such transactions are
met. To permit registrations of transfers and exchanges, the Trustee shall
execute and authenticate Certificates at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange of the
Certificates, but Enserch Exploration may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith.
(d) All Certificates surrendered for registration of transfer and
exchange shall be canceled by the Trustee.
22
Section 3.05. Mutilated, Destroyed, Lost or Stolen Certificates. If
-------------------------------------------------
(a) any mutilated Certificate is surrendered to the Registrar, or the Registrar
receives evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Registrar and the Trustee such
security, indemnity or bond, as may be required by them to save each of them
harmless, then, in the absence of notice to the Registrar or the Trustee that
such Certificate has been acquired by a bona fide purchaser, the Trustee shall
execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Fractional Undivided Interest with the same final Distribution Date. In
connection with the issuance of any new Certificate under this Section 3.05, the
Trustee shall require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and the Registrar)
connected therewith. Any duplicate Certificate issued pursuant to this Section
3.05 shall constitute conclusive evidence of the appropriate Fractional
Undivided Interest in the Trust, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
Section 3.06. Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer, the Trustee, the Registrar, and any
Paying Agent shall treat the Person in whose name any Certificate is registered
as the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 4.02 and for all other purposes whatsoever, and neither
Enserch Exploration, the Trustee, the Registrar, nor any Paying Agent shall be
affected by any notice to the contrary.
Section 3.07. Cancellation. All Certificates surrendered for payment
------------
or transfer or exchange shall, if surrendered to any Person party hereto other
than the Registrar, be delivered by such Person to the Registrar for
cancellation. The Registrar shall not be required to destroy the Certificates.
No Certificates shall be authenticated in lieu of or in exchange for any
Certificates canceled as provided in this Section, except as expressly permitted
by this Trust Agreement.
Section 3.08. Limitation of Liability for Payments. All payments or
------------------------------------
distributions made to Certificateholders under this Trust Agreement shall be
made only from the Trust Property and only to the extent that the Trustee shall
have sufficient income or proceeds from the Trust Property to make such payments
in accordance with the terms of Article IV of this Trust Agreement. Each Holder
of a Certificate, by its acceptance of such Certificate, agrees that it will
look solely to the income and proceeds from the Trust Property to the extent
available for distribution to the Holder thereof as provided in this Trust
Agreement.
23
Nothing in this Trust Agreement shall be construed as an agreement, or otherwise
creating an obligation, of Enserch Exploration to pay any of the principal,
Make-Whole Amount, if any, and interest due from time to time under the Secured
Notes or in respect of the Certificates.
Section 3.09. Book-Entry Provisions for Global Certificates. (a) Any
---------------------------------------------
Holder of a Global Certificate shall, by acceptance of such Global Certificate,
agree that transfers of beneficial interests in such Global Certificate shall be
effected only through a book entry system maintained by the Holder of such
Global Certificate (or its agent), and that ownership of a beneficial interest
in such Certificate shall be required to be reflected in a book entry.
(b) Members of, or participants in, the Depository ("Agent Members")
-------------
shall have no rights under this Trust Agreement with respect to any Global
Certificate held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Certificate and the Depository may be treated by
Enserch Exploration, the Trustee and any Paying Agent as the absolute owner of
such Global Certificate for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent Enserch Exploration, the Trustee or any
Paying Agent from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a holder of any Certificate.
(c) Transfers of Global Certificates shall be limited to transfers of
such Global Certificates in whole, but not in part, to the Depository, its
successors or their respective nominees. Interests of beneficial owners in any
Global Certificate may be transferred in accordance with the rules and
procedures of the Depository and the provisions of this Trust Agreement.
(d) The Holder of any Global Certificate may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Trust Agreement or the Certificates.
(e) The Trustee shall enter into the Letter of Representations and
fulfill its responsibilities thereunder.
(f) The beneficial interests represented by any Global Certificate
shall be issued as definitive certificated Certificates, without coupons,
registered in the names of Holders or their nominees, rather than in global
form, registered in the name of the Depository or its nominee, if (i) the
Depository notifies the Trustee in writing that it is no longer able or willing
to continue as Depository with respect to
24
the Certificates and a qualified successor is not appointed by the Trustee
within ninety (90) days after receiving such notice, (ii) the Depository ceases
to be a "clearing agency" registered under the Exchange Act and a qualified
successor is not appointed by the Trustee within ninety (90) days after the
Trustee becomes aware that the Depository is no longer so registered, (iii)
Enserch Exploration, at its option, elects to terminate the book-entry system
through the Depository or (iv) after the occurrence of an Event of Default,
beneficial owners of Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Certificates represented
by such Global Certificates advise the Trustee through the Depository in writing
that the continuation of a book-entry system through the Depository with respect
to the Certificates is no longer in such owners' best interests. Upon the
occurrence of any of the events in clauses (i) through (iii) above, the Trustee
shall, by forwarding notice to the Depository, be deemed to have notified all
Persons who hold a beneficial interest in such Global Certificate through an
Agent Member of the availability of definitive Certificates.
(g) In connection with any transfer of a portion of the beneficial
interests in any Global Certificate to beneficial owners pursuant to paragraph
(f) of this Section, the Registrar shall reflect on its books and records the
date and a decrease in the principal amount of such Global Certificate in an
amount equal to the principal amount of the beneficial interest in the Global
Certificate to be transferred, and Enserch Exploration shall execute, and the
Trustee shall authenticate and deliver one or more Physical Certificates of like
tenor and amount. In connection with the transfer of an entire Global
Certificate to beneficial owners pursuant to paragraph (f) of this Section, such
Global Certificates shall be deemed to be surrendered to the Trustee for
cancellation, and the Trustee shall execute, authenticate and deliver to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in such Global Certificate, as the case may be, an equal aggregate
principal amount of Physical Certificates of authorized denominations. Any
Physical Certificate delivered in exchange for an interest in a Global
Certificate pursuant to this Section shall, except as otherwise provided in this
Trust Agreement bear the Restricted Securities Legend.
Section 3.10. Restrictions on Transfer and Exchange of Certificates.
---------------------------- ------------------------
(a) Except as otherwise provided herein, all Certificates to be issued
hereunder shall be restricted securities ("Restricted Securities") within the
---------------------
meaning of Rule 144 under the Securities Act and shall bear and be subject to
the restrictions on transfer provided in the Restricted Securities Legend (the
"Restricted Securities Legend") set forth on the Form of Certificates in Exhibit
----------------------------
A. In addition, in the event that a Restricted Security is sold outside the
United States in compliance with Rule 904 under the Securities Act, any
25
Certificate issued upon registration of transfer of such Restricted Security
shall continue to bear the Restricted Securities Legend set forth on the face of
the Restricted Security, until such time as the transfer restrictions applicable
to such Restricted Security shall cease and terminate as described below. The
Holder of each Restricted Security, by such Holder's acceptance thereof, agrees
to be bound by such restrictions on transfer.
(b) Whenever any Restricted Security other than a Physical
Certificate held by an Institutional Accredited Investor is presented or
surrendered for registration of transfer or exchange for a Certificate
registered in a name other than that of the Holder, such Restricted Security
must be accompanied by a certificate in substantially the form set forth in
Exhibit E hereto, dated the date of such surrender and signed by such Holder, as
to compliance with such restrictions on transfer, upon which the Registrar and
Trustee may rely as to its accuracy with respect to such Holder.
(c) Notwithstanding any other provision of this Section 3.10, a
properly completed certificate shall not be required in connection with any
transfer of any Restricted Security through the facilities of the Depository or
any other United States securities clearance and settlement organization,
provided that such transfer does not require a change in the name (other than to
another nominee of the Depository or such other securities clearance and
settlement organization) in which such Restricted Security is then registered.
(d) The restrictions imposed by this Section upon the transferability
of any particular Restricted Security shall cease and terminate when such
Restricted Security has been sold pursuant to an effective registration
statement under the Securities Act or transferred pursuant to Rule 144 under the
Securities Act (or any successor provision thereto) or pursuant to any other
available exemption from registration under the Act, unless the Holder thereof
is Enserch Exploration or an affiliate of Enserch Exploration within the meaning
of Rule 144 (or such successor provision). Any Restricted Security as to which
such restrictions on transfer shall have terminated may, upon surrender of such
Restricted Security for exchange to the Registrar or Trustee in accordance with
the provisions of this Section (accompanied, in the event that such restrictions
on transfer have terminated by reason of a transfer pursuant to Rule 144 (or any
successor provision) or pursuant to any other available exemption from
registration under the Act, by an Opinion of Counsel reasonably acceptable to
Enserch Exploration, addressed to Enserch Exploration and the Trustee and in
form acceptable to Enserch Exploration, to the effect that the transfer of such
Registered Security has been made in compliance with Rule 144 (or such successor
provision) or pursuant to any other available exemption from registration under
the Act), be exchanged for a new Certificate, of like tenor and
26
aggregate principal amount, which shall not bear the Restricted Securities
Legend. Enserch Exploration shall promptly inform the Registrar and the Trustee
in writing of the effective date of any registration statement registering the
Certificates under the Securities Act. The Registrar and the Trustee shall not
be liable for any action taken or omitted to be taken by it in good faith in
accordance with the aforementioned Opinion of Counsel or registration statement.
(e) If the holder of a beneficial interest in a Restricted
Global Certificate wishes at any time to transfer such interest to a person
who wishes to take delivery thereof in the form of a beneficial interest in
a Regulation S Global Certificate, such transfer may be effected, subject
to the rules and procedures of the Depository for such Global Certificate,
Euroclear and Cedel, in each case to the extent applicable (the "Applicable
----------
Procedures"), only in accordance with the provisions of this Section. Upon
----------
receipt by the Trustee, as Registrar, at the Corporate Trust Office of (1)
written instructions given in accordance with the Applicable Procedures
from an Agent Member directing the Trustee to credit or cause to be
credited to a specified Agent Member's account a beneficial interest in a
Regulation S Global Certificate in a principal amount equal to that of the
beneficial interest in the Restricted Global Certificate to be so
transferred, (2) a written order given in accordance with the Applicable
Procedures containing information regarding the account of the Agent Member
(and the Euroclear or Cedel account, as the case may be) to be credited
with, and the account of the Agent Member to be debited for, such
beneficial interest and (3) appropriately completed certificates in
substantially the form set forth in or contemplated by Exhibit D and
Exhibit E given by the holder of such beneficial interest, the Trustee, as
Registrar, shall instruct the Depository for such Certificates to reduce
the principal amount of the Restricted Global Certificate, and to increase
the principal amount of the Regulation S Global Certificate, by the
principal amount of the beneficial interest in the Restricted Global
Certificate to be so transferred, and to credit or cause to be credited to
the account of the Person specified in such instructions (which shall be
the Agent Member for Euroclear or Cedel or both, as the case may be) a
beneficial interest in the Regulation S Global Certificate having a
principal amount equal to the amount by which the principal amount of the
Restricted Global Certificate was reduced upon such transfer.
(f) In the case of a proposed transfer of interests in the
Temporary Regulation S Global Certificate, the Trustee shall register
the transfer of any such Certificate (x) if the proposed transferee is
a Non-U.S.
27
Person within the meaning of Regulation S and the proposed transferor
has delivered to the Trustee and Enserch Exploration certificates
substantially in the form of Exhibit D and Exhibit E hereto or (y) if
the proposed transferee is a QIB and the proposed transferor has
delivered to the Trustee and Enserch Exploration a certificate
substantially in the form of Exhibit E hereto to the effect that the
sale has been made in compliance with the provisions of Rule 144A.
If the proposed transferee is an Agent Member, upon receipt
by the Trustee of the documents referred to in clause (y) above and
instructions given in accordance with the Depository's and the
Trustee's procedures, the Trustee shall reflect on its books and
records the date and an increase in the principal amount of the
Restricted Global Certificate in an amount equal to the principal
amount of the Temporary Regulation S Global Certificate to be
transferred, and the Trustee shall decrease the like amount of the
Temporary Regulation S Global Certificate.
(g) In the case of a transfer of a Certificate to any
Institutional Accredited Investor which is not a QIB (excluding Non-U.S.
Persons), the Registrar shall register the transfer of any Certificate
whether or not such Certificate bears the Restricted Securities Legend, if
(x) the requested transfer is at least three years after the later of the
original issue date of the Restricted Certificates and the last date on
which such Certificate was held by Enserch Exploration or an affiliate of
Enserch Exploration or (y) the proposed transferee has delivered (i) to the
Registrar a certificate substantially in the form of Exhibit F hereto and
(ii) if requested by Enserch Exploration after consultation with the
Trustee, an Opinion of Counsel reasonably acceptable to Enserch
Exploration, addressed to Enserch Exploration and the Trustee in form and
substance satisfactory to Enserch Exploration to the effect that such
transfer has been made in compliance with an applicable exemption from the
registration requirements of the Securities Act. The Registrar shall not
be required to accept for registration of transfer or exchange any
Restricted Security not so accompanied by a properly completed certificate
and, if requested by Enserch Exploration, an Opinion of Counsel.
If the proposed transferor is an Agent Member holding a
beneficial interest in the Restricted Global Certificate, upon receipt by
the Registrar of (x) the documents, if any, required by the preceding
paragraph and (y) instructions given in accordance
28
with the Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and a decrease in the principal
amount of the Restricted Global Certificate in an amount equal to the
principal amount of the beneficial interest in the Restricted Global
Certificate to be transferred, and the Trustee shall execute, authenticate
and deliver, one or more Restricted Physical Certificates of like tenor and
amount.
(h) If the holder of a Physical Certificate that is a Restricted
Security wishes at any time to transfer such Certificate to a person who
wishes to take delivery thereof in the form of a beneficial interest in a
Global Certificate, such transfer may be effected, subject to the
Applicable Procedures, only in accordance with this Section. Upon receipt
by the Trustee, as Registrar, at the Corporate Trust Office of (1) the
Restricted Security to be transferred, (2) written instructions given in
accordance with the Applicable Procedures from an Agent Member directing
the Trustee to credit or cause to be credited to a specified Agent Member's
account a beneficial interest in the Global Certificate, in a principal
amount equal to the principal amount of the Restricted Security to be so
transferred, (3) a written order given in accordance with the Applicable
Procedures containing information regarding the account of the Agent Member
(and, in the case of any transfer pursuant to Regulation S, the Euroclear
or Cedel account for which such Agent Member's account is held or, if such
account is held for Euroclear or Cedel, the Euroclear or Cedel account, as
the case may be) to be credited with such beneficial interest and (4) an
appropriately completed certificate in substantially the form set forth in
Exhibit E, the Trustee, as Registrar, shall cancel the Restricted Security,
and shall authenticate and deliver, a new Physical Certificate for the
principal amount of the Restricted Security not so transferred, registered
in the name of the Holder transferring such Restricted Security, and shall
instruct the Depository for such Certificates to increase the principal
amount of such Global Certificate, by the remaining principal amount of the
Restricted Security so transferred, and to credit or cause to be credited
to the account of the Person specified in such instructions (which, in the
case of any increase of the principal amount of an Unrestricted Global
Certificate as the result of a transfer pursuant to Regulation S, shall be
the Agent Member for Euroclear or Cedel or both, as the case may be) a
corresponding principal amount of the applicable Global Certificate. The
transfer of a Restricted Security to a Person who wishes to take delivery
thereof in the form of a beneficial interest in a Global Security other
than a Restricted Global Certificate may be effected only in accordance
with Regulation S or Rule 144 under the Securities Act.
29
(i) In the case of a transfer of interests in the Permanent
Regulation S Global Certificate to U.S. Persons within the meaning of
Regulation S, the Trustee shall give notice to Enserch Exploration of such
proposed transfer, and thereupon register the transfer of any such
Certificate without requiring any additional certification except to the
extent that at the time of such transfer applicable law shall require
otherwise.
(j) By its acceptance of any Certificate bearing the Restricted
Securities Legend, each Holder of such a Certificate acknowledges the
restrictions on transfer of such Certificate set forth in this Trust
Agreement and in the Restricted Securities Legend and agrees that it will
transfer such Certificate only as provided in this Trust Agreement. The
Registrar shall not register a transfer of any Certificate unless such
transfer complies with the restrictions on transfer of such Certificate set
forth in this Trust Agreement. In connection with any transfer of
Certificates, each Holder agrees by its acceptance of the Certificates to
furnish the Trustee and Enserch Exploration such certifications, legal
opinions or other information as required by this Agreement to confirm that
such transfer is being made pursuant to an exemption from, or a transaction
not subject to, the registration requirements of the Securities Act;
provided that the Trustee shall not be required to determine (but may rely
on a determination made by Enserch Exploration with respect to) the
sufficiency of any such certifications, legal opinions or other
information.
The Trustee shall retain copies of all letters, notices and other
written communications received pursuant to this Article III. Enserch
Exploration shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Trustee.
(k) As used in this Article III, the term "transfer", for the
purposes of determining compliance with the Securities Act, encompasses any
sale, transfer or other disposition of any Certificates referred to herein
except for , transfers from any Holder to an Affiliate of such Holder;
provided, however, that such transferring Holder shall deliver a letter to
-------- -------
the Trustee stating that the transferee is an Affiliate of such Holder.
The Trustee shall be entitled to rely on and be fully protected in its
reliance on such letter.
Section 3.11. CUSIP Numbers. The Trustee in issuing the
-------------
Certificates may use "CUSIP" and "CINS" numbers (if then generally in use),
and the Trustee shall use CUSIP numbers or
30
CINS numbers, as the case may be, in notices of exchange as a convenience
to Holders; provided that any such notice shall state that no
representation is made as to the correctness of such numbers either as
printed on the Certificates or as contained in any notice of exchange and
that reliance may be placed only on the other identification numbers
printed on the Certificates.
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 4.01. Certificate Account and Special Payments Account.
------------------------------------------------
(a) The Trustee shall establish and maintain on behalf of the
Certificateholders the Certificate Accounts with the Trustee as one or more
non-interest-bearing accounts. The Trustee shall hold the Certificate
Accounts in trust for the benefit of the Certificateholders, and shall make
or permit withdrawals therefrom only as provided in this Trust Agreement.
On each day when a Scheduled Payment is made under the Indenture (1996-A)
to the Trustee, as holder of the Secured Notes issued under such Indenture,
the Trustee upon receipt shall immediately deposit the aggregate amount of
such Scheduled Payment in the Certificate Account (1996-A) (the
"Certificate Account (1996-A)"). On each day when a Scheduled Payment is
-----------------------------
made under the Indenture (1996-B) to the Trustee, as holder of the Secured
Notes issued under such Indenture, the Trustee upon receipt shall
immediately deposit the aggregate amount of such Scheduled Payment(1996-B)
in the Certificate Account (1996-B) (the "Certificate Account (1996-B)").
----------------------------
(b) The Trustee shall establish and maintain on behalf of the
Certificateholders the Special Payments Accounts as one or more accounts,
which shall be non-interest bearing except as provided in Section 4.04.
The Trustee shall hold the Special Payments Accounts in trust for the
benefit of the Certificateholders, and shall make or permit withdrawals
therefrom only as provided in this Trust Agreement. On each day when a
Special Payment (1996-A) (other than a Special Payment (1996-A) that
represents the proceeds of any sale pursuant to Article VI hereof of a
Secured Note (1996-A)) is made under the Indenture (1996-A) to the Trustee,
as holder of the Secured Notes (1996-A) issued under such Indenture, the
Trustee upon receipt shall immediately deposit the aggregate amount of such
Special Payments (1996-A) in the Special Payments Account (1996-A). Upon
the sale of any Secured Note (1996-A) by the Trustee pursuant to Article VI
hereof and the realization of any proceeds thereof, the Trustee shall
deposit the aggregate amount of such proceeds as a
31
Special Payment (1996-A) in the Special Payments Account (1996-A). On each
day when a Special Payment (1996-B) (other than a Special Payment (1996-B)
that represents the proceeds of any sale pursuant to Article VI hereof of a
Secured Note (1996-B)) is made under the Indenture (1996-B) to the Trustee,
as holder of the Secured Notes (1996-B) issued under such Indenture, the
Trustee upon receipt shall immediately deposit the aggregate amount of such
Special Payment (1996-B) in the Special Payments Account (1996-B). Upon the
sale of any Secured Note (1996-B) by the Trustee pursuant to Article VI
hereof and the realization of any proceeds thereof, the Trustee shall
deposit the aggregate amount of such proceeds as a Special Payment (1996-B)
in the Special Payments Account (1996-B).
(c) The Trustee shall present to each Indenture Trustee each
Secured Note issued under the Indenture to which such Indenture Trustee is
a party on the date of its stated final maturity, or in the case of any
Secured Note which is to be prepaid in whole pursuant to such Indenture, on
the applicable prepayment date under such Indenture.
Section 4.02. Distributions from Certificate Account and Special
--------------------------------------------------
Payments Account. (a) On each Distribution Date or as soon thereafter as
----------------
the Trustee has confirmed receipt of the payment of the Scheduled Payments
due on the Secured Notes on such date, the Trustee shall distribute out of
all Certificate Accounts the entire amount deposited therein pursuant to
Section 4.01(a). There shall be so distributed to each Certificateholder
of record on the Record Date with respect to such Distribution Date (other
than as provided in Section 11.01 concerning the final distribution) by (i)
check mailed to such Certificateholder at the address appearing in the
Register or (ii) upon application to the Trustee, by wire transfer in
immediately available funds to an account maintained by the
Certificateholder with a bank, such Certificateholder's pro rata share
(based on the aggregate Fractional Undivided Interest held by such
Certificateholder) of the aggregate amount in the Certificate Accounts.
(b) On each Special Distribution Date with respect to any
Special Payment or as soon thereafter as the Trustee has confirmed receipt
of the Special Payments due on the Secured Notes or realized upon the sale
of any Secured Note, the Trustee shall distribute out of the Special
Payments Account related to such Secured Notes the entire amount of such
Special Payment deposited therein pursuant to Section 4.01(b). There shall
be so distributed to each Certificateholder of record on the Record Date
with respect to such Special Distribution Date (other than as provided in
Section 11.01 concerning the final distribution) by
32
(i) check mailed to such Certificateholder at the address appearing in the
Register or (ii) upon application to the Trustee, by wire transfer in
immediately available funds to an account maintained by the
Certificateholder with a bank, such Certificateholder's pro rata share
(based on the aggregate Fractional Undivided Interest held by such
Certificateholder) of the aggregate amount in the Special Payments Account
on account of such Special Payment.
(c) The Trustee shall at the expense of Enserch Exploration
cause notice of each Special Payment to be mailed to each Holder of a
Certificate at his address as it appears in the Register. In the event of
prepayment of Secured Notes, such notice shall be mailed not less than 20
days prior to the date any such Special Payment is scheduled to be
distributed. In the case of any other Special Payments, such notice shall
be mailed as soon as practicable after the Trustee has confirmed that it
has received funds for such Special Payment. Notices mailed by the Trustee
shall set forth:
(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01);
(ii) the amount of the Special Payment for each $1,000 face
amount Certificate and the amount thereof constituting principal, premium,
if any, and interest;
(iii) the reason for the Special Payment; and
(iv) if the Special Distribution Date is the same date as a
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Certificate.
If the amount of Make-Whole Amount payable upon the prepayment of an
Secured Note has not been calculated at the time that the Trustee mails notice
of a Special Payment, it shall be sufficient if the notice sets forth the other
amounts to be distributed and states that any Make-Whole Amount received will
also be distributed.
If any redemption of the Secured Notes held in the Trust is canceled,
the Trustee, as soon as possible after learning thereof, shall cause notice
thereof to be mailed to each Certificateholder at its address as it appears on
the Register.
Section 4.03. Statements to Certificateholders. (a) On each
--------------------------------
Distribution Date and Special Distribution Date, if any, the Trustee will
include with each distribution to Certificateholders a statement, giving effect
to such distribution to be made on such
33
Distribution Date or Special Distribution Date, as the case may be, setting
forth the following information (per a $1,000 face amount Certificate as to (i)
and (ii) below):
(i) the amount of such distribution allocable to principal and
the amount allocable to premium, if any;
(ii) the amount of such distribution allocable to interest; and
(iii) the Pool Balance and the Pool Factor.
(b) Within a reasonable period of time after the end of each calendar
year but not later than the latest date permitted by law, the Trustee shall
furnish to each Person who at any time during such calendar year was a
Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i) and (a)(ii) with respect to the Trust for
such calendar year or, in the event such Person was a Certificateholder of
record during a portion of such calendar year, for the applicable portion of
such year, and such other items as are readily available to the Trustee and
which a Certificateholder shall reasonably request as necessary for the purpose
of such Certificateholder's preparation of its Federal income tax returns. Such
report and such other items shall be prepared on the basis of information
supplied to the Trustee by the Agent Members and shall be delivered by the
Trustee to such Agent Members to be available for forwarding by such Agent
Members to beneficial owners of Certificates.
Section 4.04. Investment of Special Payment Moneys. Any money received by the
------------------------------------
Trustee pursuant to Section 4.01(b) representing a Special Payment which is not
to be promptly distributed shall, to the extent practicable, be invested in
Permitted Government Investments by the Trustee pending distribution of such
Special Payment pursuant to Section 4.02. Any investment made pursuant to this
Section 4.04 shall be in such Permitted Government Investments having maturities
not later than the date that such moneys are required to be used to make the
payment required under Section 4.02 on the applicable Special Distribution Date
and the Trustee shall hold any such Permitted Government Investments until
maturity. The Trustee shall have no liability with respect to any investment
made pursuant to this Section 4.04, other than by reason of its willful
misconduct or negligence. All income and earnings from such investments shall
be distributed on such Special Distribution Date as part of such Special Payment
(and so identified in the statement prepared pursuant to Section 4.03(a)).
ARTICLE V
34
ENSERCH EXPLORATION
Section 5.01. Maintenance of Corporate Existence. Enserch
----------------------------------
Exploration, at its own cost and expense, will do or cause to be done all thing
necessary to preserve and keep in full force and effect its corporate existence,
rights and franchises, except as otherwise specifically permitted in Section
5.02; provided, however, that Enserch Exploration shall not be required to
-------- -------
preserve any right or franchise if it shall determine that the preservation
thereof is no longer desirable in the conduct of its business and that the loss
thereof is not prejudicial in any material respect to the Certificateholders.
Section 5.02. Consolidation, Merger or Sale of Assets Permitted. (a)
-------------------------------------------------
Except as may occur in connection with the Enserch Transactions (as defined in
the Participation Agreements) so long as any of the Secured Notes remain
outstanding, Enserch Exploration shall not merge or consolidate with or into any
other corporation under circumstances where Enserch Exploration is not the
surviving corporation or sell, assign, convey, transfer, lease or otherwise
dispose of all or substantially all of its assets as an entirety to any Person
unless the conditions set forth in Section 10.4 of the Participation Agreements
shall have been satisfied.
(b) In case of any such merger, consolidation, sale, conveyance or
other disposition and upon any such assumption by the successor corporation,
such successor corporation shall succeed to and be substituted for Enserch
Exploration hereunder with the same effect as if it had been named herein as the
party of the first part and Enserch Exploration shall be fully released from any
and all further obligations or liabilities hereunder from the time of such
replacement.
(c) The Trustee, subject to the provisions of Sections 7.01 and 7.02,
may receive an Officers' Certificate of Enserch Exploration and an Opinion of
Counsel to Enserch Exploration as conclusive evidence that any such
consolidation, merger, sale or conveyance, and any such assumption complies with
the provisions of this Section 5.02.
Section 5.03. Annual Statements as to Compliance by Enserch
---------------------------------------------
Exploration. Enserch Exploration covenants and agrees to deliver to the Trustee
- -----------
on or before a date not more than 120 days after the end of each fiscal year
ending after the date hereof, an Officers' Certificate of Enserch Exploration
stating as to the officer signing such certificate, whether or not to the best
of such officer's knowledge, Enserch Exploration, has kept, observed, performed
and fulfilled each and every covenant of it in this Agreement contained and is
in default in the performance and observance of any of the terms, provisions and
35
conditions hereof, and, if Enserch Exploration shall be in such default,
specifying all such defaults and the nature thereof, of which such officer may
have knowledge.
Section 5.04. Availability of Certain Information Concerning Enserch
------------------------------------------------------
Exploration. So long as any of the Certificates are "restricted securities"
- -----------
within the meaning of Rule 144(a)(3) under the Securities Act, Enserch
Exploration, will, if it shall no longer be subject to Section 13 or 15(d) of
the Securities and Exchange Act of 1934, as amended (the "Exchange Act") and is
not exempt from reporting pursuant to Rule 12g3-2(b) under the Exchange Act,
furnish to any Certificateholder upon request, copies of the information
required to be delivered to Certificateholders or prospective purchasers of
Certificates from Certificateholders in order to enable such Certificateholders
to comply with Rule 144A under the Securities Act.
Section 5.05. Notification of Certain Enserch Exploration
-------------------------------------------
Acquisitions of Certificates. During the period of three years after the
- ----------------------------
Closing Date, Enserch Exploration will not, and it will not permit any of its
"affiliates" (as defined in Rule 144 under the Securities Act) to acquire any
beneficial interest in any Certificate unless they notify the Trustee of such
acquisition. The Trustee and all Certificateholders shall be entitled to rely
without further investigation on any such notification (or the lack thereof).
Section 5.06. Representations and Warranties of Enserch Exploration.
-----------------------------------------------------
Enserch Exploration hereby represents and warrants that:
(i) Enserch Exploration is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Texas;
(ii) The execution, delivery, and performance of this Trust
Agreement and the Participation Agreements has been duly authorized by all
necessary corporation action on the part of Enserch Exploration;
(iii) The execution and delivery by Enserch Exploration of this
Trust Agreement and the Participation Agreements will not (a) violate any
provision of any United States or Texas law or regulation governing the
operations of Enserch Exploration or any order, writ, judgment, or decree
of any court, arbitrator, or governmental authority applicable to Enserch
Exploration or any of its assets, the violation of which would materially
adversely affect the Trust Property or its ability to perform under this
Trust Agreement or the Participation Agreements, (b) violate any provision
of its charter documents or by-laws, or (c) contravene
36
any provision of, or constitute a default under, or result in the creation
or imposition of any lien (other than Permitted Liens) on any properties
included in the Trust Property pursuant to the provisions of any mortgage,
indenture, contract or other agreement or instrument to which it is a
party, which violation, default or lien could reasonably be expected to
have a material adverse effect on Enserch Exploration's ability to perform
its duties hereunder or thereunder;
(iv) the execution, delivery and performance by Enserch Exploration
of this Trust Agreement and the Participation Agreements will not require
the authorization, consent, or approval of, the giving of notice to, the
filing or registration with, or the taking of any other action in respect
of, any United States or State governmental authority or agency regulating
the operations of Enserch Exploration; and
(v) this Trust Agreement and the Participation Agreements have
been duly executed and delivered by Enserch Exploration and assuming the
due authorization, execution and delivery hereof and thereof by the other
parties hereto and thereto, constitute the legal, valid, and binding
obligations of Enserch Exploration, enforceable in accordance with their
respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and by the application of
general principles of equity.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. If any Indenture Event of Default
-----------------
(1996-A) under Indenture (1996-A) shall occur and be continuing, then, and in
each and every case, so long as such Indenture Event of Default (1996-A) shall
be continuing, the Trustee may vote all of the Secured Notes (1996-A) held in
the Trust, and upon the direction of the holders of Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust, the Trustee shall vote a corresponding majority of such Secured
Notes (1996-A), in favor of directing the Indenture Trustee (1996-A) to declare
the unpaid principal amount of the Secured Notes (1996-A) then outstanding and
accrued interest thereon to be due and payable under, and in accordance with the
provisions of, Indenture (1996-A). In addition, if an Indenture Event of
Default (1996-A) shall have occurred and be continuing, the Trustee may in
accordance with Indenture (1996-A) vote
37
the Secured Notes (1996-A) held in the Trust to direct the Indenture Trustee
(1996-A) regarding the exercise of remedies provided in Article IV of Indenture
(1996-A).
If any Indenture Event of Default (1996-B) under Indenture (1996-B)
shall occur and be continuing, then, and in each and every case, so long as such
Indenture Event of Default (1996-B) shall be continuing, the Trustee may vote
all of the Secured Notes (1996-B) held in the Trust, and upon the direction of
the holders of Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust, the Trustee shall
vote a corresponding majority of such Secured Notes (1996-B), in favor of
directing the Indenture Trustee (1996-B) to declare the unpaid principal amount
of the Secured Notes (1996-B) then outstanding and accrued interest thereon to
be due and payable under, and in accordance with the provisions of, Indenture
(1996-B). In addition, if an Indenture Event of Default (1996-B) shall have
occurred and be continuing, the Trustee may in accordance with Indenture (1996-
B) vote the Secured Notes (1996-B) held in the Trust to direct the Indenture
Trustee (1996-B) regarding the exercise of remedies provided in Article IV of
Indenture (1996-B).
In addition, after any Event of Default shall have occurred and be
continuing, the Trustee may in its discretion, and upon the direction of the
Certificateholders evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust shall, by such officer or agent as
it may appoint, subject to complying with the terms of the Indenture under which
such Event of Default has occurred and the Secured Notes related to such
Indenture, sell, convey, transfer and deliver such Secured Note or Secured
Notes, without recourse to or warranty by the Trustee or any Certificateholder,
to any Person. In any such case, the Trustee shall sell, assign, contract to
sell or otherwise dispose of and deliver such Secured Note or Secured Notes in
one or more parcels at public or private sale or sales, at any location or
locations at the option of the Trustee, all upon such terms and conditions as it
may reasonably deem advisable and at such prices as it may reasonably deem
advisable, for cash. If the Trustee so decides or is required to sell or
otherwise dispose of any Secured Note pursuant to this Section, the Trustee
shall take such of the actions described above as it may reasonably deem most
effectual to complete the sale or other disposition of such Secured Note, so as
to provide for the payment in full of all amounts due on the Certificates. The
Trustee shall give notice to Enserch Exploration promptly after any such sale.
Notwithstanding the foregoing, any action taken by the Trustee under this
Section shall not, in the reasonable judgment of the Trustee, be adverse to the
best interests of the Certificateholders.
Section 6.02. Incidents of Sale of Secured Notes. Upon any sale of
----------------------------------
all or any part of the Secured Notes made either under the
38
power of sale given under this Trust Agreement or otherwise for the enforcement
of this Trust Agreement, the following shall be applicable:
(1) Certificateholders and Trustee May Purchase Secured Notes. Any
---------------------------------------------------------
Certificateholder, the Trustee in its individual or any other capacity or
any other Person may bid for and purchase any of such Secured Notes, and
upon compliance with the terms of sale, may hold, retain, possess and
dispose of such Secured Notes in their or its or his own absolute right
without further accountability.
(2) Receipt of Trustee Shall Discharge Purchaser. The receipt of the
--------------------------------------------
Trustee or of the officer making such sale shall be a sufficient discharge
to any purchaser for his purchase money, and, after paying such purchase
money and receiving such receipt, such purchaser or his personal
representative or assigns shall not be obliged to see to the application of
such purchase money, or be in any way answerable for any loss,
misapplication or non-application thereof.
(3) Application of Moneys Received upon Sale. Any moneys collected
----------------------------------------
by the Trustee upon any sale made either under the power of sale given by
this Trust Agreement or otherwise for the enforcement of this Trust
Agreement, shall be applied as provided in Section 4.02.
Section 6.03. Judicial Proceedings Instituted by Trustee.
------------------------------------------
(a) Trustee May Bring Suit. If there shall be a failure to make
----------------------
payment of the principal of, premium, if any, or interest on any Secured Note,
or if there shall be any failure to pay Rent (as defined in the applicable
Lease) under such Lease when due and payable, then the Trustee, in its own name,
and as trustee of an express trust, as holder of such Secured Notes or
collateral assignee of such Lease, shall be, to the extent permitted by and in
accordance with the terms of the Note Documents applicable to such Secured Note
or Lease, entitled and empowered to institute any suits, actions or proceedings
at law, in equity or otherwise, for the collection of the sums so due and unpaid
on such Secured Notes or under such Lease any may prosecute any such claim or
proceeding to judgment or final decree with respect to the whole amount of any
such sums so due and unpaid.
(b) Trustee May File Proofs of Claim; Appointment of Trustee as
-----------------------------------------------------------
Attorney-in-Fact in Judicial Proceedings. The Trustee in its own name, or as
- ----------------------------------------
trustee of an express trust, or as attorney-in-fact for the Certificateholders,
or in any one or more of such capacities (irrespective of whether distributions
on the Certificates shall then be
39
due and payable, or the payment of the principal on the Secured Notes shall then
be due and payable, as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand to the Indenture
Trustee for the payment of overdue principal, premium (if any) or interest on
the Secured Notes), shall be entitled and empowered to file such proofs of claim
and other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee and of the Certificateholders allowed in any
receivership, insolvency, bankruptcy, liquidation, readjustment, reorganization
or any other judicial proceedings relative to any of Enserch Exploration or the
Grantor Trustees or the Owner Participants, their respective creditors or
property. Any receiver, assignee, trustee, liquidator, sequestrator (or similar
official) in any such judicial proceeding is hereby authorized by each
Certificateholder to make payments in respect of such claim to the Trustee, and
in the event that the Trustee shall consent to the making of such payments
directly to the Certificateholders, to pay to the Trustee any amount due to it
for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel. Nothing contained in this Trust Agreement shall
be deemed to give to the Trustee any right to accept or consent to any plan of
reorganization or otherwise by action of any character in any such proceeding to
waive or change in any way any right of any Certificateholder.
Section 6.04. Control by Certificateholders. The Certificateholders
-----------------------------
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust shall have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee under this Trust
Agreement, including any right of the Trustee as holder of the Secured Notes,
provided that:
(1) such direction shall not be in conflict with any rule of law or
with this Trust Agreement and would not involve the Trustee in personal
liability or expense,
(2) the Trustee shall not determine that the action so directed would
be unjustly prejudicial to the Certificateholders not taking part in such
direction,
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction, and
(4) if any Indenture Event of Default shall have occurred and be
continuing, such direction shall not obligate the Trustee to vote more than
a corresponding majority of the related Secured Notes held by the Trust in
favor of directing any action by the Indenture Trustee with respect to such
Indenture Event of Default.
40
Section 6.05. Waiver of Defaults. The Certificateholders evidencing
------------------
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust may on behalf of the Certificateholders of all the Certificates
waive any Default or Event of Default hereunder and its consequences or may
instruct the Trustee in writing to waive any Default pursuant to Section 5.08
under any Indenture and its consequences, except a Default:
(1) in the deposit of any Scheduled Payment or Special Payment under
Section 4.01 or in the distribution of any payment under Section 4.02 on
the Certificates, or
(2) in the payment of the principal of, Make Whole Amount (as defined
in such Indenture), if any, or interest on any Secured Notes, or
(3) in respect of a covenant or provision hereof which under Article
IX hereof cannot be modified or amended without the consent of the
Certificateholder of each Outstanding Certificate affected.
Upon any such waiver, such Default shall cease to exist with respect to this
Trust Agreement, and any Event of Default arising therefrom shall be deemed to
have been cured for every purpose of this Trust Agreement and any direction
given by the Trustee on behalf of such Holders to the Indenture Trustee under
the related Indenture shall be annulled with respect thereto; but no such waiver
shall extend to any subsequent or other Default or Event of Default under the
related Indenture or impair any right consequent thereon. Upon any such waiver,
the Trustee shall vote the Secured Notes issued under the related Indenture to
waive the corresponding Indenture Default or Indenture Event of Default.
Section 6.06. Undertaking to Pay Court Costs. All parties to this
------------------------------
Trust Agreement, and each Certificateholder by his acceptance of a Certificate,
shall be deemed to have agreed that any court may in its discretion require, in
any suit, action or proceeding for the enforcement of any right or remedy under
this Trust Agreement, or in any suit, action or proceeding against the Trustee
for any action taken or omitted by it as Trustee hereunder, the filing by any
party litigant in such suit, action or proceeding of an undertaking to pay the
costs of such suit, action or proceeding, and that such court may, in its
discretion, assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, action or proceeding, having due regard
to the merits and good faith of the claims or defenses made by such party
litigant; provided, however, that the provisions of this Section shall not apply
-------- -------
to (a) any suit, action or proceeding instituted by any Certificateholder or
group of Certificateholders evidencing Fractional Undivided Interests
aggregating more than 10% of the Trust, (b) any
41
suit, action or proceeding instituted by any Certificateholder for the
enforcement of the distribution of payments pursuant to Section 4.02 hereof on
or after the respective due dates expressed herein or (c) any suit, action or
proceeding instituted by the Trustee.
Section 6.07. Right of Certificateholders to Receive Payments Not to
------------------------------------------------------
Be Impaired. Anything in this Trust Agreement to the contrary notwithstanding,
- -----------
including without limitation Section 6.08 hereof, the right of any
Certificateholder to receive distributions of payments required pursuant to
Section 4.02 hereof on the Certificates when due, or to institute suit for the
enforcement of any such payment on or after the applicable Distribution Date or
Special Distribution Date, shall not be impaired or affected without the consent
of such Certificateholder.
Section 6.08. Certificateholders May Not Bring Suit Except Under
--------------------------------------------------
Certain Conditions. A Certificateholder shall not have the right to institute
- ------------------
any suit, action or proceeding at law or in equity or otherwise with respect to
this Trust Agreement, for the appointment of a receiver or for the enforcement
of any other remedy under this Trust Agreement, unless:
(1) such Certificateholder previously shall have given written notice
to the Trustee of a continuing Event of Default with respect to the related
Secured Notes;
(2) the Certificateholders evidencing Fractional Undivided Interests
aggregating not less than a majority in interest of the Trust shall have
requested the Trustee in writing to institute such action, suit or
proceeding and shall have offered to the Trustee reasonable security or
indemnity as provided in Section 7.03(e);
(3) the Trustee shall have refused or neglected to institute any such
action, suit or proceeding for 60 days after receipt of such notice,
request and offer of reasonable security or indemnity; and
(4) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Certificateholders
evidencing Fractional Undivided Interests aggregating not less than a
majority in interest in the Trust.
It is understood and intended that no one or more of the Certificateholders
shall have any right in any manner whatever hereunder or under the Certificates
to (i) surrender, impair, waive, affect, disturb or prejudice any property in
the Trust Property or the lien of any Indenture on any property subject thereto,
or the rights of the
42
Certificateholders or the holders of the Secured Notes, (ii) obtain or seek to
obtain priority over or preference to any other such Holder or (iii) enforce any
right under this Trust Agreement, except in the manner herein provided and for
the equal, ratable and common benefit of all the Certificateholders subject to
the provisions of this Trust Agreement.
Section 6.09. Remedies Cumulative. Every remedy given hereunder to
-------------------
the Trustee or to any of the Certificateholders shall not be exclusive of any
other remedy or remedies, and every such remedy shall be cumulative and in
addition to every other remedy given hereunder or now or hereafter given by
statute, law, equity or otherwise.
ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities.
-----------------------------------
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties as are specifically
set forth in this Trust Agreement, and no implied covenants or obligations
shall be read into this Trust Agreement against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Trust Agreement; but
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the
Trustee shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Trust Agreement.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this Trust
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs.
(c) No provision of this Trust Agreement shall be construed to
relieve the Trustee of liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that:
43
(1) this subsection shall not be construed to limit the effect of
subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Certificateholders evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust relating to
the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Trust Agreement; and
(4) no provision of this Trust Agreement shall require the Trustee to
expend or risk its own funds in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk is not reasonably assured to it.
(d) whether or not herein expressly so provided, every provision of
this Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 7.02. Notice of Defaults. As promptly as practicable after,
------------------
and in any event within 90 days after, the occurrence of any Default hereunder,
the Trustee shall transmit by mail to Enserch Exploration, the related Grantor
Trustee and the related Indenture Trustee in accordance with Section 12.03 and
to all Certificateholders, as their names and addresses appear in the Register,
notice of such Default hereunder known to the Trustee, unless such Default shall
have been cured or waived; provided, however, that, except in the case of a
-------- -------
Default in the payment of the principal of, premium, if any, or interest on any
Secured Note, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee or a trust committee
of directors and/or Responsible Officers of the Trustee in good faith determine
that the withholding of such notice is in the interests of the
Certificateholders.
44
Section 7.03. Certain Rights of Trustee. Except as otherwise
-------------------------
provided in Section 7.01:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting in reliance upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of Enserch Exploration mentioned herein
shall be sufficiently evidenced by a request;
(c) whenever in the administration of this Trust Agreement the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, rely upon an Officers' Certificate of
Enserch Exploration, the related Grantor Trustee or the related Indenture
Trustee;
(d) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Certificateholders pursuant to this Trust
Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the cost, expenses and liabilities
which might be incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or document; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by
it hereunder.
45
Section 7.04. Not Responsible for Recitals or Issuance of
-------------------------------------------
Certificates. The recitals contained herein and in the Certificates, except the
- ------------
Trustee's certificates of authentication, shall not be taken as the statements
of the Trustee, and the Trustee assumes no responsibility for their correctness.
Other than pursuant to Section 7.15, the Trustee makes no representations as to
the validity or sufficiency of this Trust Agreement, the Note Documents, the
Indentures, the Secured Notes or the Certificates, except that the Trustee
hereby represents and warrants that this Trust Agreement has been, and each
Certificate will be, executed and delivered by one of its officers who is duly
authorized to execute and deliver such document an its behalf.
Section 7.05. May Hold Certificates. The Trustee, any Paying Agent,
---------------------
Registrar or any other agent, in their respective individual or any other
capacity, may become the owner or pledgee of Certificates and may otherwise deal
with Enserch Exploration, the Grantor Trustees or the Indenture Trustees with
the same rights it would have if it were not Trustee, Paying Agent, Registrar or
such other agent.
Section 7.06. Money Held in Trust. Money held by the Trustee or the
-------------------
Paying Agent in trust hereunder need not be segregated from other funds except
to the extent required herein or by law and neither the Trustee nor the Paying
Agent shall have any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. Enserch Exploration
------------------------------
hereby agrees:
(1) to pay, or cause to be paid, to the Trustee from time to time the
compensation set forth in the schedule agreed to by the Trustee and Enserch
Exploration for all services rendered by it hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse, or
cause to be reimbursed, the Trustee upon its request for all reasonable
out-of-pocket expenses, disbursements and advances, including taxes (other
than taxes measured by the gross receipts or income of the Trustee),
incurred or made by the Trustee in accordance with any provision of this
Trust Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence, willful
misconduct or bad faith or as may be incurred due to the Trustee's breach
of its representations and warranties set forth in Section 7.04 or 7.15;
46
(3) to indemnify, or cause to be indemnified, the Trustee in
accordance with Section 12.1 of the Participation Agreement; the Trustee
shall notify Enserch Exploration promptly of any claim for which it may
seek indemnity; and
(4) to indemnify, or cause to be indemnified, the Trustee, solely in
its individual capacity, for, and to hold it harmless against, any tax
(other than for or with respect to any tax referred to in the next
paragraph, provided that no indemnification shall be available with respect
to any tax attributable to the Trustee's compensation for serving as such)
incurred without negligence, willful misconduct or bad faith, on its part,
arising out of or in connection with the acceptance or administration of
this Trust, including any costs and expenses incurred in contesting the
imposition of any such tax. The Trustee, in its individual capacity, shall
notify Enserch Exploration promptly of any tax for which it may seek
indemnity. Enserch Exploration shall defend against the imposition of such
tax and the Trustee, in its individual capacity, shall cooperate in the
defense. The Trustee, in its individual capacity, may have separate
counsel with the consent of Enserch Exploration, and Enserch Exploration
will pay the reasonable fees and expenses of such counsel. Enserch
Exploration need not pay for any taxes paid, in settlement or otherwise,
without its consent.
In addition, the Trustee shall be entitled to reimbursement from, and shall have
a lien prior to the Certificates upon, all property and funds held or collected
by the Trustee in its capacity as Trustee for any tax incurred without
negligence, bad faith or willful misconduct, on its part, arising out of or in
connection with the acceptance or administration of this Trust (other than any
tax attributable to the Trustee's compensation for serving as such), including
any costs and expenses incurred in contesting the imposition of any such tax.
If the Trustee reimburses itself for any such tax it will within 30 days mail a
brief report setting forth the circumstances thereof to all Certificateholders
as their names and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
---------------------------------------
at all times be a Trustee hereunder which shall be a corporation organized and
doing business under the laws of the United States of America or of any state,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of at least $100,000,000, and subject to supervision or
examination by Federal or state authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section, the combined capital and surplus of such corporation shall be
47
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
Section 7.09. Resignation and Removal; Appointment of Successor. (a)
-------------------------------------------------
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time by giving written notice
thereof to Enserch Exploration, the Authorized Agents, the Grantor Trustee and
the Indenture Trustee. If an instrument of acceptance by a successor Trustee
shall not have been delivered to Enserch Exploration, the Grantor Trustees and
the Indenture Trustees within 30 days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders of
Certificates evidencing Fractional Undivided Interests aggregating not less than
a majority in interest in the Trust delivered to the Trustee and to Enserch
Exploration, the Grantor Trustees and the Indenture Trustees.
(d) If at any time:
(1) the Trustee shall cease to be eligible under Section 7.08 and
shall fail to resign after written request therefor by Enserch Exploration,
or by any such Certificateholder; or
(2) the Trustee shall become incapable of acting or shall be adjudged
a bankrupt or insolvent or a receiver of the Trustee or of its property
shall be appointed or any public officer shall take charge or control of
the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) Enserch Exploration may remove the Trustee or (ii)
subject to Section 6.06, any Certificateholder who has been a bona fide Holder
of a Certificate for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee. If an
instrument of acceptance by a successor Trustee shall not have been delivered to
Enserch Exploration, the Grantor Trustees and the Indenture Trustees within 30
days after giving such
48
notice of removal, the removed Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall obtain actual
knowledge of an Avoidable Tax (as hereinafter defined) which has been or is
likely to be asserted, the Trustee shall promptly notify Enserch Exploration and
the Grantor Trustees thereof and shall, within 3O days of such notification,
resign hereunder unless within such 3O-day period the Trustee shall have
received notice that Enserch Exploration or the Grantor Trustees has agreed to
pay such tax. Enserch Exploration shall promptly appoint a successor Trustee in
a jurisdiction where there are no Avoidable Taxes. As used herein an Avoidable
Tax means a state or local tax: (i) upon (w) the Trust, (x) the Trust Property,
(y) Holders of the Certificates or (z) the Trustee for which the Trustee is
entitled to seek reimbursement from the Trust Property, and (ii) which would be
avoided if the Trustee were located in another state, or jurisdiction within a
state, within the United States. A tax shall not be an Avoidable Tax if Enserch
Exploration or the Grantor Trustees shall agree to pay, and shall pay, such tax.
(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
Enserch Exploration shall promptly appoint a successor Trustee. If, within one
year after such resignation, removal or incapability, or the occurrence of such
vacancy, a successor Trustee shall be appointed by Act of the Holders holding
Certificates evidencing Fractional Undivided Interests aggregating not less than
a majority in interest in the Trust delivered to Enserch Exploration, the
Grantor Trustees, the Indenture Trustees and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such appointment,
become the successor Trustee and supersede the successor Trustee appointed as
provided above. If no successor Trustee shall have been so appointed as
provided above and accepted appointment in the manner hereinafter provided, any
Certificateholder who has been a bona fide Holder of a Certificate for at least
six months may, on behalf of himself and all others similarly situated, petition
any court of competent jurisdiction for the appointment of a successor Trustee.
(g) The successor Trustee shall give notice of the resignation and
removal of the Trustee and appointment of the successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to the
Holders of Certificates as their names and addresses appear in the Register.
Each notice shall include the name of such successor Trustee and the address of
its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor. Every
--------------------------------------
successor Trustee appointed hereunder shall execute, acknowledge and deliver to
Enserch Exploration and to the retiring Trustee an
49
instrument accepting such appointment, and thereupon the resignation or removal
of the retiring Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on request of
Enserch Exploration or the successor Trustee, such retiring Trustee shall
execute and deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 7.07. Upon request of any such successor Trustee,
Enserch Exploration, the retiring Trustee and such successor Trustee shall
execute and deliver any and all instruments containing such provisions as shall
be necessary or desirable to transfer and confirm to, and for more fully and
certainly vesting in, such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor Trustee shall be qualified and eligible under
this Article.
Section 7.11. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business. Any corporation into which the Trustee may be merged or converted or
- --------
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Certificates shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Certificates so authenticated with the same
effect as if such successor Trustee had itself authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times
-----------------------
be maintained an office or agency where Certificates may be presented or
surrendered for registration of transfer or for exchange, and for payment
thereof and where notices and demands to or upon the Trustee in respect of the
Certificates or of this Trust Agreement may be served. Such office or agency
shall be initially at The Bank of New York, 101 Barclay Street, Floor 21 West,
New York, New York 10286. Written notice of the location of each such other
office or agency and of any change of location thereof shall be given by the
Trustee to Enserch Exploration, the Grantor Trustees, the Indenture Trustees and
the Certificateholders. In the event that no such office or agency shall be
maintained or no such notice of location or of change of location shall be
50
given, presentations and demands may be made and notices may be served at the
Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a Paying Agent
hereunder. Each such Authorized Agent shall be a bank or trust company, shall
be a corporation organized and doing business under the laws of the United
States or any state, with a combined capital and surplus of at least
$100,000,000, and shall be authorized under such laws to exercise corporate
trust powers, subject to supervision by Federal or state authorities. The
Trustee shall initially be the Paying Agent and, as provided in Section 3.04,
Registrar hereunder. Each Registrar shall furnish to the Trustee, at stated
intervals of not more than six months, and at such other times as the Trustee
may request in writing, a copy of the Register.
(c) Any corporation into which any Authorized Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authorized Agent shall
be a party, or any corporation succeeding to substantially all of the corporate
trust business of any Authorized Agent, shall be the successor of such
Authorized Agent hereunder, if such successor corporation is otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the parties hereto or such Authorized Agent or such successor
corporation.
(d) Any Authorized Agent may at any time resign by giving written
notice of resignation to the Trustee, Enserch Exploration, the Grantor Trustees
and the Indenture Trustees. Enserch Exploration may, and at the request of the
Trustee shall, at any time terminate the agency of any Authorized Agent by
giving written notice of termination to such Authorized Agent and to the
Trustee. Upon the resignation or termination of an Authorized Agent or in case
at any time any such Authorized Agent shall cease to be eligible under this
Section (when, in either case, no other Authorized Agent performing the
functions of such Authorized Agent shall have been appointed), Enserch
Exploration shall promptly appoint one or more qualified successor Authorized
Agents, reasonably satisfactory to the Trustee, to perform the functions of the
Authorized Agent which has resigned or whose agency has been terminated or who
shall have ceased to be eligible under this Section. Enserch Exploration shall
give written notice of any such appointment made by it to the Trustee, the
Grantor Trustees and the Indenture Trustees; and in each case the Trustee shall
mail notice of such appointment to all Holders as their names and addressee
appear on the Register.
(e) Enserch Exploration agrees to pay, or cause to be paid, from time
to time to each Authorized Agent the compensation as set forth in the schedule
agreed to by each Authorized Agent and Enserch
51
Exploration for its services and to reimburse it for its reasonable expenses.
Section 7.13. Money for Certificate Payments to Be Held in Trust.
--------------------------------------------------
All moneys deposited with any Paying Agent for the purpose of any payment on
Certificates shall be deposited and held in trust for the benefit of the Holders
of the Certificates entitled to such payment, subject to the provisions of this
Section. Moneys so deposited and held in trust shall constitute a separate
trust fund for the benefit of the Holders of the Certificates with respect to
which such money was deposited.
The Trustee will cause each Paying Agent other than the Trustee to
execute and deliver to it an instrument in which such Paying Agent shall agree
with the Trustee, subject to the provisions of this Section, that such Paying
Agent will:
(1) hold all sums held by it for payments on Certificates in trust
for the benefit of the Persons entitled thereto until such sums shall be
paid to such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by any obligor upon the
Certificates in the making of any such payment; and
(3) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Trustee may at any time, for the purpose of obtaining the satisfaction and
discharge of this Trust Agreement or for any other purpose, direct any Paying
Agent to pay to the Trustee all sums held in trust by such Paying Agent, such
sums to be held by the Trustee upon the same trusts as those upon which such
sums were held by such Paying Agent; and, upon such payment by any Paying Agent
to the Trustee, such Paying Agent shall be released from all further liability
with respect to such money.
Section 7.14. Registration of Secured Notes in Trustee's Name. The
-----------------------------------------------
Trustee agrees that all Secured Notes and Permitted Government Investments, if
any, shall be issued in the name of the Trustee or its nominee and held by the
Trustee, or, if not so held, the Trustee or its nominee shall be reflected as
the owner of such Secured Notes or Permitted Government Investments, as the case
may be, in the register of the issuer of such Secured Notes or Permitted
Government Investments under the applicable provisions of the Uniform Commercial
52
Code in effect where the Trustee holds such Secured Notes or Permitted
Government Investments, or other applicable law then in effect.
Section 7.15. Representations and Warranties of Trustee. The Trustee
-----------------------------------------
hereby represents and warrants that:
(i) the Trustee is a banking corporation duly organized, validly
existing, and in good standing under the laws of the State of New York;
(ii) the Trustee has full power, authority and legal right to
execute, deliver, and perform this Trust Agreement and the Participation
Agreement and has taken all necessary action to authorize the execution,
delivery, and performance by it of this Trust Agreement and the
Participation Agreement;
(iii) the execution, delivery and performance by the Trustee of this
Trust Agreement and the Participation Agreement (a) will not violate any
provision of any United States or New York law or regulation governing the
banking and trust powers of the Trustee or any order, writ, judgment, or
decree of any court, arbitrator, or governmental authority applicable to
the Trustee or any of its assets, (b) will not violate any provision of the
articles of association or by-laws of the Trustee, or (c) will not violate
any provision of, or constitute, with or without notice or lapse of time or
both, a default under, or result in the creation or imposition of any lien
on any properties included in the Trust Property pursuant to the provisions
of any mortgage, indenture, contract, agreement or other undertaking to
which it is a party, which violation, default or lien could reasonably be
expected to have an adverse effect on the Trustee's performance or ability
to perform its duties hereunder or thereunder or on the transactions
contemplated herein or therein;
(iv) the execution, delivery and performance by the Trustee of this
Trust Agreement and the Participation Agreement will not require the
authorization, consent, or approval of, the giving of notice to, the filing
or registration with, or the taking of any other action in respect of, any
United States or State governmental authority or agency regulating the
banking and corporate trust activities of the Trustee; and
(v) this Trust Agreement and the Participation Agreement have been
duly executed and delivered by the Trustee and constitute the legal, valid,
and binding agreements of the Trustee, enforceable in accordance with their
respective terms, provided that enforceability may be limited by applicable
bankruptcy, insolvency,
53
reorganization, moratorium or similar laws affecting the rights of
creditors generally and general principles of equity.
Section 7.16. Withholding Taxes; Information Reporting. The Trustee,
----------------------------------------
as trustee of a grantor trust, shall exclude and withhold from each distribution
of principal, premium, if any, and interest and other amounts due hereunder or
under the Certificates any and all withholding taxes applicable thereto as
required by law. The Trustee agrees to act as such withholding agent and, in
connection therewith, whenever any present or future taxes or similar charges
are required to be withheld with respect to any amounts payable in respect of
the Certificates, to withhold such amounts and timely pay the same to the
appropriate authority in the name of and on behalf of the holders of the
Certificates, that it will file any necessary withholding tax returns or
statements when due, and that, as promptly as possible after the payment
thereof, it will deliver to each Holder of a Certificate appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Holder may reasonably request from time to time.
The Trustee agrees to file any other information reports as it may be required
to file under United States law.
Section 7.17. Trustee's Liens. The Trustee, in its individual
---------------
capacity, agrees that it will at its own cost and expense promptly take any
action as may be necessary to duly discharge and satisfy in full any mortgage,
pledge, lien, charge, encumbrance, security interest or claim ("Trustee's
---------
Liens") on or with respect to the Trust Property which is either (i)
- -----
attributable to the Trustee in its individual capacity and which is unrelated to
the transactions contemplated by this Trust Agreement, the Participation
Agreement or the Note Documents, or (ii) which is attributable to the Trustee as
trustee hereunder or in its individual capacity and which arise out of acts or
omissions which are prohibited by this Trust Agreement.
Section 7.18. Availability of Certain Information Concerning the
--------------------------------------------------
Trust. The Trustee shall furnish to any Certificateholder upon request, copies
- -----
of the information with respect to the Trust required to be delivered to
Certificateholders or prospective purchasers of Certificates from
Certificateholders in order to enable such Certificateholders to comply with
Rule 144A under the Securities Act.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.01. Enserch Exploration to Furnish Trustee with Names and
-----------------------------------------------------
Addresses of Certificateholders. Enserch Exploration will
- -------------------------------
54
furnish to the Trustee within 15 days after each Record Date with respect to a
Scheduled Payment, and at such other times as the Trustee may request in
writing, within 30 days after receipt by Enserch Exploration of any such
request, a list, in such form as the Trustee may reasonably require, of all
information in the possession or control of Enserch Exploration as to the names
and addresses of the Holders of Certificates, in each case as of a date not more
than 15 days prior to the time such list is furnished; provided, however, that
-------- -------
so long as the Trustee is the sole Registrar, no such list need be furnished;
and provided further, however, that no such list need be furnished for so long
as a copy of the Register is being furnished to the Trustee pursuant to Section
7.12(b).
Section 8.02. Preservation of Information; Communication to
---------------------------------------------
Certificateholders. (a) The Trustee shall preserve, in as current a form as is
- ------------------
reasonably practicable, the names and addresses of Holders of Certificates
contained in the most recent list furnished to the Trustee as provided in
Section 7.12(b) or Section 8.01, as the case may be, and the names and addresses
of Holders of Certificates received by the Trustee in its capacity as Registrar,
if so acting. The Trustee may destroy any list furnished to it as provided in
Section 7.12(b) or Section 8.01, as the case may be, upon receipt of a new list
so furnished.
(b) If three or more Holders of Certificates (such Holders
hereinafter referred to as "applicants") apply in writing to the Trustee, and
furnish to the Trustee reasonable proof that each such applicant has owned a
Certificate for a period of at least six months preceding the date of such
application, and such application states that the applicants desire to
communicate with other Holders of Certificates with respect to their rights
under this Trust Agreement or under the Certificates and is accompanied by a
copy of the form of proxy or other communication which such applicants propose
to transmit, then the Trustee shall, within 5 Business Days after the receipt of
such application, at its election, either:
(i) afford such applicants access to the information preserved at
the time by the Trustee in accordance with Section 8.02(a), or
(ii) inform such applicants as to the approximate number of Holders
of Certificates whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with Section 8.02(a),
and as to the approximate cost of mailing to such Certificateholders the
form of proxy or other communication, if any, specified in such
application.
If the Trustee shall elect not to afford such applicants access to such
information, the Trustee shall, upon the written request of such
55
applicants, mail to each Certificateholder whose name and address appear in the
information preserved at the time by the Trustee in accordance with Section
8.02(a), a copy of the form of proxy or other communication which is specified
in such request, with reasonable promptness after a tender to the Trustee of the
material to be mailed and of payment, or provision for the payment, of the
reasonable expenses of mailing, unless within five days after such tender, the
Trustee shall mail to such applicants, together with a copy of the material to
be mailed, a written statement to the effect that, in the opinion of the
Trustee, such mailing would be contrary to the best interests of the Holders of
Certificates or would be in violation of applicable law. Such written statement
shall specify the basis of such opinion. If the applicants shall obtain a court
order, after notice to the Trustee and opportunity for hearing, so directing the
Trustee, the Trustee shall mail copies of such material to all such
Certificateholders with reasonable promptness after the entry of such order and
the renewal of the applicants' tender.
(c) Every Holder of Certificates, by receiving and holding the same,
agrees with Enserch Exploration and the Trustee that none of Enserch Exploration
or the Trustee shall be held accountable by reason of the disclosure of any such
information as to the names and addresses of the Holders of Certificates in
accordance with Section 8.02(b), regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 8.02(b).
Section 8.03. Reports by Enserch Exploration. Enserch Exploration
------------------------------
will:
(1) file with the Trustee the information required by Section 10.2 of
the Participation Agreement; and
(2) transmit by mail to all Certificateholders, as their names and
addresses appear in the Register, within 3O days after the filing thereof
with the Trustee, such summaries of any information documents and reports
required to be filed by Enserch Exploration pursuant to paragraph (1) of
this Section as may hereafter be required by rules and regulations
prescribed from time to time by the Commission.
ARTICLE IX
SUPPLEMENTAL TRUST AGREEMENTS
Section 9.01. Supplemental Trust Agreement Without Consent of
-----------------------------------------------
Certificateholders. Without the consent of the Holder of any
- ------------------
56
Certificates, Enserch Exploration may, and the Trustee (subject to Section 9.03)
shall, at any time and from time to time enter into one or more agreements
supplemental hereto, in form satisfactory to the Trustee, for any of the
following purposes:
(1) to evidence the succession of another corporation to Enserch
Exploration, and the assumption by any such successor of the covenants of
Enserch Exploration, as applicable, herein contained; or
(2) to add to the covenants of Enserch Exploration, for the benefit
of the Holders of the Certificates, or to surrender any right or power
herein conferred upon Enserch Exploration; or
(3) to cure any ambiguity, to correct or supplement any provision
herein which may be defective or inconsistent with any other provision
herein or to make any other provisions with respect to matters or questions
arising under this Trust Agreement; provided that any such action shall not
adversely affect the interests of the Holders of the Certificates; or
(4) to modify, eliminate or add to the provisions of this Trust
Agreement to such extent as shall be necessary to qualify this Trust
Agreement (including any supplemental agreement) under the Trust Indenture
Act, or under any similar Federal statute hereafter enacted, and to add to
this Trust Agreement such other provisions as may be expressly permitted by
the Trust Indenture Act, excluding, however, the provisions referred to in
Section 316(a)(2) of the Trust Indenture Act as in effect at the date as of
which this instrument was executed or any corresponding provision in any
similar Federal statute hereafter enacted.
Section 9.02. Supplemental Trust Agreements with Consent of
---------------------------------------------
Certificateholders. With the consent of the Holders of Certificates evidencing
- ------------------
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust, by Act of said Holders delivered to Enserch Exploration and the
Trustee, Enserch Exploration may (with the consent of the Grantor Trustees, such
consent not to be unreasonably withheld), and the Trustee (subject to Section
9.03) shall, enter into an agreement or agreements supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Trust Agreement or of modifying in any manner the
rights and obligations of the Holders of the Certificates under this Trust
Agreement; provided, however, that no such supplemental agreement shall, without
-------- -------
the consent of the Holder of each Outstanding Certificate affected thereby:
57
(1) reduce in any manner the amount of, or delay the timing of, any
receipt by the Trustee of payments on the Secured Notes or distributions
that are required to be made herein on any Certificate, or change any date
of payment on any Certificate, or change the place of payment where, or the
coin or currency in which, any Certificate is payable, or impair the right
to institute suit for the enforcement of any such payment or distribution
on or after the Distribution Date or Special Distribution Date applicable
thereto; or
(2) permit the disposition of any Secured Note in the Trust Property
except as permitted by this Trust Agreement, or otherwise deprive any
Certificateholder of the benefit of the ownership of the Secured Notes in
the Trust; or
(3) reduce the percentage of the aggregate Fractional Undivided
Interests of the Trust which is required for any such supplemental
agreement, or reduce such percentage required for any waiver (of compliance
with certain provisions of this Trust Agreement or certain defaults
hereunder and their consequences) provided for in this Trust Agreement; or
(4) modify any of the provisions of this Section or Section 6.05,
except to increase any such percentage or to provide that certain other
provisions of this Trust Agreement cannot be modified or waived without the
consent of the Holder of each Certificate affected thereby.
It shall not be necessary for any Act of Certificateholders under this Section
to approve the particular form of any proposed supplemental agreement, but it
shall be sufficient if such Act shall approve the substance thereof.
Section 9.03. Documents Affecting Immunity or Indemnity. If in the
-----------------------------------------
opinion of the Trustee any document required to be executed by it pursuant to
the terms of Section 9.01 or 9.02 affects any interest, right, duty, immunity or
indemnity in favor of the Trustee under this Trust Agreement, the Trustee may in
its discretion decline to execute such document.
Section 9.04. Execution of Supplemental Trust Agreements. In
------------------------------------------
executing, or accepting the additional trusts created by, any supplemental
agreement permitted by this Article or the modifications thereby of the trusts
created by this Trust Agreement, the Trustee shall be entitled to receive, and
(subject to Section 7.01) shall be fully protected in relying upon, an Opinion
of Counsel stating that the
58
execution of such supplemental agreement is authorized or permitted by this
Trust Agreement.
Section 9.05. Effect of Supplemental Trust Agreements. Upon the
---------------------------------------
execution of any supplemental agreement under this Article, this Trust Agreement
shall be modified in accordance therewith, and such supplemental agreement shall
form a part of this Trust Agreement for all purposes; and every Holder of
Certificates theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.06. Reference in Certificates to Supplemental Trust
-----------------------------------------------
Agreements. Certificates authenticated and delivered after the execution of any
- ----------
supplemental agreement pursuant to this Article may bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
agreement; and, in such case, suitable notation may be made upon Outstanding
Certificates after proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND NOTE DOCUMENTS
Section 10.01. Amendments and Supplements to Indenture and Other Note
------------------------------------------------------
Documents. In the event that the Trustee, as holder of any Secured Note in
- ---------
trust for the benefit of the Certificateholders, receives a request for a
consent to any amendment, modification, waiver or supplement under any Indenture
or other Note Document or any Participation Agreement, which requires the
consent of the Certificateholders, the Trustee shall forthwith send a notice of
such proposed amendment, modification, waiver or supplement, to each
Certificateholder registered on the Register as of such date. The Trustee shall
request from the Certificateholders Directions as to (i) whether or not to
direct the Indenture Trustee related to such Secured Note to take or refrain
from taking any action which a holder of such Secured Note has the option to
direct, (ii) whether or not to give or execute any waivers, consents,
amendments, modifications or supplements as a holder of such Secured Note and
(iii) how to vote such Secured Note if a vote has been called for with respect
thereto. Provided such a request for Certificateholder Direction shall have
been made, in directing any action or casting any vote or giving any consent as
the holder of any Secured Note, the Trustee shall vote or consent with respect
to such Secured Note in the same proportion as the Certificates were actually
voted by Acts of Holders delivered to the Trustee prior to two Business Days
before the Trustee directs such action or casts such vote or gives such consent.
Notwithstanding the foregoing, but subject to Section 6.04, in the case that an
Event of Default hereunder shall have occurred and be continuing, the Trustee
may, but shall not be
59
obligated to, consent and notify the Indenture Trustee under the Indenture to
which such Event of Default pertains of such consent to any amendment,
modification, waiver or supplement under such Indenture or other Note Document.
Notwithstanding anything else set forth in this Trust Agreement, until the Lease
Termination Date, the Trustee shall not, without the express written consent of
the respective Owner Participant, vote or consent to (i) any amendment or
modification to Section 10.8 of the Participation Agreements, (ii) any other
amendment or modification to the Participation Agreements or any other Operative
Document, the effect of which would be to amend, modify or override Section 10.8
of the Participation Agreements or (iii) amend, modify or override this
sentence.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective obligations
------------------------
and responsibilities of Enserch Exploration and the Trustee created hereby and
the Trust created hereby shall terminate upon the distribution to all
Certificateholders of all amounts required to be distributed to them pursuant to
this Trust Agreement and the disposition of all property held as part of the
Trust Property; provided, however, that in no event shall the trust created
-------- -------
hereby continue beyond the expiration of 21 years from the death of the last
survivor of the descendants of William Jefferson Clinton, President of the
United States, living on the date of this Trust Agreement.
Notice of any termination, specifying the Distribution Date (or
Special Distribution Date, as the case may be) upon which the Certificateholders
may surrender their Certificates to the Trustee for payment of the final
distribution and cancellation, shall be mailed promptly by the Trustee to
Certificateholders not earlier than the 60th day and not later than the 20th day
next preceding such final distribution specifying (A) the Distribution Date (or
Special Distribution Date, as the case may be) upon which final payment of the
Certificates will be made upon presentation and surrender of Certificates at the
office or agency of the Trustee therein specified, (B) the amount of any such
final payment, and (C) that the Record Date otherwise applicable to such
Distribution Date (or Special Distribution Date, as the case may be) is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. The
Trustee shall give such notice to the Registrar at the time such notice is given
to Certificateholders. Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date or
60
Special Distribution Date, as the case may be, pursuant to Section 4.02.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. In the
event that any money held by the Trustee for the payment of distributions on the
Certificates shall remain unclaimed for two years (or such lesser time as the
Trustee shall be satisfied, after sixty days' notice from Enserch Exploration,
is one month prior to the escheat period provided under applicable law) after
the final distribution date with respect thereto, the Trustee shall pay to
Indenture Trustees the appropriate amount of money relating to such Indenture
Trustee and shall give written notice thereof to the Grantor Trustees, Enserch
Exploration.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The death
------------------------------------------
or incapacity of any Certificateholder shall not operate to terminate this Trust
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties
hereto or any of them.
Section 12.02. Certificates Nonassessable and Fully Paid.
-----------------------------------------
Certificateholders shall not be personally liable for obligations of the Trust,
the Fractional Undivided Interests represented by the Certificates shall be
nonassessable for any losses or expenses of the Trust or for any reason
whatsoever, and Certificates upon authentication thereof by the Trustee pursuant
to Section 3.02 are and shall be deemed fully paid. No Certificateholder shall
have any right (except as expressly provided herein) to vote or in any manner
otherwise control the operation and management of the Trust Property, the Trust
established hereunder, or the obligations of the parties hereto, nor shall
anything set forth herein, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association.
Section 12.03. Notices. All demands, notices, and communications
-------
hereunder shall be in writing, personally delivered or mailed by certified mail-
return receipt requested, and shall be deemed to
61
have been duly given upon receipt, in the case of Enserch Exploration, at the
following address: Enserch Exploration, Inc., ENSERCH Center, 300 South St. Paul
Street, Dallas, Texas 75201, Attention: Treasurer, and, in the case of the
Trustee, at the following address: 101 Barclay Street, Floor 21 West, New York,
New York 10284, Attention: Corporate Trust Administration or, in each case, at
such other address as shall be designated by such party in a written notice to
the other parties. Any notice required or permitted to be given to a
Certificateholder hereunder shall be mailed by first class mail, postage
prepaid, at the address of such Holder as shown in the Register. Any notice so
mailed within the time prescribed in this Trust Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder received
such notice. The Trustee shall promptly furnish Enserch Exploration with a copy
of each demand, notice or written communication received by the Trustee
hereunder from any Certificateholder, the Grantor Trustee or the Indenture
Trustee.
Section 12.04. Governing Law. THIS TRUST AGREEMENT AND THE
-------------
CERTIFICATES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
Section 12.05. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions, or terms of this Trust Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Trust Agreement and shall in no way affect the
validity or enforceability of the other provisions of this Trust Agreement or
the Trust, or of the Certificates or the rights of the Holders thereof.
Section 12.06. Effect of Headings and Table of Contents. The Article
----------------------------------------
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
Section 12.07. Successors and Assigns. All covenants, agreements,
----------------------
representations and warranties in this Trust Agreement by the Trustee, Enserch
Exploration shall bind and, to the extent permitted hereby, shall inure to the
benefit of and be enforceable by their respective successors and assigns,
whether so expressed or not.
Section 12.08. Benefits of Trust Agreement. Nothing in this Trust
---------------------------
Agreement or in the Certificates, express or implied, shall give to any person,
other than the parties hereto and their successors hereunder, and the Holders of
Certificates, any benefit or any legal or equitable right, remedy or claim under
this Trust Agreement.
62
Section 12.09. Legal Holidays. In any case where any Distribution
--------------
Date or Special Distribution Date relating to any Certificate shall not be a
Business Day, then (notwithstanding any other provision of this Trust Agreement)
payment need not be made on such date, but may be made on the next succeeding
Business Day with the same force and effect as if made on such Distribution Date
or Special Distribution Date, and no interest shall accrue during the
intervening period.
Section 12.10. Counterparts. For the purpose of facilitating the
------------
execution of this Trust Agreement and for other purposes, this Trust Agreement
may be executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
* * * * *
63
IN WITNESS WHEREOF, Enserch Exploration and the Trustee have caused this Trust
Agreement to be duly executed by their respective officers and their respective
seals, duly attested, to be hereunto affixed, all as of the day and year first
above written.
ENSERCH EXPLORATION, INC.
By: /s/ Joseph T. Leary
---------------------------------
Name: Joseph T. Leary
Title: Vice President
Finance and Treasurer
SEAL
Attest:
/s/ R. L. Jay
- ----------------------
Name: R. L. Jay
Title: Asst. Corporate Secretary
The Bank of New York, as Trustee
By: /s/ Stephen J. Giurlando
---------------------------------
Name: Stephen J. Giurlando
Title: Assistant Vice President
SEAL
Attest:
/s/ F. W. Clark
- ----------------------
Name: F. W. Clark
Title: Vice President
64